Exhibit 10.13
October 5, 2007
CONFIDENTIAL PORTIONS MARKED [*******] HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Archstone-Smith Operating Trust and its affiliates
identified on the signature pages hereto
Ladies and Gentlemen:
     This side letter is written in connection with (i) the Credit Agreement,
dated the date hereof (as amended, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among Archstone-Smith Operating Trust, a
Maryland real estate investment trust (the “Borrower”), the lenders party
thereto (the lenders party thereto, the “Senior Lenders”), Lehman Commercial
Paper Inc., as administrative agent, and other parties party thereto, (ii) the
Mezzanine A Loan Agreement, dated the date hereof (the “Mezzanine A Loan
Agreement”), between the entities identified in Schedule I hereto (the
“Mezzanine A Borrowers”) and Lehman Brothers Holdings Inc. (“LBHI”), Bank of
America, N.A. (“BofA”), and Barclays Capital Real Estate Finance Inc.
(“Barclays” and, together with LBHI and BofA, the “Mezzanine A Lenders”),
(iii) the Mezzanine B Loan Agreement, dated the date hereof (the “Mezzanine B
Loan Agreement” and, together with the Mezzanine A Loan Agreement, the
“Mezzanine Loan Agreements”), between, the entities identified in Schedule II
hereto (the “Mezzanine B Borrowers” and, together with the Mezzanine A
Borrowers, the “Mezzanine Borrowers”) and LBHI, BofA and Barclays (collectively,
the “Mezzanine B Lenders” and, together with the Mezzanine A Lenders, the
“Mezzanine Lenders”), (iv) the Credit Agreement, dated the date hereof (as
amended, supplemented or otherwise modified from time to time, the “Development
Loan Agreement”), among Tishman Speyer Archstone-Smith Multifamily Holdings I
(Development Borrower), L.P., a Delaware limited partnership (the “Development
Borrower”), the lenders party thereto (the lenders party thereto, the
“Development Lenders”), Lehman Commercial Paper Inc., as administrative agent,
and other parties party thereto (the “Development Loan Agreement”) and (iv) the
Loan Agreement, dated the date hereof (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Ground Lease Loan
Agreement” and, together with the Credit Agreement, the Mezzanine Loan
Agreements and the Development Loan Agreement, the “Loan Agreements”), between
Tishman Speyer Archstone-Smith One Superior Place, L.L.C. (“One Superior”),
Tishman Speyer Archstone-Smith Marina Terrace, L.L.C. (“Marina Terrace”) and
Tishman Speyer Archstone-Smith Fairfax, L.L.C. (“Fairfax” and, together with One
Superior and Marina Trace, the “Ground Lease Borrower”), the lenders party
thereto (the lenders party thereto, the “Ground Lease Lenders”), Lehman Brothers
Holdings Inc., d/b/a Lehman Capital, a division of Lehman Brothers Holdings,
Bank of America, N.A., and Barclays Capital Real Estate Inc. Senior Lenders,
Development Lenders, Mezzanine Lenders and Ground Lease Lenders are referred to
herein collectively as the “Lenders”. Each capitalized term used and not
otherwise defined herein shall have the meaning given to such term in the
applicable Credit Agreement. The documents evidencing, securing or pertaining to
each of the related Loans are referred to herein collectively as the “Loan
Documents”.

 

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     In connection with, and in consideration of the agreements contained in the
Loan Agreements, each of the Borrower, the Development Borrower, the Ground
Lease Borrower and the Mezzanine Borrower (collectively, the “Borrowers”),
hereby agrees that each of the Senior Lenders, the Mezzanine Lenders, the Ground
Lease Lenders and the Development Lenders shall have the right to change, and
the Borrowers hereby agree to reasonably cooperate in amending the Loan
Documents to change, the pricing, fees, terms and structure of the Tranche A
Term Loans, the Tranche B Term Loans, the Revolving Credit Facility, the
“Mezzanine Loans” (as defined in Exhibit A), the term loans made pursuant to the
Development Loan Agreement (the “Development Loans”), and the loan made pursuant
to the Ground Lease Financing Agreement (the “Ground Lease Loan”), as
applicable, on the terms and subject to the conditions described below.
     1. Tranche A Term Loans. Tranche A Term Loan Lenders party to the Credit
Agreement shall have the right to require the Borrower to amend the pricing
(including the spread or margin) or fees with respect to such Tranche A Term
Loans (but not including structural changes that increase the obligations or
liabilities of the Borrower (other than ministerial and other changes which do
not affect the Borrower in more than a de minimis manner), except as allowed by
Paragraph 8 below), and Borrower shall cooperate with such Tranche A Term Loan
Lenders in all reasonable respects in amending the pricing (including the spread
or margin) or fees with respect to such Loans, such that such Tranche A Term
Loan Lenders are able to achieve a Successful Syndication of the Tranche A Term
Loans, *************************************************************************
******************************************************************************************************
******************************************************************************************************
******************************************************************************************************
******************************************************************************************************
******************************************************************************************************
*************************************************************************************
Any discount realized by such Tranche A Term Loan Lenders from any sale,
assignment or transfer of the Tranche A Term Loans to any person (other than to
an affiliate of such Tranche A Term Loan Lender except for any sale, assignment
or transfer to affiliates on the same terms, at the same price and in similar
aggregate amounts as such Loans have been sold in comparable third-party
transactions) by the relevant Borrower and shall be paid from sources of funds
described in Paragraph 9. **************************************
*********************************************************************************************************
*************************************************** For the avoidance of doubt,
any increase in the interest for the Tranche A Term Loans shall be applied to
all outstanding Tranche A Term Loans.
     2. Tranche B Term Loans. ********************* Tranche B Term Loan Lenders
party to the Credit Agreement shall have the right to require Borrower to amend
the pricing (including the spread or margin) or fees with respect to the Tranche
B Term Loans (but not including structural changes that increase the obligations
or liabilities of the Borrower (other than ministerial and other changes which
do not affect the Borrower in more than a de minimis manner), except as allowed
by Paragraph 8 below), and Borrower shall cooperate with such Tranche B Term
Loan Lenders in all reasonable respects in amending the pricing (including the
spread or margin) or fees with respect to such Loans, such that such Tranche B
Term Loan Lenders are able to achieve a Successful Syndication of the Tranche B
Term Loans. ***

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******* * **** **** ******* ***** ** ** ****** ********* ***** **** **** ***
***** ** **** *** ******* ********* ** *** ********* ******** ***** ** ***** ***
**** **** *** ******* ** ********* ** *** **** *********** Any discount realized
by such Tranche B Term Loan Lenders from any sale, assignment or transfer of any
Tranche B Loan to any person (other than to an affiliate of such Tranche B Term
Loan Lender except for any sale, assignment or transfer to affiliates on the
same terms, at the same price and in similar aggregate amounts as such Loans
have been sold in comparable third-party transactions) by the applicable
Borrower and shall be paid from sources of funds described in Paragraph 9. For
the avoidance of doubt, any increase in the interest for any portion of the
Tranche B Term Loans shall be applied to all outstanding Tranche B Term Loans.
     3. Development Loans. ***** ***** *** ***** Development Lenders shall have
the right to require Borrower to amend the pricing (including the spread or
margin) or fees with respect to the Development Loans (but not including
structural changes that increase the obligations or liabilities of the Borrower
(other than ministerial and other changes which do not affect the Borrower in
more than a de minimis manner), except as allowed by Paragraph 8 below), and
Borrower shall cooperate with Development Lenders in all reasonable respects in
amending the pricing (including the spread or margin) or fees with respect to
such Loans, such that Development Lenders are able to achieve a Successful
Syndication of the Development Loans. *** *********** ******* ***** **** ****
*** ***** ** ** **** *** ******* ******* ** *** ********* ******** ***** **
***** *** **** **** *** ******* ** ********* ** *** **** *********** Any
discount realized by Development Lenders from any sale, assignment or transfer
of any Development Loan to any person (other than to an affiliate of such
Development Lender except for any sale, assignment or transfer to affiliates on
the same terms, at the same price and in similar aggregate amounts as such Loans
have been sold in comparable third-party transactions) by the applicable
Borrower and shall be paid from sources of funds described in Paragraph 9. For
the avoidance of doubt, any increase in the interest for any portion of the
Development Loans shall be applied to all outstanding Development Loans.
     4. Revolving Credit Commitments. ***** ***** *** ***** Revolving Credit
Lenders party to the Credit Agreement shall have the right to require Borrower
to amend the pricing (including the spread or margin) or fees with respect to
the Revolving Credit Facility (but not including structural changes that
increase the obligations or liabilities of the Borrower (other than ministerial
and other changes which do not affect the Borrower in more than a de minimis
manner), except as allowed by Paragraph 8 below), and Borrower shall cooperate
with such Revolving Credit Lenders in all reasonable respects in amending the
pricing (including the spread or margin) or fees with respect to such Loans,
such that such Revolving Credit Lenders are able to achieve a Successful
Syndication of the Revolving Credit Facility. *** ********* ****** ******* *****
** *** ****** ********* ***** **** **** *** ***** ** ** **** *** *******
********* ** *** ********* ****** ***** ** ***** *** **** **** *** ******* **
********* ** *** **** *********** Any discount realized by such Revolving Credit
Lenders from any sale, assignment or transfer of any Revolving Credit
Commitments to any person (other than to an affiliate of such Revolving Credit
Lenders except for any sale, assignment or transfer to affiliates on the same
terms, at the same price and in similar aggregate amounts as such Loans have
been sold in comparable third-party transactions) by the applicable Borrower and
shall be paid from sources of funds described in Paragraph 9. For the avoidance
of doubt, any increase in the interest for any portion of the Revolving Credit
Facility shall be applied to all outstanding amounts due under the Revolving
Credit Facility.

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     5. Mezzanine Loans. Mezzanine Lenders shall have the right to require
Borrower to amend the pricing (including the spread or margin) or fees with
respect to the Mezzanine Loans (but not including structural changes that
increase the obligations or liabilities of the Borrower (other than ministerial
and other changes which do not affect the Borrower in more than a de minimis
manner), except as allowed by Paragraph 8 below), and Borrower shall cooperate
with Mezzanine Lenders in all reasonable respects in amending the pricing
(including the spread or margin) or fees with respect to such Loans, such that
Mezzanine Lenders are able to achieve a Successful Syndication of Mezzanine
Loans; **************************************************
***************************************************************************************************
***************************************************************************************************
***************************************************************************************************
***************************************************************************************************
****************************************************************************************************
************************************* Any discount realized by Mezzanine Lenders
from any sale, assignment or transfer of any Mezzanine Loan shall be borne by
the applicable Borrower and shall be paid from sources of funds described in
Paragraph 9. For the avoidance of doubt, any increase in the interest for the
Mezzanine Loans identified in any column set forth in Schedule III shall be
applied to all outstanding Mezzanine Loans in such column.
     6. Ground Lease Loan. ********************* Ground Lease Lenders shall have
the right to require Borrower to amend the pricing (including the spread or
margin) or fees or with respect to the Ground Lease Loans (but not including
structural changes that increase the obligations or liabilities of the Borrower
(other than ministerial and other changes which do not affect the Borrower in
more than a de minimis manner), except as allowed by Paragraph 8 below), and
Borrower shall cooperate with Ground Lease Lenders in all reasonable respects in
amending the pricing (including the spread or margin) or fees with respect to
such Loans, such that Ground Lease Lenders are able to achieve a Successful
Syndication of Ground Lease Loans.
********************************************************************************************************************************
************************************************************************************************
*********************************************************************************
Any discount realized by Ground Lease Lenders from any sale, assignment or
transfer of any Ground Lease Loan to any person (other than to an affiliate of
such Tranche A Term Loan Lender except for any sale, assignment or transfer to
affiliates on the same terms, at the same price and in similar aggregate amounts
as such Loans have been sold in comparable third-party transactions) by the
applicable Borrower and shall be paid from sources of funds described in
Paragraph 9. For the avoidance of doubt, any increase in the interest for any
portion of the Ground Lease Loans shall be applied to all outstanding Ground
Lease Loans.
     7. Successful Syndication. As used herein, “Successful Syndication” shall
mean (i) with respect to each type of Loan other than the Revolving Credit
Commitments, that the Lenders shall have succeeded in placing all of the Loans
of such type, and (ii) with respect to Revolving Credit Commitments, that the
Lenders shall have succeeded in placing all of the aggregate commitments under
the Revolving Credit Facility *******************************

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********************************************************************************************
*********************************************************************** For the
avoidance of doubt, each Lender has been paid in full in cash its full profit
margin on each Loan on the date hereof, and therefore, there shall be no markup
on the Loans above the terms necessary to achieve a Successful Syndication
(other than such cash payments being made on the date hereof).
     8. Changes to Terms and Structure. In the event that the Senior Lenders,
the Development Lenders, the Mezzanine Lenders or the Ground Lease Lenders
desire to modify the structure of any applicable Loan so as to achieve more
favorable pricing for the relevant Borrower, the Senior Lenders, the Development
Lenders, the Mezzanine Lenders or the Ground Lease Lenders, as applicable, shall
provide the related Borrower with a statement, prepared in good faith, of
(i) the pricing (including spread or margins), fees and other economic terms
that Lenders reasonably anticipate will apply if no such structural change is
made, and (ii) the pricing (including spread or margins), fees and other
economic terms that Lenders reasonably anticipate will apply if such structural
changes are made. The related Borrowers shall have the right to elect in their
sole discretion whether the applicable Lender will proceed under clause (i) or
(ii). For the avoidance of doubt, neither Senior Lenders, the Development
Lenders, the Mezzanine Lenders nor the Ground Lease Lenders shall be permitted
to modify the structure of any applicable Loan in a manner that would increase
the obligations or liabilities (other than ministerial and other changes which
do not affect the Borrower in more than a de minimis manner) of any Borrower
without the consent of the relevant Borrower, in its sole discretion.
     9. Reserves. (a) In order to provide a source of funds (which may be
additional debt, additional equity or a combination thereof) for each related
Borrower (x) to make any required payments to any applicable Lender arising as a
result of any sale or assignment of a Loan at any reasonably anticipated
discount as provided for in this letter agreement or (y) in the amount
approximately equal to $34,933,133 to purchase ASOT Units, the Lenders and
Borrowers shall negotiate with each other promptly after the date hereof so as
to agree upon a source of funds, which may be structured as (as agreed by all
parties) any or all of (i) an incremental term loan facility (subject to any
necessary Lender approvals), (ii) an increase in the Revolving Credit
Commitments (subject to any necessary Lender approvals), or (iii) an incremental
term loan facility under the Loan Documents related to the Development Loans
(subject to any necessary Lender approvals). The parties shall select a source
of funds described above which is reasonably satisfactory to the related Lenders
and Borrowers within thirty (30) days after the date hereof.
     (b) On the Closing Date, the Borrower shall cause funds in an amount equal
to *********** to be deposited into a reserve account (the “BofA
Account”)************************************
************************************** to the Lenders and used, established and
maintained by Bank of America, N.A. for the benefit of Bank of America, N.A., as
a Senior Lender. The parties hereto hereby agree that the amounts on deposit in
the BofA Account shall be subject to an agreement (the “Reserve Escrow Account
Agreement”) in form and substance reasonably satisfactory to all parties hereto,
provided that, until the Reserve Escrow Account Agreement has been approved by
all parties, the amounts on deposit in the BofA Account shall not be withdrawn
unless consented to by all parties hereto. ***********************************
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     10. Credit Agreement Covenants and Cure. Notwithstanding anything contained
in the Credit Agreement, if at any time the Combined Group Members are not in
compliance with the covenants contained in Section 7.1(a) and 7.1(c), then the
failure to be in compliance shall not be deemed to be a Default or Event of
Default under the Credit Agreement or any other ancillary agreements. The
Combined Group Members and the Senior Lenders hereby agree to use their
commercially reasonable best efforts to negotiate promptly and in good faith the
remedial actions the Borrower will take within 180 days of such failure.
     11. Marketing. ************************************** set forth in various
provisions of this letter agreement, nothing contained herein shall prevent the
applicable Lenders from marketing the Initial Tranche A Term Loans and the
Mezzanine Loans *********************** so long as any sale, assignment or
transfer which is prohibited *********************** without the consent of the
applicable Borrower, in its sole discretion, does not occur before such date.
The Lenders shall not be permitted to market any other Loans
**************************************************************************************.
     12. Amendments, etc. (a) Reference is hereby made to the Underwriting Fee
Letter, dated as of May 28, 2007 (the “Underwriting Fee Letter”), among Lehman
Brothers Inc., Lehman Commercial Paper Inc., Banc of America Securities LLC and
Banc of America Strategic Ventures, Inc., as commitment parties, and Property
Asset Management Inc. and Tishman Speyer Development Corporation, as sponsors.
The parties hereto agree that this letter shall amend and restate the third to
last full paragraph of the Underwriting Fee Letter and, except as expressly
modified herein, all of the terms and provisions of the Underwriting Fee Letter
and, except as expressly modified herein, all of the terms and provisions of the
Underwriting Fee Letter are and shall remain in full force and effect. The
amendments herein shall not be construed as a waiver or amendment of any other
provision of the Underwriting Fee Letter or for any purpose except as expressly
set forth herein or a consent to any further or future action on a part of the
Borrower, the Mezzanine Borrower, the Development Borrower or the Ground Lease
Borrower that would be necessary to give effect to the provisions of this side
letter. In the event of any conflict or inconsistency between the terms of any
Loan Agreement or ancillary agreement and the terms of this side letter, this
side letter shall prevail.
     (b) The Borrower, the Mezzanine Borrower, the Development Borrower and the
Ground Lease Borrower shall enter into such amendments to the applicable loan
documents as may be reasonably requested by the Senior Lenders, the Mezzanine
Lenders, the Development Lenders and the Ground Lease Lenders, as applicable, to
document any changes to the Tranche A Term Loans, the Tranche B Term Loans, the
Revolving Credit Facility, the Development Loans, the Mezzanine Loans and the
Ground Lease Loans made in accordance with this letter.
     13. Sell-downs. Nothing in this side letter is intended to affect or
affects any of the Lenders’ rights to sell down the Loans provided that the
purchasers or assignees, as the case may be, are in all respects subject to the
terms and conditions of this side letter as if a party hereto.

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     Notwithstanding anything appearing to the contrary in this letter, neither
the Administrative Agent nor any Lender shall be entitled to enforce the
liability and obligation of the undersigned to pay, perform and observe the
obligations contained in this letter by any action or proceeding against any
member, shareholder, partner, manager, director, officer, agent, affiliate,
beneficiary, trustee or employee of the undersigned (or any direct or indirect
member, shareholder, partner or other owner of any such member, shareholder,
partner, manager, director, officer, agent, affiliate or employee of the
undersigned , or any director, officer, employee, agent, manager or trustee of
any of the foregoing); provided that, nothing in this paragraph shall have the
effect of exculpating from liability an entity that is itself an undersigned
entity.
     This letter may be executed in any number of counterparts, all of which
taken together shall constitute one and the same agreement, and any of the
parties hereto may execute this letter by signing any such counterpart. Delivery
of an executed signature page of this letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
     This letter shall be governed by, and constructed in accordance with, the
laws of the State of New York.
     The parties hereto hereby waive any right to a trial by jury in any
proceeding arising from this letter or the transactions contemplated hereby.

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     Please confirm that the foregoing is our mutual understanding by signing an
executed counterpart of this letter.

                        Very truly yours,

SENIOR LENDERS/DEVELOPMENT LENDERS:

LEHMAN COMMERCIAL PAPER INC.,
   as Senior Lender and Development Lender
      By:   /s/ Paul A. Hughson         Name:   Paul A. Hughson        Title:  
Authorized Signatory     

            BANK OF AMERICA, N.A., as Senior Lender and
   Development Lender
      By:   /s/ Dean C. Ravosa         Name:   Dean C. Ravosa        Title:  
Managing Director     

            BARCLAYS CAPITAL REAL ESTATE INC., as
   Senior Lender and Development Lender
      By:   /s/ LoriAnn Rung         Name:   LoriAnn Rung        Title:   Vice
President   

 

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            GROUND LEASE LENDERS:

LEHMAN BROTHERS HOLDINGS INC.,
   a Delaware corporation
      By:   /s/ Paul A. Hughson         Name:   Paul A. Hughson        Title:  
Authorized Signatory   

            BANK OF AMERICA, N.A.,
   a national banking association
      By:   /s/ Dean C. Ravosa         Name:   Dean C. Ravosa        Title:  
Managing Director   

            BARCLAYS CAPITAL REAL ESTATE INC.,
   a Delaware corporation
      By:   /s/ LoriAnn Rung         Name:   LoriAnn Rung        Title:   Vice
President   

            MEZZANINE LENDERS:

LEHMAN BROTHERS HOLDINGS INC.,
   a Delaware corporation
      By:   /s/ Paul A. Hughson         Name:   Paul A. Hughson        Title:  
Authorized Signatory   

            BANK OF AMERICA, N.A.,
   a national banking association
      By:   /s/ Dean C. Ravosa         Name:   Dean C. Ravosa        Title:  
Managing Director   

 

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            BARCLAYS CAPITAL REAL ESTATE FINANCE INC.,
   a Delaware corporation
      By:   /s/ LoriAnn Rung         Name:   LoriAnn Rung        Title:   Vice
President        UNDERWRITING FEE LETTER PARTIES:

LEHMAN COMMERCIAL PAPER INC.,
   as party to Underwriting Fee Letter
      By:   /s/ Paul A. Hughson         Name:   Paul A. Hughson        Title:  
Authorized Signatory        LEHMAN BROTHERS INC.,
   as party to Underwriting Fee Letter
      By:   /s/ Paul A. Hughson         Name:   Paul A. Hughson        Title:  
Authorized Signatory        BANC OF AMERICA STRATEGIC VENTURES, INC.,
   as party to Underwriting Fee Letter
      By:   /s/ Dean C. Ravosa         Name:   Dean C. Ravosa        Title:  
Managing Director   

 

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          ACCEPTED AND AGREED TO     AS THE DATE FIRST ABOVE WRITTEN:    
 
        ASOT:    
 
        ARCHSTONE-SMITH OPERATING TRUST    
 
       
By:
  /s/ Michael B. Benner
 
Name: Michael B. Benner    
 
  Title:    
 
        UNDERWRITING FEE LETTER PARTIES:
 
        PROPERTY ASSET MANAGEMENT INC.    
 
       
By:
  /s/ Paul A. Hughson
 
Name: Paul A. Hughson    
 
  Title Authorized Signatory    
 
        TISHMAN SPEYER DEVELOPMENT CORPORATION    
 
       
By:
  /s/ Michael B. Benner
 
Name: Michael B. Benner    
 
  Title    

 

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          DEVELOPMENT BORROWER    
 
        TISHMAN SPEYER ARCHSTONE-SMITH MULTIFAMILY HOLDINGS I (DEVELOPMENT
BORROWER), L.P.    
 
        By: Tishman Speyer Archstone-Smith Multifamily
Holdings I (Development Borrower) GP,
L.L.C., its general partner    
 
       
By:
  /s/ Michael B. Benner
 
Name: Michael B. Benner    
 
  Title:    

 

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          GROUND LEASE BORROWERS:    
 
        TISHMAN SPEYER ARCHSTONE-SMITH FAIRFAX, L.L.C.    
 
       
By:
  /s/ Michael B. Benner
 
Name: Michael B. Benner    
 
  Title:    
 
        TISHMAN SPEYER ARCHSTONE-SMITH MARINA TERRACE, L.L.C.    
 
       
By:
  /s/ Michael B. Benner    
 
       
 
  Name: Michael B. Benner    
 
  Title:    
 
        TISHMAN SPEYER ARCHSTONE-SMITH
ONE SUPERIOR PLACE, L.L.C.    
 
       
By:
  /s/ Michael B. Benner    
 
       
 
  Name: Michael B. Benner    
 
  Title: