Exhibit 10.17
JV OPTION AGREEMENT
ROCK-FORTY-NINTH LLC
Landlord
-with-
MSDW 745, LLC
Tenant
Dated: November 19, 1998
Premises:
Land known as 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
THIS JV OPTION AGREEMENT MAY NOT BE MODIFIED OR
AMENDED EXCEPT IN ACCORDANCE WITH SECTION 12 (b) HEREOF.
TABLE OF CONTENTS
Agreement Page
--------- ----
1. Certain Definitions. ................................................1
2. Exercise of Option....................................................2
3. Assignment............................................................5
4. Arbitration; Disputes.................................................6
5. Notices; Jurisdiction.................................................7
6. Costs and Expenses....................................................8
7. Name of Joint Venture.................................................9
8. Continuing Leases.....................................................9
9. Default...............................................................9
10. Lease Options........................................................10
11. Shared Capital Improvements. .......................................13
12. Miscellaneous Provisions.............................................18
13. Bankruptcy Remote Entity.............................................19
1. Defined Terms; Section References. ................................A-1
2. Co-Venturers........................................................A-1
3. Purpose.............................................................A-2
4. Principal Office....................................................A-2
5. Initial Capital Contributions; Percentage Interests;
Apportionments......................................................A-2
6. Additional Capital Contributions; Advances to the Joint Venture.....A-9
7. Distributions; Profits and Losses. ...............................A-10
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8. Control and Management.............................................A-11
9. Duration...........................................................A-17
10. Transfer of Interests..............................................A-17
11. Disputes; Buy-Sell. ..............................................A-25
12. Withdrawal or Bankruptcy...........................................A-29
13. Tax Matters........................................................A-29
14. Borrowing..........................................................A-30
15. Outside Transactions...............................................A-30
16. Fair Market Value..................................................A-30
17. Limit of Liability.................................................A-32
18. Leasing Agent......................................................A-32
19. Affiliate Contracts................................................A-34
20. Events of Default; Remedies........................................A-34
21. Estoppel Certificates. ...........................................A-37
22. Cooperation by Venturers...........................................A-37
23. Other Terms........................................................A-37
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JV OPTION AGREEMENT
THIS JV OPTION AGREEMENT (this "AGREEMENT") made as of the
19th day of November, 1998 between ROCK-FORTY-NINTH LLC, a Delaware limited
liability company, having an office c/o Rockefeller Group, Inc., 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (and its permitted successors and
assigns, "LAND OWNER"), and MSDW 745, LLC, a Delaware limited liability company
(and its permitted successors and assigns, "BUILDING OWNER"), having an office
at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Land Owner and Building Owner have, on the date
hereof, entered into a Ground Lease (as amended, restated, supplemented or
otherwise modified from time to time, the "GROUND LEASE") for the lease of
certain land known as 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "LAND") upon
the terms and conditions more particularly set forth in the Ground Lease;
WHEREAS, subject to the terms of the Ground Lease, Building
Owner shall construct, maintain and operate the Building (as defined in the
Ground Lease) on the Land;
WHEREAS, Land Owner and Building Owner have agreed that each
party shall have an option, exercisable in the manner set forth below, to cause
Land Owner to contribute and convey the Land and all of Land Owner's interest in
the Ground Lease to Building Owner on January 1, 2032 (the "OPTION EFFECTIVE
DATE") in exchange for Land Owner being admitted as a fifty percent (50%) owner
in Building Owner;
WHEREAS, if Land Owner or Building Owner exercises such
option, from and after the Option Effective Date, Land Owner and Building Owner
Member (as defined in Exhibit A hereto) shall be equal co-venturers in the Joint
Venture (hereinafter defined), all upon the terms more particularly set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the
sufficiency of which the parties hereby acknowledge, the parties agree as
follows:
1. CERTAIN DEFINITIONS.
1. Certain capitalized terms used herein and in EXHIBIT A annexed
hereto shall be defined on the pages indicated on Annex I
hereto, which is hereby incorporated by reference.
2. All other capitalized terms used herein without definition
shall have the respective meanings ascribed to them in the
Ground Lease.
3. For all purposes in this Agreement (including EXHIBIT A
hereto), the term "BUILDING OWNER" shall mean MSDW 745, LLC
(and its successors and assigns permitted hereunder) as of any
date prior to the Option Effective Date and the formation of
the Joint Venture and the term "JOINT VENTURE" shall refer to
MSDW 745, LLC (and its successors and assigns permitted
hereunder) as such name may be modified in accordance with the
terms hereof or the JVA as of any date on and after the Option
Effective Date.
4. The term "PROJECT" shall mean all of the Land Owner's and
Building Owner's respective interests in the Land, the
Building and the Ground Lease.
2. EXERCISE OF OPTION. The options set forth herein shall be exercised as
follows:
1. On or after December 1, 2027, but prior to June 1, 2028, time
being of the essence with respect thereto, Land Owner shall
have the option, upon written notice to Building Owner, to
require Building Owner to admit Land Owner as a fifty percent
(50%) owner in Building Owner in exchange for the conveyance
by Land Owner of the Land and all of Land Owner's interest in
the Ground Lease to Building Owner, subject to and in
accordance with the terms of this Agreement. Failure to so
timely elect shall be deemed a waiver of Land Owner's option
to so elect.
2. If Land Owner has not exercised its option as set forth in
SECTION 2(A), on or after September 1, 2028, but prior to
March 1, 2029, time being of the essence with respect thereto,
Building Owner shall have the option, upon written notice to
Land Owner to require Land Owner to convey the Land and all of
Land Owner's interest in the Ground Lease to Building Owner in
exchange for the admission of Land Owner as a fifty (50%)
owner in Building Owner, subject to and in accordance with the
terms of this Agreement. Failure to so timely elect shall be
deemed a waiver of Building Owner's option to so elect.
3. Within ninety (90) days after the exercise of either of the
options set forth in SECTIONS 2(A) or 2(B), above, unless the
parties agree otherwise, Building Owner shall deliver to Land
Owner a form of amended and restated Operating Agreement for
Building Owner (the "JVA") setting forth the terms upon which
the Joint Venture shall be operated from and after the Option
Effective Date. The JVA shall incorporate the terms and
conditions set forth on EXHIBIT A annexed hereto, and such
other terms which are mutually agreeable to the parties or
which are determined by arbitration as provided herein. Within
such ninety (90) day period, Building Owner shall also deliver
to Land Owner, to the extent not previously provided to Land
Owner or its Affiliates, copies of the documents described in
clauses (i) and (ii) below together with schedules or
statements containing the information described in clauses
(iii), (iv) and (v) below (collectively, the "DUE DILIGENCE
DOCUMENTS"):
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1. Unaudited copies of the most recent financial statements of
Building Owner, certified by Building Owner, or, if previously
prepared by or for Building Owner, audited copies of such
financial statements (it being understood that Building Owner
shall be under no obligation to cause audited financial
statements to be prepared), together with statements of cash
flow as well as such other information about the operations
and financial condition of Building Owner as Land Owner shall
reasonably request and as shall be in Building Owner's
possession or control (collectively, the "FINANCIAL
STATEMENTS"). Each of the Financial Statements shall be dated
as of a date which is not more than twelve (12) months prior
to the date the same are delivered to Land Owner.
2. All material contracts, abstracts of insurance policies
(abstracting all terms and conditions relating to the Project)
and other material documents and agreements to which Building
Owner is a party, or which benefit or burden Building Owner or
the Building and are in Building Owner's possession or
control, and which will not be terminated as of the Option
Effective Date.
3. A description of all litigation and arbitration, pending or
threatened in writing, to Building Owner's knowledge, against
Building Owner or the Building.
4. A list of employees of Building Owner and their positions and
salaries.
5. A statement as to the organizational structure of the Building
Owner.
The Due Diligence Documents shall be accompanied by a certificate of
Building Owner, dated as of the date on which the Due Diligence
Documents are delivered (a "DUE DILIGENCE CERTIFICATE") stating that
(x) the Financial Statements required to be delivered to Land Owner
pursuant to clause (i) above are, to Building Owner's best knowledge,
true, accurate and complete in all material respects as of the date
made (which date shall not be more than twelve (12) months prior to the
date the same are delivered to Land Owner) and that, to Building
Owner's best knowledge, there have been no material adverse changes to
the matters set forth therein since the date thereof (or alternatively,
setting forth any such material adverse change in reasonable detail),
(y) that the schedules and other information required to be delivered
to Land Owner pursuant to clauses (iii), (iv) and (v) above are true,
accurate and complete in all material respects, and (z) Building Owner
has delivered to Land Owner true and complete copies of all documents
required to be delivered to Land Owner pursuant to clause (ii) above.
4. Building Owner shall deliver to Land Owner annually, within ten (10)
Business Days after the anniversary of the date on which either of the
options in Section 2(a) or Section 2(b) was exercised but not after the
Option Effective Date, updated Financial Statements, dated not more
than twelve (12) months prior to the date of delivery, and other Due
Diligence Documents to the extent not previously
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delivered or necessary to reflect changes to prior Due Diligence
Documents previously delivered, and an updated Due Diligence
Certificate with respect to the items so delivered. In addition to the
annual updates referred to in the previous sentence, on the Option
Effective Date, Building Owner shall deliver updated Financial
Statements, dated not more than twelve (12) months prior to the date of
delivery, and other Due Diligence Documents to the extent not
previously delivered or necessary to reflect changes to prior Due
Diligence Documents previously delivered and an updated Due Diligence
Certificate, and thereafter, within ninety (90) days after the Option
Effective Date, Building Owner shall deliver Financial Statements as of
the Option Effective Date accompanied by a Due Diligence Certificate
with respect to such Financial Statements dated as of the date that
such Financial Statements are delivered. Notwithstanding anything
contained herein to the contrary, Land Owner shall be under no
obligation to transfer its interest in the Land to Building Owner as
provided herein until Building Owner has delivered to Land Owner all
material Due Diligence Documents and Due Diligence Certificates
required pursuant to Section 2(c) above and this Section 2(d) to the
extent required to be delivered on or before the Option Effective Date
(it being understood and agreed that Building Owner shall not be in
default hereunder and Land Owner shall be not be entitled to refuse to
transfer its interest in the Land by reason of any previous failure of
Building Owner to timely deliver such Due Diligence Documents and Due
Diligence Certificates as required hereunder unless Land Owner notified
Building Owner of such failure and such failure has not been remedied
on or prior to the Option Effective Date).
5. Land Owner and Building Owner shall, in the ninety (90) day period
succeeding the date of delivery of the JVA pursuant to SECTION 2(C),
negotiate in good faith the terms of the JVA, subject to the terms of
this Agreement and EXHIBIT A hereto. Any dispute relating to the terms
and provisions of the JVA which is not resolved by the end of such
ninety (90) day period shall be submitted to arbitration for resolution
pursuant to SECTION 4, below.
6. On the Option Effective Date, the following shall simultaneously occur
1. Land Owner shall convey the Land and all of Land Owner's
interest in the Ground Lease to Building Owner by Bargain and
Sale Deed with Covenant against Grantor's Acts;
2. The JVA shall be executed and delivered by Land Owner and
Building Owner Member and Land Owner shall be admitted
pursuant thereto as a 50% owner in the Joint Venture in
accordance with the terms of this Agreement and the JVA;
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3. Land Owner and Building Owner shall prepare, execute and
deliver such transfer tax and other forms and documents which
are reasonably required to effect the transaction contemplated
hereby; and
4. Land Owner and Building Owner shall each pay their respective
costs and expenses pursuant to SECTION 6 below.
3. ASSIGNMENT.
1. This Agreement shall not be assigned by either party hereto,
except that this Agreement shall be assigned by the respective
party hereto (and shall be assumed by the party accepting such
assignment) in connection with an assignment made in
accordance with the terms of the Ground Lease of all of Land
Owner's or Building Owner's respective interest in the Land,
the Building and the Ground Lease, it being understood that
this Agreement and the terms, conditions, covenants,
provisions and undertakings herein contained shall at all
times be binding solely upon and inure solely to the benefit
of Land Owner and Building Owner, and any subsequent Landlord
and Tenant under the Ground Lease, except as provided in
clause (b) below.
2. Notwithstanding anything contained in SECTION 3(A), above, in
the event that the interest of Land Owner in the Land or the
interest of Building Owner in the Building is, at any time,
acquired by the holder of a lien on such interest, whether
through foreclosure, deed-in-lieu of foreclosure, power of
sale or other such proceedings, or is acquired by any other
purchaser at or in connection with such foreclosure or other
proceedings, the option set forth in SECTION 2 hereof of the
party whose interest is so acquired shall automatically and
without notice terminate, and such holder or other purchaser,
and its successors or assigns, shall not succeed to the right
to exercise such option upon acquiring such interest, it being
understood that the party whose interest is not so acquired
shall continue to have the right to exercise its option under
SECTION 2 hereof, and such holder or other purchaser, and its
successors and assigns, shall be bound by the terms,
conditions, covenants provisions and undertakings herein
contained to be performed or observed by the party whose
interest is so acquired.
4. ARBITRATION; DISPUTES. Any dispute relating to the terms and provisions
of the JVA shall be resolved by arbitration in the Borough of
Manhattan, City and State of New York, pursuant to the Commercial
Arbitration Rules then prevailing for the American Arbitration
Association, or any successor organization ("AAA") and pursuant to the
procedure below:
1. Within ten (10) Business Days following the giving of a demand
for arbitration, Land Owner and Building Owner shall each give
notice to the other setting forth the name and address of an
arbitrator designated by the party giving such notice.
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The two arbitrators shall conduct a hearing and then issue a
joint determination within thirty (30) days after the
appointment of both arbitrators. If either party fails to give
notice of its designation within said ten (10) Business Days,
and such failure continues beyond five (5) Business Days after
notice from the non-failing party stating in boldface
capitalized letters that such failure to designate an
arbitrator within such five (5) Business Day period will
result in the non-failing party's right to seek the
appointment by AAA or a court of a single arbitrator who will
resolve the dispute, then the non-failing party may apply to
AAA for the designation of a single arbitrator and if AAA
fails to designate such single arbitrator within ten (10)
Business Days after a request therefor, such non-failing party
may apply to the Supreme Court in New York County or to any
other court having jurisdiction for the designation of such
arbitrator and the determination of such single appointed
arbitrator shall control.
2. If the two designated arbitrators are unable to agree upon
resolution of the dispute within such thirty (30) day period,
then the two arbitrators shall designate a third impartial
arbitrator. If the two arbitrators shall fail to agree upon
the designation of a third arbitrator within five (5) days
after the expiration of such thirty (30) day period, then
either party may apply to the AAA for the designation of the
third arbitrator and if the AAA is unable or refuses to
designate such third arbitrator within ten (10) Business Days
after application to the AAA for such designation, then either
party may apply to the Supreme Court in New York County or to
any other court having jurisdiction for the designation of
such arbitrator.
3. The parties shall then conduct a hearing before all three
arbitrators, not to exceed ten (10) days. The dispute shall be
resolved by a majority of the three (3) arbitrators within
thirty (30) days after termination of the hearing, but if two
(2) arbitrators cannot agree, then the third impartial
arbitrator's determination shall prevail.
4. The determination as specified herein shall be binding upon
the parties, and a judgment thereon may be entered in and
enforced by any court of competent jurisdiction, provided that
any decision rendered in any arbitration held pursuant to this
SECTION shall be final and binding upon Land Owner and
Building Owner, whether or not a judgment shall be entered in
any court.
5. All of the arbitrators selected pursuant to this SECTION shall
be lawyers having at least ten (10) years current experience
in negotiating operating agreements, partnership agreements or
joint venture agreements for the ownership, of first-class
office space in New York County.
6. Each party shall pay the fees and expenses of its own legal
counsel, witnesses, experts and consultants, and the costs
relating to the submission of its evidence, if any, in
connection with any arbitration under this SECTION, including
the expenses and fees of any arbitrator selected by it in
accordance with the provisions of this
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SECTION, and the parties shall share equally all other
expenses and fees of any third arbitrator.
7. The arbitrators shall be instructed that their determination
of any dispute relating to additional JVA terms and provisions
not set forth in EXHIBIT A annexed hereto shall be based
solely on what is then customarily included in a joint venture
agreement for a joint venture owning a first-class office
building in Manhattan which is comparable to the Building,
between joint venturers with equal interests therein and
consistent with the intent of this Agreement. The arbitrators
shall be bound by the provisions of this Agreement and shall
not add to, subtract from, or otherwise modify this Agreement.
5. NOTICES; JURISDICTION.
1. All notices (collectively, "NOTICES" and individually, a
"NOTICE") which are required or desired to be given by either
party to the other shall be in writing. All notices by either
party to the other shall be sent by nationally recognized
overnight carrier to the other party at its address set forth
below or personally delivered (with receipt acknowledged) to
such address or at such other or additional address as it may
from time to time designate in a notice to the other party,
but in no event shall a party be required to deliver notices
to more than two (2) addressees.
If to Building Owner:
MSDW 745, LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Principal, Corporate Real Estate and Facilities
Management
With a copy to:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Vice President, Corporate Real Estate and
Facilities Management
If to Land Owner:
Rock-Forty-Ninth LLC
c/o The Rockefeller Group
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
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With a copy to:
Rock-Forty-Ninth LLC
c/o The Rockefeller Group
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
2. Notices which are served upon Land Owner, Building Owner in
the manner aforesaid shall be deemed to have been given or
served for all purposes hereunder on the date of actual
receipt as evidenced by a receipt therefor, and in the event
of a failure to deliver by reason of changed address of which
no notice was given or refusal to accept delivery, as of the
date of such failure. All notices to Guarantor must be given
in accordance with the Guaranty.
3. The parties hereby confer exclusive jurisdiction upon the
Supreme Court of New York, New York County (or any successor
court of similar jurisdiction) with respect to any judicial
action or proceeding arising out of this Agreement.
6. COSTS AND EXPENSES. If Land Owner or Building Owner exercises its
option provided in SECTION 2 above, the parties shall share equally the
cost of any transfer and similar taxes, title insurance and a then
current "ALTA" survey for the Project in connection with the exercise
of such option, the transfer of the fifty percent (50%) interest in
Building Owner to Land Owner and the transfer of the Land and all of
Land Owner's interest in the Ground Lease to Building Owner. Each party
shall individually bear all of its other costs incurred in connection
with the consummation of the transactions contemplated by the exercise
of such option, including, without limitation, any costs expended by
the respective parties in complying with the terms of SECTION 5(A) and
(5)(B) of EXHIBIT A. Moreover, each party shall bear the cost of its
own counsel in connection with the preparation and execution of the
JVA.
7. NAME OF JOINT VENTURE. If Land Owner or Building Owner exercises its
option provided in SECTION 2 above, upon the Option Effective Date the
Joint Venture shall change its name to a name mutually acceptable to
Land Owner and Building Owner, which name shall reflect that Land Owner
and Building Owner Member are equal co-venturers in the Joint Venture,
provided, however, that at the election of either Land Owner or
Building Owner Member the name of the Joint Venture shall not reflect
the name of either of Land Owner or Building Owner Member, or in any
way be more favorable to one Venturer than to the other Venturer.
8. CONTINUING LEASES. Any Sublease of space in the Building, or any
modification or extension thereof, which has a term, including any
renewal options, which extends beyond the Option Effective Date shall
be subject to the prior consent of Land Owner, which consent shall not
be unreasonably withheld provided said Sublease is on market terms,
demises at least one full floor of the Building and the proposed
subtenant has
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financial strength reasonably adequate to perform its obligations under
said Sublease (or reasonable security or guaranties are provided)
consistent with current practices in the marketplace for Comparable
Buildings. Notwithstanding the foregoing, Land Owner's rejection of a
Sublease to a Governmental Authority shall be deemed reasonable. Land
Owner's consent shall be given or denied within fifteen (15) Business
Days of its receipt of a term sheet describing the material economic
terms in reasonable detail and reasonably acceptable evidence of the
Subtenant's or a guarantor's financial strength (unless reasonable
security is provided). Provided Land Owner fails to respond in such
fifteen (15) Business Day period, Building Owner shall have the right
to deliver a Deemed Approval Notice, and if Land Owner shall fail to
respond within five (5) Business Days thereafter, such Sublease shall
be deemed approved. (Any such Sublease approved, or deemed approved, by
Land Owner pursuant to this SECTION 8 is hereby referred to
individually, as a "CONTINUING LEASE," and collectively, the
"CONTINUING LEASES").
9. DEFAULT. If either party shall default in the performance of its
obligations under this Agreement, it shall be liable to the other party
for all damages, losses, liabilities, costs and expenses suffered or
incurred by the other party by reason of such default, including,
without limitation, reasonable attorney's fees and disbursements. In
addition to seeking damages, either party may pursue any other remedy
that may be available to such party at law or in equity, including
without limitation the remedy of specific performance.
10. LEASE OPTIONS.
1. Land Owner, Building Owner and Xxxxxx Xxxxxxx & Co.
Incorporated ("MS") have, simultaneously herewith, entered
into an Option to Lease Space (the "MS LEASE OPTION"), whereby
MS or its Affiliate has the option to lease space in all or a
portion of the Building from the Joint Venture upon the
formation thereof, all as more particularly described in the
MS Lease Option (any such lease entered into by MS or an
Affiliate of MS pursuant to the MS Lease Option being referred
to as the "MS LEASE").
2. Land Owner, or, at Land Owner's election, an Affiliate of Land
Owner, is hereby granted an option ("LAND OWNER'S LEASE
OPTION"), which may be exercised only if MS has affirmatively
exercised its right to lease space in the Building pursuant to
the MS Lease Option, to lease one (1) full floor or two (2)
full floors of space available in the Building, all on the
terms set forth below:
1. Land Owner's Lease Option may be exercised within
ninety (90) days after the Election Withdrawal Date
(I.E. June 30, 2029, as such date is defined in, and
may be extended pursuant to, the MS Lease Option),
time being of the essence with respect thereto.
During such period Land Owner may elect to exercise
Land Owner's Lease Option by written notice to the
Building Owner identifying the space (subject to
CLAUSES (ii)(1) and (2) below) and the proposed term
of such lease (subject to CLAUSE (ii)(3)
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below). Land Owner shall not be deemed to have
permanently waived its right to exercise the option
contemplated by this SECTION 10(B) unless and until
(A) Land Owner fails to timely exercise Land Owner's
Lease Option as set forth above and (B) either (x)
the Initial Election Notice (as such term is defined
in the MS Lease Option) contains in boldface
capitalized letters a reminder that "LAND OWNER'S
FAILURE TO TIMELY EXERCISE ITS OPTION TO LEASE SPACE
PURSUANT TO SECTION 10(B) OF THE JV OPTION AGREEMENT
WITHIN NINETY (90) DAYS FOLLOWING THE ELECTION
WITHDRAWAL DATE WILL RESULT IN THE WAIVER OF LAND
OWNER'S RIGHTS UNDER THAT SECTION" or (y) Building
Owner delivers a separate reminder notice to Land
Owner at any time after the giving of the Initial
Election Notice which contains the language set forth
in clause (x) above and Land Owner fails to
affirmatively exercise its option under this SECTION
10(B) on or before the later of (I) ninety (90) days
after the Election Withdrawal Date and (II) if
Building Owner delivers the reminder notice pursuant
to clause (y) above (as opposed to clause (x)), five
(5) Business Days after delivery of that reminder
notice.
2. The Land Owner's Lease Option shall be:
(1) for one (1) or two (2) full floors of space
in the Building which floors (if Land Owner
exercises its option with respect to two (2)
floors) shall be contiguous to the extent
available, except as otherwise reasonably
required by Building Owner, subject to
Building Owner's reasonable approval of the
location of such space, it being understood
that if such space consists of two (2)
floors, to the extent available and
practicable, Building Owner Member shall
endeavor to locate such two (2) floors in
the same elevator bank;
(2) subject to the availability of space in the
Building at the time Land Owner exercises
Land Owner's Lease Option (provided that
Building Owner shall be entitled to deem
space to be unavailable if it is vacant or
is reasonably anticipated by Building Owner
to become vacant more than six (6) months
prior to the Option Effective Date); and
(3) for a lease term of between five (5) and
fifteen (15) years, commencing on the Option
Effective Date (but in no event shall such
term extend beyond the term of the MS
Lease), subject to any then existing future
possessory or expansion right of MS, an
Affiliate of MS or any third party.
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3. Building Owner shall send Land Owner a notice within
thirty (30) days after the exercise by Land Owner of
Land Owner's Lease Option either confirming that the
floor(s) selected by Land Owner pursuant to clause
(i) above are available for lease by Land Owner and
approved by Building Owner or stating that one or
both of such floors are not available for lease by
Land Owner or not reasonably approved by Building
Owner and indicating which floor(s), if any, are
available for lease by Land Owner and approved by
Building Owner. If Building Owner fails to send such
notice within said thirty (30) day period, Land Owner
shall be entitled to send a reminder notice to
Building Owner containing the same information as is
required to be contained in Landlord's notice
exercising its Land Owner's Lease Option, with a
statement, in bold capitalized letters, that the
floor(s) selected by Land Owner shall be deemed
approved by Building Owner unless Building Owner
notifies Land Owner of its objections within five (5)
Business Days. If Building Owner fails to so notify
Land Owner of its objections within said five (5)
Business Day period, the floor(s) selected by Land
Owner shall be deemed to have been approved by
Building Owner. In the event that Building Owner
notifies Land Owner that one or both of the floor(s)
selected by Land Owner are not available or not
reasonably approved by Building Owner, Land Owner
shall, within ten (10) Business Days after Building
Owner so notifies Land Owner of the location of the
available floor(s), give a notice to Building Owner
stating that it either (x) accepts the floor(s)
offered by Building Owner (or if Land Owner exercised
its option for two (2) floors and Building Owner
identified two (2) floors which were available and
approved, Land Owner shall indicate that it accepts
both, or if the floors indicated by Building Owner
are not contiguous, either of such floors, or if
Building Owner has given Land Owner more than one
alternative, Land Owner shall indicate which floor(s)
it has elected to take), (y) rejects the floor(s)
offered by Building Owner and withdraws the exercise
of its Land Owner's Lease Option (in which event Land
Owner shall have no more rights pursuant to this
SECTION 10(B)), or (z) disputes Building Owner's
position that one or both of the floors selected by
Land Owner is unavailable or that Building Owner has
acted reasonably in disapproving Land Owner's
indicated floor(s), in which case such dispute shall
be resolved in accordance with the provisions of
SECTION 10(B)(V) above. If the dispute is arbitrated
and Building Owner prevails, Land Owner shall not be
entitled to withdraw its exercise of Land Owner's
Lease Option and shall be required to lease the space
designated by Building Owner.
4. Any lease entered into by Land Owner (or its
Affiliate) pursuant to Land Owner's Lease Option
shall have a rental equal to 95% of the then fair
market rent for the space and shall be upon such
other terms and conditions as set forth in the MS
Lease Option, except that (x) Land Owner (or its
Affiliate) shall only be entitled to those additional
services
11
and rights which, under the MS Lease Option, would
have been provided to a tenant which is leasing
and/or occupying the amount of space which Land Owner
(or its Affiliate) will lease and/or occupy, (y) the
level of services and rights granted to Land Owner
(or its Affiliate), as tenant, shall at Land Owner's
election be less than that required by MS under the
MS Lease, and (z) the provisions set forth in SECTION
2(A) of the MS Lease Option and the provisions of
SECTION 17, SECTION 26 and the last sentence of
SECTION 27 of Exhibit A of the MS Lease Option shall
not apply to Land Owner (or its Affiliate).
5. Any dispute concerning the terms of the lease with
Land Owner (or its Affiliate) which has not been
resolved within thirty (30) days after the delivery
of Land Owner's notice set forth in SECTION 10(b)(i),
above shall be resolved by arbitration pursuant to
the terms of SECTION 6 of the MS Lease Option.
6. Though the Land Owner's Lease Option set forth herein
shall be self-operative, upon either party's request,
Land Owner and Building Owner shall execute and
deliver, with respect thereto, an instrument
confirming the terms thereof, a recordable memorandum
of the same, and any further documents reasonably in
furtherance of the terms of this SECTION 10(B).
7. In no event shall the Leasing Agent be entitled to
any commission or other fee in connection with space
leased by Land Owner or its Affiliate in the Building
pursuant to this SECTION 10(B) or otherwise.
8. Fair market rent shall be determined in the same
manner as provided in the MS Lease Option. Pending
any determination of fair market rent, Land Owner
shall pay, as rent, an amount based upon the rent per
square foot of rentable area payable under the MS
Lease, subject to adjustment in the same manner as
provided in the MS Lease Option.
11. SHARED CAPITAL IMPROVEMENTS.
1. Building Owner Member shall be entitled to reimbursement for a
portion of certain capital improvements made to the Building
by Building Owner in accordance with the provisions of this
SECTION 11.
2. Subject to the terms of this SECTION 11, Land Owner shall
reimburse Building Owner Member for fifty percent (50%) of the
Reimbursable Amount (as hereinafter defined) for Shared
Capital Improvements to the extent paid for by Building Owner
prior to the Option Effective Date. Subject to the terms of
this SECTION 11, in the case of any Shared Capital
Improvements which are commenced prior to the Option Effective
Date and not completed prior thereto ("INCOMPLETE SHARED
CAPITAL IMPROVEMENTS"), the Reimbursable Amount for
12
such Incomplete Shared Capital Improvements shall mean the
amount of costs actually paid by Building Owner to perform the
same on or prior to the Option Effective Date and the Joint
Venture shall be responsible for the completion of such
Incomplete Shared Capital Improvements and the costs incurred
by the Joint Venture to do so shall constitute Joint Venture
expenses.
3. The following terms shall have the meanings set forth below:
1. "DEPRECIABLE LIFE" shall mean the period (which is not in
violation of any Legal Requirements) which is the greater of
(i) the period over which said Shared Capital Improvement was
or will actually be depreciated on Building Owner's annual tax
returns or (ii) the period over which said Shared Capital
Improvement was or will actually be depreciated on Building
Owner's financial books.
2. "SHARED CAPITAL IMPROVEMENT" shall mean any capital
improvement, repair or replacement to the Project (i) which
has an individual cost exceeding an amount equal to $1,000,000
(such amount, as increased pursuant to the further provisions
hereof, is the "THRESHOLD AMOUNT"), increased by a fraction,
the numerator of which is the CPI on the date of the
installation of such Shared Capital Improvement and the
denominator of which is the CPI on the date of this Agreement,
but in no event shall such Threshold Amount exceed $5,000,000;
(ii) the installation of which is commenced within the seven
(7) Lease Years prior to the Option Effective Date; and (iii)
which is reasonably required to comply with Building Owner's
obligations, as Tenant, under SECTION 8.2 and SECTION 11.1 of
the Ground Lease.
4. The cost of any Shared Capital Improvement (other than any Incomplete
Shared Capital Improvement), subject to Land Owner's right to dispute
the reasonableness thereof as set forth below, shall be amortized over
its Depreciable Life from the date of completion of such Shared Capital
Improvement with interest at the Prime Rate. The portion, if any, of
the cost of such Shared Capital Improvement (with interest as provided
above) which has not been amortized pursuant to the preceding sentence
as of the Option Effective Date as agreed to (or deemed agreed to)
between Land Owner and Building Owner or as determined by arbitration
pursuant to SECTION 11(D)(II) below shall be herein referred to as the
"REIMBURSABLE AMOUNT":
1. Building Owner shall provide Land Owner written notice of the
proposed Shared Capital Improvement, which notice (the
"REIMBURSEMENT NOTICE") may be given before or after the
commencement of any Shared Capital Improvement, but no later
than the Option Effective Date, and shall include (a) a
description of the improvement, (b) preliminary specifications
for such improvement, (c) the reason for such improvement,
13
(d) for informational purposes only, the estimated cost of
undertaking the improvement and (e) for informational purposes
only, an estimate of the improvement's Depreciable Life.
2. Land Owner shall have the right to give a notice to Building
Owner within thirty (30) days after its receipt of any
Reimbursement Notice objecting to the same only if Land Owner
believes in good faith that the improvement described therein
does not satisfy the definition of Shared Capital Improvement.
Any such notice from Land Owner shall specify in reasonable
detail the reasons for Land Owner's objection. If Land Owner
fails to give such objection notice within such thirty (30)
day period, Building Owner shall have the right to deliver to
Land Owner a Deemed Approval Notice, and if Land Owner shall
fail to respond within five (5) Business Days thereafter, the
improvement described in such Reimbursement Notice and Deemed
Approval Notice shall be deemed to be a Shared Capital
Improvement. If Land Owner timely gives such objection notice,
and the dispute is not resolved within thirty (30) days after
the giving of such objection notice, the dispute shall be
submitted to arbitration in accordance with the provisions set
forth in ARTICLE 33 of the Ground Lease, and the resulting
determination shall be binding on the Land Owner and Building
Owner.
3. Following the completion of the Shared Capital Improvement,
other than any Incomplete Shared Capital Improvement, Building
Owner shall provide Land Owner with notice (the "COST
NOTICE"), which Cost Notice shall include (a) the cost of the
improvement, (b) the actual Depreciable Life over which the
Shared Capital Improvement is being or will be depreciated on
the Building Owner's annual tax returns or on the Building
Owner's financial books, and (c) Building Owner's proposed
Reimbursable Amount for such Shared Capital Improvement (it
being understood that Land Owner cannot object to the
Depreciable Life). On the Option Effective Date, Building
Owner shall also notify Land Owner in a Cost Notice of the
actual cost paid by Building Owner to date for any Incomplete
Shared Capital Improvements.
4. Land Owner shall have the right to give a notice (the "COST
OBJECTION") to Building Owner within thirty (30) days after
its receipt of any Cost Notice objecting to the same only if
Land Owner believes in good faith that the cost of such
improvement as specified in the Cost Notice is more than five
percent (5%) in excess of the reasonable cost which should
have been reasonably incurred to complete such improvement (or
in the case of any Incomplete Shared Capital Improvement, if
Land Owner believes in good faith that the costs set forth in
the applicable Cost Notice were not actually paid by Building
Owner, or that the contracted costs for the Incomplete Shared
Capital Improvement (i.e. contracted costs paid to date plus
14
contracted cost to complete) is more than 5% in excess of the
reasonable cost which should have been reasonably contracted
therefor) or that Building Owner has made a mathematical
mistake in calculating the Reimbursable Amount. Any Cost
Objection shall specify in reasonable detail the reasons for
Land Owner's objection (including, without limitation, (x)
with respect to Shared Capital Improvements other than
Incomplete Shared Capital Improvements the amount that Land
Owner believes in good faith is the reasonable cost which
should have been reasonably incurred to complete such
improvement, and (y) with respect to any Incomplete Shared
Capital Improvement, the amount that Land Owner believes in
good faith was actually paid by Building Owner for such
Incomplete Shared Capital Improvement on or prior to the
Option Effective Date or, if applicable, the cost that should
have been reasonably contracted for such Incomplete Shared
Capital Improvement).
5. (A) In the case of any Shared Capital Improvement other than
any Incomplete Shared Capital Improvements, the difference
between the cost of the improvement as specified in the Cost
Notice and Land Owner's good faith determination of the
reasonable cost of the improvement as set forth in the Cost
Objection or (B) in the case of any Incomplete Shared Capital
Improvement, the difference between the actual costs paid by
Building Owner as specified in the Cost Notice and the amount
that Land Owner believes in good faith was actually paid, in
either case shall be referred to herein as the "DISPUTED
AMOUNT" and any dispute concerning the Disputed Amount which
is not resolved within thirty (30) days after the delivery of
the Cost Objection shall be submitted to arbitration for
resolution pursuant to the provisions of Article 33 of the
Ground Lease.
6. If Land Owner fails to deliver a Cost Objection within such
thirty (30) day period, Building Owner shall have the right to
deliver to Land Owner a Deemed Approval Notice, and if Land
Owner shall fail to respond within five (5) Business Days
thereafter, the Cost Notice shall be deemed approved by Land
Owner.
7. (A) If Land Owner fails to timely deliver a Cost Objection in
accordance with clauses (iv) and (vi) above with respect to a
Shared Capital Improvement, then Land Owner shall reimburse
Building Owner Member for 50 % of the Reimbursable Amount for
such Shared Capital Improvement on the later of (x) the Option
Effective Date and (y) ten (10) Business Days after the
expiration of the five (5) Business Day Period after a Deemed
Approval Notice has been delivered by Building Owner in
accordance with clause (vi) above.
(B) If Land Owner timely delivers a Cost Objection in
accordance with clause (iv) or (vi) above with respect to any
Shared Capital Improvement,
15
then Land Owner shall reimburse Building Owner Member for 50%
of the Reimbursable Amounts, less any Disputed Amounts, in
respect of such Shared Capital Improvement on the later of (x)
the Option Effective Date and (y) ten (10) Business Days after
the date the applicable Cost Objection is timely given. If
Land Owner timely delivers a Cost Objection with respect to
any Shared Capital Improvement and the dispute is not resolved
within ten (10) Business Days after the giving of such Cost
Objection, either party may submit the dispute to arbitration
in accordance with the provisions set forth in ARTICLE 33 of
the Ground Lease and the resulting determination shall be
binding on Land Owner and Building Owner. Any amounts
determined to be payable by the resolved arbitration shall be
payable to Building Owner Member on the later of (1) the
Option Effective Date or (2) the date which is ten (10)
Business Days after the resolution of the arbitration,
together with interest thereon at the Prime Rate from the date
on which such amount would otherwise have been paid.
(C) If Land Owner timely delivers a Cost Objection with
respect to any Incomplete Shared Capital Improvement objecting
that Land Owner believes in good faith that the contracted
costs for such Incomplete Shared Capital Improvement are more
than 5% in excess of the reasonable cost which should have
been reasonably contracted therefor (which Cost Objection
includes the cost that Land Owner believes in good faith
should have been reasonably contracted therefor) and such
dispute is not resolved within thirty (30) days after the
delivery of such Cost Objection, such dispute shall be
submitted to arbitration for resolution pursuant to the
provisions of ARTICLE 33 of the Ground Lease. If pursuant to
such arbitration it is determined that the amount that should
have been reasonably contracted for such Incomplete Shared
Capital Improvement exceeds the actual contracted costs for
such Incomplete Shared Capital Improvement pursuant to
Building Owner's contracts therefor entered into prior to the
Option Effective Date (the amount of such excess with respect
to any such Incomplete Shared Capital Improvement is called a
"CONTRACT EXCESS"), upon the completion of such Incomplete
Shared Capital Improvement and the payment by the Joint
Venture of all costs for such completion, the Land Owner shall
be entitled to a credit in an amount equal to 50% of the
Contract Excess for such Incomplete Shared Capital
Improvement, which credit shall be paid in accordance with
SECTION 7 of EXHIBIT A attached hereto.
5. Nothing in this SECTION shall be deemed to affect Building
Owner's right to perform any improvement, repair or
replacement it may desire to perform (subject to the terms of
the Ground Lease) without giving any Reimbursement Notice or
Cost Notice to Land Owner. Further, if Building Owner does
elect to give a Reimbursement Notice or Cost Notice to Land
Owner with respect to any such
16
improvement, repair or replacement and Land Owner timely
objects to the same in accordance with this SECTION, nothing
in this SECTION shall be deemed to affect Building Owner's
right to perform the same without waiting for the resolution
of such dispute.
6. For informational purposes only, Building Owner shall deliver
to Land Owner true copies of the Building's capital budget for
each Lease Year in which neither RCMC nor any other Affiliate
of Land Owner was the property manager of the Project
commencing with the thirty-second (32nd) Lease Year.
12. MISCELLANEOUS PROVISIONS.
1. The failure of either party to insist in any one or more cases
upon the strict performance of any of the terms, covenants,
conditions, provisions or agreements of this Agreement, or to
exercise any option herein contained, shall not be construed
as a waiver or a relinquishment for the future of any such
term, covenant, condition, provision, agreement or option.
2. This Agreement may not be changed or terminated orally but
only by an agreement in writing signed by the party against
whom enforcement of the change or termination is sought. THE
GUARANTY PROVIDES IN PART THAT GUARANTOR IS NOT BOUND BY ANY
MODIFICATION OR AMENDMENT TO THIS AGREEMENT OR THE JVA WHICH
INCREASE THE OBLIGATIONS OR DECREASE THE RIGHTS OF BUILDING
OWNER OR BUILDING OWNER MEMBER HEREUNDER UNLESS GUARANTOR
SHALL HAVE CONSENTED TO SUCH MODIFICATION OR AMENDMENT IN
WRITING.
3. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York
and without aid of any canon or rule of law requiring
construction against the party drawing or causing this
Agreement or any provision thereof to be drawn.
4. All terms and words used in this Agreement, regardless of the
number or gender in which they are used, shall be deemed to
include any other number, or any other gender, as the context
may require.
5. The terms "herein," "hereby," "hereof," "hereunder," and words
of similar import, shall be construed to refer to this
Agreement as a whole, and not to any particular Article or
SECTION, unless expressly so stated.
6. The provisions of this Agreement shall not be construed for
the benefit of any third party, except as otherwise provided
herein.
17
7. THE PARTIES HERETO HEREBY KNOWINGLY WAIVE ANY RIGHT TO A TRIAL
BY JURY FOR ANY DISPUTE ARISING IN CONNECTION WITH THIS
AGREEMENT.
8. The section headings of this Agreement (including EXHIBIT A
annexed hereto) are for convenience and reference only, and in
no way define, limit or describe the scope or intent of this
Agreement, nor in any way affect this Agreement.
9. Each of the options provided in SECTIONS 2(A) and 2(B) hereof
are being granted in connection with the Ground Lease and
therefore the parties believe such options are not subject to
the Rule Against Perpetuities (the "RULE"). Nonetheless, the
parties agree that to avoid any violation of such Rule, to the
extent either option is deemed subject thereto, each such
option must be exercised, if at all, on or before the date
which is 21 years following the death of the last to die of
Governor Xxxx Xxxxx and the descendants of Xxxx X.
Xxxxxxxxxxx, Xx. and any of their respective descendants who
are lives in being as of the date of this Agreement.
13. BANKRUPTCY REMOTE ENTITY. Each of the covenants and agreements
contained in Sections 1.4, 3.1, 3.2, 3.5, 3.6 and 7.1 of the Limited
Liability Company Agreement of Land Owner, Paragraphs 3, 4, 5 and 6 of
the Amended and Restated Certificate of Formation of Land Owner,
Articles 2, 6, 7 and 8 of the Certificate of Incorporation of
Rock-Forty-Ninth, Inc., as amended by the Certificate of Amendment of
the Certificate of Incorporation of Rock-Forty-Ninth Inc., and Articles
2, 6, 7 and 8 of the Certificate of Incorporation of Rock-Plaza, Inc.
(collectively, the "SPE Covenants") are hereby incorporated herein by
reference as if fully set forth herein for the benefit of Building
Owner. Each of Land Owner, Rock-Forty-Ninth, Inc. and Rock-Plaza, Inc.
hereby covenant and agree to comply, at all times, with the SPE
Covenants contained in their respective organizational documents and
Rock-Forty-Ninth, Inc. and Rock-Plaza, Inc. further covenant and agree
to cause Land Owner to comply, at all times, with the SPE Covenants
contained in the Limited Liability Company Agreement and Amended and
Restated Certificate of Formation of Land Owner. Land Owner shall not,
at any time prior to the termination of the Landlord Pledge, without
Building Owner's prior consent, amend or modify or permit the amendment
or modification of any of the so-called "separateness covenants"
contained in the organizational documents of Land Owner and Land
Owner's respective members or any other provisions contained therein
which would impair the ability of Building Owner to enforce its rights
as pledgee under the Landlord Pledge.
18
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
LAND OWNER:
ROCK-FORTY-NINTH LLC
By: Rock-Forty-Ninth, Inc., its Member
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
BUILDING OWNER:
MSDW 745, LLC
By: MS Financing Inc., Member
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
IF BUILDING OWNER OR LAND OWNER EXERCISES ITS OPTION IN ACCORDANCE WITH SECTION
2 OF THIS AGREEMENT, BUILDING OWNER MEMBER AGREES TO CAUSE LAND OWNER TO BE
ADMITTED AS A 50% OWNER IN BUILDING OWNER IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT, INCLUDING THE EXECUTION AND DELIVERY OF THE JVA BY BUILDING OWNER
MEMBER.
BUILDING OWNER MEMBER:
MS FINANCING INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
THE UNDERSIGNED ENTITIES AGREE TO BE BOUND BY THE PROVISIONS OF SECTION 13
HEREOF:
ROCK-FORTY-NINTH, INC. ROCK-PLAZA, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------ --------------------------
19
EXHIBIT A
MATERIAL TERMS OF JVA
14. DEFINED TERMS; SECTION REFERENCES.
1. Terms used in this EXHIBIT A without definition shall have the
respective meanings ascribed to them in the Agreement to which
this EXHIBIT A is annexed (the "AGREEMENT"), or if not so
defined, as such terms are defined in the Ground Lease.
2. Any section references contained in this Exhibit A shall refer
to other sections in this EXHIBIT A, unless specifically
stated otherwise.
15. CO-VENTURERS. The sole initial parties (individually, a "VENTURER," and
collectively, the "VENTURERS") of the Joint Venture shall be Land Owner
and the owner(s) of all of the interests in Building Owner immediately
prior to the Option Effective Date (the "BUILDING OWNER MEMBER") (or
their successors and assigns permitted hereunder). No Venturer nor the
Joint Venture shall be responsible or liable for any indebtedness or
obligation of the other Venturer incurred either before or after the
execution of the JVA, except that the Joint Venture shall be bound by
and be responsible for the following matters (collectively, the
"CONTINUING PROJECT OBLIGATIONS"):
1. any joint responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms
of the JVA; and
2. obligations arising on or after the Option Effective Date
under all of the following: (a) Continuing Leases, brokerage
agreements and construction and other contracts relating
thereto; (b) the MS Lease, if any; (c) the Ground Lease; (d)
any contracts entered into by Building Owner prior to the
Option Effective Date so long as the same are terminable upon
not more than thirty (30) days' notice without payment of any
penalty or otherwise approved in writing by Land Owner; (e)
any customary union contracts affecting the Project; (f) any
lease entered into by Land Owner or an Affiliate of Land Owner
pursuant to the Land Owner's Lease Option; (g) the Permitted
Exceptions and other easements, permits, approvals, covenants
and restrictions entered into by Building Owner in accordance
with the terms of the Ground Lease; (h) construction and other
contracts and other obligations relating to Incomplete Shared
Capital Improvements; and (i) any other obligation or
agreement approved by Land Owner in writing as being a
Continuing Project Obligation.
A-1
16. PURPOSE. The purpose of the Joint Venture will be to own, manage,
lease, mortgage, operate, alter and dispose of the Project and to
engage in such other activities, and to enter into such agreements, as
may be necessary or advisable in connection with the promotion or
conduct of the business of the Joint Venture or the Project. The Joint
Venture shall not engage in any other business without the consent of
all of the Venturers.
17. PRINCIPAL OFFICE. The principal place of business of the Joint Venture
shall be located at the principal office of the Operating Venturer in
New York City.
18. INITIAL CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS; APPORTIONMENTS.
1. On the Option Effective Date, Land Owner shall contribute to
the Joint Venture its fee interest in the Land and all of its
right, title and interest in, to and under the Ground Lease
and all rights relating to the Land and the Ground Lease, free
and clear of all liens, claims and encumbrances, subject only
to the Permitted Exceptions, the Ground Lease and any matters
created or otherwise consented to in writing by Building
Owner.
2. On the Option Effective Date, Building Owner shall cause the
Building, the Building Equipment and all rights relating
thereto to be free and clear of all liens, claims and
encumbrances, subject only to the Continuing Project
Obligations and such other matters created or otherwise
consented to in writing by Land Owner. The following
additional provisions shall apply to the Building:
1. On the Option Effective Date, Building Owner shall
cause the Building to be in compliance in all
material respects with all Requirements (other than
any Requirements then being contested in accordance
with the Ground Lease) and otherwise in working
order, condition and repair in accordance with the
standard set forth in Section 11.1 of the Ground
Lease, subject only to reasonable wear and tear. With
respect to any non-compliance with the Requirements
which is not material as of the Option Effective Date
(other than any Requirements then being contested in
accordance with the Ground Lease), Building Owner
Member shall, promptly after the Option Effective
Date, at its sole cost and expense, take whatever
action may be reasonably necessary to cure such
non-compliance; provided, however, that if such
non-compliance would not exist but for the existence
of an Incomplete Shared Capital Improvement, the
completion of such Incomplete Shared Capital
Improvement shall be the responsibility of the Joint
Venture and the costs incurred in connection
therewith shall be expenses of the Joint Venture
other than any fines and penalties arising as a
result of the late commencement or delayed
prosecution thereof prior to the Option Effective
Date which shall be paid by Building Owner Member
(unless such fines and penalties resulted from delays
caused by force majeure, in which case they shall be
borne by the Joint Venture). Building Owner Member
shall have the right to continue contesting any such
A-2
contested Requirements and, if it is determined that
the Joint Venture must comply with the same, Building
Owner Member shall, at its sole cost and expense,
take whatever action may be reasonably necessary to
comply therewith. The Joint Venture and Land Owner
shall, at Building Owner Member's sole cost and
expense, reasonably cooperate with Building Owner
Member in connection with this clause. Any tenant
improvements constructed by or on behalf of Building
Owner, any machinery, apparatus and equipment
excluded from "Building Equipment" pursuant to clause
(i) of the definition of "Building Equipment" in the
Ground Lease, all personal property of Building Owner
and all licenses, permits, guaranties, warranties,
plans, specifications, and other intangible property
of Building Owner which are not required for the
operation of the Building or the Building Equipment
and all cash on hand and any other claims, awards,
proceeds and accounts receivable which are not
apportioned in accordance with SECTION 5(B)(II)
hereof, any rights or claims of Building Owner
against Land Owner or its Affiliates under the
Affiliate Contracts or the Ground Lease and any other
obligations of Building Owner which do not constitute
Continuing Project Obligations shall be transferred
and assigned by Building Owner to, and assumed by,
Building Owner Member or its Affiliates without any
liability to Land Owner or the Joint Venture. The
Joint Venture and Land Owner shall execute such
instruments as may be reasonably necessary to effect
any such transfer.
2. All rents under the Continuing Leases and all
expenses of the Land and the Building shall be
apportioned between Building Owner Member and the
Joint Venture as of 11:59 p.m. of the day immediately
preceding the Option Effective Date. Such prorated
expenses shall include without limitation the
following:
(1) taxes and assessments levied against the Land or the
Building;
(2) utility charges, such charges to be apportioned on
the Option Effective Date on the basis of the most
recent meter reading occurring prior to the Option
Effective Date (dated not more than thirty (30) days
prior to the Option Effective Date) or, if unmetered,
on the basis of a current xxxx for each such utility;
(3) inventory and supplies;
(4) fees and expenses payable or receivable under any
Continuing Project Obligation; and
(5) leasing commissions, costs of tenant improvements,
work allowances and base building work performed for
a tenant relating to the initial term or renewal term
in effect on the Option Effective
A-3
Date of any Continuing Lease, which have been paid by
Building Owner before the Option Effective Date (the
"Apportioned Continuing Lease Costs"), each of which
shall be amortized over such term on a straight-line
basis and apportioned accordingly; provided however,
any credit resulting to the Building Owner Member
hereunder shall not be paid on the Option Effective
Date, but shall be paid in accordance with SECTION 7
hereof. With respect to similar items payable after
the Option Effective Date, the same shall be paid by
the Joint Venture, and amortized and apportioned in
the same manner as provided above, and 50% of any
resulting credit to the Joint Venture shall be paid
to Land Owner in accordance with SECTION 7 hereof.
Notwithstanding the foregoing, any leasing
commissions, costs of tenant improvements, work
allowances and base building work relating to
Continuing Leases and payable with respect to a
renewal term commencing after the Option Effective
Date or with respect to any expansion space added to
the premises after the Option Effective Date or
arising out of any amendments, modifications or
separate agreements entered into after the Option
Effective Date shall be expenses of the Joint Venture
and not be part of any credit owed to the Joint
Venture.
3. Notwithstanding anything to the contrary contained above:
(1) On the Option Effective Date, any security deposits
actually held by Building Owner pursuant to any
Continuing Leases (to the extent such security
deposits have not been applied against delinquent
rents or otherwise as provided in the Continuing
Leases) shall be transferred to a new bank account
established by the Joint Venture for the purpose of
holding tenant security deposits.
(2) Any taxes paid at or prior to the Option Effective
Date shall be prorated based upon the amounts
actually paid. If taxes due and payable during the
year in which the Option Effective Date occurs have
not been paid before the Option Effective Date,
Building Owner Member shall be responsible for that
portion of such taxes which relates to the period
before the Option Effective Date and the Joint
Venture shall be responsible for the portion of such
taxes which relates to the period from and after the
Option Effective Date. Any such apportionment made
with respect to a tax year for which the tax rate or
assessed valuation, or both, have not yet been fixed
shall be based upon the tax rate and/or assessed
valuation last fixed. To the extent that the actual
taxes for the year of the Option Effective Date
differ from the amount apportioned as of the Option
Effective Date, the parties shall make all necessary
adjustments by
A-4
appropriate payments between themselves within thirty
(30) days after such amounts are determined following
the Option Effective Date. Assessments shall be
equitably apportioned between Building Owner Member
and the Joint Venture.
(3) The following provisions shall apply to any unpaid or
delinquent rent under any Continuing Leases:
(1) Unpaid and delinquent rent under any
Continuing Leases collected by Building
Owner Member or the Joint Venture after the
Option Effective Date shall be applied as
follows: all rent received by Building Owner
Member or the Joint Venture after the Option
Effective Date shall be applied (A) first,
to the month in which the Option Effective
Date occurs, which rent shall be apportioned
between Building Owner Member and the Joint
Venture as provided above; (B) second, to
Building Owner Member, all rent accruing
within the first thirty (30) days preceding
the Option Effective Date; (C) third, to the
Joint Venture, any delinquent rents for any
period after the month in which the Option
Effective Date occurs; and (D) fourth, to
Building Owner Member, any delinquent rents
for any period prior to the first (30) days
preceding the Option Effective Date.
Building Owner Member shall be entitled to
receive all rents collected by Building
Owner Member or the Joint Venture after the
Option Effective Date which relate to any
leases which expired or were terminated
prior to the Option Effective Date.
(2) The Joint Venture will make a good faith
effort after the Option Effective Date to
collect all rents in the usual course of the
Joint Venture's operation of the Building.
Building Owner may attempt to collect any
delinquent rents owed Building Owner and may
institute any lawsuit or collection
procedures, but may not evict any tenant. In
the event that there shall be any rents or
other charges under any leases which,
although relating to a period prior to the
Option Effective Date, do not become due and
payable until after the Option Effective
Date or are paid prior to the Option
Effective Date but are subject to adjustment
after the Option Effective Date (such as
year end common area expense reimbursements
and the like), then any rents or charges of
such type received by the Joint Venture or
its agents or Building Owner Member or its
agents subsequent to the Option Effective
Date shall, to the extent applicable
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to a period extending through the Option
Effective Date, be prorated between Building
Owner Member and the Joint Venture as of the
Option Effective Date and Building Owner
Member's portion thereof shall be remitted
promptly to Building Owner Member by the
Joint Venture and the Joint Venture's
portion thereof, if received by the Building
Owner Member, shall be remitted promptly to
the Joint Venture by the Building Owner
Member.
(3) If Building Owner Member collects any unpaid
or delinquent rent for the Building,
Building Owner Member shall, within fifteen
(15) days after the receipt thereof, deliver
to the Joint Venture any such rent which the
Joint Venture is entitled to hereunder and
if the Joint Venture collects any unpaid or
delinquent rent for the Building, the Joint
Venture shall, within fifteen (15) days
after the receipt thereof, deliver to
Building Owner Member any such rent which
Building Owner Member is entitled to
hereunder.
(4) Building Owner Member may file an appeal of
the real property tax assessment in respect
of the Project, and may take related action
which Building Owner Member deems
appropriate in connection therewith for any
tax year through and including the tax year
in which the Option Effective Date occurs;
provided, however, (x) from and after the
Option Effective Date, the Joint Venture
shall have the right and obligation to
continue diligently to prosecute any contest
commenced by Building Owner for the
reduction of real property taxes or
assessments relating to the Project for the
tax year in which the Option Effective Date
occurs (the "PRESENT TAX CONTEST"), and (y)
subject to Building Owner Member's approval,
not to be unreasonably withheld or delayed
(and which approval shall be deemed given if
Building Owner Member shall not object
thereto within fifteen (15) Business Days
after request therefor by the Joint Venture
and the Joint Venture gives a Deemed
Approval Notice to Building Owner Member
after said fifteen (15) Business Day period,
and Building Owner Member shall not object
thereto within five (5) Business Days after
the giving of said Deemed Approval Notice),
the Joint Venture shall have the right to
settle or discontinue the Present Tax
Contest. If there shall be any refund of the
taxes which are the subject of such pending
Present Tax Contest, such refund, together
with any interest thereon paid by the taxing
authority, shall be paid first, to Building
Owner Member and the Joint Venture in
respect of the expenses incurred by the
Building Owner prior to the Option Effective
Date and by the Joint Venture after the
Option Effective
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Date in obtaining such refund, second to
tenants in respect of refunds payable to
tenants of the Building pursuant to their
leases and third, the balance of such refund
shall be apportioned between the Joint
Venture and Building Owner Member. Subject
to the terms set forth below, Building Owner
Member shall own and hold all right, title
and interest in and to any appeal and refund
of real property taxes paid with respect to
any tax year prior to the tax year in which
the Option Effective Date occurs and the
Joint Venture and Land Owner shall execute
such instruments as may be necessary or
reasonably desirable to transfer such right,
title and interest to Building Owner Member.
After the Option Effective Date, Building
Owner Member shall not settle any contest
for the reduction of real property taxes or
assessments relating to the Project for any
tax year prior to the tax year in which the
Option Effective Date occurs without the
Land Owner's prior consent, which consent
shall not be unreasonably withheld or
delayed and shall be deemed granted if,
within fifteen (15) business days after
Building Owner Member's delivery of a notice
requesting such approval, the Land Owner
shall fail to object by notice to Building
Owner Member and such failure shall continue
for an additional five (5) Business Days
after a Deemed Approval Notice is given to
the Land Owner. Any refund attributable to
tax years prior to the tax year in which the
Option Effective Date occurs shall be the
sole property of the Building Owner Member.
Any dispute under this clause (4) shall be
settled by arbitration.
(5) Except as otherwise provided herein, any
revenue or expense amount which cannot be
ascertained with certainty as of the Option
Effective Date shall be prorated on the
basis of the parties' reasonable estimates
of such amount, and shall be the subject of
a final proration within one hundred eighty
(180) days after the Option Effective Date,
or as soon thereafter as the precise amounts
can be ascertained. The Joint Venture shall
promptly notify Building Owner Member when
it becomes aware that any such estimated
amount has been ascertained. Once all
revenue and expense amounts have been
ascertained, the Joint Venture shall
prepare, and certify as correct, a final
proration statement which shall be subject
to Building Owner Member's approval, such
approval not to be unreasonably withheld or
delayed. Upon Building Owner Member's
acceptance and approval of any final
proration statement submitted by the Joint
Venture, such statement shall be
conclusively deemed to be accurate and
final.
(6) If pursuant to the apportionments provided
herein, a net amount is owed by Building
Owner Member, then Building Owner Member
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shall pay such amount to the Joint Venture
on the Option Effective Date, or if a net
amount is owed by the Joint Venture, then
Land Owner shall pay to Building Owner
Member 50% of such net amount on the Option
Effective Date. This CLAUSE (6) shall not
apply to credits derived under SECTION
5(B)(II)(5), which shall be paid in
accordance with SECTION 7(A) below.
(7) The JVA shall contain provisions whereby
Building Owner Member shall indemnify the
Joint Venture (and its officers, directors,
members, shareholders, partners, trustees,
beneficiaries, agents and employees) from
and against any and all claims, demands,
causes of action, liabilities, losses,
deficiencies and damages, as well as costs
and expenses (including reasonable
attorneys' fees and court costs), interest
and penalties related thereto, asserted
against, or incurred by any such indemnified
party by reason of or resulting or arising
from (A) the ownership, leasing, maintenance
and/or operation of the Building during
Building Owner's ownership thereof (other
than expenses to be apportioned pursuant to
Section 5(b) above and payment of Land
Owner's share of Shared Capital Improvements
under SECTION 11 of the Agreement and
Continuing Project Obligations), and (B) the
ownership, leasing, maintenance and/or
operation of other properties and any other
activities, operations, businesses, concerns
or other matters engaged in or performed by
Building Owner or for which Building Owner
is or may be deemed to be liable or
responsible, including without limitation
any pledges, security agreements, mortgages
and other obligations and liabilities
arising therefrom. The foregoing is not
intended to affect the rights of Building
Owner or Land Owner or their respective
Affiliates under the Affiliate Contracts. In
no event shall Building Owner Member be
liable to Land Owner for consequential
damages.
(8) The JVA shall contain provisions whereby the
Joint Venture shall indemnify Building Owner
Member (and its respective officers,
directors, members, shareholders, partners,
trustees, beneficiaries, agents and
employees) from and against any and all
claims, demands, causes of action,
liabilities, losses, deficiencies and
damages, as well as costs and expenses
(including reasonable attorneys' fees and
court costs), interest and penalties related
thereto, asserted against, or incurred by
any such indemnified party by reason of or
resulting or arising from the ownership,
leasing, maintenance and/or operation of the
Building during the Joint Venture's period
of ownership thereof, including for
Continuing Project Obligations. The
foregoing is not intended to affect the
rights of Building Owner or Land Owner or
their respective Affiliates under the
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Affiliate Contracts. In no event shall the
Joint Venture be liable to Building Owner
Member for consequential damages.
4. The capital account of each Venturer shall be
credited with one-half of the Fair Market Value of
the Project as of the Option Effective Date.
5. Each Venturer shall, additionally, contribute fifty
(50%) percent of the working capital requirements of
the Joint Venture as set forth in the First Budget.
3. The initial respective interests of the Venturers in and to
all real and personal property, moneys and profits of the
Joint Venture, and their respective shares of all losses,
expenses, obligations and liabilities of the Joint Venture
(the "PERCENTAGE INTERESTS") shall be as follows:
Land Owner 50%
Building Owner Member 50%
19. ADDITIONAL CAPITAL CONTRIBUTIONS; ADVANCES TO THE JOINT VENTURE.
1. The JVA shall contain provisions for either Venturer to call
upon each Venturer to provide funds (the "REQUESTED AMOUNT")
within thirty (30) days (unless a shorter time period is
reasonably required under the circumstances), if such Venturer
reasonably determines that funds are required (i) for the
operation of the business of the Joint Venture in accordance
with the Budget, (ii) to cure any default under any debt of
the Joint Venture or (iii) to pay the costs of improvements in
order to comply with any Requirements if the failure to pay
the same would have an immediate material adverse affect on
the Project. Such advances shall be made as capital
contributions to the Joint Venture by both Venturers unless
otherwise agreed upon in writing by both Venturers. Each
Venturer shall contribute its Percentage Interest of the
Requested Amount.
2. If a Venturer ( the "WITHHOLDING VENTURER") fails to advance
its Percentage Interest of the Requested Amount within the
time period provided in SECTION 6(A) above, and such failure
continues for five (5) Business Days after a reminder notice
is delivered to such Venturer from the other Venturer, the
other Venturer (the "NON-WITHHOLDING VENTURER") shall have the
right to (i) contribute to the Joint Venture for its own
capital account the Percentage Interest of the Requested
Amount due from the Withholding Venturer (the "DEFICIENCY"),
in which event the respective Percentage Interests shall be
recalculated as set forth in SECTION 6(C) below, or (ii) make
a loan to the Withholding Venturer (a "DEFICIT LOAN").
3. If the Non-Withholding Venturer advances the Deficiency as a
capital contribution pursuant to SECTION 6(B)(I) above or
converts a Deficit Loan to a
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capital contribution pursuant to SECTION 6(D) below, then the
Percentage Interests of the Venturers shall be recalculated so
that (i) the Percentage Interest of the Withholding Venturer
shall be reduced by subtracting therefrom the product of (A)
the Withholding Venturer's then Percentage Interest in the
Joint Venture, multiplied by (B) a fraction, the numerator of
which shall be 1.25 times the Deficiency and the denominator
of which shall be the sum of all capital contributions
theretofore made by such Withholding Venturer plus the
Withholding Venturer's Percentage Interest of such Requested
Amount, and (ii) the Percentage Interest of the
Non-Withholding Venturer shall be increased by the same
amount.
4. Deficit Loans shall bear interest at the Prime Rate plus four
percent (4%) per annum and, at the option of the
Non-Withholding Venturer, shall be converted to a capital
contribution with the subsequent recalculation of Percentage
Interest of the Venturers as provided in SECTION 6(C) above.
Any interest due in any fiscal year on any Deficit Loan which
is not paid shall be added to the principal amount of said
Loan at the end of such fiscal year. All Deficit Loans shall
automatically become due and payable upon the transfer by the
Withholding Venturer or the Non-Withholding Venturer of its
interest in the Joint Venture. All distributions to any
Withholding Venturer shall be paid to the Non-Withholding
Venturer first towards payment of interest, then principal
under any Deficit Loan, until the same is paid in full.
20. DISTRIBUTIONS; PROFITS AND LOSSES.
1. The Joint Venture shall distribute to the Venturers quarterly
within thirty (30) days after the close of each fiscal
quarter, an amount equal to the Joint Venture's net cash flow
(I.E., cash receipts less cash expenses) as of the end of such
fiscal quarter, subject to reserves set forth in the Budget.
Net cash flow distributions shall be distributed to the
Venturers in accordance with their respective Percentage
Interests except that (i) to the extent there is a Building
Owner Member credit pursuant to SECTION 5(B)(II)(5) above,
prior to either Venturer receiving any distributions which it
would otherwise be entitled to receive under this SECTION 7,
such distributions shall first be paid to Building Owner
Member until such time as 100% of such credit has been paid in
full to Building Owner Member, (ii) to the extent there is a
Joint Venture credit pursuant to SECTION 5(b)(ii)(5) as a
result of payments with respect to Continuing Leases made
after the Option Effective Date, prior to Building Owner
Member receiving any distributions which it would otherwise be
entitled to receive under this SECTION 7, such distributions
otherwise payable to Building Owner Member hereunder shall
first be paid to Land Owner until such time as 50% of such
credit has been paid in full to Land Owner and (iii) to the
extent Land Owner is entitled to a credit pursuant to Section
11(d)(vii)(C) of the Agreement as a result of any Contract
Excess with respect to any Incomplete Shared Capital
Improvement, prior to Building Owner Member receiving any
distributions which it would otherwise be
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entitled to receive under this SECTION 7, such distributions
shall first be paid to Land Owner until such time as such
credit has been paid in full. Net proceeds resulting from
sales, financings, Joint Venture liquidation and other
extraordinary events shall be distributed to the Venturers in
accordance with their respective Percentage Interests, except
that (i) to the extent there is a Building Owner Member credit
pursuant to SECTION 5(B)(II)(5), prior to either Venturer
receiving any distributions which it would otherwise be
entitled to receive under this SECTION 7, such distributions
shall first be paid to Building Owner Member until such time
as 100% of such credit has been paid in full to Building Owner
Member, (ii) to the extent there is a Joint Venture credit
pursuant to SECTION 5(B)(II)(5) hereof as a result of payments
with respect to Continuing Leases made after the Option
Effective Date, prior to Building Owner Member receiving any
distributions which it would otherwise be entitled to receive
under this SECTION 7, such distributions otherwise payable to
Building Owner Member hereunder shall first be paid to Land
Owner until such time as such 50% of such credit has been paid
in full to Land Owner and (iii) to the extent Land Owner is
entitled to a credit pursuant to SECTION 11(D)(VII)(C) of the
Agreement as a result of any Contract Excess with respect to
any Incomplete Shared Capital Improvement, prior to Building
Owner Member receiving any distributions which it would
otherwise be entitled to receive under this SECTION 7, such
distributions shall first be paid to Land Owner until such
time as such credit has been paid in full.
2. Profits and losses shall be allocated to the Venturers in
accordance with their respective Percentage Interests.
21. CONTROL AND MANAGEMENT.
1. The Joint Venture shall be operated and governed collectively
by the Venturers, as set forth in this SECTION 8. Actions by
the Joint Venture which constitute Major Decisions shall
require the affirmative votes of the Venturer or Venturers
holding at least fifty-five (55%) percent of the Percentage
Interests in the Joint Venture (the "CONTROLLING BLOCK").
2. Land Owner shall be responsible for the day to day operation
and ordinary and usual business and affairs of the Joint
Venture which do not constitute Major Decisions; provided
however, if either (x) Land Owner shall become a Defaulting
Venturer pursuant to SECTION 20(B) below and Building Owner
Member is not then also a Defaulting Venturer or (y) the RCMC
Management Agreement shall have been terminated by reason of
the manager's default thereunder, then in either of those
cases, Building Owner Member shall have the right to elect to
have such responsibility (the actual Venturer having such day
to day responsibilities being referred to as the "OPERATING
VENTURER"). Subject to the approval by the Controlling Block
and subject to the following sentence, the Operating Venturer
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shall have the right to hire a manager to perform property
management services with respect to the Project. Provided the
conditions set forth below have been satisfied, RCMC or its
Affiliate shall be the managing agent for the Joint Venture
pursuant to a management agreement on fair market financial
terms and substantially incorporating the non-monetary terms
set forth in the Management Agreement dated as of the date of
this Agreement between Building Owner and RCMC (the "RCMC
MANAGEMENT AGREEMENT") and otherwise reasonably acceptable to
Building Owner Member (and such Management Agreement may be
terminated if, at any time, such conditions do not continue to
be satisfied):
1. Rock-Forty-Ninth LLC or its Wholly-Owned Affiliate
maintains at least a twenty-five percent (25%)
interest in the Joint Venture;
2. RCMC (or such managing Affiliate) is a Wholly-Owned
Affiliate of RGI and (A) 25% or more of the
beneficial ownership in RGI is not directly or
indirectly owned by a single Competitor of Building
Owner Member and (B) 37.5% or more of the beneficial
ownership in RGI is not directly or indirectly owned
by one or more Competitors of Building Owner Member
who, directly or through their Affiliates, are in the
same primary line of business (and that line of
business is in competition with a primary line of
business of Building Owner Member or an Affiliate of
Building Owner Member), whether or not such
Competitors are Affiliated with each other and (C)
RGI is not directly or indirectly controlled by any
single Competitor of Building Owner Member or two or
more Competitors of the Building Owner Member acting
in concert with each other. In the event the
conditions set forth in this clause (ii) are
satisfied, but a Competitor of Building Owner Member
owns a direct or indirect interest in RGI (which does
not rise to the levels specified in CLAUSES (A)
through (C), above), RGI and RCMC (or such managing
Affiliate) shall provide an agreement reasonably
satisfactory to Building Owner Member in which RGI
and RCMC (or such managing Affiliate) agree in
writing not to disclose any information regarding the
business of the Building Owner Member or any of its
Affiliates (as opposed to the financial or physical
operation of the Project) to such Competitor or
Affiliates of such Competitor; and
3. the RCMC Management Agreement has not been previously
terminated by reason of RCMC's default thereunder.
The direct or indirect beneficial ownership interests
in RGI owned or controlled by any Competitor of
Building Owner Member shall be aggregated for all
purposes of clause (ii) above (including any
"control" test).
3. The following Joint Venture Decisions ("MAJOR DECISIONS")
shall be made only upon the approval by the Controlling Block:
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1. The sale or lease of all or substantially all of the Project.
2. The financing or refinancing of the Project, or any portion
thereof, provided that Xxxxxx Xxxxxxx Xxxx Xxxxxx ("MSDW") and
its Affiliates shall have a right of first offer with respect
to the same and, in such event, so long as MSDW and any
Affiliate of MSDW who is generally in the financing business
have at least a 25% interest in the Joint Venture and the
Joint Venture elects to retain an agent to obtain such
financing, MSDW or its Affiliate will be retained by the Joint
Venture at market rates as the exclusive agent to obtain any
such financing.
3. The acquisition of real property or development rights.
4. Office leases of at least one (1) full floor of rentable
square feet in the Project and any modification or termination
thereof.
5. All other leases, licenses and other use and occupancy
agreements for a term, including extensions, exceeding five
(5) years.
6. All retail and signage leases.
7. Annual leasing guidelines.
8. Any lease, license or other use and occupancy agreement which
is inconsistent with leasing guidelines approved by all
Venturers on an annual basis or other than substantially in
the form of the approved lease form.
9. The Budget.
10. Changes in tax treatment of the Joint Venture.
11. The entering into of any agreement between the Joint Venture
and a Venturer or an Affiliate of a Venturer, other than the
agreements entered into pursuant to SECTION 8(B), SECTION
8(C)(II), and SECTION 18 hereof.
12. The entering into any agreement by the Joint Venture which has
a term exceeding one year (other than leases which do not
require the approval of the Controlling Block as set forth
herein) unless such agreement is terminable without penalty
upon not more than thirty (30) days' notice.
13. Expenditure of any amounts exceeding (a) 3% for any line items
in the Budget or (b) 1% of the total Budget in the aggregate
with respect to expenditures for any line items in the Budget
and any expenditures for any items not included in the Budget.
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14. The dissolution or voluntary bankruptcy of the Joint Venture.
15. The initiation or settlement of litigation (other than actions
relating to leases for which approval of the Controlling Block
is not required) which involve individual claims exceeding
$100,000 (or such higher minimum amount which is then
customary).
16. Redesign, alteration, improvement or reconstruction of the
Building to the extent not approved in the Budget or permitted
under clause (xiii) above.
17. The demolition or abandonment of any portion of the Project
(unless set forth in the Budget or in connection with approved
tenant improvements under leases permitted hereunder).
18. Except as provided in SECTION 10 below, the admission of new
Venturers.
19. The appointment of a manager, the services to be performed by
such manager and the terms of the management agreement other
than pursuant to the RCMC Management Agreement pursuant to
SECTION 8(B) above and other than the replacement of RCMC by
reason of default by RCMC and resulting termination of the
RCMC Management Agreement.
20. Granting of any easement or encumbrance affecting the Project.
21. Casualty settlements in excess of $100,000.
22. Condemnation settlements.
23. Determination of reserves during the term of the Joint Venture
or upon dissolution.
24. All, except de minimis, environmental matters.
25. Form of lease.
26. The appointment of a leasing agent, the services to be
performed by such leasing agent and the terms of the leasing
agency agreement, other than pursuant to the RCMC Leasing
Agreement and other than by reason of the default and
resulting termination of the RCMC Leasing Agreement.
27. The amounts and types of insurance.
Any Venturer (the "PROPOSING VENTURER") shall have the right to propose
that action be taken regarding a Major Decision. The other Venturer
(the
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"RESPONDING VENTURER") shall approve or deny any Major Decision within
thirty (30) days after request in writing for approval from the
Proposing Venturer. If approval is not granted by the Responding
Venturer within such thirty (30) day period, the Responding Venturer
shall be deemed to have denied its approval of such Major Decision. If
the Venturers do not jointly approve any Major Decision, then neither
the Joint Venture nor any Venturer individually shall have the right to
take any action with respect to such Major Decision and, provided that
the Proposing Venturer first delivers to the Responding Venturer a
Deemed Approval Notice and the Responding Venturer fails to deliver a
notice to the Proposing Venturer that it consents to the action
proposed by the Proposing Venturer set forth in the Proposing
Venturer's initial notice within five (5) Business Days following the
delivery of the foregoing Deemed Approval Notice, each Venturer shall
have the right to exercise the buy-sell option described below. In the
event either Venturer so elects, the buy-sell mechanism shall be the
sole remedy of such Venturer with respect to such Major Decision.
Notwithstanding anything to the contrary contained herein, if the
Responding Venturer exercises its buy-sell option as provided below,
the Proposing Venturer shall be entitled to withdraw its proposal
regarding the Major Decision that gave rise to the Responding
Venturer's right to exercise the buy-sell option by giving written
notice to the Responding Venturer of such withdrawal within five (5)
Business Days after the Proposing Venturer's receipt of the Buy-Sell
Offering Notice (as hereinafter defined), time of the essence. If the
Proposing Venturer exercises its buy-sell option as provided below, the
Responding Venturer shall be entitled to thereafter approve the Major
Decision that gave rise to the Proposing Venturer's right to exercise
the buy-sell option by giving written notice to the Proposing Venturer
of such approval within five (5) Business Days after the Responding
Venturer's receipt of the Buy-Sell Offering Notice, time of the
essence. If the Proposing Venturer withdraws its proposal or the
Responding Venturer approves the Major Decision, each in the manner
provided above, the Responding Venturer's or the Proposing Venturer's,
as the case may be, exercise of the buy-sell option relating thereto
shall be void and of no force and effect, and the Venturers shall be
restored to their respective positions prior to the making of the
proposal by the Proposing Venturer with respect to the Major Decision.
Notwithstanding anything contained to the contrary above, if a single
Venturer constitutes the Controlling Block such Controlling Block
Venturer shall have the sole right to make all Major Decisions and no
other Venturer shall have the right to be a Proposing Venturer.
4. The Joint Venture shall insure the Project through a reputable insurer
or insurers licensed to do business in the State of New York and having
a credit rating of not less than A-/X (or the then equivalent by Best's
or its successor).
5. Each Venturer shall have the right to reject the other Venturer's
customarily retained outside accountants or attorneys as serving as the
accountants or attorneys for the Joint Venture.
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6. So long as an Affiliate of MSDW is a Venturer having at least a 50%
Percentage Interest in the Joint Venture and is not a Defaulting
Venturer, Building Owner Member (or such Affiliate) shall have the
right to designate a bank or banks which shall maintain the Joint
Venture accounts, provided in any event said bank or banks shall (i)
not be an Affiliate of Building Owner Member (or such Affiliate), (ii)
be based in New York City and (iii) have reasonably appropriate
capital.
7. The management agreement shall contain provisions whereby RCMC (or any
other property manager for the Joint Venture) shall, at least three (3)
months prior to each calendar year (including the calendar year in
which the Option Effective Date occurs), establish operating and
capital budgets for the Project for the Joint Venture's approval. Each
of the budgets approved by the Joint Venture in accordance with the
terms hereof shall be referred to as a "BUDGET." The first such budgets
for the calendar year 2032 shall be referred to as the "FIRST BUDGET".
The following provisions shall apply to the Budgets:
1. If the First Budget is not timely established, until such time
as the First Budget is established, the Project shall be
operated in accordance with a budget consisting of (i) all
amounts for non-discretionary items such as real estate taxes,
Building employees and any indebtedness of the Joint Venture
and (ii) 102% of all other amounts included in Building
Owner's budget for the prior year, except that there shall be
no capital items other than continuing capital projects
approved or deemed approved by both Venturers, any capital
projects constituting Continuing Project Obligations and any
Incomplete Shared Capital Improvements.
2. If any year's Budget (subsequent to the First Budget) is not
timely established, until such time as the new Budget is
established, the Project shall be operated in accordance with
a budget consisting of (i) all amounts for non-discretionary
items and (ii) 102% of all other amounts included in the prior
year's Budget, except that there shall be no capital items
other than continuing capital projects approved in a prior
Budget.
3. Each operating budget shall include a detailed breakdown of
all operating costs and each capital budget shall include a
detailed breakdown of capital improvements, required reserves,
projected requirements for additional capital contributions
and tenant improvements.
4. Each Venturer shall approve or disapprove a proposed budget
within thirty (30) days after submission of the same to such
Venturer by the managing agent. If any Venturer shall not
respond within such thirty (30) day period, its approval shall
be deemed denied.
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5. The Operating Venturer shall use reasonable efforts to cause
the Project to be operated in accordance with the Budget. The
Operating Venturer shall receive no compensation for the
performance of its duties under the JVA.
8. All Venturers shall receive copies of all notices, reports and
other items delivered under any management and leasing
agreements, as well as copies of all tax returns.
22. DURATION.The Joint Venture shall continue until the earliest to occur
of (i) December 31, 2100, (ii) the agreement of the Venturers to
terminate, or (iii) the date when termination is otherwise provided by
law or by the JVA.
23. TRANSFER OF INTERESTS.
1. Except as set forth in this SECTION 10, no Venturer (nor any
direct or indirect parent of any Venturer) shall Transfer any
interest in the Joint Venture, directly or indirectly,
voluntarily or involuntarily without the consent of the other
Venturer which may be withheld in each Venturer's respective
absolute discretion.
2. No Venturer shall have the right to Transfer less than all of
its direct interest in the Joint Venture, nor shall any of its
Single-Asset Holding Companies (as hereinafter defined) have
the right to transfer less than all of its indirect interest
in the Joint Venture (a "Prohibited Transfer"). If either
Venturer wishes to Transfer all of its direct interest in the
Joint Venture or in any of its Single Asset Holding Companies
other than in connection with a Permitted Transfer (a "Direct
Transfer"), the following right of first offer provisions
shall apply:
1. The offering Venturer (the "OFFEROR") shall give
notice (a "SALE NOTICE") to the other Venturer (the
"OFFEREE") of its desire so to do, which Sale Notice
shall state the price, measured in dollars and
payable solely in cash, for which it intends to sell
its direct interest in the Joint Venture (the "OFFER
PRICE"). The Offer Price shall not include the
amounts required to be paid pursuant to SECTION
10(B)(II)(2) below. The Offeree shall, within thirty
(30) days after receipt of such Sale Notice, notify
the Offeror by written notice (the "PURCHASE NOTICE")
whether or not the Offeree will purchase the interest
at the Offer Price, payable in cash, on a closing
date not less than sixty (60) days after the date of
the Purchase Notice. If the Offeree does not respond
within said thirty (30) day period, time being of the
essence with respect thereto, the Offeree shall be
deemed to have declined to purchase the interest.
2. If the Offeree elects to purchase the interest, the
notices given by the Offeror and the Offeree pursuant
to paragraph (i) above shall constitute a binding
agreement of purchase and sale between the Offeror
and the Offeree. Concurrently with the delivery of
the Purchase Notice, the
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Offeree shall deposit into an escrow account with the
Offeror's attorney, a sum equal to ten percent (10%)
of the Offer Price (the "DEPOSIT") as security for
the purchase, which deposit shall be paid to the
Offeror at the closing of such purchase as part of
the purchase price. Any interest on the Deposit shall
be credited to the Offeree unless the Offeree
defaults, in which event the interest shall go to the
Offeror. Whichever entity receives the interest shall
pay all income taxes thereon. On a date and at a
place in New York, New York specified by the Offeror,
within the time parameters specified above:
(1) the Offeror shall deliver to the Offeree a
duly executed and acknowledged instrument of
assignment conveying the interest of Offeror
to the Offeree or its designee, free and
clear of all liens and encumbrances, which
instrument shall contain surviving
representations concerning the absence of
such liens and encumbrances and that the
Offeror has not taken any action on behalf
of the Joint Venture in violation of the JVA
and shall contain a provision indemnifying
and holding the Offeree harmless from any
loss, cost or expense (including reasonable
attorneys' fees) it may incur by reason of
any breach of any such representations.
Notwithstanding anything to the contrary
contained in SECTION 17 hereof, Offeree
shall have the right to look to Offeror and
the direct and indirect owners of Offeror
for any breach of such representations, but
only to the extent of the proceeds of such
sale;
(2) the Offeror shall pay all transfer, stamp,
gains or similar taxes due in connection
with the conveyance of its interest;
(3) the Offeree shall pay the Offer Price (less
the Deposit and as adjusted by the credits
and apportionments herein set forth) in
cash;
(4) net cash flow to the date of closing shall
be distributed in accordance with the
provisions of the JVA, the benefit of which
provisions shall survive any closing
pursuant hereto for purposes of making or
correcting any customary closing
adjustments; and
(5) the Venturers shall execute all amendments
to fictitious name or similar certificates
necessary to reflect the withdrawal of the
Offeror from the Joint Venture, the
admission of any new Venturer to the Joint
Venture and, if applicable, the termination
of the Joint Venture.
A-18
3. If the Offeree fails to close the purchase and sale
contemplated hereby by reason of its default after a
binding agreement of purchase and sale has been
formed under paragraph (i) above, then the Offeror
may (A) retain the Deposit and all interest accrued
thereon as liquidated damages and/or (B) exercise the
buy-sell option pursuant to SECTION 11 below.
Notwithstanding the remedies afforded the Offeror in
the immediately preceding clauses (A) and (B) above,
if the Offeree fails to close the purchase and sale
by reason of its default after a binding agreement of
purchase and sale has been formed under paragraph (i)
above, Offeror shall have the right to effect a
Transfer to any Qualified Third Party (including a
Competitor of the Offeree) within the twenty-four
(24) month period following the date of Offeree's
default without complying with, or being bound by any
of the terms, conditions or restrictions of this
SECTION 10.
4. If the Offeror fails to close the purchase and sale
contemplated hereby by reason of its default after a
binding agreement of purchase and sale has been
formed under paragraph (i) above, then the Offeree
(A) shall be entitled to a return of the Deposit,
together with all interest accrued thereon and (B)
may (I) seek specific performance or otherwise pursue
its remedies at law or in equity with respect to the
binding agreement of purchase and sale formed
pursuant to such paragraph (i) and/or (II) exercise
the buy-sell option pursuant to SECTION 11 below.
5. In the event that the Offeree does not timely deliver
a Purchase Notice, then, subject to the terms of
SECTION 10(C) below, the Offeror may effect the
proposed transfer to a "Qualified Third Party" within
twelve (12) months after the expiration of the thirty
(30) day period following the delivery of the Sale
Notice, for consideration in cash or cash equivalent
and on other economic terms having a present cash
value of not less than ninety-five (95%) of the Offer
Price.
6. A "QUALIFIED THIRD PARTY" shall mean a Person not an
Affiliate of either Venturer which is a reputable
person of good character and business dealings.
Within thirty (30) days after any Venturer notifies
the other Venturer of the name and other reasonable
information concerning the nature of the business and
ownership of any proposed transferee (or, if such
other Venturer reasonably requests additional
information regarding such proposed transferee within
such thirty (30) day period, thirty (30) days after
such additional information is delivered to such
other Venturer), such other Venturer shall confirm
whether or not such proposed transferee constitutes a
Qualified Third Party. If such other Venturer fails
to respond within such thirty (30) day period, such
proposed transferee shall be deemed to constitute a
Qualified Third Party. Any dispute regarding any
Qualified Third Party will be subject to arbitration
and, if
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any party elects at any time after a proposed
Qualified Third Party has been identified, the
arbitration procedure set forth in SECTION 13.18 of
the Ground Lease will be put in place to resolve any
such dispute.
7. If a Qualified Third Party transfer pursuant to this
SECTION 10(B) is not consummated within such twelve
(12) month period or if the Offeror desires to effect
such a transfer for consideration in cash or cash
equivalent and on other economic terms having a
present cash value of less than ninety-five (95%) of
the Offer Price, the Offeror must once again comply
with these right of first offer provisions.
3. Notwithstanding anything contained herein to the contrary, if
Offeree has waived or deemed to have waived its rights to
purchase Offeror's interest in the Joint Venture in accordance
with the terms of SECTION 10(B) set forth above, Offeror shall
still have no right to effect a Direct Transfer to a
Competitor of Offeree unless and until it has complied with
the provisions set forth below:
1. Offeror shall provide written notice to Offeree that
it is in serious good faith negotiations to effect
the Transfer of its direct interest in the Joint
Venture to a Competitor of Offeree, and such written
notice (the "COMPETITOR SALE NOTICE") shall include a
certification by Offeror as to (a) the name of the
proposed transferee and (b) the basic terms of the
transaction, and that such basic terms are
substantially agreed upon in principle by Offeror and
such Competitor. All information contained in the
Competitor Sale Notice, to the extent such
information is not generally available in the
marketplace, shall be kept in strict confidence by
Offeree.
2. Offeree shall have ten (10) Business Days after its
receipt of the Competitor Sale Notice to elect by
notice to Offeror (the "COMPETITOR SALE RESPONSE")
whether or not it elects to purchase Offeror's
interest upon the terms set forth in the Competitor
Sale Notice. Concurrently with the delivery of a
Competitor Sale Response in which Offeree elects to
purchase Offeror's interest upon the terms set forth
in the Competitor Sale Notice, Offeree shall deposit
into an escrow account with the Offeror's attorney, a
sum equal to ten percent (10%) of the purchase price
set forth in the Competitor Sale Notice as security
for the purchase, which deposit shall be paid to the
Offeror at the closing of such purchase as part of
the purchase price. Any interest on the deposit shall
be credited to the Offeree unless the Offeree
defaults, in which event interest shall go to the
Offeror. Whichever entity receives the interest shall
pay all income taxes thereon. If Offeree does not
deliver the Competitor Sale Response within such ten
(10) Business Day period electing to so purchase
Offeror's interest and upon the expiration of such
ten (10) Business Day period, Offeror delivers a
Deemed Approval Notice to Offeree and Offeree fails
to deliver such Competitor Sale Response within three
(3) Business Days after receipt of
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such Deemed Approval Notice, Offeree shall be deemed
to have waived its rights hereunder with respect to a
sale of the Offeror's interest on the terms and to
the Competitor set forth in the Competitor Sale
Notice, and Offeror may consummate a sale to the
third party Competitor of Offeree set forth in the
Competitor Sale Notice in accordance with SECTION
10(B)(V) within twelve (12) months of the giving of
the Competitor Sale Notice (but in any event the
ultimate cash or cash equivalent consideration shall
be not less than ninety-five (95%) of that stated in
the Competitor Sale Notice ).
3. If Offeree affirmatively elects to purchase Offeror's
interest in the Competitor Sale Response, the
Competitor Sale Notice and the Competitor Sale
Response shall, taken together, constitute a binding
agreement for the purchase and sale of Offeror's
interest, and the terms of SECTION 10(B)(II), (III)
AND (IV) shall apply, except that for purposes of
this SECTION 10(C), (1) the term Competitor Sale
Notice shall be substituted for the term Sale Notice;
(2) the term Competitor Sale Response shall be
substituted for the term Purchase Notice and (3) the
Offer Price shall be deemed to be the price which the
Competitor offered to pay for Offeror's interest in
the Joint Venture as set forth in the Competitor Sale
Notice.
4. Each Venturer and its Affiliates shall have the right to
effect any Transfer which does not constitute (x) a Prohibited
Transfer or (y) a Restricted Transfer (as defined below) the
following Transfers without the consent of the other Venturer,
including the following Transfers: (a) a Transfer to a
Wholly-Owned Affiliate of either Venturer; (b) a Transfer of
any shares or interests in any person (other than in such
Venturer or in any person whose assets consist entirely or
almost entirely of a direct or indirect ownership interest in
such Venturer (a "SINGLE ASSET HOLDING COMPANY")) owning a
direct or indirect interest in the Joint Venture; (c) a
Transfer by reason of an initial public offering of a person
(but not such Venturer or any of its Single Asset Holding
Companies) owning a direct or indirect interest in the Joint
Venture; (d) a Transfer effected by the merger, reorganization
or recapitalization of or with MSDW or an Affiliate of MSDW or
RGI or an Affiliate of RGI (but not in any Venturer or any of
its Single Asset Holding Companies) or by the purchase of all
or substantially all of the assets or ownership interests of
RGI or an Affiliate of RGI or MSDW or an Affiliate of MSDW
(but not of any Venturer or any of its Single Asset Holding
Companies) or otherwise in connection with another corporate
transaction involving RGI or an Affiliate of RGI or MSDW or an
Affiliate of MSDW (but not of any Venturer or any of its
Single Asset Holding Companies) or (e) an Upstream Competitor
Transfer (defined below) which does not constitute a
Prohibited Transfer or a Restricted Transfer, provided that
any such Transfer (including the cases (a) through (e) above)
is for a legitimate business purpose and is not solely
intended to Transfer such Venturer's interest in the Joint
Venture, and provided further that any Transfer referred to
above does not constitute a Prohibited
A-21
Transfer or a Restricted Transfer. The Transfers identified in
the foregoing clauses (a) through (d) above are hereinafter
referred to individually as a "PERMITTED TRANSFER", and
collectively as "PERMITTED TRANSFERS". The following
additional provisions shall apply to Upstream Competitor
Transfers:
1. An "UPSTREAM COMPETITOR TRANSFER" shall mean a
Transfer with respect to a transferring Venturer
(excluding Transfers of shares or interests in Public
Companies) which results in any direct or indirect
beneficial ownership in such transferring Venturer
being owned or controlled by any Competitor of the
non-transferring Venturer.
2. In the case of any Upstream Competitor Transfer which
does not constitute a Restricted Upstream Competitor
Transfer, prior to or contemporaneously with such
Transfer (but in no event later than five (5)
Business Days after the earlier of the occurrence of
such Transfer or the issuance of any press release or
other public statement made by the Venturer seeking
to effect such Transfer or the Competitor in question
or their respective Affiliates concerning the
Upstream Competitor Transfer and the parties
involved), such Venturer shall provide written notice
thereof to the non-transferring Venturer, which
written notice shall include (a) a certification by
the transferring Venturer (i) of the name of the
Competitor in question and (ii) that the Transfer
does not constitute a Restricted Upstream Competitor
Transfer and (b) a confidentiality agreement in
customary form whereby the transferring Venturer and
such Competitor agree that any information regarding
the business of the non-transferring Venturer or any
of its Affiliates (as opposed to the financial or
physical operation of the Premises and the Joint
Venture) shall be kept in strict confidence by the
transferring Venturer and shall not be disclosed in
any manner to such Competitor or its Affiliates.
3. "RESTRICTED TRANSFER" shall mean any Direct Transfer
or Restricted Upstream Competitor Transfer.
5. Notwithstanding the foregoing, the following provisions shall
apply to Upstream Competitor Transfers and Restricted Upstream
Competitor Transfers, as defined below:
1. "RESTRICTED UPSTREAM COMPETITOR TRANSFER" shall mean
a Transfer with respect to a Venturer, excluding
Transfers of shares or interests in Public Companies,
which, together with and aggregating the effect of
any prior Transfers (A) would result in 25% or more
of the beneficial ownership in the direct or indirect
parent of such Venturer being directly or indirectly
owned by a single Competitor of the other Venturer or
(B) would result in 37.5% or more of the beneficial
ownership in the direct or indirect parent of such
transferring Venturer being directly or indirectly
owned by one or
A-22
more Competitors of the non-transferring Venturer
who, directly or through their Affiliates, are in the
same primary line of business (and that line of
business is in competition with a primary line of
business of the non-transferring Venturer or an
Affiliate of the non-transferring Venturer), whether
or not such Competitors are Affiliated or (C)
actually results in either Venturer being directly or
indirectly controlled by any single Competitor of the
non-transferring Venturer or two or more Competitors
of the non-transferring Venturer acting in concert
with each other. The direct or indirect beneficial
ownership interest in any Venturer owned or
controlled by a Competitor of the other Venturer and
Affiliates of such Competitor shall be aggregated for
all purposes of this Section (including any "control"
test).
2. A Venturer seeking to effect a Restricted Upstream
Competitor Transfer (an "UPSTREAM OFFEROR") shall
provide written notice (the "UPSTREAM NOTICE") to the
other Venturer (an "UPSTREAM OFFEREE") prior to or
contemporaneously with the effectiveness of a
Upstream Competitor Transfer (but in no event later
than five (5) Business Days after the earlier of the
occurrence of such Restricted Upstream Competitor
Transfer and the issuance of any press release or
other public statement made by the transferring
Venturer or the Competitor in question or their
respective Affiliates concerning the Restricted
Upstream Competitor Transfer and the parties
involved), and such written notice shall include a
certification by Upstream Offeror of (a) the name of
the proposed transferee, (b) the aggregate percentage
direct or indirect beneficial ownership in the
transferring Venturer owned or controlled by such
Competitor (and such Competitor's Affiliates) and (c)
the existence or non-existence of any agreement by
such Competitor (or any of its Affiliates) to act in
concert with any other Competitor of the
non-transferring Venturer (or such Competitor's
Affiliates). All information contained in the
Upstream Notice, to the extent such information is
not generally available in the marketplace, shall be
kept in strict confidence by the Upstream Offeree.
Prior to or contemporaneously with the effective date
of any Restricted Upstream Competitor Transfer
(provided the Upstream Offeree has not theretofore
acquired the Upstream Offeror's interest in the Joint
Venture in accordance with the provisions set forth
below), the Upstream Offeror shall deliver to the
Upstream Offeree a customary confidentiality
agreement whereby the Upstream Offeror and the
Competitor referred to in the Upstream Notice agree
that any information regarding the business of the
Upstream Offeree or any of its Affiliates (as opposed
to the financial or physical operation of the Joint
Venture or the Project) shall be kept in strict
confidence by the Upstream Offeror and shall not be
disclosed in any manner to the Competitor or its
Affiliates.
A-23
3. The Upstream Offeree shall have thirty (30) days
after its receipt of the Upstream Notice to elect by
notice to the Upstream Offeror (the "UPSTREAM
RESPONSE") whether or not it elects to purchase
Upstream Offeror's entire interest in the Joint
Venturer (such interest being the "UPSTREAM OFFEROR'S
INTEREST"), upon the terms set forth below. If the
Upstream Offeree does not timely so affirmatively
elect in the Upstream Response or, upon the
expiration of such thirty (30) day period, does not
timely deliver an Upstream Sale Response within three
(3) Business Days after Upstream Offeror delivers an
additional Deemed Approval Notice to Upstream Offeree
, it shall be deemed to have waived its rights
hereunder to purchase the Upstream Offeror's interest
in the Joint Venture with respect to that Upstream
Notice and the Competitor referred to therein. The
Upstream Offeree shall, within ten (10) days after
request by the Upstream Offeror, deliver a
certification to the Upstream Offeror confirming that
the Upstream Offeree has no further right to purchase
the Upstream Offeror's interest in the Joint Venture
and the Restricted Upstream Competitor Transfer
referred to in the Upstream Notice shall be free of
all rights of the Upstream Offeree under this SECTION
10, but no such certification shall be necessary to
make the terms hereof effective.
4. If the Upstream Offeree shall have timely and
affirmatively elected, in the Upstream Response, to
purchase the Upstream Offeror's Interest, the
Upstream Offeror shall then have ten (10) Business
Days from the delivery of the Upstream Response by
notice to the Upstream Offeree (the "UPSTREAM
RESCISSION NOTICE") to rescind the Upstream Offer, in
which event, the Upstream Offeror shall have no right
to effect the Restricted Upstream Competitor Transfer
and the Upstream Offeree shall have not right to
acquire the Upstream Offeror's Interest in accordance
with this SECTION 10(D).
5. If the Upstream Offeree affirmatively elects in the
Upstream Response to purchase the Upstream Offeror's
Interest, in the Upstream Response, and the Upstream
Offeror has not timely delivered the Upstream
Rescission Notice then the Upstream Notice and the
Upstream Response shall, taken together, constitute a
binding agreement for the purchase and sale of the
Upstream Offeror's interest. In that event, the terms
of this SECTION 10(B)(II), (III) AND (IV) shall
apply, except that for purposes of this SECTION
10(E)(V), (1) the term Upstream Notice shall be
substituted for the term Sale Notice; (2) the term
Upstream Response shall be substituted for the term
Purchase Notice, (3) the Offer Price shall be the
Fair Market Value of the Upstream Offeror's interest
in the Joint Venture, as determined pursuant to
SECTION 16 hereof and (4) the Deposit shall be
$10,000,000.
A-24
6. Except as set forth in this SECTION 10, no party shall be
admitted as an additional Venturer to the Joint Venture
without the consent of both Venturers.
7. No Venturer shall have the right to pledge, encumber or grant
any security interest in its interest in the Joint Venture,
except for the security interest granted to the other Venturer
in accordance with SECTION 20(C) below.
24. DISPUTES; BUY-SELL.
1. If (I) any Venturer denies consent (or is deemed to have
denied its consent) to any Major Decision and the Venturers do
not resolve the dispute within thirty (30) days after such
denial or deemed denial, or (II) any Venturer becomes a
Defaulting Venturer, or (III) at any time on or prior to the
Option Effective Date, Land Owner's interest in the Land or
the Ground Lease, or Building Owner's interest in the Building
or the Ground Lease, is transferred by operation of law or
otherwise, other than in accordance with ARTICLES 22, 38 AND
46 of the Ground Lease, then in the case of clause (I) above,
each Venturer, subject to the last paragraph of SECTION 8(C)
above, shall have the right, to be exercised within sixty (60)
days after the expiration of the foregoing thirty (30) day
period, or, in the case of clause (II) above, the Venturer
that is not the Defaulting Venturer shall have the right at
any time, or, in the case of clause (III) above, the other
party shall have the right, to be exercised within sixty (60)
days after the Option Effective Date, to purchase from or sell
to the other Venturer its interest in the Joint Venture in the
manner set forth below. It is expressly understood that in no
event shall a Defaulting Venturer be entitled to initiate its
buy-sell right under this SECTION 11:
1. The Venturer (the "BUY-SELL OFFEROR") may serve upon
the other Venturer (the "BUY-SELL OFFEREE") a notice
(the "BUY-SELL OFFERING NOTICE") stating its intent
to exercise the buy-sell and the dollar amount (the
"VALUATION") which the Buy-Sell Offeror as a third
party would be willing to pay for the Project as of
the date of the Buy-Sell Offering Notice assuming the
Project is free of all debt.
2. The Buy-Sell Offeree shall have the option to elect
to do one of the following, and such option may be
exercised by notice (the "RESPONSE NOTICE") to the
Buy-Sell Offeror at any time within ninety (90) days
after its receipt of the Buy-Sell Offering Notice to
either:
(1) sell its full interest in the Joint Venture
to the Buy-Sell Offeror for an amount,
determined by the Joint Venture's
accountant, equal to the amount the Buy-Sell
Offeree would have been entitled to receive
if the Project had been sold for the
Valuation and the proceeds of such sale were
distributed in accordance with the terms of
the JVA regarding the liquidation of the
Joint Venture
A-25
(reflecting, among other things, the
repayment of any Deficit Loans), net of
reasonable transaction expenses which would
have been incurred if the Project had been
sold for the Valuation; or
(2) purchase the full interest in the Joint
Venture of the Offeror for an amount,
determined by the Joint Venture's
accountant, equal to the amount the Offeror
would have been entitled to receive if the
Project had been sold for the Valuation and
the proceeds of such sale were distributed
in accordance with the terms of the JVA
regarding the liquidation of the Joint
Venture (reflecting, among other things, the
repayment of any Deficit Loans), net of
reasonable transaction expenses which would
have been incurred if the Project had been
sold for the Valuation.
(3) If the Buy-Sell Offeree shall not exercise
either of its options within such ninety
(90) day period, then it shall be deemed to
have exercised its option to sell its full
interest in the Joint Venture to the
Buy-Sell Offeror pursuant to SECTION
11(A)(II)(1) above.
3. The purchasing Venturer shall deposit into an escrow
account with the selling Venturer's attorney, a sum
equal to ten percent (10%) of the purchase price (the
"BUY-SELL DEPOSIT") for the selling Venturer's
interest as determined above within five (5) days
following the Response Notice or deemed election
pursuant to SECTION 11(A)(II)(3) above as security
for the purchase, which Buy-Sell Deposit shall be
paid to the selling Venturer at the closing of such
purchase as part of the purchase price.
Notwithstanding the foregoing, if the buy-sell is
triggered by the non-Defaulting Venturer by reason of
the other Venturer becoming a Defaulting Venturer,
such non-Defaulting Venturer shall not be required to
provide the Buy-Sell Deposit if it is the purchasing
Venturer. Any interest on the Buy-Sell Deposit shall
be credited to the purchasing Venturer unless such
purchasing Venturer defaults in which event the
interest shall go to the selling Venturer. Whichever
entity receives the interest shall pay all income
taxes thereon.
4. The closing shall occur on the date which is one
hundred fifty (150) days following the Buy-Sell
Offering Notice. If either Venturer (the "NON-CLOSING
VENTURER") fails to close the purchase and sale
contemplated above on the closing date described
herein then the other Venturer (the "CLOSING
VENTURER") shall be entitled, (A) if the Non-Closing
Venturer is the seller, to the return of the Buy-Sell
Deposit and any accrued interest thereon, and/or to
seek specific performance or otherwise pursue its
remedies at law or in equity with respect to the
purchase and sale contemplated by such Buy-Sell
Offering Notice and Response Notice and (B) if the
Non-Closing Venturer is the purchaser, to keep the
Buy-Sell
A-26
Deposit as liquidated damages, to sell its interest
in the Joint Venture to any Qualified Third Party
(including a Competitor of the Non-Closing Venturer)
at any time within twenty-four (24) months after the
default of the Non-Closing Venturer without complying
with the provisions of this Section 10 and without
the consent of such Non-Closing Venturer and/or to
sell the Project on behalf of the Joint Venture to be
sold without the consent of the Non-Closing Venturer
and the net proceeds of any such sale shall be
distributed first to the Closing Venturer in an
amount equal to all losses, costs, expenses and
damages suffered by the Closing Venturer by reason of
such failure of the Non-Closing Venturer or in
connection with such sale and the remaining proceeds
shall be distributed in accordance with the
provisions of the JVA regarding liquidation of the
Joint Venture; provided, however, that if the
Non-Closing Venturer is the non-Defaulting Venturer,
the Closing Venturer (I.E., the Defaulting Venturer)
shall have no rights or remedies under this SECTION
11(A)(IV).
5. On the closing date described above and at the
selling Venturer's attorneys' office in New York,
New, York,
(1) the selling Venturer shall deliver to the
purchasing Venturer a duly executed and
acknowledged instrument of assignment
conveying the interest of the selling
Venturer to the purchasing Venturer or their
designee, free and clear of all liens and
encumbrances, which instrument shall contain
surviving representations concerning the
absence of such liens and encumbrances and
that the selling Venturer has not taken any
action on behalf of the Joint Venture in
violation of the JVA and shall contain a
provision indemnifying and holding the
purchasing Venturer harmless from any loss,
cost or expense (including reasonable
attorneys' fees) it may incur by reason of
any breach of such representations.
Notwithstanding anything to the contrary
contained in SECTION 17 hereof, the
purchasing Venturer shall have the right to
look to the selling Venturer and the direct
and indirect owners of the selling Venturer
for any breach of such representations, but
only to the extent of the proceeds of such
sale;
(2) the selling Venturer shall pay all transfer,
stamp, gains or similar taxes due in
connection with the conveyance of its
Interest;
(3) the purchasing Venturer shall pay the
purchase price for the selling Venturer's
interest as determined above (less the
Buy-Sell Deposit and as adjusted by the
credits and apportionments herein set forth)
in cash;
A-27
(4) net cash flow to the date of closing shall
be distributed in accordance with the
provisions of the JVA, the benefit of which
provisions shall survive any closing
pursuant hereto for purposes of making or
correcting any customary closing
adjustments; and
(5) the Venturers shall execute all amendments
to fictitious name or similar certificates
necessary to reflect the withdrawal of the
selling Venturer from the Joint Venture, the
admission of any new Venturer to the Joint
Venture and, if applicable, the termination
of the Joint Venture.
2. Disputes arising from any Major Decisions for which neither
Venturer timely delivers a Buy-Sell Offering Notice shall be
submitted to arbitration for resolution with thirty (30) days
after the expiration of the sixty (60) day period referred to
in SECTION 11(A)(I), above.
25. WITHDRAWAL OR BANKRUPTCY.
1. No Venturer shall withdraw from the Joint Venture except in
the case of a Permitted Transfer or termination of the Joint
Venture.
2. If any Venturer (herein called the "FAILED VENTURER") shall at
any time admit or be adjudicated to be insolvent, file or have
filed a petition in bankruptcy, make an assignment for the
benefit of creditors, suffer or permit the appointment of a
receiver or trustee, dissolve, liquidate or fail to do
business for any reason, then the other Venturer shall have
the right and option, exercisable by notice in writing to the
Failed Venturer, its successors or representatives, to acquire
the Joint Venture interest of the Failed Venturer at a price
equal to the amount, determined by the Joint Venture's
accountants, the Failed Venturer would have been entitled to
receive if the Project had been sold for its Distress FMV, net
of reasonable transaction expenses which would have been
incurred if the Project had been sold for such Appraised FMV
(reflecting among other things, the repayment of any Deficit
Loans). "APPRAISED FMV" means the fair market value of the
Project as determined by a qualified reputable appraiser
chosen by the non-Failed Venturer provided that any such
appraisal shall be approved by a bankruptcy court having
proper jurisdiction where such approval is required by the
court. The reasonable costs of such appraisal and any other
costs incurred in connection with such appraisal and court
approval shall be deducted from the price payable for the
Failed Venturer's interest.
26. TAX MATTERS.
1. For federal, state and local income tax purposes, all items of
taxable income, deduction, credit and loss of the Joint
Venture for each fiscal year of the Joint Venture shall be
allocated to each Venturer in accordance with the allocation
of
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the corresponding item of profits and losses, except as may
otherwise be required under SECTION 13(D) below. The Joint
Venture shall be treated as a partnership for all such tax
purposes.
2. The Joint Venture shall, if requested by either Venturer, make
the election under Section 754 of the Internal Revenue Code of
1986, as the same may be amended from time to time (the
"CODE").
3. Building Owner Member shall be the "Tax Matters" partner as
defined in Section 6231(a)(7) of the Code, it being understood
that all tax decisions and elections for the Joint Venture
shall be agreed upon by both of the Venturers (except as
provided in SECTION 13(B) above).
4. If any property of the Joint Venture shall be reflected in the
capital accounts of the Joint Venture at a value that differs
from its adjusted basis for federal income tax purposes, the
profits and losses of the Joint Venture and items of income,
loss, deduction and gain shall be allocated among the
Venturers in a manner that eliminates such difference in
accordance with Section 704(c) of the Code and the Treasury
Regulations issued thereunder (and pursuant to Reg. ss.
1.704-1(b)(4)(i)) using the traditional method specified in
Treasury Regulations issued under Section 704(c) of the Code.
27. BORROWING. Except as may be approved as a Major Decision, neither the
Joint Venture, nor any Venturer on behalf of the Joint Venture, shall
directly, or indirectly, borrow money or become obligated upon or
liable for any monies borrowed, and shall not, as a Venturer, cause the
Joint Venture to assume, guarantee or act as surety for any obligation
or liability (whether for borrowed money or otherwise) of any other
person without, in each case, the prior written consent of the
Controlling Block.
28. OUTSIDE TRANSACTIONS. Either Venturer may engage in or possess an
interest in other business ventures of any nature or description,
independently or with others, whether presently existing or hereafter
created, including, but not limited to, the commercial and residential
real estate businesses in all of their phases, which shall include,
without limitation, the ownership, leasing, operation, management,
syndication, servicing and/or development of commercial and residential
real property, including property competitive with the Project, and
neither Venturer shall have any rights in or to such independent
ventures or the income or profits derived therefrom. Notwithstanding
the foregoing, the Operating Venturer shall have a fiduciary duty to
the other Venturer for the performance of its obligations under the
JVA.
29. FAIR MARKET VALUE. For purposes of determining "Fair Market Value" of
the Project pursuant to SECTIONS 5(B)(IV) OR 10(E)(V) above or SECTION
20(B)(V) below, the same, if not otherwise agreed upon by the
Venturers, shall be submitted to and determined by binding "baseball"
arbitration, as follows:
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1. Each Venturer shall, within ten (10) days after a dispute
arises, (a) appoint a disinterested person who is a reputable
MAI (or its successor organization) appraiser (an "APPRAISER")
with at least 10 years experience in appraising major office
buildings in the Borough of Manhattan and (b) give notice of
such appointment to the other Venturer.
2. Such Appraisers shall either (i) within forty-five (45) days
after the later of the notices referred to in clause (a) have
been delivered, determine and promptly report to each Venturer
in writing the Fair Market Value of the Project, or (ii) if
they cannot agree within such forty-five (45) day period,
deliver separate reports to each Venturer within fifteen (15)
days of the expiration of such forty-five (45) day period.
3. If the two Appraisers cannot agree within the time frame set
forth in CLAUSE (B)(I) above, then they shall promptly jointly
appoint a third Appraiser who shall determine the Fair Market
Value of the Project by selecting either Venturer's designated
Appraiser's Fair Market Value determination according to
whichever of the two valuations is closer to the actual Fair
Market Value in the opinion of such third Appraiser (I.E. the
third Appraiser shall not choose a third determination).
4. If the two Appraisers shall fail to agree upon the designation
of a third Appraiser within thirty (30) days from the
expiration of the time frame set forth in clause (b)(i), then
either Venturer may apply to the AAA for the designation of
such Appraiser and if the AAA is unable or fails to designate
a third Appraiser within ten (10) Business Days after a
request therefor, then either Venturer may apply to the
Supreme Court in New York County or to any other court having
jurisdiction for the designation of such Appraiser.
5. If a Venturer who shall have a right to appoint an Appraiser
fails or refuses to do so within the time frame specified
herein and such failure continues for five (5) Business Days
after notice from the non-failing Venturer stating in boldface
capitalized letters that such failure to appoint such
Appraiser within such five (5) Business Day period will result
in the non-failing Venturer's right to seek the appointment by
AAA or a court of a single Appraiser who will determine the
Fair Market Value, then the non-failing Venturer may apply to
AAA for the designation of a single Appraiser and if AAA is
unable or fails to designate such Appraiser within ten (10)
Business Days after a request therefor, such non-failing
Venturer may apply to the Supreme Court in New York County or
to any other court having jurisdiction for the designation of
such Appraiser and the determination of such single appointed
Appraiser alone shall control.
6. The appraisal shall be conducted in the City of New York.
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7. The expense of the arbitration and the fees and disbursements
of the third Appraiser shall be shared equally by the
Venturers, but each Venturer shall be responsible for the fees
and disbursements of the Appraiser it appoints and its own
attorneys and the expenses of its own proof. The Venturers
shall execute, acknowledge and deliver such other and further
documents and instruments as may be necessary to submit such
dispute to arbitration.
8. The Appraisers shall have no power to modify any of the
provisions of the JVA or this Agreement and their jurisdiction
is limited accordingly. Each Appraiser shall be an independent
real estate appraiser who is a member of the American
Institute of Appraisers (or any successor organization) having
at least ten (10) years then current experience in the
appraisal of land and commercial buildings in the Borough of
Manhattan, New York City.
9. The Venturers promptly shall execute, acknowledge and deliver
an agreement confirming the Fair Market Value of the Project,
as so determined, but their failure to do so shall not affect
such determination.
30. LIMIT OF LIABILITY. Each Venturer shall look solely to the interest of
the other Venturer in and to the Joint Venture in the event of breach
or default by the other Venturer pursuant to the provisions of the
Joint Venture Agreement; PROVIDED, HOWEVER, that the foregoing
provisions of this SECTION shall not be deemed or construed to limit
(i) any of the rights or options granted to a Non-Withholding Venturer
pursuant to SECTION 6 hereof, (ii) the liability of either Venturer to
the other for any negligent act or omission or any wrongful act, (iii)
any claims asserted by any third party or third parties against the
Joint Venture or either Venturer and the right of the Venturers to
contribution from each other in respect of any such claims, (vi) the
liability of Building Owner Member for its indemnification obligations
pursuant to SECTION 5(B)(III)(7) hereof; (vii) the liability of the
Offeror for the breach of the representations pursuant to SECTION
10(B)(II)(1) hereof; (viii) the liability of the selling Venturer for
the breach of the representations pursuant to SECTION 11(A)(V)(1)
hereof; (ix) the liability of the Offeror for the breach of the
representations provided in SECTION 10(B)(II)(1) hereof as such
representations relate to a Transfer to a Competitor pursuant to
SECTION 10(C)(III) hereof or the liability of the Upstream Offeror for
the breach of the representations provided in SECTION 10(B)(II)(1)
hereof as such representations relate to Upstream Competitor Transfer
pursuant to SECTION 10(E) hereof; (x) the rights of either Venturer to
the Deposit pursuant to SECTION 10(b) hereof, the deposit with respect
to Transfers to Competitors pursuant to SECTION 10(C) hereof, the
deposit with respect to Restricted Upstream Competitor Transfers
pursuant to SECTION 10(E) hereof or the Buy-Sell Deposit pursuant to
SECTION 11(A) hereof; and (xi) rights under the Guaranty or the Pledge.
31. LEASING AGENT.
1. Provided the conditions set forth in SECTION 18(B) below have
been satisfied, then RCMC, or its Affiliate shall be the
leasing agent (the "LEASING AGENT") for the
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Joint Venture other than with respect to signage pursuant to a
leasing agreement on fair market financial terms taking into
account, among other things, RCMC's (or such Affiliate's) then
market share and expertise in the leasing of commercial space
in Manhattan and otherwise substantially incorporating the
non-monetary terms of any leasing agreement with RCMC (or such
Affiliate) entered into by Building Owner in accordance with
the Ground Lease, or if such leasing agreement shall not have
been entered into, otherwise on commercially reasonable terms
and in all cases in form and substance satisfactory to the
Building Owner Member (the "RCMC LEASING AGREEMENT").
2. The Joint Venture shall have no obligation to enter into the
RCMC Leasing Agreement unless the following conditions are
satisfied (and the RCMC Leasing Agent may be terminated if, at
any time, such conditions do not continue to be satisfied):
1. Rock-Forty-Ninth LLC or another Wholly Owned
Affiliate of RGI shall maintain at least a
twenty-five percent (25%) interest in the Joint
Venture;
2. no prior leasing agreement or management agreement
with respect to the Project shall have been
terminated due to a default by RCMC (or any Affiliate
of RGI);
3. RCMC (or such managing Affiliate) is a Wholly-Owned
Affiliate of RGI and (A) 25% or more of the
beneficial ownership in RGI is not directly or
indirectly owned by a single Competitor of Building
Owner Member and (B) 37.5% or more of the beneficial
ownership in RGI is not directly or indirectly owned
by one or more Competitors of Building Owner Member
who, directly or through their Affiliates, are in the
same primary line of business (and that line of
business is in competition with a primary line of
business of Building Owner Member or an Affiliate of
Building Owner Member), whether or not such
Competitors are Affiliated with each other and (C)
RGI is not directly or indirectly controlled by any
single Competitor of Building Owner Member or two or
more Competitors of the Building Owner Member acting
in concert with each other. In the event the
conditions set forth in this clause (iii) are
satisfied, but a Competitor of Building Owner Member
owns a direct or indirect interest in RGI (which does
not rise to the levels specified in clauses (A)
through (C), above), RGI and RCMC (or such leasing
agent Affiliate) shall provide an agreement
reasonably satisfactory to Building Owner Member in
which RGI and RCMC (or such leasing agent Affiliate)
agree in writing not to disclose any information
regarding the business of the Building Owner Member
or any of its Affiliates (as opposed to the financial
or physical operation of the Project) to such
Competitor or Competitors of Building Owner Member;
A-32
4. RCMC (or such leasing agent Affiliate) is the leasing
agent of at least 4 million square feet of commercial
space in Manhattan (exclusive of the Building); and
5. the Joint Venture owns the Project.
3. The direct or indirect of beneficial ownership interest in RGI
owned or controlled by a Competitor of Building Owner Member
and Affiliates of such Competitor shall be aggregated for all
purposes of clause (iii) above (including any "control" test).
Any dispute over the terms of the RCMC Leasing Agreement which
has not been resolved within sixty (60) days after Building
Owner Member on behalf of the Joint Venture has delivered to
Land Owner a form of such agreement, shall be resolved by
arbitration in accordance with SECTION 4 of the Agreement.
32. AFFILIATECONTRACTS. In the event the Joint Venture enters into any
agreement with a Venturer or an Affiliate of a Venturer (subject to the
consent of the Controlling Block to any such agreement) except for
those agreements specifically provided for and consented to in this
Agreement, including, without limitation, the RCMC Management
Agreement, the RCMC Leasing Agreement, the MS Lease Option, or any
space lease executed in connection therewith and the Land Owner's Lease
Option, or any space lease executed in connection therewith (any such
agreement being referred to as an "AFFILIATE CONTRACT"), then the
following provisions shall apply with respect to such Affiliate
Contract:
1. In case of any default under an Affiliate Contract or any
dispute or matter requiring an interpretation on behalf of the
Joint Venture under an Affiliate Contract:
1. the other Venturer shall have the sole right to
enforce such Affiliate Contract and to exercise all
remedies under such Affiliate Contract without the
consent of the Affiliated Venturer and to make any
such interpretation and resolve any such dispute; and
2. in the case of the RCMC Management Agreement or RCMC
Leasing Agreement, or any other management agreement,
leasing agreement or other service or material supply
contract, the Venturer not Affiliated with such party
shall have the right, upon the termination thereof,
to enter into a replacement agreement with third
party not an Affiliate of either Venturer and on such
fair market terms and conditions as such
non-Affiliate Venturer may determine in its sole good
faith discretion, without the consent of such
Affiliated Venturer.
2. The terms and conditions of each Affiliate Contract, any
modification thereof, and the negotiation of such Affiliate
Contracts and any arbitration arising out of the terms
thereof, or waiver of any obligation of a party to such
agreement, and any
A-33
direction, consent and approval required thereunder, shall be
subject to the reasonable approval of the non-Affiliated
Venturer.
33. EVENTS OF DEFAULT; REMEDIES.
1. Each of the following events, and with respect to CLAUSES (I)
and (II) below only, if the same shall continue for three (3)
Business Days after an additional notice is delivered from the
Venturer not committing the act set forth below to the
Venturer which committed said act, shall constitute an "Event
of Default" hereunder:
1. if any Venturer fails to make any contribution or
payment which it is required to make under this
Agreement within ten (10) Business Days after notice
from the other Venturer that such Venturer failed to
make such contribution or payment on the due date
therefor; provided however that (a) any such failure
to make a payment or contribution shall not
constitute a default or Event of Default, if, in
accordance with SECTION 6(B)(I) hereof, the
Non-Withholding Venturer contributes for its own
capital account the amount of any such Deficiency
with respect to such payment or contribution not so
made by the Withholding Venturer or (b) if the
Non-Withholding Venturer makes a Deficit Loan in
accordance with SECTION 6(B)(II) hereof with respect
to such payment or contribution not so made by the
Withholding Venturer, and provided the non-Defaulting
Venturer has not delivered a Buy-Sell Offering Notice
in accordance with SECTION 11(A) hereof, then any
such default or Event of Default shall be deemed
cured from and after the date upon which any such
Deficit Loan (and all interest accrued thereon) is
paid in full by the Withholding Venturer;
2. if any Venturer defaults in the observance or
performance of any term, covenant or condition of
this Agreement, other than a default in making a
contribution or payment and such default continues
for thirty (30) days after such Venturer receives
notice thereof from another Venturer (or, if such
default cannot reasonably be cured within such thirty
(30) day period by virtue of the nature of such
default, such Venturer does not commence to cure such
default within such period and thereafter diligently
prosecute such cure to completion); or
3. if any act or omission of a Venturer causes an event
of default (beyond applicable notice and grace
periods) to occur under any indebtedness of the Joint
Venture; or
4. any default by a Venturer under the right of first
offer or buy-sell option contained herein; or
5. if any Venturer withdraws from the Joint Venture or
becomes a Failed Venturer.
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2. If a Venturer (the "DEFAULTING VENTURER") has caused an Event
of Default hereunder, then the other Venturer (the
"NON-DEFAULTING VENTURER") may exercise any one or more of the
remedies described below:
1. institute suit in any court of competent jurisdiction
to obtain (i) specific performance of the obligations
of the Defaulting Venturer under this Agreement, (ii)
reimbursement for all costs of court and reasonable
attorneys' fees thereby incurred and (iii) damages,
if any, resulting to the Joint Venture or the
Non-Defaulting Venturer from such Event of Default by
the Defaulting Venturer plus interest thereon at the
Lease Interest Rate from the date incurred until the
date paid;
2. cure the Event of Default, in which case the
Defaulting Venturer shall pay to the Non-Defaulting
Venturer, on demand, the cost of such cure (including
any interest on funds borrowed for the purpose)
together with interest thereon at the Lease Interest
Rate from the date incurred until the date paid;
3. elect to terminate the Joint Venture;
4. exercise the buy-sell option pursuant to SECTION 11
hereof; and/or
5. exercise the right to purchase the Defaulting
Venturer's interest for an amount equal to the
amount, determined by the Joint Venture's
accountants, the Defaulting Venturer would have been
entitled to receive if the Project had been sold for
its Fair Market Value determined in accordance with
SECTION 16 hereof (reflecting, among other things,
the repayment of Deficit Loans), less the costs of
the appraisal and any other costs incurred by the
Non-Defaulting Venturer in connection with the
appraisal and less all losses, costs, expenses and
damages suffered by the Non-Defaulting Venturer by
reason of such default of the Defaulting Venturer.
3. Each of the Venturers hereby assigns and grants to the other
Venturer a first priority lien upon, and a security interest
in, the interest of such Venturer in the Joint Venture and all
amounts, payments and proceeds becoming distributable or
payable to such Venturer by the Joint Venture, as collateral
security for the payment and performance of such Venturer's
obligations under the JVA (including, without limitation, all
of such Venturer's obligations with respect to the right of
first offer and buy-sell provision herein). Each Venturer
shall execute such financing statements as the other Venturer
shall reasonably request in order to perfect and maintain the
perfection of the lien and security interest herein granted.
Any transfer of the Joint Venture interest of a Venturer shall
be subject to such lien and security interest. Each Venturer
shall notify each other Venturer
A-35
within thirty (30) days of any change in its chief executive
offices from that set forth in the JVA.
4. If (and only if) a Venturer becomes a Defaulting Venturer, all
amounts, payments and proceeds which may become distributable
or payable by the Joint Venture to such Defaulting Venturer
which are secured by a security interest created pursuant to
the above paragraph, shall be paid to the Non-Defaulting
Venturer until all amounts due to the Non-Defaulting Venturer
have been paid in full, but shall nevertheless be deemed to
have been distributed to the Defaulting Venturer.
34. ESTOPPEL CERTIFICATES.
1. Each Venturer agrees at any time and from to time, upon not
less than ten (10) days' prior request by the other Venturer
to execute, acknowledge and deliver to such Venturer a
statement in writing certifying (a) that the JVA is unmodified
and in full force and effect (or if there have been
modifications, that the same is in full force and effect as
modified and stating the modifications), (b) the Percentage
Interests of the Venturers and (c) whether or not, to the best
knowledge of the Venturer giving such certificate, there is
any existing default or Event of Default under the JVA on the
part of the other Venturer and, if so, specifying each such
default or Event of Default, it being intended that any such
statement delivered pursuant to this SECTION 21 may be relied
upon the Venturer requesting such statement and by any
prospective purchaser of such Venturer's interest in the Joint
Venture.
2. If a Venturer shall fail or refuse to execute, acknowledge and
deliver the statement required under this SECTION 21 within
twenty (20) days after request from the other Venturer, the
requesting Venturer shall have the right to send a Deemed
Approval Notice with the certifications set forth below, and
if such failure or refusal continues for five (5) Business
Days after such Deemed Approval Notice, it shall be deemed
that such Venturer has certified that (i) the JVA is
unmodified and in full force and effect and (ii) to the best
of its knowledge there are no existing defaults or Events of
Default on the part of the other Venturer to the JVA.
35. COOPERATION BY VENTURERS. Each Venturer shall reasonably cooperate with
the other Venturer in connection with any transfer of such Venturer's
interest in accordance with SECTION 10 hereof (including the right of
first offer provisions thereof), SECTION 20(B)(V) hereof, the exercise
of the buy-sell right in accordance with SECTION 11 hereof or the
exercise of the right to purchase any Failed Venturer's interest in
accordance with SECTION 12 hereof and shall cause the Joint Venture's
accountants to provide the determinations of net cash flow, buy-sell
prices and the purchase price under said SECTION 12 to be determined
within the time frames contemplated under said SECTIONS 10, 11 and 12.
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36. OTHER TERMS. The JVA shall contain such other reasonable additional
terms, conditions and provisions agreed to by the parties which are not
inconsistent with the terms of this EXHIBIT A, including, without
limitation, the incorporation of additional provisions, mechanisms and
procedures in furtherance of the terms hereof.
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ANNEX I
CERTAIN DEFINED TERMS
Term Page
---- ----
AAA ..........................................................................6
Affiliate Contract.........................................................A-34
Agreement ....................................................................1
Apportioned Continuing Lease Costs..........................................A-4
Appraiser .................................................................A-30
Budget ....................................................................A-16
Building Owner ...............................................................1
Building Owner Member.......................................................A-1
Buy-Sell Deposit ..........................................................A-27
Buy-Sell Offeree ..........................................................A-26
Buy-Sell Offering Notice...................................................A-26
Buy-Sell Offeror ..........................................................A-26
Closing Venturer ..........................................................A-27
Code ......................................................................A-29
Competitor Sale Notice.....................................................A-20
Competitor Sale Response...................................................A-21
Continuing Lease .............................................................9
Continuing Leases ............................................................9
Continuing Project Obligations..............................................A-1
Contract Excess .............................................................17
Controlling Block .........................................................A-11
Cost Notice .................................................................15
Cost Objection ..............................................................15
Defaulting Venturer........................................................A-35
Deficiency ................................................................A-10
Deficit Loan ..............................................................A-10
Deposit ...................................................................A-18
Depreciable Life ............................................................13
Direct Transfer ...........................................................A-17
Disputed Amount .............................................................16
Distress FMV ..............................................................A-29
Due Diligence Certificate.....................................................3
Due Diligence Documents.......................................................3
Failed Venturer ...........................................................A-29
Fair Market Value .........................................................A-30
Financial Statements..........................................................3
First Budget ..............................................................A-16
Ground Lease .................................................................1
Incomplete Shared Capital Improvements.......................................13
i
Joint Venture ................................................................2
JV Option Agreement.........................................................A-1
JVA ..........................................................................2
Land .........................................................................1
Land Owner ...................................................................1
Land Owner's Lease Option....................................................10
Leasing Agent .............................................................A-32
Major Decisions ...........................................................A-13
MS ..........................................................................10
MS Lease ....................................................................10
MS Lease Option .............................................................10
MSDW ......................................................................A-13
Non-Closing Venturer.......................................................A-27
Non-Defaulting Venturer....................................................A-35
Non-Withholding Venturer...................................................A-10
notice .......................................................................7
Offer Price ...............................................................A-18
Offeree ...................................................................A-18
Offeror ...................................................................A-18
Operating Venturer.........................................................A-12
Option Effective Date.........................................................1
Percentage Interests........................................................A-9
Present Tax Contest.........................................................A-6
Prohibited Transfer........................................................A-17
Project ......................................................................2
Proposing Venturer.........................................................A-15
Purchase Notice ...........................................................A-18
Qualified Third Party......................................................A-20
RCMC Leasing Agreement.....................................................A-32
RCMC Management Agreement..................................................A-12
Reimbursable Amount..........................................................14
Reimbursement Notice.........................................................14
Requested Amount ...........................................................A-9
Responding Venturer........................................................A-15
Response Notice ...........................................................A-26
Rule ........................................................................19
Sale Notice ...............................................................A-18
Shared Capital Improvement...................................................13
Threshold Amount ............................................................14
Upstream Notice ...........................................................A-23
Upstream Offeree ..........................................................A-23
Upstream Offeror ..........................................................A-23
Upstream Offeror's Interest................................................A-24
ii
Upstream Recission Notice..................................................A-25
Upstream Response .........................................................A-24
Valuation .................................................................A-26
Venturer ...................................................................A-1
Venturers ..................................................................A-1
Withholding Venturer........................................................A-9
iii
