CONTRIBUTION AGREEMENT
AMONG
ANGELES PARTICIPATING MORTGAGE TRUST,
STARWOOD MEZZANINE INVESTORS, L.P.,
AND
STARWOOD OPPORTUNITY FUND IV, L.P.
--------------------
Dated as of February 11, 1998
TABLE OF CONTENTS
ARTICLE I
CONTRIBUTION OF ASSETS; ISSUANCE OF CLASS A SHARES
Section 1.1 Contributed Assets............................................2
Section 1.2 Purchase Price................................................2
Section 1.3 Adjustments to Purchase Price.................................3
Section 1.4 Prorations....................................................4
ARTICLE II
CLOSING
Section 2.1 Closing Date..................................................4
Section 2.2 Closing Date Deliveries.......................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE TRUST
Section 3.1 Organization of the Trust.....................................4
Section 3.2 No Subsidiaries...............................................5
Section 3.3 Capitalization................................................5
Section 3.4 Authority.....................................................5
Section 3.5 Litigation....................................................6
Section 3.6 Certain Matters...............................................6
Section 3.7 SEC Documents.................................................6
Section 3.8 Shareholder Agreement.........................................6
Section 3.9 Financial Information.........................................6
Section 3.10 No Finder.....................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
STARWOOD MEZZANINE
Section 4.1 Organization of Starwood Mezzanine............................7
Section 4.2 Authority.....................................................7
Section 4.3 Investment Representations....................................8
Section 4.4 Litigation....................................................8
Section 4.5 Proxy Statement...............................................8
Section 4.6 Employee Benefit Plans........................................8
Section 4.7 No Finder.....................................................9
Section 4.8 Environmental.................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SOFI IV
Section 5.1 Organization of SOFI IV.......................................9
Section 5.2 Authority.....................................................9
Section 5.3 Investment Representations...................................10
Section 5.4 Litigation...................................................10
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Section 5.5 Proxy Statement..............................................11
Section 5.6 Employee Benefit Plans.......................................11
Section 5.7 No Finder....................................................11
Section 5.8 Environmental. ...........................................11
ARTICLE VI
REPRESENTATIONS OF BOTH CONTRIBUTORS
Section 6.1 Good Title...................................................12
Section 6.2 Record Keeping; Mortgage Files; Escrow Deposits..............12
Section 6.3 Additional Representations...................................12
ARTICLE VII
ACTIONS PRIOR TO THE CLOSING DATE
Section 7.1 Proxy Statement..............................................16
Section 7.2 Action by the Trust and Shareholders of the Trust............17
Section 7.3 Lawsuits, Proceedings, etc...................................17
Section 7.4 Conduct of Business by the Trust, Starwood Mezzanine
and SOFI IV Pending the Closing.............................17
Section 7.5 Mortgagor Solicitations......................................19
Section 7.6 Mutual Cooperation; Best Efforts.............................19
Section 7.7 No Public Announcement.......................................19
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
Section 8.1 No Misrepresentation or Breach of Covenants and
Warranties..................................................19
Section 8.2 No Material Adverse Effect...................................20
Section 8.3 Opinion of Counsel for Starwood..............................20
Section 8.4 No Injunctions or Restraints.................................20
Section 8.5 Necessary Governmental Approvals.............................20
Section 8.6 Transaction Agreements.......................................20
Section 8.7 Shareholder and Stockholder Action...........................20
Section 8.8 Termination of Partnership and Exchange Rights Agreement.....20
Section 8.9 Fairness Opinion.............................................20
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF STARWOOD MEZZANINE AND SOFI IV
Section 9.1 No Misrepresentation or Breach of Covenants and Warranties...21
Section 9.2 No Material Adverse Effect...................................21
Section 9.3 Opinion of Counsel for the Trust.............................21
Section 9.4 No Injunctions or Restraints.................................21
Section 9.5 Necessary Governmental Approvals.............................21
Section 9.6 Transaction Agreements; Advisory Agreement...................21
Section 9.7 Shareholder and Stockholder Action...........................22
ARTICLE X
INDEMNIFICATION; SURVIVAL
Section 10.1 Indemnification...............................................22
Section 10.2 Notice of Claims.............................................23
Section 10.3 Third-Party Claims...........................................23
Section 10.4 Survival of Representations and Warranties...................24
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ARTICLE XI
TERMINATION
Section 11.1 Termination..................................................24
ARTICLE XII
OTHER PROVISIONS
Section 12.1 Confidential Nature of Information...........................25
Section 12.2 Expenses.....................................................25
Section 12.3 Notices......................................................26
Section 12.4 Definitions..................................................27
Section 12.5 Partial Invalidity...........................................29
Section 12.6 Successors and Assigns.......................................29
Section 12.7 Execution in Counterparts....................................29
Section 12.8 Titles and Headings..........................................29
Section 12.9 Schedules and Exhibits.......................................29
Section 12.10 Entire Agreement; Amendments and Waivers; Assignment.........29
Section 12.11 Governing Law................................................29
Section 12.12 No Third-Party Beneficiaries.................................30
Section 12.13 The Trust; Starwood General Partners.........................30
Section 12.14 Determinations and Interpretations by the Trust..............30
Section 12.15 Submission to Jurisdiction...................................30
Section 12.16 Approvals and Consents.......................................30
SCHEDULE 1.1(a) Starwood Mezzanine Interests
SCHEDULE 1.1(b) SOFI IV Interests
EXHIBIT A - Form of Registration Rights Agreement
EXHIBIT B - Form of Shareholders Agreement
EXHIBIT C - Form of Advisory Agreement
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered into
this 11th day of February, 1998, by and between ANGELES PARTICIPATING MORTGAGE
TRUST, a California business trust, ("the Trust"), STARWOOD MEZZANINE INVESTORS,
L.P., a Delaware limited partnership ("Starwood Mezzanine") and STARWOOD
OPPORTUNITY FUND IV, L.P., a Delaware limited partnership ("SOFI IV", and
together with Starwood Mezzanine, the "Contributors"). Unless otherwise
indicated, certain terms used herein are used as defined in Section 12.4 hereof.
W I T N E S S E T H:
WHEREAS, Starwood Mezzanine intends, subject to the terms of this
Agreement, to contribute certain assets (the "Starwood Mezzanine Interests") to
the Trust in exchange for cash and Class A Shares, par value $0.01 per share, of
the Trust ("Class A Shares");
WHEREAS, SOFI IV intends, subject to the terms of this Agreement, to
contribute cash, certain letters of intent to purchase or originate debt
interests (the "Letters of Intent"), a portfolio of mortgage loans and leases
and other debt related assets, (the "SOFI IV Interests") and a portfolio of
first mortgage loans (the "First Mortgage Portfolio" and together with the
Letters of Intent, the SOFI IV Interests and the Starwood Mezzanine Interests,
the "Interests") to the Trust in exchange for cash and Class A Shares to be
issued to SOFI-IV SMT Holdings, L.L.C. ("SOFI Holdings");
WHEREAS, the Trust is the sole general partner and Starwood Mezzanine
is the sole limited partner of Angeles Participating Mortgage Trust, L.P. (the
"Partnership");
WHEREAS, on the Closing Date pursuant to an Exchange Rights Agreement
dated as of September 26, 1996 between the Trust and Starwood Mezzanine (the
"Exchange Rights Agreement") each of the outstanding interests in the
Partnership, which are referred to as "Units," will be exchanged for one Class A
Share and the Partnership and the Exchange Rights Agreement will be terminated;
WHEREAS, the Trust and Starwood Mezzanine are parties to a Registration
Rights Agreement that will be amended and restated (as amended and restated the
"Registration Rights Agreement") on the Closing Date by the Trust, Starwood
Mezzanine, SOFI Holdings and SAHI Partners in substantially the form attached
hereto as Exhibit A.
WHEREAS, the Trust, Starwood Mezzanine and certain other parties are
parties to a Shareholders Agreement originally made and entered into as of March
15, 1994, as restated as of April 27, 1994, and as amended March 15, 1996 (the
"Original Shareholders Agreement") that will be amended and restated by the
Trust, B Holdings, LLC ("BLLC"), SAHI Partners, Starwood Mezzanine and SOFI
Holdings (as amended and restated, the "Shareholders Agreement") in
substantially the form attached hereto as Exhibit B on the Closing Date;
WHEREAS, the general partner of each of Starwood Mezzanine and SOFI IV
and the Advisory Committee of SOFI IV and the requisite number of limited
partners of Starwood Mezzanine have approved the transactions provided for in
this Agreement, and the Board of Trustees of the Trust has
approved the transactions provided for in this Agreement and has directed that
the transactions contemplated by this Agreement be submitted for adoption to the
shareholders of the Trust; and
WHEREAS, the Trust, Starwood Mezzanine and SOFI IV desire to make
certain representations, warranties and agreements in connection with the
transactions contemplated by this Agreement and also to prescribe various
conditions to the consummation of such transactions.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
CONTRIBUTION OF ASSETS; ISSUANCE OF CLASS A SHARES
Section 1.1 Contributed Assets. (a) Subject to the terms and conditions
set forth in this Agreement, at the Closing, each of Starwood Mezzanine and SOFI
IV shall contribute, assign, transfer and deliver to the Trust all of their
rights, title and interests in and to the Mortgage Files, the Letters of Intent
and the Interests, regardless of when such rights, title and interests arise and
such obligation to contribute, assign and transfer all of their rights, title
and interests in the Mortgage Files, the Letters of Intent and the Interests
shall continue after the date of this Agreement and the Trust shall acquire and
take assignment and delivery of, the Mortgage Files, the Letters of Intent and
the Interests as described on Schedules 1.1(a) and (b) hereto, subject to
changes occurring after the date of this Agreement and prior to the Closing Date
as provided herein.
(b) In the event that the transactions contemplated by any Letter of
Intent are consummated prior to the Closing Date, the asset acquired or
originated will be contributed to the Trust in place of the Letter of Intent and
the amount of cash required to consummate the transaction to which it relates.
The value of the acquired or originated asset shall be equal for purposes of
this Agreement to the value of the amount of cash paid by SOFI IV to acquire or
originate the asset.
(c) Starwood Mezzanine and SOFI IV shall have the option to contribute
at the Closing additional assets to the Trust with a value equal to the amount
of any decrease in the value attributable to the payment of principal of any
Interest; provided that the new asset shall be reasonably acceptable to the
Trust and Schedule 1.1(a) and/or Schedule 1.1 (b), as applicable, shall be
updated accordingly. The value of any substituted assets shall be the actual
amount paid by Starwood Mezzanine or SOFI IV to acquire or originate the asset.
Section 1.2 Purchase Price. On the Closing Date, the Trust shall (i)
pay cash to Starwood Mezzanine in an amount equal to $28.5 million, (ii) issue
to Starwood Mezzanine that number of Class A Shares equal to (a) the dollar
value of the Starwood Mezzanine Interests on December 31, 1997 as set forth on
Schedule 1.1(a) less $28.5 million (b) divided by $2.50, (ii) issue to SOFI
Holdings that number of Class A Shares equal to 302,222,800 less the aggregate
number of Class A Shares issued to Starwood Mezzanine and (iii) pay cash to SOFI
IV in an amount equal (x) to the aggregate value of the cash, the Letters of
Intent, the SOFI IV Interests and the First Mortgage Portfolio contributed by
SOFI IV on December 31, 1997 as set forth on Schedule 1.1(b) less (y) the sum of
(1) the aggregate number of Class A Shares issued to SOFI Holdings on the
Closing Date multiplied by (2) $2.50. The value of the assets to
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be contributed by Starwood Mezzanine and SOFI IV will be adjusted as set forth
in Sections 1.1(c) and 1.3. Subject to adjustment as set forth in Sections
1.1(c) and 1.3, the value of the Starwood Mezzanine Interests as of December 31,
1997 is set forth on Schedule 1.1(a) and based on such value Starwood Mezzanine
will receive 55,148,000 Class A Shares, and the value of the SOFI IV Interests,
the Letters of Intent and the First Mortgage Portfolio as of December 31, 1997
is set forth on Schedule 1.1(b) and based on such value SOFI IV will receive
$313 million in cash and SOFI Holdings will receive 247,074,800 Class A Shares
(collectively, the "Purchase Price").
Section 1.3 Adjustments to Purchase Price. (a) Adjustments shall be
made, at the Closing, to the Purchase Price in the event of any full or partial
repayment of principal of any Mortgage Loan or the termination of any Letter of
Intent during the period from January 1, 1998 to the Closing Date (the
"Adjustment Period") by adjusting the value of the Interests. In the event of
the full repayment of any Mortgage Loan, the value of the Interests shall be
reduced by the value given to such Mortgage Loan on Schedule 1.1(a) or (b). In
the event of a regularly scheduled payment of principal or any other partial
repayment of principal occurring during the Adjustment Period, the value of the
Interests shall be reduced by the dollar amount of the principal repayment. In
the event of any principal draw by the borrower with respect to any Mortgage
Loan occurring during the Adjustment Period in excess of that anticipated on
Schedule 1.1(b), the Purchase Price shall be adjusted upward in the amount of
such excess. In the event that principal draws by the borrower with respect to
any Mortgage Loan occurring during the Adjustment Period do not equal or exceed
the anticipated amount of such draws as set forth in Schedule 1.1(b), the
Purchase Price shall be reduced by such shortfall. With respect to SOFI IV only,
adjustments to the Purchase Price shall be made by first reducing the cash
portion of the Purchase Price as set forth in Section 1.2, if any, by the amount
of any reduction in dollar value of the Interests. In the case of SOFI IV only,
when the entire cash portion of the Purchase Price has been used to offset the
reduction in dollar value of the Interests, and in the case of Starwood
Mezzanine in the event of any adjustment, the number of Class A Shares issued in
exchange for the Interests will be reduced by a number of Class A Shares
determined by dividing (i) the amount of any additional reduction in dollar
value of the Interests contributed by the Contributors by (ii) $2.50.
(b) The purchase price per share of Class A Shares issued to Starwood
Mezzanine and SOFI Holdings will be adjusted in the event of any stock split,
reverse stock split or other recapitalization of the capital stock of the Trust,
so that the percentage of issued and outstanding Class A Stock purchased by each
of Starwood Mezzanine and SOFI Holdings is equal to the percentage of issued and
outstanding Class A Stock that such party would have purchased had such split,
reverse split or other recapitalization not occurred.
(c) If cash adjustments result in a decrease of the cash portion of the
Purchase Price payable to SOFI IV below $313 million, SOFI IV may, at its
option, elect to reduce the number of Class A Shares that SOFI Holdings will
acquire and instead of issuing Class A Shares the Trust will pay cash to SOFI IV
equal to the number of Class A Shares SOFI IV elects not to receive multiplied
by $2.50, provided that SOFI IV may not elect to receive cash pursuant to
Section 1.3 in excess of $313 million.
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Section 1.4 Prorations. Interest which has accrued, whether or not
paid, on the Starwood Mezzanine Interests and the SOFI IV Interests during the
Adjustment Period shall be paid by Starwood Mezzanine or SOFI IV, as applicable,
to the Trust on the Closing Date and interest which has accrued, and not been
paid, on the First Mortgage during the Adjustment Period shall be paid by the
Trust to SOFI IV on the Closing Date. All interest accruing on the Interests
subsequent to December 31, 1997 shall be payable to the Trust.
ARTICLE II
CLOSING
Section 2.1 Closing Date. Upon the terms and subject to the conditions
set forth in this Agreement, the transactions contemplated by this Agreement
shall be consummated (the "Closing") at 10:00 a.m., local time, on the next
business day after the meeting of the shareholders of the Trust provided for in
Section 7.2 at which the Trust Shareholders Matters are approved, or such other
date as may be agreed upon by the parties hereto, at the offices of Xxxxx, Xxxxx
& Xxxxx, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place or at
such other time as shall be agreed upon by the parties hereto (such date and
time being herein called the "Closing Date").
Section 2.2 Closing Date Deliveries. On the Closing Date, the Trust,
Starwood Mezzanine, SOFI IV, SOFI Holdings, BLLC and SAHI Partners, as
appropriate, shall execute and deliver (a) the Registration Rights Agreement,
(b) the Shareholders Agreement (c) a consent to terminate the Partnership and
the Exchange Rights Agreement, (d) the Mortgage Files and (e) all the other
documents, instruments and agreements (including instruments of transfer)
reasonably necessary to carry out the terms and provisions of this Agreement and
each of the other documents referred to in this Section 2.2 and each outstanding
Unit will be exchanged for one Class A Share. The documents described in clauses
(a) and (b) above shall hereinafter be referred to as the "Transaction
Agreements."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE TRUST
As an inducement to the other parties to enter into this Agreement and
to consummate the transactions contemplated hereby, the Trust represents,
warrants and agrees as follows:
Section 3.1 Organization of the Trust. The Trust is a business trust
duly organized and validly existing under the laws of the State of California
and no personal liability attaches to the holders of the Class A Shares by
reason of the ownership thereof. The Trust is duly qualified to transact
business in each of the jurisdictions in which the ownership or leasing of the
properties used in its business or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified would not have a Material Adverse Effect on the Trust. The Trust has
all requisite trust power and authority to own or lease and operate its
properties and to carry on its business as now conducted.
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Section 3.2 No Subsidiaries. The Trust has no subsidiaries of any kind
whatsoever except for its interest in the Partnership.
Section 3.3 Capitalization. On the date hereof, (i) 7,550,000 Class A
Shares are validly issued and outstanding and are fully paid and nonassessable,
and (ii) 3,775,000 Class B Shares are validly issued and outstanding and are
fully paid and nonassessable. Subject to approval by the Shareholders of the
Trust of the Trust Shareholder Matters (as defined in Section 7.2), the Class A
Shares to be issued to Starwood Mezzanine and SOFI Holdings on the Closing Date,
upon issuance on the terms and conditions specified in the instrument pursuant
to which such shares are issuable, shall be duly authorized, validly issued,
fully paid and nonassessable. Except for this Agreement and any options or other
awards issued pursuant to the Incentive Plans, and except as contemplated by the
Transaction Agreements, the Exchange Agreement and the Trust Declaration, there
are no options, warrants or other rights to acquire, or agreements or
commitments pursuant to which the Trust is obligated to issue, sell, purchase or
redeem, shares of capital stock of the Trust. The Class A Shares are currently
publicly traded on the American Stock Exchange ("AMEX") and will remain so at
Closing.
Section 3.4 Authority.
(a) The Trust has full trust power and authority to enter into this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby to be entered into by the Trust and, subject to
the approval by the shareholders of the Trust of the Trust Shareholder Matters,
to consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by the Trust of this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby and the consummation by the Trust of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary trust action on the part of the Trust, subject to the approval by the
shareholders of the Trust of the Trust Shareholder Matters. This Agreement is,
and each other agreement or instrument contemplated hereby (including, without
limitation, the Transaction Agreements) to be executed by the Trust, when
executed and delivered by the Trust, will be, the legal, valid and binding
agreement of the Trust, enforceable against the Trust in accordance with its
respective terms.
(c) Neither the execution nor delivery by the Trust of this Agreement,
the Transaction Agreements or the other agreements and instruments contemplated
hereby or thereby, nor consummation of the transactions contemplated hereby or
thereby or compliance with or fulfillment of the terms and provisions hereof or
thereof by the Trust, will (i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights, or result in the creation or imposition of any encumbrance upon any of
the assets of the Trust or the Partnership, under any organizational document of
the Trust or the Partnership or any other instrument, agreement, mortgage,
indenture, deed of trust, permit, concession, grant, franchise, license,
judgment, order, award, decree or other restriction to which the Trust or the
Partnership is a party or any of their properties are subject or by which either
the Trust or the Partnership is bound or any statute, other law or regulatory
provision affecting either the Trust or the Partnership, (ii) require the
approval, consent or authorization of, or the making of any declaration, filing
or registration with, any third party or any foreign, federal, state or local
court, governmental authority or regulatory body, by or on behalf of the Trust
or the Partnership, (iii) cause personal liability to attach to
5
the holders of the Class A Shares by reason of the ownership thereof or (iv)
cause the Trust to fail to qualify to be taxed as a "real estate investment
trust," as defined in Section 856 of the Code ("REIT"), for the taxable year
ending December 31, 1998, except for (A) the filing of appropriate documents
with the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (B) approval by the
shareholders of the Trust of the Trust Shareholder Matters, (C) the filing of
the Trust's Declaration of Trust with certain governmental authorities and (D)
such conflicts, breaches, defaults, events, creations, impositions, approvals,
consents, declarations, filings or authorizations which would not reasonably be
expected to either (x) have a Material Adverse Effect on the Trust or (y)
prevent or hinder the consummation of the transactions contemplated hereby.
Section 3.5 Litigation. To the knowledge of the Trust, there are no
actions, suits or proceedings or court orders or decrees pending or threatened
to which the Trust is a party or any of its assets is subject or by which the
Trust is bound before or by any court or governmental agency, which if
determined adversely to the interests of the Trust, would reasonably be expected
to either (a) have a Material Adverse Effect on the Trust or (b) prevent or
hinder the consummation of the transactions contemplated hereby.
Section 3.6 Certain Matters.
(a) As of the date hereof, the Trust has no assets or properties other
than short term real estate investments, cash and cash equivalents and a 8.05%
interest in the Partnership, or as otherwise disclosed in the SEC Documents (as
defined in Section 3.7).
(b) The Trust will continue to qualify to be taxed as a REIT for the
taxable year ending December 31, 1998.
(c) As of the close of the 1997 taxable year, the Trust has no material
current or accumulated earnings and profits. The Trust has no material
liabilities for U.S. Federal or state income taxes.
Section 3.7 SEC Documents. The Trust has previously delivered or made
available to Starwood Mezzanine and SOFI IV complete and correct copies of all
reports and statements filed by the Trust with the SEC since September 26, 1996
(the "SEC Documents"). As of their respective dates, none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
Section 3.8 Shareholder Agreement. The Trust has delivered to each of
Starwood Mezzanine and SOFI IV a true and complete copy of the Original
Shareholders Agreement. Said document is in full force and effect and no
defaults or breaches exist thereunder.
Section 3.9 Financial Information. The financial statements (excluding
the pro forma financial data) included in the SEC Documents present fairly the
financial condition, results of operation and changes in the financial condition
of the Trust at the dates and for the periods indicated and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as otherwise indicated
therein). The pro forma financial data included in the Proxy Statement (as
defined in Section 7.1) has been prepared in accordance with all
6
applicable rules and guidelines of the SEC with respect to pro forma financial
data, and the adjustments used therein are appropriate to give effect to the
transaction or circumstance referred to therein.
Section 3.10 No Finder. Neither the Trust nor any party acting on the
behalf of the Trust has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
STARWOOD MEZZANINE
As an inducement to the other parties to enter into this Agreement and
to consummate the transactions contemplated hereby, Starwood Mezzanine
represents, warrants and agrees as follows:
Section 4.1 Organization of Starwood Mezzanine. Starwood Mezzanine is a
limited partnership duly formed, validly existing and in good standing as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act.
Starwood Mezzanine is duly qualified to transact business and is in good
standing in each of the jurisdictions in which the ownership or leasing of the
properties used in its business or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not have a Material Adverse Effect on
Starwood Mezzanine. Starwood Mezzanine has all requisite partnership power and
authority to carry on its business as now conducted.
Section 4.2 Authority.
(a) Starwood Mezzanine has full partnership power and authority to
enter into this Agreement, the Transaction Agreements and the other agreements
and instruments contemplated hereby and thereby to be entered into by it and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by Starwood Mezzanine of
this Agreement, the Transaction Agreements and the other agreements and
instruments contemplated hereby and thereby and the consummation by Starwood
Mezzanine of the transactions contemplated hereby and thereby have been duly
authorized by all necessary partnership action except for the required consent
of its limited partners and the amendment to the partnership agreement that will
be obtained prior to the Closing Date. This Agreement is, and each other
agreement or instrument contemplated hereby (including, without limitation, the
Transaction Agreements) to be executed by Starwood Mezzanine, when executed and
delivered by Starwood Mezzanine, will be, the legal, valid and binding agreement
of Starwood Mezzanine, enforceable against Starwood Mezzanine in accordance with
its respective terms.
(c) Except for consents and approvals that will be obtained prior to
the Closing Date, neither the execution and delivery by Starwood Mezzanine of
this Agreement, the Transaction Agreements or the other agreements and
instruments contemplated hereby and thereby, nor consummation of the
transactions contemplated hereby or thereby or compliance with or fulfillment of
the terms and provisions hereof or thereof by Starwood Mezzanine will (i)
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating
7
rights of acceleration, termination or cancellation or a loss of rights under
the agreement of limited partnership of Starwood Mezzanine, any document
relating to the Starwood Mezzanine Interests, any instrument, agreement,
mortgage, indenture, deed of trust, permit, concession, grant, franchise,
license, judgment, order, award, decree or other restriction to which Starwood
Mezzanine is a party or any statute, other law or regulatory provision affecting
any of them, or (ii) require the approval, consent or authorization of, or the
making of any declaration, filing or registration with, any third party or any
foreign, federal, state or local court, governmental authority or regulatory
body, by or on behalf of Starwood Mezzanine, except for conflicts, breaches,
defaults, events, creations, impositions, approvals, consents, declarations,
filings or authorizations which would not reasonably be expected to either (x)
have a Material Adverse Effect on Starwood Mezzanine or (y) prevent or hinder
the consummation of the transactions contemplated hereby.
Section 4.3 Investment Representations. Starwood Mezzanine is an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended (the "Securities Act"), and was not organized for the purpose
of acquiring Class A Shares. Starwood Mezzanine has sufficient knowledge and
experience in financial and business matters and in investing in entities
similar to the Trust so as to be able to evaluate the risks and merits of its
investment in the Trust and it is able financially to bear the risks thereof.
Starwood Mezzanine has had an opportunity to discuss the business, management
and financial affairs of the Trust with the management of the Trust. The Class A
Shares of the Trust are being acquired by Starwood Mezzanine for its own account
for the purpose of investment and not with a view to or for sale in connection
with any distribution thereof in violation of the securities laws. Starwood
Mezzanine understands that (i) the Class A Shares have not been registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 505 or 506 promulgated under the Securities Act, and (ii) such Class A
Shares must be held indefinitely unless such Class A Shares are registered upon
receipt thereof, or unless a subsequent disposition thereof is registered under
the Securities Act and applicable state securities laws or is exempt from such
registration.
Section 4.4 Litigation. To the knowledge of Starwood Mezzanine, there
are no actions, suits or proceedings or court orders or decrees pending or
threatened to which Starwood Mezzanine is a party or the Starwood Mezzanine
Interests are subject or by which it is bound before or by any court or
governmental agency, which if determined adversely to the interests of Starwood
Mezzanine would reasonably be expected to either (a) have a Material Adverse
Effect on Starwood Mezzanine or (b) prevent or hinder the consummation of the
transactions contemplated hereby.
Section 4.5 Proxy Statement. None of the information respecting
Starwood Mezzanine or its partners or the Starwood Mezzanine Interests supplied
or to be supplied by Starwood Mezzanine, its partners or any of its
representatives for inclusion in the Proxy Statement (as defined in Section 7.1)
will, at the time of the mailing of the Proxy Statement to the shareholders of
the Trust and at the time of the meetings of such shareholders referred to in
Section 7.2, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein relating to
Starwood Mezzanine or its partners not misleading.
Section 4.6 Employee Benefit Plans. Starwood Mezzanine is not (a) an
"employee benefit plan" as defined in and subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (b) a "plan" as defined in
and subject to Section 4975 of the Code or (c) an entity any portion
36267363
8
or all of the assets of which are deemed pursuant to United States Department of
Labor Regulation ss.2510.3-101 or otherwise pursuant to ERISA to be, for any
purpose of ERISA or Section 4975 of the Code, assets of any "employee benefit
plan" or "plan" described in clause (a) or (b) above which invests in such
entity by virtue of such investment.
Section 4.7 No Finder. Neither Starwood Mezzanine nor any party acting
on its behalf has paid or become obligated to pay any fee or any commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
Section 4.8 Environmental. Starwood Mezzanine has no actual knowledge
(without independent investigation) of any violation of Environmental Laws
related to the properties secured by the Starwood Mezzanine Interests or the
presence or release of Hazardous Materials on or from such properties, except as
reflected in the environmental reports acknowledged and approved by the Trust at
or prior to the Closing. The term "Environmental Laws" includes, without
limitation, the Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability Act and other federal laws
governing the environment as in effect on the date of this Agreement together
with their implementing regulations and guidelines as of the date of this
Agreement, and all state, regional, county, municipal and other local laws,
regulations and ordinances that are equivalent or similar to the federal laws
recited above or that purport to regulate Hazardous Materials. The term
"Hazardous Materials" includes petroleum, including crude oil or any fraction
thereof, natural gas, natural gas liquids, liquefied natural gas or synthetic
gas usable for fuel (or mixtures of natural gas or such synthetic gas), and any
substance, material waste, pollutant or contaminant listed or defined as
hazardous or toxic, or otherwise regulated, under any Environmental Law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SOFI IV
As an inducement to the other parties to enter into this Agreement and
to consummate the transactions contemplated hereby, SOFI IV represents, warrants
and agrees as follows:
Section 5.1 Organization of SOFI IV. SOFI IV is a limited partnership
duly formed, validly existing and in good standing as a limited partnership
under the Delaware Revised Uniform Limited Partnership Act. SOFI IV is duly
qualified to transact business and is in good standing in each of the
jurisdictions in which the ownership or leasing of the properties used in its
business or the conduct of its business requires such qualification, other than
in such jurisdictions where the failure to be so qualified and in good standing
would not have a Material Adverse Effect on SOFI IV. SOFI IV has all requisite
partnership power and authority to carry on its business as now conducted.
Section 5.2 Authority.
(a) SOFI IV has full partnership power and authority to enter into this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby to be entered into by it and to consummate the
transactions contemplated hereby and thereby.
9
(b) The execution, delivery and performance by SOFI IV of this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby and the consummation by SOFI IV of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary partnership action except for the required consent of its Advisory
Committee and the related amendment to its partnership agreement that will be
obtained prior to the Closing Date. This Agreement is, and each other agreement
or instrument contemplated hereby (including, without limitation, the
Transaction Agreements), to be executed by SOFI IV when executed and delivered
by SOFI IV, will be, the legal, valid and binding agreement of SOFI IV,
enforceable against SOFI IV in accordance with its respective terms.
(c) Except for consents and approvals that will be obtained prior to
the Closing Date, neither the execution and delivery by SOFI IV of this
Agreement, the Transaction Agreements or the other agreements and instruments
contemplated hereby and thereby, nor consummation of the transactions
contemplated hereby or thereby or compliance with or fulfillment of the terms
and provisions hereof or thereof by SOFI IV will (i) conflict with, result in a
breach of the terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under the agreement of limited partnership of
SOFI IV, any document relating to the Letters of Intent, SOFI IV Interests or
First Mortgage Portfolio any instrument, agreement, mortgage, indenture, deed of
trust, permit, concession, grant, franchise, license, judgment, order, award,
decree or other restriction to which SOFI IV is a party or any statute, other
law or regulatory provision affecting any of them, or (ii) require the approval,
consent or authorization of, or the making of any declaration, filing or
registration with, any third party or any foreign, federal, state or local
court, governmental authority or regulatory body, by or on behalf of SOFI IV,
except for conflicts, breaches, defaults, events, creations, impositions,
approvals, consents, declarations, filings or authorizations which would not
reasonably be expected to either (x) have a Material Adverse Effect on SOFI IV
or (y) prevent or hinder the consummation of the transactions contemplated
hereby.
Section 5.3 Investment Representations. SOFI Holdings is an "accredited
investor" within the meaning of Rule 501 under the Securities Act of 1933, as
amended (the "Securities Act"), and was not organized for the purpose of
acquiring the Class A Shares. SOFI Holdings has sufficient knowledge and
experience in financial and business matters and in investing in entities
similar to the Trust so as to be able to evaluate the risks and merits of its
investment in the Trust, and it is able financially to bear the risks thereof.
SOFI Holdings has had an opportunity to discuss the business, management and
financial affairs of the Trust with the management of the Trust. The Class A
Shares are being acquired by SOFI Holdings for its own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof in violation of the securities laws. SOFI Holdings
understands that (i) the Class A Shares of the Trust have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) thereof or Rule 505 or 506 promulgated under the Securities Act, and (ii)
such Class A Shares must be held indefinitely unless such Class A Shares are
registered upon receipt thereof, or unless a subsequent disposition thereof is
registered under the Securities Act and applicable state securities laws or is
exempt from such registration.
Section 5.4 Litigation. To the knowledge of SOFI IV, there are no
actions, suits or proceedings or court orders or decrees pending or threatened
to which SOFI IV is a party or the Letters of Intent, SOFI IV Interests or First
Mortgage Portfolio are subject or by which it is bound before or by any court or
10
governmental agency, which if determined adversely to the interests of SOFI IV
would reasonably be expected to either (a) have a Material Adverse Effect on
SOFI IV or (b) prevent or hinder the consummation of the transactions
contemplated hereby.
Section 5.5 Proxy Statement. None of the information respecting SOFI IV
or its partners or the Letters of Intent, SOFI IV Interests or First Mortgage
Portfolio supplied or to be supplied by SOFI IV, its partners or any of its
representatives for inclusion in the Proxy Statement (as defined in Section 7.1)
will, at the time of the mailing of the Proxy Statement to the shareholders of
the Trust and at the time of the meetings of such shareholders referred to in
Section 7.2, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein relating to
SOFI IV or its partners not misleading.
Section 5.6 Employee Benefit Plans. SOFI IV is not (a) an "employee
benefit plan" as defined in and subject to ERISA, (b) a "plan" as defined in and
subject to Section 4975 of the Code or (c) an entity any portion or all of the
assets of which are deemed pursuant to United States Department of Labor
Regulation ss.2510.3-101 or otherwise pursuant to ERISA to be, for any purpose
of ERISA or Section 4975 of the Code, assets of any "employee benefit plan" or
"plan" described in clause (a) or (b) above which invests in such entity by
virtue of such investment.
Section 5.7 No Finder. Neither SOFI IV nor any party acting on its
behalf has paid or become obligated to pay any fee or any commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
Section 5.8 Environmental. SOFI IV has no actual knowledge (without
independent investigation) of any violation of Environmental Laws related to the
properties which are the subject of the Letters of Intent or secured by the SOFI
IV Interests or the First Mortgage Portfolio or the presence or release of
Hazardous Materials on or from such properties, except as reflected in the
environmental reports acknowledged and approved by the Trust at or prior to the
Closing. The term "Environmental Laws" includes, without limitation, the
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response Compensation and Liability Act and other federal laws governing the
environment as in effect on the date of this Agreement together with their
implementing regulations and guidelines as of the date of this Agreement, and
all state, regional, county, municipal and other local laws, regulations and
ordinances that are equivalent or similar to the federal laws recited above or
that purport to regulate Hazardous Materials. The term "Hazardous Materials"
includes petroleum, including crude oil or any fraction thereof, natural gas,
natural gas liquids, liquefied natural gas or synthetic gas usable for fuel (or
mixtures of natural gas or such synthetic gas), and any substance, material
waste, pollutant or contaminant listed or defined as hazardous or toxic, or
otherwise regulated, under any Environmental Law.
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ARTICLE VI
REPRESENTATIONS OF BOTH CONTRIBUTORS
Each of Starwood Mezzanine and SOFI IV severally, and not jointly,
represents, warrants and agrees as follows with respect to Schedule 1.1(a) and
Schedule 1.1(b), respectively:
Section 6.1 Good Title. The Contributor has and will have, until the
consummation of the transactions contemplated by this Agreement, good title to,
and is and shall be the sole owner of (i) each Mortgage Loan and the related
Mortgage File (except to the extent any Mortgage Loan is prepaid in full prior
to the consummation of the transactions contemplated by this Agreement) and (ii)
the Ground Lease, in each case of clauses (i) and (ii) above free and clear of
any and all adverse claims, liens, pledges , assignments, charges or security
interests of any nature (including, without limitation, liens arising under the
federal tax laws or ERISA), except as shall be released or discharged at the
Closing.
Section 6.2 Record Keeping; Mortgage Files; Escrow Deposits. The
origination, servicing, record keeping, collection and foreclosure practices
used by the Contributor with respect to each Mortgage Loan have been in all
respects legal. The Contributor will deliver to the Trust on the Closing Date
all documents, instruments and files in its possession relating to each Letter
of Intent, Mortgage Loan and Ground Lease. All copies of the material, original
loan documents forwarded to the Trust are true and correct and include all
documents and other instruments known to the Contributor relating to each Letter
of Intent, Mortgage Loan and Ground Lease. Schedule 1.1(a) or (b) as applicable
is true, correct and complete in all material respects. With respect to any
escrow deposits and payments, all of these deposits and payments, if any, which
have been made and not expended for their intended purposes, are in the
possession of, or under the control of, the Contributor, except in those cases
in which the Contributor holds only a minority participation interest or the
interest of a junior lender in a Mortgage Loan, in which event the terms and
conditions of such minority participation interest are contained in an
intercreditor agreement, or similar agreement, which agreements have been
disclosed in writing to the Trust. Concurrently with the closing of this
transaction, the Contributor will, to the extent permitted by the documents
pertaining to a Mortgage Loan, deliver possession and control of all such
deposits and payments (or its rights to and under any escrow) to the Trust or
its designee, provided that the Contributor makes no representation or warranty
as to the sufficiency of such deposits and payments for their intended purposes.
There are no documents or other instruments in the possession of, or actually
known to the Contributor, which would cause the materials provided to the Trust
to be inaccurate or misleading, and, to the knowledge of the Contributor, all
documents and other instruments provided to the Trust are accurate and truthful.
Section 6.3 Additional Representations.
(a) Each Mortgage Loan of the Contributor either (A) was originated by
the Contributor or (B) was purchased by the Contributor in the ordinary course
of its business, for valuable consideration to the transferor, and neither the
transferor nor any other person or entity has any residual or other rights to
such Mortgage Loan, except in those cases in which the Contributor holds only a
minority participation interest or the interest of a junior lender in a Mortgage
Loan;
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(b) the proceeds of each Mortgage Loan of the Contributor have been
fully disbursed and there is no requirement for future advances under such
Mortgage Loan except as expressly provided in documents evidencing or securing
any Mortgage Loan as disclosed to the Trust, and all costs and expenses incurred
in making, or closing or recording, the Mortgage Loans have been paid; the
Contributor has no continuing obligations under such Mortgage Loan relating to
stop notices, set aside letters, letters of credit, subdivision agreements or
bonds except as expressly provided in documents evidencing or securing any
Mortgage Loan as disclosed to the Trust;
(c) to the knowledge of the Contributor, each Mortgage Loan of the
Contributor, as of the date of its origination complied with or is exempt from,
and as of the date hereof complies with or is exempt from, (x) applicable state
or federal laws, regulations and other requirements pertaining to usury, and (y)
any and all other requirements of any federal, state or local law, including,
without limitation, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure laws,
applicable to each such Mortgage Loan;
(d) the Contributor has not received any notice asserting that any
Mortgage Note, related Mortgage or other agreements executed in connection
therewith of the Contributor has not been duly authorized, executed and
delivered, or is not the legal, valid and binding obligation of the maker
thereof (subject to any non-recourse provisions therein), enforceable in
accordance with its terms, except as such enforcement may be limited by (x)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and (y) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and (z) contractual provisions and laws limiting or eliminating
recourse to the Mortgagor or any other obligor or surety (including, without
limitation, principles such as the so-called "one action rule" and
anti-deficiency legislation). Except as disclosed to the Trust in writing, the
Contributor has not received notice asserting any offset, defense (including
without limitation the defense of usury), claim, counterclaim, or right to
rescission with respect to such Mortgage Note, Mortgage or other related
agreements;
(e) except as disclosed in the schedules attached to the assignment of
loan relating to the Mortgage, each Mortgage of the Contributor has not been
waived, impaired, modified, altered, superseded, amended, satisfied, cancelled,
subordinated or otherwise changed in any material respect in writing by any
Person, or otherwise by the Contributor, or rescinded, and the related mortgaged
property has not been released from the lien or other encumbrance of, nor has
the Mortgagor been released from, its obligations under the Mortgage, in whole
or in any part, nor has any instrument been executed that would effect any such
amendment, satisfaction, cancellation, subordination, rescission or release,
except, in each case, by a written instrument which is part of the related
Mortgage File;
(f) each Mortgage of the Contributor is insured by an ALTA lender's
title insurance policy (each, a "Title Policy"), and the Contributor will
provide true and complete copies of each such Title Policy to the Trust. To the
actual knowledge of the Contributor, without any inquiry, each such Title Policy
is in full force and effect. Unless disclosed in the applicable Mortgage File,
the Contributor has not done, by act or omission, anything which would impair
the coverage of any such Title Policies, and the Contributor has not received
any notice by the title insurer of any such Title Policy of any impairment,
diminution or negation of such coverage;
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(g) to the actual knowledge of the Contributor, without any inquiry,
each Mortgaged Property (including all improvements thereon) of the Contributor
is insured by a hazard insurance policy as required by the applicable Mortgage,
and the Contributor has provided true and complete copies of each policy to the
Trust. To the actual knowledge of the Contributor, without any inquiry, if upon
origination of the Mortgage Loan the Mortgaged Property was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
and if required by applicable law, a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect;
(h) there is no monetary default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note of the
Contributor and no event has occurred during the last twelve months that, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a monetary default, breach, violation or event of
acceleration; to the current actual knowledge of the Contributor without inquiry
or investigation, except as set forth in the applicable Mortgage File there is
no non-monetary default, breach, violation or event of acceleration existing
under any Mortgage or the related Mortgage Note;
(i) the Contributor has not waived any material default, breach,
violation or event of acceleration under any Mortgage Loan of the Contributor,
which would materially impair the Trust's rights to enforce the documents
evidencing, securing or pertaining to such Mortgage Loan (the "Mortgage Loan
Documents");
(j) with respect to the Ground Lease of the Contributor, to the
knowledge of the Contributor, after due inquiry:
(i) the Ground Lease is valid and enforceable, is in full
force and effect, and is binding upon the parties thereto and their
respective successors and assigns, in accordance with its terms;
(ii) the Ground Lease has not been amended, restated,
supplemented, extended or otherwise modified in any respect, and a true
and correct copy of the Ground Lease has been provided to the Trust;
(iii) the Contributor, as the lessor under the Ground Lease,
has fully performed all obligations under the Ground Lease to be
performed by the lessor thereunder, and the lessee under the Ground
Lease has fully performed all obligations under the Ground Lease to be
performed by the lessee thereunder;
(iv) neither the Contributor, as lessor under the Ground Lease
nor the lessee thereunder, is in default under the Ground Lease; and
(v) no consents or approvals of any party having an interest
in the Ground Lease, including, without limitation, the lessee, is
required, under the Ground Lease or otherwise, in order for the
Contributor to validly transfer all right, title and interest of the
Contributor in and to the Ground Lease to the Trust, or, to the extent
such consent is required or necessary, upon
14
consummation of the transactions contemplated by this Agreement, such
consent will have been delivered to the Trust in full satisfaction of
such consent requirements;
(k) with respect to each Letter of Intent of the Contributor:
(i) the Letter of Intent is valid and enforceable, is in full
force and effect, and is binding upon the parties thereto except as
otherwise specified in the Letter of Intent and their respective
successors and assigns, in accordance with its terms;
(ii) the Letter of Intent has not been amended, restated,
supplemented, extended or otherwise modified in any respect, and a true
and correct copy of the Letter of Intent has been provided to the
Trust;
(iii) the Contributor has fully performed all obligations
under the Letter of Intent to be performed by the acquiror or
originator thereunder, and the borrower or seller under the Letter of
Intent has fully performed all obligations under the Letter of Intent
to be performed by the seller or borrower thereunder;
(iv) neither the Contributor nor the counter party is in
default under the Letter of Intent; and
(v) no consents or approvals of any party having an interest
in the Letter of Intent, including, without limitation, the seller or
borrower, is required, under the Letter of Intent or otherwise, in
order for the Contributor to validly transfer all right, title and
interest of the Contributor in and to the Letter of Intent to the
Trust, or, to the extent such consent is required or necessary, upon
consummation of the transactions contemplated by this Agreement, such
consent will have been delivered to the Trust in full satisfaction of
such consent requirements;
(l) there has been no fraud, dishonesty, or material misrepresentation
by Contributor, and Contributor has not received from any borrower any notice
that any predecessor to Contributor engaged in fraud, dishonesty or material
misrepresentation, in connection with the origination, servicing, collection or
foreclosure under any Mortgage or the related Mortgage Note of the Contributor;
and the Contributor has made no oral or written promises with respect to any
Mortgage Loan of the Contributor not reflected in the Mortgage File provided to
the Trust;
(m) if any Mortgage Loan of the Contributor has been participated with
other lenders, such participation is indicated on Schedule 1.1(a) or (b), as
applicable, and unless otherwise indicated, the Contributor is the lead lender
in such participation and either has the right under the related participation
agreement to sell its interest in the Mortgage Loan and to transfer the
servicing thereof without the consent of any participant required or, as of the
Closing Date for such Mortgage Loan, has obtained all required consents;
(n) there has been no fraud, dishonesty, or material misrepresentation
in connection with the Contributor's actions as lead lender in the
participations described in subsection (l) above;
15
(o) each Mortgage Loan of the Contributor (except in those cases in
which the Contributor holds only a minority participation interest or the
interest of a junior lender in a Mortgage Loan) is being and has been serviced
by the Contributor, and from the date hereof until the Closing Date the
Contributor or its affiliate shall service and administer the Mortgage Loans of
the Contributor, in accordance with Contributor's customary servicing standards.
ARTICLE VII
ACTIONS PRIOR TO THE CLOSING DATE
Each of the Trust, Starwood Mezzanine and SOFI IV, as applicable,
covenants and agrees to take the following actions between the date hereof and
the Closing Date:
Section 7.1 Proxy Statement. The Trust has prepared and filed with the
SEC a proxy statement to solicit proxies in connection with the meeting of the
shareholders of the Trust referred to in Section 7.2 (the definitive form of
such proxy statement, together with any amendments thereof or supplements
thereto, mailed to the shareholders of the Trust in connection with such meeting
is herein referred to as the "Proxy Statement"). A true and complete copy of the
Proxy Statement (and all exhibits thereto) filed with the SEC has been and to
the extent amended will be delivered to Starwood Mezzanine and SOFI IV promptly
when available. The Trust will cause the Proxy Statement to comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the respective rules and regulations thereunder and will cause the Proxy
Statement, at the time of its mailing or delivery to the shareholders of the
Trust and at the time of the meeting referred to above, to not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by the Trust in reliance upon and in conformity with information
concerning Starwood Mezzanine, SOFI IV and their partners or representatives or
the Interests for inclusion in the Proxy Statement. Each of Starwood Mezzanine
and SOFI IV shall, and shall cause their representatives to, furnish the Trust
all information concerning themselves and their partners and the Interests
reasonably required for use in the Proxy Statement. If, at any time prior to the
Closing Date, any event should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement, the Trust will cause such
event to be so described, and such amendment shall be promptly filed with the
SEC and, as required by law, disseminated to any shareholders of the Trust.
Starwood Mezzanine and SOFI IV and their partners will cooperate fully in
connection with such amendment or supplement, including supplying any and all
information with respect to Starwood Mezzanine, SOFI IV, and their partners and
the Interests which is necessary to prepare any such amendment or supplement.
The Proxy Statement includes many proposals for shareholder approval in addition
to the transaction contemplated hereby. Subject to the last sentence of Section
7.2, the Trust shall not amend or delete any proposals relating to the
transactions contemplated hereby without the approval of both Starwood Mezzanine
and SOFI IV, it being understood that shareholder approval of all such proposals
(without any amendments thereto objectionable to Starwood Mezzanine or SOFI IV,
notwithstanding the last sentence of Section 7.2) shall be a condition to the
obligation of Starwood Mezzanine and SOFI IV to close the transactions
contemplated hereby.
16
Section 7.2 Action by the Trust and Shareholders of the Trust. The
Trust shall, as soon as practicable after the Proxy Statement shall be cleared
by the SEC, duly call, give notice of, convene and hold a meeting of the
shareholders of the Trust for the purposes set forth in the Proxy Statement
(collectively, the "Trust Shareholders Matters"). Subject to the fiduciary
duties of the Board of Trustees of the Trust under applicable law and to the
last sentence of this Section 7.2 , the Board of Trustees of the Trust will
recommend to its shareholders approval of the Trust Shareholder Matters. The
Board of Trustees of the Trust may at any time prior to the Closing Date
withdraw, modify or change any recommendation regarding the Trust Shareholder
Matters, this Agreement or the transactions contemplated hereby or recommend and
declare advisable any other offer, proposal or transaction if in any such case
it determines upon advice of legal counsel that the failure to so withdraw,
modify or change such recommendation could reasonably be expected to involve it
in a breach of fiduciary duties under applicable law.
Section 7.3 Lawsuits, Proceedings, etc. Each party hereto shall notify
the other party hereto promptly upon becoming aware of any lawsuit, proceeding,
claim or investigation that may be threatened, brought, asserted or commenced
against it (a) involving in any way the transactions contemplated by this
Agreement or (b) that would have been listed or specified as an exception to
Section 3.5, 4.4 or 5.4, as the case may be, if such lawsuit, proceeding, claim
or investigation had arisen prior to the date hereof.
Section 7.4 Conduct of Business by the Trust, Starwood Mezzanine and
SOFI IV Pending the Closing.
(a) During the period from the date of this Agreement through the
Closing Date, except as expressly contemplated by this Agreement, each of the
Trust and the Partnership and each of Starwood Mezzanine and SOFI IV with
respect to the Interests only, shall carry on its business in accordance with
the ordinary course and shall not enter into any material transaction outside of
the ordinary course of business with respect thereto without the prior written
consent of the Trust in the case of Starwood Mezzanine or SOFI IV, or Starwood
Mezzanine and SOFI IV in the case of the Trust (not to be unreasonably
withheld).
(b) Without limiting the generality of the foregoing, and except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement through the Closing Date, the Trust shall not, without the prior
written consent of Starwood Mezzanine and SOFI IV (not to be unreasonably
withheld):
(i) take any action or omit to take any action that would
cause it to fail to be taxed as a REIT, for its taxable year ending
December 31, 1998 or omit to take any action necessary to cause the
Trust to be taxed as a REIT for such taxable year;
(ii) take any action or omit to take any action that would
cause personal liability to attach to the holders of the Class A Shares
by reason of the ownership thereof;
(iii) acquire any real estate or other assets (other than
receipt of cash or investments of cash in short term, liquid real
estate assets or cash equivalents);
(iv) issue or enter into any executory agreement to issue any
new debt securities;
17
(v) issue or enter into any executory agreement to issue any
new equity securities other than common shares issued in replacement of
lost, stolen or transferred outstanding shares or as described in the
Proxy Statement;
(vi) declare and pay any dividends or make other distributions
to holders of shares other than as are necessary to preserve the REIT
status of the Trust; or
(vii) repay any indebtedness.
(c) Without limiting the generality of the foregoing, and except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement through the Closing Date, Starwood Mezzanine and SOFI IV shall
not, without the prior written consent of the Trust (not to be unreasonably
withheld), except as required by law, or the documents evidencing, securing or
pertaining to the Mortgage Loans, or in the ordinary course in accordance with
Starwood Mezzanine's and SOFI IV's customary practice:
(i) voluntarily dispose of any portion of the Interests or of
the underlying collateral other than as required to maintain the
venture capital operating company status of Starwood Mezzanine;
(ii) release any collateral or any party from any liability on
or with respect to the Mortgage Loans;
(iii) compromise or settle any claims of any kind or character
with respect to the Letters of Intent, the Mortgage Loans or the Ground
Lease;
(iv) initiate, complete or otherwise take any action with
respect to a foreclosure on any of the Mortgaged Property or exercise
any remedies under the related Mortgage Note or Mortgage or under any
Letter of Intent or Ground Lease;
(v) sell or encumber, or contract to sell or encumber, the
Interests, or any portion thereof or any interest therein;
(vi) agree to any amendments or modifications to any Letter of
Intent, Mortgage Loan or Ground Lease;
(vii) subordinate any Mortgage Loan or Ground Lease;
(viii) accept any prepayment of any Mortgage Note at a
discount from the face amount thereof;
(ix) give any notice of default or make any demand on any
Mortgagor or any party to a Letter of Intent or Ground Lease;
(x) accelerate the maturity of any Mortgage Loan, except in
case of a default; or
18
(xi) initiate any litigation against any Mortgagor or any
party to a Letter of Intent or Ground Lease.
Section 7.5 Mortgagor Solicitations. Other than in connection with
solicitations or promotions directed at the general public, each Contributor
agrees severally that it will not after the Closing Date solicit any Mortgagor
for the purpose of refinancing the related Mortgage Loan or otherwise agree at
any time to refinance, restructure or replace any Mortgage Loan.
Section 7.6 Mutual Cooperation; Best Efforts. Subject to the fiduciary
duties of the Board of Trustees of the Trust under applicable law, the fiduciary
duties of general partners of Starwood Mezzanine under applicable law, and the
fiduciary duties of the general partner of SOFI IV, the parties hereto shall
cooperate with each other, and shall use their respective best efforts to cause
the fulfillment of the conditions to the parties' obligations hereunder and to
obtain as promptly as possible all consents, authorizations, orders or approvals
from each and every third party, whether private or governmental, required in
connection with the transactions contemplated by this Agreement; provided,
however, that the foregoing shall not require Starwood Mezzanine, any partner
thereof, SOFI IV, any partner thereof, or the Trust to make any divestiture or
consent to any divestiture in order to obtain any waiver, consent or approval.
Section 7.7 No Public Announcement. No party hereto shall, without the
approval of the other parties hereto (which may not be unreasonably withheld),
make any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law, in which case the other parties hereto shall be
advised and the parties hereto shall use their reasonable best efforts to cause
a mutually agreeable release or announcement to be issued.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust under this Agreement to consummate the
transactions contemplated hereby to be consummated at the Closing shall, at the
option of the Trust, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
Section 8.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Starwood Mezzanine or SOFI IV in the
performance of the covenants and agreements herein to be performed by each of
them at or prior to the Closing Date; on the Closing Date, each of the
representations and warranties of Starwood Mezzanine and SOFI IV that is
qualified as to materiality shall be true and correct as though made on the
Closing Date; on the Closing Date, each of the representations and warranties of
Starwood Mezzanine and SOFI IV that is not so qualified as to materiality shall
be true and correct in all material respects as though made on the Closing Date;
and there shall have been delivered to the Trust a certificate or certificates
to the foregoing effect, dated the Closing Date, signed on behalf of each of
Starwood Mezzanine and SOFI IV. Notwithstanding anything to the contrary, the
prepayment of any mortgage after the date hereof but prior to the Closing Date
shall not constitute a breach of the representations and warranties of SOFI IV
or Starwood Mezzanine. In the event of a breach of the warranties under Section
6.3(h), the Trust, at its option, may elect not to purchase
19
the defaulted Mortgage and to reduce the Purchase Price accordingly pursuant to
Section 1.3 or to purchase the defaulted Mortgage and to negotiate with the
Contributors in good faith in order to determine the appropriate reduction in
the Purchase Price, if the Trust reasonably determines that the occurrence of
such default adversely affects the value of such Mortgage Loan.
Section 8.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on Starwood
Mezzanine, SOFI IV or any of the Interests or the collateral therefor and there
shall have been delivered to the Trust a certificate to that effect, dated the
Closing Date, signed on behalf of Starwood Mezzanine and SOFI IV (with respect
to itself and the Interests owned by it).
Section 8.3 Opinion of Counsel for Starwood. The Trust shall have
received from Xxxxxx Xxxxxx & Xxxxx, counsel for Starwood Mezzanine and SOFI IV,
an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Trust.
Section 8.4 No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of the Trust, Starwood Mezzanine and SOFI IV, however, that
it shall use its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered.
Section 8.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on the Trust,
Starwood Mezzanine or SOFI IV.
Section 8.6 Transaction Agreements. Each of the parties (other than the
Trust) to each of the Transaction Agreements and any other documents
contemplated hereby and thereby shall have entered into such Transaction
Agreements and any other documents contemplated hereby and thereby substantially
in the forms attached hereto as exhibits or, if not so attached, as agreed to by
the parties.
Section 8.7 Shareholder and Stockholder Action. The Shareholders of the
Trust shall have approved, by the requisite vote of the holders of Class A and
Class B Shares, the Contribution Proposal (as defined in the Proxy Statement),
and the Advisory Agreement Proposal (as defined in the Proxy Statement).
Section 8.8 Termination of Partnership and Exchange Rights Agreement.
The Partnership and the Exchange Rights Agreement shall be terminated effective
as of the Closing Date.
Section 8.9 Fairness Opinion. The Trust shall have received from the
Financial Advisor a favorable opinion as to the fairness of the transactions
contemplated hereby, from a financial point of view, to the shareholders of the
Trust.
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Section 8.10 REIT Qualifications. The Trust shall be eligible to elect
to be qualified as a REIT for its taxable year ending December 31, 1998.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF STARWOOD MEZZANINE AND SOFI IV
The obligations of each of Starwood Mezzanine and SOFI IV under this
Agreement to consummate the transactions contemplated hereby to be consummated
at the Closing shall be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
Section 9.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by the Trust in the performance of its
covenants and agreements herein to be performed at or prior to the Closing Date;
on the Closing Date, each of the representations and warranties of the Trust
that is qualified as to materiality shall be true and correct as though made on
the Closing Date, on the Closing Date, each of the representations and
warranties of the Trust that is not so qualified as to materiality shall be true
and correct in all material respects as though made on the Closing Date; and
there shall have been delivered to Starwood Mezzanine and SOFI IV a certificate
or certificates to the foregoing effect, dated the Closing Date, signed on
behalf of the Trust. Without limitation of the foregoing, the Class A Shares
shall continue to be listed and publicly traded on the AMEX.
Section 9.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on the Trust or
the Partnership; and there shall have been delivered to Starwood Mezzanine and
SOFI IV a certificate to that effect, dated the Closing Date, signed on behalf
of the Trust.
Section 9.3 Opinion of Counsel for the Trust. Starwood Mezzanine and
SOFI IV shall have received from Xxxxx, Xxxxx & Xxxxx, counsel for the Trust, an
opinion dated the Closing Date, in form and substance reasonably satisfactory to
Starwood Mezzanine and SOFI IV.
Section 9.4 No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of the Trust, Starwood Mezzanine and SOFI IV, however, that
it shall use its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered.
Section 9.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on the Trust,
Starwood Mezzanine or SOFI IV.
Section 9.6 Transaction Agreements; Advisory Agreement. Each of the
parties (other than Starwood Mezzanine, SOFI IV and SOFI Holdings) to each of
the Transaction Agreements and any other
21
documents contemplated hereby and thereby shall have entered into such
Transaction Agreements and any other documents contemplated hereby and thereby
substantially in the forms attached hereto as exhibits or, if not so attached,
as agreed to by the parties. The Advisory Agreement between the Trust and
Starwood Financial Advisors, L.L.C. shall be entered into on the Closing Date
substantially in the form attached hereto as Exhibit C.
Section 9.7 Shareholder and Stockholder Action. The Shareholders of the
Trust shall have approved, by the requisite vote of the holders of Class A
Shares and Class B Shares, the Trust Shareholder Matters and each of Xxxxxxx X.
Xxxxxxx and Xxxxxxxx X. Xxxxxxxxxx, M.D. shall be elected as Trustees with a
term that expires on the date of the 1999 annual meeting of the Trust's
shareholders and Xxxxx Xxxxxxx shall be elected as a Trustee with a term that
expires on the date of the 1998 annual meeting of the Trust's shareholders.
Section 9.8 REIT Qualifications. The Trust shall be eligible to elect
to be qualified as a REIT for its taxable year ending December 31, 1998.
ARTICLE X
INDEMNIFICATION; SURVIVAL
Section 10.1 Indemnification. (a) Each of the Trust, Starwood Mezzanine
and SOFI IV shall indemnify and hold harmless each other and their respective
subsidiaries, affiliates, employees, agents, partners and successors from and
against any and all (x) liabilities, losses or damages ("Loss") and (y)
reasonable out-of-pocket expenses, including without limitation attorneys' fees
and expenses ("Expense") incurred by such party in connection with (i) its
respective breach or failure to perform its obligations under this Agreement or
any other agreement entered into by it in connection therewith (including the
Transaction Agreements) and (ii) any breach of any warranty or the inaccuracy of
any representation, or misrepresentation or material omission, made by it
respectively in this Agreement, any Transaction Agreement or in any certificate
delivered by or on behalf of it respectively pursuant hereto or thereto;
provided however, that the obligation of each Contributor to indemnify and hold
harmless pursuant to this Section 10.1 shall be limited to the payment by such
Contributor in the aggregate of an amount equal to the value of the Class A
Shares and cash received by such Contributor pursuant to this Agreement.
(b) The Trust shall indemnify and hold harmless each of Starwood
Mezzanine and SOFI IV and their respective subsidiaries, affiliates, employees,
agents, partners and successors from and against any and all Loss and Expenses
incurred by such party in connection with any untrue statement of a material
fact or omission of a material fact required to be stated in the Proxy
Statement, at the time of its mailing or delivery to the shareholders of the
Trust and at the time of the shareholders meeting referenced therein or
necessary to make the statements therein not misleading; provided, however, that
the foregoing shall not apply to the extent that any such untrue statement of a
material fact or omission to state a material fact was made by the Trust in
reliance upon and in conformity with information concerning Starwood Mezzanine,
SOFI IV and their partners or representatives or the Interests for inclusion in
the Proxy Statement.
(c) Each of Starwood Mezzanine and SOFI IV severally agrees that it
shall indemnify and hold harmless the Trust and its subsidiaries, affiliates,
employees, agents, partners and successors
22
from and against any and all Loss and Expenses incurred by such party in
connection with any untrue statement of a material fact or omission of a
material fact required to be stated in the Proxy Statement, at the time of its
mailing or delivery to the shareholders of the Trust and at the time of the
shareholders meeting referenced therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing shall only apply
to the extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Trust in reliance upon and in conformity
with information concerning the indemnifying party and its partners or
representatives or its Interests supplied by such indemnifying party for
inclusion in the Proxy Statement.
Section 10.2 Notice of Claims. If a party believes that any of the
persons entitled to indemnification under this Article X has suffered or
incurred any Loss or incurred any Expense, whether or not the applicable dollar
limitation specified by Section 10.1 has been exceeded, such party shall notify
the indemnifying party promptly in writing describing such Loss or Expense, the
amount thereof, if known, and the method of computation of such Loss or Expense,
all with reasonable particularity and containing a reference to the provisions
of this Agreement, any Transaction Agreement, the Proxy Statement or any
certificate delivered pursuant hereto in respect of which such Loss or Expense
shall have occurred; provided, however, that the omission by such indemnified
party to give notice as provided herein shall not relieve the indemnifying party
of its indemnification obligation under this Article X except to the extent that
such indemnifying party is materially damaged as a result of such failure to
give notice. If any action at Law or suit in equity is instituted against a
third party with respect to which any of the persons entitled to indemnification
under this Article X intends to claim any liability or expense as Loss or
Expense under this Article X, any such person shall promptly notify the
indemnifying party of such action or suit as specified in these Sections 10.2
and 10.3. Any party entitled to indemnification hereunder shall use reasonable
efforts to minimize any Loss or Expense for which indemnification is sought
hereunder.
Section 10.3 Third-Party Claims. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceeding by a third party, the indemnified persons shall give notice
thereof to the indemnifying party not later than twenty (20) business days prior
to the time any response to the asserted claim is required, if possible, and in
any event within fifteen (15) days following the date such indemnified person
has actual knowledge thereof; provided, however, that the omission by such
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its indemnification obligation under this Article X except
to the extent that such indemnifying party is materially damaged as a result of
such failure to give notice. In the event of any such claim for indemnification
resulting from or in connection with a claim or legal proceeding by a third
party, the indemnifying party may, at its sole cost and expense, assume the
defense thereof; provided, however, that counsel for the indemnifying party, who
shall conduct the defense of such claim or legal proceeding, shall be reasonably
satisfactory to the indemnified party; and provided, further, that if the
defendants in any such actions include both the indemnified persons and the
indemnifying party and the indemnified persons shall have reasonably concluded
based on a written opinion of counsel that there may be legal defenses or rights
available to them which have not been waived and are in actual or potential
conflict with those available to the indemnifying party, the indemnified persons
shall have the right to select one law firm reasonably acceptable to the
indemnifying party to act as separate counsel, on behalf of such indemnified
persons, at the expense of the indemnifying party. Unless the indemnified
persons are represented by separate counsel pursuant to the second proviso of
the immediately preceding sentence, if an indemnifying party assumes the defense
of any such claim or legal proceeding, such
23
indemnifying party shall not consent to entry of any judgment, or enter into any
settlement, that (a) is not subject to indemnification in accordance with the
provisions in this Article X, (b) provides for injunctive or other nonmonetary
relief affecting the indemnified persons or (c) does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
indemnified persons of a release from all liability with respect to such claim
or legal proceeding, without the prior written consent of the indemnified
persons (which consent, in the case of clauses (b) and (c), shall not be
unreasonably withheld); and provided, further, that unless the indemnified
persons are represented by separate counsel pursuant to the second proviso of
the immediately preceding sentence, the indemnified persons may, at their own
expense, participate in any such proceeding with the counsel of their choice
without any right of control thereof. So long as the indemnifying party is in
good faith defending such claim or proceeding, the indemnified persons shall not
compromise or settle such claim or proceeding without the prior written consent
of the indemnifying party, which consent shall not be unreasonably withheld. If
the indemnifying party does not assume the defense of any such claim or
litigation in accordance with the terms hereof, the indemnified persons may
defend against such claim or litigation in such manner as they may deem
appropriate, including, without limitation, settling such claim or litigation
(after giving prior written notice of the same to the indemnifying party and
obtaining the prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld) on such terms as the indemnified persons may
deem appropriate, and the indemnifying party will promptly indemnify the
indemnified persons in accordance with the provisions of Article X.
Section 10.4 Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive until
the first (1st) anniversary of the Closing Date, at which time such
representations and warranties will terminate and be of no force and effect. Any
claim under this Article X for Loss or Expense in respect of any representations
and warranties must be asserted in writing prior to the first (1st) anniversary
of the Closing Date. Notwithstanding the foregoing, if a claim of a breach of a
representation or warranty under this Article X is asserted in writing prior to
the applicable time period set forth above in this Section 10.4, then such
representation or warranty, as it relates to such claim, shall survive until the
Loss or Expense in respect thereof, if any, is finally determined and paid by
the indemnifying party.
ARTICLE XI
TERMINATION
Section 11.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of the parties;
(b) by the Trust upon any material breach by Starwood
Mezzanine or SOFI IV of any of their respective representations,
warranties or covenants contained in this Agreement that is not
qualified as to materiality and upon any breach by Starwood Mezzanine
or SOFI IV of any of their respective representations, warranties or
covenants contained in this Agreement that is qualified as to
materiality; provided that either Starwood Mezzanine or SOFI IV, as the
case may be, shall have been given a reasonable opportunity to cure
such breach;
24
(c) by Starwood Mezzanine or SOFI IV upon any material breach
by the Trust of any of its representations, warranties or covenants
contained in this Agreement that is not qualified as to materiality and
upon any breach by the Trust of any of its representations, warranties
or covenants contained in this Agreement that is qualified as to its
materiality; provided that the Trust shall have been given a reasonable
opportunity to cure such breach;
(d) by the Trust if any of the conditions specified in Article
VIII has not been met or waived at such time as it is no longer
possible to satisfy such condition;
(e) by Starwood Mezzanine and SOFI IV if any of the conditions
specified in Article IX has not been met or waived at such time as it
is no longer possible to satisfy such condition;
(f) by the Trust, Starwood Mezzanine, or SOFI IV if the
transactions contemplated by this Agreement are not consummated on or
before March 31, 1998 (the "Outside Date"); except that on or after the
Outside Date no party may terminate this Agreement pursuant to this
Section 10.1(f) if such party is then in material breach of its
representations, warranties or covenants in this Agreement; or
(g) upon 15 days' written notice by the Trust, Starwood
Mezzanine or SOFI IV if the Trust enters into an agreement with any
party other than Starwood Mezzanine, SOFI IV or any other entity
controlled by Starwood Capital Group, L.P., Starwood Capital Group,
L.L.C. or their principals (a "Starwood Controlled Party") which is not
consistent with the obligations of the Trust set forth in this
Agreement or with the consummation of the transactions contemplated by
this Agreement. For the purposes hereof, an agreement with a party
other than Starwood Mezzanine, SOFI IV or a Starwood Controlled Party
will be deemed to be inconsistent with the obligations of the Trust set
for this Agreement in the event that such agreement would impose any
exclusivity or non-competition agreements on the Trust or would require
a commitment of the Trust capital in excess of $1,000,000 in the
aggregate.
ARTICLE XII
OTHER PROVISIONS
Section 12.1 Confidential Nature of Information. Each party agrees that
it will treat in strict confidence all documents, materials and other
information which it obtains regarding the other party during the course of the
negotiations leading to the consummation of the transactions provided for herein
and the preparation of this Agreement; and if for any reason whatsoever the
transactions contemplated by this Agreement shall not be consummated, each party
shall return to the other party all copies of non-public documents and materials
which have been furnished or acquired in connection therewith and shall not use
or disseminate such documents, materials or other information for any purpose
whatsoever.
Section 12.2 Expenses.
(a) Each of the parties hereto shall bear its own costs and expenses
(including, without limitation, fees and disbursements of its counsel,
accountants and other financial, legal, accounting or other advisors) incurred
by it in connection with the preparation, negotiation, execution and delivery of
this Agreement, each of the other documents and instruments executed in
connection with or contemplated by this Agreement, including the Proxy
Statement, and the consummation of the
25
transactions contemplated hereby and thereby (collectively "Acquisition
Expenses"); provided, that, if the transactions contemplated by this Agreement
are not consummated on or before June 30, 1998, the Contributors (pro rata based
on the relative amounts of Class A Shares that would have been issued to each
and the amount of cash payable to each had the transactions been consummated)
will reimburse the Trust for all amounts the Trust pays to Xxxxxxxx, Xxxxx,
Xxxxxx & Xxxxx Financial Advisors, Inc. other than as a result of the
Independent Trustees of the Trust withdrawing their approval for the proposed
transactions.
(b) In the event of a Qualifying Termination (as defined below), then
within ten (10) business days after receipt by the Trust from Starwood Mezzanine
or SOFI IV, as the case may be, of reasonable documentation therefor, the Trust
shall reimburse Starwood Mezzanine or SOFI IV, as the case may be, for its
reasonable out-of-pocket Acquisition Expenses.
For the purposes of this Section 12.2(b), a "Qualifying Termination"
shall mean a termination of this Agreement pursuant to Section 11.1(g).
Section 12.3 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered by
facsimile, personally or by overnight mail, or four (4) days after being mailed
(by registered mail, return receipt requested) to a party at the following
address (or to such other address as such party may have specified by notice
given to the other parties pursuant to this provision):
If to the Trust to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Xxx Xxxxxxxx
Fax No.: (000) 000-0000
with copies to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
and
Xxxxxxx & Associates
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Xxxxx Xxxxxxx
Fax No.: (000) 000-0000
26
If to Starwood Mezzanine to:
c/o Starwood Capital Group, L.P.
Three Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Madison X. Xxxxx, Esq.
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
If to SOFI IV to:
c/o Starwood Capital Group, L.P.
Three Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Madison X. Xxxxx, Esq.
Fax No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
Section 12.4 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person; provided, however, that the
Trust, Starwood Mezzanine and SOFI IV are not affiliates for any purpose under
this Agreement;
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Financial Advisor" means Xxxxxxxx, Xxxxx, Xxxxxx & Xxxxx.
(d) "Incentive Plans" means the Angeles Participating Mortgage Trust
1996 Share Incentive Plan and the Angeles Participating Mortgage Trust 1996
Trustee Share Incentive Plan.
27
(e) "Ground Lease" means the lease agreement between Red Lion Hotels,
Inc. and RLH Partnership, L.P.
(f) "Material Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen, would result in any
change or effect) that is materially adverse to (i) in the case of the Trust and
Starwood Mezzanine, the business, properties, assets, condition (financial or
otherwise) or results of operations of the applicable person or persons, taken
as a whole and (ii) in the case of SOFI IV, the SOFI IV Interests, the Letters
of Intent and the First Mortgage Portfolio.
(g) "Mortgage" shall mean the original mortgage, deed of trust or other
instrument, as amended, restated, supplemented or otherwise modified from time
to time prior to the date hereof, securing a Mortgage Note relating to a
Mortgage Loan.
(h) "Mortgage Files" means all related notes, deeds of trust,
mortgages, security agreements, guaranties, indemnities, financing statements,
assignments, endorsements, correspondence, bonds, letters of credit, accounts,
insurance contracts and policies, credit reports, tax returns, appraisals,
environmental reports, escrow documents, participation agreements (if
applicable), loan files, servicing files and all other documents evidencing,
securing or pertaining to the Mortgage Loans.
(i) "Mortgage Loan" or "Mortgage Loans" shall mean the loan or loans
identified on Schedule 1.1(a) or (b), as the same may be amended from time to
time pursuant to the provisions of this Agreement, together with all Servicing
Rights related thereto.
(j) "Mortgage Note" means a note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
(k) "Mortgaged Property" means the property encumbered by a Mortgage.
(l) "Mortgagor" means a Person that has executed and delivered a
Mortgage encumbering Mortgaged Property owned and/or leased by such Person.
(m) "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
entity.
(n) "Servicing Files" means the documents, files and other items
pertaining to the Mortgage Loans, including without limitation the computer
files, data disks, books, records, data tapes, notes, and all additional
documents generated as a result of or utilized in originating or servicing the
Mortgage Loans.
(o) "Servicing Rights" means, with respect to each Mortgage Loan, any
and all of the following: (a) all rights to service such Mortgage Loan; (b) any
payments or monies payable or received for servicing such Mortgage Loan; (c) any
late fees, assumption fees, penalties or similar payments with respect to such
Mortgage Loan; (d) all agreements or documents creating, defining or evidencing
any such Servicing Rights and all rights of the Contributor thereunder,
including without limitation any clean-up calls and termination options; (e) all
accounts and other rights to payment related to any of the property described in
this paragraph; (f) possession and use of any and all Servicing Files pertaining
to
28
such Mortgage Loan or pertaining to the past, present or prospective servicing
of such Mortgage Loan; and (g) all rights, powers and privileges incident to any
of the foregoing.
Section 12.5 Partial Invalidity. In case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
Section 12.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors or assigns.
Section 12.7 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when each of the parties shall
have each executed one counterpart.
Section 12.8 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.9 Schedules and Exhibits. The schedules and exhibits
referred to in this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein.
Section 12.10 Entire Agreement; Amendments and Waivers; Assignment.
This Agreement (together with the Transaction Agreements and other documents
referred to herein) contains the entire understanding of the parties hereto with
regard to the subject matter contained herein. The parties hereto, only by
mutual agreement in writing, may amend, modify and supplement this Agreement.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
such party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach. Except as expressly provided herein, the rights and
obligations of the parties under this Agreement may not be assigned or
transferred by any party hereto without the prior written consent of the other
parties hereto, provided, however, that the Trust shall be permitted to assign
this agreement in connection with any merger, reorganization, consolidation,
sale of all or substantially all of its assets in which the Trust is the
surviving entity or the primary purpose of which is to change the domicile of
the Trust or to change the form of the Trust to a corporation.
Section 12.11 Governing Law. This Agreement and the application or
interpretation thereof, shall be exclusively governed by its terms and by the
internal laws of the State of New York, without regard to principles of
conflicts of laws as applied in the State of New York or any other jurisdiction
which, if applied, would result in the application of any laws other than the
internal laws of the State of New York.
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Section 12.12 No Third-Party Beneficiaries. Except as specified in
Article X, nothing in this Agreement, expressed or implied, is intended or shall
be construed to confer upon any person other than the parties hereto and
successors and assigns permitted by Section 12.6 any right, remedy or claim
under or by reason of this Agreement.
Section 12.13 The Trust; Starwood General Partners. Each of the parties
hereto acknowledges and agrees that (a) the name "Angeles Participating Mortgage
Trust" is a designation of the Trust and its Trustees (as Trustees but not
personally) under a Declaration of Trust, originally made and entered into as of
April 15, 1988, as restated as of July 18, 1988, and all persons dealing with
the Trust shall look solely to Trust's assets for the enforcement of any claims
against the Trust, and the Trustees, officers, agents and security holders of
the Trust assume no personal liability for obligations entered into on behalf of
the Trust, and their respective individual assets shall not be subject to the
claims of any person relating to such obligations; (b) all persons dealing with
Starwood Mezzanine shall look solely to the assets of Starwood Mezzanine for the
enforcement of any claims against Starwood Mezzanine and the general partners of
Starwood Mezzanine, and the officers, agents and security holders of such
general partner assume no personal liability for obligations entered into on
behalf of Starwood Mezzanine, and their respective individual assets shall not
be subject to the claims of any person relating to such obligations; and (c) all
persons dealing with SOFI IV shall look solely to the assets of SOFI IV for the
enforcement of any claims against SOFI IV and the general partners of SOFI IV,
and the officers, agents and security holders of such general partner assume no
personal liability for obligations entered into on behalf of SOFI IV, and their
respective individual assets shall not be subject to the claims of any person
relating to such obligations.
Section 12.14 Determinations and Interpretations by the Trust. All
determinations of the Trust (or the Board of Trustees of the Trust) provided for
in or pursuant to this Agreement shall be made by the Independent Trustees (as
defined in the Shareholders Agreement). All interpretations of the terms of this
Agreement shall be resolved on behalf of the Trust by the Independent Trustees
(as defined in the Shareholders Agreement).
Section 12.15 Submission to Jurisdiction. Each of the parties hereto
irrevocably submits and consents to the jurisdiction of the United States
District Court for the Southern District of New York in connection with any
action or proceeding arising out of or relating to this Agreement or any
Transaction Document and the transactions contemplated hereby and thereby, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
Section 12.16 Approvals and Consents. Unless otherwise expressly set
forth herein, any agreement, approval or consent required of a party hereto
shall not be unreasonably withheld or delayed.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto or by their duly authorized officers, all as of the date
first above written.
ANGELES PARTICIPATING MORTGAGE TRUST, a California
business trust
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title:
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group, L.P.
its general partner
By: BSS Capital Partners, L.P.
its general partner
By: Sternlicht Holdings II, Inc.
its general partner
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Title:
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its General Manager
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Title:
31
SCHEDULE 1.1(a)
Starwood Mezzanine Interests
Outstanding
Original Principal
Loan Interest Principal Balance at Anticipated Contribution
Borrower Collateral Rate Maturity Balance ----- Draws Participation Value Subordination
-------- ---------- -------- --------- ------- ------------ -------------- ------------- --------------- --------------
Principal
Amount to
Senior
Investment
----------
32
SCHEDULE 1.1(b)
SOFI IV Interests
Outstanding Principal
Original Principal Amount to
Loan Interest Principal Balance at Contribution Senior
Lender Collateral Rate Maturity Balance ----- Participation Value Subordination Investment
-------- ---------- -------- --------- ------- ------------ ------------- --------------- -------------- ----------
33
