Asset Purchase And Sale Agreement
by and between
Lazard Freres Real Estate Fund L.P.,
a Delaware limited partnership
Lazard Freres Real Estate Fund II L.P.,
a Delaware limited partnership
Prometheus Mid-Atlantic Holding, L.P.,
a Delaware limited partnership
Atlantic Preferred II LLC,
a New York limited liability company
Indian Preferred LLC,
a New York limited liability company
Prometheus Investment Holding, L.P.,
a Delaware limited partnership
SDJ Capital II, Ltd., a Cayman Islands exempted company
as Sellers
and
Starwood Financial Trust,
a Maryland real estate investment trust
SFT I, INC.,
a Delaware corporation
SFT II, INC.,
a Delaware corporation
Starwood Cayman Bonds, Inc.,
a Delaware corporation
Starwood D.C. Inc.,
a Delaware corporation
Starwood Cayman Bonds GP, Inc., a Delaware corporation
as Buyer
dated as of
December 15, 1998
Asset Purchase And Sale Agreement
This Asset Purchase and Sale Agreement (the "Agreement") is entered
into as of the 15th day of December, 1998, by and between Lazard Freres Real
Estate Fund L.P., a Delaware limited partnership ("Fund I"), Lazard Freres Real
Estate Fund II L.P., a Delaware limited partnership ("Fund II"), Prometheus
Mid-Atlantic Holding, l.p., a Delaware limited partnership, ("PMAH"), SDJ
Capital II, LTD., a Cayman Islands exempted company ("SDJ"), Atlantic Preferred
II LLC, a New York limited liability company ("Atlantic"), Indian Preferred LLC,
a New York limited liability company ("Indian") and Prometheus Investment
Holding, L.P., a Delaware limited partnership ("PIHLP"; Fund I, Fund II, PMAH,
SDJ, Atlantic, Indian and PIHLP, each a "Seller Party" and collectively,
"Sellers") and Starwood Financial Trust, a Maryland real estate investment trust
("Starwood"), SFT I, Inc., a Delaware corporation ("SFT I"), SFT II, Inc., a
Delaware corporation ("SFT"), Starwood Cayman Bonds, Inc., a Delaware
corporation ("SCB"), Starwood Cayman Bonds GP, Inc., a Delaware corporation
("SCBGP") and Starwood D.C., Inc., a Delaware corporation ("SDC"; Starwood, SFT,
SFT I, SCB, SCBGP and SDC, each a "Buyer Party" and collectively, "Buyer").
Recitals
A. Sellers are the owners of certain Assets (as hereinafter defined)
which are listed on Schedule 1, attached hereto.
X. Xxxxxxx desire to sell and Buyer desires to buy all as the case may
be, of Sellers' right, title and interest in (or in the case of the Remic
Interest otherwise acquire as described herein) the Purchased Assets.
X. Xxxxxxx and Buyer hereby enter into this Agreement setting forth the
terms and conditions of the sale and purchase of the Purchased Assets.
Agreement
Now, Therefore, in consideration of the foregoing, the mutual promises
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sellers and Buyer agree as
follows:
ARTICLE I
Definitions
For purposes of this Agreement, the following terms shall have the
meanings indicated below:
1.1. "Act" has the meaning set forth in Section 2.5 of this Agreement.
1.2. "Actual Knowledge" shall mean as to each Seller Party, solely the
present actual knowledge of Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxx Xxxxx or Xxxxx Xxxxx.
1.3. "Adjusted Purchase Price" means as to each Purchased Asset, the
Schedule Price for such Asset, subject to the adjustments set forth in Section
2.3.
1.4. "Affiliate" means with respect to a specified Person another
Person who:
1.4.1. Directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control
with the specified Person;
1.4.2. Is a partner, director, trustee or officer of the
specified Person or of any Person covered by Section 1.4.1 above; or
1.4.3. Is a partner of a partnership or joint venture or a
beneficiary or trustee of a trust or other owner which owns any stock
or other evidence of beneficial ownership in the specified Person or
any Person covered by Section 1.4.1 above.
No holder of a Preferred Equity Interest shall, for the purposes of
this Agreement, be deemed an Affiliate of the Borrower in which such holder owns
such Preferred Equity Interest or any Interested Person with respect to such
Borrower.
1.5. "Agreement," as defined in the introductory paragraph of this
document, means this Asset Purchase and Sale Agreement, including all Schedules,
as the same may be amended, supplemented or otherwise modified or replaced, in
writing, from time to time.
1.6. "Applicable Value" has the meaning set forth in Section 5.4.3.
1.7. "Asset" means a Loan (including the associated Hedge, if
applicable), Preferred Equity Interest or Remic Interest listed on the Asset
Schedule.
1.8. "Asset File" means, with respect to any Asset and to the exclusion
of any Excluded Document, the Due Diligence Materials.
1.9. "Asset Schedule" means the schedule identifying the Assets
attached hereto as Schedule 1.
1.10. "Assignment" means an instrument or instruments to be delivered
by a Seller Party to transfer the Purchased Assets hereunder, which instrument
shall be in in form and substance acceptable to each applicable Buyer Party and
each Seller Party as to each of its Purchased Assets.
1.11. "Assumed Liabilities" means all costs, expenses (including
reasonable attorneys' fees and expenses), claims, losses, commitments,
liabilities and obligations of any kind or nature, accrued or contingent,
arising out of, or related to, the ownership, use, possession, enjoyment or
operation of any of the Purchased Assets (including the Series B Obligation) and
the Remic Interest (to the extent of the Buyer's direct or indirect interest
therein following the Closing) except for (a) funding obligations of any Seller
Party in respect to any Loan scheduled to occur after the Closing which were not
disclosed in the Due Diligence Materials and which Buyer is not otherwise aware
of, (b) funding obligations of any Seller Party in respect to any Loan under the
Collateral Documents for such Loan which require such Seller Party to fund any
amounts prior to the Closing Date if and to the extent that such Seller Party
has not funded such amount, (c) liabilities with respect to which a breach of a
representation or warranty by any applicable Seller Party in respect of the
Asset in question has occurred (determined solely for the purposes of this
definition without reference to the limitations of Sections 5.4.3 and 5.6), (d)
any accounting for escrowed funds in respect to any of the Loans not paid or
credited to Buyer at the Closing, (e) the Wiener Litigation and (f) the Hedge
Claim.
1.12. "Assumption Agreement" means an agreement between a Buyer Party
and a Seller Party with respect to the assumption of the Assumed Liabilities by
a Buyer Party in form and substance acceptable to each Buyer Party, as
applicable, and each Seller Party as to each of its Purchased Assets.
1.13. "Atlantic" has the meaning set forth in the introductory
paragraph of this Agreement.
1.14. "Borrower" means, as to each Loan, the obligor(s) in respect to
such Loan.
1.15. "Business Day" means any day other than a Saturday, a Sunday, a
federal holiday or another day on which commercial banks in New York are
authorized or required to be closed for the conduct of their regular banking
operations.
1.16. "Buyer" has the meaning set forth in the introductory paragraph
of this Agreement.
1.17. "Buyer Party" has the meaning set forth in the introductory
paragraph of this Agreement.
1.18. "Buyer Excluded Matters" has the meaning set forth in Section 5.5
of this Agreement.
1.19. "Cash Management Provisions" has the meaning set forth in Section
5.2.17 of this Agreement.
1.20. "Certificate" means with respect to the Remic Interest,
collectively the certificates or other instruments evidencing such Remic
Interest.
1.21. "Closing" means the closing of the purchase and sale of the
Assets pursuant to Article III.
1.22. "Closing Date" means December 15, 1998.
1.23. "Closing Location" means, at Sellers' election, the offices of
(a) Lazard Freres Real Estate Investors L.L.C., 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
XX 00000, or (b) Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
XX 00000 or (c) such other place as may be mutually agreed upon by Buyer and
Sellers.
1.24. "Collateral Documents" means, for each Loan, the Note, the
Security Documents and any other documents or instruments in Seller's Possession
creating, perfecting, evidencing, governing or otherwise relating to the
collateral security or credit support for the Note (exclusive of Excluded
Documents), which other documents or instruments may include, to the extent
applicable, any security agreement, financing statement, assignment of rents,
pledge agreement, guaranty, indemnification agreement, assignment of stock or
partnership units, letter of credit, title insurance policy, fire and casualty
insurance policy, flood hazard insurance policy, continuation statements,
assumption agreements, proxies, consents, management and other contract
assignments, consolidation agreements, spreader agreements, subordination
agreements, intercreditor agreements, reserve agreements, lockbox agreements,
cash management agreements, bank recognition agreements and tenant and other
estoppel certificates.
1.25. "Confidentiality Agreements" means that certain Confidentiality
Agreement, dated August 5, 1998, by Starwood in favor of Sellers and (b) that
certain Confidentiality Agreement, dated September 24, 1998, by Fund II and
Lazard Freres Real Estate Offshore Fund II, L.P. in favor of Starwood.
1.26. "Control" of any Person means, either (i) ownership directly, or
through other entities, of more than five percent (5%) of all beneficial equity
interests in such Person or (ii) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of voting securities, by contract or otherwise.
1.27. "Current Amounts" has the meaning set forth in Section 2.3.1 of
this Agreement.
1.28. "CP/L" shall mean LF CP/L Limited, Inc., a Delaware corporation
and the holder of equity interests in City Place Limited Partnership,
Largo-Springhill Limited Partnership and Zapco 1500 Investment, L.P.
1.29. "Cut-off Date" means September 30, 1998.
1.30. "D.C. Retail Asset" shall mean the Asset identified as "D.C.
Retail" on the Asset Schedule.
1.31. "D.C. Retail Participation Agreement" means a participation
agreement pursuant to which SDC will be the holder of a senior participation
interest in the D.C. Retail Asset and Fund I will retain a junior participation
interest in the D.C. Retail Asset which is to be concurrently transferred by
Fund I to SDC at the Closing.
1.32. "Due Diligence Materials" means the files made available for
Buyers' review, which files contain, to the extent in Seller's Possession (but
in any event excluding Excluded Documents), the following with respect to each
Asset: (a) in the case of each Asset which is a Loan, (i) copies of the
Collateral Documents, (ii) payment histories, (iii) most recent financial
statements of borrowers and guarantors, (iv) most recent appraisals, (v)
guaranty and escrow agreements, if applicable, (vi) ground lease and occupancy
lease agreements, if applicable, (vii) most recent rent roll and property
operating statements and (viii) title insurance policies and preliminary title
reports, (b) in the case of each Asset which is a Preferred Equity Interest
copies of the Preferred Equity Documents; (c) in the case of each Hedge, copies
of the (i) ISDA Master Agreements, including the schedules and confirmations and
(ii) Interest Rate Cap Agreements; (d) in the case of the Remic Interest, (i)
copies of the Operative Documents, (ii) all financial statements and reports,
(iii) payment histories and (iv) other relevant documents and (e) in the case of
each of the Assets, all other relevant documents including, all environmental
site assessments, if applicable, asbestos surveys, if applicable, plats or
surveys, if applicable, opinions of counsel, financing statement searches and
all other documents, memoranda, reports, and correspondence maintained in the
ordinary course of each Seller's business as a part of the files relating to the
Assets in which such Seller has an interest or the enforcement, origination,
acquisition, servicing or administration thereof (including each Seller's
credit, servicing and management files). "Due Diligence Materials" includes all
Written Updates. Neither the term "Due Diligence Materials" nor any of its
constitutent components shall, except as referenced in Schedule 4 hereto,
include with respect to any Asset, correspondence, drafts, memoranda or similar
pre-asset acquisition or origination closing materials generated by or on behalf
of the applicable Seller Party and/or any of the applicable Interested Persons
with respect to any of the Assets prior to the closing at which such Asset was
acquired or originated by the applicable Seller Parties and which do not modify,
terminate, waive, release or subordinate any such Asset or create any defenses
to enforcement of an Asset or liability for the holder of an Asset.
1.33. "Excluded Documents" means (i) any reports, analyses, appraisals,
valuations, credit evaluations, credit ratings and memoranda generated
internally by any Seller Party or its Affiliates or its or their advisors,
attorneys, accountants or consultants (other than asset management reports, if
any), (ii) any confidential communication between any Seller Party and its legal
counsel, including, without limitation, any material subject to attorney-client
privilege, (iii) memoranda, notes, analyses, summaries and correspondence by or
between any Seller Party and its Affiliates or their respective partners,
members, shareholders, participants, managers, officers, directors, employees or
agents; provided, that, without limiting the foregoing, it is understood that
"Excluded Material" is not intended to include correspondence relating solely to
any of the Assets or any Secured Property with Loan obligors, senior lenders,
ground lessors, tenants of the Property in question, lockbox or depositary banks
(or other financial institutions performing similar functions) with respect to
the revenues of the Secured Property in question, servicers, property managers,
guarantors, indemnitors, sureties, insurers (including title insurers), letter
of credit issuers, and any partners or members in any of the Borrowers which are
not also Seller Parties or their Affiliates. The inclusion, in a Seller's sole
judgment and without any obligation, of any Excluded Document in any Asset File
shall not affect or limit in any manner such Seller's right to exclude such
Excluded Document from any other Asset File or to exclude any other Excluded
Document from any Asset File.
1.34. "Fund I" has the meaning set forth in the introductory paragraph
of this Agreement.
1.35. "Fund I Partnership Agreement" means that Second Amended and
Restated Limited Partnership Agreement of Fund I dated as of October 24, 1994.
1.36. "Fund II" has the meaning set forth in the introductory paragraph
of this Agreement.
1.37. "GAAP" means generally accepted accounting principles and
practices, consistently applied, and applicable in the United States.
1.38. "Governing Instruments": (A) in the case of a corporation, the
articles or certificates of incorporation or charter and by-laws of such
corporation and all amendments thereto, and resolutions and/or minutes, duly
adopted by the board of directors or comparable authority of each such
corporation (and the stockholders, if required), approving the transactions
anticipated hereby and the execution and delivery of this Agreement and the Sale
Documents; (B) in the case of a partnership, the partnership agreement and the
certificate of partnership of such partnership and all amendments thereto, and
resolutions or authorizations, duly adopted by the partners of such partnership,
approving the transactions anticipated hereby and the execution and delivery of
this Agreement and the Sale Documents; (C) in the case of a limited liability
company, the certificate of formation or articles of organization and operating
or limited liability company agreement and all amendments thereto, and
resolutions, actions or other approvals, duly adopted by the managers of such
limited liability company (and the members, if required), approving the
transactions anticipated hereby and the execution and delivery of this Agreement
and the Sale Documents; (D) in the case of a real estate investment trust, the
Declaration of Trust and by-laws of such real estate investment trust and all
amendments thereto and all resolutions and/or minutes, duly adopted by the board
of trustees (and shareholders, if required) approving the transactions
anticipated thereby and the execution and delivery of this Agreement and the
Sale Documents; (E) in the case of a Cayman Islands exempted company, the
Memorandum and Articles of Association of such exempted company and all
amendments thereto, and all resolutions and/or minutes, duly adopted by the
board of directors (and members, if required) approving the transactions
anticipated thereby and the execution and delivery of this Agreement and the
Sale Documents; and (F) in the case of a Cayman Islands exempted limited
partnership, the agreement of limited partnership and the certificate of limited
partnership, if any, of such partnership and all amendments thereto and all
resolutions and minutes, duly adopted by the partners of such partnership,
approving the transactions anticipated hereby and the executed and delivery of
this Agreement and the Sale Documents.
1.39. "Guaranty" is defined in the Letter Agreement.
1.40. "Hedge" means each interest rate hedging arrangement that is
referenced as a Hedge on Schedule 1 attached hereto.
1.41. "Hedge Claim" means any claim which may be asserted by The Chase
Manhattan Bank in respect to that certain Rate Floor Transaction identified by
The Chase Manhattan Bank Reference Number 101154.
1.42. "Indemnified Amounts" shall have the meaning set forth in Section
9.3.
1.43. "Indemnified Party" means Sellers, Lazard Freres Real Estate
Offshore Fund, L.P., a Delaware limited partnership, and Lazard Freres Real
Estate Offshore Fund II, L.P., a Delaware limited partnership, and their
respective Affiliates and their respective attorneys, directors, officers,
employees, agents, shareholders, members, managers, participants, partners,
successors, assigns, consultants and affiliates.
1.44. "Indian" has the meaning set forth in the introductory paragraph
of this Agreement.
1.45. "Indemnified Amounts" shall have the meaning set forth in Section
9.3.
1.46. "Insurance Policies" means any title insurance policy(s),
casualty insurance policy(s), credit life or disability insurance policy(s),
private insurance guarantor policy(s), or any other similar types of insurance
coverage documents.
1.47. "Interested Person" means with respect to any Asset, a Person
that is a Borrower or other obligor, or has an Affiliate that is a Borrower or
other obligor on, or in the case of Preferred Equity Interests, in respect to,
such Asset or, if the Asset in question is a Loan, provides collateral security
for the obligations of the Borrower or other obligor on such Asset, or, if the
Asset in question is a Loan, is a guarantor of such Asset or an issuer of or an
account party on a letter of credit securing such Asset or a provider of any
other credit support for such Asset.
1.48. "Key Lease" means any lease demising in excess of 15,000 rentable
square feet of space.
1.49. "Letter Agreement" is defined in the partnership agreement of MD3
Cayman L.P.
1.50. "LFREI" shall mean Lazard Freres Real Estate Investors L.L.C.
1.51. "Loan" means an individual loan that is identified as a Loan on
the Asset Schedule.
1.52. "MD3 Asset" shall mean the Purchased Asset relating to the Remic
Interest.
1.53. "MD3 Cayman L.P." means MD3 Cayman L.P., a Cayman Islands exempt
limited partnership, formed on or about the Closing Date which is the entity to
which SDJ will transfer the Remic Interest at Closing and in which SDJ, SCBGP
and SCB will directly or indirectly, own all of the general and limited
partnership interests.
1.54. "Menlo Letter" shall mean that certain letter from Fund II and
Atlantic in respect to the transfer of the Asset identified as "Montague" on the
Asset Schedule to the Borrower in respect to such Asset.
1.55. "Non-Transferable Rights" means the rights of Buyer as to a claim
for a breach of a representation, warranty or covenant hereunder, with respect
to any Asset.
1.56. "Note" means, with respect to each Loan, the promissory note or
other instrument evidencing the obligation to repay such Loan, as the same is
amended, endorsed or extended in writing prior to the Closing Date and disclosed
to Buyer in a Written Update.
1.57. "Offshore" means Lazard Freres Real Estate Offshore Fund L.P., a
Delaware limited partnership.
1.58. "Offshore II" means Lazard Freres Real Estate Offshore Fund II
L.P., a Delaware limited partnership.
1.59. "Operative Documents" means as to the Remic Interest, to the
extent in Seller's Possession, any private placement memorandums and/or
prospectuses, the related pooling and servicing agreement and any other relevant
documents (exclusive of Excluded Documents) including repurchase agreements and
hedge documentation, if any.
1.60. "Oxford Asset" shall mean the Asset identified as "Oxford" on the
Asset Schedule.
1.61. "Oxford Participation Agreement" means a participation agreement
pursuant to which Fund II will sell a 90% participation interest in the Oxford
Asset to SFT in form and substance acceptable to Fund II and SFT.
1.62. "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust, bank,
unincorporated organization or government or any agency or political subdivision
thereof.
1.63. "Preferred Equity Documents" means as to each Preferred Equity
Interest, to the extent in Seller's Possession, the Governing Instruments of the
Borrower in whom the Preferred Equity Interests are held.
1.64. "Preferred Equity Interest" means each Purchased Asset that is
identified on the Purchased Asset Schedule as an equity interest in a Borrower
(or in the case of Fund I, an equity interest in the holder of an equity
interest in a Borrower) currently held by either Atlantic, Indian or Fund I.
1.65. "PIHLP" has the meaning set forth in the introductory paragraph
of this Agreement.
1.66. "PMAH" has the meaning set forth in the introductory paragraph to
this Agreement.
1.67. "Property" shall mean all real and personal property (tangible
and intangible) associated with each of the Assets whether or not such Property
constitutes Secured Property.
1.68. "Purchase Price" means the price at which Buyer has agreed to
purchase the Purchased Assets purchased hereunder, which price is set forth on
Schedule 2 attached hereto and which is the aggregate of the Schedule Prices for
each of the Purchased Assets.
1.69. "Purchased Asset" means an Asset, or portion thereof or interest
therein, purchased hereunder and listed on the Purchased Asset Schedule.
1.70. "Purchased Asset Schedule" means the schedule identifying the
Purchased Assets to be sold, transferred and conveyed hereunder attached hereto
as Schedule 1A.
1.71. "Reconciliation Date" means the date which is forty-five (45)
days after the Closing Date.
1.72. "Remic Interest" means, collectively, the Assets that are
identified on the Asset Schedule as Commercial Mortgage Pass-Through
Certificates.
1.73. "Required Consents" means as to each Purchased Asset the consents
and approvals described on Schedule 3 in respect of such Purchased Asset.
1.74. "Responsible Party" shall have the meaning set forth in Section
9.4.
1.75. "Reserve Units" shall have the meaning set forth in the Fund I
Partnership Agreement and in the partnership agreement of Offshore.
1.76. "Sale Documents" has the meaning set forth in Section 5.1.2 of
this Agreement.
1.77. "SCB" has the meaning set forth in the introductory paragraph of
this Agreement.
1.78. "Schedule Price" means, with respect to each Purchased Asset, the
amount identified as the "Schedule Price" for such Purchased Asset on Schedule
2, attached hereto.
1.79. "SDC" has the meaning set forth in the introductory paragraph of
this Agreement.
1.80. "SDJ" has the meaning set forth in the introductory paragraph of
this Agreement.
1.81. "SFT I" has the meaning set forth in the introductory paragraph
of this Agreement.
1.82. "Secured Property" means the land, improvements, fixtures,
partnership interests, bank accounts, letters of credit, limited liability
company membership interests, stock, other personal property and other
collateral, a lien on which, or a security interest in which, is provided as
collateral for a Loan.
1.83. "Security Document" means with respect to any Note, a mortgage,
deed of trust, pledge or other security instrument creating a lien on the
Secured Property described therein to secure such Note, as the same is amended,
assigned or extended in writing prior to the Closing Date and disclosed to Buyer
in a Written Update.
1.84. "Sellers" has the meaning set forth in the introductory paragraph
of this Agreement.
1.85. "Seller Excluded Matters" shall have the meaning set forth in
Section 5.5 of this Agreement.
1.86. "Seller Party" has the meaning set forth in the introductory
paragraph of this Agreement.
1.87. "Seller Parties" means any group of more than one Seller Party.
1.88. "Seller's Possession" shall mean as to each Seller Party, the
documents and instruments in such Seller Party's actual possession or custody
(it being understood that documents (exclusive of the Excluded Documents) which
are in the possession of such Seller Party's Affiliates and are reasonably
obtainable by such Seller Party in question shall be deemed to be in such Seller
Party's possession).
1.89. "Senior Loan" means as to any Property, loans senior in priority
to the Loan relating to such Property.
1.90. "Series B Obligation" means any funding obligations of PIHLP as
holder of the Series B Preferred Interest in Commerce Square
Partners-Philadelphia Plaza, L.P. for One Commerce Asset arising under the
applicable Preferred Equity Documents.
1.91. "Starwood" has the meaning set forth in the introductory
paragraph of this Agreement.
1.92. "Surviving Representations" has the meaning set forth in Section
5.6 of the Agreement.
1.93. "Threshold Amount" shall have the meaning set forth in Section
5.4.3 of this Agreement.
1.94. "Wiener Litigation" means the litigation captioned "Xxxx Xxxxxx
and Xxxxxxxx Xxxxxx, Plaintiffs, against Lazard Freres & Co., Lazard Freres Real
Estate Investors Corp., Lazard Freres Real Estate Fund, L.P., et. al.,
Defendants.
1.95. "Written Updates" means, collectively, all periodic written
correspondence, copies of documents and other information sent by Sellers or
their agents to prospective purchasers before the Closing to amend, supplement
or update the Due Diligence Materials.
ARTICLE II
Purchase And Sale Of Assets
2.1. Purchase and Sale. (a) Subject to the terms and provisions set
forth in this Agreement and except as otherwise set forth in 2.1(b) and (c)
below, on the Closing Date each Seller Party shall sell, assign and convey to
the applicable Buyer Party, and such Buyer Party shall buy and accept from each
such Seller Party, all of such Seller Party's right, title and interest in and
to the respective Purchased Assets owned by such Seller Party.
(b) With respect to the D.C. Retail Asset, Fund I shall at Closing, in
connection with Fund I's sale of such Purchased Asset to SDC, transfer the D.C.
Retail Asset to SDC (who shall hold a senior participation interest therein) and
retain a junior participation interest in such Purchased Asset on the terms and
conditions set forth in the D.C. Retail Participation Agreement.
(c) With respect to the Remic Interest, SDJ shall contribute the Remic
Interest to MD3 Cayman L.P. at the Closing in the form of a contribution to the
capital of MD3 Cayman L.P., and concurrently therewith Starwood shall, or shall
cause SCB, to contribute the Purchase Price for the Purchased Asset in the form
of a contribution to the capital of MD3 Cayman L.P., and MD3 Cayman L.P. shall
immediately distribute such Purchase Price to SDJ. SCB, SCBGP and SDJ hereby
acknowledge that (i) MD3 Cayman L.P.'s tax basis in the REMIC Interest
immediately following the Closing will be not less than $49,207,886, (ii) the
aggregate tax basis of SCB and SCBGP in MD3 Cayman L.P. immediately following
the Closing will be not less than $41,826,703 and (iii) SDJ's tax basis in MD3
Cayman L.P. will be not less than $7,381,183.
2.2. Purchase Price and Payment. On the Closing Date, Buyer shall, if
all conditions to its obligations to close have been satisfied or waived, pay to
each Seller Party (or contribute capital pursuant to Section 2.1(c) with respect
to the Remic Interest) for the Purchased Assets then being transferred by such
Seller Party, without deduction or withholding for any taxes, levies, imposts,
duties, deductions, charges or other withholdings, the Adjusted Purchase Price
for such Purchased Assets, by irrevocable federal funds wire transfers to the
account of such Seller Party, in such amounts as such Seller Party may direct at
one or more federally insured financial institutions designated in writing by
such Seller Party.
2.3. Credits, Prorations and Payments on the Assets. Except for the MD3
Asset, the Purchase Price shall be adjusted on the Closing Date on a Purchased
Asset by Purchased Asset basis, and the Purchase Price in respect to the MD3
Asset shall be adjusted on the basis of the Remic Interest, but Current Payments
will be prorated as and when received in accordance with this Section 2.3. If
the amounts required to be paid or credited pursuant to this Section 2.3 cannot
be precisely determined by the Closing Date as to any Purchased Asset or
Purchased Assets, or the Remic Interest, as applicable, or were determined
erroneously on or before the Closing Date as to any Purchased Asset or Purchased
Assets, or the Remic Interest, as applicable, the applicable Seller Parties and
Buyer or MD3 Cayman L.P., as applicable shall make the necessary determination
or redetermination promptly following the Closing for such Purchased Asset or
Purchased Assets or the Remic Interest, as applicable, and the applicable Seller
Party (and in the case of more than one Seller Party, the applicable Seller
Parties) and Buyer or MD3 Cayman L.P., as applicable, shall make the necessary
adjustments through remittances between themselves not later than the
Reconciliation Date (except to the extent any payments on account of Current
Amounts are received later in which case such adjustments shall be made promptly
after receipt of the Current Amounts in question, provided that any Current
Amounts received on account of any of the Preferred Equity Interests after
January 31, 1999 shall not be prorated and shall be retained by Buyer). Without
limitation of the foregoing, on the Reconciliation Date each party that receives
a payment which is due to the other party under this Section 2.3 shall prepare
an accounting of the amounts so received for the benefit of the party entitled
to the same.
2.3.1. Accruing Interest. As to each Purchased Asset or the Remic
Interest, as applicable, all unpaid interest payable currently on or in respect
to Purchased Assets relating to Loans or Remic Interests (calculated at the then
current pay rate in respect to the applicable Asset) and distributions currently
payable in respect to the Preferred Equity Interests from the Cut-off Date
through and including the Closing Date (it being understood that such amounts
payable for the payment period or distribution period, as applicable, in which
the Closing Date occurs shall for the purposes of the foregoing be deemed to be
payable currently) ("Current Amounts") shall belong to Sellers (but only to the
extent allocable to the period prior to and including the Closing Date) and if
received by any Buyer Party or MD3 Cayman L.P., as applicable, shall be paid by
such Buyer Party or MD3 Cayman L.P., as applicable to the applicable Seller
Parties within five (5) Business Days of receipt by such Buyer Party or MD3
Cayman L.P., as applicable. All Current Amounts attributable to periods after
the Closing Date and all accrued interest and distributions and other amounts,
if any, relating to the Purchased Assets or the Remic Interest, as applicable,
which are not payable in or prior to the payment period or distribution period,
as applicable, in which the Closing Date occurs shall belong to Buyer or MD3
Cayman L.P., as applicable. All payments received on or prior to the Cut-off
Date shall, to the extent not allocable to the period following the Closing
Date, belong to the applicable Seller Parties.
2.3.2. [Intentionally Omitted].
2.3.3. Payments After the Cut-off Date. Except as provided herein and
in Sections 2.3.1, 2.3.4 and 2.3.5, (a) any payments with respect to any
Purchased Asset purchased under this Agreement or the Remic Interest, as
applicable, received by any Seller Party after the Cut-off Date, whether before,
on or after the Closing Date, shall be for Buyer's or MD3 Cayman L.P.'s, as
applicable, account and if received prior to the Closing Date, shall be retained
by the applicable Seller Party and credited to Buyer or MD3 Cayman L.P., as
applicable at Closing and, if the Closing occurs and such payment is received by
the Seller Party in question after the Closing Date, shall otherwise be paid to
Buyer or MD3 Cayman L.P., as applicable, within five (5) Business Days of
receipt by such Seller Party; and (b) any other payments Buyer or MD3 Cayman
L.P., as applicable, receives with respect to a Purchased Asset purchased by
Buyer or MD3 Cayman L.P., as applicable, pursuant to this Agreement after the
Closing in respect of such Purchased Asset may be retained by Buyer or MD3
Cayman L.P., as applicable.
2.3.4. Condemnation, Proceeds and Insurance Proceeds. All net
condemnation proceeds and insurance proceeds in respect of any Purchased Asset
(collectively, "Proceeds") received by the applicable Seller Party subsequent to
the Cut-off Date and on or before the Closing Date that are not used to restore
the real property related to such Purchased Asset shall, upon Closing, be
credited to the applicable Buyer Party (subject to the terms of the Oxford
Participation Agreement and the DC Retail Participation Agreement, if
applicable) and to MD3 Cayman L.P. in the case of Proceeds relating to the Remic
Interest. All Proceeds received by the Seller Parties after the Closing shall,
to the extent attributable to the Purchased Assets, be paid to the Buyer
(subject to distributions pursuant to the terms of the Oxford Participation
Agreement and the DC Retail Participation Agreement, if applicable); provided
that all Proceeds received in respect to the Remic Interest shall be paid to MD3
Cayman L.P. Each Seller Party shall be entitled to retain proceeds of insurance
policies obtained by such Seller Party or its Affiliates at their own expense
which are not for the benefit of the Borrower.
2.3.5. [Intentionally Omitted]
2.4. As-Is Purchase. Without in any way limiting any other disclaimers
or limitations set forth in this Agreement, including the provisions of Section
5.4, and without in any way limiting or disclaiming any of Sellers'
representations and warranties set forth in this Agreement, the D.C. Retail
Participation Agreement, the Oxford Participation Agreement, the Menlo Letter
and the MD3 Cayman L.P. partnership agreement, Buyer expressly acknowledges and
agrees to purchase the Purchased Assets taking into account all Property
(including the Secured Property) related to the Purchased Asset in question and
the ownership structures for the direct and indirect owners thereof in their "AS
IS, WHERE-IS" CONDITION "WITH ALL FAULTS" as of the Closing Date as to each of
the Purchased Assets. Buyer acknowledges that no Affiliate of any Seller Party
and no director, officer, manager, attorney, agent, employee, accountant,
consultant, advisor or representative of any Seller Party or any Affiliate of
any Seller Party is authorized to make any representations or warranties
regarding the transactions contemplated hereby and that neither Sellers, nor
Sellers' respective Affiliates, nor any director, officer, manager, attorney,
agent, employee, accountant, consultant, advisor or representative of any Seller
Party or any Affiliate of any Seller Party has made any representation
whatsoever, express or implied, regarding the Purchased Assets or any part
thereof, except for the representations and warranties set forth in this
Agreement, the D.C. Retail Participation Agreement, the Oxford Participation
Agreement, the Menlo Letter and the MD3 Cayman L.P. partnership agreement.
2.5. Not a Security. Buyer acknowledges and agrees that (i) Buyer will
not be relying in any way on the managerial efforts of Sellers with respect to
the Purchased Assets following the Closing Date, (ii) the proposed sale of the
Purchased Assets does not involve, nor is it intended in any way to constitute,
the sale of a "security" within the meaning of the Securities Act of 1933, as
amended (the "Act") or any applicable federal or state securities laws, and
(iii) no inference as to whether the Purchased Assets are or are not
"securities" under such federal or state securities laws shall be drawn from any
of the certifications, representations or warranties made herein.
ARTICLE III
Closing
3.1. Closing. The Closing of the purchase and sale of the Purchased
Assets shall take place at the Closing Location at 12:00 noon, New York City
time, on the Closing Date.
3.2. Conditions Precedent to the Obligations of Sellers. The obligation
of Sellers to sell the Purchased Assets pursuant to this Agreement is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions, except to the extent waived in writing by Sellers:
3.2.1. All material representations and warranties of Buyer set forth
in Article IV shall be true in all material respects;
3.2.2. All requisite material federal, state and local governmental and
regulatory approvals relating to the transaction contemplated hereby, if any,
required for the transaction contemplated herein to be consummated shall have
been obtained;
3.2.3. The Required Consents, if any, for each Purchased Asset being
transferred have been obtained (unless the requirement to obtain any such
Required Consent for such Purchased Asset is waived by both the Buyer and the
Seller Parties in question); and
3.2.4. The closing of the transactions contemplated by that certain
Securities Purchase Agreement of even date herewith between Starwood Financial
Trust and certain investors named therein shall have occurred simultaneously.
3.2.5. Buyer shall concurrently make all of Buyer's deliveries pursuant
to Section 3.3 below.
3.3. Deliveries by Buyer at Closing. On or prior to 12:00 noon New York
City time on the Closing Date, Buyer agrees to deliver to Sellers and, to the
extent applicable, MD3 Cayman L.P., the following:
3.3.1. Certificates of good standing, or other evidence reasonably
acceptable to Sellers, demonstrating that each Buyer Party is an entity in good
standing under the laws of the jurisdiction in which it is formed;
3.3.2. Evidence reasonably acceptable to Sellers demonstrating that
Buyer's execution and delivery of this Agreement, the Sale Documents and the
other documents delivered pursuant hereto and the consummation of the
transactions contemplated hereby have been duly authorized, by all actions
required under the Governing Instruments of Buyer and that such authorization is
in full force and effect and has not been modified;
3.3.3. Payment of the amounts due under Section 2.2, pursuant to the
terms thereof, to Sellers (or the applicable Seller Parties) by no later than
12:00 noon New York City time on the Closing Date;
3.3.4. The Assumption Agreement for each of the Purchased Assets being
transferred, dated the Closing Date and executed by an authorized signatory of a
Buyer Party, pursuant to which a Buyer Party shall assume the Assumed
Liabilities in respect of such Purchased Assets;
3.3.5. A receipt executed by an authorized signatory of the appropriate
Buyer Party or by an agent of Buyer (which may be an attorney for the Buyer),
designated in writing by an authorized signatory of such Buyer Party, in form
and substance acceptable to each Buyer Party and each Seller Party as to each of
its Purchased Assets, acknowledging receipt of Sellers' deliveries pursuant to
Section 3.4 (with exceptions for any items any Seller is unable to deliver noted
thereon);
3.3.6. The Oxford Participation Agreement, dated the Closing Date and
executed by SFT;
3.3.7. The D.C. Retail Participation Agreement, dated the Closing Date
and executed by SDC; and
3.3.8. Such other documents or instruments as each Seller may
reasonably request and which are reasonably necessary or desirable to complete
the transactions contemplated by this Agreement.
3.4. Conditions Precedent to the Obligations of Buyer. The obligation
of Buyer to buy the Purchased Assets pursuant to this Agreement is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions, except to the extent waived in writing by Buyer:
3.4.1. Subject to the provisions and limitations set forth in Sections
5.3 through 5.5, all representations and warranties of Seller set forth in
Article V shall be true in all material respects;
3.4.2. All requisite material federal, state and local governmental and
regulatory approvals relating to the transaction contemplated hereby, if any,
required for the transaction contemplated herein to be consummated shall have
been obtained;
3.4.3. The Required Consents, if any, for each Purchased Asset being
transferred shall have been obtained (unless the requirement to obtain any such
Required Consent for such Purchased Asset is waived by both the Buyer and the
Seller Parties in question);
3.4.4. The closing of the transactions contemplated by that certain
Securities Purchase Agreement of even date herewith between Starwood and certain
investors named therein shall have occurred simultaneously; and
3.4.5. Seller shall concurrently make all of Seller's deliveries
pursuant to Section 3.5 below.
3.5. Deliveries by Seller at Closing. On or prior to 12:00 noon New
York City time on the Closing Date, Sellers (or the applicable Seller Parties)
agree to deliver to Buyer, and, to the extent applicable, MD3 Cayman L.P., the
following:
3.5.1. The Assignment;
3.5.2. Certificates of good standing, or other evidence reasonably
acceptable to Buyer, demonstrating that each Seller Party and, to the extent
applicable, MD3 Cayman L.P. is an entity in good standing under the laws of the
jurisdiction in which they are formed;
3.5.3. Evidence reasonably acceptable to Buyer demonstrating that each
applicable Seller Party's execution and delivery of this Agreement and the other
documents delivered pursuant hereto and the consummation of the transactions
contemplated hereby have been fully authorized, by all actions required under
the Governing Instruments of each such Seller Party, and that such authorization
is in full force and effect and has not been modified; and
3.5.4. For each of the Purchased Assets being transferred:
3.5.4.1. For each Purchased Asset which is a Loan and for the D.C.
Retail Asset, an endorsement duly executed by such Seller Party of each original
Note (including in the case of Notes which have been assigned and later amended
and restated, consolidated, split or otherwise modified, all amended and
restated notes, replacement or substitute notes, consolidation and splitter
agreements and other documents effecting any of the foregoing) evidencing a
Loan, either directly or with an allonge to the Note, in the following manner:
"Pay to the order of [__________], a [__________], without recourse and
without representation or warranty by the undersigned, express or
implied, of any nature, except as expressly stated in that certain
Asset Purchase and Sale Agreement dated as of December __, 1998.";
3.5.4.2. For each Purchased Asset which is a Loan and for the D.C.
Retail Asset, an Assignment executed by the Seller Party in question assigning
to the applicable Buyer Party the rights of such Seller Party in the security
for such Loan and the D.C. Retail Asset owned by such Seller Party;
3.5.4.3. For each Purchased Asset which is a Loan and for the D.C.
Retail Asset, an assignment in customary form to the applicable Buyer Party of
the applicable Seller Party's rights as secured party under any financing
statements related to any Loan as to which such Buyer Party has requested an
assignment;
3.5.4.4. To the extent in Seller's Possession, the original Collateral
Documents, or Preferred Equity Documents, as applicable, or if the originals are
not within Seller's Possession, copies thereof to the extent such are in
Seller's Possession;
3.5.4.5. The Asset Files to Buyer and the Asset File for the Remic
Interest to MD3 Cayman L.P.;
3.5.4.6. For each Purchased Asset which is a Loan and for the D.C.
Retail Asset, a notice to the Borrower of the sale of the Loan from such Seller
Party to such Buyer Party, in form and substance acceptable to Buyer and each
Seller Party as to each of its Assets, or such other form as is mutually agreed
upon by such Seller Party and such Buyer Party, executed by Seller;
3.5.4.7. The Oxford Participation Agreement, together with an original
of the Certificate attached thereto in favor of the applicable Buyer Party, in
each case, dated the Closing Date and executed by an authorized signatory of
Fund II;
3.5.4.8. The D.C. Retail Participation Agreement, dated the Closing
Date and executed by an authorized signatory of Fund I; and
3.5.4.9. Such other documents or instruments as Buyer may reasonably
request and which are reasonably necessary or desirable to complete the
transactions contemplated by this Agreement.
3.6. Risk of Loss. Sellers shall deliver, and Buyer shall take,
physical possession of the original Notes, Collateral Documents, Preferred
Equity Documents and the Asset Files for each of the Assets other than the Remic
Interest on the Closing Date at the Closing Location. In the case of the Remic
Certificates, SDJ shall deliver, and SCBGP in its capacity as a general partner
of MD3 Cayman L.P. shall take, physical possession of the Certificates (subject
to the rights of any lender or repurchase facility purchaser holding the
Certificates) and the Asset Files for the Remic Interest on the Closing Date at
the Closing Location. From and after, such delivery of the original Notes,
Certificates, Collateral Documents, Preferred Equity Documents and Asset Files
to Buyer, Sellers shall have no responsibility with respect thereto or otherwise
with respect to the Assets, and all risks of loss or damage with respect to the
Notes, Collateral Documents, Certificates, Preferred Equity Documents or Asset
Files or any other document(s) transferred hereunder, shall thereafter inure to
the Buyer. In the event that Buyer shall designate, in writing to Sellers on or
before the Closing Date, any attorney, escrow agent, custodian delivery or
courier service, or any other person or entity, other than Buyer, to take
delivery, from Sellers, of the original Notes, Certificates, Collateral
Documents, Preferred Equity Documents and Asset Files on the Closing Date, Buyer
shall have all the risk of loss or damage to the original Notes, Certificates,
Collateral Documents, Preferred Equity Documents and Asset Files, and any other
documents transferred hereunder from and after such delivery. Any and all costs
and expenses associated with shipping the original Notes, Certificates,
Collateral Documents, Preferred Equity Documents and Asset Files to any location
other than that specified as the Closing Location shall be borne by the Buyer.
3.7. Transfer and Recordation Taxes; Other Costs. Buyer shall pay all
federal state, county and city transfer, filing and recording fees and taxes,
costs and expenses, and any federal, state, county and city documentary taxes,
if any, relating to the filing or recording of any document or instrument
contemplated hereby, or the assignment of any Collateral Documents or the
Preferred Equity Documents, except formation expenses for MD3. Buyer shall also
be solely responsible for the payment of any and all costs of title insurance
premiums, survey costs, and other expenses of title examination ordered by
Buyer. Each party shall bear its own fees, costs and expenses incurred in
connection with obtaining the Required Consents. As to each Required Consent,
the Seller Party or Seller Parties in question, on the one hand, and the Buyer,
on the other hand, shall each pay one-half of all fees, costs and expenses
required to be paid to any third parties in order to obtain the Required
Consents. Upon written request, Sellers and Buyer shall sign and deliver on the
Closing Date all transfer tax and related forms reasonably required by the other
party or required by applicable law. MD3 Cayman L.P. shall pay the formation
expenses of MD3 Cayman L.P. as to which SCB and SCBGP will jointly pay 85% and
SDJ will pay 15% as additional contributions. Regardless of whether the
transactions contemplated hereunder are completed, Buyer and Seller shall each
pay all of their respective expenses in negotiating and carrying out its
obligations under this Agreement and the transactions contemplated hereby,
including the costs of its due diligence consultants, its counsel and title
insurance.
ARTICLE IV
Representations And Warranties Of Buyer
4.1. Representations and Warranties of Buyer. Buyer represents and
warrants to Sellers on the Closing Date as follows:
4.1.1. Identity. Starwood is a real estate investment trust and is duly
organized, validly existing and in good standing under the laws of the State of
Maryland. SFT, SCB, SCBGP and SDC are each corporations, duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.1.2. Authority. Each Buyer Party has taken all necessary action under
its Governing Instruments to authorize its execution, delivery and performance
of, and has the power and authority to execute, deliver and perform its
obligations under, this Agreement and all related documents and all the
transactions contemplated hereby and thereby, including but not limited to the
power and authority to purchase the Purchased Assets in accordance with this
Agreement.
4.1.3. Binding on Buyer; Enforceability. Assuming due authorization,
execution and delivery hereof by Sellers, this Agreement and all the obligations
of Buyer hereunder are legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, except as such
enforcement may be limited by (a) the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally, and (b) the laws governing the availability of
specific performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
4.1.4. Conflict with Existing Laws or Contracts. Assuming the Required
Consents are obtained, the execution and delivery of this Agreement and the
other Sale Documents does not, and the performance by each Buyer Party of its
obligations hereunder and thereunder will not, conflict with any provision of
any law or regulation to which such Buyer Party is subject or conflict with or
result in a breach of or constitute a default under the Governing Instruments of
such Buyer Party or any of the terms, conditions or provisions of any other
agreement or instrument to which such Buyer Party is a party, or by which it is
bound, or any order or decree applicable to such Buyer Party, nor will such
execution, delivery and performance result in the creation or imposition of any
lien on any of Buyer Party's assets or properties that could materially and
adversely affect the ability of any Buyer Party to discharge its obligations
under and complete the transactions contemplated by this Agreement. Assuming the
Required Consents are obtained, each Buyer Party has obtained all consents,
approvals, authorizations and orders of any courts or governmental agencies or
bodies required for the due execution, delivery and performance by each Buyer
Party of this Agreement and the other Sale Documents. Other than the Required
Consents, nothing in the Due Diligence Materials, or of which any Buyer Party is
otherwise aware, requires Sellers to obtain any consents, authorizations or
approvals from any party to consummate the transactions contemplated hereby.
4.1.5. Legal Action Against Buyer. There are no judgments, orders or
decrees of any kind against any Buyer Party that are unpaid or unsatisfied or of
record in accordance with their terms for a period in excess of sixty (60) days,
except to the extent that execution thereon is stayed pending appeal, nor is
there any legal action, suit or other legal or administrative proceeding pending
against any Buyer Party in any court or by or before any other governmental
agency or instrumentality which, if concluded adversely to such Buyer Party,
could materially adversely affect the ability of Buyer to carry out the
transactions contemplated by this Agreement.
4.1.6. Bankruptcy or Debt of Buyer. No Buyer Party is insolvent and the
consummation of the transactions contemplated by this Agreement will not render
any Buyer Party insolvent. No Buyer Party has filed any petition seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any law relating to bankruptcy
or insolvency, nor has any such petition been filed against any Buyer Party. No
general assignment of any Buyer Party's property has been made for the benefit
of creditors, and no receiver, conservator, master, liquidator or trustee has
been appointed for any Buyer Party or any of its property. As of the Closing
Date, Buyer will have sufficient capital or net worth to meet its obligations
hereunder.
4.1.7. Sophisticated Investor. Each Buyer Party (a) is a sophisticated
investor, (b) has such knowledge and experience in the origination, sale and/or
purchase of performing and non-performing or distressed loans, including loans
secured by real estate or other types of collateral, as well as knowledge and
experience in other financial and business matters, as to enable it to utilize
the information made available in connection with the sale of the Purchased
Assets to evaluate the merits and risks of a prospective acquisition and
ownership of the Purchased Assets and to make an informed decision with respect
thereto, (c) has the ability to make, and is responsible for making, its own
independent investigation and evaluation of the Purchased Assets and the
economic, credit or other risks involved in a purchase of the Purchased Assets,
including the ability to resell or otherwise liquidate any of the Purchased
Assets, and (d) is able to bear the economic risks associated with the
acquisition and ownership of the Purchased Assets, including the risk of a total
loss of the purchase price for the Purchased Assets and/or the risk that it may
be required to hold the Purchased Assets for an indefinite period of time. Each
Buyer Party is purchasing the Purchased Assets for its own account and not for
resale or with a view toward distribution within the meaning of the Act.
4.1.8. Decision to Purchase. Buyer's offer and decision to purchase the
Purchased Assets are based upon its own independent expert evaluations of the
Asset Files, other materials deemed relevant by Buyer and its agents, the real
property related to the Purchased Assets in question, the Secured Properties and
on the representations and warranties made by the applicable Seller Parties in
this Agreement, the partnership agreement for MD3 Cayman L.P., the Oxford
Participation Agreement, the Menlo Letter and the D.C. Retail Participation
Agreement. In entering into this Agreement, Buyer has not relied upon any oral
or written information, or any representations or warranties whatsoever, from
Sellers or their Affiliates or any of their respective directors, officers,
managers, employees, agents, legal counsel or other representatives, other than
the representations and warranties set forth in this Agreement (subject,
however, to the limitations set forth in this Agreement), the partnership
agreement for MD3 Cayman L.P., the Oxford Participation Agreement, the Menlo
Letter and the D.C. Retail Participation Agreement. Buyer further acknowledges
that no Affiliate of any Seller Party or director, officer, manager, employee,
agent, legal counsel or other representative of any Seller Party or any
Affiliate of any Seller Party has been authorized to make, and that Buyer has
not relied upon, any statements or representations other than those specifically
contained in this Agreement.
4.1.9. Access to Information. Buyer has been able to conduct such due
diligence, investigations, inspections, review and analysis of the Due Diligence
Materials and related information furnished by the Sellers, the Assets, the real
property and other Property related to the Assets in question and the Secured
Property as Buyer deemed necessary, proper or appropriate with respect to the
purchase and acquisition of the Purchased Assets. This Section 4.1.9 shall not
be deemed to limit any rights any Buyer Party or Buyer may have under this
Agreement with respect to a breach of any Seller Party's representations and
warranties under this Agreement, the partnership agreement for MD3 Cayman L.P.,
the Oxford Participation Agreement, the Menlo Letter and the D.C. Retail
Participation Agreement.
ARTICLE V
Representations And Warranties Of SellerS
5.1. Representations and Warranties of Sellers. Subject to the
applicable provisions and limitations set forth in Sections 5.3 through 5.5
below, each Seller Party represents and warrants to Buyer, as of the Closing
Date as follows (it being understood that each Seller Party is only making the
following representations and warranties as to itself and the Assets in which it
owns an interest as of the Closing Date; provided that, in the case of each
Seller Party owning a Preferred Equity Interest in a Loan, such Seller Party and
the Seller Party holding such Loan shall be deemed to have made the following
representations and warranties jointly and severally as to such Loan and such
Preferred Equity Interest):
5.1.1. Identity. Fund I, Fund II, PMAH and PIHLP are each Delaware
limited partnerships; Atlantic and Indian are each New York limited liability
companies and SDJ is a Cayman Islands exempted company.
5.1.2. Authority. Such Seller Party has taken all necessary action
under its Governing Instruments to authorize its execution, delivery and
performance of, and has the power and authority to execute, deliver and perform
its obligations under, this Agreement and all related documents executed by such
Seller Party in connection herewith and to consummate all the transactions
contemplated hereby and thereby (such documents, collectively the "Sale
Documents"), including but not limited to the power and authority to sell,
assign and transfer the Purchased Assets in which such Seller Party has an
interest in accordance with this Agreement.
5.1.3. Binding on Seller; Enforceability. Assuming due authorization,
execution and delivery hereof and thereof by Buyer, this Agreement and the other
Sale Documents and all the obligations of such Seller Party hereunder are legal,
valid and binding obligations of such Seller Party, enforceable against such
Seller Party in accordance with their terms, except as such enforcement may be
limited by: (a) the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the enforcement of creditors' rights generally
and (b) the rules governing the availability of specific performance, injunctive
relief or other equitable remedies and general principles of equity, regardless
of whether considered in a proceeding in equity or at law.
5.1.4. Conflict with Existing Laws or Contracts. Assuming that the
Required Consents and any other consents or approvals which are reflected in the
Due Diligence Materials are obtained, the execution and delivery of this
Agreement and the other Sale Documents does not, and the performance by such
Seller Party of its obligations hereunder and thereunder will not, conflict with
any material provision of any material law or regulation to which such Seller
Party is subject or conflict with or result in a breach of or constitute a
default under the Governing Instruments of such Seller Party or any of the
terms, conditions or provisions of any agreement or instrument to which such
Seller Party is a party or by which it is bound or any order or decree
applicable to such Seller Party, nor will such execution, delivery and
performance result in the creation or imposition of any lien on any of such
Seller Party's assets or properties that could materially and adversely affect
the ability of such Seller Party to discharge its obligations under and complete
the transactions contemplated by this Agreement. Assuming that the Required
Consents and any other consents or approvals which are reflected in the Due
Diligence Materials are obtained, such Seller Party has obtained all consents,
approvals, authorizations and orders of any courts or governmental agencies or
bodies required for the due execution, delivery and performance by such Seller
Party of its obligations under this Agreement and the other Sale Documents.
5.1.5. Legal Action Against Sellers. There is no legal action, suit or
other legal or administrative proceeding pending or overtly threatened in
writing against such Seller Party in any court or by or before any other
governmental agency or instrumentality or arbitration which, if concluded
adversely to Sellers, would materially adversely affect the ability of such
Seller Party to carry out the transactions contemplated by this Agreement.
5.1.6. Bankruptcy or Debt of Sellers. Such Seller Party is not
insolvent or in the hands of a receiver, conservator or bankruptcy trustee, has
not committed an act of bankruptcy or insolvency and is not a debtor in any
bankruptcy proceeding.
Notwithstanding anything to the contrary contained in this Agreement,
including this Section 5.1, in the event of an occurrence or matter which would
otherwise constitute a breach of any of the representations or warranties set
forth in this Section 5.1 as to one or more Assets, and which occurrence or
matter also constitutes a breach of any of the representations and warranties
set forth in Section 5.2, then such occurrence or matter shall be deemed to be a
breach of such representations and warranties set forth in Section 5.2 only, and
not a breach of the representations or warranties set forth in this Section 5.1.
5.2. Limited Representations and Warranties by Sellers as to Each Loan.
Subject to the applicable provisions and limitations of Sections 5.3 through 5.5
below, each Seller Party hereby represents and warrants as to itself and those
of the Assets in which it has an ownership interest as of Closing Date as
follows (it being understood that each Seller Party is only making the following
representations and warranties as to itself and the Assets in which it owns an
interest; provided that, in the case of each Seller Party owning a Preferred
Equity Interest in a Loan, such Seller Party and the Seller Party holding such
Loan shall be deemed to have made the following representations and warranties
jointly and severally as to such Loan and such Preferred Equity Interest):
5.2.1. Sole Ownership. Such Seller Party is, together with any other
Seller Party holding an interest in the Purchased Asset in question or, in the
case of the Remic Interest, such Remic Interest in question, the sole legal,
record (if applicable), beneficial owner and holder of such Purchased Asset or,
has good and (assuming all Required Consents and any other consents or approvals
reflected in the Due Diligence Materials are obtained) marketable title to each
such Purchased Asset or Remic Interest, as applicable, and such Purchased Asset
or Remic Interest, as applicable is, as of the Closing, free and clear of any
liens, pledges, charges, security interests, options, participations or other
encumbrances of any kind or description (other than the repurchase financing
arrangements affecting the Remic Interest entered into by MD3 Cayman L.P. in
connection with the Closing), and such Seller Party has full right to sell,
transfer and assign such Purchased Asset or Remic Interest, as applicable,
without the consent of any third party, except for the Required Consents and
satisfaction of all conditions to transfers of the Assets in question reflected
in the Due Diligence Materials. The Purchased Asset Schedule correctly
identifies the owner of each applicable Purchased Asset, and SDJ is the owner of
the Remic Interest.
5.2.2. Accuracy of Final Asset Schedule. All information pertaining to
such Assets set forth in columns 1 and 2 of the Asset Schedule is true and
correct in all material respects. All of the Notes, Certificate, Security
Documents, Operative Documents and Preferred Equity Documents are listed on
Schedule 4 hereto and constitute all of the Notes, Certificates, Security
Documents, Operative Documents and Preferred Equity Documents (whether or not in
Seller's Possession), including all written amendments thereto or other
modifications thereof and, to such Seller Party's Actual Knowledge, there are no
other amendments or modifications thereto. To such Seller Party's Actual
Knowledge, there are no material consents required for the performance by such
Seller Party of its obligations under this Agreement and the Sale Documents
other than the Required Consents set forth on Schedule 3 hereto and any consents
or approvals reflected in the Due Diligence Materials.
5.2.3. No Release. As to each Purchased Asset and except as disclosed
in the Due Diligence Materials (a) neither the Note, the Certificates, the
Security Documents, the Operative Documents nor the Preferred Equity Documents
relating to such Purchased Asset have been satisfied, released, canceled or
subordinated in whole or in part, (b) in the case of each Loan, such Seller
Party has not released all or any portion of the collateral covered by such
Collateral Documents from the lien of the Security Documents related thereto and
(c) in the case of each Loan, such Seller Party has not executed any instrument
of release, cancellation or satisfaction with respect to such Security Document
or Note.
5.2.4. Asset Documents. Except as disclosed in the Due Diligence
Materials, the copies of the Note, the Certificates, the Security Documents, the
Operative Documents and the Preferred Equity Documents (and of any documents
modifying or amending the terms of such Note, Certificate, Security Document,
Operative Documents or Preferred Equity Documents) relating to such Asset
included in the Due Diligence Materials are true and complete copies of the
documents they purport to be.
5.2.5. No Discharge of Note; No Voidance of Obligations. Except as
disclosed in the Due Diligence Materials, as to each Purchased Asset which is a
Loan, the Note relating to such Asset has not been discharged in a bankruptcy
proceeding (in whole or part) such that any applicable mortgage, deed of trust,
pledge or other security instrument, if any, creating a lien on the Secured
Property relating to such Asset, has been released and all guarantors or
sureties, if any, of such Note or the obligations contained therein or in any of
the Security Documents have been discharged. No court of competent jurisdiction
has entered a final judgment holding that any debtor under such Note, and any
guarantor, pledgor or surety of the Purchased Asset in question, is relieved of
its obligation to pay the holder of such Note or to perform its obligation in
connection with any judgment arising from such Note or pledge or guaranty, as
applicable.
5.2.6. Due Diligence Materials. To Seller's Actual Knowledge, attached
hereto as Schedule 4 is a true and complete list of the Due Diligence Materials.
None of the Excluded Documents not listed on Schedule 4 amend, modify,
terminate, release, cancel, assign, subordinate, create a defense, impose
liability upon the owner of an Asset or otherwise adversely affect any of the
Assets.
5.2.7. Future Funding Obligations. Except for the Series B Obligation
and except as disclosed on the Asset Schedule or in the Due Diligence Materials,
no Borrower or any related Interested Person has any right to the disbursement
of additional loan proceeds in the case of Loans or additional equity
contributions in the case of Preferred Equity Interests, as applicable, by such
Seller Party with respect to the Assets, and there are no conditions or
circumstances which if satisfied or occurring at any time in the future would
give rise to a right of such Borrower or any related Interested Person to such a
disbursement.
5.2.8. Cross-Collateralization. Except as disclosed in the Due
Diligence Materials, the Assets which are Loans are not cross-collateralized
with any other loans made or held by such Seller Party or its Affiliates, or to
Seller's Actual Knowledge, any other Person.
5.2.9. Violations. Except as disclosed in the Due Diligence Materials,
such Seller Party has not received any written notice of, and otherwise does not
have Actual Knowledge of, any condemnation, or building code, zoning or other
legal violations with respect to the Secured Property in question and, to
Seller's Actual Knowledge, no Secured Property has been subject to any
unrepaired casualty loss.
5.2.10. Borrower Litigation. Except as disclosed in the Due Diligence
Materials, such Seller Party has not received any written notice of, and
otherwise does not have Actual Knowledge of, any actions, suits or proceedings
against the Borrower or other obligors, guarantors or pledgors in respect to any
Asset or the related Property which if determined adversely would materially and
adversely affect the Asset in question.
5.2.11. Borrower Bankrupcy. Except as disclosed in the Due Diligence
Materials, such Seller Party has not received any written notice of, and
otherwise does not have Actual Knowledge that (a) the Borrower or any other
obligor, guarantor or pledgor in respect to any Loan is a party to any
bankruptcy, reorganization, insolvency or similar proceeding, (b) any of the
partners, members or shareholders of any Borrower in which such Seller Party
holds a Preferred Equity Interest is a party to a bankruptcy, reorganization,
insolvency or similar proceeding or (c) the owner of a Secured Property is a
party to a bankruptcy, reorganization, insolvency or similar proceeding.
5.2.12. Default. Except as disclosed in the Due Diligence Materials,
such Seller Party has not (a) given a notice of default to any Borrower in
respect of any Loan (and is not now considering giving such a notice), (b)
accelerated any Loan, (c) commenced any foreclosure action or proceeding under a
power of sale in respect to any Loan or other Asset or (d) exercised its rights
under the Preferred Equity Documents to become the general partner or managing
member, as applicable, of any Borrower.
5.2.13. Delinquent Charges. Except as disclosed in the Due Diligence
Materials, such Seller Party has not received any written notice of, and
otherwise does not have Actual Knowledge of, any (a) delinquent property taxes,
ground rents, water charges, sewer rents, assessments (including assessments
payable in future installments), or other outstanding charges that could
adversely affect any Secured Property in any material respect, (b) delinquent
premiums in respect to insurance policies required to be maintained pursuant to
the Collateral Documents or Preferred Equity Documents, as applicable, with
respect to the Secured Property in question or (c) termination, cancellation or
non-renewal with respect to any of such insurance policies.
5.2.14. Leases. Except as disclosed in the Due Diligence Materials, (a)
such Seller Party has not received written notice of, and otherwise does not
have Actual Knowledge of any material default under, or termination of, any Key
Leases and (b) such Seller Party has not consented to the termination of any
ground leases or Key Leases, or to the sale, defeasance, or refinancing of any
Senior Loan.
5.2.15. Prepayment. Except as disclosed in the Due Diligence Materials,
such Seller Party has not received any notice of prepayment with respect to any
Loan and, to such Seller Party's Actual Knowledge, (other than with respect to
the Loan identified as "Park LaBrea" on the Asset Schedule), no Borrower or
other Person has notified such Seller Party or LFREI that it intends to send, or
has sent, such notice of prepayment.
5.2.16. Senior Loan Documents. To such Seller Party's Actual Knowledge
and except as disclosed in the Due Diligence Materials, (a) the copies of the
documents evidencing the Senior Loans included in the Due Diligence Materials
are true and complete copies thereof and have not been modified or amended and
(b) such Seller Party has not received any notice of default or acceleration of
any Senior Loan or of the commencement of foreclosure or other enforcement of
rights and remedies in respect to any Senior Loan by the holder of such Senior
Loan.
5.2.17. Servicing. None of the Assets are serviced by third party
servicers. Except as disclosed in the Due Diligence Materials, such Seller Party
reasonably believes that it has complied with its responsibilities under the
provisions of the Notes, Security Documents and Preferred Equity Documents which
pertain to the receipt, distribution and retention of the cash flow from the
Secured Property or from the borrower under the Senior Loan and any other
Interested Persons to the Borrower in question, as applicable (collectively, the
"Cash Management Provisions") in all material respects, and no Person (or
counsel purportedly representing such Person) has asserted, in writing that such
Cash Management Provisions have not been adhered to in all material respects.
5.2.18. Enforceability. To such Seller's Actual Knowledge and except as
disclosed in the Due Diligence Materials, no Person (or counsel purportedly
representing such Person) has asserted, in writing, that any of the Notes, the
Certificates, the Collateral Documents, the Security Documents, the Operative
Documents or the Preferred Equity Documents are unenforceable in whole or in
part.
5.2.19. Title Policy. Except as reflected in the Due Diligence
Materials, no claims have been, or as of the Closing Date will have been, made
by such Seller Party under any title policy to which any Asset is subject.
Except as reflected in the Due Diligence Materials, such Seller Party has
received no written notice of a change in (a) the principal place of business,
chief executive office or principal residence of any debtor under a UCC-1
financing statement included in the Security Documents or (b) the name, identity
or corporate structure of any such debtor.
5.2.20. Delinquency. To such Seller's Actual Knowledge and except as
disclosed in the Due Diligence Materials, as of the Closing Date there is no
monetary or material non-monetary default beyond applicable periods of grace as
to any Loan and, as of the Closing Date, no Preferred Equity Interest is in
default beyond applicable periods of grace in any material respect under any of
the Preferred Equity Documents.
5.2.21. Key Personnel. Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxxxx, Xxxxxx
X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxx Xxxxx and Xxxxx Xxxxx are the Persons
primarily responsible for the administration and servicing of the Assets on
behalf of the Seller Parties and are the only Persons who have served as
directors and/or managers of any Borrower pursuant to the rights of certain of
the Seller Parties to appoint directors and/or managers of certain of the
Borrowers.
5.2.22. No Claims. Except as disclosed in the Due Diligence Materials
and except for the Wiener Litigation, no Borrower or other Interested Person is
prosecuting any litigation against such Seller Party with respect to any Asset
owned by such Seller Party, and no such Seller Party has received written notice
from, and does not otherwise have Actual Knowledge of, any Borrower or
Interested Person threatening litigation against such Seller Party with respect
to any Asset owned by such Seller Party.
5.2.23. Series B Obligation. None of the applicable Seller Parties have
received a request or demand for payment of the Series B Obligation and the
Series B Obligation has not been paid or satisfied. The repayment obligations of
the applicable Seller Parties under the Series B Obligation does not exceed
$12,000,000.
5.2.24. No Material Adverse Effect. To such Seller Party's Actual
Knowledge and except as disclosed in the Due Diligence Materials, there is no
confidential fact or circumstance with respect to any Asset in the Excluded
Documents or of which such Seller Party has Actual Knowledge which has not been
disclosed to Buyer or its representatives (in all cases that is particular to
the Asset, Borrower or Interested Person in question, and not to assets or
Persons of such type, the location of the asset or financial, capital or real
estate or related markets generally) that is materially adverse to the Asset in
question or to the ability of the Seller Party in question to consummate the
transactions contemplated hereby with respect to such Asset.
5.2.25. No Payments. Except as disclosed on Schedule 5, since the
Cut-Off Date, no payments have been, or will be, made on any of the Assets other
than payment of Current Amounts, fees, if any, and indemnification or
reimbursable expenses, if any.
5.2.26. No Escrows. No Seller Party is, with respect to any Purchased
Asset, itself collecting or holding in escrow funds from the applicable Borrower
or Interested Persons in respect to such Purchased Asset for the purpose of
applying such funds toward the annual payments of real estate taxes,
governmental assessments, hazard insurance premiums, private mortgage insurance
premiums, security deposits, utility deposits, replacement reserves or for any
other purposes.
5.2.27. Withholding. SDJ hereby represents and warrants that its
interest in the Remic Interest to be contributed to MD 3 Cayman L.P. at Closing
pursuant to this Agreement does not constitute a United States real property
interest as defined in Section 897(c) of the Internal Revenue Code of 1986, as
amended, and that the distribution to SDJ described in Section 2.1(c) of this
Agreement may be made to it free and clear of, and without deduction or
withholding for, any taxes, levies, imposts, duties, deductions, charges or
withholdings assessed, imposed or levied under the loans of the United States or
other governmental authority. Fund I hereby represents and warrants that the
purchase price for the Purchased Asset in respect to the D.C. Retail Asset and
the Oxford Asset may be made to it free and clear of, and without deduction or
withholding for, any taxes, levies, imposts, duties, deductions, charges or
withholdings assessed, imposed or levied under the laws of the United States or
any other governmental authority.
5.3. Limitations on Sellers' Representations and Warranties. The
representations and warrantie s set forth in Section 5.2 are subject to the
following specific limitations:
5.3.1. Except with respect to Section 5.2.1, the representations and
warranties shall not apply, and Buyer shall have no basis for asserting a breach
of a representation or warranty with respect to, any matters disclosed in the
Due Diligence Materials or of which Buyer was otherwise aware of prior to
executing this Agreement (it being agreed that Buyer shall not be deemed to be
aware of any Buyer Excluded Matters);
5.3.2. No representation or warranty is made with respect to any Asset
or Purchased Asset with respect to which any Buyer Party is an Interested
Person; and
5.3.3. If, in connection with any Purchased Asset, Buyer (or any
successor or assign of Buyer) procures title insurance or is entitled to receive
the benefit of title insurance by endorsement or otherwise with respect to such
Purchased Asset, to the extent that such insurance provides coverage with
respect to any matters addressed by any of the representations and warranties
set forth in Section 5.2, then, with respect to such matters, Buyer shall first
pursue its remedies in respect of such title insurance.
5.4. Disclaimer of Representations and Warranties.
5.4.1. Buyer acknowledges that no Seller Party or Affiliate of any
Seller Party or director, officer, manager, attorney, agent, employee,
accountant, consultant, advisor or representative of any Seller Party or any
Affiliate of any Seller Party is authorized to make any representations or
warranties regarding the transactions contemplated hereby and, except for the
representations and warranties set forth in this Agreement, the Oxford
Participation Agreement, the DC Retail Participation Agreement, the Menlo Letter
and the MD3 Cayman L.P. partnership agreement, no Seller Party nor any Affiliate
of any Seller Party nor any director, officer, manager, attorney, agent,
employee, accountant, consultant, advisor or representative of any Seller Party
or any Affiliate of any Seller Party has made any representation or warranty
whatsoever, express or implied, regarding the Assets, or any part thereof,
including any warranties of a transferor under the Uniform Commercial Code.
Buyer is entering into this Agreement based solely upon Buyer's own evaluations
and inspections of the Assets and the representations and warranties of the
Seller Parties contained herein, the Oxford Participation Agreement, the DC
Retail Participation Agreement, the Menlo Letter and the MD3 Cayman L.P.
partnership agreement, and has not relied upon any written information (other
than the Due Diligence Materials), or oral information from Sellers or any
Affiliate of any Seller Party or any director, officer, manager, attorney,
agent, employee, accountant, consultant, advisor or representative of any Seller
Party or any Affiliate of any Seller Party, other than the representations and
warranties of each of the Seller Parties expressly contained herein, the Oxford
Participation Agreement, the DC Retail Participation Agreement, the Menlo Letter
and the MD3 Cayman L.P. partnership agreement. Sellers and Buyer understand that
if any of the Sellers' representations or warranties are breached, Buyer's
rights and remedies are limited as set forth herein. In no event shall a breach
of a representation or warranty in this Article V be deemed to constitute, bad
faith, misconduct or fraud even in the event that it is shown that any Seller
Party or any Affiliate of any Seller Party, or any of its or their respective
directors, officers, managers, attorneys, agents, employees, accountants,
consultants, advisors or representatives, knew or should have known of the
existence of information which was inconsistent with any of the representations
and warranties provided in this Article V.
5.4.2. Effects of Closing Over Known Unsatisfied Conditions or Breached
Representations, Warranties or Covenants. Notwithstanding anything to the
contrary set forth herein, if any party elects to proceed with the Closing
knowing of any failure to be satisfied of any condition in its favor or the
breach of any representation, warranty or covenant by any other party, the
condition that is unsatisfied or the representation, warranty or covenant which
is breached as of the Closing Date shall be deemed to be waived by such party,
and such party shall be deemed to fully release and forever discharge such other
party and the Indemnified Parties on account of any and all claims, demands or
charges, known or unknown, with respect to the same.
5.4.3. Materiality. Except as otherwise provided in Section 9.3(b) with
respect to intentional breaches of representations and warranties and
notwithstanding anything to the contrary set forth herein, no Seller Parties
shall be in breach of any representation or warranty set forth in this Agreement
if such breach together with all other breaches by Sellers, if any, does not
result in an aggregate adverse effect on the value of all of the Purchased
Assets on the date hereof (which value shall conclusively be deemed to equal the
Purchase Price) (the "Applicable Value") in an amount (calculated subject to the
limitations contained in Section 9.3) which is equal to or greater than one
percent (1%) of the Purchase Price (the "Threshold Amount"). Breaches of such
representations and warranties in excess of the Threshold Amount shall be deemed
material.
5.4.4. Insurance Policies. To the extent that the Asset Files for any
Purchased Asset contain Insurance Policies, the applicable Seller Party agrees
to deliver all such documents held by such Seller Party to the Buyer (in the
same form as so held, whether an original or a copy); provided, however, such
Seller Party makes no warranties, representations, or guarantees, whether
expressed or implied, with respect to the Insurance Policies. By way of
illustration and not limitation, such Seller Party makes no warranties,
representations, or guarantees, expressed or implied, with respect to the
existence of coverage under the Insurance Policies, the effectiveness of the
Insurance Policies, the amount of coverage under the Insurance Policies or the
effect of this transaction, if any, on the Insurance Policies. It shall be the
sole obligation, and at the sole expense, of the Buyer to determine whether the
Insurance Policies are in effect, to take such actions necessary or appropriate
to obtain or continue coverage under the Insurance Policies, and to insure that
the issuers of the Insurance Policies are notified of the purchase and transfer
of the Purchased Assets hereunder; provided that the applicable Seller Parties
shall cooperate reasonably with Buyer in connection therewith.
5.5. Excluded Matters. The parties hereby acknowledge that Xxxxxx X.
Xxxxxx (a) was previously employed by LFREI which is the general partner of Fund
I and Fund II and has certain affiliations with the other Sellers, (b) has been
since his employment by LFREI, and is currently, employed by Starwood and (c)
may have knowledge of facts or circumstances obtained during the period of his
employment by LFREI with respect to the Assets of which either (x) Sellers are
not otherwise aware (it being understood that each Seller Party shall, as to the
Assets which it owns, be deemed to be aware of and have actual knowledge of the
information set forth in Schedule 1 and 1A hereto, the Due Diligence Materials
and the Excluded Documents) and which have not been disclosed to Sellers by
Xxxxxx X. Xxxxxx ("Seller Excluded Matters") or (y) Buyer is not otherwise aware
(it being understood that Buyer shall be deemed to be aware of the information
set forth in the Due Diligence Documents listed on Schedule 4 hereto) and which
have not been disclosed to Buyer by Xxxxxx X. Xxxxxx ("Buyer Excluded Matters").
Notwithstanding anything to the contrary contained in this Agreement or the Sale
Documents, Buyer shall not be deemed to be aware, or otherwise have any
knowledge, of any Buyer Excluded Matters and the knowledge of Xxxxxx X. Xxxxxx
with respect to such Buyer Excluded Matters shall not be imputed to Buyer for
the purposes of Section 5.3.1 or otherwise. Notwithstanding anything to the
contrary contained in this Agreement or the Sale Documents, Sellers shall not be
deemed to have Actual Knowledge, or otherwise have any knowledge, of or to
otherwise be in breach of any representation or warranty (whether or not
qualified to any Seller's Actual Knowledge) by reason of any Seller Excluded
Matters and the knowledge of Xxxxxx X. Xxxxxx with respect to such Seller
Excluded Matters shall not be imputed to Sellers.
5.6. Termination of Representations and Warranties. Subject to such
other limitations as may otherwise be set forth in this Agreement, each of the
representations and warranties in Section 5.1 and Section 5.2.1 shall survive
the Closing without limitation (the "Surviving Representations") and the
representations and warranties in Section 5.2 and elsewhere shall survive
Closing for one year (except for the representations contained in Section 5.2.27
which shall survive until the expiration of the applicable statute of
limitations in respect to the withholding described therein under the Internal
Revenue Code of 1986, as amended); provided, however, that any and all claims
under or in respect to the representations and warranties (other than in respect
to Surviving Representations) must be made, if at all, on or before the first
year anniversary of the Closing. Claims under the representations and warranties
shall be subject to the terms and conditions set forth in this Agreement,
including any limitations on such representations and warranties set forth in
Article V or any other Article hereof.
ARTICLE VI
Certain Covenants Of Sellers And Buyer
6.1. Further Assurances. After the Closing Date, upon the reasonable
request of Buyer, each Seller Party shall do, execute, acknowledge and deliver,
and will cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may reasonably be required to facilitate the consummation of the
transactions contemplated hereby, without payment of any further consideration
other than reimbursement for reasonable out-of-pocket costs and expenses
incurred by such Seller Party.
6.2. Buyer Covenants. Buyer covenants and agrees with Sellers as
follows:
6.2.1. Inspection by Sellers. Buyer agrees that Sellers shall have the
continuing right, at reasonable intervals and during normal business hours, at
Sellers' sole cost and expense and without unreasonably interfering with Buyer's
business, to use, inspect and make extracts from or copies of any documents or
records relating to the Purchased Assets (other than those relating to periods
after the Closing Date which are subject to confidentiality agreements entered
into after the Closing Date in the ordinary course of Buyer's business which
prevent Buyer from disclosing the same to Sellers) in Buyer's possession (to the
extent pertaining to the period prior to and including the Closing Date) and all
tax returns and other tax related information and all financial information (to
the extent pertaining to the period prior to and including the Closing Date)
relating to the Purchased Assets now or hereafter in Buyer's possession (or
reasonably obtainable by Buyer), upon Sellers' reasonable notice to Buyer;
provided that, except in the case of the Oxford Asset, the D.C. Retail Asset and
the Remic Interest as to which there shall be no limitation, such information
shall only include such information as is necessary or desirable for tax or
accounting purposes or required by applicable law, rule or regulation. Buyer
shall give Sellers at least fifteen (15) days written notice prior to destroying
or otherwise discarding any document in the Asset Files to be acquired
hereunder. In the event Buyer transfers possession of the Purchased Assets
and/or the Asset Files to be acquired hereunder, (a) Buyer shall endeavor to
impose the same document retention and document access requirements on Buyer's
transferee as are imposed on Buyer under the terms of this Section for the
Agreement to assure that Sellers have continuing access to the Asset Files and
(b) Buyer shall use reasonable efforts to ensure that Sellers shall be entitled
to the same degree of access with respect to the information covered by this
Section 6.2.2 as Buyer is entitled to; provided that if Buyer is unable to
obtain such access rights for Sellers, Buyer shall, on request of Sellers (at
the applicable Seller's sole cost and expense), use all reasonable efforts to
obtain the information requested by the Seller in question using Buyer's access
rights.
6.2.2. Notice of Litigation. Buyer shall promptly after acquiring
knowledge of the same notify Sellers of any claim, demand or legal proceeding
asserted, filed or threatened against any Seller Party or any known by Buyer to
be an Affiliate of any Seller Party, by any Person, that arises from or relates
to any of the Purchased Assets.
6.2.3. Further Assurances. After the Closing Date, upon the reasonable
request of Sellers, Buyer shall do, execute, acknowledge and deliver, and will
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may reasonably be required to facilitate the consummation of the transaction
contemplated hereby, without payment of any further consideration other than
reimbursement for reasonable out-of-pocket costs and expenses incurred by Buyer.
6.3. Seller Covenants. The applicable Seller Parties covenant and agree
with Buyer as follows:
6.3.1. Net Worth of Fund II. Fund II together with Offshore II agrees
to maintain an aggregate net worth (determined in accordance with GAAP) of
$50,000,000 until the first anniversary of the date hereof; provided, however,
that if Buyer files a bona fide claim against Fund II pursuant to Section 9.3
prior to the first anniversary of the date hereof, Fund II together with
Offshore II shall maintain an aggregate net worth (determined in accordance with
GAAP) until such claim is finally adjudicated or settled in an amount equal to
the lesser of (x) $50,000,000 or (y) the amount of such claim multiplied by 1.5.
If Offshore II allows any of its limited partners to withdraw from Offshore II
to establish a new limited partnership with the same general partner as Offshore
II or any Affiliate thereof, such new limited partnership's net worth shall be
taken into account in determining compliance with this Section 6.3.1 if such
limited partnership joins in this Agreement to the same extent as Offshore II
pursuant to a joinder in substantially the form of the joinder by Offshore II
contained in this Agreement.
6.3.2. Reserve Units. Fund I and Offshore each severally and not
jointly represent and warrant to Buyer that (a) Fund I has furnished a true and
correct copy of the Fund I Partnership Agreement and of the partnership
agreement for Offshore to Buyer, (b) neither Fund I nor Offshore has heretofore
called any of the Reserve Units, (c) Reserve Units in an aggregate amount of $
22,460,200 are available to be called under and in accordance with the Fund I
Partnership Agreement and the partnership agreement of Offshore and (d) attached
hereto as Schedule 6 is a true and correct list of their partners and their
partner's respective percentages of Reserve Unit obligations (subject to
non-material rounding errors). Fund I and Offshore each agrees as to itself and
its partnership agreement only that it will not (i) pledge its Reserve Units or
otherwise transfer its rights with respect to its Reserve Units; (ii) amend,
permit or cause the amendment of, the Fund I Partnership Agreement or the
Offshore partnership agreement, as applicable to terminate, cancel or waive the
obligations of the partners in Fund I or Offshore, as applicable with respect to
such Reserve Units, or release any obligations with respect to its Reserve
Units; (iii) make any new Partnership Investment (as defined in the Fund I
Partnership Agreement and the Offshore partnership agreement, respectively); or
(iv) permit its Reserve Unit obligation to lapse. Notwithstanding the foregoing,
it is understood and agreed that Fund I and/or Offshore may call, pledge or
otherwise deal with its Reserve Units (i) for payment of Fund I or Offshore, as
applicable, expenses incurred in the ordinary course of business (but
nonetheless will not be permitted to make any new Partnership Investments), (ii)
in connection with the D.C. Retail Participation, the Oxford Participation, the
Remic Interests and MD3 Cayman L.P (and in each case the related Assets) and the
continuing obligations through December 21, 1998 in respect to the Hedge
relating to the Asset identified as "1500 Broadway" on the Asset Schedule and
with its continuing obligations, if any, to the senior lender under that certain
Agreement, dated September 21, 1995, by Fund I to said senior lender relating to
the Wiener Litigation in connection with the Asset identified as "1500 Broadway"
on the Asset Schedule and (iii) continuing obligations under the ISDA Agreement
and related documents pursuant to which the Xxxxxx were issued; provided that
Fund I and Offshore shall not enter into any new hedging arrangements pursuant
thereto after the Closing Date. If and to the extent the term of Fund I or
Offshore, as applicable, as the same may be extended in accordance with the Fund
I Partnership Agreement or the Offshore Partnership Agreement, as applicable,
expires and the obligations of Fund I and Offshore have not terminated pursuant
to the last sentence of this Section 6.3.2, then Fund I and/or Offshore, as
applicable shall timely call an aggregate amount of Reserve Units in an amount
equal to the lesser of (i) the Reserve Units then outstanding and (ii) the sum
of (x) 150% of the amount of such claim and retain such amount as a reserve on
account of such claim in the case of outstanding claims under Section 9.3 and
(y) the amount reasonably necessary for Fund I and Offshore, respectively to
satisfy their respective obligations under the Letter Agreement and any Guaranty
then in effect. Attached hereto as Schedule 6 is a true and correct list of the
partners in Fund I. The obligations of Fund I and Offshore under this Section
6.3.2 shall terminate and be of no further force and effect on the later to
occur of (a) the first anniversary of the date hereof, (b) the date on which all
bona fide claims pending against Fund I under Section 9.3 are finally
adjudicated or settled and (c) the date on which either (i) Fund I and Offshore
shall have transferred their interests in SDJ or SDJ shall have transferred its
interest in MD3 Cayman L.P. in accordance with Section 7.1(a) or (c) or Section
7.5 of the partnership agreement of MD3 Cayman L.P., in either case to a third
party which is either (x) not an Affiliate of SDJ, Fund I or Offshore or (y) a
Buyer Party or an Affiliate of a Buyer Party or (ii) MD3 Cayman L.P. shall have
sold, transferred or otherwise disposed of the Remic Interest and shall have no
further obligations in respect to any Financing (as defined in the partnership
agreement of MD3 Cayman L.P.) as to which Fund I and Offshore have any
obligation under the Letter Agreement or in respect to any Guaranty (as defined
in the Letter Agreement) and in either case the conditions to the termination of
the obligations of Fund I and Offshore under the Letter Agreement have been
satisfied.
ARTICLE VII
REMEDIES
7.1. Limitation on Remedies. Notwithstanding anything contained in this
Agreement or any document, instrument or agreement referred to herein and in
addition to all other limitations on remedies available to Buyer on account of
the failure of any Seller Party to observe or perform any term or provision
hereof or thereof or the breach by any Seller Party of any representation or
warranty contained herein or therein, by executing and delivering the Agreement
each of Sellers and Buyer hereby absolutely and irrevocably waives: (a) any
right to consequential or punitive damages arising out of or relating to the
transactions contemplated hereby, (b) except as permitted under Article IX, any
remedy with respect to any default or breach by any party hereto that is not
material (as determined in accordance with Section 5.4.3) and (c) any right to
offset amounts due to any Seller Parties on the one hand or Buyer on the other
hand under any other contract or agreement between Sellers or any Seller Party
or any of their respective Affiliates on one hand, and Buyer or any Affiliate of
Buyer on the other hand, against any damages on account of default by any of the
Seller Parties hereunder on the one hand or Buyer on the other hand.
ARTICLE VIII
Notices
8.1. Notices. Except as otherwise provided for herein, all notices,
approvals, consents and other communications required or permitted hereunder
shall be in writing and shall be deemed to have been duly given or sent (a) when
received (or the first Business Day after the date of receipt if the date of
receipt is not a Business Day), if dispatched by registered or certified mail
(return receipt requested), (b) when received (or the first Business Day after
the date of receipt if the date of receipt is not a Business Day), if delivered
in hand or by facsimile transmission with a copy thereof sent by reputable
overnight courier which requires a signature of the receiving party or (c) on
the following Business Day, if dispatched by a reputable overnight courier which
requires a signature of the receiving party, in each case to the party intended
at its address as follows (or at such other address as may hereafter be
specified by such party from time to time by like notice):
If to Sellers: c/o Lazard Freres Real Estate Investors L.L.C.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
with copies to: Lazard Freres Real Estate Investors L.L.C.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxxxxx X. Lodge, Esq.
If to Buyer: c/o Starwood Financial Trust
1114 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Mr. Xxx Xxxxxxxx
with copies to: c/o Starwood Financial Trust
1114 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. No failure or delay in the routing of any
such notice, demand, request, consent, approval, declaration or other
communication within any organization to the individual designated to receive
the same or a copy thereof shall in any way qualify the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
Refusal of any party to accept delivery of any notice delivered in accordance
herewith shall be deemed receipt of such notice. If a notice is undeliverable
due a change in the address, phone number or fax number for such party, and such
party has not properly given a notice changing its address, phone number or fax
number, as applicable, such notice shall be deemed delivered on the date that it
was first attempted to be delivered (it being understood that the foregoing
shall not be deemed to limit the obligation of a party sending a notice by
facsimile to send a copy thereof by reputable overnight courier as provided
above).
ARTICLE IX
Indemnities
9.1. Buyer's Release of Claim. Effective as to each Asset or Purchased
Asset on the Closing Date in respect to such Asset and Purchased Asset, Buyer
hereby releases and forever discharges the Indemnified Parties of and from any
and all causes of action, claims, demands and remedies of whatsoever kind or
nature that Buyer now has, whether known or unknown, or may in the future have,
against such Indemnified Party in any manner, on account of, arising out of or
related to the Assumed Liabilities (it being understood that the foregoing is
not intended to be a waiver of any of the rights of the Buyer under Section 9.3
hereof).
9.2. Buyer's Indemnification. Buyer hereby agrees to indemnify, hold
harmless and defend any Indemnified Party, from and against any losses, causes
of action, liabilities, claims, demands, obligations, damages, costs and
expenses, including accountants' fees and attorneys' fees of whatsoever kind or
nature, whether known or unknown, to which the Indemnified Parties may become
subject on account of, arising out of or relating to the Assumed Liabilities.
9.3. Sellers' Indemnification. (a) Subject to the terms, conditions and
limitations set forth in this Agreement, each of the Seller Parties, severally
and not jointly, hereby agrees to indemnify, hold harmless, defend and
compensate Buyer for any losses (including loss of value of any Purchased
Asset), causes of action, liabilities, claims, demands, obligations, damages,
costs and expenses, including accountants' fees and attorneys' fees of
whatsoever kind or nature (collectively, "Indemnified Amounts") whether known or
unknown, to which Buyer may become subject on account of, arising out of or
relating to (a) a breach of the representations and warranties of such Seller
Party set forth herein, (b) the Wiener Litigation or (c) the Hedge Claim.
(b) Except as provided below with respect to intentional breaches of
representations and warranties and as to any obligation any Seller Party may
have to indemnify Buyer in regard to the Wiener Litigation or any Hedge Claim
pursuant to Section 9.3 (a), no Seller Party shall have any obligation to
indemnify the Buyer in respect to any Indemnified Amounts resulting from a
breach of its representations or warranties unless and until the aggregate
adverse effect on the value of the Purchased Asset resulting from such breaches
exceeds the Threshold Amount; provided, that the aggregate amount required to be
paid by Sellers pursuant to this Section 9.3 shall not with respect to any
Purchased Asset exceed the Purchase Price for such Asset (the "Maximum Amount").
Except for claims in respect to Surviving Representations, claims under this
Section must be brought by Buyer within one year from the date hereof if at all.
Notwithstanding the foregoing, to the extent that any Seller Party's breach of
any representation or warranty is intentional, Buyer shall be entitled to
recover all Indemnified Amounts (whether or not in excess of the Threshold
Amount) in respect of each Asset affected by such intentional breach (up to the
Maximum Amount for each such Asset) resulting solely from such breach without
regard to the limitations contained in this Section 9.3. Notwithstanding
anything to the contrary contained herein, no Indemnified Amounts as to which
Buyer is fully indemnified in respect to either the Wiener Litigation, the Hedge
Claim or intentional breaches of representations and warranties shall be taken
into account in determining whether the Threshold Amount has been exceeded.
(c) In connection with Sellers' obligations under this Section, to the
extent that the D.C. Retail Loans and/or the Remic Interest, are sold prior to
the end of the one year survival period set forth in Section 5.6, Fund I and
Offshore shall not distribute the net proceeds they receive from such sale to
their partners until the end of such survival period; provided, however, that if
Buyer files a bona fide claim against Fund I under this Section 9.3 prior to the
end of the one year survival period, no such net proceeds shall be distributed
to any of Fund I's or Offshore partners, until such claim is finally adjudicated
or settled, except that Fund I and Offshore may distribute that aggregate
amount, if any, by which such net proceeds received exceed an amount equal to
150% of Buyer's claim.
(d) The Buyer acknowledges and agrees that, from and after the Closing,
its sole and exclusive remedy with respect to any claims relating to breaches of
representations and warranties by any or all of the Sellers shall be its right
of indemnification under the provisions of this Section 9.3.
9.4. Notice of Claim. Promptly after receipt by any of the Indemnified
Parties or Buyer, as the case may be (the "Injured Party"), of notice of the
commencement of any action to which this Article of the Agreement shall apply,
the Injured Party so notified shall notify the other party (the "Responsible
Party"), in writing, of the commencement of such action if a claim with respect
to such action is to be made against the Responsible Party under this Article.
The failure by any of Injured Party to notify the Responsible Party shall not
relieve the Responsible Party from any liability that the Responsible Party may
have to the Injured Party, except to the extent that the Responsible Party is
prejudiced by the failure of such notification. In case any such action is
brought against any Injured Party, and an Injured Party notifies the Responsible
Party of the commencement of such action, the Responsible Party shall be
entitled to participate in such action and, to the extent that the Responsible
Party may wish to assume the defense of such action, with counsel selected by
the Responsible Party and approved by such Injured Party (not to be unreasonably
withheld or delayed), and after notice from the Responsible Party to such
Injured Party of Responsible Party's election so to assume the defense of such
action, the Responsible Party shall not be liable to such Injured Party under
this Article of the Agreement for any legal or other defense expenses
subsequently incurred by such Injured Party in connection with the defense of
such action. If the Responsible Party so assumes defense of such Injured Party,
such Injured Party shall reasonably cooperate with the Responsible Party at
Responsible Party's sole cost and expense in connection with such defense;
provided that the foregoing shall not require such Injured Party to waive or
adversely affect any claim of priviledge it may have; provided that the
foregoing shall not require such Responsible Party to waive or adversely affect
any claim of privilege it may have. If the Injured Party elects, at its cost and
expense, to retain separate counsel in respect to any matter as to which the
Responsible Party has so assumed defense of such Injured Party, the Responsible
Party shall, at the sole cost and expense of the Injured Party, reasonably
cooperate with the Injured Party in connection with such defense.
9.5. Injured Party's Own Counsel. Notwithstanding any other provision
of this Article, if, in any action or claim as to which indemnity is or may be
available, the Injured Party's reasonably determine that, singularly or
collectively, the Injured Party's interests are, or may be, adverse, in whole or
in part, to the interests of the Responsible Party or that there may be legal
defenses available to the Injured Party's that are different from, in addition
to or inconsistent with the defenses available to the Responsible Party, the
Injured Party's, singularly or collectively, may retain their own counsel in
connection with such action or claim and shall be indemnified by the Responsible
Party for any legal and other expense reasonably incurred in connection with
investigating or defending such action or claim. In no event, however, shall the
Responsible Party be liable for the fees and expenses of more than one counsel
for all Injured Parties in connection with any one action or in connection with
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations; provided that the foregoing shall not require such
Responsible Party to waive or adversely affect any claim of privilege it may
have.
9.6. Settlement. The Responsible Party shall not be liable for any
settlement of any such action covered by this Article IX effected without such
Party's express written consent, but if any such action is settled with the
express written consent of the Responsible Party, or if there is a final
judgment for the plaintiff in any such action, the Responsible Party shall
indemnify, hold harmless and defend the Injured Party from and against any loss
or liability by reason of such settlement or judgment as, and in, the manner
described in this Article.
ARTICLE X
Miscellaneous Provisions
10.1. Severability. Each provision of this Agreement is intended to be
severable. If any term, covenant, condition or other provision herein is
unlawful, invalid or unenforceable for any reason whatsoever, and such
illegality, invalidity or unenforceability does not affect the remaining parts
of this Agreement, then all such remaining parts hereof shall be valid and
enforceable and have full force and effect as though the invalid or
unenforceable provision had not been included herein.
10.2. Rights Cumulative; Waivers. Except to the extent expressly
limited in this Agreement, the rights of each of the parties under this
Agreement are cumulative and may be exercised as often as such party considers
appropriate. Without limitation on the foregoing, if in light of the terms and
conditions of this Agreement a party disputes the position taken by the other
party then either party may seek judicial resolution of such dispute. Except to
the extent expressly limited in this Agreement, failure to exercise or any delay
in exercising any of such rights shall not operate as a waiver or variation of
that or any other such right. Except to the extent expressly limited in this
Agreement, defective or partial exercise of any such right shall not preclude
any other or further exercise of that or any other right. No act, course of
conduct or negotiation on the part of any party shall in any way preclude such
party from exercising any such right or constitute a suspension or variation of
any such right. Neither party's waiver of the other's breach of any term,
covenant or condition contained in this Agreement shall be deemed a waiver of
any subsequent breach of the same or any other term, covenant or condition in
this Agreement.
10.3. Headings. The headings appearing in this Agreement are inserted
only as a matter of convenience and in no way define, limit, construe or
describe the scope or intent of any Section of this Agreement.
10.4. Construction. Unless the context otherwise requires, singular
nouns and pronouns, when used herein, shall be deemed to include the plurals of
such nouns or pronouns and pronouns of one gender shall be deemed to include the
equivalent pronouns of the other gender. The words "including" or "included"
shall be deemed to be followed by the phrase "without limitation." The language
in all parts of this Agreement shall in all cases be construed according to its
fair meaning and not against the drafting party.
10.5. Time of the Essence. Time shall be of the essence with respect to
any time periods prescribed herein.
10.6. Assignment.
10.6.1. Assignment; Non-Transferable Rights. Buyer shall have the right
at Closing to assign its rights hereunder (including the Non-Transferable
Rights) and/or under the Sale Documents to SCB, SCBGP, SFT and SDC which are
wholly owned and controlled by Starwood. No assignment by Buyer of any of its
rights under this Agreement to any Person shall relieve Buyer of any of its
obligations hereunder or under the Sale Documents (including its obligations
under Article IX hereof). Notwithstanding anything to the contrary contained
herein, Buyer may not transfer, sell, assign or otherwise convey any
Non-Transferable Rights without the prior written consent of Sellers which may
be granted or withheld in Sellers' sole discretion; provided that each Buyer
Party shall be permitted to pledge its interest in any or all of the Purchased
Assets to Greenwich Capital Markets, Inc., Greenwich Financial Products, Inc.
and Xxxxxx Brothers Holdings Inc. (or their respective successors and
affiliates) or any bank, commercial credit company, pension fund, insurance
company, broker/dealer or other institutional lender or credit provider (or
affiliates thereof) in connection with a financing of its interest therein and
if any such lender acquires any Purchased Asset by foreclosure (or other
remedial action) or deed-in-lieu of foreclosure it shall be entitled to benefit
from the Non-Transferable Rights. The Non-Transferable Rights shall be personal
to Buyer and any purported transfer, assignment or conveyance of any such rights
shall be null, void and of no force or effect. The purported unpermitted
transfer, sale, assignment or conveyance of Non-Transferable Rights, whether or
not subsequently rescinded, shall terminate Sellers' obligations under this
Agreement with respect to such Non-Transferable Rights. For purposes of this
provision, in any direct or indirect sale or transfer of any portion of the
beneficial interests in the Buyer (whether by merger, sale, agreement with
respect to the exercise of rights or otherwise) at whatever tier which results
in a change of Control of any Buyer Party other than Starwood shall constitute
an assignment of, or transfer of rights or benefits under, this Agreement (it
being understood that a change of Control of Starwood shall not be deemed an
assignment or transfer of rights under this Agreement). Except as set forth in
this subsection as to the Non-Transferable Rights or in Section 6.2.7, nothing
herein shall otherwise limit Buyer's rights to sell the Assets or, following
such sale, to assert its retained personal right on account of a breach of
representation, warranty or covenant hereunder with respect to such Assets.
10.6.2. Successors and Assigns. Subject to the foregoing, this
Agreement and the terms, covenants, conditions and other provisions hereof, and
the obligations, undertakings, rights and benefits herein and hereunder,
including the Schedules, shall bind and inure to the benefit of the undersigned
parties and their respective heirs, executors, administrators, personal
representatives, successors and assigns.
10.7. Integration. This Agreement, and the documents and materials
incorporated herein by reference, including the Confidentiality Agreements,
constitute the entire agreement of the parties with respect to the subject
matter hereof. If there is any inconsistency between the terms of this Agreement
and any prior agreements, correspondence or proposals regarding the Assets, the
terms of this Agreement shall govern. There are no promises or other agreements,
oral or written, express or implied, between the parties other than as set out
in this Agreement or the documents referenced herein or to be executed and
delivered pursuant to this Agreement. No change or modification of, or waiver
under, this Agreement shall be valid unless it is in writing and signed by duly
authorized representatives of both the Sellers and Buyer.
10.8. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
10.9. Survival. Except as expressly provided herein and except for the
provisions of Articles I, IV, V (subject to the applicable limitations contained
therein), VI, VII, VIII, IX and X and Sections 2.3, 2.4, 2.5, 3.6 and 3.7 which
shall survive the Closing, no representation, warranty and covenant herein made
by parties hereto shall survive the Closing.
10.10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, AND THE RIGHTS
AND OBLIGATIONS OF SELLERS AND BUYER HEREUNDER DETERMINED, IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (AS PERMITTED BY
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW (OR ANY SIMILAR SUCCESSOR
PROVISION)) WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW RULE THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE INTERNAL LAWS OF THE
STATE OF NEW YORK TO THE RIGHTS AND DUTIES OF THE PARTIES.
10.11. Jurisdiction. For the purposes of any suit, action or proceeding
involving this Agreement, Buyer hereby expressly submits to the jurisdiction of
all federal and state courts sitting in the State of New York and agrees that
any order, process, notice of motion or other application to or by any such
court or a judge thereof may be served within or without such court's
jurisdiction by registered mail or by service in hand, provided that a
reasonable time for appearance is allowed, and Buyer agrees that such courts
shall have exclusive jurisdiction over any such suit, action or proceeding
commenced by either or both of said parties. In furtherance of such agreement,
Buyer agrees, upon the request of Sellers, to discontinue (or to the
discontinuance of) any such suit, action or proceeding pending in any other
jurisdiction.
10.12. Venue. Buyer hereby irrevocably waives any objection that it may
have now or hereafter to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement brought in any federal or state
court sitting in the State of New York and hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
10.13. No Third-Party Beneficiaries. Any agreement to pay any amount
and any assumption of liability herein contained, express or implied, shall be
only for the benefit of the parties hereto and the Indemnified Parties, and
their respective successors and assigns. Such agreements and assumption shall
not inure to the benefit of the obligees of any indebtedness or any other party,
whomsoever, it being the intention of the parties hereto that no one (other than
the Indemnified Parties) shall be deemed to be a third party beneficiary of this
Agreement.
10.14. Brokerage Commissions. Buyer and Sellers hereby represent and
warrant to one another that no brokerage commissions, finders fees or advisory
fees (collectively, "Fees") shall be payable to any party in connection with the
sale of the Assets except such Fees as Sellers previously may have agreed in
writing to pay to certain third parties, which Fees will be payable by Sellers
pursuant to separate listing contracts or other agreements. In the event of a
claim made for any Fees in connection herewith by (a) a Person claiming through
one or more of the Seller Parties, then the Seller Party or Seller Parties in
question shall indemnify and defend Buyer from the same if it shall be based
upon any statement or agreement alleged to have been made by such Seller Party
or Seller Parties and (b) a Person claiming through Buyer or any of its
Affiliates, then Buyer shall indemnify and defend Sellers from the same if it
shall be based upon any statement or agreement alleged to have been made by
Buyer.
10.15. WAIVER OF TRIAL BY JURY. SELLERS AND BUYER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW)
ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE
A JUDGE SITTING WITHOUT A JURY.
10.16. Attorneys' Fees. If any action is brought by any party against
another party, the prevailing party shall be entitled to recover from the other
party reasonable attorneys' fees incurred in connection with the prosecution or
defense of such action. As used herein, attorneys' fees shall include the actual
fees, costs and expenses of counsel, administrative fees, printing, duplicating
and other expenses, freight and delivery charges, and fees billed for law clerks
and legal assistants.
10.17. No Personal Liability. The liabilities and obligations of the
parties to this Agreement are not the personal obligations of any holder of any
interest in any party to this Agreement or their respective principals,
partners, shareholders, trustees, members, managers, officers, directors,
agents, employees, or successors or assigns, or any other person, it being
expressly understood that all such liability of the foregoing persons is
expressly waived and released by all other parties to this Agreement as a
condition of, and as consideration for, the execution of this Agreement. Each of
the parties hereto acknowledges and agrees that the name "Starwood Financial
Trust" is a designation of Starwood and its Trustees (as Trustees but not
personally) under Starwood's Declaration of Trust, and all persons dealing with
Starwood shall look solely to Starwood's assets for the enforcement of any
claims against Starwood, and the Trustees, officers, agents and security holders
of Starwood assume no personal liability for obligations entered into on behalf
of Starwood, and their respective individual assets shall not be subject to the
claims of any person relating to such obligations.
In Witness Whereof, the parties hereto have executed this Agreement as
of the date first set forth above.
LAZARD FRERES REAL ESTATE FUND L.P., a Delaware
limited partnership
By: LAZARD FRERES REAL ESTATE INVESTORS L.L.C.,
a New York limited liability company,
its general partner
By: /s/ Xxxx X Xxxxx
Name: Xxxx X. Xxxxx
Its: Principal
LAZARD FRERES REAL ESTATE FUND II L.P., a Delaware
limited partnership
By: LAZARD FRERES REAL ESTATE INVESTORS L.L.C.,
a New York limited liability company, its
general partner
By: /s/ Xxxx X Xxxxx
Name: Xxxx X. Xxxxx
Its: Principal
PROMETHEUS MID-ATLANTIC HOLDING, L.P., a Delaware
limited partnership
By: Prometheus Mid-Atlantic Holding Corp. II,
a Delaware corporation, its general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: President
ATLANTIC PREFERRED II LLC, a New York limited
liability company
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: Managing Member
INDIAN PREFERRED LLC, a New York limited liability
company
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: Managing Member
PROMETHEUS INVESTMENT HOLDING, L.P., a Delaware
limited partnership
By: Prometheus Mid-Atlantic Holding Corp. III, a
Delaware corporation, its general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: President
SDJ CAPITAL II, LTD., a Cayman Islands exempted
company
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: Director
Buyer: STARWOOD FINANCIAL TRUST, a Maryland real estate
investment trust
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
SFT II, INC., a Delaware corporation
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
STARWOOD CAYMAN BONDS, INC., a
Delaware corporation
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
STARWOOD D.C. INC., a Delaware corporation
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
STARWOOD CAYMAN BONDS GP, INC., a Delaware
corporation
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
SFT I, INC., a Delaware corporation
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
Offshore hereby joins in this Agreement for the sole purpose of (a)
consenting, to the extent its consent is required, to the transactions
contemplated hereby, (b) making the representations, warranties and agreements
set forth in Section 6.3.2 and Section 9.3(c) of the Agreement, subject to the
applicable limitations thereon set forth in the Agreement and (c) confirming and
agreeing with Buyer that Offshore shall pay to Fund I, as to any Asset owned by
Fund I, its proportionate share (determined on the basis of its and Fund I's
investment in such Asset) of any obligation determined to be owed by Fund I to
Buyer under Section 9.3 subject to the limitations thereon set forth in this
Agreement.
LAZARD FRERES REAL ESTATE OFFSHORE FUND L.P.
By: Luxstate, S.A., a Luxembourg societe
anonyme, its general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Director
Offshore II hereby joins in this Agreement for the sole purpose of (a)
consenting, to the extent its consent is required, to the transactions
contemplated hereby, (b) making the representations, warranties and agreements
set forth in Section 6.3.1 and (c) confirming and agreeing with Buyer that
Offshore II shall pay to Fund II, as to any Asset owned by Fund II, its
proportionate share (determined on the basis of its and Fund II's investment in
such Asset) of any obligations determined to be owed by Fund II to Buyer under
Section 9.3 subject to the limitations thereon set forth in this Agreement.
LAZARD FRERES REAL ESTATE OFFSHORE FUND II L.P.
By: LF Real Estate Investors Company, a Cayman
Island exempted company, general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Director
