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Exhibit 10.8
GENERAL AGREEMENT
DATED AS OF NOVEMBER 7, 1994
BY AND AMONG
METROPOLITAN LIFE INSURANCE COMPANY,
AEW PARTNERS, L.P., PARTNERS TOWER, L.P., TOWER LEASING, INC.,
SEARS, ▇▇▇▇▇▇▇ AND CO. AND
ST HOLDINGS, INC.
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GENERAL AGREEMENT
DATED AS OF NOVEMBER 7, 1994
BY ANY AMONG
METROPOLITAN LIFE INSURANCE COMPANY,
AEW PARTNERS, L.P., PARTNERS TOWER, L.P., TOWER LEASING, INC.,
SEARS, ▇▇▇▇▇▇▇ AND CO. AND
ST HOLDINGS, INC.
TABLE OF CONTENTS
Page
SECTION 1 AGREEMENTS AS TO DOCUMENTS...........................................4
1.01 First Loan Documents...............................................4
1.02 Second Loan and Option Documents...................................5
1.03 Further Amendments.................................................6
1.04 Franklin Center Documents..........................................7
1.05 Riverwoods Documents...............................................7
1.06 No Merger..........................................................7
SECTION 2 DEFINITIONS..........................................................8
2.01 Defined Terms......................................................8
2.02 Cross-Referenced Terms............................................15
SECTION 3 RESTRUCTURING AND TRANSFERS OF INTERESTS............................15
3.01 Order of Transactions.............................................15
3.02 Resulting Interests...............................................16
3.03 New Security Arrangements.........................................17
3.04 General Provisions for New Collateral Security Documents..........18
3.05 Continuing Security Arrangements..................................21
3.06 Franklin Center and Riverwoods Transaction........................21
3.07 Consent to the Adoption by FC of a Restated Certificate
of Incorporation................................................22
3.08 Consent to the Adoption by Skydeck of a Restated
Certificate of Incorporation....................................22
SECTION 4 AMENDMENT OF FIRST LOAN.............................................22
4.01 Amended First Notes...............................................22
4.02 Modification of Note Terms........................................22
4.03 Extension of Maturity Date........................................23
4.04 Rate Adjustment; Amended Notes B and C............................27
4.05 Prepayment of First Loan Base Debt................................28
4.06 Redemption of First Loan Further Interest, and Participating
Interest and Additional Participating Interest..................29
4.07 Amendment of First Mortgage.......................................29
4.08 Release of First Mortgage Lien Upon Payment of First Loan
Base Debt.......................................................29
4.09 Forbearance From Foreclosure......................................31
4.10 Rights Assigned to Master Lessee..................................31
4.11 Refinancing and Restructuring.....................................32
SECTION 5 AMENDMENT OF SECOND LOAN AND TOWER OPTION...........................33
5.01 Amended Tower Second Note.........................................33
5.02 Modification of Note Terms........................................33
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5.03 Amendment of Option Agreement.....................................34
5.04 Amendment of Mortgages............................................34
5.05 Further Advances..................................................35
5.06 Forbearance From Foreclosure......................................35
SECTION 6 Distribution Priorities.............................................35
6.01 Distribution Priorities...........................................35
6.02 Adjustment and Reallocation of Priorities.........................38
6.03 Loan Status Statements............................................39
6.04 Cash Flow and Distribution Statements.............................40
6.05 Payment of Minimum Interest and Additional Interest...............42
6.06 Budget Approval Procedures........................................44
SECTION 7 First Loan Participation............................................46
7.01 Payments of Participating Interest................................46
7.02 Final Participation Determination.................................46
7.03 Determination of Second Lender's, AEW New Lender's and Sears
Distribution Priorities Shares..................................48
7.04 Applications Definitions..........................................49
SECTION 8 TRANSFER EVENTS.....................................................55
8.01 Transfer Events...................................................55
8.02 AEW Transfer Escrow...............................................58
8.03 First Lender Remedies.............................................59
SECTION 9 SEARS/ST RELEASE EVENTS.............................................60
9.01 Sears/ST Release Events...........................................60
9.02 Sears/ST Transfer Escrow..........................................62
9.03 Remedies..........................................................63
9.04 Tower Bankruptcy..................................................66
SECTION 10 INTERCREDITOR AGREEMENTS...........................................67
10.01 General Agreement Controlling.....................................67
10.02 Termination of Earlier Agreements.................................67
10.03 No Impairment of Other Parties' Rights............................67
10.04 Subordination According to Distribution Priorities................68
10.05 Subordination of Tower Second Loan................................68
10.06 Subordination of Tower Option.....................................70
10.07 Subordination of AEW New Loan.....................................70
10.08 Subordination of Sears New Loan and Sears Redevelopment Cost
Obligation......................................................71
10.09 Further Agreements of Lenders and Option Holder...................73
10.10 Exercise of Remedies Under the Amended Second Loan/Option
Documents.......................................................73
10.11 No Cross Default..................................................74
10.12 Exercise of Tower Option by First Lender..........................74
SECTION 11 ST RESTRUCTURING...................................................75
11.01 Restated Articles and Bylaws......................................75
11.02 Issuance and Holding of ST Stock..................................75
11.03 Acknowledgement and Exculpation...................................75
11.04 Directors' and Officers' Liability Insurance......................76
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11.05 Additional Agreements Regarding ST Stock..........................76
SECTION 12 GRANTOR TRUST......................................................77
12.01 Establishment of Grantor Trust....................................77
12.02 Transfer of Combined Tower Property...............................77
12.03 Power of Substitution.............................................78
12.04 Distribution Upon Termination.....................................78
12.05 Indemnification from Tower Property...............................79
12.06 Sears Reimbursement for Certain Grantor Trustee Expenses..........79
12.07 Furnishing of Documents...........................................79
SECTION 13 MASTER LEASE.......................................................79
13.01 AEW Master Lessee.................................................79
13.02 MetLife Master Lease..............................................80
13.03 No Assignment of AEW Master Lease.................................81
13.04 Appointment of Receiver...........................................81
13.05 Restrictions on Actions of AEW Master Lessee......................81
13.06 AEW Master Lessee Obligations.....................................81
13.07 Subordination to First Loan.......................................82
13.08 Replacement Master Leases.........................................82
13.09 Sears/ST Covenants Regarding Master Lease.........................82
SECTION 14 NEW LOANS AND CONTRIBUTIONS........................................83
14.01 AEW New Loan......................................................83
14.02 Sears New Loan and Contribution...................................84
14.03 Several Obligations...............................................84
14.04 Restriction on Assignments........................................85
14.05 Funding and Deposit...............................................85
14.06 Payment of First Loan.............................................86
SECTION 15 SEARS REDEVELOPMENT COSTS..........................................86
15.01 Sears Redevelopment Cost Obligation...............................86
SECTION 16 TOWER ACCOUNT AGREEMENTS...........................................87
16.01 Amended CDSR Agreement............................................87
16.02 NLCR Agreement....................................................87
16.03 CRA Agreement.....................................................87
16.04 Investment Account Escrow and Security Agreement..................88
16.05 Capital Improvements Obligation Agreement.........................88
SECTION 17 TOWER LEASING AND OPERATIONS.......................................88
17.01 Assignment and Assumptions........................................88
17.02 Leasing Guidelines and Leasing Plan...............................88
17.03 Tower Management Agreement........................................88
17.04 Ernst & Young Lease...............................................89
17.05 Levy Obligations..................................................89
SECTION 18 SEARS LICENSE AGREEMENT............................................90
SECTION 19 RESTRICTIONS ON TRANSFERS..........................................91
19.01 Restrictions on Sears Transfers...................................91
19.02 Restrictions on ST Transfers......................................91
19.03 Permitted Sears/ST Transfers......................................92
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19.04 Identity of Second Lender, Option Holder and AEW New Lender.......92
19.05 Restrictions on PTLP Transfers....................................93
19.06 Restrictions on AEW Master Lease Transfers........................94
19.07 Permitted PTLP Transfers of Tower Second Loan, Tower Option
and AEW New Loan................................................94
19.08 Permitted Transfers of Tower Property.............................94
19.09 Permitted Transfers of Ownership Interests in PTLP................95
19.10 Permitted Transfers of Tower Second Loan After Payment of
First Loan Base Debt............................................95
19.11 Conditions to Permitted PTLP Transfers............................96
19.12 Restrictions Binding on PTLP Successors: Release of
Restrictions....................................................97
19.13 Covenant Against Restructuring....................................97
19.14 Restrictions on Transfers of First Loan...........................98
SECTION 20 GENERAL REPRESENTATIONS AND WARRANTIES.............................99
20.01 Representations and Warranties of Sears and ST....................99
20.02 Representations and Warranties of MetLife........................100
20.03 Representations and Warranties of AEW and PTLP...................101
20.04 Survival of Obligations..........................................102
SECTION 21 REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING
SPECIAL PURPOSE ENTITIES................................................102
21.01 Representations and Warranties Regarding ST......................102
21.02 Representations and Warranties Regarding AEW Master Lessee.......102
21.03 Representations and Warranties Regarding PTLP....................103
21.04 Covenants Regarding ST...........................................103
21.05 Covenants Regarding AEW Master Lessee............................105
21.06 Covenants Regarding PTLP.........................................107
SECTION 22 COVENANTS AND AGREEMENTS CONCERNING BANKRUPTCY....................108
22.01 Purpose of Agreement.............................................108
22.02 Grantor Trust....................................................108
22.03 Automatic Stay...................................................109
22.04 Cash Collateral Order............................................110
22.05 Priority Claim To The Extent First Lender Security Decreased.....110
22.06 Perfection of Security Interest in Rents.........................110
22.07 Assignment of Interests to First Lender..........................111
22.08 Assignment of Voting Rights......................................111
22.09 No Renewal of Exclusive Period...................................111
SECTION 23 TAX MATTERS.......................................................112
23.01 Estimated Tax Information........................................112
23.02 Tax Return Information...........................................112
23.03 ST Audit Rights..................................................112
23.04 Cooperation in Tax Disputes......................................113
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23.05 Payment of Taxes: Indemnity.....................................113
SECTION 24 REOC REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITY.........114
24.01 Representations and Warranties of AEW and PTLP Concerning REOC
Status.........................................................114
24.02 REOC Covenants...................................................114
24.03 Indemnity and Enforcement........................................116
SECTION 25 RECOURSE, LIMITATIONS ON RECOURSES, WAIVERS AND RELEASES..........116
25.01 Amendments to First Loan Sears/ST Recourse Agreements............116
25.02 Sears/ST Recourse Ageement as to Tower Second Loan/Option........117
25.03 Sears Recourse Provisions........................................117
25.04 AEW/PTLP/TLI Recourse Provisions.................................117
25.05 MetLife Recourse Provisions; Limitation on Liability.............118
25.06 ST Obligations...................................................118
25.07 AEW/PTLP Obligations.............................................118
25.08 Tower Certificates...............................................119
25.09 Release of First Lender by Sears and ST..........................120
25.10 Release of 8econd Lender and Option Holder by Sears and ST.......120
25.11 Release of First Lender by AEW and PTLP..........................120
SECTION 26 NOTICES...........................................................121
SECTION 27 MISCELLANEOUS.....................................................122
27.01 Agreement Not to Raise Certain Defenses..........................122
27.02 Brokerage Commissions............................................123
27.03 No Partnership or Joint Venture..................................123
27.04 No Third Party Beneficiaries.....................................123
27.05 Jurisdiction and Venue...........................................123
27.06 Waiver of Jury Trial.............................................123
27.07 Remedies Cumulative..............................................124
27.08 Severability.....................................................124
27.09 Assignment.......................................................124
27.10 Successors and Assigns...........................................124
27.11 Entire Agreement.................................................124
27.12 Modification, Waiver.............................................124
27.13 Captions.........................................................125
27.14 Singular and Plural..............................................125
27.15 Holidays and Weekends............................................125
27.16 Governing Law....................................................125
27.17 Time is of the Essence...........................................125
27.18 Execution in Counterparts........................................125
SCHEDULE 1 Index of Defined Terms
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EXHIBITS
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Exhibit A Legal Description of Tower Real Property
Exhibit B MetLife Documents
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B-1 First Loan Documents
Part 1 Continuing Documents
Part 2 Terminated Documents
Part 3 Superseded Documents
B-2 First Loan Modification Documents
Exhibit C AEW Documents
C-1 Second Loan Documents
Part 1 Continuing Documents
Part 2 Terminated Documents
Part 3 Superseded Documents
C-2 Option Documents
Part 1 Continuing Documents
Part 2 Terminated Documents
Part 3 Superseded Documents
C-3 Second Loan/Option Modification Documents
Exhibit D-1 Two-Party Documents
Exhibit D-2 Special Amendment Documents
Exhibit D-3 Other Amended Transaction Documents
Exhibit E-1 Franklin Center Documents
Exhibit E-2 Riverwood Documents
Exhibit F List of Approved Auditors
Exhibit G List and Priority of Amended Transaction Documents to be
Recorded or Filed
Exhibit H
H-1 Rate Adjustment Calculation for Amended Notes B and C
H-2 Sample Calculation of First Loan Base Debt Prepayment Fee
H-3 Sample Calculation of First Loan Note Prepayment Fee
Exhibit I Sample Interest Calculation for Sixth Distribution Priority
Exhibit J Sample Loan Status Statements
J-1 First Lender Statement
J-2 Second Lender Statement
J-3 Sears Statement
Exhibit K Form of Cash Flow and Distribution Statement
Exhibit K-1 List of Supporting Information for Cash Flow and Distribution
Statements
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Exhibit L Fair Market Value Appraisal Procedures
Exhibit M Schedule of Combined Tower Property
M-1 Combined Tower Property
M-2 Excluded Property
Exhibit N Leasing Procedures
N-1 Leasing Guidelines
N-2 Current Leasing Plan
Exhibit O Form of Agreed Cash Collateral Order
Exhibit P Form of Tax Information Statement
Exhibit Q-1 Sears Recourse Provisions
Exhibit Q-2 AEW/PTLP Recourse Provisions
Exhibit Q-3 MetLife Recourse Provisions
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GENERAL AGREEMENT
THIS GENERAL AGREEMENT is made and entered into as of the 7th day of
November, 1994, by and among METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation ("MetLife"), AEW PARTNERS, L.P., a Delaware limited partnership
("AEW"), PARTNERS TOWER, L.P., a Delaware limited partnership ("PTLP"), TOWER
LEASING, INC., a Massachusetts corporation ("TLI"), SEARS, ▇▇▇▇▇▇▇ AND CO., a
New York corporation ("Sears"), and ST HOLDINGS, INC., a Delaware corporation
("ST").
RECITALS
A. MetLife made a loan in the original principal amount of $600,000,000
to Sears (as more particularly defined in Section 2.01 hereof, the "First
Loan"), evidenced by three Promissory Notes each dated as of July 2, 1990
(collectively the "First Notes"): (i) Note A in the principal amount of Four
Hundred Million Dollars ($400,000,000); (ii) Note B in the principal amount of
One Hundred Million Dollars ($100,000,000); and (iii) Note C in the principal
amount of One Hundred Million Dollars ($100,000,000). (MetLife and any successor
owner of the First Loan is sometimes herein referred to as the "First Lender.")
B. The First Loan is secured by, among other things, a Mortgage,
Security Agreement and Financing Statement dated as of July 2, 1990 and recorded
in the Office of the ▇▇▇▇ County Recorder of Deeds on July 2, 1990 as Document
No. 90314602 (the "First Mortgage") from Sears to MetLife encumbering the real
property legally described in Exhibit A attached hereto together with the
improvements thereon commonly known as "Sears Tower" and the other tangible and
intangible real and personal property described in the granting clauses of the
First Mortgage (the property described in the Exhibit A, the improvements
thereon and the other real property interests described in said granting clauses
are herein collectively referred to as the "Tower Real Property"; the personal
property described in said granting clauses is herein referred to as the "Tower
Personal Property"; and the Tower Real Property and the Tower Personal Property
are herein collectively referred to as the "Tower Property"). The First Notes,
the First Mortgage and all other documents evidencing, securing or defining the
rights and obligations of the parties in respect of the First Loan, all as
listed in Exhibit B-1 attached hereto, are herein collectively referred to as
the "First Loan Documents."
C. Pursuant to a Loan and Security Agreement dated as of July 2, 1990
(the "Second Loan Agreement") among Sears, Tower Holdings, Inc., Franklin Center
Holdings, Inc. and AEW, AEW purchased two notes, each dated as of July 2, 1990,
issued by Sears in the aggregate face amount of Two Hundred Fifty Million
Dollars
($250,000,000): (i) one Note (the "Tower Second Note") in the face amount of Two
Hundred Seven Million Five Hundred Thousand Dollars ($207,500,000) evidencing
the "Tower Second Loan"; and (ii) one Note (the "Franklin Center Note") in the
face amount of Forty-Two Million Five Hundred Thousand Dollars ($42,500,000)
evidencing the "Franklin Center Loan." The Tower Second Note is secured by,
among other things, a Mortgage and Security Agreement from Sears to AEW dated as
of July 2, 1990 and recorded on July 2, 1990 as Document No. 90314612 and
rerecorded on August 27, 1990 as Document No. 90408731 (the "Second Mortgage"),
encumbering the Tower Property; and the Franklin Center Note is secured by,
among other things, a Mortgage and Security Agreement from Sears to AEW dated as
of July 2, 1990 and recorded on July 2, 1990 as Document No. 90314613 and
rerecorded on August 27, 1990 as Document No. 90408732 (the "Third Mortgage"),
encumbering the Tower Property. The Second Loan Agreement, Tower Second Note,
Second Mortgage and all other documents evidencing, securing or defining the
rights and obligations of the parties in respect of the Tower Second Loan, other
than those documents and instruments relating solely to AEW's security interests
in Franklin Center (as defined herein), all as listed on Exhibit C-1 attached
hereto, are herein collectively referred to as the "Second Loan Documents." (AEW
and any successor owner of the Tower Second Loan, including but not limited to
PTLP, each for such time as it holds the Tower Second Loan, is sometimes
referred to herein as "Second Lender.")
D. Pursuant to an Option and First Refusal Agreement (Tower) dated as
of July 2, 1990, between Sears and AEW, a memorandum of which was recorded on
July 2, 1990 as Document No. 90314611 (the "Option Agreement"), AEW was granted
an option (the "Tower Option") to purchase the Tower Property on the terms and
conditions set forth in the Option Agreement and was also granted certain other
rights, including rights of first refusal, with respect to Tower Property and
ownership interests in the owner, from time to time, of the Tower Property (or
in the beneficiary if the owner is a land trust). The rights of AEW under the
Option Agreement and the obligations of the owner of the Tower Property
thereunder are secured by, among other things a Mortgage and Security Agreement
dated as of July 2, 1990 and recorded on July 2, 1990 as Document No. 90314614
(the "Option Mortgage"), encumbering the Tower Property and subordinate to the
First Mortgage, Second Mortgage and Third Mortgage. The Option Agreement, the
Option Mortgage and all other documents evidencing, securing or defining the
rights and obligations of the parties in respect of the Tower Option, all as
listed on Exhibit C-2 attached hereto, are herein collectively referred to as
the "Option Documents". (AEW or any successor owner of the Tower Option,
including but not limited to PTLP, each for such time as it holds the Tower
Option, is sometimes herein referred to as "Option Holder".
E. Immediately preceding the closing of the First Loan and the Second
Loan, Sears transferred, by ▇▇▇▇ of Sale dated as of
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July 2, 1990, certain personal property and intangibles used in the operation of
the business known as the "Chicago Experience and Skydeck" (as more particularly
defined in Section 2.01, the "Skydeck Business") to Skydeck Holdings, Inc., a
Delaware corporation ("Skydeck"), which at that time was a wholly owned
subsidiary of Tower Holdings, Inc., a Delaware corporation ("THI"), which at
that time was a wholly owned subsidiary of Sears; and in connection with the
closing of the First Loan and the Second Loan, Skydeck executed and delivered to
MetLife and AEW certain security agreements granting to MetLife and SEW security
interests in such personal property and intangibles used in the operation of the
Skydeck Business.
F. Immediately following the closing of the First Loan and the Tower Second Loan
and the granting of the Tower Option, Sears executed and delivered: (i) a
Warranty Deed dated as of July 2, 1990, conveying the Tower Real Property to
Chicago Title and Trust Company, not personally but solely as Trustee under a
Trust Agreement dated June 12, 1990, and known as Trust No. 1095841 (said
trustee and any successor trustee is herein referred to as "Land Trustee" and
said Trust and any successor land trust is herein referred to as the "Land
Trust"), of which THI was the sole beneficiary; (ii) an Assignment of Tenant
Leases and Assumption Agreement dated as of July 2, 1990, by which Sears
assigned to THI its right, title and interest as lessor under certain leases
affecting the Tower Property and THI assumed the obligations of the lessor
thereunder; and (iii) a ▇▇▇▇ of Sale dated July 2, 1990, conveying certain other
property to THI. THI and the Land Trustee (a) accepted such transfers subject to
the First Loan Documents on the terms and conditions more particularly described
in a certain Consent to Transfer Agreement dated as of July 2, 1990 among Sears,
First Lender, THI, Land Trustee and Skydeck, and (b) received by assignment all
of the right, title and interest of Sears under the Second Loan Documents, the
option Documents and certain other documents and assumed the obligations of
Sears under all such documents, on the terms and conditions more particularly
described in a certain Assignment and Assumption of, and Consent to Assignment
and Assumption of, Loan Agreement, Loan Documents Relating to Tower Property and
Tower Option and First Refusal Agreement dated as of July 2, 1990 among Sears,
AEW, THI, Land Trustee and Skydeck.
G. THI thereafter executed and delivered: (i) an Assignment of
Beneficial Interest dated as of July 19, 1990, by which THI assigned all of the
beneficial interest in the Land Trust to ST, then a wholly owned subsidiary of
THI; (ii) an Assignment of Tenant Leases and Assumption Agreement dated as of
July 19, 1990, by which THI assigned to ST its right, tile and interest as
lessor under certain leases affecting the Tower Property and ST assumed the
obligations of the lessor thereunder; and (iii) a ▇▇▇▇ of Sale dated July 19,
1990 conveying certain other property to ST. ST (a) accepted such transfers
subject to the First Loan Documents on the
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terms and conditions more particularly described in a certain Consent to
Transfer Agreement dated as of July 19, 1990 among Sears, First Lender, THI,
Land Trustee, Skydeck and ST, and (b) received by assignment all of the right,
title and interest of THI under the Second Loan Documents, the Option Documents
and certain other documents and assumed the obligations of THI under all such
documents, on the terms and conditions more particularly described in a certain
Assignment and Assumption of, and Consent to Assignment and Assumption of, Loan
Agreement, Loan Documents Relating to Tower Property and Tower Option and First
Refusal Agreement dated as of July 19, 1990 among Sears, AEW, THI, Land Trustee,
Skydeck and ST. THI thereafter was dissolved.
H. On or before the date hereof, AEW has caused to be organized PTLP,
in which AEW is the sole limited partner and Partners Tower Corporation, a
Delaware corporation and a wholly owned subsidiary of AEW, is the sole general
partner, with the intent of transferring to PTLP all right, title and interest
of AEW under the Second Loan Documents and Option Documents and in the Tower
Property.
I. On or before the date hereof, ST has caused Skydeck to transfer to
ST the Skydeck Business and all other assets, tangible and intangible, of
Skydeck and thereafter will cause Skydeck to be dissolved.
J. As of the date hereof, prior to giving effect to the creation of the
Grantor Trust (as defined herein) and the transfers of interests contemplated
hereby: legal title to the Tower Real Property is held by Land Trustee; ST is
the owner of the Tower Personal Property and the sole beneficiary and holder of
the power of direction under the Land Trust; Skydeck is a wholly owned
subsidiary of ST; and Land Trustee and ST are, each individually and the two
collectively, the Tower Owner (as defined herein).
K. The parties hereto desire to make certain modifications and
amendments to the First Loan Documents, Second Loan Documents and Option
Documents, and to enter into certain agreements in connection with the Tower
Property.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
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SECTION 1
AGREEMENTS AS TO DOCUMENTS
--------------------------
1.01 First Loan Documents
--------------------
(a) MetLife, Sears and ST hereby acknowledge and agree, as among
themselves and also for the benefit of AEW and PTLP that: (i) as of the date
hereof and prior to giving effect to the transactions and agreements provided or
contemplated hereby, the First Loan Documents, as listed in Exhibit B-1 hereto,
constitute all of the documents, instruments and agreements evidencing or
securing the First Loan or defining the rights and obligations of the parties
(as among themselves) in respect of the First Loan; and (ii) this Agreement and
the other documents, instruments and agreements listed in Exhibit B-2 attached
hereto (this Agreement and said other documents, instruments and agreements are
herein collectively referred to as the "First Loan Modification Documents")
constitute all of the documents, instruments and agreements entered into or
contemplated, as of the date hereof, to be entered into among MetLife (or any
Affiliate of MetLife) and Sears and/or ST (or any other Affiliate of Sears)
relating to the modification of the First Loan and the other transactions
contemplated hereby.
(b) The parties hereto acknowledge and agree that: (i) the First Loan
Documents listed in Exhibit B-1, Part 2 are hereby terminated in their entirety
and are no longer of any force or effect and no party shall have any liability
under any of said documents from and after the date hereof; (ii) the First Loan
Documents listed in Exhibit B-1, Part 3 have been amended and restated in their
entirety, and superseded by, documents included among the First Loan
Modification Documents and are no longer of any force or effect: (iii) upon
giving effect to this Agreement, the First Loan Documents to remain in effect
(together with and, as applicable, amended by the First Loan Modification
Documents) from and after the date hereof are listed in Exhibit B-1, Part 1
(said documents together with the First Loan Modification Documents are referred
to herein as the "Amended First Loan Documents"); and (iv) each party hereto is
hereby released from, and hereby waives as to each other party hereto, any and
all liability, claims, damages causes of action, costs and expenses (including
but not limited to attorneys' fees) to which any party hereto may be subject or
entitled under any document, instrument or agreement evidencing or securing the
First Loan or defining the rights and obligations of the parties (as among
themselves) in respect of the First Loan, other than the Amended First Loan
Documents (which the parties acknowledge and agree to be in full force and
effect).
1.02 Second Loan and Option Documents
--------------------------------
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(a) AEW, PTLP, Sears and ST hereby acknowledge and agree, as among
themselves and also for the benefit of MetLife, that: (i) as of the date hereof
and prior to giving effect to the transactions and agreements provided or
contemplated hereby, the Second Loan Documents, as listed in Exhibit C-1
attached hereto, constitute all of the documents, instruments and agreements
evidencing or securing the Tower Second Loan or defining the rights and
obligations of the parties (as among themselves) in respect of the Tower Second
Loan (other than those documents and instruments relating solely to AEW's
security interests in Franklin Center); (ii) the Option Documents, as listed in
Exhibit C-2 hereto, constitute all of the documents, instruments and agreements
evidencing or securing the Tower Option or defining the rights and obligations
of the parties (as among themselves) in respect of the Tower Option; and (iii)
this Agreement and the other documents, instruments and agreements listed in
Exhibit C-3 attached hereto (this Agreement and said other documents,
instruments and agreements are herein collectively referred to as the "Second
Loan/Option Modification Documents") constitute all of the documents,
instruments and agreements entered into or contemplated, as of the date hereof,
to be entered into by and between AEW and/or PTLP (or any other Affiliate of
AEW) and Sears and/or ST (or any other Affiliate of Sears) relating to the
modification of the Tower Second Loan and/or the Tower Option and the other
transactions contemplated hereby (excluding, however, the documents relating
solely to the transactions involving Franklin Center and the Riverwoods
property, as described in Sections 1.04, 1.05 and 3.06).
(b) The parties hereto acknowledge and agree that: (i) the Second Loan
Documents listed in Exhibit C-1, Part 2 and the Option Documents listed in
Exhibit C-2, part 2 are hereby terminated in their entirety and are no longer of
any force or effect and no party shall have any liability under any of said
documents from and after the date hereof; (ii) the Second Loan Documents listed
in Exhibit C-1, Part 3 and the Option Documents listed in Exhibit C-2, Part 3
have been amended and restated in their entirety, and superseded by, documents
included among the Second Loan/Option Modification Documents and are no longer
of any force or effect; (iii) upon giving effect to this Agreement, the Second
Loan Documents and the Option Documents to remain in effect (together with and,
as applicable, amended by the Second Loan/Option Modification Documents) from
and after the date hereof are listed in Exhibit C-1, Part 1 and Exhibit C-2,
Part 1, respectively (said Second Loan Documents and said Option Documents to
remain in effect together with and, as applicable, amended by the Second
Loan/Option Modification Documents are referred to herein, respectively, as the
"Amended Second Loan Documents" and the "Amended Option Documents"; and the
Amended Second Loan Documents and the Amended Option Documents are herein
referred to collectively as the "Amended Second Loan/Option Documents"); and
(iv) each party hereto is hereby released from, and hereby waives as to each
other party hereto, any and all liability, claims, damages, causes of action,
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costs and expenses (including but not limited to attorneys' fees) to which any
party hereto may be subject or entitled under any document, instrument or
agreement evidencing or securing the Tower Second Loan or the Tower Option or
defining the rights and obligations of the parties (as among themselves) in
respect of the Tower Second Loan or the Tower Option, other than the Amended
Second Loan/Option Documents which the parties acknowledge and agree to be in
full force and effect). The Amended First Loan Documents and the Amended Second
Loan/Option Documents, together with the documents listed in Exhibit D-3
attached hereto, are sometimes herein collectively referred to as the "Amended
Transaction Documents."
1.03 Further Amendments
------------------
(a) The parties hereto covenant and agree that: (i) this Agreement may
be amended only by written instrument executed by all of the parties hereto and
each party hereto, in its absolute discretion, may grant or withhold its consent
to any proposed amendment; and (ii) except as otherwise provided in Section
1.03(b), none of the Amended Transaction Documents shall be amended in any
manner without the written consent of the parties to the respective document and
each of the parties hereto, which consent may be granted or withheld in the
absolute discretion of each respective party. Any attempted amendment of any
document contrary to the provisions of this Section 1.03(a) shall be null and
void and of no force or effect.
(b) Subject to the provisions of Section 1.03(a), the parties agree
that: (i) each of the documents listed in Exhibit D-1 attached hereto (the
"Two-Party Documents") may be amended or modified by the parties specified in
said Exhibit, without the consent of any other party hereto; and (ii) the
documents listed in Exhibit D-2 attached hereto (the "Special Amendment
Documents") shall be amended or modified at the direction of the parties
indicated in said Exhibit in respect of each document (herein the "Directing
Parties"), subject to the consent of any party to the respective document which
is not a Directing Party in respect of such document (herein a "Directed
Party"), which consent shall not be unreasonably withheld and which shall be
given if the proposed amendment or modification directed by the Directing
Parties does not have a material adverse economic impact (including but not
limited to material adverse income tax consequences) to any Directed Party. If a
Directed Party wrongfully withholds its consent to such amendment or
modification, then such wrongfully withholding Directed Party shall have
personal liability, on a recourse basis, to the other parties on account
thereof.
(c) Notwithstanding the provisions of Sections 1.03(a) and (b): (i)
following a Sears/ST Release Event (but subject to resolution or adjudication of
any dispute as to whether a Sears/ST Release Event which is not an Accelerated
Sears/ST Release Event has occurred), the consent or approval of Sears, ST or
any other
- 7 -
Sears Entity shall not be required for any modification or amendment of this
Agreement or any of the other Amended Transaction Documents; provided that (1)
such modification or amendment does not impose or purport to impose any
additional contractual obligation or liability on any Sears Entity and (2) if a
Sears/ST Default has not occurred, such modification or amendment does not
affect the status of the Grantor Trust or cause ST to cease to be deemed the
owner of the Tower Property for federal income tax purposes; and (ii) following
a Transfer Event (but subject to resolution or adjudication of any dispute as to
whether a Transfer Event that is not an Accelerated Transfer Event has
occurred), the consent or approval of AEW, PTLP, the AEW master Lessee or any
other AEW Entity shall not be required for any modification or amendment of this
Agreement or any of the other Amended Transaction Documents, provided such
modification or amendment does not impose or purport to impose any additional
contractual obligation or liability on any AEW Entity.
(d) Except as otherwise expressly provided herein or in any of the
Amended Transaction Documents or otherwise agreed by the parties, the party
requesting any amendment of any of the Amended Transaction Documents shall be
responsible for paying all costs and expenses (including attorneys' fees)
incurred by itself and all other parties in connection with any such amendment
or proposed amendment of any of the Amended Transaction Documents;
provided, however, unless otherwise expressly agreed at the time, the party
requesting any modification or amendment to any of the Amended Transaction
Documents shall reimburse First Lender for all reasonable costs and expenses
(including attorneys' fees) incurred by First Lender in connection with the
consideration and/or implementation of such modification or amendment.
(e) With respect to any consent or approval under or relating to this
Agreement or any of the Amended Transaction Documents, the consent or approval
of Second Lender shall also constitute the consent or approval of Option Holder
and AEW New Lender, and the consent or approval of Option Holder shall also
constitute the consent or approval of Second Lender and AEW New Lender
regardless of the capacity, if any, in which the party that is Second Lender or
Option Holder is identified; it being acknowledged and agreed that, in
accordance with the terms of this Agreement, Second Lender, Option Holder and
AEW New Lender are at all times required to be the same person or entity (except
as otherwise provided in respect of Option Holder in Section 19.04). In
addition, unless otherwise specifically provided in the particular context, any
representation, warranty, covenant or agreement made by Second Lender herein
shall be deemed to be made by PTLP (or its successor or assignee) both in its
capacity as Second Lender and in its capacity as Option Holder, as well as in
its capacity as AEW New Lender.
- 8 -
(f) With respect to any consent or approval under or relating to this
Agreement or any of the Amended Transaction Documents, the consent or approval
of either Sears or ST shall constitute and be binding as the consent or approval
of both Sears and ST.
1.04 Franklin Center Documents
-------------------------
AEW, PTLP and Sears (for itself and for Franklin Center Holdings, Inc.,
a Delaware corporation ("FC")) hereby acknowledge and agree, as among themselves
and also for the benefit of MetLife, that (i) after giving effect to this
Agreement, the documents listed in Exhibit E-1 attached hereto (the "Franklin
Center Documents") constitute all of the documents, instruments and agreements
relating to the rights and obligations of said parties (as among themselves and
any of their Affiliates) in respect of Franklin Center.
1.05 Riverwoods Documents
--------------------
AEW and Sears hereby acknowledge and agree, as between themselves and
also for the benefit of MetLife, that after giving effect to this Agreement, the
documents listed in Exhibit E-2 attached hereto (the "Riverwoods Documents")
constitute all of the documents, instruments and agreements relating to the
rights and obligations of said parties as among themselves and any of their
Affiliates, including Riverwoods Partners, L.P.) in respect of the Riverwoods
Property.
1.06 No Merger
---------
Nothing in this Agreement shall be construed, or is intended to be
construed, to constitute or effect a merger of any mortgage, other lien or
security interest in the Tower Property evidenced by any of the Amended
Transaction Documents. Each such mortgage and other lien or security interest
shall remain in full force and effect notwithstanding that the holder of a note
or mortgage included in the Amended Transaction Documents may be the same entity
or affiliated with an entity that owns the Tower Property or a beneficial
interest or other interest in the Tower Property.
SECTION 2
DEFINITIONS
-----------
2.01 Defined Terms
-------------
Each of the following terms shall have the meaning set forth below:
"Additional Participating Interest" means in respect of the Amended
First Notes all amounts payable to First Lender thereunder
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or under this Agreement on account of the reallocation to First Lender, as
provided in this Agreement, of all or any part of the Sears Cash Flow Interests
and the Second Lender Cash Flow Interests and any other amounts intended to be
payable as interest under the Amended First Notes pursuant to this Agreement
other than Stated Interest, Further Interest and Participating Interest.
"AEW Entity" means (1) AEW Partners, L.P., a Delaware limited
partnership (i.e., the party hereto identified as "AEW") in which AEW/LP, a
Delaware limited partnership is the sole general partner, and in which the
limited partners are Institutional Investors, (2) any entity which is directly
or indirectly controlled by, controlling or under common control with AEW, as
constituted as of July 2, 1990 or as currently constituted, or the persons and
entities controlling AEW as of July 2, 1990 or currently controlling AEW, or (3)
any entity with which AEW, AEW, Inc., any principal actively engaged in the
conduct of the business of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, L.P. or AEW, Inc. or any
entity described in preceding clause (2) has an advisory or fiduciary
relationship in respect of or relating, directly or indirectly, to the Tower
Property.
"AEW Cash Flow Interest" means the right of the AEW New Lender under
the AEW New Loan Documents to participate in and receive allocations and
distributions of Cash Flow pursuant to the Second Distribution Priority and the
Fourth Distribution Priority as described in Section 6.01(a).
"AEW New Lender" means PTLP (or its successor and assign) in its
capacity as holder of the AEW New Loan Note.
"AEW New Loan Documents" means the AEW New Loan Agreement, the AEW New
Loan Advance Guaranty, the AEW New Loan Note, and the AEW New Loan Mortgage.
"AEW Tower Bankruptcy Proceeding" means a Tower Bankruptcy Proceeding
(including, without limitation, a proceeding initiated as an involuntary
proceeding under Section 303 of the Bankruptcy Code) that is commenced by, or at
the direction or with the participation of, entities that constitute or include
any one or more of AEW, PTLP, the AEW Master Lessee or any other AEW Entity.
"Affiliate" means with respect to an individual or entity any other
individual or entity which, directly or indirectly, (i) controls, is controlled
by or is under common control with such first individual or entity, (ii) owns
twenty-five percent (25%) or more of the Ownership Interests of such first
entity, or (iii) is owned (as measured by its Ownership Interests) twenty-five
percent (25%) or more by such first individual or entity. Notwithstanding the
foregoing: (i) no entity as to which The Allstate Corporation and its controlled
subsidiaries ("Allstate") directly or indirectly owns ownership interests as
portfolio investments shall be
- 10 -
considered an Affiliate of Sears or ST solely by reason of such ownership so
long as Allstate beneficially owns (within the meaning of 13d-3 under the
Securities Exchange Act of 1934) less than fifty percent (50%) of the Ownership
Interests in such entity; and (ii) no pension plan, fund or other entity or
investment vehicle (collectively an "Advisee") which is advised by ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & Waltch, L.P. ("AEW L.P.") other than in respect of the Tower Property
or any other investment advisor (whether or not AEW L.P. or such other advisor
has discretion to make investments on its behalf) shall be deemed solely by
virtue of such relationship with AEW L.P. or such other advisor to be an
Affiliate of AEW, PTLP or any other such Advisee.
"Amended CDSR Agreement" means the Amended and Restated Capital and
Debt Service Reserve Account Escrow and Security Agreement dated as of the date
hereof among Sears, AEW, MetLife and ▇▇▇▇▇▇ Trust and Savings Bank as Trustee.
"Amended First Notes" means Amended Note A, Amended Note B and Amended
Note C.
"Approved Auditor" means a nationally-recognized firm of independent
certified public accountants which has at least ten (10) years experience with
major office building properties, selected from the list of such firms attached
to this Agreement as Exhibit F. Such list may be amended from time to time by
agreement of First Lender and Second Lender, each acting in the exercise of its
reasonable judgment, upon notice to the other parties hereto. No Approved
Auditor shall be or shall have been at any time owned by First Lender, Second
Lender, Option Holder, Sears or any Affiliate of any of them; nor shall it have
received directly or indirectly more than ten percent (10%) of its gross income
from any such party or Affiliate during the period of sixty (60) full months
preceding the date that such Approved Auditor is directed to perform the
respective function under the terms of this Agreement.
"Assignment and Assumption" means the Assignment and Assumption with
Indemnity dated the date hereof between ST, as assignor, and Grantor Trustee, as
assignee, pursuant to which ST transfers the Combined Tower Property to the
Grantor Trust and Grantor Trustee assumes obligations of ST in connection
therewith.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 ▇.▇.▇.▇▇.
101 et seq., as from time to time amended.
"Bankruptcy Proceeding" means (1) any proceeding or case in bankruptcy,
or for any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Bankruptcy Code, or any other federal,
state or other law or regulation relating to bankruptcy, insolvency, or other
relief for debtors, and (2) any proceeding or case for the appointment of a
trustee (other than a successor trustee under the Grantor Trust or
- 11 -
the Land Trust), custodian, conservator, receiver or liquidator for any entity
or of all or any substantial part of the assets of any entity, or the making by
any entity of a general assignment for the benefit of creditors.
"Business Day" means for purposes of this Agreement (but not with
respect to payments under the Amended First Notes) any day other than Saturday,
Sunday or any other date on which national banks are closed in Chicago,
Illinois, New York, New York or Boston, Massachusetts.
"CDSR" means the Capital and Debt Service Reserve Account established
pursuant to the Amended CDSR Agreement.
"Consensual Tower Bankruptcy Proceeding" means a Tower Bankruptcy
Proceeding that has been initiated by or at the express written request of all
of the First Lender, Second Lender, Option Holder and ST, each party acting in
its respective absolute discretion.
"Control" including "controlling," "controlled" and their variants,
mean with respect to any entity the ability, authority or power (by ownership of
Ownership Interests, or by contract, affirmative or negative action, omission or
otherwise) to direct, or to select the individuals who direct, the business and
affairs of such entity.
"Distribution Priorities" means the priorities for the allocation and
distribution of Cash Flow provided by Section 6 of this Agreement.
"Event of Default" means, unless otherwise expressly indicated, an
"Event of Default" under and as defined in this Amended First Mortgage.
"First Lender Cash Flow Interests" means First Lender's right to
participate in and receive allocations and distributions of Cash Flow pursuant
to the Distribution Priorities as described in Section 6.01(a).
"First Lender Forbearance Period" means the period through and
including the earliest of (i) December 31, 2001, (ii) the occurrence of a
Sears/ST Termination Event (other than under Section 9.01(a)(7)) after or
concurrently with the occurrence of a Transfer Event, or (iii) the occurrence of
a Transfer Event after or concurrently with the occurrence of a Sears/ST
Termination Event (other than under Section 9.01(a)(7)).
"First Loan" means the loan in the original principal amount of
$600,000,000 originally made to Sears pursuant to the First Notes, and now to be
evidenced by the Amended First Notes in the aggregate principal amount of
$600,000,000 to be executed and
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delivered by ST and the Land Trustee. The term "First Loan" shall include
extension of said loan as provided by the Amended First Notes and Section 4.03
hereof (which extension may include the addition of unpaid interest to the
principal sum of the loan).
"First Loan Base Debt" means, as of any time, the aggregate amount of
principal then outstanding and Stated Interest then payable under the Amended
First Notes (including contingent Stated Interest that has not previously been
payable but has become payable), expressly excluding all Further Interest,
Participating Interest and Additional Participating Interest under the Amended
First Notes.
"Forbearance Agreement" means the Forbearance and Segregation Agreement
dated as of June 1, 1994 (and extended as of November 1, 1994) by and among
MetLife, AEW, and ST, in the execution of which Sears joined for the limited
purposes stated therein, relating to the forbearance from the collection of
interest by MetLife under the First Loan and by AEW under the Tower Second Note,
and the segregation of funds in the CDSR for the payment of approved tenant
improvement costs and other leasing costs.
"Foreclosure Action" means, in respect of the First Loan or the Tower
Second Loan, a judicial proceeding to foreclose a mortgage lien granted by Tower
Owner on, and effect a sale of, any of the Tower Property and/or the beneficial
interest under the Land Trust, or any judicial proceeding or sale pursuant to
the Uniform Commercial Code to foreclose a security interest granted by Tower
Owner in, and effect a sale of, any of the Tower Property; provided "Foreclosure
Action" shall expressly exclude (1) any exercise of rights by First Lender
pursuant to the AEW Transfer Escrow or under Section 8.03 to effect a transfer
and/or release of all right, title and interest of AEW, PTLP and AEW Master
Lessee upon the occurrence of a Transfer Event, and (2) any exercise of rights
by First Lender or PTLP pursuant to the Sears/ST Transfer Escrow or under
Section 9.03 to effect a transfer and/or release of (i) the Sears/ST Lender
Interests upon the occurrence of a Sears/ST Release Event or a Sears/ST General
Default or (ii) the Sears/ST Ownership Interests and/or Sears/ST Stock Holdings
upon the occurrence of a Sears/ST Termination Event or a Sears/ST General
Default.
"Franklin Center" means that certain property located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ known as the ▇▇▇▇▇-▇▇▇▇▇ Parking Garage/Franklin
Center.
"Franklin Center Option" means that certain option to purchase and
related rights granted to AEW by Sears pursuant to the Franklin Center Option
Agreement.
"Franklin Center Option Agreement" means that certain Franklin Center
Option and First Refusal Agreement dated as of July 2, 1990 between Sears and
AEW.
- 13 -
"Institutional Investor" means any entity (whether domestic or foreign,
and whether acting individually or in a representative or fiduciary capacity)
that is (1) an insurance company, (2) a bank, trust company or national banking
association, (3) a pension, retirement, health or welfare, endowment or
profit-sharing trust or fund, (4) a governmental employee's pension or
retirement system or governmental agency supervising the investment of public
funds, (5) a publicly traded real estate investment trust, master limited
partnership or similar investment vehicle, (6) a similar or comparable entity of
good repute more than 50% of which is owned by any of the foregoing.
"Involuntary Tower Bankruptcy Proceeding" means a Tower Bankruptcy
Proceeding, other than an AEW Tower Bankruptcy Proceeding and a Sears/ST Tower
Bankruptcy Proceeding, that has been initiated as an involuntary proceeding
under Section 303 of the Bankruptcy Code or any other Tower Bankruptcy
Proceeding that has been initiated by a creditor or creditors of an entity
against such entity, regardless of whether any order for relief has then been
entered in the proceeding.
"IRR Amount" means the amount determined as follows, and for purposes
of calculating the IRR Amount, the First Loan and the Tower Second Loan shall be
considered together: The IRR Amount shall equal the amount from time to time
which, when added to all amounts previously received by First Lender on account
of the First Loan and by Second Lender on account of the Tower Second Loan,
produces an aggregate internal rate of return on the First Loan and Tower Second
Loan, considered together, over the term of said Loans from July 2, 1990 through
the date of such determination, of 8.6858%, taking into account all amounts
actually disbursed by First Lender and Second Lender under the First Loan and
the Tower Second Loan (as and when disbursed) and (except as provided below) all
amounts actually received by First Lender and Second Lender on account of the
First Loan and the Tower Second Loan (as and when received). The IRR Amount
corresponds to the total amount payable under the Sixth Distribution Priority
(80% of which is payable to Second Lender and 20% of which is payable to First
Lender) and shall be calculated in accordance with the sample calculation
attached hereto as Exhibit I. Notwithstanding the foregoing, in calculating the
IRR Amount, (i) all amounts paid to First Lender other than principal, Minimum
Interest, Additional Interest and Participating Interest shall be disregarded
and (ii) all amounts paid to Second Lender other than principal, Base Interest
and previous payments of Additional IRR Interest shall be disregarded.
"Lenders" means First Lender and Second Lender (but not Sears,
notwithstanding Sears' position as lender in respect of the Sears Lender
Interests) and "Lender" refers to either First Lender or Second Lender, as
applicable.
- 14 -
"Levy Obligations" means collectively (i) the Levy Note and (ii) the
Levy Reimbursement Agreement, as more fully described in Section 17.05.
"Master Lessee's Rent" means the annual amount of $10,000 which, in
accordance with the terms of the Master Lease, is deducted from revenues for
purposes of calculating "Lease Gross Revenues" under the Master Lease.
"Non-Qualified Investor/Advisor" means a person or entity (acting
either for its own account as an investor or for the account of others as an
investment advisor, manager or fiduciary) which is, or is managed or controlled
directly or indirectly by persons or entities which are, such a person (or
persons) or entity (or entities) which, in the reasonable judgment of First
Lender, make or have made investments with the purpose or intent of
restructuring the obligations of, or interests relating to, such investments or
the entities in which such investments are made, notwithstanding the objections
of the holders of such obligations or interests.
"Ownership Interests" means (1) in the case of a corporation, the
outstanding capital and voting stock therein, and whenever ownership of a
minimum percentage of Ownership Interests is specified herein with reference to
a corporation, such minimum percentage shall mean ownership of both the minimum
percentage of capital stock and the minimum percentage of voting stock; (2) in
the case of a partnership (general or limited), the outstanding interests in the
capital, profits, gains, and losses of the partnership, and whenever ownership
of a minimum percentage of Ownership Interests is specified herein with
reference to a partnership, such minimum percentage shall mean ownership of the
minimum percentage of each of such items in the partnership; and (3) in the case
of another form of entity (including, without limitation, a land trust), the
outstanding beneficial interests and voting rights in such entity and whenever
ownership of a minimum percentage of Ownership Interests is specified herein
with respect to such other entity, such minimum percentage shall mean ownership
of both the minimum percentage of beneficial interests and the minimum
percentage of voting rights.
"Permitted Designee" means a partnership, corporation, limited
liability company or other entity which is wholly owned, directly or indirectly,
by PTLP.
"Qualified Institutional Advisor" means an investment advisor, manager
or fiduciary, other than a Non-Qualified Investor/Advisor, which (a) owns or
manages real estate assets with a net asset value of at least $500 million (as
determined on a current fair market value basis as set forth in current
financial statements reasonably acceptable to First Lender, reported upon in a
manner and by a third party reasonably acceptable to First Lender) and (b) has
- 15 -
substantial operational expertise with ownership or management of major office
buildings in the central business districts of any of the fifty (50) largest
cities in the United States.
"Qualified Transferee" means: (1) an Institutional Investor, which (a)
is not a Non-Qualified Investor/Advisor and is not advised or managed by or
under the fiduciary direction of a Non-Qualified Investor/Advisor either in
respect of the Tower Property or in respect of its investments generally; and
(b) has either (i) a credit rating of at least AA or better by Standard & Poors
Corporation or Aa or better by ▇▇▇▇▇'▇ Investors Services, Inc. or a comparable
rating if such rating services change their rating designation or a comparable
rating by a comparable rating service selected by First Lender in its reasonable
discretion if neither Moody's nor Standard & Poors continues to provide such
rating services or (ii) a net worth of not less than $500 million, as determined
in accordance with generally accepted accounting principles and reported upon in
a manner and by a party reasonably acceptable to First Lender; or (2) an
Institutional Investor which (a) is not a Non-Qualified Investor/Advisor and (b)
is advised or managed by or under the fiduciary direction of a Qualified
Institutional Advisor in respect of its investment in the Tower Property.
Notwithstanding the foregoing, the term "Qualified Transferee" shall not include
either an AEW Entity or a Sears Entity.
"Riverwoods Property" means the property consisting of approximately
29.44 acres at the intersection of Lake ▇▇▇▇ and ▇▇▇▇▇▇▇▇ Roads in Lake County,
Illinois.
"Sears Corporate Lease" means that certain Lease dated as of July 2,
1990 (including any amendment thereto, extension thereof, or lease substituted
therefor) between Tower Holdings, Inc. as landlord and Sears as tenant for
approximately 268,000 sq. ft. of office space on floors Mezzanine, 5, 6, 8, 18,
51, 60, 68 and 98 in the Tower Real Property.
"Sears Entity" means Sears, ▇▇▇▇▇▇▇ and Co., a New York corporation, or
an entity directly or indirectly controlled by Sears, ▇▇▇▇▇▇▇ and Co.
"Sears Cash Flow Interests" means Sears right to participate in and
receive allocations and distributions of Cash Flow pursuant to the Second
Distribution Priority, Fourth Distribution Priority, and Fifth Distribution
Priority as described in Section 6.01(a).
"Sears Lender Documents" means the Sears Redevelopment Cost Obligation,
the Sears New Loan Agreement, the Sears New Loan Note, and the Sears New
Loan/Redevelopment Mortgage.
"Sears License Agreement" means that certain License Agreement of even
date herewith between Sears as licensor and the AEW Master
- 16 -
Lessee as licensee relating to the use of the name and service ▇▇▇▇ "Sears
Tower."
"Sears/ST Interests" means Sears/ST Lender Interests and Sears/ST
Ownership Interests collectively.
"Sears/ST Tower Bankruptcy Proceeding" means a Tower Bankruptcy
Proceeding (including, without limitation, a proceeding initiated as an
involuntary proceeding under Section 303 of the Bankruptcy Code) that is (a)
commenced by, or at the direction or with the participation of, entities that
constitute or include any one or more of Sears, ST or any other Sears Entity, or
(b) commenced by entities that include one or more creditors whose claim or
claims include one or more claims that arise from obligations incurred by ST
after the date hereof (other than obligations incurred by ST as master lessor
under the Master Lease in accordance with the terms hereof); provided however,
that a Tower Bankruptcy Proceeding which otherwise does not constitute a
Sears/ST Tower Bankruptcy Proceeding shall not be deemed to be a Sears/ST Tower
Bankruptcy Proceeding due to the filing or prosecution by Sears, subsequent to
the entry of an order for relief or its equivalent in the proceeding, of a claim
or right of action held by Sears solely in its capacity as tenant under the
Sears Corporate Lease so long as neither Sears nor ST nor any other Sears Entity
defaults in the performance of, or is in violation of, any of its agreements or
obligations in Section 9.04.
"Second Lender Cash Flow Interests" means Second Lender's right to
participate in and receive allocations and distributions of Cash Flow pursuant
to the Distribution Priorities as described in Section 6.01(a).
"Second Lender Forbearance Period" means the period through and
including the earliest to occur of (i) December 31, 2001, (ii) the occurrence of
a Sears/ST General Default, or (iii) the expiration of the First Lender
Forbearance Period.
"Second Priority Amount" means the aggregate amount of Cash Flow to be
distributed according to the Second Distribution Priority in Section 6.01(a)(2).
The Second Priority Amount shall be $90,000,000 or such greater amount (the
Increased Second Priority Amount) to which the Second Priority Amount is
increased pursuant to Section 6.02(f).
"Skydeck Business" means the business commonly known as "Chicago
Experience and Skydeck" now located on the Chicago Level and on the 100th and
103rd floors of the Tower Real Property.
"Tower Bankruptcy Proceeding" means a Bankruptcy Proceeding other than
a Consensual Tower Bankruptcy Proceeding (i) in respect of any one or more of
Tower Owner, ST, the Grantor Trust, PTLP, or the Master Lessee or (ii) under
which First Lender, Second Lender,
- 17 -
Option Holder, Grantor Trustee, Master Lessee or the residual beneficiary under
the Grantor Trust is enjoined for any period of time (including, without
limitation, by the automatic stay provided for in Section 362(a) of the
Bankruptcy Code) from enforcement, or is subject to an order of a court or other
tribunal of competent jurisdiction enjoining or delaying enforcement, of any of
the rights and remedies granted to it under any of the Amended Transaction
Documents in accordance with the terms of such Amended Transaction Documents,
including, without limitation, the exercise by either Lender of its rights to
realize upon the liens and security interests granted to it under the Amended
Transaction Documents.
"Tower Owner" means the following persons and entities, each
individually and all collectively: (i) the holder from time to time of legal
title to the Tower Real Property; and (ii) the holder from time to time of the
beneficial interest under any land trust holding legal title to the Tower Real
Property; provided, however, the term "Tower Owner" shall not include (1) any
beneficiary under the Grantor Trust or (2) any partner or shareholder of any
partnership or corporation holding (a) legal title to the Tower Real Property or
(b) the beneficial interest in any land trust holding such legal title.
"Tower Property" means collectively the Tower Real Property and the
Tower Personal Property; provided that, as used in the Grantor Trust Agreement,
"Tower Property" also refers to the beneficial interest under the Land Trust.
2.02 Cross-Referenced Terms
----------------------
Other capitalized terms are defined in various Sections of this
Agreement. Such defined terms and the respective Sections of this Agreement in
which such terms are defined are listed (together with the terms defined in
Section 2.01) in the Index of Defined Terms attached hereto as Schedule 1.
SECTION 3
RESTRUCTURING AND TRANSFERS OF INTERESTS
----------------------------------------
3.01 Order of Transactions
---------------------
(a) The following transactions in respect of the amendment of the First
Loan, Second Loan and Tower Option and the transfer of interests in the Tower
Property shall be made, pursuant to documents more fully described herein, in
the following order:
(1) ST and Land Trustee shall execute and deliver to MetLife the
Amended First Notes dated and effective as of January 1, 1994; and
Sears, ST, Land Trustee and MetLife
- 18 -
(or such of said parties as are applicable to a particular
document) shall enter into the other First Loan Modification
Documents dated and effective as of the date hereof.
(2) AEW shall transfer and assign, all of its right, title and
interest in, to and under the Second Loan Documents (other than
the Third Mortgage, which shall be released and terminated) and
the Option Documents to PTLP.
(3) ST and Land Trustee shall execute and deliver to PTLP the Amended
Tower Second Note dated and effective as of January 1, 1994; and
Sears, ST, Land Trustee, AEW and PTLP (or such of said parties as
are applicable to a particular document) shall enter into the
other Second Loan/Option Modification Documents dated and
effective as of the date hereof.
(4) Sears and ST shall execute and deliver the Sears New Loan
Agreement and the Sears Contribution Agreement; ST shall execute
and deliver to Sears the Sears New Loan Note and the Sears
Redevelopment Cost Obligation; and Land Trustee and ST shall
execute and deliver to Sears the Sears New Loan/Redevelopment
Mortgage.
(5) PTLP and ST shall execute and deliver the AEW New Loan Agreement;
ST shall execute and deliver to PTLP the AEW New Loan Note; AEW
shall execute and deliver to ST the AEW New Loan Advance Guaranty;
and Land Trustee and ST shall execute and deliver to PTLP the AEW
New Loan Mortgage.
(6) ST shall transfer the beneficial interest under the Land Trust and
all of ST's right, title and interest in the Tower Property to the
Grantor Trustee pursuant to the Assignment and Assumption with
Indemnity as described in Section 17.01.
(7) Land Trustee and the Grantor Trustee shall lease the Tower
Property to the AEW Master Lessee pursuant to the AEW Master Lease
(and shall also lease the Tower Property, subject but not
subordinate to the AEW Master Lease, to the MetLife Master Lessee
pursuant to the MetLife Master Lease).
(8) The certificate of incorporation and bylaws of ST shall be amended
and restated and the three series of preferred stock of ST shall
be issued as provided in Section 11.
(b) Except as otherwise indicated herein, all of the First Loan
Modification Documents and all of the Second Loan/Option
- 19 -
Modification Documents will be dated and effective as of the date of this
Agreement, and the transfers of interests and other transactions contemplated
hereby will be accomplished by and pursuant to documents, instruments and
agreements dated and effective as of the date of this Agreement.
(c) The enumeration of transfers of interests and other transactions in
Section 3.01(a) is not intended to be exclusive but only descriptive of the
ordering of said transfers and other transactions.
(d) All of the Amended Transaction Documents that are to be recorded in
the Office of the ▇▇▇▇ County Recorder of Deeds or filed with the Illinois
Secretary of State are listed in Exhibit G attached hereto and shall be recorded
and filed in the order of priority listed in said Exhibit G.
3.02 Resulting Interests
-------------------
After giving effect to the transfers of interests and other
transactions described in Section 3.01(a): (i) legal title to the Tower Real
Property will be held by Land Trustee; (ii) the Grantor Trust will be the sole
beneficiary under the Land Trust and the owner of the Tower Personal Property;
(iii) ST will be the income beneficiary and PTLP will be the residual
beneficiary of the Grantor Trust (and MetLife or its designee will be the
contingent residual beneficiary under the Grantor Trust and will also hold a
collateral assignment of the income beneficiary's interest and the residual
beneficiary's interest under the Grantor Trust); (iv) the power of direction
under the Land Trust will be held by the Grantor Trustee subject to an
assignment of such authority by the Grantor Trustee to the AEW Master Lessee
(and MetLife will hold a collateral assignment of the beneficial interest under
the Land Trust, and Second Lender will hold a subordinate collateral assignment
of said beneficial interest); (v) the Tower Property will be leased to the AEW
Master Lessee (and the Tower Property will also be leased, subject but not
subordinate to the AEW Master Lease, to the MetLife Master Lessee, and MetLife
will also hold a collateral assignment of the Lessee's interest under the AEW
Master Lease); and (vi) Land Trustee and Grantor Trustee will, each individually
and the two collectively, be the Tower Owner.
3.03 New Security Arrangements
-------------------------
(a) Sears and/or ST shall deliver or cause to be delivered to First
Lender the following documents and instruments, in form and content satisfactory
to First Lender, as additional security for the First Loan:
(i) Collateral assignment of the beneficial interest under the Land
Trust.
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(ii) Collateral pledge of all of the issued and outstanding common
stock and series A preferred stock of ST; together with the
stock certificates, which shall be held by the escrowee under
the Sears/ST Transfer Escrow as agent for First Lender and
Second Lender, as secured parties, for purposes of perfecting
the respective liens of First Lender and Second Lender in such
stock.
(iii) Collateral assignment of ST's interest as income beneficiary
under the Grantor Trust.
(iv) Collateral assignment of ST's interest as grantor under the
Grantor Trust.
(b) Sears and/or ST shall deliver or cause to be delivered to Second
Lender, as additional security for the Tower Second Loan, collateral security
documents substantially in the same form as the documents to be delivered to
First Lender pursuant to Section 3.03(a). The security interests granted to
Second Lender pursuant to said collateral security documents shall be subject
and subordinate to the security interests of First Lender.
(c) PTLP shall deliver or cause to be delivered to First Lender the
following document and instruments, in form and content satisfactory to First
Lender, as additional security for the First Loan:
(i) Collateral assignment of PTLP's beneficial interest as residual
beneficiary under the Grantor Trust.
(ii) Collateral pledge of all of the issued and outstanding series C
preferred stock of ST, together with the stock certificates,
which shall be held by the escrowee under the AEW Transfer
Escrow as agent for First Lender, as secured party, for purposes
of perfecting the lien of First Lender in such stock.
(iii) Collateral pledge of all of the issued and outstanding stock in
the AEW Master Lessee (said pledge to be executed by all of the
shareholders of the AEW Master Lessee); together with the stock
certificates which shall be held by the escrowee under the AEW
Transfer Escrow as agent for First Lender, as secured party, for
purposes of perfecting the lien of First Lender in such stock.
(d) The AEW Master Lessee shall deliver or cause to be delivered to
First Lender the following documents and instruments, in form and content
satisfactory to First Lender as additional security for the First Loan:
- 21 -
(i) Collateral assignment of AEW Master Lessee's interest in the AEW
Master Lease.
(ii) Security agreement collaterally assigning all right, title and
interest of AEW Master Lessee in the Tower Personal Property and
other property and assets which may be acquired by AEW Master
Lessee.
(iii) Collateral assignment of leases and rents.
(iv) Collateral assignment of service agreements.
(v) Collateral assignment of the Tower Management Agreement.
(vi) Collateral assignment of Sears License Agreement.
(e) The collateral security instruments describe in Sections 3.03(a),
(c) and (d) and delivered as security for the First Loan and the collateral
security instruments described in Section 3.03(b) and delivered as security for
the Tower Second Loan are herein referred to as the "New Collateral Security
Documents."
3.04 General Provisions for New Collateral Security Documents
--------------------------------------------------------
(a) Incorporation. The provisions of this Section 3.04 shall apply to
each of the New Collateral Security Documents as if such provisions were recited
in their entirety in each of said documents, and the provisions of this Section
3.04 are incorporated by reference into each of the New Collateral Security
Documents. As used in this Section 3.04: (i) the term "Collateral Assignor"
shall mean the party executing the respective New Collateral Security Document
and granting a security interest pursuant thereto (and any successor to such
party bound by such document in accordance with the terms thereof); (ii) the
term "Lender" shall mean First Lender in respect of the New Collateral Security
Documents delivered to First Lender pursuant to Sections 3.03(a), (c) and (d)
and Second Lender in respect of the new Collateral Security Documents pursuant
to Section 3.03(b); (iii) the term "Obligations" shall have the meaning ascribed
to such term in the respective New Collateral Security Document; and (iv) the
term "Collateral Event of Default" shall mean an "Event of Default" under and as
defined in the respective New Collateral Security Document.
(b) Application of Monies. Collateral Assignor grants to Lender full
power and authority to exercise, without notice to Collateral Assignor (notice
thereof being expressly waived by Collateral Assignor), each and every of the
rights, interests, privileges and powers granted and assigned at any and all
times hereafter, with full right and power to use and apply, to the extent
thereof, any and all monies due or to become due to
- 22 -
Collateral Assignor, if any, pursuant to the assigned collateral, to the payment
of any of the Obligations in such order as Lender may determine, but without in
any manner limiting the generality of the rights, powers, privileges and
authority conferred on Lender by the New Collateral Security Document; provided
Lender shall not exercise such rights, powers, privileges and authority until
the existence and during the continuance of a Collateral Event of Default.
(c) Remedies Cumulative. It is understood and agreed that the rights,
powers and privileges herein granted and assigned to Lender shall be deemed
special remedies given to Lender and shall not be deemed exclusive of any of the
rights, powers and remedies provided in the Amended Transaction Documents, but
shall be deemed additional remedies and cumulative with all such other rights,
powers and remedies, and each and all such rights, powers and remedies may be
pursued or exercised singly, successively or simultaneously, at such time or
times during the existence of a Collateral Event of Default or in such order as
Lender may, in its sole discretion, elect. No failure on the part of Lender to
exercise, and no delay in exercising, any rights, powers, privileges, interests,
remedies or authorizations under any of the New Collateral Security Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such rights, powers, privileges, interests, remedies or authorizations by
Lender preclude any other further or future exercise thereof or the exercise of
any other rights, powers, privileges, interests, remedies or authorizations.
(d) Release. It is expressly understood that no judgment or decree
which may be entered on any of the Obligations shall operate to abrogate or
lessen the effect of any New Collateral Security Document, but that each New
Collateral Security Document shall continue in full force and effect until any
and all Obligations, in whatever form the Obligations may be, and any and all
costs and expenses incurred and sustained by virtue of the authority contained
in such New Collateral Security Document have been fully and finally paid, or
until such time as each New Collateral Security Document may be released
pursuant to the Amended Transaction Documents, or otherwise. Each New Collateral
Security Documents shall remain in full force and effect during the pendency of
any foreclosure proceedings, both before and after sale, until the issuance of a
deed pursuant to a foreclosure decree, unless the Obligations are fully and
finally paid and discharged before the expiration of the period of redemption,
if any.
(e) Collateral Assignor's Representations, Warranties and Covenants.
Each Collateral Assignor, for itself but not for any other Collateral Assignor,
hereby represents and warrants to and covenants with Lender that:
- 23 -
(i) Except as expressly described in the General Agreement,
Collateral Assignor has not sold, pledged, assigned,
transferred, set over or otherwise encumbered the collateral
assigned by the respective New Collateral Security Document; and
except as may be expressly permitted by the Amended Transaction
Documents, Collateral Assignor will not, at any time during the
term of any New Collateral Security Document, sell, pledge,
assign, transfer, set over or otherwise encumber, or permit or
suffer to be sold, pledged, assigned, transferred, set over or
otherwise encumbered, the collateral assigned by the respective
New Collateral Security Document or perform or omit to perform
any act or execute any other document or instrument which might
prevent Lender from fully exercising and enjoying its rights,
powers, privileges and benefits under any New Collateral
Security Document; and
(ii) Collateral Assignor will pay, observe and perform, or cause to
be paid, observed and performed, each and every material
covenant, condition and obligation on its part to be paid,
observed and performed under the collateral assigned pursuant to
the respective New Collateral Security Document and (to the
extent applicable) enforce the observance and performance of
each and every material covenant, condition and obligation to be
observed and performed under any documents creating the interest
of Collateral Assignor assigned to Lender pursuant to such New
Collateral Security Document.
(f) Lender's Exculpation. Lender shall not in any way be: (i) obligated
to perform or discharge, or be responsible for the failure to perform or
exercise, any obligation, duty or liability of Collateral Assignor or any right
or authority of Collateral Assignor with respect to the collateral assigned by
any New Collateral Security Document or under or by reason of any new Collateral
Security Document or (ii) liable by reason of any dangerous or defective
condition of the Tower Property, or any part thereof, resulting in loss, damage
or injury to the property or person of any party to the collateral assigned by
any New Collateral Security Document or of any other person; Collateral
Assignor, for itself and for and on behalf of all persons claiming or to claim
hereafter by, through or under Collateral Assignor, hereby expressly waiving,
and releasing Lender from, any and all such responsibility, liability and
requirement.
(g) Collateral Assignor's Exculpation. Reference is hereby made to the
exculpation from person liability for the benefit of each Collateral Assignor
contained in the respective New Collateral Security Document. All
representations, covenants and agreements made by each Collateral Assignor in
this Section 3.04 are made and given subject to such exculpation from personal
liability contained in the respective New Collateral Security Document.
- 24 -
(h) Further Assurances. Collateral Assignor further agrees to execute
and deliver, at the reasonable request of Lender, all such further assurances
and instruments as Lender shall from time to time require in order to maintain a
perfected security interest in the Collateral and to implement the purposes of
the New Collateral Security Documents. Upon request by Lender, Collateral
Assignor shall deliver to Lender, a duplicate original (or if permitted by
Lender, a true and complete copy thereof so certified by Collateral Assignor) of
any documents creating the interest of Collateral Assignor assigned to Lender.
(i) Remedies. Upon the existence of a Collateral Event of Default, then
at the option of Lender, Lender shall, to the fullest extent permitted by law,
be entitled to exercise (i) all the rights, powers and remedies, if any,
available under the Uniform Commercial Code of the State of Illinois then in
effect, (ii) any and all other rights, powers and remedies as permitted in any
New Collateral Security Document and the other Amended Transaction Documents and
(iii) all such other rights and remedies as may be provided at law or in equity.
(j) Collateral Assignor's Successors and Assigns. Each New Collateral
Security Document, and all the provisions thereof, shall extend to and be
binding upon Collateral Assignor, its successors and assigns, and upon any party
or parties from time to time permitted to hold title to or have an interest in
the Tower Property, except that the benefits and privileges accruing to
Collateral Assignor thereunder shall only extend and inure to such of the
successors and assigns of Collateral Assignor or such party or parties as may be
permitted pursuant to the Amended Transaction Documents.
3.05 Continuing Security Arrangements
--------------------------------
(a) The parties acknowledge and agree that: (i) following the transfers
and transactions described in Section 3.01, the Tower Property and the interests
of Tower Owner therein will remain subject to the continuing first security
interests created by the collateral security instruments securing the First Loan
that are listed in Exhibit B-1, Part 1; and (ii) in accordance with the terms of
each respective collateral security instrument, the security interest created
thereby for the benefit of First Lender has attached to any property of the type
described in, and intended to be covered by, the respective collateral security
instrument acquired by Tower Owner since July 2, 1990.
(b) The parties acknowledge and agree that: (i) following the transfers
and transactions described in Section 3.01, the Tower Property and the interests
of Tower Owner therein will remain subject to the continuing subordinate
security interests created by the collateral security instruments securing the
Tower Second Loans that are listed in Exhibit C-1, Part 1; and (ii) in
accordance with
- 25 -
the terms of each respective collateral security instrument, the security
interest created thereby for the benefit of Second Lender has attached to any
property of the type described in, and intended to be covered by, the respective
collateral security instrument that has been acquired by Tower Owner since July
2, 1990.
3.06 Franklin Center and Riverwoods Transaction
------------------------------------------
(a) As part of the transactions contemplated hereby, and pursuant to
simultaneous closings effective the date hereof, the following shall occur:
(1) FC will cause all of the right, title and interest in Franklin
Center to be conveyed to an entity designated by AEW, and AEW will
deliver a release to Sears and FC in connection therewith.
(2) The Franklin Center Note will remain outstanding; and the mortgage
on Franklin Center securing the Franklin Center Note will remain
on said property, but the cross default between the Franklin
Center Loan and the Tower Second Loan will be eliminated. The
Third Mortgage encumbering the Tower Property and securing the
Franklin Center Loan will be released.
(3) FC and AEW will rescind the Franklin Center Option in exchange for
a payment by FC to AEW of $2 million.
(4) Sears will make a payment to AEW in the amount of $7 million, less
amounts advanced by Sears with respect to Franklin Center in 1994
(other than the $2 million payment described in Section
3.06(a)(3)), as consideration for the elimination from the Tower
Option of certain provisions which provided recourse against
Sears.
(5) As additional consideration for the elimination from the Tower
Option of certain provisions which provided recourse against
Sears, Sears and an entity organized by AEW will enter into the
Riverwoods Purchase Agreement, pursuant to which Sears will
transfer to such entity designated by AEW all of Sears right,
title and interest in the Riverwoods Property on the date hereof.
- 26 -
3.07 Consent to the Adoption by FC of a Restated Certificate of
Incorporation
----------------------------------------------------------
MetLife and AEW hereby each (1) consent to the adoption by FC of a
Restated Certificate of Incorporation in the form of the Restated Certificate of
Incorporation of FC delivered to each of MetLife and AEW on the date hereof, and
(2) waive any restrictions heretofore enforceable by each of them to the
adoption by Sears, in its capacity as the sole stockholder of FC, of certain
stockholder resolutions authorizing the adoption of such Restated Certificate of
Incorporation of FC.
3.08 Consent to the Adoption by Skydeck of a Restated Certificate of
Incorporation
---------------------------------------------------------------
MetLife and AEW hereby each (1) consent to the adoption by Skydeck of a
Restated Certificate of Incorporation in the form of the Restated Certificate of
Incorporation of Skydeck delivered to each of MetLife and AEW on the date
hereof, (2) waive any restrictions heretofore enforceable by each of them to the
adoption by Sears, in its capacity as the sole stockholder of Skydeck, of
certain stockholder resolutions authorizing the adoption of such Restated
Certificate of Incorporation of Skydeck, and (3) acknowledge that Skydeck will
be dissolved.
SECTION 4
AMENDMENT OF FIRST LOAN
-----------------------
4.01 Amended First Notes
-------------------
ST and Land Trustee will execute and deliver to MetLife: (i) an Amended
and Restated Note A in the principal amount of $400,000,000 (herein referred to
as "Amended Note A"); (ii) an Amended and Restated Note B in the principal
amount of $100,000,000 (herein referred to as "Amended Note B"); and (iii) and
Amended and Restated Note C in the principal amount of $100,000,000 (herein
referred to as "Amended Note C"). Each of the Amended First Notes shall be dated
and effective as of January 1, 1994. First Lender acknowledges and agrees that
as of the date hereof all required payments under the Amended First Notes have
been made. Upon the transfer of the Combined Tower Property to the Grantor
Trustee, ST will be released from its obligations as "Maker" under the Amended
First Notes; provided that if ST exercises its power of substitution under the
Grantor Trust, ST will again become obligated as Maker under the Amended First
Notes.
4.02 Modification of Note Terms
--------------------------
(a) The Amended First Notes provide for the modification, effective as
of January 1, 1994, of the interest payable
- 27 -
thereunder, including the forbearance of all monthly interest payments for ten
months commencing with the interest payment due as of February 1, 1994 and
ending with the interest payment due as of November 1, 1994. MetLife will return
to Tower Owner, by deposit into the CDSR, the four monthly interest payments
under the First Notes which were payable as of February 1, March 1, April 1 and
May 1, 1994, in the aggregate amount of $17,360,000, and which were in fact paid
to MetLife. Prior to the date hereof, pursuant to the Forbearance Agreement,
MetLife had agreed to forbear from the collection of the monthly interest
payments on the First Notes payable as of June 1, 1994 and as of the first day
of each month thereafter through November 1, 1994. The Forbearance Agreement is
hereby terminated effective as of the date hereof; and the provisions of the
Forbearance Agreement relating to the segregation of funds in the CDSR for the
payment of brokerage commissions and tenant improvement costs in respect of
certain specified leases have been incorporated into the Amended CDSR Agreement.
(b) The Amended First Notes provide for the payment of Stated Interest
(a portion of which is contingent interest), Further Interest (all of which is
contingent interest), Participating Interest (all of which is contingent
interest), and Additional Participating Interest (all of which is contingent
interest) in accordance with the Distribution Priorities described in Section
6.01(a) hereof. Stated Interest represents interest calculated at the stated
applicable rate (which is subject to adjustment under Amended Note B and Amended
Note C) and prior to the Stated Maturity Date includes Minimum Interest; (both
Contingent Minimum Interest and Required Minimum Interest) and Additional
Interest (representing the excess of Stated Interest over Minimum Interest).
Stated Interest during the Extension Period (between the Stated Maturity Date
and the Extended Maturity Date) is referred to herein and in the Amended First
Notes as Extension Period Interest.
4.03 Extension of Maturity Date
--------------------------
(a) The Amended First Notes provide for the extension of the maturity
of the First Loan from July 2, 2005 (the "Stated Maturity Date") to July 2, 2008
(the "Extended Maturity Date") at the option of Tower Owner, subject to the
satisfaction of the requirements in this Section 4.03, and First Lender agrees
to extend the First Loan subject to the satisfaction of said requirements. The
applicable maturity date under the Amended First Notes, whether the Stated
Maturity Date or the Extended Maturity Date, is referred to herein as the "First
Loan Maturity Date," and the period from the Stated Maturity Date through the
Extended Maturity Date is referred to herein as the "Extended Term."
(b) The maturity of the First Loan may be extended to the Extended
Maturity Date in accordance with the following:
- 28 -
(i) For the Extended Term, the First Loan as provided in the Amended
First Notes will evidence certain revised terms including but
not limited to the new amount of principal, the "Extension Rate"
(as defined in the Amended First Notes) and the changes in
prepayment privileges.
(ii) All unpaid Minimum Interest and Additional Interest (to the
extent not paid in connection with a partial payment of
principal pursuant to Section 4.05(b)) shall be added to
principal and shall bear interest at the Extension Date.
(iii) The following notice procedures shall be applicable:
"Extension Notice" shall be the written notice from Tower Owner
to First Lender not earlier than twenty four (24) months and not
later than nine (9) months prior to the Stated Maturity Date by
which Tower Owner requests the extension of the First Loan.
"Notice of Selected Appraisers" shall be the written notice from
First Lender to Tower Owner delivered not more than thirty (30)
days after the Extension Notice, by which First Lender
identifies not fewer than three third-party M.A.I. appraisers
satisfactory to First Lender ("Selected Appraisers").
"Appraiser Selection Notice" shall be the written notice from
Tower Owner to First Lender delivered not more than thirty (30)
days after the Notice of Selected Appraisers, by which Tower
Owner selects one appraiser from the list of Selected
Appraisers.
"Appraisal Notice" shall be the written notice from First Lender
to Tower Owner delivered not more than thirty (30) days after
the Extension Notice confirming that First Lender has engaged
the appraiser identified by Tower Owner in the Appraiser
Selection Notice, to determine the Fair Market Value of the
Tower Property.
"Submission Notice" shall be the written notice together with
the information, materials and other evidence reasonably
- 29 -
satisfactory to First Lender showing that the requirements with
respect to the Extension DSCR and the Extension LVR described
below have been satisfied, which shall be delivered by Tower
Owner to First Lender at any time after its receipt of the
Appraisal Notice and not later than one hundred and fifty (150)
days prior to the Stated Maturity Date.
"Extension Rate Notice" shall be the written notice from First
Lender (after its receipt of the Submission Notice, if any) to
Tower Owner containing the Extension Rate not later than 90 days
prior to the Stated Maturity Date.
"Extension Election Notice" shall be the written notice from
Tower Owner to First Lender in which Tower Owner accepts or
declines the Extension Rate not later than 75 days prior to the
Stated Maturity Date.
(1) Tower Owner may deliver to First Lender the Extension
Notice.
(2) Thereafter First Lender shall provide Tower Owner with
the Notice of Selected Appraisers.
(3) Tower Owner shall next deliver the Appraiser Selection
Notice.
(4) If First Lender receives the Appraiser Selection
Notice, First Lender shall provide Tower Owner with the
Appraisal Notice.
(5) First Lender will provide Tower Owner, not later than
nine (9) months prior to the State Maturity Date, with a
non-binding preliminary statement as to whether First Lender
estimates that the Extension DSCR and Extension LVR will be
satisfied.
(6) Tower Owner may deliver the Submission Notice.
(7) If First Lender receives the Submission Notice and the
completed appraisal and reasonably determines that the
requirements have been satisfied, then First Lender shall send
the Extension Rate Notice.
- 30 -
(8) After receipt of the Extension Rate Notice, Tower Owner
may give to First Lender the Extension Election Notice.
(9) If Tower Owner fails to send any notice required herein
or fails to deliver a notice within the time period required,
the extension option will be deemed to have been waived.
(iv) Tower Owner's right to exercise the option to extend the
maturity of the Amended First Notes is subject to and
conditioned upon satisfaction of all of the following
conditions:
(1) from the date of the Extension Notice to the Stated
Maturity Date, no Event of Default (as defined in the Amended
First Mortgage) shall have occurred and be continuing, and there
shall be no event or occurrence which, with the passage of time
or the giving of notice, or both, would constitute an Event of
Default;
(2) Tower Owner shall deliver to First Lender the
Submission Notice (including without limitation budgets and
operating statements, rent roll, leasing plans and any other
information reasonably requested by First Lender relating to the
Tower Property for Lender's use in determining the Extension
DSCR and Extension LVR as provided below) and such other
evidence reasonably satisfactory that:
(A) The financial condition of the Tower Property
shall be projected to equal or exceed a 1.20 debt service
coverage ratio determined according to the then applicable
requirements for a mortgage loan secured by a major Class A
office building located in the Central Business District of
the City of Chicago (the "Extension DSCR"); and
(B) the aggregate outstanding principal of the
indebtedness under the First Loan calculated as of the
Stated Maturity Date (after giving effect to any partial
payment of principal pursuant to Section 4.05(b) and the
addition to principal of unpaid Minimum Interest and
- 31 -
Additional Interest) does not exceed seventy-five percent
(75%) of the then fair market value of the Tower Property
as of said date (said ratio is herein referred to as the
"Extension LVR"). After First Lender delivers the
Appraisal Notice, First Lender shall engage a reputable
third party appraiser to determine the fair market value of
the Tower Property. All costs incurred for such appraisal
shall be paid by Tower Owner as Tower Expenses whether or
not the First Loan is extended.
(3) All interest and principal due under the Tower Second
Loan, the AEW New Loan, the Sears New Loan, the Sears
Redevelopment Cost Obligation and any other indebtedness secured
by the Tower Property shall continue to be fully contingent upon
the available Cash Flow of the Tower Property and all
distributions of such Cash Flow shall continue to be paid
pursuant to the Distribution Priorities specified in Section
6.01 of this General Agreement.
(4) There shall be no debt, mortgages, or encumbrances on
the Tower Property except those permitted under the General
Agreement and Tower Owner shall provide or furnish such
additional documents reasonably required by First Lender to
complete the extension of the First Loan in accordance with
ordinary and customary loan extension requirements and any other
requirements then applicable to First Lender with respect to
extending mortgage loans, including but not limited to
applicable regulatory and state and federal laws.
(5) All reasonable costs, fees, expenses and charges
incurred by First Lender for extension of the First Loan shall
be paid as a Tower Expense by Tower Owner including but not
limited to First Lender's special counsel, costs of inspections
and reports, appraisal fees, mortgagee's loan policy of title
insurance, and recording charges whether or not, for any reason
whatsoever, the First Loan is not extended.
(c) the valuation of the Tower Property for purposes of determining the
Extension LVR and the valuation of the Tower
- 32 -
Property for purposes of determining the Determined Value pursuant to Section
7.02(c) shall be conducted as a single valuation process. The value determined
through such process shall be the Fair Market Value as described in Exhibit L;
provided, however, (i) the valuation of the Tower Property (for purposes of the
Extension LVR and the Determined Value) shall be performed by an appraiser
selected by Tower Owner from a list of not fewer than three (3) M.A.I.
appraisers provided by First Lender, and (ii) the valuation of any other related
assets and liabilities as described in Exhibit L (for purposes of the Determined
Value) shall be performed by an Approved Auditor selected by Tower Owner. First
Lender shall submit the above described list of M.A.I. appraisers to Tower Owner
not later than one hundred eighty (180) days prior to the Stated Maturity Date;
and Tower Owner shall select one appraiser and the Approved Auditor, and notify
First Lender of such selection in writing, not later than thirty (30) days after
delivery of First Lender's list of M.A.I. appraisers. If for any reason Tower
Owner fails to select the appraiser or the Approved Auditor within said thirty
(30) day period, First Lender shall have the right to make such selection.
Following the selection of the appraiser and the Approved Auditor, First Lender
shall instruct the appraiser and the Qualified Auditor to conduct the valuation
of the Tower Property in accordance with the foregoing.
4.04 Rate Adjustment; Amended Notes B and C
--------------------------------------
(a) Each of Amended Note B and Amended Note C provides for periodic
adjustments of the Interest Rate (as defined in such Notes) prior to the Stated
Maturity Date, subject to a maximum Applicable Rate of eight percent (8%) per
annum, based upon First Lender giving notice to Tower Owner of First Lender's
determination of a "Rate Increment" and an "Adjusted Rate" for each "Interval
Period" (each such term as defined in such Notes). First Lender agrees that the
Rate Increment shall be based upon the First Lender's best rate for commercial
mortgage loans then being made available by First Lender; provided that: (a) as
provided in such Notes, the Rate Increment shall in no event be less than 75
basis points nor more than 175 basis points; and (b) if, in First Lender's
reasonable opinion, as of the time that Lender delivers an "Adjustment Notice"
(as defined in such Notes) there has been a material adverse change in the Tower
Property and other collateral and security securing the First Loan considered as
a whole, or a material adverse change in the financial condition of Tower Owner,
since the immediately preceding Adjustment Date, First Lender shall not be
obligated to base the Rate Increment upon First Lender's best rate for
commercial mortgages, but in no event shall the Rate Increment exceed 175 basis
points. If First Lender determines that it will not base the Rate Increment on
First Lender's best rate for commercial mortgages, then First Lender shall
specify the reasons therefor in the Adjustment Notice.
- 33 -
(b) In addition to the provisions for Rate Adjustments provided in each
of Amended Note B and Amended Note C, First Lender agrees to offer alternative
terms for Rate Adjustments prior to the Stated Maturity Date in accordance with
this paragraph (b). If Tower Owner delivers to First Lender, not later than the
first day of the eighth (8th) calendar month preceding the next subsequent
Adjustment Date, a written request for First Lender's offer of alternative terms
for an adjustment in the Adjustable Interest Rate under either or both of
Amended Note B and Amended Note C based upon a period of time greater than the
next subsequent "Interval Period" (as defined in such Notes), then, provided
First Lender determines in good faith that First Lender is then offering or
prepared to offer to third parties commercial mortgage loans with terms for a
longer period, First Lender shall offer to Tower Owner a Rate Increment based
upon First Lender's best commercial mortgage rate for such alternative period
(but in any event ending not later than the Stated Maturity Date), and shall
specify (in addition to the Rate Increment otherwise required to be specified by
the terms of the Note) such alternative rate and other terms, including
prepayment terms, in the Adjustment Notice required to be delivered by First
Lender for such Adjustment Date. Notwithstanding the foregoing, First Lender
will not be required to offer a Rate Increment based upon its best commercial
mortgage rate for such an alternative period if, as of the time of such
Adjustment Notice, there has been a material adverse change in the Tower
Property and other collateral and security securing the First Loan considered as
a whole, or a material adverse change in the financial condition of Tower Owner,
since the immediately preceding Adjustment Date.
(c) If Tower Owner does not request alternative terms for a Rate
Adjustment pursuant to the preceding paragraph (b), First Lender in its sole
discretion, may nevertheless specify in an Adjustment Notice in respect of
either or both of Amended Note B and Amended Note C (in addition to the Rate
Increment otherwise required to be specified by the terms of the Notes)
alternative terms for an adjustment which would result in an "Determined Rate"
based upon a period of time greater than the next subsequent Interval Period,
including such prepayment terms for such different period of time as First
Lender may deem appropriate.
(d) Tower Owner may accept the alternative terms offered by First
Lender pursuant to paragraph (b) or paragraph (c) above by written notice
delivered to First Lender at the same time that Tower Owner's Election Notice
(as defined in such Notes) is delivered to First Lender. If Tower Owner accepts
such alternative terms, the rate of interest payable on the Note shall be
adjusted accordingly commencing on the next subsequent Adjustment Date, and such
other necessary and appropriate changes in the Amended First Loan Documents
(including but not limited to the Note under which the interest rate has been
adjusted) shall be made as First Lender and Tower Owner may agree. Tower Owner
shall pay (as Tower Expenses) all costs and expenses incurred by or on behalf of
First
- 34 -
Lender in connection therewith, including but not limited to reasonable
attorneys' fees.
(e) Any calculation of the monthly payment under the Amended First
Notes, after giving effect to a Rate Adjustment under Amended Note B or Amended
Note C, shall be made in accordance with the methodology exemplified by the
sample calculation set forth in Exhibit H-1 attached hereto.
4.05 Prepayment of First Loan Base Debt
----------------------------------
(a) The Amended First Notes permit the prepayment of the First Loan
Base Debt in full, but not in part, prior to the Stated Maturity Date (provided
the maturity date has not been extended to the Extended Maturity Date), subject
to the payment of a "Base Debt Prepayment Fee" (as defined in the Amended First
Notes) in accordance with the terms of said notes. No Base Debt Prepayment Fee
is payable in respect of such a prepayment during the last year prior to the
Stated Maturity Date if the First Loan Base Debt is prepaid within ninety (90)
days after delivery of the notice of prepayment.
(b) Amended Note B and Amended Note C each permit, in accordance with
their terms, the prepayment of the entire Note or one-half of the outstanding
principal of the Note (together with one-half of all unpaid interest thereunder)
as of any Adjustment Date under the Note or during the sixty (60) day period
preceding the Adjustment Date, without payment of any prepayment fees.
(c) The Amended First Notes permit a partial payment of principal under
the First Loan as of the Stated Maturity Date, or during the sixty (60) days
preceding the Stated Maturity Date, without payment of a prepayment fee, in an
amount not less than $50,000,000 or any integral multiple thereof (or such
lesser or greater amount as may be required to satisfy the Extension DSCR or the
Extension LVR) allocated among the three Amended First Notes in proportion to
the respective original principal amounts of each note, if Tower Owner extends
the maturity date of the First Loan to the Extended Maturity Date. Pursuant to
the Amended First Notes, in connection with any such partial payment of
principal, Tower Owner shall make such payment through a payment of a
proportional share of all unpaid Minimum Interest and Additional Interest under
the Amended First Notes represented by the ratio of (i) the principal amount
being paid to (ii) the total outstanding principal amount of the Amended First
Notes prior to such partial payment.
(d) The Amended First Notes permit the prepayment of the First Loan
Base Debt in full, but not in part, after the Stated Maturity Date and prior to
the Extended Maturity Date, if the maturity of the First Loan has been extended
to the Extended Maturity Date, subject to the payment of a Base Debt Prepayment
Fee in accordance with the terms of said notes. No Base Debt
- 35 -
Prepayment Fee is payable in respect of such a prepayment during the last sixty
(60) days prior to the Extended Maturity Date.
(e) Any calculation of the Base Debt Prepayment Fee shall be made in
accordance with the methodology exemplified by the sample prepayment fee
calculation set forth in Exhibit H-2 attached hereto.
4.06 Redemption of First Loan Further Interest, and Participating
Interest and Additional Participating Interest
------------------------------------------------------------
(a) The Amended First Notes permit the prepayment of the First Loan in
full and satisfaction of all obligations thereunder in respect of principal and
interest (including Further Interest, Participating Interest and Additional
Participating Interest) at any time on or before the Stated Maturity Date
(provided the maturity date has not been extended to the Extended Maturity
Date), subject to the payment of a Note Prepayment Fee (constituting a Yield
Restoration Amount plus the Base Debt Prepayment Fee) in accordance with the
terms of said Notes. Any calculation of the Yield Restoration Amount for
purposes of determining the "Note Prepayment Fee" (as defined in the Amended
First Notes) shall be made in accordance with the methodology exemplified by the
sample calculation set forth in Exhibit H-3 attached hereto.
(b) Further Interest, Participating Interest and Additional
Participating Interest under the Amended First Notes are payable from Cash Flow
in accordance with the Distribution Priorities described in Section 6.01(a) and
the provisions of Section 7. Except as described in Section 4.06(a) with respect
to a prepayment of the First Loan in full, notwithstanding the payment or
prepayment in full of the First Loan Base Debt, Further Interest, Participating
Interest and Additional Participating Interest shall remain payable in
accordance with the Distribution Priorities, and (except for the prior payment
of further interest in full at the fourth Distribution Priority) neither Further
Interest, Participating Interest nor Additional Participating Interest may be
redeemed in full except upon a Final Participation Determination as described in
Section 7.
4.07 Amendment of First Mortgage
---------------------------
In connection with the execution and delivery of the Amended First
Notes, ST, Land Trustee and MetLife will enter into an "Amendment to First
Mortgage" of even date herewith (the First Mortgage, as so amended by said
Amendment, is herein referred to as the "Amended First Mortgage").
- 36 -
4.08 Release of First Mortgage Lien Upon Payment of First Loan Base
Debt
--------------------------------------------------------------
(a) At the time of the payment in full of the First Loan Base Debt in
accordance with the terms of the Amended First Notes, at the option of Tower
Owner and provided no Event of Default has then occurred and is continuing and
no Transfer event has occurred, the Amended First Mortgage and all other
collateral security documents granting First Lender a security interest in any
of the Tower Property shall be terminated and released subject to and in
accordance with the provisions of this Section 4.08.
(b) A first lien in all Ownership Interests in the beneficial owner of
the Tower Property (but not in the Tower Property or in the Land Trust) and all
interests of Tower Owner, Second Lender (if the Tower Second Loan is then
outstanding), and AEW New Lender (if the AEW New Loan is then outstanding) in
Cash Flow shall be granted to First Lender pursuant to written instruments
(including but not limited to a note and a pledge or other security agreements)
reasonably satisfactory to First Lender. In connection therewith, First Lender
may require reasonable assurance, including but not limited to representations,
warranties and/or an opinion of counsel, as to the validity and efficacy of such
pledge and instruments. First Lender will not unreasonably withhold its consent
to a request from Tower Owner to subordinate First Lender's lien on the
Ownership Interests in Tower Owner to a pledge of such interests to the lender
that provided the financing for the payment of the First Loan Base Debt,
provided such lender is not an AEW Entity, a Sears Entity or an Affiliate of
either, and provided further that assurances reasonably satisfactory to First
Lender shall be given to First Lender that such pledge to the refinancing lender
and such subordination by First Lender (i) shall not cause First Lender to be
entitled to receive less benefit in the event of a foreclosure by the
refinancing lender holding such pledge of Ownership Interests in Tower Owner
combined with a mortgage lien on the Tower Property than First Lender would be
entitled to receive in the event of foreclosure by the refinancing lender if
such lender held only a mortgage lien on the Tower Property without a pledge of
the Ownership Interests in Tower Owner, and (ii) shall not restrict First
Lender's exercise of its rights and remedies under its security instrument and
lien on the Ownership Interests.
(c) The Sears New Loan Redevelopment Mortgage (if the Sears New Loan
and/or the Sears Redevelopment Cost Obligation are then outstanding) and all
other collateral security documents granting Sears a security interest in the
Tower Property shall be released and terminated. Sears shall be granted a
subordinate security interest in the Ownership Interests in Tower Owner and/or
in the interests in Cash Flow pledged to First Lender pursuant to Section
4.08(b); provided that the instrument granting the subordinate security interest
to Sears shall be in substantially the same form
- 37 -
as the security interest granted to First Lender under Section 4.08(b).
(d) Notwithstanding the release and termination of the Amended First
Mortgage, First Lender's right to receive Further Interest, Participating
Interest and any Additional Participating Interest under the terms of the
Amended First Notes and pursuant to the Distribution Priorities shall continue
and remain in full force and effect, and First Lender's right to the Final
Participation Determination shall continue and remain in full force and effect
as provided in Section 7.02.
(e) If the Amended First Mortgage and other collateral security
documents securing the First Loan are terminated and released pursuant to this
Section 4.08 prior to July 2, 2005, the valuation of the Tower Property and
related rights and liabilities for purposes of determining an Extension LVR (on
a hypothetical basis) and the Determined Value and for purposes of determining
the Outside Determination Date and implementing Section 7.02 shall be performed
in accordance with the procedures for determining Fair Market Value described in
Exhibit L.
4.09 Forbearance From Foreclosure
----------------------------
(a) First Lender covenants and agrees that during the continuance of
the First Lender Forbearance Period, First Lender shall not, pursuant to any
Foreclosure Action against the Tower Property, complete the foreclosure of the
lien of the Amended First Mortgage or any other security interests in the Tower
Property granted by Tower Owner to First Lender or exercise any right to become
a mortgagee in possession; provided, however, that the foregoing shall not limit
or impair: (i) First Lender's right to commence a Foreclosure Action, (ii) First
Lender's right to seek the appointment of a receiver for the Tower Property;
(iii) the foreclosure of the lien of the security interests granted by Sears
and/or ST pursuant to the New Collateral Security Documents upon the occurrence
of a Sears/ST Termination Event (other than under Section 9.01(a)(7)) (whether
or not a Transfer Event has occurred, but subject to the provisions of Section
4.09(b) if a Transfer Event has not occurred); (iv) the foreclosure of the lien
of the security interests granted by PTLP and/or AEW Master Lessee pursuant to
the New Collateral Security Documents upon the occurrence of a Transfer Event
(whether or not a Sears/ST Termination Event has occurred); or (v) the exercise
by First Lender of its rights and remedies pursuant to Section 8 upon the
occurrence of a Transfer Event or pursuant to Section 9 upon the occurrence of a
Sears/ST Release Event.
(b) First Lender covenants and agrees that if it exercises its right to
foreclose the lien of the security interests granted by Sears and/or ST pursuant
to the New Collateral Security Documents upon the occurrence of a Sears/ST
Termination Event, then
- 38 -
provided a Transfer Event has not occurred, in accordance with Section 9.03(d)
First Lender will exercise such right so as to effect a transfer to PTLP of the
Sears/ST Ownership Interests and, if applicable, the Sears/ST Stock Holdings,
subject to the Amended First Loan Documents and the liens created thereby.
4.10 Rights Assigned to Master Lessee
--------------------------------
(a) The parties acknowledge and agree that Tower Owner has assigned to
the Master Lessee, so long as the Master Lease is in effect, the exclusive right
to exercise and deal with First Lender concerning all rights, options and
provisions exercisable by Maker under the Amended First Loan Documents (herein
collectively referred to as the "Assigned First Loan Rights"), including but not
limited to the following: (i) the exercise of the option to extend the Stated
Maturity Date to the Extended Maturity Date and the determination of the
Extension Rate as described in Section 4.03; (ii) the determination of Rate
Adjustments under Amended Notes B and C as described in Section 4.04; (iii) any
prepayment of the Amended First Notes as described in Section 4.05; (iv) any
redemption of Further Interest, Participating Interest and Additional
Participating Interest as described in Section 4.06; (v) any release of the
Amended First Mortgage as described in Section 4.08; (vi) any election or action
relating to the Final Participation Determination pursuant to Section 7; and
(vii) the determination of Cash Flow and the preparation and delivery of Cash
Flow and Distribution Statements and Auditor's CFD Statements under Section
6.04. Notwithstanding the foregoing, for purposes of this Section 4.10, the
Assigned First Loan Rights shall not include the right to effect any
modification or refinancing of the First Loan, and Master Lessee's rights with
respect thereto are as provided in Section 4.11 hereof.
(b) The parties further acknowledge and agree, with respect to the
Assigned First Loan Rights, that so long as the Master Lease is in effect: (i)
Tower Owner (as distinguished from the Master Lessee) shall have no right to
exercise, or deal with First Lender, concerning any of the Assigned First Loan
Rights; (ii) Tower Owner and First Lender shall respect and be bound by the
Master Lessee's exercise of, and actions taken with respect to, the Assigned
First Loan Rights in accordance with the terms of the Amended First Notes; (iii)
the Master Lessee shall have the responsibility to satisfy any condition or
requirement for the exercise of any of the Assigned First Loan Rights that the
Master Lessee elects to exercise, and Tower Owner shall have no responsibility
therefor; and (iv) all notices and deliveries required to be made by or to Tower
Owner shall be made by or to the Master Lessee. It is acknowledged and agreed
that the Master Lessee does not, by the foregoing provisions of this Section
4.10(b), assume nor shall it be deemed to assume any duty to Sears or ST as
Tower Owner or to ST as income beneficiary of the Grantor Trust.
- 39 -
(c) Notwithstanding the provisions of Sections 4.10(a) and (b), in the
event PTLP or its Permitted Designee becomes the Tower Owner, any or all of the
Assigned First Loan Rights and the rights of Master Lessee under Section 4.10
may be assigned or reassigned by written instrument by Master Lessee to Tower
Owner.
4.11 Refinancing and Restructuring
-----------------------------
(a) Subject to the provisions of Section 4.08 and the terms of this
Section 4.11 and further subject to the continuing applicability of the terms
and conditions of the Amended First Loan Documents, the Master Lessee shall have
the right and authority to arrange one or more refinancings of the entire First
Loan Base Debt, including payment of applicable prepayment fees, (but not less
than the entire First Loan Base Debt) with a third party lender that is not an
AEW Entity, a Sears Entity or an Affiliate of either AEW or Sears, on such terms
and conditions as are commercially reasonable for the Tower Property (a
"Refinancing") under which (i) the proceeds of the Refinancing and all benefits
to Tower Owner, Second Lender and any other parties are applied in accordance
with the Distribution Priorities; and (ii) the Tower Property may become subject
to the lien of a new first mortgage and related loan documents. Payments of
interest and reimbursements and payments of principal to the substitute first
lender (the "Refinancing Lender") pursuant to the Refinancing shall be treated
as Tower Expenses under Section 7.04(e) for purposes of determining Ordinary
Cash Flow. First Lender, Second Lender, AEW New Lender, Option Holder, Sears, ST
and Tower Owner agree to execute such amendments to or restatements of this
Agreement and the documents executed in connection herewith as (x) may be
reasonably required to meet the requirements (consistent with this Section 4.11)
of the Refinancing Lender, (y) do not materially alter the substantive rights of
the parties under this Agreement, and (z) satisfy the conditions described in
Section 4.08. In order to facilitate a Refinancing, First Lender, Second Lender,
AEW New Lender, Option Holder, Sears and ST agree to execute and deliver such
directions to the Grantor Trustee or the Land Trustee or both, as may be
reasonably required, including without limitation amendments to the Grantor
Trust and/or the Master Lease. Tower Owner shall pay, as a Tower Expense, all
costs and expenses (including attorneys fees and costs) incurred by First Lender
in connection with any Refinancing.
(b) For as long as ST or the Grantor Trust is the Tower Owner and Sears
owns the Common and Series A Preferred Stock of ST, any Refinancing shall be
conditioned upon the following: (i) the Refinancing Lender shall agree to
forbear from any foreclosure or becoming a mortgagee in possession of the Tower
Property that would divest the Grantor Trust or ST of ownership of the Tower
Property during the First Lender Forbearance Period; (ii) Sears shall receive an
opinion of counsel, subject to Sears approval (which Sears agrees not to
unreasonably withhold), (A) that the
- 40 -
Refinancing will not result in a non-exempt prohibited transaction under the
Employee Retirement Income Security Act of 1974, (B) that the Refinancing will
not cause any of Sears, ST or any Sears Entity to be deemed an issuer,
underwriter, investment company, a person that makes an offer or sale of any
security issued in connection with the Refinancing, or a direct or indirect
"controlling person" of any such issuer, underwriter, investment company,
offeror or seller for purposes of the Securities Act of 1933, the Securities
Exchange Act of 1934 or the Investment Company Act of 1940 or the related rules
and regulations of the Securities and Exchange Commission, and (C) that, if such
Refinancing occurs before July 2, 2001, it should not be characterized as a sale
or other transaction that would divest ST of ownership of the Tower Property for
federal income tax purposes; (iii) Sears shall be reimbursed for all
out-of-pocket expenses incurred by Sears, ST or any Sears Entity in connection
with the Refinancing, and (iv) the Refinancing will not result in additional
recourse liability to Sears, ST or any other Sears Entity. The opinion described
in clause (B) above shall be accompanied by a Blue Sky memorandum surveying all
applicable State Blue Sky laws and regulations and establishing to Sears
satisfaction that the result described in clause (B) will also be the result
under such laws or regulations.
SECTION 5
AMENDMENT OF SECOND LOAN AND TOWER OPTION
5.01 Amended Tower Second Note
-------------------------
ST and Land Trustee will execute and deliver to PTLP an amended and
restated Tower Second Note in the principal amount of $215,250,000 (herein
referred to as the "Amended Tower Second Note"). The Amended Tower Second Note
shall be dated and effective as of January 1, 1994. The parties acknowledge that
the principal of the Tower Second Note has increased through accretion since
July 2, 1990 from $207,500,000 to $215,250,000 as of January 1, 1994, as
reflected in the Amended Tower Second Note. Second Lender acknowledges and
agrees that as of the date hereof all required payments under the Amended Tower
Second Note have been made. Upon the transfer of the Combined Power Property to
the Grantor Trustee, ST will be released from its obligations as "Borrower"
under the Amended Tower Second Note; provided that if ST exercises its power of
substitution under the Grantor Trust, ST will again become obligated as Borrower
under the Amended Tower Second Note.
5.02 Modification of Note Terms
--------------------------
(a) The Amended Tower Second Note provides for the modification,
effective as of January 1, 1994, of the interest payable thereunder, including
the forbearance of all monthly interest payments for ten months commencing with
the interest
- 41 -
payment due as of February 1, 1994 and ending with the interest payment due as
of November 1, 1994. AEW will return to Tower Owner, by deposit into the CDSR,
the three monthly interest payments under the Tower Second Note which were
payable as of February 1, March 1 and April 1, 1994, in the aggregate amount of
$3,628,752, and which were in fact paid to AEW. Prior to the date hereof,
pursuant to the Forbearance Agreement, AEW returned to ST for deposit into the
CDSR the two monthly interest payments under the Tower Second Note in the
aggregate amount of $2,419,168, which were payable as of May 1 and June 1, 1994
and were in fact paid by ST to AEW, and AEW had also agreed to forbear from the
collection of the monthly interest payments on the Tower Second Note payable as
of May 1, 1994 and as of the first day of each month thereafter through November
1, 1994. The Forbearance Agreement is hereby terminated effective as of the date
hereof; and the provisions of the Forbearance Agreement relating to the
segregation of funds in the CDSR for the payment of brokerage commissions and
tenant improvement costs in respect of certain specified leases have been
incorporated into the Amended CDSR Agreement.
(b) The Amended Tower Second Note provides for the payment of "Base
Interest" at the rate specified herein and "Additional Interest" (as set forth
therein and consisting of "Additional IRR Interest", "Additional Payments
Interest" and "Additional Participating Interest") in accordance with the
Distribution Priorities described in Section 6.01(a) hereof. The Amended Tower
Second Note also provides for a scheduled maturity date of July 2, 2010. The
Amended Tower Second Note also provides for acceleration upon a Bona Fide Sale
of the Tower Property after July 2, 2005 or the occurrence of an "Event of
Default" (under and as defined in the Amended Tower Second Note).
5.03 Amendment of Option Agreement
-----------------------------
ST, Land Trustee, and Option Holder will execute and deliver to each
other an "Amended and Restated Option Agreement (Tower)," (herein the "Amended
Option Agreement") which amends and restates in its entirety the Option
Agreement. Pursuant to the Amended Option Agreement, the scheduled termination
date of the Tower Option, if not previously exercised, is July 2, 2005, subject
to certain extension rights under specified circumstances. In all events, the
Tower Option terminates at such time that the Option Holder (or its Permitted
Designee) becomes Tower Owner.
5.04 Amendment of Mortgages
----------------------
(a) In connection with the execution and delivery of the Amended Tower
Second Note, ST, Land Trustee and Second Lender will enter into an "Amendment to
Second Mortgage" of even date herewith (the Second Mortgage, as so amended, is
herein referred to as the "Amended Second Mortgage"). In connection with the
execution and
- 42 -
delivery of the Amended Option Agreement, the Option Mortgage will be released
and terminated.
(b) AEW will release and terminate the Third Mortgage securing the
Franklin Center loan and there shall be no mortgage or other encumbrance on any
of the Tower Property securing the Franklin Center Loan. The Amended Second
Mortgage eliminates all cross defaults from the Franklin Center Loan into the
Tower Second Loan.
(c) The Amended Second Mortgage shall incorporate the provisions of
Section 10.05.
5.05 Further Advances
----------------
Funds advanced by Second Lender, after the AEW New Loan is advanced in
full, and applied to (i) the payment of Required Minimum Interest or other
amounts under the Amended Fist Notes, or (ii) the leasing, operation,
maintenance, repair and replacement of the Tower Property shall be added to the
principal of the Tower Second Note and bear interest on the same terms ads the
original principal amount of the Tower Second Note. (Any such additional
advances by Second Lender are herein referred to as "Additional AEW Advances".)
5.06 Forbearance From Foreclosure
----------------------------
Second Lender covenants and agrees that during the continuance of the
Second Lender Forbearance Period, Second Lender shall not, pursuant to any
Foreclosure Action against the Tower Property, complete the foreclosure of the
lien of the Amended Second Mortgage or any other security interests in the Tower
Property granted by Tower Owner or Second Lender or exercise any right to become
a mortgagee in possession; provided, however, that the foregoing shall not limit
or impair: (i) Second Lender's right to commence a Foreclosure Action; (ii)
Second Lender's right to seek the appointment of a receiver for the Tower
Property; and (iii) the exercise by Second Lender of its rights and remedies
pursuant to Section 9 upon the occurrence of a Sears/ST Default, a Sears/ST
Termination Event (other than under Section 9.01(a)(7)), a Sears/ST General
Default or a Sears/ST Special Default. It is acknowledged and agreed that Second
Lender shall not be deemed to be, or to have exercised any right to become, a
mortgage in possession solely by reason of any affiliation with the Master
Lessee.
- 43 -
SECTION 6
DISTRIBUTION PRIORITIES
-----------------------
6.01 Distribution Priorities
-----------------------
(a) The parties acknowledge and agree that the Amended First Notes, the
Amended Tower Second Note, the AEW New Loan Note, the Sears New Loan Note and
the Sears Redevelopment Cost Obligation provide for the distribution and
application of "Cash Flow" (as defined herein) from the Tower Property, and that
Cash Flow from the Tower Property shall be distributed and applied, according to
the following priorities ("Distribution Priorities"), subject to the provisions
of the this Section 6.01 and Section 6.02.
(1) First Distribution Priority: First Loan principal, prepayment
premium and interest.
-------------------------------------------------------------
Cash Flow will be applied first to the payment in full of the
following amounts payable in respect of the Amended First Notes,
in the following order of priority (unless otherwise applied by
First Lender as permitted by the Amended First Note after
acceleration upon an Event of Default): (i) Minimum Interest
(whether Contingent Minimum Interest or Required Minimum Interest)
due and payable currently; (ii) previously unpaid Contingent
Minimum Interest; (iii) Additional Interest (including, without
limitation, interest with respect to the period January 1, 1994
through October 31, 1994); (iv) Extension Period Interest
(applicable only if the maturity of the Amended First Notes is
extended to the Extended Maturity Date); (v) prepayment premium,
if applicable, with payments applied to the three Amended First
Notes in proportion to the respective prepayment premiums then
payable under each; and (vi) principal (including, without
limitation, any and all advances from time to time made under the
Amended First Mortgage).
(2) Second Distribution Priority: New Loans principal, Tower Second
Loan principal, and First Loan Further Interest.
---------------------------------------------------------------
After payment of the First Distribution Priority, Cash Flow in an
amount equal to the Second Priority Amount shall next be applied:
50% to AEW New Lender and Second Lender, first to the payment of
the principal of the AEW New Loan Note (until payment in full of
the principal thereof) and then to the principal of the Amended
Tower Second Note; 40% to First Lender as Further Interest under
the Amended First Notes; and 10% to Sears in payment of the
principal of the Sears New Loan Note.
- 44 -
(3) Third Distribution Priority: Tower Second Loan principal and First
Loan Participating Interest.
------------------------------------------------------------------
Cash Flow shall next be applied: 10% to First Lender as
Participating Interest under the Amended First Notes and 90% to
the payment of the principal of the Amended Tower Second Note,
until the principal of the Amended Tower Second Note (including,
without limitation, any Additional AEW Advances) is paid in full.
(4) Fourth Distribution Priority; New Loans Interest, Tower Second
Loan Interest, and First Loan Participating Interest and Further
Interest.
----------------------------------------------------------------
Cash Flow shall next be applied: 10% to First Lender as
Participating Interest under the Amended First Notes; and 90% to
Second Lender, AEW New Lender, Sears and First Lender as interest
in the following four categories and in proportion to the amounts
due and owing in each respective category at the time of
distribution: (i) to Second Lender, the Base Interest on the
Amended Tower Second Note; (ii) to AEW New Lender, the interest on
the AEW New Note; (iii) to Sears, the interest on the Sears New
Loan Note; and (iv) to First Lender as Further Interest under the
Amended First Notes, an amount equal to four (4) times the
interest payable on the Sears New Loan Note.
The application of Cash Flow pursuant to this Fourth Distribution
Priority shall continue until each category of interest in clauses
(i) through (iv) is paid in full.
(5) Fifth Distribution Priority; Sears Redevelopment Costs and First
Loan Participating Interest.
----------------------------------------------------------------
Cash Flow shall next be applied: 20% to First Lender as
Participating Interest under the Amended First Notes and 80% to
Sears in payment of the Sears Redevelopment Cost Obligation, until
the Sears Redevelopment Cost Obligation is paid in full.
(6) Sixth Distribution Priority; First Loan Participating Interest and
Tower Second Loan Additional IRR Interest.
------------------------------------------------------------------
Cash Flow in an amount equal to the IRR Amount (calculated in
accordance with the sample calculation set forth in Exhibit I
attached hereto) shall next be applied: 20% to First Lender as
Participating Interest under the Amended First Notes and 80% to
Second Lender as Additional IRR Interest under the Amended Tower
Second Note.
- 45 -
(7) Seventh Distribution Priority; First Loan Participating Interest,
Tower Second Loan Additional Participating Interest and Balance to
Tower Owner.
------------------------------------------------------------------
Any remaining Cash Flow shall be applied: 20% to First Lender as
Participating Interest under the Amended First Notes; 50% to
Second Lender as Additional Participating Interest under the
Amended Tower Second Note; and 30% to the Tower Owner.
The distributions of Cash Flow pursuant to this Seventh
Distribution Priority (i) to First Lender shall continue until
First Lender's right to receive Participating Interest under the
Amended First Notes has terminated in accordance with the terms
thereof, and (ii) to Second Lender shall continue until Second
Lender's right to receive Additional Participating Interest under
the Tower Second Note has terminated in accordance with the terms
thereof; and upon termination of such right of First Lender to
receive Participating Interest or such right of Second Lender to
receive Additional Participating Interest, the percentage
allocation of Cash Flow previously allocated to such Lender whose
right has terminated shall thereafter be distributed to Tower
Owner.
(b) It is the intent of the parties that all First Loan Modification
Documents, all Second Loan/Option Modification Documents, the AEW New Loan
Documents and the Sears Lender Documents be consistent with the Distribution
Priorities described in Section 6.01(a), the other provisions of this Section 6,
and the provisions of Section 7. In the event of any ambiguity or inconsistency
with respect to the priority of the application of Cash Flow between the
provisions of this Section 6 or Section 7, on the one hand, and the provisions
of any of the First Loan Modification Documents, the Second Loan/Option
Modification Documents (including without limitation the AEW New Loan Documents)
or the Sears Lender Documents on the other hand, the provisions of this Section
6 and Section 7 shall be controlling.
(c) Payments made to First Lender in respect of Stated Interest under
the Amended First Notes pursuant to the First Distribution Priority shall be
applied to the three Amended First Notes in proportion to the stated Interest
then due and payable under each of said Notes. All other payments made to First
Lender in respect of the Amended First Notes pursuant to each of the seven
Distribution Priorities under Section 6.01(a) shall be applied to the three
Amended First Notes in proportion to the respective then outstanding principal
amounts of each, except as otherwise provided in the First Distribution Priority
with respect to payments of prepayment premiums, and except for any prepayment
of principal of
- 46 -
Amended Note B and/or Amended Note C on an "Adjustment Date" as provided
therein.
(d) With respect to the Fourth Distribution Priority, for purposes of
calculating amounts payable to First Lender as Further Interest, Sears shall be
deemed to have made all required advances under the Sears New Loan
(notwithstanding any failure by Sears for any reason to make such advances).
(e) The parties acknowledge and agree that interest and principal under
the Amended First Notes is payable pursuant to the First Distribution Priority
to the extent of Cash Flow. If there is insufficient Cash Flow to pay Minimum
Interest under the Amended First Notes, then Minimum Interest shall be payable
from available funds in the CDSR, if any (maintaining in effect any segregation
of funds for leasing costs as provided in the Amended CDSR Agreement); and if
and to the extent Minimum Interest is not paid from Cash Flow or from funds in
the CDSR Minimum Interest shall be payable from funds in the NLCR, if any
(including, without limitation, the proceeds of the AEW New Loan and of the
Sears New Loan/Contribution deposited into the NLCR). The parties further
acknowledge and agree that if Cash Flow, funds in the CDSR and funds in the NLCR
(or required to be deposited into the NLCR) are insufficient to pay Minimum
Interest (other than Required Minimum Interest), such Minimum Interest shall not
be due and payable unless and until Tower Owner has sufficient Cash Flow to make
such payment in accordance with the terms of the Amended First Notes. Additional
Interest under the Amended First Notes shall not be paid from funds in the CDSR
or the NLCR except at the Stated Maturity Date of the First Loan.
(f) The parties acknowledge and agree that, until payment in full of
the First Loan (including, without limitation, the satisfaction of all
obligations in respect of Further Interest, Participating Interest and
Additional Participating Interest), interest and principal on the Amended Tower
Second Note, the AEW New Loan Note and the Sears New Loan Note, and any amounts
due under the Sears Redevelopment Cost Obligation are payable solely from Cash
Flow in accordance with the Distribution Priorities.
(g) Second Lender acknowledges and agrees that it shall not have, and
hereby disclaims, any security interest in the NLCR.
6.02 Adjustment and Reallocation of Priorities
-----------------------------------------
(a) In the event of a Sears/ST Release Event as described in Section 9,
provided no Transfer Event has occurred, the Sears Cash Flow Interests shall be
reallocated 50% to First Lender and 50% to Second Lender, subject, however, to
the provisions of Section 6.02(b).
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(b) In the event of a termination of Sears/ST Interests as provided in
Section 25.08(a), if Second Lender, in its absolute discretion, advances funds
to remedy the condition of the Tower Property that is the subject of such breach
of warranty, and provided no Transfer Event has occurred, then the Sears Cash
Flow Interests shall first be reallocated to Second Lender in the amount and to
the extent of such funds advanced by Second Lender, and the balance of the Sears
Cash Flow Interests shall be reallocated 50% to First Lender and 50% to Second
Lender.
(c) Any Sears Cash Flow Interests reallocated to First Lender pursuant
to Section 6.02(a) or 6.02(b) shall be secured by the lien of the Amended First
Mortgage and characterized as Additional Participating Interest under the
Amended First Notes; and any Sears Cash Flow Interest reallocated to Second
Lender pursuant to Section 6.02(a) or 6.02(b) shall be secured by the lien of
the Amended Second Mortgage and characterized as Additional Payments Interest
under the Amended Tower Second Note.
(d) For purposes of the reallocation of the Sears Cash Flow Interests
pursuant to Section 6.02(a) or 6.02(b), as between First Lender and Second
Lender but without waiver of any claim against Sears, with respect to the Second
Distribution Priority and the Fourth Distribution Priority. Sears shall be
deemed to have made all required advances under the Sears New Loan
(notwithstanding any failure by Sears for any reason to make such advances).
(e) Upon the occurrence of a Transfer Event described in clause (3) of
Section 8.01 (arising from AEW's failure to make any required advance under the
AEW New Loan), provided a Sears/ST Release Event has not occurred, then one
hundred percent (100%) of the Second Lender Cash Flow Interests shall be
reallocated to First Lender. Any such Second Lender Cash Flow Interests
reallocated to First Lender shall be secured by the lien of the Amended First
Mortgage and characterized as Additional Participating Interest under the
Amended First Notes.
(f) Any Additional Participating Interest under the Amended First Notes
resulting from a reallocation of the Sears Cash Flow Interests and any
Additional Payments Interest under the Tower Second Note resulting from a
reallocation of the Sears Cash Flow Interests shall be payable in accordance
with the respective Distribution Priorities from which such payments were
reallocated pursuant hereto.
(g) If Sears makes any Additional Sears Advances under the Sears New
Loan Note in accordance with Section 14.02(b), then any such Additional Sears
Advances shall increase the Second Priority Amount from $90,000,000 to an amount
(the "Increased Second Priority Amount") which is the sum of $90,000,000 plus
any such Additional Sears Advances; (ii) the percentage for the distribution of
Cash Flow under the Second Distribution Priority to the First
- 48 -
Lender shall be determined by dividing $36 million by the Increased Second
Priority Amount; (iii) the percentage for the distribution of Cash Flow under
the Second Distribution Priority to the Second Lender shall be determined by
dividing $45 million by the Increased Second Priority Amount; and (iv) the
percentage for the distribution of Cash Flow under the Second Distribution
Priority to Sears shall be determined by dividing the sum of $9 million plus the
Additional Sears Advances by the Increased Second Priority Amount.
6.03 Loan Status Statements
----------------------
(a) Within ninety (90) days after the end of each calendar year, until
payment in full of the principal of and all interest (including, without
limitation, all Further Interest and Participating Interest) under the Amended
First Notes, the three respective parties specified below shall deliver to each
of the other said parties and to the Master Lessee the statements described
below (sample forms of which are attached hereto as Exhibit J), reflecting
amounts calculated through the calendar year then ended and certified in each
case by an officer of the respective party:
(i) First Lender shall deliver a statement in respect of the Amended
First Notes showing: Minimum Interest paid for the year; unpaid
(contingent and deferred) Minimum Interest from November 1,
1994; Additional Interest paid for the year; unpaid (contingent
and deferred) Additional Interest from January 1, 1994;
Extension Period Interest paid for the year; Further Interest
paid for the year; Participating Interest paid for the year;
outstanding principal.
(ii) Second Lender shall deliver a statement showing in respect of
the Amended Tower Second Note: Base Interest paid for the year;
accumulated unpaid Base Interest from January 1, 1994;
Additional Interest paid for the year; any further advances made
and the date of each advance; outstanding principal.
(iii) AEW New Lender shall deliver a statement showing in respect of
the AEW New Loan Note: amounts advanced and date of each
advance; interest paid for the year; accumulated unpaid
interest; outstanding principal.
(iv) Sears shall deliver a statement showing: (1) amounts advanced
and dates of each advance under the Sears New Loan Agreement and
the Sears Contribution Agreement, stating separately amounts
advanced as Sears New Loan and amounts advanced as
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Sears New Contribution; (2) in respect of the Sears New Loan
Note: interest paid for the year, accumulated unpaid interest;
outstanding principal; and (3) in respect of the Sears
Redevelopment Cost Obligation: amounts paid for such year;
outstanding unamortized amount.
6.04 Cash Flow and Distribution Statements
-------------------------------------
(a) In addition to the financial statements required to be delivered by
the Tower Owner pursuant to the Amended First Mortgage, the Master Lessee shall
furnish or cause to be furnished to each of First Lender, Second Lender, AEW New
Lender, Sears and ST, within twenty (20) days after the end of each month, a
statement ("Cash Flow and Distribution Statement") in form and detail as set
forth in Exhibit K attached hereto setting forth: (i) the calculation of Cash
Flow from the Tower Property for such period and on a cumulative year-to-date
basis, and stating separately Ordinary Cash Flow with Tower Gross Revenues and
Tower Expenses each shown in reasonable detail and in the same manner as in the
Approved Annual Budget), Disposition Proceeds, and any other components of Cash
Flow; and (ii) the distribution and application of Cash Flow for such period and
on a cumulative year-to-date basis according to the Distribution Priorities.
Each Cash Flow and Distribution Statement shall be prepared on a cash basis, in
accordance with the requirements of this Section 6 and Section 7, and otherwise
in accordance with generally accepted accounting principles, and shall contain a
certification from the Master Lessee that, to the best of its knowledge, such
statement is true and complete in all material respects. In support of each Cash
Flow and Distribution Statement the Master Lessee shall also provide therewith
to First Lender the information and material set forth in Exhibit K-1 attached
hereto.
(b) Within ninety (90) days after the end of each calendar year and, in
the case of a Final Participation Determination, within 90 days after the date
of the Final Participation Determination, the Master Lessee shall also furnish
or cause to be furnished to each of First Lender, Second Lender, AEW New Lender,
Sears and ST a Cash Flow and Distribution Statement for the year then ended and,
in the case of the Final Participation Determination, for the portion of the
then current year through the date of the Final Participation Determination,
prepared and certified by an Approved Auditor selected by the Master Lessee.
Said Cash Flow and Distribution Statement shall include a note or notes (i)
reviewing and reconciling the information contained in the statements delivered
pursuant to Sections 6.03(a) and 6.04(a) and (ii) showing a calculation of the
amount of the Cash Flow required, as of the end of the preceding calendar year
or as of the date of the Final Participation Determination, as the case may be,
to satisfy the First through Sixth Distribution Priorities and the
- 50 -
amount payable to each party under each of said Distribution Priorities given
such amount of Cash Flow.
(c) In the event of any failure by Master Lessee to furnish or cause to
be furnished any Cash Flow and Distribution Statement pursuant to Section
6.04(a) or Section 6.04(b), and the continuance of such failure for a period of
ten (10) days after written notice from First Lender, First Lender may at its
option at any time thereafter prepare or cause to be prepared such Cash Flow and
Distribution Statement, provided ay Cash Flow and Distribution Statement in
respect of Section 6.04(b) shall be prepared and certified by an Approved
Auditor selected by First Lender. Any Cash Flow and Distribution Statement
prepared or caused to be prepared by First Lender pursuant to this Section
6.04(c) shall be binding upon Tower Owner, Sears, ST and Master Lessee with the
same effect as a statement furnished or caused to be furnished by Master Lessee
pursuant to Section 6.04(a) or 6.04(b), as applicable.
(d) In the event of any disagreement by First Lender with any aspect of
any Cash Flow and Distribution Statement, First Lender may notify Master Lessee
of such disagreement, and Master Lessee and First Lender shall then cause their
respective representatives and accountants to hold such meetings and discussions
as they shall deem necessary to hold such meetings and discussions as they shall
deem necessary concerning the disagreement and to use all reasonable efforts to
reach a mutually acceptable resolution of the matter in question, in
consultation with First Lender and Master Lessee, within thirty (30) days after
First Lender's notice of such disagreement. If no resolution is reached, then,
within thirty (30) days after the expiration of such 30-day period, First Lender
shall appoint an Approved Auditor to review and make a determination as to the
matter in question, in consultation with First Lender and Master Lessee, within
ninety (90) days after such appointment. The Approved Auditor shall be
instructed to prepare and deliver to First Lender and Master Lessee a
preliminary statement of its conclusions not later than seventy-five (75) days
after its appointment and to meet with First Lender and Master Lessee to review
and discuss such preliminary statement of conclusions before the preparation and
delivery of its final statement. Such Approved Auditor's final determination
(the "Auditor's CFD Statement") shall be final and binding upon the parties.
Such Approved Auditor shall have full access to the books, records and accounts
of the Tower Property. The charges and expenses of such Approved Auditor shall
be paid from Cash Flow as a chargeable Tower Expense in determining Cash Flow,
except as otherwise provided below.
(e) If any inspection of the books, records and accounts by First
Lender's representatives and accountants results in the determination of an
underpayment of any sums, including, without limitation, any Minimum Interest,
Additional Interest, Extension Period Interest (if applicable), Further Interest
or Participating Interest, due under the Amended First Notes, Tower Owner shall
pay
- 51 -
the amount of any such underpayment, together with the late charge specified in
Section 4 of the Amended First Notes, to First Lender within five (5) days after
written notice thereof to Tower Owner and Master Lessee or, in the event of a
disagreement on the matter in question, within five (5) days after written
notice thereof to Tower Owner and Master Lessee of the resolution of such
disagreement by First Lender's and Master Lessee's representatives and
accountants or by the Approved Auditor, as the case may be. If such underpayment
amounts to more than the greater of $75,000 or three percent (3%) of the
interest or other sums due for the period in question, then, notwithstanding
anything to the contrary in this Section, Tower Owner covenants to pay to First
Lender, within five (5) days after demand, First Lender's reasonable costs and
expenses in conducting such inspection and exercising its rights under this
Section (including, without limitation, a reasonable charge for the services of
any employees of First Lender or an affiliate of First Lender conducting such
inspection), and such amounts shall be a chargeable Tower Expense in determining
Cash Flow. In no event shall the foregoing relieve or release Tower Owner from
any obligation to pay interest as provided in the Amended First Notes or be
deemed to waive any rights of First Lender under the Amended First Notes and the
Amended First Mortgage.
(f) It is acknowledge and agreed that First Lender's right under the
Amended First Mortgage to inspect the books, records and accounts of the
mortgagor shall include the right to inspect or cause to be inspected (by
employees of First Lender or any affiliate of First Lender or by independent
accountants retained by First Lender) all books, records and accounts relating
to the determination of Cash Flow or the preparation of Cash Flow and
Distribution Statements. It is also acknowledged and agreed that First Lender
shall have the same rights to inspect the books, records and accounts of Master
Lessee as provided by the Amended First Mortgage and this Section 6.04 with
respect to the books, records and accounts of Tower Owner. First Lender shall
also have the right to review and inspect all reasonable times all agreements,
documents, material and information relating to the leasing, operation,
management, development and redevelopment of the Tower Property.
(g) Tower Owner hereby agrees to be bound by all actions taken by the
Master Lessee in respect of the determination and application of Cash Flow under
this Section 6.04.
6.05 Payment of Minimum Interest and Additional Interest
---------------------------------------------------
(a) Prior to January 1, 2002, Minimum Interest shall be payable, to the
extent of Cash Flow and funds in or payable to the CDSR and NLCR, on the first
day of each calendar month in accordance with the Amended First Notes, subject
to the following. In the event the funds or payable to the CDSR and the NLCR
have been exhausted, prior to January 1, 2002, Minimum Interest shall be
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payable from Cash Flow as estimated under the Approved Annual Budget. On or
before the 20th day after the end of each calendar quarter (April 20, July 20,
October 20 and January 20), Master Lessee shall provide to First Lender, as part
of the Cash Flow Distribution Statement required by Section 6.04(a), a
reconciliation of the actual Cash Flow against the Approved Annual Budget. To
the extent the reconciliation discloses an underpayment to First Lender, the
additional amount owed to First Lender shall be remitted with the Cash Flow
Distribution Statement, provided that, after taking account of such payment,
projected Cash Flow as set forth in the Approved Annual Budget is sufficient to
pay projected Tower Expenses during such calendar year. To the extent the
reconciliation discloses an overpayment to First Lender, the amount of such
overpayment may be credited against the next monthly payment of Minimum Interest
and/or Additional Interest. If the amount of such overpayment exceeds the
estimated amount of the next monthly payment of Minimum Interest and/or
Additional Interest, then First Lender shall remit to Master Lessee the excess
over such estimated amount. From and after January 1, 2002, Minimum Interest
shall be due and payable in accordance with the Amended First Notes irrespective
of the availability of Cash Flow or funds in or payable to the CDSR or the NLCR.
(b) Additional Interest shall be payable, to the extent of Cash Flow,
on the first day of each calendar month in accordance with the Amended First
Notes. Additional Interest shall be payable from Cash Flow as estimated under
the Approved Annual Budget. On or before the 20th day after the end of each
calendar quarter (April 20, July 20, October 20 and January 20), Master Lessee
shall provide to First Lender, as part of the Cash Flow Distribution Statement
required by Section 6.04(a), a reconciliation of the actual Cash Flow against
the Approved Annual Budget. To the extent the reconciliation discloses an
underpayment to First Lender, the additional amount owed to First Lender shall
be remitted with the Cash Flow Distribution Statement. To the extent the
reconciliation discloses an overpayment to First Lender, the amount of such
overpayment may be credited against the next monthly payment of Minimum Interest
and/or Additional Interest. If the amount of such overpayment exceeds the
estimated amount of the next monthly payment of Minimum Interest and/or
Additional Interest, then First Lender shall remit to Master Lessee the excess
over such estimated amount. No Additional Interest shall be paid from the CDSR
or the NLCR except at the Stated Maturity Date of the First Loan.
(c) If prior to January 1, 2002 the funds from the CDSR and the NCLR
shall have been fully utilized and Cash Flow is not sufficient to pay Tower
Expenses, PTLP may advance funds to pay Tower Expenses pursuant to the Approved
Annual Budget, and PTLP may recover such funds from Cash Flow that would
otherwise be payable, subsequent to the date of contribution of such funds, as
Additional Interest under the Amended First Notes for the period prior to
January 1, 2002. If, subsequent to January 1, 2002, Cash Flow is
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not sufficient to pay Tower Expenses pursuant to the Approved Annual Budget or
to pay required Minimum Interest, for any month during a calendar year, PTLP may
contribute funds to pay such deficiency and recover the amount so contributed as
provided in this paragraph to the extent that Additional Interest under the
Amended First Notes is paid for such calendar year. The Cash Flow and
Distribution Statement to be provided by Master Lessee pursuant to Section
6.04(b) shall contain a reconciliation of the Additional Interest, if any, paid
to First Lender and the funds contributed by PTLP to pay Minimum Interest for
such year. To the extent the reconciliation discloses an overpayment to First
Lender, the amount of such overpayment may be credited against the next monthly
payment of Minimum Interest and/or estimated amount of Additional Interest. If
the amount of such overpayment exceeds the amount of the next monthly payment of
Minimum Interest and/or estimated amount of Additional Interest, then First
Lender shall remit to PTLP the excess over such Minimum Interest and estimated
amount of Additional Interest. If no Additional Interest is paid for the
calendar year in which the contributions are made by PTLP, the amount
contributed shall be added to the indebtedness under the Amended Tower Second
Note as an Additional AEW Advance and shall be payable in accordance with the
Distribution Priorities under Section 6.
6.06 Budget Approval Procedures
--------------------------
(a) Master Lessee shall submit annually to First Lender a proposed
annual budget in a form satisfactory to First Lender no later than October 1 of
the current calendar year for the next succeeding year. The proposed budget
shall have been submitted by Master Lessee to PTLP and approved by PTLP prior to
its submission to First Lender. The proposed annual budget shall also include
the proposed Leasing Plan and the proposed Annual Guidelines (Leasing
Guidelines) for such succeeding year.
The proposed annual budget shall include the following:
1. All projected receipts and expenditures;
2. Allowances for capital expenditures broken out by category
(i.e. tenant improvements, leasing commissions, other tenant
capital costs, building maintenance capital) including the
total cost of the planned capital expenditure if such
expenditures is anticipated to be phased over a period which
exceeds the budget year;
3. Operating reserves if the CDSR and NLCR have been fully
disbursed;
4. Projected payment of debt service;
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5. CDSR/NLCR budgets;
6. Narrative report describing trends in the market and their
impact on the Tower Property; and
7. Any other information reasonably requested by First Lender
needed to assist in its review of the proposed annual budget.
(b) The proposed annual budget shall be prepared on a cash basis
indicating the timing of when receipts and disbursements would be received and
paid. The proposed annual budget shall be in sufficient detail and explanation
to indicate the need and calculation of each line item and an explanation for
any increase or decrease in such line item from the prior Approved Annual Budget
(as hereinafter defined). The proposed annual budget shall also include an
updated budget for the current year showing eight months actual and four months
estimated. The proposed annual budget for the next succeeding year shall be
compared against the updated budget for the current year.
(c) First Lender will have forty-five (45) days to review the proposed
annual budget and either approve the proposed annual budget or indicate its
reasons why the proposed annual budget is not approved. Master Lessee will then
have fifteen (15) days to respond to First Lender's objections. First Lender
will then have fifteen (15) days to accept or reject Master Lessee's responses.
If First Lender objects then the proposed annual budget shall be modified to
incorporate those line items on which both parties agree and shall incorporate
where First Lender and Master Lessee disagree, the amounts from the current
budget, if any, until such time as the disputed amounts are resolved.
(d) Once approved by First Lender and Master Lessee, the proposed
annual budget shall become the approved annual budget (herein referred to as the
"Initial Approved Annual Budget"; the Initial Approved Annual Budget and, after
approval by First Lender, each "Proposed Updated Annual Budget," as described
below, are herein each referred to as the "Approved Annual Budget") for the
period that the respective budget is in effect). Master Lessee shall not exceed
the aggregated budget expenses (excluding capital expenditures) without the
prior written consent of First Lender, which approval shall not be unreasonably
withheld. With respect to capital expenditures, Master Lessee shall not expend
more than the amounts specified in the Approved Annual Budget and in accordance
with the Leasing Guidelines (as applicable) without First Lender's prior written
approval which approval shall be in its sole and absolute discretion.
(e) Within twenty (20) days after the end of every quarter, Master
Lessee shall deliver a proposed updated annual budget ("Proposed Updated Annual
Budget") which includes the actual
- 55 -
performance for the preceding quarters of that calendar year. First Lender shall
then have five (5) days to accept or reject such Proposed Updated Annual Budget,
which consent shall not be unreasonably withheld (except as to capital
expenditures not previously approved, which consent shall be at First Lender's
sole and absolute discretion. First Lender's withholding of its consent shall be
considered reasonable if, including but not limited to, the following: (i) the
Proposed Updated Annual Budget materially reflects increased Tower Expenses
(excluding the incorporation of an unanticipated event), (ii) the total capital
expenditures (excluding tenant related capital) for the calendar years have
increased above the Approved Annual Budget, (iii) operating reserves (if any)
have increased above the Approved Annual Budget to the extent they have
increased above the Approved Annual Budget to the extent they have increased
more than the Cash Flow shortfalls generated during the preceding quarter(s) of
the calendar year, and (iv) tenant related capital has not been adjusted to
reflect the Approved Leasing Plan which, with the passage of time, may or may
not be readily achievable.
(f) If approved by First Lender, the Proposed Updated Annual Budget
shall become the then applicable Approved Annual Budget. If the Proposed Updated
Annual Budget is not approved, Master Lessee shall have three (3) business days
in which it may revise the Proposed Updated Annual Budget in accordance with
First Lender's objections and deliver a copy of the modified Proposed Updated
Annual Budget to First Lender. If the Master Lessee so revises the Proposed
Updated Annual Budget (or if it is otherwise approved by First Lender), the
Proposed Updated Annual Budget shall become the then applicable Approved Annual
Budget; and otherwise the previously applicable Approved Annual Budget shall
remain in effect. The Approved Annual Budget in effect from time to time will
then be used by First Lender as the basis for releasing funds under the CDSR and
NLCR and by Master Lessee for determining the Minimum Interest and Additional
Interest to be paid to First Lender.
(g) Notwithstanding anything herein or in the Amended First Loan
Documents to the contrary, for the period commencing on the repayment in full of
the First Loan Base Debt and ending upon a Final Participation Determination (i)
the Continuing Guidelines (as defined in the Leasing Guidelines) shall
terminate, and (ii) in lieu of its rights to approve budgets and leasing matters
as set forth herein or elsewhere in the Amended First Loan Documents, First
Lender shall have the right, in its reasonable discretion, to approve the annual
business plan for the Tower Property (including the budget and leasing plan) and
amendments to the same, if any.
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SECTION 7
FIRST LOAN PARTICIPATION
------------------------
7.01 Payments of Participating Interest
----------------------------------
(a) Payments of Participating Interest under the Amended First Notes
shall be made from time to time in accordance with the Distribution Priorities
described in Section 6.01(a) and this Section 7. Payments of Participating
Interest other than pursuant to the Final Participation Determination shall be
made quarterly within 20 days after the end of each calendar quarter.
(b) Payment of Participating Interest under the Amended First Notes
pursuant to the Final Participation Determination shall be made within 90 days
after the Final Participation Determination and in any event not later than the
Outside Determination Date (as defined in Section 7.02(a) below). Any unpaid
interest under the Amended First Notes, including but not limited to Further
Interest and Additional Participating Interest, shall become payable at the same
time as the final payment of Participating Interest upon the Final Participation
Determination.
7.02 Final Participation Determination
---------------------------------
(a) A final determination of Participating Interest, Further Interest
and Additional Participating Interest under the Amended First Notes (the "Final
Participation Determination") shall be made, calculated and paid as of a date
(the "Outside Determination Date") as specified below, unless the Final
Participation Determination is required to be made as of an earlier date
pursuant to Section 7.02(b) or is made as of an earlier date at the option of
Tower Owner pursuant to Section 7.02(d). The Outside Determination Date shall
be:
(i) July 2, 2008, if (i) the maturity of the First Loan is extended
to the Extended Maturity Date pursuant to Section 4.03; or (ii)
if the First Loan Base Debt is refinanced with a Lender other
than First Lender but under terms satisfying the First Loan
extension criteria as to the Extension DSCR and the Extension
LVR described in Section 4.03(b);
(ii) July 2, 2008, if (i) the First Loan Base Debt is refinanced with
a lender other than First Lender under terms that do not satisfy
the First Loan extension criteria as to the Extension DSCR and
the Extension LVR described in Section 4.03(b), and (ii) First
Lender does not request the Discounted Determination Payment
pursuant to Section 7.02(c) or First Lender does not deliver any
notice pursuant to Section 7.02(c);
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(iii) July 2, 2010 if (i) the First Loan Base Debt is refinanced with
a lender other than First Lender under terms that do not satisfy
the First Loan extension criteria as the Extension DSCR and the
Extension LVR describe in Section 4.03(b), and (ii) First Lender
requests the Discounted Determination Payment pursuant to
Section 7.02(c) and Tower Owner instead elects to be obligated
for the Preference Determination Payment pursuant to Section
7.02(c).
(b) The Final Participation Determination shall be made upon and
calculated as of the occurrence of either of the following events prior to the
Outside Determination Event:
(i) any Bona Fide Sale of the Tower Property after July 2, 2005; or at
the option of Tower Owner, a Bona Fide Sale of the Tower Property
after April 2, 2005 and on or before July 2, 2005 (herein
referenced to as an "Early Determination Sale"); or
(ii) at the option of First Lender, an Event of Default under the
Amended First Mortgage and the acceleration by First Lender of the
Amended First Notes pursuant thereto (unless the First Loan is
reinstated for any reason whatsoever), with the Final
Participation Determination to be made as of the date of First
Lender's notice of acceleration.
Tower Owner shall give MetLife not less than ninety (90) days prior written
notice of any Final Participation Determination Event pursuant to a Bona Fide
Sale of the Tower Property as describe in clause (i) above. Tower Owner shall
deliver to First Lender copies, certified by Tower Owner to be true and
complete, of all documents and agreements relating to any Bona Fide Sale of the
Tower Property.
(c) In connection with any refinancing of the First Loan Base Debt with
a lender other than First Lender, Tower Owner shall provide to First Lender not
later than one hundred eighty (180) days prior to the Stated Maturity Date
substantially the same information as required to be delivered to First Lender
under Section 4.03(b) for purposes of determining whether the refinancing
satisfies the First Loan criteria as the Extension DSCR and the Extension LVR
described in Section 4.03(b). Provided Tower Owner has delivered such
information, then not later than thirty (30) days prior to the Stated Maturity
Date, First Lender shall deliver to Tower Owner a notice stating whether First
Lender, in its reasonable judgment, has determined that the refinancing
satisfies such extension criteria. If First Lender delivers written notice to
Tower Owner within such time period stating that, in the reasonable judgment of
First Lender, such refinancing does not satisfy such extension criteria, then
with such notice First Lender
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may, but is not required to, deliver a request that Tower Owner discharge and
satisfy all remaining obligations under the Amended First Notes in respect of
Further Interest, Participating Interest and Additional Participating Interest
by payment to First Lender of an amount (herein the "Discounted Determination
Payment") equal to eighty-five percent (85%) of the "Determined Value") (as
hereinafter defined). If First Lender delivers such request for the Discounted
Determination Payment, then Tower Owner shall pay the Discounted Determination
Payment to First Lender on or before the Stated Maturity Date or, if Tower Owner
fails to do so, Tower Owner shall be deemed to have accepted the continued
application of the provisions of this Section 7 as to the Final Participation
Determination, except that, notwithstanding the Distribution Priorities, First
Lender shall be entitled to receive pursuant to the Final Participation
Determination an amount (herein the "Preference Determination Payment") equal to
the greater of the Determined Value or the amount subsequently determined
pursuant to the Final Participation Determination under this Section 7;
provided, however, (i) Tower Owner shall have no recourse liability for the
payment of such amount, and (ii) such preference shall not affect the amount
payable to Sears in respect of the Sears Cash Flow Interests. As used herein
"Determined Value" shall mean the value, as of July 2, 2005, of First Lender's
right to Further Interest, Participating Interest and any Additional
Participating Interest under the Amended First Notes determined in accordance
with Exhibit L.
(d) If the Final Participation Determination is not earlier required to
be made pursuant to Section 7.02(b), then at the option of Tower Owner, the
Final Participation Determination shall be made upon and calculated as of any
date from or after July 2, 2005 and before the Outside Determination Date
specified by Tower Owner upon not less than one hundred eighty (180) days prior
written notice to First Lender, provided the First Loan Base Debt (including, if
applicable, any prepayment premium) has been or is paid in full in accordance
with terms of the Amended First Notes not later than the date of the payment of
the Further Interest, Participating Interest and Additional Participating
Interest pursuant to the Final Participation Determination. Notwithstanding
anything to the contrary contained herein, in all events the payment to First
Lender of Participating Interest, Further Interest and any Additional
Participating Interest pursuant to the Final Participation Determination shall
be made not later than the Outside Determination Date.
(e) With respect to a Final Participation Determination made upon an
Early Determination Sale, if First Lender at its option elects to cause the Fair
Market Value of the Tower Property to be determined pursuant to Section
7.02(b)(i), PTLP shall be personally liable on a recourse basis or paying to
First Lender the excess, if any, of (i) the Fair Market Value of the Tower
Property as of July 2, 2005 or (ii) the Sale Proceeds in respect of such sale
less
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the amount of Sale Expenses actually incurred in connection therewith. With
respect solely to such determination of Fair Market Value in connection with an
Early Determination Sale, the Fair Market Value (as determined pursuant to
Exhibit L) shall be reduced by the amount of the Sale Expenses actually incurred
by Tower Owner in connection with the Early Determination Sale.
(f) As more fully described in Section 4.10 hereof, Tower Owner has
assigned to Master Lessee, so long as the Master Lease is in effect, the
exclusive right to make all elections and to take all actions required or
permitted to be taken by Tower Owner under this Section 7.02 in respect of the
Final Participation Determination.
7.03 Determination of Second Lender's, AEW New Lender's and Sears
Distribution Priorities Shares.
------------------------------------------------------------
Notwithstanding anything to the contrary contained in the Amended
Second Loan/Option Documents, the AEW New Loan Documents, or the Sears Lender
Documents: (i) prior to the payment in full of the First Loan (including,
without limitation, all obligations in respect to Further Interest,
Participating Interest and Additional Participating Interest), no valuation of
any Second Lender Cash Flow Interests shall be made which fixes the value of any
such amount for purposes of payment (except to the extent such value is
determined and fixed by the express terms of this Agreement) prior to the Final
Participation Determination in respect of the Amended First Notes; and (ii)
prior to the payment in full of the First Loan Base Debt, no valuation of any
AEW Cash Flow Interests or Sears Cash Flow Interests shall be made which fixes
the value of any such amount for purposes of payment (except to the extent such
value is determined and fixed by the express terms of this Agreement).
7.04 Applications Definitions
------------------------
(a) The definitions contained in this Section 7.04 shall apply to the
allocation and distribution of Cash Flow according to the Distribution
Priorities described in Section 6 and to the determination of Participating
Interest under the Amended First Notes and this Section 7.
(b) "Cash Flow" shall mean the sum of Ordinary Cash Flow and
Disposition Proceeds.
(c) "Ordinary Cash Flow" for any period shall mean the amount of Tower
Gross Revenues for such period less Tower Expenses for that same period. During
the term of the Master Lease, for purposes of determining Tower Gross Revenues
and Tower Expenses, Tower Owner shall be deemed to include the Master Lessee,
and the revenues and expenses of the Master Lessee (other than the Master
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Lessee's Rent) relating to the Tower Property shall be combined with the
revenues and expenses of Tower Owner.
(d) "Tower Gross Revenues" for any period shall mean the gross revenue
actually received by or on behalf of the Tower Owner and/or Master Lessee from
the ownership or operation of the Tower Property and shall include, without
limitation:
(i) all rent and other sums paid for the use or occupancy of, or
admission to, the Tower Property, or received from the operation
of any business carried on in the Tower Property including,
without limitation (1) payments made by tenants of the Tower
Property on account of real estate taxes, operating expenses,
services, tenant improvements or other capital improvements or
expenditures in connection with the Tower Property, and other
charges not designates as rent, (2) all revenue received from
the operation of the Skydeck Business, or the operation of any
restaurant, health club, retail or other business conduced in
the Tower Property, whether by the Tower Owner, the Master
Lessee, or an Affiliate of either, (3) amounts received for
management or administrative services, and (4) payments received
for cancellation, modification or extension of leases; but
expressly excluding from Tower Gross Revenues the Master
Lessee's Rent;
(ii) interest earned and paid on the operating accounts for the Tower
Property (excluding the CDSR and NLCR);
(iii) amounts received from the operation of any parking facilities at
the Tower Property;
(iv) proceeds of rental value or business interruption insurance or
other insurance against non-capital losses or expenses net of
costs of collection (but if paid to and held by or on behalf of
the First Lender or Second Lender as additional collateral for
the First Loan or the Tower Second Loan, respectively, not until
released to, or applied to Tower Expenses for the account of,
Tower Owner or applied to amounts owing to either such loan);
(v) condemnation proceeds from any temporary condemnation of the
Tower Property, net of costs of collection, except to the extent
held by or on behalf of the First Lender or Second Lender as
additional collateral for the First Loan or the Tower Second
Loan, respectively, unless and until
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released to, or applied to Tower Expenses for the account of
Tower Owner, or applied to amounts owing on either such Loan;
(vi) security or other deposits made by tenants of the Tower
Property, but only if and when applied to amounts due to Tower
Owner, and interest earned on such security or other deposits,
but only to the extent applied to amounts due to Tower Owner;
(vii) interest earned and paid to Tower Owner, net of any taxes, if
any, required to be paid by Tower Owner, on any escrows and
reserves approved or required by First Lender or Second Lender;
(viii) as to any lease or other arrangement for use or occupancy of any
portion of the Tower Property by an Affiliate of Second Lender
or the AEW Master Lessee that is not specifically approved in
writing by First Lender, the amount by which the fair market
value of such rights of use or occupancy (as determined by an
appraiser, ▇▇▇▇▇▇▇ agent or other qualified expert selected by
First Lender) exceeds the amount required to be paid under such
lease or other arrangement;
(ix) all amounts received on account of leaseholds or other property
(net of any related expenses which are not includable as a Tower
Expense) with respect to which Tower Owner acquires an interest
or rights in connection with (1) arrangements made to induce
tenants to enter into leases of the Tower Property (including,
without limitation, the arrangement relating to the EY Lease
described in Section 17.04 or (2) any other contract or
arrangements relating to the ownership or operation of the Tower
Property (to the extent such net amounts are negative, such net
amounts shall be included in Tower Expenses); and
(x) refunds or rebates of amounts previously included in Tower
Expenses, such as a refund of real estate taxes, net of amounts
paid to tenants and net of expenses incurred in obtaining such
refund.
No cash receipt which properly may be included within more than one of
the items referred to in this Section 7.04(d) shall be taken into account more
than once.
(e) "Tower Expenses" for any period shall, subject to certain
limitations and exclusions hereinafter set forth, consist of the items actually
paid by or on behalf of Tower Owner and/or Master
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Lessee during such period related to the ownership, operation, management,
leasing, development, redevelopment, repair, replacement and maintenance of the
Tower Property, including, without limitation:
(i) all operating costs for the Tower Property, including, without
limitation, utilities, maintenance, insurance, security,
accounting, legal and any fees due the manager of the Tower
Property under the Tower Management Agreement;
(ii) capital expenditures for the Tower Property;
(iii) real estate taxes, personal property taxes, amusement taxes, use
taxes, sales taxes, parking taxes, water and sewer charges, and
other state and local governmental taxes, charges and
assessments (or payments or charges in lieu thereof), and all
costs and fees paid by or on behalf of Tower Owner or Master
Lessee in contesting or negotiating with public authorities
regarding the foregoing:
(iv) leasing costs (including, without limitation, costs paid from
CDSR and NLCR funds), including amounts expended for tenant
improvements, leasing commissions and the fixed compensation and
reimbursable amounts payable to leasing agents for the Tower
Property;
(v) lease assumption costs relating to tenants' obligations in other
buildings (including rent, termination charges, tenant
improvement costs, taxes and operating expenses and reletting
costs) paid by landlord pursuant to leases for space in the
Tower Property;
(vi) any amounts to be included in Tower Expenses under Section
7.04(d)(ix);
(vii) the cost of maintaining the CDSR and the NLCR (to the extent not
paid from funds in the CDSR and NLCR) and the cost of
maintaining any other operating or collateral accounts required
by the Amended Transaction Documents;
(viii) operating costs of the Skydeck Business and other businesses
conducted in the Tower Property, in respect of which revenues
are included in Tower Gross Revenues);
(ix) Payments pursuant to the Levy Obligations as provided in Section
17.05;
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(x) all fees and expenses relating to the Land Trust and the Land
Trustee;
(xi) all fees and expenses relating to the Grantor Trust and the
Grantor Trustee (subject to the reimbursement agreement of Sears
pursuant to Section 12.06 hereof), relating to any period that
the Grantor Trustee holds the beneficial interest under the Land
Trust, but excluding fees and expenses relating to any
substitution of the trust corpus upon Sears exercise of its
power of substitution or any distribution of the trust corpus to
the residual beneficiary;
(xii) franchise taxes and similar charges and fees imposed on Master
Lessee;
(xiii) capital and operating reserves established as part of the
Approved Annual Budget in accordance with Section 6.06 hereof;
(xiv) Financing Expenses not paid out of Financing Proceeds; and
(xv) Interest, principal and reimbursements payable to a Refinancing
Lender as described in Section 4.11(a).
No expenditure which properly may be included within more than one of
the items referred to in this Section 7.04(e) shall be taken into account more
than once.
Tower Expenses shall be calculated prior to any distribution according
to the Distribution Priorities described in Section 6.01(a) hereof, and shall
not in any case include:
(1) any cost or expense paid out of any reserve to the extent
previously taken into account in the calculation of Tower
Expenses;
(2) except as otherwise specifically provided herein, noncash items,
such as depreciation;
(3) legal, accounting, management and similar fees and other
obligations and expenses of Tower Owner or AEW Master Lessee not
incurred in connection with the ownership, operation, management,
leasing, development, redevelopment, repair and maintenance of the
Tower Property;
(4) any costs, expenses or fees, including interest payments, payable
to any party by reason of a default by Tower Owner in the
performance of any
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obligation owing to the any such party (unless such default was
specifically approved by First Lender or was incurred in good
faith in connection with the operation of the Tower Property);
(5) any demand fees, penalty, or similar charges relating to late
payments of real estate taxes, assessments and similar charges on
the Tower Property and any interest relating to such late payments
(unless such default was specifically approved by First Lender or
unless any such amount becomes due in connection with a contest in
good faith or such amounts in accordance with the terms of the
Amended First Mortgage);
(6) any income, franchise, personal property replacement tax or other
similar taxes imposed on Tower Owner, ST, Sears, AEW, or PTLP;
(7) any expenses for which Tower Owner receives reimbursement or funds
from other sources not included in Tower Gross Revenues, such as
proceeds of insurance and condemnation awards;
(8) returns of security deposits, except to the extent such deposits
were earlier included in the Gross Revenues; and
(9) costs (other than transfer taxes to the extent not paid by ST or
Sears pursuant to the Release and Agreement incurred in connection
with a transfer of the Tower Property to the Option Holder or its
designee pursuant to an exercise of the Tower Option or in
connection with any other transfer of any Sears/ST interest.
(f) "Disposition Proceeds" shall mean with respect to any particular
transaction or event, from time to time:
(i) in the case of a Final Participation Determination other than as
described in clauses (ii) or (iii) of this Section 7.04(f), an
amount equal to the Fair Market Value of the Tower Property as
of the date of such Final Participation Determination (which
amount for purposes of determining the amount due to First
Lender (but not Second Lender, AEW New Lender or Sears) shall be
deemed to be Disposition Proceeds notwithstanding the absence or
inadequacy of cash revenues resulting from such event;
(ii) in the case of a Final Participation Determination in connection
with a Bona Fide Sale of the Tower
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Property, the Sale Proceeds in respect of such sale less the
amount of Sale Expenses actually incurred in connection
therewith; provided that in the case of an Early Determination
Sale, at the option of First Lender, Disposition Proceeds shall
mean the greater of (1) the Sale Proceeds in respect of such
sale less the amount of Sale Expenses actually incurred in
connection therewith or (2) the Fair Market Value of the Tower
Property as of July 2, 2005.
(iii) in the case of a Final Participation Determination in connection
with an Event of Default under the Amended First Mortgage and
acceleration of the Amended First Notes, the greater of: (A) the
Fair Market Value of the Tower Property as of the date of such
Final Participation Determination; or (B) the proceeds realized
from the foreclosure sale of the Tower Property;
(iv) in the case of any Financing of the Tower Property, the
Financing proceeds in respect of such financing less the amount
of Financing Expenses actually incurred in connection therewith;
(v) in the case of a "Major Casualty" or a "Minor Casualty" the
amount of any "Net Insurance Proceeds" less actually incurred
costs of the "Restoration" (as such terms are defined in the
Amended First Mortgage);
(vi) in the case of a "Condemnation" the amount of any "Condemnation
Proceeds" less "Condemnation Expenses" and actually incurred
costs of "Restoration" (as such terms are defined in the Amended
First Mortgage);
(vii) the net proceeds from any mortgage foreclosure sale in respect
of the Tower Property or the foreclosure of any other security
interest in respect of the Tower Property that may be paid to or
for the benefit of Tower Owner after satisfaction of the
mortgage or other lien foreclosed;
(viii) any amount paid by Sears pursuant to the exercise of the
purchase option under the Option Agreement (Calder Sculpture) of
even date herewith.
(g) "Bona Fide Sale" means a sale, for consideration, of all or
substantially all of Tower Owner's interest in the Tower Property (or of Tower
Owner's beneficial interest in the Land Trust) to an entity other than an AEW
Entity, a Sears Entity or an
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Affiliate of AEW or Sears, in which Tower Owner does not retain or receive any
form of right or option to repurchase the Tower Property or any interest
therein; provided that if an AEW Entity or an Affiliate of AEW is Tower Owner
and the Tower Second Loan is then outstanding, either the Tower Second Loan
shall be released and terminated or all of Second Lender's interest in the Tower
Second Loan shall be sold and transferred to the purchaser pursuant to the Bona
Fide Sale.
(h) "Sale Proceeds" in respect of a Bona Fide Sale means: (i) the
dollar amount of all consideration in respect of the sale and transfer of the
Tower Property paid in cash or cash equivalents at the closing of such sale;
plus (ii) the outstanding principal amount of, and all accrued interest on, the
Tower Second Loan (to the extent the sale is made subject to the Tower Second
Loan) and any other indebtedness of a fixed and determined amount (with or
without interest accruing) subject to which the purchaser agrees to take the
Tower Property or which the purchaser agrees to assume; (iii) the Fair Market
Value of the amount of indebtedness (to the extent not fixed and determined by
agreement with the purchaser) represented by the AEW New Loan, the Sears New
Loan and the Sears Redevelopment Cost Obligation subject to which the purchaser
agrees to take the Tower Property or which the purchaser agrees to assume, plus
(iv) the Fair Market Value of all consideration payable in respect of such sale
and transfer other than in cash or cash equivalents paid at the closing. In
accordance with the foregoing, it is acknowledged and agreed that the Cash Flow
payable in cash to First Lender according to the Distribution Priorities as a
result of a Bona Fide Sale of the Tower Property may include amounts
representing consideration not received in cash by Tower Owner at the closing of
such sale. Notwithstanding the foregoing provisions of this Section 7.04(h), for
purposes of the definition of "Sale Proceeds" (1) payments to Sears shall be
based solely on cash or cash equivalents received as and when actually received
and (2) to the extent that any payments are made to the First Lender based upon
the Fair Market Value of any non-cash consideration or any purchase money
financing, First Lender thereafter shall have no right or interest in any
payments subsequently received in respect of such non-cash consideration or
purchase money financing to the extent of the value thereof included in such
Fair Market Value.
(i) "Sale Expenses" in respect of a Bona Fide Sale means: (i) customary
credits and prorations credited to the purchaser at closing, including amounts
in respect of collected rent applicable to periods following closing, accrued
real estate taxes, utilities, and service contracts; (ii) transfer taxes; (iii)
other customary and reasonable costs and expenses incurred by Tower Owner or
Master Lessee in connection with the marketing, negotiation and closing of the
sale (provided the same are not included in Tower Expenses), including title
charges, appraisal costs, brokerage commissions, investment bankers' fees, and
attorneys' fees, paid to third parties (other than any AEW Entity, Sears Entity
or Affiliate of
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AEW or Sears); (iv) the dollar amount of any cash reserves and hold-backs
securing obligations of Tower Owner as seller in an aggregate amount not to
exceed ten percent (10%) of the total gross sales price (herein collectively
referred to as "Qualified HoldBacks"). Qualified Hold-Backs may include reserves
established by Tower Owner in its reasonable discretion, even though not
contractually required by the purchaser, in order to provide funding for
contingent obligations of Tower Owner to purchaser in connection with such sale,
such as representations and warranties. For purposes of determining the amount
of Cash Flow due to First Lender (but not Second Lender, AEW New Lender, Sears
or Tower Owner), Sale Expenses shall not include; (1) any reserves, holdbacks or
guarantees securing obligations of Tower Owner as seller in excess of the
Qualified Hold-Backs; (2) any cost or expense incurred by Sears or any Sears
Entity in any capacity, other than ST in its capacity as Tower Owner (if ST has
exercised its right of substitution under the Grantor Trust); or (3) any cost or
expense incurred by PTLP or any other party in its capacity as Second Lender or
by any AEW Entity in any capacity other than as Tower Owner or Master Lessee.
Any Qualified Hold- Backs reserved in connection with a Bona Fide Sale and not
applied to the satisfaction of obligations of seller to purchaser shall be
distributed as Disposition Proceeds in accordance with the Distribution
Priorities promptly upon such amounts becoming available for distribution;
provided, however, if an Qualified Hold-Backs are established by Tower Owner
even though such hold-backs are not contractually required by the purchaser,
then First Lender shall in all events receive from the distribution of the
hold-back not less than 75% of the amount which First Lender would have been
entitled to receive from the hold-back if the entire hold-back (without
reduction for any payment or liability to purchaser) were distributed. Any
Qualified Hold-Backs, pending application or distribution, shall be invested for
the benefit of Tower Owner as seller (with investment income treated as
Disposition Proceeds). In all events, any portion of Qualified Hold-Backs
allocable to First Lender shall be distributed no later than eighteen (18)
months following the closing of the Bona Fide Sale.
(j) "Financing" means any borrowing by or on behalf of Tower Owner and
any borrowing secured by any lien or security interest in all or any part of the
Tower Property.
(k) "Financing Proceeds" in respect of a Financing means the gross
amount of proceeds paid to or on behalf of Tower Owner from the Financing.
(l) "Financing Expenses" in respect of a Financing means all customary
and reasonable costs and expenses incurred by Tower Owner or Master Lessee in
connection with the obtaining, negotiation and closing of the Financing,
including, without limitation, points, title charges, appraisal costs, brokerage
commissions, investment
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bankers' fees and attorneys' fees, paid to third parties (other than any AEW
Entity, Sears Entity or Affiliate of AEW or Sears).
(m) The "Fair Market Value" of the Tower Property to be determined in
connection with the Final Participation Determination shall mean the value
determined in accordance with the procedures described in Exhibit L attached
hereto, subject, however, to the provisions of Section 4.03(c) with respect to
the determination of the Determined Value. In addition, the Fair Market Value of
the indebtedness included in the computation of Sale Proceeds pursuant to clause
(iii) of Section 7.04(h) and the Fair Market Value of any non-cash consideration
included in the computation of Sale Proceeds pursuant to Section 7.04(h) shall
be determined in accordance with the procedures described in Exhibit L. The
parties covenant and agree to comply with the procedures contained in Exhibit L.
SECTION 8
TRANSFER EVENTS
---------------
8.01 Transfer Events
---------------
(a) Each of the following shall constitute a "Transfer Events" under
this Agreement; and the Transfer Events described in clauses (1) through (8)
below are sometimes herein referred to as "Accelerated Transfer Events":
(1) the failure of Tower Owner to make any payment of Required Minimum
Interest under the Amended First Notes when due and the
continuation of such failure for a period of ten (10) days after
written notice thereof from MetLife to PTLP and the AEW Master
Lessee;
(2) the failure of Tower Owner to make any payment of Interest (other
than Required Minimum Interest) or principal under the Amended
First Notes in accordance with the Distribution Priorities when
due in an amount calculated pursuant to and set forth in any Cash
Flow and Distribution Statement delivered by Master Lessee
pursuant to Section 6.04(a) or 6.04(b) (or, subject to the
provisions of Section 8.01(b), caused to be prepared by First
Lender pursuant to Section 6.04(c) in the event Master Lessee
fails to deliver such statement when due) and the continuation of
such failure for a period of ten (10) days after written notice
thereof from First Lender to PTLP and the AEW Master Lessee, or
the failure of Tower Owner to make any additional payment of
interest or
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principal (in excess of the amounts calculated pursuant to and
set forth in any such Cash Flow and Distribution Statement)
under the Amended First Notes in accordance with the
Distribution Priorities when due in an amount calculated
pursuant to and set forth in any Auditor's CFD Statement
delivered pursuant to Section 6.04(d) and the continuation of
such failure for a period of ten (10) days after written notice
thereof from First Lender to PLFP and the AEW Master Lessee;
(3) the failure of PTLP to make any required advance under the AEW New
Loan for deposit into the NLCR (a) to the extent such funds are
required to pay Minimum Interest under the Amended First Notes or
(b) as otherwise required pursuant to Section 14.05 hereof, and in
either case the continuation of such failure for a period of ten
(10) days after written notice thereof from First Lender to PTLP
and the AEW Master Lessee;
(4) the failure of Tower Owner to make any required escrow deposit for
"Impositions" (as defined in the Amended First Mortgage), as
determined in accordance with the Amended First Mortgage and set
forth in the Approved Annual Budget, when due as required under
the Amended First Mortgage and the continuation of such failure
for a period of thirty (30) days after written notice thereof from
First Lender to PTLP and the AEW Master Lessee;
(5) the failure of Tower Owner to make any required escrow deposit for
insurance premiums, as set forth in the Approved Annual Budget,
when due as required under the Amended First Mortgage and the
continuation of such failure for a period of thirty (30) days
after notice thereof from First Lender to PTLP and the AEW Master
Lessee;
(6) any sale, transfer, assignment or pledge by PTLF or any AEW Entity
of al or any part of the legal title to the Tower Property, the
beneficial interest under the Land Trust, the beneficial interest
under the Grantor Trust, the lessor's or the lessee's interest
under the AEW Master Lease, or the stock of ST, except as
expressly permitted by Section 19 hereof;
(7) the occurrence of any AEW Tower Bankruptcy Proceeding;
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(8) any failure by PTLP to transfer the common stock of ST and the
Series A and C preferred stock of ST to First Lender or First
Lender's designee in accordance with Section 9.04 hereof in the
event of a Sears/ST Tower Bankruptcy, unless such transfer is
prohibited by court order or other reason beyond the control of
PTLP and any AEW Entity and the continuation of such failure for a
period of thirty (30) days after written notice thereof from First
Lender to PTLP and AEW Master Lessee;
(9) any sale, transfer, assignment or pledge by PTLF of all or any
portion of its interest as Second Lender or Option Holder under
the Amended Second Loan/Option Documents, except as expressly
permitted by Section 19 hereof, and the continuation of such
circumstance or event for a period of then (10) days after written
notice thereof from First Lender to PTLP and the AEW Master
Lessee;
(10) any sale, transfer, assignment or pledge of any of the Ownership
Interests in PTLP, the general partner of PTLP or the AEW Master
Lessee, except as expressly permitted by Section 19 and the
continuation of such circumstance or event for a period of ten
(10) days after written notice thereof from First Lender to PTLP
and the AEW Master Lessee;
(11) without limitation on or by the preceding clauses (1) through
(10), the occurrence of any Event of Default under the Amended
First Mortgage other than any Tower Bankruptcy Proceeding (except
for an AEW Tower Bankruptcy Proceeding) (without regard to the
agreement by First Lender in Section 4.09 hereof to forbear from
exercising its right to foreclose the lien of the Amended First
Mortgage during the First Lender Forbearance Period), after giving
effect to any applicable cure or grace period provided by the
Amended First Mortgage; (or, if the same event constitutes a
Transfer Event pursuant to the preceding clauses (1) through (11),
then the longer of the respective cure or grace period provided by
the Amended First Mortgage or the cure or grace period provided by
the respective clause above);
(12) the failure in performance by AEW, PTLP or the AEW Master Lessee
of any of their respective obligations under this Agreement not
otherwise described or included in the preceding clauses (1)
through (11) and the continuance of such failure
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for thirty (30) days after written notice from First Lender to
PTLP and the AEW Master Lessee.
(b) Notwithstanding the provisions of clause (2) of Section 8.01(a), an
Accelerated Transfer Event shall not be deemed to have occurred if Tower Owner,
PTLP or the AEW Master Lessee, upon written notice to First Lenders specifying
the reasons therefore in reasonable detail, fails to pay to First Lender any
amount of Cash Flow reflecting the exclusion from Tower Expenses (as reflected
by the Cash Flow and Distribution Statement furnished or caused to be furnished
by First Lender, but disputed by Master Lessee) of amounts specified in clauses
(4) and (5) of Section 7.04(e).
(c) The parties acknowledge and agree that the description and
determination of Transfer Events in Section 8.01(a) and the First Lender's
remedies described in Section 8.03 shall be applicable regardless of the date
when any such Transfer Event may occur, whether before or after the expiration
of the First Lender Forbearance Period or before or after the termination of the
Grantor Trust according to its terms on January 1, 2003.
8.02 AEW Transfer Escrow
-------------------
(a) With the execution of this Agreement, PTLP shall establish an
escrow (the "AEW Transfer Escrow") and enter into an escrow agreement with
MetLife inform satisfactory to MetLife, consented to by AEW, the AEW Master
Lessee, Sears and ST, and consistent with the provisions of this Section 8.02.
Pursuant to the AEW Transfer Escrow, PTLP shall deposit into escrow with a
third-party escrowee selected by MetLife in its discretion (which may be
MetLife's outside legal counsel) executed and (where appropriate) recordable
documents and instruments, together with an irrevocable power of attorney
authorizing any officer of MetLife to complete any required information in any
such documents and instruments (herein collectively referred to as the "AEW
Release/Transfer Documents"): (i) releasing and terminating all liens, rights,
interests and claims of PTLP as lender, and all Affiliates (including clients)
of AEW (but excluding the interests of PTLP as Option Holder), in respect of the
Tower Property under the Amended Second Loan Documents and the AEW New Loan
Documents; and (ii) transferring to First Lender or First Lender's designee,
without recourse, all right, title and interest of (1) Option Holder in respect
of the Tower Property and under the Amended Second Loan/Option Documents, (2)
Second Lender and Option Holder in and to the Grantor Trust, the stock of ST,
and the AEW Master Lease, and (3) AEW Master Lessee in and to the AEW Master
Lease and any of the Tower Property.
(b) The parties hereto agree that from time to time upon request of
MetLife the documents and instruments deposited in the AEW Transfer Escrow shall
be updated and re-executed, and new executed documents and instruments will be
substituted for the
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prior document and instruments, in order to take account of changes in law,
changes in the identity of authorized officers, partners and representatives of
parties to documents, transfers of Ownership Interests in PTLP and transfers of
legal and beneficial ownership interests in the Tower Property, and other
changed circumstances which in the reasonable judgment of MetLife may require
such updating, re-execution and substitution of documents and instruments.
(c) The parties acknowledge and agree that, if ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
(outside legal counsel of MetLife) serves as escrowee under the AEW Transfer
Escrow: (i) in its capacity as escrowee, such counsel is acting solely as holder
of the escrow deposits and is directed to act strictly in accordance with the
escrow agreement; (ii) with respect to this Agreement the negotiation of the AEW
Transfer Escrow and the transactions contemplated hereby, such counsel has
represented solely MetLife, and the other parties to this Agreement have been
represented by their respective counsel in all such matters; and (iii) all
parties herby consent to the continued representation of MetLife by such
counsel, at the option of MetLife notwithstanding any dispute that may arise
concerning this Agreement, the AEW Transfer Escrow, any of the other Amended
Transaction Documents or the transactions contemplated hereby.
8.03 First Lender Remedies
---------------------
(a) Upon the occurrence of any Transfer Event: (i) First Lender shall
be entitled to exercise all rights and remedies pursuant to the New Collateral
Security Documents delivered or caused to be delivered by PTLP and the AEW
Master Lessee; (ii) PTLP and the AEW Master Lessee shall transfer or cause to be
transferred, or release or cause to be released, in each case as directed by
First Lender, all right, title and interest of PTLP, the AEW Master Lessee and
all other Affiliates of AEW under the Amended Second Loan/Option Documents and
otherwise in respect of the Tower Property; and (iii) First Lender shall have
the right at its option to exercise all other or additional rights and remedies
with respect to AEW, PTLP, the AEW Master Lessee and other Affiliates of AEW at
law or in equity in respect of this Agreement and the Amended Second Loan/Option
Documents, subject to the provisions of Section 26.07, and to the forbearance
covenant of First Lender contained in Section 4.09, during the First Lender
Forbearance Period, and provided First lender may exercise its rights under the
AEW Transfer Escrow only pursuant to Section 8.03(b).
(b) Without limitation on or by the preceding Section 8.03(a), upon the
occurrence of any Accelerated Transfer Event, First Lender shall be entitled to
obtain the release and delivery of it of the AEW Release/Transfer Documents from
the AEW Transfer Escrow, upon delivery by First Lender to the escrowee of a
certificate by an officer of First lender stating that an
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Accelerated Transfer Event has occurred. With respect to any such exercise by
First Lender of its rights under the AEW Transfer Escrow, AEW, PTLP, and the AEW
Master Lessee hereby disclaim, release and waive any and all right to seek or
obtain any form of injunction or other judicial order prohibiting, restricting
or impairing the release and delivery of the AEW Release/Transfer Documents by
the escrowee to First Lender or the transfer and release of all right, title and
interest oaf PTLP, the AEW Master Lessee and other Affiliates of AEW under the
Amended Second Loan/Option Documents or otherwise in respect of the Tower
Property, and AEW, PTLP and the AEW Master Lessee herby covenant and agree not
to seek or obtain any such injunction or other judicial order.
(c) Notwithstanding anything to the contrary contained herein, the
parties acknowledge and agree that, with respect to Transfer Events that are not
Accelerated Transfer Events, PTLP and the AEW Master Lessee do not waive, but do
hereby reserve, the right to contest in any judicial proceeding whether a
Transfer Event (other than an Accelerated Transfer Event) has occurred.
(d) The parties acknowledge the central purposes of this Agreement as
described in Section 22.01, the substantial modifications of the First Loan
being made pursuant hereto, and the First Lender's forbearance from the exercise
of rights and remedies to which it would otherwise be entitled. With regard
thereto, AEW , PTLP and the AEW Master lessee have agreed to the extraordinary
rights and remedies provided by this Section 8, which are an essential part of
the consideration for the First Lender's modification of the First Loan and its
entering into this Agreement. It is the intent and purpose of AEW, PTLP and the
AEW Master Lessee that the rights and remedies provided by this Section 8 be
enforceable in full so that First Lender may realize upon the essential
consideration intended to be given to First Lender hereby by AEW, PTLP and the
AEW Master Lessee.
SECTION 9
SEARS/ST RELEASE EVENTS
-----------------------
9.01 Sears/ST Release Events
-----------------------
(a) Each of the following shall constitute a "Sears/ST Release Event"
under this Agreement; the Sears/ST Release Events described in clauses (1)
through (6) and (8) below are sometimes herein referred to as "Accelerated
Sears/ST Release Events"; all of the Sears/ST Release Events other than the
Sears/ST Release Event described in clause (8) below are sometimes herein
referred to as "Sears/ST Termination Events"; and the Sears/ST Release Events
described in clauses (1) through (6) below are sometimes herein referred to as
"Sears/ST Defaults."
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(1) the failure of Sears to make any required advance (i) under the
Sears New Loan Agreement or the Sears Contribution Agreement for
deposit into the NLCR as required pursuant to Section 14.05
hereof, or (ii) under the Amended CDSR Agreement, and in either
case the continuation of such failure for a period of ten (10)
days after written notice thereof from First Lender to Sears;
(2) the occurrence of any Sears/ST Tower Bankruptcy Proceeding;
(3) the imposition of any lien, attachment or other encumbrance on all
or any part of the Tower Property (including, without limitation,
the Tower Real Property, the beneficial interest in the Land Trust
or any other ownership interest in the Tower Property, any account
of the Tower Owner, and any receipts or rents from the Tower
Property) as a result of the failure by ST, Sears or any Sears
Affiliate to pay any federal, state or local income, gains,
franchise, transfer or similar taxes, or any interest thereon on
penalties with respect thereto, owed or alleged to be owed by ST,
Sears or any Sears Affiliate, and the failure of ST or Sears to
cause such lien, attachment or encumbrance to be dismissed or
discharged within ten (10) days after notice thereof from First
Lender to ST or Sears;
(4) any sale, transfer, assignment or pledge by Sears of all or any
part of its interest in ST, other than (i) the collateral pledges
or the common stock and the series A preferred stock to First
Lender and Second Lender pursuant to the New Collateral Security
Documents, (ii) the transfer of the common stock and the series A
preferred stock to Second Lender in accordance with Section 9.04
in the event of a Tower Bankruptcy Proceeding, or (iii) Sears
termination and release right pursuant to Section 25.08(a); and
the failure of Sears and/or ST to cause such sale, transfer,
assignment or pledge to be rescinded, revoked or cancelled within
ten (10) days after written notice thereof from First Lender to
Sears and ST;
(5) any sale, transfer, assignment or pledge by ST of all or any part
of its interest as grantor or income beneficiary under the Grantor
Trust other than (i) the collateral assignments of the grantor's
and income beneficiary's interests to First Lender and Second
Lender pursuant to the New Collateral Security Documents and
(ii) the termination of the Grantor Trust pursuant to Section
7.1(c) or 7.1(f) of the Grantor Trust Agreement; and the failure
of Sears and/or ST to cause such sale, transfer,
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assignment or pledge to be rescinded, revoked or cancelled
within ten (10) days after written notice thereof from First
Lender to Sears and ST;
(6) any sale, transfer, assignment or pledge by Sears or ST of all or
any part of the legal title to the Tower Property or the
beneficial interest under the Land Trust, other than (i) the
collateral assignments of such beneficial interest to First Lender
and Second Lender pursuant to the New Collateral Security
Documents, (ii) the transfer of legal or beneficial ownership of
the Tower Property to Option Holder or its permitted Designee
pursuant to the exercise of the Tower Option, (iii) ST's exercise
of its right pursuant to the Grantor Trust Agreement to substitute
the trust corpus of the Grantor Trust and pursuant thereto to
withdraw the Combined Tower Property from the Grantor Trust or
(iv) Sears termination and release right pursuant to Section
25.08(a); and the failure of Sears and/or ST to cause such sale,
transfer, assignment or pledge to be rescinded, revoked or
cancelled within ten (10) days after written notice thereof from
First Lender to Sears and ST;
(7) without limitation on or by the preceding clauses (1) through (6)
or the following clauses (8) and (9), the occurrence of any Event
of Default under the Amended First Mortgage continuing beyond or
occurring after the First Lender Forbearance Period;
(8) the occurrence of any Transfer Event other than the Transfer Event
described in clause (3) of Section 8.01(a), and the continuance of
such Transfer Event, without cure by Sears or ST, for a period
ending on the later of: (i) fifteen (15) days after written notice
thereof from First Lender to Sears and ST and (ii) five (5) days
after the occurrence of such Transfer Event;
(9) the failure in performance in any material respect by Sears or ST
of any of their respective obligations under this Agreement not
otherwise described or included in the preceding clauses (1)
through (8) and the continuance of such failure of thirty (30)
days after written notice thereof from First Lender to Sears and
ST.
(b) With respect to the occurrence of an event which, with the giving
of notice or passage of time or both, would constitute a Transfer Event, the
parties acknowledge and agree: (i) the notice from First Lender referred to in
clause (8) of Section 9.01(a) may be, but is not required to be, delivered
simultaneously with the notice of such event delivered by Fist Lender to PTLP
pursuant to Section 8.01(a); (ii) unless otherwise agreed in the specific
circumstance by PTLP, in its absolute discretion, Sears and ST
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shall have no right to take, and covenant and agree not to take, any action in
respect of the Tower Property or its ownership and operation in an attempt to
cure or remedy the event unless and until any applicable cure or grace period
afforded to PTLP under Section 8.01(a) shall have expired and the Transfer
Event, as a result thereof, shall have occurred.
(c) The parties acknowledge and agree that the description and
determination of Sears/ST Release Events in Section 9.01(a) and the First
Lender's and PTLP's remedies described in Section 9.03 shall be applicable
regardless of the date when any such Sears/ST Release Event may occur, whether
before or after the expiration of the First Lender Forbearance Period or before
or after the termination of the Grantor Trust according to its terms on January
1, 2003 (provided it is acknowledged that upon the termination of that Grantor
Trust the Sears/ST Ownership Interests will be extinguished and only the
Sears/ST Lender Interests will remain).
9.02 Sears/ST Transfer Escrow
------------------------
(a) With the execution of this Agreement, Sears and ST shall establish
an escrow (the "Sears/ST Transfer Escrow") and enter into an escrow agreement
with MetLife and PTLP in form satisfactory to MetLife and PTLP and consistent
with the provisions of this Section 9.02. Pursuant to the Sears/ST Transfer
Escrow, Sears and ST shall deposit into escrow executed and (where appropriate)
recordable documents and instruments (together with irrevocable powers of
attorney authorizing any officer or representative of MetLife or PTLP, as the
case may be, to complete any required information in any such documents and
instruments) as follows: (i) documents and instruments (herein referred to as
the "Sears/ST Release Documents) releasing all liens, rights and claims of Sears
and ST in respect of the Sears New Loan and Sears Redevelopment Cost Obligation
(the "Sears/ST Leader Interests"); and (ii) documents and instruments (herein
referred to as the "Sears/ST Transfer Documents") transferring to First Lender
or PTLP or a designee of such party, as directed in accordance with the escrow
terms, all right, title and interest of Sears and ST in the Tower Property, the
Land Trust and the Grantor Trust (the "Sears/ST Ownership Interests") and all of
the common stock and series A preferred stock of ST (herein referred to as the
"Sears/ST Stock Holdings"), and, at the option of the party (First Lender or
PTLP) withdrawing documents from the escrow, also terminating the Grantor Trust
by revocation or distribution, as directed by such party in its discretion.
(b) The escrowee of the Sears/ST Transfer Escrow, unless otherwise
agreed by MetLife and PTLP, shall be outside legal counsel of MetLife selected
by MetLife, subject to the reasonable approval of PTLP, from MetLife's list of
approved legal counsel. The parties hereto agree that from time to time upon the
request of
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MetLife or PTLP the documents and instruments deposited in the Sears/ST Transfer
Escrow shall be updated and re-executed, and new executed documents and
instruments will be substituted for the prior documents and instruments, in
order to take account of changes in law, changes in the identity of authorized
officers, partners and representatives of parties to documents, transfers of
legal and beneficial ownership interests in the Tower Property, and other
changed circumstances which in the reasonable judgment of MetLife or PTLP may
require such updating, re-execution and substitution of documents and
instruments.
(c) It is acknowledged and agreed that the Sears/ST Transfer Escrow is
intended to secure the obligations of Sears and ST under this Agreement and also
the obligations of Sears and ST under the Amended Second Loan/Option Documents.
In addition to the Sears/ST Defaults described in Section 9.01(a), certain other
events are identified as "Sears/ST Special Defaults" under the Amended Second
Loan/Option Documents. PTLP may exercise rights under, and in accordance with
the terms of, the Sears/ST Transfer Escrow in relation to Sears/ST Special
Defaults under the Amended Second Loan/Option Documents as well as in relation
to Accelerated Sears/ST Release Events and Sears/ST Defaults under this
Agreement.
(d) The parties acknowledge and agree that, if ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
(outside legal counsel to MetLife) serves as escrowee under the Sears/ST
Transfer Escrow: (i) in its capacity as escrowee, such counsel is acting solely
as holder of the escrow deposits and is directed to act strictly in accordance
with the escrow agreement; (ii) with respect to this Agreement, the Sears/ST
Transfer Escrow and the transactions contemplated hereby, such counsel has
represented solely MetLife, and the other parties to this Agreement have been
represented by their respective counsel in all such matters; and (iii) all
parties hereby consent to the continued representation of MetLife by such
counsel, at the option of MetLife, notwithstanding any dispute that may arise
concerning this Agreement, the Sears/ST Transfer Escrow, any of the other
Amended Transaction Documents or the transactions contemplated hereby.
9.03 Remedies
--------
(a) Upon the occurrence of any Sears/ST Release Event (including any
Sears/ST Termination Event) or any Sears/ST General Default: (i) Sears and ST
shall release or cause to be released all Sears/ST Lender Interests; and (ii)
without limitation on or by the preceding clause (i), upon the occurrence of any
Accelerated Sears/ST Release Event (including any Sears/ST Default) or any
Sears/ST Special Default, First Lender and/or PTLP, in accordance with the
escrow terms, shall be entitled to obtain the release and delivery to it of the
Sears/ST Release Documents upon delivery by First Lender or PTLP to the
escrowee, in accordance with the escrow terms, of a certificate by an officer or
authorized representative
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of First Lender or PTLP stating than an Accelerated Sears/ST Release Event or a
Sears/ST Special Default has occurred. It is acknowledged and agreed that under
the terms of the Sears/ST Transfer Escrow, only PTLP is entitled to obtain the
release and delivery of the Sears/ST Release Documents upon the occurrence of a
Sears/ST Special Default (unless an Accelerated Sears/ST Release Event has also
occurred). As used in this Section 9.03, "Sears/ST General Default" refers to a
default by Sears or ST under and as defined in the Amended Second Loan/Option
Documents.
(b) Upon the occurrence of any Sears/ST Termination Event or any
Sears/ST General Default: (i) Sears and ST shall transfer or cause to be
transferred, without recourse, subject to the provisions of Section 9.03(c), the
Sears/ST Ownership Interests and the Sears/ST Stock Holdings (A) to PTLP or its
Permitted Designee, subject to the security interests of First Lender, if a
Transfer Event has not occurred, or (B) to First Lender, if a Transfer Event has
occurred; and (ii) without limitation on or by preceding clause (i), upon the
occurrence of any Sears/ST Default or any Sears/ST Special Default, First Lender
and/or PTLP, in accordance with the escrow terms, shall be entitled to obtain
the release and delivery to it of the Sears/ST Transfer Documents upon delivery
by First Lender or PTLP to the escrowee of a certificate by an officer of First
Lender or authorized representative of PTLP stating that a Sears/ST Default has
occurred or upon delivery by PTLP of a certificate by an authorized
representative of PTLP stating that a Sears/ST Special Default has occurred. The
parties acknowledge and agree that Sears and ST shall rely upon notice from
First Lender as to whether or not a Transfer Event has occurred. Notwithstanding
anything to the contrary contained herein, neither Sears nor ST shall transfer
any Sears/ST Ownership Interests or Sears/ST Stock Holdings to PTLP and the
escrowee shall not release or deliver any Sears/ST Release Documents or any
Sears/ST Transfer Documents to PTLP if First Lender has delivered to Sears and
ST and/or to the escrowee, as applicable, a notice stating that a Transfer Event
has occurred.
(c) Upon the occurrence of a Sears/ST Termination Event or a Sears/ST
General Default, notwithstanding the provisions of Section 9.03(b): (i) unless
required pursuant to the following clause (ii), Sears shall not be required to
transfer the Sears/ST Stock Holdings to First Lender to PTLP; (ii) if for any
reason (including, without limitation, any automatic stay or court order in any
Tower Bankruptcy Proceeding) Sears and ST are not able to effect a transfer of
the Sears/ST Ownership Interests to First Lender or PTLP, as required, within
ten (10) days after notice of the occurrence of the Sears/ST Termination Event
or Sears/ST General Default, then Sears shall be obligated immediately to
transfer the Sears/ST Stock Holdings to First Lender or PTLP, as required, and
also to transfer the Sears/ST Ownership Interests to such party when and if such
transfer becomes possible; (iii) First Lender and PTLP agree not to withdraw
from the Sears Transfer Escrow the
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Sears/ST Transfer Documents(s) transferring the Sears/ST Stock Holdings unless,
within a period of ten (10) days following First Lender's or PTLP's withdrawal
of the other Sears/ST Transfer Documents, Sears as not effected a transfer of
the Sears/ST Ownership Interests to First Lender or PTLP, as required. The
parties acknowledge and agree that, for purposes of this Section 9.03 and
Section 9.04, Sears will be deemed to have satisfied its obligation to deliver
the common stock and the series A preferred stock in ST to First Lender or PTLP,
as the case may be, by delivery of a duly authorized and executed stock
assignment separate from certificate transferring such stock, together with a
representation and warranty that such transfer is free from all liens, claims
and encumbrances other than those relating to the Amended Transaction Documents.
(d) First Lender and PTLP covenant and agree with each other that: (i)
if First Lender withdraws the Sears/ST Transfer Documents from the Sears/ST
Transfer Escrow pursuant to Section 9.03(b), or otherwise acquires the Sears/ST
Ownership Interests or the Sears/ST Stock Holdings following a Sears/ST
Termination Event, and provided a Transfer Event has not occurred, First Lender
will complete and deliver said documents so as to effect a transfer to PTLP of
the Sears/ST Ownership Interests and, if required to be transferred by Sears
pursuant to Section 9.03(c), the Sears ST Stock Holdings; and (ii) any transfer
of the Sears/ST Stock Holdings to PTLP shall be made subject to the continuing
security interest of First Lender pursuant to the collateral pledge of the same
made by Sears to First Lender pursuant to the New Collateral Security Documents.
Upon a transfer of the Sears/ST Ownership Interests to PTLP, neither Option
Holder, Second Lender nor AEW shall incur any additional liabilities or
obligations to First Lender as a result of such transfer (including, without
limitation, any liability for recourse obligations of Sears or ST to First
Lender).
(e) In addition to the rights and remedies specifically provided by
this Section 9.03, First Lender and PTLP (but as to PTLP, provided a Transfer
Event has not occurred) shall have the right, at the option of the respective
party, to exercise all other rights and remedies at law or in equity in respect
of this Agreement or under the Amended Transaction Documents in order (i) to
obtain the release of the Sears/ST Lender Interests upon the occurrence of any
Sears/ST Release Event (including any Sears/ST Termination Event) or any
Sears/ST General Default and (ii) to obtain the transfer of the Sears/ST
Ownership Interests (and, if applicable, the Sears/ST Stock Holdings) and the
termination of the Grantor Trust upon the occurrence of any Sears/ST Termination
Event or (as to PTLP) any Sears/ST General Default.
(f) With respect to any exercise by First Lender or PTLP of their
rights under the Sears/ST Transfer Escrow pursuant to Sections 9.03(a) and
9.03(b), Sears and ST hereby disclaim, release
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and waive any and all right to seek or obtain any form of injunction or other
judicial order prohibiting, restricting or impairing the release and delivery of
the Sears/ST Release Documents or the Sears/ST Transfer Documents, the release
of the Sears/ST Lender Interests, or the transfer of the Sears/ST Ownership
Interests and Sears/ST Stock Holdings; and Sears and ST hereby covenant and
agree not to seek or obtain any such injunction or other judicial order.
(g) Sears covenants and agrees, on a recourse basis (i) to prepare and
file in accordance with applicable law all state, county and local transfer tax
declarations, and to pay all taxes in accordance with such declarations, in
connection with the releases and transfers of rights, title and interests
pursuant to this Section 9.03 and 9.04 occurring as a result of a Sears/ST
Default or a Sears/ST General Default, and (ii) to indemnify, defend and hold
harmless First Lender, Second Lender and Option Holder from and against all
claims and liability for any state, county and local transfer taxes in
connection with such release and transfers.
(h) Upon any release of the Sears/ST Lender Interests pursuant to this
Section 9.03, whether upon the occurrence of a Sears/ST Release Event (including
any Sears/ST Termination Event) or a Sears/ST General Default, the Sears Cash
Flow Interests shall be reallocated 50% to First Lender and 50% to Second
Lender. In addition, upon any release of the Sears/ST Lender Interests due to
any other default by Sears or ST under the Amended Second Loan/Option Documents
which is not a Sears/ST General Default, the Sears Cash Flow Interests shall be
reallocated 50% to First Lender and 50% to Second Lender.
(i) Notwithstanding anything to the contrary contained herein, the
parties acknowledge and agree, with respect to Sears/ST Release Events that are
not Accelerated Sears/ST Release Events, Sears and ST do not waive, but do
hereby reserve, the right to contest in any judicial proceeding whether a
Sears/ST Release Event (other than an Accelerated Sears/ST Release Event) has
occurred.
(j) The parties acknowledge the central purposes of this Agreement as
described in Section 22.01, the substantial modifications of the First Loan,
Tower Second Loan and Tower Option being made pursuant hereto, and the First
Lender's, Second Lender's, and Option Holder's forbearance from the exercise of
rights and remedies to which they would otherwise be entitled. With regard
thereto, Sears and ST have agreed to the extraordinary rights and remedies
provided by this Section 9, which are an essential part of the consideration for
the Lenders' modification of the First Loan and Tower Second Loan and the Option
Holder's modification of the Tower Option and such parties' entering into this
Agreement. It is the intent and purpose of Sears and ST that the rights and
remedies provided by this Section 9 to be enforceable in full so that First
Lender, Second Lender and Option Holder may realize upon the
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essential consideration intended to be given to them hereby by Sears and ST.
(k) Sears covenants and agrees that if Sears becomes obligated to
transfer to First Lender or PTLP the common stock and series A preferred stock
of ST, (i) at the time of such transfer, there shall be no intercompany
liabilities, tax sharing arrangements or similar obligations affecting ST
(collectively, "ST Intercompany Liabilities") and (ii) Sears shall indemnify
First Lender or PTLP, as the case may be, and hold it harmless from and against
all claims, damages, causes of action, costs, penalties, judgments, losses, and
expenses (including, without limitation, the reasonable fees of attorneys and
accountants) arising out of (A) the ST Intercompany Liabilities and (B)
liabilities arising prior to the date hereof and not assumed by Tower Owner
under the Assignment and Assumption.
9.04 Tower Bankruptcy
----------------
(a) PTLP covenants and agrees with First Lender that if the Sears/ST
Ownership Interests and/or the Sears/ST Stock Holdings are transferred to PTLP
pursuant to Section 9.03 while a Tower Bankruptcy Proceeding is pending, and if
such Tower Bankruptcy Proceeding is not dismissed within one hundred twenty
(120) days after the transfer of the Sears/ST Ownership Interests and/or the
Sears/ST Stock Holdings (whichever occurred earlier) to PTLP, then PTLP shall
upon demand by First Lender immediately transfer, without recourse, to First
Lender (subject to the Amended Second Loan/Option Documents, the AEW New Loan
Documents and the AEW Master Lease) all interests in the Sears/ST Ownership
Interests and the Sears/ST Stock Holdings that had previously been transferred
to PTLP pursuant to Section 9.03. First Lender covenants and agrees with PTLP
that in the event such Tower Bankruptcy Proceeding is subsequently dismissed,
and provided a Transfer Event has not occurred and PTLP's interests in the Tower
Property have not otherwise been eliminated, First Lender will transfer, without
recourse, the Sears/ST Ownership Interests (subject to the Amended First Loan
Documents) to PTLP without further consideration promptly after the dismissal of
the Tower Bankruptcy Proceeding.
(b) First Lender, Second Lender, Option Holder, AEW, Sears and ST
covenant and agree and that in the event of any Tower Bankruptcy Proceeding,
First Lender shall exercise its rights under Section 22, and Second Lender,
Option Holder, Sears and ST shall cooperate in all reasonable ways with First
Lender in First Lender's exercise of such rights so as: (i) in the event of an
Involuntary Tower Bankruptcy Proceeding, and in the absence of any Sears/ST
Release Event and provided a Transfer Event has not occurred, to maintain, as
nearly as practicable, in any reorganization plan or similar arrangement of
interests in the Tower Property the interests of First Lender, Second Lender,
AEW New Lender and Sears (in respect of the Sears Lender Interests) in the Cash
Flow of the Tower Property substantially as represented by the Distribution
Priorities; (ii) in the event of a Sears/ST Tower Bankruptcy Proceeding or in
the event of an involuntary Tower Bankruptcy Proceeding if a Sears/ST Release
Event has also occurred, but provided in either case that a Transfer Event has
not occurred, to maintain, as nearly as practicable, in any reorganization plan
or similar arrangement of interests in the Tower Property the interests of First
Lender, Second Lender and AEW New Lender in the Cash Flow of the Tower
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Property substantially as represented by the Distribution Priorities, giving
effect to the reallocation of the Sears Cash Flow Interests pursuant to Section
6.02; and (iii) in the event of an Involuntary Tower Bankruptcy Proceeding or a
Sears/ST Tower Bankruptcy Proceeding, but provided a Transfer Event has not
occurred, to maintain the AEW Master Lease in effect provided the AEW Master
Lessee is not in material default in the performance of its obligations
thereunder or hereunder.
(c) Sears and ST covenant and agree that, in the event of a Tower
Bankruptcy Proceeding, neither of said entities or any other Sears Entity shall,
in any capacity (including, without limitation, in Sears capacity as lessee
under the Sears Corporate Lease) initiate or participate, directly or
indirectly, in any challenge to the Cash Flow Distribution Priorities or any
attempt to recharacterize the respective interests of First Lender, Second
Lender, Option Holder, AEW New Lender or the Master Lessee in the Tower Property
contrary to the expressed intentions of this Agreement and the other Amended
Transaction Documents.
SECTION 10
INTERCREDITOR AGREEMENTS
------------------------
10.01 General Agreement Controlling
-----------------------------
The parties hereto acknowledge and agree that, notwithstanding anything
to the contrary contained herein or in any of the other Amended Transaction
Documents, in the event of any ambiguity or inconsistency between the terms and
provisions of this Agreement and the term and provisions of any of the other
Amended Transaction Documents, the terms and provisions of this Agreement shall
be controlling and the parties will use all reasonable efforts to reform and
conform any inconsistent provision of any of the other Amended Transaction
Documents to be consistent with the terms and provisions of this Agreement.
10.02 Termination of Earlier Agreements
---------------------------------
First Lender, Second lender, Option Holder and AEW acknowledge and
agree that the Subordination and Intercreditor Agreement dated as of July 2,
1990 between First Lender and AEW (in its capacity at that time as holder of the
Tower Second Loan) and the Subordination
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Agreement dated as of July 2, 1990 between First Lender and AEW (in its capacity
at that time as holder of the Tower Option) are hereby terminated in their
entirety and are no longer of any force or effect and no party shall have any
liability under either of said agreements from and after the date hereof.
10.03 No Impairment of Other Parties' Rights
--------------------------------------
(a) No amendment, modification or cancellation of, and not settlement
or compromise with respect to, any obligations of Tower Owner under the Amended
Second Loan/Option Documents, the AEW New Loan Documents or the Sears Lender
Documents which constitute part of the collateral under the Amended First Loan
Documents shall release or in any manner affect the rights of First Lender under
the Amended First Loan Documents unless such amendment, modification,
cancellation, settlement or compromise is consented to by First Lender.
(b) No amendment, modification or cancellation of, and no settlement or
compromise with respect to, any obligations of Tower Owner under the Amended
First Loan Documents, the AEW New Loan Documents or the Sears Lender Documents
which constitute part of the collateral under the Amended Second Loan/Option
Documents shall release or in any manner affect the rights of Second Lender or
Option Holder under the Amended Second Loan/Option Documents unless such
amendment, modification, cancellation, settlement or compromise is consented to
by Second Lender (as to the rights of Second Lender) or Option Holder (as to the
rights of Option Holder).
(c) No amendment, modification or cancellation of, and not settlement
or compromise with respect to, any obligations of Tower Owner under the Amended
First Loan Documents, the Amended Second Loan/Option Documents or the Sears
Lender Documents which constitute part of the collateral under the AEW New Loan
Documents shall release or in any manner affect the rights of AEW New Lender
under the AEW New Loan Documents unless such amendment, modification,
cancellation, settlement or compromise is consented to by AEW New Lender.
(d) No amendment, modification or cancellation of, and no settlement or
compromise with respect to, any obligations of Tower Owner under the Amended
First Loan Documents, the Amended Second Loan/Option Documents or the AEW New
Loan Documents which constitute part of the collateral under the Sears Lender
Documents shall release or in any manner affect the rights of Sears under the
Sears Lender Documents unless such amendment, modification, cancellation,
settlement or compromise is consented to by Sears.
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10.04 Subordination According to Distribution Priorities
--------------------------------------------------
In accordance with the Distribution Priorities, all payments of
principal and interest in respect of the Tower Second Loan and the AEW New Loan
and all payments of principal and interest in respect of the Sears New Loan and
the Sears Redevelopment Cost Obligation (including, without limitation, any such
payments payable to Second Lender, AEW New Lender or Sears pursuant to any
judgment) are subordinated to the payment in full of the First Loan Base Debt.
Second Lender, AEW New Lender and Sears hereby confirm such subordination and
covenant and agree to be bound by and to observe such subordination and the
other Distribution Priorities both prior to and after any Transfer Event,
Sears/ST Release Event or any Event of Default. In accordance therewith, Second
Lender, AEW New Lender and Sears each hereby transfers and assigns to First
Lender all right, title and interest in and to any amounts recovered or
recoverable by such respective party (including, without limitation, any
judgment obtained upon the interests held under any of the Amended Transaction
Documents) in derogation of the foregoing subordination.
10.05 Subordination of Tower Second Loan
----------------------------------
(a) Second Lender acknowledges, covenants and agrees for the benefit of
First Lender that the Tower Second Loan, the Amended Second Loan Documents, the
liens created thereby, and all rights and interests of Second Lender in and to
the Tower Property and the proceeds thereof are and shall continue to be
subordinate to the First Loan, the Amended First Loan Documents, the liens
created thereby, and all rights and interests of First Lender in and to the
Tower Property and (subject to the application of the Distribution Priorities in
the absence of a Transfer Event) the proceeds thereof.
(b) Without limiting the generality of Section 10.05(a), Second Lender
acknowledges and agrees that any net proceeds payable to or for the benefit of
Second Lender as a result of any foreclosure of the Second Mortgage or any
foreclosure of any other security interest in respect of the Tower Property held
by Second Lender shall be applied first to the payment in full of the First Loan
Base Debt and the balance, if any, shall be applied in accordance with the
Second through Seventh Distribution Priorities.
(c) Second Lender covenants and agrees for the benefit of First Lender
that it shall not take any of the following actions without the prior written
consent of First Lender (which consent shall be in First Lender's absolute
discretion to grant or withhold) and that any such action or purported action
without such consent of First Lender shall be null and void:
(i) accelerate the Second Loan, except: (1) in the event of a Sears/ST
Termination Event, a Sears/ST
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General Default or an "Event of Default" under the Amended Second
Loan/Option Documents that exists after December 31, 2001 (but in
each case excluding a Tower Bankruptcy Proceeding) and provided a
Transfer Event has not occurred; or (2) in the event of a Tower
Bankruptcy Proceeding and provided a Transfer Event has not
occurred and First Lender has accelerated the First Loan;
(ii) commence any Foreclosure Action in respect of all or any part of
the Tower Property except: (1) in the event of a Sears/ST
Termination Event, a Sears/ST General Default or an "Event of
Default" under the Amended Second Loan/Option Documents that
exists after December 31, 2001 (but in each case excluding a Tower
Bankruptcy Proceeding) and provided a Transfer Event has not
occurred; or (2) in the event of a Tower Bankruptcy Proceeding and
provided a Transfer Event has not occurred and First Lender has
commenced Foreclosure Action;
(iii) seek the appointment of a receiver, trustee or similar party for
all or any part of the Tower Property; or
(iv) exercise any other rights or remedies under the Amended Second
Loan Documents effecting the same result as accelerating the
Second Loan or commencing or maintaining a Foreclosure Action
(except to the extent and in the circumstances that accelerating
the Second Loan or commencing any Foreclosure Action is permitted
under clauses (i) and (ii) above and except for an exercise of
PTLP's rights under Section 9.03 hereof other than Section
9.03(e)).
(d) Second Lender acknowledges, covenants and agrees that upon the
occurrence of any Event of Default under the Amended First Mortgage, other than
a Tower Bankruptcy Proceeding (in the absence of a Transfer Event), or upon the
occurrence of a Transfer Event, the Tower Second Loan and all liens on the Tower
Property created by the Amended Second Loan Documents shall be extinguished
without further act by Second Lender and, without limiting the foregoing, Second
Lender shall, within five (5) days after request by First Lender, execute such
releases and confirmations as First Lender may request. Notwithstanding the
foregoing, with respect to any Transfer Event which is not an Accelerated
Transfer Event and any Event of Default which is not also an Accelerated
Transfer Event, Second Lender does not hereby waive its right to contest in any
judicial proceeding whether a Transfer Event and/or an Event of Default has
occurred.
(e) Provisions substantially the same as the foregoing provisions of
this Section 10.05 and Section 10.09(a) shall be
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included in all Amended Second Loan Documents recorded in the County Recorder's
Office or filed in any other public records.
10.06 Subordination of Tower Option
-----------------------------
(a) Option Holder acknowledges, covenants and agrees for the benefit of
First Lender that the Tower Option, the Amended Option Documents, the liens
created thereby, and all rights and interests of Option Holder in and to the
Tower Property and the proceeds thereof are and shall continue to be subordinate
to the First Loan, the Amended First Loan Documents, the liens created thereby,
and all rights and interests of First Lender in and to the Tower Property and
(subject to the application of the Distribution Priorities in the absence of a
Transfer Event) the proceeds thereof.
(b) Option Holder covenants and agrees for the benefit of First Lender
that it shall not take any of the following actions without the prior written
consent of First Lender (which consent shall be in First Lender's absolute
discretion to grant or withhold) and that any such action or purported action
without such consent of First Lender shall be null and void:
(i) seek the appointment of a receiver, trustee or similar party for
all or any part of the Tower Property; or
(ii) exercise any other rights or remedies under the Amended Option
Documents effecting the same result as clause (i) of this Section
10.06(b).
(c) Option Holder acknowledges, covenants and agrees that upon the
occurrence of any Event of Default under the Amended First Mortgages, other than
a Tower Bankruptcy Proceeding (in the absence of a Transfer Event), or upon the
occurrence of a Transfer Event, all rights of the Option Holder under the Tower
Option and the Amended Option Documents shall be transferred to First Lender
without further act by Option Holder; and, without limiting the foregoing,
Option Holder shall, within five (5) days after request by First Lender, execute
such releases and confirmations as First Lender may request. Notwithstanding the
foregoing, with respect to any Transfer Event which is not an Accelerated
Transfer Event and any Event of Default which is not also an Accelerated
Transfer Event, Option Holder does not hereby waive its right to contest in any
judicial proceeding whether a Transfer Event and/or an Event of Default has
occurred.
(d) Provisions substantially the same as the foregoing provisions of
this Section 10.06 and Section 10.09(a) shall be included in all Amended Option
Documents recorded in the County Recorder's Office and filed in any other public
records.
- 87 -
10.07 Subordination of AEW New Loan
-----------------------------
(a) AEW New Lender acknowledges, covenants and agrees for the benefit
of First Lender and PTLP that the AEW New Loan, the AEW New Loan documents, the
liens created thereby, and all rights and interests of AEW New Lender in and to
the Tower Property and the proceeds thereof are and shall continue to be
subordinate to the first Loan, the Tower Second Loan, the Tower Option, the
Amended First Loan Documents, the Amended Second Loan/Option Documents, the
liens created thereby and all rights and interests of First Lender and PTLP in
and to the Tower Property and (subject to the application of the Distribution
Priorities in the absence of a Transfer Event, or an "Event of Default" under
the Tower Second Loan) the proceeds thereof.
(b) Without limiting the generality of Section 10.07(a), AEW New Lender
acknowledges and agrees that any net proceeds payable to or for the benefit of
AEW New Lender as a result of any foreclosure of the AEW New Loan Mortgage or
any foreclosure of any other security interest in respect of the Tower Property
held by AEW New Lender shall be applied first to the payment in full of the
First Loan Base Debt and the balance, if any, shall be applied in accordance
with the Second through Seventh Distribution Priorities.
(c) AEW New Lender covenants and agrees for the benefit of First Lender
that it shall not take any of the following actions without the prior written
consent of First Lender (which consent shall be in First Lender's absolute
discretion to grant or withhold) and that any such action on purported action
without such consent of First Lender shall be null and void:
(i) accelerate the AEW New Loan, except in the event of a Tower
Bankruptcy Proceeding and provided (1) a Transfer Event has not
occurred and (2) First Lender has accelerated the First Loan;
(ii) commence any Foreclosure Action in respect of all or any part of
the Tower Property except in the event of a Tower Bankruptcy
Proceeding and provided (1) a Transfer Event has occurred and (2)
First Lender has commenced a Foreclosure Action;
(iii) seek the appointment of a receiver, trustee or similar party for
all or any part of the Tower Property; or
(iv) exercise any other rights or remedies under the AEW New Loan
Documents.
(d) AEW New Loan Lender acknowledges, covenants and agrees that upon
the occurrences of any Event of Default under the Amended First Mortgage, other
than a Tower Bankruptcy Proceeding (in the
- 88 -
absence of a Transfer Event), or upon the occurrence of a Transfer Event, the
AEW New Loan and all liens on the Tower Property created by the AEW New Loan
Documents shall be extinguished without further act by AEW New Lender; and,
without limiting the foregoing, AEW New Lender shall, within five (5) days after
request by First Lender, execute such releases and confirmations as First Lender
may request. Notwithstanding the foregoing, with respect to any Transfer Event
which is not an Accelerated Transfer Event and any Event of Default which is not
also an Accelerated Transfer Event, AEW New Lender does not thereby waive its
right to contest in any judicial proceeding whether a Transfer Event and/or an
Event of Default has occurred.
(e) Provisions substantially the same as the foregoing provisions of
this Section 10.07 and Section 10.09(a) shall be included in all AEW New Loan
Documents recorded in the County Recorder's Office or filed in any other public
records.
10.08 Subordination of Sears New Loan and Sears Redevelopment Cost
Obligation
------------------------------------------------------------
(a) Sears acknowledges, covenants and agrees for the benefit of First
Lender and PTLP that the Sears New Loan and the Sears Redevelopment Cost
Obligation, the Sears Lender Documents, the liens created thereby, and all
rights and interests of Sears under the Sears Lender Documents in and to the
Tower Property and the proceeds thereof are and shall continue to be
subordinate to the First Loan, the Tower Second Loan, the Tower Option, the
Amended First Loan Documents, the Amended Second Loan/Option Documents, the
liens created thereby and all rights and interests of First Lender and PTLP in
and to the Tower Property and (subject to the application of the Distribution
Priorities in the absence of a Sears/ST Release Event or an "Event of Default"
under the Tower Second Loan) the proceeds thereof.
(b) Without limiting the generality of Section 10.08(a), Sears
acknowledges and agrees that any net proceeds payable to or for the benefit of
Sears as a result of any foreclosure of the Sears New Loan/Redevelopment
Mortgage or any other foreclosure of any other security interest in respect of
the Tower Property held by Sears shall be applied first to the payment in full
of the First Loan Base Debt and the balance, if any, shall be applied in
accordance with the Second through Seventh Distribution Priorities.
(c) Sears covenants and agrees for the benefit of First Lender and PTLP
that it shall not take any of the following actions without the prior written
consent of First Lender and PTLP (which consent shall be in First Lender's and
PTLP's absolute discretion to grant or withhold) and that any such action or
purported action without such consent of the First Lender and PTLP shall be null
and void:
- 89 -
(i) accelerate the Sears New Loan or the Redevelopment Cost
Obligation, except in the event of a Tower Bankruptcy Proceeding
and provided (1) neither a Sears/ST Release Event nor a Sears/ST
General Default has occurred, and (2) First Lender has accelerated
the First Loan;
(ii) commence any Foreclosure Action in respect of all or any part of
the Tower Property except in the event of a Tower Bankruptcy
Proceeding and provided (1) neither a Sears/ST Release Event nor a
Sears/ST General Default has occurred and (2) First Lender has
commenced a Foreclosure Action;
(iii) seek the appointment of a receiver, trustee or similar party for
all or any part of the Tower Property; or
(iv) exercise any other rights or remedies under the Sears Lender
Documents.
(d) Sears acknowledges, covenants and agrees that upon the occurrence
of any Event of Default under the Amended First Mortgage or any "Event of
Default" under the Amended Second Loan/Option Documents, other than a Tower
Bankruptcy Proceeding (in the absence of a Sears/ST Release Event), or upon the
occurrence Sears/ST Release Event, the Sears New Loan and the Sears
Redevelopment Cost Obligation and all liens on the Tower Property created by the
Sears Lender Documents shall be extinguished without further act by Sears; and,
without limiting the foregoing, Sears shall, within five (5) days after request
from First Lender or PTLP, execute such releases and confirmations as First
Lender or PTLP may request. Notwithstanding the foregoing, with respect to any
Sears/ST Release Event which is not an Accelerated Sears/ST Release Event and
any Event of Default which is not also an Accelerated Sears/ST Release Event or
Sears/ST Special Default, Sears does not hereby waive its right to contest in
any judicial proceeding whether a Sears/ST Release Event and/or an Event of
Default has occurred.
(e) Provisions substantially the same as the foregoing provisions of
this section 10.08 and Section 10.09(a) shall be included in all Sears Lender
Documents recorded in the County Recorder's Office or filed in any other public
records.
10.09 Further Agreements of Lenders and Option Holder
-----------------------------------------------
(a) Each of Second Lender, Option Holder, AEW New Lender and Sears
(each referred to herein as a "Subordinate Party") covenants and agrees for the
benefit of First Lender as follows with regard to the respective Amended
Transaction Documents under which such Subordinate Party holds a lien on any of
the Tower Property:
- 90 -
(i) During any period that payments from or on behalf of the Tower
Owner are being collected pursuant to the Amended First Loan
Documents for the purpose of escrowing for (i) taxes, assessments
or other charges imposed on the Tower Property, (ii) insurance
premiums under insurance policies maintained in respect of the
Tower Property, or (iii) any other purpose, the Subordinate Party
shall not exercise any of its rights, if any, to require such
escrow payments;
(ii) All insurance proceeds and condemnation proceeds in respect of the
Tower Property shall be held and applied under and in accordance
with the terms of the Amended First Loan Documents; and
(iii) Each Subordinate Party hereby expressly consents to and
authorizes, at the option of First Lender, the release of all or
any portion of the Tower Property from the lien of the Amended
First Loan Documents, and hereby waives any equitable rights the
Subordinate Party might have to require the First Lender to
▇▇▇▇▇▇▇▇ all collateral in favor of a Subordinate Party and, in
the event of any foreclosure under the Amended First Loan
Documents, the Subordinate Party expressly consents to and
authorizes, at the option of First Lender, the sale, whether
separately or together, of all or any portion of the Tower
Property.
(b) With respect to the Sears Lender Documents, Sears, for the benefit
of Second Lender, expressly consents to and authorizes, at the option of Second
Lender, the release of all or any portion of the Tower Property from the lien of
the Amended Second Loan Documents, and hereby waives any equitable rights that
Sears might have to require the Second Lender to ▇▇▇▇▇▇▇▇ all collateral in
favor of Sears and, in the event of any foreclosure under the Amended First Loan
Documents, Sears expressly consents to and authorizes, at the option of Second
Lender, the sale, whether separately or together, of all or any portion of the
Tower Property.
10.10 Exercise of Remedies Under the Amended Second Loan/Option
Documents
---------------------------------------------------------
(a) Subject to the provisions of Section 10.05, any transfer of the
Tower Property and/or the other security and collateral under the Amended Second
Loan/Option Documents, or any part or parts thereof, pursuant to a foreclosure
or other exercise of the rights and remedies of Second Lender or Option Holder
under the Amended Second Loan/Option Documents, or by deed or other transfer
(including an assignment of the Ownership Interests in the Tower
- 91 -
Owner or its beneficiary, whether pursuant to the provisions of Section 9, a
distribution from the Grantor Trust or otherwise) in lieu thereof, shall not be
an Event of Default under the Amended First Loan Documents if (i) such transfer
is to PTLP, a Permitted Designee or a Qualified Transferee and (ii) such
transfer (in the absence of such foreclosure or such other exercise of remedies)
would be a permitted transfer under Section 19.08 hereof.
(b) PTLP, any Permitted Designee or any Qualified Transferee, as the
case may be, pursuant to such a permitted transfer shall own the Tower Property
and/or other security and collateral subject to the terms, conditions and lien
of the Amended First Loan Documents, including, without limitation, the
provisions as to the Distribution Priorities and the Final Participation
Determination (and shall be obligated to thereafter comply with the terms and
provisions thereof); provided, however, that such transferee shall not (i) be
personally liable for any of the obligations of Tower Owner under the Amended
First Loan Documents, (ii) be required to make deposits into the CDSR or the
NLCR, and/or (iii) be obligated to assume the recourse obligations of Sears
under the Amended First Loan Documents. Notwithstanding any such permitted
transfer to PTLP, a Permitted Designee or a Qualified Transferee, Second
Lender's right to receive principal, Stated Interest, Further Interest,
Participating Interest and Additional Interest pursuant to the Distribution
Priorities, AEW New Lender's right to receive payment on the AEW New Note
pursuant to the Distribution Priorities, and First Lender's right to receive
principal, Stated Interest, Further Interest, Participating Interest and
Additional Participating Interest (including, but not limited to, the right to
receive such interest pursuant to the Final Participation Determination) shall
continue and remain in full force and effect.
10.11 No Cross Default
----------------
First Lender, Second Lender and Option Holder acknowledge and agree
that a default or an Event of Default under the Amended Second Loan/Option
Documents shall not, in and of itself, constitute a default under the Amended
First Loan Documents, and that defaults and Events of Default under the Amended
First Loan Documents shall be determined independently of the determination of
defaults and Events of Default under the Amended Second Loan/Option Documents.
10.12 Exercise of Tower Option by First Lender
----------------------------------------
If due to the occurrence of a Transfer event the interests of the
Option Holder under the Tower Option and Amended Option Agreement are
transferred to First Lender and the Tower Second Loan and AEW New Loan are
released and terminated as contemplated in Section 8, and thereafter First
Lender exercises the Tower Option, for purposes of determining the "Exercise
Price" and the "Aggregate Liabilities" applied as an adjustment in determining
the Exercise
- 92 -
Price (all as defined in and provided by the Amended Option Agreement), the
Tower Second Loan (and Amended Tower Second Note) and the AEW New Loan (and AEW
New Loan Note) shall be deemed to be outstanding in the same amount (including
the same accrued interest) as if said loans had remained in full force and
effect and held by Second Lender and AEW New Lender.
SECTION 11
ST RESTRUCTURING
----------------
11.01 Restated Articles and Bylaws
----------------------------
(a) Sears and ST will cause the Articles of Incorporation and Bylaws of
ST to be amended and restated in their entirety, effective as of the date
hereof, in form satisfactory to First Lender and Second Lender.
(b) The amended and restated Articles of Incorporation of ST provide,
among other things, for: (i) one class of common stock and three (3) series of
preferred stock (identified as Series A, Series B, and Series C); (ii) certain
consent or approval rights of the holders of the different classes and series of
stock for certain actions by the corporation; and (iii) certain requirements as
to the election of the members of the board of directors and as to the consent
or approval of the members for certain actions by the corporation.
11.02 Issuance and Holding of ST Stock
--------------------------------
(a) Following the modification of the First Loan, the Tower Second Loan
and the Tower Option pursuant to the Amended Transaction Documents and the other
transactions contemplated by this Agreement to be effected as of the date
hereof, ST will issue, effective as of the date of this Agreement, (i) 80 shares
of the Series A preferred stock and 99 shares of the common stock of ST to Sears
in exchange for $9,000 in immediately available funds, (ii) 10 shares of the
Series B preferred stock of ST to MetLife in exchange for $1,000 in immediately
available funds, and (iii) 10 shares of the Series C stock of ST to PTLP in
exchange for $1,000 in immediately available funds.
(b) Sears covenants and agrees that it shall at all times continue to
own 100% of the common stock and 100% of the Series A preferred stock of ST free
and clear of all liens and encumbrances, other than the collateral pledges to
First Lender and Second Lender pursuant to the New Collateral Security
documents.
(c) No further common or preferred stock will be issued by ST without
the consent of Sears, First Lender and Second Lender, which
- 93 -
consent may be granted or withheld by each respective party in its absolute
discretion.
11.03 Acknowledgement and Exculpation
-------------------------------
(a) Sears, MetLife and PTLP, in their capacity as the sole shareholders
of ST and as parties to this Agreement, and the other parties to this Agreement
all acknowledge and agree: (i) it is expected that MetLife will hold the Series
B preferred stock of ST and exercise its rights in respect of said stock in
furtherance of its interests as First Lender (and contingent successor residual
beneficiary under the Grantor Trust) and that the director elected by the holder
of the Series B preferred stock will exercise his or her rights and authority as
a director of ST in furtherance of such interests of First Lender under this
Agreement and the other Amended First Loan Documents; (ii) such exercise of such
rights and authority by MetLife and said director in furtherance of the
interests of First Lender, provided such exercise is not in violation of the
provisions of this Agreement, shall not constitute, or be deemed to constitute,
a breach or violation of any fiduciary duty or other duty owing by MetLife or
said director to ST or the other shareholders of ST; and (iii) neither MetLife,
in its capacity as a shareholder of ST, nor any affiliate of MetLife, nor said
director shall be liable or accountable in damages or otherwise to ST or the
other shareholders of ST for any act or omission in connection with the
ownership of ST or the conduct of the business of ST, provided said act or
omission is not in violation of the provisions of this Agreement.
(b) Sears, MetLife and PTLP, in their capacity as the sole shareholders
of ST and as parties to this Agreement, and the other parties to this Agreement
all acknowledge and agree: (i) it is expected that PTLP will hold the Series C
preferred stock of ST and exercise its rights in respect of said stock in
furtherance of its interests as Second Lender, AEW New Lender, Option Holder and
residual beneficiary of the Grantor Trust and that the director elected by the
holder of the Series C preferred stock will exercise his or her rights and
authority as a director in furtherance of the interests of Second Lender, AEW
New Lender, Option Holder and residual beneficiary of the Grantor Trust, under
this Agreement and the Amended Second Loan/Option Documents; (ii) such exercise
of such rights and authority by PTLP and said director in furtherance of such
interests, provided such exercise is not in violation of the provisions of this
Agreement, shall not constitute, or be deemed to constitute, a breach or
violation of any fiduciary duty or other duty owing by PTLP or said director to
ST or the other shareholders of ST; and (iii) neither PTLP, in its capacity as a
shareholder of ST, nor any affiliate of PTLP nor said director shall be liable
or accountable in damages or otherwise to ST or the other shareholders of ST for
any act or omission in connection with the ownership of ST or the conduct of the
business of ST, provided
- 94 -
said act or omission is not in violation of the provisions of this Agreement.
11.04 Directors' and Officers' Liability Insurance
--------------------------------------------
Sears and ST covenant and agree that each will use all reasonable
efforts to cause to be maintained directors' and officers' liability insurance
in commercially reasonable amounts for the benefit of the directors and officers
of ST (including, without limitation, the directors elected by the Series B
preferred shareholder and the Series C preferred shareholder).
11.05 Additional Agreements Regarding ST Stock
----------------------------------------
(a) The certificates representing all shares of common stock and
preferred stock of ST at any time owned by any holder thereof shall bear the
following legend:
"The sale, transfer, pledge or encumbrance of this
certificate is subject to restrictions set forth in a
certain General Agreement dated as of November 7, 1994
by and among Metropolitan Life Insurance Company, AEW
Partners, L.P., Partners Tower, L.P., Tower Leasing,
Inc., Sears, ▇▇▇▇▇▇▇ and Co. and ST Holdings, Inc. and
the Restated Certificate of Incorporation of ST
Holdings, Inc.; said General Agreement and Restated
Certificate of Incorporation are on file and available
for inspection in the Office of the Secretary of ST
Holdings, Inc."
(b) ST, MetLife and PTLP acknowledge, covenant and agree that (i) upon
the occurrence of a Transfer Event, the series C preferred stock shall be
transferred by PTLP to MetLife in the manner set forth in Section 8.03, (ii)
upon the payment in full of the First Loan Base Debt, the series B preferred
stock shall, at the direction of PTLP, be transferred to PTLP or any replacement
first lender, and (iii) the series C preferred stock may be transferred to any
Qualified Transferee of the Second Loan as provided in Section 19. If the series
B preferred stock or the series C preferred stock is transferred under (ii) or
(iii), the transferee shall agree in writing, either prior to or concurrently
with such transfer, to be bound by the restrictions on transfers and
encumbrances set forth herein. Any other attempted transfer shall be null and
void and of no force and effect.
(c) In accordance with the Restated Certificate of Incorporation of ST,
the series B preferred stock and the series C preferred stock shall be redeemed
by ST upon the first to occur of (a) provided ST has not exercised its power of
substitution under the Grantor Trust Agreement, a transfer by ST of its interest
as
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the Grantor and Income Beneficiary of the Grantor Trust to MetLife or PTLP, (b)
the transfer of the Tower Property to the Residual Beneficiary pursuant to the
terms of the Grantor Trust, (c) after ST has exercised its power of substitution
under the Grantor Trust Agreement, if ST ceases to own the beneficial interest
in the Tower Property for any reason other than a transfer contrary to the
General Agreement, or (d) the satisfaction and discharge in full or the
extinguishment of the Amended First Loan Documents, the Amended Second
Loan/Option Documents, the AEW New Loan, the Sears New Loan and the Sears
Redevelopment Cost Obligation.
SECTION 12
GRANTOR TRUST
-------------
12.01 Establishment of Grantor Trust
------------------------------
(a) ST will establish a trust (the "Grantor Trust") pursuant to a
Grantor Trust Agreement, n the form approved by First Lender, Second Lender and
Option Holder, between ST as "Grantor" and State Street Bank and Trust Company
as trustee (herein the "Grantor Trustee"). The Grantor Trust Agreement provides
that ST is the income beneficiary thereunder, PTLP is the initial residual
beneficiary, and First Lender is the contingent residual beneficiary. In
accordance with the terms of the Grantor Trust Agreement, First Lender will
become the residual beneficiary following the occurrence of a Transfer Event.
(b) ST covenants and agrees not to release, transfer, assign or pledge
its interest as Grantor or as income beneficiary under the Grantor Trust, except
for (i) the collateral assignments of its interests as income beneficiary to
First Lender and Second Lender pursuant to the New Collateral Security
Documents, (ii) as expressly provided in the Grantor Trust Agreement, and (iii)
Sears and ST's release and termination right pursuant to Section 25.08(a).
12.02 Transfer of Combined Tower Property
-----------------------------------
ST will transfer to the Grantor Trust all of ST's right, title and
interest as Tower Owner in and to the Tower Property and all related rights and
interests of Tower Owner relating to the Tower Property (other than the legal
title to the Tower Property, which shall continue to be held by Land Trustee),
including, without limitation, to the beneficial interest and power of direction
under the Land Trust and the interest of Tower Owner in the CDSR and other
accounts relating to the Tower Property (such right, title and interest in the
Tower Property and related rights and interests to be transferred to the Grantor
Trust are herein collectively referred to as the "Combined Tower Property" and
are more fully described in Exhibit M-1 attached hereto); provided, however,
that
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the parties acknowledge and agree that the property (herein the "Excluded
Property") listed in Exhibit M-2 attached hereto does not constitute part of the
Combined Tower Property. The transfer of the Combined Tower Property to the
Grantor Trust will be made subject to the Amended Transaction Documents but
prior to the execution and delivery of the Master Lease.
12.03 Power of Substitution
---------------------
Pursuant to the terms of the Grantor Trust Agreement, ST, as Grantor,
has the right to substitute property for the Combined Tower Property as the
corpus of the Grantor Trust. In the event of any such substitution of trust
corpus: (i) the Combined Tower Property shall remain subject to the Amended
Transaction Documents and the Master Lease; and (ii) ST shall assume and become
liable for all obligations of Tower Owner arising from and after such
substitution. Except as provided in Section 19.03 hereof, ST covenants and
agrees not to release such power of substitution under the Grantor Trust
Agreement without the prior written consent of First Lender, Second Lender and
Option Holder, which consent each such party may grant or withhold in its
absolute discretion.
12.04 Distribution Upon Termination
-----------------------------
The scheduled termination date of the Grantor Trust Agreement is
January 1, 2003. Upon any termination of the Grantor Trust, if ST has not prior
thereto withdrawn the Combined Tower Property from the Grantor Trust and
substituted other property as the trust corpus, the Combined Tower Property will
be distributed (i) to PTLP or as directed by PTLP as residual beneficiary if a
Transfer Event has not previously occurred, or (ii) to MetLife or as directed by
MetLife as successor residual beneficiary if a Transfer Event has previously
occurred. Any distribution of the Combined Tower Property to PTLP as residual
beneficiary will be subject to the Amended First Loan Documents, Amended Second
Loan Documents, the AEW Master Lease and the Sears Lender Documents (provided
neither a Sears/ST Release Event nor a Sears/ST General Default has occurred);
and there shall be no merger of PTLP's interests as Second Lender under the
Amended Second Loan Documents or as AEW New Lender under the AEW New Loan
Documents with the ownership interests in the Combined Tower Property. Any
distribution of the Combined Tower Property to MetLife as successor residual
beneficiary shall be made subject to the Amended First Loan Documents, which
shall remain in full force and effect; and unless otherwise expressly directed
by First Lender in its absolute discretion, there shall be no merger of First
Lender's interest as lender under the Amended First Loan Documents with the
ownership interests in the Combined Tower Property.
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12.05 Indemnification from Tower Property
-----------------------------------
Pursuant to the terms of the Grantor Trust Agreement, the Grantor
Trustee shall be indemnified by the Grantor Trust for all fees, damages, claims,
liabilities and expenses (including reasonable attorneys' fees) incurred by the
Grantor Trustee in connection with the performance of its duties ("Grantor
Trustee Expenses"). Any indemnification payments to the Trustee with respect to
Grantor Trustee Expenses shall be treated as a Tower Expense and shall be paid
prior to any other expenses, including but not limited to any payments under the
Distribution Priorities.
12.06 Sears Reimbursement for Certain Grantor Trustee Expenses
--------------------------------------------------------
Sears covenants and agrees, on a recourse basis, for the benefit of
First Lender, Second Lender, Option Holder and the Grantor Trustee, that if and
to the extent that the Grantor Trust includes Grantor Trustee Expenses in excess
of $500,000 (on an aggregate cumulative basis) which arise from or relate to (i)
fees of the Grantor Trustee, (ii) costs or expenses incurred by the Grantor
Trustee in connection with the construction, interpretation or enforcement of
the Grantor Trust Agreement, or (iii) other legal or accounting costs or
expenses incurred by the Grantor Trustee in the performance of its duties (but
excluding any Grantor Trustee Expenses arising from the ownership, operation,
leasing or management of the Tower Property which would be incurred by Tower
Owner in the absence of the Grantor Trust), Sears will make additional
contributions to the Grantor Trust to the extent of such excess, and all such
amounts shall be used solely to pay Grantor Trustee Expenses. Sears will not be
required to pay or reimburse the Grantor Trustee for any other Grantor Trustee
Expenses.
12.07 Furnishing of Documents
-----------------------
AEW Master Lessee covenants and agrees that it shall deliver to First
Lender copies of each notice, certificate and other document delivered by AEW
Master Lessee to Grantor Trustee pursuant to Article IX of the Grantor Trust
Agreement or relating to the termination of the AEW Master Lease, at the same
time that AEW Master Lessee delivers such notice, certificate or other document
to Grantor Trustee. Master Lessee further covenants and agrees that upon
reasonable request from First Lender from time to time, AEW Master Lessee will
deliver to First Lender copies of any other notices, certificates and documents
delivered by AEW Master Lessee to Grantor Trustee.
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SECTION 13
MASTER LEASE
------------
13.01 AEW Master Lessee
-----------------
(a) Following the transfer of the Combined Tower Property to the
Grantor Trust, Land Trustee and Grantor Trustee, collectively as lessor ("Master
Lessor"), will master lease the Tower Property to Tower Leasing, Inc., a
Massachusetts corporation ("TLI"), as lessee (the "AEW Master Lessee") pursuant
to a Master Lease and Assignment Agreement in form approved by First Lender (the
"AEW Master Lease"). The AEW Master Lease provides for a lease term ending July
2, 2005, subject to certain termination and extension rights of the AEW Master
Lessee.
(b) It is acknowledged and agreed that the Master Lessee has no duty or
obligation to Sears, ST or the beneficiaries of the Grantor Trust other than to
furnish information as provided in Section 23.
(c) Notwithstanding anything contained in the AEW Master Lease to the
contrary, (i) the parties hereto acknowledge and agree that the AEW Master Lease
shall terminate immediately upon delivery of written notice by First Lender to
Master Lessor and the AEW Master Lessee stating that an Accelerated Transfer
Event has occurred, and (ii) First Lender shall have the right to terminate the
AEW Master Lease upon the occurrence of a Transfer Event which is not an
Accelerated Transfer Event, subject to the right of the AEW Master Lessee and
PTLP to contest in any judicial proceeding whether a Transfer Event has
occurred.
(d) Notwithstanding anything contained in the AEW Master Lease to the
contrary, the parties acknowledge and agree that AEW Master Lessee shall have
the right to terminate the AEW Master Lease at any time if Second Lender, Option
Holder and AEW New Lender shall release and transfer, without recourse, all of
their right, title and interest in respect of the Tower Property and the Grantor
Trustee and in, to and under the Amended Second Loan/Option Documents and the
AEW New Loan Documents to the same extent as provided in Section 8.03 upon the
occurrence of an Accelerated Transfer Event. Upon any such termination of the
AEW Master Lease prior to the scheduled termination date of the MetLife Master
Lease, the term of the MetLife Master Lease shall commence without further act
of the parties.
(e) The parties also acknowledge and agree that, unless otherwise
terminated by the AEW Master Lessee, the AEW Master Lease shall remain in full
force and effect following the payment of the First Loan Base Debt.
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13.02 MetLife Master Lease
--------------------
Concurrently with the execution of the AEW Master Lease, Master Lessor
will also master lease the Tower Property to MetLife as lessee (MetLife, in its
capacity as such lessee, or any assignee of MetLife in such capacity, is herein
referred to as the "MetLife Master Lessee") pursuant to a Master Lease (the
"MetLife Master Lease") in form approved by First Lender. The MetLife Master
Lease provides for a term commencing, automatically and without further act,
upon the termination of the AEW Master Lease at any time prior to January 1,
2003 (provided the First Loan Base Debt has not been satisfied in full) and
terminating on January 1, 2003 (or upon the earlier termination of the Grantor
Trust or the payment in full of the First Loan Base Debt). (The AEW Master Lease
and the MetLife Master Lease, as to such time as the respective document is in
effect, are each sometimes herein referred to as the "Master Lease"; and the
term "Master Lessee" is used herein to refer to the AEW Master Lessee or the
MetLife Master Lessee, as the case may be, under the applicable Master Lease.)
Upon any termination of the AEW Master Lease, the AEW Master Lessee shall
transfer and deliver to the MetLife Master Lessee (or as otherwise directed by
MetLife) all documents, service agreements, records and accounts relating to the
operation and management of the Tower Property then in the possession or control
of PTLP or any other AEW Entity.
13.03 No Assignment of AEW Master Lease
---------------------------------
The AEW Master Lessee covenants and agrees not to cause or, to the
extent within its control, permit: (i) any assignment, transfer, pledge or
granting of security interest in the lessor's or the lessee's interest in the
AEW Master Lease, except to First Lender as contemplated herein and as permitted
under Section 19 hereof; (ii) any subletting by the AEW Master Lessee except to
space tenants in the Tower Property in the ordinary course; or (iii) any sale,
transfer or assignment by the AEW Master Lessee of any of its interests in any
property, tangible or intangible, relating to the operation, leasing,
management, development or redevelopment of the Tower Property other than in the
ordinary course of the conduct of its business.
13.04 Appointment of Receiver
-----------------------
In the event First Lender declares a Transfer Event (other than an
Accelerated Event) to have occurred and Second Lender, Option Holder or the AEW
Master Lessee contests the occurrence of such Transfer Event, First Lender shall
have the right immediately, upon First Lender's application to a court of
competent jurisdiction, to have a receiver, selected by First Lender, appointed
for the operation and management of the Tower Property. The costs and expenses
of such receiver shall constitute Tower Expenses for purposes of determining
Cash Flow. The provisions of this Section 13.04 shall not be deemed to be a
limitation on or in
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derogation of (i) First Lender's rights and remedies upon the occurrence of a
Transfer Event provided by Section 8.03 or (ii) Second Lender's, Option
Holder's, or AEW Master Lessee's right to contest in any judicial proceeding
whether a Transfer Event (other than an Accelerated Transfer Event) has
occurred.
13.05 Restrictions on Actions of AEW Master Lessee
--------------------------------------------
Notwithstanding anything to the contrary contained in the AEW Master
Lease or the Grantor Trust Agreement, the AEW Master Lessee covenants and agrees
that it shall not take any action contrary to any covenant, agreement, term or
provision of this Agreement or any of the other Amended Transaction Documents
(whether such covenant, agreement, term or provision is made directly by the AEW
Master Lessee or by AEW, Second Lender, Option Holder or any other AEW Entity).
13.06 AEW Master Lessee Obligations
-----------------------------
With respect to the operation, management, and leasing of the Tower
Property and with respect to the New Collateral Security Documents given by the
AEW Master Lessee to First Lender, AEW covenants and agrees for the benefit of
First Lender that it shall be directly and personally liable for, not as a
surety but as a principal obligor, and shall indemnify, protect and hold
harmless First Lender from and against any and all losses, damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys' fees)
arising out of any of the following acts or omissions by the AEW Master Lessee:
(i) any misrepresentation or breach of warranty by the AEW Master Lessee under
this Agreement or any of the other Amended First Loan Documents; (ii) any fraud
by the AEW Master Lessee in connection with the transactions contemplated by
this Agreement or in the operation, management and leasing of the Tower
Property; (iii) any failure by the AEW Master Lessee after the occurrence of a
Transfer Event or any Event of Default under the Amended First Mortgage (other
than an Event of Default arising solely from a Sears/ST Default, in the absence
of a Transfer Event) to deliver to First Lender, after written notice from First
Lender, any tenant security deposits or similar sums in the possession or
control of AEW, the AEW Master Lessee or any other AEW Entity relating to the
period after the occurrence of a Transfer Event or such Event of Default, in
connection with the Tower Property or other collateral securing the First Loan;
(iv) any failure by the AEW Master Lessee to deliver to the First Lender, after
written notice from First Lender, all rents and other receipts in respect of the
Tower Property or other collateral securing the First Loan received by the AEW
Master Lessee after the occurrence of a Transfer Event or an Event of Default
under the Amended First Mortgage (other than an Event of Default arising solely
from a Sears/ST Default, in the absence of a Transfer Event); (v) any
misappropriation, or willful application contrary to the terms of the Amended
First Loan
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Documents, by the AEW Master Lessee, of Condemnation Proceeds or Insurance
Proceeds (each as defined in the Amended First Mortgage) or similar funds
relating to the Tower Property or other collateral securing the First Loan; and
(vi) any removal by the AEW Master Lessee from the Tower Property of any
personal property that is part of the collateral securing the First Loan
following the occurrence of a Transfer Event or an Event of Default under the
Amended First Mortgage (other than an Event of Default arising solely from a
Sears/ST Default, in the absence of a Transfer Event).
13.07 Subordination to First Loan
---------------------------------
The parties acknowledge and agree that the Master Lease is and shall
remain subject and subordinate to the First Loan, the Amended First Loan
Documents and the liens created thereby and that, without limitation on any
other rights of First Lender, under any of the other Amended First Loan
Documents (including, without limitation, the New Collateral Security
Documents), upon any foreclosure of the lien of the Amended First Mortgage,
First Lender shall have the right to terminate the Master Lease.
13.08 Replacement Master Leases
-------------------------
The parties acknowledge that under certain circumstances, if the AEW
Master Lease has terminated and the MetLife Master Lease has terminated, the
Grantor Trustee may appoint a replacement master lessee pursuant to Section 7.1
of the Grantor Trust.
13.09 Sears/ST Covenants Regarding Master Lease
-----------------------------------------
(a) ST shall cooperate with AEW Master Lessee and take such action as
AEW Master Lessee may direct to allow AEW Master Lessee effectively to exercise
its rights and authority under the AEW Master Lease and, without limitation,
shall execute, acknowledge, and deliver from time to time, within five (5) days
after request by AEW Master Lessee, (i) recognition, non-disturbance and other
agreements that AEW Master Lessee deems appropriate to assure to tenants of the
Tower Real Property (or contracting parties) that the provisions of their leases
(and agreements) will continue throughout their entire term (including all
extension and renewal options), notwithstanding any termination, modification,
assignment, or surrender of the AEW Master Lease, and (ii) such instruments,
certifications, and estoppels as AEW Master Lessee may from time to time request
in furtherance of AEW Master Lessee's exercise of such powers, all without
implying that any of such documents are necessary to the effectiveness of the
powers granted to AEW Master Lessee.
(b) ST agrees that it shall not either as grantor or income beneficiary
under the Grantor Trust or (if ST exercises the power of substitution under the
Grantor Trust Agreement) as Tower Owner,
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seek to terminate the AEW Master Lease, to declare a default by AEW Master
Lessee, or to seek legal or equitable relief against AEW Master Lessee with
respect to any matter covered by the AEW Master Lease, it being intended that
the rights and authority granted to AEW Master Lessee under the AEW Master Lease
shall be exclusive, unconditional, and unfettered and ST's sole remedy in the
event of any default by AEW Master Lessee under the AEW Master Lease that would
otherwise result in a Sears/ST Termination Event shall be the right, but not the
obligation, to cure the default as set forth in Sections 9.01(a) and (b) of this
Agreement.
(c) Neither Sears, ST nor any other Sears Entity shall interfere in an
intentional, material, active and direct manner with the exclusive right of the
AEW Master Lease to operate, lease, manage, control, develop, redevelop, sell,
finance and otherwise deal with the Tower Property and exercise its rights in
accordance with the AEW Master Lease and the General Agreement.
SECTION 14
NEW LOANS AND CONTRIBUTIONS
---------------------------
14.01 AEW New Loan
------------
Pursuant to a Loan Agreement of even date herewith between PTLP as
lender and ST as borrower (the "AEW New Loan Agreement"), PTLP has committed to
loan to Tower Owner the sum of $15,000,000 (the "AEW New Loan"), such loan to be
evidenced by a note (the "AEW New Loan Note") with a stated interest rate of
7.70% per annum. The AEW New Loan Note will be secured by a subordinate mortgage
on the Tower Property (the "AEW New Loan Mortgage"). Pursuant to the AEW New
Loan Agreement, PTLP is obligated on a recourse basis to advance the AEW New
Loan in accordance with Section 14.05 hereof. AEW has delivered an unconditional
recourse guaranty (The "AEW New Loan Advance Guaranty") guaranteeing the advance
of funds pursuant to the AEW New Loan Agreement. Any unfunded portion of the AEW
New Loan will be available for the application to principal and interest in
respect of the First Loan upon the maturity (whether by acceleration or
otherwise) of the First Loan. First Lender is an intended beneficiary of the AEW
New Loan Agreement and the AEW New Loan Advance Guaranty, and the AEW New Loan
Agreement and the AEW New Loan Advance Guaranty shall be enforceable by First
Lender on its own behalf and/or on behalf of the Tower Owner. The obligation of
PTLP to advance funds pursuant to the AEW New Loan is secured by a confession of
judgment, included in the AEW New Loan Agreement, made by PTLP for the benefit
of First Lender; and the guaranty obligation of AEW in respect of the advance of
funds pursuant to the AEW New Loan Agreement is secured by a confession of
judgment, included in the AEW New Loan Advance Guaranty, made by AEW for the
benefit of First Lender.
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14.02 Sears New Loan and Contribution
-------------------------------
(a) Pursuant to a Loan Agreement of even date herewith between Sears as
lender and ST as borrower (the "Sears New Loan Agreement"), Sears has committed
to loan to Tower Owner the sum of $9,000,000 (the "Sears New Loan") to be
evidenced by a note (the "Sears New Note") with a stated interest rate of 7.70%
per annum. The Sears New Note, together with the Sears Redevelopment Cost
Obligation, will be secured by a subordinate mortgage on the Tower Property (the
"Sears New Loan/Redevelopment Mortgage"). Pursuant to a Contribution Agreement
of even date herewith between Sears as contributor and ST as recipient (the
"Sears Contribution Agreement"), Sears has committed to advance the sum of
$36,000,000 (the "Sears Contribution") to Tower Owner. (the Sears New Loan and
the Sears Contribution are sometimes herein collectively referred to as the
"Sears New Loan/Contribution".) Pursuant to the Sears New Loan Agreement and the
Sears Contribution Agreement, Sears is obligated on a recourse basis to advance
the Sears New Loan and Sears Contribution (20% as Sears New Loan and 80% as
Sears New Contribution) in accordance with Section 14.05 hereof. Any unfunded
portion of the Sears New Loan and Sears Contribution will be available for
application to principal and interest in respect of the First Loan upon the
maturity (whether by acceleration or otherwise) of the First Loan. First Lender
and PTLP are intended beneficiaries of the Sears New Loan Agreement and the
Sears Contribution Agreement, and the Sears New Loan Agreement and the Sears
Contribution Agreement shall each be enforceable by First Lender on its own
behalf and/or on behalf of the Tower Owner and by PTLP on behalf of Tower Owner.
The obligation of Sears to advance funds pursuant to the Sears New Loan and the
Sears Contribution shall be secured by a confession of judgment, included in the
Sears New Loan Agreement and in the Sears Contribution Agreement, made by Sears
for the benefit of First Lender.
(b) The parties acknowledge and agree that Sears may, but is not
obligated to, advance additional funds pursuant to the Sears New Note, after the
Sears New Loan/Contribution has been advanced in full and provided a Sears/ST
Release Event has not occurred (i) in order to cure any Transfer Event in
accordance with and subject to the provisions of Section 9.01(b), and (ii) at
any time after a Transfer Event has occurred, in order to satisfy any obligation
of Tower Owner under the Amended First Loan Documents. (Any such additional
advances by Sears are referred to herein as "Additional Sears Advances.")
(c) The parties acknowledge and agree that Tower Owner has assigned to
the Master Lessee the sole and exclusive right to exercise the Tower Owner's
rights in connection with the Sears New Loan, the Sears Contribution and all
matters relating thereto including without limitation, all rights in connection
with repayment and valuation under the Sears New Loan. Sears and ST covenant and
agree with PTLP and the Master Lessee that ST shall
- 104 -
not assert or attempt to exercise any such rights and that Sears shall deal only
with the Master Lessee in connection with all matters relating to the Sears New
Loan and the Sears Contribution. The foregoing shall not, however, limit or
affect First Lender's rights in respect of the Sears New Loan/Contribution.
14.03 Several Obligations
-------------------
The obligation of PTLP to advance funds pursuant to the AEW New Loan
and the obligation of Sears to advance funds pursuant to the Sears New Loan and
the Sears Contribution shall be proportional to such total respective
obligations of PTLP and Sears (i.e. 25% by AEW and 75% by Sears). PTLP's
obligations under the AEW New Loan Agreement and Sears obligations under the
Sears New Loan Agreement and the Sears Contribution Agreement are independent of
each other; PTLP and Sears shall each be obligated to satisfy its obligations
under its respective agreement(s) notwithstanding a default by the other party
under such other party's respective agreement(s).
14.04 Restriction on Assignments
--------------------------
(a) PTLP shall not, without the prior written consent of First Lender
(which First Lender may grant or withhold in its absolute discretion), assign,
transfer, pledge or hypothecate all or any portion of its right, title or
interest as lender under the AEW New Loan, and any such purported assignment,
transfer, pledge or hypothecation without such consent of First Lender shall be
null and void and of no force or effect. Sears shall not, without the prior
written consent of First Lender (which First Lender may grant or withhold in its
absolute discretion) and the prior written consent of PTLP (which PTLP may grant
or withhold in its absolute discretion), assign, transfer, pledge or hypothecate
all or any portion of its right, title or interest as lender under the Sears New
Loan, and any such purported assignment, transfer, pledge or hypothecation
without such consent of First Lender and PTLP shall be null and void and of no
force or effect.
(b) PTLP covenants and agrees that upon any transfer of the Second Loan
and the Tower Option as permitted by and made in accordance with Section 19,
PTLP shall, unless otherwise agreed by First Lender in its sole discretion,
transfer and assign the AEW New Note and all of its right, title and interest as
AEW New Lender to the transferee of the Second Loan and Tower Option. First
Lender, Second Lender and Option Holder acknowledge and agree that, subject to
Section 19.04, it is their intent, unless otherwise agreed by First Lender in
its sole discretion, that, until the satisfaction in full of the First Loan, the
Tower Second Loan, the Tower Option and the AEW New Loan shall at all times be
held by the same party.
(c) Notwithstanding the foregoing provisions of this Section 14.04, to
the extent that partial transfers of the Tower Second
- 105 -
Loan or interests therein are permitted under Section 19, proportional
corresponding transfers of portions of the AEW New Loan or interests therein may
be made to the same transferee.
14.05 Funding and Deposit
-------------------
(a) PTLP shall advance funds pursuant to the AEW New Loan and Sears
shall advance funds pursuant to the Sears New Loan/Contribution upon receipt of
a written request for funds from the Master Lessee, specifying the amount of
funds and the date of the proposed advance, given in accordance with New Loan
Agreement (as to the AEW New Loan), the Sears New Loan Agreement (as to the
Sears New Loan) and the Sears Contribution Agreement (as to the Sears
Contribution). The parties acknowledge and agree that the Master Lessee is
authorized to make such requests for advances of funds at such times as the
Master Lessee, in its good faith judgment, expects such funds to be required
during the succeeding ninety (90) days, in accordance with the Approved Annual
Budget, for the operation, management, leasing, development and redevelopment of
the Tower Property and for the payment of Minimum Interest (including Contingent
Minimum Interest and Required Minimum Interest) under the Amended First Notes.
It is anticipated that the Master Lessee will make such requests for advances,
if needed, on a quarterly basis in conjunction with the quarterly review and
adjustment of the Approved Annual Budget in accordance with Section 6.06.
However, the Master Lessee shall have the right to make such request for the
advance of funds ant any time that it considers necessary in accordance with
this Section 14.05(a). In any event the Master Lessee shall make a request for
the advance of funds at any time that funds are needed for the payment of
Minimum Interest under the Amended First Notes.
(b) Amounts advanced by AEW New Lender as the AEW New Loan and amounts
advanced by Sears as the Sears New Loan/Contribution shall be advanced directly
to and deposited in the New Loan/Contribution Reserve ("NLCR") to be established
as of the date hereof pursuant to the New Loan/Contribution Reserve Account and
Escrow Agreement (the "NLCR Agreement") among ST, First Lender, AEW Master
Lessee and ▇▇▇▇▇▇ Trust and Savings Bank, as Escrowee. The NLCR shall be pledged
solely to First Lender as security for the First Loan; Second Lender, Option
Holder, and Sears disclaim any security interest in or claim to the NLCR.
14.06 Payment of First Loan
---------------------
If the First Loan is paid in full, including First Loan Base Debt,
Further Interest, Participating Interest and Additional Participating Interest,
at the option of Master Lessee the AEW New Loan Mortgage and the Sears New
Loan/Redevelopment Mortgage shall be terminated and released, provided that a
lien in all Ownership Interests in the beneficial owner of the Tower Property
(but not in the Tower Property or in the Land Trust) and all interests of Tower
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Owner in Cash Flow, subordinate to the lien of any first mortgage lender, shall
be granted to Sears and the AEW New Lender pursuant to a written instrument
reasonably satisfactory to Sears and the AEW New Lender. In connection
therewith, Sears and the AEW New Lender may require reasonable assurances,
including but not limited to representations, warranties and/or an opinion of
counsel, as to the validity and efficacy of such pledge.
SECTION 15
SEARS REDEVELOPMENT COSTS
-------------------------
15.01 Sears Redevelopment Cost Obligation
-----------------------------------
(a) ST will execute and deliver to Sears a certain Sears Redevelopment
Loan Note dated as of the date hereof (herein referred to as the "Sears
Redevelopment Cost Obligation") providing for the payment to Sears of an amount
equal to the unamortized amount of costs incurred by Sears before the date
hereof for certain capital improvements to the Tower Property. The principal
amount of the Sears Redevelopment Cost Obligation as of the date hereof is
$69,790,779. The principal amount of the Sears Redevelopment Cost Obligation
amortizes over a term ending July 1, 2005 in accordance with an amortization
schedule attached thereto.
(b) the Sears Redevelopment Cost Obligation is payable solely from Cash
Flow in accordance with the Distribution Priorities and is subordinated to the
First Loan as provided in Section 10.08.
SECTION 16
TOWER ACCOUNT AGREEMENTS
------------------------
16.01 Amended CDSR Agreement
----------------------
(a) Sears, ST, First Lender, Second Lender, AEW Master Lessee and
▇▇▇▇▇▇ Trust and Savings Bank, as Escrowee, will enter into the Amended and
Restated Capital and Debt Service Reserve Account and Escrow Agreement dated as
of the date hereof (herein the "Amended CDSR Agreement"), pursuant to which the
Capital and Debt Service Reserve Account ("CSDR") shall be maintained. The
Amended CDSR Agreement amends and restates in its entirety the Capital and Debt
Service Reserve Account and Escrow Agreement (with Addendum) dated as of July 2,
1990.
(b) As provided in the Amended CDSR Agreement, the obligation of Sears
to fund the CDSR has been satisfied except for the continuing obligation of
Sears to make deposits for "Excess Real Estate Taxes" (as defined therein) in
accordance with the terms thereof. Sears covenants and agrees, on a recourse
basis, to make
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such deposits in accordance with the terms of the Amended CDSR Agreement.
(c) In connection with the termination of the CRA pursuant to Section
16.03 hereof, all funds on deposit in the CRA will be transferred to the CDSR
and applied in accordance with the Amended CDSR Agreement.
(d) Pursuant to the Assignment and Assumption, ST will assign to
Grantor Trustee, and Grantor Trustee will assume, all of ST's right, title and
interest in and obligations as Tower Owner under the CDSR and the Amended CDSR
Agreement.
16.02 NLCR Agreement
--------------
(a) As described in Section 14.05(b), the NLCR will be established
pursuant to the NLCR Agreement.
(b) Pursuant to the Assignment and Assumption, ST will assign to
Grantor Trustee, and Grantor Trustee will assume, all of ST's right, title and
interest in and obligations as Tower Owner under the NLCR the NLCR Agreement.
16.03 CRA Agreement
-------------
The Capital Replacements Account Escrow and Security Agreement (with
Addendum) dated as of July 2, 1990 (the "CRA Agreement"), by and among Sears,
First Lender, AEW and ▇▇▇▇▇▇ Trust and Savings Bank, as Escrowee, will be
terminated as of the date hereof and all amounts on deposit in the Capital
Replacements Account ("CRA") thereunder will be transferred as of the date
hereof to the CDSR. No party shall have any further liability under or on
account of the CRA Agreement.
16.04 Investment Account Escrow and Security Agreement
------------------------------------------------
The Investment Account Escrow and Security Agreement (with Addendum)
dated as of July 2, 1990 by and among Sears, First Lender, AEW and ▇▇▇▇▇▇ Trust
and Savings Bank, as Escrowee, will be terminated as of the date hereof and no
party shall have any further liability under or on account of said agreement. No
funds are on deposit in the account maintained pursuant to said agreement.
16.05 Capital Improvements Obligation Agreement
-----------------------------------------
The Capital Improvements Obligation Agreement dated as of July 2, 1990
by and between Sears and First Lender will be terminated as of the date hereof,
and neither party shall have any further liability under or on account of said
agreement. No account or deposit of funds was maintained pursuant to the Capital
Improvements Obligation Agreement.
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SECTION 17
TOWER LEASING AND OPERATIONS
----------------------------
17.01 Assignment and Assumptions
--------------------------
(a) Pursuant to an Assignment and Assumption with Indemnity dated as of
the date hereof, ST will assign to the Grantor Trustee and the Grantor Trustee
will assume in accordance with the terms of said instrument various assets and
liabilities, including but not limited to (i) ST's interest, as Tower Owner,
under the First Loan, Tower Second Loan, Tower Option, AEW New Loan and Sears
New Loan/Contribution, (ii) ST's interest in leases, contracts and other rights
relating to the Tower Property, the Tower Personal Property, and the power of
direction under the Land Trust, and (iii) certain existing disclosed
liabilities; and pursuant thereto Grantor Trustee will provide ST with an
indemnity relating to such assignment and assumption.
(b) ST and Grantor Trustee will also execute and deliver an Assignment
and Assumption of Leases and Security Deposits dated as of the date hereof,
pursuant to which ST will assign to Grantor Trustee and Grantor Trustee will
assume, in accordance with the terms of said instrument, all leases and security
deposits relating to the Tower Property.
17.02 Leasing Guidelines and Leasing Plan
-----------------------------------
In accordance with the Amended First Mortgage, attached hereto as
Exhibit N-1 is a copy of the Leasing Guidelines (Continuing Guidelines and
Annual Guidelines to be in effect through December 31, 1995); and attached
hereto as Exhibit N-2 is a copy of the Leasing Plan to be in effect through
December 31, 1995.
17.03 Tower Management Agreement
--------------------------
AEW Master Lessee will enter into a Management Agreement dated the date
hereof (the "Tower Management Agreement") with The ▇▇▇▇ ▇▇▇▇ Management Group,
L.P. ("Tower Manager") relating to the leasing, operation and management of the
Tower Property. Tower Manager will execute and deliver to First Lender a
Manager's Agreement, Subordination and Consent to Assignment dated the date
hereof, pursuant to which Tower Manager agrees to continue to perform its
services under the Tower Management Agreement for the benefit of First Lender or
its assignee following an Event of Default under the Amended First Mortgage.
17.04 Ernst & Young Lease
-------------------
ST and Ernst & Young U.S. ("EY") entered into a Lease dated as of
September 25, 1991, as amended ("EY Lease"), pursuant to the terms of which EY
agreed to lease from ST approximately 352,000
- 109 -
rentable square feet of space in the Tower Real Property, together with certain
personal property (which constitutes part of the Tower Personal Property). As
part of ST's inducement to EY to enter into the EY Lease (and as more
particularly described in section 29 of the EY Lease), (i) ST executed an
assignment and assumption agreement (the "IBM Space Assumption Agreement")
whereby ST assumed all of EY's obligations under EY's lease of space (the "IBM
Lease") at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (commonly known as One IBM
Plaza), and (ii) Sears executed a separate agreement (the "IBM Sears Separate
Agreement") whereby Sears guaranteed to the landlord under IBM Lease (the "IBM
Landlord") the performance by ST of ST's obligations under the IBM Space
Assumption Agreement. The Tower Owner hereby assumes all of ST's obligations
under the IBM Space Assumption Agreement, and shall indemnify and hold harmless
ST and Sears from and against any and all losses, costs, damages and expenses
incurred by ST under the IBM Space Assumption Agreement or by Sears under the
IBM Sears Separate Agreement (collectively, the "IBM Indemnity Obligations").
Payments on the IBM Indemnity Obligations shall constitute a Tower Expense under
Section 7.04(e)(v). If for any reason Tower Owner fails to perform its IBM
Indemnity Obligations, then from and after the date of such failure Sears and ST
shall have the right (a) unless and until such failure is cured, to seek
enforcement of the IBM Indemnity Obligations and (b) to collect from sublessees
of the space described in the IBM Lease all rents and other amounts due from
such sublessees under the terms of their respective subleases and to otherwise
act as the sublandlord thereunder and in connection with all other space subject
to the IBM Lease (including, without limitation, the right to market such
space); provided that in no event shall Sears be entitled to collect rents and
other amounts in excess of the payments that Sears makes on account of Tower
Owner's failure to pay the IBM Indemnity Obligations.
17.05 Levy Obligations
----------------
ST and Levy Tower Limited Partnership ("LTLP") entered into an
Agreement dated as of August 1, 1990 (the "Levy Agreement"), whereby ST and LTLP
agreed to terminate a Lease dated May 21, 1984, as amended (the "Levy Lease")
with respect to certain restaurant and dining facilities leased by LTLP from ST
and more particularly described in the Levy Lease. Concurrently with the
execution and delivery of the Levy Agreement (i) LTLP executed and delivered a
Note dated August 1, 1990 in the principal amount of $675,967.03 (the "Levy
Note"), which Levy Note evidences the obligation of LTLP to pay to ST, among
other things, past due rental obligations owed by LTLP under the Levy Lease and
(ii) ST and LTLP entered into a Management Agreement dated as of August 1, 1990
(the "Levy Facilities Management Agreement"), pursuant to the terms of which
LTLP agreed to manage and operate the restaurant and dining facilities more
particularly described in the Levy Facilities Management Agreement
(collectively, the "Levy Facilities"). By agreement dated February ▇, ▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ agreed that
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the losses incurred by the Tower Owner from the Levy Facilities subsequent to
January 1, 1992 would not be included as a Tower Expense, but rather such losses
would be charged to a suspense account. The agreement further provided that
Tower Owner was to be reimbursed for such losses together with 8% interest
thereon.
The parties to this Agreement acknowledge and agree that the Levy Note
shall constitute Excluded Property (and amounts due under the Levy Note shall no
longer be offset against management fees payable to LTLP under the Levy
Facilities Management Agreement or any subsequent agreement). Furthermore, ST
shall be entitled to reimbursement of its losses to date (in the aggregate
amount of $1,998,300) as follows: Each annual Cash Flow and Distribution
Statement shall indicate the amount of profit or loss incurred by the Tower
Owner with respect to the Levy Facilities or any replacement facilities operated
by LTLP (the "Levy Restaurants") during the preceding year. In the event that a
net profit is realized by the Levy Restaurants during any calendar year
beginning with 1995, ST shall be entitled to receive from Tower Owner, as a
Tower Expense, the ST Levy Payment. The ST Levy Payment shall be equal to the
amount of such annual net profit as set forth on the Cash Flow and Distribution
Statement multiplied by a fraction the numerator of which is the ST Restaurant
Losses and the denominator of which is the Total Restaurant Losses, provided,
that (a) the total cumulative payment to ST hereunder cannot exceed the ST
Restaurant Losses, together with interest thereon at 8%, and (b) no payment
shall be due with respect to profits realized in any year after 2004. For
purposes of this provision, (i) the ST Restaurant Losses means $1,998,300
(representing the aggregate unpaid losses from January 1, 1992 to the date
hereof) and (ii) Total Restaurant Losses means the total cumulative annual net
losses incurred in the operation of the Levy Restaurants during the period
commencing January 1, 1992 and ending on the earlier of the date of such
calculation or December 31, 2004. Each ST Levy Payment shall be paid by Tower
Owner to ST within forty-five (45) days after delivery of the annual Cash Flow
and Distribution Statement to Tower Owner.
The Letter Agreement dated as of February 3, 1993, with respect to the
repayment to Sears of losses from the Levy Restaurants is hereby terminated, and
the agreement of the parties pursuant to the preceding grammatical paragraph is
herein referred to as the "Levy Reimbursement Agreement."
SECTION 18
SEARS LICENSE AGREEMENT
-----------------------
Pursuant to the License Agreement of even date herewith between Sears,
as Licensor, and AEW Master Lessee as Licensee (the "Sears License Agreement"),
Sears has granted AEW Master Lessee a
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license to use the registered service ▇▇▇▇ "Sears Tower" on the terms and
conditions set forth therein. The Sears License Agreement acknowledges the
rights of the MetLife Master Lessee as the possible successor Master Lessee. In
addition, the AEW Master Lessee's interest under the Sears License Agreement has
been collaterally assigned to First Lender pursuant to the New Collateral
Security Documents.
SECTION 19
RESTRICTIONS ON TRANSFERS
-------------------------
19.01 Restrictions on Sears Transfers
-------------------------------
Sears covenants and agrees that it will not cause, except as provided
in Section 9 hereof, suffer or permit any of the following, without in each case
the prior written consent of First Lender and Second Lender, which consent shall
be in the respective absolute discretion of First Lender and Second Lender to
grant or withhold:
(a) ST Stock: any sale, transfer, assignment or pledge by Sears of all
or any part of its Ownership Interests in ST, other than (i) the collateral
pledges of the common stock and the series A preferred stock to First Lender and
Second Lender pursuant to the New Collateral Security Documents, (ii) the
transfer of the common stock and the series A preferred stock to Second Lender
in accordance with Section 9.04 in the event of a Tower Bankruptcy Proceeding,
and (iii) Sears termination and release right pursuant to Section 25.08(a).
(b) Sears Lender Interests: any sale, transfer, assignment or pledge by
Sears of all or any part of (i) its interest as lender under the Sears New Loan
or the Sears Redevelopment Cost Obligation or (ii) its interest in the Sears
Cash Flow Interests, except as otherwise provided in Section 19.03.
19.02 Restrictions on ST Transfers
----------------------------
ST covenants and agrees that it will not cause, suffer or permit any of
the following, without in each case the prior written consent of First Lender
and Second Lender, which consent shall be in the respective absolute discretion
of First Lender and Second Lender to grant or withhold:
(a) Tower Property and Land Trust: any sale, transfer, assignment or
pledge by ST of all or any part of the legal title to the Tower Property or the
beneficial interest under the Land Trust other than (i) the collateral
assignments of such beneficial interest to First Lender and Second Lender
pursuant to the New Collateral Security Documents, (ii) the transfer of legal or
- 112 -
beneficial ownership of the Tower Property to Option Holder or its Permitted
Designee pursuant to the exercise of the Tower Option, (iii) ST's exercise of
its rights pursuant to the Grantor Trust Agreement to substitute the trust
corpus of the Grantor Trust and pursuant thereto to withdraw the Combined Tower
Property from the Grantor Trust, or (iv) Sears termination and release right
pursuant to Section 25.08(a).
(b) Grantor Trust: any sale, transfer, assignment or pledge by ST of
all or any part of its interest as grantor or income beneficiary under the
Grantor Trust other than the collateral assignments of the grantor's and income
beneficiary's interests to First Lender and Second Lender pursuant to the New
Collateral Security Documents; or any voluntary termination of the Grantor Trust
prior to January 1, 2003 except as otherwise provided in Section 19.03.
(c) The provisions of this Section 19.02 shall not be a limitation upon
(i) First Lender's exercise of its rights and remedies pursuant to Section 9
hereof in the event of a Sears/ST Release Event or under the other Amended First
Loan Documents upon an Event of Default or (ii) Second Lender's, AEW New
Lender's or Option Holder's exercise of their respective rights and remedies
pursuant to Section 9 hereof in the event of a Sears/ST Release Event or a
Sears/ST General Default or under the other Amended Second Loan/Option Documents
(including the AEW New Loan Documents) upon a Sears/ST General Default or an
"Event of Default" thereunder.
19.03 Permitted Sears/ST Transfers
----------------------------
(a) Sears shall have the right at any time, upon prior written notice
to First Lender, to sell, transfer and assign all, but not less than all, of the
Sears Cash Flow Interests to Second Lender subject to and in accordance with the
following:
(i) Pursuant to any such sale, transfer or assignment, Second Lender
shall receive only the Sears Cash Flow Interests and shall not
receive or exercise any rights of Sears or ST under this Agreement
or any of the other Amended Transaction Documents.
(ii) The Sears New Loan/Redevelopment Mortgage and any other collateral
security documents securing the Sears New Loan and/or the Sears
Redevelopment Cost Obligation shall be released and terminated.
(iii) Upon the occurrence of any Sears/ST Termination Event or any
other event or circumstances which pursuant to the terms hereof
(in the absence of a sale, transfer or assignment of the Sears
Cash Flow Interests) would result in the Sears Cash Flow Interests
being reallocated 50% to
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First Lender and 50% to Second Lender, the Sears Cash Flow
Interests (having been sold, transferred and assigned to Second
Lender) shall nevertheless be reallocated 50% to First Lender.
(b) At any time from and after January 1, 2002, ST shall have the
right, as provided in Section 7.1(f) of the Grantor Trust Agreement, by
agreement with PTLP, to terminate the Grantor Trust and to cause a distribution
of the corpus of the Grantor Trust (including the beneficial interest under the
Land Trust) to PTLP or a Permitted Designee as the residual beneficiary
thereunder.
19.04 Identity of Second Lender, Option Holder and AEW New Lender
-----------------------------------------------------------
It is acknowledged and agreed that as of the date hereof, PTLP is
Second Lender, Option Holder and AEW New Lender. Second Lender, Option Holder
and AEW New Lender covenant and agree that, subject to the provisions of
Sections 19.10 and 19.12, at all times until payment in full of the First Loan
(including, without limitation, all Further Interest, Participating Interest and
any Additional Participating Interest) the Tower Second Loan, the Tower Option
and the AEW New Loan shall be held by the same entity; provided, however, that
in connection with the acquisition of the Tower Property, whether pursuant to
the exercise of the Tower Option, a transfer pursuant to Section 9, a
distribution from the Grantor Trust, a foreclosure or the exercise of other
rights and remedies pursuant to the Amended Second Loan/Option Documents, the
Option Holder may, immediately prior to the closing of such acquisition, assign
all of its rights, title and interest under the Tower Option and Option
Agreement to a Permitted Designee which shall acquire the Tower Property
pursuant to the Tower Option.
19.05 Restrictions on PTLP Transfers
------------------------------
PTLP covenants and agrees that, except as otherwise provided in
Sections 19.07 through 19.10, until payment in full of the First Loan
(including, without limitation, all Further Interest, Participating Interest and
any Additional Participating Interest) PTLP will not cause, suffer or permit any
of the following, without in each case the prior written consent of First
Lender, which consent shall be in the absolute discretion of First Lender to
grant or withhold:
(a) ST Stock: any sale, transfer, assignment or pledge by PTLP of all
or any part of its Ownership Interests in ST (including, without limitation, the
common stock and series A preferred stock which may be transferred to PTLP),
other than (i) the collateral pledge of the series C preferred stock to First
Lender pursuant to the New Collateral Security Documents and (ii) the transfer
of the Sears/ST Stock Holdings to First Lender
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pursuant to Section 9.04(a) in the event of a Tower Bankruptcy Proceeding.
(b) Tower Property and Land Trust: any sale, transfer, assignment or
pledge by PTLP of all or any part of the legal title to the Tower Property or
the beneficial interest under the Land Trust.
(c) Grantor Trust: any sale, transfer, assignment or pledge by PTLP or
all or any party of its interest under the Grantor Trust (including, without
limitation, any interest as residual beneficiary and any interest as grantor and
income beneficiary which may be transferred to PTLP by ST or to which PTLP may
succeed by operation of the Grantor Trust), other than the collateral assignment
of PTLP's interest as residual beneficiary to First Lender pursuant to the New
Collateral Security Documents; or any voluntary termination by PTLP of the
Grantor Trust prior to January 1, 2003 except (i) as otherwise provided in
Section 19.03 or (ii) pursuant to the exercise of PTLP's remedies under the
Amended Second Loan/Option documents in connection with a termination of the
Sears/ST Lender Interests and the Sears/ST Ownership Interests.
(d) Master Lease: any sale, transfer, assignment or pledge of all or
any portion of the lessor's interest under the AEW Master Lease.
(e) Partnership Interests: any sale, transfer, assignment or pledge of
any of the Ownership Interests in PTLP or in the general partner of PTLP.
(f) Tower Second Loan, Tower Option and AEW New Loan: any sale,
transfer, assignment or pledge by PTLP of all or any portion of (i) interest in
respect of the Tower Second Loan and as Second Lender under the Amended Second
Loan Documents, (ii) its interest in respect of the Tower Option and as Option
Holder under the Amended Option Documents, or (iii) its interest in respect of
the AEW New Loan and as AEW New Lender under the AEW New Loan Documents.
19.06 Restrictions on AEW Master Lease Transfers
------------------------------------------
AEW Master Lessee covenants and agrees that, except as otherwise
provided in Section 19.07, until payment in full of the First Loan (including,
without limitation, all Further Interest, Participating Interest and Additional
Participating Interest), AEW Master Lessee will not cause, suffer or permit any
of the following, without in each case the prior written consent of First
Lender, which consent shall be in First Lender's absolute discretion to grant or
withhold:
- 115 -
(a) AEW Master Lease: any sale, transfer, assignment or pledge of all
or any portion of the lessee's interest under the AEW Master Lease.
(b) Ownership Interests in AEW Master Lessee: any sale, transfer,
assignment or pledge of all or any portion of the Ownership Interests in the AEW
Master Lessee.
19.07 Permitted PTLP Transfers of Tower Second Loan, Tower Option and
AEW New Loan
---------------------------------------------------------------
(a) If PTLP has not become Tower Owner, PTLP shall have the rights at
any time to sell, assign and transfer all, but not less than all, of (i) its
right, title and interest in, to and under the Tower Second Loan, the Tower
Option and the AEW New Loan or (ii) all, but not less than all, of the Ownership
Interests in PTLP to a single entity which is a Qualified Transferee, subject to
and in accordance with the provisions of this Section 19.07 and Section 19.11.
(b) If the Grantor Trust has not previously terminated then,
simultaneously with such transfer of its interest in the Tower Second Loan,
Tower Option and AEW New Loan, PTLP shall also sell, assign and transfer to the
same transferee all of the PTLP's right, title and interest as beneficiary under
the Grantor Trust.
(c) In connection with any sale pursuant to Section 19.07(a), (i) the
AEW Master Lessee shall sell, assign and transfer all, but not less than all, of
its right, title and interest in, to and under the AEW Master Lease to the
Qualified Transferee; or (ii) all, but not less than all, of the Ownership
Interests in the AEW Master Lessee shall be transferred to such Qualified
Transferee.
19.08 Permitted Transfers of Tower Property
-------------------------------------
(a) If PTLP (or its Permitted Designee) has become Tower Owner, Tower
Owner shall have the right to sell, assign and transfer all, but not less than
all, of (i) its right, title and interest in and to the Tower Property and/or
the beneficial interest under the Land Trust or (ii) the Ownership Interests in
PTLP (or its Permitted Designee) to a single entity which is a Qualified
Transferee, subject to and in accordance with the provisions of this Section
19.08 and Section 19.11.
(b) If the Tower Second Loan and/or the AEW New Loan is outstanding at
the time of the transfer made pursuant to Section 19.08(a), then, simultaneously
with such transfer of the Tower Owner's interest in the Tower Property or the
Ownership Interests in PTLP (or its Permitted Designee), PTLP shall also sell,
assign and transfer to the same transferee all of its right, title and interest
in and to the Tower Second Loan and the AEW New Loan (or 100% of the Ownership
Interests in the entity that owns the same),
- 116 -
subject to and in accordance with the provisions of this Section 19.08 and
Section 19.11.
(c) In connection with any transfer pursuant to Section 19.08(a), if
the AEW Master Lease has not previously terminated, PTLP shall either (i) cause
it to be terminated simultaneously with such transfer, (ii) transfer it to the
Qualified Transferee or (iii) cause all of the Ownership Interests in the AEW
Master Lessee to be transferred to such Qualified Transferee.
19.09 Permitted Transfers of Ownership Interests in PTLP
--------------------------------------------------
(a) AEW and PTLP (or its Permitted Designee) may allow, in the
aggregate, up to forty percent (40%) of the Ownership Interests in PTLP (or its
Permitted Designee) to be sold, assigned and transferred from time to time to
one or more Qualified Transferees subject to and in accordance with the
provisions of this Section 19.09 and Section 19.11; provided that in all events:
(i) AEW shall continue to own not less than sixty percent (60%) of the Ownership
Interests in PTLP; (ii) Partners Tower Corporation shall continue to be the sole
general partner of PTLP, or, if there is more than one general partner, Partners
Tower Corporation shall be the sole managing general partner; and (iii) AEW
shall continue to own not less than sixty percent (60%) of the Ownership
Interests in Partners Tower Corporation.
19.10 Permitted Transfers of Tower Second Loan After Payment of First
Loan Base Debt
---------------------------------------------------------------
(a) At any time after payment of the First Loan Base Debt, subject to
the provisions of this Section 19.10 and Section 19.11, PTLP shall have the
right, from time to time, to (i) transfer the Tower Second Loan and Tower
Option, in whole or in part, or any right, title and interest evidenced or
created by the Amended Second Loan/Option Documents, in whole or in part, to a
Qualified Transferee, a Sears Entity or an AEW Entity and, subject to the
provisions of this Agreement, to divide into components of varying priorities
the Tower Second Loan; (ii) transfer a portion of such right, title and interest
in the Tower Second Loan and Tower Option to any Institutional Investor (other
than a Non-Qualified Investor/Advisor), a Sears Entity or an AEW Entity provided
that (1) Second Lender or an AEW Entity is the managing general partner of the
entity to which the Tower Second Loan and Tower Option are transferred or Second
Lender or an AEW Entity otherwise manages or acts as lead lender with respect to
the Tower Second Loan and Tower Option, (2) Second Lender retains an interest
(directly or indirectly) in the Tower Second Loan and Tower Option worth, in the
aggregate, at least Twenty-Five Million Dollars ($25,000,000), and (iii)
transfer a portion of any such interests in the Tower Second Loan or Tower
Option to such parties and on such other terms as are reasonably acceptable to
First Lender.
- 117 -
(b) If, in accordance with the foregoing, the Tower Second Loan and
Tower Option have been divided into components so that more than one lender or
option holder holds the interests of PTLP under the Tower Second Loan and Tower
Option, one of such parties shall be designated to act as "Second Lender" and
"Option Holder" herewith pursuant to a written notice to First Lender given by
the party or parties authorized to make such designation (together with evidence
of such authority, reasonably satisfactory to First Lender). In no event shall
First Lender be required to obtain consents from or accept performance by more
than one party acting on behalf of all of such parties at that time; provided
that First Lender agrees to send notices sent or required to be sent by First
Lender to Second Lender pursuant to this Agreement to up to three (3) of such
parties.
19.11 Conditions to Permitted PTLP Transfers
--------------------------------------
(a) Any transfer of the Tower Second Loan, Tower Option and AEW New
Loan pursuant to Section 19.07, any transfer of Tower Owner's interest in the
Tower Property or in the beneficial interest under the Land Trust pursuant to
Section 19.08, and any transfer of Ownership Interests in PTLP pursuant to
Section 19.09, and any transfer of interests in the Tower Second Loan pursuant
to Section 19.10 shall be conditioned upon and subject to satisfaction of the
following requirements:
(i) Not less than twenty (20) Business Days prior to the effective
date of the proposed transfer, PTLP shall deliver to First Lender
(A) written notice of such proposed transfer together with a
general description of the proposed transfer, true and complete
copies of any proposed documentation relating to the proposed
transfer, and such information and materials reasonably requested
by First Lender to establish that the proposed transfer is
permitted hereby or, if not permitted, to evaluate the granting of
its consent, and (B) such evidence as First Lender may reasonably
request, which may include representations, warranties and/or an
opinion of counsel, that neither the proposed transfer nor the
transferee's interest in the Tower Second Loan, Tower Option or
AEW New Loan is prohibited under ERISA.
(ii) The transfer shall satisfy the requirements of Section 24.
(iii) PTLP shall pay all reasonable costs and expenses (including,
without limitation, legal fees and costs) incurred by First Lender
in connection with any proposed transfer, whether or not
consummated.
(iv) the transferee executed such additional assurances as may be
reasonably requested by First Lender in order
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to assure continuing compliance by the transferee with the
purposes and intent of this Agreement with the same effect as
existed with PTLP as the Second Lender, Option Holder and AEW New
Lender.
(v) Second Lender and/or Tower Owner shall promptly furnish First
Lender with true and complete copies of all documents executed in
connection with any such transfer promptly after their execution
and delivery.
(b) With respect to any transfer of the Tower Second Loan, Tower Option
and AEW New Loan pursuant to Section 19.07, the transferee shall assume and hold
the Tower Second Loan, Tower Option and AEW New Loan subject to the rights and
obligations of the transferor thereof under the terms of this Agreement and
shall assume the obligations of PTLP (recourse and non-recourse, as the case may
be) hereunder pursuant to a written instrument reasonably satisfactory to First
Lender.
(c) With respect to any transfer of the Tower Owner's interest in the
Tower Property or in the beneficial interest under the Land Trust pursuant to
Section 19.08, the transferee shall hold the Tower Property subject to the
rights and obligations of the transferor thereof under the terms of this
Agreement and the Amended First Loan Document and shall assume the obligations
of Tower Owner hereunder and under the Amended First Loan Documents.
(d) Notwithstanding any transfer of all or any part of the Tower Second
Loan or interests therein or any division of the Tower Second Loan into varying
components, (i) First Lender's right to receive payments of principal and Stated
Interest (unless the First Loan Base Debt has been paid in full) and Further
Interest, Participating Interest and Additional Participating Interest under the
terms of the Amended First Notes and pursuant to the Distribution Priorities
shall continue and remain in full force, and First Lender's right to the Final
Participation Determination shall continue and remain in full force and effect
as provided in Section 7.02, and (ii) Sears rights under the Sears New Loan and
the Sears Redevelopment Cost Obligation and the AEW New Lender's rights under
the AEW New Loan shall continue and remain in full force and effect.
19.12 Restrictions Binding on PTLP Successors: Release of Restrictions
----------------------------------------------------------------
(a) The restrictions on transfer described in Sections 19.04, 19.05 and
19.06 and the provisions permitting transfers pursuant to Sections 19.07 through
19.11 shall be binding upon and inure to the benefit of the permitted successors
and assigns of PTLP in respect of the Tower Second Loan, the Tower Option and
the AEW New Loan, and upon the successors and assigns of PTLP in respect of its
interests in the Tower Property, the Land Trust and
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the Grantor Trust. The restrictions on transfer described in Section 19.06 shall
be binding upon the successors and assigns of the AEW Master Lessee.
(b) Notwithstanding anything to the contrary contained in this Section
19, but, subject to Section 24, the restrictions on transfer described in
Sections 19.04, 19.05 and 19.06 shall be released and terminated, and shall be
of no further force or effect, upon the release and termination of the Amended
First Mortgage pursuant to Section 4.08; provided, however, such release and
termination of the transfer restrictions and such release and termination of the
Amended First Mortgage shall not in any way impair or affect First Lender's
right to receive Further Interest, Participating Interest and Additional
Participating Interest under the terms of the Amended First Notes and pursuant
to the Distribution Priorities, which right shall continue and remain in full
force and effect together with First Lender's right to the Final Participation
Determination as provided in Section 7.02.
19.13 Covenant Against Restructuring
------------------------------
The parties acknowledge and agree that First Lender has entered into
this Agreement and agreed to the substantial modifications of the First Loan
being made pursuant hereto, with substantial rights and interests being retained
by Sears, ST, Second Lender and Option Holder, on the understanding and basis
that such other parties hereto will not seek any further modification of the
First Loan except on a consensual basis, with each party acting in its
respective absolute discretion and its individual interest, and that, absent
such understanding and basis, First Lender would not have entered into this
Agreement. Accordingly, PTLP covenants and agrees, for itself and its successors
and assigns as owners of any interests in the Tower Second Loan, Tower Option,
Tower Property or the beneficial interest under the Land Trust, that neither it
nor any such successor or assign shall at any time seek or attempt any further
modification of the First Loan or any restructuring of the obligations of, or
interests relating to, the Tower Property contrary to the objection of First
Lender, or challenge the validity and binding nature of this Agreement and the
transactions contemplated hereby; and that in the event of any such act or
attempt by PTLP or any of its successors and assigns, by assertion of any claim
or by any judicial proceeding or otherwise, the terms and provisions of the
original First Notes with respect to the payment of principal, interest
prepayment fees and default prepayment fees shall, at the option of First
Lender, be immediately reinstated in substitution for the terms and provisions
of the Amended First Notes, in which event all amounts then due and payable
under the original terms of the First Notes shall be immediately due and
payable.
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19.14 Restrictions on Transfers of First Loan
---------------------------------------
(a) Except as otherwise provided below in this Section 19.14, unless
the Amended First Mortgage has been released and terminated pursuant to Section
4.08 hereof, First Lender agrees not to sell, transfer or assign all or any
portion of its interest in the First Loan or the interests evidenced or created
by the Amended First Loan Documents without the prior written consent of Second
Lender.
(b) First Lender shall have the right to sell the entire (but not less
than entire) First Loan and all of its rights in the Amended First Loan
Documents to an Institutional Lender or a Special Purpose Entity, provided that
such transferee assumes and agrees to be bound by all of the terms and
provisions of this Agreement, including, without limitation, this Section 19.14,
and further provided that in the case of a transfer to a Special Purpose Entity
MetLife shall remain liable for the performance of its obligations under
Sections 4.09 and 22.02(c) hereof. As used herein, "Institutional Lender" shall
mean any domestic entity which is either a national banking association, life
insurance company, real estate investment trust, pension fund, or any master
limited partnership in the real estate lending business and which has assets in
excess of Two Billion Dollars ($2,000,000,000) and with a nationally recognized
financial standing and reputation in real estate lending; and "Special Purpose
Entity" shall mean an entity organized by First Lender for the purpose of
holding the First Loan and issuing certificates or other evidence of
participation therein, provided (i) the holders of such certificates or other
evidence of participation shall have no greater rights than would be permitted
to participants under a participation pursuant to Section 19.14(c), and (ii)
such transfer will not cause PTLP or any AEW Entity to be deemed an issuer,
underwriter, investment company or a direct or indirect "controlling person" of
any such issuer, underwriter, or investment company for purposes of the
Securities Act of 1933, the Securities Exchange Act of 1934 or the Investment
Company Act of 1940 or any state securities law.
(c) First Lender shall also have the right to grant participations in
the First Loan (including, without limitation, participations reflecting
division of the First Loan into components of varying rights and priorities)
provided that (i) First Lender at all times remains a participant in the First
Loan, (ii) except as provided in clause (iii) below, no consent of a participant
shall be required in connection with any consent or approval required to be
given by First Lender under the Amended First Loan Documents, any amendment or
modification of the Amended First Loan Documents or any waiver by First Lender
thereunder, including, without limitation, a waiver of any Event of Default
under any of the Amended First Loan Documents, (iii) the consent of a
participant may be required only in connection with any forgiveness of
principal, interest or commitment fees, any reduction in interest rates or
commitment fees, any postponement of
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any date fixed for payment of principal, fees or interest or any release of any
substantial portion of the collateral securing the First Loan, other than in
accordance with the Amended First Loan Documents, (iv) First Lender shall have
the right, but not the obligation, under the participation agreements to replace
participants, without undue penalties, at any time after the participant fails
to give its consent to the matters described in clause (iii) above, and (v) each
participant shall participate in one or more of the Amended First Notes and
shall not be issued separate and distinct notes.
(d) First Lender agrees to deliver to Second Lender written notice of
any such proposed transfer or participation at least ten (10) Business Days
prior to such transfer or participation together with a general description of
the proposed transfer or participation and, if applicable, proposed transferee
and a copy of all proposed documents then existing with respect thereto and
shall furnish such information and material as may be reasonably requested by
Second Lender for Second Lender to ascertain that the transfer or participation
is permitted pursuant to this Section 19.14 or, if not permitted, to evaluate
the granting of its consent to such transfer or participation. First Lender
agrees to deliver to Second Lender true and complete copies of all documents and
instruments executed in connection with any such transfer or participation.
SECTION 20
GENERAL REPRESENTATIONS AND WARRANTIES
--------------------------------------
20.01 Representations and Warranties of Sears and ST
----------------------------------------------
Sears and ST jointly and severally represent and warrant to and for the
benefit of each of MetLife, AEW and PTLP as of the date hereof as follows:
(a) Organization. Sears is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and ST is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and each of Sears and ST is authorized to do
business and is in good standing in the State of Illinois, with its principal
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) Certificates, Licenses and Permits. Each of Sears and ST has
obtained or filed, as the case may be, and kept in full force and effect any and
all certificates, licenses, permits and other approvals required in connection
with its existence as a corporation or in order to engage in the business in
which it is
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presently engaged, the failure of which to obtain would have a material and
adverse effect on its ability to enter into and perform this Agreement and each
of the documents and instruments contemplated hereby or executed and delivered
in connection herewith to which it is a party.
(c) Authority. Each of Sears and ST has full power and authority to
enter into this Agreement and each of the documents and instruments contemplated
hereby or executed and delivered in connection herewith to which it is a party
and to consummate the transactions contemplated hereby and thereby.
(d) Authorization; Effect. This Agreement and each of the documents and
instruments contemplated hereby or executed and delivered in connection herewith
to which Sears and/or ST are parties (i) have been duly and validly authorized,
executed, and delivered by Sears and/or ST, as the case may be, and are in full
force and effect, and are the legal and valid obligations of Sears and/or ST, as
the case may be, provided that the foregoing representation and warranty in this
Section 20.01(d)(i) shall not cause any instrument or document to constitute a
recourse liability of Sears or ST to any extent not otherwise expressly provided
in this Agreement or in such instrument or document; and (ii) do not violate any
provisions of any agreement or law or any judicial or other governmental order
to which First Lender is a party or to which First Lender or its interest in the
Tower Property is subject.
(e) Issuance of Preferred Stock. The ten (10) shares of Series B
Preferred Stock of ST issued to MetLife on the date hereof have been validly
issued and are fully paid and non-assessable; and the ten (10) shares of Series
C Preferred Stock of ST issued to PTLP on the date hereof have been validly
issued and are fully paid and non-assessable.
20.02 Representations and Warranties of MetLife
-----------------------------------------
MetLife represents and warrants to and for the benefit of each of
Sears, ST, AEW and PTLP as of the date hereof as follows:
(a) Organization. MetLife is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and is
authorized to do business and is in good standing in the State of Illinois, with
its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) Certificates, Licenses and Permits. MetLife has obtained or filed,
as the case may be, and kept in full force and effect any and all certificates,
licenses, permits and other approvals required in connection with its existence
as a corporation or in order to engage in the business in which it is presently
engaged, the failure of which to obtain would have a material and adverse
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effect on its ability to enter into and perform this Agreement and each of the
documents and instruments contemplated hereby or executed and delivered in
connection herewith to which MetLife is a party.
(c) Authority. MetLife has full power and authority to enter into this
Agreement and each of the documents and instruments contemplated hereby or
executed and delivered in connection herewith to which MetLife is a party and to
consummate the transactions contemplated hereby and thereby.
(d) Authorization; Effect. This Agreement and each of the documents and
instruments contemplated hereby or executed and delivered in connection herewith
to which MetLife is a party (i) have been duly and validly authorized, executed,
and delivered by MetLife, and are in full force and effect, and are the legal
and valid obligations of MetLife; provided that the foregoing representation and
warranty is this Section 20.02(d)(i) shall not cause any instrument or document
to constitute a recourse liability of MetLife to any extent not otherwise
expressly provided in this Agreement or in such instrument or document; and (ii)
do not violate any provisions of any agreement or law or any judicial or other
governmental order to which MetLife is a party or to which MetLife or its
interest in the Tower Property is subject.
(e) Participants in First Loan. Any and all parties to which MetLife
previously has granted a participation in the First Loan in accordance with the
provisions of the First Loan Agreement have given any consent to the
transactions contemplated by this Agreement, including the modification of the
First Loan pursuant to the First Loan Modification Documents, as may be required
under the terms of the agreement among MetLife and such participants governing
such participation.
20.03 Representations and Warranties of AEW and PTLP
----------------------------------------------
AEW (with respect to itself, PTLP, TLI and Partners Tower Corporation),
PTLP (with respect to itself and Partners Tower Corporation) and TLI (with
respect to itself) jointly and severally represent and warrant to and for the
benefit of each of Sears, ST and MetLife as of the date hereof as follows:
(a) Organization. Each of AEW and PTLP is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware; TLI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Massachusetts; Partners Tower
Corporation ("PTC"), the general partner of PTLP, is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
each of AEW, PTLP, TLI and Partners Tower Corporation is authorized to do
business and is in good standing in the State of Illinois, with
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its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
(b) Certificates, Licenses and Permits. Each of AEW, PTLP, TLI and PTC
has obtained or filed, as the case may be, and kept in full force and effect any
and all certificates, licenses, permits and other approvals required in
connection with its existence as a limited partnership or corporation, as the
case may be, or in order to engage in the business in which it is presently
engaged, the failure of which to obtain would have a material and adverse effect
on its ability to enter into and perform this Agreement and each of the
documents and instruments contemplated hereby or executed and delivered in
connection herewith to which it is a party.
(c) Authority. Each of AEW, PTLP, and TLI has full power and authority
to enter into this Agreement and each of the documents and instruments
contemplated hereby or executed and delivered in connection herewith to which
AEW, PTLP and/or TLI is a party and to consummate the transactions contemplated
hereby and thereby.
(d) Authorization; Effect. This Agreement and each of the documents and
instruments contemplated hereby or executed and delivered in connection herewith
to which AEW, PTLP and/or TLI are parties (i) have been duly and validly
authorized, executed, and delivered by AEW, PTLP and/or TLI, as the case may be,
and are in full force and effect, and are the legal and valid obligations of
AEW, PTLP and/or TLI, as the case may be; provided that the foregoing
representation and warranty in this Section 20.03(d)(i) shall not cause any
instrument or document to constitute a recourse liability of AEW, PTLP, TLI or
PTC to any extent not otherwise expressly provided in this Agreement or in such
instrument or document, and (ii) do not violate any provisions of any agreement
or law or any judicial or other governmental order to which AEW, PTLP and/or TLI
are parties or to which AEW, PTLP and/or TLI or their respective interests in
the Tower Property are subject.
20.04 Survival of Obligations
-----------------------
The representations and warranties contained in this Section 20 and in
Sections 21.01, 21.02 and 21.03 and made as of the date hereof shall survive the
consummation of the transactions contemplated by this Agreement.
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SECTION 21
REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING
SPECIAL PURPOSE ENTITIES
---------------------------------------------------
21.01 Representations and Warranties Regarding ST
-------------------------------------------
Sears and ST jointly and severally make the following representations
and warranties to and for the benefit of each of MetLife, AEW, AEW Master Lessee
and PTLP as of the date hereof:
(a) ST was incorporated on June 26, 1990 for the sole purpose of
serving as Tower Owner, and prior to the date hereof has not owned or operated
any assets other than the Tower Property and the Levy Obligations, incurred any
liabilities not related to the operation of the Tower Property or engaged in any
other business of any kind;
(b) ST has, concurrently with the execution and delivery of this
Agreement, delivered to each of MetLife, PTLP and TLI a true and correct copy of
the certificate of incorporation and by-laws of ST as in effect on the date
hereof; and
(c) Sears owns one hundred percent (100%) of the issued and outstanding
shares of common stock of ST and one hundred percent (100%) of the issued and
outstanding shares of Series A Preferred Stock of ST, all of such shares have
been validly issued, fully paid and are non-assessable, and except as otherwise
provided herein, such shares have not been transferred, pledged or hypothecated
to any other party for any purpose.
21.02 Representations and Warranties Regarding AEW Master Lessee
----------------------------------------------------------
AEW, PTLP and TLI jointly and severally make the following
representations and warranties to and for the benefit of each of MetLife, Sears
and ST as of the date hereof:
(a) TLI was incorporated on October 28, 1994 for the sole purpose of
serving as master lessee under the AEW Master Lease, and prior to the date
hereof has not owned or operated any assets, incurred any liabilities, or
engaged in any other business of any kind;
(b) AEW and Second Lender have, concurrently with the execution and
delivery of this Agreement, delivered to each of MetLife, Sears and ST a true
and correct copy of the certificate of incorporation and by-laws or AEW Master
Lessee as in effect on the date hereof; and
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(c) AEW owns twenty-five percent (25%) of the issued and outstanding
shares of common stock of TLI, and AEW, Inc., the general partner of AEW's
general partner, owns seventy-five percent (75%) of the issued and outstanding
shares of common stock of TLI, and all of such shares have been validly issued,
fully paid and are non-assessable. Except as otherwise provided herein, no
shares of TLI have been transferred, pledged or hypothecated to any other party
for any purpose.
21.03 Representations and Warranties Regarding PTLP
---------------------------------------------
AEW and PTLP jointly and severally make the following representations
and warranties to and for the benefit of each of MetLife, Sears and ST as of the
date hereof:
(a) PTLP was organized as a limited partnership pursuant to a
certificate of limited partnership filed with the Delaware Secretary of State on
November 1, 1994, for the purposes of serving as Second Lender, Option Holder
and AEW New Lender, and to hold the residual (and, if applicable, other)
beneficial interest under the Grantor Trust, and for no other purpose, and prior
to the date hereof PTLP has not owned or operated any assets, incurred any
liabilities, or engaged in any other business of any kind;
(b) AEW and PTLP have, concurrently with the execution and delivery of
this Agreement, delivered to each of MetLife, Sears and ST a true and correct
copy of the certificate of limited partnership and agreement of limited
partnership of PTLP as in effect on the date hereof; and
(c) AEW owns a ninety-nine percent (99%) interest in PTLP as limited
partner and PTC, the sole stockholder of which is AEW, owns a one percent (1%)
interest in PTLP as general partner. Except as otherwise provided herein, no
partnership interest in PTLP or shares of TLI have been transferred, pledged or
hypothecated to any other party for any purpose.
21.04 Covenants Regarding ST
----------------------
Until neither Sears nor ST shall hold any of the Sears/ST Ownership
Interests, ST will not authorize or otherwise effect (except as otherwise
permitted herein) any of the corporate actions set forth below with respect to
itself; and Sears hereby agrees that it will not, as the holder of all of the
issued and outstanding Series A Preferred Stock and common stock of ST, vote
such stock, or authorize any directors elected by it to vote to cause or permit
any of the corporate actions prohibited below, and that it will vote such shares
to cause to be effected the corporate actions required to be effected below,
with respect to ST:
(a) ST shall not incur, assume, guarantee or otherwise become or remain
liable for any indebtedness or other liabilities or
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obligations except: (1) such indebtedness, liabilities or obligations as may be
expressly permitted by this Agreement or the Amended Transaction Documents; (2)
taxes due but not yet payable; (3) (at such times as it may be a Tower Owner)
trade payables and other liabilities incurred in the ordinary course of business
as Tower Owner in accordance with Amended Transaction Documents and the Master
Lease; and (4) any intercompany income tax sharing obligations arising from the
consolidation of ST with Sears for income tax purposes and any other
intercompany liabilities and obligations between ST and Sears existing on the
date hereof or arising from the Sears New Loan/Contribution.
(b) ST shall not engage in any business or activity, except as may be
expressly permitted by this Agreement or the Amended Transaction Documents,
other than: (1) acting as Tower Owner or as Grantor under the Grantor Trust in
accordance with the Amended Transaction Documents and the Master Lease, (2)
holding the interest of the income beneficiary of the Grantor Trust, and (3)
holding the Levy Obligations.
(c) ST shall not engage in any transaction, except as expressly
permitted by this Agreement or the Amended Transaction Documents, with Sears or
with any Affiliate of Sears, provided that this clause (c) shall not (1)
prohibit or restrict the issuance of insurance by Allstate on commercial
arm's-length terms for the benefit of any party, or (2) the payment to Sears as
a dividend of any proceeds of the Levy Obligations or the proceeds from the
issuance of preferred and common stock in accordance with the terms hereof.
(d) ST shall not consolidate or merge with or into any other entity or
convey or transfer all or any substantial portion of its assets other than as
expressly permitted under this Agreement or the Amended Transaction Documents.
In addition, except as expressly permitted under this Agreement or the Amended
Transaction Documents, ST shall not grant or permit to attach any liens,
encumbrances, security interests, options or other rights or interests in or
upon any of its assets, except (without limitation of any of First Lender's
rights under the Amended First Mortgage or any of the other Amended First Loan
Documents or any of PTLP's rights under the Amended Second Loan/Option
Documents) for such liens as may, through no direct or indirect action or
consent of Sears of ST, attach to the Tower Property in connection with
third-party mechanics' lien claims and similar encumbrances. ST shall not permit
any pledges or, except as expressly permitted under this Agreement or the
Amended Transaction Documents, transfers of the Ownership Interests in it or any
issuance of additional Ownership Interests in it.
(e) ST shall not voluntarily dissolve or liquidate, in whole or in
part, without the unanimous approval of such action by all of
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the members of ST's board of directors and the requisite vote of shareholders
required by ST's Certificate of Incorporation.
(f) ST shall not initiate any Tower Bankruptcy Proceeding or permit a
Sears/ST Tower Bankruptcy Proceeding, without the unanimous approval of such
action by all of the members of ST's board of directors and the requisite vote
of shareholders required by ST's Certificate of Incorporation.
(g) At all times, except in the case of a temporary vacancy (which
shall be promptly filled), at least a majority of ST's directors and officers
shall be persons who are not directors or officers of any corporation or other
entity which owns, directly or indirectly, more than 50% of the Ownership
Interests in ST. In the event of the resignation of a director or executive
officer of ST whose service satisfies the foregoing requirement, the stockholder
or board of directors of ST, as may be appropriate, shall appoint a person to
fill such vacancy so as to satisfy such requirement.
(h) The funds and other assets of ST shall not be commingled with those
of any other entity.
(i) ST shall maintain separate records, books of account and bank
accounts, from those of any person, firm, corporation or other entity, including
but not limited to anyone owning beneficially, directly or indirectly, more than
50% of the Ownership Interests in ST.
(j) ST shall maintain a principal office through which its business
shall be conducted. The office of ST may be the principal office of an officer
of ST, but such officer shall not be an officer of any stockholder of ST.
(k) The board of directors of ST shall hold appropriate meetings at
least annually to authorize all of its corporate actions.
(l) ST shall keep and maintain minutes of meetings of the board of
directors and any committee to which the board of directors may delegate any of
its authority, which meetings shall be held as necessary and appropriate to
carry on the business of ST and, in the case of meetings of the board of
directors, not less frequently than annually.
(m) ST shall have a name which sufficiently distinguishes it from its
stockholder.
(n) ST shall not modify, amend or repeal any provision of its articles
of incorporation or its by-laws in a manner inconsistent with the foregoing
provisions of this Section 21.04.
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21.05 Covenants Regarding AEW Master Lessee
-------------------------------------
Until the payment in full of the First Loan Base Debt, AEW Master
Lessee will not authorize or otherwise effect (except as otherwise permitted
herein) any of the corporate actions set forth below with respect to itself; and
AEW and AEW, Inc. (the general partner of AEW/LP, the general partner of AEW),
as the only stockholders of AEW Master Lessee, hereby agree that they will not
vote such stock, or authorize any directors elected by it to vote to cause or
permit any of the corporate actions prohibited below, and that they will vote
such shares of AEW Master Lessee to cause to be effected the corporate actions
required to be effected below, with respect to AEW Master Lessee.
(a) AEW Master Lessee shall not incur, assume, guarantee or otherwise
become or remain liable for any indebtedness or other liabilities or
obligations, except: (1) such indebtedness, liabilities or obligations as may be
expressly permitted by this Agreement or the Amended Transaction Documents; (2)
taxes due but not yet payable; and (3) trade payables and other liabilities
incurred in the ordinary course of business.
(b) AEW Master Lessee shall not engage in any business or activity,
except as may be expressly permitted by this Agreement or the Amended
Transaction Documents or the Master Lease, other than acting as lessee under the
AEW Master Lease.
(c) AEW Master Lessee shall not engage in any transaction, except as
expressly permitted by this Agreement or the Amended Transaction Documents or
the Master Lease, with AEW or AEW, Inc. or with any Affiliate of AEW or AEW,
Inc.
(d) AEW Master Lessee shall not consolidate or merge with or into any
other entity or convey or transfer all or any substantial portion of its assets
other than as expressly permitted under this Agreement or the Amended
Transaction Documents. In addition, except as expressly permitted under this
Agreement or the Amended Transaction Documents, AEW Master Lessee shall not
grant or permit to attach any liens, encumbrances, security interests, options
or other rights or interests in or upon any of its assets, except (without
limitation of any of First Lender's rights under the Amended First Mortgage or
any of the other Amended First Loan Documents), for such liens as may, through
no direct or indirect action or consent of AEW Master Lessee, attach to the
Tower Property in connection with third-party mechanics' lien claims and similar
encumbrances. AEW Master Lessee shall not permit any pledges or, except as
expressly contemplated or permitted under this Agreement or the Amended
Transaction Documents, transfers of the Ownership Interests in it or any
issuance of additional Ownership Interests in it.
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(e) AEW Master Lessee shall not voluntarily dissolve or liquidate, in
whole or in part.
(f) AEW Master Lessee shall not initiate any Tower Bankruptcy
Proceeding or permit an AEW Tower Bankruptcy Proceeding.
(g) The funds and other assets of AEW Master Lessee shall not be
commingled with those of any other entity.
(h) AEW Master Lessee shall maintain separate records, books of account
and bank accounts, from those of AEW and AEW, Inc. and any other person, firm,
corporation or other entity, including but not limited to anyone owning
beneficially, directly or indirectly, more than 50% of the Ownership Interests
in AEW Master Lessee.
(i) AEW Master Lessee shall maintain a principal office through which
its business shall be conducted.
(j) The board of directors of AEW Master Lessee shall hold appropriate
meetings at least annually.
(k) AEW Master Lessee shall keep and maintain minutes of meetings of
the board of directors and any committee to which the board of directors may
delegate any of its authority, which meetings shall be held as necessary and
appropriate to carry on the business of AEW Master Lessee and, in the case of
meetings of the board of directors, not less frequently than annually.
(l) AEW Master Lessee shall have name which sufficiently distinguishes
it from its stockholders, AEW and AEW, Inc.
(m) AEW Master Lessee shall not modify, amend or repeal any provision
of its certificate of incorporation or its by-laws in a manner inconsistent with
the foregoing provisions of this Section 21.05.
21.06 Covenants Regarding PTLP
------------------------
Until the payment in full of the First Loan Base Debt, PTLP will not
authorize or otherwise effect (except as otherwise permitted herein) any of the
partnership actions set forth below with respect to itself; and AEW and PTC, as
the only partners of PTLP, hereby agree that they will not vote such stock, or
authorize any director elected by either of them to vote to cause or permit any
of the partnership actions prohibited below, and that they will vote such stock
to cause to be effected the partnership actions required to be effected below,
with respect to PTLP;
(a) PTLP shall not incur, assume, guarantee or otherwise become or
remain liable for any indebtedness or other liabilities or obligations, except:
(1) such indebtedness, liabilities or obligations as may be expressly permitted
by this Agreement or the
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Amended Transaction Documents; and (2) taxes due but not yet payable.
(b) PTLP shall not engage in any business or activity, except as may be
expressly permitted by this Agreement or the Amended Transaction Documents,
other than acting as Second Lender, Option Holder, AEW New Lender and residual
beneficiary under the Grantor Trust.
(c) PTLP shall not engage in any transaction, except as expressly
permitted by this Agreement or the Amended Transaction Documents, with either of
its partners or with any Affiliate of any such partner.
(d) PTLP shall not consolidate or merge with or into any other entity
or convey or transfer all or any substantial portion of its assets other than as
expressly permitted under this Agreement or the Amended Transaction Documents.
In addition, except as expressly permitted under this Agreement or the Amended
Transaction Documents, PTLP shall not grant or permit to attach any liens,
encumbrances, security interests, options or other rights or interests in or
upon any of its assets, except (without limitation of any of First Lender's
rights under the Amended First Mortgage or any of the other Amended First Loan
Documents), for such liens as may, through no direct or indirect action or
consent of PTLP, attach to the Tower Property in connection with third-party
mechanics' lien claims and similar encumbrances. Except as expressly
contemplated or permitted under this Agreement or the Amended Transaction
Documents, PTLP shall not permit any pledges or transfers of the Ownership
Interests in it or any issuance of additional Ownership Interests in it.
(e) PTLP shall not voluntarily dissolve or liquidate, in whole or in
part.
(f) PTLP shall not initiate any Tower Bankruptcy Proceeding or permit
an AEW Tower Bankruptcy Proceeding.
(g) The funds and other assets of PTLP shall not be commingled with
those of any other entity.
(h) PTLP shall maintain separate records, books of account and bank
accounts, from those of AEW, PTC and AEW, Inc. and any other person, firm,
corporation or other entity, including but not limited to anyone owning
beneficially, directly or indirectly, more than fifty percent (50%) of the
Ownership Interests in PTLP.
(i) PTLP shall maintain a principal office through which its business
shall be conducted.
(j) The board of directors of PTC shall hold appropriate meetings at
least annually to authorize all of its corporate
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actions and no action (other than the election of directors annually) shall be
permitted to be taken by stockholders' consent or vote.
(k) PTC shall keep and maintain minutes of meetings of the board of
directors and any committee to which the board of directors may delegate any of
its authority, which meetings shall be held as necessary and appropriate to
carry on the business of PTLP and, in the case of meetings of the board of
directors, not less frequently than annually.
(l) PTLP shall have a name which sufficiently distinguishes it from AEW
and AEW, Inc.
(m) PTLP shall not modify, amend or repeal any provision of its
agreement of limited partnership or certificate of limited partnership in a
manner inconsistent with the foregoing provisions of this Section 21.06.
SECTION 22
COVENANTS AND AGREEMENTS CONCERNING BANKRUPTCY
----------------------------------------------
22.01 Purpose of Agreement
--------------------
The parties hereto mutually and severally acknowledge that the central
purposes of this Agreement are to restructure the mortgage indebtedness on the
Tower Property (and in conjunction therewith to modify the Tower Option) and to
redirect funds toward the rehabilitation of the Tower Property, and in
furtherance of such purposes, First Lender and PTLP have agreed to substantial
modifications of the First Loan Documents, the Second Loan Documents and the
Option Documents, and to the forbearance from the exercise of rights and
remedies to which it would otherwise be entitled. In consideration of the
foregoing, the parties hereto acknowledge, covenant and agree as provided below
in this Section 22.
22.02 Grantor Trust
-------------
(a) Any other term or provision hereof notwithstanding, it is the
intention of the parties hereto that the Grantor Trust created pursuant hereto
shall not conduct or engage in any form of business activity or commercial
enterprise, shall have no power or authority to and shall not participate in the
ongoing management or operation of the Tower Property, or any portion thereof,
and shall not sell or participate in any form of investment or security other
than its beneficial ownership of the Land Trust, but instead is to be created
merely to hold, protect and preserve the beneficial interest in the Land Trust
subject to the Master Lease, it being
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the purpose and intent of the parties that the Grantor Trust be precluded from
engaging in any form of "business" or "business activity" or otherwise
constituting a "business trust" for purposes of the Bankruptcy Code. The
foregoing is not intended to limit the obligation of the Grantor Trustee to act
upon the direction of the Master Lessee in accordance with the Grantor Trust
Agreement.
(b) Sears and ST each covenants and agrees, for itself, any Sears
Entity, and its and their successors and assigns, that it will not authorize,
effect or cause ST to become subject to a Sears/ST Tower Bankruptcy Proceeding
or other proceedings under any federal or state bankruptcy or similar law, other
than a Consensual Tower Bankruptcy Proceeding.
(c) MetLife covenants and agrees for itself, its subsidiaries and its
and their successors and assigns, that it will not initiate a Tower Bankruptcy
Proceeding other than a Consensual Tower Bankruptcy Proceeding during the First
Lender Forbearance Period.
(d) AEW, PTLP and the AEW Master Lessee each covenants and agrees that
it will not initiate an AEW Tower Bankruptcy Proceeding and it will not
authorize or (to the extent within its reasonable control to prevent) permit the
Grantor Trust to become subject to a Tower Bankruptcy Proceeding other than a
Consensual Tower Bankruptcy Proceeding.
22.03 Automatic Stay
--------------
Each of ST and Sears (for itself and any Sears Entity and its and their
successors and assigns), AEW (for itself, PTLP and any other AEW Entity and its
and their successors and assigns), and PTLP (for itself and its successors and
assigns) (and each of ST and PTLP also on behalf of the Grantor Trust and the
Land Trust) acknowledges and agrees that in the event of any Tower Bankruptcy
Proceeding, and subject to the provisions of Section 9.04(b), First Lender shall
be entitled to relief from any automatic stay (including the automatic stay of
Section 362 of the Bankruptcy Code, or any successor or similar law) for
purposes of enforcing remedies available to it under the Amended First Loan
Documents immediately upon the filing of a motion to lift such stay by First
Lender, and that Tower Owner and the other parties hereto will not oppose, but
will consent to and support, the granting of such relief to First Lender. Each
of Sears, ST, AEW, Second Lender and Option Holder hereby stipulates that First
Lender's entitlement to relief from the automatic stay shall be based upon: (1)
cause, including (with respect to Sears and/or ST in the case of a Sears/ST
Tower Bankruptcy, and AEW in the case of an AEW Tower Bankruptcy) a lack of good
faith in the filing of any bankruptcy case in the face of the concessions
granted hereby and after the failure of Tower Owner to comply with the
obligations and opportunities to which it has been committed in this Agreement;
(2) the mutual recognition by all parties hereto of the substantial
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forbearance on the part of First Lender resulting herefrom both in its
entitlement to receive payments otherwise due under the First Loan Documents and
in its forbearance from pursuing loan enforcement rights available to it; (3)
First Lender cannot receive adequate protection of the value of its interest
absent foreclosure immediately upon the occurrence of a Transfer Event; and (4)
the Tower Property is not necessary to any viable plan of reorganization or
liquidation due to the encumbrances against the Tower Property and to the
ongoing financial burdens attending the operation of the same. This Section
22.03 is entered into by the parties in reliance upon the authority of In re
Club Tower, L.P., 138 B.R. 307 (Bankr. N.D. Ga. 1991); In Matter of ▇▇▇▇▇▇ Manor
Partners, Ltd., 28 C.B.C. 2d 221 (Bankr. N.D. Ga. 1991); In re Citadel
Properties, Inc., 86 B.R. 275 (Bankr. M.D. Fla. 1988); In re Orange Park South
Partnership, 79 B.R. 79 (Bankr. M.D. Fla. 1987); see also, In re Wheaton Oaks
Office Partners, No. 92 C 2955 (N.D. Ill. November 18, 1992) (LEXIS 1983),
rehearing denied, December 9, 1992 (LEXIS 18781) with the parties intending to
be legally bound hereby and for this provision to be fully enforced. Second
Lender shall be entitled to the rights afforded First Lender in this Section
22.03, provided that relief from the automatic stay has been granted to First
Lender and a Transfer Event has not occurred.
22.04 Cash Collateral Order
---------------------
In the event of any Tower Bankruptcy Proceeding, the parties agree that
the form of Agreed Order for Use of Cash Collateral attached hereto as Exhibit O
shall, at the option of First Lender and without modification except as
considered appropriate by First Lender to accommodate the circumstances then
existing with respect to such Tower Bankruptcy Proceeding, but subject to
Section 9.04(b), be deemed a stipulation among the parties for the entry of a
Cash Collateral Order pursuant to Section 363 of the Bankruptcy Code. The
parties further agree that they shall consent to, and shall cooperate in and
shall not in any way resist having the Cash Collateral Order as then tendered by
First Lender immediately entered upon court approval by a bankruptcy court under
Section 363 of the Bankruptcy Code and before any use of Cash Collateral (as
that term is defined in Section 363 of the Bankruptcy Code and/or in the form of
Agreed Order attached hereto as Exhibit O), and that Cash Collateral shall only
be used as provided in the Cash Collateral Order. The Cash Collateral Order
shall provide for the payment of the Grantor Trustee's expenses on a priority
basis.
22.05 Priority Claim To The Extent First Lender Security Decreased
------------------------------------------------------------
All rents and income from the Tower Property are Cash Collateral, and
to the extent they are used and consumed after filing or entry of any Cash
Collateral Order, it is specifically acknowledged and stipulated that they are
collateral for a secured
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claim under Section 506 of the Bankruptcy Code in the amount so used. To the
extent the collateral securing First Lender's claim in the bankruptcy proceeding
is thereafter deemed or proves to be insufficient to pay First Lender in full,
First Lender's secured claim shall be deemed to have been inadequately protected
by the provisions of the Cash Collateral Order, and it shall therefore have an
administrative expense claim in the proceeding with super priority over any and
all administrative expenses of the kind specified in Sections 503(b) and 507(b)
of the Bankruptcy Code, which super priority shall be equal to the priority
provided under the provisions of Section 364(c)(1) of the Bankruptcy Code over
all other costs and administrative expenses incurred in the case of the kind
specified in, or ordered pursuant to, Sections 105, 326, 330, 331, 503(b),
506(c), 507(a), 507(b) or 726 of the Bankruptcy Code and shall at all times be
senior to the rights of any or all of Sears, ST, AEW, Second Lender and Option
Holder or any successor trustee in the resulting bankruptcy proceeding or any
subsequent proceeding under the Bankruptcy Code.
22.06 Perfection of Security Interest in Rents
----------------------------------------
Each of Sears, ST, AEW, Second Lender and Option Holder acknowledges
and stipulates that in the event of a Tower Bankruptcy Proceeding in which Tower
Owner becomes either a debtor or debtor in possession, the security interest of
First Lender in the rents from the Tower Property will be deemed perfected under
the Bankruptcy Code without the need of further acts on the part of First
Lender. Subject to the provisions of Section 9.04(b), nothing herein shall
preclude First Lender from taking such other or further actions toward the
realization of its rights regarding rentals as it may elect.
22.07 Assignment of Interests to First Lender
---------------------------------------
Each of AEW, Second Lender, Option Holder, Sears and ST stipulates and
agrees, for itself and its successors and assigns, that any monies paid or
payable to it within or as a result of any Tower Bankruptcy Proceeding,
including any adequate protection payment or within or as a result of any cash
collateral or equivalent order of plan of reorganization or other arrangement
resulting therein or therefrom, or in settlement of any of the foregoing, shall
be expressly subordinate to all rights of First Lender to receive funds in
respect of the First Loan (to the extent of and in accordance with the
Distribution Priorities). AEW, Second Lender, Option Holder, Sears and ST hereby
assign and set over to First Lender all right, title and interest in and to any
amounts recoverable by any of them in derogation hereof, with the full right to
demand, collect and apply the same in accordance with Section 6 of this
Agreement at any time and from time to time at the election of First Lender.
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22.08 Assignment of Voting Rights
---------------------------
Subject to Section 9.04(b), in aid of the foregoing, but also as
independent rights granted to First Lender as a portion of its consideration
hereunder, Sears, ST, AEW, Second Lender and Option Holder, for themselves,
their successors and assigns, hereby assign, set over and transfer to First
Lender all right or entitlement each may have to vote upon, consent to or agree
to (including the right to not consent or to not agree to) any issue arising
within, during or otherwise as a result of any Tower Bankruptcy Proceeding,
including, without limitation, all rights relating to voluntary or involuntary
proceedings, adequate protection issues, cash collateral orders, post petition
financing proceedings, initiatives to dismiss or convert, Bankruptcy Code
Section 1111(b)(2) elections and plan confirmation proceedings. Subject to the
provisions of Section 9.04(b); First Lender may exercise the rights granted to
it hereby for its own benefit and as it may elect without regard to the
interests of Sears, ST, AEW, Second Lender or Option Holder. Subject to the
provisions of Section 9.04(b), First Lender may act or vote either directly
within said proceedings or through representatives of Sears, ST, AEW, Second
Lender and Option Holder by directing the same to act or vote as First Lender
may instruct.
22.09 No Renewal of Exclusive Period
------------------------------
In the event of any Tower Bankruptcy Proceeding under Chapter 11 of the
Bankruptcy Code and the Bankruptcy Court enters a Cash Collateral Order, then,
subject to the court's approval and the provisions of Section 9.04(b) that Order
shall provide that in the event a plan is not filed within the 120-day exclusive
period provided by Section 1121(b), First Lender shall, without the necessity of
any additional notice to the debtor or to other creditors or parties in
interest, or any hearing or any further motion to or order of the Court, have
immediate relief from the Section 362 stay to commence and complete foreclosure
upon the Tower Property, conduct and complete a sale thereunder, and either
purchase the same itself or sell to a third party as it may elect and as
non-bankruptcy law may allow, and to take any other action authorized under the
Amended First Loan Documents and applicable non-bankruptcy law.
SECTION 23
TAX MATTERS
-----------
23.01 Estimated Tax Information
-------------------------
In addition to the requirements set forth in Section 6.04, Master
Lessee agrees that for so long as the Master Lease is in effect, within thirty
(30) days after the end of each calendar
- 137 -
quarter, Master Lessee shall use good faith efforts to furnish or cause to be
furnished to ST and to the Grantor Trust (so long as the Combined Tower Property
is owned by the Grantor Trust), a statement (the "Tax Information Statement")
which contains the information set forth in Exhibit P to the extent such
information is required to allow Sears or ST to prepare its tax return and is
within the control of Master Lessee to provide. Master Lessee's failure to
deliver the Tax Statement shall not constitute a default under the Master Lease
or result in any liability whatsoever to Master Lessee. Master Lessee shall have
no liability for any inaccuracies, omissions, mistakes or other matters relating
to the Tax Information Statement. ST's sole and exclusive remedy, at law or in
equity, for any failure by Master Lessee to provide the Tax Information
Statement as required by this Section 23.01 or to provide information to the
Approved Auditor as required by Section 23.02 shall be to exercise its rights
under Sections 23.03 and 23.04.
23.02 Tax Return Information
----------------------
For so long as either the Grantor Trust or ST is the Tower Owner, after
the Approved Auditor has prepared the financial statements pursuant to Section
1.11 of the Amended First Mortgage and the Cash Flow and Distribution Statement
pursuant to Section 6.04(b) hereof for each year, the Approved Auditor shall
prepare and furnish to the Grantor Trust, and ST a Tax Information Statement
containing the information set forth in Exhibit P to be used in the filing of
annual Federal, state and local tax returns. Sears shall pay any incremental
fees and costs (in excess of the cost of preparing the financial statements and
the Cash Flow and Distribution Statement) due to the Approved Auditor as a
result of preparation of the Tax Information Statement. Master Lessee shall
furnish information needed by the Approved Auditor to prepare the Tax
Information Statement, provided that Master Lessee's failure to deliver
information to the Approved Auditor shall not constitute a default under the
Master Lease or result in any liability whatsoever to Master Lessee.
23.03 ST Audit Rights
---------------
ST shall have the right at the sole cost and expense of Sears to
inspect or cause to be inspected (by employees of ST, or an affiliate of ST or
by independent accountants retained by ST), upon reasonable prior notice and at
reasonable times during normal business hours, all books, records and accounts
relating to the determination of any Tax Information Statement, including
without limitation the books and records of the Master Lessee.
23.04 Cooperation in Tax Disputes
---------------------------
For so long as the Combined Tower Property is owned by the Grantor
Trust, or if ST is the owner of the Combined Tower Property
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as a result of its exercise of its right of substitution under the Grantor
Trust, ST shall maintain the position that ST is the owner of the Combined Tower
Property for Federal, state and local income tax purposes, and First Lender,
Second Lender, Option Holder and Master Lessee agree not to assert otherwise in
their filing of Federal, state and local income tax returns during such time. In
the event of any Federal, state or local income tax audit, administrative
proceeding or litigation (collectively, a "Tax Dispute"), Tower Owner and Master
Lessee acknowledge and agree that they will at the sole cost and expense of
Sears: (a) provide ST with reasonable access to the Tower Property and to
individuals responsible for the preparation and maintenance of all financial
records at such times and places as ST may reasonably request; (b) furnish upon
request of ST copies of all books, records and other information reasonably
requested by ST; and (c) otherwise cooperate in all reasonable respects with ST
in connection with ST's handling of such Tax Dispute. Sears shall notify First
Lender, Second Lender, Option Holder and the Master Lessee if Sears receives a
notice of deficiency (within the meaning of Section 6212 of the Internal Revenue
Code of 1986, as amended) concerning ST.
23.05 Payment of Taxes; Indemnity
---------------------------
(a) Sears and ST jointly and severally covenant and agree (i) to pay,
on a timely basis, all federal, state and local income, gains, franchise,
personal property replacement and similar taxes owed by Sears, ST or any Sears
Affiliate in connection with the ownership, operation, financing and sale of the
Combined Tower Property (collectively, "Sears Income Taxes") and (ii) to prepare
and file, on a timely basis, all Federal, state and local income tax returns in
respect of the Combined Tower Property during any period in which the Combined
Tower Property is owned by the Grantor Trust or ST is the Tower Owner. In the
event of any lien, attachment or other encumbrance on all or any part of the
Tower Property (including, without limitation, the beneficial interest in the
Land Trust or any other ownership interest in the Tower Property, or any account
of Tower Owner, and any receipts or rents from the Tower Property) to the extent
it results from any failure by Sears, ST or any Sears Affiliate to pay any Sears
Income Taxes, Sears shall cause such lien, attachment or encumbrance to the
dismissed or discharged within ten (10) days of notice from First Lender or
PTLP.
(b) Sears hereby covenants and agrees, on a recourse basis, to
indemnify, defend and hold harmless the Land Trust and Land Trustee, the Grantor
Trust and Grantor Trustee, the beneficiaries of the Grantor Trust, Tower Owner
and Master Lessee (collectively the "Tax Indemnified Parties") from and against
all losses, claims, liabilities, damages, obligations, costs and expenses of any
nature (including but not limited to interest, penalties, additional taxes,
attorneys' and accountants' fees and expenses) imposed upon or incurred by any
of the Tax Indemnified Parties arising out of,
- 139 -
due to or related to any Income Taxes or the assessment, collection or
determination thereof in respect of any period that Sears or ST is deemed the
owner of the Combined Tower Property for purposes of Income Taxes.
(c) In connection with any audit, investigation or lawsuit relating to
the tax liability of Sears, ST or the Grantor Trust for any period during which
Sears is claiming to be the owner of the Combined Tower Property for purposes of
Income Taxes (a "Tax Proceeding"), (i) Sears shall have the right to control the
Tax Proceeding and to be represented by counsel of Sears choice (provided Sears
shall take no action contrary to the terms of this Agreement), (ii) the Tax
Indemnified Parties shall not settle any Tax Proceeding or extend any statute of
limitations without the written consent of Sears, and (iii) if any of the Tax
Indemnified Parties receives any written notices with respect to a Tax
Proceeding, it shall within fifteen (15) days after receipt of such notice
provide a copy thereof to Sears.
SECTION 24
REOC REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITY
---------------------------------------------------------
24.01 Representations and Warranties of AEW and PTLP Concerning REOC
Status
--------------------------------------------------------------
(a) AEW and PTLP each individually represents and warrants to and for
the benefit of each of Sears, ST, Tower Owner and First Lender (the "Other
Parties") as of the date hereof as follows:
(1) After giving effect to the transfers of interests and other
transactions contemplated hereby, the assets of PTLP will consist solely of its
interest as lender under the Tower Second Loan and the Amended Second Loan
Documents, as lender under the AEW New Loan and the AEW New Loan Documents, as
option holder under the Amended Option Documents, and as residual beneficiary
under the Grantor Trust, its interests as holder of the Series C Preferred Stock
of ST, and its other rights and interests under this Agreement and the other
agreements and instruments executed in connection herewith (collectively, the
"AEW Real Estate Assets").
(2) PTLP was formed on November 1, 1994 for the sole purpose of
holding the AEW Real Estate Assets.
(3) PTLP is a real estate operating company ("REOC") within the
meaning of Department of Labor Regulations Section 2510.3-101(e) (the "REOC
Regulations").
(4) AEW is a REOC.
- 140 -
(5) The assets of AEW and PTLP are not "plan assets" as defined in
the REOC Regulations.
24.02 REOC Covenants
--------------
(a) AEW and PTLP each individually covenants to each of the Other
Parties as follows:
(1) AEW and PTLP will each maintain its status as a REOC.
(2) PTLP and AEW will not do or perform or fail to perform any act
(including, but not limited to, the exercise of or failure to exercise any
rights it may have under any loan or other documents or with respect to any
other assets it holds) which would cause entering into the Amended Second Loan
Documents, the Amended Option Documents, the AEW New Loan Documents or the
Grantor Trust Agreement (collectively the "AEW Documents"), holding the AEW Real
Estate Assets or the AEW Documents or the exercise of any of its rights under
any of the AEW Documents to constitute a nonexempt prohibited transaction under
Section 406 of ERISA of Section 4975 of the Code, assuming solely for purposes
of this Section that Sears, ST and/or First Lender is a party in interest and a
disqualified person with respect to any ERISA plans involved in such
transaction.
(3) Each of PTLP and AEW shall annually, within thirty (30) days
following the last day of each "annual valuation period" as defined in Section
101(d)(5)(ii) of the REOC Regulations (the "Determination Date") deliver to each
of the Other Parties written certification that as of such Determination Date
each respective entity is, and at all times since the immediately preceding
Determination Date (or, in the case of the first annual valuation period, at all
times since the "initial valuation date" as defined in Section 101(d)(5)(i) of
the RECO Regulations), has been a real estate operating company as defined in
Section 101(e) of the REOC Regulations. PTLP and AEW shall as soon as possible,
but in no event later than five (5) days after it knows that it has ceased to be
a REOC, provide written notification thereof to each of the Other Parties.
(4) PTLP shall not do or perform or fail to perform any act which
would cause PTLP to cease to be a REOC.
(5) PTLP shall not in any circumstances purchase or otherwise
acquire an interest in any property, whether real or personal, tangible or
intangible, other than property or interests in or appurtenant to the Tower
Property, or purchase or acquire or otherwise enter into any option or other
right to make any such acquisition. PTLP shall not sell, transfer, redeem or
otherwise dispose of any of the AEW Real Estate Assets, other than a transfer to
First Lender pursuant to Section 8.03 hereof, or grant, sell or
- 141 -
otherwise enter into any option or other obligation to make any such
disposition, without first providing Sears and First Lender with such
information and documents, including an opinion of counsel in form and substance
satisfactory to each of them, sufficient to establish, in the reasonable
discretion of each of Sears and First Lender, that (i) after giving effect to
the transaction, each of the holders of the AEW Real Estate Assets and AEW
Documents will either (x) be and covenant to continue to be a REOC or (y) be an
entity whose assets are not subject to regulation under ERISA, and (ii) the
transfer does not constitute a non-exempt prohibited transaction for purposes of
ERISA.
(6) AEW shall not do or perform or fail to perform any act which
would cause AEW to cease to a be REOC.
(7) AEW, PTLP and each of the Other Parties agree to cooperate in
such manner as any of them may reasonably request, at the requesting entity's
sole expense, in order to mitigate any exposure of PTLP and AEW pursuant to
Section 24.03(a) or (c) or of the Other Parties for which the Other Parties
could be indemnified pursuant to Section 24.03(a) or (c), including without
implied limitation, by cooperating in seeking an exemption from the Department
of Labor for any act or failure to act on the part of AEW or PTLP which could
give rise to any indemnity obligation pursuant to Section 24.03(a) or (c).
24.03 Indemnity and Enforcement
-------------------------
(a) PTLP and AEW, jointly and severally, agree to defend, indemnify and
hold the Other Parties and each of them harmless against any and all claims,
demands, liabilities, damages, losses, costs, expenses (including reasonable
attorneys' fees), taxes or penalties arising out of PTLP's of AEW's breach of
their representations and warranties set forth in Section 24.01 or their
covenants set forth in Section 24.02. This rights of indemnity shall be the sole
and exclusive remedy of the Other Parties with respect to any such breach by
PTLP or AEW, it being agreed that the Other Parties shall have such remedies
available to them in equity under Section 24.03(b).
(b) PTLP, AEW and the Other Parties hereby recognize and agree that
damages as set forth in Section 24.03(a) are an inadequate remedy for breach of
the covenants set forth in Section 24.02 and accordingly agree that specific
performances may be had by any of them to enforce such covenants, including,
without limitation, obtaining in any court of competent jurisdiction an
injunction to restrain a violation of any such covenant.
(c) The indemnification and hold harmless agreed to by AEW in Section
19.3 of the Second Loan Agreement (but not the covenants and other provisions of
said Section) shall continue in full force and effect on and after the date of
this Agreement with respect to
- 142 -
any and all claims, demands, taxes or penalties arising out of AEW's breach
prior to the date of this Agreement of its warranty set forth in items (b) and
(c) of Section 2.5 of such agreement or its covenants set forth in Section 19.2
of such agreement.
SECTION 25
RECOURSE, LIMITATIONS ON RECOURSE,
WAIVERS AND RELEASES
----------------------------------
25.01 Amendments to First Loan Sears/ST Recourse Agreements
-----------------------------------------------------
(a) Sears and MetLife will enter into an Agreement Concerning Recourse
Obligations and Release (MetLife) dated as of the date hereof ("Agreement and
Release") modifying and amending the Recourse Obligation Agreement dated as of
July 2, 1990 between Sears and MetLife; and Sears will also execute and deliver
an Amended and Restated Unsecured Indemnity Agreement (the "Restated Indemnity
Agreement"), modifying and amending the Unsecured Indemnity Agreement dated as
of July 2, 1990 given by Sears for the benefit of MetLife. Under the Agreement
and Release and the Restated Indemnity Agreement, Sears has personal recourse
liability to MetLife for certain matters in respect of the Amended First Loan
Documents and the Tower Property; and MetLife has agreed to limit Sears personal
recourse liability to MetLife to such matters specifically set forth therein.
(b) Included in the matters for which Sears has personal recourse
liability pursuant to the Agreement and Release is the Certificate as to Tower
Property (MetLife) dated as of the date hereof (the "MetLife Tower Certificate")
to be executed and delivered by Sears and ST to MetLife. Sears personal recourse
liability under the MetLife Tower Certificate is subject to any limitations
stated therein.
(c) Also included in the matters for which Sears has personal recourse
liability pursuant to the Agreement and Release are the "Sears Recourse
Provisions," which as used therein and herein means Section 25.03 hereof and the
provisions of this Agreement specified in Section 25.03.
25.02 Sears/ST Recourse Ageement as to Tower Second Loan/Option
---------------------------------------------------------
(a) Sears, ST, AEW, PTLP and TLI will enter into a Release and
Agreement Concerning Recourse Obligations (AEW) dated as of the date hereof
("Release and Agreement"). Pursuant to the Release and Agreement, Sears and ST
have personal recourse liability to AEW, PTLP and TLI for certain mattors in
respect of the Amended Second Loan/Option Documents and the Tower Property; and
AEW, PTLP and TLI
- 143 -
have agreed to limit Sears and ST's personal recourse liability to AEW, PTLP and
TLI to such matters specifically set forth therein.
(b) Included in the matters for which Sears and ST have personal
recourse liability pursuant to the Release and Agreement is the Certificate as
to Tower Property (PTLP) dated as of the date hereof (the "PTLP Tower
Certificate") to be executed and delivered by Sears and ST to PTLP. Sears
personal recourse liability under the PTLP Tower Certificate is subject to any
limitations stated therein.
(c) Also included in the matters for which Sears has personal recourse
liability pursuant to the Release and Agreement are Section 25.03 hereof and the
provisions of this Agreement specified in Section 25.03.
25.03 Sears Recourse Provisions
-------------------------
Notwithstanding anything to the contrary contained in this Agreement,
without limiting the other rights and remedies hereunder or at law or in equity
(including but not limited to the right to specific performance), the parties
acknowledge and agree that neither Sears nor ST shall be personally liable on a
recourse basis under or on account of any of the provisions of this Agreement
except as provided in this Section 25.03. Sears and ST shall be personally
liable on a recourse basis to First Lender, AEW, Second Lender, Option Holder
and Master Lessee for the representations, warranties, covenants and agreements
made herein by each of them that are described in Exhibit O-1 attached hereto.
25.04 AEW/PTLP/TLI Recourse Provisions
--------------------------------
Notwithstanding anything to the contrary contained in this Agreement,
without limiting the other rights and remedies hereunder or at law or in equity
(including but not limited to the right to specific performance), the parties
acknowledge and agree that neither AEW, PTLP nor TLI shall be personally liable
on a recourse basis under or on account of any of the provisions of this
Agreement except as provided in this Section 25.04. AEW and PTLP shall be
personally liable on a recourse basis to First Lender, Sears and ST for the
representations, warranties, covenants and agreements made by the respective
party in the following sections of this Agreement, and AEW shall also be
personally liable on a recourse basis, not as a surety but as a principal
obligor, to First Lender, Sears and ST for the representations, warranties,
covenants and agreements made herein by PTLP and/or TLI that are described in
Exhibit O-2 attached hereto.
25.05 MetLife Recourse Provisions; Limitation on Liability
----------------------------------------------------
(a) Notwithstanding anything to the contrary contained in this
Agreement, without limiting the other rights and remedies
- 144 -
hereunder or at law or in equity (including but not limited to the right to
specific performance, the parties acknowledge and agree that MetLife shall not
be personally liable on a recourse basis under or on account of any of the
provisions of this Agreement except as provided in this Section 25.05. MetLife
shall be personally liable on a recourse basis to Sears, ST, AEW, Second Lender,
Option Holder and Master Lessee for the representations, warranties, covenants
and agreements made herein by MetLife that are described in Exhibit O-3 attached
hereto.
(b) Notwithstanding anything to the contrary contained herein, in no
event shall MetLife at any time have any personal recourse liability under or on
account of this Agreement or the First Loan in excess of $50,000,000, nor shall
any such liability exist or be asserted unless the party intending to make such
assertion shall have given MetLife written notice of its claim and initiated
legal proceedings with respect to such claim not later than three (3) years
after such party acquires knowledge of the act, occurrence, event or condition
giving rise to such claim.
25.06 ST Obligations
--------------
Notwithstanding anything to the contrary contained in this Agreement or
in any of the other Amended Transaction Documents, with respect to the Tower
Property and the Amended Transaction Documents, ST shall be personally liable
for and shall indemnify, protect and hold harmless First Lender, Second Lender,
Option Holder and Master Lessee from and against any and all losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of: (i) any misrepresentation or breach of warranty
by ST under this Agreement or any of the other Amended Transaction documents
(subject, however, to any limitations stated in the respective document); (ii)
any fraud by ST in connection with the First Loan, Tower Second Loan, Tower
Option or the transactions contemplated by this Agreement; (iii) any failure by
ST after the occurrence of a Sears/ST Termination Event or an Event of Default
(under and as defined in the New Collateral Security Documents delivered by ST)
to deliver to First Lender or Second Lender any deposits, rents or other funds
in respect of the Tower Property received by ST after the occurrence of a
Sears/ST Termination Event or such Event of Default; or (iv) any
misappropriation, or willful application contrary to the Amended Transaction
Documents, of funds relating to the Tower Property or other collateral securing
the First Loan or Tower Second Loan.
25.07 AEW/PTLP Obligations
--------------------
Notwithstanding anything to the contrary contained in this Agreement or
any of the other Amended Transaction Documents, with respect to the Tower
Proporty and the Amended Transaction Documents, PTLP shall be personally liable
for and shall indemnify,
- 145 -
protect and hold harmless First Lender from and against any and all losses,
damages, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees) arising out of any of the following acts or
omissions by PTLP, and AEW covenants and agrees that it shall be directly and
personally liable for, not as a surety but as a principal obligor, and shall
indemnify, protect and hold harmless First Lender from and against any and all
losses, damages, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees) arising out of any of the following acts or
omissions by itself or by PTLP: (i) any misrepresentation or breach of warranty
under this Agreement or any of the other Amended Transaction Documents; (ii) any
fraud in connection with the First Loan or the transactions contemplated by this
Agreement; (iii) any failure after the occurrence of a Transfer Event or any
Event of Default to deliver to First Lender deposits, rents and other funds in
respect of the Tower Property or other collateral securing the First Loan
received by such party after the occurrence of a Transfer Event or an Event of
Default; (iv) any misappropriation, or willful application contrary to the terms
of the Amended First Loan Documents, of funds relating to the Tower Property or
other collatoral securing the First Loan; and (v) any removal from the Tower
Property of any personal property that is part of the collateral securing the
First Loan following the occurrence of a Transfer Event or any Event of Default.
25.08 Tower Certificates
------------------
(a) Pursuant to Paragraph 4 in each of the MetLife Tower Certificate
and the PTLP Tower Certificate (said two certificates are herein collectively
referred to as the "Tower Certificates" and each individually as a "Tower
Certificate"), Sears and ST made certain representations, to their knowledge,
concerning the condition of the Tower Property. Pursuant to Paragraph 11(c) in
each of the Tower Certificates, Sears and ST have the right, at their election,
to discharge all liability in respect of any misrepresentation or breach of
warranty set forth in Paragraph 4 of the Tower Certificates by paying certain
specified amounts to MetLife and PTLP and relinquishing any and all remaining
ownership, economic and other interests in respect of the Tower Property held by
Sears and/or ST (excluding, however, Sears obligations to fund the Sears New
Loan and the Sears New Contribution). The parties acknowledge and agree that in
order to exercise such right Sears and ST shall (i) make payments to MetLife and
PTLP in the amounts and to the extent specified in the Tower Certificates and
(ii) release all Sears/ST Lender Interests and transfer to or at the direction
of MetLife (or, in the absence of any direction being delivered by MetLife
within 15 days after written notice from Sears of Sears exercise of its right,
then to or at the direction of PTLP) all Sears/ST Ownership Interests (and, if
necessary, the Sears/ST Stock Holdings) by delivery of the same Sears/ST Release
Documents and the same Sears/ST Transfer Documents as provided by the Sears/ST
Transfer Escrow to be delivered upon a Sears/ST
- 146 -
Default. The parties acknowledge and agree that Sears and ST will not be
required to transfer the Sears/ST Stock Holdings unless, for any reason, Sears
and ST cannot effect a transfer of the Sears Ownership Interests. In the event
of any such transfer of the Sears/ST Ownership Interests and/or the Sears/ST
Stock Holdings, MetLife covenants and agrees with PTLP to cause Sears and ST to
transfer such interests to PTLP or its Permitted Designee, subject to the
Amended First Loan Documents, if a Transfer Event has not occurred. Sears will
be deemed to have satisfied its obligation to deliver the Sears/ST Stock
Holdings by delivery of a duly authorized and executed stock assignment separate
from certificate transferring the common stock and series A preferred stock of
ST, together with a representation and warranty that such transfer is free from
all liens, claims and encumbrances other than those relating to the Amended
Transaction Documents.
(b) With respect to Paragraph 11 in each of the Tower Certificates
concerning a suit or proceeding under either Tower Certificate alleging a
misrepresentation or breach of warranty substantially identical to a
representation or warranty in the other Tower Certificate, Sears, ST, MetLife
and PTLP agree to cooperate in all reasonable ways, at the election of any of
said parties, to allow the joinder of MetLife and PTLP in the same suit or
proceeding.
(c) As contemplated by Paragraph 1 in each of the Tower Certificates,
Sears covenants and agrees to deliver to MetLife and PTLP audited financial
statements for ST for the period from January 1, 1994 through the date hereof
(or through October 31, 1994) within ninety (90) days after the date hereof.
25.09 Release of First Lender by Sears and ST
---------------------------------------
Sears and ST hereby acknowledge and agree that, as of the date hereof,
there are no offsets, counterclaims or defenses of any nature whatsoever related
to the First Loan, the First Loan Documents or the Amended First Loan Documents
or the obligations of Sears and ST thereunder. Without limiting the foregoing,
Sears and ST hereby release, waive and discharge First Lender from all
liability, claims, damages, causes of action and costs and expenses (including
but not limited to attorneys' fees) arising or accruing on or before the date
hereof, whether known or unknown, in any manner relating to the First Loan (but
excluding from such release, waiver and discharge the obligations of First
Lender under this Agreement).
25.10 Release of Second Lender and Option Holder by Sears and ST
----------------------------------------------------------
Sears and ST hereby acknowledge and agree that, as of the date hereof,
there are no offsets, counterclaims or defenses of any nature whatsoever related
to the Tower Second Loan, the Tower
- 147 -
Option, the Second Loan Documents, the Option Documents or the Amended Second
Loan/Option Documents or the obligations of Sears and ST thereunder. Without
limiting the foregoing, Sears and ST hereby release, waive and discharge Second
Lender and Option Holder from all liability, claims, damages, causes of action
and costs and expenses (including but not limited to attorneys' fees) arising or
accruing on or before the date hereof, whether known or unknown, in any manner
relating to the Second Loan or the Tower Option (but excluding from such
release, waiver and discharge the obligations of Second Lender and Option Holder
under this Agreement).
25.11 Release of First Lender by AEW and PTLP
---------------------------------------
AEW and PTLP acknowledge and agree that, as of the date hereof, there
are no claims of any nature whatsoever by or on behalf of AEW or PTLP against
First Lender relating to the First Loan or under any agreement between AEW and
First Lender relating to the First Loan. Without limiting the foregoing, AEW and
PTLP hereby release, waive and discharge First Lender from all liability,
claims, damages, causes of action and costs and expenses (including but not
limited to attorneys' fees) arising or accruing on or before the date hereof,
whether known or unknown in any manner relating to the First Loan (but excluding
from such release, waiver and discharge the obligations of First Lender under
this Agreement).
SECTION 26
NOTICES
-------
Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be in writing, and
shall be deemed to have been given properly if (a) hand delivered, or (b)
deposited with a national overnight delivery service in a manner acceptable to
such service for delivery, addressed in each case as follows:
If to Sears: Sears, ▇▇▇▇▇▇▇ and Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
If to ST: ST Holdings, Inc.
c/o Sears, ▇▇▇▇▇▇▇ and Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
- 148 -
in each case,
with copies to: Sears, ▇▇▇▇▇▇▇ and Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
8000 Sears Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to MetLife: Metropolitan Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President
Real Estate Investments
and Metropolitan Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Investment Officer
Mortgage Portfolio Services
in each case,
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Real Estate Chair
If to AEW: AEW Partners, L. P.
c/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to PTLP: PTLP
c/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
In each case, AEW Partners, L. P.
with a copy to: c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Waltch, L. P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
- 149 -
in each case, Hill & Harlow
with an additional One International Place
copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or at such other address as the party to be served with notice may have
furnished in writing in accordance with the provisions of this Section as a
place for the service of notice to the party seeking or desiring to serve
notice. Notices shall be effective in all cases solely upon actual receipt.
SECTION 27
MISCELLANEOUS
-------------
27.01 Agreement Not to Raise Certain Defenses
---------------------------------------
Sears and ST covenant, warrant and agree on a recourse basis that
neither Sears, ST nor any Affiliate of Sears shall claim, and AEW and PTLP
covenant, warrant and agree on a recourse basis that neither AEW, PTLP nor any
Affiliate of AEW shall claim, that the validity or enforceability of this
Agreement or any of the other Amended Transaction Documents is subject to a
defense or claim based on recharacterization, usury, unconscionability, merger,
or the legal theory known as the clogging of the equity of redemption.
27.02 Brokerage Commissions
---------------------
Each party hereto (hereinafter an "Indemnifying Party") represents and
warrants to each other party hereto (hereinafter an "Indemnified Party") that
such Indemnifying Party has not dealt with any broker, finder, consultant or
similar commission agent (other than LaSalle Partners, Limited, whose
compensation Sears hereby covenants and agrees to pay) in connection with the
transactions contemplated by this Agreement or any Appendix hereto or any other
document or instrument executed and delivered in connection herewith, and such
Indemnifying Party agrees to indemnify, defend (with counsel reasonably
satisfactory to the Indemnified Party) and hold forever harmless each
Indemnified Party against and from any and all claims, costs and liabilities
(including without limitation reasonable attorneys' fees) incurred by such
Indemnified Party in connection with any claim for compensation, commissions or
fees by any such broker, finder, consultant or similar commission agent claiming
to have dealt with such Indemnifying Party in connection with the transactions
contemplated by this Agreement or any other document or instrument executed and
delivered in connection herewith.
- 150 -
27.03 No Partnership or Joint Venture
-------------------------------
Neither anything contained herein nor the acts of the parties hereto
shall be construed to create a partnership or joint venture between or among any
parties hereto. No party shall be deemed the agent or representative of any
other for any purpose.
27.04 No Third Party Beneficiaries
----------------------------
This Agreement is for the benefit of each of the parties hereto only,
and no provision hereof shall be construed as an agreement for the benefit of
any person or entity not a party to this Agreement.
27.05 Jurisdiction and Venue
----------------------
Each party hereby submits to the jurisdiction of the state courts of
the State of Illinois and of the United States District Court for the Northern
District of Illinois in connection with any suit or proceeding arising in
connection with this Agreement or the transactions contemplated hereby, and
agrees that venue properly shall lie in any such court.
27.06 Waiver of Jury Trial
--------------------
Each party hereto hereby waives any right to a trial by jury in any
action or proceeding to enforce or defend any rights under this Agreement or any
document or instrument executed in connection herewith or relating hereto and
agrees that any such action or proceeding shall be tried before a court and not
before a jury.
27.07 Remedies Cumulative
-------------------
Except as otherwise expressly set forth herein, no right, power or
remedy conferred upon or reserved to a party hereto by this Agreement is
intended to be exclusive of any other right, power or remedy, but shall be
cumulative and concurrent and in addition to any other right, power or remedy
given hereunder or under any document or instrument contemplated hereby or
executed and delivered in connection herewith or now or hereafter existing under
applicable law.
27.08 Severability
------------
The parties hereto intend and believe that each provision in this
Agreement comports with all applicable local, state and federal laws and
judicial decisions. However, if any provision in this Agreement is found by a
court of law to be in violation of any applicable local, state, or federal law,
statute, ordinance, administrative or judicial decision, or public policy, or if
in any other respect such a court declares any such provision to be illegal,
invalid, unlawful, void or unenforceable as written, then
- 151 -
it is the intent of all parties hereto that, consistent with and with a view
towards preserving the economic and legal arrangements among the parties hereto
as expressed in this Agreement, such provision shall be given force and effect
to the fullest possible extent, and that the remainder of this Agreement shall
be construed as if such illegal, invalid, unlawful, void, or unenforceable
provision was not contained therein, and that the rights, obligations, and
interests of the parties under the remainder of this Agreement shall continue in
full force and effect.
27.09 Assignment
----------
Except an otherwise expressly set forth in this Agreement, the rights
and obligations of each party hereto may not be assigned without the prior
written consent of the remaining parties.
27.10 Successors and Assigns
----------------------
All representations, warranties, covenants and agreements contained in
this Agreement shall inure to the benefit of and shall bind the successors and
assigns of the respective parties.
27.11 Entire Agreement
----------------
This Agreement and the instruments delivered in connection herewith,
constitute the entire agreement among the parties with respect to the
transactions described herein, and all prior or simultaneous discussions,
negotiations and document drafts are merged herein and therein.
27.12 Modification, Waiver
--------------------
Except as otherwise provided in this Agreement, no modification,
waiver, or amendment of any provision of this Agreement shall be valid unless
the same is in a writing expressly intended for such purpose and signed by each
party hereto.
27.13 Captions
--------
The captions and headings of the various Sections of this Agreement and
the Exhibits hereto are for convenience of reference only and are not to be
considered as defining or limiting in any way the scope or intent of the
provisions hereof.
27.14 Singular and Plural
-------------------
Reference to the singular or plural shall be deemed to include the
other where the context requires.
- 152 -
27.15 Holidays and Weekends
---------------------
If any period of time provided for in this Agreement expires on a
weekend or bank holiday either in Chicago, Illinois or Boston, Massachusetts,
then such time period shall be deemed extended until the next business day in
both such cities.
27.16 Governing Law
-------------
This Agreement shall be governed by and construed under the internal
laws (and not the conflicts of laws principles) of the State of Illinois.
27.17 Time is of the Essence
----------------------
Time is hereby declared to be of the essence of this Agreement and of
every part hereof.
27.18 Execution in Counterparts
-------------------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
- 153 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
METROPOLITAN LIFE INSURANCE SEARS, ▇▇▇▇▇▇▇ AND CO., a
COMPANY, a New York corporation New York corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- -----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President Its: Vice President Strategy and
Analysis
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Assistant Secretary Its: Assistant Secretary
ST HOLDINGS, INC., AEW PARTNERS, L.P., a Delaware
a Delaware corporation limited partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: AEW/LP, a Delaware
----------------------------------- limited partnership,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Its: General Partner
Its: President
By: AEW, Inc., a
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Massachusetts
------------------------------- corporation
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Its: General Partner
Its: Assistant Secretary
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Its: Vice President
PARTNERS TOWER, L.P., a TOWER LEASING, INC., a
Delaware limited partnership Massachusetts corporation
By: PARTNERS TOWER By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
CORPORATION, a Delaware -----------------------------------
corporation ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Its: President
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
- 154 -
SCHEDULE I
GENERAL AGREEMENT
INDEX OF DEFINED TERMS
Term Section
---- -------
Accelerated Sears/ST Option Defaults 9.01(b)
Accelerated Sears/ST Release Events 9.01(a)
Accelerated Transfer Events 8.01(a)
Additional AEW Advances 5.05
Additional Interest 5.02(b)
Additional IRR Interest 5.02(b)
Additional Participating lnterest 2.01
Additional Sears Advances 14.02(b)
Adjustment Date 6.01(c)
Adjustment Notice 4.04(a)
Aggregate Liabilities 10.12
AEW Intro.Recital
AEW Cash Flow Interests 2.01
AEW Documents 24.02(a)(2)
AEW Entity 2.01
AEW L.P. 2.01
AEW Master Lease 13.01(a)
AEW Master Lessee 13.01(a)
AEW New Lender 2.01
AEW New Loan 14.01
AEW New Loan Advance Guaranty 14.01
AEW New Loan Agreement 14.01
AEW New Loan Documents 2.01
AEW New Loan Mortgage 14.01
AEW New Loan Note 14.01
AEW Real Estate Assets 24.01(a)(1)
AEW Release/Transfer Documents 8.02(a)
AEW Transfer Escrow 8.02(a)
AEW Tower Bankruptcy Proceeding 2.01
Affiliate 2.01
Agreement and Release 25.01(a)
Amended CDSR Agreement 16.01(a)
Amended First Loan Documents 1.01(b)
Amended First Mortgage 4.07
Amended First Notes 2.01
Amended Note A 4.01
Amended Note B 4.01
Amended Note C 4.01
Amended Option Agreement 5.03
Amended Option Documents 1.02(b)
Amended Second Loan Documents 1.02(b)
Amended Second Loan/Option Documents 1.02(b)
Amended Second Mortgage 5.04(a)
Amended Tower Second Note 5.01
Amended Transaction Documents 1.02(b)
Amendment to First Mortgage 4.07
Amendment to Second Mortgage 5.04(a)
Appraisal Notice 4.03(b)(iii)
Approved Annual Budget 6.06(d)
Approved Auditor 2.01
Approved Updated Annual Budget 6.06(d)
Assigned First Loan Rights 4.10(a)
Assignment and Assumption 2.01
Auditor's CFD Statement 6.04(d)
Bankruptcy Code 2.01
Bankruptcy Proceeding 2.01
Base Debt Prepayment Fee 4.05(a)
Base Interest 5.02(b)
Bona Fide Sale 7.04(g)
Business Day 2.01
Cash Flow 6.01(b)
Cash Flow and Distribution Statement 6.04(a)
CDSR 2.01
Chicago Experience and Skydeck Recital E
Collateral Assignor 3.04(a)
Collateral Event of Default 3.04(a)
Combined Tower Property 12.02
Consensual Tower Bankruptcy Proceeding 2.01
Control 2.01
Condemnation 7.04(f)(vi)
Condemnation Expenses 7.04(f)(vi)
Condemnation Proceeds 7.04(f)(vi)
CRA 16.03
CRA Agreement 16.03
Determination Date 24.02(a)(3)
Determined Rate 4.04(c)
Determined Value 7.02(c)
Directed Party 1.03(b)
Directing Parties 1.03(b)
Discounted Determination Payment 7.02(c)
Disposition Proceeds 7.04(f)
Distribution Priorities 2.01
Early Determination Sale 7.02(b)(i)
Election Notice 4.03(b)(iii)
Event of Default 2.01
Excess Real Estate Taxes 16.01(b)
Exercise Price 10.12
Extended Maturity Date 4.03(a)
Excluded Property 12.02
Extended Term 4.03(a)
Extension DSCR 4.03(b)
Extension Election Notice 4.03(b)
- 2 -
Extension LVR 4.03(b)
Extension Notice 4.03(b)
Extension Rate 4.03(b)(i)
Extension Period Interest 4.02(b)
Extension Notice 4.03(b)(iii)
Extension Rate Notice 4.03(b)
EY 17.04
EY Lease 17.04
Fair Market Value 7.04(m)
FC 1.04
Final Participation Determination 7.02(a)
Financing 7.04(j)
Financing Proceeds 7.04(k)
Financing Expenses 7.04(l)
First Lender Recital A or 2.01
First Lender Cash Flow Interests 2.01
First Lender Forbearance Period 2.01
First Loan Recital A
First Loan Base Debt 2.01
First Loan Documents Recital B
First Loan Maturity Date 4.03(a)
First Loan Modification Documents 1.01(a)
First Mortgage Recital B
First Notes Recital A
Forbearance Agreement 2.01
Foreclosure Action 2.01
Franklin Center 2.03
Franklin Center Loan Recital C
Franklin Center Note Recital C
Franklin Center Option 2.01
Franklin Center Option Agreement 2.01
Franklin Center Documents 1.04
Grantor 12.01(a)
Grantor Trust 12.01(a)
Grantor Trustee 12.01(a)
Grantor Trustee Expenses 12.05
Grantor Trust Agreement 12.01
IBM Landlord 17.04
IBM Lease 17.04
IBM Indemnity Obligations 17.04
IBM Sears Separate Agreement 17.04
IBM Space Assumption Agreement 17.04
Income Taxes 23.05(a)
Increased Second Priority Amount 6.02(f)
Indemnifed Party 27.01
Indemnifying Party 27.01
Initial Approved Annual Budget 6.06(d)
Initial Valuation Date 24.02(a)(2)
Institutional Investor 2.01
Institutional Lender 19.14(b)
Interval Period 4.04(b)
Involuntary Tower Bankruptcy Proceeding 2.01
- 3 -
IRR Amount 2.01
Land Trust Recital F
Land Trustee Recital F
Leasing Guidelines 17.02
Leasing Plan 17.02
Lender 3.04
Lenders 2.01
Levy Agreement 17.05
Levy Facilities Management Agreement 17.05
Levy Facilities 17.05
Levy Lease 17.05
Levy Note 17.05
Levy Obligations 2.01
Levy Restaurants 17.05
LTLP 17.05
Major Casualty 7.04(f)(v)
Master Lease 13.02
Master Lessee 13.02
Master Lessee's Rent 2.01
Master Lessor 13.01(a)
MetLife Intro Recital
MetLife Master Lease 13.02
MetLife Master Lessee 13.02
MetLife Tower Certificate 25.01(b)
Minimum Interest 4.02(b)
Minor Casualty 7.04(f)(v)
Net Insurance Proceeds 7.04(f)(v)
New Collateral Security Documents 3.03(e)
▇▇▇▇ ▇▇.▇▇(▇)
▇▇▇▇ Agreement 14.05(b)
Non-Qualified Investor/Advisor 2.01
Note Prepayment Fee 4.06(a)
Notice of Selected Appraisers 4.03(b)(iii)
Obligations 3.04(a)
Option Agreement Recital D
Option Documents Recital D
Option Holder Recital D
Option Mortgage Recital D
Ordinary Cash Flow 7.04(c)
Other Parties 24.01(a)
Outside Determination Date 7.02(a)
Ownership Interests 2.01
Participating Interest 4.02(b)
Permitted Designee 2.01
Permitted Participant 4.10
Preference Determination Payment 7.02(c)
PTC 20.03(a)
PTLP Intro Recital
PTLP Tower Certificate 25.02(b)
Proposed Updated Annual Budget 6.06(e)
Qualified Hold-Backs 7.04(i)
Qualified Institutional Advisor 2.01
- 4 -
Qualified Transferee 2.01
Rate Adjustment 4.04
Rate Increment 4.04(a)
Refinancing 4.11(a)
Refinancing Lender 4.11(a)
Release and Agreement 25.02(a)
REOC 24.01(a)(3)
REOC Regulations 24.01(a)(3)
Restated Indemnity Agreement 25.01(a)
Restoration 7.04(f)(v)
Riverwoods Documents 1.05
Riverwoods Property 2.01
ST Intro. Recital
ST Intercompany Liabilities 9.03(k)
ST Restaurant Losses 17.05
Sale Expenses 7.04(i)
Sale Proceeds 7.04(h)
Sears Intro. Recital
Sears Cash Flow Interests 2.01
Sears Contribution 14.02(a)
Sears Contribution Agreement 14.02
Sears Corporate Lease 2.01
Sears Entity 2.01
Sears Income Taxes 23.05(a)
Sears Lender Documents 2.01
Sears License Agreement 2.01
Sears New Loan 14.02(a)
Sears New Loan Agreement 14.02(a)
Sears New Loan Note 2.01
Sears New Loan/Contribution 14.02
Sears New Loan/Redevelopment Mortgage 14.02
Sears New Note 14.02(a)
Sears Recourse Provisions 25.01(c)
Sears Redevelopment Cost Obligation 15.01(a)
Sears Tower Recital B
Sears/ST Defaults 9.01(a)
Sears/ST General Default 9.03(a)
Sears/ST Lender Interests 9.02
Sears/ST Interests 2.01
Sears/ST Ownership Interests 9.02(a)
Sears/ST Release Documents 9.02(a)
Sears/ST Release Event 9.01(a)
Sears/ST Special Default 9.02(c)
Sears/ST Stock Holdings 9.02(a)
Sears/ST Tower Bankruptcy Proceeding 2.01
Sears/ST Transfer Documents 9.02(a)
Sears/ST Transfer Escrow 9.02
Second Lender Recital C
Second Lender Cash Flow Interests 2.01
Second Lender Forbearance Period 2.01
Second Loan Agreement Recital C
Second Loan Documents Recital C
- 5 -
Second Loan/Option Modification Documents 1.02(a)
Second Mortgage Recital C
Selected Appraisers 4.03(b)(iii)
Second Priority Amount 2.01
Skydeck Recital E
Skydeck Business Recital E
Special Amendment Documents 1.03(b)
Special Purpose Entity 19.14(a)
Stated Interest 4.02(b)
Stated Maturity Date 4.03(a)
Submission Notice 4.03(b)(iii)
Subordinate Party 10.09(a)
Tax Dispute 23.04
Tax Indemnified Parties 23.05(b)
Tax Information Statement 23.01
Tax Proceeding 23.05(c)
THI Recital E
Third Mortgage Recital C
TLI Intro. Recital
Tower Bankruptcy Proceeding 2.01
Tower Certificate 25.08(a)
Tower Certificates 25.08(a)
Tower Expenses 7.04(e)
Tower Gross Revenues 7.04(d)
Tower Management Agreement 17.03
Tower Manager 17.03
Tower Option Recital D
Tower Owner 2.01
Tower Personal Property Recital B
Tower Property Recital B
Tower Real Property Recital B
Tower Second Note Recital C
Tower Second Loan Recital C
Transfer Event 8.01(a)
Two-Party Documents 1.03
- 6 -
EXHIBIT "A"
LEGAL DESCRIPTION OF TOWER REAL PROPERTY
PARCEL 1
Lots 1 to 12, both inclusive, and all of vacated Quincy Street lying South of
and adjoining said Lots 1 to 6 and lying West of and adjoining the East line of
said Lot 1 extended South to the East line of Lot 12 and lying East of and
adjoining the West line of said Lot 6 extended South to the West line of Lot 7
in ▇▇▇▇▇▇▇'▇ Subdivision of Block 83 in School Section Addition to Chicago in
▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ of the Third Principal Meridian,
in ▇▇▇▇ County, Illinois.
PARCEL 2
Easements in favor of Parcel 1 as created by Deed of Easement dated July 2, 1990
and recorded July 2, 1990, as Document Number 90314601, and amended by First
Amendment to Deed of Easement dated as of June 20, 1994 and recorded July 18,
1994 as Document 94622663 made by Chicago Title and Trust Company, as Trustee
under a Trust Agreement dated June 12, 1990, and known as Trust No. 1095842 on,
over and across the following described property:
That part of Block 92 lying North of the North line of West Quincy Street in
School Section Addition to Chicago, in Section 16, Township 39 North, Range 14
East of the Third Principal Meridian, in ▇▇▇▇ County, Illinois.
Property Address: Sears Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tax Parcel: 17-16-216-009-0000
Exhibit B MetLife Documents
Exhibit C AEW Documents
Exhibit D-1 Two-Party Documents
Exhibit D-2 Special Amendment Documents
Exhibit D-3 Other Amended Transaction Documents
Exhibit E-1 Franklin Center Documents
Exhibit E-2 Riverwood Documents
Exhibit F List of Approved Auditors
Exhibit G List and Priority of Amended Transaction Documents to be
Recorded or Filed
EXHIBIT H-1
-----------
RATE ADJUSTMENT SAMPLE CALCULATION;
AMENDED NOTES B AND C
EXAMPLE ONE - MINIMUM ADJUSTED RATE EXCEEDS FIRST LENDER RATE
I. Given Information - Notes B and C
---------------------------------
Principal Balance: $100,000,000 (each)
Determination Date: June 1, 1996
Adjustment Date: July 2, 1996
Last Day of Next Interval Period: July 1, 1999 ("Last Interval Day")
First Lender's Best Rate for
Commercial Mortgages: .075 (7.5%)
Minimum Rate Increment: 75 basis points
Maximum Rate Increment: 175 basis points
II. Derivation of Treasury Rate
Derived Treasury Rate used to determine the Adjusted Rate: .0701 (7.01%)
The aforementioned Treasury Rate was derived by interpolating between
the two U.S. Treasury Rates with terms that are the closest to and are
longer and shorter than the term of the period between the Determination
Date and the last day of the next Interval Period. The following
outlines this calculation:
Time Period between Determination Date and the last day of the next
Interval Period: 1,125 days.
Treasury Rates used (as of 6/01/96): 4 year (1,460 days) - .0729
----------- -----
(Longer term)
3 year (1,095 days) - .0608
----------- -----
(Shorter term)
Treasury Rate Interpolation Calculation:
Derived Treasury Rate = shorter term rate + ((longer term rate - shorter
term rate) x ((# of days to Last Interval Day -
# of days in shorter term)/ # of days difference
between longer term and shorter term))
= .0698 + ((.0729 - .0698) x ((1,125-1,095/365))
= .0698 + (.0031 x (30/365))
= .0701 (7.01%)
EXHIBIT H-1
Page 2
III. Determination of Adjusted Rate
A. Minimum Adjusted Rate
Derived Treasury Rate .0701
Minimum Rate Increment +.0075
-----
Minimum Adjusted Rate .0776 (7.76%)
B. Maximum Adjusted Rate
Derived Treasury Rate .0701
Maximum Rate Increment +.0175
-----
Maximum Calculated Adjusted Rate .0876 (8.76%)
C. Adjusted Rate Determination
Since the First Lender's Best Rate for Commercial Mortgages (7.5%)
is less than the Minimum Adjusted Rate, the Adjusted Rate must be
adjusted upward to at least 7.76%.
The Maximum Calculated Adjusted Rate is 8.76%. However, the maximum
Applicable Rate for Amended Notes B and C per the General Agreement
is 8%. Accordingly, in this example, the final Adjusted Rate could
fall in a range from 7.76% to 8%.
ADJUSTED RATE RANGE: 7.76% - 8.00%
IV. Calculation of the Monthly Payment
Adjusted Rate: 7.76%
Principal Balance: $100,000,000
Monthly Payment = $100,000,000 X .0776 X (30/360)
= $646,667
NEW ADJUSTED MONTHLY PAYMENT: $646,667 for Notes B and C (each).
EXHIBIT H-1
Page 3
EXAMPLE TWO - FIRST LENDER RATE EXCEEDS MAXIMUM ADJUSTED RATE
I. Given Information - Notes B and C
---------------------------------
Principal Balance: 100,000,000 (each)
Determination Date: June 1, 1996
Adjustment Date: July 2, 1996
Last Day of Next Interval Period: July 1, 1999 ("Last Interval Day")
First Lender's Best Rate for
Commercial Mortgages: .08 (8.0%)
Minimum Rate Increment: 75 basis points
Maximum Rate Increment: 175 basis points
II. Derivation of Treasury Rate
Derived Treasury Rate used to determine the Adjusted Rate: .0606 (6.06%)
The aforementioned treasury rate was derived by interpolating between
the two U.S. Treasury Rates with terms that are the closest to and are
longer and shorter than the term of the period between the Determination
Date and the last day of the next Interval Period. The following
outlines this calculation:
Time Period between Determination Date and the last day of the next
Interval Period: 1,125 days.
Treasury Rates used (as of 6/01/96): 4 year (1,460 days) - .0629
----------- -----
(Longer term)
3 year (1,095 days) - .0604
----------- -----
(Shorter term)
Treasury Rate Interpolation Calculation:
Derived Treasury Rate = shorter term rate + ((longer term rate - shorter
term rate) x ((# of days to Last Interval Day -
# of days in shorter term) / # of days
difference between longer term and shorter
term))
= .0604 + ((.0629 - .0604) x ((1,125 - 1,095/365))
= .0604 + (.0025 x (30/365))
= .0606 (6.06%)
EXHIBIT H-1
Page 4
III. Determination of Adjusted Rate
A. Minimum Adjusted Rate
Derived Treasury Rate .0606
Minimum Rate Increment +.0075
-----
Minimum Adjusted Rate .0681 (6.81%)
B. Maximum Adjusted Rate
Derived Treasury Rate .0606
Maximum Rate Increment +.0175
-----
Maximum Calculated Adjusted Rate .0781 (7.81%)
C. Adjusted Rate Determination
Since the First Lender's Best Rate for Commercial Mortgages (8.0%)
exceeds the Maximum Calculated Adjusted Rate (7.81%), the Adjusted
Rate must be adjusted down from the First Lender's rate to 7.81%.
ADJUSTED RATE: 7.81%
IV. Calculation of the Monthly Payment
Adjusted Rate: 7.81%
Principal Balance: $100,000,000
Monthly Payment = $100,000,000 X .0781 X (30/360)
= $650,833
NEW ADJUSTED MONTHLY PAYMENT: $650,833 for notes B and C (each)
EXHIBIT H-2
BASE DEBT PREPAYMENT FEE
SAMPLE CALCULATION
I. Given Information - Note A
Principal Balance: $400,000,000
Prepayment Calculation Date: April 17, 1997
Prepayment Date: May 2, 1997
Maturity Date: July 2, 2005
II. Derivation of Treasury Rate
Derived Treasury Rate used to determine Prepayment Fee: .0824 (8.24%)
The aforementioned Treasury Rate was derived by interpolating between
the two U.S. Treasury Rates with terms that are the closest to and are
longer and shorter than the term of the period between the prepayment
date and the Maturity Date and adding 75 basis points (100 basis points
if the prepayment date is after the tenth (10th) anniversary of the
Advance Date) to the result. The following outlines this calculation:
Time Period between Prepayment Date and Maturity Date: 8 yrs. 2 mos.
--- ---
(98 months total or 2,980 days)
U.S. Treasury Rates used (as of 4/17/97): 10 year - .0825 (3,650 days)
---- -----
(Longer term)
7 year - .0700 (2,555 days)
---- -----
(Shorter term)
Treasury Rate Interpolation Calculation:
Interpolated Treasury Rate = shorter term rate + ((longer term rate -
shorter term rate) x ((# of days to
Maturity - # of days in shorter term) / #
of days difference between longer term and
shorter term))
= .0700 + ((.0825 - .0700) x ((2,980 -
2,555)/1,095))
= .0700 + (.0125 x (425/1,095))
= .0749 (7.49%)
Derived Treasury Rate = Interpolated Treasury Rate + 75 basis
points
= .0749 + .0075
= .0824 (8.24%)
EXHIBIT H-2
Page 2
III. Determination of Present Value of Income Stream
A. Given Information (Note A)
Derived Treasury Rate .0824 (8.24%)
Applicable Rate .0990 (9.90%)
Principal @ Maturity $400,000,000
Outstanding Principal at Prepayment: $400,000,000
Monthly Interest Payments: $3,300,000
(@ the Applicable Rate)
Number of months to maturity: 98
B. Determination of Discount Rate
Convert the Derived Treasury Rate to a monthly rate.
Discount Rate = Derived Treasury Rate/12
= .0824/12
= .00687
C. Calculation of Present Value
Using a financial calculator or other financial function tool, use
the following given inputs and solve for the Present Value (PV).
Given:
Future Value (FV) = $403,300,000 (paid on the 98th month)
Monthly Payment (PMT) = $3,300,000 (97 monthly payments)
Interest Rate (I) = .00687 (.687%) (Discount Rate)
Time (N) = 98 (months)
Solve For:
Present Value (PV) = $440,960,283
D. Calculation of Base Debt Prepayment Fee For Note A
Base Debt Prepayment Fee = Present Value - Outstanding Principal
on the date of Prepayment
BASE DEBT PREPAYMENT FEE FOR NOTE A = $440,960,283 - $400,000,000
= $40,960,283 For Note A
EXHIBIT H-2
Page 3
IV. Given Information - Notes B and C
-----------------------------------
Principal Balance: $200,000,000 ($100,000,000 Each)
Prepayment Calculation Date: April 17, 1997
Prepayment Date: May 2, 1997
Next Adjustment Date: July 2, 2000
V. Derivation of Treasury Rate
Derived Treasury Rate used to determine Prepayment Fee: .0390 (3.90%)
The aforementioned Treasury Rate was derived by interpolating between
the two U.S. Treasury Rates with terms that are the closest to and are
higher and longer and shorter than the term of the period between the
prepayment date and the Maturity Date and adding 75 basis points (100
basis points if the prepayment date is after the tenth (10th)
anniversary of the Advance Date) to the result. The following outlines
this calculation:
Time Period between Prepayment Date and Maturity Date: 3 yrs. 2 mos.
--- ---
(38 months total
or 1,157 days)
U.S. Treasury Rates used (as of 4/17/97): 5 year - .0475 (1,825 days)
----- -----
(Longer term)
3 year - .0300 (1,095 days)
----- -----
(Shorter term)
Treasury Rate Interpolation Calculation:
Interpolated Treasury = shorter term rate + ((longer term rate -
Rate shorter term rate) x ((# of days to Maturity -
# of days in shorter term) / # of days
difference between longer term and shorter
term))
= .0300 + ((.0475 - .0300) x ((1,157 -
1,095/730))
= .0300 + (.0175 x (62/730))
= .0315 (3.15%)
Derived Treasury Rate = Interpolated Treasury Rate + 75 basis points
= .0315 + .0075
= .0390 (3.90%)
EXHIBIT H-2
Page 4
VI. Determination of Present Value of Income Stream
A. Given Information (For Notes B and C)
Derived Treasury Rate .0390 (3.90%)
Applicable Rate (Assumed) .0775 (7.75%)
Principal @ Maturity $100,000,000 (Each B & C)
Outstanding Principal at Prepayment: $100,000,000 (Each B & C)
Monthly Interest Payments: $645,833
(@ the Applicable Rate)
Number of months to next adjustment date: 38
B. Determination of Discount Rate
Convert the Derived Treasury Rate to a monthly rate.
Discount Rate = Derived Treasury Rate/12
= .0390/12
= .00325
C. Calculation of Present Value
Using a financial calculator or other financial function tool, use
the following given inputs and solve for the Present Value (PV).
Given:
Future Value (FV) = $100,645,833 (paid on the 38th month)
Monthly Payment (PMT) = $645,833 (37 monthly payments)
Interest Rate (I) = .00325 (.325%) (Discount Rate)
Time (N) = 38 (months)
Solve For:
Present Value (PV) = $112,022,319
D. Calculation of Base Debt Prepayment Fee for each Note B and C
Base Debt Prepayment Fee = Present Value - Outstanding Principal on
the date of Prepayment
BASE DEBT PREPAYMENT FEE = $112,022,319 - $100,000,000
= $12,022,319 for Notes B and C each
EXHIBIT H-2
Page 5
VII. Calculation of Total Base Debt Prepayment Fee:
Sum of Prepayment Fees for Notes A, B and C
Note A = $40,960,283
Note B = $12,022,319
Note C = $12,022,319
-----------
$65,004,921
===========
EXHIBIT H-3
YIELD RESTORATION AMOUNT
SAMPLE CALCULATION
FIRST LOAN ANNUAL DEBT
SERVICE PAYMENTS AND
YEAR DISTRIBUTION PRIORITIES
---- -----------------------
Initial Investment ($600,000,000)
Debt Service Payments - Year 1 $59,192,000
Debt Service Payments - Year 2 $59,260,000
Debt Service Payments - Year 3 $22,298,000
Debt Service Payments - Year 4 $20,000,000
Debt Service Payments - Year 5 $20,000,000
Year 6 Payments $742,532,500
IRR= 8.6858%
--------------------------------------------------------------------------------
Verification using HP12C Calculator
Keystrokes Display Notes
---------- ------- -----
(f) Fin Clears Register
(f) 4 Sets display to 4
600,000,000 CHS (g) CFo -600,000,000
59,192,000 (g) CFj 59,129,000
59,260,000 (g) CFj 59,260,000
22,298,000 (g) CFj 22,298,000
20,000,000 (g) CFj 20,000,000
20,000,000 (g) CFj 20,000,000
742,532,500 (g) CFj 742,532,500 Includes Principal
RCL N 6
(f) IRR 8.6858
--------------------------------------------------------------------------------
Note: The Yield Restoration Amount is calculated by determining the number
through trial and error that, which added to the subtotal of all other payments
made to the First Loan Holder, will provide an IRR to the first Loan Holder of
8.6858%.
EXHIBIT I(1) - DETAIL - DISTRIBUTION PRIORITIES 1 THROUGH 7:
------------------------------------------------------------------------------------------------------------------------------------
SRS NEW LN UNPD INTx4 (METLIFE) $27,720,000
GIVEN: SEARS CONTRIBUTION (MET) $36,000,000
PROPERTY M.V. IN YR. 15 $2,000,000,000 AEW NEW LOAN BALANCE $15,000,000
FIRST LOAN PRINCIPAL BALANCE $600,000,000 AEW NEW LOAN UNPAID INTEREST $11,550,000
FIRST LOAN UNPAID INTEREST $116,850,000 SEARS NEW LOAN BALANCE (SEARS) $9,000,000
TOWER 2ND LOAN PRINCIPAL BALANCE $215,250,000 SEARS NEW LOAN UNPAID INTEREST $6,930,000
TOWER 2ND LOAN UNPAID INTEREST $190,603,875 UNAMORT. REDEVELOPMENT $54,000,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
FIRST DISTRIBUTION PRIORITY: STEP 1:
FIRST LOAN PRINCIPAL, PREPAYMENT FIRST LOAN PRINCIPAL $600,000,000 PROPERTY MARKET VALUE YR. 15 $2,000,000,000
PREMIUM AND UNPAID INTEREST FIRST LOAN UNPAID INT. $116,850,000 LESS: UNPAID MINIMUM INTEREST 0
PREPAYMENT PREMIUM $0 UNPAID CONT. MIN. INT. 0
UNPAID ADD. INT. 116,850,000
UNPAID EXTENSION INT. 0
PREPAYMENT PREMIUM 0
PRINCIPAL 600,000,000
--------------
SUB-TOTAL $1,283,150,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SECOND DISTRIBUTION PRIORITY: STEP 2:
NEW LOANS PRINCIPAL, TOWER SECOND 2ND PRIOR. AMT. $90,000,000
LOAN PRINCIPAL, AND FIRST LOAN AEW NEW LOAN 15,000,000
FURTHER INTEREST FIRST LOAN SHARE = 40% TOWER SECOND LOAN 30,000,000
SEARS SHARE = 10% SEARS 9,000,000
2ND/AEW NEW LOAN SHARE 50% FIRST LOAN 36,000,000
--------------
$1,193,150,000
------------------------------------------------------------------------------------------------------------------------------------
THIRD DISTRIBUTION PRIORITY: STEP 3:
TOWER SECOND LOAN PRINCIPAL TOWER 2ND PRIN. BAL. $215,250,000
AND FIRST LOAN PARTICIPATING INTEREST LESS 2ND PRIOR. EXCESS $30,000,000 TOWER SECOND LOAN(90%) 185,250,000
REMAIN. PRIN. $185,250,000 FIRST LOAN(10%) 20,583,000
------------
PRO-RATA DISTRIBUTION - 10% OF C.F. TO GROSS UP FACTOR 90% SUB-TOTAL $987,317,000
FIRST LOAN AS PARTICIPATING INTEREST PRINCIPAL GROSSED UP $205,833,000
AND 90% OF C.F. AS PRINCIPAL PMT. OF FIRST LOAN = 10%
TOWER SECOND LOAN - UNTIL TOWER SECOND TOWER SECOND = 90%
PRINCIPAL PAID IN FULL
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
FOURTH DISTRIBUTION PRIORITY: STEP 4:
NEW LOANS INTEREST, TOWER SECOND LOAN 2ND TOW. UNPAID INTEREST. $190,603,875
INTEREST, AND FIRST LOAN PARTICIPATING AEW NEW LN UNPAID INT. $11,550,000 FIRST LOAN (10%) 26,311,500
INTEREST AND FURTHER INTEREST - SRS NEW LN UNPD INT +4X $34,650,000 TOWER SECOND/SEARS/
TOT. SEARS/AEW UNPD. INT. $236,803,875 FIRST LOAN (90%) 236,803,500
-----------
PRO-RATA DISTRIBUTION - 10% TO FIRST GROSS UP FACTOR 90% SUB-TOTAL $724,202,000
LOAN AS PARTICIPATING INTEREST AND 90% UNPAID INT. GROSSED UP $263,115,000
TO TOWER SECOND LOAN, AEW NEW LENDER, FIRST LOAN = 10%
SEARS AND FIRST LOAN AS INTEREST TOWER 2ND/SEARS/1ST LN = 90%
90% PORTION TO BE DISTRIBUTED PRO-RATA 90% PORTION ALLOCATION:
BASED UPON PROPORTIONATE AMOUNT TOWER 2ND ALLOCATION 85.37%
OUTSTANDING - FIRST LOAN TO RECEIVE SEARS ALLOCATION 14.63%
80% OF SEARS ALLOCATION AS FURTHER SEARS ADJ. ALLOCATION 2.93%
INTEREST 1ST LN. SHARE OF SEARS
ALLOCATION 11.71%
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT I(2) - DETAIL - DISTRIBUTION PRIORITIES 1 THROUGH 7:
------------------------------------------------------------------------------------------------------------------------------------
FIFTH DISTRIBUTION PRIORITY: STEP 5:
SEARS REDEVELOPMENT COSTS AND FIRST
LOAN PARTICIPATING INTEREST UNAMORT. REDEV. COSTS $54,000,000 FIRST LOAN (20%) 13,500,000
GROSS UP FACTOR 80% SEARS (80%) 54,000,000
------------
PRO-RATA DISTRIBUTION - 20% OF C.F. TO REDEV. GROSSED UP $67,500,000 SUB-TOTAL $656,702,000
FIRST LOAN AND 80% OF C.F. TO SEARS FIRST LOAN = 20%
UNTIL REDEVELOPMENT. COST OBLIGATION SEARS = 80%
IS PAID IN FULL
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SIXTH DISTRIBUTION PRIORITY: DISTRIBUTION AMOUNT $160,600,000 STEP 6:
FIRST LOAN PARTICIPATING INTEREST AND
TOWER SECOND LOAN ADDITIONAL INTEREST - FIRST LOAN = 20% FIRST LOAN (20%) 32,120,000
DISTRIBUTION ON A PRO-RATA BASIS UNTIL TOWER SECOND LOAN = 80% TOWER SECOND (80%) 128,480,000
------------
LENDERS RECEIVE AN IRR EQUAL TO 8.6858% SUB-TOTAL $496,102,000
IRR (TARGET IRR= 8.6858%) 8.6858%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SEVENTH DISTRIBUTION PRIORITY: STEP 7:
FIRST LOAN PARTICIPATING INTEREST,
UNTIL FIRST LENDER'S RIGHT TO MET SHARE = 20.00% FIRST LOAN (20%) 99,220,400
PARTICIPATING INTEREST UNDER THE AEW SHARE = 50.00% TOWER SECOND(50%) 248,051,000
AMENDED FIRST NOTES TERMINATES, ------- -----------
TOWER SECOND LOAN ADDITIONAL INTEREST TOWER OWNER = BALANCE BALANCE REMAINING FOR 148,830,600
UNTIL SECOND LENDER'S RIGHT TO ADDITIONAL TWR OWNR DISTR.
PARTICIPATING INTEREST MADE UNDER THE
TOWER SECOND NOTE TERMINATES, AND RETURN
TO TOWER OWNER
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT I(3) - DETAIL - DISTRIBUTION PRIORITIES 1 THROUGH 7 - ALLOCATIONS:
TOWER AEW
FIRIST LOAN FIRST SEARS TOWER SECOND AEW NEW
PARTICI- LOAN SEARS REDEVELOP- SECOND LOAN NEW LOAN
PATING FURTHER NEW MENT LOAN UNPAID LOAN UNPAID
INTEREST INTEREST LOAN COSTS PRINCIPAL INTEREST PRINCIPAL INTEREST
-------- -------- ---- ----- --------- -------- --------- --------
FIRST DISTRIBUTION
PRIORITY - STEP 1: ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇
SECOND DISTRIBUTION
PRIORITY - STEP 1: N/A $36,000,000 $ 9,000,000 N/A $ 30,000,000 N/A $15,000,000 N/A
THIRD DISTRIBUTION
PRIORITY - STEP 1: $ 20,583,000 N/A N/A N/A $185,250,000 N/A N/A N/A
FOURTH DISTRIBUTION
PRIORITY - STEP 1: $ 26,311,500 $27,719,956 $ 6,929,989 N/A N/A $190,604,000 N/A $11,550,000
FIFTH DISTRIBUTION
PRIORITY - STEP 1: $ 13,500,000 N/A N/A $54,000,000 N/A N/A N/A N/A
SIXTH DISTRIBUTION
PRIORITY - STEP 1: $ 32,120,000 ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇
TOTAL USED FOR
IRR CALCULATION: $ 92,514,500 $63,719,956 N/A N/A $215,250,000 $190,604,000 $15,000,000 $11,550,000
SEVENTH DISTRIBUTION
PRIORITY - STEP 1: $ 99,220,400 ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇
TOTAL $191,734,900 $63,719,956 $15,929,989 $54,000,000 $215,500,000 $190,604,000 $15,000,000 $11,550,000
TOWER
SECOND RETURN
LOAN TO
ADDITIONAL TOWER
INTEREST OWNER
-------- -----
FIRST DISTRIBUTION
PRIORITY - STEP 1: N/A N/A
SECOND DISTRIBUTION
PRIORITY - STEP 1: N/A N/A
THIRD DISTRIBUTION
PRIORITY - STEP 1: N/A N/A
FOURTH DISTRIBUTION
PRIORITY - STEP 1: N/A N/A
FIFTH DISTRIBUTION
PRIORITY - STEP 1: N/A N/A
SIXTH DISTRIBUTION
PRIORITY - STEP 1: $128,480,000 N/A
TOTAL USED FOR
IRR CALCULATION: $128,480,000 N/A
SEVENTH DISTRIBUTION
PRIORITY - STEP 1: $248,051,000 148,830,600
TOTAL $376,531,000 148,830,600
EXHIBIT I(4) - DETAIL - IRR CALCULATION
TOTAL D.S.
RECEIVED
FIRST LOAN TOWER SECOND ON ACCOUNT OF
ANNUAL D.S. ANNUAL D.S. 1ST & 2ND
PAYMENT AND PAYMENT AND TOWER LOANS
DISTRIBUTION DISTRIBUTION THROUGH
PRIORITIES PRIORITIES DIST. PRIOR.
YEAR 1 TO 6 1 TO 6 1 TO 6
---- ------ ------ ------
* INITIAL INV ($588,000,000) INITIAL INV. ($203,350,000) INITIAL INV. ($791,350,000)
1 $59,192,000 1 $7,408,000 1 $66,600,000
2 $59,260,000 2 $7,340,000 2 $66,600,000
3 $59,260,000 3 $7,340,000 3 $66,600,000
4 $26,040,000 4 $7,260,000 4 $33,300,000
5 $20,000,000 5 $0 5 $20,000,000
6 $20,000,000 6 $0 6 $20,000,000
7 $30,000,000 7 $0 7 $30,000,000
8 $30,000,000 8 $0 8 $30,000,000
9 $35,000,000 9 $0 9 $35,000,000
10 $45,000,000 10 $0 10 $45,000,000
11 $50,000,000 11 $0 11 $50,000,000
12 $55,000,000 12 $0 12 $55,000,000
13 $60,000,000 13 $0 13 $60,000,000
14 $65,000,000 14 $0 14 $65,000,000
15 $943,084,456 ▇▇▇. D.S. + 15 $534,333,875 ▇▇▇. D.S. + 15 $1,477,418,331 ▇▇▇. D.S. +
DIST. PRIOR. DIST. PRIOR. DIST. PRIOR.
1 TO 6 1 TO 6 1 TO 6
IRR = 9.1629% IRR = 7.5712% IRR = 8.6858%
--------------------------------------------------------------------------------------
FIRST LOAN YEAR 15 DETAIL: : TOWER SECOND LOAN YEAR 15 DETAIL: :
: :
YR. 15 ▇▇▇. D.S. REC. $70,000,000 : YR. 15 ▇▇▇. D.S. REC. $0 : Note for Partial Year Payments
TOT. CONT. INT. (UNPAID) $116,850,000 : AEW NEW LOAN PRINCIPAL Not Applicable : For any partial year, the monthly payments
PARTCIPATING INTEREST $92,514,000 : TOWER 2ND LN. PRINCIPAL $215,250,000 : shall be discounted back on a monthly basis
FURTHER INTEREST $63,719,956 : AEW NEW LN. INT. (UNPAID) Not Applicable : to the end of the last full year of payments
PRINCIPAL BALANCE $600,000,000 : TOWER 2ND LN. INT. (UNPAID) $190,603,875 : at a rate equal to 8.6858% per annum (or
: TOWER 2ND LN. ADD. INT. $128,480,000 : .7238% per month). Such discounted number
: : shall be added to the last full year of
TOTAL FOR YEAR 15 $943,084,456 : TOTAL FOR YEAR 15 $534,333,875 : payments resulting in an IRR calculation
-------------------------------------------------------------------------------------- computed on a yearly basis from the initial
loan funding to the last full year of
payments.
* Note: Initial Investment equals loan proceeds funded ($600,000,000) less points paid upfront (12,000,000).
Exhibit J Sample Loan Status Statements
Exhibit K Form of Cash Flow and Distribution Statement
Exhibit K-1 List of Supporting Information for Cash Flow and Distribution
Statements
111124
January 10, 1995
Final
EXHIBIT L
Valuation Procedures
Set forth below are the procedures to be used in the following circumstances:
1. To determine the Fair Market Value of the Tower Property in those
situations in which, in connection with a Final Participation
Determination, the General Agreement calls for the Fair Market Value of
the Tower Property to be determined in accordance with Exhibit L;
2. To determine the Fair Market Value of any indebtedness or non-cash
consideration included in the computation of Sale Proceeds pursuant to
Section 7.04(h);
3. To determine the Fair Market Value of the Tower Property pursuant to
Section 7.02(c) and 4.03(c) in connection with an extension of the
First Loan and/or a calculation of the Determined Value;
4. To determine the Appraised Value of the Tower Property under the Sears
New Loan Note or the Sears Redevelopment Cost Obligation; and
5. To determine the Appraised Value of the Tower Property under the AEW
New Loan Note.
1. Final Participation Determination. The Tower Owner shall provide First
Lender with a notice (the "Initial Notice") setting forth Tower Owner's
opinion of the fair market value of the Tower Property for purposes of
calculating the amount (if any) of Further Interest, Participating Interest
and Additional Participating Interest due to First Lender. The Initial
Notice shall be delivered to First Lender as follows: (a) on or before
January 2, 2008, if the Final Participation Determination is being made
pursuant to Section 7.02(a)(i) or (ii); (b) on or before January 2, 2010, if
the Final Participation Determination is being made pursuant to Section
7.02(a)(iii); and (c) with Tower Owner's prepayment notice, if the Final
Participation Determination is being made pursuant to Section 7.02(d). If,
within thirty (30) days of the delivery of the Initial Notice, Tower Owner
and First Lender do not agree in writing on the fair market value of the
Tower Property, the following procedures shall apply. Within ten (10) days
after the expiration of such thirty (30) day period, First Lender shall
deliver to Tower Owner a list of three (3) third party MAI appraisers (the
"Designated Appraisers"). Tower Owner shall, within ten (10) days
thereafter, select one of the
Designated Appraisers to determine the fair market value of the Tower
Property. If First Lender fails to deliver the list of Designated Appraisers
within such ten (10) day period, the fair market value shall be determined
by any third party MAI appraiser selected by Tower Owner. If First Lender
timely delivers the list of Designated Appraisers and Tower Owner fails to
designate the selected appraiser within ten (10) days after such delivery,
the fair market value shall be determined by a Designated Appraiser selected
by First Lender from such list. The fair market value of the Tower Property
determined by the appraiser so-selected (the "Selected Appraiser") shall
constitute the Fair Market Value of the Tower Property. The Selected
Appraiser shall be instructed to value the Tower Property as of a date which
is on or within ninety (90) days prior to the applicable date for the Final
Participation Determination pursuant to Section 7.02. The amount, if any, of
Further Interest, Participating Interest and Additional Participating
Interest due to First Lender shall be determined by an Approved Auditor
selected by Tower Owner based upon such Fair Market Value.
If Tower Owner gives First Lender notice of an Early Determination Sale
pursuant to Section 7.02(b)(i) (an "Early Sale Notice"), the following
procedures shall apply. The Early Sale Notice shall include a description of
the consideration being paid in connection with the sale. First Lender may,
within ten (10) days from receipt of the Early Sale Notice, send a notice
(the "Election Notice") to Tower Owner electing to have the Disposition
Proceeds calculated in accordance with the last clause (i.e., the proviso
clause) of Section 7.04(f)(ii). If First Lender fails to send a valid
Election Notice within such ten (10) day period, the amount (if any) of
Further Interest, Participating Interest or Additional Participating
Interest due to First Lender in connection with the Early Determination Sale
shall be calculated in accordance with the first clause of Section
7.04(f)(ii). If First Lender timely sends an Election Notice the following
provisions shall apply. First Lender shall include in the Election Notice a
list of three (3) third party MAI appraisers; if First Lender fails to
include such list in the Election Notice, the Election Notice shall be
invalid. Within ten (10) days from receipt of a properly given Election
Notice, Tower Owner shall select an appraiser from the list provided by
First Lender and such appraiser shall determine the Fair Market Value of the
Tower Property as of July 2, 2005. The amount, if any, of Further Interest,
Participating Interest and Additional Participating Interest due to First
Lender pursuant to Section 7.04(f)(ii) shall be determined by an Approved
Auditor selected by Tower Owner based upon such Fair Market Value.
In the case of a Final Participation Determination in connection with an
Event of Default under the Amended First Mortgage and acceleration of the
Amended First Notes, the Fair Market Value of the Tower Property shall be
determined by a third party MAI appraiser selected by First Lender.
2. Non-Cash Valuation. For purposes of determining the amount, if any, of
Participating Interest, Further Interest and Additional Participating
Interest due to First Lender
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upon a Bona Fide Sale of the Tower Property, the fair market value (positive
or negative) of non-cash consideration and indebtedness (collectively,
"Non-Cash Consideration") included in the definition of Sale Proceeds under
Section 7.04(h) shall be determined as follows. When Tower Owner gives First
Lender notice of the sale under Section 7.02(b) (the "Sale Notice"), Tower
Owner shall set forth its opinion of the fair market value of any Non-Cash
Consideration. If First Lender and Tower Owner have not agreed in writing on
the fair market value of the Non-Cash Consideration with ten (10) days from
the Sale Notice, Tower Owner shall, within twenty (20) days after the Sale
Notice, select an Approved Auditor to determine such value. If Tower Owner
fails to select an Approved Auditor within such twenty (20) day period, the
fair market value of such Non-Cash Consideration shall be determined by an
Approved Auditor selected by First Lender.
3. Extension LVR and Determined Value. If Tower Owner gives an Extension Notice
pursuant to Section 4.03(b)(iii), the fair market value of the Tower
Property for purposes of the Extension LVR and Determined Value shall be
determined in accordance with the process set forth in Section 4.03(b). If
Tower Owner refinances the First Loan Base Debt with a third party lender
and does not give an Extension Notice, the Determined Value and Extension
LVR (for purposes of determining, on a hypothetical basis, whether such
financing would, as of July 2, 2005, have satisfied the Extension LVR) shall
be determined in accordance with the process set forth in Section 4.03(c).
In either case, both the appraised value of the Tower Property and the
Extension DSCR shall be determined as of July 2, 2005. If First Lender fails
to deliver the list of three (3) MAI appraisers to Tower Owner within one
hundred and eighty (180) days prior to the Stated Maturity Date as required
by Section 4.03(c), and such failure continues for more than five (5) days
after written notice to First Lender, the Fair Market Value of the Tower
Property for purposes of such Section shall be determined by any third party
MAI appraiser selected by Tower Owner.
If the Tower Owner refinances the First Loan Base Debt more than 180 days
before the Stated Maturity Date, the following provisions shall apply. The
fair market value of the Tower Property for purposes of determining both the
Determined Value and whether, on a hypothetical basis, the new loan would
have satisfied the Extension LVR shall be determined as described in the
immediately preceding paragraph and shall be based on the balance of such
loan and fair market value of the Tower Property as of July 2, 2005.
Compliance (on a hypothetical basis) with the Extension DSCR shall be
determined based upon the terms of the new loan and the financial condition
of the Tower Property as of July 2, 2005.
4. Appraised Value Under Sears New Loan Note and Sears Redevelopment Cost
Obligation. Not less than 180 days before any New Loan Valuation Date (as
defined in the Sears New Loan Note) or Redevelopment Loan Valuation Date (as
defined in the Sears Redevelopment Cost Obligation), Master Lessee may
provide Sears with notice of Master Lessee's opinion of the fair market
value of the Tower Property for
-3-
purposes of the valuation allowed under Section 4 of the Sears New Loan
Note, Section 3 of the Sears Redevelopment Cost Obligation, or both. If
Master Lessee and Sears do not agree in writing on the fair market value of
the Tower Property within thirty (30) days of such notice, the following
procedures shall apply. Sears shall, within ten (10) days of Master Lessee's
request, deliver to Master Lessee a list of three (3) third party MAI
appraisers (the "Sears Designated Appraisers"). Master Lessee shall, within
ten (10) days thereafter, select one of the Sears Designated Appraisers to
determine the fair market value of the Tower Property. If Sears fails to
deliver such list within such ten (10) day period, the fair market value of
the Tower Property shall be determined by any third party MAI appraiser
selected by Master Lessee. If Sears timely delivers such list and Master
Lessee fails to select a Sears Designated Appraiser within ten (10) days
after such delivery, the fair market value of the Tower Property shall be
determined by a Sears Designated Appraiser selected by Sears from such list.
The Appraised Value (as such term is used in the Sears New Loan Note or the
Sears Redevelopment Cost Obligation, as applicable) shall be the value of
the Tower Property determined by the appraiser so selected. Notwithstanding
the foregoing, at any time that the fair market value of the Tower Property
is valued in connection with a Final Participation Determination under the
First Loan, Master Lessee may elect to cause a simultaneous valuation for
purposes of the Sears New Loan Note, the Sears Redevelopment Cost
Obligation, or both. If Master Lessee makes such an election, (i) the Fair
Market Value of the Tower Property for purposes of determining the amount,
if any, of Further Interest, Participating Interest and Additional
Participating Interest due to First Lender shall also be used as the
Appraised Value for purposes of the Sears New Loan Note or Sears
Redevelopment Cost Obligation, as applicable, and (ii) the date of such
valuation shall be deemed to be the New Loan Valuation Date and/or the
Redevelopment Loan Valuation Date, as applicable. The amount payable under
Section 3 of the Sears Redevelopment Cost Obligation, Section 4 of the Sears
New Loan Note, or both, may be paid at any time after the Appraised Value is
determined and shall be the amount (if any) which would be payable under the
Sears Redevelopment Cost Obligation and/or the Sears New Loan Note under the
Distribution Priorities if the Tower Property were sold for the Appraised
Value on the New Loan Valuation Date (in the case of the Sears New Loan
Note) or on the Redevelopment Loan Valuation Date (in the case of the Sears
Redevelopment Cost Obligation). In accordance with Sections 7.04(h) and (i),
the amount (if any) due under the Sears New Loan Note and Sears
Redevelopment Cost Obligation upon a Bona Fide Sale of the Tower Property
shall be based solely on the net amount of cash or cash equivalents as and
when actually received.
5. Appraised Value Under AEW New Loan Note. Not less than 180 days before any
New Loan Valuation Date (as defined in the AEW New Loan Note), PTLP may
deliver to Master Lessee a list of three (3) third party MAI appraisers (the
"PTLP Designated Appraisers"). Master Lessee shall, within ten (10) days
thereafter, select one of the PTLP Designated Appraisers to determine the
fair market value of the
-4-
Tower Property. If PTLP fails to deliver such list within such ten (10) day
period, the fair market value of the Tower Property shall be determined by
any third party MAI appraiser selected by Master Lessee. If PTLP timely
delivers such list and Master Lessee fails to select a PTLP Designated
Appraiser within ten (10) days after such delivery, the fair market value of
the Tower Property shall be determined by a PTLP Designated Appraiser
selected by PTLP from such list. The Appraised Value (as such term is used
in the AEW New Loan Note) shall be the value of the Tower Property
determined by the appraiser so selected. Notwithstanding the foregoing, at
any time that the fair market value of the Tower Property is valued in
connection with a Final Participation Determination under the First Loan,
Master Lessee may elect to cause a simultaneous valuation for purposes of
the AEW New Loan Note. If Master Lessee makes such an election, (i) the Fair
Market Value of the Tower Property for purposes of determining the amount,
if any, of Further Interest, Participating Interest and Additional
Participating Interest due to First Lender shall also be used as the
Appraised Value for purposes of the AEW New Loan Note, and (ii) the date of
such valuation shall be deemed to be the New Loan Valuation Date. The amount
payable under Section 4 of the AEW New Loan Note may be paid at any time
after the Appraised Value is determined and shall be the amount (if any)
which would be payable under the AEW New Loan Note under the Distribution
Priorities if the Tower Property were sold for the Appraised Value on the
New Loan Valuation Date.
6. Valuation Methodology. For purposes of the valuations required hereunder,
the real estate appraisals shall be conducted in accordance with the
following:
(i) The appraisers shall determine the fair market value of the real
estate by appraising the fair market value on the basis of the all
cash price which would be paid by an informed willing buyer to an
informed willing seller, neither being under any compulsion to buy or
sell, in an arm's length transaction under then prevailing market
conditions.
(ii) The appraiser shall take into consideration the income approach to
valuation, comparable sales and replacement costs and shall determine
the importance of the foregoing valuation techniques and make use of
such other valuation techniques to the extent that the appraiser
deems appropriate.
(iii) The appraiser shall be instructed to complete the appraisal within
one hundred and twenty (120) days from the date of engagement and to
deliver it simultaneously to First Lender, Tower Owner, Master Lessee
and Sears.
7. Master Lessee and Tower Owner. As long as the Master Lease is in effect, all
action to be taken by the Tower Owner hereunder shall be taken solely by the
Master Lessee. If the Master Lease is no longer in effect, all action to be
taken by the Master Lessee hereunder and under the Sears New Loan Note and
Sears Redevelopment Cost Obligation shall be taken by Tower Owner.
-5-
8. Appraisal Costs. All reasonable third party appraisal and accounting costs
(including the costs of the Approved Auditor) incurred in connection with
the valuation of the Tower Property pursuant to this Exhibit L shall
constitute Tower Expenses.
-6-
Exhibit M Schedule of Combined Tower Property
Exhibit N Leasing Procedures
Exhibit O Form of Agreed Cash Collateral Order
Exhibit P Form of Tax Information Statement
EXHIBIT Q-1
SEARS RECOURSE PROVISIONS
(1) Wrongfully withholding consent to the amendment or modification of
a Special Amendment Document as required under Section 1.03(b);
(2) Failure to pay the cost and expenses incurred in connection with
the amendment or proposed amendment of any of the Amended Transaction Documents
as required under Section 1.03(d);
(3) Failure to execute and deliver directions to the Grantor Trustee or
the Land Trustee as required in order to facilitate a Refinancing under Section
4.11(a);
(4) Failure to transfer the Sears/ST Lender Interests as required under
Section 9.03(a);
(5) Failure to transfer the Sears/ST Stock Holdings as required under
Section 9.03(c);
(6) Seeking or obtaining any form of injunction or judicial order in
violation of Section 9.03(f);
(7) Failure to pay transfer taxes as required under Section 9.03(g) ;
(8) Violation of the covenants set forth in Section 9.03(k);
(9) Failure to cooperate in a Tower Bankruptcy Proceeding as required
under Section 9.04(b);
(10) In the event of a Tower Bankruptcy Proceeding, challenging the
Cash Flow Distribution Priorities or attempting to recharacterize the interests
of First Lender, Second Lender, Option Holder, AEW New Lender or the Master
Lessee in violation of Section 9.04(c);
(11) Violation of the covenant in Section 12.01(b);
(12) Failure to pay Grantor Trustee Expenses as required under Section
12.06;
(13) Failure to advance funds as required under Section 14.02(a);
(14) Except as required by operation of law, assignment or transfer of
the Sears New Loan in violation of Section 14.04(a);
(15) Failure to deposit Excess Real Estate Taxes as required under
Section 16.01(b);
(16) Except as required by operation of law, violation of the transfer
restrictions set forth in Section 19.01;
(17) Except as required by operation of law, violation of the transfer
restrictions set forth in Section 19.02;
(18) Breach of the representations and warranties in Section 20.01;
(19) Breach of the representations and warranties in Section 21.01;
(20) Failure to apply funds as required under Section 22.07;
(21) Failure to pay the fees of the Approved Auditor as required under
Section 23.02;
(22) Failure to pay for the cost of an audit as required under Section
23.03;
(23) Failure to pay Federal, state and local income taxes as required
under Section 23.05;
(24) The liabilities provided in Section 25.06;
(25) Violation of the covenant in Section 27.01;
(26) Breach of the representation and warranty in Section 27.02
-2-
EXHIBIT Q-2
AEW RECOURSE PROVISIONS
(1) Wrongfully withholding consent to the amendment or modification of
a Special Amendment Document as required under Section 1.03(b);
(2) Failure to pay the cost and expenses incurred in connection with
the amendment or proposed amendment of any of the Amended Transaction Documents
as required under Section 1.03(d);
(3) Failure to execute and deliver directions to the Grantor Trustee or
the Land Trustee as required in order to facilitate a Refinancing under Section
4.11(a);
(4) (a) Completion of the foreclosure of the lien of the Amended Second
Mortgage or any other security interests in the Tower Property or (b) exercising
or attempting to exercise rights under the Second Mortgage as a
mortgagee-in-possession), in either case in violation of Section 5.06; provided,
that PTLP shall not be treated as exercising or attempting to exercise rights as
a mortgagee-in-possession unless either (a) PTLP applies for a court order that
PTLP is a mortgagee-in-possession, or (b) PTLP, after written notice to tenants
or a collection agent, collects rent in its capacity as a mortgagee (and not in
any other capacity).
(5) Failure to pay certain amounts as required in Section 7.02(e);
(6) Failure to transfer or release all right, title and interest of
PTLP, the AEW Master Lessee and all other Affiliates of AEW under the Amended
Second Loan/Option Documents and otherwise in respect of the Tower Property as
required under Section 8.03(a);
(7) Seeking or obtaining any form of injunction or other judicial order
in violation of Section 8.03(b);
(8) Failure to transfer the Sears/ST Ownership Interests and the
Sears/ST Stock Holdings as required under Section 9.04(a);
(9) Failure to cooperate in a Tower Bankruptcy Proceeding as required
under Section 9.04(b).
(10) Taking any of the actions specified in Section 10.05(c)(i), (ii)
and (iii) without the prior written consent of the First Lender;
(11) Taking any of the actions specified in Section 10.07(c)(i), (ii)
and (iii) without the prior written consent of the First Lender;
(12) Any transfer of the series C preferred stock of ST in violation of
Section 11.05(b)(i);
(13) Assignment of the AEW Master Lease in violation of Section 13.03;
(14) The liabilities provided in Section 13.06;
(15) Failure to advance funds as required under Section 14.01;
(16) Except as required by operation of law, assignment or transfer of
the AEW New Loan in violation of Section 14.04(a);
(17) Except as required by operation of law, violation of the covenant
set forth in Section 19.04;
(18) Except as required by operation of law, violation of the transfer
restrictions set forth in Section 19.05;
(19) Except as required by operation of law, violation of the transfer
restrictions set forth in Section 19.06;
(20) Breach of the representations and warranties in Section 20.03;
(21) Breach of the representations and warranties in Section 21.02;
(22) Breach of the representations and warranties in Section 21.03;
(23) Failure to apply funds as required under Section 22.07;
(24) Violation of any of the representations, warranties and covenants
in Sections 24.01, 24.02 and/or 24.03;
(25) The liabilities provided in Section 25.07;
(26) Violation of the covenant in Section 27.01; and
(27) Breach of the representation and warranty in Section 27.02.
-2-
EXHIBIT Q-3
METLIFE RECOURSE PROVISIONS
(1) Wrongfully withholding consent to the amendment or modification of
a Special Amendment Document as required under Section 1.03(b);
(2) Failure to pay the cost and expenses incurred in connection with
the amendment or proposed amendment of any of the Amended Transaction Documents
as required under Section 1.03(d);
(3) Failure to extend the First Loan in the manner and to the extent
required under Section 4.03;
(4) Failure to adjust interest rates on the Amended Note B and Amended
Note C as required in Sections 4.04(a) and (b);
(5) Failure to release the lien of the Amended First Mortgage as
required in Section 4.08(a);
(6) Wrongfully withholding consent to subordinate First Lender's lien
as required in Section 4.08(b);
(7) (a) Completion of the foreclosure of the lien of the Amended First
Mortgage or any other security interests in the Tower Property or (b) exercising
or attempting to exercise rights under the First Mortgage as a
mortgagee-in-possession), in either case in violation of Section 4.09(a);
(8) Failure to transfer to PTLP the Sears/ST Stock Ownership Interests
and, if applicable, the Sears/ST Stock Holding as required under Section
4.09(b);
(9) Failure to execute and deliver directions to the Grantor Trustee or
the Land Trustee as required in order to facilitate a Refinancing under Section
4.11(a);
(10) Failure to transfer Sears/ST Ownership Interests and the Sears/ST
Stock Holdings as required under Section 9.03(d);
(11) Violation of the covenant concerning a dismissed Tower Bankruptcy
Proceeding in Section 9.04(a);
(12) Failure to cooperate in a Tower Bankruptcy Proceeding as required
under Section 9.04(b);
(13) Any transfer of the series B preferred stock of ST in violation of
Section 11.05(b)(ii);
(14) Except as required by operation of law, violation of the
restrictions on transfers of the First Loan as set forth in Section 19.14;
(15) Breach of the representation and warranty in Section 20.02;
(16) Breach of the representation and warranty in Section 27.02.
-2-