SECURITIES TRANSFER AGREEMENT by and among GRAMERCY CAPITAL CORP. GKK CAPITAL LP SL GREEN OPERATING PARTNERSHIP, L.P. GKK MANAGER MEMBER CORP. and SL GREEN REALTY CORP.
Exhibit 99.1
EXECUTION
VERSION
by
and among
GRAMERCY
CAPITAL CORP.
GKK
CAPITAL LP
▇▇
▇▇▇▇▇ OPERATING PARTNERSHIP, L.P.
GKK
MANAGER MEMBER CORP.
and
▇▇
▇▇▇▇▇ REALTY CORP.
(solely
for the purpose of Sections 2.6, 5.4, 5.5, 5.6, 6.3, 6.4, 6.5, 7.1, 7.2, 7.3,
7.4(a), 7.4(b), 7.4(d), 7.4(e), 7.5, 7.6 and 7.7 and Article VIII of this
Agreement)
with
respect to
all
of the outstanding
membership
interests of
GKK
MANAGER LLC
and
certain
Class B Limited Partnership Units of
GKK
CAPITAL LP
Dated
as of April 24, 2009
TABLE OF
CONTENTS
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Page
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ARTICLE
I
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DEFINITIONS
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5
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Section 1.1.
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Definitions.
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5
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ARTICLE
II
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THE
TRANSFERS; CLOSING
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11
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Section 2.1.
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Transfers
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11
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Section 2.2.
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Consideration.
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12
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Section 2.3.
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Closing
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12
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Section 2.4.
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Closing
Deliveries by Parent
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12
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Section 2.5.
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Closing
Deliveries by SLGOP and Manager Corp
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13
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Section 2.6.
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Termination
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13
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Section 2.7.
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Class
B Distributions
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13
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ARTICLE
III
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REPRESENTATIONS
AND WARRANTIES RELATING TO SLGOP, MANAGER CORP AND THE
MANAGER
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14
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Section 3.1.
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Organization
and Qualification.
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14
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Section 3.2.
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Authority;
Non-Contravention; Approvals.
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14
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Section 3.3.
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The
Manager Corp Owned Manager Interests, the SLGOP Owned Manager Interests,
the SLGOP Owned Class B Units
and
the Manager Owned Class B Units.
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15
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Section 3.4.
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Capitalization
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16
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Section 3.5.
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Subsidiaries
and Equity Investments
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16
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Section 3.6.
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Financial
Statements
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16
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Section 3.7.
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Absence
of Undisclosed Liabilities
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16
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Section 3.8.
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Intentionally
Omitted.
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16
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Section 3.9.
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Books
and Records
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17
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Section 3.10.
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Tax
Matters.
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17
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Section 3.11.
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ERISA
and Employee Benefits.
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18
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Section 3.12.
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Employment
Matters.
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19
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Section 3.13.
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Labor
Relations
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19
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Section 3.14.
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Absence
of Litigation
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20
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Section 3.15.
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No
Violation of Law
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20
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Section 3.16.
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Title
to Assets; Encumbrances
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20
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Section 3.17.
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Sufficiency
of Assets
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20
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Section 3.18.
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Insurance
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20
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Section 3.19.
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Contracts
and Other Agreements.
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21
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Section 3.20.
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Intellectual
Property.
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22
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Section 3.21.
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Real
Property.
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22
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Section 3.22.
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Environmental
Matters
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23
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Section 3.23.
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Bank
Accounts
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23
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Section 3.24.
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Permits
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23
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Section 3.25.
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Powers
of Attorney
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23
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Section 3.26.
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No
Other Clients
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23
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Section 3.27.
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Transactions
and Related Parties
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23
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Section 3.28.
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Brokers
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24
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ARTICLE
IV
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REPRESENTATIONS
AND WARRANTIES OF PARENT AND THE OPERATING PARTNERSHIP
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24
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Section 4.1.
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Organization
and Qualification of Parent and the Operating Partnership
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24
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Section 4.2.
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Authority;
Non-Contravention; Approvals.
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24
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Section 4.3.
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Brokers
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25
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ARTICLE
V
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COVENANTS
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25
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Section 5.1.
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Commercially
Reasonable Efforts
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25
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Section 5.2.
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Use
of Name
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25
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Section 5.3.
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Transfer
Taxes
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26
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Section 5.4.
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Officers
and Employees.
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26
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Section 5.5.
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Public
Statements
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26
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Section 5.6.
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Confidentiality
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27
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Section 5.7.
|
Management
Agreement Acknowledgement
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27
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Section 5.8.
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Parent
Equity Awards
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27
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Section 5.9.
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Certain
Amendments
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28
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Section 5.10.
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D&O
Insurance
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28
|
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Section 5.11.
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Obligations
of American Financial Realty Trust
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28
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ARTICLE
VI
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POST-CLOSING
TAX MATTERS
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28
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Section 6.1.
|
Covenants
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28
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Section 6.2.
|
Cooperation
on Tax Matters
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28
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Section 6.3.
|
Tax
Indemnity.
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29
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Section 6.4.
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Disputes
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30
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Section 6.5.
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Tax
Returns.
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30
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ARTICLE
VII
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SURVIVAL;
INDEMNIFICATION
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31
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Section 7.1.
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Survival
of Representations, Warranties, Covenants and Agreements.
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31
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Section 7.2.
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Indemnification
of Parent
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31
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Section 7.3.
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Indemnification
of SLG, SLGOP and Manager Corp
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32
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Section 7.4.
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Limitations.
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32
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Section 7.5.
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Method
of Asserting Claims
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33
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Section 7.6.
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Subrogation;
Insurance
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34
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Section 7.7.
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Exclusive
Remedy
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35
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ARTICLE
VIII
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MISCELLANEOUS
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35
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Section 8.1.
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Notices
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35
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Section 8.2.
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Entire
Agreement
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36
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Section 8.3.
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Expenses
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36
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Section 8.4.
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Waiver
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36
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Section 8.5.
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Amendment
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36
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Section 8.6.
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No
Third Party Beneficiary
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36
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Section 8.7.
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Assignment;
Binding Effect
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36
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Section 8.8.
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CONSENT
TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF TRIAL BY
JURY.
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36
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Section 8.9.
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Specific
Performance
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37
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Section 8.10.
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Invalid
Provisions
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37
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Section 8.11.
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GOVERNING
LAW
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37
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Section 8.12.
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Manager
Disclosure Schedule
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37
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Section 8.13.
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Counterparts;
Effectiveness
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37
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Section 8.14.
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Interpretation
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38
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Section 8.15.
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Parent
Board Actions
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38
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EXHIBITS:
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A
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Form
of Special Rights Agreement
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B
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Form
of Special Servicing Agreement
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C
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Joint
Press Release
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THIS
SECURITIES TRANSFER AGREEMENT, dated as of April 24, 2009 (this “Agreement” ), is made
by and among Gramercy Capital Corp., a Maryland corporation (“Parent”), GKK Capital
LP, a Delaware limited partnership (the “Operating
Partnership”), ▇▇ ▇▇▇▇▇ Operating Partnership, L.P., a Delaware limited
partnership (“SLGOP”), GKK Manager
Member Corp., a Delaware corporation (“Manager Corp”), and,
solely for the purpose of Sections 2.6, 5.4, 5.5, 5.6, 6.3, 6.4, 6.5, 7.1, 7.2, 7.3, 7.4(a), 7.4(b), 7.4(d), 7.4(e), 7.5, 7.6 and 7.7 and Article VIII of this
Agreement, ▇▇ ▇▇▇▇▇ Realty Corp., a Maryland corporation (“SLG”). Capitalized
terms used herein but not otherwise defined (including in the Recitals to this
Agreement) shall have the meanings ascribed to such terms in Article I of this
Agreement.
RECITALS
WHEREAS,
(i) SLGOP owns 34.02% of the issued and outstanding membership interests
(the “SLGOP Owned
Manager Interests”) in GKK Manager LLC, a Delaware limited liability
company (the “Manager”) and
(ii) Manager Corp owns 65.98% of the issued and outstanding membership
interests (the “Manager Corp Owned Manager
Interests”) in the Manager;
WHEREAS,
(i) SLGOP is a limited partner of the Operating Partnership and owns 70.00 Class
B Units (the “SLGOP
Owned Class B Units”), representing 70.00% of the issued and outstanding
Class B Units and (ii) the Manager is a limited partner of the Operating
Partnership and owns 30.00 Class B Units (the “Manager Owned Class B
Units”), representing 30.00% of the issued and outstanding Class B
Units;
WHEREAS,
Parent, the Operating Partnership and the Manager are parties to the Second
Amended and Restated Management Agreement, dated as of October 27, 2008 (the
“Management
Agreement”), pursuant to which the Manager provides management, advisory
and various other services to Parent and the Operating Partnership;
WHEREAS,
Parent and SLGOP are parties to and wish to terminate the Amended and Restated
Origination Agreement, dated as of April 19, 2006 (the “Origination
Agreement” ), and Parent and SLGOP wish to enter into a Special Rights
Agreement in the form attached hereto as Exhibit A (the “Special Rights
Agreement”);
WHEREAS,
Parent, Gramercy Loan Services LLC and Green Loan Services, LLC wish to enter
into an Special Servicing Agreement in the form attached hereto as Exhibit
B (the “Special Servicing
Agreement”);
WHEREAS,
the Operating Partnership, Parent, SLGOP and SLG are parties to and wish to
terminate the Services Agreement, dated as of October 27, 2008 (the “Services Agreement”
), pursuant to which SLGOP and SLG provide certain consulting and other services
to Parent and the Operating Partnership;
WHEREAS,
the Operating Partnership, Parent, SLGOP and the Manager are parties to an
Agreement, dated as of December 30, 2008, pursuant to which, among other things,
(i) the Manager paid to the Operating Partnership $2.75 million in cash
simultaneously with the execution of such agreement and (ii) SLGOP transferred
to Parent 1.9 million shares of Parent’s common stock, in full satisfaction of
all potential obligations that the holders of Class B Units may have had to the
Operating Partnership, and that the Operating Partnership may have had to the
holders of Class B Units; and
WHEREAS,
the parties to this Agreement wish to provide for a transaction in which SLGOP
and Manager Corp will assign, transfer, convey and deliver to the Operating
Partnership all of the Manager Corp Owned Manager Interests, SLGOP Owned Manager
Interests and the SLGOP Owned Class B Units, and in consideration therefor,
Parent and the Operating Partnership will take the actions and pay the amounts
set forth in this Agreement;
NOW,
THEREFORE, the parties agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1. Definitions.
(a) As
used in this Agreement, the following terms have the respective meanings
indicated:
“Affiliate” means,
with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the Person specified. The term “control”
(including the terms “controlling,” “controlled by” and “under common control
with”) means possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Business Day” means
any day other than a Saturday, Sunday or any day on which banks located in the
State of New York are authorized or required to be closed for the conduct of
regular banking business.
“Class B Units” means
the Class B units of the Operating Partnership.
“Closing” means the
closing of the transactions contemplated by this Agreement.
“Closing Date” means
the date on which the Closing occurs.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Company Plan” means a
Plan that the Manager or any ERISA Affiliate sponsors, maintains, has any
obligation to contribute to, has or may have Liability under or is otherwise a
party to, or which otherwise provides benefits for employees, former employees,
independent contractors or former independent contractors (or their dependents
and beneficiaries) who provide or provided services primarily to the Manager;
provided, that Company
Plan shall not include any Plan sponsored or maintained by Parent or the
Operating Partnership, or any Plan to which Parent or the Operating Partnership
is a party.
“Encumbrances” means
any and all liens, charges, security interests, mortgages, pledges, options,
preemptive rights, rights of first refusal or first offer, proxies, levies,
voting trusts or agreements, or other adverse claims or restrictions on title or
transfer of any nature whatsoever, but excluding non-exclusive licenses of
Intellectual Property.
“Environmental Law”
means any Law relating to the protection, investigation or restoration of the
environment (including natural resources) or the health or safety of human or
other living organisms, including the manufacture, introduction into
commerce, export, import, processing, distribution, use, generation, treatment,
storage, handling, presence, disposal, transportation, release or management of,
or other activities with respect to, Hazardous Substances, in each case as
presently in effect.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.
“ERISA Affiliate”
means a person required at any particular time to be aggregated with the Manager
under Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA.
“GAAP” means United
States generally accepted accounting principles.
“Governmental
Authority” means any U.S. or foreign federal, state, municipal or local
government, any instrumentality, subdivision, court, administrative or
regulatory agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority or self-regulatory agency
or authority.
“Governmental Consent”
means any material declaration, filing or registration with, or notice to, or
authorization, consent, order or approval of, any Governmental
Authority.
“Hazardous Substance”
means (i) any petroleum or petroleum products, flammable explosives,
radioactive materials, medical waste, radon, asbestos or asbestos-containing
products or materials, chloroflourocarbon, hydroflourocarbon, urea formaldehyde
foam insulation, polychlorinated biphenyls (PCBs) or lead-containing paint or
plumbing, and (ii) any element, compound, substance, waste or other
material that is regulated under any Environmental Law or is defined as, or
included in the definition of, or deemed by or pursuant to any Environmental Law
or by any Governmental Authority to be “hazardous,” “toxic,” a “contaminant,”
“waste,” a “pollutant,” “hazardous substance,” “hazardous waste,” “restricted
hazardous waste,” “hazardous material,” “extremely hazardous waste,” a “toxic
substance,” a “toxic pollutant” or words with similar meaning.
“Indebtedness” means,
as to any Person, (i) all obligations of such Person for borrowed money
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers’ acceptances, whether or not matured),
(ii) all obligations of such Person evidenced by notes, bonds, debentures
or similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
and accrued commercial or trade payables arising in the ordinary course of
business, (iv) all interest rate and currency swaps, caps, collars and
similar agreements or hedging devices under which payments are obligated to be
made by such Person, whether periodically or upon the happening of a
contingency, (v) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, (vi) all obligations of such Person under leases which have
been or should be, in accordance with GAAP, recorded as capital leases,
(vii) all indebtedness secured by any lien on any property or asset owned
or held by such Person regardless of whether the indebtedness secured thereby
shall have been assumed by such Person or is non-recourse to the credit of such
Person, and (viii) all guarantees by such Person of any of the indebtedness
specified in clauses (i) through (vii) of this definition of any other
Person.
“Indemnified Party”
means any Person claiming indemnification under any provision of Article VII.
“Indemnifying Party”
means any Person against whom a claim for indemnification is being asserted
under any provision of Article VII.
“Intellectual
Property” means all of the following intellectual property and
intellectual property rights: (i) all names and marks, brands
and slogans, all registered and unregistered trademarks, trade names, service
marks and applications therefor and all goodwill associated therewith;
(ii) all patents, patent applications and inventions conceived or reduced
to practice prior to the Closing, including any provisional, utility,
continuation, continuation-in-part or divisional applications filed in the
United States or other jurisdiction prior to the Closing, and all reissues
thereof and all reexamination certificates issuing therefrom; (iii) all
copyrights, including all related copyright registrations; (iv) all know-how or
other trade secrets, whether or not reduced to practice; (v) the right to ▇▇▇
for and recover damages, assert, settle and/or release any claims or demands and
obtain all other remedies and relief at law or equity for any past, present or
future infringement or misappropriation of any of the foregoing; (vi) all
licenses, options to license and other contractual rights to use such
intellectual property or intellectual property rights; and (vii) all
computer and electronic data processing programs and software programs and
related documentation.
“Knowledge of the
Manager” means the actual knowledge (after reasonable inquiry) of the
persons listed on Section
1.1(a)(i) of
the Manager Disclosure Schedule.
“Laws” means all laws,
statutes, regulations, ordinances, orders, judgments, decrees or other legally
binding requirements issued, promulgated, adopted or imposed by any Governmental
Authority.
“Liabilities” means
all indebtedness, liabilities, obligations, responsibilities, commitments and
expenses of every kind, whether or not accrued or fixed, known or unknown,
absolute or contingent, matured or unmatured, determined or
determinable.
“Losses” means any and
all damages, fines, fees, penalties, Liabilities, settlements and judgments,
losses and costs and expenses (including loss of value, interest, court costs
and fees, and reasonable costs of attorneys, accountants and other experts,
expenses of investigation or other reasonable expenses of litigation or other
proceedings or of any claim, default or assessment); provided, that Losses shall
not include any indirect, special, punitive, incidental or consequential damages
of any kind (except to the extent such damages are awarded against any
Indemnified Party in a claim by a third party).
“Manager Material Adverse
Effect” means, with respect to the Manager, any development, occurrence,
effect, event or change that, individually or taken together with all other
developments, occurrences, effects, events or changes occurring prior thereto,
has or is reasonably likely to have (i) a material adverse effect on the
business, operations, properties, condition (financial or otherwise) or assets
of the Manager and the Manager Subsidiary, taken as a whole (provided, however, that Manager
Material Adverse Effect shall not be deemed to include any developments,
occurrences, effects, events or changes to the extent resulting from
(A) changes in general political, economic or business conditions
(including the commencement, continuation or escalation of a war, material armed
hostilities or other material international or national calamity or acts of
terrorism or earthquakes, hurricanes, other natural disasters or acts of God)
affecting the business or industry in which the Manager and the Manager
Subsidiary, as applicable, operates, except to the extent that such changes in
general political, economic or business conditions have a materially
disproportionate adverse effect on the Manager and the Manager Subsidiary, as
applicable, relative to other similarly situated participants, (B) changes
in general financial and capital market conditions, except to the extent that
such changes in general financial and capital market conditions have a
materially disproportionate adverse effect on the Manager and the Manager
Subsidiary, as applicable, relative to other similarly situated participants,
(C) changes, after the date hereof, in Laws of general applicability or
interpretations thereof by courts or Governmental Authorities, (D) changes,
after the date hereof, in GAAP, applicable to the business or industry in which
the Manager and the Manager Subsidiary, as applicable, operates generally,
(E) the announcement or performance of the transactions contemplated by
this Agreement or the Special Rights Agreement or (F) matters expressly
requested by Parent or consented to by Parent); or (ii) a material adverse
effect on the enforceability of SLG’s, SLGOP’s or Manager Corp’s obligations
under this Agreement or the Special Rights Agreement, as the case may be, or
SLG’s, SLGOP’s or Manager Corp’s ability to perform its obligations under this
Agreement or the Special Rights Agreement in a timely manner or to consummate
the transactions contemplated by this Agreement or the Special Rights Agreement,
as the case may be, without material delay.
“OP Agreement” means
the Third Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, as amended.
“OP Units” means,
collectively, the Class A Units, the Class B Units, the Class C Units and units
of limited partnership of the Operating Partnership classified as LTIP
Units.
“Parent Material Adverse
Effect” means, with respect to Parent and the Operating Partnership, any
development, occurrence, effect, event or change that, individually or taken
together with all other developments, occurrences, effects, events or changes
occurring prior thereto, has or is reasonably likely to have a material adverse
effect on the enforceability of such party’s obligations under this Agreement or
the Special Rights Agreement or on such party’s ability to perform its
obligations under this Agreement or the Special Rights Agreement in a timely
manner or to consummate the transactions contemplated by this Agreement or the
Special Rights Agreement without material delay.
“Permit” means any
permit, license, franchise, approval, consent, registration, clearance,
variance, exemption, order, certificate or authorization by or of any
Governmental Authority.
“Permitted
Encumbrances” means (a) liens for Taxes not yet due and payable or,
if due and payable, are being contested in good faith in appropriate
proceedings, (b) mechanics’, workmen’s, repairmen’s, warehousemen’s,
carriers’ and other statutory liens arising or incurred in the ordinary course
of business in respect of Liabilities that will have been paid prior to the
Closing or that are not yet due and payable or, if due and payable, are being
contested in good faith in appropriate proceedings, (c) Encumbrances
consisting of pledges or deposits made in connection with obligations under
workers’ compensation laws, unemployment insurance or similar legislation,
including liens of judgments thereunder which are not currently dischargeable,
(d) Encumbrances over goods or equipment arising under the supplier’s
standard retention of title arrangements or (e) Encumbrances constituted by
existing credit facilities, finance or capital leases.
“Person” means any
natural person, corporation, general partnership, limited partnership, limited
or unlimited liability company, proprietorship, joint venture, other business
organization, trust, union, association or Governmental Authority.
“Plan” means any
employment, consulting, bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, equity (or equity-based),
leave of absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, medical, dental, vision, welfare, accident, disability,
workmen’s compensation or other insurance, severance, separation, termination,
change of control, collective bargaining or other benefit plan, agreement,
practice, policy or arrangement, whether written or oral, and whether or not
subject to ERISA, including any “employee benefit plan” within the meaning of
Section 3(3) of ERISA.
“Pre-Closing Tax
Period” means any Tax period ending on or before the Closing
Date.
“SEC” means the U.S.
Securities and Exchange Commission.
“Securities Act” means
the Securities Act of 1933, as amended.
“Securities Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“SLG Material Adverse
Effect” means, with respect to SLG, SLGOP and Manager Corp, any
development, occurrence, effect, event or change that, individually or taken
together with all other developments, occurrences, effects, events or changes
occurring prior thereto, has or is reasonably likely to have a material adverse
effect on the enforceability of such party’s obligations under this Agreement or
the Special Rights Agreement or on such party’s ability to perform its
obligations under this Agreement or the Special Rights Agreement in a timely
manner or to consummate the transactions contemplated by this Agreement or the
Special Rights Agreement without material delay.
“Straddle Period”
means any Tax period beginning, but not ending, on or before the Closing
Date.
“Subsidiary” means,
with respect to any Person, any other Person (i) of which the first Person
owns directly or indirectly 50% or more of the equity interest in the other
Person, (ii) of which the first Person or any other Subsidiary of the first
Person is a general partner or (iii) of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions with respect to the
other Person are at the time owned by the first Person and/or one or more of the
first Person’s Subsidiaries.
“Tax” means any tax,
governmental fee or other like assessment or charge of any kind whatsoever
(including withholding on amounts paid to or by any Person), whether federal,
state, local, foreign or other, together with any interest, penalty, addition to
tax or additional amount imposed by any Tax Authority and any Liability for any
of the foregoing as transferee or successor.
“Tax Authority” means
any Governmental Authority responsible for the imposition of any
Tax.
“Tax Return” means any
return, declaration, report, claim for refund or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
“Tax Sharing
Agreements” means all existing or effective agreements or arrangements
(whether or not written) binding on the Manager that provide for the allocation,
apportionment, sharing or assignment of any Tax Liability or benefit, or the
transfer or assignment of income, revenues, receipts, or gains for the purpose
of determining any person’s Tax Liability (other than any indemnification
agreement or arrangement pertaining to the sale or lease of assets or
subsidiaries).
(b) In
addition, the following terms are defined on the pages of this Agreement
indicated below:
|
401(k)
Plan Transfer Amount
|
Section
5.4(a)
|
||
|
Agreement
|
Preamble
|
||
|
Balance
Sheet
|
Section
3.6
|
||
|
Confidential
Information
|
Section
5.6
|
||
|
Employee
|
Section
3.12(a)
|
||
|
Financial
Statements
|
Section
3.6
|
||
|
Fundamental
Representations
|
Section
7.1(a)
|
||
|
Indemnity
Amount
|
Section
7.4(a)
|
||
|
Individuals
|
Section
3.10(b)
|
||
|
Leased
Real Property
|
Section
3.21(a)
|
||
|
Leases
|
Section
3.21(a)
|
||
|
Management
Agreement
|
Recitals
|
||
|
Manager
|
Recitals
|
||
|
Manager
Corp
|
Preamble
|
||
|
Manager
Corp Consideration
|
Section
2.2(b)
|
||
|
Manager
Corp Owned Manager Interests
|
Recitals
|
||
|
Manager
Corp Transfer
|
Section
2.1(b)
|
||
|
Manager
Disclosure Schedule
|
ARTICLE
III
|
||
|
Manager
Indemnified Parties
|
Section
7.3
|
||
|
Manager
Owned Class B Units
|
Recitals
|
||
|
Manager
Permits
|
Section
3.24
|
||
|
Manager
Subsidiary
|
Section
3.1(c)
|
||
|
Operating
Partnership
|
Preamble
|
||
|
Origination
Agreement
|
Recitals
|
||
|
Parent
|
Preamble
|
||
|
Parent
401(k) Plan
|
Section
5.4(a)
|
||
|
Parent
Deductible
|
Section
7.4(b)
|
||
|
Parent
Indemnified Parties
|
Section
7.2
|
||
|
Post
Closing Amount
|
Section
2.7
|
||
|
Qualifying
Losses
|
Section
7.4(a)
|
||
|
Representatives
|
Section
5.6
|
||
|
Services
Agreement
|
Recitals
|
||
|
SLG
|
Preamble
|
||
|
SLGOP
|
Preamble
|
||
|
SLGOP
Consideration
|
Section
2.2(a)
|
||
|
SLGOP
Deductible
|
Section
7.4(a)
|
||
|
SLGOP
Owned Class B Units
|
Recitals
|
||
|
SLGOP
Owned Manager Interests
|
Recitals
|
||
|
SLGOP
Transfer
|
Section
2.1(a)
|
||
|
Special
Rights Agreement
|
Recitals
|
||
|
Special
Servicing Agreement
|
Recitals
|
||
|
Tax
Loss
|
Section
6.3(a)
|
||
|
Tax
Referee
|
Section
6.4
|
||
|
Transfers
|
Section
2.1(b)
|
(c) For
the purposes of this Agreement, except to the extent the context otherwise
requires:
(i) when
a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or an Exhibit or
Schedule to, this Agreement;
(ii) the
table of contents and headings in this Agreement are for reference purposes only
and do not affect in any way the meaning or interpretation of this
Agreement;
(iii) whenever
the words “include,” “includes” or “including” (or similar terms) are used in
this Agreement, they are deemed to be followed by the words “without
limitation”;
(iv) the
words “hereof,” “herein” and “hereunder” and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement;
(v) all
terms defined in this Agreement have their defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;
(vi) the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of those terms;
(vii) if
any action is to be taken by any party hereto pursuant to this Agreement on a
day that is not a Business Day, such action shall be taken on the next Business
Day following such day;
(viii) references
to a party are also to its permitted successors and assigns;
(ix) the
use of “or” is not intended to be exclusive unless expressly indicated
otherwise;
(x) “contract”
includes any note, bond, mortgage, indenture, deed of trust, loan, credit
agreement, franchise concession, contract, agreement, Permit, license, lease,
purchase order, sales order, arrangement or other commitment, obligation or
understanding, whether written or oral;
(xi) “ordinary
course of business” (or similar terms) shall be deemed followed by “consistent
with past practice;”
(xii) “assets”
shall include “rights,” including rights under contracts;
(xiii) “reasonable
efforts” or similar terms shall not require the waiver of any rights under this
Agreement; and
(xiv) “extent”
in the phrase “to the extent” shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply “if.”
ARTICLE
II
THE
TRANSFERS; CLOSING
Section
2.1. Transfers. At
the Closing, upon the terms and subject to the conditions of this
Agreement:
(a) SLGOP
hereby transfers, assigns, conveys and delivers to the Operating Partnership,
and the Operating Partnership hereby accepts from SLGOP, good and valid title,
free and clear of all Encumbrances (other than Encumbrances arising under
applicable federal and state securities Laws), to all of (i) the SLGOP
Owned Manager Interests and (ii) the SLGOP Owned Class B Units
(collectively, the “SLGOP Transfer”);
and
(b) Manager
Corp hereby transfers, assigns, conveys and delivers to the Operating
Partnership, and the Operating Partnership hereby accepts from Manager Corp,
good and valid title, free and clear of all Encumbrances (other then
Encumbrances arising under applicable federal and state securities Laws), to all
of the Manager Corp Owned Manager Interests (the “Manager Corp
Transfer” and, together with the SLGOP Transfer, the “Transfers”).
Section
2.2. Consideration.
(a) In
consideration of the SLGOP Transfer, SLGOP’s entry into this Agreement and the
Special Rights Agreement and other value and benefit to be provided by SLGOP
hereunder and thereunder, Parent and the Operating Partnership shall at the
Closing pay SLGOP an amount in cash equal to $10.00 (the “SLGOP Consideration”
) and shall take the other actions and enter into the other agreements required
by this Agreement.
(b) In
consideration of the Manager Corp Transfer, Manager Corp’s entry into this
Agreement and other value and benefit to be provided by Manager Corp hereunder,
Parent and the Operating Partnership shall at the Closing pay Manager Corp an
amount in cash equal to $10.00 (the “Manager Corp
Consideration” ) and shall take the other actions and enter into the
other agreements required by this Agreement.
(c) Each
of SLGOP and Manager Corp acknowledges and agrees that, notwithstanding any
provision to the contrary in the OP Agreement or any other agreement or
understanding among SLGOP or Manager Corp or any of their respective
Subsidiaries or Affiliates, on the one hand, and Parent or the Operating
Partnership or any of their respective Subsidiaries or Affiliates, on the other
hand, the payment of the cash consideration set forth in Section 2.2(a) and Section 2.2(b), the entry by
each of Parent and the Operating Partnership into this Agreement and, in the
case of Parent, the Special Rights Agreement and other value and benefit to be
provided by Parent and the Operating Partnership hereunder and thereunder
constitute the only consideration payable in exchange for the SLGOP Transfer and
the Manager Corp Transfer and that no other consideration is payable to SLGOP or
Manager Corp in exchange for the SLGOP Transfer and the Manager Corp Transfer
and in respect of any other actual, potential or perceived ownership interest in
the Manager, the Operating Partnership or any of their respective Subsidiaries
or Affiliates.
Section
2.3. Closing. The
Closing shall be held at the offices of ▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time, on the date
hereof.
Section
2.4. Closing Deliveries by
Parent. At the Closing, Parent and/or the Operating
Partnership, as applicable, will deliver or cause to be delivered to SLGOP and
Manager Corp, as applicable:
(a) to
SLGOP, cash in an aggregate amount equal to the sum of (i) $1,737,158, which
amount represents the netting of (x) certain accrued and unpaid bonuses of the
Manager due to Parent and (y) certain consulting fees, management fees, special
servicing fees and other expenses due to SLGOP or its Affiliate and (ii) the
SLGOP Consideration;
(b) to
Manager Corp, cash in an aggregate amount equal to the Manager Corp
Consideration;
(c) a
duly executed counterpart of the Special Rights Agreement;
(d) duly
executed counterparts of the Special Servicing Agreement; and
(e) such
further instruments and documents as may be required to be delivered by Parent
or the Operating Partnership pursuant to the terms of this Agreement or as may
be reasonably requested by SLGOP in connection with the Closing.
Section
2.5. Closing Deliveries by SLGOP
and Manager Corp. At the Closing, SLGOP and Manager Corp, as
applicable, will deliver to Parent:
(a) a
duly executed assignment of each of the SLGOP Owned Manager Interests, the
Manager Corp Owned Manager Interests and the SLGOP Owned Class B Units, as
applicable, in each case in form and substance reasonably satisfactory to
Parent;
(b) duly
executed counterparts of the Special Rights Agreement;
(c) a
duly executed counterpart of the Special Servicing Agreement; and
(d) such
further instruments and documents as may be required to be delivered by SLGOP
and Manager Corp pursuant to the terms of this Agreement or as may be reasonably
requested by Parent or the Operating Partnership in connection with the
Closing.
Section
2.6. Termination. Immediately
upon the Closing, each of the Origination Agreement and the Services Agreement
shall automatically terminate and be of no further force and effect without any
further action by any party thereto. For the avoidance of doubt, it
is acknowledged that no provisions set forth in these agreements shall have any
further force of effect even if the terms of any of these agreements may be
interpreted otherwise.
Section
2.7. Class B
Distributions. The Operating Partnership shall have an
obligation to pay to SLGOP an amount equal to the amount that would have been
payable, if any, to SLGOP and the Manager in their capacities as holders of the
SLGOP Owned Class B Units and the Manager Owned Class B Units under the terms of
Section 5.01(C) of the OP Agreement (the “Post Closing Amount”)
in respect of the quarter ended March 31, 2009 had this Agreement not been
entered into. Such Post Closing Amount shall be paid in the same
manner and timing as distributions on Class B Units would normally be paid under
the OP Agreement; provided, however, that if the
Operating Partnership is, at the time a Post Closing Amount is due as set forth
above, restricted from making distributions on Class B Units pursuant to an
agreement existing as of the date hereof, the obligation to make a payment in
respect of the Post Closing Amount, if any, will be deferred until such time
that all such restrictions no longer exist. No interest shall accrue
with respect to such deferred payment. SLGOP agrees that it, as the
sole holder of Class B Units as of the date hereof (other than the Manager),
waives any rights to receive any distributions in respect of the Class B Units
in respect of any prior or future periods. The holders of the SLGOP
Owned Class B Units and the Manager Owned Class B Units and the Operating
Partnership agree that they have no obligations to each other under the terms of
Section 5.01(C) of the OP Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES RELATING TO
SLGOP,
MANAGER CORP AND THE MANAGER
Each of
SLGOP and Manager Corp, jointly and severally, represents and warrants to Parent
and the Operating Partnership that, except as set forth in the disclosure
schedule delivered by SLGOP and Manager Corp to Parent and the Operating
Partnership prior to the execution and delivery of this Agreement (the “Manager Disclosure
Schedule”), as of the date hereof (except that with respect to the
representations and warranties related to the Manager Subsidiary, all such
representations and warranties are made only for the period from April 1,
2008 to and including the date hereof):
Section
3.1. Organization and
Qualification.
(a) SLGOP
is a limited partnership duly organized, validly existing and in good standing
under the Laws of the State of Delaware and has all requisite power and
authority to own, license, use, lease and operate its assets and properties
(including the SLGOP Owned Manager Interests and the SLGOP Owned Class B Units)
and to carry on its business as it is now being conducted. SLGOP is
not in default under any provision of its certificate of limited partnership or
its limited partnership agreement.
(b) Manager
Corp is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware and has all requisite power and
authority to own, license, use, lease and operate its assets and properties
(including the Manager Corp Owned Manager Interests) and to carry on its
business as it is now being conducted. Manager Corp is not in default
under any provision of its certificate of incorporation or bylaws.
(c) The
Manager is a limited liability company duly organized, validly existing and in
good standing under the Laws of the State of Delaware and has all requisite
power and authority to own, license, use, lease and operate its assets and
properties (including the Manager Owned Class B Units) and to carry on its
business as it is now being conducted. First States Services
Management LLC (the “Manager Subsidiary”)
is a limited liability company duly organized, validly existing and in good
standing under the Laws of the Commonwealth of Pennsylvania. Each of
the Manager and the Manager Subsidiary is duly qualified, licensed or admitted
to do business and is in good standing in every jurisdiction in which such
qualification, licensing or admission is necessary because of the nature of the
property owned, leased or operated by it or the nature of the business conducted
by it (each of which jurisdictions is listed in Section 3.1(c) of the Manager Disclosure
Schedule), except where the failure to be so qualified, licensed or
admitted or in good standing would not reasonably be expected to have a Manager
Material Adverse Effect. Neither the Manager nor the Manager
Subsidiary is in default under any provision of its certificate of formation or
operating agreement. SLGOP has delivered to Parent true, complete and
correct copies of the certificate of formation, operating agreement, minute
books and member ledgers of each of the Manager and the Manager Subsidiary as
are in effect on the date hereof.
Section
3.2. Authority;
Non-Contravention; Approvals.
(a) Each
of SLGOP and Manager Corp has all requisite power and authority to execute and
deliver this Agreement and, in the case of SLGOP, the Special Rights Agreement
and to perform the transactions contemplated by this Agreement and, in the case
of SLGOP, the Special Rights Agreement. The execution and delivery of
this Agreement and, in the case of SLGOP, the Special Rights Agreement and the
performance by each of SLGOP and Manager Corp of the transactions contemplated
by this Agreement and, in the case of SLGOP, the Special Rights Agreement has
been approved by the general partner of SLGOP or the members and the board of
managers of Manager Corp, as applicable, and no partnership or limited liability
company, as applicable, or other proceedings on the part of SLGOP or Manager
Corp are necessary to authorize the execution and delivery of this Agreement or,
in the case of SLGOP, the Special Rights Agreement and the performance by SLGOP
and Manager Corp of the transactions contemplated by this Agreement and, in the
case of SLGOP, the Special Rights Agreement.
(b) This
Agreement has been, and upon its execution by SLGOP the Special Rights Agreement
will be, duly and validly executed and delivered by SLGOP or Manager Corp, as
applicable, and, assuming the due authorization, execution and delivery of this
Agreement and, in the case of SLGOP, the Special Rights Agreement by each other
party thereto, constitute, and upon their execution, this Agreement and, in the
case of SLGOP, the Special Rights Agreement will constitute, legal, valid and
binding obligations of SLGOP or Manager Corp, as applicable, enforceable against
SLGOP or Manager Corp, as applicable, in accordance with their respective
terms.
(c) The
execution and delivery of this Agreement and, in the case of SLGOP, the Special
Rights Agreement by SLGOP and Manager Corp and the performance of the
transactions contemplated by this Agreement and, in the case of SLGOP, the
Special Rights Agreement by SLGOP and Manager Corp do not and will not (i)
conflict with or result in a breach of any provision of the organizational
documents of SLGOP, Manager Corp, the Manager or the Manager Subsidiary, (ii)
result in a violation or breach of or constitute a default (or an event which,
with or without notice or lapse of time or both, would constitute a default)
under, or result in the termination, modification or cancellation of, or the
loss of a benefit under or accelerate the performance required by, or result in
a right of termination, modification, cancellation or acceleration under, the
terms, conditions or provisions of any contract or other instrument of any kind
to which SLGOP, Manager Corp, the Manager or the Manager Subsidiary is a party
or by which any of their respective properties or assets may be bound or
affected, or (iii) violate any order, writ, judgment, injunction, decree,
statute, treaty, rule or regulation applicable to SLGOP, Manager Corp, the
Manager or the Manager Subsidiary or any of their respective properties or
assets, excluding from the foregoing clauses (ii) and (iii) such violations,
breaches, defaults, terminations, modifications, cancellations, losses or
accelerations that would not reasonably be expected to have a Manager Material
Adverse Effect or SLG Material Adverse Effect, as the case may be.
(d) No
Governmental Consent is required to be obtained or made in connection with or as
a result of the execution and delivery of this Agreement and, in the case of
SLGOP, the Special Rights Agreement by SLGOP or Manager Corp, as applicable, or
the performance by SLGOP or Manager Corp, as applicable, of the transactions
contemplated by this Agreement and, in the case of SLGOP, the Special Rights
Agreement or the consummation of the transactions contemplated by this Agreement
and, in the case of SLGOP, the Special Rights Agreement.
Section
3.3. The Manager Corp Owned Manager
Interests, the SLGOP Owned Manager Interests, the SLGOP Owned Class B Units and
the Manager Owned Class B Units.
(a) As
of the date hereof, (i) SLGOP is the lawful record and beneficial owner of the
SLGOP Owned Manager Interests and the SLGOP Owned Class B Units, (ii) Manager
Corp is the lawful record and beneficial owner of the Manager Corp Owned Manager
Interests and (iii) the Manager is the lawful record and beneficial owner of the
Manager Owned Class B Units, in each case free and clear of all Encumbrances
whatsoever, other than Encumbrances arising under this Agreement or the Special
Rights Agreement or restrictions on transfer imposed under applicable federal
and state securities Laws or, with respect to the Class B Units only, the OP
Agreement. The Manager Corp Owned Manager Interests, the SLGOP Owned
Manager Interests, the SLGOP Owned Class B Units and the Manager Owned Class B
Units have been duly authorized and are validly issued, fully-paid and
non-assessable and have been issued in accordance with all applicable federal
and state securities Laws.
(b) Upon
the conveyance of the SLGOP Owned Manager Interests and the SLGOP Owned Class B
Units by SLGOP, in each case in the manner contemplated under Article II, SLGOP will
transfer, assign, convey and deliver beneficial and legal title to the Operating
Partnership of all of the SLGOP Owned Manager Interests and the SLGOP Owned
Class B Units free and clear of all Encumbrances, except for Encumbrances
created by the Operating Partnership, the OP Agreement or restrictions on
transfer imposed under federal and state securities Laws.
(c) Upon
the conveyance of the Manager Corp Owned Manager Interests by Manager Corp in
the manner contemplated under Article II, Manager Corp
will transfer, assign, convey and deliver beneficial and legal title to the
Operating Partnership of all of the Manager Corp Owned Manager Interests free
and clear of all Encumbrances, except for Encumbrances created by the Operating
Partnership, the OP Agreement or restrictions on transfer imposed under federal
and state securities Laws.
(d) There
are no outstanding options, warrants or other rights of any kind to acquire any
membership or other interest in the Manager or the Manager Subsidiary or
securities convertible into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire any such interests, nor is the Manager
or the Manager Subsidiary committed to issue any such option, warrant, right or
security.
Section
3.4. Capitalization. The
SLGOP Owned Manager Interests and the Manager Corp Owned Manager Interests
constitute all of the issued and outstanding membership interests in the
Manager. The Manager has no other outstanding membership or other
equity interests. No Person other than SLGOP and Manager Corp has any
right to participate in the revenues, profits, control or administration of the
Manager.
Section
3.5. Subsidiaries and Equity
Investments. The Manager has no Subsidiaries other than the
Manager Subsidiary and does not have, directly or indirectly, any equity
interest in any other Person. The Manager owns all the outstanding
limited liability company interests in the Manager Subsidiary free and clear of
all Encumbrances.
Section
3.6. Financial
Statements. Section 3.6 of the Manager Disclosure
Schedule sets forth the (i) unaudited balance sheet of the Manager
as of each of March 31, 2009 (the “Balance Sheet”)
and December 31, 2008 and (ii) unaudited statement of
income for each of the years ended December 31, 2008, 2007, 2006 and 2005
(collectively, the “Financial
Statements”). The Financial Statements were prepared in
accordance with GAAP on a basis consistent with prior periods and fairly present
in all material respects the financial position and results of operations of
Manager as of the dates and for the respective periods presented (subject to the
absence of footnote disclosures otherwise required by
GAAP).
Section
3.7.
Absence of
Undisclosed Liabilities. There are no Liabilities of the
Manager or the Manager Subsidiary of any nature, whether accrued, contingent or
otherwise, except for Liabilities (a) reflected in the Financial
Statements, (b) that were incurred since the date of the Balance Sheet and
were normal and recurring expenses incurred in the ordinary course of business
that would not reasonably be expected to have a Manager Material Adverse Effect,
(c) that have been discharged or paid in full prior to the date hereof or
(d) that derive from actions, inactions or omissions that any of the Manager
Indemnified Parties (as defined in Section 7.3) would be
entitled to indemnification for under Section 7.3(c).
Section
3.8. Intentionally
Omitted.
Section
3.9. Books and
Records. The minute books and other similar records of the
Manager and the Manager Subsidiary as made available to Parent prior to the
execution of this Agreement contain a true and complete record, in all material
respects, of all actions taken at all meetings and by written consents in lieu
of meetings of the members, board of managers, and committees of the board of
managers of the Manager and the Manager Subsidiary.
Section
3.10. Tax Matters.
(a) All
Tax Returns required to be filed with any Tax Authority or delivered to any
Person by the Manager or the Manager Subsidiary have been timely filed or
delivered in accordance with applicable Law, and all such Tax Returns were true,
correct and complete. No claim has been made by a Tax Authority in a
jurisdiction where Tax Returns are not filed by the Manager or the Manager
Subsidiary that the Manager or the Manager Subsidiary is or may be subject to
taxation by that jurisdiction.
(b) At
all times since the organization of the Manager (i) all of the issued and
outstanding membership interests of the Manager have been owned by SLGOP and/or
Manager Corp or were owned by the individuals listed on Section 3.10(b) of the Manager Disclosure
Schedule (the “Individuals”),
(ii) the Manager has been treated as a partnership for U.S. federal income
Tax and all state and local income and franchise Tax purposes and (iii) no
election has been made by the Manager or any other Person to treat the Manager
as other than a partnership for such purposes. At all times since the
organization of the Manager Subsidiary (i) the Manager Subsidiary has been
treated as a “disregarded entity” within the meaning of U.S. Treasury Regulation
Section 301.7701-3 for U.S. federal income Tax and all state and local income or
franchise Tax purposes, and (ii) no election has been made by the Manager
Subsidiary or any other person to treat the Manager Subsidiary as other than a
“disregarded entity” for such purposes. Except for the interests in
the Manager Subsidiary owned by the Manager, none of the Manager or the Manager
Subsidiary owns securities (A) possessing more than 10% of the total voting
power of the outstanding securities of any one issuer or (B) having a value
of more than 10% of the total value of the outstanding securities of any
issuer.
(c) No
audit or other examination by any Tax Authority that relates to any Taxes of the
Manager or the Manager Subsidiary is currently in progress (and to the Knowledge
of the Manager, no such audit or examination is pending or has been threatened),
and neither the Manager nor the Manager Subsidiary has received any notification
from any Tax Authority relating to any issue that could affect any Liability for
Taxes of the Manager or the Manager Subsidiary.
(d) No
agreement or waiver extending the statue of limitations relating to the payment,
assessment or collection of any Taxes of the Manager or the Manager Subsidiary
has been entered into or requested, and no contest that relates to any Taxes of
the Manager or the Manager Subsidiary exists.
(e) There
are no agreements in effect between the Manager or the Manager Subsidiary and
any Person (including, but not limited to, any Tax Sharing Agreements) or any
other statutory, judicial or contractual agreements or provisions under which
the Manager or the Manager Subsidiary could be liable for any Taxes of any
Person or claims related to any Taxes of any Person (including, but not limited
to SLGOP and Manager Corp). None of the Manager or the Manager
Subsidiary has (i) requested, received or been the subject of any written
ruling of any Tax Authority relating to Taxes of the Manager or the Manager
Subsidiary and has entered into any written agreement with a Tax Authority
relating to Taxes of the Manager or the Manager Subsidiary, (ii) engaged in
any transaction of which it has made (or intends to make or was required to
make) any disclosure to any Tax Authority to avoid the imposition of any
penalties, interest or addition to Taxes of the Manager or the Manager
Subsidiary, or (iii) filed any Tax Return of the Manager or the Manager
Subsidiary containing any position that is, or would be, subject to penalties
under Code Section 6662 (or any similar provision of state, local or foreign
Law).
(f) None
of the Manager or the Manager Subsidiary has changed any method of accounting
(or requested any change in any method of accounting) that related to any Taxes
of the Manager or the Manager Subsidiary as a separate entity, and is not
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any (i) “closing agreement” as described in
Code Section 7121 (or any similar provision of state, local or foreign Law)
executed on or before the Closing Date, (ii) installment sale or open
transaction made on or prior to the Closing Date, or (iii) prepaid amount
on or prior to the Closing Date.
(g) None
of SLGOP or Manager Corp expects any Governmental Authority to assess any
additional Taxes of the Manager or the Manager Subsidiary for any period for
which Tax Returns have been or should have been filed. There is no
dispute or claim concerning any Tax Liability of the Manager or the Manager
Subsidiary either (i) claimed or raised by any Governmental Authority in
writing or (ii) to the Knowledge of the Manager, pending or
threatened. Section 3.10(g) of the Manager Disclosure
Schedule lists all jurisdictions in which state, local and foreign Tax
Returns are filed by or with respect to the Manager and the Manager Subsidiary
and indicates any Tax Returns that have been audited or that are currently the
subject of audit.
(h) All
Taxes owed by the Manager and the Manager Subsidiary have been paid whether or
not reflected on any Tax Return. The charges, accruals and reserves
with respect to Taxes on the books of the Manager and the Manager Subsidiary
were determined in accordance with GAAP consistently applied and are adequate to
cover any Taxes of the Manager and the Manager Subsidiary that have accrued but
are not yet due and payable. All Taxes that the Manager and the
Manager Subsidiary is or was required by Law to withhold or collect in
connection with amounts owing to any employee, independent contractor, creditor,
member or other third party have been duly withheld or collected and, to the
extent required, have been paid to the appropriate Governmental
Authority. There are no Encumbrances with respect to Taxes upon any
of the properties or assets, real or personal, tangible or intangible, of the
Manager or the Manager Subsidiary (except statutory Encumbrances for Taxes not
yet due or payable).
Section
3.11. ERISA and Employee
Benefits.
(a) Section 3.11(a) of the Manager Disclosure
Schedule contains a correct and complete list of each Company Plan; provided, that a Company Plan
does not need to be listed on Section 3.11(a) if it is
maintained by an ERISA Affiliate and has never been maintained or participated
in by the Manager or the Manager Subsidiary and if no employee or independent
contractor of the Manager or the Manager Subsidiary is or has ever been eligible
to participate therein. Neither the Manager nor the Manager
Subsidiary has any obligation to change or otherwise modify any existing Company
Plan or program or to establish any new Company Plan or program.
(b) Each
of the Company Plans maintained or participated in by the Manager or the Manager
Subsidiary and, to the Knowledge of the Manager (for purposes of this Section 3.11(b)), each other
Company Plan, is, and its administration (including without limitation, with
respect to reporting and disclosure) is and has been, in compliance in all
material respects with, and neither the Manager nor the Manager Subsidiary has
not received any claim or notice that any such Company Plan is not in compliance
in all material respects with, its terms and with applicable Law. Neither Parent
nor any subsidiary thereof shall be required to pay or otherwise have any
Liability in respect of a Company Plan that is not maintained or participated in
by the Manager or the Manager Subsidiary.
(c) SLGOP
has delivered to Parent prior to the execution of this Agreement correct and
complete copies of each Company Plan required to be listed on Section 3.11(a) of the Manager Disclosure
Schedule, together with all amendments and supplements
thereto.
(d) Each
of the Company Plans that is intended to be tax-qualified under
Section 401(a) of the Code has been determined by the IRS to be so
qualified and such determination has not been modified, revoked or limited, and,
to the Knowledge of the Manager, no circumstances have occurred that would
adversely affect the tax-qualified status of any such Plan that cannot be
corrected under the Self-Correction Program of the Employee Plans Compliance
Resolution System of the Internal Revenue Service.
(e) There
is no suit, action, dispute, claim, arbitration or legal, administrative or
other proceeding or governmental investigation pending, or, to the Knowledge of
the Manager, threatened, alleging any breach of the terms of any Company Plan or
of any fiduciary duties thereunder or violation of any applicable Law with
respect to any such Plan that would be reasonably likely to result in a Manager
Material Adverse Effect.
(f) No
Company Plan is subject to Title IV of ERISA. Parent, the Operating
Partnership and its Affiliates (including without limitation, on and after the
Closing Date, the Manager and its ERISA Affiliates) shall have no Liability for,
under, with respect to or otherwise in connection with any Plan, which Liability
arises under ERISA or the Code, solely by virtue of the Manager or the Manager
Subsidiary being aggregated, with any other person that is an ERISA Affiliate
(other than with the Manager or Manager Subsidiary), in a controlled group or
affiliated service group for purposes of ERISA or the Code at any relevant time
prior to the Closing Date.
Section
3.12. Employment Matters.
(a) Section 3.12(a) of the
Manager Disclosure Schedule sets forth the name and base compensation of
all officers, managers, consultants and employees of each of the Manager and the
Manager Subsidiary and their Affiliates who provide services to the Manager or
the Manager Subsidiary, as applicable (each, an “Employee”). All
commitments and/or obligations of the Manager or the Manager Subsidiary to pay
any Employee or any other Person any form of compensation (whether base
compensation, bonus, benefits, severance or other termination payments) are set
forth in the Plans or other documents listed on Section 3.11(a) of the
Manager Disclosure Schedule.
(b) Neither
the execution and delivery of this Agreement or the Special Rights Agreement,
nor the performance of the transactions contemplated hereby and thereby, will
(either alone or in conjunction with any other event, such as termination of
employment) (i) result in any material payment (including severance
payments, payments under any other agreements or unemployment compensation
payments, payments subject to Section 280G of the Code or otherwise) becoming
due from the Manager, the Manager Subsidiary or any ERISA Affiliate to any
officer, manager or employee of the Manager, the Manager Subsidiary or any other
Person, under any Company Plan, (ii) materially increase any benefits
otherwise payable under any Company Plan or (iii) other than as provided in
Section 5.8
herein, result in any acceleration of the time of payment or vesting of any
material benefits payable by the Manager, the Manager Subsidiary or any ERISA
Affiliate under any Company Plan.
Section
3.13. Labor
Relations. Other than as set forth on Schedule 3.13: (i) there
is no unfair labor practice, charge or complaint or other proceeding pending or,
to the Knowledge of the Manager, threatened against the Manager or the Manager
Subsidiary, (ii) each of the Manager and the Manager Subsidiary complies all in
material respects, and at all times in the past, has complied in all material
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and has not
engaged in any unfair labor practice that is likely to result in any material
Liability to the Parent or the Operating Partnership, (iii) neither the Manager
nor the Manager Subsidiary is a party to, nor does it have any direct or
indirect material Liability with respect to, any collective bargaining agreement
or other labor union contract applicable to its employees or to any other
Persons providing services to the Manager or the Manager Subsidiary or, to the
Knowledge of the Manager, are any activities or proceedings of any labor union
or other Person to organize any such employees ongoing and (iv) there is no
labor strike, slowdown, work stoppage or lockout pending or, to the Knowledge of
the Manager, threatened, against or affecting the Manager or the Manager
Subsidiary, nor has there been any such activity within the past two
years.
Section
3.14. Absence of
Litigation. There are no claims, suits, proceedings, actions,
investigations, oppositions, challenges or cancellation proceedings pending or,
to the Knowledge of the Manager, threatened against or affecting any of the
Manager or the Manager Subsidiary or relating to or affecting any of their
respective properties or assets that, if adversely determined, would reasonably
be expected to result in a Manager Material Adverse Effect. There are
no outstanding orders, writs, judgments, decrees, injunctions or settlements
that (i) prohibit or restrict the consummation of the transactions
contemplated by this Agreement or the Special Rights Agreement, (ii) would
reasonably be expected to have a Manager Material Adverse Effect,
(iii) would materially adversely affect the operations of the Manager,
Parent or the Operating Partnership following the Closing or (iv) that
otherwise restrict the Manager or the Manager Subsidiary in any material
respect.
Section
3.15. No Violation of
Law. Neither the Manager nor the Manager Subsidiary is, or in
the past two years has it been, in default under or in violation of, or has it
been charged with any violation of, any material Law. The business of
each of the Manager and the Manager Subsidiary has during the last two years
been operated in all material respects in accordance with applicable material
Laws. This Section 3.15 does
not relate to matters with respect to Taxes, which are the subject of Section 3.10,
employee benefits and labor matters, which are the subject of Sections 3.11, 3.12 and 3.13,
environmental matters, which are the subject of Section 3.22, and
Permits, which are the subject of Section
3.24.
Section
3.16.
Title to Assets;
Encumbrances. Each of the Manager and the Manager Subsidiary
has good, valid and marketable title to all of its assets and properties, free
and clear of all Encumbrances (other than Permitted Encumbrances).
Section
3.17. Sufficiency of
Assets. Immediately following the Closing, none of SLGOP or
any of its Affiliates will own or lease any assets or properties (other than
Parent’s lease of its office in New York, NY from SLG) that are used in or are
necessary for the conduct of the business consistent with past practice of the
Manager or the Manager Subsidiary. For purposes of this Section 3.17,
“Affiliates” shall not include Parent, the Operating Partnership, the Manager or
the Manager Subsidiary.
Section
3.18.
Insurance. Section 3.18 of the Manager Disclosure
Schedule sets forth a complete and correct list of all policies held by
for the benefit of the Manager or the Manager Subsidiary as of the date hereof
and a brief description of the coverage provided by such insurance
policies. SLGOP has delivered to Parent a complete and correct copy
of all such policies together with all riders and amendments thereto entered
into prior to the date hereof. All the insurance policies listed on
Section 3.18 of the Manager Disclosure
Schedule are in full force and effect, all premiums due and payable
thereon have been paid and no notice of cancellation or termination has been
received with respect to any such policy.
Section
3.19. Contracts and Other
Agreements.
(a) Section 3.19(a) of the Manager Disclosure
Schedule contains a correct and complete list of all of the following
contracts or other arrangements to which the Manager or the Manager Subsidiary
is a party or by which any of their respective assets is bound:
(i) all
contracts or other arrangements providing for a commitment of employment or
consultation services;
(ii) all
contracts or other arrangements with any Person containing any provision or
covenant prohibiting or materially limiting the ability of the Manager or the
Manager Subsidiary to engage in any business activity or compete with any
Person;
(iii) all
material partnership, joint venture, shareholders’ or other similar contracts or
other arrangements with any Person;
(iv) all
contracts or other arrangements related to Indebtedness of the Manager or the
Manager Subsidiary;
(v) all
contracts or other arrangements involving payments or potential payments by or
to the Manager or the Manager Subsidiary of more than $100,000;
(vi) all
contracts or other arrangements for the purchase of materials, supplies,
equipment, software or technology providing for payments in excess of
$100,000;
(vii) all
contracts or other arrangements pursuant to which the Manager or the Manager
Subsidiary is a lessee of any machinery, equipment, motor vehicle, office
furniture, fixtures or other personal property providing for lease payments in
excess of $100,000 per year; and
(viii) all
contracts or other arrangements providing for payments in excess of $100,000 in
any twelve-month period from the Manager and the Manager Subsidiary and are not
otherwise required to be included in Section 3.19(a) of the Manager Disclosure
Schedule by clauses (i) through (vii).
(b) Each
contract and other arrangement set forth on Section 3.19(a) of the Manager Disclosure
Schedule is in full force and effect and constitutes a legal, valid and
binding agreement enforceable against the Manager or the Manager Subsidiary, as
applicable, and, to the Knowledge of the Manager, each other party thereto, in
accordance with its terms. None of the Manager, the Manager
Subsidiary or, to the Knowledge of the Manager, any other party to any such
contract or other arrangement is in material violation or material breach of, or
in material default under, and, to the Knowledge of the Manager, there has not
occurred an event or condition that with the passage of time or giving of notice
(or both) would constitute a material default under, or permit the termination
of, any such contract or other arrangement.
(c) SLGOP
has delivered to Parent correct and complete copies (or if none exists,
reasonably complete and accurate written descriptions) of each contract and
other arrangement required to be listed on Section 3.19(a) of the Manager Disclosure
Schedule, together with all amendments and supplements
thereto.
Section
3.20. Intellectual
Property.
(a) Section 3.20(a) of the Manager Disclosure
Schedule sets forth a correct and complete list of (i) all material
Intellectual Property owned by the Manager or the Manager Subsidiary,
(ii) all licenses of material Intellectual Property to which the Manager or
the Manager Subsidiary is a party (other than any “off the shelf” computer
software that at the time of Closing is commercially available) and
(iii) all material Intellectual Property used by the Manager or the Manager
Subsidiary pursuant to formal or informal arrangements with any of their
respective Affiliates (including SLGOP and its Affiliates).
(b) The
Manager or the Manager Subsidiary, as applicable, owns or otherwise has the
right to use all of the material Intellectual Property necessary for the conduct
of the businesses of the Manager and the Manager Subsidiary as they are
currently conducted (other than Permitted Encumbrances).
(c) The
conduct of the Manager’s and the Manager Subsidiary’s businesses does not
infringe upon or misappropriate the rights of any other Person except for such
infringement or misappropriation that would not reasonably be expected to have a
Manager Material Adverse Effect nor, to the Knowledge of the Manager, is any
Intellectual Property owned by or licensed to the Manager or the Manager
Subsidiary being infringed upon or misappropriated by any other
Person.
(d) Consummation
of the transactions contemplated by this Agreement will not result in the
elimination of Manager’s or the Manager Subsidiary’s right to use any of the
Intellectual Property described in Section 3.20(a) of the Manager Disclosure
Schedule or result in the imposition of any material financial or other
obligation on the Manager, the Manager Subsidiary or Parent in respect of any
such Intellectual Property, except for such eliminations of rights that would
not reasonably be expected to have a Manager Material Adverse
Effect.
Section
3.21. Real
Property.
(a) Neither
the Manager nor the Manager Subsidiary owns any real property. Section 3.21(a) of the Manager Disclosure
Schedule contains a correct and complete list of each parcel of real
property leased or subleased to or by the Manager or the Manager Subsidiary (the
“Leased Real
Property”) and also lists the full name of each lease agreement, sublease
agreement and any amendments thereto pursuant to which such Leased Real Property
is leased (collectively, the “Leases”).
(b) The
Manager or the Manager Subsidiary, as applicable, has a valid and subsisting
leasehold estate in and the right to quiet enjoyment of the Leased Real Property
for the full term of the applicable lease or leases of such
property. Each lease required to be listed on Section 3.21(a) of the Manager Disclosure
Schedule is a legal, valid and binding agreement of the Manager or the
Manager Subsidiary, as applicable, enforceable against the Manager or the
Manager Subsidiary, as applicable, and, to the Knowledge of the Manager, each
other party thereto, in accordance with its terms. Since
October 1, 2006, neither the Manager nor the Manager Subsidiary is, nor has
either of them received any written notice that any other party is, in default
(or any condition or event that, after notice or lapse of time or both, would
constitute a default) under any such lease, except for such defaults that would
not reasonably be likely to have a Manager Material Adverse
Effect. Neither the Manager nor the Manager Subsidiary owes any
brokerage commissions with respect to any such leased space (including any
contingent obligation in respect of future lease extensions).
(c) SLGOP
has delivered to Parent prior to the execution of this Agreement correct and
complete copies of all Leases (including any amendments and renewal letters)
required to be listed on Section 3.21(a) of the Manager Disclosure
Schedule.
(d) No
other Person holds any written sublease, lease option or other current or
contingent right to occupy any of the Leased Real Property before the expiration
of the applicable lease. No tenant or other party in possession of
any of the Leased Real Property has any right to purchase, or holds any right of
first refusal to purchase, such properties.
Section
3.22. Environmental
Matters. The Manager and the Manager Subsidiary comply and at
all times have complied in material respects with all applicable Environmental
Laws and no claim has been asserted against the Manager or the Manager
Subsidiary under any Environmental Law, nor is there any basis on which such
material Liability might validly be imposed on the Manager or the Manager
Subsidiary in the future.
Section
3.23. Bank
Accounts. Section 3.23 of the Manager Disclosure
Schedule sets forth (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers and other financial
institutions at which the Manager or the Manager Subsidiary has an account or
safe deposit box or maintains a banking, custodial, trading or other similar
relationship and (b) a true and complete list and description of each such
account, safe deposit box and relationship, indicating in each case the account
number and the names of the respective managers, officers, employees, agents or
other similar representatives of the Manager or the Manager Subsidiary, as
applicable, having signatory power with respect thereto.
Section
3.24. Permits. Each
of the Manager and the Manager Subsidiary holds all Permits that are required to
be maintained by it in connection with the conduct of its business, except for
such Permits the absence of which would not reasonably be expected to have a
Manager Material Adverse Effect. All the Permits held by the Manager
and the Manager Subsidiary are listed in Section 3.24 of the Manager Disclosure
Schedule (the “Manager
Permits”). All the Manager Permits have been legally obtained
and maintained and are in full force and effect except where such failure to
maintain or to cause such Manager Permits to be in full force effect would not
reasonably be expected to have a Manager Material Adverse
Effect. None of the Manager, the Manager Subsidiary or any of their
Affiliates is in violation of or is being operated in violation of the terms of
any Manager Permit, except for such violations which would not reasonably be
expected to have a Manager Material Adverse Effect. Neither the
execution and delivery of this Agreement or the Special Rights Agreement nor the
performance of any of the transactions contemplated hereby or thereby
will: (i) require any assignment, consent, waiver or other
action in respect of any Manager Permit; (ii) result in the termination or
modification of any Manager Permit; or (iii) result in a need for
additional Permits, except in the case of foregoing clauses (i), (ii) and (iii),
as would not reasonably be expected to have a Manager Material Adverse
Effect.
Section
3.25.
Powers of
Attorney. There are no outstanding powers of attorney executed
on behalf of the Manager or the Manager Subsidiary.
Section
3.26. No Other
Clients. The Manager’s and the Manager Subsidiary’s only
clients since their respective inceptions have been Parent and the Operating
Partnership.
Section
3.27. Transactions and Related
Parties. There is no (a) loan outstanding from or to the
Manager or the Manager Subsidiary, on the one hand, from or to any employee,
officer, manager or consultant of the Manager or the Manager Subsidiary (other
than (i) salaries or fees for services rendered and reimbursable business
expenses paid to employees, officers, managers or consultants or
(ii) advances made to employees, officers, managers or consultants in the
ordinary course of the business to meet reimbursable business expenses
anticipated to be incurred by such obligor), or any of the Manager’s or the
Manager Subsidiary’s Affiliates, on the other hand, or (b) agreement
between the Manager or the Manager Subsidiary and any Affiliate or any such
employee, officer or manager that is not reflected in Section
3.19(a) of
the Manager Disclosure Schedule.
Section
3.28. Brokers. No
agent, broker, investment banker, financial advisor or other firm or Person is
entitled to any brokerage, finder’s, financial advisor’s or other similar fee or
commission for which Parent or any of its Subsidiaries (including the Operating
Partnership) could become liable in connection with the transactions
contemplated by this Agreement or the Special Rights Agreement as a result of
any action taken by or on behalf of SLG, SLGOP, Manager Corp, the Manager or the
Manager Subsidiary other than Citigroup Global Markets, Inc., whose fees and
expenses will be paid by SLGOP at or prior to Closing.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
PARENT AND THE OPERATING PARTNERSHIP
Parent
and the Operating Partnership, jointly and severally, hereby represent and
warrant to SLGOP and Manager Corp that:
Section
4.1. Organization and
Qualification of Parent and the Operating Partnership. Parent
is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Maryland. The Operating Partnership is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Each of Parent and the Operating
Partnership has all requisite power and authority to own, license, use, lease
and operate its assets and properties and to carry on its business as it is now
being conducted. Parent is not in default under any provision of its
articles of incorporation or it bylaws and the Operating Partnership is not in
default under any provision of its certificate of limited partnership or the OP
Agreement.
Section
4.2. Authority;
Non-Contravention; Approvals.
(a) Each
of Parent and the Operating Partnership has all requisite power and authority to
execute and deliver this Agreement and, in the case of Parent, the Special
Rights Agreement and to perform the transactions contemplated by this Agreement
and the Special Rights Agreement. The execution and delivery of this
Agreement and, in the case of Parent, the Special Rights Agreement and the
performance by each of Parent and the Operating Partnership of the transactions
contemplated by this Agreement and, in the case of Parent, the Special Rights
Agreement have been approved by the board of directors of Parent, on behalf of
itself and as the general partner of the Operating Partnership, and no other
corporate or partnership, as applicable, or other proceedings on the part of
Parent or the Operating Partnership are necessary to authorize the execution and
delivery of this Agreement or, in the case of Parent, the Special Rights
Agreement and the performance by Parent and the Operating Partnership of the
transactions contemplated by this Agreement and, in the case of Parent, the
Special Rights Agreement.
(b) This
Agreement has been, and upon its execution by Parent the Special Rights
Agreement will be, duly and validly executed and delivered by Parent or the
Operating Partnership, as applicable, and, assuming the due authorization,
execution and delivery of this Agreement and, in the case of Parent, the Special
Rights Agreement by each other party thereto, constitute, and upon their
execution, this Agreement and, in the case of Parent, the Special Rights
Agreement will constitute, legal, valid and binding obligations of Parent or the
Operating Partnership, as applicable, enforceable against Parent or the
Operating Partnership, as applicable, in accordance with their respective
terms.
(c) The
execution and delivery of this Agreement and the Special Rights Agreement by
Parent or the Operating Partnership, as applicable, and the performance of the
transactions contemplated by this Agreement and the Special Rights Agreement by
Parent or the Operating Partnership, as applicable, do not and will not
(i) conflict with or result in a breach of any provisions of the articles
of incorporation or bylaws of Parent or the certificate of limited partnership
or the OP Agreement, as applicable, (ii) result in a violation or breach of
or constitute a default (or an event which, with or without notice or lapse of
time or both, would constitute a default) under, or result in the termination,
modification or cancellation of, or the loss of a benefit under or accelerate
the performance required by, or result in a right of termination, modification,
cancellation or acceleration under, the terms, conditions or provisions of any
contract or other instrument of any kind to which Parent or any of its
Subsidiaries (including the Operating Partnership) is a party or by which any of
their respective properties or assets may be bound or affected or
(iii) violate any order, writ, judgment, injunction, decree, statute,
treaty, rule or regulation applicable to Parent or any of its Subsidiaries
(including the Operating Partnership) or any of their respective properties or
assets excluding from the foregoing clauses (ii) and (iii) such
violations, breaches, defaults, terminations, modifications, cancellations,
losses or accelerations that would not reasonably be expected to have a Parent
Material Adverse Effect.
(d) No
Governmental Consent is required to be obtained or made in connection with or as
a result of the execution and delivery of this Agreement and the Special Rights
Agreement by either Parent or the Operating Partnership or the performance by
Parent and the Operating Partnership of the transactions contemplated by this
Agreement and the Special Rights Agreement or the consummation of the
transactions contemplated by this Agreement and the Special Rights Agreement,
other than (i) the filing with the SEC of any reports or filings under the
Securities Act or the Securities Exchange Act and (ii) the filing with the
appropriate state authorities of any required “blue sky” filings.
Section
4.3. Brokers. No
agent, broker, investment banker, financial advisor or other firm or Person is
entitled to any brokerage, finder’s, financial advisor’s or other similar fee or
commission for which SLGOP could become liable in connection with the
transactions contemplated by this Agreement and the Special Rights Agreement as
a result of any action taken by or on behalf of Parent or the Operating
Partnership other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees and expenses will be
paid by Parent at or prior to Closing.
ARTICLE
V
COVENANTS
Section
5.1. Commercially Reasonable
Efforts. Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use its respective commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Special Rights Agreement; provided, however, that each party’s
obligations pursuant to this Section 5.1 shall
be limited only to those sections specifically applicable to such
party.
Section
5.2. Use of
Name. SLGOP and Manager Corp agree, for themselves and their
respective Affiliates, that from and after the Closing, other than in connection
with any regulatory filings and public statements, none of them will use the
names “GKK” or “Gramercy” or any abbreviation of or derivation from that name or
any name similar to it in any form whatsoever, including in connection with
advertising and promotional materials. Parent and the Operating
Partnership agree, for themselves and their respective Affiliates, that from and
after the Closing, other than in connection with any regulatory filings
(including filings with the SEC) and public statements, none of them will use
the names “SLG” or “▇▇ ▇▇▇▇▇” or any abbreviation of or derivation from that
name or any name similar to it in any form whatsoever, including in connection
with advertising and promotional materials. Within 10 Business Days
after the Closing, Manager Corp shall amend its certificate of incorporation to
change its name to a name that does not contain the word “GKK” or substantially
similar words.
Section
5.3. Transfer
Taxes. The responsibility for, and the payment obligation in
connection therewith, all transfer, registration, stamp, documentary, sales, use
and similar Taxes (including all applicable real estate transfer or gains Taxes
and transfer Taxes), any penalties, interest and additions to Tax, and fees
incurred in connection with the transactions contemplated by this Agreement
shall be borne one-half by Parent on the one hand, and one-half by SLGOP and
Manager Corp, on the other hand. Parent, on the one hand, and SLGOP
and Manager Corp, on the other hand, shall cooperate in the timely making of all
filings, returns, reports and forms as may be required in connection
therewith.
Section
5.4. Officers and
Employees.
(a) SLG
agrees to take all actions as are necessary to permit Employees to continue to
participate in the ▇▇ ▇▇▇▇▇ Realty Corp. 401(k) Plan (“SLG 401(k) Plan”) after
the Closing Date. As soon as practicable after Parent or the
Operating Partnership has established a retirement plan qualified under Section
401(a) and Section 401(k) of the Code (the “Parent 401(k) Plan”),
SLG shall cause the trustee of the SLG 401(k) Plan to transfer to the qualified
trust established under the Parent 401(k) Plan the account balances, whether or
not vested, of all Employees in the SLG 401(k) Plan (the “401(k) Plan Transfer
Amount”). The 401(k) Plan Transfer Amount shall be transferred
as cash and calculated as the value of account balances, determined by the
trustee of the SLG 401(k) Plan as of the applicable daily valuation date of the
SLG 401(k) Plan. With respect to notes evidencing plan loans, the SLG
401(k) Plan shall assign such notes to the Parent 401(k) Plan. Parent
and SLG shall cooperate in making, and shall make, all appropriate filings
required under the Code and ERISA, and the regulations thereunder, and shall
further cooperate to ensure that the transfers described herein satisfy the
applicable requirements of Sections 401(k), 414(l) and 401(a)(12) of the Code
and the regulations thereunder.
(b) Prior
to the Closing Date, SLG and Parent or the Operating Partnership shall take all
actions necessary so that the participation of, and any expense related to, all
Employees (and their dependents and beneficiaries) in the Plans of
SLG, as set forth in Section 5.4(b) of the Manager Disclosure
Schedule, shall cease as of the Closing, and their participation in the
applicable Plans maintained by Parent or the Operating Partnership shall
commence immediately upon the Closing with no waiting periods or other
exclusions being applied if they were not applied to the Employee’s
participation in the corresponding Plans of SLG. In addition to the
foregoing, SLG and Parent or the Operating Partnership shall take all actions
necessary to ensure that, as soon as practicable following the Closing, the
employee benefits provided to current and former employees of SLG or SLGOP (and
their dependents and beneficiaries), on the one hand, and current and former
employees of Parent, the Operating Partnership and the Manager (and their
dependents and beneficiaries), on the other hand, will be provided under Plans
and pursuant to insurance or other funding arrangements maintained solely by the
applicable party.
Section
5.5. Public
Statements. The parties hereby agree to, and approve, the form
of joint press release attached hereto as Exhibit
C. After Closing, none of the parties hereto shall issue any
other press release or any other written public statement with respect to this
Agreement or the Special Rights Agreement or the transactions contemplated
hereby or thereby without the prior written approval of the other parties
hereto, except that prior review and approval shall not be required if, in the
reasonable judgment of the party seeking to issue such release or public
statement, prior review and approval would prevent the timely dissemination of
such release or announcement in violation of any applicable Law or NYSE policy
or other rules and regulations governing the stock exchange on which any such
party’s stock is listed.
Section
5.6. Confidentiality. From
the Closing and for two years thereafter, SLG, SLGOP and Manager Corp will not,
except in connection with this Agreement, disclose to any third party any
confidential and non-public information concerning the business of the Manager
and the Manager Subsidiary (“Confidential
Information”); provided, SLG, SLGOP or
Manager Corp may disclose Confidential Information (x) if required by Law or
legal process or (y) to any of their respective employees, agents, counsel,
accountants, financial managers, lenders, consultants and other representatives
(together, its “Representatives” ) if
such Representatives need to know Confidential Information to advise any of SLG,
SLGOP, Manager Corp or any of their respective Affiliates; provided, however, that SLG, SLGOP or
Manager Corp, as applicable, shall inform each such Person of the confidential
nature of such Confidential Information and direct such Representatives to treat
the Confidential Information with strict confidence. In the event
that SLG, SLGOP or Manager Corp is requested or required (by Law, oral question
or request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand or similar process) to disclose any
Confidential Information, the applicable Person will, to the extent permitted by
applicable Law, notify Parent promptly of such request or requirement so that
Parent may, at Parent’s sole cost and expense, seek an appropriate protective
order or waive compliance with the provisions of this Section
5.6. If, in the absence of a protective order or the
receipt of a waiver hereunder, SLG, SLGOP or Manager Corp is, on the advice of
counsel, compelled to disclose any Confidential Information, then such Person
may disclose the Confidential Information; provided, that such Person
shall use its commercially reasonable efforts to obtain, at the request of
Parent (at Parent’s sole cost and expense), an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Parent shall designate. The
term Confidential Information shall not include information which (i) is or
subsequently may become generally available to the public, other than as a
result of disclosure by SLG, SLGOP or Manager Corp in violation of this Section 5.6, or
(ii) is disclosed with Parent’s prior approval.
Section
5.7. Management Agreement
Acknowledgement. Parent and the Operating Partnership
acknowledge and agree that none of the Manager or its Affiliates or any of their
respective members, stockholders, partners, managers, directors, officers,
employees and agents will be liable to Parent, the Operating Partnership and
their respective Affiliates or any of their respective members, stockholders,
partners, managers, directors, officers, employees and agents for any acts or
omissions performed or not performed on or prior to the Closing in accordance
with and pursuant to the Management Agreement, except for any acts or omissions
performed or not performed on or prior to the Closing that constituted willful
misconduct, gross negligence or fraud in connection with the exercise of
Manager’s duties under the Management Agreement. The parties
acknowledge and agree that in the event of a conflict between the terms and
provisions of this Agreement and the Management Agreement in respect of the
foregoing, the terms and provisions of this Agreement shall govern and
control. The parties acknowledge and agree that this Section 5.7 has
no effect on the other terms and provisions of this Agreement or the respective
rights, duties and obligations of the parties hereto.
Section
5.8. Parent Equity
Awards. Notwithstanding anything to the contrary contained in
any Plan of Parent or any individual award document under any Plan of Parent,
from and after the date of this Agreement, each issued and outstanding Parent
equity award (including stock options and restricted stock) granted to any SLG
or SLGOP employees that will not become employees of Manager as a result of the
transactions contemplated by this Agreement shall become immediately vested and
exercisable in accordance with its terms. Prior to the Closing,
Parent has taken all necessary corporate and board action in order to authorize
and effectuate the transactions described in this Section
5.8.
Section
5.9. Certain
Amendments. Without the prior written consent of SLGOP, Parent
shall not amend or cause to be amended for six years after the Closing Date
Sections 6.8, 12.1, 12.2, 12.3, 12.4, 12.5 and 12.6 of the Limited Liability
Company Operating Agreement of the Manager, in any case in a manner that is
adverse to SLGOP or any of the Individuals.
Section
5.10. D&O
Insurance. Parent and the Operating Partnership shall not
terminate any of the existing insurance policies relating to director and/or
officer liability as disclosed by the Parent and the Operating Partnership and
set forth on Schedule
5.10 prior to their expiration (and represent and warrant that no such
insurance policies have been terminated by Parent or the Operating Partnership
since January 1, 2009) unless any such policy is replaced with a policy that
provides for at least the same coverage and amounts containing terms and
conditions that are no less favorable to the past directors and officers of the
Manager covered by the policy to be terminated.
Section
5.11. Obligations of American
Financial Realty Trust. Parent and the Operating Partnership
acknowledge and agree that all obligations and liabilities under the
employment-related agreements of employees of American Financial Realty Trust
that became employees of the Manager following Parent’s acquisition of American
Financial Realty Trust, which agreements are set forth in Section 5.11 of the Manager Disclosure
Schedule, shall be the responsibility of the Parent and/or the Operating
Partnership, and none of SLG, SLGOP, or Manager Corp shall have any obligations
or liabilities with respect to such employment-related agreements.
ARTICLE
VI
POST-CLOSING
TAX MATTERS
Section
6.1. Covenants. Without
the prior written consent of Parent (which consent shall not be unreasonably
withheld, conditioned or delayed), neither SLGOP nor Manager Corp shall, to the
extent it may affect or relate to the Manager or the Manager Subsidiary,
(i) make or change any Tax election, (ii) change any annual Tax
accounting period, (iii) adopt or change any method of Tax accounting,
(iv) file any amended Tax Return, (v) enter into any closing agreement
related to any taxes, (vi) settle any Tax claim or assessment,
(vii) surrender any right to claim a Tax refund, (viii) offset or
effect any other reduction in Tax Liability, (ix) consent to any extension
or waiver of the limitations period applicable to any Tax claim or assessment or
(x) take or omit to take any other action, if any such action or omission
would have the effect of increasing the Tax Liability or reducing any Tax asset
of the Manager or the Manager Subsidiary for any period after the Closing; provided, that the provisions
of this Section 6.1 shall
only apply to the extent that they relate to the Tax Liability of the Manager
and the Manager Subsidiary as entities.
Section
6.2. Cooperation on Tax
Matters. Parent and SLGOP shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
preparation and filing of any Tax Return and any audit or other proceeding with
respect to Taxes. Such cooperation shall include the retention and
(upon the other party’s reasonable request) the provision of records and
information which are reasonably relevant to any such audit or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The parties agree (i) to retain all books and records
with respect to Tax matters pertinent to the Manager or the Manager Subsidiary
relating to any Pre-Closing Tax Period, and to abide by all record retention
agreements entered into with any Tax Authority, and (ii) to give the other
party reasonable written notice prior to destroying or discarding any such books
and records and, if the other party so requests, Parent or SLGOP, as the case
may be, shall allow the other party or parties, as applicable, to take
possession of such books and records (to the extent ever received by
Parent). The provisions of this Section 6.2 shall
only apply to the extent that they relate to the Tax Liability of the Manager
and the Manager Subsidiary as entities.
Section
6.3. Tax
Indemnity.
(a) SLG,
SLGOP and Manager Corp, jointly and severally, hereby indemnify Parent and the
Operating Partnership and their Affiliates (including, effective upon the
Closing, the Manager and the Manager Subsidiary) against and agree to hold them
harmless from any (i) Taxes of the Manager and the Manager Subsidiary
attributable to a Pre-Closing Tax Period or to the portion of a Straddle Period
ending on the date preceding the Closing Date, (ii) without duplication,
any and all Losses, directly or indirectly arising out of or resulting from a
breach of the provisions of Section 3.10, Section 6.1 or Section 6.2,
(iii) any Liability for Taxes of others (including, but not limited to,
SLGOP and Manager Corp) which Liability results from the Manager and the Manager
Subsidiary having been disregarded entities (within the meaning of U.S. Treasury
Regulation Section 301.7701-3) of SLGOP, or which is imposed by Law (including,
without limitation, U.S. Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign Law) or as a result of any
agreement or transaction that the Manager or the Manager Subsidiary was a party
to or subject to prior to the Closing Date, and (iv) without duplication,
any and all Losses arising out of or incident to the imposition, assessment or
assertion of any Tax described in clauses (i), (ii) or (iii) (the sum of
(i), (ii), (iii) and (iv) being referred to herein as a “Tax
Loss”).
(b) For
purposes of this Section 6.3, in
the case of any Taxes that are payable for a Straddle Period, the portion of
such Tax related to the portion of such Tax period ending on the date preceding
the Closing Date shall (i) in the case of any Taxes other than gross
receipts, sales or use Taxes and Taxes based upon or related to income, be
deemed to be the amount of such Tax for the entire Tax period for which such Tax
is determined multiplied by a fraction the numerator of which is the number of
days in the Tax period ending on and including the date preceding the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of any Tax based upon or related to income and
any gross receipts, sales or use Tax, be deemed equal to the amount which would
be payable if the relevant Tax period ended on and included the date preceding
the Closing Date. All determinations necessary to give effect to the
allocation set forth in the foregoing clause (ii) shall be made in a manner
consistent with prior practice of the Manager.
(c) Subject
to SLG’s consultation rights under Section 6.3(d), not later
than 30 days after receipt by SLG of written notice from Parent stating that any
Tax Loss has been incurred by any of the Persons specified in Section 6.3(a)
and the amount thereof (specifying with reasonable particularity the calculation
thereof), SLG, SLGOP and Manager Corp shall discharge their indemnification
obligations with respect to such Tax Loss by paying to Parent an amount equal to
the amount of such Tax Loss in immediately available funds by wire
transfer. The payment by Parent or any of the other Persons specified
in Section 6.3(a) of
any Tax Loss shall not relieve SLG, SLGOP or Manager Corp of their obligations
under this Section
6.3.
(d) Parent
agrees to give prompt written notice to SLG of any Tax Loss or the assertion of
any claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought hereunder which Parent deems to be within the
ambit of this Section 6.3
(specifying with reasonable particularity the basis therefor) and will give
SLG such information with respect thereto as SLG may reasonably
request. SLG may, at the sole expense of SLG, SLGOP and Manager Corp,
upon notice to Parent, assume the defense of any such suit, action or proceeding
(including any Tax audit); provided, that (x) SLG
shall thereafter consult with Parent upon Parent’s reasonable request for such
consultation from time to time with respect to such suit, action or proceeding
(including any Tax audit) and (y) SLG shall not, without Parent’s
consent, not to be unreasonably withheld or delayed, agree to any settlement
with respect to any Tax if such settlement reasonably would be expected to
adversely affect the Tax Liability of Parent, any of its Affiliates or,
following the Closing, the Manager and the Manager Subsidiary. If SLG
assumes such defense, (i) Parent shall have the right (but not the
obligation) to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by SLG (provided, that SLG shall
retain control of all aspects of such defense) and (ii) SLG shall not
assert that the Tax Loss, or any portion thereof, with respect to which Parent
seeks indemnification is not within the ambit of this Section
6.3. If SLG elects not to assume such defense, Parent, the
Operating Partnership or the Manager may pay, compromise or contest the Tax at
issue. SLG, SLGOP and Manager Corp shall be liable for the fees and
expenses of counsel employed by Parent for any period during which SLG has not
assumed the defense thereof. All of the parties hereto shall
cooperate in the defense or prosecution of any claim
hereunder. Parent’s failure to give timely notice of a claim or
otherwise comply with the requirements of this Section 6.3(d) shall not
constitute a defense (in whole or in part) to any claim for indemnification
hereunder.
(e) To
the extent permitted by applicable Law, any amount payable pursuant to this Section 6.3 shall
be treated by the parties to this Agreement for federal income tax as an
adjustment to the consideration payable to SLGOP in return for the SLG Transfer
up to the amount of such consideration, and thereafter as taxable income (and
SLG, SLGOP and Manager Corp shall fully indemnify for any Taxes resulting from
such taxable income).
Section
6.4. Disputes. Disputes
arising under this Article VI and not
resolved by mutual agreement within 30 days shall be resolved by a nationally
recognized Law or accounting firm with no material relationship with Parent or
the Operating Partnership, on the one hand, or SLG, SLGOP or Manager Corp on the
other hand (the “Tax
Referee”), chosen by and mutually acceptable to both Parent and SLG
within five days of the date on which the need to choose the Tax Referee
arises. The Tax Referee shall resolve any disputed items within 30
days of having the item referred to it pursuant to such procedures as it may
require. The costs, fees and expenses of the Tax Referee shall be
borne equally by Parent, on the one hand, and SLG, SLGOP and Manager Corp on the
other hand.
Section
6.5. Tax
Returns.
(a) The
Manager and the Manager Subsidiary shall, and SLGOP shall cause the Manager and
the Manager Subsidiary to, file or cause to be filed all Tax Returns that are
required to be filed by the Manager or the Manager Subsidiary prior to the
Closing Date; provided, that such Tax Returns shall be prepared and filed in a
manner consistent with past practices unless otherwise required by applicable
Law; and provided, further, that, except as provided in Section 6.5(b), in
the case of any Tax Return required to be filed after the date of this
Agreement, the Manager and the Manager Subsidiary shall, not later than thirty
(30) days prior to the due date for filing any such Tax Return (including
extensions), provide Parent with the opportunity to review a draft copy of such
Return (together with any supporting materials, including schedules and work
papers) by sending such draft to Parent, and Parent shall, not later than
fifteen (15) days prior to the date for filing such Tax Return (including
extensions), inform the Manager or the Manager Subsidiary, as applicable, of any
objections to such Tax Return, which objections shall be resolved in good
faith. Except as provided in the preceding sentence or in Section 6.5(b),
Parent shall have the exclusive obligation and authority to file or cause to be
filed all Tax Returns that are required to be filed by the Manager or the
Manager Subsidiary, provided, that the Manager and the Manager Subsidiary shall,
not later than thirty (30) days prior to the due date for filing any such Tax
Return (including extensions), provide SLG with the opportunity to review a
draft copy of such Return (together with any supporting materials, including
schedules and work papers) by sending such draft to SLG, and SLG shall, not
later than fifteen (15) days prior to the date for filing such Tax Return
(including extensions), inform the Manager or the Manager Subsidiary, as
applicable, of any objections to such Tax Return, which objections shall be
resolved in good faith.
(b) Notwithstanding
anything to the contrary in this Article VI, the parties agree that the
consummation of the Transfers shall result in a termination of the Manager as a
partnership for federal income tax purposes under Section 708(b)(1)(A) of the
Code and that SLGOP shall have the exclusive obligation and authority for the
preparation and filing of the federal, state and local income tax returns of the
Manager for the taxable year of the Manager ending on the Closing
Date.
ARTICLE
VII
SURVIVAL;
INDEMNIFICATION
Section
7.1. Survival of Representations,
Warranties, Covenants and Agreements.
(a) The
representations and warranties of the parties contained in this Agreement will
survive the Closing (i) indefinitely with respect to the representations
and warranties contained in Section 3.1 [Organization and
Qualification], Section 3.2(a),
Section 3.2(b)
and Section
3.2(c)(i) [Authority], Section 3.3 [The Manager Corp Owned Manager
Interests, the SLGOP Owned Manager Interests, the SLGOP Owned Class B Units and
the Manager Owned Class B Units], Section 3.4 [Capitalization], Section 3.28
[Brokers], Section 4.1 [Organization and Qualification of
Parent and Operating Partnership], Section 4.2(a)
and Section 4.2(b)
[Authority] and Section 4.3 [Brokers] (collectively, the
“Fundamental
Representations”) and with respect to the assessment of any Taxes or the
incurrence of Tax Losses as provided for in Article VI; (ii)
until 60 calendar days after the expiration of all applicable statutes of
limitation (including all periods of extension, whether automatic or permissive)
with respect to the matters contained in Section 3.10
[Tax Matters] and Section 3.11
[ERISA and Employee
Benefits]; (iii) until April 30, 2010 in the case of all other
representations and warranties; provided, however, that any
representation or warranty that would otherwise terminate in accordance with
clause (ii) or (iii) above will continue to survive if a notice of a claim shall
have been validly and timely given under this Article VII on or prior
to the date on which it otherwise would terminate, until the related claim for
indemnification has been satisfied or otherwise resolved as provided in this
Article VII. Any
such extended survival will relate solely to the specific matters set forth in
the notice of claim and for all other purposes such representation and warranty
shall terminate. Except as otherwise expressly provided in this
Agreement, each covenant hereunder shall survive without limitation as to
time.
(b) For
purposes of this Agreement, a party’s representations and warranties shall be
deemed to include such party’s Disclosure Schedule.
Section
7.2. Indemnification of
Parent. SLG, SLGOP and Manager Corp, jointly and severally,
shall indemnify and hold harmless Parent and its Subsidiaries (including the
Operating Partnership) and their respective successors and the respective
shareholders, members, partners, officers, directors, managers, employees and
agents of each such indemnified Person (collectively, the “Parent Indemnified
Parties”) from and against any and all Losses that may be asserted
against, or paid, suffered or incurred by any Parent Indemnified Party (whether
or not due to third party claims) that, directly or indirectly, arise out of,
result from, are based upon or relate to: (a) any inaccuracy in or
any breach of, as of the Closing Date (except any representations and warranties
that expressly speak as of a specified date or time, in which case only as of
such specified date or time), any representation or warranty made by SLGOP or
Manager Corp in this Agreement; provided, however, that if
any such representation and warranty is qualified in any respect by materiality,
Manager Material Adverse Effect or SLG Material Adverse Effect, for purposes of
this clause (a) such materiality, Manager Material Adverse Effect or SLG
Material Adverse Effect qualification will in all respects be ignored;
(b) any failure by SLG, SLGOP or Manager Corp to duly and timely perform or
fulfill any of its covenants or agreements required to be performed by it under
this Agreement; (c) any acts or omissions performed or not performed by
Manager prior to the Closing in its capacity as “Manager” under the Management
Agreement, to the extent any such acts or omissions performed or not performed
constituted willful misconduct, gross negligence, or fraud in connection with
the exercise of the Manager’s duties under the Management Agreement (it being
understood that in the event of a conflict between the terms and provisions of
this Agreement and the Management Agreement in respect of the foregoing, the
terms and provisions of this Agreement shall govern and control); and (d) any
claims made by any of the individuals party to the agreements set forth on Schedule 7.2(d) with
respect to the subject matter covered by those
agreements. Notwithstanding anything in this Agreement to the
contrary, the parties agree that none of SLG, SLGOP or Manager Corp shall be
liable or responsible under this Section 7.2 or
otherwise for Losses of the Manager or Parent arising out of, resulting from,
based upon or relating to the matters set forth on Schedule 7.2.
Section
7.3. Indemnification of SLG,
SLGOP and Manager Corp. Parent and the Operating Partnership,
jointly and severally, shall indemnify and hold harmless SLG, SLGOP and Manager
Corp and their respective successors and the respective shareholders, members,
partners, officers, directors, managers, employees and agents of each such
indemnified Person (collectively the “Manager Indemnified
Parties”) from and against any and all Losses that may be asserted
against, or paid, suffered or incurred by any Manager Indemnified Party (whether
or not due to third party claims) that, directly or indirectly, arise out of,
result from, are based upon or relate to: (a) any inaccuracy in or
any breach of, as of the Closing Date (except any representations and warranties
that expressly speak as of a specified date or time, in which case only as of
such specified date or time), any representation or warranty made by Parent or
the Operating Partnership in this Agreement; provided, however, that if any such
representation and warranty is qualified in any respect by materiality or Parent
Material Adverse Effect, for purposes of this clause (a), such materiality
or Parent Material Adverse Effect qualification will in all respects be ignored;
(b) any failure by Parent or the Operating Partnership to duly and timely
perform or fulfill any of its covenants or agreements required to be performed
by it under this Agreement; (c) any acts or omissions performed or not performed
by Manager prior to the Closing in its capacity as “Manager” under the
Management Agreement and not resulting from the willful misconduct, gross
negligence or fraud in connection with the exercise of the Manager’s duties
under the Management Agreement (it being understood that in the event of a
conflict between the terms and provisions of this Agreement and the Management
Agreement in respect of the foregoing, the terms and provisions of this
Agreement shall govern and control); and (d) any obligations or liabilities (i)
under the Employment and Noncompetition Agreement, dated as of April 16, 2008,
between ▇▇▇▇ ▇▇▇▇▇ and the Manager, as amended by the First Amendment to
Employment and Noncompetition Agreement, dated as of November 3, 2008, the
letter agreement between ▇▇▇▇ ▇▇▇▇▇ and SLGOP, dated as of November 3, 2008 and
the Letter Agreements between ▇▇▇▇ ▇▇▇▇▇ and the Manager, dated as of January 9,
2009 and March 16, 2009 and (ii) to ▇▇▇ ▇▇▇▇▇▇ in connection with his provision
of consulting services to Parent.
Section
7.4. Limitations.
(a) No
amounts of indemnity shall be payable by SLG, SLGOP and Manager Corp as a result
of any claim arising under clause (a) of Section 7.2
relating to a breach or alleged breach of a representation or warranty (i)
unless the Losses in respect of such claim or series of related claims exceeds
$20,000 (any such Losses being “Qualifying
Losses”) and (ii) unless and until Parent Indemnified
Parties have paid, suffered, incurred, sustained or become subject to Qualifying
Losses referred to in that clause in excess of $500,000 in the aggregate (the
“SLGOP
Deductible”), in which case Parent Indemnified Parties may bring a claim
for such Losses to the extent the aggregate amount of such Losses exceeds the
SLGOP Deductible; provided, that such
limitation shall not apply to any claim for Losses based upon a breach of any
Fundamental Representation. The maximum aggregate Liability of SLG,
SLGOP and Manager Corp under clause (a) of Section 7.2 shall
not exceed $10,000,000 (the “Indemnity Amount”);
provided, that such
limitation shall not apply to any claim for Losses based upon a breach of any
Fundamental Representation or to any claim for Losses pursuant to Section 7.2(b), Section
7.2(c) or Section 7.2(d).
(b) No
amounts of indemnity shall be payable as a result of any claim arising under
clause (a) of Section 7.3
relating to a breach or alleged breach of a representation or warranty (i)
unless the Losses in respect of such claim or series of related claims are
Qualifying Losses and (ii) unless and until the Manager Indemnified Parties have
paid, suffered, incurred, sustained or become subject to Qualifying Losses
referred to in that clause in excess of $500,000 in the aggregate (the “Parent Deductible”)
in which case the Manager Indemnified Parties may bring a claim for such Losses
to the extent the aggregate amount of such Losses exceeds the Parent Deductible;
provided, that no such
limitation exists with respect to a claim based on a breach of any of Parent’s
Fundamental Representations. The maximum aggregate Liability of
Parent under clause (a) of Section 7.3 shall
not exceed the Indemnity Amount; provided, that no such
limitation exists with respect to a claim based on a breach of any of Parent’s
Fundamental Representations.
(c) Notwithstanding
anything contained in this Agreement to the contrary, Parent acknowledges and
agrees that the breach by SLGOP of the representation and warranty contained in
Section 3.6 shall
not in and of itself result in a Loss; provided, that the foregoing
shall not prevent or otherwise affect a determination that the underlying cause
of such breach shall have resulted in a Loss.
(d) Nothing
in this Section 7.4 shall
apply to, or in any way limit the obligations of, an Indemnifying Party under Section 7.5 to
pay all defense costs in respect of third-party claims.
(e) Nothing
in this Section 7.4 shall
apply to, or in any way limit the obligations of the parties under Article VI.
Section
7.5. Method of Asserting
Claims. All claims for indemnification by any Indemnified
Party under Section 6.3 and
this Article VII shall be
asserted and resolved as follows:
(a) If
an Indemnified Party intends to seek indemnification under this Article VII, it shall
promptly (i) notify the Indemnifying Party in writing of such claim, indicating
with reasonable particularity the nature of such claim and the basis therefor
(including a good faith estimate of the amount of Losses), and (ii) provide the
Indemnifying Party with all relevant information that is material to the claim
or that the Indemnifying Party may reasonably request (but any such notice and
information from a Parent Indemnified Party need only be given to
SLGOP). The failure to provide such notice and information will not
affect any rights hereunder except to the extent the Indemnifying Party is
materially prejudiced thereby.
(b) If
such claim involves a claim by a third party against the Indemnified Party, and
provided the claim by the Indemnified Party is not of a type for which the
Indemnifying Party’s Liability may be limited by Section 7.4, the
Indemnifying Party may, within twenty days after receipt of such notice and
information, and upon notice to the Indemnified Party, assume, with counsel
reasonably satisfactory to the Indemnified Party, at the sole cost and expense
of the Indemnifying Party, the settlement or defense thereof (in which case any
Loss associated therewith shall be the sole responsibility of the Indemnifying
Party); provided, that
the Indemnified Party may participate in such settlement or defense through
counsel chosen by it; provided
further, that the Indemnifying Party shall not be obligated to obtain the
approval of the Indemnified Party with respect to any monetary settlement which
by its terms unconditionally releases the Indemnified Party completely from all
liability in connection with such claim and does not contain any admission of
guilt, culpability, misconduct or wrongdoing by, or an undertaking or continuing
obligation of the Indemnified Party and is the sole responsibility of the
Indemnifying Party (it being acknowledged that in the event of any non-monetary
or injunctive settlement, the Indemnifying Party must obtain approval of the
Indemnified Party prior to settlement. If the Indemnifying Party
assumes the settlement or defense of such claim and the Indemnified Party
determines reasonably and in good faith that representation by the Indemnifying
Party’s counsel of both the Indemnifying Party and the Indemnified Party may
present such counsel with a conflict of interest, then the Indemnifying Party
shall pay the reasonable fees and expenses of the Indemnified Party’s
counsel. Notwithstanding the foregoing, (A) the Indemnified
Party may, at the sole cost and expense of the Indemnified Party, at any time
prior to the Indemnifying Party’s delivery of the notice referred to in the
first sentence of this Section 7.5(b),
file any motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate to protect
its interests, provided, that the
Indemnified Party shall not, without the consent of the Indemnifying Party,
enter into any settlement or compromise with respect to a claim unless the
Indemnifying Party has failed to deliver the notice referred to in the first
sentence of this Section 7.5(b),
(B) the Indemnified Party may take over the control of the defense or
settlement of a third-party claim at any time if it irrevocably waives its right
to indemnity under this Agreement with respect to such claim and (C) the
Indemnifying Party may not, without the consent of the Indemnified Party, settle
or compromise any action (other than a monetary settlement or compromise which
by its terms unconditionally releases the Indemnified Party completely from all
liability in connection with such claim and does not contain any admission of
guilt, culpability, misconduct or wrongdoing by, or an undertaking or continuing
obligation of the Indemnified Party and is the sole responsibility of the
Indemnifying Party (it being acknowledged that in the event of any non-monetary
or injunctive settlement)) or consent to the entry of any judgment, such consent
not to be unreasonably withheld or delayed. So long as the
Indemnifying Party is contesting any such claim in good faith, the Indemnified
Party shall not pay or settle any such claim without the Indemnifying Party’s
consent, such consent not to be unreasonably withheld. If the
Indemnifying Party is not entitled to assume the defense of the claim pursuant
to the foregoing provisions or is entitled but does not contest such claim in
good faith (including if it does not notify the Indemnified Party of its
assumption of the defense of such claim within the twenty day period set forth
above), then the Indemnified Party may conduct and control, through counsel of
its own choosing and at the expense of the Indemnifying Party, the settlement or
defense thereof (it being acknowledged that in such event the Indemnified Party
is not required to obtain the consent of the Indemnifying Party with respect to
any settlement or defense thereof), and the Indemnifying Party shall cooperate
with it in connection therewith. Except as otherwise expressly
provided in this Section 7.5, the
failure of the Indemnified Party to participate in, conduct or control such
defense shall not relieve the Indemnifying Party of any obligation it may have
hereunder. Any defense costs required to be paid by the Indemnifying
Party on behalf of the Indemnified Party shall be paid as incurred, promptly
against delivery of reasonably detailed invoices therefor.
(c) An
Indemnified Party shall (i) pursue a claim for indemnification under this Article VII on a timely
basis and (ii) to the extent it is reasonably practical to do so, provide the
Indemnifying Party with a good faith estimate of the amount of a claim at the
time it is asserted; provided, that the
Indemnified Party’s failure to comply with either of the preceding clauses (i)
or (ii) shall not affect any rights hereunder except to the extent the
Indemnifying Party is materially prejudiced thereby.
Section
7.6. Subrogation;
Insurance. If an Indemnified Party recovers Losses from an
Indemnifying Party, the Indemnifying Party shall be subrogated, to the extent of
such recovery, to the Indemnified Party’s rights against any third party with
respect to such recovered Losses, subject to the subrogation rights of any
insurer providing insurance coverage under one of the Indemnified Party’s
policies and except to the extent that the grant of subrogation rights to the
Indemnifying Party is prohibited by the terms of the applicable insurance
policy. In case any event shall occur which would otherwise entitle
any party to assert any claim for indemnification hereunder, no Losses shall be
deemed to have been incurred by such party to the extent of any proceeds
actually received by such party from any insurance policies maintained by the
Indemnified Party with respect thereto, net of any increase in premiums or other
costs associated with such insurance recovery, but nothing herein shall require
any party to pursue any insurance claim.
Section
7.7. Exclusive
Remedy. The right of each party hereto to assert
indemnification claims and receive indemnification payments pursuant to this
Article VII shall be the
sole and exclusive right and remedy exercisable by such party with respect to
any breach by the other party hereto of any representation or warranty in this
Agreement, except in the case of Losses attributable to (i) intentional
misrepresentation, gross negligence or fraud, (ii) a breach by the other
party of any of its covenants and agreements contained in this Agreement or
(iii) a breach by the other party of any of its Fundamental Representations;
provided, that the
foregoing shall not affect such parties’ rights in Section
8.9.
ARTICLE
VIII
MISCELLANEOUS
Section
8.1. Notices. All
notices, requests and other communications under this Agreement must be in
writing and will be deemed to have been duly given upon receipt to the parties
at the following addresses or facsimiles (or at such other address or facsimile
for a party as shall be specified by the notice):
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If
to SLG, SLGOP or Manager Corp:
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▇▇ ▇▇▇▇▇
Realty Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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With
a copy (which shall not constitute notice)
to:
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Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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If
to Parent or the Operating
Partnership:
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Gramercy
Capital Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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With
copies (which shall not constitute notice)
to:
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▇▇▇▇▇▇▇▇
Chance US LLP
▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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Section
8.2. Entire
Agreement. This Agreement, the exhibits and schedules hereto
and the Special Rights Agreement supersede all prior and contemporaneous
discussions and agreements, both written and oral, among the parties with
respect to the subject matter of this Agreement and the Special Rights Agreement
and constitute the sole and entire agreement among the parties to this Agreement
with respect to the subject matter of this Agreement.
Section
8.3. Expenses. Except
as otherwise expressly provided in this Agreement, whether or not the
transactions contemplated by this Agreement are consummated, each party will pay
its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the Special Rights Agreement and the
transactions contemplated by this Agreement and the Special Rights
Agreement.
Section
8.4. Waiver. Any
term or condition of this Agreement may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
Section
8.5. Amendment. This
Agreement may be amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each party to this Agreement.
Section
8.6. No Third-Party
Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person other than any
Person entitled to indemnity under Article VII and other
than as provided in Section 5.8
herein.
Section
8.7. Assignment; Binding
Effect. Neither this Agreement nor any right, interest or
obligation under this Agreement may be assigned by any party to this Agreement
by operation of law or otherwise without the prior written consent of the other
party to this Agreement and any attempt to do so will be
void. Subject to the foregoing, this Agreement is binding upon,
inures to the benefit of and is enforceable by the parties to this Agreement and
their respective successors and assigns.
Section
8.8. CONSENT TO JURISDICTION;
SERVICE OF PROCESS; WAIVER OF TRIAL BY JURY.
(a) EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY COURT OF THE
STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK IN RESPECT OF ANY ACTION,
SUIT OR PROCEEDING ARISING IN CONNECTION WITH THIS AGREEMENT AND THE SPECIAL
RIGHTS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE BROUGHT ONLY IN SUCH
COURT (AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS OR ANY
OTHER OBJECTION TO VENUE THEREIN); PROVIDED, THAT SUCH CONSENT
TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS SECTION 8.8 AND SHALL NOT
BE DEEMED TO BE A GENERAL SUBMISSION TO THE JURISDICTION OF SAID COURTS OR IN
THE STATE OF NEW YORK OTHER THAN FOR SUCH PURPOSE. Any and all
process may be served in any action, suit or proceeding arising in connection
with this Agreement or the Special Rights Agreement by complying with the
provisions of Section
8.1. Such service of process shall have the same effect as
if the party being served were a resident in the State of New York and had been
lawfully served with such process in such jurisdiction. The parties
hereby waive all claims of error by reason of such service. Nothing
herein shall affect the right of any party to service process in any other
manner permitted by Law or to commence legal proceedings or otherwise proceed
against the other in any other jurisdiction to enforce judgments or rulings of
the aforementioned courts.
(b) THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT. THE PROVISIONS OF
THIS SECTION 8.8 SHALL SURVIVE
THE CLOSING.
Section
8.9. Specific
Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at Law would exist and damages would be difficult to determine,
and that the parties shall be entitled to seek specific performance of the terms
hereof.
Section
8.10. Invalid
Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar in terms
to such illegal, invalid or unenforceable provision as may be
possible.
Section
8.11. GOVERNING
LAW. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
Section
8.12. Manager Disclosure
Schedule. The disclosure of any fact or item in any portion of
the Manager Disclosure Schedule referenced by a particular Section or subsection
of this Agreement shall, should the existence of the fact or item or its
contents be relevant to any other Section or subsection of this Agreement, and
if such relevance is reasonably apparent on the face thereof, be deemed to be
disclosed with respect to such other Section or subsection of this Agreement to
which such fact or item relates.
Section
8.13. Counterparts;
Effectiveness. This Agreement may be signed in any number of
identical counterparts, each of which shall be an original (including signatures
delivered via facsimile or electronic mail) with the same effect as if the
signatures thereto and hereto were upon the same instrument. The
parties hereto may deliver this Agreement and the other documents required to
consummate the transaction contemplated herein by facsimile or electronic mail
and each party shall be permitted to rely upon the signatures so transmitted to
the same extent and effect as if they were original signatures. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by each other party hereto.
Section
8.14. Interpretation. The
parties hereto acknowledge and agree that (i) each party hereto and its
counsel reviewed and negotiated the terms and provisions of this Agreement and
have contributed to its revision, (ii) the rule of construction to the
effect that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto,
regardless of which party was generally responsible for the preparation of this
Agreement.
Section
8.15. Parent Board
Actions. Except as otherwise required by Law, all decisions
and authorizations that may be required of Parent’s Board of Directors in
respect of this Agreement (including the enforcement of Parent’s rights
hereunder) and the transactions contemplated hereby shall be made solely by
action of those directors who at the time of the relevant deliberation or action
have no beneficial or pecuniary interest, direct or indirect, in
SLGOP.
[Signatures
begin on the next page.]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
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GRAMERCY CAPITAL CORP.,
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a Maryland corporation
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By:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇
▇. ▇▇▇▇▇
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Title: Chief
Executive Officer
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GKK CAPITAL LP,
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a Delaware limited partnership
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By:
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Gramercy
Capital Corp., a Maryland Corporation, its general
partner
|
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By:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇
▇. ▇▇▇▇▇
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Title: Chief
Executive Officer
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▇▇ ▇▇▇▇▇ OPERATING PARTNERSHIP, L.P.,
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a Delaware limited partnership
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By:
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▇▇
▇▇▇▇▇ Realty Corp., a Maryland Corporation, its general
partner
|
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By:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title: Chief
Legal Officer
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GKK MANAGER MEMBER CORP.
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By:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
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Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title: Chief
Legal Officer
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▇▇ ▇▇▇▇▇ REALTY CORP. (solely for the purpose of the Sections and Articles
as specified in the Preamble of this Agreement)
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By:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
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Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
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Title: Chief
Legal Officer
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