EXHIBIT 10.45

 

FORM OF STOCK PURCHASE AGREEMENT

 

between

 

the Sellers identified herein

 

and

 

Vornado America LLC,

 

as the Buyer

Dated as of March 5, 2007

 

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TABLE OF CONTENTS

     
Page 
  ARTICLE I DEFINITIONS  1                     Section  1.1  Certain Defined
Terms  1                   Section  1.2  Table of Definitions  10    ARTICLE II
PURCHASE AND SALE  11                     Section  2.1  Purchase and Sale of the
Shares  11                   Section  2.2  Purchase Price Deposit  12           
       Section  2.3  Closing  12                   Section  2.4  Buyer Closing
Deliveries  13                   Section  2.5  Sellers Closing Deliveries  13   
               Section  2.6  Closing Date Base Purchase Price Adjustment  14   
               Section  2.7  Post-Closing Purchase Price Adjustment  14         
         Section  2.8  Transaction Costs  16    ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE SELLER  17                     Section  3.1  Organization and
Qualification  17                   Section  3.2  Authority  17                 
 Section  3.3  No Conflict; Required Filings and Consents  18                 
 Section  3.4  Shares and Partnership Intercompany Notes  18                 
 Section  3.5  Capitalization  19                   Section  3.6  Equity
Interests  19                   Section  3.7  Financial Statements; No
Undisclosed Assets or Liabilities  20                   Section  3.8  Absence of
Certain Changes or Events  21                   Section  3.9  Compliance with
Law; Permits  21                   Section  3.10  Litigation  21               
   Section  3.11  Employee Benefit Plans  22                   Section  3.12 
Insurance  23                   Section  3.13  Condemnation  23                 
 Section  3.14  Taxes  23                   Section  3.15  Environmental
Matters  25                   Section  3.16  Material Contracts  26             
     Section  3.17  OFAC List  28                   Section  3.18  Brokers  28 
                 Section  3.19  Rent Roll  28                   Section  3.20 
Americans with Disabilities Act  28                   Section  3.21  Tenant
Improvement Allowances; Brokerage Commissions  28 

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                 Section  3.22  Other Property  28                   Section 
3.23  Zoning  29                   Section  3.24  No Purchase Rights  29       
           Section  3.25  Labor Matters  29                   Section  3.26 
Exclusivity of Representations and Warranties  29    ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF THE BUYER  29                     Section  4.1  Organization
and Qualification  29                   Section  4.2  Authority  29             
     Section  4.3  No Conflict; Required Filings and Consents  30               
   Section  4.4  Financing  30                   Section  4.5  Brokers  31     
             Section  4.6  Investment Intent  31                   Section  4.7 
Condition of the Targets, the Subsidiaries and the Properties;       
Representations and Warranties of the Sellers  31    ARTICLE V COVENANTS  32   
                 Section  5.1  Conduct of Business Prior to the Closing  32     
             Section  5.2  Dissolution of HWA II  35                   Section 
5.3  Distributions  36                   Section  5.4  Covenants Regarding
Information  37                   Section  5.5  Notification of Certain Matters 
37                   Section  5.6  Resignations  38                   Section 
5.7  Confidentiality  38                   Section  5.8  Consents and Filings;
Further Assurances  38                   Section  5.9  Public Announcements  39 
                 Section  5.10  Directors' and Officers' Indemnification  39   
               Section  5.11  Release  40                   Section  5.12  Legal
Action  40                   Section  5.13  Estoppel Certificates  41           
       Section  5.14  Personal Property  41                   Section  5.15 
Other Transfers of Condominiums  41                   Section  5.16  Elimination
of New Title Matters  41                   Section  5.17  Preparation of
Financial Statements  42                   Section  5.18  Termination of 401(k)
Plan  43                   Section  5.19  Termination of Management Agreements 
43                   Section  5.20  Conversion of Shares  43                 
 Section  5.21  Further Assurances  43    ARTICLE VI TAX MATTERS  43           
         Section  6.1  Cooperation  43                   Section  6.2  Taxes
Generally  44                   Section  6.3  Responsibility for and
Apportionment of Taxes  44                   Section  6.4  Filing of Amended Tax
Returns  45 

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                 Section  6.5  Refunds or Credits  45                   Section 
6.6  Tax Contests  46                   Section  6.7  Payment of Transfer Taxes 
46                   Section  6.8  Adjustment to Purchase Price  46    ARTICLE
VII CASUALTY AND CONDEMNATION  46                     Section  7.1  Casualty 
46                   Section  7.2  Condemnation  48                   Section 
7.3  Waiver  48    ARTICLE VIII CONDITIONS TO CLOSING  49                   
 Section  8.1  General Conditions  49                   Section  8.2  Conditions
to Obligations of the Sellers  49                   Section  8.3  Conditions to
Obligations of the Buyer  50    ARTICLE IX INDEMNIFICATION  51                 
   Section  9.1  Survival of Representations, Warranties and Covenants  51     
             Section  9.2  Indemnification by the Sellers  51                 
 Section  9.3  Indemnification by the Buyer  51                   Section  9.4 
Procedures  52                   Section  9.5  Limits on Indemnification  53   
               Section  9.6  [Reserved]  54                   Section  9.7 
Escrow Fund  54                   Section  9.8  Assignment of Claims  55       
           Section  9.9  Interest  56                   Section  9.10 
Exclusivity  56    ARTICLE X TERMINATION  56                     Section  10.1 
Termination  57                   Section  10.2  Effect of Termination  57     
             Section  10.3  Termination Fee  57                   Section  10.4 
Return of Escrow Fund  57    ARTICLE XI GENERAL PROVISIONS  57                 
   Section  11.1  Fees and Expenses  58                   Section  11.2 
Amendment and Modification  58                   Section  11.3  Waiver  58     
             Section  11.4  Seller Representative  58                   Section 
11.5  Notices  58                   Section  11.6  Interpretation  59           
       Section  11.7  Entire Agreement  60                   Section  11.8  No
Third-Party Beneficiaries  60                   Section  11.9  Governing Law 
60 

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                   Section  11.10  Dispute Settlement  60                   
 Section  11.11  Disclosure Generally  62                     Section  11.12 
Personal Liability  62                     Section  11.13  Assignment;
Successors  62                     Section  11.14  Enforcement  63             
       Section  11.15  Currency  63                     Section  11.16 
Severability  63                     Section  11.17  Waiver of Jury Trial  63   
                 Section  11.18  Counterparts  63                     Section 
11.19  Facsimile Signature  63                     Section  11.20  Time of
Essence  63                     Section  11.21  No Presumption Against Drafting
Party  63 

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EXHIBITS AND SCHEDULES

Exhibits:

 

Exhibit 1.1

Description of the Properties

Exhibit 2.2

Escrow Agreement

Exhibit 2.3

Form of Share Transfer Instrument

Exhibit 2.4(a)

Form of Indemnification Agreement

Exhibit 2.4(b)

Form of UK Tax Agreement

Exhibit 2.5(d)

Forms of Non-Imputation Affidavits

Exhibit 2.5(e)

Form of Owners' Affidavit

Exhibit 2.5(g)

Form of Gibson, Dunn & Crutcher LLP Opinion

Exhibit 2.5(h)

Form of 401(k) Resolutions

Exhibit 2.5(k)

Form of Target Resolutions

Exhibit 5.13

Forms of Estoppel Certificates

 

Schedules:

Schedule 1.1(a) - Condominiums

Schedule 1.1(b) - Superintendent Condominiums

Schedule 1.1(c) - Tier 1 Subsidiaries

Schedule 1.1(d) - Title Materials

Schedule 2.5(j) - Stockholders' Agreements

Schedule 2.6 - Accounting Methods

Schedule 3.1(b) - Subsidiaries

Schedule 3.1(c) - Organizational Documents

Schedule 3.3(a) - No Conflict

Schedule 3.4(a) - Shares

Schedule 3.6(a) - Equity Interests

Schedule 3.6(a)(ii) - Encumbrances

Schedule 3.6(b) - Capital Contributions and Tax Distributions

Schedule 3.7(a) - Financial Statements

Schedule 3.7(f) – Extell Purchase Agreement Obligations

Schedule 3.8(d) - Dividends and Distributions

Schedule 3.10 - Litigation

Schedule 3.11(a) - Employee Benefit Plans

Schedule 3.12 - Insurance Policies

Schedule 3.14 - Taxes

Schedule 3.15 - Environmental Matters

Schedule 3.16(a) - Material Contracts

 

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Schedule 3.16(b) - Default

Schedule 3.19(a) - Rent Rolls

Schedule 5.1(j) - Capital Budgets

Schedule 5.2(b)(i) - HWA Extell Note Distribution Entities

Schedule 5.2(b)(iv) - Partnership Intercompany Notes

Schedule 5.3(a) - Entities to be Distributed

Schedule 5.3(b) - Lenten Lily First-Tier Delaware Subsidiaries

 

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STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, dated as of March 5, 2007 (this "Agreement"), between
the Sellers identified herein and Vornado America LLC, a Delaware limited
liability company (the "Buyer").

RECITALS

A.           The Sellers own all of the issued and outstanding shares (the
"Shares") of common stock of the entities (each a "Target" and collectively, the
"Targets") listed in Schedule 3.4(a).

B.           Collectively, the Targets indirectly own a 69% limited partnership
interest and a 1% general partnership interest in certain limited partnerships
that own fee interests in: (1) the 1290 Property; and (2) the 555 Property
(each, a "Property" and together, the "Properties").

C.           In order to transfer their aggregate 70% interest in the Properties
to the Buyer, the Sellers wish to sell to the Buyer, and the Buyer wishes to
purchase from the Sellers, all of the Shares.

AGREEMENT

In consideration of the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties agree as
follows:

ARTICLE I

DEFINITIONS

 

 

Section 1.1

Certain Defined Terms. For purposes of this Agreement:

"401(k) Resolutions" means the resolutions (effective as of the day before the
Closing Date) of the general partner of HWA I in the form attached hereto as
Exhibit 2.5(h).

"555 Mezzanine Debt Agreements" means (i) the First Mezzanine Loan Agreement,
dated as of September 2, 2004, between 555 California Mezz-1 LLC, a Delaware
limited liability company, and Bank of America, N.A., a national banking
association ("Bank of America"), as amended, restated, replaced, supplemented or
otherwise modified as reflected on Schedule 3.16(a), (ii) the Second Mezzanine
Loan Agreement, dated as of September 2, 2004, between 555 California Mezz-2
LLC, a Delaware limited liability company, and Bank of America, as amended,
restated, replaced, supplemented or otherwise modified as reflected on Schedule
3.16(a), (iii) the Third Mezzanine Loan Agreement, dated as of September 2,
2004, between 555 California Mezz-3 LLC, a Delaware limited liability company,
and Bank of America, as amended, restated, replaced, supplemented or otherwise
modified as reflected on Schedule 3.16(a), (iv) the Fourth Mezzanine Loan
Agreement, dated as of September 2, 2004, between 555 California Mezz-4 LLC, a
Delaware limited liability company, and Bank of America, as amended, restated,
replaced, supplemented or otherwise modified as reflected on

 

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Schedule 3.16(a) and (v) the Fifth Mezzanine Loan Agreement, dated as of
September 2, 2004, between 555 California Mezz-5 LLC, a Delaware limited
liability company, and Bank of America, as amended, restated, replaced,
supplemented or otherwise modified as reflected on Schedule 3.16(a).

"555 Property" means the properties commonly know as (i) 555 California Street,
San Francisco, CA; (ii) 315 Montgomery Street, San Francisco, CA; and (iii) 345
Montgomery Street, San Francisco, CA, as more fully described on Exhibit 1.1.

"555 Purchase Agreement" means the Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of September 20, 2005, by and between HWA LLC and 555
California Owner, L.P.

"555 Senior Debt Agreement" means the Loan Agreement, dated as of September 2,
2004, between 555 California Owners LLC, a Delaware limited liability company,
and Bank of America, as amended, restated, replaced, supplemented or otherwise
modified as reflected on Schedule 3.16(a).

"1290 Property" means the property commonly known as 1290 Avenue of the
Americas, New York, NY, as more fully described on Exhibit 1.1.

"1290 Purchase Agreement" means the Purchase and Sale Agreement, dated as of
December 18, 2005, between Jamestown 1290, L.P. and HWA 1290 LLC.

"1290 Senior Debt Agreement" means the Loan Agreement, dated as of September 9,
2002, between Jamestown 1290, L.P., a Delaware limited partnership, and Morgan
Stanley Dean Witter Mortgage Capital Inc., a New York corporation, as amended,
restated, replaced, supplemented or otherwise modified as reflected on Schedule
3.16(a).

"Action" means any claim, action, suit, arbitration or proceeding by or before
any Governmental Authority.

"Affiliate" means, with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.

"Ancillary Agreements" means (i) the Indemnification Agreement; (ii) the Escrow
Agreement; (iii) the UK Tax Agreement; (iv) the Non-Imputation Affidavits; and
(v) the Owners' Affidavit.

"Business Day" means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in The City of New
York.

"Buyer Material Adverse Effect" means any event, change, circumstance, effect or
state of facts that materially delays, prevents or impairs the ability of the
Buyer to perform its obligations under this Agreement or the Ancillary
Agreements to which it is a party, or to consummate the transactions
contemplated hereby or thereby.

 

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"Code" means the Internal Revenue Code of 1986, as amended.

"Condominiums" means all condominiums owned by the Hudson Waterfront
Partnerships, which condominiums are listed on Schedule 1.1(a) hereto.

"Confidentiality Agreements" means the confidentiality agreement, dated
September 20, 2006, between Hudson Waterfront II Corporation, Hudson Waterfront
III Corporation, Hudson Waterfront IV Corporation and Hudson Waterfront V
Corporation, on the one hand, and the Buyer, on the other hand, as supplemented
by the Supplement to the HWA Confidentiality Agreement, dated December 14, 2006,
and the confidentiality agreement, dated September 20, 2006, between Stockdale
Enterprises, Inc. and the Buyer, as supplemented by the Supplement to the
Stockdale Confidentiality Agreement, dated December 14, 2006.

"Contract" means any written agreement, lease, license, contract, note,
mortgage, indenture, arrangement or other obligation.

"control", including the terms "controlled by" and "under common control with",
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, as trustee or executor, as general partner or
managing member, by contract or otherwise.

"Debt" means any indebtedness for borrowed money pursuant to the 555 Mezzanine
Debt Agreements; the 555 Senior Debt Agreement and the 1290 Senior Debt
Agreement.

"Debt Agreements" means the 555 Mezzanine Debt Agreements, the 555 Senior Debt
Agreement and the 1290 Senior Debt Agreement.

"Debt Consents" means those consents required under the 555 Senior Debt
Agreement and the 555 Mezzanine Debt Agreements to be given by the respective
Lenders (as defined therein) thereunder in connection with the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements.

"Encumbrance" means any charge, mortgage, lien, pledge, security interest,
encumbrance or easement, including any right of first refusal or purchase option
or, with respect to the Shares or the Equity Interests, restriction on voting.

"Escrow Agreement" means the escrow agreement dated the date hereof between the
Sellers, the Buyer and the Escrow Agent attached hereto as Exhibit 2.2.

"Extell Purchase Agreement" means the Agreement of Sale and Purchase by and
among Hudson Waterfront Company A, LLC, Hudson Waterfront Company C, LLC, Hudson
Waterfront Company D, LLC, Hudson Waterfront Company E, LLC, Hudson Waterfront
Company F, LLC, Hudson Waterfront Company G, LLC, HWA III, HWA IV and HWA V,
collectively as sellers and CRP/Extell Riverside, L.P. as purchaser, dated as of
June 17, 2005.

 

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"Final Adjustment Amount" means (x) the total Other Assets, minus (y) the total
Other Liabilities, minus, (z) the Partner Priority Return Adjustment Amount, all
as shown on the Final Adjustment Statement, as such amount may be revised in
accordance with Section 2.7(c).

"Final Adjustment Statement" means the statement that sets forth the Other
Assets, Other Liabilities and the Partner Priority Return Adjustment Amount,
each as of the Closing Date, prepared, or caused to be prepared, and as may be
revised, by the Sellers in accordance with Section 2.7(a) hereof; provided,
however, that the liability for unpaid income Taxes included in Other
Liabilities shall be (i) in respect of the period through March 31, 2007, the
actual amount of income Taxes due as reflected in the Tax Returns of the Targets
and Subsidiaries filed for the tax year then ended, and (ii) in respect of the
period between April 1, 2007 and the Closing Date, the then most-current
estimate prepared by the Sellers.

"Governmental Authority" means any United States federal, state or local or
foreign or multinational governmental, quasi-governmental, regulatory or
administrative authority, agency, bureau, department, tribunal, self-regulatory
organization or commission or similar body or instrumentality thereof, or any
judicial or arbitral body.

"Hudson Waterfront Partnerships" means HWA I, HWA II, HWA III, HWA IV and HWA V.

"HWA I" means Hudson Waterfront Associates I, L.P., a Delaware limited
partnership.

"HWA II" means Hudson Waterfront Associates II, L.P., a Delaware limited
partnership.

"HWA III" means Hudson Waterfront Associates III, L.P., a Delaware limited
partnership.

"HWA IV" means Hudson Waterfront Associates IV, L.P., a Delaware limited
partnership.

"HWA V" means Hudson Waterfront Associates V, L.P., a Delaware limited
partnership.

"Indemnification Agreement" means the agreement attached hereto as Exhibit
2.4(a).

"IRS" means the Internal Revenue Service of the United States.

"Knowledge" with respect to the Sellers means the knowledge of Mr. Barry Gross,
after due inquiry of the building managers for each of the Properties.

"Law" means any statute, law, ordinance, regulation, rule, code, injunction,
judgment, decree or order of any Governmental Authority.

"Legal Action" has the meaning provided in the Indemnification Agreement.

 

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"Material Adverse Effect" means any event, change, circumstance, effect or state
of facts that is (i) materially adverse to the business, financial condition,
operations, assets, liabilities or results of operations of (x) the Targets and
the Subsidiaries, taken as a whole, or (y) any of the Properties or
(ii) prevents or materially delays or impairs the ability of the Sellers to
perform their obligations under this Agreement or the Ancillary Agreements to
which they will be parties or to consummate the transactions contemplated hereby
or thereby; provided, however, that "Material Adverse Effect" shall not include
the effect of any circumstance, change, development, event or state of facts
arising out of or attributable to any of the following, either alone or in
combination: (1) the markets in which the Properties operate generally, (2) any
casualty or condemnation of the Properties, (3) general economic or political
conditions (including those affecting the securities markets), (4) the public
announcement of this Agreement or of the consummation of the transactions
contemplated hereby, (5) acts of war (whether or not declared), sabotage or
terrorism, military actions or the escalation thereof or other force majeure
events occurring after the date hereof, (6) any changes in applicable laws,
regulations or accounting rules or (7) any findings of fact made by the court
in, or admissions made by or on behalf of any party in writing and submitted to
the court in, the Legal Action.

"Monetary New Title Matter" means any New Title Matter that is capable of being
discharged solely by the payment of a specified amount of money.

"New Title Matter" means any Encumbrance against any Property other than (a)
those Encumbrances that are Permitted Encumbrances pursuant to clauses (i),
(iii), (iv), (v), (vi) and (viii) of the definition of Permitted Encumbrance,
(b) any Encumbrance identified in the Schedules or (c) any Encumbrance created
by the Buyer.

"Non-Imputation Affidavits" means the non-imputation affidavits to be dated the
Closing Date in favor of the title insurance companies identified therein
attached hereto as Exhibit 2.5(d), updated as of the Closing Date to reflect any
matters of which the Sellers become aware after the date hereof, provided such
matters do not violate the covenant contained in Section 5.1(l) of this
Agreement.

"Non-Monetary New Title Matter" means any New Title Matter that is not a
Monetary New Title Matter.

"Other Assets" means the Targets' interest in the following assets owned by the
Targets and their Subsidiaries (with respect to those assets owned by a
Subsidiary, the Targets' indirect percentage interest in such assets based on
the Targets' direct or indirect percentage interest in such Subsidiary as set
forth in Schedule 3.6(a)) as of the Closing Date:

(i)           all cash and cash equivalents (whether or not pledged to a third
party) minus the aggregate amount of all insurance and condemnation proceeds
received after January 1, 2006;

(ii)          escrowed amounts held by the lenders pursuant to the Debt and
other deposits held by third parties (including deposits held by utilities);

 

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(iii)          the principal amount owed to the Hudson Waterfront Partnerships,
as the mortgagees, of the condominiums set forth on Schedule 1.1(b) (true and
complete copies of such mortgages have been provided to the Buyer prior to the
date hereof);

(iv)         all prepaid expenses and credits (including, but not limited to,
prepaid Property Taxes and personal property Taxes to the extent attributable to
any periods or portions thereof beginning on or after the Closing Date and
prepaid insurance premiums);

(v)          all accrued and unpaid rents, whether base rents, additional rents
or otherwise (including any operating expense escalation payments, real estate
tax escalation payments, and percent rent, if any), under the Leases in respect
of all periods through but not including the Closing Date (and in the month in
which the Closing occurs, based on the actual number of days in the month during
which the Closing occurs);

(vi)         all accrued and unpaid administrative charges, if any, permitted
under the Leases and applicable law, on security deposits held pursuant to the
Leases; and

(vii)         fuel, if any, as estimated by the supplier, at most recent actual
cost (it being understood and agreed that letters from suppliers will be
presumptive evidence as to the amount and pricing of fuel on hand absent any
other more definitive basis for measurement).

"Other Liabilities" means the Targets' share of the following liabilities of the
Targets and the Subsidiaries (with respect to the liabilities of any Subsidiary,
the Targets' indirect share of such liabilities based on the Targets' direct or
indirect percentage interest in such Subsidiary as set forth in Schedule 3.6(a))
as of the Closing Date:

(i)           all advance payments to, or funds of third parties on deposit
with, any Target or Subsidiary as of the Closing Date, including advance
payments and security deposits (including any accrued interest on such deposits)
by tenants under the Leases;

(ii)          all income and withholding Tax liabilities for any Pre-Closing Tax
Period that are shown as due under Tax Returns filed on or prior to the Closing
Date or that have been assessed by a Governmental Authority on or prior to the
Closing Date but, in each case, that remain unpaid as of the Closing Date, and
(B) all estimated taxes that are attributable to Tax Returns for a Pre-Closing
Tax Period that are not required to be filed on or prior to the Closing Date
determined in a manner consistent with the Sellers' past practice;

(iii)          the notional amount of United States withholding tax that would
be payable upon the distribution of the accumulated and current earnings and
profits of the Subsidiaries through the Closing Date to

 

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the respective Targets, to the extent not previously paid or withheld, and for
purposes of determining accumulated and current earnings and profits of the
Subsidiaries through the Closing Date, crediting 50% of any deficit in
accumulated or current earnings and profits of any Subsidiary against any
positive accumulated or current earnings and profits, as the case may be, of all
other Subsidiaries;

(iv)         all accrued but unpaid Property Taxes, sewer rents and taxes, water
rates and charges, vault charges and taxes and assessments and other
governmental taxes, charges or assessments levied against the Properties as of
the Closing Date (but not including any Transfer Taxes);

(v)         all accrued but unpaid payroll, occupation, capital stock,
severance, stamp, employment, social security (or similar), unemployment,
disability, sales, and occupancy Taxes levied against the Targets or the
Subsidiaries as of the Closing Date (but not including any Transfer Taxes);

(vi)        the amount of any Monetary New Title Matter that the Sellers elect
to treat as an "Other Liability" pursuant to Section 5.16(b);

(vii)       all accrued but unpaid wages and fringe benefits and other
compensation payable to any employees of the Targets or the Subsidiaries;

(viii)      50% of the amount of (A) all unpaid tenant improvement allowances
payable or that will become payable to a tenant (including any such allowances
that have been converted to "free rent" for any period after the Closing and
which are noted on Schedule 2.6) ("Tenant Improvement Allowances") in respect of
any Leases executed prior to the date hereof (but excluding amounts due upon any
renewals or extensions of such Leases or for any must-take space or option space
under such Leases) and (B) commissions (or similar compensation due a broker,
agent or finder) owing, or that will become payable ("Brokerage Commissions")
(1) in respect of any Leases executed prior to the date hereof (but excluding
amounts due upon any renewals or extensions of such Leases or for any must-take
space or option space under such Leases) or (2) as otherwise set forth on
Schedule 2.6, less the total amount of all payments made in respect of clauses A
or B between the date hereof and the Closing Date;

(ix)      all accounts payable, including any unpaid insurance premiums; an

(x)       all accrued but unpaid interest under the Debt.

 

 

7

 

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"Owners' Affidavit" means the general affidavit with respect to the 1290
Property to be dated the Closing Date in favor of the title insurance companies
identified therein attached hereto as Exhibit 2.5(e).

 

"Partner Priority Return" means the aggregate amount as of the Closing Date of
the Partner Priority Return (as such term is defined in each Partnership
Agreement) to which each Partner (as such term is defined in each Partnership
Agreement) other than Donald J. Trump ("Trump") is entitled in respect of HWA I,
HWA III, HWA IV and HWA V.

 

"Partner Priority Return Adjustment Amount" means (i) if the Partner Priority
Return is less than $151,445,000, 30% of the difference between the Partner
Priority Return and $151,445,000 or (ii) if the Partner Priority Return is equal
to or greater than $151,445,000, zero.

"Partnership Agreements" means the limited partnership agreements of the Hudson
Waterfront Partnerships as set forth on Schedule 3.1(c).

"Permitted Encumbrance" means (i) statutory liens for current Taxes not yet due
or delinquent (i.e., which may be paid without interest or penalties) or the
validity or amount of which is being contested in good faith by appropriate
proceedings, (ii) mechanics', carriers', workers', repairers' and other similar
liens arising or incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of the Targets or the
Subsidiaries, or the validity or amount of which is being contested in good
faith by appropriate proceedings, or pledges, deposits or other liens securing
the performance of bids, trade contracts, leases or statutory obligations
(including workers' compensation, unemployment insurance or other social
security legislation), in each case that would not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; (iii)
the rights of the tenants under the Leases, (iv) zoning, entitlement,
conservation restriction and other land use and environmental regulations by
Governmental Authorities; (v) all matters disclosed by any Title Materials,
including the possible encroachment on the eastern property line of 1290 Avenue
of the Americas; (vi) any lien or other Encumbrance filed by Trump on any of the
Properties that is related to his ownership of limited interests in the Hudson
Waterfront Partnerships or the Legal Action; (vii) any restriction on voting
contained in any Target's or Subsidiary's certificate of incorporation, bylaws
or equivalent organizational documents provided to the Buyer prior to the date
hereof and listed on Schedule 3.1(c) hereto and (viii) any Encumbrance in
respect of work being performed for and at the direction of a tenant and for
which the tenant bears financial responsibility pursuant to its Lease (a
"Tenant's Encumbrance").

"Person" means an individual, corporation, partnership, limited liability
company, limited liability partnership, syndicate, person, trust, association,
organization or other entity, including any Governmental Authority, and
including any successor, by merger or otherwise, of any of the foregoing.

"Pre-Closing Adjustment Amount" means (x) the total Other Assets, minus (y) the
total Other Liabilities, minus (z) the Partner Priority Return Adjustment
Amount, all as shown on the Pre-Closing Adjustment Statement.

 

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"Pre-Closing Adjustment Statement" means the Base Purchase Price adjustment
statement that sets forth the estimated Other Assets, Other Liabilities and
Partner Priority Return Adjustment Amount, each as of the Closing Date,
prepared, or caused to be prepared, and as may be revised, by the Sellers in
accordance with Section 2.6(a) hereof.

"Property Taxes" means any general or special real estate taxes, ad valorem
taxes or other charges or assessments, business improvement district taxes and
other state or local taxes, fees, charges or assessments in respect of real
estate.

"Representatives" means, with respect to any Person, the officers, directors,
trustees, employees, agents, accountants, advisors, bankers and other
representatives of such Person.

"Schedules" means the schedules identified herein and attached hereto, which
form an integral part of this Agreement.

"Seller" or "Sellers" means those entities identified in Schedule 3.4(a) as
being the record and beneficial owners of the Shares.

"Share Transfer Instruments" means the instruments of transfer with respect to
the Shares in the form attached hereto as Exhibit 2.3, duly endorsed in blank.

"Stockholders' Agreements" means those agreements listed on Schedule 2.5(j).

"Subsidiary" or "Subsidiaries" means those entities set forth in Schedule
3.6(a).

"Tax" or "Taxes" means any United States federal, state or local or foreign tax
or withholding tax, including any interest and penalties thereon.

"Tax Return" means any return, declaration, report, statement, information
statement and other document required to be filed with respect to Taxes.

"Tier 1 Subsidiaries" means those Subsidiaries listed in Schedule 1.1(c)

"Title Materials" means the materials specifically identified on Schedule
1.1(d), each of which has previously been delivered to the Buyer.

"Transfer Tax" means any stamp, registration, real or personal property
transfer, documentary, notary fee or other similar Tax payable because of the
transfer of the Shares from the Sellers to the Buyer.

"UK Tax Agreement" means the agreement attached hereto as Exhibit 2.4(b).

"Voluntary Title Matter" means any New Title Matter created by the Sellers or
their Affiliates, including the Targets and the Subsidiaries, or any employee or
agent of any of the foregoing, prior to the Closing, unless created after the
date hereof as permitted in accordance with Section 5.1.

 

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Section 1.2        Table of Definitions. The following terms have the meanings
set forth in the Sections referenced below:

                                          
                                                         

  Definition Location

 

AAA

11.9(a)

 

ADA

3.20

 

Agreement

Preamble

 

Bank of America

Definition of 555 Mezzanine Debt Agreements

 

Base Purchase Price

2.1

 

Basket Amount

9.5(b)(i)

 

Brokerage Commissions

Definition of Other Liabilities

 

Buyer

Preamble

 

Buyer Adjustment Statement Objection

2.7(b)

 

Buyer Indemnified Parties

9.2

 

Casualty Termination Notice

7.1(c)

 

Closing

2.3(a)

 

Closing Date

2.3(a)

 

Continuing Entities

2.5(i)

 

Covered Person

5.10

 

Deposit

2.2

 

Employee Plans

3.11(a)

 

Environmental Laws

3.15

 

Environmental Permits

3.15

 

Equity Interests

3.6(a)

 

ERISA

3.11(a)

 

ERISA Affiliate

3.11(d)

 

Escrow Agent

2.2

 

Escrow Fund

2.2

 

Estoppel Certificate

5.13

 

Excess Amount

5.16(b)

 

Extell

5.2(b)(i)

 

Financial Statements

3.7(a)

 

Hazardous Substances

3.15

 

HWA Extell Note

5.2(b)(i)

 

HWA I Tax Returns

6.2

 

Indemnified Party

9.4(a)

 

Indemnifying Party

9.4(a)

 

Independent Accounting Firm

2.7(c)

 

Insurance Policies

3.12

 

Lease

3.16(a)(iii)

 

Leases

3.16(a)(iii)

 

Losses

9.2

 

Major Casualty

7.1(a)

 

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Material Contracts

3.16(a)

 

Material Portion

7.1(a)

 

Minimum Loss Amount

9.5(b)(i)

 

Non-Consolidation Opinion

5.8(c)

 

OFAC List

3.17

 

Order

8.1(a)

 

Organizational Documents

3.1(c)

 

Original Intercompany Notes

5.2(b)(iii)

 

Partnership Intercompany Notes

5.2(b)(iv)(A)

 

Permits

3.9(b)

 

Post-Closing Tax Period

6.3(a)

 

Potential Contributor

9.8

 

Pre-Closing Tax Period

6.3(a)

 

Properties

Recitals

 

Property

Recitals

 

Purchase Price

2.1

 

Rent Rolls

3.19

 

Restoration Costs

7.1(a)

 

Rules

11.9(a)

 

Securities Act

4.6

 

Seller Indemnified Parties

9.3

 

Shares

Recitals

 

Straddle Period

6.3(b)

 

Target

Recitals

 

Targets

Recitals

 

Tenant Improvement Allowances

Definition of Other Liabilities

 

Tenant's Encumbrance

Definition of Permitted Encumbrance

 

Third Party Claim

9.4(a)

 

Transaction Costs

2.8

 

Trump

Definition of Partner Priority Return

  Trump Intercompany Notes 5.2(b)(iv)(C)

 

Westside II Partnership

5.2(b)(i)

                                                                        

ARTICLE II

PURCHASE AND SALE

Section 2.1         Purchase and Sale of the Shares. Upon the terms and subject
to the conditions of this Agreement, at the Closing, the Sellers shall sell,
assign, transfer, convey and deliver the Shares and the Partnership Intercompany
Notes to the Buyer, and the Buyer shall purchase the Shares and the Partnership
Intercompany Notes from the Sellers, for an aggregate purchase price of
$1,165,000,000 (the "Base Purchase Price"), as adjusted pursuant to this
Agreement (as so adjusted, the "Purchase Price").

 

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Section 2.2         Purchase Price Deposit. Upon the execution and delivery of
this Agreement, the Buyer shall deposit a portion of the Purchase Price in the
amount of $100,000,000 (the "Deposit") in immediately available funds in United
States dollars in escrow with The Bank of New York, a New York banking
corporation (the "Escrow Agent"), to be held by the Escrow Agent in accordance
with the terms and conditions of this Agreement and the Escrow Agreement (the
Deposit and the additional amounts to be deposited pursuant to Section
2.3(c)(ii) of this Agreement, together with any interest earned thereon, is
referred to herein as the "Escrow Fund"). After the Closing, the amount
remaining in the Escrow Fund shall secure the Sellers' indemnification
obligations pursuant to Article IX of this Agreement. In the event that this
Agreement is terminated prior to the Closing, the Escrow Agent shall disburse
the Escrow Fund in accordance with Article X. The Buyer hereby grants the
Sellers a first priority perfected security interest in such Escrow Fund as
collateral security for the Buyer's obligation pursuant to Section 10.3, and
each of the Sellers hereby grants the Buyer a first priority perfected security
interest in such Escrow Fund as collateral security for the Sellers' obligations
following the Closing.

Section 2.3         Closing.

(a)   The sale and purchase of the Shares and the Partnership Intercompany Notes
shall take place at a closing (the "Closing") to be held at the offices of
Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, New York, at 10:00 A.M.,
local time on May 15, 2007, subject to extension as provided in Section 2.3(b),
or at such other place or at such other time or on such other date as the
Sellers and the Buyer mutually may agree in writing. The day on which the
Closing takes place is referred to as the "Closing Date".

(b)   Each of the Sellers, on the one hand, and the Buyer, on the other hand,
shall have the right, exercisable in one or more increments by delivering
written notice to the other party, to adjourn the Closing Date to a date not
later than June 15, 2007, if such party determines, in its judgment, that such
adjournment is necessary to enable any of the conditions precedent to the other
party's obligation to participate in the Closing to be satisfied (unless, the
party receiving such notice responds in writing that it is willing to waive such
unmet condition(s) and proceed with the Closing). Any such notice of deferral
must include an explanation, in reasonable detail, of the reasons therefor, and
following delivery thereof the party giving the notice shall thereafter apprise
the other party on a regular basis of its progress in resolving the
circumstances upon which the deferral was based. In addition, each of the Buyer
and the Sellers shall have the additional right to extend the Closing Date in
one or more increments to a date not later than July 31, 2007, if the condition
set forth in Section 8.1(a) has not been met.

(c)   At the Closing, (i)the Buyer shall deliver to the Sellers, by wire
transfer to a bank account or accounts designated in writing by the Sellers to
the Buyer at least five Business Days prior to the Closing Date, an amount equal
to the Base Purchase Price, as adjusted pursuant to Section 2.6 less
$125,000,000 in immediately available funds in United States dollars; (ii)the
Buyer shall deliver to the Escrow Agent, by wire transfer to an account
designated in writing by the Escrow Agent to the Buyer at least five Business
Days prior to the Closing Date, an amount equal to $125,000,000 less the amount
of the Escrow Fund at the close of business on the Business Day prior to the
Closing Date for deposit into the Escrow Fund; and (iii)the Sellers shall
deliver or cause to be delivered to the Buyer (A) certificates representing the
Shares, duly

 

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endorsed in blank or accompanied by Share Transfer Instruments, as appropriate,
duly endorsed in blank in proper form for transfer, with appropriate transfer
stamps, if any, affixed and (B) the Partnership Intercompany Notes duly endorsed
in favor of the Buyer.

Section 2.4        Buyer Closing Deliveries. In addition to the payment of the
funds specified in Section 2.3, at the Closing, the Buyer shall deliver the
following to the Sellers:

(a)   a duly executed counterpart to the Indemnification Agreement;

(b)   a duly executed counterpart to the UK Tax Agreement; and

(c)   a duly executed officer's certificate pursuant to Section 8.2(a).

Section 2.5         Sellers Closing Deliveries. In addition to the delivery of
the certificates representing the Shares and the Partnership Intercompany Notes
as set forth in Section 2.3(c)(iii), at the Closing, the Sellers shall deliver
the following to the Buyer:

(a)   a duly executed counterpart to the Indemnification Agreement;

(b)   a duly executed counterpart to the UK Tax Agreement;

(c)   the resignations required pursuant to Section 5.6;

(d)   the Non-Imputation Affidavits;

(e)   the Owners' Affidavit;

(f)   a duly executed officer's certificate pursuant to Section 8.3(a);

(g)   an opinion of Gibson, Dunn & Crutcher LLP in the form attached hereto as
Exhibit 2.5(g);

(h)   the 401(k) Resolutions, duly adopted by the general partner of HWA I;

(i)    confirmation that the officers, directors and other employees of the
Targets and Subsidiaries (other than those entities identified in Schedule
5.2(b)(iv) and their Subsidiaries and Lenten Lily Limited) (such Targets and
Subsidiaries, the "Continuing Entities") have relinquished in writing all
withdrawal and other signature authority any of them may have had over any bank,
brokerage or other investment account in which any funds or investment assets of
any of the Continuing Entities are being held and have caused (or delivered to
the Buyer instruments in form sufficient to cause) the bank or other financial
institution to recognize one or more of the Buyer's Representatives (as
identified by the Buyer to the Sellers at least three Business Days prior to the
Closing) as replacement signatories on all accounts;

(j)    written instruments executed by all parties thereto terminating each of
the Stockholders' Agreements;

(k)   resolutions of the board of directors of each of the Targets in the form
attached hereto as Exhibit 2.5(k);

 

13

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(l)    copies of the updated share registers of each of the Targets reflecting
the transfer of the Shares to the Buyer; and

(m) evidence that each of the Shares in bearer form shall have been exchanged
for corresponding shares in registered form.

 

 

Section 2.6

Closing Date Base Purchase Price Adjustment.

(a)   Not later than five Business Days prior to the Closing, the Sellers shall
prepare and deliver, or cause to be prepared and delivered, together with
reasonable supporting documentation, to the Buyer the Pre-Closing Adjustment
Statement, which shall set forth the Sellers' good faith estimate of Other
Assets, Other Liabilities, the Partner Priority Return Adjustment Amount and the
Pre-Closing Adjustment Amount for the Targets as of the Closing. The Other
Assets and Other Liabilities reflected in the Pre-Closing Adjustment Statement
shall be prepared in accordance with the accounting methods, policies, practices
and procedures set forth in Schedule 2.6. Not less than three Business Days
prior to the Closing, the Buyer shall provide the Sellers with any good faith
objections to the Pre-Closing Adjustment Statement in writing. After considering
the Buyer's objections, the Sellers, acting reasonably and in good faith, shall
make such revisions to the Pre-Closing Adjustment Statement with which they
agree not less than two days prior to the Closing, and the Pre-Closing
Adjustment Amount shall be based upon the amount set forth in the Sellers'
revised Pre-Closing Adjustment Statement. Any disagreements that may continue to
exist with respect to the Pre-Closing Adjustment Statement shall be resolved in
connection with the Final Adjustment Statement pursuant to Sections 2.7(b) and
(c).

(b)   At the Closing, the Base Purchase Price shall be: (A) increased by the
amount the Pre-Closing Adjustment Amount is greater than $221,900,000 or
(B) decreased by the amount the Pre-Closing Adjustment Amount is less than
$221,900,000.

 

 

Section 2.7

Post-Closing Purchase Price Adjustment.

(a)   Upon the later of October 31, 2007 and 120 days following the Closing, the
Sellers shall prepare and deliver, or cause to be prepared and delivered, to the
Buyer the Final Adjustment Statement, which shall set forth the Other Assets and
the Other Liabilities of the Targets as of the Closing Date and the Partner
Priority Return Adjustment Amount. The Other Assets and the Other Liabilities
reflected in the Final Adjustment Statement shall be prepared in accordance with
the accounting methods, policies, practices and procedures set forth in Schedule
2.6. The Final Adjustment Amount shall be derived from the Final Adjustment
Statement, and the Sellers shall deliver, or cause to be delivered, such
calculation and the Final Adjustment Statement to the Buyer.

(b)   The Buyer shall complete its review of the Final Adjustment Statement and
the Buyer's calculation of the Final Adjustment Amount no later than December
31, 2007. During the Buyer's review period, the Sellers shall cooperate with the
Buyer and its Representatives to provide them with any information used in
preparing the Final Adjustment Statement. In the event that the Buyer believes
that the Final Adjustment Statement has not been prepared in compliance with the
terms of this Agreement, the Buyer may, on or before December 31,

 

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2007, so inform the Sellers in writing (the "Buyer Adjustment Statement
Objection"), setting forth the Buyer's objections and the adjustments to the
Final Adjustment Amount that the Buyer believes should be made. If no Buyer
Adjustment Statement Objection is received by the Sellers on or before December
31, 2007, then the Final Adjustment Amount, as set forth on the Final Adjustment
Statement delivered by the Sellers, shall be final.

(c)   During the ten Business Day period following delivery of a Buyer
Adjustment Statement Objection by the Buyer to the Sellers, the parties in good
faith shall seek to resolve in writing any differences that they may have with
respect to the matters specified therein. During such ten Business Day period,
the Buyer shall cooperate with the Sellers' auditors and other Representatives
to provide them with any information used in preparing the Buyer Adjustment
Statement Objection reasonably requested the Sellers' auditors and other
Representatives. Any disputed items resolved in writing between the Buyer and
the Sellers within such ten Business Day period shall be final and binding with
respect to such items, and if the Sellers and the Buyer agree in writing on the
resolution of each disputed item specified by the Buyer in the Buyer Adjustment
Statement Objection and the calculation of the Final Adjustment Amount, the
Final Adjustment Amount so determined shall be final and binding on the parties
for all purposes hereunder. If the Sellers and the Buyer have not resolved all
such differences by the end of such ten Business Day period, the Sellers and the
Buyer shall submit, within 15 Business Days, in writing, to an independent
public accounting firm (the "Independent Accounting Firm"), their briefs
detailing their views as to the nature and amount of each item remaining in
dispute and the calculation of the Final Adjustment Amount, and the Independent
Accounting Firm shall make a written determination as to each such disputed item
and the calculation of the Final Adjustment Amount, which determination shall be
final and binding on the parties for all purposes hereunder. The Independent
Accounting Firm shall be authorized to resolve only those items remaining in
dispute between the parties in accordance with the standards set forth in this
Section 2.7 within the range of the difference between the Buyer's position with
respect thereto and the Sellers' position with respect thereto. The
determination of the Independent Accounting Firm shall be based solely on the
briefs submitted by the parties and not on independent review, and shall be
accompanied by a certificate of the Independent Accounting Firm that it reached
such determination in accordance with the provisions of this Section 2.7. The
Independent Accounting Firm shall be Ernst & Young LLP or, if such firm is
unable or unwilling to act, such other independent public accounting firm of
national standing as shall be agreed promptly in writing by the Sellers and the
Buyer. The Sellers and the Buyer shall use their commercially reasonable efforts
to cause the Independent Accounting Firm to render a written decision resolving
the matters submitted to it within 20 Business Days following the submission
thereof. Judgment may be entered upon the written determination of the
Independent Accounting Firm in any court having competent jurisdiction over the
parties or their assets. The costs of any dispute resolution pursuant to this
Section 2.7(c), including the fees and expenses of the Independent Accounting
Firm and of any enforcement of the determination thereof, shall be borne by the
parties in inverse proportion as they may prevail on the matters resolved by the
Independent Accounting Firm, which proportionate allocation shall be calculated
on an aggregate basis based on the relative dollar values of the amounts in
dispute and shall be determined by the Independent Accounting Firm at the time
the determination of such firm is rendered on the merits of the matters
submitted. The fees and disbursements of the auditors and Representatives of
each party incurred in connection with their preparation or review of the Final
Adjustment

 

15

 

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Statement and preparation or review of any Buyer Adjustment Statement Objection,
as applicable, shall be borne by such party.

(d)   The Purchase Price shall be increased or decreased, as the case may be, as
follows:

(i)           if the Final Adjustment Amount as finally determined pursuant to
this Section 2.7 is greater than the Pre-Closing Adjustment Amount, the Purchase
Price shall be increased in an amount equal to the difference between the Final
Adjustment Amount and the Pre-Closing Adjustment Amount, and the Buyer shall pay
such amount to the Sellers; and

(ii)          if the Final Adjustment Amount as finally determined pursuant to
this Section 2.7 is less than the Pre-Closing Adjustment Amount, the Purchase
Price shall be decreased in an amount equal to the difference between the Final
Adjustment Amount and the Pre-Closing Adjustment Amount, and the Sellers,
jointly and severally, shall pay such amount to the Buyer.

(e)   Amounts to be paid pursuant to Section 2.7(d) shall bear interest from the
Closing Date to the date of such payment at a rate equal to the rate of interest
from time to time published in The Wall Street Journal as the prime rate,
calculated on the basis of a year of 365 days and the number of days elapsed.
Payments in respect of Section 2.7(d) shall be made within three Business Days
of final determination of the Final Adjustment Amount pursuant to the provisions
of this Section 2.7 by wire transfer of United States dollars in immediately
available funds to such account or accounts as may be designated in writing by
the party entitled to such payment at least two Business Days prior to such
payment date. For the avoidance of doubt, payments in respect of Section 2.7(d)
shall not be subject to the Minimum Loss Amount, Basket Amount or other
limitations set forth in Section 9.5.

Section 2.8        Transaction Costs. Regardless of law or convention, if the
Closing occurs, it shall be the responsibility of the Buyer to, and the Buyer
shall, pay or cause to be paid all transaction costs incurred by the Buyer, the
Sellers, the Targets and the Subsidiaries in connection with the transactions
contemplated hereby, including brokerage fees of CB Richard Ellis, Inc. and
Sutton Canyon Capital Corp. and of any other broker engaged by the Buyer or any
Affiliate of the Buyer in connection with the transactions described herein,
costs of obtaining the Debt Consents, Transfer Taxes (as provided in Section 6.7
below) and title insurance costs (the "Transaction Costs"), and otherwise
complete and file all Tax Returns of such Transfer Taxes in connection therewith
in a timely manner, provided, however, that the Sellers jointly and severally
(rather than the Buyer) shall pay the following: (a) the legal fees and expenses
of counsel to any of the Sellers, (b) the legal fees and expenses of counsel to
any of the Targets and their Subsidiaries for services rendered at or before the
Closing in connection with the transactions contemplated hereby and (c) any
brokerage fees incurred by any of the Sellers, Targets, Subsidiaries or any
Affiliate of any of them, other than the fees of CB Richard Ellis, Inc. and
Sutton Canyon Capital Corp. set forth above. In addition, it shall also be the
responsibility of the Buyer to pay or cause to be paid all costs and fees in
connection with obtaining the Debt Consents, Non-Consolidation Opinion and any
other consents obtained pursuant to Section 5.8.

 

16

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLER

Except as set forth in the corresponding Schedule attached hereto the Sellers
hereby represent and warrant to the Buyer as follows:

 

 

Section 3.1

Organization and Qualification.

(a)   Each Target is (i) a British Virgin Islands business company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of the British Virgin Islands and has all necessary corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and (ii) duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except, in each case, for any such failure to be so qualified or
licensed that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(b)   Each Subsidiary is (i) a corporation, a limited liability company or a
limited partnership duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation as set forth in
Schedule 3.1(b), and has all necessary corporate, limited liability company or
partnership power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and (ii) duly qualified or
licensed as a foreign entity to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except, in each case, for any such failure to be so qualified or
licensed that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(c)   Schedule 3.1(c) sets forth a true, complete and correct list of the (i)
certificates of incorporation, certificates of formation, and certificates of
limited partnership and (ii) bylaws, limited liability company agreements and
limited partnership agreements, or, in either case, the equivalent
organizational documents (all such documents referred to in this Section 3.1(c)
being referred to as the "Organizational Documents"), each as amended, of each
Target and each Subsidiary. The Sellers have provided to the Buyer complete and
correct copies of each of the Organizational Documents listed on Schedule 3.1(c)
prior to the date of this Agreement, and each Organizational Document is in full
force and effect.

Section 3.2        Authority. Each Seller has full power and authority to
execute and deliver this Agreement and each of the Ancillary Agreements to which
it is or will be a party, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by each Seller of this Agreement and each of
the Ancillary Agreements to which each Seller is or will be a party and the
consummation by each Seller of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary action. This Agreement
has been, and upon the execution by each Seller of each of the Ancillary
Agreements to which the Sellers will be parties

 

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will have been, duly executed and delivered by each Seller. This Agreement
constitutes, and upon their execution by the Sellers each of the Ancillary
Agreements will constitute, the legal, valid and binding obligations of each
Seller, enforceable against each Seller in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

 

 

Section 3.3

No Conflict; Required Filings and Consents.

(a)   Except as set forth in Schedule 3.3(a), the execution, delivery and
performance by each Seller of this Agreement and each of the Ancillary
Agreements to which each Seller is or will be a party, and the consummation of
the transactions contemplated hereby and thereby, do not and will not:

(i)           conflict with or violate the Organizational Documents of any
Seller, Target or Subsidiary;

(ii)          conflict with or violate any Law applicable to any Seller, Target
or Subsidiary or by which any property or asset of any Seller, Target or
Subsidiary is bound or affected; or

(iii)         conflict with, result in any breach of, constitute a default (or
an event that, with notice or lapse of time or both, would become a default)
under, violate, require any consent of any Person pursuant to, or give to others
any rights of termination, acceleration or cancellation of, or change any rights
under any Contract to which any Seller, Target or Subsidiary is a party or by
which any of their assets are bound;

except, in the case of clause (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(b)   No Seller, Target or Subsidiary is required to file, seek or obtain any
notice, authorization, approval, order, permit or consent of or with, or make
any filing with, any Governmental Authority in connection with the execution,
delivery and performance by each Seller of this Agreement and each of the
Ancillary Agreements to which each Seller is or will be a party or the
consummation of the transactions contemplated hereby or thereby or in order to
prevent the termination of any right, privilege, license or qualification of any
Target or any Subsidiary, except for (i) such filings as may be required by any
applicable federal or state securities or "blue sky" laws, (ii) where failure to
obtain such consent, approval, authorization or action, or to make such filing
or notification, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or (iii) as may be necessary as a
result of any facts or circumstances relating to the Buyer or any of its
Affiliates.

 

 

Section 3.4

Shares and Partnership Intercompany Notes.

 

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(a)   Each Seller is the legal and beneficial owner of the number of Shares as
set forth in Schedule 3.4(a). Each Seller has the right, authority and power to
sell, assign and transfer the Shares owned by it to the Buyer. Upon delivery to
the Buyer of certificates for the Shares at the Closing, the Buyer's payment of
the Purchase Price and registration of the Shares in the name of the Buyer in
the registers of members of the applicable Targets, the Buyer shall acquire
title to the Shares, free and clear of any Encumbrance other than Encumbrances
created by the Buyer.

(b)   At the Closing, the Sellers will own the Partnership Intercompany Notes.
Upon payment of the Purchase Price, the Buyer shall acquire title to the
Partnership Intercompany Notes free and clear of any Encumbrance other than
Encumbrances created by the Buyer.

Section 3.5         Capitalization. Each Target's authorized and outstanding
capital stock is as set forth in Schedule 3.4(a). The Shares constitute all of
the issued and outstanding capital stock of the Targets. The Shares are validly
issued, fully paid and nonassessable. There are no outstanding obligations,
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any kind relating to the capital stock of any
Target or obligating any Target to issue or sell any shares of capital stock of,
or any other interest in, any Target. There are no outstanding contractual
obligations of any Target to repurchase, redeem or otherwise acquire any shares
of capital stock of any Target or to provide funds to, or make any investment
in, any other Person. There are no agreements or understandings in effect with
respect to the voting or transfer of any of the capital stock of any of the
Targets.

Section 3.6        Equity Interests.

(a)   The record and beneficial ownership of the equity interests in each of the
Subsidiaries directly or indirectly owned by the Targets (the "Equity
Interests") is set forth in Schedule 3.6(a). Except for the equity interests
owned, to the Knowledge of the Sellers, by CB Richard Ellis, Inc. and Trump as
set forth on Schedule 3.6(a), the Equity Interests constitute all of the issued
and outstanding equity interests in the Subsidiaries. Except for the
Subsidiaries listed in Schedule 3.6(a), neither any Target nor any Subsidiary
directly or indirectly owns any equity, partnership, membership or similar
interest in, or any interest convertible into, exercisable for the purchase of
or exchangeable for any such equity, partnership, membership or similar
interest, or is under any current or prospective obligation to form or
participate in, provide funds to, make any loan, capital contribution or other
investment in or assume any liability or obligation of, any Person. Except as
set forth in Schedule 3.6(a)(ii), the Equity Interests are held free and clear
of any Encumbrance other than Encumbrances created by the Buyer. There are no
outstanding obligations, options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any kind relating to the
Equity Interests or obligating any Subsidiary to issue or sell any shares of
capital stock of, or any other interest in, any Subsidiary. There are no
outstanding contractual obligations of any Subsidiary to repurchase, redeem or
otherwise acquire any Equity Interests or to provide funds to, or make any
investment in, any other Person. Except as required by this Agreement, there are
no agreements or understandings in effect with respect to the voting or transfer
of any of the Equity Interests.

 

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(b)   Schedule 3.6(b) sets forth the amount and timing of all Capital
Contributions (as defined in each Partnership Agreement) made by any Partners
(as defined in each Partnership Agreement) to the Hudson Waterfront Partnerships
(other than HWA II) and all distributions made to any Partners by the Hudson
Waterfront Partnerships (other than HWA II).

 

 

Section 3.7

Financial Statements; No Undisclosed Assets or Liabilities.

(a)   Copies of the unaudited combined and combining statements of assets,
liabilities and partners' capital for each of HWA I, HWA II, HWA III, HWA IV and
HWA V as at March 31, 2004, 2005, and 2006 and as at December 31, 2006, and the
related unaudited combined and combining statements of revenues and expenses for
each of HWA I, HWA II, HWA III, HWA IV and HWA V, together with all related
notes and schedules thereto (collectively referred to as the "Financial
Statements") are attached hereto as Schedule 3.7(a). Each of the Financial
Statements (i) has been prepared based on the books and records of each of HWA
I, HWA II, HWA III, HWA IV and HWA V (except as may be indicated in the notes
thereto), (ii) has been prepared on an United States federal income tax basis of
accounting, applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and (iii) fairly reflects, in
all material respects, the assets, liabilities, partners' capital, revenues and
expenses on an United States federal income tax basis of each of HWA I, HWA II,
HWA III, HWA IV and HWA V as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein.

(b)   Other than their interests in the Subsidiaries as set forth in Schedule
3.6(a), there are no assets of any Target or any Subsidiary of a nature required
to be reflected on a statement of assets, liabilities and partners' capital
prepared on an United States federal income tax basis, other than any such
assets (i) set forth on the Financial Statements or the notes thereto, (ii) set
forth in the Schedules, (iii) acquired since December 31, 2006, in the ordinary
course of business of the Targets and the Subsidiaries, or (iv) that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Notwithstanding anything to the contrary contained herein, it is
agreed by the parties that any fixtures, furniture, furnishings, equipment or
other personal property (including trade fixtures in, on, around or affixed to
the Properties) located or used at either of the Properties and owned by any
other Person, including the Thomas Hart Benton murals located in the lobby of
the 1290 Property owned by AXA Financial, Inc., are not assets of the Targets or
the Subsidiaries.

(c)   There are no debts, liabilities or obligations of any Target or any
Subsidiary of any nature, accrued or of a contingent nature that would be
required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles in the United States, other than any
such debts, liabilities or obligations (i) reflected or reserved against on the
Financial Statements or the notes thereto, (ii) set forth in the Schedules
(including the Legal Action), (iii) incurred by the Tier 1 Subsidiaries since
December 31, 2006, in their ordinary course of business or (iv) for Taxes.

(d)   No Target and no Subsidiary, other than the Tier 1 Subsidiaries, is
legally obligated for any liabilities of the Hudson Waterfront Partnerships or
their Subsidiaries, other than any such liabilities that would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(e)   Except for cash, cash equivalents, prepaid Taxes and the Equity Interests,
the Targets and their Subsidiaries, other than the Tier 1 Subsidiaries, do not
own or have any interests in any assets or properties, other than any such
interests that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(f)    The Sellers, Targets and Subsidiaries (including the Hudson Waterfront
Partnerships) have completed in all material respects all development,
construction and other obligations required of any of them pursuant to the
Extell Purchase Agreement and, except as identified on Schedule 3.7(f), none of
them has any remaining or unsatisfied material covenant or material financial
obligations pursuant to the Extell Purchase Agreement or any of the other
agreements of instruments entered into by any of them in connection with the
transactions contemplated in the Extell Purchase Agreement.

Section 3.8          Absence of Certain Changes or Events. Since December 31,
2006, (a) the business of the Targets and the Subsidiaries has been conducted,
in all material respects, in the ordinary course of business consistent with
past practice, (b) there has not occurred any Material Adverse Effect, (c) no
action or circumstance which would be proscribed after the date hereof under
Sections 5.1(a), (b), (c), (d), (e), (f), (g), (o) or (p) has been taken or is
occurring and (d) except as set forth on Schedule 3.8(d), no Target or
Subsidiary has declared or paid any dividend or distribution.

Section 3.9          Compliance with Law; Permits.

(a)   To the Knowledge of the Sellers, each Target and each Subsidiary is and
has been in compliance with all Laws applicable to it, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. None of the Sellers, Targets or their Subsidiaries has received
any written notice of any material violation of law and no action with respect
to any violation of law is pending or threatened.

(b)   Each Target and each Subsidiary is in possession of all permits, licenses,
franchises, approvals, certificates, consents, waivers, concessions, exemptions,
orders, registrations, notices or other authorizations of any Governmental
Authority necessary for each Target and each Subsidiary to own and operate the
Properties and to carry on its business as currently conducted (the "Permits"),
except where the failure to have, or the suspension or cancellation of, any of
the Permits would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

No representation or warranty is made under this Section 3.9 with respect to
ERISA, Taxes, environmental matters or the ADA, which are covered exclusively by
Sections 3.11, 3.14, 3.15 and 3.20, respectively.

Section 3.10       Litigation. Except for the Legal Action and except as set
forth in Schedule 3.10, as of the date hereof, there is no Action not covered by
insurance in favor of the applicable Target or Subsidiary by or against any
Target or any Subsidiary or against the owner of the Properties with respect to
any of the Properties pending or, to the Knowledge of the Sellers, threatened
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or would affect the legality, validity or enforceability
of this Agreement

 

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or any Ancillary Agreement or the consummation of the transactions contemplated
hereby or thereby.

 

 

Section 3.11

Employee Benefit Plans.

(a)   Schedule 3.11(a) sets forth (i) a list of all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all bonus, stock option, stock purchase, restricted
stock, stock appreciation rights, stock-based incentive, bonus, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, that are maintained,
contributed to or sponsored by any Target or any Subsidiary for the benefit of
any current or former employee, officer or director of any Target or any
Subsidiary and (ii) a list of all employment, termination, severance or other
contracts, agreements or arrangements, pursuant to which any Target or any
Subsidiary has any current or future obligation with respect to any current or
former employee, officer or director of any Target or any Subsidiary
(collectively, the "Employee Plans"). A true and complete copy of each Employee
Plan and all current summary plan descriptions and the most recent determination
letter from the IRS with respect to any Employee Plan have been made available
to the Buyer by or on behalf of the Sellers.

(b)   (i) Each Employee Plan has been maintained in all material respects in
accordance with its terms and the requirements of ERISA and the Code, (ii) each
Target and each Subsidiary has performed all material obligations required to be
performed by it under any Employee Plan and to the Knowledge of the Sellers, is
not in any material respect in default under or in violation of any Employee
Plan, and (iii) no Action (other than claims for benefits in the ordinary
course) is pending or, to the Knowledge of the Sellers, threatened with respect
to any Employee Plan by any current or former employee, officer or director of
any Target or any Subsidiary.

(c)   Each Employee Plan that is intended to be qualified under Section 401(a)
of the Code has received a determination or opinion letter from the IRS that it
is so qualified and each related trust that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination or opinion letter from the IRS that it is so exempt and, to the
Knowledge of the Sellers, no fact or event has occurred since the date of such
letter or letters from the IRS that would reasonably be expected adversely to
affect the qualified status of any such Employee Plan or the exempt status of
any such trust.

(d)   None of the Employee Plans is a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) or a single employer plan (within the
meaning of Section 4001(a)(15) of ERISA) for which any Target or any Subsidiary
would reasonably be expected to incur liability under Section 4063 or 4064 of
ERISA. No Target or Subsidiary, and no entity which is considered one employer
with any Target under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate") (i) maintains or contributes to or has within the past six
years maintained or contributed to a pension plan that is subject to Subtitles C
or D of Title IV of ERISA or (ii) maintains or has an obligation to contribute
to a multiemployer plan (within the meaning of Section 3(37) of ERISA). All
contributions required to be made under each Employee Plan, as of the date
hereof, have been timely made and all obligations in respect of each Benefit
Plan have been properly accrued and reflected in the Financial Statements. No

 

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Target or Subsidiary has any obligations for retiree health and life benefits
under any Employee Plan. Any such plan may be amended or terminated by the
Targets or Subsidiaries at any time without incurring any liability thereunder
other than in respect of claims incurred prior to such amendment or termination.

(e)   There has been no amendment to, announcement by any Target or any
Subsidiary relating to, or change in employee participation or coverage under,
any Employee Plan which would increase materially the expense of maintaining
such plan above the level of the expense incurred therefor for the most recent
fiscal year. Neither the approval or the execution of this Agreement nor the
approval or consummation of any of the transactions contemplated hereby will,
either directly or in combination with any other events, (i) entitle any
employees of any Target or any Subsidiary to severance pay or any increase in
severance pay upon any termination of employment after the date hereof, (ii)
accelerate the time of payment or vesting or result in any payment of funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or result in any other material obligation pursuant
to, any of the Employee Plans, (iii) limit or restrict the right of any Target
or Subsidiary, or, after the consummation of the transactions contemplated
hereby, the Buyer, to merge, amend or terminate any of the Employee Plans or
(iv) result in payments under any of the Employee Plans which would not be
deductible under Section 162(m) or Section 280G of the Code.

Section 3.12      Insurance. Schedule 3.12 sets forth a true and complete list
of all material insurance policies in force with respect to the Targets and the
Subsidiaries (the "Insurance Policies"). Each Insurance Policy is in full force
and effect and all premiums due with respect to all Insurance Policies have been
paid, with such exceptions that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.

Section 3.13      Condemnation. There are no condemnation or eminent domain
proceedings pending or, to the Knowledge of the Sellers, threatened in writing
that may result in the taking of any part of any of the Properties.

Section 3.14      Taxes. Except as set forth on Schedule 3.14:

(a)   All federal income Tax returns and all other material Tax Returns that are
required to be filed on or before the Closing by or with respect to any Target
or any Subsidiary have been or will be timely filed on or before the Closing
Date, and all such Tax Returns are or will be true, complete and correct in all
material respects. All Taxes due and owing by the Targets and the Subsidiaries
have been or will be timely paid in full prior to the Closing. The Targets and
the Subsidiaries have adequately reserved for all accrued Taxes, even if not yet
payable.

(b)   (i) No Tax Returns referred to in Section 3.14(a) have been the subject of
an audit by the IRS or the appropriate state, local or foreign taxing authority
for the period for assessment where the statute of limitations remains open;
(ii) all deficiencies asserted or assessments made as a result of any such
audits have been paid in full and (iii) no claim has ever been made by an
authority in a jurisdiction where any Target or any Subsidiary does not file Tax
Returns that the Target or the Subsidiary is or may be subject to taxation by
that jurisdiction or

 

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may be subject to taxation by that jurisdiction or should have been included in
a consolidated return.

(c)   There are no Encumbrances on any of the assets of any Target or any
Subsidiary that arose in connection with any failure (or alleged failure) to pay
any Tax.

(d)   There is no material dispute or claim concerning any Tax liability of any
Target or any Subsidiary claimed or raised by any authority in writing.

(e)   The Sellers have delivered or made available to the Buyer correct and
complete copies of all income Tax Returns and all material non-income Tax
Returns, examination reports, and statements of deficiencies assessed against,
or agreed to by any Target or any Subsidiary since December 31, 2002.

(f)    Each of the Targets and the Subsidiaries has withheld or collected and
paid or deposited in accordance with Law all Taxes required to have been
withheld or collected and paid or deposited in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, partner or
other third party.

(g)   None of the Targets or the Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency, and no such waivers of statutes of limitation
or extensions have been requested from any Target or any Subsidiary.

(h)   None of the Targets or the Subsidiaries is a party to or is otherwise
bound by or has any obligation under any Tax allocation or sharing agreement.

(i)    None of the Targets or the Subsidiaries (x) has been a member of an
affiliated, combined, consolidated or unitary Tax group for purposes of filing
any Tax Return, or (y) has any liability for the Taxes of any Person (other than
the Targets and the Subsidiaries) under Reg. §1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.

(j)    None of the Targets or the Subsidiaries will be required, as a result of
(i) a change in accounting method for a Tax period beginning on or before the
Closing, to include any adjustment under Section 481(c) of the Code (or any
similar provision of state, local or foreign law) in taxable income for any Tax
period beginning on or after the Closing Date, or (ii) any "closing agreement"
as described in Section 7121 of the Code (or any similar provision of state,
local or foreign Tax law), to include any item of income in or exclude any item
of deduction from any Tax period beginning on or after the Closing.

(k)   None of the Targets or the Subsidiaries has engaged in any listed
transaction as defined in Treasury Regulations Section 1.6011-4(b)(2).

(l)    No Tax is required to be withheld pursuant to Section 1445 of the Code as
a result of the transfer contemplated by this Agreement.

 

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(m) Except as disclosed in Schedule 3.14, no Target or Subsidiary has paid any
interest to any Person that is a "10 Percent Shareholder" of such Subsidiary
within the meaning of Section 871(h)(3)(B) of the Code.

(n)   None of the Targets is a resident for tax purposes of any country other
than the British Virgin Islands.

(o)   No Target has ever been engaged in a trade or business within the United
States.

(p)   No "check the box election" under Treasury Regulations Section 301.7701-3
has been made at any time for any Target.

(q)   No election has been made under Section 897(i) of the Code to treat any of
the Targets as a domestic corporation.

(r)    No "physical production activity" within the meaning of Treasury
Regulations Section 1.263A-12(e)(1) has been performed by any of HWA III, HWA IV
or HWA V or any of their Subsidiaries, with respect to the real property
exchanged by the Hudson Waterfront Partnerships and their Subsidiaries pursuant
to the Extell Purchase Agreement, prior to the date of such exchange.

Section 3.15      Environmental Matters. Except as set forth on Schedule 3.15,
to the Knowledge of the Sellers:

(a)   No Target or Subsidiary has received any written notice, claim, demand or
request for information from a Governmental Authority or other Person alleging
or otherwise indicating that any Target, Subsidiary or Property may incur
material liability under any Environmental Law or is not or has not been in
material compliance with any Environmental Law;

(b)   There is no pending, and none of the Sellers, any Target or any Subsidiary
has received written notice of any threatened investigation by any Governmental
Authority with respect to any of the Properties relating to Hazardous Substances
or otherwise relating to any Environmental Law;

(c)   Each Target and each Subsidiary and each Property has complied at all
times and in all material respects with all Environmental Laws and holds all
material Environmental Permits;

(d)   No Property has been contaminated with any Hazardous Substance (including
soils, groundwater, surface water, buildings or other structures) in a manner
that could be expected to require investigation, remediation or other action
pursuant to any Environmental Law;

(e)   The Targets, the Subsidiaries and the Properties are not subject to any
order, decree, injunction or other arrangement with any Governmental Authority
or any indemnity or

 

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other agreement with any third party relating to obligations or liability under
any Environmental Law;

The Sellers have delivered to the Buyer copies of all material environmental
reports, studies, assessments, Environmental Permits, sampling data and other
environmental analyses in their possession relating to the Properties or any
current operations.

For purposes of this Agreement:

"Environmental Laws" means: any Laws of any Governmental Authority relating to
(i) releases or threatened releases of Hazardous Substances or materials
containing Hazardous Substances; (ii) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances or materials containing
Hazardous Substances; or (iii) pollution or protection of the environment,
health, safety or natural resources.

"Environmental Permits" means all Permits under any Environmental Law.

"Hazardous Substances" means: (i) those substances defined as a pollutant,
contaminant or toxic or hazardous substance or waste in, or otherwise or
regulated under, the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act, and their state counterparts, as each may be amended
from time to time, and all regulations thereunder and (ii) any substance,
material or waste regulated by any Governmental Authority pursuant to any
Environmental Law.

 

 

Section 3.16

Material Contracts.

(a)   Schedule 3.16(a) lists each of the following types of Contracts to which
any of the Targets or the Subsidiaries is a party or by which any of their
assets are bound (such Contracts as described in this Section 3.16(a) being
"Material Contracts"):

(i)           all Contracts that provide for or will be reasonably likely to
result in payment or receipt by any Target or any Subsidiary of more than
$1,000,000 in any year, including any such Contracts with customers or clients;

(ii)          all Contracts relating to indebtedness for borrowed money;

(iii)         any Contract, as amended, pursuant to which any Target or any
Subsidiary leases any portion of any of the Properties to any third party,
including any and all amendments, supplements or other modifications thereto
(each a "Lease" and collectively, the "Leases"; it is agreed that the term
"Lease" does not include any subleases, licenses and occupancy agreements
entered into by tenants under the Leases but does include the Subsidiaries'
rights under any consent agreement executed in connection

 

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therewith) and any guaranties or indemnities or other collateral agreements in
support of any Lease;

(iv)         all Contracts that limit or purport to limit the ability of any
Target or any Subsidiary to compete in any line of business or with any Person
or in any geographic area or during any period of time;

(v)          the Extell Purchase Agreement, 555 Purchase Agreement and 1290
Purchase Agreement;

(vi)         all management agreements;

(vii)        all brokerage arrangements;

(viii)      all joint venture, partnership or similar agreements or arrangements
with any Person other than another Target or Subsidiary;

(ix)         all Contracts with any Seller or Affiliate of any Seller; and

(x)          all other Contracts entered by a Target or Subsidiary with any
other Person that is a direct or indirect owner of any equity interest in any of
the Hudson Waterfront Partnerships (other than the Partnership Agreements).

(b)   Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, each Material Contract (i) is valid
and binding on the applicable Target or the applicable Subsidiary, as the case
may be, and, to the Knowledge of the Sellers, the counterparties thereto, and is
in full force and effect and (ii) shall continue in full force and effect upon
consummation of the transactions contemplated by this Agreement, except to the
extent that any consents set forth in Schedule 3.3(a) are not obtained. Except
as set forth in Schedule 3.16(b), no Target nor any Subsidiary is in breach of,
or default under, any Material Contract to which it is a party, except for such
breaches or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Sellers have
delivered to the Buyer true and complete copies of all Material Contracts.

 

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Section 3.17      OFAC List. None of the Sellers is (i) identified in the OFAC
List (as hereinafter defined) or (ii) a Person with whom a citizen of the United
States is prohibited to engage in transactions by any trade embargo, economic
sanction, or other prohibition of United States law, rule, regulation or
Executive Order of the President of the United States. The term "OFAC List"
shall mean the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the United States Treasury
Department, Office of Foreign Assets Control and any other similar list
maintained by the United States Treasury Department, Office of Foreign Assets
Control pursuant to any law, rule, regulation or Executive Order of the
President of the United States, including, without limitation, trade embargo,
economic sanctions, or other prohibitions imposed by Executive Order of the
President of the United States.

Section 3.18      Brokers. Except for CB Richard Ellis, Inc. and Sutton Canyon
Capital Corp., the fees of which will be paid by the Buyer pursuant to Section
2.8 hereof, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of any Seller,
Target or any Subsidiary or any Affiliate of any of them.

Section 3.19      Rent Roll.

(a)   The rent rolls for the Properties provided by the Sellers to the Buyer and
attached as Schedule 3.19(a) (the "Rent Rolls") have been prepared in the
ordinary course of business by the respective building managers for each of the
Properties. The Sellers make no representations or warranties regarding the
accuracy or completeness of the Rent Rolls.

(b)   The Sellers have provided the Buyer with a true and complete copy of (i)
the most recent annual escalation statement for the 555 Property and for the
1290 Property and (ii) the most recent monthly tenant bills for the 1290
Property.

Section 3.20      Americans with Disabilities Act. None of the Targets or the
Subsidiaries has received written notice since January 1, 2004 that any Target
or Subsidiary is the subject of any pending suit or proceeding alleging that it
is not in compliance with the Americans With Disabilities Act (the "ADA") or has
received any written notice that any of the Properties is not in compliance with
the requirements of the ADA or is subject to any order, settlement, consent,
decree or judgment relating to the ADA.

Section 3.21      Tenant Improvement Allowances; Brokerage Commissions. Except
as set forth on Schedule 2.6, to the Knowledge of the Sellers, (i) there are no
Tenant Improvement Allowances and (ii) there are no Brokerage Commissions, in
either case owing, or that will become payable, in respect of any of the Leases
executed prior to the date hereof (but excluding amounts due upon any renewals
or extensions of such Leases or for any must-take space or option space under
such Leases).

Section 3.22      Other Property.

(a)   Other than immaterial leases for use in a manner that could not reasonably
be expected to expose any such entity to remedial responsibilities or liability
pursuant to any Environmental Law, the Targets and Subsidiaries have not owned
or leased any real property except for the Properties or the real property
exchanged by the Hudson Waterfront Partnerships and their Subsidiaries pursuant
to the Extell Purchase Agreement.

(b)   The Targets and Subsidiaries do not currently lease any real property or
interest therein from any Person.

Section 3.23      Zoning. None of the Sellers or any of the Targets or the
Subsidiaries has received any written notice from any Governmental Authority to
the effect that any condemnation, taking by power of eminent domain or similar
proceeding or rezoning proceeding is pending with respect to any of the
Properties.

 

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Section 3.24      No Purchase Rights. No Person has any option to purchase,
right of first refusal to purchase or other similar purchase right with respect
to any of the Properties.

Section 3.25      Labor Matters. None of the Targets or Subsidiaries is or has
been a party to or otherwise bound by any collective bargaining agreement or
other Contract with a labor union or labor organization, and, to the Knowledge
of the Sellers, there is no organizational effort presently being made or
threatened by or on behalf of any labor organization or labor union.

Section 3.26       Exclusivity of Representations and Warranties. Neither the
Sellers nor any of their Affiliates or Representatives are making any
representation or warranty of any kind or nature whatsoever, oral or written,
express or implied (including, but not limited to, any relating to financial
condition, results of operations, assets or liabilities of the Targets and the
Subsidiaries), except as expressly set forth in this Agreement, including the
Schedules and the Sellers hereby disclaim any such other representations or
warranties.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer hereby represents and warrants to the Sellers as follows:

Section 4.1         Organization and Qualification. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware and has all necessary limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. The Buyer is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except, in each case, for any
such failures that would not, individually or in the aggregate, reasonably be
expected to have a Buyer Material Adverse Effect.

Section 4.2        Authority. The Buyer has full limited liability company power
and authority to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is or will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by the Buyer of this
Agreement and each of the Ancillary Agreements to which it is or will be a party
and the consummation by the Buyer of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action.
This Agreement

 

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has been, and upon their execution each of the Ancillary Agreements to which the
Buyer is or will be a party will have been, duly and validly executed and
delivered by the Buyer. This Agreement constitutes, and upon their execution
each of the Ancillary Agreements to which the Buyer is or will be a party will
constitute, the legal, valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

Section 4.3        No Conflict; Required Filings and Consents.

(a)   The execution, delivery and performance by the Buyer of this Agreement and
each of the Ancillary Agreements to which the Buyer is or will be a party, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not:

(i)           conflict with or violate the organizational documents of the
Buyer;

(ii)          conflict with or violate any Law applicable to the Buyer or by
which any property or asset of the Buyer is bound or affected; or

(iii)         conflict with, result in any breach of, constitute a default (or
an event that, with notice or lapse of time or both, would become a default)
under, require any consent of any Person pursuant to, or give to others any
rights of termination, acceleration or cancellation of, any material contract or
agreement to which the Buyer is a party;

except, in the case of clause (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not, individually or in the
aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

(b)   The Buyer is not required to file, seek or obtain any notice,
authorization, approval, order, permit or consent of or with any Governmental
Authority in connection with the execution, delivery and performance by the
Buyer of this Agreement and each of the Ancillary Agreements to which it will be
party or the consummation of the transactions contemplated hereby or thereby or
in order to prevent the termination of any right, privilege, license or
qualification of the Buyer, except for (i) such filings as may be required by
any applicable federal or state securities or "blue sky" laws, (ii) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.4         Financing. The Buyer has access to sufficient funds to
permit the Buyer to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements. Notwithstanding anything to the contrary contained
herein, the parties acknowledge and agree that it shall not be a condition to
the obligations of the Buyer to consummate the transactions contemplated hereby
that the Buyer have sufficient funds for payment of the Purchase Price.

Section 4.5        Brokers. Except for Sutton Canyon Capital Corp. and CB
Richard Ellis, Inc., the fees of which will be paid by the Buyer, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Buyer.

Section 4.6        Investment Intent. The Buyer is acquiring the Shares for its
own account for investment purposes only and not with a view to any public
distribution thereof or with any intention of selling, distributing or otherwise
disposing of the Shares in a manner that would violate the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act").
The Buyer agrees that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act and any

 

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applicable state securities laws, except pursuant to an exemption from such
registration under the Securities Act and such laws. The Buyer is able to bear
the economic risk of holding the Shares for an indefinite period (including
total loss of its investment), and (either alone or together with its
Representatives) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risk of its
investment.

Section 4.7         Condition of the Targets, the Subsidiaries and the
Properties; Representations and Warranties of the Sellers.

(a)   The Buyer is a sophisticated purchaser and has made its own independent
investigation and analysis, basing its valuation of, and decision to purchase,
the Shares and to enter into the transactions contemplated by this Agreement and
the Ancillary Agreements to which it is a party upon such investigation and
analysis. This investigation and analysis was conducted by the Buyer together
with its expert advisors and other Representatives that it has engaged for such
purpose. The Buyer and its Representatives have been provided with access to the
Properties and to other information that they have requested in connection with
such investigation and analysis. The Buyer is not relying on any statement,
representation or warranty, oral or written, express or implied, made by any of
the Sellers, the Targets or the Subsidiaries or any of their Affiliates or
Representatives, except as expressly set forth in this Agreement, including the
Schedules and the Ancillary Agreements. The Buyer acknowledges that, except as
specifically provided in this Agreement or any of the Ancillary Agreements,
should the Closing occur, the Buyer shall acquire the Targets without any
representation or warranty as to merchantability or fitness for any particular
purpose of their respective assets, including the Subsidiaries and the
Properties and the Buyer has not relied upon any oral or written information
from, including without limitation, any estimates, projections or forecasts
prepared by, any of the Sellers, the Targets or any of their Affiliates or
Representatives or any employees, agents, consultants, advisors or
representatives of the foregoing. The Buyer acknowledges that there are inherent
uncertainties in attempting to make such estimates, projections and forecasts
and that it takes full responsibility for making its own evaluation of the
adequacy and accuracy of any such estimates, projections or forecasts (including
the reasonableness of the assumptions underlying any such estimates, projections
and forecasts). Without limiting the generality of the foregoing, the Buyer
acknowledges and agrees that except as may be expressly set forth in this
Agreement or any Ancillary Agreements, the Buyer is acquiring the assets of the
Targets, including the Subsidiaries and the Properties, "AS IS" and "WHERE IS"
on the Closing Date and, except as expressly set forth in this Agreement, the
Sellers are not making any representation or warranty, express or implied, and
the Buyer has not

 

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relied on any representation or warranty, express or implied, regarding the
Targets or their assets, including the Subsidiaries and the Properties,
including, without limitation, any representation or warranty with respect to
(i) the business or financial condition of any tenant of any Property, (ii) the
physical condition of any improvement or any other property comprising all or a
part of any Property or any other portion of the Property, or its fitness,
merchantability or suitability for any use or purpose, (iii) the Leases, rents,
income or expenses of any Property or any other portion of the Property or (iv)
the current or future use of any Property or any other portion of the Property,
including, but not limited to, use for commercial retail, industrial,
residential or other purposes. Sellers are not liable or bound in any manner by
any verbal or written statements, representations, real estate brokers'
"set-ups", offering memoranda or information pertaining to the Properties
furnished by any real estate broker, advisor, consultant, agent, employee,
representative or other Person.

(b)   Neither the Sellers nor any Target or Subsidiary represent or warrant that
any particular Lease or tenancy will be in force or effect at the Closing or
that the tenants will have performed their obligations thereunder. The
termination of any Lease or tenancy in accordance with Section 5.1(i) prior to
Closing by reason of the tenant's default shall not affect the obligations of
the Buyer under this Agreement in any manner or entitle the Buyer to an
abatement or credit against the Purchase Price or give rise to any other claim
by the Buyer.

(c)   In addition to, and not by way of limitation of Sections 3.9 and 4.7(a),
but subject to the other provisions of this Agreement, including Section 8.3(a),
the Buyer acknowledges that, upon the Closing, it shall purchase interests in
the Properties subject to all violations of law, notes or notices of violations
of law or governmental ordinances, orders or requirements noted in or issued by
the New York City Department of Housing and Buildings, Fire, Labor, Health, Air
Resource, Emergency Repair, Highway and the equivalent agencies in the City of
San Francisco or any other municipal department, agency or bureau having
jurisdiction related to the Properties that are not Monetary New Title Matters.
Without limiting the generality of the foregoing, except as set forth in
Sections 5.1 and 5.16 of this Agreement, none of the Sellers, the Targets, the
Subsidiaries or any of their Affiliates or Representatives or any employees,
agents, consultants, advisors or representatives of the foregoing shall be
required to remove or comply with any violations, notes, notices, orders,
requirements or liens which (i) arise in connection with New York City Local Law
5/73, 10/80, 10/81, 62/81, 16/84, 80/85, 76/85 and 58 and equivalent or similar
municipal laws and ordinances of the City of San Francisco or (ii) a tenant is
required to remove or comply with pursuant to the terms of its Lease, and such
violations, notes, notices, orders, requirements or liens shall not be deemed to
be an objection to title. Notwithstanding the foregoing provisions of this
paragraph (c), if any of the matters described in this paragraph (c) have, as of
the Closing Date, been liquidated to a monetary fine or penalty, then to the
extent not previously paid such matters are "Other Liabilities" and the Sellers
shall bear such amount in accordance with Sections 2.6 and 2.7 hereof.

ARTICLE V

COVENANTS

Section 5.1         Conduct of Business Prior to the Closing. Except as provided
in this Agreement, between the date hereof and the Closing, unless the Buyer
shall otherwise agree in

 

 

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writing, the Sellers shall cause the business of the Targets and the
Subsidiaries to be conducted only in the ordinary course of business in all
material respects and shall use their commercially reasonable efforts to
preserve intact in all material respects the business of the Targets and the
Subsidiaries and the relationships of the Targets and the Subsidiaries with
their respective lessees, suppliers, creditors and employees. Except as
expressly provided in this Agreement, between the date hereof and the Closing,
without the prior consent of the Buyer (which consent shall not be unreasonably
withheld or delayed), the Sellers shall cause each Target and Subsidiary not to
and shall not permit any Target or Subsidiary to, and no Target or Subsidiary
will:

(a)   amend or otherwise change its certificate of incorporation, certificate of
formation or certificate of limited partnership or its bylaws, limited liability
company agreement or limited partnership agreement or equivalent organizational
documents;

(b)   issue or sell equity securities, capital stock or equity interests of any
Target or Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any such equity securities, capital stock or other
equity interests;

(c)   declare, set aside, make or pay any dividend or other distribution,
payable in cash, securities, property or otherwise, or make any other payment on
or with respect to any of its equity securities, except for dividends or
distributions made to a Target or to a Subsidiary;

(d)   reclassify, combine, split, subdivide or redeem, or purchase or otherwise
acquire, directly or indirectly, any equity securities, capital stock or equity
interests or make any other change with respect to its capital structure;

(e)   (i) acquire or otherwise become the owner of any corporation, partnership,
limited liability company, other Person or division thereof or (ii) acquire or
otherwise become the owner of any other assets, other than (A) assets acquired
in the ordinary course of business in an amount for all assets covered by this
clause (A) not in excess of $1,000,000 in the aggregate, and (B) assets acquired
pursuant to paragraph (j) of this Section 5.1;

(f)    adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation or recapitalization of any Target or Subsidiary;

(g)   incur any indebtedness for borrowed money, other than (i) indebtedness of
the Hudson Waterfront Partnerships or their Subsidiaries owed to any other
Hudson Waterfront Partnership or Subsidiary thereof and (ii) indebtedness of any
Target or Subsidiary wholly-owned by a Target owed to any Target or Subsidiary
wholly-owned by a Target, or issue any debt securities;

(h)   amend, revise, renew or terminate any Material Contract (other than the
Leases, which are the subject of paragraph (i) below), except in the ordinary
course of business consistent with past practice, or increase any existing
obligations in any material respect or enter into any Contract that would be a
Material Contract if entered into prior to the date hereof, other than any such
Contracts entered into in the ordinary course of business (including Contracts
with customers, vendors or clients);

 

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(i)    (1) amend or modify any Lease or any related document or terminate or
accept or consent to the surrender or assignment of any Lease, in each case
without the Buyer's written consent, which consent shall not be unreasonably
withheld or delayed; provided, however, that the Targets and Subsidiaries shall
have the right, without the Buyer's consent, to enter into any modification or
amendment of any Lease to the extent required of the landlord pursuant to the
terms of any Lease or required by Law or that is entered into to effectuate or
memorialize the exercise of any right, remedy or option exercisable by the
Tenant 'as of right' pursuant to the terms of any Lease or pursuant to any Law;
(2) apply any security being held under any Lease (unless and until the Lease
has terminated and the tenant under the Lease has vacated the premises demised
thereby); or (3) enter into any new lease or renew or extend any Lease in
existence as of the date hereof or entered into as permitted herein without the
Buyer's prior written consent, which consent shall not be unreasonably withheld
or delayed (and upon effectiveness, any new lease approved by the Buyer as
provided herein shall thereafter be deemed a Lease for purposes of this
Agreement); provided, however, that the Targets and Subsidiaries shall have the
right without the Buyer's consent to renew or extend any Lease as necessary to
reflect the exercise by the tenant of any "as of right" renewal or extension
under the terms of such Lease;

(j)    authorize, or make any commitment with respect to any capital
expenditures, to the extent the commitments that will remain outstanding
following the Closing could reasonably be expected to exceed $500,000 for any
single expenditure or $5,000,000 in the aggregate for all such capital
expenditures, other than those capital expenditures (i) at any of the Properties
if and to the extent reflected but not yet paid in the 2006 and 2007 capital
budgets for that Property attached as Schedule 5.1(j), (ii) required of the
landlord pursuant to the applicable Lease or (iii) determined by the Sellers to
be necessary to address an emergency arising at the relevant Property;

(k)   cancel or otherwise fail to maintain or cause to be maintained all
material policies of insurance currently in effect with respect to each of the
Properties, which policies (or comparable replacements thereof) shall not be
changed as to coverage terms or amounts (including limits and deductibles) in
any material respect from the terms of the Insurance Policies;

(l)    create, or authorize any Person to create, any Encumbrance other than a
Permitted Encumbrance against the Properties other than Encumbrances existing on
the date hereof;

(m) (i) grant or announce any increase in the salaries, bonuses, severance or
other benefits payable by any Target or Subsidiary to any of their employees or
(ii) terminate, establish, adopt, enter into, amend or otherwise modify any
equity incentive compensation or employee benefit plan or any employment,
severance, change in control or similar Contract with any employee, director,
officer or consultant, other than, in either case, as required by Law or
pursuant to any written plans, programs or agreements existing on the date
hereof;

(n)   initiate or settle any litigation or other claim or Action involving any
of the Targets or Subsidiaries or Properties (including the Legal Action),
provided, however, that the Sellers may settle litigation against a Target or
Subsidiary arising in the ordinary course of

 

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business so long as the amount of the claim is not material in the context of
the Property to which it relates, the settlement involves only the payment of
money and does not result in any admission of guilt or involve the imposition of
any limitation or restriction upon any Target or Subsidiary and the settlement
is fully covered by insurance (other than any deductible amount related thereto)
in favor of the relevant Target or Subsidiary;

(o)   make any material changes in its accounting methods, policies, procedures,
principles or practices;

 

(p)

change any method of Tax accounting;

(q)   intentionally take, or intentionally cause or authorize any Subsidiary or
other Person to take, any action that constitutes or reasonably could be
expected to result in an Event of Default (as such term is defined in the
applicable Debt Agreement); or

 

(r)

agree or commit to do any of the foregoing.

 

Notwithstanding anything to the contrary contained herein, nothing in this
Section 5.1 shall be deemed to require any of the general partners of the
respective Hudson Waterfront Partnerships to take any action or fail to take any
action with respect to the conduct of the business of the Hudson Waterfront
Partnerships in contravention of (i) the duties of the general partners under
the applicable Partnership Agreements, (ii) the Debt Agreements and the other
loan documents related thereto or (iii) applicable Law.

 

 

Section 5.2

Dissolution of HWA II.

(a)   At or prior to the Closing, the Sellers shall cause the dissolution of HWA
II pursuant to Section 17.1 of the HWA II Partnership Agreement.

(b)   Prior to the dissolution of HWA II, the assets of HWA II shall be
liquidated and the proceeds thereof shall be distributed to the partners of HWA
II in accordance with Section 17.2(a) of the HWA II Partnership Agreement, other
than the following assets, which shall be distributed in kind as follows:

(i)           interests in the Mortgage Note in the principal amount of
$140,000,000, dated November 3, 2005, by CRP/Extell Parcel N, L.P. ("Extell") in
favor of LaSalle Bank, as trustee for the benefit of HWA V, and payable to HWA
II pursuant to the Allonge, dated April 26, 2006 (the "HWA Extell Note"), shall
be distributed to Hudson Westside Associates II, L.P. (the "Westside II
Partnership"), which shall distribute the interests in the HWA Extell Note to
the entities identified in Schedule 5.2(b)(i);

(ii)          the Mortgage Note in the principal amount of $60,000,000, dated as
of November 3, 2005, by Extell in favor of LaSalle Bank, as trustee for the
benefit of HWA V, and payable to HWA II pursuant to the

Allonge, dated April 26, 2006, shall be distributed to Trump or his designee;
and

 

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(iii)        the intercompany notes in the principal amount of up to
$250,000,000, dated as of April 1, 2005, by HWA I in favor of HWA II (the
"Original Intercompany Notes") shall be canceled and reissued as follows:

(A)         11 or more promissory notes by HWA I, HWA III, HWA IV and HWA V with
an aggregate principal amount equal to 70% of the aggregate principal amount of
the Original Intercompany Notes in favor of HWA II in the principal amounts set
forth in Schedule 5.2(b)(iv) (collectively, the "Partnership Intercompany
Notes"), which shall be distributed to the Westside II Partnership which shall
distribute the Partnership Intercompany Notes to its beneficial owners as set
forth in Schedule 5.2(b)(iv);

(B)         upon receipt by the Westside II Partnership of the Partnership
Intercompany Notes, the Westside II Partnership shall distribute the Partnership
Intercompany Notes to the entities identified on Schedule 5.2(b)(i);

(C)         promissory notes with an aggregate principal amount equal to 30% of
the aggregate principal amount of the Original Intercompany Notes, by HWA I, HWA
III, HWA IV and HWA V in favor of Trump (the "Trump Intercompany Notes"), and
the Trump Intercompany Notes shall be distributed to Trump.

(c)   The Sellers shall provide the Buyer with reasonable opportunity to review
and comment upon the documentation required to consummate the transactions
contemplated by this Section 5.2 and Section 5.3, and the Sellers shall consider
such comments in good faith before proceeding with any such transactions.

 

 

Section 5.3

Distributions.

(a)   Following the receipt by the entities identified in Schedule 5.2(b)(i) of
the interests in the HWA Extell Note and the Partnership Intercompany Notes, at
or prior to the Closing, each Target shall distribute, or cause to be
distributed, its respective interest in the entities identified in Schedule
5.3(a) to such Target's parent-Seller, after which the entities identified in
Schedule 5.2(b)(i) shall distribute the Partnership Intercompany Notes to their
respective parent-Sellers as part of the liquidation for federal income tax
purposes of the entities listed on Schedule 5.3(a), which liquidation may occur
as a result of such entity’s actual or deemed (by reason of a conversion into a
limited liability company) liquidation once such entity is owned by its
respective parent-Seller. It is agreed that the Buyer shall acquire no interest
in the entities identified in Schedule 5.3(a) and the HWA Extell Note and that
the Partnership Intercompany Notes shall be sold to the Buyer as set forth
herein.

(b)   Prior to the Closing Date, (i) all Subsidiaries that have borrowed from
Lenten Lily Limited shall repay all principal and accrued interest (less
withholding Tax of 30%) owed to Lenten Lily Limited, and shall furnish the Buyer
upon request with evidence that all such withholding Taxes have been paid over;
(ii) Lenten Lily Limited shall elect to be treated as a disregarded entity for
United States federal income tax purposes under Treasury Regulations

 

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Section 301.7701-3 and shall thereafter transfer its entire interest in the
entities identified in Schedule 5.3(b) to its parent corporation, Lokeren Co.
Ltd.; after which (iii) Lokeren Co. Ltd. shall distribute (A) any other assets
of Lenten Lily Limited that it receives as a distribution from Lenten Lily
Limited and (B) the shares of Lenten Lily Limited to the parent-Seller of
Lokeren Co. Ltd.

 

 

Section 5.4

Covenants Regarding Information.

(a)   From the date hereof until the Closing Date, upon reasonable notice, the
Sellers shall, and shall cause the Targets and the Subsidiaries to, afford the
Buyer and its Representatives reasonable access to the Representatives of each
Seller and of each Target and Subsidiary, including, but not limited to, the
Targets' registered agents in the British Virgin Islands, properties, offices,
plants and other facilities, books and records (including any Tax Returns) of
the Targets and the Subsidiaries, and shall cause the Targets and the
Subsidiaries to furnish the Buyer with such financial, operating and other data
and information as the Buyer may reasonably request; provided, however, that any
such access or furnishing of information shall be conducted at the Buyer's
expense, during normal business hours, under the supervision of the Sellers or
their designee and in such a manner as not to interfere unreasonably with the
normal operations of the Targets and the Subsidiaries. Notwithstanding anything
to the contrary in this Agreement, neither the Targets nor any Subsidiary shall
be required to disclose any information to the Buyer or its Representatives if
such disclosure would, in the Sellers' reasonable judgment, after consultation
with legal counsel, (i) jeopardize any attorney-client, work product or other
legal privilege or (ii) contravene any applicable Laws, fiduciary duty or
binding agreement entered into prior to the date hereof. On or prior to the
Closing, the Sellers shall, and shall cause their respective Representatives to,
deliver to the Buyer originals (or, if originals are not available, copies) of
all books and records relating to the ownership or operation of the Targets and
Subsidiaries within such parties' possession, other than any materials (i)
located in the offices of HWA 1290 Management Member, LLC and any offices of the
managers of the Properties, (ii) in the possession of PricewaterhouseCoopers
LLP, or (iii) in the possession of the Targets' registered agents in the British
Virgin Islands.

(b)   In order to facilitate the resolution of any claims made against or
incurred by the Sellers (as it relates to the Targets and the Subsidiaries), for
a period of seven years after the Closing or, if shorter, the applicable period
specified in the Buyer's document retention policy, the Buyer shall (i) retain
the books and records relating to the Targets and the Subsidiaries relating to
periods prior to the Closing and (ii) afford the Representatives of the Sellers
reasonable access (including the right to make, at the Sellers' expense,
photocopies), during normal business hours, to such books and records; provided,
however, that the Buyer shall notify the Sellers in writing at least 30 days in
advance of destroying any such books and records in order to provide the Sellers
the opportunity to copy (or obtain the originals of) such books and records in
accordance with this Section 5.4(b).

Section 5.5         Notification of Certain Matters. Until the Closing, each
party hereto shall promptly notify the other party in writing of any fact,
change, condition, circumstance or occurrence or nonoccurrence of any event of
which it is aware that will or is reasonably likely to result in any of the
other party's conditions set forth in Article VIII of this Agreement becoming
incapable of being satisfied.

 

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Section 5.6           Resignations. The Sellers will deliver at the Closing the
resignation of all of the directors, managers, general partners and officers of
the Targets and the Subsidiaries, effective as of the Closing, except for such
directors, managers, general partners or officers that the Buyer specifies in
writing to the Sellers prior to the Closing Date.

Section 5.7            Confidentiality. For a period of six years from the
Closing, each Seller shall and shall cause its Affiliates and Representatives to
keep confidential all information, knowledge and data of or relating to the
Targets and the Subsidiaries and shall not provide such information to any
Person without the consent of the Buyer; provided, however, that the Sellers may
disclose such information, knowledge and data to the extent required or
requested pursuant to the rules and regulations of any applicable stock
exchange, any proceedings before or Order by any Governmental Authority or
subpoena, deposition, interrogatory, civil investigative demand or other
applicable Law.

Section 5.8        Consents and Filings; Further Assurances.

(a)   The Sellers agree to provide the Buyer with any cooperation reasonably
requested by the Buyer in connection with obtaining the Debt Consents and
Non-Consolidation Opinion set forth in paragraphs (b) and (c), below.

(b)   The Buyer shall use its commercially reasonable efforts to obtain the Debt
Consents. Without limiting the generality of the foregoing, promptly following
the date hereof, the Buyer shall submit a written request for the Debt Consents
to the applicable lenders in accordance with the terms of the 555 Mezzanine Debt
Agreements and the 555 Senior Debt Agreement. In addition, the Buyer shall (i)
use commercially reasonable efforts to promptly respond to any subsequent
requests of, and supply any information reasonably requested by, the lenders and
(ii) pay any and all fees and expenses as set forth in the 555 Mezzanine Debt
Agreements and the 555 Senior Debt Agreement. As used in this paragraph (b), the
phrase "commercially reasonable efforts" will not be interpreted as requiring
the Sellers or the Buyer to prepay any principal or to agree to supplement or
otherwise modify in any material respect any terms of the underlying
indebtedness in a manner adverse to the Buyer or any Target or Subsidiary, or to
bring any lawsuit or incur any other material expense (other than customary
legal and administrative costs associated with such actions).

(c)   The Buyer shall use its best efforts to deliver to the Lender (as defined
therein) under the 1290 Senior Debt Agreement a non-consolidation opinion in
form acceptable to the Lender and the Ratings Agencies (as defined in the 1290
Senior Debt Agreement) (the "Non-Consolidation Opinion") in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements; provided, however, that as used in this paragraph (c), the
phrase "best efforts" shall not be interpreted to require the Buyer to alter the
manner in which it acquires the Shares or to prepay principal or to agree to
supplement or otherwise modify the terms of the Debt or to bring any Action.

(d)   Prior to the Closing, each of the parties shall promptly notify the other
party of any communication it or any of its Affiliates receives from any
Governmental Authority relating to the Properties or the matters that are the
subject of this Agreement and permit the other party to review in advance any
proposed communication by such party to any

 

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Governmental Authority in response thereto. Prior to the Closing, neither party
to this Agreement shall agree to participate in any meeting with any
Governmental Authority in respect of any filings, investigation or other inquiry
relating to any of the Properties, the Targets, the Subsidiaries or the matters
that are the subject of this Agreement unless it consults with the other party
in advance and, to the extent permitted by such Governmental Authority, gives
the other party the opportunity to attend and participate at such meeting.
Subject to the Confidentiality Agreements, the parties will coordinate and
cooperate fully with each other in exchanging such information and providing
such assistance as the other party may reasonably request in connection with the
foregoing. Prior to the Closing and subject to the Confidentiality Agreements,
the parties will provide each other with copies of all correspondence, filings
or communications between them or any of their Representatives, on the one hand,
and any Governmental Authority or members of its staff, on the other hand, with
respect to this Agreement and the transactions contemplated hereby.

(e)   Certain consents and waivers with respect to the transactions contemplated
by this Agreement may be required from parties to contracts to which any Target
or Subsidiary is a party that have not been and may not be obtained. Except as
otherwise provided in this Agreement (including Sections 8.3 and 9.2), the
Sellers and their Affiliates shall have no liability to the Buyer arising out of
or relating to the failure to obtain any consents or waivers that may be
required in connection with the transactions contemplated by this Agreement or
because of the termination of any contract as a result thereof.

Section 5.9         Public Announcements. The Sellers and the Buyer shall
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation
unless the requirements of any Governmental Authority makes providing such prior
consultation and review impracticable.

Section 5.10      Directors' and Officers' Indemnification. For a period of six
years following the Closing, the Buyer agrees that it will continue to cause
each Target and Subsidiary to indemnify and hold harmless each present and
former director, officer, employee and manager (each a "Covered Person") of such
Target or Subsidiary against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Closing, whether asserted or claimed prior to, on or after the Closing, to the
fullest extent that such Target or Subsidiary is permitted under the Laws of its
applicable jurisdiction of organization and required pursuant to its certificate
of incorporation, certificate of formation, certificate of limited partnership,
bylaws, limited liability company agreement, limited partnership agreement or
other organizational documents in effect on the date hereof to indemnify such
Covered Person (including the advancing of expenses as incurred to the fullest
extent permitted under applicable Law); provided, however, that such Covered
Person must provide an undertaking to such Target or Subsidiary (as appropriate)
to repay such advances if it is ultimately determined by a court of competent
jurisdiction (which determination shall have become final) that such Covered
Person is not entitled to indemnification; and provided further, however, that,
to the fullest extent permitted: (i) the Buyer or such Target or Subsidiary
shall

 

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have the right to assume the defense thereof, and neither the Buyer nor any
Target or Subsidiary shall be liable to any such Covered Person for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Covered Person in connection with the defense thereof, except that if the Buyer
or such Target or Subsidiary elects not to assume such defense or counsel for
such Covered Person advises that there are issues which raise conflicts of
interest between the Buyer or such Target or Subsidiary and such Covered Person,
such Covered Person may retain counsel satisfactory to it, and the Buyer or such
Target or Subsidiary shall pay all reasonable fees and expenses of such counsel
for such Covered Person promptly as statements therefor are received; provided,
however, that whether or not the Buyer or such Target or Subsidiary assumes the
defense of a Covered Person, the Buyer or such Target or Subsidiary shall not
admit any liability with respect to, or settle, compromise or discharge, or
offer to settle, compromise or discharge, such claim without such Covered
Person's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed, unless such settlement or compromise includes
as one of its terms the complete release of the Covered Person without any
admission of guilt; and provided further, however, that the Buyer and such
Target or Subsidiary shall be obligated pursuant to this Section 5.10 to pay for
only one firm or counsel for all Covered Persons in any jurisdiction unless the
use of one counsel for such Covered Persons would present such counsel with a
conflict of interest, provided that the fewest number of counsel necessary to
avoid conflicts of interest shall be used; (ii) such Covered Persons will
reasonably cooperate in the defense of any such matter; and (iii) none of the
Buyer or any Target or Subsidiary shall be liable for any settlement effected
without the prior written consent of the Buyer or such Target or Subsidiary, as
applicable. For the avoidance of doubt, nothing in this Section 5.10 shall
supersede or modify the Indemnification Agreement or in any way affect the
parties' obligations pursuant to the Indemnification Agreement.

Section 5.11         Release. Effective as of the Closing Date and except as
otherwise provided by Section 5.10 and except as set forth in the
Indemnification Agreement, the Sellers do hereby, on behalf of themselves and
each of their respective Affiliates, successors and assigns, release and forever
discharge each of the Targets, the Subsidiaries, their Affiliates and their
respective successors and assigns, and all Persons who at any time prior to the
Closing Date have been stockholders, directors, officers or employees of any
Target or any of the Subsidiaries (in each case, in their respective capacities
as such), and their respective heirs, executors, administrators, successors and
assigns, from any and all liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed at or
before the Closing Date, including in connection with the transactions and all
other activities contemplated by this Agreement.

Section 5.12         Legal Action. From the date hereof and continuing through
Closing, the Sellers shall, and shall cause their respective Affiliates to,
provide the Buyer with copies of all pleadings, Orders, requests for information
or meetings, correspondence and other similar materials received or sent by them
relating to the Legal Action or any related proceedings, Actions or claims
promptly upon receipt or delivery thereof, as applicable. In addition, the
Sellers agree to provide the Buyer with notice of any actual or proposed hearing
or other proceeding relating to the Legal Action or any related proceedings,
Actions or claims promptly upon receipt or prior to delivery by any of the
Sellers, any Target or any Subsidiary of notice

 

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thereof. At least 24 hours prior to submission, the Sellers shall provide the
Buyer with the right to review and to consult with the Sellers, the Targets, the
Subsidiaries and their counsel on any pleadings or other submissions relating to
the Legal Action or other related proceeding, Action or claim, unless the same
involves an emergency filing, in which case the Sellers shall provide the Buyer
the right to review and to consult at least 12 hours prior to submission. If
counsel for the Buyer objects to any such filing or other submission, the
parties and their respective counsel shall confer in good faith in an effort to
reach agreement on such filing or other submission, and the Sellers shall not
submit, or permit the submission of, any such filing or other submission without
the Buyer's prior approval, which will not be unreasonably withheld or delayed.
The Sellers also agree to apprise the Buyer on the status of the Legal Action
and any related proceedings, Actions or claims as and when requested and
promptly upon the Sellers' becoming aware of any material development therein.

Section 5.13         Estoppel Certificates. Within 10 Business Days after the
date hereof, the Sellers shall cause the Subsidiary that owns the relevant
Property to prepare and deliver to each of the tenants at that Property (with a
blind copy to the Buyer concurrently therewith), an estoppel certificate in the
applicable form attached hereto as Exhibit 5.13, in each case completed to
reflect the terms of such tenant's lease and related tenancy (each, an "Estoppel
Certificate"). Subject to the next sentence, the Sellers shall (i) direct the
building manager for the relevant Property to attempt to obtain a completed and
original countersigned Estoppel Certificate from each such tenant; and (ii)
deliver to the Buyer a copy of each completed and countersigned Estoppel
Certificate and any other response or related correspondence from each such
tenant (any such Estoppel Certificates and information contained therein
received by the Buyer shall be deemed to be Information (as defined in the
Confidentiality Agreements)). The parties understand and agree that receipt of
completed Estoppel Certificates from the above-referenced tenants is not a
condition precedent to any of the Buyer's obligations as set forth in this
Agreement. The Buyer shall not contact any of the tenants of the Properties with
respect to their Leases or the transactions contemplated herein prior to the
Closing without the prior written consent of the Sellers, which consent may be
withheld in the Sellers' sole discretion. Except as provided in this Section
5.13, the Sellers shall have no other obligations hereunder or under any
Ancillary Agreements with respect to estoppel certificates.

Section 5.14         Personal Property. The Sellers shall not, and shall cause
the Targets and Subsidiaries not to, remove any personal property from the
Properties.

Section 5.15         Other Transfers of Condominiums. The Sellers shall use
their commercially reasonable efforts to complete the sales of the Condominiums
on or prior to March 31, 2007. If HWA I or HWA II continue to own any of the
Condominiums on March 30, 2007, the Sellers shall cause HWA I and HWA II to sell
their interests in the Condominiums to HWA III on March 31, 2007 for an amount
equal to 95% of the contract price for such Condominiums as of the date hereof.
Any gain realized upon the sale of any interests in the Condominiums shall be
recognized in the tax year ending March 31, 2007, and any unpaid income tax
liabilities associated with such gain shall constitute "Other Liabilities" and
shall be borne by the Sellers in accordance with Sections 2.6 and 2.7 hereof.

Section 5.16       Elimination of New Title Matters.

 

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(a)   The Sellers shall cause the Targets and Subsidiaries to satisfy, cure or
otherwise cause the elimination of any Voluntary Title Matters prior to the
Closing.

(b)   Either (i) the Sellers shall cause the Targets and Subsidiaries to
satisfy, cure or otherwise cause the elimination of any Monetary New Title
Matters prior to the Closing or (ii) elect to treat such Monetary New Title
Matters as "Other Liabilities" (pursuant to clause (vi) of that definition) to
be borne by the Sellers in accordance with Sections 2.6 and 2.7 hereof;
provided, however, that if the aggregate amount of all Monetary New Title
Matters (but specifically excluding for purposes of this subparagraph any
Voluntary Title Matters, which are addressed in clause (a) above and which shall
not be considered when determining the dollar amounts set forth in this
paragraph 5.16(b)) exceeds $15,000,000 (such excess amount, the "Excess
Amount"), the Sellers shall have the option, but shall have no obligation, to
cause the Targets and Subsidiaries to satisfy, cure or otherwise cause the
elimination of, or elect to treat as an "Other Liability," such Excess Amount.
If the Sellers are not willing to cause the removal of, or elect to treat as an
"Other Liability," the Excess Amount, then the Sellers shall give written notice
of the same to the Buyer promptly upon the Sellers first becoming aware of the
Excess Amount (which notice will state the Sellers' unwillingness to remove, or
to treat as an "Other Liability," the Excess Amount prior to the Closing, it
being understood that (x) the Sellers will not be required to remove, or elect
to treat as an "Other Liability," any Excess Amount unless the Sellers
separately undertake to do so in their discretion, and also that (y) in any
event the Sellers will, in every instance, be responsible for causing the
removal of all Voluntary Title Matters). If the Sellers are not willing to
remove, or elect to treat as an "Other Liability," the Excess Amount, the Buyer
shall have the right, in the Buyer’s discretion, either to (1) waive the Excess
Amount and proceed to Closing (in which case the Sellers will only be required
to remove or treat as an "Other Liability" the first $15,000,000 of Monetary New
Title Matters, and to remove such portion of the Excess Amount as the Sellers,
and the Buyer shall agree) or (2) terminate this Agreement. The Buyer shall
exercise its right to elect either clause (1) or (2) of the foregoing sentence
by providing written notice of such election to the Sellers within the earlier
of 20 days after receipt of notice from the Sellers as set forth above or the
then-scheduled Closing Date.

Section 5.17         Preparation of Financial Statements. The Sellers agree that
they will assist the Buyer, at the Buyer's expense, to produce financial
statements for the Properties satisfying the requirements of Regulation S-X
promulgated under the U.S. securities laws as and when needed to satisfy the
Buyer's public reporting obligations in connection with the transactions
contemplated hereby, and permit the Buyer's independent registered public
accounting firm access to the books and records of the Targets and the
Subsidiaries for the purpose of conducting an audit of such financial
statements. The Sellers agree to use commercially reasonable efforts to cause
the Targets and Subsidiaries to give the Buyer and its accountants access to
such of its books and records relating to the Targets, Subsidiaries and
Properties and to direct their internal and external property management
personnel to cooperate with the Buyer and its accountants, in each case to the
extent necessary to enable the Buyer and the accountants to produce and, where
applicable, audit financial statements for the Properties. Notwithstanding
anything to the contrary contained in this Section 5.17, the Buyer acknowledges
that the Sellers and the general partners of the Hudson Waterfront Partnerships
have limited resources and are engaged in the preparation of the audited
financial statements for the Properties for the 2006 fiscal year as required by
the Debt Agreements. Accordingly, the Buyer shall use its commercially
reasonable efforts to minimize any interference with the preparation of such
financial statements.

 

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Section 5.18         Termination of 401(k) Plan. Prior to the Closing, the
Sellers shall execute the 401(k) Resolutions pursuant to which the general
partner of HWA I shall terminate each Employee Plan that includes a Code Section
401(k) arrangement.

Section 5.19         Termination of Management Agreements. Within five Business
Days of the date hereof, the Sellers shall (i) cause HWA I to deliver a notice
of termination of the Asset Services Agreement, dated as of March 1, 2006,
between HWA I and Shorenstein Realty Services, L.P, pursuant to Section 4.1(c)
thereof and (ii) cause HWA 555 Owners, LLC to deliver a notice of termination of
the Building Management Agreement, dated as of March 1, 2006, by and between HWA
555 Owners, LLC and Shorenstein Realty Services, L.P, pursuant to Section 5.1(c)
thereof. The Sellers make no representations with respect to the timeliness or
effect of such notice and shall have no liability to the Buyer for any claims
resulting therefrom.

Section 5.20         Conversion of Shares. Prior to the Closing, the Sellers
shall cause all of the Shares that are bearer shares to be exchanged for
registered shares in the applicable Targets, and the Sellers shall cause their
Representatives to replace any Shares that have been lost, stolen or destroyed
prior to such conversion.

Section 5.21         Further Assurances. At any time following the Closing, the
Sellers shall and shall cause their Affiliates to promptly execute, acknowledge
and deliver any other assurances or documents reasonably requested by the Buyer
to vest more effectively in the Buyer ownership of the Shares and the
Partnership Intercompany Notes; provided, that the Buyer shall pay any actual
and reasonable third-party fees, costs or expenses incurred by the Sellers in
connection therewith and that such assurances or other documents do not create
any further obligation on or impair any right of the Sellers.

ARTICLE VI

TAX MATTERS

Section 6.1           Cooperation. The Sellers and the Buyer shall provide each
other with such cooperation and information as either of them reasonably may
request of the other in filing any Tax Return or claim for refund, determining a
liability for Taxes or a right to a refund of Taxes, and participating in or
conducting any audit or other proceeding in respect of Taxes. The Sellers and
the Buyer shall make themselves (and their respective Representatives and
employees) available on a basis mutually convenient to both parties to provide
explanations of any Tax Returns or information provided under this Section 6.1.
Each of the Sellers and the Buyer shall retain all Tax Returns in their
possession relating to Tax matters relevant to the Targets and Subsidiaries for
each taxable period first ending after the Closing Date and for all prior
taxable periods until the later of (a) the expiration of the statute of
limitations of the taxable periods to which such Tax Returns relate, without
regard to extensions except to the extent notified by the other party in writing
of such extensions for the respective Tax periods, or (b) six years following
the due date (without extension) for such Tax Returns. After such time, before
the Sellers or the Buyer shall dispose of any such Tax Returns in its possession
(or in the possession of its Affiliates), the other party shall be given the
opportunity, after 30 days' prior written notice, to remove and retain all or
any part of such Tax Returns as such other party may select (at such other
party's expense). Any information obtained under this Section 6.1 shall be kept
confidential as provided in the letter agreement regarding confidentiality being
entered into

 

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between the Buyer and the Sellers concurrently herewith (including the
exceptions permitted therein), except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding.

Section 6.2        Taxes Generally. All Tax Returns of the Targets or
Subsidiaries not required to be filed on or before the date hereof will, to the
extent required to be filed on or before the Closing Date, be filed (or caused
to be filed) by the Sellers when due and will be prepared (or caused to be
prepared) consistent with past practice and in accordance with all applicable
Laws. On or before the Closing Date, the Sellers shall prepare and file (or
cause to be prepared and filed) Form 1065 for HWA I and Form 1120 for the
Subsidiaries that are the direct or indirect partners of HWA I (and, in each
case, any state and local equivalent Tax Returns) for the fiscal year ending
March 31, 2007 (the "HWA I Tax Returns"). To the extent Tax Returns of the
Targets or Subsidiaries are required to be filed after the Closing Date, but
relate to taxable periods ending on or before the Closing Date, the Seller will
prepare (or cause to be prepared) such Tax Returns consistent with past practice
and in accordance with all applicable Laws, and will deliver such Tax Returns to
the Buyer for filing. The Sellers will cause to be paid by the applicable Target
or Subsidiary the amount of Taxes shown as due on the Tax Returns that are filed
by the Seller pursuant to this Section 6.2. The Buyer shall cause the relevant
Subsidiaries and/or Targets to file all other Tax Returns and, subject to the
Sellers' obligation to indemnify the Buyer pursuant to Section 6.3, shall cause
the relevant filing entities to pay all Taxes shown as due on such Tax Returns;
provided, however, that any Tax Return prepared and filed by or at the direction
of the Buyer that includes any period (or portion thereof) on or before the
Closing Date (including a Straddle Period, as defined below) (x) shall report
the Tax consequences of the property exchanges entered into by HWA III, HWA IV
and HWA V in a manner consistent with the reporting of such exchanges on Form
1065 filed with respect to the fiscal year ending March 31, 2006; (y) shall be
prepared consistent with past practices of the entity for which such Tax Return
is filed, but only to the extent such past practices are in accordance with
applicable Laws; and (z) shall be delivered to the Sellers for review no later
than 10 days prior to filing and shall be revised to reflect any reasonable
comments by the Sellers.

Section 6.3        Responsibility for and Apportionment of Taxes.

(a)   All Taxes relating to the Targets and the Subsidiaries for any taxable
year or period (or portion thereof) ending on or prior to the Closing
(including, for the avoidance of doubt, any Taxes arising from the sale of the
Targets pursuant to this Agreement, the dissolution of HWA II and any
corresponding assignments or distributions pursuant to Section 5.2 and the
transactions described in Section 5.3) (the "Pre-Closing Tax Period") will be
the responsibility of the Sellers, and the Sellers shall jointly and severally
indemnify and hold the Buyer, the Targets and the Subsidiaries harmless with
respect thereto. Except as otherwise provided herein, all Taxes relating to the
Targets and the Subsidiaries for any taxable year or period (or portion thereof)
beginning after the Closing (the "Post-Closing Tax Period") will be the
responsibility of the relevant Target or Subsidiary and not of the Sellers. The
Sellers shall also be liable, and shall jointly and severally indemnify the
Buyer, the Targets and the Subsidiaries, for all Taxes imposed on any Target or
any Subsidiary as a result of a failure of any of the representations and
warranties in Section 3.14 to be true, and such representations and warranties
shall survive for the relevant statute of limitations period for the Taxes in
question. Notwithstanding anything in this Agreement to the contrary, to the
extent Taxes relating to the Targets or the Subsidiaries for

 

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any Pre-Closing Tax Period are attributable to the Buyer's adoption,
modification or termination of any Tax election, Tax year or method of Tax
accounting, on or after the Closing Date (other than as expressly contemplated
by this Agreement, required by applicable Laws or mandated by a Governmental
Authority), such Taxes shall not be the responsibility of the Sellers, and the
Sellers shall have no indemnification obligation for such Taxes. Any prepaid
Taxes or estimated Tax payments made by a Target or a Subsidiary (or by the
Sellers on behalf of a Target or a Subsidiary) on or prior to the Closing Date
shall be allocated to the Sellers in determining the Sellers' obligations
hereunder (including any Pre-Closing Adjustment Amount or Final Adjustment
Amount). For certainty of interpretation, and for purposes of this Section
6.3(a), Taxes for a Pre-Closing Tax Period attributable to any public disclosure
by the Buyer or its Affiliates that is required as a result of FASB
Interpretation No. 48 shall remain the responsibility of the Sellers, and the
Sellers shall have an indemnification obligation for such Taxes.

(b)   Whenever it is necessary for purposes of this Article VI to determine the
liability for Taxes of any Target or any Subsidiary for any taxable period
beginning on or prior to and ending after the Closing Date (a "Straddle
Period"), the determination shall be made by assuming that the Target or the
Subsidiary (as the case may be) had a taxable year or period which ended at the
close of business on the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis (such as the deduction for
depreciation) shall be apportioned on a time basis.

Section 6.4         Filing of Amended Tax Returns. Any amended Tax Return or
claim for Tax refund with respect to a Target or Subsidiary to be filed after
the Closing for a Pre-Closing Tax Period requires the consent of both the
Sellers and the Buyer. The Buyer shall not make an election under Section 338(g)
of the Code with respect to the acquisition of the Targets without the prior
written consent of the Sellers.

Section 6.5        Refunds or Credits.

(a)   To the extent any refunds, interest or credits with respect to Taxes of a
Target or a Subsidiary are attributable to a Pre-Closing Tax Period, such
refunds, interest or credits shall be for the account of the Sellers.
Notwithstanding the foregoing, any such refunds, interest, credits or offsets of
Taxes shall be for the account of the Buyer to the extent such refunds,
interest, credits or offsets of Taxes are (A) attributable (determined on a
marginal basis) to the carryback from a taxable year or period that begins after
the Closing Date of items of loss, deduction or credit, or other Tax items of
any Target or any Subsidiary (or any of their respective Affiliates, including
the Buyer) or (B) included in the Other Assets.

(b)   To the extent that any refunds, interest or credits with respect to Taxes
of a Target or a Subsidiary are attributable to a Post-Closing Tax Period, such
refunds, interest or credits shall be for the account of the Buyer. To the
extent any refunds, interest or credits with respect to Taxes paid by a Target
or a Subsidiary are attributable to a Straddle Period, such refunds, interest or
credits with respect to Taxes shall be apportioned between the Sellers and the
Buyer based on the appropriate allocation method set forth in Section 6.3. The
Buyer shall forward to the Sellers or reimburse the Sellers for any such
refunds, interest or credits that are for the account of the Sellers within 10
Business Days from receipt thereof by the Buyer or any of its

 

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Affiliates, provided that solely with respect to any refunds, interest or
credits related to Taxes, such amounts shall be subject to a right of set-off in
respect of any claim a Buyer Indemnified Party may have against the Sellers.

 

Section 6.6

Tax Contests

(a)   The Buyer shall promptly notify the Sellers in writing upon receipt by the
Buyer, any Target or any Subsidiary of notice of any pending or threatened
federal, state, local or foreign income or franchise Tax audits or assessments
which may materially affect the Tax liabilities of any Target or any Subsidiary
for which the Sellers would be required to indemnify the Buyer pursuant to
Article VI, provided, however, that failure to comply with this provision shall
not affect the Buyer's right to indemnification hereunder except to the extent
such failure has materially prejudiced the Sellers' ability to defend the audit
or assessment.

(b)   The interests of the Sellers in any Tax audit or administrative or court
proceeding to the extent relating to taxable periods ending on or before the
Closing Date or relating to any Straddle Period shall be determined based on
procedures mutually agreed upon between the Sellers and the Buyer.

Section 6.7         Payment of Transfer Taxes. The Buyer shall pay all Transfer
Taxes owing in respect of the transfer of the Shares from the Sellers to the
Buyer as contemplated herein. The Sellers agree to cooperate with the Buyer in
the preparation of and, where required, by joining as signatory to, the Tax
Returns required in connection with the foregoing Transfer Taxes.

Section 6.8        Adjustment to Purchase Price. Any payment under article vi
will be an adjustment to the purchase price to the extent permitted by
applicable law.

ARTICLE VII

CASUALTY AND CONDEMNATION

 

Section 7.1         Casualty.

(a)   For purposes of this Article VII, the following terms shall have the
following meanings:

"Major Casualty" means one or more fires or other casualties to any of the
Properties that results in (1) aggregate Restoration Costs in excess of
$45,000,000 at a Property, as determined on a Property by Property basis, and
not on an aggregate basis among all of the Properties, (2) tenants holding
Leases of more than 20% of the total rentable space in the applicable Property
having a right to terminate their Leases (it being understood that any tenant
that subsequently loses or waives such right to terminate in writing shall not
be included in such calculation) or (3) receipt of notice from the Lender under
the 1290 Senior Debt Agreement that the casualty (or, if applicable,
condemnation) has resulted in an Event of Default (as defined in the 1290 Senior
Debt Agreement) or otherwise allows the loan made pursuant to the 1290 Senior
Debt Agreement to be declared due and payable (unless such Lender shall have
waived in writing all such rights).

 

 

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"Material Portion" shall mean a fee, leasehold, easement or other interest in
any Property that reduces the value of such Property by more than $45,000,000.

"Restoration Costs" means, as of any date with respect to any fire or other
casualty, the estimated total cost, as reasonably determined by an architect or
engineer selected by Sellers and reasonably approved by the Buyers, to be
incurred, from and after such date, to repair or restore the damage to any of
the Properties caused by such fire or other casualty.

(b)   If, between the date hereof and the Closing, there shall occur one or more
fires or other casualties affecting any or all of the Properties, or any
portions thereof and the fires and/or other casualties do not constitute a Major
Casualty, then (i) no party shall have any right to terminate this Agreement as
a result thereof and (ii) if such fires or other casualties resulted in damages
to the Properties, the Buyer shall acquire the Targets without reduction of or
offset against the Purchase Price or any other claim against the Sellers except
as may be expressly provided below. At Closing, the Sellers shall pay to the
Buyer all insurance proceeds received by the Sellers or any of their Affiliates
(other than a Target or a Subsidiary) in connection with such fires or other
casualties (other than any business interruption or rent loss insurance
attributable to the period prior to the Closing) and shall assign to the Buyer
the Sellers' right, if any, to receive any insurance proceeds payable to the
Sellers or any of their Affiliates (other than a Target or a Subsidiary) as a
result of such fires or other casualties, provided, however, that the Sellers
shall be entitled to retain (to the extent previously paid to the Sellers), and
shall not be obligated to assign the right to receive (to the extent not
previously paid to the Sellers), an amount of such insurance proceeds equal to
the Sellers' expenses, if any, incurred by the Sellers or any of their
Affiliates (including the Targets and Subsidiaries) in collecting such proceeds
and undertaking any repairs of the Properties. Additionally, the Purchase Price
shall be reduced by the deductible amount under such insurance policies.

(c)   If, between the date hereof and the Closing, there shall occur a fire or
other casualty affecting the Properties, and the damage to any of the Properties
(as determined on a Property by Property basis and not on an aggregate basis
among all the Properties) results in a Major Casualty to such Property, then the
Buyer shall have the option, to be exercised by notice given to the Sellers (a
"Casualty Termination Notice") within 15 days after the date the Sellers deliver
written notice to the Buyer of such fire or other casualty (including, in such
notice, an affirmative statement that it is being given pursuant to this Section
7.1(c) and that if the Buyer fails to respond within 15 days of receipt the same
will be deemed a waiver of the Buyer's termination right under this Agreement),
to terminate this Agreement in its entirety. If the Buyer shall deliver a
Casualty Termination Notice, then this Agreement shall terminate in its entirety
(subject to Section 10.2) immediately upon receipt by the Sellers of such
termination notice. If the Buyer shall elect to terminate this Agreement by
delivering a Casualty Termination Notice, then (x) the Buyer shall be entitled
to the return of the Escrow Fund and (y) no party hereto shall have any further
obligations or liabilities to the other under this Agreement, except for those
which expressly survive the termination of this Agreement as set forth in
Section 10.2. If the Buyer does not elect to terminate this Agreement as
provided in this Section 7.1(c), then this Agreement shall remain in full force
and effect and, to the extent applicable, the provisions of Section 7.1(b) above
shall apply to such damage and any insurance proceeds payable in connection
therewith.

 

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(d)   In no event shall the Sellers have any obligation to repair any damage or
destruction to the Properties (except as provided in Section 5.1 of this
Agreement), but the Sellers shall have the right to do so and utilize insurance
proceeds for such purpose.

 Section 7.2        Condemnation.

(a)   If, between the date hereof and the Closing, and as determined on a
Property by Property basis, any condemnation or eminent domain proceedings are
initiated which would result in the taking of all or any Material Portion of a
Property or that would result in the circumstances described in clause (2) or
clause (3) of the definition of Major Casualty, then the Buyer may elect to
terminate this Agreement by giving written notice of its election to the Sellers
within 15 days after receiving written notice of such prospective taking
(including, in such notice, an affirmative statement that it is being given
pursuant to this Section 7.2(a) and that if the Buyer fails to respond within 15
days of receipt the same will be deemed a waiver of the Buyer's termination
right under this Agreement). If this Agreement shall be so terminated, then (i)
the Buyer shall be entitled to the prompt return of the Escrow Fund, and (ii)
none of the parties hereto shall have any further obligations or liabilities to
any other parties under this Agreement, except for those which-expressly survive
the termination of this Agreement as set forth in Section 10.2. If this
Agreement is not so terminated as aforesaid, then the parties hereto shall
proceed to the Closing without reduction of or offset against the Purchase Price
(but the Sellers agree that at Closing the Sellers will assign any and all right
to recover proceeds in respect of any such condemnation or other proceedings to
the Buyer in a form of assignment reasonably acceptable to the Buyer and if any
such proceeds shall be paid to or become payable to any Seller or any Affiliate
thereof, other than a Target or a Subsidiary, the Sellers agree to deliver, or
cause the same to be delivered, directly to the Buyer promptly upon receipt) and
the Buyer shall have no other claim against the Sellers. In such event, at the
Closing all of the Sellers' right, title and interest in and to any condemnation
proceeds paid or payable in connection therewith shall be paid or assigned, as
the case may be, to the Buyer.

(b)   If, between the date hereof and the Closing, any condemnation or eminent
domain proceedings are initiated which would result in the taking of less than a
Material Portion of a Property, then the Buyer may not terminate this Agreement
as a result thereof and the parties shall proceed to the Closing without
reduction of or offset against the Purchase Price (but the Sellers agree that at
Closing the Sellers will assign any and all right to recover proceeds in respect
of any such condemnation or other proceedings to the Buyer in a form of
assignment reasonably acceptable to the Buyer and if any such proceeds shall be
paid to or become payable to any Seller or any Affiliate thereof, other than a
Target or a Subsidiary, the Sellers agree to deliver, or cause the same to be
delivered, directly to the Buyer promptly upon receipt) and the Buyer shall have
no claim against the Sellers with respect thereto. In such event, at the Closing
all of the right, title and interest of the Sellers in and to any condemnation
proceeds paid or payable in connection therewith shall be paid or assigned to
the Buyer.

Section 7.3           Waiver. The Sellers and the Buyer hereby waive the
provisions of Section 5-1311 of the General Obligations Law of the State of New
York and Section 1662(a) of the California Civil Code, and of any other similar
law to the same or similar effect, and agree that the same shall not apply to
this Agreement.

 

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ARTICLE VIII

CONDITIONS TO CLOSING

Section 8.1        General Conditions. The respective obligations of the Buyer
and the Sellers to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions, any of which may, to the extent permitted by applicable
Law, be waived in writing by either party in its sole discretion (provided,
however, that such waiver shall only be effective as to the obligations of such
party):

(a)   No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law (whether temporary, preliminary or permanent) that
is then in effect and that enjoins, restrains, makes illegal or otherwise
prohibits the consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements (an "Order ") and no such Order has been threatened.

(b)   All material consents of, or registrations, declarations or filings with,
any Governmental Authority required for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements shall have been
obtained or filed.

Section 8.2         Conditions to Obligations of the Sellers. The obligations of
the Sellers to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions, any of which may be waived in writing by the Sellers in
their sole discretion:

(a)   The representations and warranties of the Buyer contained in this
Agreement or any Ancillary Agreement or any certificate delivered pursuant
hereto shall be true and correct both when made and as of the Closing, or in the
case of representations and warranties that are made as of a specified date,
such representations and warranties shall be true and correct as of such
specified date, except where the failure to be so true and correct (without
giving effect to any limitation or qualification as to "materiality" (including
the word "material") or "Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, have a Buyer Material Adverse Effect. The
Buyer shall have performed all obligations and agreements and complied with all,
covenants and conditions required by this Agreement or any Ancillary Agreement
to be performed or complied with by it in all material respects prior to or at
the Closing. The Sellers shall have received from the Buyer a certificate to the
effect set forth in the preceding sentences, signed by a duly authorized officer
thereof.

(b)   The Sellers shall have received an executed counterpart of each of the
Ancillary Agreements, signed by each party other than the Sellers, and each of
the other closing deliverables required to be delivered by the Buyer pursuant to
Section 2.4.

(c)   The distributions set forth in Sections 5.2 and 5.3 of this Agreement
shall have been consummated in accordance with the provisions thereof.

(d)   The HWA I Tax Returns shall have been prepared and filed with the relevant
taxing authorities as provided in Section 6.2.

 

 

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Section 8.3         Conditions to Obligations of the Buyer. The obligations of
the Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, any of which may be waived in writing by the Buyer in its sole
discretion:

(a)   The representations and warranties of the Sellers contained in this
Agreement or any Ancillary Agreement or any certificate delivered pursuant
hereto shall be true and correct both when made and as of the Closing, or in the
case of representations and warranties that are made as of a specified date,
such representations and warranties shall be true and correct as of such
specified date, except where the failure to be so true and correct (without
giving effect to any limitation or qualification as to "materiality" (including
the word "material") or "Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Notwithstanding the preceding sentence, the representations and
warranties of the Sellers contained in Sections 3.4, 3.5 and 3.6 shall be true
and correct in all respects both when made and as of the Closing. The Sellers
shall have performed all obligations and agreements and complied with all
covenants and conditions required by this Agreement or any Ancillary Agreement
to be performed or complied with by them in all material respects prior to or at
the Closing. Notwithstanding the preceding sentence, the covenants of the
Sellers contained in Section 5.16 shall have been performed (subject to waiver
by the Buyer) in all respects prior to the Closing. The Buyer shall have
received from each of the Sellers a certificate to the effect set forth in the
preceding sentences, signed by a duly authorized officer thereof.

(b)   The Buyer shall have received an executed counterpart of each of the
Ancillary Agreements, signed by each party other than the Buyer, and each of the
other closing deliverables required to be delivered by the Sellers pursuant to
Section 2.5.

(c)   The Buyer shall have obtained the Debt Consents.

(d)   The Buyer shall have delivered the Non-Consolidation Opinion to the Lender
(as defined therein) under the 1290 Senior Debt Agreement in a form acceptable
to such Lender and the relevant ratings agencies.

(e)   The distributions set forth in Sections 5.2 and 5.3 of this Agreement
shall have been consummated in accordance with the provisions thereof.

(f)    (i) There shall exist no Voluntary Title Matters, (ii) there shall exist
no Monetary New Title Matters (other than such Monetary New Title Matters as
have been waived by the Buyer as provided in Section 5.16(b) or which the
Sellers have elected to treat as an "Other Liability" as provided in this
Agreement) and (iii) there shall exist no Non-Monetary New Title Matters, that,
individually and in the aggregate materially and adversely affect the value or
use of the Property to which the Non-Monetary New Title Matter relates.

(g)   The HWA I Tax Returns shall have been prepared and filed with the relevant
taxing authorities as provided in Section 6.2.

 

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ARTICLE IX

INDEMNIFICATION

Section 9.1         Survival of Representations, Warranties and Covenants. The
representations and warranties of the Sellers and the Buyer contained in this
Agreement shall survive the Closing until December 31, 2007, subject to
extension as contemplated by Section 9.5(a); provided, however, that:

(a)    the representations and warranties contained in Sections 3.4, 3.5 and 3.6
shall survive indefinitely;

(b)   the representations and warranties contained in Sections 3.1, 3.2, 3.3,
3.7(c), 3.7(f), 3.16(a)(ii), 3.16(a)(v), 3.16(a)(viii), 3.16(a)(ix), 3.16(a)(x),
3.17, 3.22 and 3.25 shall survive until January 31, 2009; and

(c)   in the absence of fraud, the representations and warranties contained in
Sections 3.9, 3.15 and 3.23 shall not survive the Closing.

Section 9.2        Indemnification by the Sellers. Following the Closing, the
Sellers shall, jointly and severally, save, defend, indemnify and hold harmless
the Buyer and its Affiliates (including the Targets and the Subsidiaries),
officers, directors, employees, agents, successors and assigns (collectively,
the "Buyer Indemnified Parties") from and against any and all losses, damages,
liabilities, deficiencies, claims, interest, awards, judgments, penalties, costs
and expenses (including reasonable attorneys' fees, costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (hereinafter collectively, "Losses") to the extent arising out of or
resulting from:

(a)   any breach of any representation or warranty made by a Seller or the
Sellers contained in this Agreement or any Ancillary Agreement or any
certificate delivered pursuant hereto (for purposes of determining the amount of
any Losses (but not for determining if a breach of any representation or
warranty has occurred) pursuant to this Section 9.2(a), all representations and
warranties shall be read without any "material", "materiality" and "material
adverse effect" qualifications);

(b)   any breach of any covenant or agreement by a Seller or the Sellers
contained in this Agreement; and

(c)   any indemnification or other obligation of the Targets or the Subsidiaries
arising under the Extell Purchase Agreement and, any other residual liability
any of the Targets or Subsidiaries may have as a result of owning or operating
the property exchanged pursuant to the Extell Purchase Agreement or any other
property any of the Targets and the Subsidiaries may have owned or leased prior
to purchasing the Properties. For the avoidance of doubt, nothing in this
paragraph (c) shall supersede or modify the Indemnification Agreement or in any
way affect the parties' obligations pursuant to the Indemnification Agreement.

Section 9.3        Indemnification by the Buyer. Following the Closing, the
Buyer shall save, defend, indemnify and hold harmless the Sellers and their
Affiliates, officers, directors,

 

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employees, agents, successors and assigns (collectively, the "Seller Indemnified
Parties") from and against any and all Losses to the extent arising out of or
resulting from:

(a)   any breach of any representation or warranty made by the Buyer contained
in this Agreement or any Ancillary Agreement or any certificate delivered
pursuant hereto;

(b)   any breach of any covenant or agreement by the Buyer contained in this
Agreement; and

(c)   any claim or cause of action by any Person against any Seller Indemnified
Party with respect to the operations of the Targets or the Subsidiaries
following the Closing (but subject to the Targets' and Subsidiaries'
indemnification obligations pursuant to Section 5.10), except for claims or
causes of action with respect to which the Sellers are obligated to indemnify
the Buyer Indemnified Parties pursuant to Section 9.2.

Section 9.4         Procedures.

(a)   In order for a Buyer Indemnified Party or Seller Indemnified Party (the
"Indemnified Party") to be entitled to any indemnification provided for under
this Agreement as a result of a Loss or a claim or demand made by any Person
against the Indemnified Party (a "Third Party Claim"), such Indemnified Party
shall deliver notice thereof to the party against whom indemnity is sought (the
"Indemnifying Party") promptly after receipt by such Indemnified Party of
written notice of the Third Party Claim, describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder, the amount or
method of computation of the amount of such claim (if known) and such other
information with respect thereto as the Indemnifying Party may reasonably
request. The failure to provide such notice, however, shall not release the
Indemnifying Party from any of its obligations under this Article IX except to
the extent that the Indemnifying Party is materially prejudiced by such failure.

(b)   The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party within 30 days of receipt of notice from the Indemnified Party
of the commencement of such Third Party Claim, to assume the defense thereof at
the expense of the Indemnifying Party with counsel selected by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party. If the Indemnifying
Party assumes the defense of such Third Party Claim, the Indemnified Party shall
have the right to employ separate counsel and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party. If the Indemnifying Party assumes the defense of any
Third Party Claim, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party. Whether or not the
Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified
Party shall not admit any liability with respect to, or settle, compromise or
discharge, or offer to settle, compromise or discharge, such Third Party Claim
without the Indemnifying Party's prior written consent.

(c)   In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim being
asserted against or

 

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sought to be collected from such Indemnified Party, the Indemnified Party shall
deliver notice of such claim promptly to the Indemnifying Party, describing in
reasonable detail the facts giving rise to any claim for indemnification
hereunder, the amount or method of computation of the amount of such claim (if
known) and such other information with respect thereto as the Indemnifying Party
may reasonably request. The failure promptly to provide such notice, however,
shall not release the Indemnifying Party from any of its obligations under this
Article IX except to the extent that the Indemnifying Party is materially
prejudiced by such failure. The Indemnified Party shall reasonably cooperate and
assist the Indemnifying Party in determining the validity of any claim for
indemnity by the Indemnified Party and in otherwise resolving such matters. Such
assistance and cooperation shall include providing reasonable access to and
copies of information, records and documents relating to such matters.

 

Section 9.5

Limits on Indemnification.

(a)   No claim may be asserted against either party for breach of any
representation, warranty or covenant contained herein, unless written notice of
such claim is received by such party, describing in reasonable detail the facts
and circumstances with respect to the subject matter of such claim on or prior
to the date on which the representation, warranty or covenant on which such
claim is based ceases to survive as set forth in Section 9.1, in which case such
representation, warranty or covenant shall survive as to such claim until such
claim has been finally resolved.

 

(b)

Notwithstanding anything to the contrary contained in this Agreement:

(i)           the Sellers shall not be liable to any Buyer Indemnified Party for
any claim for indemnification pursuant to Sections 9.2(a) and (b) unless and
until the aggregate amount of indemnifiable Losses that may be recovered from
the Sellers equals or exceeds $5,000,000, as this amount may be reduced from
time to time as provided in Section 2.6 of the Indemnification Agreement (as so
reduced, the "Basket Amount"), in which case the Sellers shall be liable only
for the Losses in excess of the Basket Amount (i.e., claims pursuant to Section
9.2(a) are subject to a one-time deductible equal to the Basket Amount);
provided, however, that no Losses may be claimed by any Buyer Indemnified Party
or shall be reimbursable by the Sellers or shall be included in calculating the
aggregate Losses for purposes of this clause (i) other than Losses in an amount
that exceeds $50,000 resulting from any single claim or aggregated claims
arising out of the same or related facts, events or circumstances (the "Minimum
Loss Amount"; it being understood that any Losses that do exceed the Minimum
Loss Amount will be recoverable in full – i.e., the Minimum Loss Amount is a
filter but not a deductible); and provided further, however, that claims for
indemnification: (A) for breaches of any representation or warranty contained in
Section 3.18 or (B) provided by Article VI with respect to income taxes (it
being agreed that any claims for indemnification for any Taxes, other than
income taxes and withholding taxes and all interest, penalties and expenses
relating thereto, shall be subject to the Basket Amount and Minimum Loss Amount)
shall not be subject to any of the limitations set forth in this Section
9.5(b)(i);

 

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(ii)          the Sellers shall not be obligated to indemnify any Buyer
Indemnified Party with respect to any Loss to the extent that the Buyer was
compensated for such Loss in the calculation of the adjustment of the Base
Purchase Price, if any, as finally determined pursuant to Section 2.7; and

(iii)        no party hereto shall have any liability under Sections 9.2 or 9.3
of this Agreement for any punitive, consequential, special or indirect damages,
including business interruption, loss of future revenue, profits or income, or
loss of business reputation or opportunity relating to the breach or alleged
breach of this Agreement.

(c)   For all purposes of this Article IX, "Losses" shall be net of the actual
dollar benefit payable to the Buyer or the affected Subsidiaries pursuant to any
insurance or other recoveries payable under the Insurance Polices (or
replacements thereof) obtained by the Sellers, the Targets or the Subsidiaries
prior to the Closing, for which all premiums were either paid in full prior to
the Closing or reflected as an "Other Liability," to the Indemnified Party or
its Affiliates in connection with the facts giving rise to the right of
indemnification. The Buyer and the Sellers shall, or shall cause the applicable
Indemnified Party to, use commercially reasonable efforts to seek full recovery
under all Insurance Policies (or replacements thereof) obtained by the Sellers,
the Targets or the Subsidiaries prior to the Closing, for which all premiums
were either paid in full prior to the Closing or reflected as an "Other
Liability," covering any Loss to the same extent as they would if such Loss were
not subject to indemnification hereunder.

 

 

Section 9.6

[Reserved]

 

 

Section 9.7

Escrow Fund.

(a)   The Buyer hereby agrees that the Escrow Fund shall provide the sole and
exclusive remedy for the Buyer Indemnified Parties with respect to any
indemnification claim asserted hereunder other than (i) claims for Losses
resulting from breaches of Sections 3.4, 3.5, 3.6 and 3.18, (ii) indemnification
claims provided by Article VI and (iii) indemnification for the Sellers'
obligations under the Indemnification Agreement, for which, in each case, the
Buyer may seek indemnification as provided herein from the Sellers, jointly and
severally, (A) in the case of (i) and (ii) for any amounts in excess of the
amount remaining in the Escrow Fund and (B) in the case of (iii) for any amounts
(it being understood that solely with respect to (iii), the Buyer is not
required to exhaust funds in the Escrow Fund before seeking indemnification for
such claims against the Sellers directly). If a Buyer Indemnified Party is
entitled to indemnification under this Article IX and the Buyer so requests, the
Buyer and the Sellers shall jointly instruct the Escrow Agent to pay to the
Buyer Indemnified Party from the Escrow Fund the amount of such Losses by wire
transfer of immediately available funds in accordance with the terms of the
Escrow Agreement.

(b)   The Buyer and the Sellers agree that, if any amounts in excess of
$50,000,000 remain in the Escrow Fund as of the close of business on December
31, 2007, the Buyer and the Sellers promptly shall instruct the Escrow Agent to
pay such funds (less any amounts then subject to any claim by any Buyer
Indemnified Party against the Sellers) to the Sellers. The Buyer and the Sellers
agree that any amounts remaining in the Escrow Fund after December 31,

 

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2007 shall only be available to satisfy (i) claims for Losses resulting from
breaches of the representations set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5,
3.6, 3.7(c), 3.7(f), 3.16(a)(ii), 3.16(a)(v), 3.16(a)(viii), 3.16(a)(ix),
3.16(a)(x), 3.17, 3.22 and 3.25 of this Agreement, (ii) indemnification claims
provided by Article VI of this Agreement, (iii) the Sellers' obligations under
the Indemnification Agreement and (iv) any claims still outstanding hereunder as
of December 31, 2007.

(c)   The Buyer and the Sellers agree that, if any amounts in excess of
$25,000,000 remain in the Escrow Fund as of the close of business on January 31,
2009, the Buyer and Sellers promptly shall instruct the Escrow Agent to pay such
funds (less any amounts then subject to any claim by any Buyer Indemnified Party
against the Sellers) to the Sellers. The Buyer and the Sellers agree that any
amounts remaining in the Escrow Fund after January 31, 2009 shall only be
available to satisfy (A) indemnification claims provided by Article VI, (B) the
Sellers' obligations under the Indemnification Agreement and (C) any claims
still outstanding hereunder as of January 31, 2009. If the Legal Action has been
finally resolved on or before December 31, 2009, then on or after December 31,
2009 Buyer and the Sellers promptly shall instruct the Escrow Agent to pay the
remaining amount of the Escrow Fund (less any amounts then subject to any claim
by any Buyer Indemnified Party against the Sellers) to the Sellers. Any amounts
remaining in the Escrow Fund after December 31, 2009 shall only be available to
satisfy (A) indemnification claims provided by Article VI, (B) the Sellers'
obligations under the Indemnification Agreement and (C) any claims still
outstanding hereunder as of December 31, 2009.

(d)   The Buyer and the Sellers agree that promptly after the later of December
31, 2009 and the date on which the Legal Action is no longer pending (whether by
settlement or final judgment) the Buyer and the Sellers shall instruct the
Escrow Agent to pay any funds remaining in the Escrow Fund (less any amounts
then subject to any claim by any Buyer Indemnified Party against the Sellers) to
the Sellers.

(e)   Subject to paragraphs (a) – (d) above, the Buyer and the Sellers shall
promptly instruct the Escrow Agent to pay any amounts that are subject to any
claim by any Buyer Indemnified Party against the Sellers to such Buyer
Indemnified Party or the Sellers, as appropriate, upon the final determination
of such claim.

Section 9.8        Assignment of Claims. If any Buyer Indemnified Party receives
any payment from the Sellers in respect of any Losses pursuant to Section 9.2
and the Buyer Indemnified Party had a reasonable and good faith basis for
recovering all or a significant portion of such Losses from a third party (and
specifically excluding Vornado Realty Trust, Vornado Realty L.P., the Buyer, any
Target or Subsidiary, any Affiliate of any of the foregoing, any existing or
former owner of an equity interest in any of the foregoing, any lender or
servicer or collateral agent in respect of any financing binding upon any Target
or Subsidiary or any assets of any of them, and any then-current tenant, in its
capacity as a tenant or occupant, at either of the Properties) (a "Potential
Contributor"), based on the underlying claim asserted against the Sellers, and
the Buyer Indemnified Party elected not to pursue such third party claim, the
Buyer Indemnified Party shall assign, on a non-recourse basis and without any
representation or warranty, such of its rights to proceed against the Potential
Contributor as are available and necessary to permit the Sellers to pursue
recovery from the Potential Contributor of the amount

 

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of such payment. If any such assignment would afford the Potential Contributor
any defense to the payment of the same, such assignment shall not take place and
the Buyer Indemnified Party will, at the Sellers' direction and at the Sellers'
sole expense, take such reasonable actions as may be requested by the Sellers to
seek to recover such claim from such Potential Contributor. Any payment received
in respect of such claim against the Potential Contributor (whether by the
Sellers or the relevant Buyer Indemnified Party as provided in the immediately
preceding sentence) shall be distributed, (i) first, to the Buyer Indemnified
Party in the amount of any deductible or similar amount required to be paid or
borne by the Buyer Indemnified Party prior to the Sellers being required to make
any payment to the Buyer Indemnified Party plus, in the case of any claim by a
Buyer Indemnified Party as provided in the immediately preceding sentence, the
costs and expenses incurred in investigating, prosecuting, defending or
otherwise addressing such claim, (ii) second, to the Sellers in an amount equal
to the aggregate payments made by the Sellers to the Buyer Indemnified Party in
respect of such claim, plus the costs and expenses incurred in investigating,
prosecuting, defending or otherwise addressing such claim and (iii) the balance,
if any, to the Buyer Indemnified Party.

Section 9.9           Interest. Any amounts payable to any Buyer Indemnified
Party (pursuant to Section 9.2) or any Seller Indemnified Party (pursuant to
Section 9.3) shall become immediately due and payable upon the final
determination of such claim, and any amounts payable to the Sellers (pursuant to
Section 9.7) shall be become immediately due and payable as set forth in Section
9.7. If the Buyer or the Sellers do not pay, or do not instruct the Escrow Agent
to pay, such amounts within 30 days of their becoming due and payable pursuant
to the preceding sentence, such amounts shall bear interest at a rate equal to
the rate of interest from time to time published in The Wall Street Journal as
the prime rate, calculated on the basis of a year of 365 days and the number of
days elapsed.

Section 9.10         Exclusivity. Except as specifically set forth in this
Agreement, the Ancillary Agreements and any other agreement or instrument being
entered into by the Buyer, the Sellers or any Target or Subsidiary concurrently
herewith, effective as of the Closing, in the absence of bad faith, willful
misconduct or fraud by the other party (to the extent determined in accordance
with Section 11.10), the Buyer, on behalf of itself and the other Buyer
Indemnified Parties, on the one hand, and the Sellers, on behalf of themselves
and the other Seller Indemnified Parties, on the other hand, waive any rights
and claims they may have against each other, whether in law or equity, relating
to the Targets or the Subsidiaries and/or the transactions contemplated by this
Agreement or the Ancillary Agreements. The righ ts and claims waived include,
without limitation, claims for contribution or other rights of recovery arising
out of or relating to any claims for breach of contract, breach of
representation or warranty, negligent misrepresentation and all other claims for
breach of duty not amounting to bad faith, willful misconduct or fraud. After
the Closing, subject to the foregoing and except for payments owing by any party
in the nature of adjustments to the Purchase Price or pursuant to Article VI or
Section 2.8, this Article IX will provide the exclusive remedy available to the
parties against each other for any breach of any representation, warranty,
covenant or other claim arising out of or relating to this Agreement or any
Ancillary Agreement and/or the transactions contemplated hereby or thereby.

ARTICLE X

TERMINATION

 

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Section 10.1        Termination.

(a)   This Agreement may be terminated by either the Sellers or the Buyer if the
Closing has not occurred by the close of business on the Closing Date (as the
same may have been adjourned as provided in Section 2.3), and a failure of the
party seeking to terminate to fulfill any obligation under this Agreement was
not the cause of the failure of the Closing to occur on such date.

(b)   This Agreement may be terminated by the Buyer pursuant to the exercise of
its right under clause (2) of the proviso contained in Section 5.16(b) of this
Agreement.

Section 10.2         Effect of Termination. In the event of termination of this
Agreement as provided herein, this Agreement shall forthwith become void and
there shall be no liability on the part of either party except (a) for the
provisions of Sections 3.18 and 4.5 relating to broker's fees and finder's fees,
Section 5.7 relating to confidentiality, Section 5.9 relating to public
announcements, Sections 10.3 and 10.4 relating to payments from the Escrow Fund,
Section 11.1 relating to fees and expenses, Section 11.5 relating to notices,
Section 11.8 relating to third-party beneficiaries, Section 11.9 relating to
governing law, Section 11.10 relating to dispute settlement and this Section
10.2 and (b) that nothing herein shall relieve either party from liability for
any breach of this Agreement or any agreement made as of the date hereof or
subsequent thereto pursuant to this Agreement.

Section 10.3         Termination Fee. If, on the Closing Date, the Sellers are
ready, willing and capable of closing (it being understood that so long as the
Sellers are ready, willing and capable of implementing any of the agreements,
obligations or covenants set forth in Sections 5.2 and 5.3 of this Agreement and
satisfying the other conditions precedent to the obligations of the Buyer set
forth in clauses (a), (b) and (f) of Section 8.3 of this Agreement immediately
prior to the Closing, they shall not be required to actually implement those
transactions in order to satisfy the foregoing standard) and the Buyer is
required by the terms hereof, but defaults in its obligation, to effectuate the
Closing, then the Sellers shall be entitled to receive from the Buyer as
liquidated damages for the damages suffered by the Sellers, an amount equal to
$100,000,000 (which amount the parties agree is a reasonable estimate of the
actual damages that will be suffered by the Sellers and does not constitute a
penalty), and the Buyer and the Sellers shall instruct the Escrow Agent to pay
the that amount out of the Escrow Fund to the Sellers. The termination fee
described in this Section 10.3 will be the sole and exclusive remedy that the
Sellers will have for any Buyer breach constituting or resulting in a failure of
the Buyer to purchase the Shares and the Partnership Intercompany Notes as
provided herein.

Section 10.4         Return of Escrow Fund. In the event of any termination of
this Agreement by the Buyer or the Sellers prior to the Closing for any reason,
the Buyer and the Sellers shall instruct the Escrow Agent to pay the amounts
remaining in the Escrow Fund (after the payment, if any, of amounts due the
Sellers pursuant to Section 10.3), to the Buyer.

ARTICLE XI

 

GENERAL PROVISIONS

 

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Section 11.1         Fees and Expenses. Except as otherwise provided herein, all
expenses incurred in connection with this Agreement and the Ancillary Agreements
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, whether or not such transactions are consummated. In
the event of termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by the other.

Section 11.2         Amendment and Modification. This Agreement may not be
amended, modified or supplemented in any manner, whether by course of conduct or
otherwise, except by an instrument in writing signed on behalf of each party and
otherwise as expressly set forth herein.

Section 11.3         Waiver. No failure or delay of either party in exercising
any right or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, or any course of
conduct, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereunder are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have hereunder. Any agreement on the part of either party to any such
waiver shall be valid only if set forth in a written instrument executed and
delivered by a duly authorized officer on behalf of such party.

Section 11.4         Seller Representative. Each of the Sellers, irrevocably and
unconditionally appoints Mr. Michael Pei as the representative of all of the
Sellers and agrees, for the benefit of that representative and the Buyer, that
Mr. Michael Pei alone will represent and act on behalf of all of the Sellers for
all purposes under this Agreement, including the giving and/or receiving of any
notice or consent or approval contemplated hereunder. In the event of the
incapacity or death of Mr. Michael Pei, the Sellers shall nominate a new
representative within five Business Days, and will provide notice of such
nomination to the Buyer as set forth herein, and absent such appointment the
Sellers agree that Mr. Henry Cheng will serve as the sole representative of the
Sellers in the capacity described above until such time as they have appointed
another representative to replace Mr. Pei in the capacity described above and
have advised the Buyer of that appointment in writing.

Section 11.5         Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or if by facsimile, upon written confirmation of
receipt by facsimile, e-mail or otherwise, (b) on the first Business Day
following the date of dispatch if delivered utilizing a next-day service by a
recognized next-day courier or (c) on the earlier of confirmed receipt or the
fifth Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:

 

(a)

if to the Sellers, to:

Mr. Michael Pei

33rd Floor

 

 

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New World Tower

16-18, Queen's Road, Central

Hong Kong

Facsimile: (852) 2537-6701

 

with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, NY 10166

Attention: Stephan H. Haimo, Esq.

Facsimile: (212) 351-5321

 

 

(b)

if to the Buyer, to:

 

Vornado America LLC

888 Seventh Avenue

New York, NY 10019

Attention: David Greenbaum

Facsimile: (212) 894-7070

 

and:

Vornado America LLC

210 Route 4 East

Paramus, NJ 07652-0910

Attention: Joe Macnow

Facsimile: (201) 843-2198

with a copy (which shall not constitute notice) to:

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attention: Benjamin R. Weber

Facsimile: (212) 558-3588

Section 11.6         Interpretation. When a reference is made in this Agreement
to a Section, Article, Exhibit or Schedule such reference shall be to a Section,
Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement or in any Exhibit are
for convenience of reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
Any capitalized terms used in any Exhibit but not otherwise defined therein
shall have the meaning as defined in this Agreement. All Exhibits and the
Schedules annexed hereto or referred to herein are hereby

 

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incorporated in and made a part of this Agreement as if set forth herein. The
word "including" and words of similar import when used in this Agreement will
mean "including, without limitation", unless otherwise specified. When used in
this Agreement the term "ordinary course of business" shall be deemed to refer
to the ordinary course of the ownership and operation of the Properties.

Section 11.7         Entire Agreement. This Agreement (including the Exhibits
and the Schedules hereto), the Ancillary Agreements, the Confidentiality
Agreements and the other agreements and instruments being entered into
concurrently herewith constitute the entire agreement, and supersede all prior
written agreements, arrangements, communications and understandings and all
prior and contemporaneous oral agreements, arrangements, communications and
understandings between the parties with respect to the subject matter hereof and
thereof. Neither this Agreement nor any Ancillary Agreement or any of the other
agreements and instruments being entered into concurrently herewith shall be
deemed to contain or imply any restriction, covenant, representation, warranty,
agreement or undertaking of any party with respect to the transactions
contemplated hereby or thereby other than those expressly set forth herein or
therein or in any document required to be delivered hereunder or thereunder, and
none shall be deemed to exist or be inferred with respect to the subject matter
hereof.

Section 11.8         No Third-Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person other than
the parties and their respective successors and permitted assigns any legal or
equitable right, benefit or remedy of any nature under or by reason of this
Agreement, except as provided in Section 5.10 and Article IX.

Section 11.9         Governing Law. This Agreement and all disputes or
controversies arising out of or relating to this Agreement or the transactions
contemplated hereby shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without regard to the laws of any other
jurisdiction that might be applied because of the conflicts of laws principles
of the State of New York.

Section 11.10      Dispute Settlement.

(a)   Any dispute, controversy or claim arising out of or relating to any
provision of this Agreement or the Ancillary Agreements or the interpretation,
enforceability, performance, breach, termination or validity hereof or thereof
(including this arbitration clause) shall be solely and finally settled by
arbitration by a panel of three arbitrators in accordance with the Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association ("AAA"),
as modified by the provisions of this Section. Each party agrees that the award
of the arbitrators shall be final and non-appealable and shall be the sole and
exclusive remedy between or among them regarding any and all claims,
counterclaims, issues and accountings presented to the arbitrators, irrespective
of the magnitude thereof.

(b)   To the extent this Section 11.10 is deemed a separate agreement,
independent from this Agreement, and for purposes of the Ancillary Agreements,
Sections 11.1 (Fees and Expenses), 11.5 (Notices), 11.9 (Governing Law) and
11.16 (Severability) and are incorporated in this Section 11.10 by reference.

 

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(c)   All of the arbitrators shall speak English. The parties agree that the
choice of arbitrators shall be as follows: one arbitrator shall be appointed by
the Buyer and one by the Sellers and the third shall be selected by the two
party-appointed arbitrators or, failing agreement within 15 days after both
party-appointed arbitrators have been appointed, by the AAA in accordance with
the Rules.

(d)   All arbitration proceedings shall be conducted pursuant to the Rules in
the English language in New York, New York. Each party agrees to facilitate the
arbitration by: (i) making available to each other and to the arbitrators for
inspection and extraction all documents, books, records and personnel under
their control as the arbitrators shall determine to be relevant to the dispute,
and (ii) conducting arbitration hearings to the greatest extent possible on
successive, contiguous days, and (iii) observing strictly the time periods
established by the Rules or by the arbitrators for the submission of evidence
and briefs.

(e)   All papers, documents and evidence, whether written or oral, filed with or
presented to the arbitrator shall be deemed by the parties to be Information (as
defined in the Confidentiality Agreements). In addition, the arbitrators shall
keep such papers, documents and evidence strictly confidential, and no expert or
arbitrator shall disclose in whole or in part to any other person any
confidential information submitted by any other person in connection with any
arbitration proceedings, except to the extent (i) required by law or regulation,
(ii) reasonably necessary to assist counsel in the arbitration or preparation
for arbitration of the dispute, or (iii) that such "confidential" information
was previously or subsequently becomes known to the disclosing party without
restrictions on disclosure, was independently developed by such disclosing party
or becomes publicly known through no fault of the disclosing party.

(f)    Any award issued by the arbitrators (including any interim award) shall
set out a written explanation in English of the reasons for the award and a full
statement of the facts as found and the rules of law applied in reaching their
decision. Such explanation of the award and the statement of facts shall be
treated by the parties as Information (as defined in the Confidentiality
Agreements). In addition, the arbitrators shall keep such explanation of the
award and the statement of facts strictly confidential and shall treat such
information in accordance with paragraph (e) above.

(g)   The arbitrators are empowered to render the following awards in accordance
with any provision of this Agreement and the Ancillary Agreements: (i) enjoining
a party from performing any act prohibited or compelling a party to perform any
act required, by the terms of this Agreement and the Ancillary Agreements and
any order entered pursuant to this Agreement and the Ancillary Agreements or
deemed necessary by the arbitrator to resolve disputes arising under or relating
to this Agreement, the Ancillary Agreements or order, (ii) where, and only
where, violations of this Agreement or the Ancillary Agreements have been found,
shortening or lengthening any period established by this Agreement, the
Ancillary Agreements or order, and (iii) ordering such other legal or equitable
relief (subject to the limitations on liability set forth herein and therein) or
specifying such procedures as the arbitrator deems appropriate, to resolve any
dispute submitted to it for arbitration.

(h)   Any monetary award of the arbitrators shall be made and payable in
immediately available funds in U.S. dollars, free of any Tax and deductions of
any kind. Any

 

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such monetary award shall include interest from the date of such award at the
rate of interest from time to time published by the Wall Street Journal as the
prime rate, calculated on the basis of a year of 365 days and the number of days
elapsed.

(i)    Any decision or award of the arbitral tribunal shall be final and binding
upon the parties to the arbitration proceeding and the arbitrators shall resolve
in their award the extent to which the parties shall bear the arbitration costs.
Each party hereby waives to the extent permitted by law all jurisdictional
defenses, objections as to venue and any rights to appeal or to review of such
award by any court or tribunal. Each party agrees that the arbitral award may be
found and that a judgment on the arbitration award may be entered in any court
having competent jurisdiction over the parties or their assets.

(j)    The parties hereby agree that for purposes of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, the relationship between
the parties is commercial in nature, and that any disputes between the parties
related to this Agreement or the Ancillary Agreements shall be deemed
commercial.

(k)   Each of the Sellers irrevocably (a) agrees that any suit, Action or other
legal proceeding to enforce the outcome of any arbitration provided for herein,
may be brought in the courts of the United States of America or in a state court
of record in New York County, New York or in any court of competent jurisdiction
within Hong Kong, (b) consents to the jurisdiction of each such court in any
such suit, Action or proceeding and (c) waives any objection it may have to the
laying of venue of any such suit, Action or proceeding in any of such courts and
any claim that any such suit, Action or proceeding has been brought in an
inconvenient forum.

Section 11.11       Disclosure Generally. Notwithstanding anything to the
contrary contained in the Schedules or in this Agreement, the information and
disclosures contained in any Schedule shall be deemed to be disclosed and
incorporated by reference in any other Schedule as though fully set forth in
such Schedule for which applicability of such information and disclosure is
reasonably apparent on its face. The fact that any item of information is
disclosed in any Schedule shall not be construed to mean that such information
is required to be disclosed by this Agreement. Such information and the dollar
thresholds set forth herein shall not be used as a basis for interpreting the
terms "material" or "Material Adverse Effect" or other similar terms in this
Agreement.

Section 11.12       Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Sellers or the Buyer or any officer,
director, employee, Representative or investor of either party hereto.

Section 11.13       Assignment; Successors. Neither this Agreement, the
Ancillary Agreements, nor any of the rights, interests or obligations under this
Agreement or the Ancillary Agreements may be assigned or delegated, in whole or
in part, by operation of law or otherwise, by either the Buyer, on one hand, or
any Seller on the other hand, without the prior written consent of the other
party, and any such assignment without such prior written consent shall be

 

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null and void; provided, however, that the Buyer may assign this Agreement to
any Affiliate of the Buyer immediately prior to, but conditioned upon, the
Closing, provided, however, that: (i) such assignment shall not shall eliminate
or release any of the Buyer's obligations pursuant to this Agreement or the
Ancillary Agreements, and (ii) the Buyer and any such Affiliate shall execute
and deliver to the Sellers an assignment and assumption agreement in a form
reasonably acceptable to the Sellers wherein such Affiliate unconditionally
assumes all of the Buyer's rights and obligations under this Agreement and the
Ancillary Agreements.

Section 11.14        Enforcement. The parties agree that irreparable damage
would occur in the event that the Sellers did not perform any of the provisions
of this Agreement in accordance with their specific terms or otherwise breached
those provisions. Accordingly, the Buyer shall be entitled to specific
performance of the terms hereof, including an injunction or injunctions to
prevent breaches of this Agreement, this being in addition to any other remedy
to which the Buyer is entitled at law or in equity. The Sellers hereby further
waive (a) any defense in any action for specific performance that a remedy at
law would be adequate and (b) any requirement under any law to post security as
a prerequisite to obtaining equitable relief.

Section 11.15       Currency. All references to "dollars" or "$" or "US$" in
this Agreement or any Ancillary Agreement refer to United States dollars, which
is the currency used for all purposes in this Agreement and any Ancillary
Agreement.

Section 11.16        Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application of such provision to any Person
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application of
such provision, in any other jurisdiction.

Section 11.17       Waiver of Jury Trial. Each of the parties to this agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or counterclaim arising out of or relating to this agreement or the transactions
contemplated hereby.

Section 11.18       Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.

Section 11.19       Facsimile Signature. This Agreement may be executed by
facsimile signature and a facsimile signature shall constitute an original for
all purposes.

Section 11.20       Time of Essence. Time is of the essence with regard to all
dates and time periods set forth or referred to in this Agreement.

Section 11.21       No Presumption Against Drafting Party. Each of the Buyer and
the Sellers acknowledges that each party to this Agreement has been represented
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connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the drafting
party has no application and is expressly waived.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the Sellers and the Buyer have caused this Agreement to be
executed as of the date first written above.

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

 

--------------------------------------------------------------------------------

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(as Seller of                                     )

 

 

By:

 

 

Name:

 

 

(                                                          )

 

 

 

By:

 

By:

 

 

 

By:

 

 

Name:

 

 

Title: