EXHIBIT 10.12
AMENDED AND RESTATED
ORGANIZATION AGREEMENT
FOR
▇▇▇▇▇-SUMISEI NY CORE OFFICE TRUST
TABLE OF CONTENTS
Page No.
--------
ARTICLE I Definitions............................................... 1
SECTION 1.1 Defined Terms........................................ 1
SECTION 1.2 Interpretation; Terms Generally...................... 7
ARTICLE II Acquisition of First Closing Properties.................. 7
SECTION 2.1 First Closing........................................ 7
SECTION 2.2 Closing Events....................................... 7
SECTION 2.3 Closing Deliveries................................... 8
ARTICLE III Additional Capital Contributions........................ 9
SECTION 3.1 Third Party Equity................................... 9
SECTION 3.2 Second Closing....................................... 10
SECTION 3.3 Repayment of Mezzanine Loan.......................... 10
SECTION 3.4 Hines Capital Contributions.......................... 10
SECTION 3.5 GM Capital Contributions............................. 11
SECTION 3.6 Issuance of Shares................................... 11
SECTION 3.7 STB Earn Out......................................... 11
SECTION 3.8 No Other Capital Obligations......................... 12
ARTICLE IV Acquisition of Manhattan Tower........................... 12
SECTION 4.1 Acquisition of Manhattan Tower....................... 12
SECTION 4.2 Formation of MT Trust................................ 13
SECTION 4.3 Funding of MT Trust.................................. 13
SECTION 4.4 Trust True-Up........................................ 13
SECTION 4.5 MT Trust Share Issuances............................. 16
SECTION 4.6 MT Documentation..................................... 16
ARTICLE V Covenants................................................. 16
SECTION 5.1 REIT Qualification................................... 16
SECTION 5.2 Expenses............................................. 17
SECTION 5.3 Securities Law Transfer Restrictions................. 17
SECTION 5.4 Legends.............................................. 18
SECTION 5.5 ERISA................................................ 18
SECTION 5.6 UBTI................................................. 18
SECTION 5.7 Holding Partnership Liquidity........................ 19
SECTION 5.8 HREH Guaranties of Contingent Obligation............. 19
SECTION 5.9 HP Voting Rights..................................... 20
ARTICLE VI Representations and Warranties........................... 20
SECTION 6.1 Representations and Warranties of Investors.......... 20
SECTION 6.2 Representations and Warranties of the Trust.......... 23
SECTION 6.3 Representations and Warranties of HILP............... 24
(i)
ARTICLE VII Miscellaneous........................................... 24
SECTION 7.1 Entire Agreement..................................... 24
SECTION 7.2 Remedies............................................. 25
SECTION 7.3 Survival............................................. 25
SECTION 7.4 Severability......................................... 25
SECTION 7.5 Notices.............................................. 25
SECTION 7.6 Amendments and Waivers............................... 27
SECTION 7.7 Governing Law........................................ 28
SECTION 7.8 Successors and Assigns............................... 28
SECTION 7.9 Expenses............................................. 28
SECTION 7.10 Construction........................................ 28
SECTION 7.11 Headings............................................ 28
SECTION 7.12 Incorporation of Exhibits and Schedules............. 28
SECTION 7.13 No Third Party Beneficiaries........................ 28
SECTION 7.14 No Public Announcements............................. 28
SECTION 7.15 Counterparts........................................ 28
(ii)
LIST OF SCHEDULES
2.1 INITIAL CAPITALIZATION OF THE TRUST
2.2A FIRST CLOSING CAPITAL CONTRIBUTIONS AND SHARE ISSUANCES
2.2B USE OF PROCEEDS
3.2 GM INVESTOR CONTRIBUTIONS AT SECOND CLOSING
3.3 GM INVESTOR CONTRIBUTIONS TO TRUST AT MANHATTAN TOWER CLOSING
4.4 EXAMPLES OF SECTION 4.4
5.6 TRANSACTION DOCUMENTS
LIST OF EXHIBITS
EXHIBIT A FORM OF WRITTEN CONSENT IN LIEU OF ORGANIZATIONAL MEETING
EXHIBIT B FORM OF PROPERTY MANAGEMENT AND LEASING AGREEMENT
EXHIBIT C-1 FORM OF MT TRUST DECLARATION OF TRUST
EXHIBIT C-2 FORM OF MT TRUST BYLAWS
(iii)
10.12
AMENDED AND RESTATED
ORGANIZATION AGREEMENT
FOR
HINES-SUMISEI NY CORE OFFICE TRUST
This Amended and Restated Organization Agreement (this "Agreement") is entered
into as of December 23, 2003, by and among General Motors Investment Management
Corporation, a Delaware corporation, First Plaza Group Trust, a New York trust,
GMAM Core Plus II-NYC-DC, LLC, a Delaware limited liability company, [-- --],
▇▇▇▇▇ Interests Limited Partnership, a Delaware limited partnership, Hines US
Core Office Capital Associates III Limited Partnership, a Texas limited
partnership, Hines-Sumisei U.S. Core Office Fund, L.P., a Delaware limited
partnership and Hines-Sumisei NY Core Office Trust, a Maryland real estate
investment trust.
This Agreement amends and restates the Organization Agreement
originally entered into by the parties hereto as of August 19, 2003 (the
"Original Agreement"), and sets forth the terms and conditions on which the
parties organized and funded a real estate investment trust for the purpose of
acquiring from Sumitomo Life Realty (N.Y.), Inc. and SLR Investments, Inc.
office buildings located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ and at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ in Washington D.C. and on which they intend to
organize and fund a second real estate investment trust for the purpose of
acquiring an office building from Sumitomo Life Realty (N.Y.), Inc. referred to
as Manhattan Tower at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ in New York City.
In consideration of the terms and conditions set forth herein,
the mutual benefits to be gained by the performance thereof and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree that the Original Agreement is hereby amended
and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the
following terms have the meanings indicated:
"425 Lexington Avenue": As defined in the Master Agreement.
"499 Park Avenue": As defined in the Master Agreement.
"Affiliate": With respect to any Person, a Person which,
directly or indirectly, Controls, is Controlled by or is under common Control
with such Person; provided, that, for purposes of this Agreement, (i) Holding
Partnership and Persons Controlled by Holding Partnership shall be deemed not to
be Affiliates of HILP, and HILP and Persons Controlled by
HILP shall be deemed not to be Affiliates of Holding Partnership, and (ii) each
of the parties to this Agreement, shall be deemed not to be an Affiliate of the
Trust or of any Person Controlled by the Trust.
"Agreement": As defined in the preamble.
"Assignment and Assumption": The Assignment and Assumption
Agreement, dated as of the First Closing Date, among the parties to the Master
Agreement, the Trust, Holding Partnership and SLRI.
"Available Financing": As defined in Section 4.1(a).
"Beneficial Owner": A beneficial owner within the meaning of
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended, as
interpreted by the Securities and Exchange Commission. "Beneficially Own" and
"Beneficial Ownership" have correlative meanings.
"Board of Trustees": The board of trustees of the Trust.
"Business Day": Any day other than a Saturday or Sunday, that
is neither a legal holiday nor a day on which banking institutions in New York
City are authorized or required by law, regulation or executive order to close.
"Class A Common Shares": As defined in the Declaration of
Trust.
"Class B Common Shares": As defined in the Declaration of
Trust.
"Class C Common Shares": As defined in the Declaration of
Trust.
"Class A Preferred Shares": As defined in the Declaration of
Trust.
"Class B Preferred Shares": As defined in the Declaration of
Trust.
"Class C Preferred Shares": As defined in the Declaration of
Trust.
"Code": The Internal Revenue Code of 1986, as amended, and any
successor statute.
"Common Shares": The Class A Common Shares, Class B Common
Shares and Class C Common Shares collectively.
"Constituent Documents": With respect to any entity, its
constituent, governing or organizational documents, including (a) in the case of
a limited partnership, its certificate of limited partnership and its limited
partnership agreement, (b) in the case of a limited liability company, its
articles or certificate of formation and its operating agreement or limited
liability agreement, (c) in the case of a corporation, its articles or
certificate of incorporation and its bylaws and (d) in the case of a trust, its
declaration of trust and bylaws.
-2-
"Control": With respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"CPII": GMAM Core Plus II-NYC-DC, LLC, a Delaware limited
liability company, and its successors.
"Current Owner": As defined in the Master Agreement.
"Declaration of Trust": The Declaration of Trust of the Trust,
as in effect on the date hereof, and as the same may be amended from time to
time hereafter in accordance therewith.
"Department": Maryland State Department of Assessments and
Taxation.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"First Closing": As defined in Section 2.1.
"First Closing Date": August 19, 2003.
"First Closing Properties": As defined in the Master
Agreement.
"First Mortgage Loan": The loan made to the SPE Owners
pursuant to the First Mortgage Loan Agreement.
"First Mortgage Loan Agreement": The Loan Agreement, dated as
of the First Closing Date, among each of the SPE Owners, as borrowers, and Bank
of America, N.A. and Connecticut General Life Insurance Company, as lenders.
"First Plaza": First Plaza Group Trust, a New York trust, and
its successors.
"GMIMCo": General Motors Investment Management Corporation, a
Delaware corporation.
"GM Investors": First Plaza, CPII and GMX.
"GM Target Common Percentage": As defined in Section 4.4(ii).
"GM Target Preferred Percentage": As defined in Section
4.4(i).
"GMX": [-- --], and its successors.
"HILP": ▇▇▇▇▇ Interests Limited Partnership, a Delaware
limited partnership, and its successors.
"Hines Controlled Entity": Any partnership, limited liability
company, corporation, trust or other entity which is, directly or indirectly,
Controlled by (a) HILP and/or
-3-
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or, in the event of the death or
disability of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the heirs, legal
representatives or estates of either or both of them.
"Hines Group": HILP, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the
estates, spouses, children and grandchildren of ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, present and former employees of HILP, and any trust for the benefit of
any of the foregoing.
"Hines Investor": Hines US Core Office Capital Associates III
Limited Partnership, a Texas limited partnership, and its successors, and any
Hines Controlled Entity to which Hines Investor assigns any of its rights or
obligations to acquire Shares under this Agreement in accordance with the terms
hereof.
"Holding Partnership": Hines-Sumisei U.S. Core Office Fund,
L.P., a Delaware limited partnership, and its successors.
"HREH": ▇▇▇▇▇ Real Estate Holdings Limited Partnership, a
Delaware limited partnership, and its successors.
"HP MT Contribution Amount": As defined in Section 4.3(b).
"Investor": Any of Hines Investor, Holding Partnership and the
GM Investors.
"Investor Rights Agreement": The Amended and Restated Investor
Rights Agreement, dated as of December 23, 2003, among the parties hereto other
than Hines Investor.
"Issue Price": As defined in the Declaration of Trust.
"Manhattan Tower": As "101 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇" is defined in the
Master Agreement.
"Manhattan Tower Closing": As defined in Section 3.3(a).
"Master Agreement": The Amended and Restated Master Agreement,
dated as of March 31, 2003, among HILP, Hines US Core Office Properties LP and
SLR for the creation of Hines U.S. Core Office Fund, as modified by two letter
agreements dated March 31, 2003 and an extension letter agreement dated June 26,
2003 and as amended by the amendment thereto dated July 22, 2003, as
supplemented and amended by the letter agreement, dated as of July 22, 2003,
among HILP, Hines US Core Office Properties LP and SLR and by the letter
agreement dated as of the First Closing Date among the parties to the Master
Agreement.
"MezzCo": Hines NY Office Properties LLC, a Delaware limited
liability company and a wholly-owned subsidiary of the Trust.
"Mezzanine Loan": The loan made to MezzCo pursuant to the
Mezzanine Loan Agreement.
-4-
"Mezzanine Loan Agreement": The Mezzanine Loan Agreement,
dated as of the First Closing Date, among MezzCo, as borrower, and Bank of
America, N.A. and Connecticut General Life Insurance Company, as lenders.
"MT Declaration of Trust": As defined in Section 4.2.
"MT Documentation": As defined in Section 4.6.
"MT Election Notice": As defined in Section 4.1(b).
"MT Equity Amount": As defined in Section 4.3.
"MT Issue Price": The price to be paid for one MT Common Share
and one MT Preferred Share issued in connection with the closing of the
acquisition of Manhattan Tower as contemplated by Article IV, which price shall
be the same as the Issue Price.
"MT Trust": As defined in Section 4.2.
"Original Agreement": As defined in the Recitals.
"Person": An individual, corporation, partnership, limited
liability company, estate, trust, association, joint stock company or other
legal entity.
"Plan Assets Regulation": The regulations promulgated under
ERISA at 29 C.F.R. Section 2510.3-101.
"Preferred Shares": Class A Preferred Shares, Class B
Preferred Shares and Class C Preferred Shares.
"Property": As defined in the Master Agreement.
"Qualifying Persons": As defined in Section 5.1(a).
"Second Closing": As defined in Section 3.2.
"Securities Act": The Securities Act of 1933, as amended.
"Shareholder": A record holder of Shares.
"Shareholders Agreement": The Amended and Restated
Shareholders Agreement, dated as of December 23, 2003, among the parties hereto
other than HILP.
"Shares": Common Shares and Preferred Shares collectively.
-5-
"SPE Owners": The single purpose subsidiaries of the Trust
formed to acquire and hold title to the First Closing Properties. The SPE Owner
with respect to each Property is as follows:
Property SPE Owner
-------- ---------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Hines ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC
"SLR": Sumitomo Life Realty (N.Y.), Inc., a New York
corporation, and its successors.
"SLR Redemption": As defined in Section 3.2.
"SLR Redemption Amount": $45 million plus, if (and only if)
the Trust has paid any portion of the STB Earn Out Amount prior to December 31,
2003, an amount equal to the product of the amount paid by the Trust in respect
of the STB Earn Out Amount prior to such date multiplied by a fraction, the
numerator of which equals the total number of outstanding Class C Preferred
Shares and the denominator of which equals the total number of outstanding
Preferred Shares of all classes.
"SLR Subscription Agreement": The Subscription Agreement
entered into at the First Closing between the Trust and SLR.
"SLRI": SLR Investments, Inc., a Delaware corporation, and its
successors.
"SLR Units": As defined in Section 4.3(b).
"Specified Rate": As defined in the Investor Rights Agreement.
"STB Earn Out Amount": The amount, if any, payable to SLR
pursuant to Section 3.1(d) of the Master Agreement.
"STB Earn Out Payment": As defined in Section 3.7.
"Sumitomo": SLR and SLRI collectively.
"Third Party Equity": As defined in Section 3.1.
"Third Party Investors": As defined in Section 3.1.
"Transaction Agreements": This Agreement, the Investors Rights
Agreement and the Shareholders Agreement.
"Trust": Hines-Sumisei NY Core Office Trust, a Maryland real
estate investment trust, and its successors.
"Trust Bylaws": The Bylaws of the Trust, as in effect
immediately following the adoption thereof in the form attached as Annex A to
the written consent in lieu of organizational
-6-
meeting attached hereto as Exhibit A by the Board of Trustees at the First
Closing, and as the same may be amended from time to time thereafter in
accordance therewith.
SECTION 1.2 Interpretation; Terms Generally. The definitions
set forth in Section 1.1 and elsewhere in this Agreement shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless otherwise indicated, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import shall
be deemed to refer to this Agreement (including the Exhibits and Schedules) in
its entirety and not to any part hereof, unless the context shall otherwise
require. All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Agreement, unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations). Any reference in this
Agreement to a "day" or number of "days" (that does not refer explicitly to a
"Business Day" or "Business Days") shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
Business Day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day.
ARTICLE II
ACQUISITION OF FIRST CLOSING PROPERTIES
SECTION 2.1 First Closing. Pursuant to the Master Agreement,
on the First Closing Date, the Trust acquired the First Closing Properties from
Sumitomo in exchange for $45 million in Shares and $516,073,757 in cash, with
title to each First Closing Property being acquired by the subsidiary of the
Trust designated as the SPE Owner thereof in the definition of SPE Owner. The
cash portion of the purchase price, as well as transaction costs payable by the
Trust and its subsidiaries in connection with the transactions entered into at
the First Closing, were funded with the proceeds of the First Mortgage Loan, the
Mezzanine Loan and capital contributions made by the GM Investors, Hines
Investor and Holding Partnership. The closing of the acquisition of the First
Closing Properties, the closing of the First Mortgage Loan, the closing of the
Mezzanine Loan and the closing of the capital contributions contemplated by
Section 2.2(c) (collectively, the "First Closing") all happened simultaneously
and concurrently with the execution and delivery of the Original Agreement. Each
such closing was a condition to each other such closing. Immediately following
the First Closing, the capitalization of the Trust was as set forth on Schedule
2.1.
SECTION 2.2 Closing Events. At the First Closing, the
following took place:
(a) The applicable persons made the deliveries described
in Section 2.3;
(b) The GM Investors, Hines Investor and Holding
Partnership contributed capital to the Trust in the amounts set forth opposite
their names on Schedule 2.2A, such
-7-
contributions being made by wire transfer of immediately available funds to the
account or accounts previously designated in writing by the Trust.
(c) The Trust issued Class A Common Shares and Class A
Preferred Shares to Hines Investor and Holding Partnership in the amounts set
forth opposite their names on Schedule 2.2A.
(d) The Trust issued Class B Common Shares and Class B
Preferred Shares to each GM Investor in the amounts set forth opposite its name
on Schedule 2.2A.
(e) The closing of the First Mortgage Loan took place in
accordance with the First Mortgage Loan Agreement;
(f) The closing of the Mezzanine Loan took place in
accordance with the Mezzanine Loan Agreement;
(g) The closing of the acquisition of the First Closing
Properties from the Current Owners by the SPE Owners took place in accordance
with the Master Agreement and the Assignment and Assumption;
(h) The Trust issued Class C Common Shares and Class C
Preferred Shares to SLR in the amounts set forth opposite its name on Schedule
2.2A;
(i) The proceeds from the First Mortgage Loan, the
Mezzanine Loan and the issuance of Shares to the GM Investors, Hines Investor
and Holding Partnership were applied as set forth on Schedule 2.2B.
(j) The Board of Trustees adopted a written consent in
lieu of organizational meeting in the form attached as Exhibit A; and
(k) Each SPE Owner entered into a Property Management and
Leasing Agreement with HILP substantially in the form attached as Exhibit B with
respect to the Property acquired by such SPE Owner.
SECTION 2.3 Closing Deliveries. At the First Closing the
following deliveries were made:
(a) The applicable parties entered into the following
agreements:
(i) Investor Rights Agreement
(ii) Shareholders Agreement
(iii) Assignment and Assumption Agreement
(iv) Letter Agreement, dated as of the First
Closing Date, among SLR, Hines-Sumisei US Core Properties LP
and HILP, amending and supplementing the Master Agreement.
-8-
(v) Reimbursement Agreement, dated as of the
First Closing Date, among HILP, Holding Partnership and the
Trust.
(b) The Trust entered into the SLR Subscription Agreement
with SLR;
(c) Each of the Trust, MezzCo and the SPE Owners made the
deliveries required to be made by it under the Master Agreement, the First
Mortgage Loan Agreement and the Mezzanine Loan Agreement;
(d) The Trust delivered certificates representing the
Shares being issued to each GM Investor, Hines Investor, Holding Partnership and
SLR at the First Closing to each such Person;
(e) ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. delivered an opinion to the Trust
(which opinion stated that it may be relied upon by each Person acquiring Shares
at the First Closing) to the effect that the Trust is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;
the Trust requested that ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. deliver such opinion.
(f) ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. delivered an opinion to the Trust
(which opinion stated that it may be relied upon by GMIMCo on behalf of each GM
Investor) to the effect that the Trust is in compliance as of the date of the
First Closing with such requirements of ERISA as are necessary to qualify the
Trust as a "real estate operating company" within the meaning of the Plan Assets
Regulation; the Trust requested that ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. deliver such opinion.
(g) HILP delivered a letter to each of Hines 499 Park LLC
and Hines ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC confirming HILP's obligations under the
letter agreement, dated ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ and Hines US Core Office
Properties LP regarding management fees payable to HILP with respect to ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 499 Park Avenue and Manhattan Tower.
(h) The Trust and each subsidiary of the Trust entered
into an indemnity agreement with the independent manager of such subsidiary.
(i) HILP delivered a letter to the Trust regarding the
satisfaction or waiver of the conditions set forth in the Master Agreement to
the obligation of the purchaser to acquire the First Closing Properties at the
First Closing.
ARTICLE III
ADDITIONAL CAPITAL CONTRIBUTIONS
SECTION 3.1 Third Party Equity. Holding Partnership will
diligently endeavor in good faith to raise equity capital ("Third Party Equity")
from third parties other than SLR or its Affiliates ("Third Party Investors").
It is expected that Third Party Investors will contribute capital to Holding
Partnership, which will in turn contribute capital to the Trust as contemplated
by this Agreement. However, depending on the needs of particular Third Party
Investors, Third Party Equity may be contributed directly to the Trust. The
failure to raise any Third Party Equity
-9-
shall not be considered a default under or breach of any provision of this
Agreement by any party hereto.
SECTION 3.2 Second Closing. Under Section 6.8 of the
Declaration of Trust, on or before December 31, 2003, the Trust is required to
redeem all outstanding Class C Preferred Shares and Class C Common Shares (all
of which were issued to Sumitomo at the First Closing ) for an aggregate amount
equal to the SLR Redemption Amount (the "SLR Redemption"). On December 31, 2003,
a closing (the "Second Closing") shall be held for the purpose of making the SLR
Redemption. At the Second Closing, the GM Investors shall contribute $45 million
in cash to the Trust, with each GM Investor contributing the amount set forth
opposite its name on Schedule 3.2. The Trust shall use the proceeds of such
capital contribution to fund the SLR Redemption.
SECTION 3.3 Repayment of Mezzanine Loan.
(a) Concurrently with the closing of the acquisition of
Manhattan Tower as contemplated by Article IV (the "Manhattan Tower Closing"),
the GM Investors shall contribute $38,711,531 in cash to the Trust, with each GM
Investor contributing the amount set forth opposite its name on Schedule 3.3.
The Trust shall use all of the proceeds of such capital contribution to make a
partial prepayment of the Mezzanine Loan on or about the date of the Manhattan
Tower Closing. In addition, the Trust will make a prepayment of the Mezzanine
Loan of an additional $1.5 million from amounts currently held in reserve, which
prepayment will be made at the same time as the prepayment required by the
preceding sentence. The Manhattan Tower Closing shall occur on February 2, 2004,
or such other date as GMIMCo, Holding Partnership and Hines Investor may agree.
The Trust shall deliver a notice to the GM Investors requesting contribution of
the capital required by this Section 3.3(a) on or before January 2, 2004, or
such other date as the Trust and GMIMCo may agree.
(b) On the earlier of (i) the date of the first closing
at which Third Party Investors contribute capital to Holding Partnership or the
Trust or (ii) December 31, 2004, Holding Partnership and/or Hines Investor shall
contribute to the Trust an amount in cash equal to the then remaining
outstanding principal balance of the Mezzanine Loan, and the Trust shall use all
of the proceeds of such capital contribution to the Trust to repay the remaining
balance of the Mezzanine Loan. The ▇▇▇▇▇ Group shall be responsible for the
capital contribution required by this Section 3.3(b) to the extent Third Party
Equity is not available to fund such capital contribution.
SECTION 3.4 Hines Capital Contributions. Any right or
obligation of Hines Investor or Holding Partnership under this Agreement to
contribute capital to the Trust or the MT Trust (including in respect of capital
to be contributed by the Hines Group) may be assigned to and met by either Hines
Investor or Holding Partnership, as they may agree between themselves. Hines
Investor and/or Holding Partnership will contribute capital to the Trust using
capital provided by the Hines Group such that at least 1% of the aggregate
amount of capital contributed to the Trust and, to the extent the parties remain
bound by the provisions of Article IV, the MT Trust, has been contributed by the
▇▇▇▇▇ Group. HREH shall be liable for any capital contributions which, under the
terms of this Agreement, are required to be made to the
-10-
Trust by the ▇▇▇▇▇ Group or for which the ▇▇▇▇▇ Group is responsible, through
either ▇▇▇▇▇ Investor or Holding Partnership.
SECTION 3.5 GM Capital Contributions. Each GM Investor shall
be responsible for its proportionate share of each capital contribution required
to be made by GM Investors under this Agreement, based on the proportion of the
Capital Contribution made by such GM Investor at the First Closing relative to
the Capital Contribution made by all GM Investors at the First Closing as set
forth on Schedule 2.2A.
SECTION 3.6 Issuance of Shares. In connection with each
contribution of capital to the Trust under this Article III (other than Section
3.7), and in consideration thereof, the Trust will issue Shares to the Person
contributing such capital as follows:
(a) In respect of capital contributed by ▇▇▇▇▇ Investor
or Holding Partnership, the Trust will issue to the Person making the
contribution (i) a number of Class A Preferred Shares equal to the total amount
contributed by such Person divided by the Issue Price, and (ii) a number of
Class A Common Shares equal to such number of Class A Preferred Shares.
(b) In respect of capital contributed by any GM Investor,
the Trust (i) will issue to such GM Investor (A) a number Class B Preferred
Shares equal to the total amount contributed by such GM Investor divided by the
Issue Price and (B) a number of Class B Common Shares equal to 0.925 of such
number of Class B Preferred Shares and (ii) will issue to ▇▇▇▇▇ Investor a
number of Class A Common Shares equal to 0.075 of the number of Class B
Preferred Shares issued to such GM Investor; provided that, in respect of the
$45 million that the GM Investors contribute to the Trust pursuant to Section
3.2, (1) the Trust will issue to the GM Investors in respect of $26,541,390 of
such contribution a number of Class B Common Shares equal to the number of Class
B Preferred Shares issued to the GM Investors in respect of such $26,541,390 and
will issue no Shares to ▇▇▇▇▇ Investor in respect of such $26,541,390, and (2)
the Trust will issue Shares to the GM Investors and ▇▇▇▇▇ Investor in respect of
the remaining $18,458, 610 of such $45 million contribution as provided in
clauses (i) and (ii) of this sentence without regard to this proviso. Shares
issued to GM Investors pursuant to this Section 3.6(b) shall be apportioned
ratably among such GM Investors in proportion to the amount of capital
contributed to the Trust by each such GM Investor. A numerical example of the
application of this Section 3.6(b) is included in Schedule 4.4.
(c) In respect of capital contributed by any Third Party
Investor, the Trust will issue to such Third Party Investor (i) a number of
Class A Preferred Shares equal to the amount contributed by such Third Party
Investor divided by the Issue Price and (B) a number of Class A Common Shares
equal to such number of Class A Preferred Shares.
SECTION 3.7 STB Earn Out. If at any time it is determined that
a payment is due to SLR pursuant to Section 3.1(d) of the Master Agreement (an
"STB Earn Out Payment"), then the Trust shall make the STB Earn Out Payment as
required by the Master Agreement out of earnings of (rather than capital
contributions or loans to) the Trust and shall not make any distributions to
Shareholders until the STB Earn Out Amount has been paid in full. An amount
equal to any amount paid by the Trust in respect of the STB Earn Out Payment
shall be deemed to have been distributed, as of the date of each such payment,
to the holders of Preferred Shares
-11-
and contributed by such holders to the Trust pro rata in accordance with the
number of Preferred Shares held. In connection with each such deemed
contribution, the Trust shall issue (a) to each holder of Class A Preferred
Shares deemed to have made such contribution a number of Class A Preferred
Shares equal to the amount of such contribution divided by the Issue Price and a
number of Class A Common Shares equal to such number of Class A Preferred
Shares, (b) to each holder of Class B Preferred Shares deemed to have made such
contribution a number of Class B Preferred Shares equal to the amount of such
contributions divided by the Issue Price and a number of Class B Common Shares
equal to 0.925 of such number of Class B Preferred Shares, (c) to each holder of
Class C Preferred Shares deemed to have made such contribution a number of Class
C Preferred Shares equal to the amount of such contribution divided by the Issue
Price and a number of Class C Common Shares equal to such number of Class C
Preferred Shares, and (d) to ▇▇▇▇▇ Investor, in addition to any Shares issued
pursuant to subsections (a), (b) or (c) of this Section 3.7, a number of Class A
Common Shares equal to 0.075 of the number of Class B Preferred Shares issued
pursuant to subsection (b) of this Section 3.7.
SECTION 3.8 No Other Capital Obligations. No party hereto has
any obligation to contribute capital to the Trust except to the extent
specifically set forth in this Agreement.
ARTICLE IV
ACQUISITION OF MANHATTAN TOWER
SECTION 4.1 Acquisition of Manhattan Tower.
(a) The GM Investors, ▇▇▇▇▇ Investor and Holding
Partnership shall be obligated to participate in the acquisition and ownership
of Manhattan Tower on the terms set forth in Sections 4.2 through 4.5; provided
that the financing described in the Loan Application and Commitment Agreement,
dated October 6, 2003, between Holding Partnership and Connecticut General Life
Insurance Company (the "Available Financing") is available to finance the
acquisition of Manhattan Tower to the extent, and on the terms, provided
therein. For the avoidance of doubt, Holding Partnership, HILP and their
respective Affiliates retain the right to exercise any and all rights and
remedies they may have with respect to Manhattan Tower under the terms of the
Master Agreement in their sole and absolute discretion.
(b) If the Available Financing is not available as
expected, then GMIMCo may, but shall not be obligated to, elect to cause the GM
Investors to participate in the acquisition and ownership of Manhattan Tower on
the terms set forth in Sections 4.2 through 4.5 by delivering a written notice
to such effect (an "MT Election Notice") to HILP or such Affiliate within 10
Business Days after being notified of the terms, if any, on which financing is
available for the acquisition of Manhattan Tower. If GMIMCo delivers an MT
Election Notice within such 10 Business Day Period, the GM Investors, ▇▇▇▇▇
Investor and Holding Partnership shall be obligated to participate in the
acquisition of Manhattan Tower on the terms set forth in Sections 4.2 through
4.5. If the Available Financing is not available as expected and GMIMCo does not
deliver an MT Election Notice to HILP within such 10 Business Day period, then
none of GMIMCo, the GM Investors or any other Affiliate of GMIMCo will have any
rights or obligations with respect to Manhattan Tower, HILP and its Affiliates
will have no obligation to GMIMCo or any GM Investor or any of their respective
Affiliates with respect to Manhattan
-12-
Tower, and the parties to this Agreement will have no further obligations under
this Article IV. None of the GM Investors, GMIMCo or any of their respective
Affiliates shall have any co-investment right with respect to Manhattan Tower
under the Investor Rights Agreement or otherwise. GMIMCo, the GM Investors and
their respective Affiliates have no right to participate in the acquisition or
ownership of Manhattan Tower except as provided in this Article IV.
SECTION 4.2 Formation of MT Trust. If GM Investors, ▇▇▇▇▇
Investor and Holding Partnership are obligated to participate in the acquisition
of Manhattan Tower pursuant to Section 4.1, then such GM Investors, Holding
Partnership and ▇▇▇▇▇ Investor shall organize a Maryland real estate investment
trust (the "MT Trust") for the purpose of acquiring and owning Manhattan Tower.
The MT Trust shall have a declaration of trust substantially in the form
attached as Exhibit C-1 (the "MT Declaration of Trust") and bylaws substantially
in the form attached as Exhibit C-2. In accordance with and subject to the
provisions of the Master Agreement, the MT Trust shall assume the rights and
obligations of the ▇▇▇▇▇ Affiliate having the right or obligation to acquire
Manhattan Tower under the terms of the Master Agreement with respect to the
acquisition of Manhattan Tower. In this Agreement, any reference to a defined
class of shares beginning with "MT" refers to such class of shares as defined in
the MT Declaration of Trust.
SECTION 4.3 Funding of MT Trust. The parties will contribute
capital to the MT Trust in an aggregate amount necessary to provide the equity
needed to fund the acquisition of Manhattan Tower (the "MT Equity Amount") as
follows:
(a) ▇▇▇▇▇ and/or Holding Partnership will contribute cash
to the MT Trust in an aggregate amount equal to the excess of the MT Equity
Amount over $25 million.
(b) Pursuant to the Master Agreement, Holding Partnership
will credit SLR with a $25 million capital contribution to Holding Partnership
in partial consideration for the purchase of Manhattan Tower, and issue $25
million in limited partner interests in Holding Partnership to SLR (the "SLR
Units"). In consideration of the issuance of the SLR Units to SLR, Holding
Partnership will, subject to the last sentence of this Section 4.3(b), be deemed
to have made a capital contribution to the MT Trust in the amount of $25 million
(the "HP MT Contribution Amount"). Notwithstanding anything in this Section
4.3(b) to the contrary, (A) the ▇▇▇▇▇ Group shall contribute to the MT Trust,
through ▇▇▇▇▇ Investor and/or Holding Partnership, the amount, if any, which,
when added to the amount contributed by the ▇▇▇▇▇ Group to the Trust (through
▇▇▇▇▇ Investor or Holding Partnership), is necessary to cause the aggregate
capital contributions of the ▇▇▇▇▇ Group to the Trust and the MT Trust to be not
less than 1% of the aggregate equity capital of the Trust and the MT Trust and
(B) ▇▇▇▇▇ Investor may, but shall not be obligated to, contribute cash to the MT
Trust in an aggregate amount (including any amount contributed by ▇▇▇▇▇ Investor
pursuant to clause (A) of this sentence) up to 1% of the MT Equity Amount. The
HP MT Contribution Amount shall be reduced by an amount equal to the total
amount of cash contributed by ▇▇▇▇▇ Investor to the MT Trust pursuant to clauses
(A) and (B) of the preceding sentence.
SECTION 4.4 Trust True-Up.
-13-
(a) The share ownership of the Shareholders in the Trust
and the MT Trust shall be adjusted in the manner described in this Section 4.4,
(A) immediately following the Manhattan Tower Closing and the contribution of
capital to the Trust required by Section 3.3(a) (and the issuance of MT Shares
and Shares in connection therewith) and (B) again, immediately following the
contribution of capital to the Trust required by Section 3.3(b) (and the
issuance of Shares in connection therewith), so that:
(i) the percentage of the total outstanding
Preferred Shares of all classes of the Trust owned by each GM
Investor and the percentage of the total outstanding MT
Preferred Shares of all classes owned by such GM Investor
equals the percentage (such GM Investor's "GM Target Preferred
Percentage") expressed as a fraction, the numerator of which
is the aggregate amount of the capital contributions made by
such GM Investor to the Trust and the denominator of which is
the aggregate amount of equity capital of the Trust and the MT
Trust;
(ii) the ratio of the number of Class B Common
Shares of the Trust owned by each GM Investor to the number of
Class B Preferred Shares of the Trust owned by such GM
Investor and the ratio of the number of MT Class B Common
Shares owned by such GM Investor to the number of MT Class B
Preferred Shares owned by such GM Investor are each equal to
the ratio, expressed as the percentage (such GM Investor's "GM
Target Common Percentage") resulting from a fraction, the
numerator of which is the sum of the number of Class B Common
Shares issued to such GM Investor in exchange for
contributions of cash to the Trust and the denominator of
which is the number of Class B Preferred Shares of the Trust
issued to such GM Investor in exchange for contributions of
cash to the Trust;
(iii) the number of Class A Common Shares of the
Trust held by each Shareholder other than ▇▇▇▇▇ Investor and
the GM Investors equals the number of Class A Preferred Shares
held by such Shareholder, and the number of MT Class A Common
Shares held by each Shareholder other than ▇▇▇▇▇ Investor and
the GM Investors equals the number of MT Class A Preferred
Shares held by such Shareholder.
(b) The adjustment contemplated by Section 4.4(a)(i)
shall be effected in the following manner with respect to each GM Investor: If
the difference between (A) the number of Class B Preferred Shares then owned by
such GM Investor and (B) the product of (1) such GM Investor's GM Target
Preferred Percentage and (2) the total number of Preferred Shares outstanding,
is positive, then such GM Investor shall deliver to Holding Partnership a number
of Class B Preferred Shares equal to such difference in exchange for an equal
number of MT Class A Preferred Shares held by Holding Partnership. If such
difference is negative, Holding Partnership shall deliver to such GM Investor a
number of Class A Preferred Shares equal to such difference in exchange for an
equal number of MT Class B Preferred Shares held by such GM Investor.
-14-
(c) Following the exchanges contemplated by Section
4.4(b), (i) each GM Investor shall deliver to the MT Trust all MT Class A
Preferred Shares received by such GM Investor, if any, which shall be cancelled
by the MT Trust, and the MT Trust shall issue to such GM Investor a like number
of MT Class B Preferred Shares; (ii) each GM Investor shall deliver to the Trust
all Class A Preferred Shares received by such GM Investor, if any, which shall
be cancelled by the Trust, and the Trust shall issue to such GM Investor a like
number of Class B Preferred Shares; (iii) Holding Partnership shall deliver to
the Trust all Class B Preferred Shares received by Holding Partnership, if any,
which shall be cancelled by the Trust, and the Trust shall issue to Holding
Partnership a like number of Class A Preferred Shares; and (iv) Holding
Partnership shall deliver to the MT Trust all MT Class B Preferred Shares
received by Holding Partnership, if any, which shall be cancelled by the MT
Trust, and the MT Trust shall issue to Holding Partnership a like number of MT
Class A Preferred Shares.
(d) The adjustments contemplated by Section 4.4(a)(ii)
shall be effected in the following manner with respect to each GM Investor: If
such adjustment requires a decrease in the number of Common Shares and an
increase in the number of MT Common Shares held by such GM Investor, then such
GM Investor shall deliver to Holding Partnership a number of Class B Common
Shares in exchange for an equal number of MT Class A Common Shares held by
Holding Partnership, which, when subtracted from the number of Class B Common
Shares then owned by such GM Investor, will cause the ratio of the number of
Common Shares owned by such GM Investor (after giving effect to the adjustment
contemplated by this Section 4.4(d)) to the number of Class B Preferred Shares
owned by such GM Investor (after giving effect to the adjustment contemplated by
Sections 4.4(b) and (c)) to equal the GM Target Common Percentage. If such
adjustment requires an increase in the number of Common Shares and a decrease in
the number of MT Common Shares held by such GM Investor, then Holding
Partnership shall deliver to such GM Investor a number of Class A Common Shares
in exchange for an equal number of MT Class B Common Shares held by such GM
Investor, which, when added to the number of Class B Common Shares then owned by
such GM Investor, will cause the ratio of the number of Common Shares owned by
such GM Investor (after giving effect to the adjustment contemplated by this
Section 4.4(d)) to the number of Class B Preferred Shares owned by such GM
Investor (after giving effect to the adjustment contemplated by Sections 4.4(b)
and (c)) to equal the GM Target Common Percentage.
(e) Following the exchanges contemplated by Section
4.4(d): (i) each GM Investor shall deliver to the MT Trust all MT Class A Common
Shares received by such GM Investor, if any, which shall be cancelled by the MT
Trust, and the MT Trust shall issue to such GM Investor a like number of MT
Class B Common Shares; (ii) each GM Investor shall deliver to the Trust all
Class A Common Shares received by such GM Investor, if any, which shall be
cancelled by the Trust, and the Trust shall issue to such GM Investor a like
number of Class B Common Shares; (iii) Holding Partnership shall deliver to the
Trust all Class B Common Shares received by Holding Partnership, if any, which
shall be cancelled by the Trust, and the Trust shall issue to Holding
Partnership a like number of Class A Common Shares; and (iv) Holding Partnership
shall deliver to the MT Trust all MT Class B Common Shares received by Holding
Partnership, if any, which shall be cancelled by the MT Trust, and the MT Trust
shall issue to Holding Partnership a like number of MT Class A Common Shares.
-15-
(f) Attached at Schedule 4.4 are examples of the
application of this Section 4.4.
SECTION 4.5 MT Trust Share Issuances. The MT Trust shall issue
MT Shares in consideration of capital contributed to the MT Trust pursuant to
this Article IV as follows:
(a) In respect of any capital contributed or deemed
contributed by ▇▇▇▇▇ Investor or Holding Partnership, the MT Trust shall issue
to the Person contributing such capital (i) a number of MT Class A Preferred
Shares equal to the total amount contributed divided by the MT Issue Price, and
(ii) a number of MT Class A Common Shares equal to such number of Class A
Preferred Shares.
(b) The MT Trust will issue MT Shares to the GM Investors
as contemplated by Section 4.4.
(c) In respect of any capital contributed by a Third
Party Investor, the MT Trust shall issue to such Third Party Investor (i) a
number of MT Class A Preferred Shares equal to the total amount contributed by
such Third Party Investor divided by the MT Issue Price and (ii) a number of MT
Class A Common Shares equal to such number of Class A Preferred Shares.
(d) Subject to the requirements of Section 4.4(c), any
right or obligation of Holding Partnership under this Article IV to contribute
capital to the MT Trust and/or receive MT Shares may be assigned to ▇▇▇▇▇
Investor or Third Party Investors, as ▇▇▇▇▇ Investor, Holding Partnership and
any such Third Party Investor may agree among themselves.
SECTION 4.6 MT Documentation. At the closing of the
acquisition of Manhattan Tower pursuant to this Article IV, the parties will
execute and deliver such agreements and documents as are necessary to give
effect to the requirements of this Article IV (the "MT Documentation"). The MT
Documentation shall provide for the making of covenants that correspond to the
covenants made in Article V and the making of representations and warranties
corresponding to those set forth in Article VI. The MT Documentation shall
include an agreement among the holders of MT Shares having provisions for the
voting and ownership of MT Shares substantially the same as those in the
Shareholders Agreement for the voting and ownership of Shares. If the MT Trust
is formed as contemplated by this Article IV, then concurrently with the filing
of the MT Declaration of Trust, the Trust shall amend the Declaration of Trust
to revise the definition of "Class B Preferred Capital Amount" to be the same as
the definition of "Class B Preferred Capital Amount" in the MT Declaration of
Trust, and any necessary conforming revisions shall be made to the provisions of
the Declaration of Trust affected by such revision, including, if applicable,
Appendix A.
ARTICLE V
COVENANTS
SECTION 5.1 REIT Qualification.
(a) The Trust has elected or will elect to be treated as
a partnership for income tax purposes for each taxable period, if any, prior to
the first taxable period for which the Trust
-16-
elects to be treated as a REIT under Section 856 of the Code. If and when
requested by Holding Partnership, or as otherwise determined to be advisable by
the Board of Trustees, the Trust will take such steps as are necessary to
qualify as a REIT under Section 856 of the Code. In furtherance thereof, the
Trust may require ▇▇▇▇▇ Investor and/or Holding Partnership to transfer Common
Shares and Class A Preferred Shares held by them to up to 100 different Persons
("Qualifying Persons") in such amounts as the Board of Trustees deems advisable
to satisfy the requirements of Section 856(a)(5) of the Code. The Trust may
impose such transfer and other restrictions on any Shares held by Qualifying
Persons as is deemed advisable by the Board of Trustees.
(b) Within 30 days after the Trust first elects to be
taxed as a REIT for U.S. federal income tax purposes, ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., or
other counsel reasonably acceptable to GMIMCo, will deliver an opinion to the
Trust (which opinion shall state that it may be relied upon by each Shareholder)
to the effect that, assuming the accuracy of representations as to certain
factual matters set forth in certificates to be delivered by officers of the
Trust and one or more other Persons (including GMIMCo) as of the date of such
election and as of the date of such opinion (which certificates must be
reasonably acceptable to such counsel), the Trust properly qualified as a REIT
as of the date of such election and as of the date of such opinion.
SECTION 5.2 Expenses.
(a) Members of the Board of Trustees will receive no
compensation from the Trust for their services as such. The compensation of such
persons and the costs of their attending and participating in meetings of the
Board of Trustees shall be the responsibility of the Investors electing such
persons or designating such persons for election to the Board of Trustees
pursuant to the Shareholders Agreement.
(b) For so long as a majority of the members of the Board
of Trustees are employees of HILP, HILP shall make suitable employees of HILP
available to serve as officers of the Trust, and HILP shall be responsible for
the compensation of such persons, for any costs and expenses of providing such
persons with office space, facilities and supplies and for necessary ongoing
overhead support services for the operations of the Trust.
(c) All costs and expenses of administering and operating
the Trust and its assets other than those described in subsections (a) and (b)
of this Section 5.2 (including fees and expenses of attorneys and accountants)
shall be borne by the Trust.
(d) The Trust shall reimburse HILP and its Affiliates for
all out-of-pocket expenses incurred by them in connection with the acquisition
of the First Closing Properties and the negotiation, execution and delivery of
the First Mortgage Loan Agreement and the Mezzanine Loan Agreement, including
without limitation, legal, accounting, tax, consulting and other professional
services fees and expenses and travel and entertainment expenses; provided that
HILP provides documentation to support such reimbursement which is reasonably
satisfactory to GMIMCo.
SECTION 5.3 Securities Law Transfer Restrictions. No Investor
shall sell, assign, pledge, transfer or otherwise dispose or encumber any Shares
acquired by it, except (i)
-17-
pursuant to an effective registration statement under the Securities Act or (ii)
pursuant to an available exemption from registration under the Securities Act
and applicable state securities laws and, if requested by the Trust, upon
delivery by such Investor of an opinion of counsel reasonably satisfactory to
the Trust to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws. Any transfer or
purported transfer of the Shares in violation of this Section 5.3 shall be
voidable by the Trust. The Trust shall not register any transfer of Shares in
violation of this Section 5.3.
SECTION 5.4 Legends. Each certificate representing Shares
shall be endorsed with the legend set forth below, and each Investor covenants
that, except to the extent such restrictions are waived by the Trust, it shall
not transfer any Shares represented by any such certificate without complying
with the restrictions on transfer described in this Agreement and the legends
endorsed on such certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF
REQUESTED BY THE TRUST, UPON DELIVERY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE TRUST THAT THE PROPOSED
TRANSFER IS EXEMPT FROM SAID ACT, AND (B) IN ACCORDANCE WITH
THE DECLARATION OF TRUST."
SECTION 5.5 ERISA. Within a reasonable period of time
following the end of each "annual valuation period" of the Trust (as such term
is defined in the Plan Assets Regulation), the Board of Trustees shall, or shall
cause an officer of the Trust to, provide to ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. or other legal
counsel reasonably acceptable to GMIMCo a factual certificate sufficient to
enable such legal counsel to, and the Trust shall instruct such legal counsel
to, deliver to the Trust a legal opinion (which opinion shall state that it may
be relied upon by the GM Investors), dated as of a date within such annual
valuation period, which legal opinion, with respect to the twelve-month period
following such annual valuation period, shall state whether the Trust qualifies
as a "real estate operating company" in accordance with the Plan Assets
Regulation.
SECTION 5.6 UBTI. Prior to the Initial Date (as defined in the
Declaration of Trust), the Trust shall take all actions reasonably necessary to
identify the activities in which it expects to engage in connection with the
fulfillment of the purposes of the Trust and the operation of the business of
the Trust that could result in the realization by the Trust of unrelated
business taxable income. The Trust shall confer with ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. or other
legal counsel reasonably acceptable to GM Investor respecting any such
activities and the potential unrelated business taxable income consequences
thereof and, in consultation with such legal counsel, shall develop and provide
to GM Investor a written proposal for the undertaking of such activities in a
manner that will prevent the realization by GM Investor of unrelated business
taxable income. Prior to the Initial Date, the Trust shall not, without the
prior written consent of GM Investor,
-18-
undertake or perform any act, or cause or permit any of its subsidiaries to
undertake or perform any act, that the Trust has been advised by such legal
counsel could cause GM Investor to realize unrelated business taxable income. GM
Investor acknowledges and agrees that GM Investor and its counsel have been
furnished with details regarding the acquisition of the First Closing Properties
by the Trust and the SPE Owners, the terms of the First Mortgage Loan and the
Mezzanine Loan, the capitalization and equity structure of the Trust, and the
terms and provisions of the Declaration of Trust. GMIMCo and each of the GM
Investors further acknowledges that it has been afforded the opportunity to
review this Agreement and each of the documents listed on Schedule 5.6 and the
opportunity to ask questions regarding such documents prior to their execution
and delivery, and, based on such review, it acknowledges and agrees that the
acquisition of the First Closing Properties by the Trust and the SPE Owners, the
financing described in the First Mortgage Loan Agreement and the Mezzanine Loan
Agreement, the capitalization and equity structure of the Trust which is
described in the Declaration of Trust, the distribution and redemption
provisions contained in the Declaration of Trust, the payments contemplated to
be made by the Trust under the terms of this Agreement and the other Transaction
Agreements and the performance by each of the parties to the Transaction
Agreements of their respective obligations thereunder will not result in a
violation of the provisions of this Section 5.6.
SECTION 5.7 Holding Partnership Liquidity. If the general
partner of Holding Partnership determines in good faith that it is in the best
interests of Holding Partnership to sell one or more of the First Closing
Properties, then the Trust shall be obligated to sell, for cash, any (or all) of
the First Closing Properties that the Holding Partnership instructs the Trust to
sell. Unless otherwise agreed by the Holding Partnership, the Trust shall cause
such sale to take place within nine (9) months after being instructed to do so
by Holding Partnership. If Holding Partnership and the GM Investors or one of
more other Affiliates of GMIMCo participate in the formation of the MT Trust or
any other entity organized for the purpose of acquiring Manhattan Tower, and, at
any time after the MT Trust or any other such entity acquires Manhattan Tower,
the general partner of Holding Partnership determines in good faith that it is
in the best interests of Holding Partnership to sell Manhattan Tower, then the
MT Trust or such other entity shall be obligated to sell Manhattan Tower for
cash. Unless otherwise agreed by Holding Partnership, the MT Trust or such other
entity shall cause such sale to take place within nine (9) months after being
instructed to do so by Holding Partnership. The MT Documentation shall include a
covenant by the MT Trust equivalent to this Section 5.7.
SECTION 5.8 HREH Guaranties of Contingent Obligation.
(a) The Trust or any subsidiary of the Trust may from
time to time incur contingent obligations which are required by third parties to
be guaranteed or secured. At the request of the Trust, HREH or its Affiliates
may, but shall not be obligated to, issue guarantees or enter into other
undertakings for the benefit of such third parties in respect of such contingent
obligations for the benefit of the Trust or such subsidiary. The Trust shall, or
shall cause one or more of its subsidiaries to, promptly reimburse any amounts
paid by HREH or its Affiliates in respect of any such guaranty or other
undertaking, together with interest thereon at the Specified Rate. The Trust may
use Trust cash flow, cause the Trust to incur indebtedness or obtain funds
through any other means permitted under this Agreement and the Declaration of
Trust in order to make such repayment. No distributions shall be made to any
Shareholder until all amounts
-19-
payable to HREH or its Affiliates in respect of any amounts paid by HREH or its
Affiliates in respect of any such guaranty have been paid in full. HREH shall be
a third party beneficiary of the provisions of this Section 5.8(a). The Trust
shall, to the extent practicable, satisfy any obligation which, if unsatisfied,
would be required to be satisfied by HREH and reimbursed by the Trust pursuant
to this Section 5.8, prior to HREH having to satisfy such obligation.
(b) Without limiting the generality of subsection (a) of
this Section 5.8, (i) if HREH is required to make any guaranty payment in
respect of any obligation: (A) to pay tenant allowances, up to $2,000,000 that
may become due under paragraph 11 of the Fourth Amendment to Lease dated
December 21, 2001 of the lease dated October 14, 1987 by and between Simpson,
Thacher & ▇▇▇▇▇▇▇▇ and 425 Lexington Limited Liability Company, as successor in
interest to Orion Limited Partnership and predecessor in interest to Hines ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC; or (B) to make any payment arising under section 14.2 of
the First Mortgage Loan Agreement, then the Trust shall promptly reimburse HREH
for the full amount of any such payment and pay interest on such amount at the
Specified Rate from the date such payment was made by HREH to the date it is
repaid by the Trust, and (ii) if HREH is required to enter into either or both
of the Master Leases pursuant to Section 9.12 of the First Mortgage Loan
Agreement and is required to make any payments under either such Master Lease
relating to periods of time after December 31, 2003, then the Trust shall
promptly reimburse HREH for the full amount of such payments together with
interest on such amount at the Specified Rate from the date such payment was
made by HREH to the date it is repaid by the Trust. The Trust shall satisfy such
reimbursement obligation prior to making any distributions to Shareholders.
Notwithstanding subsection (a) of this Section 5.8, the Trust shall not be
obligated to reimburse HREH for any payments by HREH under either of the Master
Leases described in clause (ii) of this Section 5.8(b) relating to periods of
time prior to January 1, 2004. HREH shall be a third party beneficiary of the
provisions of this Section 5.8(b).
SECTION 5.9 HP Voting Rights. HILP agrees that, so long as
HILP or an Affiliate of HILP Controls the general partner of Holding
Partnership, the partnership agreement of Holding Partnership shall provide
GMIMCo the right to vote in any vote of limited partners of Holding Partnership
called to require or consent to (i) the removal of the general partner of
Holding Partnership as the general partner, or (ii) the liquidation of Holding
Partnership, with GMIMCo's vote on such matters to be in proportion to the
aggregate equity capital invested by GM Investors and other Affiliates of GMIMCo
Controlled by GMIMCo in the Trust, the MT Trust any other GM/Hines Co-Investment
Vehicles (as defined in the Investor Rights Agreement) relative to the total
equity capital of all Persons with equity capital invested in Holding
Partnership and Affiliates of Holding Partnership in which Holding Partnership
has a direct or indirect equity interest) to the extent such Persons are
entitled to vote on such matters under the terms of the partnership agreement of
Holding Partnership.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties of Investors. Each
Investor represents and warrants to each other Investor, the Trust and HILP as
follows:
-20-
(a) Such Investor is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization.
(b) All action required on the part of such Investor
under its Constituent Documents necessary for the authorization, execution,
delivery and performance of this Agreement and each of the other Transaction
Agreements by such Investor has been taken. When executed and delivered by such
Investor, this Agreement and each of the other Transaction Agreements shall
constitute the legal, valid and binding obligation of such Investor, enforceable
against such Investor in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally and by general equitable principles. Such Investor has all requisite
power under its Constituent Documents to enter into this Agreement and each of
the other Transaction Agreements and to carry out and perform its obligations
under the terms of this Agreement and each of the other Transaction Agreements.
(c) All consents, approvals, orders and authorizations
required on the part of such Investor in connection with the execution, delivery
or performance of this Agreement and each of the other Transaction Agreements
have been obtained and will be effective as of the First Closing Date.
(d) Such Investor's execution and delivery of, and
performance under, this Agreement and each of the other Transaction Agreements
do not conflict with, and will not result in a breach of, any of the terms,
conditions, or provisions of, or constitute a default under, any of such
Investor's Constituent Documents or any indenture, agreement, order, judgment,
or other instrument to which the such Investor is a party or by which such
Investor is bound.
(e) Such Investor has not incurred, and shall not incur,
directly or indirectly, any liability for any brokerage or finders' fees or any
similar charges in connection with this Agreement (other than, in the case of
Hines Investor and Holding Partnership, with respect to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and
Co., Inc., the fees of which will be borne by HILP or its Affiliates and not by
the Trust or GM Investor).
(f) Such Investor is acquiring the Shares to be acquired
by it pursuant to this Agreement for its own account, and not with a view to, or
for sale in connection with, any distribution of such Shares in violation of the
Securities Act. Except as contemplated by this Agreement, the Investor Rights
Agreement or the Master Agreement, such Investor has no present agreement,
undertaking, arrangement, obligation or commitment providing for the disposition
of such Shares. In the case of each Investor other than CPII, such Investor has
not been organized, reorganized or recapitalized specifically for the purpose of
investing in such Shares. GMIMCo hereby represents and warrants to the Trust
that each member of CPII is an Accredited Investor.
(g) Such Investor certifies and represents to the Trust
that at the time such Investor acquires any Shares, such Investor will be an
"accredited investor" as defined in Rule 501 of Regulation D promulgated under
the Securities Act. Such Investor's financial condition is such that it is able
to bear the risk of holding the Shares to be acquired by it for an indefinite
period of time and the risk of loss of its entire investment.
-21-
(h) Such Investor understands that the Shares have not
been and will not be registered under the Securities Act, by reason of their
issuance by the Trust in a transaction exempt from the registration requirements
of the Securities Act, have not been and will not be registered or qualified
under any state or foreign securities laws and must continue to be held by such
Investor unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. Investor understands that
there are substantial restrictions on the transferability of Shares, and that
Shares may not be sold, exchanged, assigned, or transferred unless all of the
applicable conditions set forth in the Declaration of Trust are satisfied or
waived.
(i) Such Investor has had access to any and all
information concerning the Trust and the Properties which the Investor and its
financial, tax and legal advisors required or considered necessary to make a
proper evaluation of an investment in the Trust. In making the decision to
invest in the Trust, such Investor has relied solely upon its own independent
investigations of the Properties and the Trust or investigations conducted by
its own independent advisors in evaluating its participation in the Trust, and
not on any advice or recommendation of the Trust, Holding Partnership, HILP or
any of their respective Affiliates or on any representations, warranties or
agreements of any Person other than those set forth in this Agreement and the
other Transaction Agreements.
(j) Such Investor acknowledges that any estimates,
projections and other forward-looking statements as to the future performance or
results of operations of the Trust or the Properties were provided to assist the
Investor in the evaluation of the Properties and an investment in the Trust, but
have not been considered by the Investor as facts, and the Investor is not
relying upon such estimates, projections or forward-looking statements as
accurate representations of future performance or results of operations. Such
Investor acknowledges that any such estimates, projections or forward-looking
statements are based on estimates and assumptions with respect to future facts,
events or conditions and are subject to significant economic and other
uncertainties beyond the control of the Trust, HILP or any of their respective
partners, officers, employees, agents or Affiliates, and there can be no
assurance that any projected results will be realized or that actual results
will not be materially different from those projected.
(k) In the case of each GM Investor, such GM Investor is
not "closely held" within the meaning of Section 856(h) of the Code.
(l) In the case of each of First Plaza and Holding
Partnership, such Investor represents and warrants that, as of the date hereof,
it does not own, actually or Constructively (as defined in the Declaration of
Trust), an interest in a tenant of the Trust (or a tenant of any entity owned or
Controlled by the Trust) that would cause the Trust to own, actually or
Constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B)
of the Code) in such tenant; and such Investor agrees that any violation of the
foregoing representation (or other action which is contrary to the restrictions
contained in Sections 7.2(a) through 7.2(f) of the Declaration of Trust) will
result in all Shares held by such Investor being automatically transferred to a
Charitable Trust (as defined in the Declaration of Trust) in accordance with
Sections 7.2(a)(ii) and 7.3 of the Declaration of Trust.
-22-
SECTION 6.2 Representations and Warranties of the Trust. The
Trust represents and warrants to each Investor and HILP as follows:
(a) The Trust is a Maryland real estate investment trust,
duly organized, validly existing and in good standing under the laws of the
State of Maryland. The Trust has no subsidiaries other than MezzCo, the SPE
Owners and Hines ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Member LLC. Each such subsidiary is
wholly-owned, directly or indirectly, by the Trust.
(b) Immediately following the original filing of the
Declaration of Trust and prior to the issuance of any Shares pursuant to the
Original Agreement, the authorized capital stock of the Trust consisted of
600,000 Class A Common Shares, 200,000 Class B Common Shares, 45,000 Class C
Common Shares, 600,000 Class A Preferred Shares, 200,000 Class B Preferred
Shares and 45,000 Class C Preferred Shares, of which no Shares were outstanding.
Except as contemplated by this Agreement and the Master Agreement, there are no
existing options, warrants, calls, preemptive (or similar) rights, subscriptions
or other rights, agreements, arrangements or commitments of any character
obligating the Trust to issue, transfer or sell, or cause to be issued,
transferred or sold, any shares of the capital stock of the Trust or other
equity interests in the Trust or any securities convertible into or exchangeable
for such shares of capital stock or other equity interests, and there are no
outstanding contractual obligations of the Trust to repurchase, redeem or
otherwise acquire any shares of its capital stock or other equity interests.
(c) All action required on the part of the Trust under
its Constituent Documents necessary for the authorization of the Common Shares
and Preferred Shares and the filing of the Declaration of Trust and the
authorization, execution, delivery and performance of this Agreement and each of
the other Transaction Agreements by the Trust has been taken. When executed and
delivered by the Trust, this Agreement and each of the other Transaction
Agreements shall constitute the legal, valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. The Trust has
all requisite power under its Constituent Documents to enter into this Agreement
and to carry out and perform its obligations under the terms of this Agreement
and each of the other Transaction Agreements.
(d) The Shares issued to the Investors pursuant to this
Agreement will, upon issuance against payment therefor pursuant to the terms
hereof, be duly authorized, validly issued, fully paid, non-assessable and free
of preemptive or similar rights.
(e) All consents, approvals, orders and authorizations
required on the part of the Trust in connection with the execution, delivery or
performance of this Agreement and each of the other Transaction Agreements have
been obtained and will be effective as of the First Closing Date, other than
such filings required to be made after each issuance of Shares under applicable
federal and state securities laws.
(f) The Trust's execution and delivery of, and
performance under, this Agreement and each of the other Transaction Agreements
do not conflict with, and will not result in a breach of, any of the terms,
conditions, or provisions of, or constitute a default under, any
-23-
indenture, agreement, order, judgment, or other instrument to which the Trust is
a party or by which the Trust is bound.
(g) Other than with respect to (i) the fees and expenses
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. for services rendered in connection with the
First Mortgage Loan and the Mezzanine Loan, which will be borne by the Trust,
and (ii) the fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and Co., Inc., which will be
borne by HILP or its Affiliates and not by the Trust or any Investor, the Trust
has not incurred, and shall not incur, directly or indirectly, any liability for
any brokerage or finders' fees or any similar charges in connection with this
Agreement.
SECTION 6.3 Representations and Warranties of HILP. HILP
represents and warrants to each Investor and the Trust as follows:
(a) HILP is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) All action required on the part of HILP under its
Constituent Documents necessary for the authorization, execution, delivery and
performance of this Agreement by HILP has been taken. When executed and
delivered by HILP, this Agreement shall constitute the legal, valid and binding
obligation of HILP, enforceable against HILP in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally and by general equitable principles. HILP
has all requisite power under its Constituent Documents to enter into this
Agreement and to carry out and perform its obligations under the terms of this
Agreement.
(c) All consents, approvals, orders and authorizations
required on the part of HILP in connection with the execution, delivery or
performance of this Agreement have been obtained and will be effective as of the
First Closing Date.
(d) HILP's execution and delivery of, and performance
under, this Agreement do not conflict with, and will not result in a breach of,
any of the terms, conditions, or provisions of, or constitute a default under,
any indenture, agreement, order, judgment, or other instrument to which HILP is
a party or by which HILP is bound.
(e) Other than with respect to (i) the fees and expenses
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. for services rendered in connection with the
First Mortgage Loan and the Mezzanine Loan, which will be borne by the Trust,
and (ii) the fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and Co., Inc., which will be
borne by HILP or its Affiliates and not by the Trust or any Investor, HILP has
not incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or any similar charges in connection with this
Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Entire Agreement. This Agreement and the other
Transaction Agreements constitute the entire agreement among the parties hereto
with respect to the subject
-24-
matter hereof and supersede any prior agreement or understanding among or
between them with respect to such subject matter.
SECTION 7.2 Remedies.
(a) If any party fails to contribute capital to the Trust
in the full amount required and on the date required under the terms of this
Agreement, then such party shall be required to contribute, in addition to the
capital contributions required hereunder, an amount in interest on the defaulted
amount of any such capital contribution computed at the Default Rate (as defined
in the Investor Rights Agreement) from the date such capital contribution was
due until the date such defaulted amount is paid in full. No party shall receive
any additional Shares or other consideration in respect of any default interest
paid pursuant to this Section 7.2(a).
(b) The parties hereto hereby acknowledge and agree that
in the event of any breach of any agreement, obligation or covenant contained in
this Agreement by any party hereto, the other interested party or parties would
be irreparably harmed and could not be made whole by monetary damages. It is
accordingly agreed that, in addition to any other right or remedy that any such
party may have in law or equity under applicable law, the non-breaching
interested party or parties shall be entitled to compel specific performance of
such agreement, obligation or covenant by the nonperforming party or parties.
(c) The remedies specified in subsections (a) and (b) of
this Section 7.2 are in addition to, and not to the exclusion of, any and all
other remedies that may be available at law or in equity to any party hereto for
any breach by any other party of any provision of this Agreement.
SECTION 7.3 Survival. The representations, warranties and
covenants made by the parties hereunder shall survive the closing of the
transactions contemplated hereby for the period of the applicable statutes of
limitations.
SECTION 7.4 Severability. Each provision of this Agreement
shall be considered severable and if for any reason any provision which is not
essential to the effectuation of the basic purposes of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable
and contrary to existing or future applicable law, such invalidity shall not
impair the operation of or affect those provisions of this Agreement which are
valid. In that case, this Agreement shall be construed so as to limit any term
or provision so as to make it enforceable or valid within the requirements of
any applicable law, and in the event such term or provision cannot be so
limited, this Agreement shall be construed to omit such invalid or unenforceable
provisions.
SECTION 7.5 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) mailed, registered mail, first-class postage paid, (ii) sent
by overnight mail or courier, or (iii) delivered by hand, if to any Person, at
such Person's address, or to such Person's facsimile number, as follows:
-25-
If to the Trust: Hines-Sumisei NY Core Office Trust
c/o Hines Interests Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
If to Hines Investor: Hines US Core Office Capital Associates III
Limited Partnership
c/o Hines Interests Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
-26-
If to Holding Partnership: Hines-Sumisei U.S. Core Office Fund, L.P.
c/o Hines Interests Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
If to a GM Investor: Name of such GM Investor
c/o General Motors Investment Management
Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C.
Any party may change the address to which notices, requests, demands or other
communications under this Agreement are to be delivered by giving the other
parties notice pursuant to this Section 7.5. Any notice shall be deemed to have
been duly given if personally delivered or sent by the mails or courier or by
facsimile confirmed by letter and will be deemed received, unless earlier
received, (i) if sent by certified or registered mail, return receipt requested,
when actually received, (ii) if sent by overnight mail or courier, when actually
received, and (iii) if delivered by hand, on the date of receipt.
SECTION 7.6 Amendments and Waivers. No amendment to any
provisions of this Agreement shall be valid unless it is in writing and signed
by all the parties hereto. No waiver by any party of any default,
misrepresentation or breach or warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
-27-
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence.
No waiver shall be effective hereunder unless contained in a writing signed by
the party to be charged with such waiver.
SECTION 7.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7.8 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their legal
representatives, heirs, successors and permitted assigns. No party hereto may
assign any of its rights or obligations hereunder without the consent of the
other parties, except that, subject to Section 3.4, Hines Investor may assign,
without consent, any of its rights and obligations under this Agreement to
Holding Partnership or any Hines Controlled Entity.
SECTION 7.9 Expenses. Except as otherwise provided herein,
each party shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
SECTION 7.10 Construction. Each party hereto acknowledges that
it has been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waives the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or document will be construed against the party drafting such
agreement or document.
SECTION 7.11 Headings. The Article and Section headings in
this Agreement are for convenience of reference only, and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.
SECTION 7.12 Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
SECTION 7.13 No Third Party Beneficiaries. Nothing in this
Agreement, expressly or implied, is intended to confer upon any Person other
than the parties hereto or their respective successors and permitted assigns any
rights, benefits, remedies, obligations or liabilities under this Agreement.
SECTION 7.14 No Public Announcements. No party hereto shall,
without the prior written consent of each other party hereto, issue any press
release or make any public statement with respect to the execution and delivery
of this Agreement or the other Transaction Agreements or the transactions
contemplated hereby or thereby.
SECTION 7.15 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which, when taken together, shall constitute one and the same instrument.
[Signature Pages Follow]
-28-
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the date first set forth above.
HINES-SUMISEI NY CORE OFFICE TRUST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
President
HINES-SUMISEI U.S. CORE OFFICE FUND, L.P.
By: Hines US Core Office Capital LLC
By: ▇▇▇▇▇ Interests Limited Partnership
By: Hines Holdings, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
HINES US CORE OFFICE CAPITAL ASSOCIATES III LIMITED PARTNERSHIP
By: ▇▇▇▇▇ Interests Limited Partnership
By: Hines Holdings, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
▇▇▇▇▇ INTERESTS LIMITED PARTNERSHIP
By: Hines Holdings, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
GENERAL MOTORS INVESTMENT MANAGEMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
GMAM CORE PLUS II-NYC-DC, LLC
By: General Motors Investment Management Corporation, as its Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
FIRST PLAZA GROUP TRUST
By: JPMorgan Chase Bank, as trustee for First Plaza Group Trust (as directed
by General Motors Investment Management Corporation)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
[-- --]
By: [-- --]
By: [-- --]
________________________________________
Name:[-- --]
Title:[-- --]
JOINDER
The undersigned hereby agrees that it shall be liable for the capital
contributions required under the terms of this Agreement to be made by the Hines
Group, through either Hines Investor or Holding Partnership.
HINES REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
By: JCH Investments, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
SCHEDULE 2.1
INITIAL CAPITALIZATION OF THE TRUST
EQUITY
GM Investors $ 93,673,469
▇▇▇▇▇ Group $ 45,000,000
SLR $ 45,000,000
TOTAL EQUITY $183,673,469
DEBT
First Mortgage Loan $316,405,000
Mezzanine Loan $ 85,000,000(1)
TOTAL DEBT $401,405,000
TOTAL CAPITALIZATION $585,078,469
------------------------
(1) At the First Closing, $4 million of the proceeds of the Mezzanine Loan was
held in reserve rather than applied to transaction costs. Of this amount, $2.5
million was repaid in September 2003 and $1.5 million will be repaid in
connection with the Manhattan Tower Closing in accordance with Section 3.3(a).
SCHEDULE 2.2A
FIRST CLOSING CAPITAL CONTRIBUTIONS AND SHARE ISSUANCES
Shareholder Capital Contribution Shares Issued at First Closing Percentage
----------- -------------------- ------------------------------ ----------
First Plaza $83,475,464.37 77,214.8046 Class B Common Shares 89.11% of Class B Common
42.04% of all Common
83,475.4644 Class B Preferred Shares 89.11% of Class B Preferred
45.45% of all Preferred
CPII $4,204,124.41 3,888.8151 Class B Common Shares 4.49% of Class B Common
2.12% of all Common
4,204.1244 Class B Preferred Shares 4.49% of Class B Preferred
2.29% of all Preferred
GMX $5,993,880.22 5,544.3392 Class B Common Shares 6.40% of Class B Common
3.02% of all Common
5,993.8802 Class B Preferred Shares 6.40% of Class B Preferred
3.26% of all Preferred
▇▇▇▇▇ Investor $946,286.00 7,971.7961 Class A Common Shares 15.32 % of Class A Common
4.34% of all Common
946.2860 Class A Preferred Shares 2.10% of Class A Preferred
0.52% of all Preferred
Holding Partnership $44,053,714.00 44,053.7140 Class A Common Shares 84.68% of Class A Common
23.98% of all Common
44,053.7140 Class A Preferred Shares 97.90% of Class A Preferred
23.98% of all Preferred
SLR $45,000,000 45,000 Class C Common Shares 100% of Class C Common
24.5% of all Common
45,000 Class C Preferred Shares 100% of Class C Preferred
24.5% of all Preferred
TOTAL 183,673,469 52,025.5101 Class A Common
86,647.9589 Class B Common
45,000 Class C Common
183,673.4690 Total Common
-------------------------
45,000 Class A Preferred
93,673.4690 Class B Preferred
45,000 Class C Preferred
183,673.4690 Total Preferred
----------------------------
SCHEDULE 2.2B
USE OF PROCEEDS
(ATTACHED)
425 LEXINGTON 499 PARK ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ FIRST CLOSE TOTAL
---------------------------------------------------------------
Agreed Valuation Per Master Agreement 346,000,000 147,800,000 66,500,000 560,300,000
Budgeted Closing Costs 8,637,000 3,742,000 2,637,000 15,016,000
----------- ----------- ---------- -----------
Total Cost 354,637,000 151,542,000 69,137,000 575,316,000
Budgeted Working Capital 5,000,000 2,000,000 500,000 7,500,000
----------- ----------- ---------- -----------
Cost Plus Working Capital 359,637,000 153,542,000 69,637,000 582,816,000
Permanent Financing 194,874,000 83,379,000 38,152,000 316,405,000
Bridge Financing 52,700,000 22,100,000 10,200,000 85,000,000
GM Equity 57,802,884 24,678,135 11,192,451 93,673,469
▇▇▇▇▇ Equity 27,768,052 11,855,182 5,376,766 45,000,000
Sumitomo Equity 27,768,052 11,855,182 5,376,766 45,000,000
----------- ----------- ---------- -----------
360,912,988 153,867,500 70,297,982 585,078,469
Excess Capital Drawn under Bridge 1,275,988 325,500 660,982 2,262,469
SCHEDULE 3.2
GM INVESTOR CONTRIBUTIONS AT SECOND CLOSING
NAME OF GM INVESTOR AMOUNT OF CAPITAL CONTRIBUTION
------------------- ------------------------------
First Plaza $40,096,463.85
CPII $ 2,022,314.35
GMX $ 2,881,221.80
SCHEDULE 3.3
GM INVESTOR CONTRIBUTIONS TO TRUST AT MANHATTAN TOWER CLOSING
NAME OF GM INVESTOR AMOUNT CAPITAL CONTRIBUTION
------------------- ---------------------------
First Plaza $34,495,845.27
CPII $ 1,738,147.74
GMX $ 2,477,537.98
SCHEDULE 4.4
EXAMPLES OF SECTION 4.4
CONTRIBUTIONS TO AND CAPITALIZATION OF TRUST AND MT TRUST:
FIRST
CLOSING DECEMBER 2003 CLOSING MANHATTAN TOWER CLOSING MEZZANINE LOAN PAYOFF
------- --------------------- ----------------------- ---------------------
TOTAL AS OF TOTAL AS OF TOTAL AS OF TOTAL AS OF
CLOSING CHANGE CLOSING CHANGE (4) CLOSING CHANGE CLOSING
GM Investors 93,673,469 45,000,000 138,673,469 38,711,531 177,385,000(p) 177,385,000(y)
SLR (1) 45,000,000 (45,000,000) 25,000,000 25,000,000 25,000,000
Hines Group (2) 45,000,000 45,000,000 16,761,531 61,761,531 42,288,469 104,050,000
Permanent Debt 316,415,000 316,415,000 49,850,000 366,265,000 366,265,000
Mezzanine Loan (3) 85,000,000 82,500,000 (40,211,531) 42,288,469 (42,288,469)
Total Capitalization 581,088,469 581,088,469 672,700,000 672,700,000
Total Equity 183,673,469 183,673,469 264,146,531(q) 306,435,000(z)
Total Equity Trust Only 183,673,469 183,673,469 222,385,000 264,673,469
Total Equity MT Trust Only 41,761,531 41,761,531
GM Investors Ownership 51.0% 75.5% 67.154% 57.887%
▇▇▇▇▇ Group Ownership (2) 24.5% 24.5% 23.382% 33.955%
SLR Ownership (1) 24.5% 0.0% 9.464% 8.158%
(1) SLR ownership in MT Trust will be indirect through an interest in Holding
Partnership.
(2) ▇▇▇▇▇ Group ownership in the Trust and MT Trust will be held indirectly
through ▇▇▇▇▇ Investor and Holding Partnership.
(3) At the First Closing, $4 million of the proceeds of the Mezzanine Loan was
held in reserve rather than applied to transaction costs. Of this amount
$2.5 million was repaid in September 2003. Of the $40,211,531 to be paid
on the Mezzanine Loan at the Manhattan Tower Closing, as provided in
Section 3.3(a), $38,711,531 will be paid using capital contributed to
the Trust by the GM Investors and $1.5 million will be paid from amounts
the Trust currently holds in reserve.
(4) The total capitalization including reserves at closing for Manhattan Tower
is currently estimated at $91.6 million. Savings may be realized that
will reduce the total equity requirements on this schedule.
SHARES ISSUED IN RESPECT OF CAPITAL CONTRIBUTIONS (WITHOUT TRUE UP):
FIRST CLOSING DECEMBER 2003 CLOSING MANHATTAN TOWER CLOSING MEZZANINE LOAN PAYOFF
------------- --------------------- ----------------------- ---------------------
TOTAL AS OF TOTAL AS OF TOTAL AS OF
AS OF CLOSING CHANGE CLOSING CHANGE CLOSING CHANGE CLOSING
TRUST SHARES
GM Investors
Preferred 93,673.4690 45,000 138,673.4690 38,711.5310 177,385(s) 0 177,385
Common 86,647.9589 43,615.6043 130,263.5632 35,808.1662 166,071.7294(r) 0 166,071.7294
SLR
Preferred 45,000 (45,000) 0
Common 45,000 (45,000) 0
▇▇▇▇▇ Investor
Preferred 946.2860 0 946.2860 0 946.2860 0 946.2860
Common 7,971.7961 1,384.3958 9,356.1919 2,903.3648 12,259.5567 0 12,259.5567
Holding Partnership
Preferred 44,053.7140 0 44,053.7140 0 44,053.7140 42,288.469 86,342.183
Common 44,053.7140 0 44,053.7140 0 44,053.7140 42,288.469 86,342.183
Total Preferred 183,673.469 183,673.4690 222,385.0000(n) 264,673.4690(w)
Total Common 183,673.469 183,673.4691 222,385.0001 264,673.4691
MT TRUST SHARES
GM Investors
Preferred 0
Common 0
▇▇▇▇▇ Investor
Preferred 417.6153 0 417.6153
Common 417.6153 0 417.6153
Holding Partnership
Preferred 41,343.9147 0 41,343.9147
Common 41,343.9147 0 41,343.9147
Total Preferred 41,761.53(o) 41,761.53
Total Common 41,761.53 41,761.53
MANHATTAN TOWER CLOSING
[Note: For purposes of these examples, the GM Investors are treated collectively
as a single investor referred to as "GM Investor".]
GM Investor Ownership Preferred Common
Trust MT Trust Trust MT Trust
------------------------------------------------------------------
Before True-Up 177,385.0000(a) 166,071.7294
Target 149,340.4229(b) 28,044.5771(e) 139,815.7894(h) 26,255.9400(k)
------------------------------------------------------------------
Change Per True-Up (28,044.5771) 28,044.5771 (26,255.9400)(i) 26,255.9400(l)
4.4(a)(i)
GM Target Preferred Percentage (GMTP) = (p)/(q) = 67.1540%
Where: (p) = $177,385,000, the aggregate amount of the capital
contributions made by GM Investor to the Trust, and
(q) = $264,146,531, the aggregate amount of equity capital of
the Trust and the MT Trust.
Per Section 4.4(a)(i) the true-up must result in:
GMTP = (b)/(n) = (e)/(o)
Where:
(b)/(n) is percentage of total outstanding Preferred Shares of
the Trust owned by GM Investor, and
(e)/(o) is the percentage of the total outstanding MT
Preferred Shares owned by GM Investor.
4.4(a)(ii)
GM Target Common Percentage (GMTC) = (r)/(s) = 93.6222%
Where: (r) = the number of Class B Common Shares of the Trust issued
to GM Investor in exchange for cash capital contributions to
the Trust, and
(s) = the number of Class B Preferred Shares of the Trust
issued to GM Investor in exchange for cash capital
contributions to the Trust.
Per Section 4.4(a)(ii) the true-up must result in:
GMTC = (h)/(b) = (k)/(e)
Where:
(h)/(b) = the ratio of the number of Class B Common Shares of
the Trust owned by GM Investor to the number of Class B
Preferred Shares of the Trust owned by GM Investor, and
(k)/(e) = the ratio of the number of MT Class B Common Shares
owned by GM Investor to the number of MT Class B Preferred
Shares owned by GM Investor.
4.4(b)
Pursuant to this section, GM Investor shall deliver to Holding Partnership a
number of Class B Preferred Shares equal to the difference between
(a) and (b)
Where:- (a) = the number of Class B Preferred Shares of the Trust then
owned by GM Investor,
(b) = GMTP multiplied by (n),
(n) = the total number of outstanding Preferred Shares of the
Trust, and
(a) is greater than (b).
Holding Partnership shall deliver to GM Investor a number of MT Class A
Preferred Shares equal to the number of Class B Preferred Shares delivered to
Holding Partnership pursuant to the calculation above.
4.4(d)
Pursuant to this section, GM Investor shall deliver to Holding Partnership a
number of Class B Common Shares and Holding Partnership shall deliver to GM
Investor that same amount of MT Class A Common Shares such that the GMTC is
achieved. In the above example these amount are (i) and (l).
MEZZANINE LOAN PAYOFF
[Note: For purposes of these examples, the GM Investors are treated collectively
as a single investor referred to as "GM Investor".]
GM Investor Ownership Preferred Common
Trust MT Trust Trust MT Trust
-------------------------------------------------------------------------------------------
Beginning of Period 149,340.4229(a) 28,044.5771(d) 139,815.7894 26,255.9400
Target 153,210.7370(b) 24,174.2630(e) 143,439.2626(h) 22,632.4668(k)
-------------------------------------------------------------------------------------------
Change Per True-Up 3,870.3141 (3,870.3141) 3,623.4732(i) (3,623.4732(l)
4.4(a)(i)
GM Target Preferred Percentage (GMTP) = (y)/(z) = 57.8867%
Where: (y) = 177, 385,000, the aggregate amount of the capital
contributions made by the GM Investors to the Trust, and
(z) = 306,435,000, the aggregate amount of equity capital of
the Trust and MT Trust
Per Section 4.4(a)(i) the true-up must result in:
GMTP = (b)/(w) = (e)/(o)
Where:
(b)/(w) is the percentage of total outstanding Preferred
Shares of all classes of the Trust owned by GM Investor, and
(e)/(o) is the percentage of the total outstanding MT
Preferred Shares of all classes owned by GM Investor
4.4(a)(ii)
GMTC remains at 93.6222% since GM Investors have made no additional capital
contributions and there has been no change to "contingent equity."
4.4(b)
Pursuant to this section, Holding Partnership shall deliver to GM Investor a
number of Class B Preferred Shares equal to the difference between
(a) and (b)
Where: (a) = the number of Class B Preferred Shares of the Trust then
owned by GM Investor,
(b)= GMTP multiplied by (w)
(w)= the total number of Preferred Shares of the Trust, and
(a) is less than (b).
GM Investor shall deliver to Holding Partnership a number of MT Class A
Preferred Shares equal to the number of Class B Preferred Shares delivered to GM
Investor pursuant to the calculation above.
4.4(d)
Pursuant to this section, Holding Partnership shall deliver to GM Investor a
number of Class B Common Shares and GM Investor shall deliver to Holding
Partnership that same number of MT Class A Common Shares such that the GMTC
percentage is achieved. In the above example these amount are (i) and (1).
SCHEDULE 5.6
TRANSACTION DOCUMENTS
Master Agreement
Investor Rights Agreement
Shareholders Agreement
First Mortgage Loan Agreement and the Loan Documents referred to therein
Mezzanine Loan Agreement and the Loan Documents referred to therein
Property Management and Leasing Agreement to be entered into by each SPE Owner
and HILP
Limited Liability Company Agreement of ▇▇▇▇▇ NY Properties LLC
Limited Liability Company Agreement of ▇▇▇▇▇ 499 Park LLC
Limited Liability Company Agreement of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC
Limited Liability Company Agreement of ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC
Limited Liability Company Agreement of ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Member LLC
EXHIBIT A
Form of Written Consent in Lieu of Organizational Meeting
(attached)
ANNEX A
BYLAWS
(attached)
EXHIBIT B
Form of Property Management and Leasing Agreement
(attached)
EXHIBIT C-1
Form of MT Trust Declaration of Trust
(attached)
EXHIBIT C-2
Form of MT Trust Bylaws
(attached)