INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT dated as of the 10th day of
October, 1996 given by PROPERTY PARTNERS, L.P., CARLYLE-XIII ASSOCIATES, L.P.,
and CARLYLE-XIV ASSOCIATES, L.P., each a Delaware limited partnership having an
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter individually referred to as an "Indemnitor" and collectively as the
"Indemnitors") to METROPOLIS REALTY TRUST, INC., a Maryland corporation having
an office at c/o ▇▇▇▇▇▇ Capital Group, L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - 12th Floor, New
York, New York 10022, Attn: ▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as
"Indemnitee").
W I T N E S S E T H:
WHEREAS, each Indemnitor is a partner in JMB/NYC Office
Building Associates, L.P. ("JMB LP"), an Illinois limited partnership and a
member of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Associates, LLC and 1290 Associates, LLC
(collectively, the "Debtors"), each a New York limited liability company and the
obligors under certain notes in the aggregate original principal amount of
$970,000,000 issued pursuant to that certain Mortgage Spreader and Consolidation
Agreement and Trust Indenture dated as of March 20, 1984 among O&Y Equity Corp.,
Olympia & York Holdings Corporation, FAME Associates, Olympia & York 2 Broadway
Land Company, Olympia & York 2 Broadway Company and Manufacturers Hanover Trust
Company as Trustee, as supplemented and amended (the "Indenture"), which
encumbers the fee estates of the Debtors in properties known as ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
and 1290 Avenue of the Americas;
WHEREAS, the Debtors defaulted under the Indenture beyond the
expiration of all applicable notice and cure periods;
WHEREAS, the Debtors, JMB LP and the Indemnitors requested
that the Trustee and the holders of the Existing Notes forbear from exercising
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their rights to pursue an action to foreclose the Indenture in order to provide
the Debtors with an opportunity to file a pre-negotiated plan of reorganization
(hereinafter referred to as the "Plan") under the Bankruptcy Code, which Plan
provides for, among other things, (i) a transfer of the Properties to the
Property Owning Partnerships, (ii) the Lower Tier Partnership to own a 99%
interest as a limited partner in each of the Property Owning Partnerships, (iii)
the Upper Tier Partnership to own a 5% interest as a limited partner in the
Lower Tier Partnership, and (iv) JMB LP to own a 99% interest as a limited
partner in the Upper Tier Partnership;
WHEREAS, the Trustee and the holders of the Existing Notes
were willing to forbear from exercising their rights to pursue an action to
foreclose the Indenture and to proceed with the transactions contemplated by the
Plan only if the Indemnitors execute and deliver this Indemnification Agreement
to the Indemnitee and the Plan and the Agreements of Limited Partnership of the
Upper Tier Partnership and the Lower Tier Partnership require that JMB LP cause
the Indemnitors to execute and deliver this Indemnity Agreement to the
Indemnitee;
WHEREAS, the Plan was filed with the Bankruptcy Court on April
23, 1996 and became effective pursuant to an order of the Bankruptcy Court
entered on September 20, 1996 and, pursuant to the terms thereof;
WHEREAS, the Indemnitors will materially benefit from the
consummation of the transactions provided for in the Plan and described above;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt of which is hereby acknowledged,
and in order to induce the Trustee and the holders of the Existing Notes to
forbear from exercising their rights as hereinbefore stated and such parties
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and the Indemnitee to proceed with the transactions contemplated by the Plan,
the Indemnitors hereby covenant and agree with the Indemnitee as follows:
1. Capitalized terms used but not defined herein shall have
the meanings provided in the Plan.
2. The Indemnitors absolutely and unconditionally agree to
indemnify and to hold Indemnitee harmless from and against any and all losses,
claims, liabilities, damages, costs or expenses (including, without limitation,
reasonable counsel fees) of any nature whatsoever, contingent or otherwise,
foreseen or unforeseen, which Indemnitee may or shall incur as a result of any
of JMB LP, its officers, directors, partners (including without limitation any
Indemnitor), stockholders, agents or affiliates (collectively, the "Controlled
Entities") intentionally interfering with, impeding or preventing (including,
without limitation, the filing by JMB LP of a voluntary petition under the
Bankruptcy Code or any other federal or state bankruptcy or insolvency statute
or any Controlled Entity joining in an involuntary petition against JMB LP under
the Bankruptcy Code or such other statute) (x) the exercise by the Indemnitee of
the Purchase Right (as defined in Section 12.2A of the Lower Tier Partnership
Agreement) or (y) any disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of the Properties by the Property Owning Partnerships or the
Property Owning Partnership Interests (as defined in the Lower Tier Partnership
Agreement) by the Lower Tier Partnership or the merger or other combination of
the Property Owning Partnerships or the Lower Tier Partnership with or into
another entity, in accordance with the terms of the Lower Tier Partnership
Agreement, provided that such disposition, mortgage, pledge, encumbrance,
hypothecation, exchange, merger or other combination does not constitute an
Adverse Transaction as defined in the agreement of limited partnership of the
Lower Tier Partnership ("Prohibited Actions"), and provided that any such
Prohibited Action is not revoked or rescinded within the time period provided in
paragraph 3 below.
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3. In the event that any Indemnitor or Controlled Entity takes
any Prohibited Action (including, without limitation, the filing by or against
JMB LP of a petition under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency statute), the Indemnitors (x) acknowledge (and
Indemnitee, by its acceptance of this Indemnification Agreement, acknowledges)
that the damage to be suffered by Indemnitee shall be difficult or impossible to
ascertain and (y) if the Prohibited Action is not revoked or rescinded within
sixty (60) days after notice by Indemnitee to Indemnitors so as to permit the
consummation of the transaction described in clause (x) or (y) of paragraph 2
above unimpeded by any actions by JMB LP or any of the Controlled Entities,
absolutely and unconditionally agree to pay to Indemnitee upon demand the
Maximum Indemnitors' Liability Amount (as hereinafter defined) as full
liquidated damages for, and in satisfaction of, the undersigned's obligations
under this Indemnification Agreement, including but not limited to the
Indemnitors' obligations under paragraph 2 hereof. The Indemnitor acknowledges
and agrees that (and Indemnitee, by its acceptance of this Indemnification
Agreement, acknowledges and agrees that) the payment of the Maximum Indemnitors'
Liability Amount is a fair and reasonable remedy for Indemnitee if any of the
events set forth in paragraph 2 of this Indemnification Agreement shall occur,
as any such event will result in Indemnitee incurring damages which cannot now
be determined with any degree of certainty. The foregoing shall not limit the
remedies Indemnitee may have against any other party, including without
limitation, JMB LP and the right of the Indemnitors to seek injunctive relief
with respect to the Prohibited Action or specific performance of the underlying
obligation.
4. The term "Maximum Indemnitors' Liability Amount" as used in
this Indemnification Agreement shall mean an amount equal to $25,000,000,
provided that the Maximum Indemnitors' Liability Amount shall be reduced on a
dollar for dollar basis for each dollar actually received by Indemnitee in
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respect of the JMB Collateral (as defined in the Lower Tier Partnership
Agreement).
5. The Indemnitors hereby consent that from time to time,
before or after the taking of any Prohibited Action by any Indemnitor or
Controlled Party, with or without further notice to or assent from the
Indemnitors, any security at any time held by or available to Indemnitee with
respect to any obligation of JMB LP, or any security at any time held by or
available to Indemnitee for any obligation of any other person or party
secondarily or otherwise responsible for the compliance by JMB LP of its
obligations under the Upper Tier and Lower Tier Partnership Agreements
(hereinafter referred to as the "Obligations"), may be exchanged, surrendered or
released and any obligation of JMB LP, or of any such other person or party, may
be changed, altered, renewed, extended, continued, surrendered, compromised,
waived or released in whole or in part, or any default with respect thereto
waived, and Indemnitee may release, in whole or in part, the JMB Collateral or
any balance of any deposit account or credit on its books in favor of JMB LP, or
of any such other person or party, and may generally deal with JMB LP or any
such security or other person or party as Indemnitee may see fit; and the
Indemnitors shall remain bound under this Indemnification Agreement
notwithstanding any such exchange, surrender, release, change, alteration,
renewal, extension, continuance, compromise, waiver, inaction or other dealing.
6. This is an agreement to pay liquidated damages and not an
agreement of collection and the Indemnitor further waives any right to require
that any action be brought against JMB LP or any other person or party or to
require that resort be had to any security or to any balance of any deposit
account or credit on the books of Indemnitee in favor of JMB LP or any other
person or party.
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7. Each reference herein to Indemnitee shall be deemed to
include its successors and assigns, in whose favor the provisions of this
Indemnification Agreement shall also inure. This Indemnification Agreement shall
be binding upon, and shall inure to the benefit of, Indemnitee and each
Indemnitor and the respective heirs, executors, administrators, legal
representatives, successors and assigns of Indemnitee and each Indemnitor;
provided, however, that the Indemnitors shall in no event or under any
circumstance have the right without obtaining the prior written consent of
Indemnitee to assign or transfer the Indemnitors' obligations and liabilities
under this Indemnification Agreement, in whole or in part, to any other person,
party or entity.
8. The term "Indemnitor" as used herein shall, if this
Indemnification Agreement is signed by more than one party, mean the
"Indemnitors and each of them" and each undertaking herein contained shall be
their joint and several undertaking, provided, however, that in the next
succeeding paragraph hereof the term "Indemnitor" shall mean the "Indemnitors or
any of them".
9. No delay on the part of Indemnitee in exercising any right
or remedy under this Indemnification Agreement or failure to exercise the same
shall operate as a waiver in whole or in part of any such right or remedy. No
notice to or demand on the Indemnitor shall be deemed to be a waiver of the
obligation of the Indemnitor or of the right of Indemnitee to take further
action without notice or demand as provided in this Indemnification Agreement.
10. This Indemnification Agreement may only be modified,
amended, changed or terminated by an agreement in writing signed by Indemnitee
and the Indemnitors. No waiver of any term, covenant or provision of this
Indemnification Agreement shall be effective unless given in writing by
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Indemnitee and if so given by Indemnitee shall only be effective in the specific
instance in which given.
11. The Indemnitors acknowledge that this Indemnification
Agreement and the Indemnitors' obligations under this Indemnification Agreement
are and shall at all times continue to be absolute and unconditional in all
respects. This Indemnification Agreement sets forth the entire agreement and
understanding of Indemnitee and the Indemnitors, and, except as otherwise herein
set forth, the Indemnitors absolutely, unconditionally and irrevocably waive any
and all right to assert any setoff, counterclaim or crossclaim of any nature
whatsoever with respect to this Indemnification Agreement or the obligations of
the Indemnitors under this Indemnification Agreement or the obligations of any
other person or party (including, without limitation, JMB LP) relating to this
Indemnification Agreement or the obligations of the Indemnitors hereunder in any
action or proceeding brought by Indemnitee to enforce the obligations of the
Indemnitors under this Indemnification Agreement. Nothing contained in this
paragraph 11 shall limit the right of the Indemnitors to assert a defense or
maintain a separate action against Indemnitee with respect to any matter
irrespective of whether it relates to this Indemnification Agreement or the
obligations of the Indemnitors under this Indemnification Agreement. The
Indemnitors acknowledge and Indemnitee, by its acceptance hereof, acknowledges
that no oral or other agreements, understandings, representations or warranties
exist with respect to this Indemnification Agreement or with respect to the
obligations of the Indemnitors under this Indemnification Agreement except as
specifically set forth in this Indemnification Agreement or otherwise in writing
by Indemnitee and the Indemnitors.
12. THE INDEMNITORS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE, AND INDEMNITEE BY ITS ACCEPTANCE OF THIS INDEMNIFICATION AGREEMENT
IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION,
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SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO
THIS INDEMNIFICATION AGREEMENT.
13. If at any time (i) any payment, or portion thereof, made
by, or for the account of, the Indemnitors on account of the obligations under
this Indemnification Agreement, or (ii) any transaction described in clause (x)
or (y) of paragraph 2 hereof, or (iii) the consummation of the transfer of the
interest of JMB LP in the Upper Tier Partnership pursuant to the JMB Put Right
under Section 7.7 of the partnership agreement of the Upper Tier Partnership or
of the interest of the Upper Tier Partnership in the Lower Tier Partnership
pursuant to the Put Right under Section 12.2C of the partnership agreement of
the Lower Tier Partnership, is set aside by any court or trustee having
jurisdiction as a voidable preference, fraudulent transfer or otherwise as being
subject to avoidance or recovery under the provisions of the Bankruptcy Code or
under any other applicable Federal or state bankruptcy law or similar law, the
Indemnitor hereby agrees that this Indemnification Agreement (x) shall continue
and remain in full force and effect, or (y) if previously terminated as a result
of the Indemnitors having fulfilled its obligations hereunder in full or as a
result of Indemnitee having released the Indemnitors from their obligations and
liabilities hereunder, shall without further act or instrument be reinstated and
shall thereafter remain in full force and effect, in either case with the same
force and effect as though such payment or transaction had not been made, and if
applicable, as if such previous termination had not occurred.
14. The Indemnitor hereby waives all defenses it may have
based upon any election of remedies by Indemnitee which destroys or impairs the
Indemnitors' subrogation rights or the Indemnitors' right to proceed against JMB
LP or any other person for reimbursement. The foregoing waivers include any
requirement of law that Indemnitee exhaust any security for the Obligations
before proceeding under this Indemnification Agreement. In
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addition to the foregoing, the Indemnitors hereby waive and relinquish the
following rights and remedies accorded by applicable law to indemnitors and
agree not to assert or take advantage of any such rights or remedies: (a) any
defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other person or persons; (b) demand, protest and, except as
set forth therein, notice of any kind; (c) any defense based upon any statute or
rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal; and (d) any duty on the part of Indemnitee to disclose to the
Indemnitors any facts Indemnitee may now or hereafter know about JMB LP,
regardless of whether Indemnitee has reason to believe that any such facts
materially increase the risk beyond that which the Indemnitor intends to assume
or has reason to believe that such facts are unknown to Indemnitors or has a
reasonable opportunity to communicate such facts to Indemnitors.
15. Any notice, request or demand given or made under this
Indemnification Agreement shall be in writing and shall be hand delivered or
sent by Federal Express or other reputable overnight national courier service,
and shall be deemed given when received at the following addresses whether hand
delivered or sent by Federal Express or other reputable overnight national
courier service:
If to Indemnitee:
c/o ▇▇▇▇▇▇ Capital Group, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
With a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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If to the Indemnitors:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
Pircher, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Each party to this Indemnification Agreement may designate a change of address
by notice given to the other party fifteen (15) days prior to the date such
change of address is to become effective.
16. This Indemnification Agreement is, and shall be deemed to
be, a contract entered into under and pursuant to the laws of the State of New
York and shall be in all respects governed, construed, applied and enforced in
accordance with the laws of the State of New York. No defense given or allowed
by the laws of any other state or country shall be interposed in any action or
proceeding hereon unless such defense is also given or allowed by the laws of
the State of New York.
17. The Indemnitor agrees to submit to personal jurisdiction
in the State of New York in any action or proceeding arising out of this
Indemnification Agreement and, in furtherance of such agreement, the Indemnitor
hereby agrees and consents that without limiting other methods of obtaining
jurisdiction, personal jurisdiction over the Indemnitor in any such action or
proceeding may be obtained within or without the jurisdiction of any federal
court located in New York (and any such court shall have jurisdiction over the
subject matter hereof) and that any process or notice of motion or other
application to any such court in connection with any such action or proceeding
may be served upon the Indemnitor, by registered or certified mail to or by
personal service at the last known address of the Indemnitor, whether
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such address be within or without the jurisdiction of any such court. In
addition to and in furtherance of the foregoing, the Indemnitor hereby consents
to venue being held in either of the Southern District of New York.
18. This Indemnification Agreement may be executed in one or
more counterparts by some or all of the parties hereto, each of which
counterparts shall be an original and all of which together shall constitute a
single indemnification agreement. The failure of any party listed below to
execute this Indemnification Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
19. Except as set forth in paragraph 13 of this
Indemnification Agreement, the obligations and liabilities of the Indemnitors
under this Indemnification Agreement shall terminate on the earlier to occur of
(i) the date upon which the transactions described in clause (x) of paragraph 2
hereof have been consummated, (ii) the date upon which the Properties have been
sold or transferred by the Property Owning Partnerships or the Property Owning
Partnership Interests have been sold or transferred by the Lower Tier
Partnership in accordance with the provisions of the Lower Tier Partnership
Agreement, or (iii) the date upon which the interest of JMB LP in the Upper Tier
Partnership or of the Upper Tier Partnership in the Lower Tier Partnership has
been transferred pursuant to the JMB Put Right under Section 7.7 of the
partnership agreement of the Upper Tier Partnership or the Put Right under
Section 12.2C of the partnership agreement of the Lower Tier Partnership.
20. If any term, covenant, condition or provision of this
Indemnification Agreement or the application thereof to any circumstance or to
the Indemnitors shall be invalid or unenforceable to any extent, the remaining
terms, covenants, conditions and provisions of this Indemnification Agreement
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shall not be affected thereby and shall remain valid and enforceable to the
fullest extent permitted by law.
21. Notwithstanding any provision in this Indemnification
Agreement, no present or future partner, officer, director or shareholder of the
Indemnitors shall have any personal liability under this Indemnification
Agreement, provided, however, that the foregoing shall not limit or impair any
rights of Indemnitee (i) to enforce this Indemnification Agreement against the
Indemnitors and any assets of the Indemnitors, (ii) to seek and enforce other
equitable relief against the Indemnitors or against any such partner, officer,
director or shareholder, or (iii) to initiate proceedings at law or in equity
for the purpose of determining any rights of the Indemnitee hereunder, so long
as, in each such case, the same cannot result in personal liability of any
present or future partner, officer, director or shareholder of Indemnitors.
IN WITNESS WHEREOF, the Indemnitors have duly executed this
Indemnification Agreement the day and year first above set forth.
PROPERTY PARTNERS, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner
By: ________________________
Name:
Title:
CARLYLE-XIII ASSOCIATES, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner
By: ________________________
Name:
Title:
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CARLYLE-XIV ASSOCIATES, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner
By: ________________________
Name:
Title:
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[ACKNOWLEDGEMENTS TO BE ADDED]
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