EXHIBIT 99.9
FORMATION AGREEMENT
THIS FORMATION AGREEMENT (this "Agreement") is made and entered into this
26th day of September, 1996, by and between ANGELES PARTICIPATING MORTGAGE
TRUST, a California business trust, organized under the laws of the State of
California ("APT"), and STARWOOD MEZZANINE INVESTORS, L.P., a Delaware limited
partnership ("Starwood Mezzanine"). Unless otherwise indicated, certain terms
used herein are used as defined in Section 9.4 hereof.
W I T N E S S E T H:
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WHEREAS, APT is a California business trust, having 2,550,000 Class A
Shares, par value $1.00 per share ("Class A Shares"), issued and outstanding,
and having 1,275,000 Class B Shares, par value $0.01 per share ("Class B
Shares"), issued and outstanding, in each case as of the date hereof;
WHEREAS, APT and Starwood Mezzanine desire to, among other things, provide
for the formation, capitalization and operation of a limited partnership (the
"Partnership") under the Delaware Revised Uniform Limited Partnership Act (the
"Delaware RULPA") on the terms and conditions set forth herein;
WHEREAS, the general partner of Starwood Mezzanine and the requisite number
of limited partners have approved the transactions provided for in this
Agreement and the Board of Trustees of APT has approved the transactions
provided for in this Agreement and has directed that the transactions
contemplated by this Agreement be submitted for adoption to the shareholders of
APT; and
WHEREAS, APT and Starwood Mezzanine desire to make certain representations,
warranties and agreements in connection with the transactions contemplated by
this Agreement and also to prescribe various conditions to the consummation of
such transactions.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
FORMATION AND CLOSING
Section 1.1 Formation. Upon the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.2) (a) APT
and Starwood Mezzanine shall form the Partnership by executing and delivering
the Limited Partnership Agreement of the Partnership in substantially the form
attached to this Agreement as Exhibit A (the "Partnership Agreement") and by
executing and filing in the Office of the Secretary of State of the State of
Delaware a certificate of limited partnership of the Partnership, (b) in
exchange for a limited partnership interest in the Partnership representing a
92.24% Partnership Interest (as defined in the Partnership Agreement), subject
to adjustment, Starwood Mezzanine shall contribute to the Partnership the entire
interest of Starwood Mezzanine in the Certificates (as defined in Section 3.5),
valued at approximately $4,757,000 as of January 1, 1996, (c) in exchange for a
general partnership interest in the Partnership representing a 7.76% Partnership
Interest, subject to adjustment, APT shall contribute $400,000, in cash, plus or
minus prorations, if any, to the Partnership, and (d) APT and Starwood Mezzanine
shall take or cause to be taken all other actions contemplated herein to be
taken on the Closing Date.
Section 1.2 Closing Date. Upon the terms and subject to the conditions set
forth in this Agreement, the transactions contemplated by this Agreement shall
be consummated (the "Closing") at 10:00 a.m., local time, on the next business
day after the meetings of the shareholders of APT provided for in Section 4.2,
or such other date as may be agreed upon by APT and Starwood Mezzanine, at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, 1999 Avenue of the Stars, Suite 1400, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place or at such other time as
shall be agreed upon by APT and Starwood Mezzanine (such date and time being
herein called the "Closing Date").
Section 1.3 Closing Date Deliveries. On the Closing Date, APT and Starwood
Mezzanine, as appropriate, shall execute and deliver or cause the Partnership to
execute and deliver the following documents: (a) the Partnership Agreement, (b)
the Exchange Rights Agreement between APT and Starwood Mezzanine in
substantially the form attached to this Agreement as Exhibit B (the "Exchange
Agreement"), (c) the Registration Rights Agreement between APT and Starwood
Mezzanine in substantially the form attached to this Agreement as Exhibit C (the
"Registration Rights Agreement"), (d) the Assignment and Assumption Agreement
between the Partnership and Starwood Mezzanine in substantially the form
attached to this Agreement as Exhibit D, (e) all of the documents, instruments
and opinions required to be delivered pursuant to Articles V and VI hereof, and
(f) all the other documents, instruments and agreements (including instruments
of transfer) reasonably necessary to carry out the terms and provisions of this
Agreement and each of the other documents referred to in this Section 1.3. The
documents described in clauses (a), (b), (c) and (d) above shall hereinafter be
referred to as the Transaction Agreements.
Section 1.4 Closing Adjustments. Interest which has accrued but not yet
been paid on the Certificates prior to or on the Closing Date shall be paid to
Starwood Mezzanine by the Partnership within 1 day of the date such interest is
paid to the Partnership. All interest accruing on the Certificates subsequent to
the Closing Date shall be payable to the Partnership. If the principal amount of
the Certificates has been reduced subsequent to January 1, 1996, Starwood
Mezzanine's Partnership Interest will be reduced accordingly and APT's
Partnership Interest will be increased accordingly.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF APT
As an inducement to Starwood Mezzanine to enter into this Agreement and to
consummate the transactions contemplated hereby, APT represents and warrants to
Starwood Mezzanine and agrees as follows:
Section 2.1 Organization of APT. APT is a real estate investment trust duly
organized and validly existing under the laws of the State of California. APT is
duly qualified to transact business in each of the jurisdictions in which the
ownership or leasing of the properties used in its business or the conduct of
its business requires such qualification, other than in such jurisdictions where
the failure to be so qualified would not have a Material Adverse Effect on APT
or, to the knowledge of APT, after the Closing, on the Partnership. APT has all
requisite trust power and authority to own or lease and operate its properties
and to carry on its business as now conducted.
Section 2.2 No Subsidiaries. APT has no subsidiaries of any kind
whatsoever.
Section 2.3 Capitalization. On the date hereof, (i) 2,550,000 Class A
Shares are validly issued and outstanding and are fully paid and nonassessable,
and (ii) 1,275,000 Class B Shares are validly issued and outstanding and are
fully paid and nonassessable. All shares subject to issuance pursuant to the
Class A Warrant and Class B Warrant, upon issuance on the terms and conditions
specified in the instrument pursuant to which such shares are issuable, shall be
duly authorized, validly issued, fully paid and non-assessable. APT has
delivered to Starwood Mezzanine complete and correct copies of the Class A
Warrant and Class B Warrant. Except for the Warrants, and except as contemplated
by the Transaction Agreements and the Trust Declaration, there are no options,
warrants or other rights to acquire, or agreements or commitments pursuant to
which APT is obligated to issue, sell, purchase or redeem, shares of capital
stock of APT. The Class A Shares are currently publicly traded on the American
Stock Exchange ("AMEX") and will remain so at Closing.
Section 2.4 Authority.
(a) APT has full trust power and authority to enter into this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby to be entered into by APT and, subject to the
approval by the shareholders of APT of the APT Shareholder Matters (as defined
in Section 4.2), to consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by APT of this Agreement,
the Transaction Agreements and the other agreements and instruments contemplated
hereby and thereby and the consummation by APT of the transactions contemplated
hereby and thereby have been duly authorized by all necessary trust action on
the part of APT, subject to the approval by the shareholders of APT of the APT
Shareholder Matters. This Agreement is, and each other agreement or instrument
contemplated hereby (including, without limitation, the Transaction
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Agreements) to be executed by APT, when executed and delivered by APT, will be,
the legal, valid and binding agreement of APT, enforceable against APT in
accordance with their respective terms.
(c) Neither the execution or delivery by APT of this Agreement, the
Transaction Agreements or the other agreements and instruments contemplated
hereby or thereby, nor consummation of the transactions contemplated hereby or
thereby or compliance with or fulfillment of the terms and provisions hereof or
thereof by APT, will (i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights, or result in the creation or imposition of any encumbrance upon any of
the assets of APT, under any organizational document of APT or any other
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which APT is a party or any of its properties is subject or by which it is
bound or any statute, other law or regulatory provision affecting it, (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of APT, or (iii) adversely affect the ability of APT to continue to
qualify to be taxed as a "real estate investment trust", as defined in Section
856 of the Code ("REIT"), for the taxable year ending December 31, 1996, other
than as described in the Proxy Statement (as hereinafter defined), except for
(A) the filing of appropriate documents with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (B) approval by the shareholders of APT of the APT
Shareholder Matters, and (C) such conflicts, breaches, defaults, events,
creations, impositions, approvals, consents, declarations, filings or
authorizations which would not reasonably be expected to either (x) have a
Material Adverse Effect on APT or, in addition, to the knowledge of APT, after
the Closing, on the Partnership or (y) prevent or hinder the consummation of the
transactions contemplated hereby.
Section 2.5 Litigation. To the knowledge of APT, there are no actions,
suits or proceedings or court orders or decrees pending or threatened to which
APT is a party or any of its assets is subject or by which it is bound before or
by any court or governmental agency, which if determined adversely to the
interests of APT, would reasonably be expected to either (a) have a Material
Adverse Effect on APT or, after the Closing, to the knowledge of APT, on the
Partnership or (b) prevent or hinder the consummation of the transactions
contemplated hereby.
Section 2.6 Certain Matters.
(a) As of the date hereof, APT has no assets or properties other than
One Million Seven Hundred Eighty Five Thousand Dollars ($1,785,000) in cash and
cash equivalents or as otherwise disclosed in the SEC documents.
(b) APT will continue to qualify to be taxed as a REIT for the taxable
year ending December 31, 1996; provided that the Closing Date has occurred prior
to September 30, 1996.
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Section 2.7 SEC Documents. APT has previously delivered or made available
to Starwood Mezzanine complete and correct copies of all reports and statements
filed by APT with the SEC since December 31, 1993 (the "SEC Documents"). As of
their respective dates, none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Section 2.8 Shareholder Agreement. APT has delivered to Starwood Mezzanine
a true and complete copy of the Restated Shareholders Agreement, originally made
and entered into as of March 15, 1994, as restated as of April 27, 1994, and as
amended March 15, 1996. Said document is in full force and effect and no
defaults or breaches exist thereunder.
Section 2.9 Financial Information. The financial statements (excluding the
pro form financial data) included in the SEC documents present fairly the
financial condition, results of operation and changes in the financial condition
of APT at the dates and for the periods indicated and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as otherwise indicated therein).
The pro forma financial data included in the Proxy Statement (as defined in
Section 4.1) has been prepared in accordance with all applicable rules and
guidelines of the SEC with respect to pro forma financial data, and the
adjustments used therein are appropriate to give effect to the transaction or
circumstance referred to therein.
Section 2.10 No Finder. Neither APT nor any party acting on the behalf of
APT has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
STARWOOD MEZZANINE
As an inducement to APT to enter into this Agreement and to consummate the
transactions contemplated hereby, Starwood Mezzanine represents and warrants to
APT and agrees as follows:
Section 3.1 Organization of Starwood Mezzanine. Starwood Mezzanine is a
limited partnership duly formed, validly existing and in good standing as a
limited partnership under the Delaware RULPA. Starwood Mezzanine is duly
qualified to transact business and is in good standing in each of the
jurisdictions in which the ownership or leasing of the properties used in its
business or the conduct of its business requires such qualification, other than
in such jurisdictions where the failure to be so qualified and in good standing
would not have a Material Adverse Effect on Starwood Mezzanine or, to the
knowledge of Starwood Mezzanine, after the Closing, on the Partnership. Starwood
Mezzanine has all requisite partnership power and authority to carry on its
business as now conducted.
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Section 3.2 Authority.
(a) Starwood Mezzanine has full partnership power and authority to
enter into this Agreement, the Transaction Agreements and the other agreements
and instruments contemplated hereby and thereby to be entered into by it and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by Starwood Mezzanine of
this Agreement, the Transaction Agreements and the other agreements and
instruments contemplated hereby and thereby and the consummation by Starwood
Mezzanine of the transactions contemplated hereby and thereby have been duly
authorized by all necessary partnership action. This Agreement is, and each
other agreement or instrument contemplated hereby (including, without
limitation, the Transaction Agreements) of Starwood Mezzanine contemplated
hereby (including, without limitation, the Transaction Agreements), to be
executed by Starwood Mezzanine when executed and delivered by Starwood
Mezzanine, will be, the legal, valid and binding agreement of Starwood
Mezzanine, enforceable against Starwood Mezzanine in accordance with its
respective terms.
(c) Neither the execution and delivery by Starwood Mezzanine of this
Agreement, the Transaction Agreements or the other agreements and instruments
contemplated hereby and thereby, nor consummation of the transactions
contemplated hereby or thereby or compliance with or fulfillment of the terms
and provisions hereof or thereof by Starwood Mezzanine will (i) conflict with,
result in a breach of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights, or result in the creation or
imposition of any encumbrance upon the Certificates (as hereinafter defined)
under the agreement of limited partnership of Starwood Mezzanine, any
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which Starwood Mezzanine is a party or the Certificates are subject or bound
or any statute, other law or regulatory provision affecting any of them, or (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of Starwood Mezzanine, except for conflicts, breaches, defaults,
events, creations, impositions, approvals, consents, declarations, filings or
authorizations which would not reasonably be expected to either (x) have a
Material Adverse Effect on Starwood Mezzanine or, to the knowledge of Starwood
Mezzanine, after the Closing, on the Partnership or (y) prevent or hinder the
consummation of the transactions contemplated hereby.
Section 3.3 Investment Representations. Starwood Mezzanine and its
requisite affiliates are "accredited investors" within the meaning of Rule 501
under the Securities Act of 1933, as amended (the "Securities Act"), and were
not organized for the purpose of acquiring limited partnership interests or
Units in the Partnership or Warrants or the Shares issuable upon exercise of the
Warrants of APT. Starwood Mezzanine and its requisite affiliates have sufficient
knowledge and experience in financial and business matters and in investing in
entities similar to the Partnership and APT so as to be able to evaluate the
risks and merits of its investment in the Partnership and APT and it is able
financially to bear the risks thereof. Starwood Mezzanine and its requisite
affiliates have had an opportunity to discuss the business, management and
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financial affairs of APT and the Partnership with the management of APT. The
limited partnership interest in the Partnership, the Units and the Warrants are
being acquired by Starwood Mezzanine and the Warrants were acquired by the
requisite affiliate of Starwood Mezzanine for their own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof. Starwood Mezzanine and its requisite affiliates understand
that (i) the limited partnership interest and the Units in the Partnership and
the Warrants have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act, and (ii) such securities and, upon any issuance of
Class A Shares pursuant to the Exchange Agreement, the Trust Declaration, or the
Class A Warrant, such Class A Shares must be held indefinitely unless such Class
A Shares are registered upon receipt thereof, or unless a subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or is exempt from such registration.
Section 3.4 Litigation. To the knowledge of Starwood Mezzanine, there are
no actions, suits or proceedings or court orders or decrees pending or
threatened to which Starwood Mezzanine is a party or the Certificates are
subject or by which it is bound before or by any court or governmental agency,
which if determined adversely to the interests of Starwood Mezzanine would
reasonably be expected to either (a) have a Material Adverse Effect on Starwood
Mezzanine or the Certificates or, after the Closing, to the knowledge of
Starwood Mezzanine, on the Partnership or (b) prevent or hinder the consummation
of the transactions contemplated hereby.
Section 3.5 The Certificates. Attached hereto as Exhibit E is a true and
complete list of all material documents and instruments (the "Loan Documents")
evidencing and securing pass through participation certificates (the
"Certificates") to be contributed to the Partnership in their entirety. The
Certificates represent one hundred percent (100%) of the beneficial ownership in
a non-recourse first mortgage loan on the Warwick Hotel and Apartments located
in Philadelphia, Pennsylvania. As of January 1, 1996, the outstanding principal
balance on such mortgage loan was $5,203,192.13. The Certificates are free and
clear of all liens, encumbrances, mortgages, pledges, charges or adverse claims
and rights of others whatsoever other than as set forth in the Loan Documents.
Starwood Mezzanine has delivered to APT true and complete copies of the
documents listed on Exhibit E (as such documents were delivered to Starwood
Mezzanine upon its acquisition of the Certificates). Each of the Loan Documents
described on Exhibit E is in full force and effect, unmodified (except as
described therein) and is valid and enforceable against Starwood Mezzanine in
accordance with its respective terms and Starwood Mezzanine has no knowledge of
any default thereunder nor has Starwood Mezzanine any knowledge of an event or
condition that, with the giving of notice or passage of time shall result in a
default thereunder, except to the extent that such default or event or condition
would not have a material adverse effect on the Certificates or the Partnership.
Starwood Mezzanine has not received any notice that the borrower or Key Savings
Bank, as servicer under a certain Loan Document, has any defense, claim, offset
or counterclaim with respect to the Loan Documents. Starwood Mezzanine has not
consented to and Starwood Mezzanine has no knowledge of any subordination, non-
disturbance or attornment agreement with the owner or holder of a junior
mortgage, ground lessor or subground lessor on the real property subject to the
Loan Documents.
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Section 3.6 Proxy Statement. None of the information respecting the
Certificates Starwood Mezzanine or its affiliates supplied or to be supplied by
Starwood Mezzanine, its affiliates or any of its representatives for inclusion
in the Proxy Statement (as defined in Section 4.1) will, at the time of the
mailing of the Proxy Statement to the shareholders of APT and at the time of the
meetings of such shareholders referred to in Section 4.2., contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein relating to the Certificates, Starwood
Mezzanine or its affiliates not misleading.
Section 3.7 Employee Benefit Plans. Starwood Mezzanine is not (a) an
"employee benefit plan" as defined in and subject to the Employment Retirement
Income Security Act of 1974, as amended ("ERISA"), (b) a "plan" as defined in
and subject to Section 4975 of the Code or (c) an entity any portion or all of
the assets of which are deemed pursuant to United States Department of Labor
Regulation (S)2510.3-101 or otherwise pursuant to ERISA to be, for any purpose
of ERISA or Section 4975 of the Code, assets of any "employee benefit plan" or
"plan" described in clause (a) or (b) above which invests in such entity by
virtue of such investment.
Section 3.8 No Finder. Neither Starwood Mezzanine nor any party acting on
its behalf has paid or become obligated to pay any fee or any commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING DATE
APT and Starwood Mezzanine covenant and agree to take the following
respective actions between the date hereof and the Closing Date:
Section 4.1 Proxy Statement. APT has prepared and filed with the SEC a
proxy statement to solicit proxies in connection with the meetings of the
shareholders of APT referred to in Section 4.2 (the form of definitive such
proxy statement, together with any amendments thereof or supplements thereto,
mailed to the shareholders of APT in connection with such meetings is herein
referred to as the "Proxy Statement"). A true and complete copy of the Proxy
Statement (and all exhibits thereto) filed with the SEC has been delivered to
Starwood Mezzanine. APT will cause the Proxy Statement to comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the respective rules and regulations thereunder and will cause the Proxy
Statement, at the time of its mailing or delivery to the shareholders of APT and
at the time of the meeting referred to above, to not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by APT in reliance upon and in conformity with information concerning
Starwood Mezzanine, its affiliates and the Certificates furnished to APT by
Starwood Mezzanine, its affiliates or its representatives for inclusion in the
Proxy Statement. Starwood Mezzanine shall, and shall cause its representatives
to, furnish APT all information concerning itself, its affiliates and the
Certificates reasonably required for use in the Proxy Statement. If,
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at any time prior to the Closing Date, any event should occur which is required
to be described in an amendment of, or a supplement to, the Proxy Statement, APT
will cause such event to be so described, and such amendment shall be promptly
filed with the SEC and, as required by law, disseminated to any shareholders of
APT. Starwood Mezzanine and its affiliates will cooperate fully in connection
with such amendment or supplement, including supplying any and all information
with respect to Starwood Mezzanine, its affiliates and the Certificates which is
necessary to prepare any such amendment or supplement. The Proxy Statement
includes many proposals for shareholder approval in addition to the transaction
contemplated hereby. Subject to the last sentence of Section 4.2, APT shall not
amend or delete any of proposals relating to the transactions contemplated
hereby without Starwood Mezzanine's approval; it being understood that
shareholder approval of all such proposals (without any amendments thereto
objectionable to Starwood Mezzanine; notwithstanding the last sentence of
Section 4.2) shall be a condition to Starwood Mezzanine's obligation to close
the transactions contemplated hereby.
Section 4.2 Action by APT and Shareholders of APT. APT shall, as soon as
practicable after the Proxy Statement shall be cleared by the SEC, duly call,
give notice of, convene and hold a meeting of the shareholders of APT for the
purposes set forth in the Proxy Statement (collectively, the "APT Shareholders
Matters"). Subject to the fiduciary duties of the Board of Trustees of APT under
applicable law and to the last sentence of this Section 4.2, the Board of
Trustees of APT will recommend to its shareholders approval of the APT
Shareholder Matters. The Board of Trustees of APT may at any time prior to the
Closing Date withdraw, modify or change any recommendation regarding the APT
Shareholder Matters, this Agreement or the transactions contemplated hereby or
recommend and declare advisable any other offer, proposal or transaction if in
any such case it determines upon advice of legal counsel that the failure to so
withdraw, modify or change such recommendation could reasonably be expected to
involve it in a breach of fiduciary duties under applicable law.
Section 4.3 Lawsuits, Proceedings, Etc. Each party hereto shall notify the
other party hereto promptly upon becoming aware of any lawsuit, proceeding,
claim or investigation that may be threatened, brought, asserted or commenced
against it (a) involving in any way the transactions contemplated by this
Agreement or (b) that would have been listed or specified as an exception to
Sections 2.5 or 3.4, as the case may be, if such lawsuit, proceeding, claim or
investigation had arisen prior to the date hereof.
Section 4.4 Conduct of Business by APT and Starwood Mezzanine
Pending the Closing.
(a) During the period from the date of this Agreement through the
Closing Date, except as expressly contemplated by this Agreement, (i) APT shall
carry on its business in accordance with the ordinary course and shall not enter
into any material transaction with respect thereto, and (ii) Starwood Mezzanine
shall carry on its business with respect to the Certificates in, and not enter
into any material transaction with respect to the Certificates other than in
accordance with, the ordinary course (except, with respect to APT, with the
prior written consent of Starwood Mezzanine, and except, with respect to the
Starwood Mezzanine, with the prior written consent of APT).
(b) Without limiting the generality of the foregoing, and except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement through the
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Closing Date, APT shall not, without the prior written consent of Starwood
Mezzanine (not to be unreasonably withheld):
(i) take any action that would cause it to fail to be taxed as a
REIT, for its taxable year ending December 31, 1996, or omit to take any
action necessary to cause APT to be taxed as a REIT for such taxable year;
(ii) acquire any real estate or other assets (other than receipt
of cash or investments of cash in cash equivalents);
(iii) issue or enter into any executory agreement to issue any
new debt securities;
(iv) issue or enter into any executory agreement to issue any new
equity securities other than common shares issued in replacement of lost,
stolen or transferred outstanding shares or as described in the Proxy
Statement; or
(v) declare and pay any dividends or make other distributions to
holders of shares other than as are necessary to preserve the REIT status
of the Trust or repay indebtedness.
Notwithstanding the foregoing, APT may take any action pursuant to clause
(b)(ii) above in order to preserve its status as a REIT if the Closing Date has
not occurred by September 30, 1996.
(c) Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement, during the period from the
date of this Agreement through the Closing Date, Starwood Mezzanine shall not,
without the prior written consent of APT (not to be unreasonably withheld):
(i) voluntarily sell, transfer or dispose of any portion of the
Certificates or Loan Documents;
(ii) take any action which would cause a default or an event of
default under the Certificates or Loan Documents; or
(iii) voluntarily encumber any of the Certificates or Loan
Documents.
Section 4.5 Mutual Cooperation; Best Efforts. Subject to the fiduciary
duties of the Board of Trustees of APT under applicable law, and the fiduciary
duties of general partners of Starwood Mezzanine under applicable law, the
parties hereto shall cooperate with each other, and shall use their respective
best efforts to cause the fulfillment of the conditions to the parties'
obligations hereunder and to obtain as promptly as possible all consents,
authorizations, orders or approvals from each and every third party, whether
private or governmental, required in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing shall not
require Starwood Mezzanine, any partner thereof, APT or the Partnership
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to make any divestiture or consent to any divestiture in order to obtain any
waiver, consent or approval.
Section 4.6 No Public Announcement. Neither party hereto shall, without
the approval of the other party hereto (which may not be unreasonably withheld),
make any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law, in which case the other party hereto shall be
advised and the parties hereto shall use their reasonable best efforts to cause
a mutually agreeable release or announcement to be issued.
Section 4.7 No Solicitation. From and after the date hereof, except as
otherwise permitted by this Agreement, APT will not, and will instruct its
officers and trustees not to, solicit or otherwise engage in any discussions or
negotiations with any person other than Starwood Mezzanine or any other entity
controlled by Starwood Capital Group, L.P. or its principals (a "Starwood
Controlled Party") relating to any Proposal (as hereinafter defined); provided,
however, that APT or its officers and trustees may engage in discussions or
negotiations with any person (provided that APT did not solicit such discussions
or negotiations on or after July 1, 1995) if the Board of Trustees of APT
determines in good faith upon advice of legal counsel that a failure to engage
in such discussions or negotiations could reasonably be expected to involve the
Board of Trustees of APT in a breach of fiduciary duties under applicable law;
and provided further, that nothing herein shall prevent the Board of Trustees of
APT from taking, and disclosing to the shareholders of APT, a position in
respect of a Proposal as contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act. In the event that APT reaches an agreement with respect to a
Proposal with any person other than Starwood Mezzanine or a Starwood Controlled
Party, and such agreement is not consistent with the obligations of APT set
forth in this Agreement or with the transactions contemplated by this Agreement,
then, prior to entering into such agreement, APT will deliver the notice
provided in Section 8.1(g) and pay the expenses provided in Section 9.2. For
purposes of this Agreement, "Proposal" shall mean the following actions, as each
is presently contemplated in the Proxy Statement: (i) a recapitalization or
restructuring of APT, (ii) the creation of any UPREIT or DOWN REIT partnership
or other entity, (iii) a sale, disposition or refinancing of all or portions of
APT's assets, (iv) the issuance of any additional debt or equity securities of
APT or the Partnership, (v) the transfer in one transaction or a series of
related transactions of more than ten percent (10%) of the existing debt or
equity securities of APT, or (vi) the appointment to the Board of Trustees of
APT of trustees designated by a single person and its affiliates, other than as
designated by Starwood Mezzanine or a Starwood Controlled Party; provided,
however, that any transaction consented to by Starwood Mezzanine shall not be a
Proposal.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF APT
The obligations of APT under this Agreement to consummate the transactions
contemplated hereby to be consummated at the Closing shall, at the option of
APT, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
11
Section 5.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Starwood Mezzanine in the
performance of its covenants and agreements herein to be performed at or prior
to the Closing Date; on the Closing Date, each of the representations and
warranties of Starwood Mezzanine that is qualified as to materiality shall be
true and correct as though made on the Closing Date; on the Closing Date, each
of the representations and warranties of Starwood Mezzanine that is not so
qualified as to materiality shall be true and correct in all material respects
as though made on the Closing Date; and there shall have been delivered to APT a
certificate or certificates to the foregoing effect, dated the Closing Date,
signed on behalf of Starwood Mezzanine.
Section 5.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on the
Certificates and the Loan Documents (taken as a whole); and there shall have
been delivered to APT a certificate or certificates to such effect, dated the
Closing Date, signed on behalf of Starwood Mezzanine.
Section 5.3 Opinion of Counsel for Starwood. APT shall have received from
▇▇▇▇▇▇▇ & Associates, counsel for Starwood Mezzanine, an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to APT.
Section 5.4 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of APT and Starwood Mezzanine, however, that it shall use
its best efforts to prevent the entry of any such injunction or other order and
to appeal as promptly as possible any injunction or other order that may be
entered.
Section 5.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on APT,
Starwood Mezzanine, or, in addition, after the Closing, on the Partnership.
Section 5.6 Transaction Agreements. Each of the parties (other than APT)
to each of the Transaction Agreements and any other documents contemplated
hereby and thereby shall have entered into such Transaction Agreements and any
other documents contemplated hereby and thereby substantially in the forms
attached hereto as exhibits or, if not so attached, as agreed to by the parties.
Section 5.7 Shareholder and Stockholder Action. The Shareholders of APT
shall have approved by the requisite vote of the holders of Class A Shares and
Class B Shares, the Warrant Proposal (as defined in the Proxy Statement), the
Partnership Proposal (as defined in the Proxy Statement) and the Trust
Amendments Proposals (as defined in the Proxy Statement) and the nominees named
in the Proxy Statement shall have been elected to the APT Board of Trustees.
12
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF STARWOOD MEZZANINE
The obligations of Starwood Mezzanine under this Agreement to consummate
the transactions contemplated hereby to be consummated at the Closing shall, at
the option of Starwood, be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
Section 6.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by APT in the performance of its
covenants and agreements herein to be performed at or prior to the Closing Date;
on the Closing Date, each of the representations and warranties of APT that is
qualified as to materiality shall be true and correct as though made on the
Closing Date, on the Closing Date, each of the representations and warranties of
APT that is not so qualified as to materiality shall be true and correct in all
material respects as though made on the Closing Date; and there shall have been
delivered to Starwood Mezzanine a certificate or certificates to the foregoing
effect, dated the Closing Date, signed on behalf of APT. Without limitation of
the foregoing, the Class A Shares shall continue to be listed and publicly
traded on the AMEX.
Section 6.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on APT; and there
shall have been delivered to Starwood Mezzanine a certificate to that effect,
dated the Closing Date, signed on behalf of APT.
Section 6.3 Opinion of Counsel for APT. Starwood Mezzanine shall have
received from ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis, counsel for APT, an opinion dated the
Closing Date, in form and substance reasonably satisfactory to Starwood
Mezzanine.
Section 6.4 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of APT and Starwood, however, that it shall use its best
efforts to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any injunction or other order that may be entered.
Section 6.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect an APT,
Starwood Mezzanine or, in addition, after the Closing, on the Partnership.
Section 6.6 Transaction Agreements. Each of the parties (other than
Starwood Mezzanine) to each of the Transaction Agreements and any other
documents contemplated hereby and thereby shall have entered into such
Transaction Agreements and any other
13
documents contemplated hereby and thereby substantially in the forms attached
hereto as exhibits or, if not so attached, as agreed to by the parties.
Section 6.7 Shareholder and Stockholder Action. The Shareholders of APT
shall have approved by the requisite vote of the holders of Class A Shares and
Class B Shares, the Warrant Proposal (as defined in the Proxy Statement), the
Partnership Proposal (as defined in the Proxy Statement) and the Trust
Amendments Proposals (as defined in the Proxy Statement) and the nominees named
in the Proxy Statement shall have been elected to the APT Board of Trustees.
ARTICLE VII
INDEMNIFICATION; SURVIVAL
Section 7.1 Indemnification by APT. APT shall indemnify and hold harmless
Starwood Mezzanine, the Partnership and their respective subsidiaries,
affiliates, employees, agents, partners and successors from and against any and
all (x) liabilities, losses or damages ("Loss") and (y) reasonable out-of-pocket
expenses ("Expense") incurred by Starwood Mezzanine, the Partnership or their
respective subsidiaries, affiliates, employees, agents, partners and successors
in connection with or arising from (a) any breach or failure to perform by APT
of any of its agreements, covenants or obligations in this Agreement or any
Transaction Agreement or (b) any breach of any warranty or the inaccuracy of any
representation, or misrepresentation or material omission, of APT contained in
this Agreement, any Transaction Agreement, the Proxy Statement or in any
certificate delivered by or on behalf of APT pursuant hereto or thereto;
provided however, that the obligation of APT to indemnify and hold harmless
pursuant to this Section 7.1 shall be limited to the payment by APT in the
aggregate of an amount equal to Five Hundred Thousand Dollars ($500,000).
Section 7.2 Indemnification by Starwood Mezzanine. Starwood Mezzanine
shall indemnify and hold harmless APT and the Partnership and their respective
subsidiaries, affiliates, employees, agents, trustees, partners and successors
from and against any and all Loss and Expense incurred by APT or the Partnership
or their respective subsidiaries, affiliates, employees, agents, trustees,
partners and successors in connection with or arising from (a) any breach or
failure to perform by Starwood Mezzanine of any of its agreements, covenants or
obligations in this Agreement or any Transaction Agreement or (b) any breach of
any warranty or the inaccuracy of any representation, or misrepresentation or
material omission, of Starwood Mezzanine or its affiliates contained in this
Agreement, any Transaction Agreement, the Proxy Statement or in any certificate
delivered by or on behalf of Starwood Mezzanine or its affiliates pursuant
hereto or thereto; provided, however, that the obligation of Starwood Mezzanine
to indemnify and hold harmless pursuant to this Section 7.2 shall be limited to
the payment by Starwood Mezzanine in the aggregate of an amount equal to Five
Hundred Thousand Dollars ($500,000).
Section 7.3 Notice of Claims. If a party believes that any of the persons
entitled to indemnification under this Article VII has suffered or incurred any
Loss or incurred any Expense, whether or not the applicable dollar limitation
specified by Sections 7.1 or 7.2 has been exceeded, such party shall notify the
indemnifying party promptly in writing describing
14
such Loss or Expense, the amount thereof, if known, and the method of
computation of such Loss or Expense, all with reasonable particularity and
containing a reference to the provisions of this Agreement, any Transaction
Agreement, the Proxy Statement or any certificate delivered pursuant hereto in
respect of which such Loss or Expense shall have occurred; provided, however,
that the omission by such indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its indemnification obligation under
this Article VII except to the extent that such indemnifying party is materially
damaged as a result of such failure to give notice. If any action at law or
suit in equity is instituted by or against a third party with respect to which
any of the persons entitled to indemnification under this Article VII intends to
claim any liability or expense as Loss or Expense under this Article VII, any
such person shall promptly notify the indemnifying party of such action or suit
as specified in this Section 7.3 and Section 7.4. Any party entitled to
indemnification hereunder shall use reasonable efforts to minimize any Loss or
Expense for which indemnification is sought hereunder.
Section 7.4 Third Party Claims. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceeding by a third party, the indemnified persons shall give such
notice thereof to the indemnifying party not later than twenty (20) business
days prior to the time any response to the asserted claim is required, if
possible, and in any event within fifteen (15) days following the date such
indemnified person has actual knowledge thereof; provided, however, that the
omission by such indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its indemnification obligation under this
Article VII except to the extent that such indemnifying party is materially
damaged as a result of such failure to give notice. In the event of any such
claim for indemnification resulting from or in connection with a claim or legal
proceeding by a third party, the indemnifying party may, at its sole cost and
expense, assume the defense thereof; provided, however, that counsel for the
indemnifying party, who shall conduct the defense of such claim or legal
proceeding, shall be reasonably satisfactory to the indemnified party; and
provided, further, that if the defendants in any such actions include both the
indemnified persons and the indemnifying party and the indemnified persons shall
have reasonably concluded based on a written opinion of counsel that there may
be legal defenses or rights available to them which have not been waived and are
in actual or potential conflict with those available to the indemnifying party,
the indemnified persons shall have the right to select one law firm reasonably
acceptable to the indemnifying party to act as separate counsel, on behalf of
such indemnified persons, at the expense of the indemnifying party. Unless the
indemnified persons are represented by separate counsel pursuant to the second
proviso of the immediately preceding sentence, if an indemnifying party assumes
the defense of any such claim or legal proceeding, such indemnifying party shall
not consent to entry of any judgment, or enter into any settlement, that (a) is
not subject to indemnification in accordance with the provisions in this Article
VII, (b) provides for injunctive or other nonmonetary relief affecting the
indemnified persons or (c) does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such indemnified persons of a release
from all liability with respect to such claim or legal proceeding, without the
prior written consent of the indemnified persons (which consent, in the case of
clauses (b) and (c), shall not be unreasonably withheld); and provided, further,
that, unless the indemnified persons are represented by separate counsel
pursuant to the second proviso of the immediately preceding sentence, the
indemnified persons may, at their own expense, participate in any such
proceeding with the counsel of their choice without any right of control
thereof. So long as the indemnifying party is in good faith defending such
claim or proceeding, the
15
indemnified persons shall not compromise or settle such claim or proceeding
without the prior written consent of the indemnifying party, which consent shall
not be unreasonably withheld. If the indemnifying party does not assume the
defense of any such claim or litigation in accordance with the terms hereof, the
indemnified persons may defend against such claim or litigation in such manner
as they may deem appropriate, including, without limitation, settling such claim
or litigation (after giving prior written notice of the same to the indemnifying
party and obtaining the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld) on such terms as the indemnified
persons may deem appropriate, and the indemnifying party will promptly indemnify
the indemnified persons in accordance with the provisions of this Section 7.4.
Section 7.5 Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive until
the first (1st) anniversary of the Closing Date (except for the representation
of APT pursuant to Section 2.6(b), which shall survive until the second (2nd)
anniversary of the Closing Date), at which time such representations and
warranties will terminate and be of no force and effect. Any claim under this
Article VII for Loss or Expense in respect of any representations and warranties
must be asserted in writing prior to the first (1st) anniversary of the Closing
Date, except for such a claim in respect of the representation of APT pursuant
to Section 2.6(b), which must be asserted in writing prior to the second
anniversary of the Closing Date. Notwithstanding the foregoing, if a claim of a
breach of a representation or warranty under this Article VII is asserted in
writing prior to the applicable time period set forth above in this Section 7.5,
then such representation or warranty, as it relates to such claim, shall survive
until the Loss or Expense in respect thereof, if any, is finally determined and
paid by the indemnifying party.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of APT and Starwood Mezzanine;
(b) by APT upon any material breach by Starwood Mezzanine of any of
its representations, warranties or covenants contained in this Agreement that is
not qualified to materiality and upon any breach by Starwood Mezzanine of any of
its representations, warranties or covenants contained in this Agreement that is
qualified as to materiality; provided that Starwood Mezzanine shall have been
given a reasonable opportunity to cure such breach;
(c) by Starwood Mezzanine upon any material breach by APT of any of
its representations, warranties or covenants contained in this Agreement that is
not qualified as to materiality and upon any breach by APT of any of its
representations, warranties or covenants contained in this Agreement that is
qualified as to its materiality; provided that APT shall have been given a
reasonable opportunity to cure such breach;
16
(d) by APT if any of the conditions specified in Article V has not
been met or waived at such time as it is no longer possible to satisfy such
condition;
(e) by Starwood Mezzanine if any of the conditions specified in
Article VI has not been met or waived at such time as it is no longer possible
to satisfy such condition;
(f) by APT or Starwood Mezzanine if the Closing shall not have been
consummated on or before September 30, 1996; or
(g) by APT or Starwood Mezzanine, upon fifteen (15) days' prior
written notice, by APT to Starwood Mezzanine or by Starwood Mezzanine to APT, in
the event that, as set forth in Section 4.7, APT enters into an agreement with
any person other than Starwood Mezzanine or a Starwood Controlled Party which is
not consistent with the obligations of APT set forth in this Agreement or with
the consummation of the transactions contemplated by this Agreement (such notice
to include an explanation of such inconsistencies); provided that in entering
into such agreement APT materially complied with the provisions of Section 4.7.
For purposes hereof, an agreement with a party other than Starwood Mezzanine or
a Starwood Controlled Entity shall be deemed to be inconsistent with the
obligations of APT set forth in this Agreement in the event that such agreement
would impose any exclusivity or non-competition agreements on the Trust or
Partnership or would require a commitment of Trust or Partnership capital in
excess of $100,000 in the aggregate.
In the event that this Agreement shall be terminated pursuant to this Section
8.1, all further obligations of the parties under this Agreement (other than the
provisions of Article VII and Sections 9.1, 9.2, 9.10, 9.12 and 9.15) shall
terminate without further liability of any party to the others; provided,
however, that nothing herein shall relieve any party from liability for its
nonperformance or breach of any provision of this Agreement if performance of or
compliance with such provision was within its reasonable control.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 Confidential Nature of Information. Each party agrees that it
will treat in strict confidence all documents, materials and other information
which it obtains regarding the other party during the course of the negotiations
leading to the consummation of the transactions provided for herein and the
preparation of this Agreement; and if for any reason whatsoever the transactions
contemplated by this Agreement shall not be consummated, each party shall return
to the other party all copies of non-public documents and materials which have
been furnished or acquired in connection therewith and shall not use or
disseminate such documents, materials or other information for any purpose
whatsoever.
Section 9.2 Expenses.
(a) Except as otherwise provided in this Section 9.2, each of the
parties hereto shall bear its own costs and expenses (including, without
limitation, fees and disbursements of
17
its counsel, accountants and other financial, legal, accounting or other
advisors) incurred by it in connection with the preparation, negotiation,
execution and delivery of this Agreement, each of the other documents and
instruments executed in connection with or contemplated by this Agreement,
including the Proxy Statement, and the consummation of the transactions
contemplated hereby and thereby (collectively "Acquisition Expenses").
(b) In the event of a Qualifying Termination (as defined below), then
within ten (10) business days after receipt by APT from Starwood Mezzanine of
reasonable documentation therefor, APT shall reimburse Starwood Mezzanine for
its reasonable out-of-pocket Acquisition Expenses.
For purposes of this Section 9.2(b), a "Qualifying Termination" shall mean
a termination of this Agreement pursuant to Section 8.1(g).
Section 9.3 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight mail, or four (4) days after being mailed (by
registered mail, return receipt requested) to a party at the following address
(or to such other address as such party may have specified by notice given to
the other parties pursuant to this provision):
If to APT to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
1999 Avenue of the Stars
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Starwood Mezzanine to:
c/o Starwood Capital Group, L.P.
Three ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Madison ▇. ▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
18
with a copy to:
▇▇▇▇▇▇▇ & Associates
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.4 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) an "associate" of any person means (i) a corporation or
organization of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of a class of
equity securities, any trust or other estate in which such person has
substantial beneficial interest or as to which such person serves as trustee or
in the similar capacity and (iii) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is a
director or officer of the person or any of its parents or subsidiaries.
(c) "Class A Warrant" means the warrant issued to SAHI Partners, a
Delaware general partnership, on March 15, 1994 and subsequently assigned to
Starwood Mezzanine for the purchase of up to 5,000,000 Class A Shares, subject
to adjustment.
(d) "Class B Warrant" means the warrant issued to SAHI Inc., a
Delaware general partnership, on March 15, 1994 for the purchase of up to
2,500,000 Class B Shares, subject to adjustment.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Material Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen, would result in any
change or effect) that is materially adverse to the business, properties,
assets, condition (financial or otherwise) or results of operations of the
applicable person or persons.
(g) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
entity.
(h) "REIT Requirements" shall mean the requirements for APT to (i)
qualify as a REIT and (ii) avoid any federal income or excise tax liability.
(i) "Trust Declaration" means the Declaration of Trust of APT, as
proposed to be amended in the Proxy Statement.
19
(j) "Warrants" means the Class A Warrant and the Class B Warrant.
Section 9.5 Partial Invalidity. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
Section 9.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors or assigns.
Section 9.7 Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when APT and Starwood
Mezzanine shall have each executed one counterpart.
Section 9.8 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 9.9 Schedules and Exhibits. The schedules and exhibits referred
to in this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Section 9.10 Entire Agreement; Amendments and Waivers; Assignment. This
Agreement (together with the Transaction Agreements) contains the entire
understanding of the parties hereto with regard to the subject matter contained
herein. The parties hereto, by mutual agreement in writing, may amend, modify
and supplement this Agreement. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of such party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach. Except as expressly
provided herein, the rights and obligations of the parties under this Agreement
may not be assigned or transferred by any party hereto without the prior written
consent of the other parties hereto.
Section 9.11 Governing Law. This Agreement, and the application or
interpretation thereof, shall be exclusively governed by its terms and by the
internal laws of the State of California, without regard to principles of
conflicts of laws as applied in the State of California or any other
jurisdiction which, if applied, would result in the application of any laws
other than the internal laws of the State of California.
Section 9.12 No Third-Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
person other than the parties hereto
20
and successors and assigns permitted by Section 9.6 any right, remedy or claim
under or by reason of this Agreement.
Section 9.13 The Trust; Starwood General Partners. Each of the parties
hereto acknowledge and agree that (a) the name "Angeles Participating Mortgage
Trust" is a designation of APT and its Trustees (as Trustees but not personally)
under a Declaration of Trust, originally made and entered into as of April 15,
1988, as restated as of July 18, 1988, and all persons dealing with APT shall
look solely to the APT's assets for the enforcement of any claims against APT,
and the Trustees, officers, agents and security holders of APT assume no
personal liability for obligations entered into on behalf of APT, and their
respective individual assets shall not be subject to the claims of any person
relating to such obligations and (b) all persons dealing with Starwood Mezzanine
shall look solely to the assets of Starwood Mezzanine for the enforcement of any
claims against Starwood Mezzanine and the general partners of Starwood
Mezzanine, and the officers, agents and security holders of such general partner
assume no personal liability for obligations entered into on behalf of Starwood
Mezzanine, and their respective individual assets shall not be subject to the
claims of any person relating to such obligations.
Section 9.14 Determinations and Interpretations by APT. All
determinations of the Trust (or the Board of Trustees of the Trust) provided for
in or pursuant to this Agreement shall be made by the Independent Trustees (as
defined in the Exchange Agreement). All interpretations of the terms of this
Agreement shall be resolved on behalf of the Trust by the Independent Trustees
(as defined in the Exchange Agreement).
Section 9.15 Submission to Jurisdiction. Each of the parties hereto
irrevocably submits and consents to the jurisdiction of the United States
District Court for the Central District of California in connection with any
action or proceeding arising out of or relating to this Agreement or any
Transaction Document and the transactions contemplated hereby and thereby, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
21
Section 9.16 Approvals and Consents. Unless otherwise expressly set forth
herein, any agreement, approval or consent required a party hereto shall not be
unreasonably withheld or delayed.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or by their duly authorized officers, all as of the date
first above written.
ANGELES PARTICIPATING MORTGAGE TRUST,
a California business trust
By: ____________________________________
STARWOOD MEZZANINE INVESTORS,
L.P.
By: Starwood Capital Group,
L.P.
By: BSS Capital Partners,
L.P.
By: Sternlicht Holdings
II, Inc.
By: ________________
Its: ________________
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