EXHIBIT 10.9
AMENDED AND RESTATED
MASTER AGREEMENT
by and between
XXXXX INTERESTS LIMITED PARTNERSHIP
and
XXXXX US CORE OFFICE PROPERTIES LP
and
SUMITOMO LIFE REALTY (N.Y.), INC.
for creation of
HINES U.S. CORE OFFICE FUND
------
Dated as of March 31, 2003
TABLE OF CONTENTS
Page
----
Introductory Statement .................................................... 1
ARTICLE 1. Definitions .................................................... 3
1.1 Certain Defined Terms .............................................. 3
1.2 Construction ....................................................... 13
1.3 Knowledge .......................................................... 14
1.4 Other Terms Defined Elsewhere ...................................... 14
ARTICLE 2. Formation of Partnership and Trust ............................. 14
2.1 Formation of Partnership ........................................... 14
2.2 Formation of Trust ................................................. 14
2.3 Partnership Management; Trust Board ................................ 15
ARTICLE 3. First Closing; Second Closing .................................. 15
3.1 First Closing; Agreed Valuations ................................... 15
3.2 MSI Interests ...................................................... 18
3.3 [Intentionally Omitted] ............................................ 19
3.4 Repayment of Bridge Loan; Redemption of Shares and Units ........... 19
3.5 Second Closing ..................................................... 19
ARTICLE 4. Mortgage Financing; Third Party Equity ......................... 20
4.1 Permanent Financing; Loan-Criteria ................................. 20
4.2 Existing Mortgage .................................................. 21
4.3 Third Party Equity Target .......................................... 21
4.4 Failure to Meet Equity Target ...................................... 21
4.5 Marketing .......................................................... 23
4.6 Indemnities Relating to Marketing .................................. 25
4.7 Survival ........................................................... 26
ARTICLE 5. Closings; Closing Deliveries ................................... 26
5.1 Closing Dates ...................................................... 26
5.2 First Closing Events ............................................... 26
5.3 First Closing Document Deliveries .................................. 27
5.4 Second Closing Events .............................................. 31
5.5 Second Closing Document Deliveries ................................. 31
ARTICLE 6. Sumitomo Closing Conditions .................................... 34
6.1 Sumitomo Closing Conditions ........................................ 34
i
ARTICLE 7. Closing Conditions of Hines and the Partnership ................... 36
7.1 Closing Conditions of Hines and the Partnership ....................... 36
ARTICLE 8. Failure to Satisfy Closing Conditions ............................. 38
8.1 Waiver of Closing, Condition by Hines and the Partnership ............. 38
8.2 Waiver of Closing Condition by SLR .................................... 38
8.3 Procedure for Waiver .................................................. 38
8.4 Cure of Certain Representations and Warranties ........................ 38
8.5 Failure to Satisfy Closing Conditions ................................. 39
8.6 Maximum Cure Amount ................................................... 39
8.7 Limitation on Right to Claim Failure of Condition ..................... 40
ARTICLE 9. Property Management and Leasing ................................... 40
9.1 Termination of Existing Agreements .................................... 40
9.2 Hines as New Property Manager and Leasing Agent ....................... 40
9.3 Termination of Certain Service Contracts and Construction Agreements... 40
ARTICLE 10. Advisory Agreement ............................................... 40
ARTICLE 11. Representations and Warranties of SLR ............................ 41
11.1 Properties "As Is" ................................................... 41
11.2 Representations and Warranties ....................................... 41
11.3 Changes in Representations Regarding Leases .......................... 45
11.4 Lease Documents and Service Contracts Not Yet Delivered .............. 46
ARTICLE 12. Representations and Warranties of Hines and the Partnership ...... 46
12.1 Representations and Warranties ....................................... 46
ARTICLE 13. Defaults; Remedies; Survival of Representations and
Warranties; Indemnities .......................................... 49
13.1 Pre-Closing Defaults ................................................. 49
13.2 Post-Closing Breach of Representations and Warranties or Covenants.... 52
13.3 Indemnities of SLR ................................................... 53
13.4 Indemnities of the Partnership ....................................... 54
13.5 Procedures Relating to Indemnities ................................... 55
ARTICLE 14. Transfer Taxes; Transaction Expenses ............................. 55
14.1 Transfer Taxes ....................................................... 55
14.2 Transaction Expenses ................................................. 56
ARTICLE 15. Casualty; Condemnation ........................................... 57
15.1 Definitions .......................................................... 57
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15.2 Termination Right ................................................. 57
15.3 Dispute Resolution ................................................ 58
15.4 Adjournment of Closing Date ....................................... 58
15.5 Waiver ............................................................ 59
15.6 Condemnation ...................................................... 59
ARTICLE 16. Apportionments ................................................ 59
16.1 Apportionments of Certain Items at Closing ........................ 59
16.2 Utilities ......................................................... 59
16.3 Tenant Expense Recoveries ......................................... 60
16.4 Closing Statement; Payment of Estimated Prorations ................ 60
16.5 Post-Closing Apportionments ....................................... 60
16.6 Tax Protests ...................................................... 60
16.7 Apportionment of Rent Received Post-Closing ....................... 61
16.8 Post-Closing Payments ............................................. 61
16.9 Amounts Due under Property Management Agreements, Leasing Agent
Agreements, Brokerage Commission Agreements and Construction
Agreements; Tenant Improvement Allowances .............................. 61
16.10 Survival ......................................................... 62
ARTICLE 17. Certain Covenants ............................................. 62
17.1 Pre-Closing Negative Covenants .................................... 62
17.2 Other Covenants ................................................... 63
17.3 Inspections of Properties and Documents ........................... 64
17.4 Survival .......................................................... 65
ARTICLE 18. Removal Title Defects; Surveys; Violations .................... 65
18.1 Definition ........................................................ 65
18.2 Notice and Cure of Title Defects .................................. 65
18.3 Discharge of Liens ................................................ 65
18.4 Surveys ........................................................... 65
18.5 Violations ........................................................ 65
ARTICLE 19. Training of Sumitomo Personnel ................................ 66
ARTICLE 20. Notices ....................................................... 66
ARTICLE 21. No Assignment ................................................. 66
..
ARTICLE 22. Brokers ....................................................... 66
22.1 Payment ........................................................... 66
22.2 Representations ................................................... 67
22.3 Indemnities ....................................................... 67
22.4 Survival .......................................................... 67
iii
ARTICLE 23. Confidentiality ............................................... 67
23.1 Pre-Closing ....................................................... 67
23.2 Post-Closing ...................................................... 67
23.3 Certain Disclosures Permitted ..................................... 67
23.4 Existing Confidentiality Agreement; Survival ...................... 68
ARTICLE 24. Miscellaneous ................................................. 68
24.1 Further Assurances ................................................ 68
24.2 Governing Law ..................................................... 68
24.3 Amendments ........................................................ 68
24.4 Entire Agreement .................................................. 68
24.5 No Waiver ......................................................... 68
24.6 Counterparts ...................................................... 69
24.7 Successors and Assigns ............................................ 69
24.8 Jurisdiction Venue ................................................ 69
24.9 Invalidity of Certain Provisions .................................. 69
24.10 No Third Party Beneficiaries ..................................... 69
24.11 Construction ..................................................... 69
24.12 No Personal Liability ............................................ 69
24.13 Clarification of Use of Defined Terms Sumitomo and SLR ........... 69
24.14 Prevailing Party's Attorney's Fees ............................... 69
24.15 Termination; Survival ............................................ 70
24.16 Cooperation ...................................................... 70
24.17 District of Columbia Disclosures ................................. 70
SCHEDULES
Schedule "1" Legal Descriptions of the Properties; Permitted Encumbrances
Schedule "2" Current Ownership of the Properties
Schedule "3" Agreed Valuations
Schedule "4" Insurance
Schedule "5" Existing Mortgage
Schedule "6" Guidelines for Increase to Agreed Valuation of 000 Xxxxxxxxx
Xxxxxx
Schedule "7" [Intentionally Omitted]
Schedule "8" Website Domain Names
Schedule "9" Other Closing Deliveries
Schedule "10" [Intentionally Omitted]
Schedule "11" SLR and SLRI Shareholders
Schedule "12" Partners, Members, Officers and, Managers of Hines, General
Partner and HREH
Schedule "13" Leases and Related Information
Schedule "14" Exceptions (if any) to SLR's Representations
Schedule "15" Service Contracts and Construction Agreements
Schedule "16" Notice Addresses
Schedule "17" Environmental Reports
iv
Schedule "18" Leasing Agent Agreements and Brokerage Commission Agreements and
Leasing/Brokerage Commissions Which Are or May Become Payable in
Future.
Schedule "19" Rent Rolls
Schedule "20" Estoppel Tenants
Schedule "21" Outstanding Amounts under Construction Agreements
Schedule "22" Outstanding Tenant Improvement Allowances
v
EXHIBITS
Exhibit "A" Form of Amended and Restated Agreement of Limited Partnership of
the Partnership
Exhibit "B" Trust Organization Documents
Exhibit "C" Form of Deed
Exhibit "D" Property Management and Leasing Agreement
Exhibit "E" Advisory Agreement
Exhibit "F" Form of HREH Guaranty
Exhibit "G" Securities Protocol
Exhibit "H" Subscription Agreement
Exhibit "I" Filed Declaration of Trust
Exhibit "J" Filed Certificate of Limited Partnership of the Partnership
Exhibit "K" Form of Ground Lease Assignment .'
Exhibit "L" Form of Assignment of Leases
Exhibit "M' Form of General Assignment
Exhibit "N" Form of Notice to Tenants
Exhibit "O" Form of Agreement of SPE Owners and Current Owners
vi
AMENDED AND RESTATED
MASTER AGREEMENT
AMENDED AND RESTATED MASTER AGREEMENT (this "Agreement") dated
as of March 31, 2003 between XXXXX INTERESTS LIMITED PARTNERSHIP, a Delaware
limited partnership ("Xxxxx") and XXXXX US CORE OFFICE PROPERTIES LP, a Delaware
limited partnership (the "Partnership"), each having an address at 0000 Xxxx Xxx
Xxxxxxxxx, Xxxxxxx, Xxxxx 00000-0000, and SUMITOMO LIFE REALTY (N.Y.), INC., a
New York corporation ("SLR") having an address at Manhattan Tower, 000 Xxxx 00xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
INTRODUCTORY STATEMENT
On March 31, 2003, Hines, the Partnership and SLR entered into
that certain Master Agreement relating to the creation of a real estate
investment fund (the "Original Master Amendment"). After entering into the
Original Master Agreement, the parties agreed to certain amendments of the
Original Master Agreement and have elected to set forth such amendments in this
Amended and Restated Master Agreement. Hines, the Partnership and SLR agree that
this Amended and Restated Master Agreement amends and restates in its entirety
the Original Master Agreement, which shall be of no further force or effect.
Hines is one of the largest privately held real estate
development, investment, and management companies in the world. Hines currently
manages several million square feet of first-class office and retail properties
in the U.S. and other countries, and provides clients with a wide range of real
estate services. Building upon these strengths, Hines has developed and managed
several real estate investment funds.
SLR is the U.S. subsidiary of Sumitomo Life Insurance Company,
one of the largest life insurance companies in Japan. Sumitomo Life Insurance
Company is a major investor in Class A office properties in Japan and is also a
major provider of asset, property management and related services in Japan. In
the U.S., SLR and its wholly owned subsidiary SLR Investments, Inc. ("SLRI"),
through their ownership of interests in the Current Owners (defined below) and
otherwise, own a portfolio of signature office buildings in New York City and
other major urban areas in the U.S. currently valued at approximately $1
billion. (SLR and SLRI are referred to together in this Agreement as
"Sumitomo").
Hines and Sumitomo wish to combine certain of Sumitomo's U.S.
assets and its real estate experience, Hines' acquisition, property management
and leasing skills, and the respective reputations of each of the parties, to
form a world-class core office investment structure, to be named the "Hines U.S.
Core Office Fund." This structure will be in the form of a real estate
investment trust combined with a limited partnership (as described in more
detail below); it is intended to be an open-end, infinite life vehicle that will
periodically seek new investments by offering shares and units for purchase at
net asset value. (The Trust and the Partnership (each as defined below) are
referral to together as the "Fund").
Investment in the Fund will be marketed by Hines, as lead
sponsor, on a global basis to institutional and other investors seeking to
invest in stable, long term, high current yield office assets with the goal of
attracting third party equity commitments of $250 million by July 31,2003. The
parties anticipate that most investors will elect to participate as Trust
shareholders; however, for tax or other reasons some investors will receive
interests (denominated by units) in the Partnership. Xxxxxx Xxxxxxx & Co.
Incorporated ("Xxxxxx Xxxxxxx") will act as an advisor with respect to the
marketing of the Fund.
It is anticipated that SLR and its affiliates would focus
their capital-raising efforts for the Fund in Japan; however, due to economic
conditions and other factors, the parties do not anticipate that marketing
efforts in Japan would begin until after the Closings (defined below).
For Hines, this venture with Sumitomo will provide a set of
signature properties (the "Properties", as defined below) which will form an
impressive initial core office asset base to market to investors, and the
possibility of investment from Japanese or other Asian capital sources. For
Sumitomo, this venture with Hines will allow Sumitomo to restructure its U.S.
real estate investments, and provide Sumitomo with an opportunity to develop and
market its U.S. asset management expertise.
The parties intend also, to work to raise capital for a
sister fund in Japan, for which Sumitomo would act as lead sponsor and Hines
would be primarily responsible for raising capital outside of Japan and Asia.
The Trust will be a Maryland real estate investment trust. The
Trust will be a limited partner in the Partnership which will own the Properties
through one or more single-purpose subsidiaries ("SPE Owners", as defined
below). The general partner of the Partnership is Hines US Core Office Capital
LLC ("General Partner"), a Delaware limited liability company. An Affiliate of
Hines is a limited partner in the Partnership. SLR and SLRI (or their
Affiliates) will be shareholders of the Trust. The Trust and Partnership have
been formed by Hines and its affiliates to facilitate the First Closing (defined
below), but the appointment of the Trust board and Partnership management board,
and other initial organizational activities, will not occur until the First
Closing.
At the First Closing which would occur on or before June 30,
2003 (subject to extension as provided herein), Sumitomo will convey three of
the Properties to the SPE Owners designated by the Partnership and receive in
exchange shares in the Trust and cash. Conditions to the First Closing will
include, among other things, obtaining satisfactory mortgage financing on these
Properties and other matters described in this Agreement. If third party
investors have made commitments to the Fund, these investors may be admitted to
the Trust and/or the Partnership at the First Closing.
At the First Closing, Sumitomo will receive as consideration
for the Properties being then conveyed, cash (the "Initial Sumitomo Payment", as
defined below) and Trust shares representing a 19.9% interest in the Fund, not
to exceed $25 million in share value. The Partnership will also obtain Permanent
Financing and (to the extent Permanent Financing and third party equity raised
by the First Closing are insufficient to pay the Initial Sumitomo Payment) a
Bridge Loan with respect to the First Closing.
2
After the First Closing and the payment of the Initial
Sumitomo Payment, all proceeds of third party equity of the Fund will be applied
first, at the Partnership's option, to pay off the Bridge Loan (if a Bridge Loan
is obtained), second, to redeem or purchase all of Sumitomo's shares, and third,
at Hines' option, to redeem Hines' units until Hines holds units representing
the lesser of $25 million or 1% of the total Fund capital (or such greater
percentage as Hines may elect).
Sumitomo will convey a fourth Property to the Partnership at a
Second Closing (defined below) which would occur on or before September 30, 2003
(subject to extension as provided herein), in exchange for cash (defined below
as the "Second Sumitomo Payment") and $25 million in Trust shares. Conditions
to the Second Closing will include, among other things, raising sufficient third
party equity (or equity commitments) to repay in full the Bridge Loan,
purchasing or redeeming all of Sumitomo's shares that it received at the First
Closing and (if Hines elects) redeeming Hines' units as described above, as well
as obtaining satisfactory mortgage financing on this Property, and other matters
described in this Agreement.
In the event that the amount of third party equity raised (or
equity commitments made) by the Second Closing Date (defined below) is
insufficient to satisfy the Closing conditions described above and make the
Second Sumitomo Payment, then at Sumitomo's election (as set forth below),
alternatively: (1) the Second Closing will be postponed to a date specified by
Sumitomo (but not later than December 31, 2003) or (2) Sumitomo may terminate
this Agreement in part so that it is no longer obligated to convey the fourth
Property to the Partnership.
In the event that the amount of third party equity raised
after the First Closing and prior to December 31, 2003 is insufficient for the
Trust to redeem all of Sumitomo's shares that it received at the First Closing,
Hines shall purchase all of Sumitomo's shares on December 31, 2003.
After the Closings, Hines will become property manager and
leasing agent for the Properties. Hines and Sumitomo (or its affiliates) will
provide advisory, asset management and acquisition services to the Partnership
and will receive fees for doing so.
The parties to this Agreement agree that this Introductory
Statement is intended to serve as a preface to this Agreement only, and none of
the terms of this Introductory Statement shall be legally binding on the parties
or be used to interpret the terms of this Agreement.
NOW, THEREFORE, for good and valuable consideration and
intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS.
1.1 Certain Defined Terms. The following words and phrases have the
following meanings in this Agreement:
"AAA" is defined in Section 3.1(d)(vi).
3
"Advisory Agreement" is defined in Article 10.
"Affected Floor" means any of floors 2 through 11 at 000
Xxxxxxxxx Xxxxxx.
"Affected Property" is defined in Section 8.5(b).
"Affiliate" means a person or entity Controlling, Controlled
by or under common Control with another person or entity. However, with respect
to Sumitomo and the Current Owners, "Affiliate" shall be deemed not to include
PM Partners LLC or any limited liability company, partnership or other Person in
which PM Realty (and/or its affiliates) and Sumitomo (and/or its affiliates)
hold ownership interests.
"Agreed Valuations" is defined in Section 3.1(c).
"Agreement" means this amended and Restated Master Agreement
and all Schedules and Exhibits to this Agreement.
"Amended Cash Flow Stream" is defined in Schedule "6".
"Approved Marketing Materials" is defined in Section 4.5.
"Appurtenance" means, with respect to each Property, any
easement, covenant, restriction, tenement, hereditament, and other right of
every kind whatsoever, benefitting or appertaining to the Property (and all
remainders, rents, issues, and profits thereof). "Appurtenance" includes all
right, title and interest (if any) of the applicable Current Owner in and to the
following with respect to the applicable Property: (i) any land lying in the bed
of any xxxxxxx, xxxxxx, xxxxxxx, rights of way or roads abutting the Property to
the center line thereof, (ii) all strips, gores, rights of way, reservations,
and privileges, (iii) unpaid awards for any taking by condemnation or any damage
by reason of a change of grade of any alleys, streets, roads, highways, avenues
or rights-of-way, and (iv) all air and subsurface rights, transferable
development rights, water and wastewater rights and reservations.
"Arbitrator" is defined in Section 3.1(d)(vi).
"Assignments of Leases" is defined in Section 5.3(a)(viii).
"Bankruptcy Event" means, with respect to any Person, that
such Person has: (i) made an assignment for the benefit of creditors; (ii)
commenced any Legal Proceeding for the appointment of a custodian, receiver or
trustee for it or a substantial part of its assets; (iii) commenced any Legal
Proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law of any jurisdiction whether now or
hereafter in effect; or (iv) had any such Legal Proceeding (described in (ii)
and/or (iii) above) filed or commenced against it.
"Bridge Loan" means a short-term loan made to one or more SPE
Owners and/or the Partnership, as borrower, which will be unsecured or secured
by interests of the Partnership in the SPE Owners and other assets of the
Partnership, and with respect to which Sumitomo will have no personal liability.
4
"Brokerage Commission Agreement" means an agreement entered
into by Sumitomo or any Current Owner or assumed by either of them from their
respective predecessors in interest which requires the payment of a commission
to a Tenant's broker in connection with any Lease transaction relating to any
Property.
"Business Day" means any day other than (a) Saturday or
Sunday; (b) a federal banking holiday; or (c) a banking holiday in the States of
New York or Texas or in the District of Columbia.
"Cash Flow Stream" is defined in Schedule "6".
"Casualty Consultant" means a professional engineer, architect
and/or general contractor selected by SLR and reasonably approved by Hines which
has not been retained by SLR, Hines or their respective Affiliates within five
years prior to the date of this Agreement.
"Casualty Event" is defined in Section 15.1.
"Change in Lease Status" is defined in Section 11.3.
"CIBC" is defined in Section 3.1(d).
"Claims" is defined in Section 4.6(a).
"Class A Common Share" is defined in the Declaration of Trust
Form.
"Class B Common Share" is defined in the Declaration of Trust
Form.
"Closing" means the First Closing and/or the Second Closing,
as applicable.
"Closing Date" means the First Closing Date and/or the Second
Closing Date, as applicable.
"Closing Instruments" means all instruments, agreements and
documents required to be executed and/or delivered by Sumitomo, the Current
Owners, Hines, the Partnership, the SPE Owners, the Trust, HREH, and/or their
respective Affiliates, at the applicable Closing under this Agreement.
"Clsoing Statement" is defined in Section 16.4.
"Code" means the Internal Revenue Code of 1986, as amended,
and all regulations promulgated pursuant thereto.
"Common Share" is defined in the Declaration of Trust Form.
"Condemnation" (or to "Condemn") means a taking (whether
temporary or permanent) by any Government Entity in condemnation or eminent
domain (or any transfer by agreement in lieu thereof).
5
"Construction Agreements" means every agreement, contract or
purchase order for the performance or furnishing of work, materials or services
relating to construction, repair, improvement or restoration of any Property
(but not including Service Contracts) entered into by or on behalf of Sumitomo
or any Current Owner or assumed by either of them from their respective
predecessors in interest.
"Control" (or in the context, "Controlled" or "Controlling")
means (i) the direct or indirect ownership of 51% or more of the common
shares, membership interests, partnership interests or other equity of a person
or entity, and/or (ii) the possession, directly or indirectly, of the power to
direct the management and policies of a person or entity, whether through voting
control, contractual rights, a trust, or otherwise. Notwithstanding the
foregoing, with respect to a Sumitomo group entity which conducts marketing
activities for the Fund, or performs services under and/or collects fees under
the Advisory Agreement, the applicable percentage of ownership described above
shall be 15% or more.
"Current Hines Partner" means the Affiliate of Hines that is a
limited partner in the Partnership as of the date of this Agreement.
"Current Owner" means the Affiliate of Sumitomo which owns
each Property as of the date of this Agreement. The Current Owners are described
in Schedule "2" hereto.
"DC Return" is defined in Section 5.3(a)(iv).
"Declaration of Trust Form" means the form of Amended and
Restated Declaration of Trust attached hereto as a part of Exhibit "B", as it
may be revised from time to time in accordance with this Agreement.
"Defaulting Party" is defined in Section 13.1(a).
"Development Approvals" means temporary or permanent
certificates of occupancy for each Property, and zoning variances, licenses,
permits, certificates of operation for incinerators, boilers and other
equipment, and any other approvals or consents, issued by a Government Entity
with respect to each Property.
"Development Rights" means, with respect to each Property, the
floor area pertaining to such Property and all rights to construct on, above,
or under such property as permitted by applicable laws and any other
transferable development rights.
"Due Diligence Information" is defined in Section 23.1.
"Employee" means an officer, director, managing director,
employee, partner, agent, or representative involved in the operation,
maintenance or repair of, or providing services in connection with, any
Property.
"Encumbrance" means a Mortgage, security agreement, security
interest, lien, levy, lease, pledge, hypothecation, charge, claim, license,
judgment, covenant, easement, and/or any other encumbrance or restriction of any
and every kind whatsoever.
6
"Event of Termination" is defined in Section 15.1.
"Existing, Mortgage" means the mortgage listed on Schedule "5"
hereto.
"Expansion Amendment" means any contractually binding
amendment to the Lease of, or new Lease with (a) CIBC which provides for the
lease of any Affected Floor and which is fully executed and delivered by CIBC
prior to the First Closing Date, or (b) STB which provides for the lease of any
Affected Floor and which is fully executed and delivered by STB prior to the
Outside Date.
"Fees-And-Costs" means reasonable fees of attorneys,
architects, engineers, expert witnesses, consultants, and other Persons, and
costs charged by, or reimbursable to, the foregoing (including costs of
transcripts, printing of briefs and records, and copying).
"First Closing" means the closing of the conveyance of the
First Closing Properties to the SPE Owners designated by the Partnership, the
payment of the Initial Sumitomo Payment and (if not paid prior to the First
Closing) the Xxxxx Capital Contribution, the issuance of Units to the Xxxxx
Limited Partner, the General Partner and the Trust (if not issued prior to the
First Closing), the issuance of Initial Sumitomo Shares to Sumitomo, and the
completion of the First Closing deliveries described below.
"First Closing Date" is defined in Section 5.1.
"First Closing Properties" is defined in Section 3.1(a).
"Fiscal Year" is defined in Schedule "6".
"Form Lease and Guidelines" is defined in Section 17.1(a).
"General Assignments" is defined in Section 5.3(a)(ix).
"General Partner" means Xxxxx US Core Office Capital, LLC, a
Delaware limited liability company.
"Ground Lease Assignments" is defined in Section 5.3(a)(vii).
"Government Entity" means the United States; the State of New
York or the District of Columbia; any other state in which a party to this
Agreement is organized if a legal entity; any municipality or other political
subdivision of any of the foregoing; and any agency, administrative board or
body, authority, department, court, commission or other legal entity of any of
the foregoing. "Government Entity" includes, also, any business improvement
district or similar taxpayers' or real property owners' organization which
assesses a charge against any Property for community security, street
improvements, other improvements, or other services or benefits.
"Guarantees" means guarantees or warranties of workmanship,
design, installation, construction, maintenance, performance, or functioning of
buildings on the Properties.
7
"Hazardous Substances" means any materials, substances,
fluids, chemicals, gases or other compounds the presence, use, storage,
emission, drainage, leakage or disposition of which is prohibited by law or is
subject by law to specific procedures, controls or restrictions, or which are
otherwise deemed toxic, poisonous or unsafe.
"Xxxxx Capital Contribution" is defined in Section 3.1(b).
"Xxxxx Contribution Amount" is defined in Section 3.1(b).
"Xxxxx Indemnitees" means Xxxxx, its Affiliates, and their
respective managers, members, partners, officers, directors, shareholders and
employees.
"Xxxxx Limited Partner" means the Affiliate of Xxxxx that is
then the limited partner in the Partnership.
"HREH" means Xxxxx Real Estate Holdings Limited Partnership, a
Texas limited partnership.
"HREH Guaranty" means the guaranty of HREH in favor of SLR
with respect to certain obligations of Xxxxx and the Partnership under Sections
3.1(d) and 4.4(d) of this Agreement, in the form attached hereto as Exhibit "F".
"HREH Opinion" means an opinion from counsel to HREH in favor
of Sumitomo, in form reasonably satisfactory to Sumitomo, as to HREH's power and
authority to execute and deliver the HREH Guaranty and the due execution and
delivery of the HREH Guaranty.
"Initial Fund Equity" is declared in Section 3.1(b).
"Initial Sumitomo Payment" is defined in Section 3.1(a).
"Initial Sumitomo Shares" is defined in Section 3.1(a).
"Intangibles" means, with respect to each Property, all of the
following intangible property associated with, or used in connection with, the
Property: the website domain names on Schedule "8", and the names of the
buildings on each Property. For purposes of clarification, "Intangibles" does
not include logos, trade names (other than the building names) or trademarks.
"Interests" means, collectively, Shares and Units.
"Leases" means all leases of space at the Properties, all
other occupancy agreements affecting the Properties, and all amendments,
renewals, replacements, extensions, substitutions and modifications of any of
the foregoing, together with guarantees executed in connection with any such
leases or occupancy agreements.
"Leasing Agent Agreement" means an agreement entered into by
Sumitomo or any Current Owner or assumed by either of them from their respective
predecessors in interest
with a real estate brokerage firm to act as Sumitomo's, the Current Owners or
any such predecessor's leasing agent for any Property.
"Legal Proceeding" means an action, litigation, arbitration,
administrative proceeding, and other legal or equitable proceeding of any kind.
"Loan Criteria" is defined in Section 4.1.
"Major Lease" means the Lease of each of the following Tenants:
Simpson, Thacher and Xxxxxxxx; Canadian Imperial Bank of Commerce; Bloomberg,
L.P.; Xxxxxx & Xxxxxx, LLP; Xxxxx Xxxxxxx LLP; Park Tower Realty Corp.; Mercer
Management Consulting, Inc.; and with respect to 000 Xxxx 00xx Xxxxxx, the
collective Leases of Tenants occupying 10% or more of the rentable square
footage in the aggregate.
"Management and Leasing Agreement" is defined in Section 9.2.
"Management Board" is defined in Section 2.3(a).
"Material Tenant Default" means, with respect to any Tenant
under a Major Lease: (i) the failure to pay when due one month's fixed rent and
additional rent, and/or any other amounts due under such Lease which in the
aggregate equal or exceed one month of such Tenant's fixed rent and additional
rent, (ii) the failure to restore within applicable notice and grace periods a
portion of its Tenant Deposit equal to or greater than one month of its fixed
rent and additional rent, which the Current Owner has applied to such Tenant's
Lease obligations, or (iii) the occurrence of any material non-monetary default
under such Lease.
"Maximum Cure Amount" is defined in Section 8.6.
"Mortgage" means a mortgage, deed of trust, or other lien for
the payment of borrowed money.
"MSI" is defined in Section 3.2(a).
"MSI Payment" means the amount, if any, to be paid to MSI by
Sumitomo pursuant to Section 3.2(a).
"Net Operating Income" is defined in Schedule "6".
"Net Present Value" is defined in Schedule "6".
"Non-Defaulting Party" is defined in Section 13.1(a).
"Notice Addresses" means the addresses set forth on
Schedule "16".
"NYC Returns" is defined in Section 5.3(a)(iii).
"NYS Returns" is defined in Section 5.3(a)(ii).
9
"Offering" means the offering of the Interests to potential
investors pursuant to the PPM.
"Outside Date" means October 31, 2008.
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of the Partnership in the form attached as Exhibit "A"
hereto, as amended from time to time in accordance with the terms of this
Agreement.
"Permanent Financing" is defined in Section 4.1.
"Permitted Encumbrances" means the Encumbrances listed as such
for each Property on Schedule "1" hereto.
"Person" means an individual person, a corporation, partnership,
trust, joint venture, limited liability company, partnership, estate,
association, land trust, other trust, Government Entity or other incorporated or
unincorporated enterprise, entity or organization of any kind.
"Personalty" means, with respect to each Property, all art work,
machinery, equipment, fixtures, furniture, tools, supplies, spare parts,
inventory and other tangible property of every kind owned by Sumitomo or the
Current Owner (or in which Sumitomo or the Current Owner has any right, title,
or interest but only to the extent thereof) now or hereafter attached to, or
located in or upon, or used in connection with, the Property, together with
additions to and substitutions for the same, and repairs, replacements and
improvements thereof prior to the Closing.
"PPM" means the private placement memorandum for the Fund, as
the same may be supplemented from time to time in accordance with the terms of
this Agreement.
"Proposal" is defined in Section 3.1(d)(vi).
"Properties" means more than one Property.
"Property" means, individually, each of the following:
(a) the land and improvements thereon located and commonly
known as 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx as more
particularly described in Schedule "1-A" hereto ("499
Park Avenue") and the Appurtenances thereof, the
Personalty thereon, and the Intangibles and Development
Rights associated therewith;
(b) the land and improvements thereon located and commonly
known as 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx as
more particularly described in Schedule "1-B" hereto
("425 Lexington Avenue") and the Appurtenances thereof,
the Personalty thereon, and the Intangibles and
Development Rights associated therewith;
10
(c) the land and improvements thereon located and commonly
known as 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx as
more particularly described in Schedule "1-C" hereto
("000 Xxxx 00xx Xxxxxx") and the Appurtenances thereof,
the Personalty thereon, and the Intangibles and
Development Rights associated therewith; and
(d) the land and improvements thereon located and commonly
known as 0000 Xxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
as more particularly described in Schedule "x-X" hereto
("1200 Nineteenth Street") and the Appurtenances
thereof, the Personalty thereon, and the Intangibles and
Development Rights associated therewith.
"Property Documents" means the Development Approvals and the
following: (a) all Leases; (b) all Service Contracts; (c) all Construction
Agreements; (d) (if in the possession of Sumitomo or the Current Owner) all
"as-built" and other drawings, plans and specifications; (e) all Guarantees; and
(f) the Current Owner's and Sumitomo's books, records, and correspondence
(including correspondence with and from Tenants, environmental reports and
studies) pertaining to the Service Contracts, Leases, Development Approvals,
Guarantees, Construction Agreements, and the leasing, operation, maintenance
and repair of the Property (collectively, "Building Records").
"Property Information Binder" is defined in Section 4.5(a).
"REIT" is defined in Section 2.2.
"Rent" is defined in Section 11.2(g).
"Residual Cap Rate" is defined in Schedule "6".
"Residual Value" is defined in Schedule "6".
"Restoration Costs" means, as of any date with respect to any
Casualty Event affecting any Property, the cost to be incurred, from and after
the date of such Casualty Event, to repair or restore (as reasonably determined
by the agreement of the parties, or failing such agreement, by a Casualty
Consultant in accordance with Section 15.3 hereof) the damage to the building
and other improvements at such Property caused by such Casualty Event.
"Second Closing" means the closing of the conveyance of the
Second Closing Property to the SPE Owner designated by the Partnership and the
payment of consideration to Sumitomo (or its Affiliate) for same as described in
Section 3.5 hereof.
"Second Closing Date" is defined in Section 5.1.
"Second Closing Property" is defined in Section 3.5.
"Second Sumitomo Payment" is defined in Section 3.5.
"Securities Protocol" is set forth as Exhibit "G" hereto.
11
"Service Contracts" means all contracts and agreements for the
furnishing of management, maintenance, repairs, supplies, or other services to
the Properties (and all amendments thereof) entered into by or on behalf of
Sumitomo or any Current Owner or assumed by either of them from their respective
predecessors in interest.
"Share" is defined in the Declaration of Trust Form.
"SLR Lease Amendment" is defined in Section 5.5(a)(xii).
"SNDAs" is defined in Section 7.1(m).
"SPE" means a single purpose limited liability company.
"SPE Owner" means, with respect to each Property, the SPE to be
formed to hold the title to such Property (it being agreed that any SPE Owner
may own and hold title to more than one Property). "SPE Owner" will also include
any SPE formed to own all membership interests in the title-holding SPE if
required by the lender in connection with the Permanent Financing.
"STB" is defined in Section 3.1(d).
"Subscription Agreement" is defined in Section 5.3(a)(xxiii).
"Sumitomo Entity" means any limited liability company or other
legal entity, wholly owned by SLR and/or SLRI, through which Sumitomo elects to
hold its interest in the Fund.
"Sumitomo Indemnitees" means Sumitomo, its Affiliates, and their
respective managers, members, partners, officers, directors, shareholders and
employees.
"Tenant" means any Person occupying any portion of a Property.
"Tenant Deposits" means all security deposits (including letters
of credit), paid or deposited by the Tenants with the landlord, or any other
person on the landlord's behalf pursuant to the Leases (together with any
interest which has accrued thereon, but only to the extent such interest has
accrued for account of the respective Tenants).
"Tenant Estoppels" is defined in Section 7.1(m).
"Tenant Expense Recoveries" is defined in Section 16.3.
"Third Party Equity" is defined in Section 3.1(b).
"Third Party Investor" means any Person (other than Xxxxx,
Sumitomo and their respective Affiliates) who invests in the Fund.
"Title Defect" is defined in Section 18.1.
"Title Insurer" means First American Title Insurance Company.
12
"Transaction Cost Reimbursement" is defined in Section 13.1(a).
"Transfer" or "to Transfer" means to sell, transfer, assign,
convey, pledge, donate, hypothecate, grant a security interest in, Mortgage,
option or otherwise encumber or dispose of, voluntarily or involuntarily, with
or without consideration.
"Trust" means the Maryland real estate investment trust now
known as "Xxxxx U.S. Core Office Trust", which will amend its name at or before
the First Closing to be called "Xxxxx-Sumisei US Core Office Trust".
"Trust Organization Documents" means the Declaration of Trust
and the Bylaws of the Trust attached hereto as Exhibit "B".
"Unit" means a "Partnership Unit" as such term is defined in the
Partnership Agreement.
"Utilities" or "Utility" means gas, water, sewer, electricity,
light, heat, power, telephone, telecommunications, and other utilities of any
kind.
"Violation" means any note or notice of any violation of law
noted or issued by any Government Entity against or with respect to any
Property, other than violations relating to the compliance of the buildings on
the Properties as of the date of this Agreement with applicable zoning
requirements.
"Wire Transfer" means a wire transfer of immediately available
federal funds to a bank account to be specified by SLR.
1.2 Construction. Wherever used in this Agreement:
(a) the words "include" or "including" shall be construed as
incorporating, also, "but not limited to" or "without limitation";
(b) the word "day" means a calendar day unless otherwise
specified;
(c) the word "party" means each and every Person whose
signature is set forth at the end of this Agreement;
(d) the word "law" (or "laws") means any law, rule,
regulation, order, statute, ordinance, resolution, code, decree,
judgment, injunction, mandate or other legally binding requirement of a
Government Entity
(e) each reference to the Properties (or any part or
component thereof) shall be deemed to include "and/or any portion
thereof";
(f) the word "notice" shall mean notice in writing (whether
or not specifically so stated);
(g) the word "month" means a calendar month unless otherwise
specified;
13
(h) the word "amended" means "amended, modified, extended,
renewed, changed, or otherwise revised"; and the word "amendment" means
"amendment, modification, extension, change, renewal, or other
revision";
(i) the phrase "subject to the terms of this Agreement"
means "upon and subject to all terms, covenants, conditions and
provisions of this Agreement"; and
(j) documents or other items or materials shall be deemed in
a party's "possession" if the same are in the actual possession or
control of such party or its Affiliates or agents, of if such party may
obtain such documents, items or materials from consultants or other
third parties at minimal expense and with reasonable effort.
1.3 Knowledge. For purposes of this Agreement, a party shall be
deemed to have knowledge or notice of a matter if such matter is actually known
by, or if written notice disclosing such matter has been received by, an
officer, director, general partner, shareholder, limited liability company
manager or member of such party (or of any entity which is a general partner or
member of such party).
1.4 Other Terms Defined Elsewhere. Other words and phrases are
defined elsewhere in this Agreement and in the Schedules and Exhibits hereto.
ARTICLE 2: FORMATION OF PARTNERSHIP AND TRUST.
2.1 Formation of Partnership. Current Xxxxx Partner and General
Partner have formed the Partnership prior to the date hereof by filing the
Certificate of Limited Partnership attached hereto as Exhibit "J" with the
Delaware Secretary of State. At or prior to the First Closing, General Partner
and the Current Xxxxx Partner will execute and deliver the Partnership
Agreement. The Trust will become a partner of the Partnership at or prior to the
First Closing. Xxxxx shall have the right to have admitted to the Partnership as
a limited partner another Affiliate of Xxxxx in place of Current Xxxxx Partner
and such Affiliate will then become the Xxxxx Limited Partner. Before the First
Closing, the Partnership will file an amendment to the Certificate of Limited
Partnership to change the name of the Partnership to "Xxxxx Sumisei US Core
Office Properties LP."
2.2 Formation of Trust. The Trust was formed prior to the date
hereof by filing the Declaration of Trust attached hereto as Exhibit "I" with
the State Department of Assessments and Taxation of Maryland. At or prior to the
First Closing, the initial trustees of the Trust will cause the Trust to adopt
its By-Laws and take such other actions as are necessary or desirable in
connection with the formation of the Trust. At or prior to the First Closing,
the Trust will file the amended and restated Declaration of Trust in the form
attached hereto as part of Exhibit "B" and will change its name to
"Xxxxx-Sumisei U.S. Core Office Trust". The Trust is a Maryland real estate
investment trust ("REIT") under the Maryland REIT Act. At the First Closing, the
Trust will meet all requirements to qualify as a REIT under Section 856 of the
Code (other than the requirements of Sections 856(a)(5), 856(a)(6) and
856(c)(1)). The parties anticipate that the Trust will meet the requirements of
Sections 856(a)(5), 856(a)(6) and 856(c)(1) as soon as it has sufficient Third
Party Equity to satisfy the requirement of Section 856(a)(6). Until the Trust
qualifies as a REIT under the Code, the Trust will elect to be taxed as a
partnership.
14
2.3 Partnership Management: Trust Board.
(a) As set forth in the Partnership Agreement, from and
after the First Closing, the activities of the Partnership will be
controlled by the General Partner, subject to the oversight of a
"Management Board", consisting of two appointees of Sumitomo, four
appointees of Xxxxx and one appointee of the Trust. Day-to-day affairs
of the Partnership shall be delegated to a three person management team
(as described in the Partnership Agreement) whose initial members are
expected to be: Xxxxx X. Xxxx, President; Xxxxxx Xxxxxxxxx, Senior
Investment Manager; and Xxxxx Xxxxx, Senior Asset Manager.
(b) The Trust will be managed by a board of trustees, which
shall have the powers and duties described in the Trust Organization
Documents. The initial trustees shall be the same as the initial members
of the Management Board.
ARTICLE 3. FIRST CLOSING; SECOND CLOSING
3.1 First Closing; Agreed Valuations.
(a) At the First Closing, Sumitomo will convey (or cause to
be conveyed) 000 Xxxx Xxxxxx, 000 Xxxxxxxxx Avenue and 0000 Xxxxxxxxxx
Xxxxxx (collectively, the "First Closing Properties") to the SPE Owners
designated by the Partnership. At the First Closing, in consideration
for the First Closing Properties, Sumitomo or a Sumitomo Entity shall
receive (a) Class B Common Shares with a value equal to 19.9% of the
Initial Fund Equity (the "Initial Sumitomo Shares"), plus (b) cash in an
amount equal to the Agreed Valuations for the First Closing Properties
minus the value of such Shares in the Trust (the "Initial Sumitomo
Payment"). Notwithstanding the preceding sentence, in no event shall the
Initial Sumitomo Shares have an initial value greater than $25 million,
or represent more than 50% of the total Fund equity at any time (and the
Partnership shall redeem the Initial Sumitomo Shares as provided in
Section 3.4 or decrease the number of Shares issued to Sumitomo at the
First Closing (and increase the Initial Sumitomo Payment) to prevent
this from occurring). In such event, "Initial Sumitomo Shares" shall
mean such lesser number of Shares issued to Sumitomo at the First
Closing and "Initial Sumitomo Payment" shall mean the increased cash
amount payable to Sumitomo at the First Closing. Sumitomo shall cause
the Existing Mortgage to be discharged at the First Closing. The Initial
Sumitomo Payment shall be paid by Wire Transfer at the First Closing.
Each Person other than Sumitomo that contributes cash to the Trust will
receive Class A Common Shares, with such Shares valued at the same price
per Share as the Initial Sumitomo Shares. The Trust, the Xxxxx Limited
Partner and any other Person contributing capital to the Partnership at
the First Closing will receive Common Units at a price per Unit equal to
the price per Share at which Common Shares are issued at the First
Closing. In addition, the Trust shall issue Preferred Shares as provided
in the Declaration of Trust Form, and the Partnership shall issue
Preference Units as provided in the Partnership Agreement.
(b) At the First Closing, Xxxxx will or will cause one or
more of its Affiliates to contribute cash to the Trust and/or the
Partnership (the "Xxxxx Capital Contribution")
15
in an aggregate amount (the "Xxxxx Contribution Amount") equal to the
excess of (i) 80.1% of the excess of (A) the sum of (I) the Agreed
Valuations of the First Closing Properties, (II) all closing costs
(including the costs of obtaining any financing) and closing adjustments
in respect of the First Closing Properties, and (III) all organizational
expenses of the Trust and the Partnership which pursuant to the terms of
the Partnership Agreement are to be paid by the Partnership, over (B)
the proceeds of the Permanent Financing and the Bridge Loan in respect
of the First Closing Properties (such excess of (A) over (B), the
"Initial Fund Equity"), over (ii) the aggregate amount of capital
contributed to the Trust and/or the Partnership by Third Party Investors
("Third Party Equity") at the First Closing. Of the Xxxxx Contribution
Amount, Xxxxx or its Affiliate will contribute a sufficient amount to
the Trust so that Xxxxx and its Affiliates, together with any Third
Party Investors issued Shares at the First Closing, hold, in the
aggregate, at least 1% of the total number of Common Shares outstanding
immediately after the First Closing, with the remainder of the Xxxxx
Capital Contribution being contributed to the Partnership or the Trust
(as determined by Xxxxx in its sole discretion); provided that if the
Third Party Equity contributed to the Trust at the First Closing is
greater than or equal to 1% of the total equity of the Trust immediately
following the First Closing, then Xxxxx and its Affiliates shall not be
required to make any capital contribution to the Trust, and 100% of the
Xxxxx Capital Contribution may be contributed to the Partnership.
(c) For purposes of this Agreement, the fair market value of
each Property at Closing shall be the value set forth on Schedule "3"
hereto (the "Agreed Valuations").
(d) (i) As of the date of this Agreement, Canadian Imperial Bank
of Commerce ("CIBC"), a Tenant of 000 Xxxxxxxxx Xxxxxx, has not yet
entered into an amendment of its Lease which would have allowed 425
Lexington Limited Liability Company to enter into an agreement with
Xxxxxxx Xxxxxxx & Xxxxxxxx ("STB") to lease a portion of CIBC's
premises. Xxxxx and SLR acknowledge and agree that the fair market value
of 000 Xxxxxxxxx Xxxxxx may increase if one or more Expansion Amendments
are executed and delivered. Accordingly, the parties wish to provide for
a mechanism to increase the Agreed Valuation of 000 Xxxxxxxxx Xxxxxx and
the Initial Sumitomo Payment, if Expansion Amendments are executed and
delivered by CIBC and/or STB. In the event that the Agreed Valuation of
000 Xxxxxxxxx Xxxxxx is increased pursuant to this Section, references
in this Agreement to the Agreed Valuation of 000 Xxxxxxxxx Xxxxxx shall
be deemed references to the Agreed Valuation set forth in Schedule "3"
hereto, as increased pursuant to this Section 3.1(d).
(ii) The mechanism for determining the amount of the
increase is set forth in Schedule "6" hereto. The parties acknowledge
that Schedule "6" may not address all possible forms that an Expansion
Amendment could take, and that different amendments could have different
effects on the Agreed Valuation. Accordingly, the parties agree to work
in good faith to agree upon an appropriate increase consistent (to the
extent applicable) with the formula set forth in Schedule "6" when an
Expansion Amendment is executed and delivered.
(iii) Prior to the Closing of 000 Xxxxxxxxx Xxxxxx,
Xxxxx shall be notified of, and permitted to approve, any Expansion
Amendment pursuant to Section
16
17.1(a) hereof. If an Expansion Amendment is executed and delivered
after the Closing Date, the Partnership shall notify SLR within 10 days
after an Expansion Amendment has been executed and delivered. The
parties shall work in good faith to agree upon the increase in the
Agreed Valuation within 30 days after an Expansion Amendment is executed
and delivered. The parties shall execute and deliver a written amendment
to this Agreement which sets forth the amount of the agreed increase
(but the failure to do so shall not affect SLR's rights hereunder).
(iv) The Initial Sumitomo Payment shall be increased by
an amount equal to the agreed increase in the Agreed Valuation. If the
amount of the increase is determined before the First Closing, the
Initial Sumitomo Payment paid at the First Closing shall be increased
accordingly. If the amount of the increase is determined after the First
Closing, the Partnership shall be required to pay SLR by Wire Transfer,
within sixty days after the date that the increase is agreed by the
parties, the total amount of such increase, plus interest from the First
Closing Date through the date of payment at the rate of 9% per annum,
compounded annually. Xxxxx will cause HREH to deliver the HREH Guaranty
at the First Closing to guarantee the Partnership's obligation to pay
the increase. If the full amount of such increase is paid at the First
Closing, the HREH Guaranty will be delivered at the First Closing but
will be modified to exclude Xxxxx' obligations under this Section
3.1(d).
(v) In the event that no Expansion Amendment is executed
and delivered prior to the Outside Date, the Partnership shall have no
obligation to pay any increase in the Initial Sumitomo Payment or any
other consideration to Sumitomo and this Section 3.1(d) shall be of no
further force or effect. If more than one Expansion Amendment is
executed and delivered on or before the Outside Date, the Partnership
shall be required to pay the agreed increase with respect to each
Expansion Amendment. In no event shall the Agreed Valuation of 000
Xxxxxxxxx Xxxxxx be deemed to decrease as the result of any Expansion
Amendment (or the failure to execute same). In the event that an
increase in the Initial Sumitomo Payment is payable hereunder, SLR shall
pay (or cause to be paid) New York State and New York City transfer tax
on the amount of such increase promptly following receipt of same.
(vi) In the event that the parties cannot agree upon the
amount of the increase to the Agreed Valuation within forty (40) days
after an Expansion Amendment has been executed and delivered, then the
parties shall submit the dispute to arbitration to be conducted in the
City and County of New York in accordance with the then applicable
expedited commercial arbitration rules of the American Arbitration
Association (the "AAA"). An arbitrator shall be appointed by the AAA or
its successor (the branch office of which is located in or closest to
The City of New York), within ten (10) days of a request by either party
(the "Arbitrator"). Each of the Partnership and SLR shall deliver to the
Arbitrator in writing, within five (5) days after such Arbitrator is
appointed, its proposal for the increase to the Agreed Valuation,
together with any evidence, documentation, or other materials supporting
the same (a "Proposal"). After the submission of such Proposals, neither
party may make any additions to or deletions from, or otherwise change,
its respective Proposal. Within ten (10) days after the delivery of the
Proposals, the Arbitrator shall choose one or the other of the Proposals
made by the
17
Partnership and SLR. The determination of the Arbitrator (regardless of
how appointed) shall be final and binding upon Xxxxx, SLR and the
Partnership. SLR and the Partnership shall each pay one-half of the
costs and expenses incurred in connection with the selection and use of
the Arbitrator.
(vii) This Section 3.1(d) shall survive Closing.
3.2 MSI Interests.
(a) MSI Property (U.S.A.), Inc. (formerly known as Sumitomo
Marine Realty (U.S.A.), Inc.) ("MSI") owns a 10% interest in 19th and M
Street Associates Limited Liability Company, the Current Owner of 0000
Xxxxxxxxxx Xxxxxx, and a 9.7727% interest in Park Land Associates
Limited Liability Company and in Park Building Associates Limited
Liability Company, collectively the Current Owner of 000 Xxxx Xxxxxx.
Sumitomo will negotiate with MSI for the sale of MSI's interests in
these Current Owners. It shall be a condition to Xxxxx' and Sumitomo's
obligation to proceed with the First Closing that either: (i) MSI has
sold its interests in Park Land Associates Limited Liability Company,
Park Building Associates Limited Liability Company and 19th and M Street
Associates Limited Liability Company to Sumitomo at or prior to the
First Closing; or (ii) MSI consents to, and at the First Closing MSI
joins in, the sale of these Properties to the Partnership. The "MSI
Payment" is the payment to be made by Sumitomo for MSI's interests in
000 Xxxx Xxxxxx and 0000 Xxxxxxxxxx Xxxxxx. At the First Closing, at
Sumitomo's option, a portion of the Initial Sumitomo Payment will be
paid directly to MSI in payment for its interests. Notwithstanding
anything to the contrary in this Agreement, Sumitomo shall have no
liability hereunder for failure to reach an agreement with MSI, or if
such an agreement is obtained from MSI prior to the First Closing, for
failure of MSI to close the transactions for any reason.
(b) In the event that MSI has not (i) entered into a legally
binding written agreement on or before May 15, 2003 to sell its
interests in Park Land Associates Limited Liability Company, Park
Building Associates Limited Liability Company and 19th and M Street
Associates Limited Liability Company to Sumitomo, or (ii) delivered to
SLR its written consent to the sale of 000 Xxxx Xxxxxx and 0000
Xxxxxxxxxx Xxxxxx to the Partnership, then each of Xxxxx and Sumitomo
may elect upon notice to the other, to postpone the First Closing (as to
all of the First Closing Properties) in order to obtain MSI's agreement
or consent, but neither party may postpone the Closing to a date later
than July 31, 2003 (unless SLR elects to further extend the Closing as
to 000 Xxxx Xxxxxx and 0000 Xxxxxxxxxx Xxxxxx by agreeing to pay the
fees and other charges necessary to extend (and upon such payment Xxxxx
is able to extend) the Partnership's financing commitments) but in no
event shall the Closing as to these Properties be extended beyond
November 15, 2003. In the event Sumitomo fails to obtain such consent or
agreement of MSI by the applicable date set forth above, such failure
will constitute the failure of the Closing condition set forth in
Section 6.1(e) and the provisions of Section 8.5(b) shall apply.
(c) In the event that the agreement with MSI contemplated by
Section 3.2(a) has not been obtained by May 15, 2003, but Xxxxx wishes
to enter into a loan
18
commitment for the Bridge Loan with respect to the First Closing and
such commitment requires Xxxxx or the Partnership to post a
non-refundable deposit, then Xxxxx shall so notify SLR. SLR shall then
elect to either have such commitment entered into or not have such
commitment entered into. If SLR elects to have such commitment entered
into, and if the written agreement with MSI is not obtained so that the
First Closing does not occur with respect to 0000 Xxxxxxxxxx Xxxxxx
and/or 000 Xxxx Xxxxxx, then Sumitomo shall reimburse Xxxxx and the
Partnership for any portion of such non-refundable deposit which is lost
on account thereof. If SLR does not elect to have such commitment
entered into, SLR shall have no liability hereunder for failure of Xxxxx
to satisfy such Closing condition and the failure of Xxxxx to enter into
a Bridge Loan commitment or obtain the Bridge Loan by the First Closing
shall not be deemed a breach or default by Xxxxx under this Agreement.
3.3 [Intentionally Omitted].
3.4 Repayment of Bridge Loan; Redemption of Shares and Units. After the
First Closing, the Fund shall apply the net proceeds of all Third Party Equity
contributed to the Fund and of all additional Permanent Financing obtained by
the Fund (and any other funds from capital transactions of the Fund) as follows
(before using such proceeds for any other purpose): (a) first, if the
Partnership elects, to repay the Bridge Loan (if any) with respect to the First
Closing in full; (b) second, to cause the Trust to redeem all of the Initial
Sumitomo Shares at the same price per Share at which such Shares were issued at
the First Closing; and (c) third, if Xxxxx elects, to redeem Units held by the
Xxxxx Limited Partner until the Xxxxx Limited Partner holds Common Units
representing the lesser of 1% of the total number of Common Units outstanding or
$25 million in value, as provided in the Partnership Agreement (or such greater
amount as the Xxxxx Limited Partner shall elect in its sole discretion). It
shall be a condition to the Second Closing that Sumitomo has received payment
for all of the Initial Sumitomo Shares at least 31 days prior to the Second
Closing Date. In addition, it shall be a condition to the Partnership's
obligation to proceed with the Second Closing that the Xxxxx Limited Partner has
received the sums described in clause (c) above (provided that Xxxxx may waive
this condition in its sole discretion). The parties anticipate that the
redemption of the Initial Sumitomo Shares will occur at Third Party Equity
Closing #1 (described in Section 4.3 below). Further, it shall be a condition to
the Second Closing that the Bridge Loan (if any) obtained at the First Closing
has been repaid in full, unless the Partnership demonstrates to SLR's reasonable
satisfaction that the Partnership has sufficient Third Party Equity commitments
to repay the Bridge Loan obtained at the First Closing in full and covenants in
writing to SLR to apply such commitments to the repayment of such Bridge Loan no
later than March 31, 2004.
3.5 Second Closing. At the Second Closing, Sumitomo will convey 000 Xxxx
00xx Xxxxxx (xxx "Second Closing Property") to the SPE Owner designated by the
Partnership. At the Second Closing, in consideration for the Second Closing
Property, Sumitomo shall receive from the Partnership (a) Class A Common Shares
with a value of $25 million (at the same price per share at which the Initial
Sumitomo Shares were issued at the First Closing) plus (b) cash in an amount
equal to the Agreed Valuation for the Second Closing Property minus $25 million
(the "Second Sumitomo Payment"). The Second Sumitomo Payment shall be paid by
Wire Transfer at the Second Closing. If the First Closing does not occur due to
the failure to satisfy any Closing condition, neither SLR nor the Partnership
will have any obligation to proceed with the
19
Second Closing and in such event the parties may terminate this Agreement in
accordance with Section 8.5. The Partnership shall be permitted to obtain a
Bridge Loan to finance the Second Closing, provided that the Partnership
demonstrates to SLR's reasonable satisfaction that the Partnership has
commitments for Third Party Equity in an amount at least equal to the amount of
such Bridge Loan (in addition to the commitments described in the last sentence
of Section 3.4, as applicable) and covenants in writing to SLR to apply such
commitments to the repayment in fue1s of such Bridge Loan no later than March
31, 2004.
ARTICLE 4. MORTGAGE FINANCING; THIRD PARTY EQUITY.
4.1 Permanent Financing; Loan Criteria. The Partnership and Xxxxx will
use good faith efforts to obtain first mortgage financing, to be closed and
funded at the First Closing and Second Closing (each, the "Permanent
Financing"). The Permanent Financing shall meet the following criteria (the
"Loan Criteria"):
(a) the principal amount of (i) Permanent Financing for the
First Closing shall not exceed 55% of the aggregate of (A) the Agreed
Valuations of the First Closing Properties, plus (B) all closing costs
(including the costs of obtaining any financing) and closing adjustments
in respect of the First Closing Properties, and (ii) the Permanent
Financing for the Second Closing Property shall not exceed an amount
which, when taken together with all Permanent Financing on the First
Closing Properties, would not cause the aggregate amount of Permanent
Financing on all four Properties to exceed 55% of the sum of (x) the
Agreed Valuations of all of the Properties, plus (y) all closing costs
(including the cost of obtaining any financing) or closing adjustments
paid by the Partnership with respect to the Closing of the Properties;
(b) the security will consist of first mortgages, assignments of
leases and other security instruments that are customary with respect to
first lien mortgage financings;
(c) the loan documents shall not prohibit or restrict in any way
the redemption of the Initial Sumitomo Shares following the First
Closing pursuant to Section 3.4 hereof (or pursuant to the corresponding
provisions of the Declaration of Trust and Partnership Agreement), or
Xxxxx' ability to purchase the Initial Sumitomo Shares pursuant to
Section 4.4(d);
(d) the SPE Owners will be the borrowers and no party other than
the SPE Owners and the Partnership will have liability in connection
with the loans; provided, however, Xxxxx may elect, in its sole
discretion, to accept personal liability for itself or one or more of
its Affiliates with respect to certain matters relating to such
financing, such as non-recourse carve-outs and similar matters; and
(e) all other terms of the loans must be acceptable to Xxxxx and
the Partnership in their sole and absolute discretion (subject to the
requirements of the Partnership Agreement and PPM).
20
References in this Agreement to the Permanent Financing shall be deemed to mean
Permanent Financing which meets the Loan Criteria. It will be a condition to
Closing that Permanent Financing which meets the Loan Criteria is closed and
funded at Closing.
4.2 Existing Mortgage. Sumitomo will cause the Existing Mortgage to be
fully released and discharged of record on or prior to the First Closing without
expense to Xxxxx or the Partnership.
4.3 Third Party Equity Target. It is the parties' intention to raise at
least $250 million in Third Party Equity on or before July 31, 2003, although it
is hoped that Third Party Equity may be raised on or before the First Closing.
The parties anticipate that Third Party Equity closings will occur on the
following dates (and on the First Closing Date, if Third Party Equity is then
available):
(a) Third Party Equity Closing #1: July 31, 2003
(b) Third Party Equity Closing #2: September 30, 2003
(simultaneous with the Second Closing)
(c) Third Party Equity Closing #3: December 31, 2003
However, in no event xxxx Xxxxx or the Partnership be deemed to be
in breach or default hereunder if Third Party Equity in the amount specified
above is not raised on or before July 31, 2003, nor if one or more of the Third
Party Equity Closings described above fail to occur by the specified date.
4.4 Failure to Meet Equity Target.
(a) If, on the First Closing Date, Third Party Equity, together
with the Xxxxx Capital Contribution and Permanent Financing meeting the
Loan Criteria, are insufficient to make the Initial Sumitomo Payment to
Sumitomo, Xxxxx shall use good faith efforts to obtain a Bridge Loan on
behalf of the Partnership to cover the deficiency. Any Bridge Loan which
the Partnership obtains in connection with the Closings shall be in an
amount not to exceed 30% of the aggregate of (i) the Agreed Valuations
of the applicable Properties and (ii) all closing costs (including cost
of obtaining financing) and closing adjustments paid by the Partnership
with respect to such Properties. In no event will the failure to raise
sufficient Third Party Equity (or the failure to obtain funds which
Third Party Investors have agreed to contribute) relieve Xxxxx and the
Partnership from the obligation to complete the First Closing, nor shall
Xxxxx and the Partnership be entitled to postpone the First Closing in
order to obtain the Bridge Loan or other funds required for the First
Closing (except as otherwise agreed by SLR or as provided in Section 3.2
or 8.5(b)).
(b) If, on the Second Closing Date, Third Party Equity, together
with Permanent Financing, is insufficient to (w) make the Second
Sumitomo Payment to Sumitomo, (x) cause the Trust to redeem all of the
Initial Sumitomo Shares, (y) if required by Xxxxx, redeem Xxxxx' Units
so that the Xxxxx Limited Partner holds Common Units representing the
lesser of 1% of the total number of Common Units outstanding or $25
million in value, as provided by the Partnership Agreement, and (z) if
required by the
21
Partnership, to repay the Bridge Loan in full, then the Partnership
shall so notify SLR prior to the Second Closing Date, and within five
Business Days thereafter SLR shall elect, by notice to the Partnership,
alternatively: (i) to postpone the Second Closing to a date to be
specified by Sumitomo (but not later than December 31, 2003), or (ii) to
terminate this Agreement as to the Second Closing Property without
liability. Notwithstanding the foregoing, if the Partnership can, with
the proceeds of a second Bridge Loan, (1) make the Second Sumitomo
Payment, (2) cause the Trust to redeem all of the Initial Sumitomo
Shares and (3) to the extent required by Xxxxx, redeem Xxxxx' Units as
described above, then the Partnership shall be permitted to proceed with
the Second Closing using a second Bridge Loan and SLR shall not be
entitled to adjourn the Closing, subject to compliance with the last
sentence of each of Sections 3.4 and 3.5. If SLR elects to postpone the
Second Closing and the Second Closing does not occur by December 31,
2003 (or such earlier date to which SLR has agreed to extend the Second
Closing), each of the Partnership and SLR shall have the right to
terminate this Agreement only as to the Second Closing Property upon
notice to the other. If Xxxxx does not require the Partnership to redeem
its Units prior to the Second Closing as provided in the first sentence
of this Section, then all net proceeds of Third Party Equity contributed
to the Fund after the Second Closing and of all additional Permanent
Financing obtained by the Fund after the Second Closing shall be applied
first to such redemption of Xxxxx' Units.
(c) After the First Closing, the Partnership shall not purchase
any properties other than the Second Closing Property unless and until:
(i) the Second Closing has occurred, or (ii) the Second Closing has not
occurred for failure to satisfy a Closing condition and Sumitomo or the
Partnership terminates this Agreement as permitted hereunder with
respect to the Second Closing Property, or (iii) the Partnership
demonstrates to SLR's reasonable satisfaction that it has sufficient
Third Party Equity commitments which, when aggregated with the Permanent
Financing for the Second Closing Property, will permit the Partnership
to make the Second Sumitomo Payment and will permit the Trust to redeem
all of the Initial Sumitomo Shares, and the Partnership covenants in
writing to SLR to reserve such commitments to fund the Second Closing
(or to repay a Bridge Loan which the Partnership may elect to obtain to
complete the Second Closing).
(d) In the event that Xxxxx is unable to raise sufficient Third
Party Equity to cause the Trust to redeem all of the Initial Sumitomo
Shares in accordance with Section 3.4 on or before December 31, 2003,
then (regardless of whether the Second Closing occurs) on December 31,
2003 Xxxxx shall purchase or cause the Xxxxx Limited Partner or another
Affiliate of Xxxxx to purchase (and Sumitomo shall sell) all the Initial
Sumitomo Shares that are still owned by Sumitomo at the same price
per Share at which such Shares were issued at the First Closing. At the
First Closing, Xxxxx shall cause HREH to deliver to Sumitomo the HREH
Guaranty to guarantee Xxxxx' purchase obligation described in this
Section 4.4(d). If Xxxxx purchases any of the Initial Sumitomo Shares,
Sumitomo shall provide Xxxxx with customary representations in
assignment documentation that Sumitomo has not sold or encumbered, and
has good title to, such Shares. In such event, this Agreement shall
terminate as to the Second Closing Property in accordance with Section
8.5 and Sumitomo shall have no further rights under
22
the Trust Organization Documents, the Partnership Agreement or any
agreements relating thereto (including but not limited to the Advisory
Agreement). For example, Sumitomo shall no longer have any rights to
appoint members to the Management Board or to receive fees under the
Advisory Agreement.
(e) Each Bridge Loan shall be on terms and conditions
satisfactory to the Partnership and Xxxxx in their sole discretion.
While Sumitomo shall have no personal liability with respect thereto,
Xxxxx may, in its sole discretion, agree to accept limited liability as
to such loan including liability for any non-recourse carve-outs. Xxxxx
and the Partnership agree to use good faith efforts to obtain the Bridge
Loan to the extent required for the First Closing.
4.5 Marketing.
(a) The parties will work together to finalize the PPM and a
binder containing detailed information regarding the Properties (the
"Property Information Binder") as quickly as possible after the date
hereof, and the forms of the PPM and Property Information Binder shall
be acceptable to all parties in their reasonable discretion. The PPM
and Property Information Binder which have been approved by the parties,
and amendments or supplements to the foregoing which have been
approved (or deemed approved) by the parties are referred to
collectively as "Approved Market Materials". Changes--other than de
minimis changes--in the forms of the Approved Marketing Materials, once
final forms have been agreed, will require the prior written consent of
the parties. In the event that any party wishes to amend any Approved
Marketing Materials, such party shall notify the other parties of the
proposed change. The other parties shall notify the party seeking the
amendment of its approval (or the reasons for its disapproval) within 5
Business Days after receipt of such proposed change. Any revision of a
proposed change submitted to secure the other party's approval shall
also be approved or disapproved within 5 Business Days. If a party fails
to respond to a notice requesting approval of a proposed change to
Approved Marketing Materials within such 5 Business Day period, such
party shall be deemed to have consented to the proposed change (except
that only Xxxxx will be permitted to make agreed changes to the Approved
Marketing Materials).
(b) Notwithstanding subparagraph (a) above, Xxxxx, the Fund and
Xxxxxx Xxxxxxx shall be permitted to prepare and distribute other
marketing materials without SLR's consent, provided that Xxxxx causes
each Third Party Investor to acknowledge in writing prior to investing
in the Fund that in the event of any discrepancy between such marketing
materials and Approved Marketing Materials, the Approved Marketing
Materials shall govern.
(c) Each party agrees (on its own behalf and on behalf of its
Affiliates which engage or assist in Fund marketing efforts) that it
shall comply with all applicable securities laws of the U.S. and each
other jurisdiction in which such party is marketing Interests. For this
purpose, each party shall comply with the Securities Protocol attached
hereto as Exhibit "G" (the "Securities Protocol").
23
(d) Xxxxx has already begun, and shall continue, to market to third party
investors in the U.S. and Europe the opportunity to invest equity in the Fund
with a view towards obtaining the maximum amount of commitments for Third Party
Equity. Xxxxx, working together with Xxxxxx Xxxxxxx, has the lead responsibility
for marketing in the U.S. and Europe, including the preparation of marketing
materials and negotiation of final terms with investors. Sumitomo and its
Affiliates will have the lead responsibility after the Closings for marketing in
Japan and, commencing in 2004, elsewhere in Asia; however, due to current
economic conditions and other factors, Sumitomo and its Affiliates will not
begin marketing efforts until after the Second Closing (i.e., it is not
anticipated that any Asian capital will be raised prior to Second Closing) and
are not specifically undertaking to do so in this Agreement. Prior to the date
Sumitomo or its Affiliate begins such marketing activities, it shall enter into
a placement agent agreement with the Trust and the Partnership with respect
thereto, which agreement shall be in such form as may be acceptable to the
parties acting reasonably. Xxxxx will pay Xxxxxx Xxxxxxx'x placement fee.
Sumitomo will pay the placement fees of any placement agent engaged by Sumitomo
in connection with marketing Interests to investors in Japan and Asia, and SLR
and its Affiliates shall be entitled to retain 100% of any marketing or
distribution fees that they collect from Asian investors in connection with the
marketing of Interests in the Fund. All other marketing costs will be paid by
the Fund, including all travel and entertainment costs heretofore or hereafter
incurred by Xxxxx, Xxxxxx Xxxxxxx and Sumitomo and its Affiliates in marketing
Interests to Third Party Investors. Notwithstanding the foregoing, in the event
that market conditions in the various geographic areas where the Fund is being
marketed, or the requirements of Third Party Investors in these geographic
areas, result in caps, limits or restrictions on the Fund's ability to pay or
bear marketing costs (including travel and entertainment expenses), then any
portion of such costs or expenses in excess of the amount the Fund may, as a
result of such caps, limits or restrictions, pay or bear shall be paid (x) by
Sumitomo, if incurred with respect to marketing efforts by Sumitomo or its
placement agent(s), or (y) by Xxxxx, if incurred with respect to marketing
efforts by Xxxxx or Xxxxxx Xxxxxxx. It shall be a condition to Sumitomo's
obligation to proceed with the First Closing that Xxxxx obtain an amendment of
Xxxxxx Xxxxxxx'x agreement to provide Sumitomo and its Affiliates with the sole
right to market the Fund in Japan. After such agreement expires, Xxxxx will
structure any successor agreement, after consultation with SLR, to expand
Sumitomo's exclusive marketing rights to other parts of Asia;
(e) Xxxxx and SLR agree that they will work together in good faith to
adjust the asset management, advisory and acquisition fee structure and other
terms of the Fund if, as a result of investor feedback, they conclude that such
adjustments are necessary to make it market-clearing. The parties will also work
together in good faith to make adjustments to the terms of the Fund as applied
to Japanese investors, if necessary, once Sumitomo has had an opportunity to
investigate the kind of fee structure and other terms that would optimize the
raising of Japanese equity. Further, Xxxxx and SLR agree that (i) they will work
together in good faith to make such amendment to the Partnership Agreement,
Trust Organization Documents, Advisory Agreement, and the Management and Leasing
Agreement if, as a result of investor feedback, they conclude that such
amendments or adjustments are necessary to make these documents market-clearing,
or (ii) Xxxxx may make amendments or adjustments to the above-referenced
documents if
24
Xxxxx concludes that such amendments or adjustments are necessary for the Fund
to comply with applicable law, including being exempt from the registration
requirements of the Securities Act of 1933 (as amended) or the Investment
Company Act of 1940 (as amended). Notwithstanding the foregoing, each of SLR and
Xxxxx shall have the right to consent (in its sole discretion) to amendments or
adjustments of the type described in the preceding sentence if such amendments
or adjustments would affect the rights and/or obligations of SLR or Xxxxx or
their respective Affiliates hereunder or under any of the Closing Instruments in
more than a de minimis manner. The failure of the parties, acting in good faith,
to agree upon the amendments and adjustments described in this section shall not
be deemed a default under this Agreement and in the event of such failure the
parties shall have the remedies set forth in Section 8.5.
(f) Xxxxx may perform its obligations under this Article 4 through the
General Partner, but such delegation shall not be deemed to relieve Xxxxx of its
obligations or liabilities hereunder.
4.6 Indemnities Relating to Marketing.
(a) Each of Xxxxx, the Trust and the Partnership, on the one hand, and
Sumitomo, on the other hand, hereby agrees to indemnify, hold harmless and
defend the other (and the Sumitomo Indemnitees and Xxxxx Indemnitees, as
applicable) against any and all claims, damages, losses, Legal Proceedings,
costs, demands, liabilities, expenses and Fees-And-Costs, including
Fees-and-Costs of enforcing this indemnity (collectively; "Claims") resulting
from or arising out of the following in connection with or relating to the offer
or sale of Interests by the indemnifying party or its Affiliates or otherwise in
connection with marketing efforts of such party or its Affiliates relating to
the Fund: (i) a breach by such party or its Affiliates of applicable securities
laws; (ii) a breach of the Securities Protocol by such party or its Affiliates;
or (iii) a misrepresentation as to a material fact or the omission of a material
fact made by such party or its Affiliates in any communication other than
Approved Marketing Materials.
(b) Xxxxx and the Partnership (on their own behalf and on behalf of the
Trust) acknowledge and agree that the representations and warranties of SLR and
its Affiliates in this Agreement and the Closing Instruments are made for the
sole benefit of, and may be relied upon only by, Xxxxx and the Partnership, and
that the Trust, the other partners of the Partnership, and Third Party Investors
shall have no right to rely upon such representations. Without limiting the
preceding sentence, Xxxxx and the Partnership (on their own behalf and on behalf
of the Trust) acknowledge and agree that the Sumitomo Indemnitees shall have no
liability to Xxxxx, the Partnership or the Trust for, and hereby (on their own
behalf and on behalf of their Affiliates) release the Sumitomo Indemnitees from
all liability in connection with, any and all Claims arising from or in
connection with any misrepresentation now or in the future included in, or any
factual information omitted from, Approved Marketing Materials or otherwise
communicated to any Person which is based upon a misrepresentation of, or any
factual information omitted by, SLR or its Affiliates in this Agreement or the
Closing Instruments. (The foregoing is not intended, however, to limit the
remedies of Xxxxx and the Partnership against SLR in Section 4.6(a) or Article
13 hereof.)
25
(c) The Partnership and (by executing and delivering the form of agreement
attached hereto as Exhibit "O" at the First Closing) the Trust, hereby agree to
indemnify, hold harmless and defend each of the Xxxxx Indemnitees and the
Sumitomo Indemnitees against any and all Claims incurred by or asserted against
any Sumitomo Indemnitee or Xxxxx Indemnitee, as applicable, by Third Party
Investors or other Persons (including third party partners of the Partnership
and Trust shareholders) arising from or in connection with: (i) the offer or
sale of Interests by the Indemnitees (or any of them), the Partnership or the
Trust, or other marketing activities by the Indemnitees (or any of them), the
Partnership or the Trust, in connection with the Fund, provided that the
Indemnitee seeking indemnification has not: (A) violated applicable securities
laws, (B) violated the Securities Protocol, or (C) made any misrepresentation to
any Third Party Investor or any other Person of a material fact or omitted to
disclose to any Third Party Investor or any other Person a material fact in any
communication other than Approved Marketing Materials; (ii) a misrepresentation
as to a material fact in or any omission of a material fact from Approved
Marketing Materials (regardless of whether such misrepresentation or omission is
based upon a misrepresentation or omission of SLR or its Affiliates in this
Agreement or the Closing Instruments); (iii) any violation of applicable
securities laws by Xxxxxx Xxxxxxx or any misrepresentation of a material fact or
omission of a material fact by Xxxxxx Xxxxxxx in connection with the offer or
sale of Interests in the Fund or otherwise in connection with marketing
activities relating to the Fund; and (iv) any other Claims by Third Party
Investors relating to the offer or sale of the Interests.
4.7 Survival. This Article 4 (other than Sections 4.1 and 4.2) shall
survive the Closings and the termination of this Agreement.
ARTICLE 5. CLOSINGS; CLOSING DELIVERIES.
5.1 Closing Dates. The First Closing shall take place at the offices of
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000
on June 30,2003, or such later date as may be provided herein (the "First
Closing Date"). The Second Closing shall also take place at the offices of
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P. in New York, on September 30, 2003, or
such later date as may be provided herein (the "Second Closing Date").
References in this Agreement to the "Closing" and the "Closing Date" are deemed
to be references to the First and/or Second Closing, aricl the First and/or
Second Closing Date, as applicable in the particular context.
5.2 First Closing Events. The following shall occur at the First Closing:
(a) The Partnership closes the Permanent Financing;
(b) SLR provides to the Title Insurer all appropriate releases and
discharges (in recordable form) of the Existing Mortgage;
(c) The Initial Sumitomo Payment is made to Sumitomo and the Initial
Sumitomo Shares are issued to Sumitomo;
26
(d) The Xxxxx Capital Contribution is made to the Partnership;
(e) Units are issued to the Trust to reflect the value of the Shares
being issued to Sumitomo;
(f) If applicable, the Partnership closes the Bridge Loan;
(g) Third Party Investors (if any) are admitted to the Fund and are
issued an appropriate number of Shares or Units, as applicable;
(h) The Title Insurer issues title policies for the First Closing
Properties to the applicable SPE Owners;
(i) Sumitomo, at its option, directs that a portion of the Initial
Sumitomo Payment be used to make the MSI Payment to MSI (unless Sumitomo
purchases MSI's interests in Park Land Associates Limited Liability
Company, Park Building Associates Limited Liability Company, and 19th and
M Street Associates Limited Liability Company prior to the First Closing);
(j) The First Closing Properties (and the related rights, titles and
interests contemplated by this Agreement to be assigned or transferred at
the First Closing) are conveyed to the SPE Owners;
(k) The deliveries required by Section 5.3 are made;
(l) If the Fund seeks to qualify for exemption from the registration
requirements of the Securities Act of 1933 afforded by Regulation D, within
15 days after the Closing, the Fund shall file a Form D with the Securities
and Exchange Commission in compliance with Regulation D and shall file with
any state any comparable form required pursuant to such state's securities
laws; and
(m) The other payments required by this Agreement to be made at the
First Closing are made with respect to the First Closing Properties.
5.3 First Closing Document Deliveries.
(a) Subject to the terms of this Agreement, Sumitomo shall execute
and/or deliver and/or cause the Current Owners to execute and/or deliver,
as applicable, the following documents, items and payments at the First
Closing:
(i) The Deed to each First Closing Property, in the forms
attached hereto as Exhibit "C";
(ii) A New-York State Combined Real Estate Transfer Tax Return
and Credit Line Mortgage Certificate (Form TP-584) and Real Property
Transfer Report (Form RP-5217) (the "NYS Returns") for 000 Xxxx Xxxxxx
and 000 Xxxxxxxxx Xxxxxx;
27
(iii) A New York City Real Property Transfer Tax Return and Real
Property Transfer Report (Form RP 5217 NYC) (the "NYC Returns") for
000 Xxxx Xxxxxx and 000 Xxxxxxxxx Xxxxxx;
(iv) A Washington D.C. Real Property Recordation and Transfer Tax
Form FP 7/C (the "DC Return");
(v) Appropriate checks (or wire transfers to the extent required
by the Title Insurer), payable to the applicable taxing authorities,
in the amount of New York State and City and Washington, D.C. transfer
and recordation taxes applicable to the conveyance of the First
Closing Properties in accordance with Section 14.1 hereof;
(vi) The Advisory Agreement;
(vii) An Assignment of Ground Lease in the forms attached hereto
as Exhibit "K" (collectively, the "Ground Lease Assignments") with
respect to each of 000 Xxxx Xxxxxx and 000 Xxxxxxxxx Xxxxxx;
(viii) An Assignment of Leases in the forms attached hereto as
Exhibit "L" (each, an "Assignment of Leases" and collectively, the
"Assignments of Leases") with respect to each First Closing Property;
(ix) A General Assignment in the forms attached hereto as Exhibit
"M" (each, a "General Assignment" and collectively, the "General
Assignments") with respect to each First Closing Property;
(x) A notice to each Tenant of each First Closing Property in the
forms attached hereto as Exhibit "N";
(xi) A certificate of non-foreign status pursuant to Section 1445
of the Code from each of the Current Owners of the First Closing
Properties;
(xii) The closing deliveries specified in paragraphs 1 and 2 of
Schedule "9";
(xiii) Originals of the letters of credit for the First Closing
Properties listed on Schedule "13" hereto, together with an original
of the additional letter of credit required to be delivered by Xxxxxx
& Xxxxxx, LLP;
(xiv) Standard title affidavits requested by the Title Insurer to
issue the title insurance policies for the First Closing Properties
(which will not include any indemnities other than a so-called "gap
indemnity" with respect to the Closing of 0000 Xxxxxxxxxx Xxxxxx);
(xv) The letter agreement in the form attached hereto as Exhibit
"O", executed and delivered by the Current Owners of the First Closing
Properties;
28
(xvi) Originals (or if such originals are not in the possession
of Sumitomo and/or the Current Owners, copies) of the Property
Documents for the First Closing Properties;
(xvii) The Tenant Estoppels and SNDAs for the First Closing
Properties, as required by Section 7.1(m) hereof;
(xviii) Appropriate letters or other evidence with respect to the
termination of management and Leasing Agent Agreements in accordance
with Section 9.1 below;
(xix) Appropriate letters or other evidence with respect to the
termination of Service Contracts and Construction Agreements in
accordance with Section 9.3 below;
(xx) The Tenant Deposits: (i) in the case of cash Tenant
Deposits, in the form of(x) a cashier's check payable to the
Partnership (or by wire transfer to an account designated by the
Partnership) or (y) transfer by appropriate instruments of the
accounts in which such deposits are held, and (ii) in the event any
Tenant Deposits are in the form of a letter of credit, then Sumitomo
shall, or shall cause the applicable Current Owner to, deliver at
Closing the original letter(s) of credit, together with documentation
sufficient to cause the letter(s) of credit to be assigned to the
Partnership or the applicable SPE Owner, together with the payment of
any costs in connection therewith;
(xxi) At least three (3) counterparts of a Closing Statement
showing all closing apportionments made under Article 16 hereof and
such other Closing payments; credits and prorations as may be required
hereby;
(xxii) All keys to the First Closing Properties which are in the
possession of Sumitomo, the applicable Current Owners or any of their
respective agents or employees;
(xxiii) A Subscription Agreement from each of SLR and SLRI in the
form attached hereto as Exhibit "H" (the "Subscription Agreement");
(xxiv) Certified rent rolls for the First Closing Properties in
substantially the same form as the rent rolls attached as Schedule
"19" hereto, but updated to reflect the current status of Rents
(subject, however, to Sections 7.l(g) and 8.5 hereof); and
(xxv) Any other instruments or documents to be executed and/or
delivered by Sumitomo or the Current Owners pursuant to any other
provisions of this Agreement.
29
(b) Subject to the terms of this Agreement, Xxxxx, its Affiliates, and the
Partnership shall execute and/or deliver, and/or cause the applicable SPE Owners
and the Trust to execute and/or deliver, as applicable, the following documents,
items and payments at the First Closing:
(i) The NYS Returns for 000 Xxxx Xxxxxx and 000 Xxxxxxxxx Xxxxxx;
(ii) The NYC Returns for 000 Xxxx Xxxxxx and 000 Xxxxxxxxx Xxxxxx;
(iii) The DC Return;
(iv) The Partnership Agreement;
(v) The Trust Organization Documents executed pursuant to Section
2.2 hereof;
(vi) The Advisory Agreement;
(vii) The Ground Lease Assignments with respect to the First Closing
Properties;
(viii) The Assignments of Leases with respect to the First Closing
Properties;
(ix) The General Assignments with respect to the First Closing
Properties;
(x) Certificates representing the Initial Sumitomo Shares issued
to SLR and SLRI;
(xi) Copy of the Management and Leasing Agreement;
(xii) Copies of the Permanent Financing documents;
(xiii) Copies of the Bridge Loan documents (if applicable);
(xiv) Copies of the title insurance policies;
(xv) The closing deliveries specified in paragraphs 3 through 8 of
Schedule "9";
(xvi) At least three (3) counterparts of a Closing Statement showing
all closing apportionments made under Article 16 hereof and such other
Closing payments, credits and prorations as may be required hereby;
(xvii) The letter agreement in the form attached hereto as "Exhibit
"O", executed and delivered by the Trust and the SPE Owners of the First
Closing Properties;
30
(xviii) The HREH Guaranty and the HREH Opinion; and
(xix) Any other instruments or documents to be executed and/or
delivered by Xxxxx, its Affiliates, the Partnership, the SPE Owners, the Trust
and/or General Partner pursuant to any other provisions of this Agreement.
5.4 Second Closing Events. The following shall occur at the Second Closing:
(a) The Partnership closes the Permanent Financing for the Second
Closing Property;
(b) The Second Sumitomo Payment is made to Sumitomo and Shares
are issued to Sumitomo in accordance with Section 3.5;
(c) If applicable, the Partnership closes the Bridge Loan;
(d) The Title Insurer issues title insurance policies for the
Second Closing Property to the applicable SPE Owner;
(e) The Second Closing Property(and the related rights, titles
and interests contemplated by this Agreement to be assigned or transferred at
the Second Closing) is conveyed to the applicable SPE Owner;
(f) The deliveries required by Section 5.5 are made; and
(g) The other payments required by this Agreement to be made at
Closing are made with respect to the Second Closing Property.
5.5 Second Closing Document Deliveries.
(a) Subject to the terms of this Agreement, Sumitomo shall
execute and/or deliver, and/or cause the Current Owner to execute and/or
deliver, as applicable, the following documents, items and payments at the
Second Closing:
(i) The Deed to the Second Closing Property in the form
attached hereto as Exhibit "C";
(ii) The NYS Return for the Second Closing Property;
(iii) The NYC Return for the Second Closing Property;
(iv) An appropriate check (or wire transfer to the extent
required by the Title Insurer), payable to the applicable taxing authorities, in
the amount of New York State and City transfer taxes applicable to the
conveyance of the Second Closing Property in accordance with Section 14.1
hereof;
(v) An Assignment of Leases with respect to the Second
Closing Property;
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(vi) A General Assignment With respect to the Second Closing
Property;
(vii) A notice to each Tenant of the Second Closing Property in
the form attached hereto as Exhibit "N";
(viii) A certificate of non-foreign status pursuant to Section
1445 of the Internal Revenue Code from 000 Xxxxxxxxx Xxxxxx
Associates;
(ix) The closing deliveries specified in paragraphs 1 and 2 of
Schedule "9";
(x) Originals of the letters of credit for Leases relating to the
Second Closing Property listed on Schedule "13" hereto;
(xi) Standard title affidavits requested by the Title Insurer to
issue the title insurance policy for the Second Closing Property
(which will not include any indemnities);
(xii) An amendment to SLR's Lease covering certain space at the
Second Closing Property, in a form reasonably acceptable to Xxxxx and
SLR (the "SLR Lease Amendment"), pursuant to which SLR surrenders
7,471 r.s.f. of space on floor 3 (Xxxxx agrees to work in good faith
with SLR to reach agreement on the surrender at the Second Closing by
SLR of up to an additional 3,523 r.s.f. of space currently subleased
by SLR, so long as in Xxxxx' sole judgment the terms of such surrender
of additional space do not have an impact on the value of this
Property; however, the failure to reach such agreement shall not
constitute a default, breach or failure of a condition to Closing);
(xiii) Originals (or if originals are not in the possession of
Sumitomo and/or the Current Owner, copies) of the Property Documents
for the Second Closing Property;
(xiv) The letter agreement in the form attached hereto as
"Exhibit "0", executed and delivered by the Current Owner of the
Second Closing Property;
(xv) The Tenant Estoppels and SNDAs for the Second Closing
Property, as required by Section 7.1(m) hereof;
(xvi) Appropriate letters or other evidence with respect to the
termination of management and Leasing Agent Agreements in accordance
with Section 9.1 below;
(xvii) Appropriate letters or other evidence with respect to the
termination of Service Contracts and Construction Agreements in
accordance with Section 9.3 below;
(xviii) The Tenant Deposits: (i) in the case of cash Tenant
Deposits, in the form of(x)a cashier's check payable to the
Partnership (or by wire transfer to an account
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designated by the Partnership) or (y) transfer by appropriate instruments of the
accounts in which such deposits are held, and (ii) in the event any Tenant
Deposits are in the form of a letter of credit, then Sumitomo shall, or shall
cause the applicable Current Owner to, deliver at Closing the original letter(s)
of credit, together with documentation sufficient to cause the letter(s) of
credit to be assigned to the Partnership or the applicable SPE Owner, together
with the payment of any costs in connection therewith;
(xix) At least three (3) counterparts of a Closing Statement showing
all closing apportionments made under Article 16 hereof and such other
Closing payments, credits and prorations as may be required hereby;
(xx) All keys to the Second Closing Property which are in the
possession of Sumitomo, the applicable Current Owner or any of their
respective agents or employees;
(xxi) A Subscription Agreement from each of SLR and SLRI in the form
attached hereto as "Exhibit H";
(xxii) Certified rent rolls for the Second Closing Property in
substantially the same form as the rent rolls attached as Schedule "19"
hereto but updated to reflect the current status of Rents (subject,
however, to Sections 7.1(g) and 8.5 hereof); and
(xxiii) Any other instruments or documents to be executed and/or
delivered by Sumitomo or the Current Owner pursuant to any other provisions
of this Agreement.
(b) Subject to the terms of this Agreement, Xxxxx, its Affiliates and the
Partnership shall execute and/or deliver, and/or cause the applicable SPE Owners
and the Trust to execute and/or deliver, as applicable, the following documents
at the Second Closing:
(i) The NYS Return for the Second Closing Property;
(ii) The NYC Return for the Second Closing Property;
(iii) An Assignment of Leases with respect to the Second Closing
Property;
(iv) A General Assignment with respect to the Second Closing Property;
(v) The closing deliveries specified in paragraphs 3 through 8 of
Schedule "9";
(vi) Certificates representing the Shares issued to SLR and SLRI
pursuant to Section 3.5;
(vii) Copy of the Management and Leasing Agreement;
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(viii) Copies of the Permanent Financing documents;
(ix) Copies of the Bridge Loan documents (if applicable);
(x) Copy of the title insurance policy;
(xi) The letter agreement in the form attached hereto as "Exhibit "O",
executed and, delivered by the SPE Owner of the Second Closing Property;
(xii) At least three (3) counterparts of a Closing Statement showing
all closing apportionments made under Article 16 hereof and such other
Closing payments, credits and prorations as may be required hereby; and
(xiii) Any other instruments or documents to be executed and/or
delivered by Xxxxx, its Affiliates, the Partnership, the SPE Owners, the
Trust and/or General Partner pursuant to any other provisions of this
Agreement.
ARTICLE 6. SUMITOMO CLOSING CONDITIONS.
6.1 Sumitomo Closing Conditions. Sumitomo's and the Current Owners'
obligation to perform and complete its obligations at each Closing shall be
subject to satisfaction of all of the following conditions:
(a) The Partnership is prepared to close the Permanent Financing
for the applicable Properties (i.e., loan documents have been, or are
simultaneously being, executed and delivered and the lender is
prepared to simultaneously disburse funds to the Partnership and/or
the applicable SPE Owners);
(b) If applicable, the Partnership is prepared to close the
Bridge Loan;
(c) With respect to the Second Closing: (i) if applicable, the
Bridge Loan obtained at the First Closing has been repaid in full or
the Partnership has demonstrated to SLR's reasonable satisfaction that
it has equity commitments in an amount at least equal to the first
Bridge Loan and covenants in writing to SLR to apply such commitments
to the repayment of such Bridge Loan no later than Xxxxx 00, 0000,
(xx) if the Partnership elects to obtain a second Bridge Loan to
finance the Second Closing, the Partnership has demonstrated to SLR's
reasonable satisfaction that it has equity commitments (in addition to
the equity commitments described in subsection (i) above) in an amount
at least equal to the proceeds of such Bridge Loan, and the
Partnership covenants in writing to SLR to apply such commitments to
the repayment of such Bridge Loan no later than March 31, 2004, and
(iii) proceeds of the Permanent Financing, the Third Party Equity, and
Bridge Loan (if applicable) are sufficient to make the Second Sumitomo
Payment;
(d) The Trust and the Partnership are in compliance in all
material respects with all applicable securities laws (or all
applicable exemptions);
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(e) MS1 has joined in, or has consented to and authorized the
applicable Current Owners to consummate, the sale of 000 Xxxx Xxxxxx and 0000
Xxxxxxxxxx Xxxxxx, or has assigned and transferred all of its interests in the
Current Owners of these Properties to SLR, at or prior to the First Closing
(this shall be a condition to the First Closing only and shall be a condition
only with respect to 0000 Xxxxxxxxxx Xxxxxx and 000 Xxxx Xxxxxx);
(f) The Trust: (i) qualifies as a REIT pursuant to the Maryland
REIT Law, and (ii) meets all requirements to qualify as a REIT under Section 856
of the Code (other than the requirements of Sections 856(a)(5), 856(a)(6) and
856(c)(l));
(g) Xxxxx' and the Partnership's representations and warranties in
this Agreement remain true, correct and complete in all material respects;
(h) Neither Xxxxx nor the Partnership is in material default under
its respective covenants, agreements and undertakings in this Agreement, and
HREH is not in material default under the HREH Guaranty;
(i) The Partnership shall be prepared to pay to Sumitomo the
Initial Sumitomo Payment or the Second Sumitomo Payment, as applicable;
(j) The First Closing shall have occurred (this shall be a
condition to the Second Closing only);
(k) Xxxxx and the Partnership shall have executed and delivered
and/or shall have caused General Partner, the Trust, the Xxxxx Limited Partner,
the applicable SPE Owners and their respective Affiliates to execute and
deliver, as applicable, all Closing Instruments required to be executed and
delivered by the above described Persons, at or prior to Closing;
(1) Any other conditions to SLR's obligations which are
specifically set forth elsewhere in this Agreement shall have been fulfilled;
(m) Xxxxx (or an Affiliate) has purchased or the Trust has fully
redeemed, all Initial Sumitomo Shares at least 31 days prior to the Second
Closing Date (this shall be a condition to the Second Closing only);
(n) No Bankruptcy Event shall have occurred with respect to any of
Xxxxx, HREH, any other direct or indirect parent company of Xxxxx, any Affiliate
of Xxxxx which is involved in the transactions described in this Agreement, the
General Partner, the Partnership, any SPE Owner, or the Trust;
(o) The applicable SPE Owner has executed and delivered the SLR
Lease Amendment (this shall be a condition to the Second Closing only); and
(p) Xxxxx has entered into the amendment of Xxxxxx Xxxxxxx'x
agreement described in Section 4.5(d) (this shall be a condition to the First
Closing only).
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ARTICLE 7. CLOSING CONDITIONS OF XXXXX AND THE PARTNERSHIP.
7.1 Closing Conditions of Xxxxx and the Partnership. The
obligation of Xxxxx, its Affiliates, the Partnership, the General Partner, the
SPE Owners and the Trust to perform and complete their respective obligations at
each Closing shall be subject to satisfaction of all of the following
conditions:
(a) All conditions in 6.1 (other than (c), (d), (f),
(g), (h), (k), (1), (m), (n), (0) and (p)) are satisfied;
(b) Sumitomo has terminated (or has caused the applicable
Current Owner to terminate) all management and Leasing Agent Agreements
for the applicable Properties at or prior to Closing and has paid (or
has caused the applicable Current Owner to pay) any and all leasing
commissions or brokerage fees which SLR has agreed to pay pursuant to
Section 16.9;
(c) Sumitomo has terminated (or has caused the applicable
Current Owner to terminate) all Service Contracts and Construction
Agreements not expressly assumed by the SPE Owners pursuant to Section
9.3 hereof (subject to the last sentence of Section 9.3) and has paid
(or has caused the applicable Current Owner to pay) any and all fees,
costs and charges due or payable in connection with such termination or
under such contracts or agreements;
(d) The Title Insurer has agreed to insure the applicable
SPE Owner's title in fee simple (and, if applicable, its ground
leasehold estate) to the applicable Properties on the current ALTA form
title insurance policy in an amount equal to the Agreed Valuation
for each applicable Property, excepting no Encumbrances other than the
Permitted Encumbrances, without the requirement for the payment by
the applicable SPE Owner (or the Partnership) of an additional premium
(alternatively, this condition can be satisfied by another title
insurer reasonably acceptable to the Partnership licensed to do
business with the State of New York and Washington D.C. (as applicable)
provided that the cost of coverage payable by the Partnership or SPE
Owner does not exceed the cost agreed to by Xxxxx and the Title
Insurer);
(e) SLR is not in material default under SLR's covenants,
agreements and undertakings in this Agreement;
(f) With respect to the Second Closing: (i) at the
Partnership's election, the Bridge Loan obtained at the First Closing
has been repaid in full (if applicable); (ii) at Xxxxx' election, the
interests of Xxxxx (or its applicable Affiliate) have been redeemed so
that the Xxxxx Limited Partner holds Common Units representing the
lesser of 1% of the total number of Common Units outstanding or $25
million in value, as provided in the Partnership Agreement; and
(iii) proceeds of the Permanent Financing, Third Party Equity and
Bridge Loan (if the Partnership elects to obtain a Bridge Loan) are
sufficient to make the Second Sumitomo Payment;
(g) There shall be no Change in Lease Status which
constitutes a Material Tenant Default or Bankruptcy Event under a Major
Lease pursuant to Section 11.3 hereof
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(provided, however, that in such event SLR will be entitled to a
reasonable adjournment of the applicable Closing (not to exceed 30
days) in order to provide notice of such default to the applicable
Tenant and the opportunity for the Tenant to cure);
(h) SLR shall have executed and delivered (and caused
SLRI and the Current Owners to execute and deliver, as applicable) all
Closing Instruments required to be executed and delivered by SLR
(and/or SLRI and/or the Current Owners, as applicable) at or prior to
Closing;
(i) Any other conditions to Xxxxx' obligations which are
specifically set forth elsewhere in this Agreement shall have been
fulfilled;
(j) The Properties which are the subject of the Closing
are in compliance with all applicable zoning laws;
(k) No Bankruptcy Event shall have occurred with respect
to any of Sumitomo or any Current Owner;
(l) No Event of Termination has occurred under Article 15
(it being understood that if an Event of Termination occurs, Xxxxx
shall only be entitled to terminate this Agreement as provided in
Article 15);
(m) Sumitomo shall have obtained and delivered to the
Partnership: (i) executed estoppel certificates from: (A) for the First
Closing, the Tenants listed on Schedule "20" attached hereto (the
"Estoppel Tenants") and (B) for the Second Closing, Tenants at 000
Xxxx 00xx Xxxxxx leasing space which aggregates at least eighty percent
(80%) of the total leased space at such Property ("Tenant Estoppels")
on the forms attached to or described in such Tenants' leases (or if no
such form is attached or described, a form reasonably required by the
Partnership), with no material changes thereto, and (ii) Subordination,
Non-Disturbance and Attornment Agreements ("SNDAs"), from all Estoppel
Tenants and such other tenants, and on such form (with no changes
thereto not approved by the Partnership's lender), as may be required
by the Partnership's lenders;
(n) Each of Xxxxx and SLR (in its respective sole
discretion) shall have agreed to amendments to this Agreement
reflecting a change in the structure of the transactions contemplated
hereby pursuant to which none of Xxxxx, its Affiliates or the investors
which contribute Third Party Equity would be liable for payment of New
York State or New York City transfer tax or Washington D.C. transfer or
recordation tax upon the redemption, dilution or sale of the Interests
of Xxxxx and its Affiliates in connection with the admission of Third
Party Investors to the Fund. The amendments contemplated by this
Section 7.1(n) are designed to avoid the imposition of New York State,
New York City, and Washington D.C. real property transfer and
recordation taxes on the Partnership, Trust, Xxxxx or its Affiliates as
a result of obtaining Third Party Equity to redeem or purchase Shares
and/or Units held by Xxxxx or its Affiliates pursuant to Section 3.4
hereof (this Section 7.1(n) shall be a condition to the First Closing
only);
37
(o) SLR's representations and warranties in this
Agreement remain true, correct and complete in all material respects;
and
(p) Xxxxxx & Xxxxxx, LLP shall have delivered to Sumitomo
(or the applicable Current Owner) the additional letter of credit
required to be delivered as an additional Tenant Deposit under its
Lease (this shall be a condition to Closing for 000 Xxxx Xxxxxx only).
ARTICLE 8. FAILURE TO SATISFY CLOSING CONDITIONS.
8.1 Waiver of Closing Condition by Xxxxx and the Partnership.
Xxxxx and the Partnership shall have the right to waive compliance by SLR and/or
any other party with any condition set forth in Section 7.1.
8.2 Waiver of Closing Condition by SLR. SLR shall have the right
to waive compliance by Xxxxx, the Partnership and/or any other party with any
condition set forth in Section 6.1.
8.3 Procedure for Waiver. Any waiver under Sections 8.1 or 8.2
must be in writing and must refer specifically to the condition being waived.
8.4 Cure of Certain Representations and Warranties.
If, between the date of this Agreement and the Closing Date,
any party becomes aware that any of its representations and warranties in this
Agreement are untrue, incorrect, or incomplete in any material respect, such
party shall give notice to the other party as promptly as practicable after such
party becomes aware of the same and the following shall apply:
(1) If the representation or warranty
was untrue, incorrect or incomplete as of the date of
this Agreement, or if it became so due to the act or
omission of the party making the representation or
warranty, then such party shall cure the same prior
to Closing (subject to Section 8.6), failing which
such party shall be in breach of this Agreement.
(2) Otherwise, the party making the
representation or warranty shall have the right,
alternatively, to (i) cure or correct such untruth,
incorrectness or incompleteness prior to five days
before the Closing Date; or (ii) refuse to cure. If
such party refuses or is unable to cure or correct
the same on or before that date, the other parties
shall have the option, by notice to the party making
the representation or warranty, either to terminate
this Agreement without further liability to any
party, or to proceed with the Closing notwithstanding
the particular problem, subject, however, to Section
11.3.
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8.5 Failure to Satisfy Closing Conditions.
(a) In the event that a condition to the First Closing is
not satisfied by the First Closing Date, and such unsatisfied Closing
condition relates to all of the First Closing Properties, the parties
shall have no liability to each other and, unless the unsatisfied
Closing condition has been waived or Xxxxx and SLR have extended the
Closing Date to satisfy the condition, this Agreement shall terminate
without further obligation or liability on the part of any party, other
than those obligations or liabilities which expressly survive
termination of this Agreement.
(b) In the event that a condition to the First Closing is
not satisfied by the First Closing Date and such unsatisfied Closing
condition relates to less than all of the First Closing Properties, the
parties shall have no liability to each other with respect to the
Property or Properties which are the subject of such unsatisfied
Closing condition (the "Affected Property") and, unless the unsatisfied
Closing condition has been waived or Xxxxx and SLR have extended the
Closing Date to satisfy the condition, this Agreement shall terminate
only as to the Affected Property without further obligation or
liability on the part of any party (other than those obligations or
liabilities relating to the Affected Property which expressly survive
termination of this Agreement), but this Agreement shall remain in
full force and effect with respect to the remaining First Closing
Properties. In such event, the Initial Fund Equity shall be calculated
as to only those Properties for which the Closing will occur. This
Section 8.5(b) shall be subject to Section 3.2(b).
(c) In the event that a condition to the Second Closing
is not satisfied by the Second Closing Date, the parties shall have no
liability to each other with respect to the Second Closing Property,
and unless the unsatisfied Closing condition has been waived or Xxxxx
and SLR have extended the Closing Date to satisfy the condition, this
Agreement shall terminate only as to the Second Closing Property
without further obligation or liability on the part of any party, other
than those obligations or liabilities relating to the Second Closing
Property that expressly survive termination of this Agreement, but
otherwise this Agreement shall remain in full force and effort.
8.6 Maximum Cure Amount. Notwithstanding anything to the contrary
in this Agreement, (i) Sumitomo shall not be required to expend more than Two
Million Dollars ($2,000,000) (the "Maximum Cure Amount") in the aggregate with
respect to all Properties: (a) to discharge Violations under Article 18, (b) to
cure or correct a representation or warranty as described in Section 8.4, and
(c) to cure any Title Defects other than Mortgages, judgments against Sumitomo
and the Current Owners which constitute liens against the Properties, and liens
against the Properties for non-payment of Sumitomo's or the Current Owners'
Federal income tax and (ii) Xxxxx and the Partnership shall not be required
to expend more than the Maximum Cure Amount, in the aggregate with respect to
all Properties, to cure or correct a representation or warranty as described in
Section 8.4. If the total cost of the items in clause (i) with respect to
Sumitomo, or in clause (ii) with respect to Xxxxx and the Partnership, as
applicable, exceeds the Maximum Cure Amount, there shall be no obligation on the
part of such party to cure, and the other party shall have the option to proceed
with the Closing and to receive a credit against (or increase of) the Initial
Sumitomo Payment or the Second Sumitomo Payment, as applicable, in
39
an amount equal to the Maximum Cure Amount, or to terminate this Agreement as to
the affected Property only without further liability to any party hereunder
subject to Article 13.
8.7 Limitation on Right to Claim Failure of Condition.
Notwithstanding anything to the contrary contained herein, no party shall be
entitled to claim or rely upon a failure of a condition to such party's
obligation to close hereunder, if such failure results from or is based upon a
breach or default by such party under this Agreement.
ARTICLE 9. PROPERTY MANAGEMENT AND LEASING.
9.1 Termination of Existing Agreements. At Closing, SLR will cause
the Current Owners to terminate all existing property management and Leasing
Agent Agreements relating to the Properties to be conveyed at such Closing. SLR
shall direct the property manager (consistent with the obligations of the
property manager under its agreements with the Current Owners) to cooperate with
Xxxxx prior to and after Closing to facilitate the orderly and prompt transition
of the management of the property to Xxxxx. At Closing, SLR will deliver to the
Partnership fully executed termination agreements or other reasonably
satisfactory evidence that all terminations required by this Section 9.1 have
occurred.
9.2 Xxxxx as New Property Manager and Leasing Agent. From and
after the First Closing, Xxxxx (or an Affiliate) will act as the property
manager and leasing agent for the First Closing Properties (and from and after
the Second Closing, Xxxxx (or an Affiliate) will act as the property manager and
leasing agent for the Second Closing Property) in accordance with the terms of
the Property Management and Leasing Agreement attached hereto as Exhibit "D"
(the "Management and Leasing Agreement"). Xxxxx (or an Affiliate), the
Partnership, and the SPE Owners will execute and deliver the Management and
Leasing Agreement at Closing.
9.3 Termination of Certain Service Contracts and Construction
Agreements. At Closing, SLR will cause the Current Owners to terminate, at their
sole cost and expense, all Service Contracts and Construction Agreements which
the Partnership does not expressly elect to have the SPE Owners assume in a
written notice delivered to SLR on or before forty-five (45) days prior to the
applicable Closing Date, except those Service Contracts specifically identified
on Schedule "15" as not being terminable by the Closing Date, which
non-terminable Service Contracts shall be assumed by the SPE Owners at Closing.
At the applicable Closing, SLR or the Current Owners will deliver evidence
showing that all such terminations have occurred. Notwithstanding the
foregoing, SLR may elect not to terminate the Xxxxxx Xxxxx agreement relating to
0000 Xxxxxxxxxx Xxxxxx, but if SLR does not terminate this agreement and the
Partnership does not elect to assume this agreement at Closing, SLR shall be
responsible for all obligations thereunder after the Closing Date.
ARTICLE 10. ADVISORY AGREEMENT.
At the First Closing, Sumitomo, Xxxxx (and/or their respective
Affiliates) and the Partnership will execute and deliver the Advisory Agreement
attached hereto as Exhibit "E" (the "Advisory Agreement").
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ARTICLE 11. REPRESENTATIONS AND WARRANTIES OF SLR.
11.1 Properties "As Is". Subject to the specific representations
and warranties of SLR set forth in Section 11.2, Sumitomo agrees to convey, and
Xxxxx and the Partnership and the applicable SPE Owners agree to accept, the
Properties in "as is" condition on the date of this Agreement (reasonable wear
and tear to the Properties excepted, subject to Article 15). Each of Xxxxx and
the Partnership acknowledge that it has had the opportunity to inspect all of
the Properties and to review the records and other documentation of Sumitomo and
the Current Owners relating to the Properties (and will have similar rights
under Section 17.3 between the date hereof and the applicable Closing Dates) and
that except with respect to the specific representations and warranties of SLR
set forth in this Agreement, (i) Xxxxx and the Partnership are relying upon
their own independent investigations and analyses of the Properties and other
matters referred to in this Agreement, and (ii) Xxxxx and the Partnership are
not relying upon information provided to Xxxxx or the Partnership by Sumitomo,
its Affiliates, property managers or other agents in deciding to enter into this
Agreement.
11.2 Representations and Warranties. SLR makes the representations
and warranties set forth below to Xxxxx and the Partnership as of the date
hereof and as of the Closing Date:
(a) SLR is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, and
qualified to conduct business under the laws of the District of
Columbia. The execution and delivery by SLR of this Agreement and the
Closing Instruments, the performance by SLR of its obligations
hereunder and thereunder and the consummation by SLR of the
transactions contemplated thereby, have been duly authorized by all
necessary action of SLR and duly approved by the board of directors
of SLR. The execution and delivery of this Agreement and the Closing
Instruments by SLR, the performance by SLR of its obligations hereunder
and thereunder, and the consummation of the transactions contemplated
hereby, will not (i) violate any provision of SLR's certificate of
incorporation or by-laws; (ii) violate any material agreement to which
SLR is a party; or (iii) violate any law, judgment, order, injunction,
award or decree of any Government Entity against or binding upon SLR or
the property or business of SLR. The ownership of SLR, and its current
officers and directors, are set forth on Schedule "11" hereto;
(b) SLRI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The execution and delivery of this Agreement and the Closing
Instruments by SLRI, the performance by SLRI of its obligations
hereunder and thereunder and the consummation of the transactions
contemplated hereby by SLRI have been duly authorized by all necessary
action of SLRI and duly approved by its board of directors. The
execution and delivery of the joinder to this Agreement and the Closing
Instruments by SLRI, the performance by SLRI of its obligations
hereunder and thereunder and the consummation of the transactions
contemplated hereby, will not (i) violate any provision of SLRI's
certificate of incorporation or by-laws, (ii) violate any material
agreement to which SLRI is a party; or (iii) violate any law, judgment,
order, injunction, award or decree of any Government Entity against or
binding upon SLRI or the property or business of SLRI. The ownership
of SLRI, and its current officers and directors, are set forth on
Schedule "11" hereto;
41
(c) Each of Park Land Associates Limited Liability
Company, Park Building Associates Limited Liability Company and 425
Lexington Limited Liability Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of New York, and 19th and M Street Associates Limited Liability
Company is a limited liability company duly organized and validly
existing under the laws of the District of Columbia. The execution and
delivery of the applicable Closing Instruments by each of Park Land
Associates Limited Liability Company, Park Building Associates Limited
Liability Company, 425 Lexington Limited Liability Company, and 19th
and M Street Associates Limited Liability Company, the performance by
each entity of its respective obligations hereunder and thereunder and
the consummation of the applicable transactions contemplated hereby by
Park Land Associates Limited Liability Company, Park Building
Associates Limited Liability Company, 425 Lexington Limited Liability
Company, and 19th and M Street Associates Limited Liability Company,
have been duly authorized, as applicable, by all members of 425
Lexington Limited Liability Company, and by all members (other than
MSI) of Park Land Associates Limited Liability Company, Park Building
Associates Limited Liability Company and 19th and M Street Associates
Limited Liability Company. The execution and delivery of the
applicable Closing Instruments by Park Land Associates Limited
Liability Company, Park Building Associates Limited Liability Company,
425 Lexington Limited Liability Company, and 19th and M Street
Associates Limited Liability Company, the performance by each entity of
its respective obligations hereunder and thereunder and the
consummation of the applicable transactions contemplated hereby, will
not (provided MSI's consent to the transactions involving 000 Xxxx
Xxxxxx and 0000 Xxxxxxxxxx Xxxxxx is obtained or MSI sells its
interests in Park Land Associates Limited Liability Company, Park
Building Associates Limited Liability Company and 19th and M Street
Associates Limited Liability Company to Sumitomo prior to Closing): (i)
violate any provision of the certificate of formation, certificate of
conversion or articles of organization, as applicable, or operating
agreement of Park Land Associates Limited Liability Company, Park
Building Associates Limited Liability Company, 425 Lexington Limited
Liability Company, or 19th and M Street Associates Limited Liability
Company; (ii) violate any material agreement to which any of Park Land
Associates Limited Liability Company, Park Building Associates Limited
Liability Company, 425 Lexington Limited Liability Company, or 19th and
M Street Associates Limited Liability Company is a party; or (iii)
violate any law, judgment, order, injunction, award or decree of any
Government Entity against or binding upon any of Park Land Associates
Limited Liability Company, Park Building Associates Limited Liability
Company, 425 Lexington Limited Liability Company, or 19th and M Street
Associates Limited Liability Company or the property or business of
Park Land Associates Limited Liability Company, Park Building
Associates Limited Liability Company, 425 Lexington Limited Liability
Company, or 19th and M Street Associates Limited Liability Company.
The ownership of each Park Land Associates Limited Liability Company,
Park Building Associates Limited Liability Company, 425 Lexington
Limited Liability Company, and 19th and M Street Associates Limited
Liability Company is set forth on Schedule "2" hereto;
(d) 000 Xxxxxxxxx Xxxxxx Associates is a general
partnership validly existing under the laws of the State of New York.
The execution and delivery of the applicable Closing Instruments by 000
Xxxxxxxxx Xxxxxx Associates, the performance by such
42
entity of its obligations hereunder and thereunder and the consummation
of the applicable transactions contemplated hereby regarding 000
Xxxxxxxxx Xxxxxx Associates, have been duly authorized by the partners
of 000 Xxxxxxxxx Xxxxxx Associates. The execution and delivery of the
applicable Closing Instruments by 000 Xxxxxxxxx Xxxxxx Associates, the
performance by such entity of its obligations hereunder and thereunder
and the consummation of the applicable transactions contemplated
hereby, will not: (i) violate any provision of the partnership
agreement of 000 Xxxxxxxxx Xxxxxx Associates; (ii) violate any material
agreement to which 000 Xxxxxxxxx Xxxxxx Associates is a party; or (iii)
violate any law, judgment, order, injunction, award or decree of any
Government Entity against or binding upon 000 Xxxxxxxxx Xxxxxx
Associates or the property or business of 000 Xxxxxxxxx Xxxxxx
Associates. The ownership of 000 Xxxxxxxxx Xxxxxx Associates is set
forth on Schedule "2" hereto;
(e) This Agreement, and the Closing Instruments to be
executed by SLR, SLRI and/or the Current Owners, constitute the legal,
valid and binding obligations of SLR, SLRI and/or the Current Owners
(as applicable), enforceable against SLR, SLRI and/or the Current
Owners (as applicable) in accordance with their respective terms;
(f) The Properties are owned by the Persons described on
Schedule "2" subject to the Permitted Encumbrances. The Current Owners
have not granted any options to purchase any of the Properties, rights
of refusal to acquire any of the Properties, rights of first offer to
acquire any of the Properties or similar rights to acquire any of the
Properties which remain in effect as of the date hereof;
(g) (I) Schedule "13" contains a list of all Leases
currently in effect with respect to the Properties, and true,
correct and complete copies of all such Leases have been
delivered to Xxxxx, except as provided in Schedule "13";
(II) (A) All of the Leases are in full force and effect;
(B) to Sumitomo's knowledge, no Tenant has any right of offset
or defense against the payment of rent, additional rent,
Tenant Expense Recoveries or any other payments due under its
Lease (collectively "Rent"), (C) except as set forth in
Schedule "13", no Tenant occupies any portion of a Property
except under a written Lease; (D) except as set forth in
Schedule "13", to Sumitomo's knowledge, no Tenant has paid
Rent more than one month in advance (this representation shall
be deemed made initially as of March 25, 2003 and again as of
the Closing Date); (E) except as set forth in Schedule "13",
no Tenant has received notice of default under its Lease which
has not been cured within applicable grace periods, and to
Sumitomo's knowledge no Tenant is in default under the terms
of its Lease; (F) all Tenant Deposits (whether in the form of
cash or letters of credit) currently held by the Current
Owners are described in Schedule "13"; (G) except as set forth
on Schedule "18", no leasing commissions or brokerage fees are
due or shall become due and payable (including, without
limitation, on any renewal, extension or expansion of any
Lease) after the date hereof in connection with any Lease in
effect as of the date hereof, and except as set forth on
Schedule "18" there are no Leasing Agent Agreements or
Brokerage Commission Agreements affecting the Properties; (H)
to Sumitomo's knowledge, no Bankruptcy Event has occurred with
respect to any
43
Tenant; and (I) the rent rolls for the Properties attached as
Schedule "19" hereto are true, accurate and complete in all
material respects (this representation shall be deemed made
initially as of March 25, 2003 and again as of the Closing
Date);
(III) To Sumitomo's knowledge, the Current Owners
are not in default under any Lease, and the Current Owners
have received no notice from any Tenant claiming a default
under its Lease, or making a claim not set forth in its Lease
for a decrease in Rent, or an increase in services, or
claiming any defense or set off with respect to its Lease
obligations, any rent concession or abatement not set forth in
its Lease, or any right not set forth in its Lease to have the
Current Owner perform (or pay for) work in its premises, and,
except for the tenant improvement and other allowances
described in Schedule "22", all tenant improvement and other
allowances have been fully paid and disbursed;
(h) Schedule "13" contains true, correct and complete
rent and expense statements for each Property for the years 2000
through 2002 and the first two months of 2003;
(i) Except as disclosed on Schedule "14", Sumitomo has
received no written notice that any Property is not presently in
compliance with any laws relating to the use and operation of the
Property. To Sumitomo's knowledge, all material Development Approvals
relating to the Properties are current, valid and in full force and
effect;
(j) Except as described on Schedule "14", Sumitomo has no
knowledge of any Hazardous Substances on, under or migrating to or from
the Properties, other than (I) as set forth in the environmental
reports listed on Schedule "17", true, correct and complete copies of
which have been delivered to Xxxxx and (II) minor quantities of
Hazardous Substances which are used in the ordinary course of office
operations or the maintenance and repair of an office building. Neither
Sumitomo nor any Current Owner has received notice from any Government
Entity or other Person regarding the actual or suspected presence of
Hazardous Substances at, on or under any Property or the violation of
any laws relating to Hazardous Substances with respect to any Property;
(k) Schedule "15" contains a list of all Service
Contracts and Construction Agreements currently in effect with respect
to the Properties, and except as otherwise provided in Schedule "15",
true, correct and complete copies of all such Service Contracts and
Construction Agreements have been delivered to Xxxxx. To Sumitomo's
knowledge, the Current Owners are not in default under any such Service
Contract or Construction Agreement, the Current Owners have received no
notice from any other party to any such Service Contract or
Construction Agreement claiming a default by a Current Owner
thereunder, and to Sumitomo's knowledge, no service provider or other
third party is currently in default under any such Service Contract or
Construction Agreement. There will be no Construction Agreements or
Service Contracts in effect (or executory) on or as of the Closing Date
other than those Construction Agreements and Service Contracts which
the Partnership has expressly elected or is required to assume in
accordance with Section 9.3 above;
44
(1) There are no approvals, authorizations, consents or
other actions by or filings with any Person which are required to be
obtained or completed by Sumitomo or the Current Owners (other than the
actions to be taken by MSI as described in Section 3.2 above) in
connection with the execution and delivery of this Agreement or any of
the Closing Instruments or in connection with any other action required
to be taken by Sumitomo or the Current Owners hereunder at or before
the Closing;
(m) Except as set forth in Schedule "14", there are no
outstanding judgments, orders, writs, injunctions or decrees of any
Government Entity, and no Legal Proceedings pending (or to Sumitomo's
knowledge threatened in writing), against: (i) any Property; (ii)
Sumitomo or any Current Owner in connection with any Property; and/or
(iii) Sumitomo or any Current Owner other than in connection with any
Property (to the extent that the same would have a material adverse
effect on Sumitomo's or any Current Owner's performance of its
obligations under this Agreement or the Closing Instruments);
(n) Sumitomo and the Current Owners have received no
written notice of any taking, or proposed taking, of any Property in
Condemnation, and Sumitomo and the Current Owners have had no
discussions with any Government Entity concerning any proposed
Condemnation;
(o) Sumitomo and the Current Owners are not foreign
persons within the meaning of Section 1445(b)(2) of the Code;
(p) Schedule "14" describes any Legal Proceedings pending
by any Current Owner (or any Government Entity) for the reduction (or
increase) of real property assessments or taxes on any Property as of
the date hereof;
(q) The Current Owners have no Employees engaged in the
operation, management, or repair of the Properties;
(r) There are no currently pending applications submitted
to any Government Entity for changes to the current zoning status of
any Property;
(s) As of the date hereof, no Bankruptcy Event has
occurred with respect to any of Sumitomo or any Current Owner; and
(t) No Current Owner has received any written notice from
any insurance company or board of fire underwriters of any defects or
inadequacies in or on the Properties or any part or component thereof
that would adversely affect the insurability of the Properties or cause
any increase in the premiums for insurance for the Properties.
11.3 Changes in Representations Regarding Leases. In the event that
any representation or warranty of SLR in Section 11.2(g) was true, correct and
complete when made (or deemed to be made) but is inaccurate or incomplete as of
the applicable Closing Date (other than as a result of the actions or failure to
act of Sumitomo or any of the Current Owners) (a "Change in Lease Status"),
then such inaccuracy or incompleteness shall not be deemed to constitute a
breach of representation or warranty by SLR hereunder. In the event that a
Change in Lease Status constitutes a Material Tenant Default or a Bankruptcy
Event under a Major
45
Lease, then such Change in Lease Status shall constitute the failure of a
Closing condition and Xxxxx shall have the applicable rights set forth in
Section 8.5 hereof. In the event there is a Change in Lease Status which does
not constitute a Material Tenant Default or a Bankruptcy Event under a Major
Lease, then such inaccuracy or incompleteness shall not be deemed to constitute
a breach of SLR's representations or warranties or the failure of a Closing
condition, and this Agreement shall remain in full force and effect without
adjustment to the Initial Sumitomo Payment, the Second Sumitomo Payment or any
other consideration to be delivered to SLR at any Closing.
11.4 Lease Documents and Service Contracts Not Yet Delivered.
Certain Lease documents and Service Contracts have not yet been delivered to
Xxxxx for review, as indicated on Schedules "13" and "15". SLR shall use
commercially reasonable efforts to deliver copies of such documents to Xxxxx
promptly after the date hereof (and SLR shall notify Xxxxx if it determines that
such Lease documents and Service Contracts (or any of them) are not available
and therefore cannot be delivered). If (a) SLR is unable to deliver any of such
documents to Xxxxx and/or (b) SLR delivers such documents to Xxxxx and Xxxxx
reasonably determines that the contents of such documents materially impact the
Agreed Valuation of any Property, then in either case, at Xxxxx' option and as
Xxxxx' sole remedy, Xxxxx may notify SLR within 10 days after (i) receipt of
notice from SLR that any Lease documents and/or Service Contracts cannot be
delivered or (ii) actual delivery of any such Lease documents and/or Service
Contracts to Xxxxx (as applicable), that Xxxxx elects to terminate this
Agreement as to the Property or Properties as to which such Lease documents
and/or Service Contracts relate, and in such event the Agreement will terminate
as to the Affected Property or Affected Properties under Section 8.5 without
liability to SLR. Notwithstanding the preceding sentence, if the Service
Contract in question can be terminated at or prior to Closing, Xxxxx shall not
have the right to terminate this Agreement under this Section 11.4 but may elect
not to assume such Service Contract at Closing (in which event SLR shall
terminate such Service Contract at or prior to Closing). If Xxxxx fails to so
notify SLR within such 10 day period after delivery of the last such Lease
document or Service Contract (or notice that such Lease document or Service
Contract cannot be delivered), time being of the essence, then Xxxxx shall be
deemed to have waived its right to terminate pursuant to this Section 11.4, this
Agreement shall remain in full force and effect, and there shall be no
adjustment to the Initial Sumitomo Payment, the Second Sumitomo Payment or any
other consideration due to Sumitomo hereunder.
ARTICLE 12. REPRESENTATIONS AND WARRANTIES OF XXXXX AND THE PARTNERSHIP.
12.1 Representations and Warranties. Xxxxx and the Partnership make
the representations and warranties set forth below to Sumitomo as of the date
hereof and as of the Closing Date:
(a) Xxxxx is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The execution and delivery by Xxxxx of this Agreement and the
Closing Instruments, the performance by Xxxxx of obligations hereunder
and thereunder, and the consummation by Xxxxx of the transactions
contemplated thereby, have been duly authorized by all necessary action
of Xxxxx and duly approved by the partners of Xxxxx. The executing and
delivery of this Agreement and the Closing Instruments by Xxxxx, the
performance by Xxxxx of its obligations
46
hereunder and thereunder, and the consummation of the transactions
contemplated thereby, will not: (i) violate any provision of Xxxxx'
certificate of limited partnership or partnership agreement; (ii)
violate any material agreement to which Xxxxx is a party; or (iii)
violate any law, judgment, order, injunction, award or decree of any
Government Entity against or binding upon Xxxxx or upon the property or
business of Xxxxx. The partners of, and for the purpose of the
definition of "knowledge" the relevant officers of, Xxxxx are set
forth on Schedule "12";
(b) General Partner is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The execution and delivery of the Closing
Instruments by General Partner, the performance by General Partner of
its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby by General Partner have been duly
authorized by all necessary action of General Partner and duly approved
by the members of General Partner. The execution and delivery of the
Closing Instruments by General Partner, the performance by General
Partner of its obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby, will not: (i)
violate General Partner's certificate of formation or operating
agreement; or (ii) violate any material agreement to which General
Partner is a party; or (iii) violate any law, judgment, order,
injunction, award or decree of any Government Entity against or binding
upon General Partner or the property or business of General Partner.
The ownership of, and members, managers and officers of, General
Partner are set forth on Schedule "12";
(c) HREH is a limited partnership duly organized and
validly existing under the laws of the State of Texas. The execution
and delivery by HREH of the HREH Guaranty, the performance by HREH of
its obligations thereunder, and the consummation by HREH of the
transactions contemplated thereby, have been (or by closing will be)
duly authorized by all necessary action of HREH and duly approved by
the partners of HREH. The execution and delivery of the HREH Guaranty
by HREH, the performance by HREH of its obligations thereunder, and the
consummation of the transactions contemplated thereby, will not: (i)
violate any provision of HREH's certificate of limited partnership or
partnership agreement; (ii) violate any material agreement to which
HREH is a party; or (iii) violate any law, judgment, order, injunction,
award or decree of any Government Entity against or binding upon HREH
or upon the property or business of HREH. The partners of HREH are set
forth on Schedule "12";
(d) The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware and the Trust is an existing real estate investment
trust duly organized, validly existing and in good standing under the
laws of the State of Maryland. The execution and delivery of the
applicable Closing Instruments by the Partnership, the Trust and the
SPE Owners, the performance of their respective obligations thereunder,
and the consummation of the applicable transactions contemplated hereby
by the Partnership, the Trust and the SPE Owners, have been or will be
duly authorized by all necessary action of the Partnership, the Trust
and the SPE Owners and duly approved by the partners of the
Partnership, Trust shareholders and members of the SPE Owners. The
execution and delivery of the applicable Closing Instruments by the
Partnership, the Trust and the SPE Owners, the performance of their
47
respective obligations thereunder, and the consummation of the
transactions contemplated hereby, will not: (i) violate the
organizational documents of the Partnership, the Trust or the SPE
Owners; (ii) violate any material agreement to which the Partnership,
the Trust or any SPE Owner is a party; or (iii) violate any law,
judgment, order, injunction, award or decree of any Government Entity
against or binding upon the Partnership, the Trust or any SPE Owner or
the property or business of the Partnership, the Trust or any SPE
Owner;
(e) This Agreement, and the Closing Instruments to be
executed by Xxxxx, its Affiliates, General Partner, HREH, the
Partnership, the Trust and/or the SPE Owners constitute (or will
constitute) the legal, valid and binding obligations of Xxxxx, its
Affiliates, General Partner, HREH, the Partnership, the Trust and/or
the SPE Owners (as applicable), enforceable against Xxxxx, General
Partner, HREH, the Partnership, the Trust and/or the SPE Owners (as
applicable) in accordance with their respective terms;
(f) There are no approvals, authorizations, consents or
other actions by or filings with any Person which are required to be
obtained or completed by Xxxxx or the Partnership in connection with
the execution and delivery of this Agreement or the performance of
their respective duties and obligations hereunder before the Closing,
except such approvals, authorizations, consents or other actions or
filings as have been obtained or completed. There are no approvals,
authorizations, consents or other actions by or filings with any Person
which are required to be obtained or completed (except such approvals,
authorizations, consents or other actions or filings as have been or by
Closing will be obtained or completed) by Xxxxx, the Partnership, the
Trust, any Xxxxx Affiliate (including HREH) and/or the SPE Owners in
connection with the execution and delivery of any of the Closing
Instruments or in connection with any other action required to be taken
or performed at Closing by Xxxxx, the Partnership, the Trust, any Xxxxx
Affiliate (including HREH) and/or the SPE Owners. It is understood and
agreed that the failure or inability of any Person referred to in this
subsection (f) to obtain or complete any approvals, authorizations,
consents, other actions or filings described in this subsection by the
applicable Closing Date shall be deemed a breach of representation and
warranty by Xxxxx and the Partnership (and not the failure of a Closing
condition);
(g) There are no outstanding judgments, orders, writs,
injunctions or decrees of any Government Entity, and no Legal
Proceedings pending (or to Xxxxx' knowledge threatened in writing),
against Xxxxx, General Partner, HREH, the Trust, the Partnership or the
SPE Owners which, if determined in a manner adverse to Xxxxx, General
Partner, HREH, the Trust, the Partnership and the SPE Owners, would
have a material adverse effect on the performance of the respective
obligations of any of the above described Persons under this Agreement
or the Closing Instruments;
(h) Xxxxx, General Partner and their respective
Affiliates have complied in all material respects with all applicable
U.S. federal and state, and international, securities laws applicable
to the marketing of the Fund and have received no notice from any
Government Entity alleging any non-compliance with securities laws; and
48
(i) As of the date hereof, no Bankruptcy Event has
occurred with respect to any of Xxxxx, General Partner, HREH, any other
direct or indirect parent company of Xxxxx, any Affiliate of Xxxxx
which is involved in the transactions described in this Agreement, the
Partnership, any SPE Owner, or the Trust.
ARTICLE 13. DEFAULTS; REMEDIES; SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNITIES.
13.l Pre-Closing Defaults.
(a) If either Xxxxx or the Partnership, on the one hand,
or Sumitomo, on the other hand (in either case, the "Defaulting Party")
is in material breach of its obligations, covenants or agreements set
forth herein whether relating to one or more Properties, and if the
other party or parties (collectively, the "Non-Defaulting Party") is
not in breach of its obligations, covenants or agreements in this
Agreement and there is no condition to the Defaulting Party's
obligation to close which cannot be satisfied by the Closing Date if
the parties perform their obligations under this Agreement, and such
Defaulting Party fails to cure such breach within ten Business Days
after receipt of notice thereof (or such longer period as may be
required to cure such breach, provided that the Defaulting Party has
promptly commenced and diligently prosecutes such cure to completion,
but in no event in excess of 30 days, it being understood that such
party shall be entitled to adjourn the Closing to complete such cure),
the Non-Defaulting Party shall be entitled, as its sole and exclusive
remedy (subject to Sections 13.1(b) and (c) below), to terminate this
Agreement in its entirety (prior to the First Closing) or as to the
Second Closing Property (after the First Closing) and receive and
recover from the Defaulting Party the Transaction Cost Reimbursement.
As used herein, the term "material breach" shall mean any breach or
default which, when taken together with all such other breaches or
defaults by the Defaulting Party, has the effect of directly causing
the Non-Defaulting Party to incur costs and/or suffer losses or
damages in the amount of $250,000 or more in the aggregate. As used
herein, the term "Transaction Cost Reimbursement" shall mean the amount
of any and all of the transaction costs described in Section 14.2
hereof incurred by the Non-Defaulting Party and/or its Affiliates in
connection with the transactions contemplated by this Agreement and/or
the Closing Instruments, up to an aggregate sum of $2,000,000. For
purposes of clarification, with respect to a default which occurs after
the First Closing, such transaction costs shall include only those
costs relating to the Second Closing.
(b) Notwithstanding subsection (a) above or any other
provision of this Agreement, if on the Closing Date a representation or
warranty is untrue, incorrect or incomplete but is susceptible to
cure, the Defaulting Party (the party which made such representation or
warranty) shall be required to cure such breach, subject to Section 8.4
and 8.6 hereof, and such party shall be entitled to adjourn the Closing
for up to 30 days to complete such cure. If such breach is not
susceptible to cure or if the cost to cure would cause the Maximum Cure
Amount to be exceeded, and if such party elects not to cure the breach,
the Defaulting Party shall not be required to cure such breach and the
Non-Defaulting Party shall be entitled, as its sole and exclusive
remedy, to terminate this Agreement in its entirety (prior to the
First Closing) or as to the Second Closing Property
49
(after the First Closing) and receive and recover from the Defaulting Party the
Transaction Cost Reimbursement. If the Defaulting Party elects to cure the
breach and spends an amount at least equal to the Maximum Cure Amount to attempt
to cure such breach (and to cure other items covered by Section 8.6), but does
not succeed in curing such breach, then in such event the Defaulting Party shall
not be required to pay the Transaction Cost Reimbursement to the Non-Defaulting
Party. Notwithstanding the preceding sentence, if the Defaulting Party
reasonably determines that if it were to cure such breach and other items which
the Defaulting Party is required to cure hereunder, the Maximum Cure Amount
would be exceeded, then the Defaulting Party shall so notify the Non-Defaulting
Party and the Non-Defaulting Party may elect, upon notice to the Defaulting
Party given not more than 5 days after receipt of the Defaulting Party's notice,
to terminate this Agreement and obtain the Transaction Cost Reimbursement in
lieu of curing such items, in which event the Defaulting Party shall not be
required to cure such items.
(c)(i) Notwithstanding the provisions of subsection (a) above, if
neither the Partnership nor Xxxxx is in breach of its obligations, covenants or
agreements in this Agreement and there is no Closing condition to SLR`s
obligation to close which cannot be satisfied by the Closing Date if the parties
perform their obligations under this Agreement, and SLR willfully breaches a
covenant in Section 17.1 hereof or otherwise willfully refuses to consummate
this Agreement and convey title to the applicable Properties at the First
Closing (or willfully causes the Current Owners to so refuse), the Partnership
may elect by notice to SLR within ten Business Days after it receives notice of
(or otherwise becomes aware of the occurrence of) such willful breach or willful
failure to close, as its sole and exclusive remedy and in lieu of the right to
receive the Transaction Cost Reimbursement (subject to Section 13.l(c)(iii)), to
purchase 000 Xxxxxxxxx Xxxxxx from the applicable Current Owner for cash in an
amount equal to the Agreed Valuation of 000 Xxxxxxxxx Xxxxxx. If the Partnership
fails to deliver notice of its election to purchase 000 Xxxxxxxxx Xxxxxx within
such, ten Business Day period, the Partnership will be deemed to have elected to
receive the Transaction Cost Reimbursement.
(ii) In the event the Partnership exercises such election, it shall
deliver to SLR's attorneys simultaneously with the delivery of its election
notice, a xxxx xxxxxxx money deposit in an amount equal to one percent (1%) of
such Agreed Valuation of 000 Xxxxxxxxx Xxxxxx (the "Xxxxxxx Money") to be held
in escrow in an interest-bearing account pursuant to an escrow agreement
acceptable to SLR's attorneys containing customary escrow provisions for a
deposit under a contract of sale for real property and the applicable Current
Owner and the Partnership shall close the sale of such Property on a date
mutually agreed to by the parties but not later than the later of (i) June
30, 2003, and (ii) 60 days after notice of such election is given, time being of
the essence. At the closing, of the conveyance of 000 Xxxxxxxxx Xxxxxx under
this subsection (c):(I) Sumitomo shall not receive Shares; (II) Sumitomo shall
receive cash in the amount of the Agreed Valuation of 000 Xxxxxxxxx Xxxxxx
subject to adjustment under Section 3.1(d) hereof and the adjustments in Article
16 hereof (to the extent applicable to this Property); (III) the closing
conditions shall be those conditions set forth in Sections 6.1 and 7.1 which
apply to a conveyance of this Property for cash and without regard to the
50
formation of the Fund; (IV) the satisfaction of Xxxxx' and the Partnership's
obligations relating to the formation of the Fund will not be conditions to such
closing, the Advisory Agreement shal1 not be executed and delivered and Sumitomo
shall have no rights to participate in the management of marketing of the Fund
and there shall be no further obligation with respect to any other projects then
contemplated by Xxxxx and SLR (but all indemnities and releases relating to the
Fund and the offer and sale of Interests in Section 4.6 shall remain in full
force and effect and shall survive the closing); (V) SLR shall have no right to
approve the terms of any financing obtained by the Partnership (but obtaining
financing on terms satisfactory to the Partnership in its reasonable discretion
shall be a condition to the Partnership's obligation to close); (VI) the
Partnership shall have no right to purchase the Second Closing Property or any
other Property and at closing this Agreement shall terminate as to all other
Properties; (VII) the representations and warranties of SLR and its covenants
relating to the Properties shall be deemed to relate only to 000 Xxxxxxxxx
Xxxxxx; (VIII) the maximum post-closing liability of any party under Section
13.2 shall be $8,000,000; (IX) the parties shall execute and deliver (or cause
to be executed and delivered) the documents contemplated by Article 5 only with
respect to such Property; and (X) SLR shall cause the applicable Current Owner
to pay all real property transfer taxes relating to the conveyance of this
Property in accordance with Section 14.1 hereof.
(iii) As its sole remedies for a willful failure of SLR to convey 000
Xxxxxxxxx Xxxxxx under this Section 13.1(c) the Partnership may bring an action
for specific performance to enforce the obligations of SLR and the applicable
Current Owner to convey 000 Xxxxxxxxx Xxxxxx to the Partnership, or in lieu
thereof the Partnership shall be entitled to obtain the Transaction Cost
Reimbursement from SLR.
(iv) In the event that after exercising its election under this Section
13.1(c), there is a material breach by the Partnership or Xxxxx or willful
failure of the Partnership to consummate this Agreement (as amended as provided
in this Section 13.1 (c)) and accept title to 000 Xxxxxxxxx Xxxxxx, then SLR may
exercise the remedies described in Section 13.1(a) or in lieu thereof, SLR shall
have the right to retain the Xxxxxxx Money as liquidated damages (it being
agreed that actual damages would be difficult if not impossible to quantify),
this Agreement shall terminate and be of no further force or effect and no party
shall have any further rights or obligations hereunder (other than those rights
and obligations which expressly survive the termination of this Agreement).
(d) For the avoidance of doubt: (i) in no event shall a Defaulting
Party be required in any event to pay an aggregate sum in excess of $2,000,000
under this Agreement in the event of a material breach (whether to cure such
breach, to pay the Transaction Cost Reimbursement of any and all Non-Defaulting
Parties, or to pay Fees-and-Costs in connection with a Legal Proceeding under
Section 13.1 (c)(iii) hereof) which occurs or is discovered prior to Closing, as
applicable to all four Properties in the aggregate (except for the right to,
retain the Xxxxxxx Money described in Section 13.l(c)(iv) above); (ii) the
remedies of Xxxxx and the Partnership hereunder shall be exercised jointly by
both of them and Xxxxx and the Partnership shall be jointly and severally liable
for the obligations of either of them under this Section 23.1; and (iii) the
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remedies in this Section 13.1 shall be the sole and exclusive remedies of the
parties hereto (or anyone claiming through any of them) as a result of a breach
of covenant, representation or warranty discovered prior to Closing (whether or
not a "material breach") or the willful failure to close; and (iv) in the event
of a failure of a Closing condition, no party shall have any obligation to make
any payment to any other party and Section 8.5 shall apply (subject, however, to
Section 8.7 hereof).
13.2 Post-Closing Breach of Representations and Warranties or Covenants.
(a) In the event of a breach by SLR of any of its representations or
warranties in this Agreement or a breach by SLR of its covenants in Section
17.1(a) or (b) hereof, which is discovered after the applicable Closing,
notwithstanding anything to the contrary in this Agreement: (i) in no event
shall Xxxxx or the Partnership be entitled to recover consequential or punitive
damages against SLR in connection with this Agreement, the Closing Instruments,
or the transactions contemplated hereby or thereby; (ii) in no event shall the
maximum amount of damages of every kind whatsoever which Xxxxx and the
Partnership collectively shall be entitled to recover from SLR exceed, in the
aggregate with respect to all Properties, $15,000,000; and (iii) neither Xxxxx
nor the Partnership shall have the right to bring any action against SLR, and
SLR shall not have any liability to Xxxxx or the Partnership, as a result of any
Claim based upon the breach by SLR of its representations, warranties or
covenants, unless and until the aggregate amount of all Claims of both Xxxxx and
the Partnership arising out of any such breaches (when aggregated with amounts
incurred and/or losses suffered prior to Closing) exceeds $250,000.
(b) In the event of a breach by Xxxxx and/or the Partnership of any of
its representations or warranties hereunder, which is discovered after the
applicable Closing, notwithstanding anything to the contrary in this Agreement:
(i) in no event shall SLR be entitled to recover consequential or punitive
damages against Xxxxx or the Partnership in connection with this Agreement, the
Closing Instruments or the transactions contemplated hereby or thereby; (ii) in
no event shall the maximum amount of damages of every kind whatsoever which SLR
shall be entitled to recover from both of Xxxxx and the Partnership exceed in
the aggregate with respect to all Properties $15,000,000; and (iii) SLR shall
have no right to bring any action against Xxxxx or the Partnership, and Xxxxx
and the Partnership shall have no liability to SLR, as a result of any Claim
based upon the breach by Xxxxx and the Partnership of any of their respective
representations, warranties or covenants, unless and until the aggregate amount
of all Claims arising out of any such breaches (when aggregated with amounts
incurred and/or losses suffered prior to Closing) exceeds $250,000.
(c) With respect to a breach described in Section 13.2(a) or (b)
above, if the party to whom (or for whose benefit) the representation, warranty
or covenant was made gives the other party (or parties) notice setting forth a
brief description of the alleged breach at any time until the day which is 365
days after the applicable Closing Date, and commences a Legal Proceeding with
respect to such breach within 380 days after the applicable Closing Date, the
party giving the notice may enforce its rights against the other party or
parties. Notwithstanding anything to the contrary in this Agreement, no
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party to this Agreement shall make any claim hereunder for any breach of a
representation or warranty of the other party (or parties) or a breach of
covenant by the other party, if such party has not given the notice described
above, before the end of such 365 day period and commenced a Legal Proceeding
thereon before the end of such 380 day period.
(d) The limitations set forth in Sections 13.2(a)(ii) and 13.2(c) shall
not apply to SLR's indemnities set forth in Sections 4.6, 13.3, Article 19 and
Section 22.3, and the limitation set forth in Section 13.2(a)(ii) above shall
not apply to SLR's agreement to pay post-Closing adjustments in Article 16
hereof.
(e) The limitations set forth in Sections 13.2(b)(ii) and 13.2(c) shall
not apply to: (i) the indemnities of Xxxxx and the Partnership in Sections 4.6,
13.4, 17.3(b) or 22.3; (ii) the Partnership's obligation to pay adjustments to
the Initial Sumitomo Payment under Section 3.1(d) in connection with the
adjustment to the Agreed Valuation of 000 Xxxxxxxxx Xxxxxx; (iii) Xxxxx'
obligation to repurchase the Initial Sumitomo Shares under Section 4.4(d); or
(iv) the obligations of HREH under the HREH Guaranty. The limitation set forth
in Section 13.2(b)(ii) shall not apply to the Partnership's obligation to pay
post-Closing adjustments in Article 16 hereof.
13.3 Indemnities of SLR. From and after the date that each Closing
occurs, SLR hereby agrees to indemnify, hold harmless and defend the Xxxxx
Indemnitees against any and all Claims incurred by or asserted against any Xxxxx
Indemnitees by any third party, arising from or in connection with the
following as they relate to the Properties which are the subject of such
Closing:
(a) any duty, obligation or payment arising or accruing under
any Lease or Development Approval (i) prior to the First Closing Date,
with respect to any First Closing Property, and (ii) prior to the
Second Closing Date, with respect to the Second Closing Property;
(b) any duty, payment or obligation arising or accruing under
any Service Contract which the Partnership has elected or is required
to assume under Section 9.3 hereof (A) prior to the First Closing Date
with respect to any First Closing Property, and (B) prior to the Second
Closing Date, with respect to the Second Closing Property;
(c) any duty, payment or obligation arising or accruing under
any Service Contract which the Partnership has not elected and is not
required to assume under Section 9.3 hereof;
(d) any duty, payment or obligation arising or accruing under
any Leasing Agent Agreements or Brokerage Commission Agreements which
are the responsibility of SLR to pay under Section 16.9 hereof;
(e) any Tenant improvement allowances which are the
responsibility of SLR to pay under Section 16.9 hereof;
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(f) any amounts due under Construction Agreements which are
the responsibility of SLR to pay under Section 16.9 hereof;
(g) any pending or threatened litigation described in Schedule
"13", or in Schedule "14", other than the pending tax certiorari
proceedings described in Schedule "14";
(h) except as otherwise provided in (d), (e), (f) or (g)
above, any duty, payment or obligation of Sumitomo or any Current Owner
under agreements affecting the Properties when the applicable payment
or performance was due or to be performed prior to the applicable
Closing Date;
(i) death, bodily injury or property damage (to property of
others) occurring at, on or about the Property (or Properties) caused
by the negligence or willful misconduct of Sumitomo, any Current Owner
or any of their respective employees or agents prior to Closing;
(j) any New York State or New York City transfer taxes and
Washington D.C. transfer or recordation taxes in connection with the
Properties and/or the Fund which SLR has agreed to pay (or caused to be
paid) under Sections 3.1(d) and 14.1 hereof; and
(k) any breach of SLR's covenants in Article 23 hereof.
13.4 Indemnities of the Partnership. From and after the date that each
Closing occurs, the Partnership hereby agrees to indemnify, hold harmless and
defend the Sumitomo Indemnitees against any and all Claims incurred by or
asserted against any Sumitomo Indemnitees by any third party arising from, or in
connection with, the following as they relate to the Properties which are the
subject of such Closing:
(a) any duty, payment or obligation arising or accruing under
any Lease or Development Approval (i) on or after the First Closing
Date, with respect to any First Closing Property, and (ii) on or after
the Second Closing Date, with respect to the Second Closing Property;
(b) any duty, payment or obligation arising or accruing under
any Service Contract which the Partnership has elected or is required
to assume under Section 9.3 hereof: (A) on or after the First Closing
Date, with respect to any First Closing Property, and (B) on or after
the Second Closing Date, with respect to the Second Closing Property;
(c) any duty, payment or obligation arising or accruing under
any Leasing Agent Agreements or Brokerage Commission Agreements which
are the responsibility of the Partnership to pay under Section 16.9
hereof;
(d) any Tenant improvement allowances which are the
responsibility of the Partnership to pay under Section 16.9 hereof;
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(e) any amounts due under Construction Agreements which are
the responsibility of the Partnership to pay under Section 16.9 hereof;
(f) except as otherwise provided in (c), (d) and (e) above,
any duty, payment or obligation of the Partnership or any SPE Owner
under agreements affecting the Properties when the applicable payment
or performance was due or to be performed on or after the applicable
Closing Date (but excluding obligations under agreements existing as of
the date hereof which the Partnership and SPE Owners elect not to and
are not required to assume at Closing);
(g) death, bodily injury or property damage (to property of
others) occurring at, on or about the Property or Properties caused by
the negligence or willful misconduct of the Partnership, any SPE Owner
or any of their respective employees or agents after Closing;
(h) any New York State or New York City transfer taxes and
Washington D.C. transfer and recordation taxes in connection with the
Properties and/or the Fund relating to periods on and after the Closing
Date, other than those which SLR has agreed to pay (or caused to be
paid) under Sections 3.1(d) and 14.1 hereof; and
(i) any breach of Xxxxx' or the Partnership's covenants in
Article 23 hereof.
13.5 Procedures Relating to Indemnities. In the event that any Claim is
made against any indemnified party under any of the indemnities in this
Agreement, the indemnified party shall promptly notice the indemnifying party of
such claim and shall assist the indemnifying party (without expense to the
indemnified party) in the defense of such Claim. The indemnifying party shall
defend any Legal Proceeding commenced against the indemnified party relating to
such Claim (with counsel reasonably acceptable to the indemnified party), advise
the indemnified party promptly upon request of the status of such Claim, and
provide copies of all legal process and other documents delivered to or received
by the indemnifying party in connection with such Claim. The indemnifying party
shall not settle any Claim unless the effect of such settlement is to release
the indemnified party from all liability with respect to such Claim, without
cost or contribution, and without admission of liability, from the indemnified
party. The indemnified party shall not settle any Claim without the prior
written consent of the indemnifying party unless the effect of such settlement
shall be to release the indemnifying party from all liability with respect to
such Claim, without cost or contribution from the indemnifying party. If the
indemnifying party fails to defend any Claim when required hereunder, the
indemnified party shall have the right (but no obligation) to defend the same at
the indemnifying party's expense upon notice to the indemnifying party.
ARTICLE 14. TRANSFER TAXES; TRANSACTION EXPENSES.
14.1 Transfer Taxes. Sumitomo will pay (or cause the Current Owners to
pay) to the applicable Government Entities real property transfer and
recordation taxes relating to the initial conveyance of the Properties by the
Current Owners to the Partnership or SPE Owners, at the New York State or New
York City transfer tax rates or District of Columbia transfer and recordation
tax rates, based upon 100% of the Agreed Valuations of the Properties (as the
same
55
may be adjusted pursuant to Section 3.1(d) hereof). Sumitomo shall pay (or cause
to be paid) the amount of such taxes referred to in the preceding sentence which
become due upon the redemption by the Trust or sale to Xxxxx of the Initial
Sumitomo Shares promptly following such redemption or sale, and Sumitomo shall
pay (or cause to be paid) the amount of such taxes referred to in the preceding
sentence which become due upon any subsequent Transfer by Sumitomo of the Shares
received by Sumitomo at the Second Closing promptly following such Transfer.
Sumitomo shall have no liability for any transfer or recordation taxes which may
be payable in connection with the purchase by Xxxxx or its Affiliates of
Interests in the Fund, or the transfer or issuance of Interests in the Fund to
Third Party Investors, even if such transactions are aggregated with the
conveyance of the Properties by the Current Owners to the Partnership, and/or
the redemption by the Trust or purchase by Xxxxx or its Affiliate of the Initial
Sumitomo Shares, for transfer or recordation tax purposes; provided, however,
that nothing in this sentence diminishes Sumitomo's obligation to pay (or to
cause the Current Owners to pay) the transfer and recordation taxes based on
100% of the Agreed Valuations thereon as provided in this Section 14.1. The
Current Owners and SPE Owners, as applicable, will sign all returns which are
required in connection with the conveyances of the Properties.
14.2 Transaction Expenses.
(a) The following costs shall be paid by the Partnership at or
in connection with each Closing: mortgage recording tax (as
applicable); loan fees, costs and points; title insurance premiums and
title search fees; costs to prepare surveys; costs relating to third
party assessments, evaluations, reports, studies and/or tests;
recording costs; costs of formation of the Trust, Partnership and the
SPE Owners (including the fees of Xxxxx' attorneys relating thereto);
general due diligence costs and expenses; marketing costs (subject to
Section 4.5(d) hereof) other than the placement fee of Xxxxxx Xxxxxxx;
the fees of Xxxxx attorneys incurred in connection with the negotiation
and preparation of the purchase and sale aspects of this Agreement,
including the negotiation of the typical real estate Closing
Instruments (but not the fees of Xxxxx' attorneys relating solely to
the portion of this Agreement addressing the participation by Sumitomo
in the Fund) and the fees of Xxxxx' attorneys relating to general
property acquisition and due diligence matters (e.g., title and survey
review, lease review, etc.), and travel and entertainment costs of
Xxxxx, SLR and their respective Affiliates in connection with their
marketing efforts (subject to Section 4.5(d) hereof).
(b) The following costs shall be paid by Xxxxx at or in
connection with each Closing: the placement fee of Xxxxxx Xxxxxxx; the
fees of Xxxxx' attorneys relating solely to the portion of this
Agreement addressing the participation by Sumitomo in the Fund; and all
other costs which are designated as Xxxxx' or General Partner's
obligations pursuant to this Agreement or the Closing Instruments.
(c) The following costs shall be paid or caused to be paid by
Sumitomo and/or the Current Owners at or in connection with each
Closing: the MSI Payment; transfer taxes as described in Sections
3.1(d) and 14.1; the fees of Sumitomo's attorneys to negotiate this
Agreement and the Closing Instruments; the fees payable to consultants
and third party service providers retained by Sumitomo in connection
with the transactions
56
contemplated by this Agreement; and all other costs which are
designated as Sumitomo's (or its Affiliates') obligations pursuant to
this Agreement or the Closing Instruments.
ARTICLE 15. CASUALTY; CONDEMNATION.
15.1 Definitions, "Event of Termination" means a fire or other
casualty, including flood, lightning, other severe weather or terrorist attack
(each, a "Casualty Event") which results in Restoration Costs in excess of 5% of
the Agreed Valuation of the affected Property, as determined by the parties (or,
if the parties cannot agree upon the amount of such costs within 15 days, as
determined by the Casualty Consultant pursuant to Section 15.3).
15.2 Termination Right.
(a) If an Event of Termination occurs prior to the Closing
Date, such Event of Termination shall be deemed the failure of a
Closing condition and in such event the Partnership shall have the
right to terminate this Agreement with respect to the affected Property
only under Section 8.5, by notice to SLR given within 45 days after the
Casualty Event. If the Partnership elects to terminate under the
preceding sentence, this Agreement shall not terminate if within 15
days after receipt of the Partnership's notice SLR (i) demonstrates to
the Partnership's satisfaction that the Event of Termination is fully
covered by insurance (including business interruption and loss of rents
coverage but less deductible) or (ii) agrees to pay the Restoration
Costs as well as lost rental income to the extent such costs and income
exceed such insurance coverage with respect to such Event of
Termination. In such event, SLR shall arrange for the Partnership to
speak to the applicable insurer(s) to verify the status of coverage. If
the Partnership fails to deliver the termination notice referred to in
the first sentence of this subsection (a) within such 45 day period
(time being of the essence), or if SLR demonstrates to the Partnership
within such 15-day period (time being of the essence) that full
coverage is available or agrees to pay any uninsured amount as
described above, then this Agreement shall remain in full force and
effect and there shall be no reduction in the Initial Sumitomo Payment,
the Second Sumitomo Payment or any other consideration payable to SLR
at Closing, but in such event, at Closing SLR shall (A) pay or cause
the applicable Current Owner to pay to the Partnership (or the
applicable SPE Owner) all insurance proceeds received prior to Closing,
(B) cause to be assigned to the Partnership (or SPE Owner) (by an
assignment in form reasonably satisfactory to counsel for Xxxxx and
consented to by the applicable insurer), all of Sumitomo's and the
applicable Current Owner's right, title and interest (if any) in and to
all of the Current Owner's policies of casualty, business interruption
and lost rental income insurance (if any) for the applicable Property
and all sums paid or payable thereunder, (C) pay (or cause the Current
Owner to pay) the Partnership (or the applicable SPE owner) the amount
of the deductible (if any) on or under the applicable insurance policy
or policies, and (D) pay (or cause the Current Owner to pay) the
Partnership any excess Restoration Costs as well as lost rental income
which it agreed to pay as provided above. If such Event of Termination
is not covered by any insurance, SLR shall have no right to pay the
Restoration Costs and prevent a termination of the Agreement as to the
affected Property as provided above. If an Event of Termination is
demonstrated to the Partnership's satisfaction to be fully covered by
insurance and the Partnership does not elect to terminate but it is
later determined prior to Closing (for any
57
reason) that the applicable policies of insurance may not be assigned
by the Current Owner as specified above or do not fully cover the Event
of Termination, the Partnership may terminate this Agreement upon
notice to SLR only as to the affected Property within 10 days after
receipt of notice by the Partnership that the policy or policies cannot
be assigned or do not fully cover the Event of Termination (time being
of the essence), unless SLR agrees in writing within 15 days after
receipt of the Partnership's notice (time being of the essence) to pay
the Restoration Costs to the extent such costs exceed all insurance
which would be assigned to the Partnership hereunder with respect to
the affected Property. If the Partnership does not elect to terminate
within such 10 day period, the Partnership shall be deemed to have
waived its termination right with respect to the applicable Casualty
Event. For purposes of clarification, if Xxxxx elects to close and it
is determined after Closing that insurance proceeds are unavailable or
less than the amount determined to be available pre-Closing, Xxxxx
shall have no right to additional payments or price adjustments or any
other payments from or remedies against SLR or its Affiliates on
account of such Casualty Event. If this Agreement does not terminate as
to the affected Property, SLR shall obtain the Partnership's consent
(not to be unreasonably withheld or delayed) to settle or adjust (prior
to the Closing or any earlier termination of this Agreement) the amount
of any loss payable under an insurance policy covering such Casualty
Event, and the Partnership, by written notice to SLR, shall have the
right to participate in any negotiations relating to any such
settlement or adjustment.
(b) In the event that there is a Casualty Event which is not
an Event of Termination, or the Partnership does not otherwise have a
right to terminate this Agreement in accordance with Section 15.2(a)
above, the parties shall proceed to Closing on the terms and conditions
set forth in this Agreement, there shall be no adjustment as a result
of such Casualty Event to the Initial Sumitomo Payment, the Second
Sumitomo Payment or other consideration payable to Sumitomo at Closing,
all insurance proceeds previously received shall be paid by Sumitomo or
the applicable Current Owner to, and all applicable insurance policies
shall be assigned by Sumitomo or the applicable Current Owner to, the
Partnership or applicable SPE Owner as provided above, and SLR shall
pay the deductible (if any) on or under the applicable insurance policy
or policies.
15.3 Dispute Resolution. If any party disputes the Restoration Costs
after a Casualty Event, the disputing party shall give notice to the other party
within 15 days after the occurrence of the Casualty Event. In such event, if the
parties are unable to resolve such dispute within 15 days, the parties shall
submit the dispute to the Casualty Consultant who shall issue a written decision
as promptly as possible; and the parties shall abide by the decision of the
Casualty Consultant (which shall be conclusive and binding).
15.4 Adjournment of Closing Date. The Closing Date shall be adjourned
automatically to allow the parties the periods of time specified for the
exercise of rights under Sections 15.2 and 15.3, but in no event beyond December
31, 2003, time being of the essence. The parties' failure to exercise their
rights under Section 15.2 on or before December 31, 2003 shall be deemed a
failure of a Closing condition.
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15.5 Waiver. This Article 15 shall constitute an express waiver by all
parties of the provisions of any law apportioning the risk of loss under
contracts for the sale or purchase of real property.
15.6 Condemnation. In the event that prior to Closing, Sumitomo or any
Current Owner receives official notice by a Government Entity of a Condemnation
(or a notice from a Government Entity threatening such action) with respect to
any Property, this Agreement shall not terminate in whole or in part and there
shall be no adjustment to the Initial Sumitomo Payment, Second Sumitomo Payment
or other consideration to be received by Sumitomo at Closing, but SLR shall
cause the Current Owner to assign to Xxxxx at Closing (by an assignment in form
reasonably satisfactory to counsel for Xxxxx) all of the Current Owner's right,
title and interest (if any) in and to any awards in Condemnation or any sums
paid or payable thereunder.
ARTICLE 16. APPORTIONMENTS.
16.1 Apportionments of Certain Items at Closing. The following shall be
apportioned and adjusted between Sumitomo, the Current Owners, the Partnership
and the SPE Owners, as applicable, as of midnight the day preceding each Closing
Date (with respect to the applicable Properties) and shall constitute
adjustments to the Initial Sumitomo Payment or Second Sumitomo Payment as
applicable:
(a) real property taxes and assessments by any Government
Entity (including any business improvement district assessments or
fees);
(b) all other items of revenue (other than Rent) and expense
and expenditures with respect to the applicable Properties (other than
Tenant Expense Recoveries, amounts due under Service Contracts and
Construction Agreements which the Partnership has not elected and is
not required to assume in accordance with Section 9.3 hereof and as
otherwise provided in Article 9 and Section 16.9 hereof);
(c) Rent (other than Tenant Expense Recoveries) received by
the applicable Current Owner prior to Closing from Tenants under
Leases; and
(d) Tenant Expense Recoveries as provided in Section 16.3
below.
16.2 Utilities. At the Closing, if permitted by applicable Utility
companies, the Current Owners shall assign to the applicable SPE Owner all
deposits or escrows, if any, held for the Current Owner's account at or by any
Utility company in connection with Utility services furnished to the Properties;
and the Partnership shall pay SLR or the applicable Current Owner (or credit to
the Initial Sumitomo Payment or Second Sumitomo Payment, as applicable), at the
Closing for the amount of the deposits or escrows so assigned. If a transfer of
such Utility service is permitted, prior to the Closing Date, SLR shall notify
(or shall cause the applicable Current Owner to notify) all such Utility
companies in writing (with copies to Xxxxx) of the applicable transfer of
service. The Current Owners shall arrange for the applicable Utility companies
to take meter readings on the applicable Closing Date, and SLR and/or the
Current Owners shall be solely responsible for paying all utility usage shown by
such meter readings.
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16.3 Tenant Expense Recoveries. SLR will prepare a reconciliation as of
midnight the day preceding each Closing Date of the amounts of all xxxxxxxx and
charges for operating expense escalations and tax escalations (collectively,
"Tenant Expense Recoveries") under the Leases. If more amounts have been
incurred for Tenant Expense Recoveries than have been collected from Tenants for
Tenant Expense Recoveries, the Partnership will pay such difference to SLR at
such time as the Partnership has recovered such amounts from the Tenants. If
more amounts have been collected from Tenants for Tenant Expense Recoveries than
have been incurred for Tenant Expense Recoveries, SLR will pay to the
Partnership at Closing such excess collected amount. Notwithstanding the
foregoing, the parties agree that Partnership's obligations under this Section
16.3 shall terminate 180 days after the Closing Date. This Section 16.3 is only
intended to cover amounts payable by Tenants with respect to operating expenses
and taxes. All other items of taxes, expenses and expenditures are covered by
Section 16.1.
16.4 Closing Statement; Payment of Estimated Prorations. The estimated
Closing apportionments contemplated by Sections 16.1, 16.2 and 16.3 above shall
be set forth on a closing statement to be prepared by SLR and submitted to the
Partnership for its approval (which approval shall not be unreasonably withheld,
delayed or conditioned) at least three (3) Business Days prior to the Closing
Date (the "Closing Statement"). The Closing Statement, once agreed upon, shall
be signed by SLR, the applicable Current Owners, the Partnership and the
applicable SPE Owners and delivered in accordance with Article 5 hereof. The
estimated Closing apportionments shall be paid at Closing by the Partnership to
SLR (if the estimated apportionments result in a net credit to SLR) or by SLR
to the Partnership (if the estimated apportionments result in a net credit to
the Partnership).
16.5 Post-Closing Apportionments. If any item covered by this Article
cannot be apportioned because the same has not been (or cannot be) fully
ascertained on the Closing Date, or if any error has been made with respect to
any apportionment, such item shall be apportioned (or corrected, as applicable)
as soon as the same is fully ascertained. Notwithstanding the foregoing, the
parties agree that their respective rights to make or correct apportionments
hereunder shall terminate 180 days after the Closing Date.
16.6 Tax Protests. After the date of this Agreement, SLR shall not
institute, withdraw, settle, or otherwise compromise any protest or reduction
proceeding affecting real estate taxes or other charges of any Government Entity
assessed against any Property, or enter into any agreement with any Government
Entity to increase the assessed value of any Property in tax years after the
2002/2003 tax year (and shall not permit the Current Owners to do so) without
the Partnership's prior written consent (which consent shall not be unreasonably
withheld or delayed). Real estate tax refunds and credits received after the
Closing which are attributable to the fiscal tax year during which the Closing
Date occurs shall be apportioned between SLR and the Partnership, after
deducting the Fees-And-Costs of collection thereof, unless and to the extent the
same are payable to Tenants under Leases. (Refunds or credits for prior years
shall be payable to SLR, after deducting the fees and costs of collection
thereof unless and to the extent the same are payable to Tenants under Leases.)
SLR agrees to cooperate reasonably (at no cost or expense to SLR) with the
Partnership and/or the SPE Owners in connection with any protest or reduction
proceeding filed by the Partnership and/or the SPE Owners for the year in which
the Closing occurs (or prior years).
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16.7 Apportionment of Rent Received Post-Closing. If any Tenant is in
arrears as of the Closing Date in the payment of Rent, payments received from
such Tenant after the Closing shall be applied in the following order of
priority:
(a) first, to Rent due for the month in which the Closing
occurs;
(b) second, to Rent due for the month preceding the month in
which the Closing occurs;
(c) third, to Rent due for any month(s) following the month in
which the Closing occurs with respect to which Rent is due at the time
of receipt; and
(d) fourth, to Rent due for the period prior to the month
preceding the month in which the Closing occurs.
If any payments from a Tenant received by SLR (or any Current Owner) or
the Partnership (or SPE Owner) after the Closing are payable to the other party
by reason of this Section, the appropriate sum (less a pro rata share of
Fees-And-Costs for collection thereof, based on the percentage collected for the
other party) shall be promptly paid to the other party. After the Closing, the
Partnership (or SPE Owner) shall use commercially reasonable efforts to collect
arrearages from Tenants for periods prior to the Closing Date. The Partnership
(or SPE Owner) shall commence Legal Proceedings (to the extent not commenced by
or on behalf of Sumitomo, any Current Owner or their Affiliates prior to
Closing) against Tenants on behalf of the Current Owners to recover amounts in
excess of $25,000 owed by any Tenant (which are more than one hundred eighty
days past due) under the applicable Lease with respect to periods or events
occurring prior to the Closing Date, but the Partnership (or SPE Owner) shall
have no obligation to evict such Tenants or commence any Legal Proceeding which
may result in any eviction of such Tenants or otherwise terminate Leases. Each
of SLR (or the Current Owner), on the one hand and the Partnership (or SPE
Owner), on the other hand shall pay a pro rata share of the Fees-and-Costs of
each such Legal Proceeding, based upon the portion of the total rents collected
in such Legal Proceeding by or on behalf of such party which are due to the
Partnership (or SPE Owner) or SLR (or the Current Owner) respectively. The
Partnership shall furnish to SLR upon request copies of papers served by the
Partnership (or SPE Owner) or the respective Tenant in any Legal Proceeding for
amounts due from such Tenant prior to the Closing Date.
16.8 Post-Closing Payments. If Xxxxx; the Partnership (on its own
behalf or on behalf of any SPE Owner), any Current Owner or Sumitomo owes any
other party any money under this Article 16 (whether at the Closing or
thereafter), the party owing shall pay the other party such money as promptly as
possible after the amount is determined.
16.9 Amounts Due under Property Management Agreements, Leasing Agent
Agreements, Brokerage Commission Agreements and Construction Agreements; Tenant
Improvement Allowances. Notwithstanding Section 16.1 hereof: (a) SLR shall be
responsible to pay all amounts due through the date of termination (and
otherwise in connection with the termination) of property management agreements;
(b) each of SLR and the Partnership shall be required to pay all amounts due
under Leasing Agent Agreements and Brokerage Commission Agreements with respect
to Leases executed prior to the date hereof which are designated as
61
such party's responsibility in Schedule "18"; (c) each of SLR and the
Partnership shall be responsible for paying the Tenant improvement allowances
with respect to Leases executed prior to the date hereof which are designated as
such party's responsibility in Schedule "22"; (d) the Partnership shall be
responsible for paying all brokerage commissions, Tenant improvement allowances,
legal fees incurred in connection with the negotiation of, and any other costs
incurred by Sumitomo or the Current Owner (as landlord) relating to, Leases
executed after the date hereof pursuant to Section 17.1(a) hereof and SLR shall
be entitled to reimbursement for the foregoing amounts at Closing to the extent
paid by Sumitomo or the Current Owner prior to Closing; and (e) each of SLR and
the Partnership shall be responsible for paying amounts due under Construction
Agreements which are designated as such party's responsibility in Schedule "21"
hereof.
16.10 Survival. This Article 16, and all rights and duties of the
parties hereunder, shall survive the Closing.
ARTICLE 17. CERTAIN COVENANTS
17.1 Pre-Closing Negative Covenants. From the date hereof until the
Closing Date (or if earlier, a termination of Sumitomo's obligations under the
Agreement) Sumitomo agrees that it shall not take any of the following actions
(or permit the Current Owners to do so), provided that neither Xxxxx nor the
Partnership is in material breach of its obligations under this Agreement:
(a) without Xxxxx' prior written consent (which consent shall
not be unreasonably withheld or delayed) enter into any Lease, or grant
any right to renew, expand or extend any Lease, or materially amend,
materially modify or terminate (except in the event of default by
Tenant) any Lease or release or discharge any Tenant. Sumitomo shall
request Xxxxx' consent prior to entering into any final letter of
intent or final term sheet with any proposed Tenant for any such
transaction (which request shall be accompanied by any such letter of
intent or term sheet as well as all financial information obtained by
SLR with respect to such Tenant). Xxxxx shall respond to each request
for consent within five days after receipt of such request so long as
the terms in the letter of intent and/or term sheet comply with the
standard form lease and leasing guidelines (the "Form Lease and
Guidelines") to be jointly developed by SLR and Xxxxx promptly after
the execution of this Agreement, which Form Lease and Guidelines shall
be acceptable to each party in its sole discretion, If Xxxxx objects to
the proposed transaction it shall notify SLR of the reasons for its
objection within such five day period. If Xxxxx fails to respond as
provided in the preceding sentence within such five day period, Xxxxx'
consent shall be deemed given. If Xxxxx consents to any such
transaction, such consent shall be subject to review and approval of
final documentation, and SLR will provide Xxxxx with copies of the
applicable Lease documents as negotiations proceed. SLR will submit the
final Lease documents evidencing the transaction as well all Tenant
financial information obtained by SLR to Xxxxx for its consent, which
will not be unreasonably withheld provided there are no material
changes to the transaction as originally presented to Xxxxx for its
consent as described above. Xxxxx shall respond to SLR's request for
final consent within five days. If Xxxxx objects to the proposed
transaction it shall notify SLR of the reasons for its objection within
such five day period. If Xxxxx fails to respond as provided in the
preceding sentence within such five day
62
period, Xxxxx' consent shall be deemed given. Each of SLR and Xxxxx
shall appoint (and promptly notify the other party in writing of such
appointment) a representative who shall be responsible for coordinating
the process described in this Section 17.1(a) on behalf of its
organization. Notwithstanding anything to the contrary in this Section,
the deadline for Xxxxx to respond to requests for approval of all new
Leases delivered to Xxxxx prior to the date hereof shall be Friday,
April 4, 2003. In the event that a proposed Lease transaction described
in the first sentence of this subsection (a) does not comply with the
Form Lease and Guidelines: (i) the procedure and time periods for
consent shall be the same as provided in this subsection (a) (and if
consent is not granted or withheld within such time periods it shall be
deemed given); (ii) Xxxxx may grant or deny its consent to such
transaction in its sole discretion; and (iii) if Xxxxx rejects any such
transaction, SLR may nevertheless proceed with such transaction (or
cause the applicable Current Owner to do so) provided that SLR pays all
brokerage commissions, Tenant improvement allowances, legal fees
incurred in connection with the negotiation of, and any other costs
incurred by Sumitomo or the Current Owner (as landlord) relating to,
such transaction. Xxxxx and Sumitomo agree to work together to update
the Form Lease and Guidelines from time to time to reflect changes in
the leasing market;
(b) consent to any zoning changes, or sell, transfer, assign,
dispose of, or consent to the utilization of, any Development Rights,
if any, relating to any Property;
(c) place any Encumbrances on any Property, other than: (i)
Permitted Encumbrances; (ii) Encumbrances consented to by Xxxxx in
writing; (iii) Encumbrances which can and shall be satisfied by SLR at
Closing; and (iv) liens which, with an indemnity from SLR, the Title
Insurer is willing to omit from the title insurance policies as an
exception to coverage;
(d) make any improvement, alteration or addition to any
building or improvements on any Property other than pursuant to
existing Construction Agreements set forth on Schedule "15", unless
such improvements, alterations or additions are required (in SLR's
reasonable judgment) to preserve the Property, without Hines' prior
written consent; or
(e) fail to operate and maintain any Property or the buildings
thereon in accordance with SLR's customary practices.
17.2 Other Covenants. From the date hereof until the Closing Date (or
if earlier, a termination of Sumitomo's obligations under this Agreement)
provided Hines and the Partnership are not in material breach of any of their
respective obligations under this Agreement, SLR agrees that it shall (or shall
cause Sumitomo and/or the Current Owners, as applicable, to):
(a) provide Hines with a copy of any notice of default
received from or sent to any Tenant;
(b) pay all real estate taxes and assessments which may become
liens upon the Properties, subject to the Current Owners' right to
contest such taxes or assessments in
63
good faith, provided that such contest does not jeopardize the Current
Owners' title to the Properties;
(c) keep in force the amounts of casualty insurance currently
in effect with respect to the Properties (as set forth on Schedule
"4"), to the extent available at commercially reasonable rates;
(d) notify Hines of the commencement of any Legal Proceeding
relating to Sumitomo (to the extent relating to any Property), the
Current Owners, or any Property;
(e) make those capital repairs contemplated in Construction
Agreements set forth on Schedule "15";
(f) use commercially reasonable efforts to obtain the SNDAs
and Tenant Estoppels from Tenants as described in Section 7.1, but SLR
shall have no liability hereunder to the Partnership or to the lender
in the event SLR fails to obtain the required agreements or estoppels;
and
(g) qualify SLRI to conduct business in the State of New York,
if such qualification is required in order for SLRI to perform its
obligations hereunder or under the Closing Instruments.
17.3 INSPECTIONS OF PROPERTIES AND DOCUMENTS.
(a) Hines shall be entitled to inspect all Property Documents
and other information in Sumitomo's (or the Current Owners') possession
which relate to the ownership and operation of the Properties, as Hines
may reasonably request to confirm, verify or inquire into matters
covered by or represented by SLR in this Agreement and/or the Closing
Instruments. Hines, at Hines' sole cost, shall also have the right to
make such inspections, investigations and tests of the physical
condition of the Properties (subject to the rights of Tenants under
Leases) as Hines may elect to make or obtain; provided, however, that
(i) Hines shall not perform invasive testing in any Tenant premises
without SLR's consent (which may be granted or withheld in SLR's
reasonable discretion) and without the consent of the applicable
Tenant, and (ii) Hines shall work with SLR to schedule such
inspections, investigations and tests so as not to disturb or interfere
with the operations of Tenants. SLR shall provide reasonable access to
the Properties to Xxxxx and Xxxxx' employees, consultants and agents,
and, within seven days after request from Hines, SLR shall deliver to
Hines any documents or instruments of the type described above which
are in Sumitomo's or the Current Owners' possession. Upon request by
Hines, SLR shall arrange interviews with Tenants to permit Hines to
make reasonable inquiries of Tenants. It is understood and agreed this
Section 17.3 does not constitute a free look" or similar right and that
the results of the above described due diligence shall not give Hines
the right to terminate this Agreement, subject to the other provisions
of this Agreement.
(b) Hines agrees to indemnify Sumitomo and its Affiliates
from and against all Claims which Sumitomo and its Affiliates may
suffer, incur, or pay out by reason of any physical damage to the
Property or injury to persons caused by the acts or omissions
64
of any of Hines' officers, employees, consultants or other agents in
making any reviews, interviews, inspections or tests relating to the
Properties pursuant to Section 17.3(a).
17.4 Survival. Section 17.3 shall survive the Closings and any
termination of this Agreement. Sections 17.1 (other than Section 17.1(a) and
(b)) and 17.2 shall not survive, with respect to any Property, the applicable
Closing of such Property or termination of this Agreement with respect to such
Property.
ARTICLE 18. REMOVAL OF TITLE DEFECTS; SURVEYS; VIOLATIONS.
18.1 Definition. "Title Defect" means any Encumbrance recorded against,
or otherwise affecting, any Property which is not a Permitted Encumbrance.
18.2 Notice and Cure of Title Defects. On or before the Closing Date,
Hines may give SLR notice of any Title Defect. If Hines gives notice to SLR of
any such Title Defect, SLR may adjourn the Closing for a period or periods not
exceeding 30 days in the aggregate in order to remove the Title Defect(s)
specified in Hines' notice. Upon the expiration of such period(s) (or on the
Closing Date if sooner and if SLR does not so adjourn the Closing), if SLR is
unable or does not elect (subject to Section 8.6 hereof) to satisfy the
conditions in Section 7.1(d) of this Agreement, Hines may accept such title as
SLR is then able to provide (without any adjustment in the Agreed Valuations);
or Hines shall terminate this Agreement with respect to the Affected Property by
notice to SLR, without further liability to either party.
18.3 Discharge of Liens. SLR agrees, without further notice from Hines,
to pay and discharge at the Closing all Mortgages, including the Existing
Mortgage, judgments against Sumitomo and the Current Owners which constitute
liens against the Property, and liens against the Property for non-payment of
Sumitomo's and the Current Owners' Federal income tax, and, subject to Section
8.6 hereof, to remove and discharge of record, by payment, bonding or otherwise
all mechanics', materialmen's and any other liens of record which may be
satisfied by payment of money only and which are not Permitted Encumbrances (or
in the case of liens which are not Mortgages, to provide the Title Insurer with
an indemnity sufficient to induce the Title Insurer to insure title to the
Property free and clear of such liens).
18.4 Surveys. The Partnership shall obtain, at the Partnership's
expense, all surveys of the Properties which the Partnership requires in
connection with the transactions described in this Agreement.
18.5 Violations. If Hines gives notice to SLR on or prior to the
Closing Date of any Violations noted or noticed in writing against or with
respect to any Property prior to the date of this Agreement that are not set
forth in the title insurance commitments delivered to the Partnership and SLR
prior to the date of this Agreement, SLR shall cure, correct, or eliminate all
such Violations at SLR's expense (or pay to the Partnership at the Closing the
cost of curing the same), subject to Section 8.6 hereof. For the avoidance of
doubt, SLR shall have no obligation to cure: (a) any Violations which are
disclosed in the title commitments referred to in the previous sentence, (b) any
Violations filed against the Property after the date hereof, or (c) any
violations of law which relate to compliance of the Properties with zoning
requirements; however, in the event any such Violations described in (a), (b)
and (c) above shall occur, Xxxxx
65
shall have the right to terminate this Agreement with respect to the Property or
Properties affected thereby if the aggregate cost to cure such violations
exceeds $250,000.
ARTICLE 19. TRAINING OF SUMITOMO PERSONNEL.
From time to time, as requested by Sumitomo, Hines will provide
access in Houston to employees of Hines and to the Partnership's Management Team
to provide appropriate training opportunities for Sumitomo's (and its
Affiliates') personnel with respect to the operations of the Fund, its
investment strategy, the marketing of Shares and other topics relating to the
Fund and its business that are of interest and value to employees of Sumitomo
and its Affiliates. A reasonable number of Sumitomo's (and its Affiliates')
employees will seek this training at any time, and such employees will be
compensated by Sumitomo or its Affiliates during such training period. Hines
shall not be required to bear any costs or expenses with respect to such
personnel and Hines may require Sumitomo to demonstrate that it has the
appropriate insurance to protect Hines from any injury or sickness of or claims
made by such personnel. Sumitomo shall indemnify and hold harmless Hines from
any and all costs, liabilities and claims made by such personnel unless the same
results from the gross negligence or willful misconduct of Hines.
ARTICLE 20. NOTICES.
All notices, consents or other communications under this Agreement
must be in writing and addressed to each party at its respective Notice Address
set forth on Schedule "16" (or at any other address which the respective parties
may designate by notice given to the other party from time to time). Any notice
required by this Agreement to be given or made within a specified period of
time, on or before a date certain, shall be deemed given or made if sent by fax
with confirmed answer back received, or by registered or certified mail (return
receipt requested and postage and registry fees prepaid) or by commercial
express or courier service. A notice sent by registered or certified mail shall
be deemed given on the date of receipt (or attempted delivery if refused)
indicated on the return receipt. All other notices shall be deemed given when
actually received. A notice may be given by a party or by its legal counsel.
ARTICLE 21. NO ASSIGNMENT.
None of Hines, the Partnership nor SLR shall have the right to.
Transfer this Agreement or any rights or obligations under this Agreement
except with the prior written consent of the other party, which consent may be
granted or withheld in the other party's sole discretion.
ARTICLE 22. BROKERS.
22.1 Payment. Hines shall pay all fees and commissions due or payable
to Xxxxxx Xxxxxxx in connection with the transactions contemplated by this
Agreement and the Closing Instruments. SLR shall pay all fees and commissions,
if any, due to Xxxxxxx Xxxxxxxx, in connection with the transactions
contemplated by this Agreement and the Closing Instruments (although SLR
believes that no such fees or commissions are or should be due to Xx. Xxxxxxxx).
66
22.2 Representations. Hines represents and warrants to SLR, and SLR
represents and warrants to Hines, that each knows of no broker, advisor, or
finder who has claimed or who has the right to claim any fee, commission or
other similar compensation in connection with the transactions contemplated by
this Agreement or the Closing Instruments, except as set forth in Section 22.1,
and that each has taken no actions which would form the basis for such a claim.
22.3 Indemnities. Hines shall indemnify, hold harmless and defend the
Sumitomo Indemnitees against all Claims arising out of any breach of Hines'
obligations or representation in Sections 22.1 and 22.2. SLR shall indemnify,
hold harmless and defend the Hines Indemnitees against all Claims arising out of
any breach of SLR's obligations or representations in Sections 22.1 and 22.2.
22.4 Survival. This Article shall survive the Closings (or, if the
Closings do not occur, the termination of this Agreement).
ARTICLE 23. CONFIDENTIALITY.
23.1 Pre-Closing. Prior to the Closing, the parties hereto agree not
to make public announcements regarding this Agreement or the transactions
contemplated under this Agreement except on a joint basis, and, except to the
extent the parties agree that a joint public announcement is desirable, each of
the parties agrees to keep confidential the terms of this Agreement and the
Closing Instruments and all Property and other transaction-related information
which Hines or SLR has provided (or will provide) to the other in connection
with this Agreement and the transactions contemplated hereby (to the extent such
information is not publicly available and is not required to be disclosed under
applicable laws or court order) (collectively, the "Due Diligence Information").
The parties acknowledge that certain information which has been provided to them
is required under the terms of Leases and other Property Documents to be treated
in a confidential manner, and agree not to make any unauthorized disclosure of
such information which could result in liability to Sumitomo and its Affiliates.
23.2 Post-Closing. After the First Closing, each of the parties may
make public announcements without the consent or participation of the other
party; provided, however, that no such public announcements shall describe the
business terms of this Agreement or the Closing Instruments or the contents of
any Due Diligence Information which relates to the business, operations or
financial position of Sumitomo or its Affiliates (but not the Properties) and,
for a period of one year after the applicable Closing, before any public
announcement is made by any party it shall furnish a copy thereof to the other
parties and give the other parties a reasonable period of time to comment on
and/or suggest changes in the same.
23.3 Certain Disclosures Permitted. Notwithstanding Sections 23.1 and
23.2, each of the parties may make disclosures regarding these matters to: (a)
their respective Affiliates, partners, members, officers, directors, and
employees (on a need to know basis); (b) financial institutions, but only in
connection with the proposed financing of the Properties or the Fund; (c)
proposed Third Party Investors; (d) such other parties as SLR or Hines deems
necessary in order to comply with laws; (e) Xxxxxx Xxxxxxx; (f) Tenants
(provided, however, that Hines shall only make disclosure to Tenants during the
interviews contemplated by Section 17.3, such
67
disclosure by Hines shall be limited to matters necessary to determine the
status of the tenancy, satisfaction with the Property, and related matters, not
involve any disclosure relating to other Tenants' leases, and no party shall
disclose pricing or other specific financial terms of the transactions under
this Agreement with Tenants); and (g) agents, partners, shareholders, attorneys,
and consultants of any of the foregoing whose involvement is necessary or
appropriate for such matters. Notwithstanding the foregoing, the parties shall
not disclose any Due Diligence Information which relates to the business,
operations (other than the Properties) or financial position of Sumitomo or its
Affiliates except to the extent required by applicable laws or court order to do
so (and in such event, to the extent time and law permits, such party shall give
SLR advance notice of disclosure and an opportunity to contest the need for such
disclosure). Prior to making disclosure to any Person described in the preceding
sentence, the disclosing party shall notify such Person of the confidential
nature of such information and request that such Person keep such information
confidential.
23.4 Existing Confidentiality Agreement; Survival. This Article 23 is
intended to supercede that certain Confidentiality Agreement dated October
28, 2002 between Hines, SLR and Mitsui Fudosan America, which shall be of no
further force or effect. This Article 23 shall survive the Closings and the
termination of this Agreement.
ARTICLE 24. MISCELLANEOUS.
24.1 Further Assurances. Each of the parties shall take such actions
and sign and deliver such other instruments and documents as may be reasonable,
necessary or appropriate to effectuate the transactions contemplated under this
Agreement; provided, however, that the taking of such acts or the execution of
such documents will not result in material cost or liability to the respective
party which is not otherwise required under this Agreement.
24.2 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York (without regard to principles
of conflicts of law), provided however, that the laws of the District of
Columbia shall govern to the extent required with respect to the conveyance of
0000 Xxxxxxxxxx Xxxxxx.
24.3 Amendments. This Agreement shall not be modified, waived, or
amended except by written agreement executed by the Partnership, SLR and Hines.
24.4 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, and any other documents, agreements or instruments which are
specifically stated to form a part of this Agreement or to relate thereto,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings of the
parties relating thereto.
24.5 No Waiver. Except as expressly provided in this Agreement, no
delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof or as a waiver of any
other right, power or privilege hereunder, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise hereunder. Except as otherwise provided in this Agreement, the
rights and remedies of
68
each party under this Agreement are cumulative and are not exclusive of any
rights or remedies which the party may otherwise have at law or in equity.
24.6 Counterparts. This Agreement may be executed (a) in counterparts,
a complete set of which together shall constitute an original and (b) in
duplicates, each of which shall constitute an original. Copies of this Agreement
showing the signatures of the respective parties, whether produced by
photographic, digital, computer, or other reproduction, may be used for all
purposes as originals.
24.7 Successors and Assigns. This Agreement (and all terms thereof,
whether so expressed or not), shall be binding upon the respective successors,
permitted assigns and legal representatives of the parties and shall inure to
the benefit of and be enforceable by the parties and their respective
successors, permitted assigns and legal representatives.
24.8 Jurisdiction; Venue. Each party (and each permitted assignee of
any party) irrevocably submits to the jurisdiction of the courts of (and service
of process in) the State of New York and agrees that any action or proceeding
arising out of or relating to this Agreement may be brought and/or defended in
such courts.
24.9 Invalidity of Certain Provisions. If any term, covenant, condition
or provision of this Agreement is determined by a final judgment to be invalid
or unenforceable, the remaining terms, covenants, conditions and provisions of
this agreement shall not be affected thereby; and each other term, covenant,
condition and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
24.10 No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended: (a) to confer on any Person -- other than the parties
hereto -- any rights, obligations, liabilities, or remedies; or (b) to waive any
claim or right of any party hereto against any Person who is not a party hereto.
24.11 Construction. This Agreement shall be construed without regard to
any presumption requiring construction against the party drafting this
Agreement. The captions of this instrument are for convenience and do not define
or limit the provisions of this Agreement.
24.12 No Personal Liability. It is expressly understood and agreed,
anything herein to the contrary notwithstanding, that in no event will the
members, partners, shareholders, directors, officers, agents, employees or
managers, of any party have any personal liability for the obligations of such
party under this Agreement or any of the Closing Instruments.
24.13 Clarification of Use of Defined Terms Sumitomo and SLR. The
defined terms Sumitomo and SLR are used interchangeably throughout this
document. Each of them agrees that a reference to one of them will also include
a reference to the other of them to the extent necessary for each of them to
perform its obligations under this Agreement.
24.14 Prevailing Party's Attorney's Fees. In connection with any Legal
Proceeding initiated by a party hereto against any other party hereto and
arising out of this Agreement or any Closing Instrument, the prevailing party
shall be entitled to recover the Fees-and-Costs actually
69
incurred in connection with such Legal Proceeding from the other party or
parties. The provisions of this section shall survive the Closing or the
termination of this Agreement.
24.15 Termination; Survival.
(a) In the event that any party elects to terminate this
Agreement as permitted hereunder, this Agreement shall terminate with
respect to the applicable Properties effective as of the date that such
party's notice is given, and neither party shall have any further
rights, obligations or liabilities hereunder with respect to the
applicable Properties except under the following Sections of this
Agreement, which shall be deemed to survive any termination of this
Agreement (as a whole or with respect to one or more Properties) for a
period of six years: Sections 4.6, 8.5(b), 13.1, 13.5, 17.3(b), 22.3,
24.2, 24.7, 24.8, 24.9, 24.10, 24.11, 24.12, 24.13, 24.14 and 24.15 and
Article 23, For the avoidance of doubt, in the event this Agreement is
terminated as to less than all of the Properties as permitted herein,
this Agreement shall remain in full force and effect in all respects as
to each Property which is not the subject of a termination hereunder.
(b) Notwithstanding Section 13.2(c) above, the following
provisions of this Agreement shall survive the Closing of the
applicable Property for a period of six years: Sections 3.1(d), 4.4(d),
4.5, 4.6, 13.3, 13.4, 13.5, 14.1, 17.3(b) and 22.3, and Articles 19, 23
(other than Section 23.l), and 24 (other than Section 24.17).
24.16 Cooperation. After the Second Closing, the Partnership agrees to
cooperate with SLR, its Affiliates and advisors (at no material expense to the
Partnership) and provide SLR, its Affiliates and advisors with access to records
relating to the LePatner and Associates Lease to enable SLR to defend the
LePatner litigation after Closing.
24.17 District of Columbia Disclosures. SLR (on behalf of the Current
Owners) indicates that the characteristic of the soil on the premises hereby
conveyed is Urban land as described by the Soil Conservation Service of the
United States Department of Agriculture in the Soil Survey of the District of
Columbia published in 1976 and as shown on the Soil Maps of the District of
Columbia at the back of that publication. For further information, the
Partnership can contact a soil testing laboratory, the District of Columbia
Department of Environmental Services or the Soil Conservation Service of the
Department of Agriculture. This Section is intended solely to comply with D.C.
Code Xxx. Section 42-608 (2003) and (to the maximum extent permitted by
applicable law) neither SLR nor any Current Owner shall be deemed to have made
any representation with respect to the subject matter of this Section or to have
any liability hereunder to Xxxxx or the Partnership with respect to any
inaccuracy, untruth or incompleteness in this Section.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Hines, the Partnership and SLR have executed and
delivered this Agreement as of the date first set forth above.
XXXXX INTERESTS LIMITED PARTNERSHIP
By: Xxxxx Holdings, Inc.,
its general partner
By: /s/ XXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxx X. Xxxxx
President
XXXXX US CORE OFFICE PROPERTIES LP
By: Xxxxx US Core Office Capital LLC,
its general partner
By: Xxxxx Interests Limited Partnership,
its sole member
By: Xxxxx Holdings, Inc.,
its general partner
By: /s/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx
President
SUMITOMO LIFE REALTY (N.Y.), INC.
By: /s/ XXXXX XXXXXXXX
-----------------------------------------
Xxxxx Xxxxxxxx
President
The following party signs below to evidence its agreement with the
terms of, and to agree to be bound by, and to perform its obligations under,
this Amended and Restated Master Agreement.
SLR INVESTMENTS INC.
By: /s/ XXXXX XXXXXXXX
-------------------------
Xxxxx Xxxxxxxx
President
AMENDMENT TO AMENDED AND
RESTATED MASTER AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED MASTER AGREEMENT (this
"Amendment") dated as of July 22, 2003 between XXXXX INTERESTS LIMITED
PARTNERSHIP, a Delaware limited partnership ("Xxxxx") and XXXXX US CORE OFFICE
PROPERTIES LP, a Delaware limited partnership (the "Partnership"), each having
and address at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxxxx, Xxxxx 00000-0000, and SUMITOMO
LIFE REALTY (N.Y.), INC., a New York corporation ("SLR"), having an address at
Manhattan Tower, 000 Xxxx 00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
INTRODUCTORY STATEMENT
Hines, the Partnership and SLR are parties to that certain Amended and
Restated Master Agreement dated as of March 31, 2003, as amended by that certain
letter agreement dated June 26, 2003 between Hines, the Partnership and SLR
(collectively, the "Master Agreement"). Words and phrases used but not defined
in this Amendment shall have the meanings set forth in the Master Agreement.
The Master Agreement provides that at the First Closing, Sumitomo will
receive Trust shares with a value equal to 19.9% of the Initial Fund Equity plus
cash, and that Hines will contribute cash to the Fund equal to the excess of
80.1% of the Initial Fund Equity over Third Party Equity contributed at the
First closing.
The First Closing is scheduled to occur on July 31, 2003. Although
Hines is negotiating a letter of intent (the "LOI") with General Motors Asset
Management ("GMAM") (the most current draft of which is attached hereto as
Exhibit "5") concerning a possible equity investment to be made in the
Properties by General Motors Pension Trust or any fund consisting of General
Motors Pension Trust and other U.S. pension plans which fund is advised by GMAM
(collectively, the "Potential Investor"), the terms of such an investment have
not yet been finalized by Xxxxx or approved by SLR. The parties intend to work
in good faith (without obligation) to revise the Fund structure (such revised
structure, the "Proposed Fund") to permit investment in the Proposed Fund by the
Potential Investor by August 5, 2003, as more particularly described in the LOI;
however, the parties acknowledge that Hines may not be able to reach a final
agreement with the Potential Investor by August 5, 2003, or the terms of such
agreement may not be acceptable to SLR.
In order to complete the First Closing by August 5, 2003, Hines, the
Partnership and SLR have agreed to amend the Master Agreement as set forth below
so that in the event Hines does not reach an agreement with the Potential
Investor, or the agreement that is reached is not acceptable to SLR (in its sole
discretion), or the parties cannot agree upon further amendments to the Master
Agreement which are required by Xxxxx or SLR in its sole discretion in
connection with the final agreement with the
Potential Investor, at the First Closing: (1) if Hines has not reached a final
agreement with the Potential Investor, the First Closing Properties will be
contributed to the Partnership and Sumitomo will receive Trust shares with a
value equal to 51% of the Initial Fund Equity and cash in an amount equal to the
Agreed Valuations of the First Closing Properties minus the value of such
shares, and Hines will contribute cash to the Fund equal to 49% of the Initial
Fund Equity or (2) if Hines reaches a final agreement with the Potential
Investor which is not acceptable to SLR, or parties cannot agree upon further
amendments to the Master Agreement required by Xxxxx or SLR in its sole
discretion in connection with the final agreement, then Hines, its Affiliate,
the Partnership, or an entity in which Hines and/or its Affiliates are equity
owners (including Potential Investor) will acquire the First Closing Properties
for cash only (and will become obligated to purchase the Second Closing Property
for cash only at the Second Closing), all as more particularly described in this
Amendment.
Hines will continue its efforts to raise equity for the Fund (as the
same may be restructured as provided herein), and the parties hope that by
October 31, 2003, Hines will raise at least $250 million in Third Party Equity
(in addition to any funds that may be raised from the Potential Investor),
although Hines, the Partnership and HREH will remain obligated as set forth
below whether or not Third Party Equity is raised from the Potential Investor or
other sources.
In addition, the parties wish to amend and/or clarify certain other
matters relating to the Master Agreement, as described in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Closing Options.
(a) Hines shall regularly inform SLR as to the status of (and
to the extent appropriate, include SLR and its counsel in) Xxxxx'
negotiations with the Potential Investor, and Xxxxx shall provide SLR with
all drafts of proposed documentation relating to the Potential Investor's
investment in the Proposed Fund. Xxxxx shall have the right, in its sole
discretion, to accept or reject any agreements relating to the terms of an
investment by the Potential Investor. Xxxxx shall notify Sumitomo prior to
the First Closing Date whether Xxxxx has reached a final agreement with the
Potential Investor (and if a deal has been reached, Xxxxx shall provide SLR
with copies of the most recent versions of the transaction documents and
shall advise SLR in such notice whether such documents are in final form).
In the event that Xxxxx reaches an agreement with the Potential Investor
which is acceptable to SLR in its sole discretion, SLR shall so notify
Xxxxx and the Closings shall take place as described in paragraph 2 below
(the "GM Closing", as defined below). (However, if Xxxxx does not deliver
final forms of transaction documents with its notice described above, any
approval of such transaction by SLR shall be subject to its review and
approval of the final transaction documents with respect thereto.) In the
event that Xxxxx reaches an
2
agreement with the Potential Investor which is not acceptable to SLR (in
its sole discretion), or the parties cannot agree upon further amendments
to the Master Agreement required by Xxxxx or SLR in its sole discretion in
connection with such agreement (as described in paragraph 2(a) below) SLR
shall so notify Xxxxx prior to the First Closing Date and Xxxxx, its
Affiliate, the Partnership, or an entity in which Xxxxx and/or its
Affiliates and Potential Investor are equity owners, or a wholly-owned
subsidiary of any of them (each, and "Acquiring Entity") shall purchase the
First Closing Properties on the First Closing Date for cash only, and upon
the exercise of such option Xxxxx shall become obligated to cause another
Acquiring Entity to purchase the Second Closing Property for cash only
(collectively, the "Cash Closing"), all upon the terms described in
subparagraphs (b), (c) and (f) below, and the Master Agreement shall be
deemed modified accordingly. In the event that Xxxxx fails to reach a final
agreement with the Potential Investor it shall so notify SLR, and SLR shall
contribute the First Closing Properties to the Partnership on the First
Closing Date for combination of cash and Shares, and on the Second Closing
Date shall contribute the Second Closing Property to the Partnership for a
combination of cash and Shares, upon the terms described in subparagraphs
(d), (e) and (f) below (the"51-49 Closing"). (For purposes of
clarification, if Xxxxx notifies SLR pursuant to this Section that is has
selected (or is deemed to have selected) the GM Closing and thereafter
Xxxxx is unable to conclude the transaction with Potential Investor or to
obtain SLR's approval of such transaction, Xxxxx shall be permitted to
withdraw its notice and select another Closing Option prior to the First
Closing Date.)
(b) In the event of a Cash Closing, notwithstanding anything
to the contrary in the Master Agreement, the following transactions will
take place. At the First Closing:
(i) Sumitomo shall convey the First Closing
Properties to an Acquiring Entity designated by Xxxxx (which
Acquiring Entity shall be deemed an SPE Owner);
(ii) Sumitomo shall receive cash in an amount equal
to the Agreed Valuations for the First Closing Properties via
Wire Transfer, less $45 million (the "First Post-Closing
Payment"), subject to adjustment under Section 3.1(d) and
Article 16 of the Master Agreement, and Sumitomo shall not
receive Shares;
(iii) the Acquiring Entity shall pay via Wire
Transfer the First Post-Closing Payment to Sumitomo, not later
than December 31, 2003, with interest at a rate per annum
equal to the one-month London Interbank Offered Rate on the
First Closing Date (and adjusted on the first day of each
month thereafter until the date of payment) plus 375 basis
points, calculated form the First Closing Date to the date of
payment, the obligation to pay these amounts shall be
evidenced by a promissory note or other instrument acceptable
to SLR in its sole discretion made by the Acquiring Entity,
its REIT parent company, or a credit-worthy Xxxxx
3
Affiliate in favor of Sumitomo and delivered to SLR at Closing, and HREH shall
guaranty the repayment of all amounts due pursuant to such promissory note or
other instrument under the HREH Guaranty;
(iv) the closing conditions shall be those conditions set forth in
Sections 6.1 and 7.1 of the Master Agreement which apply to the conveyance of
the First Closing Properties for cash and without regard to the formation of the
Fund or any Alternate Fund (as defined below), and the satisfaction of Xxxxx'
and the Partnership's obligations relating to the formation of the Fund shall
not be conditions to closing (without limiting the foregoing, the conditions in
Sections 6.1(c), (d), (f), (i), (j), (m) and (o), and Section 7.1(f), shall not
apply and the conditions in Sections 6.1(a) and (b) shall be deemed to apply to
the Acquiring Entity);
(v) subject to paragraph 17(a) hereof, SLR shall have the rights
(described in the Master Agreement and the Exhibits thereto) to participate in
the management of the Fund or similar rights with respect to any fund or other
investment vehicle developed by Xxxxx and/or the Acquiring Entity with respect
to the First Closing Properties (including the Proposed Fund), whether or not
similar to the Fund (an "Alternate Fund"), and regardless of whether Sumitomo
makes an equity investment in the Fund or Alternate Fund, but in such event the
Fund or Alternate Fund may not use the "Sumsei" or "Sumitomo" names without the
prior written consent of SLR (which may be granted or withheld in SLR's sole
discretion);
(vi) (I) as a condition to Sumitomo's obligation to close, the
Partnership shall assign to the Acquiring Entity (if other than the
Partnership), and the Acquiring Entity shall assume in writing (in form
reasonably acceptable to SLR), all rights, obligations and liabilities of the
Partnership, the Trust and the SPE Owners under the Master Agreement as
applicable to the First Closing Properties and shall make the same
representations and warranties with respect to such Acquiring Entity as Xxxxx,
the Trust and the Partnership have made with respect to themselves in the Master
Agreement (modified as necessary to reflect the organizational structure of the
Acquiring Entity), (II) Xxxxx and the Partnership shall not be relieved of any
of their respective obligations under the Master Agreement, (III) all
indemnities and releases relating to the Fund and the offer and sale of
Interests in Section 4.6 shall be deemed to apply, also, to any Alternate Fund,
and the Acquiring Entity shall have the same rights, obligations and liabilities
thereunder as the Partnership, and such indemnities and releases shall remain in
full force and effect and survive the Closings, and (IV) the Acquiring Entity,
Xxxxx and the Partnership shall exercise their rights and remedies under the
Master Agreement jointly, and the Acquiring Entity shall be liable for its
obligations under Article 13 of the Master Agreement (but shall not be liable
for the obligations thereunder of Xxxxx, the Partnership (to the extent
Acquiring Entity has not assumed the obligations of the
4
Partnership) and/or the Acquiring Entity which acquires the Second
Closing Property), and the limits on liability (and limits on recovery
of damages) in the Master Agreement shall apply on an aggregate basis
to both Acquiring Entities, Xxxxx and the Partnership;
(vii) the Advisory Agreement shall be executed and delivered
with respect to the Fund (or an agreement with the same rights in favor
of SLR shall be executed and delivered with respect to the Alternate
Fund), and SLR shall have the right to market interests in the Fund or
any Alternate Fund in Asia;
(viii) SLR shall have no right to approve the terms of any
financing obtained by the Acquiring Entity (but obtaining financing on
terms satisfactory to Xxxxx in its sole discretion shall be a condition
to the Acquiring Entity's obligation to close);
(ix) SLR shall cause the Current Owner to pay real property
transfer and recordation taxes relating to the conveyance of the First
Closing Properties to the Acquiring Entity in accordance with Section
14.1; and
(x) except as provided herein, the closing shall take place
pursuant to the terms and conditions of the Master Agreement, as
amended hereby.
(c) In the event of a Cash Closing, the Second Closing will occur on
the same terms as those described above, as applicable to the Second Closing
Property, except that:
(i) the Second Closing Date shall be February 2, 2004;
(ii) Xxxxx shall designate another Acquiring Entity to acquire
the Second Closing Property, and at the Second Closing, in
consideration for the conveyance of the Second Closing Property to such
Acquiring Entity Sumitomo shall receive via Wire Transfer, cash in an
amount equal to the Agreed Valuation for the Second Closing Property,
less $25 million (the "Second Post-Closing Payment"), subject to
adjustment under Article 16 of the Master Agreement;
(iii) the Acquiring Entity shall pay via Wire Transfer the
Second Post-Closing Payment to Sumitomo, not later than July 31, 2004,
with interest at a rate per annum equal to the one month London
Interbank Offered Rate on the Second Closing Date (and adjusted on the
first day of each month thereafter until the date of payment) plus 375
basis points, calculated from the Second Closing Date to the date of
payment, the obligation to pay these amounts shall be evidenced by a
promissory note or other instrument satisfactory to SLR in its sole
discretion made by the Acquiring Entity, its REIT parent company, or
credit-worthy Xxxxx
5
Affiliate in favor of Sumitomo and delivered to SLR at Closing, and
HREH shall guaranty the repayment of all amounts due pursuant to such
promissory note or other instrument under the HREH Guaranty;
(iv) Section 3.4, the second, third and last sentences of
Section 3.5, and Sections 4.4(b) and (d) shall not apply to the Second
Closing, the conditions in Sections 6.1(c), (d), (f), (i), (m), and (p)
and Section 7.1(f)) shall not apply to the Second Closing, and the
conditions in Sections 6.1(a) and (b) shall be deemed to apply to the
Acquiring Entity;
(v) (I) as a condition to Sumitomo's obligation to close, the
Partnership shall assign to the Acquiring Entity (if other than the
Partnership), and the Acquiring Entity shall assume in writing (in form
reasonably acceptable to SLR), all rights, obligations and liabilities
of the Partnership, the Trust and the SPE Owners under the Master
Agreement as applicable to the Second Closing Property and shall make
the same representations and warranties with respect to Acquiring
Entity as Xxxxx, the Trust and the Partnership have made with respect
to themselves in the Master Agreement (modified as necessary to reflect
the organizational structure of the Acquiring Entity), (II) Xxxxx and
the Partnership shall not be relieved of any of their respective
obligations under the Master Agreement, (III) the Acquiring Entity
shall have the same rights, obligations and liabilities under Section
4.6 of the Master Agreement as the Partnership, and (IV) the Acquiring
Entity which acquires the First Closing Properties, the Acquiring
Entity which acquires the Second Closing Property, Xxxxx and the
Partnership shall exercise their rights and remedies under the Master
Agreement jointly, and the Acquiring Entity which acquires the Second
Closing Property shall be liable for its obligations under Article 13
of the Master Agreement (but shall not be liable for the obligations of
Xxxxx, the Partnership (to the extent Acquiring Entity has not assumed
the obligations of the Partnership) and/or the other Acquiring Entity
thereunder), and the limits on liability (and limits on recovery of
damages) in the Master Agreement shall apply on an aggregate basis to
both Acquiring Entities, Xxxxx and the Partnership.
(d) In the event of a 51-49 Closing, the following transactions will
take place at the First Closing, Sumitomo will contribute the First Closing
Properties to the Partnership in consideration for Class B Common Shares with a
value equal to 51% of the Initial Fund Equity, and cash in an amount equal to
the Agreed Valuations for the First Closing Properties minus the value of such
Shares. At the First Closing, Xxxxx will or will cause one or more of its
Affiliates to contribute cash to the Trust and/or the Partnership in an amount
equal to 49% of the Initial Fund Equity. The parties acknowledge that Third
Party Equity will not be contributed to the Fund at the First Closing, but that
Xxxxx will continue its efforts to raise Third Party Equity, as described in the
Master Agreement (provided, however, in no event will the failure to raise Third
Party Equity be deemed a breach or default by Xxxxx or the Partnership under the
Master
6
Agreement nor xxxx Xxxxx or the Partnership be subject to any liability as a
result of such failure, but such failure shall not relieve the Partnership from
the obligation to complete the First Closing). It is the parties' hope that
sufficient Third Party Equity will be raised to make the redemptions described
in Section 3.4 of the Master Agreement on or before September 30, 2003.
(e) Unless the Cash Closing or the GM Closing (as defined in paragraph
2(a) below) takes place pursuant to the terms of this Amendment, the Closings
shall take place pursuant to the terms of the Master Agreement, as amended by
this Amendment. The Master Agreement is hereby amended as follows to reflect
the matters described in subparagraph 1(d) above (and except as set forth in
subparagraph 1(d) and this subparagraph 1(e), the 51-49 Closing will take place
pursuant to the terms of the Master Agreement):
(i) In the Introductory Statement, in the fifth paragraph, the
words "July 31, 2003" are hereby deleted and replaced with the words
"October 31, 2003", and in the eleventh paragraph, third line, the
words "19.9% interest in the Fund, not to exceed $25 million" are
hereby deleted and replaced with the words "51% interest in the Fund,
not to exceed $45 million."
(ii) In Section 3.1(a), fifth line, the number "19.9%" is hereby
deleted and replaced with the number "51%".
(iii) In Section 3.1(a), ninth and tenth lines, the words "$25
million, or represent more than 50% of the total Fund equity at any
time" are hereby deleted and replaced with the words "$45 million".
(iv) In Section 3.1(b), fourth line, the words "the excess of (i)
"80.1%" are hereby deleted and replaced with the words "49%".
(v) In Section 3.1(b), tenth through twelfth lines, the words "over
(ii) the aggregate amount of capital contributed to the Trust and/or
the Partnership by Third Party Investors ("Third Party Equity") at the
First Closing" are hereby deleted and replaced with the following: "The
parties acknowledge that Third Party Investors may not contribute
capital to the Trust and/or the Partnership ("Third Party Equity") at
the First Closing, but that Xxxxx will continue to seek Third Party
Equity as described in this Agreement (provided, however, in no event
will the failure to raise Third Party Equity be deemed a breach or
default by Xxxxx or the Partnership hereunder nor xxxx Xxxxx or the
Partnership be subject to any liability as a result of such failure,
but such failure shall not relieve the Partnership from the obligation
to complete the First Closing.)"
(vi) In Section 3.1(b), the last sentence thereof is hereby
deleted and replaced with the following sentence: "Of the Xxxxx
Contribution Amount, Xxxxx or its Affiliate will contribute a
sufficient amount to the
7
Trust so that Xxxxx and its Affiliates hold, in the aggregate, at least
1% of the total number of Common Shares outstanding immediately after
the First Closing, with the remainder of the Xxxxx Capital Contribution
being contributed to the Partnership or the Trust (as determined by
Xxxxx in its sole discretion)."
(vii) In Section 4.3: (I) in the first and last sentences, the
words "July 31, 2003" are hereby deleted and replaced with "October 31,
2003"; (II) in Section 4.3(a) the words "(GM only)" are inserted after
"#1", and the words "July 31,2003" are hereby deleted and replaced with
"August 5, 2003"; (III) in Section 4.3(b), the words "(simultaneously
with the Second Closing)" are hereby deleted; (IV) in Section 4.3(c),
the words "December 31,2003" are hereby deleted and replaced with
"October 31,2003"; and (V) the following is hereby added as a new
Section 4.3(d): "Third Party Equity Closing #4; December 31, 2003."
(f) For the avoidance of doubt, this Amendment shall not be deemed to
release or reduce the obligations of HREH under the HREH Guaranty, except that
if a Cash Closing occurs, no Initial Sumitomo Shares or Second Sumitomo Shares
will be issued and in such event the HREH Guaranty will not cover the purchase
of such Shares by Xxxxx. Xxxxx acknowledges that as a result of this Amendment,
HREH's obligations under the HREH Guaranty will increase, since, as applicable:
(i) the value of the Initial Sumitomo Shares which Xxxxx may be required to
purchase under Section 4.4(d) of the Master Agreement is increased as a result
of the changes in the structure of the transactions described in this paragraph
1 and paragraph 2 below, and (ii) the HREH Guaranty will also include and
guaranty all of the obligations of: (A) the Acquiring Entity with respect to the
First Post-Closing Payment and the Second Post-Closing Payment; (B) Xxxxx and
the Partnership under the new Section 4,4(f) of the Master Agreement as set
forth below; and (C) Xxxxx and the Partnership under paragraph 16 below, as
applicable.
2. Third Party Equity; Potential Investor.
(a) As of the date hereof, Xxxxx has not yet obtained agreements from
Third Party Investors to contribute equity to the Fund, and this Amendment
contemplates that Third Party Equity may not be available at the First Closing.
However, the parties acknowledge that Xxxxx is negotiating the LOI regarding a
possible major equity investment in the Proposed Fund. In the event that Xxxxx
and the Potential Investor fail to reach a final agreement on the terms of the
Potential Investor's investment in the Proposed Fund prior to the First Closing
Date, such failure shall not be deemed a default or breach by Xxxxx or the
Partnership or the failure of a Closing condition under the Master Agreement,
and the parties shall proceed to a 51-49 Closing on the First Closing Date, as
described in paragraph 1 above. If, however, Xxxxx and the Potential Investor
reach a final agreement for the Potential Investor's investment prior to the
First Closing Date and such final agreement is acceptable to SLR (in SLR's sole
8
discretion), then assuming that no further amendments to the Master Agreement
are required by SLR or Xxxxx (as described below), each being able to require
the same in its sole discretion, the Closings shall take place as provided in
subparagraphs (b) and (c) below (collectively, the "GM Closing") and the Master
Agreement shall be deemed modified accordingly. In the event that the final
agreement between Xxxxx and the Potential Investor is acceptable to SLR (in
SLR's sole discretion) but Xxxxx or SLR (each in its sole discretion) determines
that such final agreement contains terms which it wishes to address in the
Master Agreement, the parties agree to work in good faith (without obligation)
to further amend the Master Agreement prior to the First Closing Date to reflect
the final agreement and make the final agreement and Master Agreement
consistent. Notwithstanding anything to the contrary in this paragraph 2,
however, in no event shall any party have any obligation to agree to any further
amendments to the Master Agreement, or any liability to any other party as a
result of its failure or refusal to agree to any further amendments to the
Master Agreement, it being understood that each party has the right in its sole
discretion to agree (or refuse to agree) to any such amendments. If, after a
final agreement has been reached by Xxxxx and the Potential Investor, and SLR or
Xxxxx has determined that further amendments to the Master Agreement are
required, and Xxxxx, the Partnership and SLR fail to agree prior to the First
Closing Date to such amendments, such failure to agree shall not be deemed a
breach or default by Xxxxx, the Partnership or SLR or the failure of a Closing
condition under the Master Agreement, and in such event the Cash Closing shall
occur. Notwithstanding anything to the contrary in this Amendment, in no event
shall the LOI be deemed a part of the Master Agreement (as amended by this
Amendment), nor shall SLR be deemed to have approved the terms of the LOI, it
being understood that SLR shall not be deemed to have approved the LOI or any of
the terms and conditions thereof unless and until SLR has reviewed and approved
(in its sole discretion) all documentation relating to the Potential Investor's
investment, the structure of the Proposed Fund, and the other matters described
in the LOI, and the parties shall have executed and delivered all further
amendments to the Master Agreement (if any) required by SLR (in its sole
discretion) in connection with the agreement with the Potential Investor. In no
event shall GMAM, the Potential Investor or any other GM affiliate be deemed a
third party beneficiary of the Master Agreement (as amended by this Amendment).
In no event shall this paragraph 2 be deemed an agreement by any party to
adjourn any Closing Date in order to permit a simultaneous Third Party Equity
closing.
(b) In the event of a GM Closing, notwithstanding anything to the
contrary in the Master Agreement, the following transactions will take place. At
the First Closing:
(i) Sumitomo shall contribute the First Closing Properties to
REIT Co #l (as defined in the LOI), or to one or more of its
wholly-owned subsidiaries (which shall be deemed SPE Owners);
9
(ii) in consideration for the contribution of the First Closing
Properties, Sumitomo shall receive (I) shares in REIT Co #1 having a value equal
to the lesser of 24.5% of the total initial equity of REIT Co #1 and $45
million, which shares shall provide rights which, considered together with asset
management fees payable to Xxxxx or an Affiliate of Xxxxx by REIT Co #l and/or
SLR under the terms of the definitive documentation entered into at the GM
Closing, are no less favorable to SLR than those provided by the Initial
Sumitomo Shares (including the Class E Preferred Shares considered together with
the asset management fee payable to the General Partner under the terms of the
Partnership Agreement) to be issued to Sumitomo under the current terms of the
Master Agreement ("Sumitomo REIT Co #l Shares") plus (II) cash in an amount
equal to the Agreed Valuations of the First Closing Properties less the value of
the Sumitomo REIT Co #l Shares, subject to adjustment under Section 3.1(d) (in
the same manner as the Initial Sumitomo Payment) and Article 16 of the Master
Agreement;
(iii) the rights and obligations set forth in the Master Agreement (as
amended hereby) with respect to the Initial Sumitomo Shares (including but not
limited to Xxxxx' obligations to cause the redemption of, or to purchase, such
shares under Section 4.4(d) of the Master Agreement and the obligations under
the HREH Guaranty) shall apply to the Sumitomo REIT Co #l Shares;
(iv) the closing conditions shall be those conditions set forth in
Sections 6.1 and 7.1 of the Master Agreement which apply to the conveyance of
the First Closing Properties, without regard to the formation of the Fund, and
the satisfaction of Xxxxx' and the Partnership's obligations relating to the
formation of the Fund shall not be conditions to closing (without limiting the
foregoing, Section 4.4(b) shall not apply to the GM Closing, the conditions in
Sections 6.1 (c), (f), (i),(j), (m) and (o) and 7.1 (f) shall not apply to the
GM Closing, the conditions in Sections 6.1(a) and (b) shall be deemed to apply
to REIT Co #l and Sections 6.1(d) and (k) shall be deemed to apply to the New
Entities (as defined below));
(v) the following shall be additional conditions to SLR's obligation to
consummate the First Closing:
(I) REIT Co #l shall have been formed as a Maryland real
estate investment trust by the filing of a declaration of trust with
the State Department of Assessments and Taxation of Maryland, the
initial trustees shall have adopted the by-laws for REIT Co #l, and
such REIT shall (A) qualify as a REIT pursuant to the Maryland REIT
Law, and (B) meet all requirements to qualify as a REIT under Section
856 of the Code (other than the requirements of Section 856(a)(5),
856(a)(6) and 856(c)( 1));
10
(II) Holding Partnership (as such term is defined in the LOI)
shall have been formed as a Delaware limited partnership by filing the
certificate of limited partnership with the Delaware Secretary of State
and executing and delivering the partnership agreement; Xxxxx
Affiliates shall have acquired general and limited partner interests in
Holding Partnership; and Holding Partnership shall have acquired equity
interests in REIT Co #1;
(III) Potential Investor shall acquire a 51% equity interest
in REIT Co #1 for cash at the First Closing;
(IV) Xxxxx or an Affiliate of Xxxxx shall contribute cash to
Holding Partnership and/or REIT Co #1 at the First Closing in an
amount equal to the lesser of 24.5% of the total initial equity
contributed to REIT Co #1 (directly and/or through the Holding
Partnership) and $45 million;
(vi) the names of REIT Co #1 and Holding Partnership shall each contain
the name "Sumisei";
(vii) (I) as a condition to Sumitomo's obligation to close, the
Partnership shall assign to REIT Co #l, and REIT Co #l shall assume in writing
(in form reasonably satisfactory to SLR), all rights, obligations and
liabilities of the Partnership, the Trust and the SPE Owners under the Master
Agreement as applicable to the First Closing Properties and shall make the same
representations and warranties with respect to REIT Co #1 as Xxxxx and the
Partnership have made with respect to themselves in the Master Agreement
(modified as necessary to reflect the organizational structure of REIT Co. #l);
(II) Xxxxx and the Partnership shall not be relieved of any of their respective
obligations under the Master Agreement, (III) all indemnities and releases
relating to the Fund and the offer and sale of Interests in Section 4.6 of the
Master Agreement shall be deemed to apply, also to REIT Co #1, REIT Co #2, REIT
Co #3 (as defined in the LOI), Holding Partnership, and Xxxxx Operating Limited
Partnership (as defined in the LOI) (collectively, the "New Entities") and the
offer and sale of interests therein; the New Entities shall (and as a condition
to Sumitomo's obligation to close REIT Co #1 and Holding Partnership shall
confirm in writing at the closing that they) have the same rights, obligations
and liabilities under Section 4.6 as the Partnership; and such indemnities and
releases shall remain in full force and effect and survive the Closings (it
being agreed that each of REIT Co #2, REIT Co #3 and Xxxxx Operating Limited
Partnership shall confirm, by written agreement delivered to Sumitomo, its
rights, obligations .and liabilities under Section 4.6 of the Master Agreement
as soon as it is formed); and (IV) REIT Co #l, Xxxxx and the Partnership shall
exercise their rights and remedies under the Master Agreement jointly; and REIT
Co #l shall be liable for its obligations under Article 13 of the Master
Agreement (but
11
shall not be liable for the obligations thereunder of Xxxxx and/or the
Partnership (to the extent REIT Co #l has not assumed the obligations
of the Partnership)), and the limits on liability (and limits on
recovery of damages) in the Master Agreement shall apply on an
aggregate basis to REIT Co #1, Xxxxx and the Partnership;
(viii) SIX and one or more of the New Entities shall execute
and deliver one or more agreements which provide SLR with the same
rights and obligations with respect to the new investment structure as
those currently contemplated, with respect to the Fund under the
Advisory Agreement;
(ix) SLR, Xxxxx and/or an Affiliate of Xxxxx and/or one or
more of the New Entities shall enter into one or more agreements and
deliver such other documents (in such forms as are agreed by the
parties in their sole discretion) as are necessary to give effect to
the new investment structure and provide SLR with the same rights and
obligations with respect to the new investment structure (including
without limitation the payment by SLR, directly or indirectly, of asset
management fees to Xxxxx or an Affiliate of Xxxxx with respect to the
First Closing Properties) as those currently contemplated with respect
to the Fund under the Master Agreement, including all Exhibits thereto;
(x) the contribution of Third Party Equity (other than that of
the Potential Investor) shal1 not be a condition to closing; and
(xi) except as provided herein, the closing shall take place
pursuant to the terms and conditions of the Master Agreement, as
amended hereby.
(c) In the event of a GM Closing, the Second Closing will occur on the
same terms as those described in subsection (b) above, as applicable to
the Second Closing, Property, except that:
(i) Sumitomo shah convey the Second Closing Property to REIT Co
#3 or one of its wholly-owned subsidiaries (which shall be deemed an
SPE Owner) in consideration for (I) a limited partnership interest in
Holding Partnership having a value of $25 million (the "Sumitomo
Partnership Units") which Sumitomo Partnership Units shall provide
rights which, considered together with asset management fees payable to
Xxxxx or an Affiliate of Xxxxx by Holding Partnership and/or SLR under
the terms of the definitive documentation entered into on or before the
Second Closing, are no less favorable to SLR than those provided by the
Class A Shares and the corresponding Class E Preferred Shares
(considered together with the asset management fee payable to the
General Partner under the terms of the Partnership Agreement) to be
issued to Sumitomo under the current terms of the Master Agreement,
plus
12
(II) cash in an amount equal to the Agreed Valuation of the Second Closing
Property less the value of the Sumitomo Partnership Units, subject to adjustment
under Article 16 of the Master Agreement;
(ii) the rights and obligations of Xxxxx and its Affiliates set forth
in the Master Agreement (as amended hereby) with respect to the shares received
by Sumitomo at the Second Closing shall apply to the Sumitomo Partnership
Units;
(iii) it shall be a condition to SLR's obligation to consummate the
Second Closing that:
(I) Holding Partnership, Potential Investor and SLR shall have
agreed (in their respective sole discretion) upon the final forms of
organizational documents for REIT Co #3, and Holding Partnership, Xxxxx
and SLR shall have agreed (in their respective sole discretion) upon
the final forms of organizational documents for REIT Co #2 and Xxxxx
Operating Limited Partnership (which documents shall be in forms
substantially similar to the forms of Trust Organization Documents
and the Partnership Agreement and Certificate of Limited Partnership
of the Partnership, respectively, modified as necessary to reflect
the structure of the Proposed Fund); provided, however, that if SLR
does not agree to the final forms of any of such organizational
documents, then the Second Closing shall take place as a Cash Closing
pursuant to the terms of paragraph 1(c) above (and the terms described
in this paragraph 2(c) shall not apply to such Closing);
(II) REIT Co #3 shall have been formed as a Maryland real
estate investment trust by the filing of a declaration of trust with
the State Department of Assessments and Taxation of Maryland, the
initial trustees shall have adopted the by-laws for such REIT, and such
REIT shall (A) qualify as a REIT pursuant to the Maryland REIT Law, and
(B) meet all requirements to qualify as a REIT under Section 856 of
the Code (other than the requirements of Section 856(a)(5), 856(a)(6)
and 856(c)(1)); and
(III) Potential Investor, other Third Party Investors, Holding
Partnership and/or Xxxxx or its Affiliates shall acquire at least an
aggregate 37.5% equity interest (based upon the Agreed Valuation of the
Second Closing Property and assuming a loan equal to 55% of such Agreed
Valuation) in REIT Co #3 for cash at the Second Closing; provided,
however, if no Third Party Equity (including Potential Investor) is
available to make the cash payment to Sumitomo described in subsection
(c)(i) above at the Second Closing, Xxxxx shall so notify SLR prior to
the Second Closing Date and SLR shall have the option (in its sole
discretion)
13
either to: (A) proceed with the Closing (pursuant to the terms and
conditions of the Master Agreement, as amended hereby), in which event
Xxxxx or a Xxxxx Affiliate shall be required to contribute all equity
required to complete the Second Closing or (B) terminate the Master
Agreement as to the Second Closing Property only, in which event the
failure to obtain the necessary Third Party Equity shall be deemed the
failure of a Closing condition (notwithstanding anything to the
contrary in the Master Agreement (as amended hereby); and
(IV) Xxxxx (or an Affiliate), Potential Investor and/or Third
Party Investors have purchased or REIT Co #1 has fully redeemed, all
Sumitomo REIT Co #l Shares (for the same price per share at which
such Shares were issued to Sumitomo at the First Closing) at least 31
days prior to the Second Closing Date;
(iv) the closing conditions shall be those conditions set forth in
Sections 6.1 and 7.1 which apply to the conveyance of the Second Closing
Property, without regard to the formation of the Fund, and the satisfaction of
Xxxxx' and the Partnership's obligations relating to the formation of the Fund
shall not be conditions to closing (without limiting the foregoing, Sections
4.4(b) and 4.4(f) shall not apply to the Second Closing, the conditions in
Sections 6.1 (c), (f), (i), (m) and (p) and 7.1 shall not apply to the Second
Closing, the conditions in Sections 6.1(a) and (b) shall be deemed to apply to
REIT Co #3, and Sections 6.1(d) and (k) shall be deemed to apply to the New
Entities);
(v) (I) as a condition to Sumitomo's obligation to close, the
Partnership shall assign to REIT Co #3, and REIT Co #3 shall assume in writing
(in form reasonably satisfactory to SLR), all obligations and liabilities of the
Partnership, the Trust and the SPE Owners under the Master Agreement as
applicable to the Second Closing Property and shall make the same
representations and warranties with respect to REIT Co #3 as Xxxxx and the
Partnership have made with respect to themselves in the Master Agreement
(modified as necessary to reflect the organizational structure of REIT Co #3),
(II) neither Xxxxx nor the Partnership shall be relieved of any of their
respective obligations under the Master Agreement, and (III) XXXX Xx #0, XXXX Xx
#0, Xxxxx and the Partnership shall exercise their rights and remedies under the
Master Agreement jointly, and REIT Co #3 shall be liable for its obligations
under Article 13 of the Master Agreement (but shall not be liable for the
obligations thereunder of Xxxxx, the Partnership (to the extent REIT Co #3 has
not assumed the obligations of the Partnership), and/or REIT Co #1 thereunder),
and the limits on liability (and limits on recovery of damages) in the Master
Agreement shall apply on an aggregate basis to REIT Co #3, REIT Co #1, Xxxxx and
the Partnership;
00
(xx) XXX, Xxxxx and/or an Affiliate of Xxxxx and/or one or
more of the New Entities shall enter into one or more agreements and
deliver such other documents (in such forms as are agreed by the
parties in their sole discretion) as are necessary to accomplish the
Second Closing and give effect to the new structure and provide SLR
with the same rights and obligations with respect to the new investment
structure (including without limitation the payment by SLR, directly or
indirectly, of asset management fees to Xxxxx or an Affiliate of Xxxxx
with respect to SLR's interest in the Holding Partnership) as those
currently contemplated with respect to the Fund under the Master
Agreement, including all Exhibits thereto;
(vii) it shall not be a condition to the Second Closing that
the Bridge Loan is repaid (or that there are sufficient commitments for
Third Party Equity to repay the Bridge Loan) or that Xxxxx' equity is
redeemed as contemplated by Section 3.4 of the Master Agreement;
(viii) notwithstanding paragraph 4(b) hereof, the Second
Closing Date shall not be any date selected by Xxxxx on or after
October 31, 2003 and not later than February 2, 2004 (but in any event
not less than 31 days after all of the Sumitomo REIT Co #1 Shares are
purchased by Xxxxx, its affiliate or Potential Investor or redeemed by
REIT Co #1), which Second Closing Date shall be set forth in a notice
specifying the date of such purchase or redemption delivered by Xxxxx
to SLR not later than ten days prior to the date of such purchase or
redemption, but in no event shall the selection of any Second Closing
Date by Xxxxx affect the Closing condition in subsection (c)(iii)(IV)
above or postpone the date of purchase or redemption of the Sumitomo
REIT Co #l Shares under Section 4.4(d) of the Master Agreement; and
(ix) except as provided herein, the closing shall take place
pursuant to the terms and conditions of the Master Agreement, as
amended hereby.
(d) The Master Agreement is hereby amended as follows: "The
Partnership and" is deleted from the beginning of the first sentence of
Section 4.1.
3. Required Purchase of Manhattan Tower.
(a) The following is hereby added to the Master Agreement as a
new subsection 4.4(f):
"(i) If the First Closing occurs (with respect to one or more
of the First Closing Properties) as a 51-49 Closing, but Xxxxx is
unable to raise sufficient Third Party Equity for the Partnership to
purchase the Second Closing Property by the Second Closing Date, and,
provided SLR
15
has not exercised its right to terminate this Agreement as to the Second Closing
Property in accordance with Section 4.4(b) hereof, but has instead elected to
extend the Second Closing Date to December 31,2003 pursuant to said Section
4.4(b), then in addition to Xxxxx' obligations under Section 4.4(d), at
Sumitomo's option (to be exercised by giving notice to Xxxxx on or before
January 9, 2004), the Partnership (or an SPE Owner designated by the
Partnership) shall purchase (and Sumitomo shall cause the Current Owner of the
Second Closing Property to sell to the Partnership or such designated SPE Owner)
the Second Closing Property on February 2, 2004. At the closing of title to the
Second Closing Property as provided in the preceding sentence (the "Buyout
Closing"), Sumitomo shall receive Class B Common Shares with a value of $25
million (the "Second Sumitomo Shares") (at the same price per share at which the
Initial Sumitomo Shares were issued at the First Closing) and the Second
Sumitomo Payment, as described in Section 3.5. However, in such event Xxxxx
shall be required to purchase (or cause its Affiliate to purchase or the Trust
to redeem) all of the Second Sumitomo Shares for $25 million not later than
March 31, 2004; provided, however, that Xxxxx shall have a one-time right to
extend this date (but not beyond July 31, 2004) upon notice given to SLR on or
before March 15, 2004. In the event of any such purchase by Xxxxx or its
Affiliate or redemption by the Trust of the Second Sumitomo Shares, Sumitomo
shall provide the purchaser or the Trust with customary representations in the
assignment or redemption documentation that Sumitomo has not sold or encumbered,
and has good title to, such Shares.
(ii) Subject to the provisions of this Section 4.4(f), the
terms of and conditions to a Buyout Closing shall be the same as the terms of
and conditions to the Second Closing set forth herein, except that (A) in no
event shall the Partnership be entitled to postpone the Buyout Closing in order
to obtain the Bridge Loan or other funds required for the Buyout Closing and
Section 4.4(b) shall not apply to the Buyout Closing; (B) Section 6.1(c) shall
not be a condition to Sumitomo's or the Current Owner's obligation to close; (C)
Sections 6.1(i) and 7.1(f) and the conditions in the third and fifth sentences
of Section 3.4 shall not be conditions to the obligation of Xxxxx, its
Affiliates, the Partnership, the General Partner, the SPE Owner and the Trust to
close; (D) the requirement in the proviso in the last sentence of Section 3.5
shall be deemed waived; (E) the net proceeds of Third Party Equity contributed
to the Fund after the Buyout Closing (and of all additional Permanent Financing
obtained by the Fund after the Second Closing) shall be applied first to the
redemption of the Second Sumitomo Shares (unless Xxxxx has elected or is
obligated hereunder to purchase the Second Sumitomo Shares); and (F) the
conditions, limitations and requirements of Section 4.1(a) and in the second
sentence of Section 4.4(a) shall be deemed waived. For the avoidance of doubt,
in no event shall the failure to raise sufficient Third Party Equity (or the
failure to obtain funds which Third
16
Party Investors have agreed to contribute) relieve
the Partnership from the obligation to complete the
Buyout Closing.
(iii) HREH shall guaranty the obligations of the
Partnership and Xxxxx under this Section 4.4(f) pursuant to
the HREH Guaranty.
(iv) In the event of a Buyout Closing, references in
the Master Agreement to the Second Closing (as amended hereby)
shall be deemed references to the Buyout Closing, references
to the Closing shall be deemed to include, as applicable, the
Buyout Closing, and references to the Closing Date shall be
deemed to include, as applicable, the date of the Buyout
Closing."
(b) The parties hereto acknowledge that it will be necessary
to amend the Declaration of Trust in order to permit the issuance of
additional Class B Shares at a Buyout Closing and the preferential
redemption of such shares as described in subparagraph 3(a) above. In
the event of a Buyout Closing, at or prior to Closing Xxxxx and the
Partnership shall obtain and deliver to SLR (at no expense to SLR) an
amendment to the Declaration of Trust in form reasonably satisfactory
to Sumitomo which permits the issuance of additional Class B Shares to
Sumitomo and the preferential redemption of such shares described in
subparagraph 3(a) above (and which does not affect any of the rights of
Sumitomo under the Master Agreement (as amended hereby), the Trust
Organization Documents, the Partnership Agreement or any other
agreements relating to the transactions described in the Master
Agreement (as amended hereby)). In the event that Xxxxx and the
Partnership cannot or do not obtain such amendment, then the Buyout
Closing shall occur as described in subparagraph 3(a) above, except
that in lieu of Class B Shares, Class A Shares with a value of $25
million (at the same price per share at which the Initial Sumitomo
Shares were issued at the First Closing) shall be issued to Sumitomo
and Xxxxx shall be obligated to purchase (or to cause its Affiliate to
purchase) such shares as if such shares were the Class B Shares
described in subparagraph 3(a) above. The failure of Xxxxx and the
Partnership to obtain the above-described amendment to the Declaration
of Trust shall not relieve Xxxxx or the Partnership from its obligation
to complete the Buyout Closing and the purchase of the shares received
at such closing.
(c) The Master Agreement is hereby amended as follows to
reflect the matters described in subparagraph 3(a) above:
(i) The form of HREH Guaranty set forth in Exhibit
"F" to the Master Agreement is hereby deleted in its entirety
and replaced with the form of HREH Guaranty set forth in
Exhibit "1" hereto.
(ii) In Section 1.l of the Master Agreement, in the
definition of HREH Guaranty, the words "under Sections 3.1(d)
and 4.4(d) of this Agreement" are hereby deleted.
17
(iii) In Section 4.1(c), the following words are
hereby added to the end of the paragraph "or the Partnership's
ability to purchase the Second Closing Property or the
redemption or purchase of the Shares received by Sumitomo at
the Second Closing or Buyout Closing."
(iv), In Section 4.4(d), the last two sentences are
hereby deleted.
(d) Xxxxx and SLR hereby amend the form of Declaration of
Trust, attached to the Master Agreement as Exhibit "B", as follows to
reflect the matters described in subparagraph 3(a) above: in Section
6.3(a)(v), after the words "the Initial Asset Group" the following
words shall be added: "or otherwise in connection with the transactions
described in that certain Amended and Restated Master Agreement dated
as of March 31,2003 between SLR, Xxxxx and the Partnership".
4. First Closing Date; Second Closing; Date Acknowledgment
of Potential Property Contributions.
(a) The parties hereby agree to adjourn the First Closing to
August 5, 2003. In Section 5.1 of the Master Agreement, the words "June
30, 2003" are hereby deleted and replaced with the following: "August
5, 2003". In the Introductory Statement, tenth paragraph, the words
"June 30, 2003" are hereby deleted and replaced with the words "August
5, 2003." In Section 13.l(c)(ii), eighth line, the words "June 30,
2003" are hereby deleted and replaced with the words "August 5, 2003,"
The parties hereby agree that either of SLR or Xxxxx may elect, at its
option upon notice given to the other parties no later than August 1,
2003, to adjourn the First Closing to a date not later than August 15,
2003.
(b) The parties hereby agree to adjourn the Second Closing to
October 31, 2003. In Section 5.1 of the Master Agreement, the words
"September 30, 2003" are hereby deleted and replaced with the
following: "October 31, 2003". In the Introductory Statement,
thirteenth paragraph, the words "September 30, 2003 " are hereby
deleted and replaced with the words "October 31, 2003".
(c) The parties hereby acknowledge and agree that the
provisions of Section 4.4(c) of the Master Agreement shall not be
deemed to apply to, restrict or prohibit, contributions of assets to
the Fund by potential Third Party Investors in exchange for Shares or
Units prior to the Partnership's (or its designated SPE Owner's)
acquisition of the Second Closing Property, provided that the Fund does
not make any cash payments to such Third Party Investors or other
Persons in connection with such contributions unless and until the
Initial Sumitomo Shares have been redeemed and the Second Closing
Payment has been received by SLR.
5. Service Contracts and Construction Agreements. The
Partnership hereby elects, pursuant to Section 9.3 of the Master Agreement, to
have the SPE Owners assume all Service Contracts and Construction Agreements
listed on Schedule "15"
18
(other than the existing management contracts and the Leasing Agent Agreements
(except for the Leasing Agent Agreement with Xxxxxxxxx, which the Partnership or
applicable SPE Owner will assume) and the Xxxxxx Xxxxx agreements listed on the
last page of Schedule "15") with respect to all of the Properties.
Notwithstanding the preceding sentence, Sumitomo, upon the request of the
Partnership, shall prepare termination notices from the SPE Owners for all such
Service Contracts (other than Service Contracts which, as indicated on Schedule
"l5", cannot be terminated for convenience upon 30 days' notice), which notices
may, at the Partnership's option, be executed by the SPE Owners and delivered on
the applicable Closing Date, so that such Service Contracts will be terminated
thirty days after the applicable Closing. The Partnership will be responsible
for all costs and charges incurred from and after the Closing Date through the
effective date of termination under such Service Contracts, except for
termination fees under such Service Contracts as to which the Partnership elects
to deliver such termination notices on the applicable Closing Date and items
which are the responsibility of SLR under Section 16.9 of the Master Agreement.
Sumitomo shall be solely liable and responsible for, and shall indemnify, hold
harmless and defend the Xxxxx Indemnitees against, any and all termination fees
incurred in connection with the termination of such Service Contracts as to
which the Partnership elects to deliver such termination notices on the
applicable Closing Date. The procedures relating to indemnities set forth in
Section 13.5 of the Master Agreement shall apply to the indemnity in this
paragraph 5.
6. Brokerage Commission Agreements and Leasing Agent
Agreements.
(a) Schedule "18" to the Master Agreement is hereby amended to
include the following Brokerage Commission Agreement relating to 000
Xxxx 00xx Xxxxxx, a copy of which was delivered previously to Xxxxx:
Agreement dated August 14, 2002 between 000 Xxxxxxxxx Xxxxxx Associates
and Xxxxxxx-Aug Associates Store Office Leasing, Inc. (relating to Riva
Cards, Inc. d/b/a Papyrus). The parties agree that of the total
commission of $2,975.75 due under this agreement, $396.90 has been paid
by SLR, the second payment of $396.90 will be paid by SLR in July 2003,
and the balance of $2,181.95 will be paid by the Partnership.
(b) The commissions listed on Exhibit "2" hereto, which are
listed on Schedule "18" of the Master Agreement as payable by SLR, have
been paid by the applicable Current Owners.
(c) The brokerage commission payable in connection with the
Xxxxxx LLP (successor of Xxxxxx & Xxxxxx) leases (collectively; the
"Xxxxxx Lease") has been reduced to $193,684.10 by letter from
Insignia/ESG, Inc. to Park Building Associates Limited Liability
Company dated June 12, 2003 (the "Xxxxxx Brokerage Amendment") amending
the brokerage agreement dated January 3, 2000 between Park Building
Associates Limited Liability Company and Insignia/ESG, Inc. (the
"Xxxxxx Brokerage Agreement"). Accordingly, in Schedule "18" of the
Master Agreement, the list of leasing/brokerage
19
commissions which are or may become payable in the future is hereby
amended by adding a reference to the Xxxxxx Brokerage Amendment to the
description of the Xxxxxx Brokerage Agreement, and by replacing the
commission amount of $202,074.19 with the amount of $193,684.10. SLR
hereby agrees to pay one-half of this commission ($96,842.05) prior to
the First Closing, and the Partnership agrees to pay the remainder
($96,842.05) in August, 2003, which amount will be reimbursed by SLR
to the Partnership upon notice to SLR after payment. Notwithstanding
the foregoing, neither Xxxxx nor the Partnership shall have any
liability for, and Sumitomo hereby agrees to remain solely liable and
responsible for, and from and after the First Closing to indemnify,
hold harmless and defend Xxxxx, the Partnership and the other Xxxxx
Indemnitees against, any and all Claims incurred by or asserted against
any of them or otherwise arising from or under, relating to or in
connection with any leasing and/or brokerage commissions which may be
due, payable or owing to, or claimed by, Insignia/ESG, Inc. in
connection with the promissory note described in paragraph 9 below. The
procedures relating to indemnities in Section 13.5 of the Master
Agreement shall apply to the indemnity in this subparagraph 6(c).
(d) Neither Xxxxx nor the Partnership shall have any liability
for, and Sumitomo hereby agrees to remain solely liable and responsible
for, and from and after the First Closing to indemnify, hold harmless
and defend Xxxxx, the Partnership and the other Xxxxx Indemnitees
against, any and all Claims incurred by or asserted against any of them
or otherwise arising from or under, relating to or in connection with
that certain letter agreement dated January 28, 2000, between 425
Lexington Limited Liability Company and Insignia/ESG, Inc. regarding
certain services to be provided in connection with leasing negotiations
with Xxxxxxx Xxxxxxx & Xxxxxxxx. Notwithstanding the preceding
sentence, SLR believes that no payments are due to Insignia/ESG
pursuant to the agreement described in the preceding sentence. The
procedures relating to indemnities in Section 13.5 of the Master
Agreement shall apply to the indemnity in this subparagraph 6(d).
7. Approved Leases. The parties hereby acknowledge that Xxxxx
has approved the following Lease documents under Section 17.1(a) of the Master
Agreement:
(a) First Amendment of Lease dated as of April 1, 2003 between
000 Xxxxxxxxx Xxxxxx Associates and Xxxxxxx & Marsal, Inc.
(b) Second Amendment of Lease dated as of May 15, 2003 between
000 Xxxxxxxxx Xxxxxx Associates and Xxxxxxx, Savage, Kaplowitz, Wolf &
Marcus, LLP.
(c) Seventh Amendment to Lease dated April 14, 2003 between
425 Lexington Limited Liability Company and Simpson, Thacher &
Xxxxxxxx.
(d) Eight Amendment to Lease, dated May 29, 2003 between 425
Lexington Limited Liability Company and Simpson, Thacher & Xxxxxxxx.
20
(e) Second Amendment of Lease, dated as of June 30, 2003,
between 000 Xxxxxxxxx Xxxxxx Associates and Xxxxx Fund Management, LLC.
The above-referenced Lease documents are hereby deemed added to Schedule "13"
of the Master Agreement.
8. Construction Agreement. Supplementing Schedule "21" of the
Master Agreement, the Partnership has advised SLR that the Partnership elects to
proceed with the HVAC upgrade project at 000 Xxxx 00xx Xxxxxx. Accordingly, the
Partnership hereby agrees to pay at the Second Closing all costs incurred from
April 1, 2003 through the Second Closing Date with respect to such project.
9. Xxxxxx Lease.
(a) Xxxxx and the Partnership hereby acknowledge that (i) a
First Amendment of Lease dated as of May 7, 2003 has been entered into
between Park Building Associates Limited Liability Company and Xxxxxx
LLP (successor of Xxxxxx & Xxxxxx LLP), and that in connection with
such amendment a promissory note dated as of May ___, 2003 in the
amount of $237,171.24 has been made by Xxxx Xxxxxx in favor of Park
Building Associates Limited Liability Company (such note being given in
consideration for the rent abatement for the period from March through
June, 2003 granted by Section 2 of such First Amendment) (collectively,
the "Xxxxxx Lease Amendment"), and (ii) that the execution, delivery
and acceptance of said Xxxxxx Lease Amendment does not constitute a
breach or default by SLR under Section 17.1(a) of the Master Agreement,
or the failure of a Closing condition, notwithstanding the fact that
Xxxxx did not grant its prior approval of or consent to such amendment.
However, in no event shall the foregoing be deemed to limit (or be
deemed a waiver of) the consent or approval rights of Xxxxx and the
Partnership under said Section 17.1(a) in connection with any
subsequent amendments to the Xxxxxx Lease (or any other Lease). The
parties agree that, notwithstanding SLR's obligation to transfer all
Lease documents to the SPE Owners at Closing, SLR shall not be required
to transfer the above-referenced promissory note to the Partnership or
any SPE Owner.
(b) Notwithstanding the provisions of Section 16.7 of the
Master Agreement to the contrary, the parties hereby agree that any and
all payments received by the Partnership or the applicable SPE Owner
from the tenant under the Xxxxxx Lease on or after the First Closing
Date shall be applied first to any sums payable to such SPE Owner under
such Lease for periods on and after the First Closing Date, and second,
after deduction of any Fees-And-Costs incurred by such SPE Owner or the
Partnership in connection with the collection of such payments to any
sums due to the applicable Current Owner under such Lease for periods
prior to the First Closing Date.
10. Lease Documents and Service Contracts Not Yet Delivered.
Pursuant to Section 11.4 of the Master Agreement, SLR has delivered copies of
certain Lease documents and Service Contracts to Xxxxx, as described on Exhibit
"3" hereto, the
21
receipt of which are hereby acknowledged by Xxxxx. SLR hereby notifies Xxxxx,
pursuant to Section 11.4 of the Master Agreement, that the Lease documents and
Service Contracts described on Exhibit "4" hereto are unavailable and cannot be
delivered to Xxxxx. Xxxxx hereby waives its right to terminate the Master
Agreement pursuant to Section 11.4 thereof, both with respect to the Lease
documents and Service Contracts delivered to Xxxxx and listed on Exhibit "3" and
the Lease documents and Service Contracts listed on Exhibit "4" which were not
delivered to Xxxxx.
11. References to Master Agreement in Exhibits. References in
the Exhibits to the Master Agreement are hereby deemed to include this
Amendment. Prior to execution and delivery of the Exhibits, the parties shall
amend all applicable Exhibits to include this Amendment in the definition of
Master Agreement.
12. PPM. Promptly following the First Closing, Xxxxx (with
SLR's approval, which shall not be unreasonably withheld) shall amend the PPM to
reflect the changes in the terms on which the First Closing occurred and the
terms of the revised Master Agreement applicable thereto, as well as any changes
necessary to reflect the final terms and conditions of the Permanent Financing
and/or the Bridge Loan, in accordance with Section 4.5(a) of the Master
Agreement.
13. Closing Conditions.
(a) Xxxxx and the Partnership acknowledge that Sumitomo has
acquired MSI's interests in the Current Owners of 000 Xxxx Xxxxxx and
0000 Xxxxxxxxxx Xxxxxx, in satisfaction of the Closing condition in
Section 6.1(e) of the Master Agreement. As a result of these
transactions, Sumitomo's ownership interest in these Current Owners is
as follows: (a) Park Land LLC: SLR - 99.9023%; SLRI - .0977%; (b) Park
Building LLC: SLR - 99.9023%; SLRI -.0977%; and (c) 19th & M LLC: SLR -
99.9%; SLRI - .l%, and Schedule "2" to the Master Agreement is hereby
deemed amended to reflect such ownership interests. Consequently,
Section 6.1(e) of the Master Agreement is hereby deleted.
(b) Section 7.1(n) of the Master Agreement is hereby deleted.
(c) Xxxxxx LLP has furnished Sumitomo with the security
deposit described in the Xxxxxx Lease Amendment (and has paid all Rent
due through July 31, 2003 plus accrued interest). Accordingly, the
parties agree that the condition to closing in Section 7.1(p) has been
satisfied, and Section 7.1(p) of the Master Agreement is hereby
deleted.
(d) Supplementing Section 6.1 of the Master Agreement, it
shall be a condition of SLR's obligation to complete the First Closing
that SLR receive an opinion of Xxxxx Xxxxx LLP or other outside counsel
of Xxxxx reasonably satisfactory to SLR, in form reasonably
satisfactory to SLR, that the HREH Guaranty is enforceable in
accordance with its terms (subject to customary
22
qualifications regarding bankruptcy, creditors' rights, general
principles of equity and similar matters).
14. Certain Definitional Changes. Section 1.1 of the Master
Agreement is hereby amended as follows:
(a) the definition of the "Bridge Loan" is deleted and
replaced with the following: ""Bridge Loan" means a short-term loan
made to one or more SPE Owners, another Partnership Subsidiary and/or
the Partnership, as borrower, which will be unsecured or secured by
interests of the Partnership and/or such Partnership Subsidiary in the
SPE Owners and other assets of the Partnership or such Partnership
Subsidiary, and with respect to which Sumitomo will have no personal
liability."
(b) the definition of "SPE" is revised to add the words "or
limited partnership whose general partner is a Partnership Subsidiary,"
after the words "limited liability company."
(c) the following definition is hereby added to Section 1.1:
""Partnership Subsidiary" means a corporation,
limited partnership or limited liability company
which is wholly - owned, directly or indirectly, by
the Partnership."
15. Tenant Improvement Allowances. Schedule "22" to the Master
Agreement is hereby amended by deleting references to Xxxxx X. XxXxxxxx &
Associates LLP, Anheuser-Xxxxx and Kuraray America, Inc. SLR has paid all
outstanding tenant improvement allowances to such tenants.
16. Optional Redemption of SLR Shares Following Second
Closing.
(a) Xxxxx and the Partnership agree that after the Second
Closing (provided such closing is not part of the Cash Closing), at
SLR's option, to be exercised by delivery of notice to Xxxxx not later
than July 31, 2004, Xxxxx shall purchase (or shall cause its Affiliate
or a Third Party Investor to purchase or the Trust or Holding
Partnership to redeem) all of Sumitomo's Class A Shares or Sumitomo
Partnership Units (as applicable) not later than December 31, 2004. In
the event of any such purchase by Xxxxx or its Affiliate or redemption
by the Trust or Holding Partnership of such Shares or Units, Sumitomo
shall provide the purchaser, the Trust or Holding Partnership with
customary representations in the assignment or redemption
documentation that Sumitomo has not sold or encumbered, and has good
title to, such Shares or Units. HREH shall guarantee this obligation
pursuant to the HREH Guaranty.
(b) [Intentionally Omitted.]
17. Reinvestment by Sumitomo; Retention of Rights.
23
(a) If Sumitomo's Shares are redeemed or purchased by Xxxxx or
an Affiliate as the result of a Buyout Closing or pursuant to paragraph
16 hereof, or if there is a Cash Closing, or if the Second Closing or
Buyout Closing never occurs, then in any such event (but subject to the
remainder of this subparagraph (a)) Sumitomo shall retain all of its
management rights described in the Closing Instruments with respect to
the Fund (or Alternate Fund, as applicable), and all of its rights to
raise capital for the Fund (or Alternate Fund, as applicable) and to
receive the fees described in the Advisory Agreement after the date of
such redemption or purchase, or the date of the First Closing (if there
is a Cash Closing or if there is no Second Closing or Buyout Closing).
However, unless by December 31, 2005 either (i) Sumitomo or its
Affiliate makes an equity investment of at least $25 million in the
Fund (or Alternate Fund, as applicable); or (ii) Sumitomo and/or its
Affiliates have raised at least $25 million in equity for the Fund or
Alternate Fund (as applicable); then the positions of the Sumitomo
appointees on the governing boards of the Fund or the Alternate Fund
(as applicable) shall become non-voting. In addition, if neither of the
events described in the preceding sentence has occurred during the five
year period following the redemption or purchase of Sumitomo's shares
(after a Buyout Closing) or the date of the First Closing (if there is
a Cash Closing or if there is no Second Closing or Buyout Closing),
then all of Sumitomo's management and capital raising rights with
respect to the Fund (or Alternate Fund, as applicable) shall cease.
(b) If Sumitomo's Shares are redeemed or purchased by Xxxxx or
an Affiliate as the result of a Buyout Closing or pursuant to paragraph
16 hereof, or if there is a Cash Closing or if the Second Closing or
Buyout Closing never occurs, then in any such event Sumitomo shall have
the right (but not the obligation) at any time to purchase equity
interests in the Fund (or any Alternate Fund, as applicable), which
interests shall provide Sumitomo with rights similar to those afforded
by the Class A Common Shares and Class E Preferred Shares.
(c) In the event that Sumitomo or its Affiliate re-invests in
the Fund (or Alternate Fund) pursuant to subparagraph 17(b) above on
any date:
(i) on or prior to December 31, 2004, the new
interests shall be sold to Sumitomo at the value on the First
Closing Date; and
(ii) after December 31, 2004 the new interests shall
be sold to Sumitomo at the Per Share NAV (as defined in the
Declaration of Trust).
18. Survival; Limitations on Liability; Remedies.
(a) Notwithstanding Section 13.2(c) of the Master Agreement,
the following provisions of this Amendment shall survive the Closing of
the applicable Property for a period of six years: l(f), 2(b)(iii),
2(b)(vii)(II),(III) and (IV), 2(c)(ii), 2(c)(v)(II) and (III), 3(a)(i),
3(a)(ii)(E), 3(b)(third sentence only), 5, 6(c) and (d), 12, 16, 17,
18, 19 (first and last sentences only), 21 and 23. To the
24
extent that any section of the Master Agreement survives the Closing
and is amended by this Amendment, that section (as amended) shall
survive the Closing. The obligations in Section 9(b) of this Amendment
shall survive the Closing of the applicable Property for a period of
six months.
(b) Supplementing Article 25 of the Master Agreement, the
limitations on liability in Section 13.2(b)(ii) and 13.2(c) of the
Master Agreement shall not apply to: (i) the redemption or purchase of
the Shares or Units received by Sumitomo at the Second Closing pursuant
to paragraph 16 hereof; (ii) the payment of the First Post-Closing
Payment and the Second Post-Closing Payment and (iii) the obligations
of the Partnership and Xxxxx under Section 4.4(f) of the Master
Agreement.
(c) For purposes of clarification, the exercise by the
Partnership of the right of specific performance under Section
13.1(c)(ii) or the right to purchase 000 Xxxxxxxxx Xxxxxx under Section
13.1(c)(i) shall be deemed a joint exercise of remedies by Xxxxx and
the Partnership and shall preclude the exercise of other remedies by
Xxxxx.
19. Miscellaneous. This Amendment shall be government and
construed in accordance with the laws of the State of New York (without regard
to principles of conflicts of law), provided however, that the laws of the
District of Columbia shall govern to the extent required with respect to the
conveyance of 0000 Xxxxxxxxxx Xxxxxx. This Amendment may be executed (a) in
counterparts, a complete set of which together shall constitute an original, (b)
in duplicates, each of which shall constitute an original, and/or (c) by
facsimile (and a facsimile signature shall be deemed an original for all
purposes). Copies of this Amendment showing the signatures of the respective
parties, whether produced by photographic, digital, computer, or other
reproduction, may be used for all purposes as originals. It is expressly
understood and agreed, anything herein to the contrary notwithstanding, that in
no event will the members, partners, shareholders, directors, officers, agents,
employees or managers, of any party have any personal liability for the
obligations of such party under this Amendment.
20. Update of Representation. Supplementing Section 11.2(h) of
the Master Agreement, SLR hereby represents and warrants to Xxxxx and the
Partnership (as of the date hereof and as of the Closing Date) that Exhibit "6"
attached hereto contains true, correct and complete rent and expense statements
for each Property for the first six months of 2003.
21. Expansion Amendment. The third sentence of Section
3.l(d)(iv) of the Master Agreement is hereby deleted in its entirety and
replaced with the following: "If the amount of the increase is determined after
the First Closing Date, the Partnership shall be required to pay SLR by Wire
Transfer, the total amount of such increase, but only from the revenue received
by the Partnership from the operation of its Properties (after payment of all
operating and other expenses, including third party (i.e., non-investor) debt
service), plus interest from the First Closing Date through the date of payment
at the rate of 9% per annum, compounded annually (but the full amount of such
25
increase shall be paid to SLR within 180 days after the date the amount of the
increase is determined). The right of SLR to receive the revenue of the
Partnership as provided in the preceding sentence shall have priority over any
right of any other investor in the Fund to receive revenue of the Fund. (For
purposes of clarification, in the event of a GM Closing, the obligation to pay
increases in the Agreed Valuation of 000 Xxxxxxxxx Xxxxxx shall be assigned to
REIT Co #1, and the obligation of REIT Co #1 to pay such increases to SLR as
provided above shall have priority over any right of redemption of the Potential
Investor's shares in REIT Co #1 in the event of a forced sale (as described in
the LOI) and any right of Potential Investor to receive an annual return after
delivering a Forced Sale Notice (as described in the LOI).)
22. Financial Information Required by Lenders. It will be a
failure of a condition to the obligation of each of Xxxxx, its Affiliates, the
Partnership, the General Partner, the SPE Owners and the Trust to perform its
obligations at the First Closing if, prior to the First Closing, Xxxxx, in its
sole and absolute discretion, determines that it does not have the ability to
obtain all of the financial information relating to the Properties and the
Current Owners required to be delivered to the lenders under the terms of the
Permanent Financing contemplated by Xxxxx to be entered into at the First
Closing.
23. Transfer and Recordation Taxes. Section 14.1 of the Master
Agreement is hereby deleted in its entirety and replaced with the following:
"Section 14.1. Sumitomo shall pay (or cause the Current Owners
to pay) to the applicable Government Entities the real property
transfer and recordation taxes that become due by virtue of the initial
conveyance by the Current Owners of the Properties at the First Closing
or the Second Closing as contemplated hereby, based upon 100% of the
Agreed Valuations of the Properties (as the same may be adjusted
pursuant to Section 3.1(d) of the Master Agreement). Sumitomo shall
also pay (or cause to be paid) to the applicable Government Entities
the amount of the real property transfer and recordation taxes that
become due upon any Transfer by Sumitomo of any direct or indirect
equity interests that Sumitomo holds in the grantee of any such
conveyance of the Properties made by the Current Owners at the First
Closing or the Second Closing (including, without limitation, any such
transfer and recordation taxes that become due by virtue of such
Transfer of direct or indirect equity interests by Sumitomo being
aggregated with other Transfers of the Properties or interests therein,
or other Transfers being aggregated with the Transfer by Sumitomo);
provided, however, that Sumitomo shall not be required to pay transfer
and recordation taxes under this Section 14.1 in an amount that exceeds
the total amount of transfer and recordation taxes that Sumitomo would
have otherwise been required to pay if Sumitomo Transferred the
Properties for consideration equal to the Agreed Valuations to an
entity in which Sumitomo and the Current Owners own no equity interest.
Xxxxx shall pay (or cause to be paid) to the applicable Government
Entities the amount of the real property transfer and recordation taxes
that become due upon any Transfer by Xxxxx or its Affiliates of any
direct or indirect equity interests that Xxxxx holds in the grantee of
any such conveyance of the Properties made by the Current Owners at the
First closing or the Second Closing (including, without limitation, any
such
26
transfer and recordation taxes that become due by virtue of such
Transfer by Xxxxx or its Affiliate being aggregated with other
Transfers of the Properties or interests therein or other Transfers
being aggregated with the transfer by Xxxxx or its Affiliate) except
for any real property transfer or recordation taxes payable by Sumitomo
pursuant to the preceding sentence; provided, however, if the 51-49
Closing occurs, the Fund (and not Xxxxx) shall pay the real property
transfer and recordation taxes that become due as a result of the
Transfer by Xxxxx of all or a portion of its initial interest in the
Fund. The parties shall cause to be executed and delivered any transfer
and recordation tax returns that the applicable Government Entities
require and that reflect the terms of this Section 14.1. The terms of
this Section 14.1 shall survive the First Closing and the Second
Closing."
24. No Other Amendments. Except as expressly amended hereby,
the Master Agreement remains unmodified and in full force and effect.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Xxxxx, the Partnership and SLR have executed and delivered
this Amendment as of the date first written above.
XXXXX INTERESTS LIMITED
PARTNERSHIP
By: Xxxxx Holdings, Inc.,
its general partner
By: /s/ X. XXXXXXXX XXXXXXX
-------------------------------
Name: X. Xxxxxxxx Xxxxxxx
Title: Executive Vice President
XXXXX US CORE OFFICE PROPERTIES LP
By: Xxxxx US Core Office Capital LLC,
its general partner
By: Xxxxx Interests Limited Partnership,
its sole member
By: Xxxxx Holdings, Inc.,
its general partner
By: /s/ X. XXXXXXXX XXXXXXX
---------------------------------
Name: X. Xxxxxxxx Xxxxxxx
Title: Executive Vice President
SUMITOMO LIFE REALTY (N.Y.), INC.
By: /s/ XXXXX XXXXXXXX
-------------------------------------
Xxxxx Xxxxxxxx
President
26
The following party signs below to evidence its agreement with the
terms of, and to agree to be bound by, and to perform its obligations under,
this Amendment.
SLR INVESTMENTS INC.
By: /s/ XXXXX XXXXXXXX
--------------------------------
Xxxxx Xxxxxxxx
President
SUMITOMO LIFE REALTY (N.Y.), INC.
000 XXXX 00XX XXXXXX
XXX XXXX, XXX XXXX 00000
June 26th, 2003
Xxxxx Interests Limited Partnership
Hines US Core Office Properties LP
0000 Xxxx Xxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Dear Sirs/Madames:
Reference is made to that certain Amended and Restated Master Agreement
dated as of March 31, 2003 (the "Master Agreement") between Sumitomo Life Realty
(N.Y.), Inc. ("SLR"), Xxxxx Interests Limited Partnership ("Xxxxx") and Xxxxx US
Core Office Properties LP (the "Partnership"). Words and phrases used but not
defined in this letter shall have the meanings set forth in the Master
Agreement.
SLR, Xxxxx and the Partnership hereby agree to adjourn the First
Closing to July 31, 2003. In Section 5.1 of the Master Agreement, the words
"June 30, 2003" are hereby deleted and replaced with the following: "July 31,
2003". In the Introductory Statement, tenth paragraph, the words "June 30, 2003"
are hereby deleted and replaced with the words "July 31, 2003". In Section
13.1(c)(ii), eighth line, the words "June 30, 2003" are hereby deleted and
replaced with the words "July 31, 2003".
Except as expressly amended hereby, the Master Agreement remains
unmodified and in full force and effect.
Please sign below to evidence your agreement to the foregoing.
SUMITOMO LIFE REALTY (N.Y.), INC.
By: /s/ XXXXX XXXXXXXX
--------------------------------
Xxxxx Xxxxxxxx
President
Accepted and agreed to:
XXXXX INTERESTS LIMITED PARTNERSHIP
By: Xxxxx Holdings, Inc., its general partner
By: /s/ X. XXXXXXXX XXXXXXX
------------------------------------
Name: X. Xxxxxxxx Xxxxxxx
Title: Executive Vice President
XXXXX US CORE OFFICE PROPERTIES LP
By: Xxxxx US Core Office Capital LLC, its general partner
By: Xxxxx Interests Limited Partnership, its sole member
By: Xxxxx Holdings, Inc., its general partner
By: /s/ X. XXXXXXXX XXXXXXX
------------------------------------
Name: X. Xxxxxxxx Xxxxxxx
Title: Executive Vice President
SLR INVESTMENTS, INC.
By: /s/ XXXXX XXXXXXXX
----------------------------
Xxxxx Xxxxxxxx
President
