Document:

Exhibit
10.2

 

EXECUTION COPY

 

PURCHASE AGREEMENT

 

Dated February 14, 2005

 

among

 

iSTAR FINANCIAL INC.,

 

iSTAR ALPHA TRS INC.,

 

OAK HILL ADVISORS, L.P.,

 

OAK HILL SECURITIES GENPAR II, L.P.,

 

OAK HILL CREDIT ALPHA GENPAR, L.P.,

 

OAK HILL ADVISORS MGP, INC.,

 

WHB, INC.,

 

KRASE, INC.,

 

RBO, INC.,

 

CSW, INC.,

 

GA LLC,

 

OAK HILL ASSET MANAGEMENT, INC.,

 

OHSF GP PARTNERS II, LLC,

 

OAK HILL CREDIT ALPHA MGP, LLC,

 

GLENN R. AUGUST,

 

WILLIAM H. BOHNSACK, JR.,

 

SCOTT D. KRASE,

 

ROBERT OKUN,

 

and

 

CARL L. WERNICKE

 

 

Table of
Contents

 

	
  ARTICLE I CLOSINGS; SALE AND PURCHASE

  	
   

  
	
   

  	
   

  
	
  1.1

  	
  The Closings

  	
   

  
	
  1.2

  	
  Purchase and Sale at the Initial Closing

  	
   

  
	
  1.3

  	
  Purchase and Sale at the Subsequent Closing

  	
   

  
	
  1.4

  	
  Delivery of Initial Purchase Price and
  Certificates

  	
   

  
	
  1.5

  	
  Delivery of Subsequent Purchase Price and
  Certificates

  	
   

  
	
  1.6

  	
  Pre-Closing Fees and Expenses; Discharge of
  OHA Liabilities; Delivery of Closing Statement

  	
   

  
	
  1.7

  	
  Excluded Assets

  	
   

  
	
  1.8

  	
  FIRPTA Affidavits

  	
   

  
	
  1.9

  	
  Actions Simultaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II REPRESENTATIONS AND
  WARRANTIES WITH RESPECT TO THE PURCHASER PARTNERSHIP INTERESTS AND THE
  PURCHASER LLC INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Authority; Execution and Delivery;
  Enforceability

  	
   

  
	
  2.2

  	
  Title to Purchaser Partnership Interests

  	
   

  
	
  2.3

  	
  Title to Purchaser LLC Interests

  	
   

  
	
  2.4

  	
  Non-Contravention

  	
   

  
	
  2.5

  	
  Governmental Consents and Approvals

  	
   

  
	
  2.6

  	
  Litigation and Claims

  	
   

  
	
  2.7

  	
  Investment Representations

  	
   

  
	
  2.8

  	
  Competition; Conflicts

  	
   

  
	
  2.9

  	
  No Finder

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES WITH RESPECT TO THE OAK HILL ENTITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization; Good Standing

  	
   

  
	
  3.2

  	
  Authority; Execution and Delivery;
  Enforceability

  	
   

  
	
  3.3

  	
  Capitalization

  	
   

  
	
  3.4

  	
  Subsidiaries

  	
   

  
	
  3.5

  	
  Non-Contravention

  	
   

  
	
  3.6

  	
  Books and Records

  	
   

  
	
  3.7

  	
  Governmental Consents and Approvals

  	
   

  
	
  3.8

  	
  Title to Assets

  	
   

  
	
  3.9

  	
  Real Property

  	
   

  
	
  3.10

  	
  Employment Related Agreements and Actions

  	
   

  
	
  3.11

  	
  Contracts

  	
   

  
	
  3.12

  	
  Intellectual Property

  	
   

  
	
  3.13

  	
  Insurance

  	
   

  
	
  3.14

  	
  Financial Statements; Liabilities; Books
  and Records

  	
   

  
	
  3.15

  	
  Tax Matters

  	
   

  
	
  3.16

  	
  Absence of Changes

  	
   

  
	
  3.17

  	
  Litigation and Claims

  	
   

  
	
  3.18

  	
  Governmental Permits; Compliance with
  Applicable Law

  	
   

  
	
  3.19

  	
  The Funds

  	
   

  
	
  3.20

  	
  Environmental Matters

  	
   

  

 

i

 

	
  3.21

  	
  Employee Plans

  	
   

  
	
  3.22

  	
  Fiduciary Commitments and Duties

  	
   

  
	
  3.23

  	
  No Finder

  	
   

  
	
  3.24

  	
  OHAI/OHAMI

  	
   

  
	
  3.25

  	
  Assets Under Management

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF THE iSTAR PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization; Good Standing

  	
   

  
	
  4.2

  	
  Authority; Execution and Delivery;
  Enforceability

  	
   

  
	
  4.3

  	
  Non-Contravention

  	
   

  
	
  4.4

  	
  Governmental Consents and Approvals

  	
   

  
	
  4.5

  	
  iStar
  Shares

  	
   

  
	
  4.6

  	
  Litigation and Claims

  	
   

  
	
  4.7

  	
  SEC
  Reports

  	
   

  
	
  4.8

  	
  Private Offering

  	
   

  
	
  4.9

  	
  REIT
  Status

  	
   

  
	
  4.10

  	
  Sources of Funds

  	
   

  
	
  4.11

  	
  Books and Records

  	
   

  
	
  4.12

  	
  No Finder

  	
   

  
	
  4.13

  	
  Investment Intention and Accredited
  Investor

  	
   

  
	
  4.14

  	
  No Other Representations and Warranties

  	
   

  
	
  4.15

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  ACTION PRIOR TO THE INITIAL CLOSING DATE

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Conduct of Business

  	
   

  
	
  5.2

  	
  No Breach of Representations and
  Warranties; Notification of Certain Matters

  	
   

  
	
  5.3

  	
  Access

  	
   

  
	
  5.4

  	
  Standstill

  	
   

  
	
  5.5

  	
  Notice of Litigation

  	
   

  
	
  5.6

  	
  Fulfillment of Conditions to Obligations of
  the iStar Parties

  	
   

  
	
  5.7

  	
  Fulfillment of Conditions to Obligations of
  the Oak Hill Parties

  	
   

  
	
  5.8

  	
  Notices

  	
   

  
	
  5.9

  	
  Amended and Restated LP Agreements/Operating
  Agreements

  	
   

  
	
  5.10

  	
  Delivery of Governmental Documents

  	
   

  
	
  5.11

  	
  Publicity

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  OTHER AGREEMENTS OF THE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Key Man Insurance

  	
   

  
	
  6.2

  	
  Office
  Space

  	
   

  
	
  6.3

  	
  Board Representation

  	
   

  
	
  6.4

  	
  Consulting Agreement

  	
   

  
	
  6.5

  	
  Federal Income Tax Treatment

  	
   

  
	
  6.6

  	
  Transfer Taxes

  	
   

  
	
  6.7

  	
  Contributions and Reorganization

  	
   

  
	
  6.8

  	
  Further Assurances

  	
   

  
	
  6.9

  	
  Additions to Securities List

  	
   

  
	
  6.10

  	
  New TRSs

  	
   

  
	
  6.11

  	
  Extension of Funds

  	
   

  

 

ii

 

	
  ARTICLE VII CONDITIONS PRECEDENT TO
  OBLIGATIONS OF iSTAR PARTIES

  	
   

  
	
   

  	
   

  
	
  7.1

  	
  Initial Closing

  	
   

  
	
  7.2

  	
  Subsequent Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  CONDITIONS PRECEDENT TO OBLIGATIONS OF THE OAK HILL PARTIES AND THE OAK HILL
  SELLERS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Initial Closing

  	
   

  
	
  8.2

  	
  Subsequent Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Survival of Representations and Warranties

  	
   

  
	
  9.2

  	
  Indemnification by the Oak Hill Sellers and
  the Seller Principals

  	
   

  
	
  9.3

  	
  Indemnification by the Parent

  	
   

  
	
  9.4

  	
  Notification of Claims

  	
   

  
	
  9.5

  	
  Limitations on Indemnification

  	
   

  
	
  9.6

  	
  Tax Treatment of Indemnity Payments

  	
   

  
	
  9.7

  	
  Indemnity Payments by Seller Group Members

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Termination

  	
   

  
	
  10.2

  	
  Effects of Termination

  	
   

  
	
  10.3

  	
  Termination Following Initial Closing but
  Prior to Subsequent Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Expenses of the Transaction

  	
   

  
	
  11.2

  	
  Notices

  	
   

  
	
  11.3

  	
  No Modification Except in Writing

  	
   

  
	
  11.4

  	
  Entire Agreement

  	
   

  
	
  11.5

  	
  Severability

  	
   

  
	
  11.6

  	
  Assignment

  	
   

  
	
  11.7

  	
  Governing Law; Jurisdiction

  	
   

  
	
  11.8

  	
  Headings; References

  	
   

  
	
  11.9

  	
  Interpretation

  	
   

  
	
  11.10

  	
  Third Parties

  	
   

  
	
  11.11

  	
  Counterparts

  	
   

  

 

iii

 

	
  APPENDICES

  	
   

  
	
   

  	
   

  	
   

  
	
  Appendix A

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 1

  	
  Form of Consulting Agreement

  	
   

  
	
  Exhibit 2

  	
  Form of Amended and Restated OHA LP
  Agreement

  	
   

  
	
  Exhibit 3

  	
  Form of Relationship Agreement

  	
   

  
	
  Exhibit 4

  	
  Form of Shareholder’s Agreement

  	
   

  
	
  Exhibit SL

  	
  Securities List

  	
   

  
	
  Exhibit R

  	
  Manner of Reorganization

  	
   

  

 

iv

 

PURCHASE
AGREEMENT

 

PURCHASE
AGREEMENT (this “Agreement”),
dated February 14, 2005, among iSTAR FINANCIAL INC., a Maryland corporation
(the “Parent”), iSTAR ALPHA TRS INC., a Delaware corporation and
wholly-owned subsidiary of the Parent (the “Purchaser”), on the one
hand, OAK HILL ADVISORS, L.P., a Delaware limited partnership (“OHA”),
OAK HILL SECURITIES GENPAR II, L.P., a Delaware limited partnership (“GenPar
II”), OAK HILL CREDIT ALPHA GENPAR, L.P., a Delaware limited partnership (“GenPar
Alpha”), GA LLC, a Delaware limited liability company (“GA LLC”), OAK
HILL ASSET MANAGEMENT, INC., a Delaware corporation (“OHAMI”), OAK HILL
ADVISORS MGP, INC., a Delaware corporation (the “GRA Seller”), WHB,
INC., a Delaware corporation (the “WHB Seller”), KRASE, INC., a Delaware
corporation (the “Krase Seller”), RBO, INC., a Delaware corporation (the
“RBO Seller”), CSW, INC., a Delaware corporation (the “CSW Seller”
and, together with GA LLC, OHAMI the GRA Seller, the WHB Seller, the Krase Seller
and the RBO Seller, the “Oak Hill Sellers”), OHSF GP PARTNERS II, LLC, a
Delaware limited liability company (“GenPar II LLC”), OAK HILL CREDIT
ALPHA MGP, LLC, a Delaware limited liability company (“GenPar Alpha LLC”
and, together with GenPar II LLC, OHA, GenPar II and GenPar Alpha, the “Oak
Hill Entities”), GLENN R. AUGUST (“August”), WILLIAM H. BOHNSACK,
JR. (“Bohnsack”), SCOTT D. KRASE (“Krase”), ROBERT OKUN (“Okun”)
and CARL L. WERNICKE (“Wernicke” and, together with August, Bohnsack,
Krase and Okun, the “Seller Principals” and, together with the Oak Hill
Sellers and the Oak Hill Entities, the “Oak Hill Parties”), on the other
hand.

 

W I T N E S S E T H:

 

WHEREAS, OHA and certain of its Affiliates are engaged in investment and asset
management and other advisory services, and OHA serves as the direct or
indirect manager or advisor of certain investment vehicles, including the
Funds;

 

WHEREAS, the Parent is in the business of providing custom-tailored financing
solutions to private and corporate owners of real estate;

 

WHEREAS, the Purchaser desires to purchase and acquire from the Oak Hill
Sellers and the Seller Principals, and the Oak Hill Sellers and the Seller
Principals desire to sell and transfer to the Purchaser, certain interests more
fully described herein and in the Amended and Restated LP Agreements and
Amended and Restated Operating Agreements;

 

WHEREAS, the Seller Principals, directly or indirectly, own all of the equity
interests in the Oak Hill Sellers as more fully described herein;

 

WHEREAS, the Oak Hill Sellers (other than OHAMI) collectively own 100% of the
issued and outstanding partnership interests of OHA (the “OHA Partnership
Interests”);

 

WHEREAS, at or prior to the Initial Closing the OHA Partnership Interests will
be reclassified pursuant to the Amended and Restated OHA LP Agreement into
Class A Interests and Class B Interests (the “Reclassification”) and OHAMI,
in connection with the OHAMI Contribution, will receive Class A Interests in
OHA;

 

WHEREAS, the Purchaser desires to purchase and acquire from each Oak Hill
Seller, and each Oak Hill Seller desires to sell and transfer to the Purchaser,
all of its Class A Interests,

 

 

which represent in the aggregate, after giving effect to the OHAI
Contribution, 47.5% of the OHA Partnership Interests (the “Purchaser
Partnership Interests”) on the terms and subject to the conditions
hereinafter set forth and subject to the terms of the Amended and Restated OHA
LP Agreement;

 

WHEREAS, August, Bohnsack, Krase and Wernicke collectively
own 87.635239% of the issued and outstanding membership interests of GenPar II LLC
(the “GenPar II LLC Interests”), and the Purchaser or a Purchaser
Designee desires to purchase and acquire from the Seller Principals, and the Seller
Principals desire to sell and transfer to the Purchaser, an interest in GenPar
II LLC which shall entitle Purchaser or a Purchaser Designee to 38% of the
aggregate carried interest distributions from GenPar II which amount represents 46.986090% of the
Class B Interests of GenPar II LLC (the “Purchaser GenPar II LLC Interest”)
on the terms and subject to the conditions hereinafter set forth and subject to
the terms of the Amended and Restated GenPar II LLC Operating Agreement;

 

WHEREAS, the Seller Principals collectively own all
of the issued and outstanding membership interests of GenPar Alpha LLC (the “GenPar
Alpha LLC Interests” and, together with the GenPar II LLC Interests, the “LLC
Interests”) and the Purchaser desires to purchase and acquire from the Seller
Principals, and the Seller Principals desire to sell and transfer to the Purchaser,
an interest in GenPar Alpha LLC which shall entitle Purchaser or a Purchaser
Designee to 42.75% of the aggregate incentive allocations from GenPar Alpha,
which amount represents 47.5% of the incentive allocation interests in GenPar
Alpha LLC (the “Purchaser GenPar Alpha LLC Interest” and, together with
the Purchaser GenPar II LLC Interest, the “Purchaser LLC Interests”) on
the terms and subject to the conditions hereinafter set forth and subject to
the terms of the Amended and Restated GenPar Alpha LLC Operating Agreement;

 

WHEREAS, in connection with the transactions
contemplated hereby and by the Related Agreements, the Oak Hill Sellers and the
Seller Principals will cause the Reclassification and Reorganization to occur prior
to the Initial Closing Time; and

 

WHEREAS, terms used in this Agreement and not
otherwise defined in this Agreement are defined in Appendix A hereto.

 

NOW,
THEREFORE, the
parties hereto hereby agree as follows:

 

ARTICLE
I

 

CLOSINGS; SALE AND PURCHASE

 

1.1                                 The Closings.  The closing (the “Initial
Closing”) of the purchase and sale of the Purchaser Partnership Interests
and the Purchaser LLC Interests owned by OHAMI, GA LLC, the GRA Seller, the WHB
Seller, the Krase Seller, August, Bohnsack and Krase, as the case may be, shall
take place at 10:00 a.m., Eastern Time, on April 1, 2005 as long as all of the
conditions contained in Sections 7.1 and 8.1 have been satisfied or waived
(other than those conditions which will be satisfied at the Initial Closing Time).
 (Hereinafter, such date is referred to
as the “Initial Closing Date” and such time on the Initial Closing Date
is referred to as the “Initial Closing Time”.)  The closing (the “Subsequent Closing”
and, together with the Initial Closing, the “Closings”) of the purchase
and sale of the Purchaser Partnership Interests and the Purchaser

 

2

 

LLC Interests owned by the
RBO Seller, the CSW Seller, Okun and Wernicke, as the case may be, shall take
place at 10:00 a.m., Eastern Time, on May 2, 2005 as long as all of the
conditions contained in Sections 7.2 and 8.2 have been satisfied.  (Hereinafter, such date is referred to as the
“Subsequent Closing Date” and such time on the Subsequent Closing Date
is referred to as the “Subsequent Closing Time”.)  The Closings shall take place at the offices
of Katten Muchin Zavis Rosenman, 575 Madison Avenue, New York, New York.

 

1.2                                 Purchase and Sale at the Initial Closing.  Upon
the terms and subject to the conditions set forth herein, at the Initial
Closing (a) each of OHAMI, GA LLC, the GRA Seller, the WHB Seller and the
Krase Seller agrees to sell, convey, transfer, assign and deliver to the
Purchaser certificates (or such other appropriate evidences of ownership)
representing such Oak Hill Seller’s Purchaser Partnership Interests and (b) each
of August, Bohnsack and Krase agrees to sell, convey, transfer, assign and
deliver to the Purchaser or a Purchaser Designee certificates (or such other
appropriate evidences of ownership) representing such Seller Principal’s Purchaser
LLC Interests, in each case (if certificated) duly endorsed in blank or
accompanied by appropriate powers in blank with all appropriate transfer stamps
affixed thereto, and the Purchaser agrees (and the Parent shall cause the
Purchaser and the Purchaser Designees) to purchase from such Oak Hill Sellers
and from such Seller Principals such Oak Hill Seller’s Purchaser Partnership
Interests and such Seller Principal’s Purchaser LLC Interests, respectively, for
an aggregate purchase price consisting of (i) $128,729,257.81 in cash (the
“Initial Cash Purchase Price”) and (ii) such number of shares of iStar
Common Stock equal to the quotient of (x) $41,650,000 over (y) the iStar
Common Stock Price (the “Initial iStar Shares” and, together with the
Initial Cash Purchase Price, the “Initial Purchase Price”).

 

1.3                                 Purchase and Sale at the Subsequent Closing.  Upon
the terms and subject to the conditions set forth herein, at the Subsequent
Closing (a) each of the RBO Seller and the CSW Seller agrees to sell,
convey, transfer, assign and deliver to the Purchaser or a Purchaser Designee
certificates (or such other appropriate evidences of ownership) representing
such Oak Hill Seller’s Purchaser Partnership Interests and (b) each of Okun and
Wernicke agrees to sell, convey, transfer, assign and deliver to the Purchaser
or a Purchaser Designee certificates (or such other appropriate evidences of
ownership) representing such Seller Principal’s Purchaser LLC Interests, in each
case (if certificated) duly endorsed in blank or accompanied by appropriate
powers in blank with all appropriate transfer stamps affixed thereto, and the
Purchaser agrees (and the Parent shall cause the Purchaser and the Purchaser
Designees) to purchase from such Oak Hill Sellers and from such Seller Principals
such Oak Hill Seller’s Purchaser Partnership Interests and such Seller Principal’s
Purchaser LLC Interests, respectively, for an aggregate purchase price
consisting of (i) $22,270,742.19 in cash, adjusted upward (as it relates
to such Oak Hill Seller or such Seller Principal) by an amount equal to the
amount by which such Oak Hill Sellers’ or such Seller Principals’ pro rata
share (based on its or his partnership/membership interest in an Oak Hill Entity
as set forth in Section 1.3 of the Disclosure Letter, such share referred to as
its or his “Pro Rata Share”) of base management fees accrued by the Oak
Hill Entities exceeds its or his Pro Rata Share of expenses incurred or accrued
by the Oak Hill Entities for the period between the Initial Closing Date and
the Business Day prior to the Subsequent Closing Date, or adjusted downward by
an amount equal to the amount by which such Oak Hill Sellers’ or such Seller
Principals’ Pro Rata Share of expenses incurred or accrued by the Oak Hill
Entities exceeds its or his Pro Rata Share of base management fees accrued by
the Oak Hill Entities for the period between the Initial Closing Date and the
Business Day prior

 

3

 

to the Subsequent Closing
Date (as adjusted, the “Subsequent Cash Purchase Price”) and (ii) such
number of shares of iStar Common Stock equal to the quotient of (x) $7,350,000
over (y) the iStar Common Stock Closing Price (the “Subsequent iStar
Shares” and, together with the Subsequent Cash Purchase Price, the “Subsequent
Purchase Price”).

 

1.4                                 Delivery of Initial Purchase Price and
Certificates.  At
the Initial Closing (i) the Initial Cash Purchase Price shall be paid by
the Purchaser, and the Parent shall cause the Purchaser and the Purchaser
Designees to pay, to OHAMI, GA LLC, the GRA Seller, the WHB Seller, the Krase
Seller, August, Bohnsack and Krase, as the case may be, by wire transfer of
immediately available funds to accounts designated in writing by such Oak Hill Sellers
and such Seller Principals, as the case may be, at least two Business Days
prior to the Initial Closing Date, (ii) the Initial iStar Shares shall be
delivered by the Parent to such Oak Hill Sellers and such Seller Principals, and
(iii) the certificates (or such other appropriate evidences of ownership)
representing such Oak Hill Seller’s Purchaser Partnership Interests and such
Seller Principal’s Purchaser LLC Interests shall be delivered by such Oak Hill Sellers
and such Seller Principals, as the case may be, to the Purchaser and the
Purchaser Designees, and in the case of (i) and (ii) in the
proportions as set forth in Section 1.4 of the Disclosure Letter.

 

1.5                                 Delivery of Subsequent Purchase Price and
Certificates.  At
the Subsequent Closing (i) the Subsequent Cash Purchase Price shall be
paid by the Purchaser, and the Parent shall cause the Purchaser and the
Purchaser Designees to pay, to the RBO Seller, the CSW Seller, Okun and
Wernicke, as the case may be, by wire transfer of immediately available funds
to accounts designated in writing by such Oak Hill Sellers and such Seller
Principals, as the case may be, at least two Business Days prior to the
Subsequent Closing Date, (ii) the Subsequent iStar Shares shall be
delivered by the Parent to such Oak Hill Sellers and such Seller Principals,
and (iii) the certificates (or such other appropriate evidences of
ownership) representing such Oak Hill Seller’s Purchaser Partnership Interests and
such Seller Principal’s Purchaser LLC Interests shall be delivered by such Oak
Hill Sellers and such Seller Principals, as the case may be, to the Purchaser
and Purchaser Designees, and in the case of (i) and (ii) in the
proportions as set forth in Section 1.5 of the Disclosure Letter.

 

1.6                                 Pre-Closing Fees and Expenses; Discharge of
OHA Liabilities; Delivery of Closing Statement.  Notwithstanding
anything contained herein, (i) all base management fees and expenses incurred
or accrued by the Oak Hill Entities prior to the Business Day prior to the Initial
Closing Date shall be for the account of the Oak Hill Sellers and (ii) the OHA
Liabilities shall be paid and discharged in full by the Oak Hill Sellers at or prior
to the Initial Closing Date.  The
proceeds of such accrued base management fees, net of accrued expenses (which expenses
shall include the pro rata portion of any projected bonuses to be paid to the
employees of the Oak Hill Entities in respect of such accrued management fees)
will be distributed by the Oak Hill Entities to the Oak Hill Sellers
immediately upon the receipt thereof by the Oak Hill Entities.  Prior to the Initial Closing Date, the Oak
Hill Entities shall distribute to the Oak Hill Sellers all cash and cash
equivalents on hand.  At or prior to the
Initial Closing Date, each Oak Hill Entity will have in place a revolving line
of credit sufficient to fund the operation of its business in the ordinary
course, which line of credit shall be on commercially reasonable terms and if
such line of credit is provided by one or more of the Seller Principals or any
of their respective Affiliates, such line of credit shall have an interest rate
of no greater than LIBOR plus 150 basis points. 
Within 30 days after the Initial Closing Date, the Seller Principals
shall cause the Oak Hill Entities to deliver to the iStar Parties a closing
statement reflecting the base management fees,

 

4

 

expenses
and OHA Liabilities incurred or accrued by each Oak Hill Entity as of the Business
Day prior to the Initial Closing Date (the “Closing Statement”).  The Closing Statement shall be prepared in
accordance with GAAP and consistent with the books and records of each Oak Hill
Entity.

 

1.7                                 Excluded Assets.  Subject
to Section 6.11, the transactions contemplated hereby and by the Related
Agreements shall not include the sale, conveyance, transfer, assignment or
delivery to the iStar Parties of the Excluded Assets.

 

1.8                                 FIRPTA Affidavits.  In
order to establish that withholding under Section 1445 of the Code does not
apply, each of the Oak Hill Sellers anticipates that he or it will timely
provide (or cause to be provided) to the Purchaser the certification described
in Treasury Regulation Section 1.1445-11T(d)(2)(i) or the certification
described in Treasury Regulation Section 1.1445-2(b)(2).  Any Oak Hill Seller that does not timely
provide such certification shall be subject to withholding on (and out of the
cash portion of) the Purchase Price payable to such Oak Hill Seller as provided
under Section 1445 of the Code and the Treasury Regulations.

 

1.9                                 Actions Simultaneous. 
Except with respect to the OHAI Contribution and the OHAMI Contribution,
all actions to be taken and all documents to be executed and delivered by the
parties at the Initial Closing and the Subsequent Closing, respectively, shall
be deemed to have been taken and executed and delivered simultaneously at such Closing
and no actions shall be deemed to have been taken nor shall any documents be
deemed to have been executed and delivered until all actions have been taken
and all documents have been executed and delivered at such Closing.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT
TO THE 

PURCHASER PARTNERSHIP INTERESTS AND THE
PURCHASER LLC INTERESTS

 

Each
Oak Hill Seller, individually as to such Oak Hill Seller, and each Seller
Principal, jointly and severally only with respect to such Seller Principal and
any Oak Hill Seller in which such Seller Principal owns equity interests,
hereby represents and warrants to the iStar Parties as follows, subject to such
exceptions or qualifications as are disclosed in writing in the Disclosure
Letter, which is arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Agreement and the disclosures in any
paragraph of the Disclosure Letter shall also constitute disclosure under, and
shall also qualify, the other paragraphs in this Agreement to the extent that
the relevance of such disclosures is apparent on its face.  The inclusion of any information in any
section of the Disclosure Letter or other document delivered pursuant to this
Agreement shall not be deemed to be an admission or evidence of the materiality
of such item, nor shall it establish a standard of materiality for any purpose
whatsoever.

 

2.1                                 Authority;
Execution and Delivery; Enforceability.

 

(a)                                  Such Oak Hill Seller is duly incorporated,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation.

 

5

 

(b)                                 Such Oak Hill Seller and such Seller Principal
has full power, authority and, if applicable, capacity to execute and deliver
this Agreement and, to the extent a party thereto, the Related Agreements, to
perform its or his respective obligations hereunder and under such Related Agreements
and to consummate the transactions contemplated hereby and by such Related
Agreements.  The sale, conveyance,
transfer, assignment and delivery of the Purchaser Partnership Interests to the
Purchaser has been duly authorized by all requisite action of such Oak Hill
Seller.  The sale, conveyance, transfer,
assignment and delivery of the Purchaser LLC Interests to the Purchaser has
been duly authorized by all requisite action of such Seller Principal.

 

(c)                                  Each of this Agreement and (when executed)
the Related Agreements has been (or will be) duly executed and delivered by
such Oak Hill Seller and such Seller Principal (to the extent a party thereto),
and constitutes (or will, when executed, constitute) the legal, valid and
binding obligation of such Oak Hill Seller and such Seller Principal (to the
extent a party thereto), enforceable against such Oak Hill Seller and such Seller
Principal in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, moratorium and other similar Laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

2.2                                 Title
to Purchaser Partnership Interests. 
Except as set forth in Section 2.2 of the Disclosure Letter, such Oak
Hill Seller has good and valid title to the Purchaser Partnership Interests
owned by such Oak Hill Seller as set forth in Section 2.2 of the Disclosure
Letter, free and clear of all Liens.  Other
than rights to purchase granted under the OHA Partnership Agreement, such Oak
Hill Seller has not entered into any contract, agreement, arrangement,
commitment or understanding with, or granted any option or right to, any party
other than the iStar Parties with respect to the acquisition of any of such Oak
Hill Seller’s OHA Partnership Interests.

 

2.3                                 Title to Purchaser LLC Interests.  Except
as set forth in Section 2.3 of the Disclosure Letter, such Seller Principal has
good and valid title to the Purchaser LLC Interests owned by such Seller
Principal as set forth in Section 2.3 of the Disclosure Letter, free and clear
of all Liens.  Other than rights to
purchase granted under the LLC Operating Agreements, such Seller Principal has
not entered into any contract, agreement, arrangement, commitment or
understanding with, or granted any option or right to, any party other than the
iStar Parties with respect to the acquisition of any of such Seller Principal’s
LLC Interests.

 

2.4                                 Non-Contravention.  Assuming
the Notices have been delivered in the manner specified in Section 5.8 of
the Disclosure Letter, the execution and delivery of this Agreement and the
Related Agreements by such Oak Hill Seller and such Seller Principal (to the
extent a party thereto) do not and will not, and the consummation of the
transactions contemplated at the Closings hereby and by such Related Agreements
and compliance with the terms hereof and of such Related Agreements, will not:

 

(i)                                     constitute a violation or breach of the
Organizational Documents of such Oak Hill Seller;

 

(ii)                                  constitute a default under or a violation or
breach of, or result in the acceleration of any obligation under, or require
the consent of any Person under, any

 

6

 

provision
of any contract or other instrument to which such Oak Hill Seller or such Seller
Principal is a party;

 

(iii)                               violate any Order or any Law affecting such Oak
Hill Seller or such Seller Principal; or

 

(iv)                              result in the creation of any Lien on such Oak
Hill Seller’s Purchaser Partnership Interests or such Seller Principal’s Purchaser
LLC Interests, other than restrictions under the Amended and Restated OHA LP
Agreement, in the case of such Purchaser Partnership Interests, and the Amended
and Restated Operating Agreements, in the case of such Purchaser LLC Interests.

 

2.5                                 Governmental Consents and Approvals.  No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained by or on behalf of such Oak Hill Seller or such Seller Principal in
connection with the execution, delivery and performance of this Agreement or
the Related Agreements (to the extent a party thereto) or the consummation of
the transactions contemplated at the Closings hereby and by such Related
Agreements.

 

2.6                                 Litigation and Claims.  There
is no Action pending or, to the knowledge of such Oak Hill Seller or such Seller
Principal, threatened, against such Oak Hill Seller or such Seller Principal or
to which such Oak Hill Seller or such Seller Principal is reasonably likely to
become a party that would reasonably be expected to materially adversely affect
such Oak Hill Seller’s or such Seller Principal’s ability to consummate the
transactions contemplated hereby or by the Related Agreements (to the extent a
party thereto).

 

2.7                                 Investment Representations.  Such
Oak Hill Seller and Seller Principal understand that the Initial iStar Shares and
Subsequent iStar Shares (collectively, the “iStar Shares”) delivered
pursuant to Sections 1.2 and 1.3, respectively, will not have been
registered under the Securities Act. 
Such Oak Hill Seller and such Seller Principal also understand that the iStar
Shares are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon the representations of such Oak
Hill Seller or Seller Principal contained in this Agreement.  Such Oak Hill Seller and such Seller
Principal hereby represents and warrants to the iStar Parties as follows:

 

(i)                                     Such Oak Hill Seller or such Seller Principal
is capable of evaluating the merits and risks of the investment in the Parent
and has the capacity to protect its or his own interests.  Such Oak Hill Seller or such Seller Principal
must bear the economic risk of this investment indefinitely unless the iStar
Shares are registered pursuant to the Securities Act, or an exemption from
registration is available.  Such Oak Hill
Seller or such Seller Principal also understands that there is no assurance
that any exemption from registration under the Securities Act will be available
and that, even if available, such exemption may not allow such Oak Hill Seller or
such Seller Principal to transfer all or any portion of its iStar Shares under
the circumstances, in the amounts or at the times such Oak Hill Seller or such Seller
Principal might propose.

 

7

 

(ii)                                  Such Oak Hill Seller or such Seller Principal
is acquiring the iStar Shares for its or his own account for investment only,
and not with a view towards their distribution.

 

(iii)                               Such Oak Hill Seller or such Seller Principal
represents that it or he is an “accredited investor” within the meaning of
Regulation D under the Securities Act.

 

2.8                                 Competition; Conflicts.  Except
as set forth in Section 2.8 of the Disclosure Letter, no Seller Principal or
any member of the Immediate Family of such Seller Principal (other than
siblings of such Seller Principal) serves as an officer, director, employee,
consultant, partner, member or in similar capacity of any competitor of any of
the Oak Hill Entities or the Subsidiaries or owns directly or indirectly (other
than in or through beneficial ownership of less than 5% of the outstanding
securities of a publicly traded company) any interests in any competitor or any
Person that has a material contract or agreement (other than intercompany
contracts or agreements between or among two or more of the Oak Hill Entities
or the Subsidiaries) with any of the Oak Hill Entities or the Subsidiaries.

 

2.9                                 No Finder. 
Except for the engagement of Morgan Stanley & Co., Inc., neither
such Oak Hill Seller or such Seller Principal nor any party acting on such Oak
Hill Seller’s or such Seller Principal’s behalf has paid or become obligated to
pay any fee or commission to any broker, finder or intermediary for or on
account of the transactions contemplated hereby or by the Related Agreements.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO THE OAK HILL ENTITIES

 

Each Oak Hill Party, jointly and severally (but subject
to the limitations set forth in Sections 9.5(g) and (h) and
Section 10.2), hereby represents and warrants to the iStar Parties as
follows, subject to such exceptions or qualifications as are disclosed in
writing in the Disclosure Letter, which is arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Agreement and the
disclosures in any paragraph of the Disclosure Letter shall also constitute
disclosure under, and shall also qualify, the other paragraphs in this
Agreement to the extent that the relevance of such disclosures is apparent on
its face.  The inclusion of any
information in any section of the Disclosure Letter or other document delivered
pursuant to this Agreement shall not be deemed to be an admission or evidence
of the materiality of such item, nor shall it establish a standard of
materiality for any purpose whatsoever.

 

3.1                                 Organization;
Good Standing.  

 

(a)                                  Each Oak Hill Entity and each Subsidiary is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization.

 

(b)                                 Each Oak Hill Entity and each Subsidiary has
full power and authority to conduct all of the business and activities
conducted by it, and to own or lease all of the assets owned or leased by it;
and is duly licensed or qualified to do business and is in good standing as a
foreign entity in all jurisdictions in which the nature of the business and
activities conducted by it, and/or

 

8

 

the character of the assets
owned or leased by it, makes such qualification or license necessary, except
for those jurisdictions in which the failure to be so qualified or licensed,
individually or in the aggregate, would not limit its ability to consummate the
transactions contemplated hereby and by the Related Agreements or would not reasonably
be expected to have an Oak Hill Material Adverse Effect.

 

3.2                                 Authority;
Execution and Delivery; Enforceability.  

 

(a)                                  Each Oak Hill Entity has full power and
authority to execute and deliver this Agreement and, to the extent a party
thereto, the Related Agreements, to perform its respective obligations
hereunder and under such Related Agreements and to consummate the transactions
contemplated hereby and by such Related Agreements.

 

(b)                                 All requisite acts and other proceedings
required to be taken by each Oak Hill Entity to authorize the execution,
delivery and performance of this Agreement and such Related Agreements have been
duly and properly taken.

 

(c)                                  Each of this Agreement and (when executed)
the Related Agreements has been (or will be) duly executed and delivered by
each Oak Hill Entity (to the extent a party thereto), and constitutes (or will,
when executed, constitute) the legal, valid and binding obligation of each Oak
Hill Entity (to the extent a party thereto), enforceable against each Oak Hill
Entity in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, moratorium and other similar Laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

3.3                                 Capitalization.

 

(a)                                  Except as set forth in Section 3.3(a) of the Disclosure
Letter (i) the Oak Hill Sellers collectively own all of the outstanding OHA
Partnership Interests, (ii) GenPar II LLC owns 80.875% of the outstanding carried
interest distributions of GenPar II (the “GenPar II Interests”) and (iii)
GenPar Alpha LLC owns 90% of the outstanding incentive allocation interest in GenPar
Alpha (the “GenPar Alpha Interests” and, together with the GenPar II
Interests, the “GenPar Interests”). 
Except as set forth in Section 3.3(a) of the Disclosure Letter, all outstanding
OHA Partnership Interests and GenPar Interests have been duly authorized and
validly issued and are fully paid and nonassessable, and are free and clear of
all Liens.

 

(b)                                 August, Bohnsack, Krase and Wernicke
collectively own 87.635239% of the outstanding GenPar II LLC Interests and
(iii) the Seller Principals collectively own all of the outstanding GenPar Alpha
LLC Interests.  Except as set forth in
Section 3.3(b) of the Disclosure Letter, all outstanding LLC Interests have
been duly authorized and validly issued and are fully paid and nonassessable,
and are free and clear of all Liens.

 

(c)                                  There are no outstanding warrants, options,
contracts, rights (preemptive or otherwise), calls or commitments of any
character relating to any issued or unissued equity interests in any Oak Hill
Entity or other instruments binding on any Oak Hill Entity convertible into or
exchangeable for any equity interests in any Oak Hill Entity, or which obligate
any Oak Hill Entity to seek authorization to issue additional equity interests,
nor will any be created by

 

9

 

virtue of this Agreement or
the Related Agreements or the transactions contemplated hereby or by the
Related Agreements.

 

(d)                                 Set forth in Section 3.3(d) of the Disclosure
Letter is a complete and correct chart setting forth all of the Oak Hill
Entities and Subsidiaries and ownership percentages with respect thereto (and
the ownership of each of the Selling Principals with respect thereto) and
Persons that are parties to Investment Advisory Contracts with any of the Oak
Hill Entities and Subsidiaries.  In
addition, Section 3.3(d) of the Disclosure Letter sets forth ownership percentages
giving effect to the transactions contemplated by this Agreement.

 

3.4                                 Subsidiaries.  Except
as set forth in Section 3.4 of the Disclosure Letter, all outstanding equity
interests of each Subsidiary are beneficially owned by an Oak Hill Entity.  Except as set forth in Section 3.4 of the Disclosure
Letter, all outstanding equity interests in the Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable, and are
free and clear of all Liens.  There are
no outstanding warrants, options, contracts, rights (preemptive or otherwise),
calls or commitments of any character relating to any issued or unissued equity
interests in the Subsidiaries or other instruments binding on a Subsidiary
convertible into or exchangeable for equity interests in the Subsidiaries, or
which obligate a Subsidiary to seek authorization to issue additional
interests, nor will any be created by virtue of this Agreement or the Related
Agreements or the transactions contemplated hereby or by the Related Agreements.  Section 3.4 of the Disclosure Letter contains
a complete and correct list of the Subsidiaries and the current ownership of
each Subsidiary.  Neither any Oak Hill
Entity nor any Subsidiary owns (directly or indirectly) any equity interests
in, any Person or any interest convertible into or exercisable or exchangeable
for any such equity interests, other than the Oak Hill Entities’ ownership of
the Subsidiaries and its and their interests in the Funds.

 

3.5                                 Non-Contravention.  Assuming
the Notices have been delivered in the manner specified in Section 5.8 of
the Disclosure Letter, the execution and delivery of this Agreement and the
Related Agreements by each Oak Hill Entity (to the extent a party thereto) do not
and will not, and the consummation of the transactions contemplated at the
Closings hereby and by such Related Agreements and compliance with the terms
hereof and of such Related Agreements, will not:

 

(i)                                     constitute a violation or breach of the Organizational
Documents of any Oak Hill Entity or any Subsidiary, and will not constitute a
violation or breach of any Fund Documents;

 

(ii)                                  except as set forth in Section 3.5(ii) of the
Disclosure Letter, constitute a default under or a violation or breach of, or
result in the acceleration of any obligation of any Oak Hill Entity, any
Subsidiary or any Fund under, or a change in any right or obligation of any Oak
Hill Entity, any Subsidiary or any Fund or counterparty under, or require the
consent of any Person under, any provision of any Contract or other instrument
to which any Oak Hill Entity, any Subsidiary or any Fund is a party or by which
(a) any of the assets of any Oak Hill Entity, any Subsidiary or any Fund, or
(b) the Purchaser Partnership Interests or the Purchaser LLC Interests, may be
affected or secured;

 

10

 

(iii)                               violate any Order or any Law affecting any
Oak Hill Entity, any Subsidiary or any Fund, or the assets of any Oak Hill
Entity, any Subsidiary or any Fund; or

 

(iv)                              result in the creation of any Lien on any of
the assets of any Oak Hill Entity, any Subsidiary or any Fund, other than
restrictions contained in the Amended and Restated GenPar II LP Agreement and
the Amended and Restated GenPar Alpha LP Agreement.

 

3.6                                 Books and Records.  The Oak
Hill Parties have made available to the iStar Parties complete and correct
copies of the Organizational Documents of each Oak Hill Entity and each
Subsidiary.  The Oak Hill Parties have
made available to the iStar Parties complete and correct in all material
respects copies of all minute books and all other existing records of any
meeting of the partners or members, as the case may be, of each Oak Hill Entity
and each Subsidiary.

 

3.7                                 Governmental Consents and Approvals.  No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained by or on behalf of any Oak Hill Entity or any Subsidiary in connection
with the execution, delivery and performance of this Agreement or the Related
Agreements (to the extent a party thereto) or the consummation of the
transactions contemplated at the Closings hereby and by such Related
Agreements.

 

3.8                                 Title
to Assets.

 

(a)                                  Each of the Oak Hill Entities and each Subsidiary
has good and valid title, free and clear of all Liens (other than Permitted
Liens), to all of its assets reflected on its most recent balance sheet as
owned (other than assets disposed of in the ordinary course of business) and
assets acquired after September 30, 2004.

 

(b)                                 Except as set forth in Section 3.8(b) of the Disclosure
Letter, none of the Oak Hill Sellers, the Seller Principals or any of their respective
Affiliates (other than the Oak Hill Entities and the Subsidiaries) owns any
assets used in or necessary to conduct the business of any Oak Hill Entity or
any Subsidiary.

 

(c)                                  All of the material tangible personal
property of the Oak Hill Entities and the Subsidiaries has been maintained in
all material respects in accordance with generally accepted industry
practice.  All of the material leased
personal property of the Oak Hill Entities and the Subsidiaries is in all
material respects in the condition required of such property by the terms of
the lease applicable thereto during the relevant term of the lease.

 

3.9                                 Real
Property.

 

(a)                                  None of the Oak Hill Entities or the
Subsidiaries owns any real property.

 

(b)                                 Section 3.9(b) of the Disclosure Letter lists
all Real Property Leases.  Complete and
correct copies of each Real Property Lease have been made available to the iStar
Parties.

 

11

 

3.10                           Employment
Related Agreements and Actions.

 

(a)                                  Section 3.10(a) of the Disclosure Letter sets
forth separately in respect of each Oak Hill Entity and its Subsidiaries a
complete and correct list, as of the date hereof, of its directors and officers
(to the extent such Oak Hill Entity has directors and officers).

 

(b)                                 Section 3.10(b) of the Disclosure Letter sets
forth separately in respect of each Oak Hill Entity and its Subsidiaries a
complete and correct list, as of the date hereof, of all its Contracts currently
in effect with current or former employees, consultants, or independent
contractors.

 

(c)                                  Except as set forth in Section 3.10(c) of the
Disclosure Letter:

 

(i)                                     no Action by or before any Governmental
Authority brought by or on behalf of any employee, prospective employee, former
employee, retiree, labor organization or other representative of the employees
of any Oak Hill Entity or any Subsidiary is pending or, to the knowledge of any
Oak Hill Party, threatened, against any Oak Hill Entity or any Subsidiary, and
none of the Oak Hill Entities or the Subsidiaries is a party to, or otherwise
bound by, any consent decree with, or citation by, any Governmental Authority
relating to employees or employment practices at any Oak Hill Entity or any
Subsidiary;

 

(ii)                                  no grievance is pending or, to the knowledge of
any Oak Hill Party, threatened, by any Person or Persons at any Oak Hill Entity
or any Subsidiary against any Oak Hill Entity or any Subsidiary;

 

(iii)                               each Oak Hill Entity and each Subsidiary is
in compliance in all material respects with all applicable Laws, Contracts and
policies relating to employment, employment practices, wages, hours,
occupational safety and health, the withholding and payment of Taxes from or
with respect to the compensation of employees, and terms and conditions of
employment; and

 

(iv)                              each Oak Hill Entity and each Subsidiary has
paid in full (subject to any good faith dispute) to all of its employees all
wages, salaries, commissions, bonuses, benefits and other compensation due to
such employees or otherwise arising under any policy, practice, agreement,
plan, program, statute or other applicable Law.

 

3.11                           Contracts.

 

(a)                                  Section 3.11(a) of the Disclosure Letter sets
forth as of the date hereof separately in respect of each Oak Hill Entity and
its Subsidiaries, and the Oak Hill Parties have made available to the iStar
Parties copies of:

 

(i)                                     (A) each Contract (other than an Investment
Advisory Contract) that is not cancelable without penalty by the Oak Hill
Entity or Subsidiary party thereto upon 90 days or less notice or that involves
the receipt or payment by the Oak Hill Entity or Subsidiary party thereto in
any of the two prior fiscal years (or is reasonably likely to involve the
receipt of payment by the Oak Hill Entity or Subsidiary party thereto in the
current or any future fiscal year) of an amount in excess of $25,000; (B) each
Contract (other than an Investment Advisory Contract) for services for which a
prepayment or

 

12

 

advance has been made to, or by, or on behalf
of, any Oak Hill Entity or any Subsidiary in excess of $25,000 per Contract;
(C) each partnership or joint venture Contract or arrangement or any other
agreement involving a sharing of revenue or profits between an Oak Hill Entity
or a Subsidiary, on the one hand, and a Person who is not an Oak Hill Entity,
Subsidiary or Fund, on the other hand; (D) Contracts restricting any Oak Hill
Entity or any Subsidiary from carrying on its business or activities, as the
case may be, in any material respect in its usual and customary manner in any
jurisdiction; (E) each Contract (other than an Investment Advisory Contract) between
any Oak Hill Entity or Subsidiary, on the one hand, and any Affiliate of any
Oak Hill Entity or Subsidiary (who is not also an Oak Hill Entity or a
Subsidiary), on the other hand; (F)  any
Contracts for the sale or other disposition by any Oak Hill Entity or any
Subsidiary of any of its assets (but, for the avoidance of doubt, not any
assets of the Funds) in excess of $25,000 other than in the ordinary course of
business, consistent with past practice, and in no event in excess of $50,000;
(G) any notes, debt instruments, other evidences of indebtedness, letters of
credit or guarantees issued by or for the benefit of any Oak Hill Entity or any
Subsidiary the value of which is in excess of $50,000; (H) each
outstanding loan or advance made by any Oak Hill Entity or any Subsidiary to
any director, officer, employee, partner, member or other Affiliate of such Oak
Hill Entity or such Subsidiary (other than business-related advances to
employees made in the ordinary course of business, consistent with past practice
and in an amount not in excess of $25,000 per employee or $100,000 in the
aggregate or tax advances to partners or members); (I) each Contract (other
than the Organizational Documents of the Oak Hill Entities or the Subsidiaries)
with one or more of the Seller Principals or members of their Immediate
Families or entities in which any of them has greater than 5% equity interest;
and (J) each other Contract (other than an Investment Advisory Contract)
material to the business, governance and financial condition of the Oak Hill
Entities and the Subsidiaries, taken as a whole.

 

(ii)                                  all Contracts under which any Oak Hill Entity
or any Subsidiary provides investment advisory or management services to any Person
including, without limitation, as a general partner, under a limited
partnership, or a similar arrangement and including without limitation, side
letter agreements or similar arrangements with Fund investors (collectively, “Investment
Advisory Contracts”).

 

(b)                                 As of the date hereof, each Oak Hill Entity and
Subsidiary has, with respect to all Contracts required to be listed in any
section of the Disclosure Letter (the “Material Contracts”), performed
in all material respects all obligations required to be performed by it, and is
not in default in any material respect under any such Material Contract, and, to
the knowledge of the Oak Hill Parties, no other party to any such Material Contract
is in default in any material respect under any such Material Contract.  No event has occurred which, with the lapse
of time or the giving of notice or both, would constitute a default in any
material respect by any Oak Hill Entity or Subsidiary, or, to the knowledge of
the Oak Hill Parties, by any other party to any such Contract.

 

3.12                           Intellectual Property.

 

(a)                                  The Oak Hill Entities and the Subsidiaries own
or have the right to use all Intellectual Property as currently used in
connection with any of their respective businesses,

 

13

 

including, without
limitation, all service marks and license agreements and other agreements
granting rights relating to any such Intellectual Property to which any of the
Oak Hill Entities or the Subsidiaries is a party or is otherwise bound (the “License
Agreements”) (collectively, “Oak Hill Entities Intellectual Property”).

 

(b)                                 Section 3.12(b) of the Disclosure Letter sets
forth for the Oak Hill Entities Intellectual Property owned by any Oak Hill
Entity or a Subsidiary a complete and accurate list of all registrations and
applications, United States (federal and state) and foreign (i) Patents,
(ii) Trademarks, (iii) Internet Domain Names, and (iv) registered
Copyrights, indicating, for each, the applicable jurisdiction, record owner and
registration number.  Section 3.12(b) of
the Disclosure Letter sets forth a complete and accurate list of all License
Agreements granting any right to use or practice any material Intellectual
Property, to which any of the Oak Hill Entities or the Subsidiaries is a party,
except for those licenses for Software that may be readily obtained in the
public marketplace for less than $1,500 individually, indicating for each the
title, the parties and date.

 

(c)                                  The Oak Hill Entities Intellectual Property
owned by the Oak Hill Entities and the Subsidiaries is owned by one of the Oak
Hill Entities or a Subsidiary free and clear of all Liens (other than Permitted
Liens disclosed in Section 3.12(c) of the Disclosure Letter).

 

(d)                                 Section 3.12(b) of the Disclosure Letter discloses
all Domain Names owned by any Oak Hill Entity or any Subsidiary that
incorporate any of the Trademarks.

 

(e)                                  All Oak Hill Entities Intellectual Property owned
by any Oak Hill Entity or any Subsidiary has been duly maintained, is valid and
subsisting, in full force and effect, and has not been cancelled, expired, or
abandoned.  There is no pending, or, to
the knowledge of the Oak Hill Parties, threatened, litigation, opposition,
interference, or inter parties proceeding, administrative proceeding, demand
(sent or received by any Oak Hill Party), cancellation proceeding before any
court, registration authority, or administrative or arbitral tribunal in any
jurisdiction against or relating to any of the Oak Hill Entities Intellectual
Property owned by any Oak Hill Entity or any Subsidiary.

 

(f)                                    Except as set forth in Section 3.12(f) of the
Disclosure Letter, there are no settlements, forbearances to sue, consents,
judgments, orders, or similar obligations to which any of the Oak Hill Entities
or any Subsidiary is a party or is otherwise bound, which (i) materially
restrict the rights of any of the Oak Hill Entities or any Subsidiary to use
any Oak Hill Entities Intellectual Property, or (ii) permit third parties to
use any Oak Hill Entities Intellectual Property owned by any Oak Hill Entity or
any Subsidiary that would otherwise materially infringe any Oak Hill Entities
Intellectual Property.  The Oak Hill
Entities and the Subsidiaries have not licensed or sublicensed their rights in
any Oak Hill Entities Intellectual Property owned by any Oak Hill Entity or any
Subsidiary other than pursuant to the License Agreements, and no royalties,
honoraria or other fees are payable by the Oak Hill Entities or any Subsidiary for
the use of or right to use any Oak Hill Entities Intellectual Property owned by
any Oak Hill Entity or any Subsidiary in connection with the business of any of
the Oak Hill Entities as currently conducted, except pursuant to the License
Agreements.

 

(g)                                 To the knowledge of the Oak Hill Parties, the
Oak Hill Entities Intellectual Property owned by any Oak Hill Entity or any
Subsidiary is not being violated or infringed by

 

14

 

any third party, and no such
claims are pending against a third party by any Oak Hill Entity or any
Subsidiary.

 

(h)                                 The Oak Hill Entities and the Subsidiaries take
reasonable measures to protect the confidentiality of their Trade Secrets.

 

(i)                                     To the knowledge of the Oak Hill Parties, the
conduct of the business of each of the Oak Hill Entities and the Subsidiaries as
currently conducted does not materially infringe upon any Intellectual Property
owned or controlled by any third party. 
Except as set forth in Section 3.12(i) of the Disclosure Letter, there
are no material claims or suits pending or, to the knowledge of the Oak Hill
Parties, threatened, and no Oak Hill Entity or any Subsidiary has received written
notice of any third party claim or suit (i) alleging that its activities or the
conduct of its business infringes upon or constitutes the unauthorized use of the
Intellectual Property rights of any third party, nor alleging libel, slander,
defamation, or other violation of a personal right, or (ii) challenging the
ownership, use, validity or enforceability of any Oak Hill Entities
Intellectual Property, in each case which if resolved adversely to the Oak Hill
Entities, would reasonably be expected to have an Oak Hill Material Adverse
Effect.

 

(j)                                     Except as set forth in Section 3.12(j) of the
Disclosure Letter, the consummation of the transactions contemplated hereby
will not result in the loss or impairment of the right of any Oak Hill Entity or
any Subsidiary to own or use any of the Oak Hill Entities Intellectual Property
nor require the consent of any Governmental Authority or third party in respect
of such Intellectual Property, except for those consents the absence of which,
either individually or in the aggregate, would not reasonably be expected to
have an Oak Hill Material Adverse Effect.

 

3.13                           Insurance.  The
Oak Hill Entities and the Subsidiaries maintain the workers’ compensation,
comprehensive property and casualty, liability, errors and omissions, fidelity
and other insurance described in Section 3.13 of the Disclosure Letter.

 

3.14                           Financial
Statements; Liabilities; Books and Records.

 

(a)                                  OHA has provided to the iStar Parties its audited
combined statements of financial position as of, and its audited combined statements
of operations, changes in partners’ capital/stockholder’s equity and cash flows
for, the fiscal year ended December 31, 2003, together with the notes thereto
and the opinions of KPMG LLP thereon (collectively, the “OHA Audited
Financial Statements”).  The OHA Audited
Financial Statements present fairly in all material respects, in conformity
with GAAP, the financial condition, results of operations, changes in partners’
capital/stockholder’s equity and cash flows of OHA and certain affiliated
advisory companies of OHA for the periods and dates covered thereby.  Additionally, OHA has provided to the iStar
Parties its unaudited combined statement of financial position as of, and the unaudited
combined statement of operations, for the nine-month period ended
September 30, 2004 (collectively, the “Unaudited Interim Financial
Statements”).  The Unaudited Interim
Financial Statements present fairly in all material respects, in conformity
with GAAP, the financial condition and results of operations of OHA for such
period and date covered thereby, except for adjustments and accruals which are
normally made at year end and the absence of footnote disclosures thereto.

 

15

 

(b)                                 Except as set forth in Section 3.14(b) of the
Disclosure Letter, OHA and its Subsidiaries do not have any liabilities or
obligations of the kind required to be recorded or reflected on a balance
sheet, including any notes thereto, under GAAP, whether absolute, accrued,
asserted or unasserted, contingent or otherwise, except liabilities,
obligations and contingencies, that (i) are reflected on or accrued or reserved
against in the OHA 2003 Balance Sheet, or reflected in any notes thereto, or
the September 30 Balance Sheet, or reflected in any notes thereto, or (ii) were
incurred since September 30, 2004 in the ordinary course of business.

 

(c)                                  Each of the Oak Hill Entities and the Subsidiaries
has at all times since its formation maintained records which in all material
respects accurately reflect all its material transactions in reasonable detail,
and have at all times maintained accounting controls, policies and procedures
reasonably designed to provide that such material transactions are executed in
accordance with its management’s general or specific authorization, as
applicable, and recorded in a manner which permits the preparation of financial
statements in accordance with GAAP and applicable regulatory accounting
requirements and other account and financial data, and the documentation
pertaining thereto is retained, protected and duplicated in accordance with
applicable regulatory requirements.

 

3.15                           Tax
Matters.

 

(a)                                  Each Oak Hill Entity and each Subsidiary has
timely filed, or has had or caused to be timely filed on its behalf, all material
Tax Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate in all material respects. 
All Taxes shown to be due on such Tax Returns, or otherwise owed, have
been timely paid.  Each Oak Hill Entity
and each Subsidiary has withheld or collected and has paid over to the
appropriate taxing authority (or is properly holding for payment to such taxing
authority) all material Taxes required by Law to be withheld or collected.  Complete and correct copies have been made
available to the Purchaser and the Parent of (i) all income tax, and
unincorporated business tax, gross receipts tax, personal property tax replacement
income tax, franchise tax and other similar Tax Returns filed by each of the
Oak Hill Entities and the Subsidiaries for the last three taxable years, and
(ii) all Tax examination reports and statements of deficiencies assessed with
respect to any Oak Hill Entity or Subsidiary for the last five taxable years.

 

(b)                                 The OHA Audited Financial Statements reflect
an adequate reserve in accordance with GAAP for all Taxes and deferred Taxes
payable by the Oak Hill Entities and each Subsidiary for all taxable periods
and portions thereof through the date of such financial statements.  Except as set forth in Section
3.15(b) of the Disclosure Letter, no deficiency with respect to any Taxes
has been proposed, asserted or assessed in writing or, to the knowledge of the
Oak Hill Parties, threatened in writing against any Oak Hill Entity or any
Subsidiary, no waivers of the time to assess any such Taxes are outstanding,
and no requests for any other waivers are pending.

 

(c)                                  Except as set forth in Section 3.15(c) of the
Disclosure Letter, none of the Tax Returns of any Oak Hill Entity or any
Subsidiary has been examined by any taxing authority or is currently being
examined by any taxing authority or is the subject of a pending
examination.  All assessments for Taxes due
with respect to any completed or settled examinations or any concluded
litigation have been fully paid.  Except
as set forth in Section 3.15(c) of the Disclosure

 

16

 

Letter, none of the Oak Hill
Entities or the Subsidiaries has entered into a closing agreement with any
taxing authority with respect to Taxes.

 

(d)                                 There are no Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of any Oak Hill Entity or
any Subsidiary.  Except as set forth in Section 3.15(d)
of the Disclosure Letter, no Oak Hill Entity or Subsidiary is bound by or
subject to any tax sharing, allocation or similar agreement or any
indemnification or reimbursement agreement with respect to Taxes.

 

(e)                                  No Oak Hill Entity or Subsidiary has agreed
or is or will be required (including as a result of the transactions
contemplated hereby) to make any positive adjustments to taxable income
pursuant to Section 481 of the Code for any period following the Initial Closing
except for any adjustments that are allocated in a manner consistent with the
provisions of Section 6.3(b) of the Amended and Restated OHA LP Agreement.

 

(f)                                    No claim or pending investigation has been proposed
or asserted in writing, or to the knowledge of the Oak Hill Parties, has been
threatened in writing, by any state, local or other jurisdiction with which an
Oak Hill Entity or Subsidiary does not currently file Tax Returns, alleging
that such Oak Hill Entity or Subsidiary has a duty to file Tax Returns and pay
Taxes or is otherwise subject to the taxing authority of such jurisdiction,
nor, to the knowledge of the Oak Hill Parties, has any Oak Hill Entity or
Subsidiary received any written notice or questionnaire from any such
jurisdiction that suggests or asserts that such Oak Hill Entity or Subsidiary may
have a duty to file such Tax Returns and pay such Taxes, or otherwise is
subject to the taxing authority of such jurisdiction.

 

(g)                                 No Oak Hill Entity or Subsidiary has ever
been (or has ever had any liability for unpaid Taxes because it once was) a
member of an “affiliated group” (as defined in Section 1504(a) of the Code) or
any consolidated, combined or unitary state or local Tax Return group.

 

(h)                                 None of the transactions contemplated hereby
will result in a tax termination of GenPar II LLC or GenPar Alpha LLC under
Section 708(b)(1)(B) of the Code unless such entity and GenPar II or GenPar
Alpha, as applicable, files a federal (and corresponding state and local)
income Tax Return that includes a Section 754 election (and related tax basis
adjustments consistent with the provisions of Section 6.5 hereof) for the
taxable period ending with the date of such tax termination.

 

(i)                                     Each Oak Hill Entity is and has at all times
been classified and treated as a partnership for federal income tax purposes
and in each state and local jurisdiction in which it files Tax Returns.  Each Subsidiary has at all times been a
disregarded entity of OHA or been classified and treated as a partnership for
federal, state and local income tax purposes. 
Except as disclosed in Section 3.15(i) of the Disclosure Letter, no
Tax Returns are required to be filed by any Subsidiary.

 

(j)                                     As of the Initial Closing Date, none of the
Oak Hill Entities owns, directly or indirectly (through one or more entities all
of which are not “corporations” within the meaning of Section 7701(a)(3) of the
Code and the Treasury Regulations), any Equity-Like Security of any issuer that
operates or manages (within the meaning of Section 856(l)(3)(A) of the Code) a
lodging or healthcare facility or that licenses or otherwise provides rights to
any brand name

 

17

 

under which any lodging or
healthcare facility is operated, unless in either case the issuer is a “corporation”
(within the meaning of Section 7701(a)(3) of the Code and the Treasury
Regulations).  For purposes of this
Section 3.15(j), a lodging facility means a hotel, motel or other establishment
more than one-half of the dwelling units in which are used on a transient
basis.  For purposes of this Section
3.15(j), a healthcare facility means a hospital, nursing facility, assisted
living facility, congregate care facility, continuing care facility or other
licensed facility which extends medical or nursing or similar services.  For purposes of this Section 3.15(j), an Equity-Like
Security means any equity interest in the issuer, any option or warrant to
acquire an equity interest in the issuer, any debt Security that the holder
thereof agrees to treat as equity for federal income tax purposes and any
deeply subordinated or participating debt Security; provided that for the
avoidance of doubt, no Oak Hill Entity shall be deemed to own an interest in
any Equity-Like Security owned by any entity solely by reason of the existence
of a management agreement with respect to that entity.

 

(k)                                  As of the Initial Closing Date, the Oak Hill
Entities, individually and together, do not own, directly or indirectly, any
TRS Security to the extent that the sum of the products of the ownership interests
(expressed as a percentage) represented by the applicable Purchaser Partnership
Interests or Purchaser LLC Interests in each Oak Hill Entity, multiplied by the
percentage of the total voting power or value represented by all TRS Securities
of the applicable issuer held (directly or indirectly) by such Oak Hill Entity,
exceeds 35% of the total voting power or value of the outstanding Securities of
such issuer.  A TRS Security means any
Security of a “corporation” (within the meaning of Section 7701(a)(3) of the
Code and the Treasury Regulations) that is not a REIT or a “qualified REIT
subsidiary” (as defined in Section 856(i)(2) of the Code); provided, however,
that if (but only if) the only Security of the applicable issuer that is held
by the Oak Hill Entities is a debt Security described in Section 1361(c)(5)
(without regard to subparagraph (B)(iii) thereof) of the Code, then such
Security shall not be treated as a TRS Security.

 

(l)                                     As of the Initial Closing Date, except as
disclosed in Section 3.15(l) of the Disclosure Letter, the Oak Hill
Entities, individually and together, do not own, directly or indirectly, any
Security (other than a debt Security described in Section 856(m)(2)(A)-(B) of
the Code, a Security described in Section 856(m)(l)(B)-(G) of the Code or a
Security described in Section 856(c)(4)(A) of the Code) in any issuer
identified in the Securities List to the extent that the sum of the products of
the ownership interests (expressed as a percentage) represented by the
applicable Purchaser Partnership Interests or Purchaser LLC Interests in each
Oak Hill Entity, multiplied by the percentage of the total value represented by
all Securities (other than a debt Security described in Section
856(m)(2)(A)-(B) of the Code, a Security described in Section 856(m)(l)(B)-(G)
of the Code or a Security described in Section 856(c)(4)(A) of the Code)
of the applicable issuer held (directly or indirectly) by such Oak Hill Entity,
exceeds 1% of the value of the outstanding Securities of such issuer.

 

3.16                           Absence of Changes.  Since
December 31, 2003, through the date of this Agreement, except as set forth in Section
3.16 of the Disclosure Letter, each Oak Hill Entity and Subsidiary has
conducted its business in the ordinary course thereof consistent with past
practice, and with respect to any Oak Hill Entity or any Subsidiary, as the
case may be, there has not been any:

 

18

 

(i)                                     event, condition or contingency that would
reasonably be expected to have an Oak Hill Material Adverse Effect;

 

(ii)                                  (A) incurrence, payment or discharge of any
liability or obligation (absolute, accrued, contingent or otherwise), (B)
incurrence of indebtedness for borrowed money, (C) sale or transfer of any property,
or (D) acquisition or sale, lease, grant of interest in, or other disposition
of, any assets or businesses, in each case, other than in the ordinary course
of business, consistent with past practice;

 

(iii)                               (A) guarantee or any other assumption of the
obligations of any Person, or (B) making of any loan or advance to any Person
(other than business-related advances to employees in the ordinary course of
business, consistent with past practice and in an amount not in excess of $25,000
per employee or $100,000 in the aggregate or tax advances to partners or
members);

 

(iv)                              settlement or compromise of any Action if the
amount of such settlement will either not be paid in full prior to the Initial
Closing or which settlement or compromise would reasonably be expected to have
a continuing material adverse impact on the business of the Oak Hill Entities
or any Subsidiary after the Initial Closing;

 

(v)                                 Tax election or change in a Tax election or
the filing for any change in any material respect of any method of accounting
with the Internal Revenue Service, except as required by any change in Law;

 

(vi)                              change in any method of accounting applied in
the preparation of the OHA Audited Financial Statements, and Unaudited Interim Financial
Statements, other than a change which is required by reason of a concurrent
change in Law or GAAP;

 

(vii)                           material change or modification in any of the
Contracts, nor has any of the Oak Hill Entities or any Subsidiary entered into
any Contract, except, in each case, in the ordinary and regular course of its
business; and

 

(viii)                        agreement, whether in writing or otherwise,
to take any action described in this Section 3.16.

 

3.17                           Litigation
and Claims.

 

(a)                                  As of the date hereof, there is no material
Action pending or, to the knowledge of the Oak Hill Parties, threatened,
against (i) any Oak Hill Entity or any Subsidiary or to which any Oak Hill
Entity or any Subsidiary is reasonably likely to become a party or (ii) against
any director, officer, partner or member of any Oak Hill Entity or any
Subsidiary in connection with their status as such.

 

(b)                                 There is no Action pending or, to the
knowledge of the Oak Hill Parties, threatened, against any Oak Hill Entity or
any Subsidiary or to which any Oak Hill Entity or any Subsidiary is reasonably
likely to become a party that would reasonably be expected to materially
adversely affect any Oak Hill Entity’s or any Subsidiary’s ability to
consummate the transactions contemplated hereby or by the Related
Agreements.  There is no Order imposed

 

19

 

upon any Oak Hill Entity or
Subsidiary or their respective properties or assets or any of their Affiliated
Persons relating to any Oak Hill Entity or any Subsidiary.

 

3.18                           Governmental
Permits; Compliance with Applicable Law.

 

(a)                                  Each Oak Hill Entity and Subsidiary owns,
holds or possesses all material Governmental Permits which are necessary to
entitle it to own or lease, operate and use its assets and to carry on and
conduct its business substantially as currently conducted.

 

(b)                                 Section 3.18(b) of the Disclosure Letter sets
forth a complete and correct list and brief description of each Governmental
Permit owned, held or possessed by the Oak Hill Entities and Subsidiaries,
except for such Governmental Permits which would be obtainable in due course by
any qualified applicant without any undue burden or cost in the event of any
failure to apply, lapse, termination, cancellation or forfeiture thereof.  Except as set forth in Section 3.18(b) of the
Disclosure Letter, (i) each Oak Hill Entity and Subsidiary has fulfilled and
performed in all respects its obligations under each of the Governmental
Permits which it owns, holds or possesses other than where the failure to
perform would not reasonably be expected to have an Oak Hill Material Adverse
Effect, and (ii) no notice of cancellation, of default or of any material
dispute concerning any Governmental Permit, has been received by the Oak Hill
Sellers or any Oak Hill Entity or Subsidiary other than where any such
cancellation, default or dispute, individually or in the aggregate, would not
reasonably be expected to have an Oak Hill Material Adverse Effect.

 

(c)                                  Each Oak Hill Entity and Subsidiary is in
compliance in all material respects with all Laws which are applicable to its
business.

 

(d)                                 OHA is duly registered as an investment
adviser with the Securities and Exchange Commission under the Investment
Advisers Act.  Except for OHA, no Oak
Hill Entity is required to register as an investment adviser with the
Securities and Exchange Commission under the Investment Advisers Act.  No Oak Hill Entity is required to register in
any capacity under the Commodity Exchange Act or the Exchange Act. Each
investment advisory representative of OHA has obtained and maintains all material
licenses, registrations or qualifications in each state in which such
licensing, registration or qualification is required by virtue of the
activities of such Person.  Each Oak Hill
Entity and Subsidiary has made such notice filings with such states as are
required by state Law, except where such failure, either individually or in the
aggregate, would not reasonably be expected to have an Oak Hill Material
Adverse Effect.

 

(e)                                  Each Oak Hill Entity and Subsidiary has
timely filed all forms, reports, registration statements, schedules and other
documents, together with any amendments required to be made with respect
thereto, that were required to be filed with any Governmental Authority, and
has paid all fees and assessments due and payable in connection therewith,
except where such failure, either individually or in the aggregate, would not reasonably
be expected to have an Oak Hill Material Adverse Effect.

 

(f)                                    As of their respective dates, all forms,
reports, registration statements, schedules or other filings made by each Oak
Hill Entity and Subsidiary with Governmental Authorities complied in all
material respects with applicable Laws.

 

20

 

(g)                                 Except for (i) the registrations described in
Section 3.18(d) and (e) above, the business activities of the Oak Hill
Entities, the Subsidiaries and their respective employees (acting in their
capacities as such), as presently and heretofore conducted, do not require any
registrations under applicable Law except for such registrations the absence of
which would not reasonably be expected to have an Oak Hill Material Adverse
Effect.

 

(h)                                 Section 3.18(h) of the Disclosure Letter
lists the dates of, and describes in reasonable detail, all Actions commenced
by any Governmental Authority against the Oak Hill Entities and the
Subsidiaries and Affiliated Persons (in their capacities as such) conducted
since January 1, 1999 by any applicable Governmental Authority.

 

(i)                                     Except as set forth in Section 3.18(i) of the
Disclosure Letter, no Affiliated Person of the Oak Entities or Subsidiaries (i)
has ever been censured, suspended, barred, disciplined, or otherwise had their
activities restricted by any Governmental Authority, (ii) is subject to an
order of the Securities and Exchange Commission issued under Section 203(f) of
the Investment Advisers Act, (iii) has been convicted within ten years of the
date hereof of any felony or misdemeanor involving conduct described in Section
203(e)(2)(A)-(D) of the Investment Advisers Act, (iv) has been found by any
Governmental Authority to have engaged, and has been convicted of engaging, in
any of the conduct specified in paragraph (1), (5) or (6) of Section 203(e) of
the Investment Advisers Act, (v) is subject to an order, judgment or decree
described in Section 203(e)(4) of the Investment Advisers Act or (vi) has been
found by a court or Governmental Authority to have made a false statement or
omission or to have engaged in dishonest activities.

 

(j)                                     Except with respect to any Employee Benefit
Plan of the Oak Hill Entities: 
(i) the Oak Hill Entities and their Subsidiaries have operated
their businesses with the intention of avoiding becoming a “fiduciary” (within
the meaning of Section 3(21) of ERISA) or managing “plan assets” (within the
meaning of 29 C.F.R. Section 2510.3-101 (the “Plan Asset Regulation”) or
Section 401 of ERISA) with respect to any Code Plan or any ERISA Plan
(A) by structuring its operations for the purpose of conforming with the
requirements of the Plan Asset Regulation (generally relating to ensuring that
the assets of any benefit plan investor are invested in a “VCOC” (as defined in
the Plan Asset Regulation) and/or managing the assets of entities in which
benefit plan investor participation is not “significant” (within the meaning of
the Plan Asset Regulation)) and Section 401 of ERISA, and (B) by taking
all reasonably prudent steps necessary (including, without limitation, the
establishment of, and compliance with, relevant policies and procedures) to avoid
becoming such a “fiduciary” of any Code Plan or any ERISA Plan and to avoid the
management of “plan assets” of any Code Plan or any ERISA plan; and
(ii) to the knowledge of the Oak Hill Parties, (x) the Oak Hill
Entities and their Subsidiaries have operated their businesses in full
conformity with the Plan Asset Regulation and Section 401 of ERISA to avoid
becoming a “fiduciary” of any Code Plan or any ERISA Plan, and to avoid
managing “plan assets” of any Code Plan or any ERISA Plan, (y) on the
basis of the Plan Asset Regulation, Section 401 of ERISA and the taking of
all reasonably prudent steps necessary to avoid becoming a “fiduciary” of any
Code Plan or any ERISA Plan, or a manager of “plan assets” of any Code Plan or
any ERISA Plan, the Oak Hill Entities and their Subsidiaries are not managing
any “plan assets” of any Code Plan or any ERISA Plan, and are not a “fiduciary”
with respect to any Code Plan or any ERISA Plan, and (z) neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will give rise to a nonexempt “prohibited transaction”
within the meaning of Section 406 of ERISA or Section 4975 of the

 

21

 

Code; provided, however,
that the foregoing representation in clause (z) is made on the basis of a
representation by the iStar Parties, which representation is hereby given, that
the iStar Parties are not using the assets of any Code Plan or ERISA Plan or
otherwise engaging in a prohibited transaction with respect to any such plan by
entering into or performing under this Agreement.

 

3.19                           The Funds. Except as set forth in Section 3.19 of the Disclosure
Letter:

 

(a)                                  The Funds are all separately managed
accounts, collateralized loan or debt obligations or private investment vehicles,
which are not required to be registered under the Investment Company Act, for
which any Oak Hill Entity or Subsidiary acts as investment adviser, or the
like.

 

(b)                                 The Funds have timely filed all forms,
reports, registration statements, schedules and other documents, together with
any amendments required to be made with respect thereto, that were required to
be filed with any Governmental Authority, and have paid all fees and
assessments due and payable in connection therewith, except where such failure,
either individually or in the aggregate, would not reasonably be expected to
have an Oak Hill Material Adverse Effect.

 

(c)                                  All information provided by an Oak Hill
Entity, Subsidiary or Affiliated Person expressly for use in a Fund Document complied
in all material respects with the requirements of applicable Laws.

 

(d)                                 No Oak Hill Entity or Subsidiary has received
notice from any Governmental Authority advising it of the initiation of an
Action related to the business or operations of any of the Funds.  To the knowledge of the Oak Hill Parties,
there is no unresolved violation, criticism or exception made in writing by any
Governmental Authority with respect to any report or statement by such
Governmental Authority related to any examination of the Funds.

 

(e)                                  The Disclosure Letter lists the dates of and
describes in reasonable detail, all Actions related to the Funds conducted
since January 1, 1999 by any Governmental Authority.

 

(f)                                    The Oak Hill Parties have caused each Fund
(other than the Separately Managed Accounts and those Funds where audited
financial statements are not required in accordance with the applicable Fund
Documents) to provide to the iStar Parties its audited balance sheets as of,
and its audited statements of operations, changes in partners’ capital, cash
flows and investments for, the fiscal years ended December 31, 2003 and
December 31, 2002 or, in the case of any Fund that did not exist prior to the
end of any of such years, any such financial statements for each of such fiscal
years during which such Fund existed, together with the notes thereto and the
opinions of KPMG LLP thereon (the “Audited Fund Financial Statements”).  The Audited Fund Financial Statements present
fairly in all material respects, in conformity with GAAP and its respective
Fund Documents, the financial condition, results of operations, changes in
partners’ capital and cash flows of each Fund for the periods and dates covered
thereby.  Additionally, the Oak Hill
Parties have caused each Fund (other than the Separately Managed Accounts and
those Funds where audited financial statements are not required in accordance
with the applicable Fund Documents) to provide to the iStar Parties its
unaudited balance sheets as of, and its unaudited consolidated statements of operations,
changes in partners’ capital, cash flows and investments for, the nine-month
period ended September 30, 2004 (the “Unaudited

 

22

 

Interim Fund Financial
Statements”).  Such Unaudited Interim Fund Financial
Statements present fairly in all material respects, in conformity with GAAP and
its respective Fund Documents, the financial condition, results of operations,
changes in partners’ capital and cash flows for such period and date covered
thereby, except for adjustments and accruals which are normally made at year
end, the absence of footnote disclosures thereto and as provided in its
respective Fund Documents.

 

(g)                                 Except as set forth in Section 3.19(g) of the
Disclosure Letter, the Funds do not have any liabilities or obligations of the
kind required to be recorded on a balance sheet, including any notes thereto,
under GAAP, whether absolute, accrued, asserted or unasserted, contingent or
otherwise, except liabilities, obligations and contingencies, that (i) are
reflected on or accrued or reserved against in the balance sheet contained in the
Unaudited Interim Fund Financial Statements, or reflected in any notes thereto,
or (ii) were incurred since September 30, 2004 in the ordinary course of
business.

 

(h)                                 Except as set forth in Section 3.19(h) of the
Disclosure Letter, each of the Funds has at all times since its formation
maintained records which in all material respects accurately reflect all its
transactions in reasonable detail, and has at all times maintained accounting
controls, policies and procedures reasonably designed to provide that such
transactions are executed in accordance with its management’s general or
specific authorization, as applicable, and recorded in a manner which permits
the preparation of financial statements in accordance with GAAP and applicable
regulatory accounting requirements and other account and financial data, and
the documentation pertaining thereto is retained, protected and duplicated in
accordance with applicable regulatory requirements.

 

(i)                                     Each Fund has, with respect to all of its
material contracts or other instruments, performed in all material respects all
obligations required to be performed by it, and is not in default in any
material respect under any such contract or instrument, and, to the knowledge
of the Oak Hill Parties, no other party to any such contract or instrument is
in default in any material respect under any such contract or instrument.  No event has occurred which, with the lapse
of time or the giving of notice or both, would constitute a default in any
material respect by any Fund, or, to the knowledge of the Oak Hill Parties, by
any other party to any such contract or instrument.

 

(j)                                     The Oak Hill Parties have made available to
the iStar Parties complete and correct copies of the Organizational Documents
of each Fund.  The Oak Hill Parties have
made available to the iStar Parties complete and correct in all material
respects copies of all minute books and all other existing records of any
meeting of the partners of each Fund.

 

3.20                           Environmental Matters.  Except as set forth in Section 3.20 of the Disclosure
Letter:

 

(i)                                     None of the Oak Hill Entities or any
Subsidiary has materially violated or is in material violation of any Environmental
Law;

 

(ii)                                  There are no Environmental Conditions present
at, on, or under, any Facility as a result of activities of any Oak Hill Entity
or any Subsidiary or any of their employees or agents or, to the knowledge of
the Oak Hill Parties, as a result of activities

 

23

 

of any other Person, in amounts exceeding the
levels permitted by applicable Environmental Law or under circumstances that
would reasonably be expected to result in liability in any material respect
under or relating to Environmental Law;

 

(iii)                               None of the Oak Hill Entities or any
Subsidiary has disposed of, arranged for the disposal of, released, threatened
to release, or transported any Hazardous Substances in violation of any applicable
Environmental Law or in a manner that would reasonably be expected to result in
liability to any Person, except as would not reasonably be expected to have an
Oak Hill Material Adverse Effect;

 

(iv)                              None of the Oak Hill Entities or any
Subsidiary is subject to any Actions, is subject to any Order or has received
any notice or other communication from any Governmental Authority or the
current or prior owner or operator of any of their facilities or any other
Person, in each case with respect to any actual or potential violation or
failure to comply with any Environmental Law or of any actual or threatened
obligation or liability under any Environmental Law, or regarding any Hazardous
Substances; and to the knowledge of the Oak Hill Parties, none of the Oak Hill
Entities or the Subsidiaries is threatened with any such written Action, Order,
notice or communication;

 

(v)                                 None of the Oak Hill Entities or any
Subsidiary has assumed under any contract any liability or obligation under or
relating to Environmental Laws or Hazardous Substances; and

 

(vi)                              There are no Environmental Reports in the
custody or control of the Oak Hill Entities or any Subsidiary relating to their
facilities, business of any Oak Hill Entity or any Subsidiary or activities of
any Oak Hill Entity or any Subsidiary that have not been made available to the iStar
Parties.

 

3.21                           Employee Plans.

 

(a)                                  Section 3.21(a) of the Disclosure Letter
lists each Employee Benefit Plan of the Oak Hill Entities.  Except for the Employee Benefit Plans of the
Oak Hill Entities, none of the Oak Hill Entities nor any of their Subsidiaries
has any liability for any Employee Benefit Plan maintained or contributed to by
any current or former Oak Hill Plan Affiliate. 
None of the Employee Benefit Plans of the Oak Hill Entities is subject
to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA and none
of the Oak Hill Entities or any of their Subsidiaries has any liability under
Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.

 

(b)                                 The Oak Hill Entities
have delivered complete and correct copies to the iStar Parties of (i) each
written Employee Benefit Plan of the Oak Hill Entities, as amended to the
Initial Closing, together with all required unaudited financial statements and
actuarial reports for the three most recent plan years, if any; (ii) each
funding vehicle with respect to each such plan; (iii) the most recent and any
other material determination letter, ruling or notice issued by any
Governmental Authority with respect to such plan; (iv) the Form 5500 Annual
Report (or evidence of any applicable exemption) for the three most recent plan
years to the extent such forms are required for any Employee Benefit Plan; (v)
the most recent summary plan description and any summary of material
modifications thereto which relates to any such plan; and (vi) each

 

24

 

other
document, explanation or communication which describes any material aspect of
any such plan that is not disclosed in previously or subsequently delivered
materials.  A description of any
unwritten Employee Benefit Plans of the Oak Hill Entities, including a
description of any material terms of such plan, is set forth in Section 3.21(b)
of the Disclosure Letter.

 

(c)                                  Each Employee Benefit Plan of the Oak Hill
Entities (i) has been in material compliance and currently complies in all
material respects in form and in operation in all respects with all applicable
requirements under ERISA, the Code or any other applicable Law, and in accordance
with its terms; and (ii) has, with respect to each such plan which is intended
to be qualified under Section 401(a) of the Code, received a determination
letter from the Internal Revenue Service with respect to its qualified status,
and, since the date of such determination letter, to the knowledge of the Oak
Hill Parties, nothing has occurred which would reasonably be expected to result
in revocation of such plan’s qualified status under Section 401(a) of the Code,
and (iii) has, with respect to each plan which is not intended to qualify under
Section 401(a) of the Code, been and is operated and funded in such a manner as
to qualify, where appropriate, for both federal and state purposes, for income
tax exclusions to its participants, tax-exempt income for its funding vehicle,
and the allowance of deductions and credits with respect to contributions
thereto.

 

(d)                                 None of the Employee Benefit Plans of the Oak
Hill Entities is (i) a plan which is a “multiemployer plan” as defined in
Section 4001 of ERISA, (ii) a “multiemployer plan” within the meaning of
Section 3(37) of ERISA, (iii) except as set forth in Section 3.21(d) of the Disclosure
Letter, a “multiple employer plan” within the meaning of Code Section 413(c),
or (iv) a “multiple employer welfare arrangement” within the meaning of Section
3(40) of ERISA.

 

(e)                                  There are no actions, suits, investigations
or claims pending or, to the knowledge of the Oak Hill Parties, threatened with
respect to any Employee Benefit Plan of the Oak Hill Entities, or the assets
thereof (other than routine claims for benefits), and to the knowledge of any
Oak Hill Party, there are no facts which would reasonably be expected to give
rise to any liability, action, suit, investigation, or claim against any
Employee Benefit Plan of the Oak Hill Entities, any fiduciary or plan
administrator or other person dealing with any Employee Benefit Plan of the Oak
Hill Entities or the assets thereof other than routine claims for benefits.

 

(f)                                    No person: 
(i) has entered into any nonexempt “prohibited transaction,” as
such term is defined in ERISA and the Code, with respect to any Employee
Benefit Plan of the Oak Hill Entities; (ii) has breached a fiduciary obligation
with respect to any Employee Benefit Plan of the Oak Hill Entities; or (iii)
otherwise has any liability for any failure to act or comply in connection with
the administration or investment of the assets of any such plan.

 

(g)                                 Except as set forth in Section 3.21(g) of the
Disclosure Letter, to the knowledge of the Oak Hill Parties, each Employee
Benefit Plan of the Oak Hill Entities may be amended, terminated, modified or
otherwise revised by the Oak Hill Entities or their Subsidiaries, as
applicable, on and after the Initial Closing, without further liability to any
of the Oak Hill Entities or their Subsidiaries, other than accrued costs,
claims in process, wind-down expenses or liabilities imposed by statute or
regulation (including, without limitation, COBRA, as defined below).

 

25

 

(h)                                 No Employee Benefit
Plan of the Oak Hill Entities provides medical, health, life insurance or other
welfare-type benefits to retirees or former employees or individuals who
terminate (or have terminated) employment with any of the Oak Hill Entities or
their Subsidiaries, or the spouses or dependents of any of the foregoing
(except for limited continued medical benefit coverage for former employees,
their spouses and other dependents as required to be provided under Section
4980B of the Code or Part 6 of Subtitle B of Title I of ERISA (“COBRA”) or
applicable similar state law).

 

(i)                                     With respect to the six year period prior to
the Initial Closing, the requirements of COBRA or any applicable similar state
Law have been satisfied with respect to each Employee Benefit Plan of the Oak
Hill Entities.

 

(j)                                     With respect to each Employee Benefit Plan of
the Oak Hill Entities, all contributions, payments, premiums, expenses,
reimbursements or accruals for all periods ending prior to or as of the Initial
Closing (including periods from the first day of the then current plan year to
the Initial Closing) shall have been made or accrued on the appropriate
financial statements and each such plan has no unfunded liability which is not
reflected on the appropriate financial statements.

 

(k)                                  Except as would not reasonably be expected to
result in material liability to the Oak Hill Entities or Subsidiaries, no
communication or disclosure has been made that, at the time made, did not
accurately reflect the terms and operations of any Employee Benefit Plan of the
Oak Hill Entities.

 

(l)                                     No Employee Benefit Plan of the Oak Hill
Entities or any other agreement, program, policy or other arrangement by or to
which any of the Oak Hill Entities or any of their Subsidiaries are a party,
are bound or are otherwise liable, by its terms or in effect could reasonably
be expected to require any payment or transfer of money, property or other
consideration on account of or in connection with the transactions contemplated
by this Agreement or any subsequent termination of employment related to the
transactions contemplated by this Agreement which payment could constitute an “excess
parachute payment” within the meaning of Section 280G of the Code.

 

(m)                               Except as set forth in Section 3.21(m) of the
Disclosure Letter, to the knowledge of the Oak Hill Parties, no Oak Hill
Employee Benefit Plan is both (i) a non-qualified deferred compensation plan as
defined in section 409A of the Code, and (ii) non-compliant with the requirements
of section 409A of the Code; provided, however, that any such
plan will be deemed to comply with Section 409A of the Code if (A) it is
eligible for grandfathered treatment, or (B) it can be brought into compliance
with such section by December 31, 2005, in accordance with Section 409A of the
Code and any guidance issued by the U.S. Treasury Department thereunder, or
otherwise.

 

3.22                           Fiduciary Commitments and Duties.  Assuming
the Notices have been delivered in the manner specified in Section 5.8 of the Disclosure
Letter, each Oak Hill Entity and Subsidiary has performed in all material
respects all of its duties as a fiduciary under the Investment Advisers Act,
and has complied in all material respects, in its capacity as a fiduciary, with
all applicable Laws, Orders, agreements and instruments, except as expressly
provided in the Investment Advisory Contracts.

 

26

 

3.23                           No Finder.  Except
for the engagement of Morgan Stanley & Co., Inc., which obligation shall be
the sole responsibility of the Oak Hill Sellers or the Seller Principals, none
of the Oak Hill Entities or any party acting on their behalf, has paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated hereby or by
the Related Agreements.

 

3.24                           OHAI/OHAMI. 
Other than the Investment Advisory Agreements and certain other
agreements being transferred to OHAI and OHAMI as contemplated by the OHAI
Contribution and the OHAMI Contribution, respectively, and except as otherwise
set forth in Section 3.24 of the Disclosure Letter, neither OHAI nor OHAMI has
any material assets, including, without limitation, assets used in or necessary
to conduct the business of any Oak Hill Entity or any Subsidiary.  The representation contained in this Section
3.24 is solely being made by OHAMI and August and only OHAMI and August shall
have any liability in connection herewith if breached.

 

3.25                           Assets Under Management.  Set
forth in Section 3.25 of the Disclosure Letter is a complete and correct list
of the fee basis amounts of assets under management, administration or custody
by the Oak Hill Entities and the Subsidiaries as of the dates set forth in such
Letter.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

OF THE iSTAR PARTIES

 

Each iStar Party represents and warrants to the Oak
Hill Sellers and the Oak Hill Principals as follows, subject to such exceptions
or qualifications as are disclosed in writing in the iStar Disclosure Letter,
which is arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Agreement and the disclosures in any paragraph of
the iStar Disclosure Letter shall also constitute disclosure under, and shall
also qualify, the other paragraphs in this Agreement to the extent that the
relevance of such disclosures are apparent on their face.  The inclusion of any information in any
section of the iStar Disclosure Letter or other document delivered pursuant to
this Agreement shall not be deemed to be an admission or evidence of the
materiality of such item, nor shall it establish a standard of materiality for
any purpose whatsoever.

 

4.1                                 Organization;
Good Standing.

 

(a)                                  Each iStar Party is a corporation duly
organized, validly existing and in good standing under the Laws of the state of
the jurisdiction in which it is incorporated.  The Purchaser will not own any assets other
than the Purchaser Partnership Interests, the Purchaser Designee that purchases
the Purchaser GenPar II LLC Interests will not own any assets other than the
Purchaser GenPar II LLC Interests and the Purchaser Designee that purchases the
Purchaser GenPar Alpha LLC Interests will not own any assets other than the
Purchaser GenPar Alpha LLC Interests.

 

(b)                                 Each iStar Party has full power and authority
to conduct all of the business and activities conducted by it, and to own or
lease all of the assets owned or leased by it; and is duly licensed or
qualified to do business and is in good standing as a foreign entity in all
jurisdictions

 

27

 

in which the nature of the
business and activities conducted by it, and/or the character of the assets
owned or leased by it, makes such qualification or license necessary, except
for those jurisdictions in which the failure to be so qualified or licensed,
individually or in the aggregate, would not limit its ability to consummate the
transactions contemplated hereby and by the Related Agreements or would reasonably
be expected to have an iStar Material Adverse Effect.

 

4.2                                 Authority;
Execution and Delivery; Enforceability.

 

(a)                                  Each iStar Party has full corporate power and
authority to execute and deliver this Agreement and, to the extent a party
thereto, the Related Agreements, to perform its respective obligations
hereunder and under the Related Agreements and to consummate the transactions
contemplated hereby and by such Related Agreements.

 

(b)                                 All corporate acts and other proceedings
required to be taken by each iStar Party to authorize the execution, delivery
and performance of this Agreement and such Related Agreements have been duly
and properly taken.

 

(c)                                  Each of this Agreement and (when executed)
the Related Agreements has been (or will be) duly executed and delivered by each
iStar Party, and constitutes (or will, when executed, constitute) the legal,
valid and binding obligation of each iStar Party enforceable against each iStar
Party in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, moratorium and other similar Laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

4.3                                 Non-Contravention.  The
execution and delivery of this Agreement and the Related Agreements by each iStar
Party (to the extent a party thereto) does not and will not, and the
consummation of the transactions contemplated at the Closings hereby and by such
Related Agreements and compliance with the terms hereof and of such Related
Agreements, will not:

 

(i)                                     constitute a violation or breach of the Organizational
Documents of any iStar Party;

 

(ii)                                  constitute a default under or a violation or
breach of, or result in the acceleration of any obligation under, or require
the consent of any Person under, any provision of any contract or other
instrument to which any iStar Party is a party or by which any of the assets of
any iStar Party may be affected or secured; or

 

(iii)                               violate any Order or any Law affecting any
iStar Party or the assets of any iStar Party.

 

4.4                                 Governmental Consents and Approvals.  No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained by or on behalf of any iStar Party in connection with the execution,
delivery and performance of this Agreement or the Related Agreements (to the
extent a party thereto) or the consummation of the transactions contemplated at
the Closings hereby and by such Related Agreements.

 

28

 

4.5                                 iStar Shares.  The iStar
Shares when issued in accordance with the terms of this Agreement, will be duly
and validly issued, fully paid and non-assessable, will be free and clear of
any Liens, other than restrictions on transferability imposed under the Shareholder’s
Agreement, the Securities Act and restrictions on ownership intended to preserve
the Parent’s status as a REIT, as set forth in its organizational documents, will
not be subject to preemptive rights and will not subject the holder thereof to
personal liability by reasons of being such a holder.

 

4.6                                 Litigation and Claims.  There is no Action pending or, to the
knowledge of the iStar Parties, threatened, against any iStar Party or to which
any iStar Party is reasonably likely to become a party that would reasonably be
expected to materially adversely affect any iStar Party’s ability to consummate
the transactions contemplated hereby or by the Related Agreements.

 

4.7                                 SEC Reports.  The
Parent has filed all forms, reports and documents required to be filed by it
with the Securities and Exchange Commission since January 1, 2004 (the “SEC
Reports”).  The SEC Reports (i) were
prepared in all material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.  Each of
the balance sheets (including the related notes) included in the SEC Reports
presents fairly in all material respects the consolidated financial position of
the Parent as of the respective dates thereof, and the other related financial
statements (including the related notes) included therein presented fairly in
all material respects the consolidated results of operations and changes in
financial position of the Parent for the respective periods indicated, except,
in the case of interim financial statements, for year-end audit adjustments,
consisting only of normal recurring accruals. 
Each of the financial statements (including the related notes) included
in the SEC Reports has been prepared in accordance with GAAP, except as otherwise
noted therein or, in the case of the unaudited financial statements, as
permitted by the applicable rules and regulations of the Securities and
Exchange Commission.

 

4.8                                 Private Offering. 
Subject to the accuracy of the representations and warranties of the Oak
Hill Sellers and the Seller Principals contained herein, the offer, sale and
issuance of the iStar Shares, as contemplated hereby, are exempt from the
registration requirements of the Securities Act.  The Parent has not offered or sold the iStar
Shares by any form of general solicitation or general advertising, as such
terms are used in Rule 502(c) under the Securities Act.

 

4.9                                 REIT Status.  The
Parent (i) qualifies as a REIT, (ii) for all taxable years commencing with its
taxable year of formation through its taxable year ended December 31, 2004, has
been subject to taxation as a REIT, and (iii) has operated, and intends to
continue to operate, in such manner as to qualify as a REIT for the taxable
year ending December 31, 2005 and subsequent taxable years.  To Parent’s knowledge, no action, proceeding
or investigation that would reasonably be expected to result in the termination
of Parent’s status as a REIT has been taken or omitted or is pending or
threatened in writing.

 

29

 

4.10                           Sources of Funds.  The
Parent has the funds necessary to consummate the transactions on the terms contemplated
by this Agreement.

 

4.11                           Books and Records.  The
Parent has made available to the Oak Hill Parties and the Seller Principals
complete and correct in all material respects copies of all minute books and
all other existing records of any meeting of the board of directors, or the
audit committee thereof, for the Parent’s three preceding fiscal years.

 

4.12                           No Finder.  Neither
any iStar Party nor any party acting on their behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated hereby or by the Related
Agreements.

 

4.13                           Investment
Intention and Accredited Investor.

 

(a)                                  The iStar Parties are acquiring the Purchaser
Partnership Interests and the Purchaser LLC Interests for their own account for
investment only, and not with a view towards their distribution.  The iStar Parties understand that the
Purchaser Partnership Interests and the Purchaser LLC Interests are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act.  The iStar Parties also understand
that they must bear the economic risk of this investment indefinitely unless
the Purchaser Partnership Interests and the Purchaser LLC Interests are
registered pursuant to the Securities Act, or an exemption from registration is
available.

 

(b)                                 Each of the iStar Parties represents that it
is an “accredited investor” within the meaning of Regulation D under the
Securities Act.

 

4.14                           No Other Representations and Warranties.  Notwithstanding
anything to the contrary contained in this Agreement, each of the iStar Parties
acknowledges and agrees that none of the Oak Hill Parties or any of their
respective Affiliates has made or is making any representations or warranties
whatsoever, express or implied, beyond those expressly given in Articles II and
III of this Agreement (as supplemented or amended by the Disclosure Letter).  Any claims the iStar Parties may have for a
breach of a representation or warranty contained in this Agreement shall be
based solely on the representations and warranties set forth in Articles II and
III of this Agreement (as supplemented or amended by the Disclosure Letter).  Without affecting the representations and
warranties of the Oak Hill Parties contained in this Agreement, each of the
iStar Parties further represents that none of the Oak Hill Parties or any of
their respective Affiliates, or any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding the Oak Hill Entities including without limitation (i)
any confidential memoranda, financial or other projections and forward looking
statements, budgets or Fund Documents distributed on behalf of any Oak Hill
Party or relating to any Oak Hill Entity or any of the Funds, (ii) other
publications or data room information provided to the iStar Parties or their
respective representatives, and (iii) 
any other document or information in any form provided to the iStar
Parties or their representatives in connection with the transactions
contemplated hereby, or the transactions contemplated by this Agreement and the
Related Agreements not expressly set forth in this Agreement.  Without affecting the representations and
warranties contained in this Agreement, each of the iStar Parties acknowledges
that it has conducted to its satisfaction, its own independent investigation of
the condition, operations and business of the Oak Hill Entities and the Funds
and, in making its

 

30

 

determination
to proceed with the transactions contemplated by this Agreement, the iStar
Parties have relied on the results of their own independent investigation
together with the representations and warranties of the Oak Hill Parties
contained in this Agreement.

 

4.15                           Taxes.  Parent and each Subsidiary of
Parent has timely filed all Tax Returns required to be filed by it, and all
such Tax Returns are true, complete and accurate in all material respects.  All Taxes shown to be due on such Tax
Returns, and all material Taxes otherwise owed, have been paid.  No material deficiencies for any Taxes have
been or are currently being proposed, asserted or assessed in writing, or to
the knowledge of Parent, threatened in writing by any Governmental Authority
against Parent or any Subsidiary of Parent. 
The most recent audited financial statements contained in the SEC
Reports reflect an adequate accrual in accordance with GAAP for all Taxes and
deferred Taxes payable by Parent and the Subsidiaries of Parent for all taxable
periods and portions thereof through the date of such financial statements.  Since the date of such financial statements,
(i) Parent has incurred no material liability for Taxes under Sections 856(c)(7),
857(b)(4), 857(b)(5), 857(b)(6), 857(b)(7), 860(c) or 4981 of the Code,  and (ii) no condition or circumstance exists
which presents a material risk that any material Tax described in this sentence
will be imposed upon Parent or any Subsidiary of Parent.  Neither Parent nor any Subsidiary is bound by
or subject to any written Tax sharing or similar agreement or arrangement.

 

ARTICLE V

 

ACTION PRIOR TO THE INITIAL CLOSING DATE

 

From
and after the execution of this Agreement until the Initial Closing Time (or
earlier termination of this Agreement in accordance with Section 10.1):

 

5.1                                 Conduct
of Business.

 

(a)                                  Except for the Reclassification, the
Reorganization, the OHAMI Contribution, the OHAI Contribution, the Keystone
Payment and any other transaction in respect of the Excluded Assets, and as otherwise
set forth in Section 1.6 (collectively, the “Permitted Transactions”),
each Oak Hill Entity shall, and each Oak Hill Seller and each Seller Principal shall
cause each Oak Hill Entity and Subsidiary to, (i) carry on its business in
the ordinary course of business in accordance with past practice; (ii) use
commercially reasonable efforts to preserve its respective present business
organization and relationships; (iii) use commercially reasonable efforts
to keep available the present services of its employees; and (iv) use
commercially reasonable efforts to preserve and enhance its assets under
management, administration and custody and profitability and the goodwill and
relations of its clients and others with whom business relationships exist
consistent with past practice.

 

(b)                                 Notwithstanding Section 5.1(a), and except
for the Permitted Transactions, from and after the date hereof and through and
until the Initial Closing none of the Oak Hill Entities or any Subsidiary
shall, and each Oak Hill Seller and Seller Principal shall cause the Oak Hill
Entities and the Subsidiaries not to, without the prior written consent of the
Parent (such consent not to be unreasonably withheld, delayed or conditioned):

 

31

 

(i)                                     take any action that would be prohibited by
the provisions of Section 8.4 of the Amended and Restated OHA LP Agreement as
if such provisions were in effect as of the date of this Agreement;

 

(ii)                                  incur any indebtedness or issue any debt
securities, or assume, guarantee or otherwise become responsible for the
obligation of another Person;

 

(iii)                               make or change any material Tax elections,
make any material change in accounting methods with respect to Taxes, settle or
offer to settle any material Tax controversy or file any amended Tax Return;

 

(iv)                              make any change in the methods of accounting
or accounting principals applied in the preparation of financial statements of
the Oak Hill Entities, other than a change which is required by reason of a
concurrent change in Law or GAAP;

 

(v)                                 amend its Organizational Documents (other
than as contemplated hereby or by the Related Agreements), or cause any Fund
Document to be amended or modified in any material respect;

 

(vi)                              issue, deliver, or agree (actually or
contingently) to issue or deliver (whether pursuant to any option or
otherwise), or grant or modify any option, warrant or other right to purchase
or otherwise acquire, any equity interests of any Oak Hill Entity or any
Subsidiary, as the case may be, or any security convertible into or
exchangeable for, any such interests, or issue or agree to issue any bonds,
notes, or other securities;

 

(vii)                           enter into any partnership or joint venture
agreement or arrangement or any other agreement involving a sharing of revenue
or profits;

 

(viii)                        take any action or omit to take any action
that would reasonably be expected to cause the representations made in
subparagraphs (h), (i), (j) or (k) of Section 3.15 to be untrue in any respect
as of the Initial Closing Date;

 

(ix)                                take any action or omit to take any action
that would reasonably be expected to cause the representation made in Section
3.15(l) to be untrue in any respect as of the Initial Closing Date based on the
Securities List then in effect; or

 

(x)                                   agree, whether in writing or otherwise, to do
any of the foregoing.

 

5.2                                 No Breach of Representations and Warranties;
Notification of Certain Matters.  Each of the parties hereto
will use his or its commercially reasonable efforts to refrain from taking any
action, and each of them will endeavor in good faith not to permit any event to
occur, which (a) would cause the conditions set forth in Articles VII and VIII not
to be satisfied, or (b) would otherwise prohibit such party from consummating
the transactions contemplated hereby or by any Related Agreement.  The parties hereto will, in the event of, and
promptly after the occurrence of, or promptly after becoming aware of the
occurrence of, or the impending or threatened occurrence of, any event or
condition which would reasonably be expected to result in the inability of any
condition contained in Articles VII or VIII to be satisfied or would otherwise
prevent it from consummating the transactions contemplated hereby or by any
Related

 

32

 

Agreement, give detailed
written notice thereof to the other parties hereto and each such party shall
use its commercially reasonable efforts to prevent or promptly to remedy such
breach.  None of the disclosures pursuant
to this Section 5.2 will be deemed to qualify, modify, amend or supplement the
representations, warranties or covenants of any party hereto.

 

5.3                                 Access.  Subject to the terms of the November
Confidentiality Agreement, the Oak Hill Parties shall afford the iStar Parties’
employees, auditors, legal counsel and other authorized representatives and
advisors, upon reasonable notice, all reasonable opportunity and access during
normal business hours to inspect and investigate the assets, liabilities, Contracts,
operations and businesses of the Oak Hill Entities and the Subsidiaries and to
interview the employees and officers of the Oak Hill Entities and the
Subsidiaries.

 

5.4                                 Standstill.  None
of the Oak Hill Parties shall, and shall not permit any of their respective Affiliated
Persons or Affiliates to, initiate, solicit, encourage, negotiate or enter into
any agreement with any Person other than the iStar Parties respecting the
acquisition of any portion of the business of any Oak Hill Entity or any
Subsidiary or any of the Purchaser Partnership Interests or the Purchaser LLC
Interests.

 

5.5                                 Notice of Litigation. 
Promptly after becoming aware of the occurrence of or the threatened
occurrence of any material Action against any Oak Hill Party, or to which any
Oak Hill Party is reasonably likely to become a party, such Oak Hill Party shall
give detailed written notice thereof to the iStar Parties.

 

5.6                                 Fulfillment of Conditions to Obligations of
the iStar Parties.  Each
Oak Hill Party agrees, and the Oak Hill Sellers and the Seller Principals agree,
to cause each Oak Hill Entity, to use commercially reasonable efforts to
effectuate the transactions contemplated hereby and by the Related Agreements
and to fulfill the conditions to the obligations of the iStar Parties contained
in Article VII.

 

5.7                                 Fulfillment of Conditions to Obligations of the
Oak Hill Parties.  Each
iStar Party agrees, and the Parent agrees to cause the Purchaser, to use commercially
reasonable efforts to effectuate the transactions contemplated hereby and by
the Related Agreements and to fulfill the conditions to the obligations of the
Oak Hill Parties contained in Article VIII.

 

5.8                                 Notices.  The
Oak Hill Entities shall use commercially reasonable efforts to deliver the notices
set forth in Section 5.8 of the Disclosure Letter (collectively, the “Notices”)
in the manner provided in Section 5.8 of the Disclosure Letter; provided,
however, that in no event shall any Person be required to pay any
consideration, relinquish any right or incur any additional liabilities or
obligations in connection with delivering the Notices.  The parties agree and acknowledge that they
have jointly developed the actions and procedures described in this Section 5.8
and that, notwithstanding anything to the contrary, no party shall have
liability to any other party under this Agreement or otherwise in respect of
the Notices, the method pursuant to which such Notices were delivered or any
other such claim relating to a violation of Law or a violation of the
Organizational Documents of any Fund.

 

5.9                                 Amended and Restated LP Agreements/Operating
Agreements. 
Promptly following the date of this Agreement, the Parent and the Seller
Principals shall cause the Organizational Documents of each of the Oak Hill
Entities to be amended and revised, to the

 

33

 

extent necessary to
effectuate the transactions contemplated hereby and by the Related
Agreements.  Without limiting the
foregoing, the operating agreement or the partnership agreement, as the case
may be, of an Oak Hill Entity shall be amended and revised to provide that any
transfer of ownership interests in such Oak Hill Entity shall be subject to
restrictions substantially similar to those restrictions contained in Article
10 of the Amended and Restated OHA LP Agreement.  In addition, the Organizational Documents of
Oak Hill CLO Management I, L.L.C., Oak Hill CLO Management II, L.L.C. and Oak
Hill CLO Management III, L.L.C., shall be amended and revised to provide for
the separation of the Excluded Assets and the interests being purchased as
contemplated by this Agreement.

 

5.10                           Delivery of Governmental Documents.  The Oak
Hill Parties will deliver or cause to be delivered or by notice make available
or cause to be made available to the iStar Parties at the same time as the
filing thereof a complete copy of each Governmental Document filed after the
date hereof and prior to the Initial Closing Date by or on behalf of any of the
Oak Hill Entities or any Subsidiary.

 

5.11                           Publicity.  No
public release or announcement concerning the transactions contemplated hereby
or by the Related Agreements shall be issued by any party without the prior
consent of the other parties (which consent shall not be unreasonably withheld
or delayed), except as such release or announcement may be required by Law, in
which case the party required to make the release or announcement shall allow
the other parties reasonable time to comment on such release or announcement in
advance of such issuance and shall make a reasonable effort to take into
account such comments.

 

ARTICLE VI

 

OTHER AGREEMENTS OF THE PARTIES

 

6.1                                 Key Man Insurance.  From
and after the date hereof, the iStar Parties shall have the right to obtain at their
sole cost and expense for their sole benefit key-man life insurance policies on
each Seller Principal.  Each Seller
Principal expressly consents to, and will reasonably cooperate with respect to,
the acquisition of such policies by the iStar Parties and has no knowledge of
any reason why he would be uninsurable.

 

6.2                                 Office Space.  Following
the Initial Closing, the iStar Parties and the Seller Principals shall
cooperate with each other with respect to relocating to office space at the
same location, subject to entering into mutually satisfactory agreements
relating to the sharing of costs and expenses.

 

6.3                                 Board Representation.  The
Parent agrees that the GRA Seller shall have the right to designate one person
(the “Oak Hill Designee”) to be appointed to the Parent’s board of directors,
such appointment to take effect on the later of (1) the day after the Initial
Closing and (2) the day after the Parent’s 2005 Annual Meeting of
Stockholders.  The Oak Hill Designee
shall be appointed to serve as a director until the Parent’s 2006 Annual
Meeting of Stockholders, subject to the Oak Hill Designee’s continued
compliance with the policies and procedures applicable to the Parent’s
directors generally.  The initial Oak
Hill Designee shall be August.  If August
is for any reason unwilling or unable to serve as a director, or if August resigns
or is

 

34

 

removed
as a director, the GRA Seller shall have the right to designate another person
to serve as the Oak Hill Designee, subject to the reasonable approval of such
person’s credentials by the Parent’s nominating and governance committee of the
board of directors.

 

6.4                                 Consulting Agreement. 
After the Initial Closing, the iStar Parties and OHA and its Affiliates shall
enter into a consulting agreement in substantially the form attached hereto as Exhibit
1 (the “Consulting Agreement”). 
It is understood by the parties hereto that the compensation to OHA or
such Affiliates under such agreement will be nominal.

 

6.5                                 Federal Income Tax Treatment.  The
parties shall cause OHA and each Subsidiary of OHA that is not a disregarded
entity, GenPar II LLC, GenPar Alpha LLC, GenPar II and GenPar Alpha, respectively,
to make an election under Section 754 of the Code (and any corresponding
provisions of state and local tax law), effective with respect to the transfers
of partnership interests occurring on the Initial Closing Date and the
Subsequent Closing Date, respectively, to adjust their tax basis in their
assets with respect to the Purchaser.  In
the case of OHA and each Subsidiary of OHA (if any) that is not a disregarded
entity, the Section 754 election (and any corresponding state and local Tax Law
election) relating to the purchase transactions consummated at the Initial
Closing shall be made on a federal (and any corresponding state and local) Tax
Return filed for the taxable period ending with the Initial Closing Date.  The Purchaser shall be provided with a copy
of such Tax Returns, in the form proposed to be filed, at least 15 days prior
to the due date with extensions (or earlier proposed filing date) of such Tax
Returns for the limited purpose of enabling the Purchaser to confirm OHA’s
compliance with the provisions of this Section 6.5. (The immediately preceding
sentence shall also apply to any Tax Returns filed pursuant to Section 3.15(h) hereof.)
 All basis adjustments made under Section
743 of the Code pursuant to the Section 754 election shall be based on the
total purchase price actually paid (valuing the iStar Shares based on their
market trading price), shall reflect the allocation of the Initial Purchase
Price and the Subsequent Purchase Price, respectively, between the Purchaser
Partnership Interests and the Purchaser LLC Interests in accordance with the
Allocation Percentages, and shall reflect the further allocation of the portion
of the Initial Purchase Price and the portion of the Subsequent Purchase Price so
allocated to the Purchaser Partnership Interests among the assets of OHA in a manner
consistent with a written appraisal report prepared by Ernst & Young (or
other nationally recognized appraisal firm) for OHA and provided to the
Purchaser as soon as practicable.  The
parties agree to report the Tax consequences of the transactions contemplated
hereby consistent with the foregoing.

 

6.6                                 Transfer Taxes.  All
transfer, real estate transfer, documentary, stamp, recording, sales or other
similar Taxes (including interest, penalties and additions to any such Taxes) (“Transfer
Taxes”) incurred in connection with the transactions contemplated by this
Agreement shall be paid by the person on which such Transfer Taxes are imposed
by applicable law.  The parties shall
cooperate with each other in preparing, executing and filing any Tax Returns
with respect to such Transfer Taxes.

 

6.7                                 Contributions and Reorganization.  If
the OHAI Contribution is not effected at or prior to the Initial Closing, then
promptly following the Initial Closing (but in no event later than two Business
Days following the Initial Closing Date), the Seller Principals shall cause the
OHAI Contribution to be effected.  The
Reorganization shall be effected at or prior to the Initial

 

35

 

Closing
in the manner contemplated on Exhibit R and the OHAMI Contribution shall be
effected at or prior to the Initial Closing.

 

6.8                                 Further Assurances.  From
and after the Closings, each party shall, at any time and from time to time,
make, execute and deliver, or cause to be made, executed and delivered, for no
additional consideration but at the cost and expense of the requesting party
(excluding any internal costs incurred, such as having any of the following reviewed
by in-house counsel) such assignments, deeds, drafts, checks, certificates,
returns, filings and other instruments, agreements, consents and assurances and
take or cause to be taken all such actions as the other party or its counsel
may reasonably request for the effectual consummation and confirmation of this
Agreement and the Related Agreements and the transactions contemplated hereby
and by the Related Agreements.

 

6.9                                 Additions to Securities List.  The
following procedures shall apply with respect to the Securities List and
related matters for all purposes of this Agreement, including, without
limitation, for purposes of Section 3.15(1), Section 5.1(b)(ix) and this
Section 6.9.  Parent shall have the right
to revise the Securities List at any time after the date hereof in accordance
with the following procedure: (i) The Seller Principals shall cause OHA to
provide to Parent in writing, no later than five Business Days after the date
on which they receive a written request to do so, any factual information
requested by Parent in writing (in order to make the determinations hereinafter
provided) with respect to the Oak Hill Entities’ ownership (direct or indirect)
of or commitments to acquire (directly or indirectly) any Security (other than
a debt Security described in Section 856(m)(2)(A)-(B) of the Code, a
Security described in Section 856(m)(1)(B)-(G) of the Code or a Security
described in Section 856(c)(4)(A) of the Code) of a Real Estate Issuer to
which Parent might make a loan (which loan, subject to the following provisions
of this Section 6.9, Parent anticipates would be added to the Securities List
if such loan is made) based on discussions commenced prior to the date of such
request.  (ii) If, based on the written factual
information provided by OHA in response to Parent’s request (together with any
additional factual information requested by Parent in writing in order to make
this determination) Parent concludes that the Oak Hill Entities (directly or
indirectly) own or have committed to acquire Securities of such issuer that would
reasonably be expected to cause the representation in Section 3.15(l) to be
untrue if such issuer were added to the Securities List, then Parent shall notify
the Seller Principals in writing of such conclusion (such notification to be
provided by Parent no later than five Business Days after Parent has received
all written factual information requested by it in writing in order to make
such determination) and Parent shall not be permitted to add such issuer to the
Securities List (and the existing Securities List shall remain in effect), provided,
that if the Securities identified in writing by OHA (in response to Parent’s written
request) as Securities committed to be acquired by the Oak Hill Entities are
not actually acquired within 65 Business Days after the date that the Seller
Principals receive notification from Parent of its conclusion with respect to
such Real Estate Issuer, then the Seller Principals shall cause OHA to so notify
Parent in writing no later than five Business Days after such 65 Business Day
period has ended and, unless Parent concludes that the representation made in
Section 3.15(l) would be untrue in any respect based on the Securities of such
Real Estate Issuer actually owned (directly or indirectly) by the Oak Hill
Entities, upon receipt by the Seller Principals of written notification from
Parent, the Securities List shall thereupon be amended to include such Real
Estate Issuer subject to the deemed agreement (as to the Securities identified
in the written factual information provided by OHA as Securities owned by the
Oak

 

36

 

Hill
Entities) under, and to the second proviso of, clause (iii) of this Section 6.9.  (iii) If the written factual information
provided by OHA in response to Parent’s written request (A) is not timely
provided or (B) indicates that the Oak Hill Entities (directly or indirectly)
own or have committed to acquire Securities of the issuer but, based on such factual
information, Parent concludes that clause (ii) of this Section 6.9 does not
apply, then Parent shall so notify the Seller Principals in writing within five
Business Days after Parent has received all written factual information
requested by it in writing in order to make such determination and the
Securities List shall thereupon be amended to include the Real Estate Issuer
identified in Parent’s request and, in the case of clause (B) of this sentence,
for all purposes of this Agreement Parent shall be deemed to have agreed that
the Securities identified in the written factual information provided by OHA as
Securities that the Oak Hill Entities own or have committed to acquire shall
not at any time cause the representation made in Section 3.15(l) to be untrue
in any respect; provided, that for avoidance of doubt, any such deemed
agreement of Parent shall only apply to the class of Security and number of
units (such as principal amount or number of shares) specified in the written
factual information provided by OHA; and provided  further, that
Parent shall notify the Seller Principals in writing if Parent does not make a loan
or commit to make a loan to such Real Estate Issuer within 65 Business Days thereafter,
or if Parent does commit to make a loan to such Real Estate Issuer within said
65 Business Day period but the commitment is thereafter terminated without
Parent actually making the loan, and the Securities List shall thereupon be
amended to exclude such Real Estate Issuer. 
(iv) If the written factual information provided by OHA in response to
Parent’s request is timely provided and indicates that an Oak Hill Entity has
commenced discussions to acquire Securities of such issuer (other than a debt
Security described in Section 856(m)(2)(A)-(B) of the Code, a Security described
in Section 856(m)(1)(B)-(G) of the Code or a Security described in Section
856(c)(4)(A) of the Code), then the parties will conduct discussions in good
faith to determine whether and under what circumstances such issuer may be
added to the Securities List.  (v) Once
Parent has submitted a written request as to a particular Real Estate Issuer,
Parent shall not be entitled to again submit a written request as to such Real
Estate Issuer during the 65 Business Day period applicable to Parent’s earlier
request (so as to effectively extend the 65 Business Day period as to such Real
Estate Issuer), but shall not be precluded from submitting written requests as
to any other Real Estate Issuers in accordance with this Section 6.9 during
such period.  (vi) If the applicable debt
Securities of any Real Estate Issuer identified in the Securities List cease to
be owned by Parent, then Parent shall so notify the Seller Principals in
writing and the Securities List shall thereupon be amended to remove such Real
Estate Issuer from the Securities List.  (vii)
If one or more of the Oak Hill Entities intends to commence or has commenced
discussions with a Real Estate Issuer identified on the Securities List and the
Oak Hill Entities anticipate that they might acquire or commit to acquire
Securities of such issuer, the Seller Principals may cause OHA to request in
writing that Parent provide its consent to such acquisition or commitment to
acquire such Securities by the Oak Hill Entities (such consent to be in writing
and not to be unreasonably withheld) and if Parent either consents in writing
or does not provide a written response within 5 Business Days after the date it
receives such written request from OHA, for all purposes of this Agreement
Parent shall be deemed to have agreed that the Securities identified in the written
information provided by OHA as Securities that the Oak Hill Entities intend to
acquire or commit to acquire shall not at any time cause the representation
made in Section 3.15(l) to be untrue in any respect; provided, that for
avoidance of doubt, any such deemed agreement of Parent shall only apply to the
class of Security and number of units (such as principal amount or number of
shares) specified in such written information; and provided  further,
that such Securities are actually

 

37

 

acquired
by the Oak Hill Entities within 65 Business Days thereafter (and, if such
Securities are not actually acquired by the Oak Hill Entities by the end of
such 65 Business Day period, the Seller Principals shall cause OHA to so notify
Parent in writing no later than five Business Days after such 65 Business Day
period has ended).  (viii) Promptly after
the date of the occurrence of any event that results in an amendment of the
Securities List in accordance with this Section 6.9, Parent shall provide a
revised Securities List to the Seller Principals.  For the avoidance of doubt, the parties agree
that the covenants contained in this Section 6.9 shall apply from the date of
this Agreement until the Initial Closing Date.

 

6.10                           New TRSs. Promptly following the date of this
Agreement, the Parent shall cause the incorporation of two new wholly-owned
taxable REIT subsidiaries (each, a “Purchaser Designee”).  The Parent will cause one Purchaser Designee
to purchase the GenPar II LLC Interests, and one Purchaser Designee to purchase
the GenPar Alpha LLC Interests, in accordance with the terms of this Agreement.

 

6.11                           Extension of Funds.

 

The parties agree that:

 

(i)                                     if the term of any of Oak Hill Credit
Partners I, Limited, Oak Hill Credit Partners II, Limited, or Oak Hill Credit
Partners III, Limited is extended beyond its term as of the date of this
Agreement, then, promptly following such extension, the Seller Principals shall
cause, as of the date of such extension and thereafter, the Parent, the
Purchaser or a Purchaser Designee to receive, for no additional consideration,
47.5% of the Seller Principals’ aggregate direct and indirect economic interest
in any carried interest, incentive fee or other performance based allocation,
distribution or compensation of the general partner or investment manager
special purpose vehicle relating to such Excluded Assets;

 

(ii)                                  if, after the date of this Agreement, the
term of Oak Hill Special Opportunities Fund, L.P. or Oak Hill Special
Opportunities Fund (Management), L.P. is extended and capital commitments in
excess of the aggregate capital commitments to those funds as of the date
hereof are made, then, the Seller Principals shall cause the Parent, the
Purchaser or a Purchaser Designee to receive, for no additional consideration,
47.5% of the Seller Principals’ aggregate direct and indirect economic interest
in any carried interest, incentive fee or other performance based allocation,
distribution or compensation of the general partner or investment manager
special purpose vehicle associated with and attributable to such additional
capital commitments; and

 

(iii)                               if after the date of this Agreement any
incentive fee, distribution or similar payment related to Oak Hill Securities
Fund, L.P. is or becomes distributable or payable to Oak Hill Securities
GenPar, L.P. or any of its Affiliates or any Seller Principal, as of the date
distributable or payable and thereafter, the Seller Principals shall cause the Parent,
the Purchaser or a Purchaser Designee to receive, for no additional
consideration, an amount equal to 47.5% of the Seller Principals’ aggregate
direct and indirect share thereof as and when received by the Oak Hill Parties.

 

38

 

The parties shall make,
execute and deliver, or cause to be made, executed and delivered, for no
additional consideration to any iStar Party, such agreements, consents and
assurances and take or cause to be taken all such actions as may reasonably be
requested by the Parent to effectuate the agreements contained in this Section
6.11.

 

ARTICLE VII

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF iSTAR PARTIES

 

7.1                                 Initial Closing.  The
obligation of the iStar Parties to consummate the transactions contemplated
under this Agreement are subject to the fulfillment of each of the following
conditions at the Initial Closing, any or all of which may be waived in whole
or in part by the iStar Parties, in their sole discretion:

 

(i)                                     Representations and Warranties.  Except
as provided in the next sentence, the representations and warranties contained
in Articles II and III shall be true and correct as of the date of this
Agreement and as of the Initial Closing Time as though made as of such time (other
than the representations and warranties contained in Sections 3.15(j), 3.15(k)
and 3.15(l), which shall be true and correct only as of the Initial Closing
Time as though made as of such time), except as would not reasonably be
expected to have an Oak Hill Material Adverse Effect.  Notwithstanding the foregoing, (A)
representations and warranties which expressly relate to an earlier date shall
be true and correct only on and as of such earlier date, and any other
representations and warranties contained in Sections 3.10(c), 3.11, 3.12, 3.13,
3.14(b), 3.15 (other than Sections 3.15(i), 3.15(j), 3.15(k) and 3.15(l)), 3.16,
3.17(a), 3.18, 3.19(b), 3.19(d), 3.20, 3.21, 3.22 and 3.25 shall be true and
correct only on and as of the date of this Agreement, except, in each case, as
would not reasonably be expected to have an Oak Hill Material Adverse Effect
and (B) representations and warranties contained in Sections 2.1, 2.2, 2.3,
3.1, 3.2, 3.3, 3.4 and 3.24 and qualified as to materiality or an Oak Hill
Material Adverse Effect shall be true and correct, and those contained in
Sections 2.1, 2.2, 2.3, 3.1, 3.2, 3.3, 3.4 and 3.24 not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and at the Initial Closing Time as though made as of such time.

 

(ii)                                  Performance.  The Oak Hill Parties shall
each have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by any
Oak Hill Party prior to or at the Initial Closing Time, except those covenants
and agreements required by this Agreement to be performed or complied with by
the RBO Seller, the CSW Seller, Okun and Wernicke at the Subsequent Closing
Time.

 

(iii)                               Material Adverse Effect.  Between
the date of this Agreement and the Initial Closing Date, no Action shall have
been commenced, brought, conducted or heard by or before any Governmental
Authority (whether commenced, or brought or conducted by any Governmental Authority
or other Person) that has had or would reasonably be expected to have an Oak
Hill Material Adverse Effect.

 

39

 

(iv)                              Certificates.  The
iStar Parties shall have received (a) a certificate of the managing general
partner or managing member, as the case may be, of each Oak Hill Entity dated
the Initial Closing Date and certifying to the fulfillment on the part of such Oak
Hill Entity of the conditions specified in Section 7.1(i), (ii) and (iii); and
(b) a certificate of the managing general partner or managing member, as
the case may be, of each Oak Hill Entity dated the Initial Closing Date,
setting forth the resolutions of the partners/members of such Oak Hill Entity
adopting and approving this Agreement, the Related Agreements (to the extent a
party thereto) and all other documents contemplated hereby and thereby and
authorizing the transactions hereby and thereby contemplated.

 

(v)                                 No Injunction.  There
shall not be in effect any injunction or restraining order issued by a court of
competent jurisdiction in an Action against the consummation of the
transactions contemplated hereby or by any Related Agreement.

 

(vi)                              Notices.  The Oak Hill Parties and the
Oak Hill Entities shall have delivered the Notices in the manner specified in
Section 5.8 of the Disclosure Letter.

 

(vii)                           Pre-Closing Transactions.  The Reclassification,
the OHAMI Contribution (with respect to Investment Advisory Contracts) and the
Reorganization shall have been completed.

 

(viii)                        Relationship Agreement.  The
Relationship Agreement shall have been executed and delivered by the parties
thereto.

 

(ix)                                Amended and Restated LP Agreements/Amended
and Restated Operating Agreements.  Each Amended and Restated LP
Agreement and each Amended and Restated Operating Agreement shall have been
executed and delivered by the parties thereto.

 

(x)                                   Shareholder’s Agreement.  The Shareholder’s
Agreement shall have been executed and delivered by the parties thereto.

 

(xi)                                Legal Opinion.  The
iStar Parties shall have received a reasoned legal opinion from Paul, Weiss,
Rifkind, Wharton & Garrison LLP or Dechert LLP that the transactions
contemplated by this Agreement should not constitute an assignment under the
Investment Advisers Act.

 

(xii)                             Certificates.  The iStar
Parties shall have received certificates (or other appropriate evidences of
ownership) representing all the Purchaser Partnership Interests and the Purchaser
LLC Interests (other than those owned by the RBO Seller, the CSW Seller, Okun
or Wernicke which are required to be delivered at the Subsequent Closing Time),
and, if certificated, duly endorsed to the Purchaser or its designee or
accompanied by appropriate powers, with all appropriate tax transfer stamps
affixed.

 

7.2                                 Subsequent Closing.  The
obligation of the iStar Parties to consummate the transactions contemplated
under this Agreement at the Subsequent Closing are subject to the fulfillment
of each of the following conditions at the Subsequent Closing:

 

40

 

(i)                                     Initial Closing.  The
Initial Closing shall have taken place on or prior to the Subsequent Closing
Date.

 

(ii)                                  Representations and Warranties.  The
representations and warranties of the RBO Seller, the CSW Seller, Okun and
Wernicke contained in Sections 2.1, 2.2 and 2.3 shall be true and correct as of
the date of this Agreement and at the Subsequent Closing Time as though made as
of such time.

 

(iii)                               Performance.  The RBO Seller, the CSW
Seller, Okun and Wernicke shall each have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by any of them prior to or at the Subsequent
Closing Time.  For purposes of
clarification, the only covenants and agreements required to be performed by
them at the Subsequent Closing relate to the delivery to the Purchaser of the
RBO Seller’s and the CSW Seller’s Purchaser Partnership Interests and Okun’s
and Wernicke’s Purchaser LLC Interests.

 

(iv)                              Material Adverse Effect.  Between
the date of this Agreement and the Subsequent Closing Date, no Action shall
have been commenced, brought, conducted or heard by or before any Governmental
Authority (whether commenced, or brought or conducted by any Governmental
Authority or other Person) that has had or would reasonably be expected to have
an Oak Hill Material Adverse Effect.

 

(v)                                 Certificates.  The
iStar Parties shall have received certificates (or other appropriate evidence
of ownership) representing the Purchaser Partnership Interests owned by the RBO
Seller and the CSW Seller and the Purchaser LLC Interests owned by Okun and
Wernicke, and, if certificated, duly endorsed to the Purchaser or its designee
or accompanied by appropriate powers, with all appropriate tax transfer stamps
affixed.

 

(vi)                              Subsequent Amended and Restated LP Agreements
and Subsequent Amended and Restated Operating Agreements.  Each
Subsequent Amended and Restated LP Agreement and each Subsequent Amended and
Restated Operating Agreement shall have been executed and delivered by the
parties thereto.

 

ARTICLE VIII

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF

THE OAK HILL PARTIES AND THE OAK HILL SELLERS

 

8.1                                 Initial Closing.  The
obligation of the Oak Hill Parties to consummate the transactions contemplated
by this Agreement are subject to the fulfillment of each of the following
conditions at the Initial Closing, any or all of which may be waived in whole
or in part by the Oak Hill Parties:

 

(i)                                     Representations
and Warranties.  Except as provided
in the next sentence, the representations and warranties contained in Article
IV shall be true and correct as of the date hereof and as of the Initial
Closing Time as though made as of such time, except as would not reasonably be
expected to have an iStar Material Adverse Effect.  Notwithstanding the foregoing, (A) representations
and warranties which expressly relate

 

41

 

to an earlier date shall be true and correct
only on and as of such earlier date, and any other representations and
warranties contained in Section 4.7 shall be true and correct only on and as of
the date of this Agreement except, in each case, as would not reasonably be
expected to have an iStar Material Adverse Effect, and (B) representations
and warranties contained in Sections 4.1, 4.2 and 4.5 and qualified as to
materiality or an iStar Materials Adverse Effect shall be true and correct, and
those contained in Sections 4.1, 4.2 and 4.5 not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and at the Initial Closing Time as though made as of such time.

 

(ii)                                  Performance.  The iStar Parties shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by them
prior to or at the Initial Closing Time.

 

(iii)                               Certificates.  The Oak
Hill Parties shall have received (a) a certificate of an executive officer of each
of the Parent and the Purchaser, dated the Initial Closing Date, certifying to
the fulfillment of the conditions specified in Section 8.1(i) and (ii); and (b)
a certificate of the Secretary of each of the Parent and the Purchaser, dated
the Initial Closing Date, setting forth the resolutions of the board of directors
of each of them approving this Agreement, the Related Agreements and all other
documents contemplated hereby and thereby, and authorizing the transactions
hereby and thereby contemplated.

 

(iv)                              No Injunction.  There
shall not be in effect any injunction or restraining order issued by a court of
competent jurisdiction in an Action against the consummation of the
transactions contemplated hereby or by any Related Agreement.

 

(v)                                 Notices.  The Oak Hill Parties and the
Oak Hill Entities shall have delivered in the manner specified in Section 5.8
of the Disclosure Letter.

 

(vi)                              Shareholder’s Agreement.  The
Parent shall have executed and delivered the Shareholder’s Agreement.

 

(vii)                           Initial Purchase Price.  The Purchaser
and the Purchaser Designees shall have delivered the Initial Cash Purchase
Price and the Parent shall have delivered the Initial iStar Shares, each in
accordance with Section 1.2.

 

(viii)                        Relationship Agreement.  The
Relationship Agreement shall have been executed and delivered by the parties
thereto.

 

(ix)                                Amended and Restated LP Agreements/Amended
and Restated Operating Agreements.  Each Amended and Restated LP
Agreement and each Amended and Restated Operating Agreement shall have been
executed and delivered by the parties thereto.

 

8.2                                 Subsequent Closing.  The
obligation of the RBO Seller, the CSW Seller, Okun and Wernicke to consummate
the transactions contemplated by this Agreement at the Subsequent

 

42

 

Closing
are subject to the fulfillment of each of the following conditions at the
Subsequent Closing:

 

(i)                                     Initial Closing. The Initial Closing shall have taken place
on or prior to the Subsequent Closing Date.

 

(ii)                                  Subsequent Purchase Price. The Purchaser and the Purchaser Designees shall
have delivered the Subsequent Cash Purchase Price and the Parent shall have
delivered the Subsequent iStar Shares, each in accordance with Section 1.3.

 

ARTICLE IX

 

INDEMNIFICATION

 

9.1                                 Survival of Representations and Warranties.  All
certificates delivered pursuant to Sections 7.1 and 8.1 (the “Closing
Certificates”) and all representations and warranties made herein by the
parties to this Agreement and their respective obligations to be performed
pursuant to the terms hereof, shall survive the Initial Closing Time, provided,
that, the representations and warranties and the covenants contained in
Sections 5.2 and 5.5 made herein by the parties and the Closing Certificates as
they relate to such representations, warranties and covenants shall terminate
18 months following the Initial Closing Date, except that (i) the
representations and warranties (and the Closing Certificates as they relate
thereto) set forth in Sections 3.15 (Tax Matters), 3.20 (Environmental
Matters), 3.21 (Employee Plans), 4.9 (REIT Status) and 4.15 (Taxes) shall
survive the Initial Closing Time for the applicable statute of limitations,
plus 30 days, and (ii) the representations and warranties (and the Closing Certificates
as they relate thereto) set forth in Sections 2.1 (Authority; Execution and
Delivery; Enforceability), 2.2 (Title to Purchaser Partnership Interests), 2.3
(Title to Purchaser LLC Interests), 2.4(i) (Non-Contravention), 3.1 (Organization;
Good Standing), 3.2 (Authority; Execution and Delivery; Enforceability),
3.3 (Capitalization), 3.4 (Subsidiaries), 3.5(i) (Non-Contravention), 3.24 (OHAI/OHAMI),
4.1 (Organization; Good Standing), 4.2 (Authority; Execution and Delivery;
Enforceability), 4.3(i) (Non-Contravention), 4.5 (iStar Shares) and 4.14 (No
Other Representations and Warranties) shall survive the Initial Closing Time
indefinitely.  Notwithstanding the
foregoing, if written notice of any matter setting forth in reasonable detail a
claim for a breach of any representation or warranty is given to the iStar
Parties or the applicable Oak Hill Party, as the case may be, in writing
pursuant to this Agreement prior to the end of the applicable survival period,
any such representation or warranty (and the Closing Certificates as they
relate thereto) that would otherwise terminate shall be deemed to survive
solely with respect to such claim until resolved.

 

9.2                                 Indemnification
by the Oak Hill Sellers and the Seller Principals.

 

(a)                                  Each Oak Hill Seller, individually as to such
Oak Hill Seller and each Seller Principal, jointly and severally only with
respect to such Seller Principal and each Oak Hill Seller in which such Seller Principal
owns any equity interests, shall indemnify and hold harmless any iStar Group
Member from and against any and all Damages incurred by such iStar Group Member
arising from:

 

43

 

(i)                                     any failure by such Oak Hill Seller or such Seller
Principal to perform any covenants or other agreements of such Oak Hill Seller
or Seller Principal contained in Article I;

 

(ii)                                  any breach of any representation or warranty
of such Oak Hill Seller or such Seller Principal contained in Article II; or

 

(iii)                               the allegation in writing by any third party
of the existence of any liability, obligation, lease, agreement, contract or other
commitment or state of facts which, if such allegation were true, would
constitute a breach by such Oak Hill Seller or Seller Principal of any
representation or warranty of such Oak Hill Seller or Seller Principal
contained in Article II.

 

(b)                                 Each Oak Hill Seller and each Seller
Principal, jointly and severally, shall indemnify and hold harmless any iStar
Group Member from and against any and all Damages incurred by such iStar Group
Member, directly (or indirectly as a result of Damages suffered by an Oak Hill
Entity), arising from:

 

(i)                                     any failure by an Oak Hill Party to perform
any of its covenants or other agreements contained herein, other than covenants
or other agreements for which the iStar Group Members are entitled to
indemnification pursuant to Section 9.2(a)(i);

 

(ii)                                  any breach of any representation or warranty
of an Oak Hill Party contained in Article III or in any Closing Certificate
delivered by an Oak Hill Party in connection herewith;

 

(iii)                               the allegation in writing by any third party
of the existence of any liability, obligation, lease, agreement, contract or
other commitment or state of facts which, if such allegation were true, would
constitute a breach by such Oak Hill Party of any representation or warranty of
such Oak Hill Seller or Seller Principal contained in Article III;

 

(iv)                              without duplicating Damages recovered under
Section 9.2(b)(ii), any and all Taxes imposed upon or assessed against any Oak
Hill Entity or Subsidiary or their respective assets (A) with respect to any
pre-Closing period, (B) by reason of having been a member of an “affiliated
group” (as defined in Section 1504(a) of the Code) or any consolidated,
combined or unitary state or local Tax Return group, or (C) under any tax
sharing, allocation or similar agreement or any indemnification or
reimbursement agreement with respect to Taxes; or

 

(v)                                 any Damages incurred in respect of the
failure of the OHAI Note or the OHA Liabilities to be paid and discharged by
the applicable Oak Hill Party.

 

9.3                                 Indemnification by the Parent.  The
Parent will indemnify and hold harmless any Seller Group Member from and
against any and all Damages incurred by such Seller Group Member arising from:

 

44

 

(i)                                     any failure by any iStar Party to perform any
of its covenants or other agreements contained herein;

 

(ii)                                  any breach of any representation or warranty
of any iStar Party contained in Article IV or in any Closing Certificate delivered
by any iStar Party in connection herewith; or

 

(iii)                               the allegation in writing by any third party
of the existence of any liability, obligation, lease, agreement, contract or other
commitment or state of facts which, if such allegation were true, would
constitute a breach by an iStar Party of any representation or warranty of it contained
herein.

 

9.4                                 Notification
of Claims.  

 

(a)                                  A Person that may be entitled to be
indemnified under this Agreement (the “Indemnified Party”), shall
promptly notify the party or parties liable for such indemnification (the “Indemnifying
Party”) in writing (a “Claim Notice”) of any pending or threatened
claim or demand that the Indemnified Party has determined, has given or could
reasonably be expected to give rise to a right of indemnification under this
Agreement (including a pending or threatened claim or demand asserted by a
third party against the Indemnified Party, such claim being a “Third Party
Claim”), describing in reasonable detail the facts giving rise to any claim
for indemnification hereunder and shall include (if then known) the amount or
the method of computation of the amount of such claim, and a reference to the
provision of this Agreement; provided, however, that the failure
to provide such notice shall not release the Indemnifying Party from any of its
obligations under this Article IX except to the extent the Indemnifying Party
is prejudiced by such failure, it being understood that notices for claims in
respect of a breach of a representation, warranty, covenant or agreement must
be delivered prior to the expiration of any applicable survival period
specified in Section 9.1 for such representation or warranty (as contemplated
by Section 9.1).

 

(b)                                 In the case of any Third Party Claim as to
which indemnification is sought by an Indemnified Party, the Indemnifying Party
shall have 30 Business Days after receipt of a Claim Notice to notify the
Indemnified Party that it elects to conduct and control such Third Party Claim.  If the Indemnifying Party elects to conduct
and control such Third Party Claim, the Indemnifying Party shall agree promptly
to reimburse the Indemnified Party for the full amount of any Damages resulting
from such Third Party Claim, except fees and expenses of counsel for the
Indemnified Party incurred after the assumption of the conduct and control of
such Third Party Claim by the Indemnifying Party.  If the Indemnifying Party does not give the
foregoing notice, the Indemnified Party shall have the right to conduct and
control such Third Party Claim, provided, that (x) the Indemnified Party shall
permit the Indemnifying Party to participate in such conduct or settlement
through counsel chosen by the Indemnifying Party, but the fees and expenses of
such counsel shall be borne by the Indemnifying Party, and (y) the Indemnified
Party may not compromise or settle such Third Party Claim without the consent
of the Indemnifying Party (which consent will not be unreasonably withheld or
delayed), unless (i) there is no finding or admission of any violation of Law
by the Indemnifying Party or any violation by the Indemnifying Party of the
rights of any Person and no effect on any other claims that may be made against
the Indemnifying Party, (ii) the sole relief provided is monetary Damages that
are paid in full by the Indemnified Party, (iii) the Indemnifying Party shall
have no

 

45

 

liability with respect to
any compromise or settlement and (iv) such settlement includes an unconditional
release in favor of the Indemnifying Party by the third-party claimant from all
liability with respect to such claim.  If
the Indemnifying Party gives the foregoing notice, subject to the first and
second sentences of this Section 9.4(b), the Indemnifying Party shall have the
right, at the sole expense of the Indemnifying Party, to conduct and control,
such Third Party Claim with counsel reasonably acceptable to the Indemnified
Party, and the Indemnified Party shall cooperate with the Indemnifying Party in
connection therewith, provided, that (x) the Indemnifying Party shall permit
the Indemnified Party to participate in such conduct or settlement through
counsel chosen by the Indemnified Party, but the fees and expenses of such
counsel shall be borne by the Indemnified Party, and (y) the Indemnifying Party
may not compromise or settle any such Third Party Claim without the consent of
the Indemnified Party (which consent will not be unreasonably withheld or
delayed) unless (i) there is no finding or admission of any violation of Law by
the Indemnified Party or any violation by the Indemnified Party of the rights
of any Person and no effect on any other claims that may be made against the
Indemnified Party, (ii) the sole relief provided is money Damages that are paid
in full by the Indemnifying Party, (iii) the Indemnified Party shall have no
liability with respect to any compromise or settlement and (iv) such settlement
includes an unconditional release in favor of the Indemnified Party by the
third-party claimant from all liability with respect to such claim.  The parties hereto shall use their reasonable
commercial efforts to minimize any Damages from claims by third parties and
shall act in good faith in responding to, defending against, settling or
otherwise dealing with such claims, notwithstanding any dispute as to liability
under this Article IX.

 

(c)                                  Each of the parties agrees and acknowledges
that for the purposes of this Section 9.4, Oak Hill Advisors GenPar, L.P. shall
have the right to act as the Indemnifying Party with respect to any claim
arising under Section 9.2(b) of this Agreement; provided, however,
that such an election by Oak Hill Advisors GenPar, L.P. shall not limit the
liability of any other Oak Hill Party under this Article IX.

 

9.5                                 Limitations
on Indemnification.

 

(a)                                  No iStar Group Member shall be entitled to be
indemnified (1) pursuant to Sections 9.2(a)(ii) or (iii) or Sections 9.2(b)(ii)
or (iii), or (2) for any breach of the covenants set forth in Sections 5.2 or 5.5,
as the case may be, unless and until the aggregate of all Damages for which the
iStar Group Members are entitled to be indemnified under Sections 9.2(a)(ii) and
(iii) and Sections 9.2(b)(ii) and (iii) for any breach of the covenants
set forth in Sections 5.2 and 5.5 shall exceed $1,000,000 (the “Deductible
Amount”), after which the iStar Group Members shall be entitled to be
indemnified for the aggregate cumulative amount of all such Damages in excess
of the Deductible Amount; provided, however, that each iStar
Group Member shall be entitled to be indemnified for all Damages on a
dollar-for-dollar basis from the first dollar of Damages, without regard to the
Deductible Amount, incurred as a result of any breach of the representations
and warranties set forth in Sections 2.1(a), 2.1(b), 2.2, 2.3, 2.9, 3.1(a),
3.1(b), 3.2(a), 3.3, 3.4, 3.15, 3.23, and 3.24 (the “Seller Deductible Exclusions”).

 

(b)                                 The iStar Group Members, collectively, shall
not be entitled to indemnification pursuant to this Agreement to the extent
that such indemnification in the aggregate exceeds $50,000,000 (the “Cap
Amount”) (other than for Damages in respect of the Seller Deductible Exclusions,
or with respect to Section 9.2(a)(i) or Sections 9.2(b)(i), (iv) or (v) in
which case the

 

46

 

aggregate amount of all
indemnification under this Agreement (including for matters which are subject
to the Cap Amount) shall not exceed the Purchase Price.

 

(c)                                  No Seller Group Member shall be entitled to
be indemnified pursuant to Sections 9.3(ii) or (iii) unless and until the
aggregate of all Damages for which the Seller Group Members are entitled to be
indemnified under Sections 9.3(ii) and (iii) shall exceed the Deductible
Amount, after which the Seller Group Members shall be entitled to be
indemnified for the aggregate cumulative amount of all such Damages in excess
of the Deductible Amount; provided, however, that each Seller
Group Member shall be entitled to be indemnified for all Damages on a
dollar-for-dollar basis from the first dollar of Damages, without regard to the
Deductible Amount, incurred as a result of any breach of the representations
and warranties set forth in Sections 4.1(a), 4.2(a), 4.5, 4.9, 4.14, and 4.15 (the
“iStar Deductible Exclusions”).

 

(d)                                 The Seller Group Members, collectively, shall
not be entitled to indemnification pursuant to this Agreement to the extent
that such indemnification in the aggregate exceeds the Cap Amount (other than
for Damages in respect of the iStar Deductible Exclusions, or with respect to
Section 9.3(i) in which case the aggregate amount of all indemnification
under this Agreement (including for matters which are subject to the Cap
Amount) shall not exceed the Purchase Price), except in respect of Section 4.5).

 

(e)                                  Without limitation to the foregoing, for
purposes of Sections 9.2(b)(ii) and (iii) and Sections 9.3(ii) and (iii),
in determining the amount of any Damages in connection with any inaccuracy of a
representation and warranty (but not for purposes of determining whether any
such inaccuracy has occurred), any materiality or “Material Adverse Effect”
qualifier in such representation or warranty will be disregarded.

 

(f)                                    The parties acknowledge and agree that after
the Closings, the indemnification provisions contained in Sections 9.2(a),
9.2(b) and 9.3 shall be the sole and exclusive remedy for damages or claims
(whether directly or by way of contribution) arising out of or caused by the
breach of any of the representations, warranties, covenants or agreements of
the parties contained in this Agreement, except for any remedies that may be available
with respect to claims arising out of fraud. 
For purposes of clarity, the parties acknowledge and agree that the
foregoing shall not limit any remedies for damages or claims arising out of the
ongoing relationships of the parties.

 

(g)                                 In no event will (i) the RBO Seller or Okun
be liable for any Damages arising under Section 9.2(b) with respect to GenPar
II or GenPar II LLC, (ii) any Oak Hill Seller or Seller Principal, other
than OHAMI and August, be liable for any Damages arising under Section 9.2(b)
as a result of a breach of a representation or warranty contained in Section
3.24, or (iii) the RBO Seller, the CSW Seller, Okun or Wernicke be liable
for any Damages arising under Article IX if the Subsequent Closing has not
occurred in accordance with Section 1.1 of this Agreement.

 

(h)                                 Notwithstanding the preamble to Article III,
in no event will any Oak Hill Seller or Seller Principal be liable for more
than the percentage interest set forth opposite its or his name in Section
9.5(h) of the Disclosure Letter of any Damages arising under Section 9.2(b)
(other than OHAMI and August in the case of Section 3.24).  The iStar Parties agree to proceed against
the Oak Hill Parties at the same time in connection with any action arising
under Section 9.2(b).

 

47

 

(i)                                     The iStar Parties acknowledge and agree that in
respect of any damages or claims arising out of or caused by a breach of a
covenant contained in Section 5.1(b)(viii) or Section 5.1(b)(ix) or
Section 6.9 or a breach of a representation or warranty contained in Sections
3.15(j), 3.15(k) or 3.15(l) by any Oak Hill Seller or Seller Principal, their
recourse shall be limited to such Oak Hill Seller’s or Seller Principal’s direct
and indirect interests (including, without limitation, any distributions and
allocations relating thereto, in each case after the date of such claims) in
the Oak Hill Entities and no Oak Hill Seller or Seller Principal shall have any
other liability with respect thereto, and none of the iStar Parties shall have
recourse against any other assets of the Oak Hill Sellers or Seller Principals
with respect thereto.

 

9.6                                 Tax Treatment of Indemnity Payments.  It
is the intention of the parties to treat any indemnity payment made under this Agreement
as an adjustment to the purchase price for all federal, state, local and
foreign income Tax purposes, and the parties agree to file their income Tax
Returns accordingly (unless otherwise required by applicable Tax Laws).

 

9.7                                 Indemnity Payments by Seller Group Members.  Any
Seller Group Member shall be entitled, at its sole discretion, to satisfy all
or a portion of any claim made for indemnification by an iStar Group Member by
surrendering to such iStar Group Member iStar Common Stock, which shall be
deemed to have a value equal to the average VWAP of the iStar Common Stock over
the 15 Trading Days immediately preceding delivery of the iStar Shares by such
Seller Group Member.

 

ARTICLE X

 

TERMINATION

 

10.1                           Termination.  This
Agreement may be terminated at any time prior to the Initial Closing Date:

 

(a)                                  by mutual consent of the parties hereto; or

 

(b)                                 by the iStar Parties, if there has been a
material violation or breach by any Oak Hill Party or any Oak Hill Entity of
any representation, warranty, covenant or agreement contained in this
Agreement, provided, that written notice of such material violation or breach
shall have been given to such Oak Hill Party or such Oak Hill Entity, as
applicable, and such material violation or breach shall not have been cured
within 30 days of receipt of such notice (provided, further, that, to exercise
its rights under this Section 10.1(b) for any particular violation or breach, the
iStar Parties must terminate this Agreement within 15 Business Days after the
cure period provided for in this Section 10.1(b) if not cured); or

 

(c)                                  by all of the Oak Hill Parties and the Oak
Hill Entities, if there has been a material violation or breach by the iStar
Parties of any representation, warranty, covenant or agreement contained in
this Agreement, provided, that written notice of such material violation or
breach shall have been given to the iStar Parties and such material violation
or breach shall not have been cured within 30 days of receipt of such notice
(provided, further, that, to exercise their rights under this Section 10.1(c)
for any particular violation or breach, the Oak Hill Parties and the Oak Hill
Entities must terminate this Agreement within 15 Business Days after the end of
the cure period provided for in this Section 10.1(c) if not cured); or

 

48

 

(d)                                 by either the iStar Parties, on one hand, or
all of the Oak Hill Parties and the Oak Hill Entities, on the other hand, if
the Initial Closing shall not have occurred on or by April 1, 2005.

 

10.2                           Effects of Termination.  Except
as otherwise provided in this Section 10.2, in the event of a termination of
this Agreement pursuant to this Article X (i) all further obligations of
the parties under this Agreement shall terminate, (ii) the parties will
remain subject to the provisions of the November Confidentiality Agreement and
February Confidentiality Agreement, (iii) no party shall have any right
under this Agreement against any other party except as set forth in Section 11.1,
and (iv) each party shall bear its own costs and expenses; provided, however,
that the termination of this Agreement under this Article X shall not relieve
any party of liability for any breach of this Agreement prior to the date of
termination, or constitute a waiver of any claim with respect thereto; provided, further,
that Sections 9.5(g), 9.5(h) and 9.5(i) shall survive such termination and
apply with respect to any such liability.

 

10.3                           Termination Following Initial Closing but
Prior to Subsequent Closing. This Agreement may be terminated with
respect to the Okun Group Sellers and the Wernicke Group Sellers by either the
iStar Parties, on one hand, and Okun Group Sellers and Wernicke Group Sellers,
on the other hand, if the Subsequent Closing shall not have occurred by May 2,
2005; provided, however, that the termination of this Agreement
under this Article X shall not relieve any party of liability for any breach of
this Agreement prior to the date of termination, or constitute a waiver of any
claim with respect thereto; provided, further, that Sections 9.5(g), 9.5(h) and
9.5(i) shall survive such termination and apply with respect to any such
liability.

 

ARTICLE XI

 

MISCELLANEOUS

 

11.1                           Expenses of the Transaction.  Each
of the parties hereto agrees to pay such party’s own fees and expenses in
connection with this Agreement and the Related Agreements and the transactions
contemplated hereby and by the Related Agreements including, without
limitation, legal and accounting fees and expenses.  The fees and expenses of the Oak Hill
Entities in connection with this Agreement and the Related Agreements and the
transactions contemplated hereby and by the Related Agreements shall be borne
solely by the Seller Principals or the Oak Hill Sellers.

 

11.2                           Notices.  All
notices or other communications required or permitted hereunder shall be in
writing and shall be deemed given or delivered (i) when delivered personally or
by private courier, (ii) when actually delivered by registered or certified
United States mail, return receipt requested, or (iii) when sent by facsimile
transmission (provided, that it is confirmed by a means specified in clause (i)
or (ii)), addressed as follows:

 

49

 

	
  If to the iStar Parties
  to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  iStar Financial Inc.

  	
   

  	
   

  
	
   

  	
  1114 Avenue of the
  Americas, 27th Floor

  	
   

  	
   

  
	
   

  	
  New York, New York 10036

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Jay Nydick

  	
   

  
	
   

  	
   

  	
  Nina Matis

  	
   

  
	
   

  	
   

  	
  Andrew Richardson

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 930-9494

  	
   

  
	
   

  	
  Telephone:

  	
  (212) 930-9400

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Katten Muchin Zavis
  Rosenman

  	
   

  	
   

  
	
   

  	
  575 Madison Avenue

  	
   

  	
   

  
	
   

  	
  New York, New York 10022

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Henry Bregstein, Esq.

  	
   

  
	
   

  	
   

  	
  David H. Landau, Esq.

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 940-8776

  	
   

  
	
   

  	
  Telephone:

  	
  (212) 940-8800

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If to any Oak Hill Party
  or Oak Hill Entity to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Oak Hill Advisors, L.P.

  	
   

  	
   

  
	
   

  	
  Park Avenue Tower

  	
   

  	
   

  
	
   

  	
  65 East 55th
  Street

  	
   

  	
   

  
	
   

  	
  New York, New York 10022

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Glenn R. August

  	
   

  
	
   

  	
   

  	
  William H. Bohnsack, Jr.

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 838-8411

  	
   

  
	
   

  	
  Telephone:

  	
  (212) 326-1500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Paul, Weiss, Rifkind,
  Wharton & Garrison LLP

  	
   

  	
   

  
	
   

  	
  1285 Avenue of the
  Americas

  	
   

  	
   

  
	
   

  	
  New York, New York 10019

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Kenneth M. Schneider, Esq.

  	
   

  
	
   

  	
   

  	
  Marco V. Masotti, Esq.

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 757-3990

  	
   

  
	
   

  	
  Telephone:

  	
  (212) 373-3000

  	
   

  
					

 

or to such other address as
such party may indicate by a notice delivered to the other parties hereto.

 

11.3                           No Modification Except in Writing.  This
Agreement shall not be changed, modified, or amended except by a writing signed
by the party to be affected by such change, modification or amendment, and this
Agreement may not be discharged except by performance

 

50

 

in accordance with its terms
or by a writing signed by the party to which performance is to be rendered.

 

11.4                           Entire Agreement.  This
Agreement together with the Related Agreements, Disclosure Letters, Appendices
and Exhibits hereto and the November Confidentiality Agreement (except that the
provisions of the February Confidentiality Agreement pertaining to
non-solicitation of employees, officers and directors and to transfers or
purchases of iStar common stock are hereby terminated and of no further force
and effect), sets forth the entire agreement and understanding among the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of every kind and nature among them
with respect to such subject matter.

 

11.5                           Severability.  If
any provision of this Agreement or the application of any provision hereof to
any person or circumstances is held invalid, the remainder of this Agreement
and the application of such provision to other persons or circumstances shall
not be affected unless the provision held invalid shall substantially impair
the benefits of the remaining portions of this Agreement.

 

11.6                           Assignment.  No
party will assign this Agreement or any rights hereunder, or delegate any
obligations hereunder, without the prior consent of the other parties, except
that, after the Initial Closing Date, the iStar Parties may assign their rights
(but not their obligations) under this Agreement to any of their respective
Affiliates or to its successor or transferee in any merger, business
combination or sale or other disposition of material assets.  This Agreement will inure to the benefit of
the parties, and will be binding upon the parties and their respective heirs,
executors, administrators, permitted successors and assigns.

 

11.7                           Governing
Law; Jurisdiction.

 

(a)                                  This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York applicable to
contracts made and to be performed wholly within said State, without giving
effect to the conflict of laws principles thereof.

 

(b)                                 Each party to this Agreement irrevocably
submits to the exclusive jurisdiction of (i) the courts of the State of New
York located in New York County and (ii) the United States District Court for
the Southern District of New York, for the purposes of any Action arising out
of this Agreement or the transactions contemplated hereby.

 

11.8                           Headings; References.  The
headings appearing in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
and intent of this Agreement or any of the provisions hereof.  Any reference in this Agreement (including in
any Exhibit, Appendix or Disclosure Letter hereto) to a “Section,” “Article,”
or “Exhibit” shall mean a Section, Article or Exhibit of or to this Agreement
unless expressly stated otherwise.

 

11.9                           Interpretation.  In
this Agreement, (a) words used herein regardless of the gender specifically
used shall be deemed and construed to include any other gender, masculine,
feminine or neuter, as the context shall require, and (b) all terms defined in
the singular shall have the same meanings when used in the plural and vice versa.  Any statute defined or referred

 

51

 

to herein or in any
agreement or instrument that is referred to herein means such statute as from
time to time amended, modified or supplemented, including (in the case of
statutes) by succession of comparable successor statutes.  References to a Person are also its
predecessors and permitted successors and assigns.

 

11.10                     Third Parties. 
Except as expressly provided herein or as otherwise agreed by the
parties hereto, the provisions of this Agreement are solely for the benefit of
the parties hereto and shall not inure to the benefit of any third party.

 

11.11                     Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which taken together shall constitute a single
agreement.

 

[Signature page follows]

 

52

 

IN
WITNESS WHEREOF,
each of the parties hereto has executed this Agreement on the day and year
first above written.

 

iSTAR
PARTIES:

 

	
   

  	
  iSTAR FINANCIAL INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jay S. Sugerman

  	
   

  
	
   

  	
  Name:
  Jay S. Sugerman

  	
   

  
	
   

  	
  Title:
  Chairman & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  iSTAR ALPHA TRS INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jay S. Sugerman

  	
   

  
	
   

  	
  Name:
  Jay S. Sugerman

  	
   

  
	
   

  	
  Title:
  Chairman & CEO

  	
   

  

 

 

OAK HILL
ENTITIES:

 

	
   

  	
  OAK HILL ADVISORS, L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Oak
  Hill Advisors MGP, Inc.,

  	
   

  
	
   

  	
   

  	
  Managing
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OAK HILL SECURITIES GENPAR II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Oak
  Hill Securities MGP II, Inc.,

  	
   

  
	
   

  	
   

  	
  General
  Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OAK HILL CREDIT ALPHA GENPAR, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Oak
  Hill Credit Alpha MGP, LLC,

  	
   

  
	
   

  	
   

  	
  General
  Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OHSF GP PARTNERS II, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Glenn
  R. August

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OAK HILL CREDIT ALPHA MGP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

OAK HILL
SELLERS:

 

	
   

  	
  OAK HILL ADVISORS MGP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WHB, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William H. Bohnsack
  Jr.

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KRASE, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott D. Krase

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RBO, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Okun

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CSW, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carl L. Wernicke

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

	
   

  	
  GA LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OAK HILL ASSET MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn R. August

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

SELLER PRINCIPALS:

 

 

	
   

  	
  /s/
  Glenn R. August

  	
   

  
	
   

  	
  Glenn
  R. August

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  William H. Bohnsack Jr.

  	
   

  
	
   

  	
  William
  H. Bohnsack, Jr.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Scott D. Krase

  	
   

  
	
   

  	
  Scott
  D. Krase

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Robert Okun

  	
   

  
	
   

  	
  Robert
  Okun

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Carl L. Wernicke

  	
   

  
	
   

  	
  Carl
  L. Wernicke

  	
   

  

 

 

APPENDIX A

 

DEFINITIONS

 

The following terms when used in the Agreement shall
have the respective meanings ascribed to them below:

 

“Action” shall mean any action, suit, claim,
litigation, proceeding, arbitration, audit, investigation, or hearing (whether
civil, criminal, administrative, investigative or informal) commenced, brought,
conducted or heard by or before, any Governmental Authority.

 

“Affiliate” shall mean, with respect to a
specified Person, any other Person who, directly or indirectly, controls, is
controlled by, or is under common control with such specified Person.  As used in this definition, the term “control”
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
ownership of voting securities, by contract or otherwise.

 

“Affiliated Person” shall mean, with respect to
a Person, any director, officer, agent, partner, member or employee of such
Person.

 

“Agreement” has the meaning ascribed to such
term in the Preamble hereto.

 

“Allocation Percentages” has the meaning
ascribed to such term in Section A-1 of the Disclosure Letter.

 

“Amended and Restated GenPar II LLC Operating
Agreement” shall mean the Amended and Restated Operating Agreement of
GenPar II LLC amended in accordance with Section 5.9 and otherwise in form
and substance reasonably satisfactory to the parties.

 

“Amended and Restated GenPar II LP Agreement”
shall mean the Amended and Restated Limited Partnership Agreement of GenPar II amended
in accordance with Section 5.9 and otherwise in form and substance reasonably
satisfactory to the parties.

 

“Amended and Restated GenPar Alpha LLC Operating
Agreement” shall mean the Amended and Restated Operating Agreement of
GenPar Alpha LLC amended in accordance with Section 5.9 and otherwise in
form and substance reasonably satisfactory to the parties.

 

“Amended and Restated GenPar Alpha LP Agreement”
shall mean the Amended and Restated Limited Partnership Agreement of GenPar Alpha
amended in accordance with Section 5.9 and otherwise in form and substance
reasonably satisfactory to the parties.

 

“Amended and Restated LP Agreements” shall mean
the Amended and Restated OHA LP Agreement, the Amended and Restated GenPar II
LP Agreement and the Amended and Restated GenPar Alpha LP Agreement.

 

“Amended and Restated OHA LP Agreement” shall
mean the Fifth Amended and Restated Limited Partnership Agreement of OHA in
substantially the form attached hereto as Exhibit 2.

 

A-1

 

“Amended and Restated Operating Agreements”
shall mean the Amended and Restated GenPar II LLC Operating Agreement and the
Amended and Restated GenPar Alpha LLC Operating Agreement.

 

“Audited Fund Financial Statements” has the
meaning ascribed thereto in Section 3.19(f).

 

“August” has the meaning ascribed to such term
in the Preamble hereto.

 

“August Group Sellers” shall mean August and
the GRA Seller.

 

“Bohnsack” has the meaning ascribed to such
term in the Preamble hereto.

 

“Bohnsack Group Sellers” shall mean Bohnsack
and the WHB Seller.

 

“Business Day” shall mean a day (other than a
Saturday or Sunday), on which commercial banks are open for business in New
York, New York.

 

“Cap Amount” has the meaning ascribed to such
terms in Section 9.5(b).

 

“Claim Notice” has the meaning ascribed to such
term in Section 9.4(a).

 

“Closing Certificate” has the meaning ascribed
to such term in Section 9.1.

 

“Closing Statement” has the meaning set forth
in Section 1.6.

 

“Closings” has the meaning ascribed to such
term in Section 1.1.

 

“COBRA” has the meaning ascribed to such term
in Section 3.21(h).

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

“Code
Plan” shall mean a plan (within the meaning of Section 4975 of the Code)
which is subject to Section 4975 of the Code.

 

“Consulting Agreement” has the meaning ascribed
to such term in Section 6.4.

 

“Content” has the meaning ascribed to such term
in the definition of Intellectual Property.

 

“Contracts” shall mean all leases, including,
without limitation, Real Property Leases, licenses, contracts, including,
without limitation, Investment Advisory Contracts, agreements, indentures,
promissory notes, guarantees, arrangements, commitments and understandings of
any kind, whether written or oral, to which any Oak Hill Entity or Subsidiary
is a party or by which any Oak Hill Entity or Subsidiary or any of the assets
of any Oak Hill Entity or Subsidiary may be bound, and all rights arising under
any of them.

 

 “Copyrights” has the meaning ascribed
to such term in the definition of Intellectual Property.

 

“CSW
Seller” has the meaning ascribed to such term in the Preamble hereto.

 

A-2

 

“Daily iStar Common Stock Price” shall mean, in
respect of any Trading Day, the VWAP on such Trading Day; provided, however,
(i) if the VWAP on such Trading Day is greater than $45.00, “Daily iStar
Common Stock Price” for such Trading Day shall mean $45.00 and (ii) if the
VWAP on such Trading Day is less than $39.00, “Daily iStar Common Stock
Price” for such Trading Day shall mean $39.00.

 

“Damages” shall mean losses, obligations,
reduction in value of the Purchaser Partnership Interests or the Purchaser LLC
Interests from the Purchase Price, liabilities, settlement payments, awards,
judgments, fines, penalties, damages, deficiencies, Taxes and reasonable
expenses and costs, including reasonable attorneys’ and auditors’ fees (and any
reasonable experts’ fees) and court costs. 
“Damages” shall not include punitive damages or consequential damages,
except to the extent a reduction in value of the Purchaser Partnership
Interests or the Purchaser LLC Interests from the Purchase Price would be considered
consequential damages.

 

“Deductible Amount” has the meaning ascribed
thereto in Section 9.5(a).

 

“Disclosure Letter” shall mean that certain letter,
dated the date hereof from the Oak Hill Parties to iStar, qualifying the
representations and warranties contained in Article II and Article III.

 

“Domain Names” has the meaning ascribed to such
term in the definition of Intellectual Property.

 

“Employee Benefit Plan” shall mean any of the
following (whether written, unwritten or terminated):  (a) any “employee welfare benefit plan,” as
defined in Section 3(1) of ERISA, including, but not limited to, any medical
plan, life insurance plan, short-term or long-term disability plan, dental
plan, and sick leave; (b) any “employee pension benefit plan,” as defined in
Section 3(2) of ERISA, including, but not limited to, any excess benefit, top
hat or deferred compensation plan or any nonqualified deferred compensation or
retirement plan or arrangement or any qualified defined contribution or defined
benefit plan; or (c) any other plan, policy, program, arrangement or agreement
which provides employee benefits or benefits to any current or former employee,
dependent, beneficiary, director, independent contractor or like person,
including, but not limited to, any severance agreement or plan, personnel
policy, vacation time, holiday pay, service award, moving expense reimbursement
programs, tool allowance, safety equipment allowance, material fringe benefit
plan or program, bonus or incentive plan, stock option, restricted stock, stock
bonus or deferred bonus plan, salary reduction, change-of-control or employment
agreement (or consulting agreement with a former employee).

 

“Employee Benefit Plan of the Oak Hill Entities”
shall mean “Oak Hill Employee Benefit Plan” as set forth below.

 

“Environment” shall mean soil, surface waters,
ground waters, land, stream, sediments, surface
or subsurface strata and ambient air.

 

“Environmental Condition” shall mean any
condition with respect to the Environment on or off any Facility caused by a
Release of Hazardous Substances or violation of Environmental Laws, whether or
not yet discovered, which could or does result in any Damages, including,

 

A-3

 

without limitation, any
condition resulting from the operation of the business of any Oak Hill Entity
or Subsidiary or the operation of the business of any subtenant or occupant of
any Facility or that of other property owners or operators in the vicinity of
any Facility or any activity or operation formerly conducted by any person or
entity on or off such Facility.

 

“Environmental Laws” shall mean all Laws
relating to the pollution of or protection of the Environment, from
contamination by, or relating to injury to, or the protection of, real or
personal property or human health or the Environment, including, without limitation,
all valid and lawful requirements of courts and other Governmental Authorities
pertaining to reporting, licensing, permitting, investigation, remediation and
removal of, emissions, discharges, releases or threatened releases of Hazardous
Substances, chemical substances, pesticides, petroleum or petroleum products,
pollutants, contaminants or hazardous or toxic substances, materials or wastes,
into the Environment, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes.

 

“Environmental Report” shall mean any report,
study, assessment, audit, or other similar document that addresses any issue of
actual or potential noncompliance with, actual or potential liability under or
cost arising out of, or actual or potential impact on business in connection
with, any Environmental Law or any proposed or anticipated change in or
addition to any Environmental Law.

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended.

 

“ERISA Plan” shall mean an employee benefit
plan (as defined in Section 3(3) of ERISA) which is subject to Title I of
ERISA.

 

“Exchange Act” shall mean the U.S. Securities
Exchange Act of 1934, as amended, or any successor law, and regulations and
rules issued under that Act or any successor law.

 

“Excluded Assets” shall mean (a) the interests
attributable to carried interest, incentive fees or other performance based
allocations, distributions or compensation of the general partner or investment
manager special purpose vehicles relating to Oak Hill Special Opportunities
GenPar, L.P., Oak Hill CLO Management I, L.L.C., a Delaware limited liability
company, Oak Hill CLO Management II, L.L.C., a Delaware limited liability
company, and Oak Hill CLO Management III, L.L.C., a Delaware limited liability
company, (b) the fractional interests in four airplanes indirectly owned by
August and (c) the passive investments by the Oak Hill Parties or their
Affiliates for their own account (i) not arising directly or indirectly from
the business of the Partnership or (ii) arising from the activities on behalf
of Keystone, Inc., other Oak Hill – related investment management business and
related parties and co-investment entities thereof.

 

“Facility” shall mean any facility that is now
or has heretofore been owned, leased or used in connection with the business of
any Oak Hill Entity or Subsidiary.

 

“February Confidentiality Agreement” shall mean
the Confidentiality Agreement, dated February 3, 2005, between OHA and the
Parent.

 

A-4

 

“Fund Documents” shall mean the offering
documents with respect to offerings and sales of the interests in a Fund and
all forms, reports, registration statements, schedules or other filings made by
an Oak Hill Entity or Subsidiary with federal, state or securities
self-regulatory organizations with respect to a Fund.

 

“Funds” shall mean Oak Hill Securities Fund,
L.P., Oak Hill Securities Fund II, L.P., Oak Hill Securities Fund Liquidating
Trust, Oak Hill Special Opportunities Fund, L.P., Oak Hill Special
Opportunities Fund (Management), L.P., Oak Hill Credit Partners I, Limited, Oak
Hill Credit Partners II, Limited, Oak Hill Credit Partners III, Limited, Oak
Hill Credit Partners IV, Limited, VP CBO, Limited, SMBC MVI SPC, Oak Hill
Credit Alpha Fund, LP, Oak Hill Credit Alpha Fund (Offshore), Ltd. and
separately managed accounts (the “Separately Managed Accounts”) entered
into with The Leland Stanford Junior University, Lerner Enterprises Limited
Partnership, Cardinal Investment Partners I, L.P., and P&PK Family Limited
Partnership.

 

“GAAP” shall mean United States generally
accepted accounting principles.

 

“GA LLC” has the meaning ascribed thereto in
the Preamble hereto.

 

“GenPar II” has the meaning ascribed to such
term in the Preamble hereto.

 

“GenPar II Interests” has the meaning ascribed
to such term in Section 3.3.

 

“GenPar II LLC” has the meaning ascribed to
such term in the Preamble hereto.

 

“GenPar II LLC Interests” has the meaning
ascribed to such term in the Recitals hereto.

 

“GenPar II LLC Operating Agreement” shall mean
the limited liability company agreement of GenPar LLC, dated September 28, 1999.

 

“GenPar II LP Agreement” shall mean the
agreement of limited partnership of GenPar II, dated as of September 28, 1999.

 

“GenPar Alpha” has the meaning ascribed to such
term in the Preamble hereto.

 

“GenPar Alpha Interests” has the meaning
ascribed to such term in Section 3.3.

 

“GenPar Alpha LLC” has the meaning ascribed to
such term in the Preamble hereto.

 

“GenPar Alpha LLC Interests” has the meaning
ascribed to such term in the Recitals hereto.

 

“GenPar Alpha LLC Operating Agreement” shall
mean the limited liability company agreement of GenPar Alpha LLC, dated as of
January 1, 2004.

 

“GenPar Alpha LP Agreement” shall mean the
amended and restated agreement of limited partnership of GenPar Alpha, dated as
of January 1, 2004.

 

“GenPar Interests” has the meaning ascribed to
such term in Section 3.3.

 

A-5

 

“Governmental Authority” shall mean any (i)
federal, state, local, provincial, municipal, foreign, or other government,
(ii) governmental or quasi-governmental authority of any nature or (iii) other
body exercising any statutory, administrative, judicial, arbitrative,
legislative, police, regulatory, or taxing authority or power.

 

“Governmental Documents” shall mean all reports
and registration statements filed, or required to be filed, by Law, by contract
or otherwise, by an entity pursuant to the authority of any Governmental
Authority.

 

“Governmental Permits” shall mean all licenses,
franchises, registrations, permits, privileges, immunities, approvals and other
authorizations from a Governmental Authority.

 

“GRA Seller” has the meaning ascribed to such
term in the Preamble hereto.

 

“Hazardous Substance” shall mean any substance
whether solid, liquid or gaseous in nature:

 

(i)                                     the presence of which requires
notification, investigation, or remediation under any Environmental Law;

 

(ii)                                  which is defined as “toxic”, a “hazardous
waste”, “hazardous material” or “hazardous substance” or “pollutant” or “contaminant”
under any Environmental Laws;

 

(iii)                               which is toxic, explosive, corrosive,
flammable, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated by any Governmental Authority;

 

(iv)                              which contains gasoline, diesel fuel or
other petroleum hydrocarbons or volatile organic compounds;

 

(v)                                 which contains polychlorinated byphenyls
(PCBs) or asbestos or urea formaldehyde foam insulation; or

 

(vi)                              which contains or emits radioactive
particles, waves or materials, including radon gas.

 

 “Immediate
Family” shall mean, with respect to any individual, (a) such individual’s
spouse, parents, siblings and children, (b) any spouse, parent, sibling or
child of any Person specified in clause (a) above and (c) estates, trusts,
partnerships and other entities and legal relationships of which a majority in
interest of the beneficiaries, members, owners, investors or participants at
all times in question are, directly or indirectly, one or more of the Persons
described above and/or such individual.

 

“Indemnified Party” has the meaning ascribed to
such term in Section 9.4(a).

 

“Indemnifying Party” has the meaning ascribed
to such term in Section 9.4(a).

 

“Initial Cash Purchase Price” has the meaning
ascribed to such term in Section 1.2.

 

“Initial Closing” has the meaning ascribed to
such term in Section 1.1.

 

A-6

 

“Initial Closing Date” has the meaning ascribed
to such term in Section 1.1.

 

“Initial Closing Time” has the meaning ascribed
to such term in Section 1.1.

 

“Initial iStar Shares” has the meaning ascribed
to such term in Section 1.2.

 

“Initial Purchase Price” has the meaning
ascribed to such term in Section 1.2.

 

“Intellectual
Property” shall mean any United States (federal and state) and foreign:
patents and patent applications, including but not limited to all reissues,
divisions, continuation, continuations-in-part, and extensions of the patents,
industrial design registrations, certificates of invention and utility models
(collectively, “Patents”); trademarks, service marks, and trademark and
service mark registrations and applications, both use based and on an intent to
use basis, trade names, business names, logos, and, slogans, together with all
goodwill related to the foregoing (collectively, “Trademarks”); Internet
domain names (collectively, the “Domain Names”); copyrights, copyright
registrations, renewals, and applications for copyrights, including without
limitation for the Content and the Software (collectively, “Copyrights”);
and Software, technology, trade secrets, business methodology, and other
confidential models and methodologies; in each case that are trade secrets
under applicable law (collectively, “Trade Secrets”); “Software”
means any and all of (i) computer programs, including any and all software
implementations of algorithms, models, and methodologies, whether in source
code or object code form, (ii) databases, compilations, and any other
electronic data files, including any and all collections of data, whether
machine readable or otherwise, and (iii) all documentation, including technical,
end-user, training and troubleshooting manuals and materials, relating to any
and all of the foregoing.  “Content”
means any and all written or fixed information, pictures, images, graphics,
video, audio, text and any other written or fixed content or information, in
whatever form and on any media.

 

“Investment Advisers Act” shall mean the
Investment Advisors Act of 1940, as amended, or any successor Law, and
regulations and rules issued under that Act or any successor Law.

 

“Investment Advisory Contracts” has the meaning
ascribed to such term in Section 3.11(a)(ii).

 

“Investment Company Act” shall mean the
Investment Company Act of 1940, as amended, or any successor law, and
regulations and rules issued under that Act or any successor law.

 

“iStar Common Stock” shall mean the common
stock, par value $0.0001 per share, of the Parent.

 

“iStar Common Stock Price” shall mean the
average of the Daily iStar Common Stock Prices for the first 20 Trading Days in
March 2005.

 

“iStar Deductible Exclusions” has the meaning
ascribed to such term in Section 9.5(c).

 

“iStar Group Member” shall mean each of Parent,
the Purchaser, the Purchaser Designees and their respective Affiliates,
including the Oak Hill Entities and their respective directors, officers,
employees, agents and attorneys and their respective successors and assigns.

 

A-7

 

“iStar Material Adverse Effect” shall mean any
event or condition that has had, or is reasonably likely to have, a material
adverse effect on the business, assets, liabilities, results of operations or
financial condition of the Parent, taken as a whole; provided, however,
that such changes shall not include events, developments, conditions, facts or
occurrences resulting from (i) changes in U.S. general economic or securities,
debt, or high-yield market conditions, (ii) acts of terrorism or outbreak
of war generally affecting the economy, or (iii) the announcements of the
transactions contemplated by this Agreement.

 

“iStar Parties” shall mean the Parent and the
Purchaser, and, for purposes of Articles VII, IX, and XI, the Purchaser
Designees.

 

“iStar Shares” has the meaning ascribed to such
term in Section 2.7.

 

“Keystone Payment” shall mean the cash payment
by OHA to Keystone, Inc. (or one of its Affiliates) in an amount agreed to by
OHA and Keystone, Inc., which will be funded at or prior to the Initial Closing
and which shall constitute an OHA Liability.

 

“Krase” has the meaning ascribed to such term
in the Preamble hereto.

 

“Krase Group Sellers” shall mean Krase and the
Krase Seller.

 

“Krase Seller” has the meaning ascribed to such
term in the Preamble hereto.

 

“Law” shall mean any constitution, law, treaty,
compact, directive, ordinance, principal of common law, permit, authorization,
variance, regulation, rule, or statute, including, without limitation, all
federal, foreign, international, state, exchange and local laws (including
without limitation the anti-fraud provisions thereof) and rules and all
exchange and self-regulatory organization rules and regulation related to
securities (including without limitation the Exchange Act, the Securities Act,
the Investment Advisers Act, the Investment Company Act and the Bank Holding
Company Act), commodities (including without limitation, the Commodity Exchange
Act), Taxes, ERISA, Hazardous Substances and the Environment, zoning and land
use, Intellectual Property, privacy, occupational safety and health, consumer
protection, product quality, safety, employment and labor matters.

 

“LIBOR” shall mean the rate appearing on Page
3750 of the Dow Jones Market Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of such
Service as determined by the general partner of OHA from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of an interest period
relating to a loan issued under the line of credit referred to in Section 1.6,
as the rate for dollar deposits with a maturity comparable to such interest
period.

 

“License Agreements” has the meaning ascribed
to such term in Section 3.12(a).

 

“Liens” shall mean all mortgages, pledges,
liens, security interests, conditional sale agreements, encumbrances or similar
restrictions but expressly excluding licensed Intellectual Property.

 

A-8

 

“LLC Interests” has the meaning ascribed to
such term in the Recitals.

 

“LLC Operating Agreements” shall mean the GenPar
II Operating Agreement and the GenPar Alpha LLC Operating Agreement.

 

“Material Contracts” has the meaning ascribed
to such term in Section 3.11(b).

 

“Notices” shall have the meaning ascribed to
such term in Section 5.8.

 

“November Confidentiality Agreement” shall mean
the Confidentiality Agreement, dated November 9, 2004, between OHA and the
Parent.

 

“Oak Hill Designee” has the meaning ascribed to
such term in Section 6.3.

 

“Oak
Hill Employee Benefit Plan” shall mean any Employee Benefit Plan, with
respect to which any Oak Hill Entity, or any of Subsidiary thereof, maintains,
makes contributions to or has any other liability with respect to, or arising
out of the employment, or other similar affiliation (e.g., independent
contractor, director, etc.), of any individual with any current or former Oak
Hill Plan Affiliate.

 

“Oak
Hill Entities” has the meaning ascribed to such term in the Preamble
hereto.

 

“Oak
Hill Entities Intellectual Property” has the meaning ascribed to such term
in Section 3.12(a).

 

“Oak
Hill Material Adverse Effect” shall mean any event, or condition that has
had, or is reasonably likely to have, a material adverse effect on the
business, assets, liabilities, results of operations or financial condition of
the Oak Hill Entities, taken as a whole; provided, however, that an
Oak Hill Material Adverse Effect shall not include events, developments,
conditions, facts or occurrences resulting from (i) U.S. general economic or
securities, debt or high yield market conditions, (ii) acts of terrorism
or outbreak of war generally affecting the economy or (iii) the announcement of
the transactions contemplated by this Agreement.

 

“Oak
Hill Parties” has the meaning ascribed to such term in the Preamble hereto.

 

“Oak
Hill Plan Affiliate” shall mean any of the Oak Hill Entities, any
Subsidiary and predecessor of any of them and any other Person who constitutes
or has constituted all or part of a controlled group or has been or is under
common control with, or whose employees were or are treated as employed by, any
of the Oak Hill Entities, any Subsidiary and/or any predecessor or any of them,
under Section 414 of the Code.

 

“Oak
Hill Sellers” has the meaning ascribed to such term in the Preamble.

 

“OHA”
has the meaning ascribed to such term in the Preamble hereto.

 

“OHA 2003 Balance Sheet” shall mean the audited
combined statement of financial position of OHA and certain affiliated advisory
companies for the fiscal year ended December 31, 2003.

 

A-9

 

“OHA Audited Financial Statements” has the
meaning ascribed to such term in Section 3.14(a).

 

“OHA Liabilities” shall mean (x) those
liabilities set forth on the OHA 2003 Balance Sheet or the September 30 Balance
Sheet described in the following line items: 
(i) Due to Oak Hill Special Opportunities Management, LLC and (ii) Due
to Affiliates and (y) any similar liabilities of OHA or any other Oak Hill
Entity that may exist as of the Business Day immediately prior to the Initial Closing.

 

“OHA Partnership Agreement” shall mean the
Third Amended and Restated Agreement of Limited Partnership, dated as of
November 1, 2004, of OHA.

 

“OHA
Partnership Interests” has the meaning ascribed to such term in the
Recitals hereto.

 

“OHAI”
shall mean Oak Hill Advisors, Inc., a Delaware corporation wholly-owned by
August.

 

“OHAI Advisory Agreements” shall mean the
Investment Advisory Contracts with Lerner Enterprises Partnership, Cardinal
Investment Partners I, L.P. and P&PK Family Limited Partnership.

 

“OHAI Contribution” shall mean the contribution
(by merger, assignment or other transfer) of the OHAI Advisory Agreements and
certain other agreements to which OHAI is a party as set forth in Section A-10
of the Disclosure Letter to OHA in exchange for Class B Interests.

 

“OHAMI Contribution” shall mean the
contribution (by merger, assignment or other transfer) of the OHAMI Advisory
Agreements and certain other agreements to which OHAMI is a party as set forth
in Section A-10 of the Disclosure Letter to OHA in exchange for Class A
Interests.

 

 “OHAI Note”
shall mean that certain note payable to August as shown in the OHA Audited
Financial Statements and any financial statements thereafter.

 

“OHAMI”
has the meaning ascribed to such term in the Preamble hereto.

 

“OHAMI Advisory Agreements” shall mean the
Investment Advisory Contracts with Oak Hill Securities Fund, L.P. and Oak Hill Securities
Fund Liquidating Trust.

 

“Okun” has the meaning ascribed to such term in
the Preamble hereto.

 

“Okun Group Sellers” shall mean Okun and the
RBO Seller.

 

“Order”
shall mean any award, decision, injunction, decree, stipulation, determination,
writ, judgment, order, ruling, or verdict ordered, issued, made or rendered by
any court, administrative agency or other Governmental Authority.

 

“Organizational
Documents” shall mean, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable
constitutive

 

A-10

 

documents with respect to
any non-U.S. jurisdiction); (b) with respect to any limited liability company,
the certificate or articles of formation or organization and operating
agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

 

“Parent”
has the meaning ascribed to such term in the Preamble hereto.

 

“Patents”
has the meaning ascribed to such term in the definition of Intellectual
Property.

 

“Permitted
Liens” shall mean Liens (i) for any current taxes or assessments not yet
delinquent, (ii) created by statute of carriers, warehousemen, mechanics,
laborers or materialmen incurred in the ordinary course of business for sums
not yet due or (iii) real property leases and licenses for the use of
Intellectual Property.

 

“Permitted
Transactions” has the meaning ascribed to such term in Section 5.1.

 

“Person”
shall mean any individual, firm, unincorporated organization, corporation
(including any not-for-profit corporation), general or limited partnership,
limited liability company, cooperative marketing association, joint venture,
estate, trust, association or other entity as well as any syndicate or group
that would be deemed to be a person under Section 13(a)(3) of the Exchange Act.

 

“Plan
Asset Regulation” has the meaning ascribed thereto in Section 3.18(j).

 

“Principal
Exchange” shall mean the New York Stock Exchange or, if at any time the
iStar Common Stock is not listed on the New York Stock Exchange, the principal
stock exchange (including Nasdaq) on which the iStar Common Stock is then
listed or admitted to trading, or quotes, as applicable.

 

“Pro
Rata Share” has the meaning ascribed to such term in Section 1.3.

 

“Purchaser”
has the meaning ascribed to such term in the Preamble hereto.

 

“Purchaser
Designee” has the meaning ascribed to such term in Section 6.10.

 

“Purchaser
GenPar II LLC Interest” has the meaning ascribed to such term in the
Recitals hereto.

 

“Purchaser
GenPar Alpha LLC Interest” has the meaning ascribed to such term in the
Recitals hereto.

 

“Purchaser
LLC Interests” has the meaning ascribed to such term in the Recitals
hereto.

 

“Purchaser
Partnership Interests” has the meaning ascribed to such term in the
Recitals hereto.

 

A-11

 

“RBO
Seller” has the meaning ascribed to such term in the Preamble hereto.

 

“Real
Estate Issuer” shall mean any corporation or partnership if real estate and
“interests in real property” (within the meaning of Section 856(c)(4)(C) of the
Code, irrespective of where such assets are located) constitute more than 50%
of the fair market value of its assets.

 

“Real
Property Leases” shall mean all leases for real property to which any Oak
Hill Entity or Subsidiary is a party or by which it is bound.

 

“Reclassification”
has the meaning ascribed to such term in the Recitals hereto.

 

“REIT”
shall mean a real estate investment trust, within the meaning of Section 856 of
the Code.

 

“Related
Agreements” shall mean (i) the Amended and Restated LP Agreements, (ii) the
Amended and Restated Operating Agreements, (iii) the Relationship Agreement,
(iv) the Shareholder’s Agreement, (v) the Consulting Agreement and (vi) those
other agreements and documents contemplated by this Agreement.

 

“Relationship Agreement” shall mean the
Relationship Agreement in substantially the form attached hereto as Exhibit 3.

 

“Reorganization”
shall mean the recapitalization of GenPar II LLC, as described in Exhibit R.

 

“SEC Reports” has the meaning ascribed to such
term in Section 4.7.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued under that Act or any successor
law.

 

“Securities List” shall mean the written list attached
hereto as Exhibit SL, as the same may be amended in writing from time to
time in accordance with the provisions of Section 6.9 hereof, containing the
name, address and taxpayer identification number of, and any additional
information reasonably requested by the Seller Principals with respect to, each
Real Estate Issuer in which Parent owns or, as a result of any transaction
entered into or pending, reasonably expects to acquire, Securities the
ownership of which would cause Parent to violate Section 856(c)(4)(B)(iii)(III)
of the Code but for qualifying (in Parent’s good faith judgment) as “straight
debt securities” described in Section 856(m)(1)(A) of the Code.

 

“Security” shall have the meaning set forth in
the Investment Company Act of 1940, as amended; provided that for the avoidance
of doubt, no Oak Hill Entity shall be deemed to own an interest in any Security
owned by any entity solely by reason of the existence of a management agreement
with respect to that entity.

 

“Seller Deductible Exclusions” has the meaning
ascribed to such term in Section 9.5(a).

 

“Seller Group Member” shall mean the August
Group Sellers, the Bohnsack Group Sellers, the Krase Group Sellers, the Okun
Group Sellers and the Wernicke Group Sellers and

 

A-12

 

each of their respective
agents and attorneys and their respective successors and permitted assigns.

 

“Seller Principals” has the meaning ascribed to
such term in the Preamble hereto.

 

“Separately Managed Accounts” has the meaning
ascribed thereto in the definition of Funds.

 

“September 30 Balance Sheet” shall mean the
unaudited combined statement of financial position of OHA for the period ended
September 30, 2004.

 

“Shareholder’s Agreement” shall mean the
Shareholder’s Agreement in substantially the form attached hereto as Exhibit 4.

 

“Software” has the meaning ascribed to such
term in the definition of Intellectual Property.

 

“Subsequent Amended and Restated LP Agreements”
shall mean any Amended and Restated LP Agreements revised to reflect the
transactions contemplated by the Subsequent Closing.

 

“Subsequent Amended and Restated Operating
Agreements” shall mean any Amended and Restated Operating Agreements
revised to reflect the transactions contemplated by the Subsequent Closing.

 

“Subsequent Cash Purchase Price” has the
meaning ascribed to such term in Section 1.3.

 

“Subsequent Closing” has the meaning ascribed
to such term in Section 1.1.

 

“Subsequent Closing Date” has the meaning
ascribed to such term in Section 1.1.

 

“Subsequent Closing Time” has the meaning
ascribed to such term in Section 1.1.

 

“Subsequent iStar Shares” has the meaning
ascribed to such term in Section 1.3.

 

“Subsequent Purchase Price” has the meaning
ascribed to such term in Section 1.3.

 

“Subsidiary” shall mean, as to any Person, any
other Person more than 50% of the shares of the voting stock or other voting
interests of which are owned or controlled, or the ability to select or elect
more than 50% of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries.  Unless otherwise, specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of the Oak Hill Entities. 
For purposes of this Agreement, none of the Funds shall be deemed to be
Subsidiaries of any of the Oak Hill Entities.

 

“Tax Returns” shall mean all federal, state,
local, provincial and foreign returns, reports, declarations, estimates,
information returns, forms, schedules and statements (including any related or
supporting information) and any amended Tax return relating to Taxes.

 

A-13

 

“Taxes” shall mean any and all federal, state,
local and foreign taxes, assessments, governmental charges, duties, impositions
and liabilities, including, but not limited to, income (whether net or gross),
excise, property, sales, transfer, gains, gross receipts, occupation,
privilege, payroll, wage, unemployment, workers’ compensation, social security,
escheat, use, value added, capital, gross receipts, franchise, license,
severance, stamp, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), capital stock, profits, withholding, disability, real
property, personal property, registration, customs duties, alternative or
add-on minimum, estimated or other tax of any kind whatsoever (whether disputed
or not) imposed by any tax authority, including any related charges, fees,
interest, penalties, additions to tax or other assessments.

 

“Third Party Claim” has the meaning ascribed to
such term in Section 9.4(a).

 

“Trade Secrets” has the meaning ascribed to
such term in the definition of Intellectual Property.

 

“Trademarks” has the meaning ascribed to such
term in the definition of Intellectual Property.

 

“Trading Day” shall mean any day on which the
Principal Exchange is open for trading.

 

“Transfer Taxes” has the meaning ascribed to
such term in Section 6.6.

 

“Unaudited Interim Financial Statements” has
the meaning ascribed to such term in Section 3.14(a).

 

“Unaudited Interim Fund Financial Statements”
has the meaning ascribed thereto in Section 3.19(f).

 

“VWAP” shall mean the daily dollar
volume-weighted average sale price for the iStar Common Stock on the Principal
Exchange on any particular Trading Day during the period beginning at 9:30
a.m., Eastern Time, and ending at 4:00 p.m., Eastern Time, as reported by
Bloomberg through its “Volume at Price” functions.

 

“Wernicke” has the meaning ascribed to such
term in the Preamble hereto.

 

“Wernicke Group Sellers” shall mean Wernicke
and the CSW Seller.

 

“WHB Seller” has the meaning ascribed to such
term in the Preamble hereto.

 

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Exhibit 10.2  

 
 

REGAL ENTERTAINMENT GROUP
  SUMMARY OF
  DIRECTOR COMENSATION ARRANGMENTS    
    

        Directors who are employees of Regal Entertainment Group or its subsidiaries receive no additional cash or equity compensation for service on the Regal
Entertainment Group Board of Directors. All Directors are reimbursed for reasonable out-of-pocket expenses related to attendance at Board of Director and Board of Director
committee meetings. Messrs. Thomas D. Bell, Jr., Lewis W. Coleman, Michael J. Dolan and Alfred C. Eckert III receive an annual cash retainer for Board
of Director service of $40,000. 

        Directors
do not receive additional cash or equity compensation for service on committees of Regal Entertainment Group's Board of Directors. 

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REGAL ENTERTAINMENT GROUP SUMMARY OF DIRECTOR COMENSATION ARRANGMENTS

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