Construction Agency Agreement

Exhibit 10.4


[Execution Copy]


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CONSTRUCTION AGENCY AGREEMENT


dated as of June 21, 2000


among


30 HUDSON STREET LESSOR URBAN RENEWAL L.L.C.,


and


50 HUDSON STREET LESSOR URBAN RENEWAL L.L.C.,
collectively,


as Lessor


and


GSJC 30 HUDSON URBAN RENEWAL L.L.C.,
as Construction Agent


and


GSJC 50 HUDSON URBAN RENEWAL L.L.C.,
as Construction Agent


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TABLE OF CONTENTS


Section Page
------- ----


ARTICLE I
DEFINITIONS


1.1. Definitions; Interpretation; Amendment and
Restatement.................................................................................... 2


ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT


2.1. Appointment and Acceptance..................................................................... 2
2.2. Relationship as between Persons
Comprising Lessee..................................................................... 2
2.3. Term........................................................................................... 3
2.4. Construction Materials......................................................................... 3
2.5. Scope of Authority............................................................................. 4
2.6. Covenants of Construction Agents............................................................... 6
2.7. Title to the Improvements...................................................................... 8
2.8. Interim Use.................................................................................... 8


ARTICLE III
THE IMPROVEMENTS


3.1. Amendments; Modifications...................................................................... 9
3.2. Casualty, Condemnation, Liquidated
Damages and Force Majeure Events..................................................... 10


ARTICLE IV
PAYMENT OF FUNDS


4.1. Funding of Improvement Costs.................................................................. 11


ARTICLE V
CONSTRUCTION AGENCY EVENTS OF DEFAULT


5.1. Construction Agency Events of Default......................................................... 12
5.2. Survival...................................................................................... 16
5.3. Remedies Cumulative; Waivers.................................................................. 16
5.4. Limitation on Recourse Liability of


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Construction Agents.................................................................. 19
5.5. Lessor's Right to Cure Construction Agents'
Defaults............................................................................. 20


5.6. Determination of Whether Budget is
"In Balance"......................................................................... 20
5.7. Limitations on Construction Agents' Liability................................................. 21


ARTICLE VI
NO CONSTRUCTION AGENCY FEE


ARTICLE VII
MISCELLANEOUS


7.1. Notices....................................................................................... 21
7.2. Successors and Assigns........................................................................ 21
7.3. GOVERNING LAW................................................................................. 22
7.4. Amendments, etc............................................................................... 22
7.5. Counterparts.................................................................................. 22
7.6. Severability.................................................................................. 22
7.7. Headings and Table of Contents................................................................ 22
7.8. Exercise of Lessor's Rights................................................................... 22
7.9. Limited Liability............................................................................. 23
7.10. No Third Party Beneficiaries.................................................................. 23
7.11. Survival of Agreements........................................................................ 23


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CONSTRUCTION AGENCY AGREEMENT


Construction Agency Agreement, dated as of June 21, 2000 (this "Agreement"), among 30 HUDSON STREET LESSOR URBAN RENEWAL L.L.C., and 50 HUDSON STREET LESSOR URBAN RENEWAL L.L.C., each a New Jersey limited liability company (collectively and individually, the "Lessor"), and GSJC 30 Hudson Urban Renewal L.L.C., a New Jersey limited liability company ("30 Hudson") and GSJC 50 Hudson Urban Renewal L.L.C., a New Jersey limited liability company ("50 Hudson"), as Construction Agents.


W I T N E S S E T H:


A. Lessor and Construction Agents are parties to that certain Participation Agreement (as hereafter defined) pursuant to which each Construction Agent, as a Lessee, has agreed to lease from Lessor, and Lessor has agreed to lease to such Lessee, Lessor's interest in the Properties pursuant to the Lease.


B. Lessor, such Lessee and Construction Agents are parties to that certain Participation Agreement of even date herewith (as amended, supplemented or otherwise modified, the "Participation Agreement"), among, inter alia, The Goldman Sachs Group, Inc., as Guarantor, 50 Hudson and 30 Hudson, as Lessee and Construction Agents, Lessor, Ground Lessee, Ground Lessor, the Persons named therein as Investors, Hudson Street Funding Corporation, Hudson Street Lessor Investment Trust 2000-1, Wilmington Trust Company (not in its individual capacity, except as specifically indicated but as investment trustee) Hatteras Funding Corporation, the financial institutions named therein as Liquidity Purchasers, and The Chase Manhattan Bank, as Collateral Agent.


C. Subject to the terms and conditions hereof, (i) Lessor desires to appoint Construction Agents as its sole and exclusive agents for the construction of the Improvements on the Land in accordance with the Construction Budget, Construction Schedule and Plans and Specifications (each as described more fully in Exhibit A hereto and as each of the foregoing may be modified from time to time in accordance with this Agreement)(collectively, the "Construction Materials") and pursuant to this Agreement, and (ii) Construction Agents desire, for the benefit of Lessor, to cause the Improvements to be constructed in accordance with the Construction Materials and in each case in accordance with the terms set forth herein and in the Lease.


NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and


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sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto covenant and agree as follows:


ARTICLE I
DEFINITIONS


1.1. Definitions; Interpretation; Amendment and Restatement. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings set forth in Appendix A to the Participation Agreement, and the rules of interpretation set forth therein shall apply to this Agreement.


ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT


2.1. Appointment and Acceptance.


Pursuant to and subject to the terms and conditions set forth herein and in the Participation Agreement and the other Operative Documents, Lessor hereby irrevocably designates and appoints the Construction Agents as its exclusive agents for the construction of the Improvements on the Land substantially in accordance with the applicable Plans and Specifications, and Construction Agents by entering into this Agreement accept such designation and appointment.


2.2. Relationship as between Persons Comprising Lessee.


(a) The Persons comprising Construction Agent or Construction Agents (i.e., 30 Hudson and 50 Hudson) agree, as between themselves, that (i) they will apportion and allocate between them, on an equitable basis, all of the obligations, duties and liabilities of the "Construction Agent" hereunder, (ii) to the fullest extent appropriate, an apportionment and allocation determined by the relative developable floor areas of the Office Tower Improvements and the Conference/Training Center Improvements shall be deemed for purposes of this Section 2.2 to be equitably based, (iii) 30 Hudson shall be responsible for the performance of all obligations of Construction Agents hereunder in respect of the Site having an address of 30 Hudson Street and that 50 Hudson shall be responsible for the performance of all obligations of Construction Agents hereunder in respect of the Site having an address at 50 Hudson Street, and (iv) each of said


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Persons shall indemnify the other for its failure to perform in accordance with the immediately preceding clause (iii).


(b) Each Construction Agent hereby authorizes the other to execute and deliver documents hereunder, on behalf of one or both Construction Agents.


2.3. Term. This Agreement shall commence on the Documentation Date and shall terminate with respect to the Properties upon the first to occur of:


(a) Substantial Completion of both the Properties and the
completion of Final Completion Work in accordance with Section 2.6(e)
with respect to both of the Properties and the performance of all other
material obligations of the Construction Agents hereunder with respect
thereto; and


(b) payment by Lessee or Lessor's receipt through other
provisions of the Operative Documents of the Lease Balance and all
other amounts owing under the Operative Documents (including Article V
of the Lease, incorporated herein by reference), and termination of the
Commitments in accordance with the Participation Agreement; and


(c) termination of this Agreement by Lessor pursuant to
Article V.


2.4. Construction Materials; Construction Documents. (a) The Construction Agents shall develop, define, refine and detail proposed budgets, construction schedules and Plans and Specifications for the Properties. The Construction Agents shall cause each such proposal to provide for compliance and conformance with generally accepted construction practices, Applicable Law, Insurance Requirements and Environmental Requirements and shall cause each such proposal to have a reasonable likelihood that it can be completed as intended on time and within budget.


(b) Subject to each of the terms and conditions in this Agreement, Construction Agents may execute any of their duties under this Agreement by or through agents, developers, consultants, advisors, contractors, employees or attorneys-in-fact, and Construction Agents with respect to each Property shall enter into such agreements with architects and contractors as Construction Agents deem necessary or desirable for the completion of the Construction pursuant hereto (as such documents


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may be amended, supplemented or otherwise modified except as prohibited hereby, the "Construction Documents").


(c) As the Construction Documents are for the benefit of Lessor, Construction Agents hereby assign all the proceeds (including Liquidated Damages, insurance proceeds and warranty payments), if any, resulting from the Construction Documents to Lessor and hereby agrees to file applicable UCC-1 financing statements in respect of the foregoing.


2.5. Scope of Authority. (a) Subject to the terms, conditions, restrictions and limitations set forth in the Operative Documents, Lessor hereby expressly authorizes Construction Agents (or any agent, consultant, advisor, developer, employee, attorney-in-fact or contractor of a Construction Agent to which a Construction Agent has made a delegation of authority pursuant to the terms of this Agreement), and Construction Agents unconditionally agree, for the benefit of Lessor, to take all action necessary or (as determined by Construction Agents) desirable for the performance and satisfaction of all of Construction Agents' obligations hereunder with respect to the Properties, including:


(i) performing or causing the performance of all design and
supervisory functions and all engineering work related to the
Construction and the retention and supervision of the General
Contractor (if Construction Agents elect to retain a General
Contractor);


(ii) negotiating and entering into, or causing the negotiation
and execution and delivery of, all contracts or arrangements to procure
the labor, materials, supplies and equipment necessary or (as
determined by the Construction Agents) desirable to construct the
Improvements;


(iii) obtaining or causing to be obtained all necessary
permits, licenses, consents, approvals and other authorizations,
including those required under Applicable Laws (including Environmental
Laws), from all Governmental Authorities in connection with the
acquisition of the Sites and the Construction of the Improvements
thereon;


(iv) maintaining or causing to be maintained all books and
records with respect to the Construction and the operation and
management of the Properties;


(v) performing or causing the performance of any other acts
necessary or desirable (as reasonably determined by


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Construction Agents) in connection with the construction and
development of the Improvements in accordance in all material respects
with the Construction Materials, any Applicable Laws and all Insurance
Requirements; provided, however, that the foregoing shall not limit
Construction Agents' right to engage in Permitted Contests;


(vi) paying when due or causing to be paid when due (subject
to reimbursement as provided for under this Agreement) pursuant to and
subject to the Construction Budget or the Participation Agreement, all
Improvement Costs (including costs associated with the Construction
Agents' actions as provided in Section 2.5(a)(viii) below, pursuant to
and subject to the Construction Budget) provided, however, that the
foregoing shall not limit Construction Agents' right to engage in
Permitted Contests. Construction Agents acknowledge that any liability
resulting to Collateral Agent, any Participant or any other Indemnitee
as a result of or arising from any such negotiation, Permitted Contest,
or act or omission of either Construction Agent or their designees with
respect to such Permitted Contest will be a Claim subject to
indemnification under Article IX of the Participation Agreement;


(vii) enforcing or causing the enforcement in all material
respects of performance by each party to each Construction Document of
its respective obligations, warranties and other design, construction
and other obligations with respect to the design, engineering,
construction and completion of the Improvements on the applicable Site
or pursuing remedies with respect to the breach of those obligations,
in each case, as deemed appropriate by Construction Agents in their
discretion; and


(viii) using the proceeds of any insurance maintained with
respect to the Improvements to complete construction of or rebuild any
portion of such Improvements with respect to a Casualty or Condemnation
and to fund all Construction Period Accrued Interest accruing during
such Construction or rebuild, provided that the foregoing shall not
affect Construction Agents' right to purchase the Properties in
accordance with Article V of the Lease which shall be applicable during
the Construction Period and is hereby incorporated herein by reference.


(b) Neither Construction Agents nor any of their Affiliates or agents shall enter into any contract which would impose any


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liability or obligation on Lessor (other than Lessor's obligation to Construction Agents to provide Advances in accordance with and subject to the terms and conditions of the Operative Documents).


(c) Subject to the terms and conditions of this Agreement and the other Operative Documents, Construction Agents shall have sole management and control over the construction means, methods, sequences and procedures and the hiring, termination and contracting for and supervision of and payment for the labor, personnel and services with respect to the Construction; provided, however, that this subsection (c) shall not give rise to any rights in any Person other than Lessor, the Participants and the other Indemnitees.


(d) All fees and expenses of Lessees and Construction Agents under any Operative Document which are included in and which may be paid in accordance with the Construction Budget shall be paid or reimbursed through Advances.


2.6. Covenants of Construction Agents. Construction Agents shall with respect to the Land:


(a) following the commencement of Construction, cause the
Construction to proceed diligently and without material interruption
(subject to Force Majeure Events) in accordance in all material
respects with the applicable Construction Materials and Insurance
Requirements and all Applicable
Laws;


(b) take or cause to be taken commercially reasonable and
practical steps to minimize liabilities of Lessor or any Agent or
Participant, delays, increased costs and the disruption of the
construction process arising from Force Majeure Events, Casualties and
Condemnations;


(c) subject to Section 3.2, cause Substantial Completion to
occur on or prior to the Outside Completion Date;


(d) cause all Liens (including Liens or claims for materials
supplied or labor or services performed in connection with the
construction of the Improvements), other than Permitted Liens, to be
removed or discharged; provided, however, that the foregoing shall not
limit Construction Agents' right to engage in Permitted Contests;


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(e) following Substantial Completion, cause all Final
Completion Work to be completed in a timely manner (subject to Force
Majeure Events), but in no event later than the Lease Term Expiration
Date;


(f) at all times during Construction, cause title to all
Improvements on or within the Land (including any personal property
which either Construction Agent acquires with Advances whether or not
such personal property so acquired has become a permanent part of such
Improvements) to be and remain vested in Lessor free of all Liens,
other than Permitted Liens and Lessor Liens, and cause to be on file
(including financing statements and fixture filings) with the
applicable filing office all necessary documents under Article 9 of the
UCC to perfect Lessor's and Collateral Agent's interest in such
personalty free of all Liens other than Permitted Liens and Lessor
Liens unless and only for such period of time as any Construction Agent
is prevented from doing the same as the result of the failure of the
Lessor to sign and return any reasonable documentation prepared by
Construction Agents in performance of this Section;


(g) at all times prior to the Lease Commencement Date,
maintain, for the benefit of Lessor, the insurance described in
Schedule 2.6(g). In addition, Construction Agents shall from time to
time, but in intervals of not less than twelve (12) months nor more
than fifteen (15) months, each, (i) undertake all actions and due
diligence as reasonably necessary to determine whether the insurance
coverage required to be maintained hereunder is in compliance with the
requirements thereunder, including any increases in coverage required
as a result of any change in any Applicable Laws, and (ii) if
Construction Agents determine that such insurance coverage does not
meet such requirements, promptly take all actions and steps necessary
to cause such coverage to comply with such requirements and shall
notify Lessor and Collateral Agent of the steps being taken by
Construction Agents or on their behalf;


(h) provide to Lessor and Collateral Agent monthly, or within
10 days after request by Lessor, if not provided by Construction Agents
in prior 30 days, Construction Agents' certification stating: (A) that
the Construction Budget is In Balance, and that Construction Agents
reasonably believe the Construction of the Improvements will continue
to be completed In Balance (or, if not, a description of why not);


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(B) that the remaining contingency reserves, as such amounts may be
adjusted pursuant to this Agreement, are sufficient to complete the
Construction; and (C) the anticipated date on which the Construction
will be completed.


(i) Neither Construction Agent shall incur or allow the
incurrence of any Improvement Costs, individually or in the aggregate,
(A) in excess of the sum of the Aggregate Available Commitments and
Other Available Amounts as of the date of determination thereof or (B)
that would or could reasonably be expected to cause the aggregate
Improvement Costs not to be In Balance.


(j) Construction Agents shall deliver to Lessor and Collateral
Agent (i) annually (unless an Event of Default has occurred and is
continuing in which case as requested) copy of the then current Plans
and Specifications and (ii) within 30 days after Substantial Completion
copies of the then current Plans and Specifications.


2.7. Title to the Improvements. Title to the Improvements (including, all materials or equipment incorporated therein or paid for out of Advances) shall automatically, without further act of either Construction Agent, vest in Lessor.


2.8. Interim Use. (a) At Lessee's option from and after Substantial Completion of the Conference/Training Center and five or more floors of the Office Tower, Construction Agents shall have the right to place such Improvements in service and to lease and occupy such substantially completed portions of the Improvements. The Construction Agents shall have the further right from time to time to lease additional floors of the Office Tower as they are substantially completed and ready to be placed in service. Such right to lease and occupy the substantially completed portions may be exercised by Lessee giving at least 30 days' prior written notice to Lessor or Collateral Agent specifying the date such lease is to begin, the portions to be occupied and the rent in respect thereof (determined in accordance with Section 2.8(b)); upon the giving of such notice of exercise, the interim right to use shall be operative, without the need for any further lease agreement.


(b) Construction Agents shall pay rent on a monthly basis ("Interim Rent") for any portion of the Improvements leased pursuant to Section 2.8(a), in an amount equal to Construction Period Accrued Interest and Construction Period Accrued Yield fairly allocable in accordance with GAAP (allocated as of the end


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of each period for which Construction Period Accrued Interest and Construction Period Accrued Yield are determined on the basis of the cost of the portion of the Properties leased pursuant to Section 2.8(a) relative to the portions not so leased) to the Advances applied to constructing such Improvements. Interim Rent is payable on each Advance Date.


ARTICLE III
THE IMPROVEMENTS


3.1. Amendments; Modifications. (a) Except as otherwise provided in Section 3.1(b) below, Construction Agents may revise, amend or modify any of the Construction Materials or enter into any change orders with respect to any Improvements without the prior written consent of Lessor if such revision, amendment, modification or change order will not extend Substantial Completion beyond the Outside Completion Date. Any amendment to the Construction Materials for which Construction Agents do not seek the approval of the Lessor shall be deemed a certification by the Construction Agent that such amendment complies with the foregoing requirement. Any revi ...