EXHIBIT 10.1
CO-INVESTMENT AGREEMENT, dated as of July 28, 1998, among CAPITAL
TRUST, a California business trust, VORNADO REALTY L.P., a Delaware limited
partnership, EOP OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership,
and GENERAL MOTORS INVESTMENT MANAGEMENT CORPORATION, a Delaware corporation, as
agent for and for the benefit of the Pension Plans (as defined herein).
Preliminary Statement
Capitalized terms used in this Agreement are defined in Section 1
hereof. The Company has requested that each of the Prospective Co-Investors
purchase $50,000,000 in aggregate liquidation amount of Securities pursuant to
the terms of the Securities Purchase Agreement. The Prospective Co-Investors are
willing to do so provided that the Company agrees with the Prospective
Co-Investors as provided herein. The Company is willing to agree with the
Prospective Co-Investors as provided herein. Accordingly, the parties hereto
agree as follows.
Agreement
Section 1. Definitions. The following terms have the indicated
meanings when used herein.
a. "Advance Notice" shall mean one or more oral or written
communications that provide notice to each of the
Prospective Co- Investors of a potential Target
Investment in advance of any formal offer to co-invest
with a Term Sheet pursuant to Section 4 hereof. The
Advance Notice shall contain as much information as
practicable with regard to the nature and prospective
terms and conditions of the co-investment and the
Target Investment.
b. "Affiliate" shall have the same meaning as given
to that term in Rule 405 under the Securities Act
of 1933, as amended, or any successor rule
thereunder.
c. "Agreement" shall mean this Co-Investment
Agreement, as amended, modified, or restated from
time to time.
d. "Blocked Party" shall have the meaning set forth
in Section 5(c) hereof.
e. "Business Day" shall mean any day other than a
Saturday, Sunday or any day on which banking
institutions in New York, New York are permitted
or required by applicable law to close.
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f. "Change in Control" shall mean, with respect to any
person, (A) the acquisition after the date hereof by
any person (as such term is used in section 13(d) and
section 14(d)(2) of the Exchange Act, as in effect on
the date hereof) or related persons constituting a
group (as such term is used in Rule 13d-5 under the
Exchange Act as in effect on the date hereof) of (i)
the power to elect, appoint or cause the election or
appointment of at least a majority of the members of
the board of directors or trustees of such person,
through beneficial ownership of the voting securities
of the person or otherwise, or (ii) all or
substantially all of the properties and assets of such
person or (B) the merger or consolidation of such
person with or into another person upon the
consummation of which a majority of the board of
directors or trustees of the successor shall not be
comprised of individuals serving on the board of
directors or trustees of such person immediately prior
to consummation of the merger or consolidation.
g. "Code" shall mean the Internal Revenue Code of
1986, as amended.
h. "Co-Investment Amount" with respect to any Target
Investment shall mean the aggregate dollar amount
of co-investment in such Target Investment offered
by the Company as set forth on the Term Sheet with
respect to such Target Investment.
i. "Co-Investment Right" shall have the meaning set
forth in Section 4 hereof.
j. "Company" shall mean Capital Trust, a California
business trust.
k. "Debentures" shall mean the 8.25% Step Up
Convertible Junior Subordinated Debentures issued
pursuant to that certain Indenture, dated as of
July 28, 1998, between the Company and Wilmington
Trust Company that may be distributed to holders
of Securities upon liquidation of the Trust.
l. "Definitive Participation Agreement" shall mean the
definitive participation, joint venture or other
agreement which shall be prepared by the Company
governing the rights and obligations of the Company,
any Participating Co-Investor and any other co-
investor with respect to the participation of
co-investors in any Target Investment on terms and
conditions substantially the same as set forth on the
Term Sheet which shall be substantially in the form
attached hereto as Exhibit A.
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m. "Due Diligence Information" shall have the meaning
set forth in Section 3 hereof.
n. "Due Diligence Period" shall mean a period of
eight Business Days following the later of the
date of receipt by the Prospective Co-Investors of
substantially all of the Due Diligence Information
or the Initial Decision Date, during which due
diligence of a Target Investment shall be
completed.
o. "Election" shall have the meaning set forth in Section
4(c) hereof.
p. "EOP" shall mean Equity Office Properties Trust, a
Maryland real estate investment trust.
q. "EOPLP" shall mean EOP Operating Limited
Partnership, an Illinois limited partnership.
r. "EOPLP Entity" shall have the meaning set forth in
Section 7(b).
s. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
t. "GMIM" shall mean General Motors Investment Management
Corporation, a Delaware corporation, as agent for and
for the benefit of the Pension Plans.
u. "GMIM Entity" shall have the meaning set forth in
Section 7(c).
v. "Indication of Interest" shall mean one or more
oral or written communications that indicate the
level of interest, if any, with regard to making a
co-investment in a Target Investment that is the
subject of Advance Notice.
w. "Initial Decision Date" with respect to any Target
Investment shall mean the date two Business Days after
the Company shall have provided the Prospective
Co-Investor with a Term Sheet; provided however, that
the Initial Decision Date shall be three Business Days
after receipt of a Term Sheet if the Prospective
Co-Investor receives the Term Sheet after 4:30 p.m. New
York City time on the date of receipt.
x. "Investment Basis Amount" shall mean an amount
equal to the total liquidation value of Securities
purchased by a Prospective
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Co-Investor pursuant to the Securities Purchase
Agreement, or, if Debentures have been distributed
in respect thereof, the total principal amount of
the Debentures, or if any of such Securities or
Debentures, as the case may be, have been
converted into Underlying Common Shares, an amount
equal to the sum of the total liquidation value of
Securities or total principal amount of
Debentures, as the case may be, that have not been
so converted and the total Conversion Value (as
defined below) of the Underlying Common Shares.
For purposes of the foregoing, the term Conversion
Value shall mean the liquidation value or
principal amount of Securities or Debentures, as
the case may be, converted into Underlying Common
Shares.
y. "Participating Co-Investor" shall have the meaning
set forth in paragraph c. of Section 4 hereof.
z. "Pension Plans" shall mean one or more employee
benefit plans sponsored by General Motors
Corporation for the benefit of its employees or
the employees of its Affiliates.
aa. "Prospective Co-Investors" shall mean VRLP, EOPLP and
GMIM.
bb. "Registration Rights Agreement" shall mean the
Registration Rights Agreement, dated as of the date
hereof, among the Company, VRLP, EOPLP and certain of
the Pension Plans.
cc. "REIT Participating Co-Investor" shall mean either or
both of VRLP and EOPLP as a Participating Co-Investor
who shall have made an Election in accordance with
Section 4.
dd. "Securities" shall mean the 8.25% Step Up Convertible
Trust Preferred Securities representing undivided
beneficial interests in the assets of the Trust.
ee. "Securities Purchase Agreement" shall mean the
Preferred Securities Purchase Agreement, dated as of
the date hereof, among the Company, the Trust, VRLP,
EOPLP and certain of the Pension Plans.
ff. "Target Investment" shall mean any loan or other
investment (i.e., a commercial real estate
financial asset other than a loan), the
opportunity for which develops on or after the
date hereof, with respect to which the Company has
purchased or has made or intends to make a
commitment or offer to purchase and for which
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the Company has determined to obtain co-investors
to originate and fund or acquire all or any
portion of the loan or other investment.
gg. "Tax-Exempt Participating Co-Investor" shall mean any
Pension Plan which shall have made an Election in
accordance with Section 4.
hh. "Term Sheet" with respect to any Target Investment
shall mean a written summary of terms that describes
such Target Investment, including the proposed terms
and conditions thereof, and the proposed terms and
conditions of the co-investment, including without
limitation, the principal amount and nature of the
loan or the aggregate amount of the investment, the
maturity date, in the case of a loan, the name and a
brief description of the borrower or target of the
investment, the aggregate investment amount, the Co-
Investment Amount, the pro-rata share, the rate of
interest to be paid to the Company and to each of the
Prospective Co-Investors on such loan and a
description of the form of security for such loan, in
the case of the loan, in reasonable detail in the
usual and customary form, it being represented by the
Company that the Company's term sheet presented to
counter parties customarily provides for customary due
diligence termination provisions.
ii. "Trust" shall mean CT Convertible Trust I, a Delaware
statutory business trust.
jj. "Underlying Common Shares" means the class A common
shares of the Company issuable upon conversion of the
Securities or the Debentures.
kk. "VRLP" shall mean Vornado Realty L.P., a Delaware
limited partnership.
ll. "VNO" shall mean Vornado Realty Trust, a Maryland real
estate investment trust.
mm. "VRLP Entity" shall have the meaning set forth in
Section 7(a) hereof.
Section 2. No Obligation. The Company shall have complete discretion in
determining whether to obtain co-investors for any investment and shall be under
no obligation to offer any particular investment opportunity to the Prospective
Co-Investors except as set forth in this Agreement. The Prospective Co-Investors
shall have no right
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to co-invest in any investment made by the Company unless and until the Company
has determined in its sole and absolute discretion to obtain co-investors for
such investment and any right to co-invest enjoyed by the Prospective
Co-Investors shall be limited to the rights set forth in this Agreement.
Section 3. Preliminary Indication. In advance of any formal offer to
co-invest in a Target Investment with a Term Sheet pursuant to Section 4 hereof,
the Company shall use best efforts to provide the Prospective Co-Investors with
Advance Notice and, upon receipt of such notice, the Prospective Co-Investors
shall use best efforts to provide, as soon as practicable, an Indication of
Interest. Following the receipt of an Indication of Interest confirming an
interest in making a co-investment in a Target Investment, the Company shall
provide to the Prospective Co-Investor, as soon as practicable, copies of all
due diligence reports, financial, underwriting and market information, credit
files and any other information relating to the Target Investment prepared or
obtained by and in the possession of the Company (collectively "Due Diligence
Information") as reasonably requested by the Prospective Co-Investor.
Irrespective of whether the Company receives from a Prospective Co-Investor an
Indication of Interest in response to any Advance Notice provided by the
Company, the Company shall make a formal offer to each Prospective Co- Investor
with a Term Sheet pursuant to Section 4 hereof.
Section 4. Co-Investment Right. The Prospective Co-Investors shall have
the right to co-invest in loans and other investments to be entered into or made
or previously entered into or made by the Company, directly or indirectly
through any entity, upon the following terms and conditions (the "Co-Investment
Right"). If the Company determines in its sole and absolute discretion to obtain
co-investors for any Target Investment, the Company shall first offer the
opportunity to co-invest in the Target Investment to the Prospective
Co-Investors (which offer shall be made upon the same terms to each of the
Prospective Co-Investors) as follows:
a. The Company shall provide each of the Prospective
Co-Investors with the Term Sheet which shall serve
as an irrevocable offer by the Company to the
Prospective Co-Investors to co-invest in the
Target Investment on the terms and conditions set
forth in such Term Sheet.
b. If prior to 5:00 p.m. New York City time on the
Initial Decision Date, any Prospective Co-Investor
shall not have advised the Company in writing that
it elects to co-invest in the Target Investment,
any such Prospective Co-Investor shall be deemed
to have waived its right to co-invest in such
Target Investment, and, if all Prospective
Co-Investors entitled to the right to co-invest
hereunder shall have waived their right to
co-invest in accordance with the foregoing, the
Company shall thereafter be free without
restriction under this Section 4 to obtain
alternative co-investors as it determines in its
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complete discretion, provided however, if the
Company determines to offer a co-investment in
such Target Investment to alternative co-investors
on materially more favorable terms and conditions,
the Company must first offer the Prospective
Co-Investors the opportunity to co-invest on such
terms and conditions by means of a revised Term
Sheet incorporating such terms and conditions.
Such offer shall be made in accordance with, and
shall be governed by, the provisions of this
Section 4.
c. Each Prospective Co-Investor may individually
elect to co-invest in the Target Investment by
providing written notice to the Company of such
election (each such notice, an "Election") prior
to 5:00 p.m. New York City time on the Initial
Decision Date and confirming such Election in
writing prior to 5:00 p.m. New York City time on
the last Business Day of the Due Diligence Period
(a Prospective Co-Investor who delivers an
Election and confirms such Election is hereinafter
referred to as a "Participating Co- Investor"). If
a Prospective Co-Investor shall have failed in its
sole and absolute discretion to confirm its
Election in accordance with the foregoing, such
Prospective Co-Investor shall be deemed to have
waived its right to co-invest in such Target
Investment (but not in any other Target
Investment). Upon delivery to the Company of its
written confirmation of the Election, unless
otherwise agreed in writing by the Company, the
Participating Co- Investor shall be deemed to have
accepted the offer to co-invest its pro rata share
of the Co-Investment Amount on the terms and
conditions set forth on the Term Sheet and the
parties thereafter shall proceed as follows:
i. The Company shall in good faith use
reasonable commercial efforts to secure
for each Participating Co- Investor the
opportunity to co-invest in the Target
Investment on terms and conditions
substantially the same as set forth in
the Term Sheet. Notwithstanding the
foregoing, each Participating Co-Investor
shall have the sole and absolute right to
terminate without penalty any Election
and confirmation thereof or other
agreement to co- invest in such Target
Investment (each Participating Co-
Investor who shall exercise such right
shall no longer be considered a
Participating Co-Investor with respect to
such Target Investment) if (i) there are
one or more changes that individually or
in the aggregate constitute a material
change in the terms and conditions as set
forth on the Term Sheet or the REIT
Suitable Investment (as defined below) or
Non-
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UBTI Investment (as defined below)
status of the Target Investment based on
information contained on or omitted from
the Term Sheet (a change altering an
investment from a REIT Suitable
Investment to an investment that is not a
REIT Suitable Investment or a change
altering an investment from a Non-UBTI
Investment to an investment that is not a
Non-UBTI Investment shall constitute a
material change), or (ii) the Company
shall not have consummated the Target
Investment within 120 days after date of
confirmation of its Election.
ii. Notwithstanding the agreement of a
Participating Co- Investor to co-invest
in a Target Investment upon delivery and
confirmation of an Election pursuant to
the foregoing provisions of this Section
4, the Company shall have the exclusive
right to negotiate the terms and
conditions of such Target Investment with
the counter-party borrower or seller of
such Target Investment. The Company shall
also promptly provide the Participating
Co-Investor with copies of all Due
Diligence Information not previously
provided in accordance with Section 3
hereof.
iii. To the extent commercially practicable
without causing any detriment or
prejudice to the Company's ability to
consummate any Target Investment on
substantially the same economic terms set
forth in the Term Sheet with respect
thereto, (a) upon request of any REIT
Participating Co-Investor, the Company
shall undertake to negotiate with the
counter-party borrower or seller a
structure for the Target Investment (i)
that is in a format suitable for
investment by such REIT Participating
Co-Investor in terms of compliance with
the asset and gross income qualification
requirements for real estate investment
trusts under the Code and (ii) which
avoids excess inclusion income (under
Section 860E of the Code) for REIT
Participating Co- Investors (a Target
Investment meeting the requirements of
both of the immediately foregoing clauses
(i) or (ii), a "REIT Suitable
Investment"), and (b) upon request of any
Tax- Exempt Participating Co-Investor (as
herein defined), the Company shall
undertake to negotiate with the counter-
party borrower or seller a structure for
the Target Investment that does not
result in unrelated business taxable
income for the Tax-Exempt Participating
Co-
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Investor (a Target Investment meeting
the requirements of the foregoing clause,
a "Non-UBTI Investment").
iv. Subject to the terms and conditions of
this Agreement, the Participating
Co-Investor shall in good faith use
reasonable commercial efforts to execute
and deliver, or cause to be executed and
delivered, the Definitive Participation
Agreement with respect to the Target
Investment and any related definitive
documentation necessary to consummate the
co-investment governed thereby no later
than the closing of the underlying Target
Investment transaction, and after
execution and delivery of the foregoing
definitive documentation, to take all
actions as may be reasonably necessary to
consummate the transactions governed
thereby.
d. Unless otherwise agreed in writing among the
Prospective Co- Investors, the Prospective
Co-Investors shall be entitled to co- invest a pro
rata share of the Co-Investment Amount set forth
on the Term Sheet. If any Prospective Co-Investor
shall have failed to deliver and confirm an
Election or otherwise elected not to co- invest
and shall thereby have waived its right to
co-invest in accordance with paragraphs b. or c.
of this Section 4, the Company may in its sole and
absolute discretion offer to the Participating
Co-Investors (on a pro rata basis if there is more
than one other Participating Co-Investor), the
opportunity to co-invest an additional portion of
the Co-Investment Amount set forth on the Term
Sheet on the terms set forth in the Term Sheet,
such additional amount to be determined by the
Company in its sole and absolute discretion. Each
Participating Co-Investor may individually elect
to co-invest such additional portion of the Co-
Investment Amount by providing written notice to
the Company of such election prior to 5:00 p.m. on
the second Business Day following the date written
notification of the offer pursuant to paragraph d.
of this Section 4 by the Company is delivered to
such Participating Co-Investor (or, if later, 5:00
p.m. on the last Business Day of the Due Diligence
Period). Upon delivery to the Company of its
written election to co-invest such additional
portion of the Co-Investment Amount, each such
Participating Co-Investor shall be deemed to have
accepted the Company's offer to co-invest such
portion of the Co-Investment Amount on terms and
conditions set forth on the Term Sheet and the
parties thereafter shall proceed as set forth in
subparagraphs i. through iv. of paragraph c. of
this Section 4.
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Section 5. Certain Agreements, Acknowledgments and Representations. The
parties acknowledge and agree as follows:
a. The Company acknowledges and agrees that the
Prospective Co- Investors would not have entered
into the Securities Purchase Agreement without the
Company having entered into this Agreement.
b. Each Prospective Co-investor acknowledges and
agrees, severally and not jointly, that the
Company is entitled to rely on any agreement made
by such Prospective Co-Investor to co-invest in a
Target Investment pursuant to the provisions of
paragraph c. or paragraph d. of Section 4 hereof
and that, if such Prospective Co- Investor shall
have breached its obligations under subparagraph
iv. of paragraph c. of Section 4 hereof, any such
Prospective Co-Investor shall indemnify and hold
harmless the Company for any actual out-of-pocket
losses incurred as a result of such breach. The
Company shall indemnify and hold each of the
Prospective Co-Investors harmless from and against
any and all losses, arising, directly or
indirectly, from any willful misconduct, gross
negligence or fraud by the Company in connection
with this Agreement, any Definitive Participation
Agreement or any co- investment in a Target
Investment under this Agreement. Each of the
Prospective Co-Investors, severally and not
jointly, shall indemnify and hold the Company
harmless from and against any and all losses,
arising, directly or indirectly, from any willful
misconduct, gross negligence or fraud by such
Prospective Co- Investor in connection with this
Agreement, any Definitive Participation Agreement
or any co-investment in a Target Investment under
this Agreement.
c. Notwithstanding any of the terms and provisions of
this Agreement to the contrary, the Prospective
Co-Investors acknowledge and agree that, if, after
the Company shall have in good faith used
reasonable commercial efforts to overcome an
Objection (as defined herein), the counter-party
borrower or seller of any particular investment
for which the Company has determined to obtain
co-investors objects (an "Objection") to the
participation of any Prospective Co-Investor as a
co-investor in such investment (a "Blocked
Party"), the validity of such Objection to be
determined in the sole and absolute good faith
discretion of the Company, the Company shall not
be obligated to offer the opportunity to co-
invest in such investment to any such Blocked
Party, in which case
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any offer made pursuant to Section 4 hereof shall
be made solely to the other Prospective
Co-Investors, provided that, the objecting
counter-party shall not have objected to the
participation of such other Prospective
Co-Investor as a co-investor, in which case no
offer need be made pursuant to Section 4 hereof;
provided further that, if the Company is not
obligated to offer an opportunity to co-invest to
any Blocked Party in accordance with the
foregoing, no other Prospective Co-Investor(s)
(other than GMIM (assuming GMIM is not a Blocked
Party)) shall be entitled to participate in a
Target Investment unless the Blocked Party or
Parties consent(s) in writing to the participation
of such other Prospective Co- Investor(s) in such
Target Investment. The Company shall provide
written notice of any Objection to all Prospective
Co-Investors as soon as practicable after the
Company learns of such Objection.
d. Each Prospective Co-Investor acknowledges and
agrees, severally and not jointly, that except
pursuant to the provisions of Section 4 hereof,
such Prospective Co-Investor and its Affiliates
shall not, without the Company's prior written
consent, acquire an interest for its own account
in any loan or other investment that was the
subject of an Advance Notice or a Term Sheet that
was initially presented to such Prospective
Co-Investor pursuant to the provisions of Section
4 hereof; provided, however, the foregoing
restriction shall not apply to any acquisition by
an enterprise in which any such Prospective
Co-Investor owns an interest but over which it
does not possess or exercise any discretionary
investment power; provided further the foregoing
restriction shall terminate upon the earlier of
(i) the declaration by the Company that it has
terminated all negotiations toward consummation of
the loan or investment, (ii) the Company's receipt
of notice that the counter-party has terminated
negotiations with the Company toward consummation
of the loan or investment, or (iii) 90 days
following the date the Term Sheet was provided to
the Prospective Co-Investors, except in the case
of clause (ii) the restrictions shall not
terminate if the principal reason for the
counter-party's termination of negotiations is due
to the receipt of an offer with more favorable
terms directly or indirectly from such Prospective
Co-Investor; provided further that a Prospective
Co-Investor may acquire such interest in any loan
or other investment for which it or its Affiliates
had independently identified and considered for
investment prior to receipt of Advance Notice
pursuant to Section 3 hereof or a Term Sheet
concerning such loan interest or investment; and
provided further that the Prospective Co-Investor
will promptly notify the Company of such prior
identification and consideration
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after the earlier of the receipt of Advance Notice
pursuant to Section 3 hereof or a related Term
Sheet. The Company shall promptly notify the
Prospective Co-Investors of any termination of
negotiations by the Company or the counter-party
borrower or seller. For purposes of this paragraph
(d) of Section 5, the term "Affiliate" (A) when
used with respect to EOPLP, shall exclude (i) any
person or entity having securities that are listed
on a national securities exchange or traded in the
national over-the-counter market (a "Public
Company"), (ii) any subsidiary, direct or
indirect, of a Public Company, (iii) any person or
entity any part of whose equity or other ownership
interests (or any rights to acquire the same) are
owned, directly or indirectly, beneficially or of
record by any person or entity in addition to
Equity Group Investments, Inc. ("EGI"), or (iv)
any person or entity that owns, directly or
indirectly, beneficially or of record, any equity
or other ownership interests in EGI or any wholly
owned subsidiary, direct or indirect, of EGI and
(B) when used with respect to VRLP, shall exclude
(i) any Public Company, (ii) any subsidiary,
direct or indirect, of a Public Company.
e. Each Prospective Co-Investor and the Company
acknowledges and agrees that the rights and
obligations of any Participating Co- Investor,
respectively, with respect to participation in any
Target Investment shall be governed by the
Definitive Participation Agreement with respect
thereto, and only the execution and delivery of
such Definitive Participation Agreement by the
parties thereto shall constitute and give rise to
a legally binding and enforceable agreement of the
Participating Co-Investor and the Company in
respect of the Target Investment.
f. Each Prospective Co-Investor, severally and not
jointly, acknowledges and agrees that, in
connection with any Target Investment in which it
shall co-invest, it shall undertake its own
independent investigation and evaluation of the
Target Investment and it shall not rely on any
investigation or evaluation undertaken by the
Company or any other Prospective Co-Investor, it
being further acknowledged and agreed by each
Prospective Co-Investor that neither the Company
nor any other Prospective Co-Investor makes any
representation or warranty with respect to the
suitability or fitness of any Target Investment.
Each Prospective Co-Investor, severally and not
jointly, represents and warrants that it is a
sophisticated investor that has such knowledge and
experience in financial and business matters and
that it is capable of evaluating
732653.17
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the merits and risks of a co-investment in any
prospective Target Investment.
g. At any time following the receipt of an Indication
of Interest or confirmation of an Election, the
Company shall use commercially reasonable efforts
to respond to due diligence related inquiries made
by any Prospective Co-Investor who shall have
provided such Indication of Interest or confirmed
such Election and allow such party to participate
in any property inspections or tours.
h. The parties hereto acknowledge and agree that
nothing contained in this Agreement shall be
considered to create the relationship of principal
and agent or of partners or joint venturers and
that no party shall have the authority to bind any
other party hereto or have any fiduciary duty to
any other party under this Agreement.
i. Notwithstanding any of the terms and provisions of
this Agreement to the contrary, each Prospective
Co-Investor shall have the right to co-invest in
loans and other investments on the same economic
terms and conditions (including, without
limitation, the same interest rate and the same
share of fees) that the Company has obtained or
will obtain from the counter-party borrower or
seller and the Company shall set forth such same
terms and conditions in the applicable Term Sheet;
provided, however, that no Prospective co-Investor
shall be required, unless it otherwise agrees, to
reimburse the Company for any costs or expenses
that the Company has incurred or will incur in
connection with the negotiation, documentation or
consummation of such loan or other investment;
provided, further, that this paragraph i of
Section 5 shall not apply to any proposed or
consummated Target Investment (i) with respect to
all Prospective Co-Investors, if the Company
consummated such Target Investment that is the
subject of a Term Sheet more than 90 days prior to
the date the Company first provides any
Prospective Co-Investor with Advance Notice of
such Target Investment or (ii) with respect to an
Uninterested Prospective Co-Investor (as defined
herein). For purposes of the foregoing, the term
"Uninterested Prospective Co-Investor" means any
Prospective Co-Investor who has failed to make and
confirm an Election pursuant to Section 4
following the receipt of a Formal Offer.
Section 6. Termination of Co-Investment Right. The Co-Investment Right
of any Prospective Co-Investor (or assignee pursuant to Section 8 hereof) shall
continue until terminated and shall terminate upon the earlier of:
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a. the date upon which such Prospective Co-Investor
shall have, in one or more transactions, disposed
of Securities, Debentures and Underlying Common
Shares in the aggregate representing more than 50%
of its Investment Basis Amount; provided that the
transfer of Securities, Debentures or Underlying
Common Shares to Affiliates of any such
Prospective Co-Investor shall not be deemed to be
a disposition;
b. the date upon which such Prospective Co-Investor
shall have breached its obligations under
subparagraph iv. of paragraph c. of Section 4
hereof;
c. the date upon which such Prospective Co-Investor
shall have materially breached or defaulted upon
the provisions of any Definitive Participation
Agreement and such breach shall not have been
cured within ten Business Days of receipt by the
breaching Prospective Co-Investor of written
notice of such breach;
d. the date upon which a Change in Control shall have
occurred with respect to such Prospective
Co-Investor (other than GMIM); or
e. the date upon which such Prospective Co-Investor
shall have materially breached or defaulted upon
the provisions of the Securities Purchase
Agreement or the Registration Rights
Agreement;
provided, however, that any such termination shall have no effect on the rights
and obligations of the Company and the terminated Prospective Co-Investor with
respect to any agreement made by such terminated Prospective Co-Investor to
co-invest in a Target Investment pursuant to the provisions of paragraph c. or
paragraph d. of Section 4 hereof.
Section 7. Investment Through, or Transfers to, Certain Entities.
a. VRLP, in or after electing to co-invest in a
Target Investment, shall have the absolute right
to make or hold such investment either directly or
through any entity in which VRLP holds, directly
or indirectly, an economic interest of greater
than 50% (any such entity, a "VRLP Entity"). In
addition, VRLP shall have the right, in electing
to co-invest in a Target Investment, to transfer
its right to invest in such Target Investment to
Vornado Operating Inc. or any Affiliate or
subsidiary of Vornado Operating Inc. In addition,
VRLP and each VRLP Entity shall have the right to
transfer all or a portion of its interest in any
Target Investment to VRLP or any other VRLP
Entity.
732653.17
14
b. EOPLP, in or after electing to co-invest in a
Target Investment, shall have the absolute right
to make or hold such investment either directly or
through any entity in which EOPLP holds, directly
or indirectly, an economic interest of greater
than 50% (each such entity, a "EOPLP Entity"). In
addition, EOPLP shall have the right to, in
electing to co-invest in a Target Investment, to
transfer its right to invest in such Target
Co-Investment to any EOP sponsored "Paper Clip"
enterprise or any Affiliate or subsidiary thereof.
In addition, EOPLP and each EOPLP Entity shall
have the right to transfer all or a portion of its
interests in any Target Investment to EOPLP or any
other EOPLP Entity.
c. GMIM, in or after electing to co-invest in a
Target Investment, shall have the absolute right
to make or hold such investment either directly or
through any entity in which GMIM holds, directly
or indirectly, an economic interest of greater
than 50% (each such entity, a "GMIM Entity"). In
addition, GMIM and each GMIM Entity shall have the
right to transfer all or a portion of its
interests in any Target Investment to GMIM or any
other GMIM Entity.
Section 8. Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned in whole or in part by any party hereto without
the prior written consent of all of the other parties hereto other than, in the
case of the Prospective Co-Investors, to one or more Affiliates of the assigning
party. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, their successors in interest and permitted assigns.
Section 9. Notices. All notices or other communications under this
Agreement shall be sufficient if in writing and delivered by hand or sent by
telecopy and shall be deemed given when so delivered by hand or telecopied to
the parties at the following addresses:
a. if to VRLP, to:
Vornado Realty L.P.
c/o Vornado Realty Trust
Park ββ ββββ, βββββ ββ
ββββββ βββββ, βββ ββββββ βββββ
Attention: βββββ βββββββββββ
Facsimile: (βββ) βββ-ββββ
732653.17
15
b. If to EOPLP, to:
EOP Operating Limited Partnership
βββ βββββ βββββββββ βββββ
βββββββ, ββββββββ βββββ
Attention to each of: βββββββ β. βββββββ
βββββββ β. βββββββ
Facsimile: (βββ) βββ-ββββ
c. If to GMIM, to:
General Motors Investment Management Corporation
βββ βββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: βββββ βββββ
Facsimile: (βββ) βββ-ββββ
d. if to the Company, to:
Capital Trust
βββ βββββ ββββββ,
ββββ βββββ,
βββ ββββ, βββ ββββ βββββ,
Attention: ββββ β. βββββ
Facsimile: (βββ) βββ-ββββ
or at such other address as the addressee may have furnished in writing to the
sender as provided herein.
Section 10. Entire Agreement. This Agreement constitutes the entire
understanding of the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings, whether oral or written,
with regard thereto. No amendment or modification of the terms of this Agreement
shall be binding or effective unless expressed in writing and signed by each
party.
Section 11. No Waiver. The waiver by any party of the breach of any of
the terms and conditions of, or any right under, this Agreement shall not be
deemed to constitute the waiver of any other breach of the same or any other
term or condition or of any similar right. No such waiver shall be binding or
effective unless expressed in writing and signed by the party giving such
waiver.
Section 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements
732653.17
16
executed and to be fully performed in such State, without regard to its
principles of conflicts of law.
Section 13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
Section 14. Construction. The section headings contained in this
Agreement are inserted for reference purposes only and shall not affect the
meaning or interpretation of this agreement.
Section 15. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules and Title 9 of the U.S. Code. Judgment on
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
The number of arbitrators shall be three, one of whom shall be
appointed by the Company, one of whom shall be appointed by the other party to
the claim or controversy (or if more than one such party, jointly by such other
parties) and the third of whom shall be selected by mutual agreement, if
possible, within 30 days of the selection of the second arbitrator and
thereafter by the American Arbitration Association and the place of arbitration
shall be New York, New York.
The arbitrators will have no authority to award punitive
damages or any other damages not measured by the prevailing party's actual
damages, and may not, in any event, make any ruling, finding or award that does
not conform to the terms of this Agreement.
Either party may make an application to the arbitrators
seeking injunctive relief to maintain the status quo until such time as the
arbitration award is rendered or the controversy is otherwise resolved. For
purposes of the foregoing, the term "status quo" shall mean with respect to a
Prospective Co-Investor, the continued enjoyment of its Co- Investment Right
conferred hereunder with respect to future Target Investments following the
development of a controversy as to the Company's right to terminate such Co-
Investment Right pursuant to the terms of Section 6.
732653.17
17
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be signed on its behalf as of the date first above written.
CAPITAL TRUST
By: /S/ ββββ β. βββββ
-----------------------------------------
Name: ββββ β. βββββ
Title: Chief Executive Officer
VORNADO REALTY L.P.
By: Vornado Realty Trust, its general partner
By: /s/ βββββββ β. ββββββββββ
----------------------------------
Name: βββββββ β. ββββββββββ
Title: President
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties Trust, its general
partner
By: /s/ βββββ β. ββββββββ
----------------------------------
Name: βββββ β. ββββββββ
Title: Senior Vice President
GENERAL MOTORS INVESTMENT
MANAGEMENT CORPORATION
By: /s/ ββββββ βββββββββ
-----------------------------------------
Name: ββββββ βββββββββ
Title: Managing Director
732653.17
16
EXHIBIT A
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Agreement") made as of the
____ day of __________ among CAPITAL TRUST, a California business trust (the
"Lender"), having an office at βββ βββββ ββββββ, βββ ββββ, βββ ββββ βββββ, and
***[VORNADO REALTY L.P., a Delaware limited partnership ("VRLP") having an
address c/o Vornado Realty Trust, Park ββ ββββ, βββββ ββ, ββββββ βββββ, βββ
ββββββ 07663]*** ***[EOP OPERATING LIMITED PARTNERSHIP, a Delaware limited
partnership ("EOPLP") having an address at βββ βββββ βββββββββ βββββ, βββββββ,
ββββββββ 60606]*** [and] ***[GENERAL MOTORS INVESTMENT MANAGEMENT CORPORATION, a
Delaware corporation, as agent for one or more employee benefit plans
(collectively, the "GM Pension Plans") sponsored by the General Motors
Corporation for the benefit of its employees or the employees of its affiliates
("GMIM"), having an address at βββ βββββ ββββββ, βββ ββββ, βββ ββββ βββββ]***
([VRLP], [EOPLP] and [GMIM], collectively, the "Co-Investing Participants"; each
a "Co-Investing Participant").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Lender is making a loan in the ***[maximum]*** principal
amount of $__________ (the "Loan") to ____________, a ________ ________ [type of
entity] (the "Borrower"), with respect to the Premises (as defined in Exhibit A
attached hereto and made a part hereof; all capitalized terms used and not
otherwise defined in this Agreement having the respective meanings given to such
terms in Exhibit A) and the Improvements located thereon, which Loan is
evidenced by the Note and is secured by, inter alia, the Mortgage1 and the other
Security Documents;
***[WHEREAS, the full $__________ of the Loan is being
advanced by the Lender to the Borrower]***; and
WHEREAS, the Lender desires to sell and assign to the
Co-Investing Participants, and the Co-Investing Participants desire to purchase
from the Lender, undivided
--------
1 Note: This Agreement to be modified appropriately for non-mortgage loans.
736730.10
participation interests in the outstanding principal balance of the Loan on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Lender and the Co-Investing Participants mutually agree as
follows:
1. Purchase of Undivided Interests. As of the date hereof, the
Lender shall sell and assign to each Co-Investing Participant, and each
Co-Investing Participant shall purchase and assume from the Lender, a respective
undivided participation interest in the outstanding principal balance of the
Loan and the Loan Documents, in the amount and percentage and otherwise in
accordance with the terms and provisions set forth with respect to such Co-
Investing Participant on Exhibit B attached hereto and made a part hereof, and
the Lender shall, subject to the provisions of paragraph 9 of this Agreement,
retain an undivided interest in the outstanding principal balance of the Loan
and the Loan Documents in the amount and percentage and otherwise in accordance
with the terms and provisions set forth with respect to Lender on Exhibit B. As
of the date hereof, each Co-Investing Participant shall transfer to the Lender
by Federal funds wire or in other immediately available New York City funds in
United States dollars an amount equal to its respective undivided interest in
the outstanding principal balance of the Loan as set forth on Exhibit B.
2. Obligations of the Lender. The Lender shall, in its
capacity as lead lender and servicer and until each Co-Investing Participant's
undivided interest in the Loan has been paid in full, (i) hold the Loan
Documents and the collateral for the Loan for the benefit of itself and the
Co-Investing Participants (it being understood and agreed that each party to
this Agreement shall be deemed to have an interest therein in proportion to its
undivided interest in the Loan), (ii) receive all payments in respect of
interest, principal and other sums on account of or with respect to the Loan,
(iii) promptly remit to each Co-Investing Participant its pro rata share of
interest, principal and other sums received by the Lender on account of or with
respect to the Loan in accordance with the provisions of this Agreement by wire
or ACH transfer in immediately available funds pursuant to the respective wiring
or ACH instructions delivered in connection with each Co-Investing Participant's
acquisition of its interest in the Loan (as such instructions may be modified in
writing from time to time by such Co-Investing Participant), and (iv) use due
diligence to recover from the Borrower all expenses incurred which are
reimbursable from the Borrower and promptly remit to each Co-Investing
Participant its pro rata share thereof. Except as specifically provided to the
contrary in Exhibit B to this Agreement and except in the case of amounts
payable by the Borrower pursuant to the provisions of the Loan Documents
regarding reserve requirements and capital adequacy, the Lender's and the
Co-Investing Participants' respective shares of principal, interest and other
sums (if any) actually received by the Lender on account of or with respect to
the Loan shall be calculated on the basis of the Lender's and the Co-Investing
Participants' respective undivided percentage interests in the Loan from time to
time. In addition, (a) not less frequently than once per month, the Lender shall
provide to each Co-Investing Participant a periodic loan status report, either
prepared by the Lender or obtained by the Lender from Midland Loan
736730.10
-2-
Services, Inc. or any other loan servicer which may be unanimously agreed upon
in writing by the parties to this Agreement (Midland Loan Services, Inc. or such
other servicer, the "Loan Servicer"), which loan status report shall include
without limitation a record of any and all loan payments and other activity, and
(b) upon request, the Lender shall promptly furnish any Co-Investing Participant
with such information or documentation regarding the Loan as may be reasonably
required by such Co-Investing Participant for tax or regulatory compliance, in
connection with any internal audit requirements applicable to such Co-Investing
Participant or for similar purposes, provided in each case that the information
or documentation requested is within the possession of the Lender or the Loan
Servicer. Except as specifically provided to the contrary in paragraph 4 of this
Agreement, the Lender shall not without the prior unanimous written consent of
the Co-Investing Participants (i) waive, modify or amend in any respect
whatsoever the interest rate provisions set forth in the Loan Documents, (ii)
increase the maximum principal amount of the Loan other than as a result of
protective advances in situations which are, in the Lender's opinion in the
exercise of commercially reasonable judgement, of an emergency nature, including
without limitation advances for the payment of taxes or insurance premiums,
provided that in any event such increases shall be subject to the limitations
set forth on Exhibit B, (iii) extend the maturity date of the Loan, other than
in accordance with any mandatory provisions of the Loan Documents relating
thereto, (iv) make or consent to any materially adverse amendment, modification
or waiver of any of the terms, covenants, provisions or conditions of the Loan
Documents, (v) waive, compromise or settle any material claim against the
Borrower or any guarantor or other person or entity (a "Guarantor") liable for
payment of the Loan in whole or in part or for the observance and performance by
the Borrower of any of the terms, covenants, provisions and conditions of the
Loan Documents, or release the Borrower or any Guarantor from any material
obligation or liability under the Loan Documents, (vi) waive any material
default under the Loan Documents, or (vii) substitute, release, reconvey or
change, in whole or in part, any collateral or security interest held under the
Loan Documents other than in accordance with any mandatory provisions of the
Loan Documents or agree to subordinate or otherwise adversely affect the
priority of the lien held by the Lender on the Premises, the Improvements or any
other security for the Loan. The Lender, in its capacity as lead lender and
servicer, may, without obtaining the prior consent of the Co-Investing
Participants, (i) extend for reasonable periods of time the time for the
observance or performance by the Borrower or any Guarantor of the terms and
conditions of the Loan Documents, provided that such extension in the reasonable
judgment of the Lender will not have a materially adverse effect on the Loan,
the Borrower's or any Guarantor's performance of its obligations under the Loan
Documents or the collateral for the Loan, and further provided that no such
extension in the case of any scheduled payment of principal and/or interest on
the Loan shall be for a period in excess of ten (10) Business Days (hereinafter
defined) beyond the expiration of any applicable grace period with respect
thereto without the prior unanimous written consent of the Co-Investing
Participants, (ii) agree or consent to any non-material amendment, modification
or waiver of the terms, covenants, provisions or conditions of the Loan
Documents (it being understood and agreed that the Lender shall not agree,
except pursuant to the immediately preceding clause (i), to modify any economic
terms of the Loan without the unanimous written consent of the Co-
736730.10
-3-
Investing Participants), (iii) waive, compromise or settle any non-material
claim against the Borrower or any Guarantor, or release the Borrower or any
Guarantor from any non-material obligation or liability under the Loan Documents
(non-material claims, for the purposes of this clause (iii), being defined as
any single claim not in excess of $10,000 or any claims in the aggregate not in
excess of $25,000 over the term of the Loan), (iv) waive any non-material
default under the Loan Documents (it being understood and agreed that the Lender
shall not agree, except pursuant to the immediately preceding clause (i), to
waive any monetary default under the Loan without the unanimous written consent
of the Co-Investing Participants), (v) release, reconvey or change, in whole or
in part, any collateral or security interest held under the Loan Documents which
is required to be released or reconveyed in accordance with the express
provisions of the Loan Documents, and (vi) subject to the provisions of the
preceding sentence, do or perform any act or thing which in the reasonable
judgment of the Lender is necessary to enable the Lender to discharge and
perform its duties under this Agreement or which in the reasonable judgment of
the Lender is necessary or required to preserve and protect the liens and
security interests created by the Loan Documents and the priority thereby and
the collateral for the Loan and the interests of the Lender and the Co-
Investing Participants therein. Notwithstanding the foregoing, in no event shall
the Lender (a) take any action that would to the Lender's knowledge result in
unrelated business taxable income to the Co-Investing Participants, unless
otherwise agreed by the unanimous written consent of the Co-Investing
Participants or (b) take or omit to take any action in violation of applicable
law or the provisions of the Loan Documents or (unless otherwise agreed by
unanimous consent of the Co-Investing Participants) the provisions of this
Agreement. Each Co-Investing Participant shall from time to time, upon request
of the Lender, but subject to the immediately following provisions of this
paragraph, execute and deliver such documents and instruments as may be
reasonably necessary to enable the Lender to effectively administer and service
the Loan in its capacity as lead lender and servicer and in the manner
contemplated by the provisions of this Agreement. Prior to taking any action in
connection with the Loan in the name of any Co-Investing Participant or
Co-Investing Participants in any state, the Lender shall notify such
Co-Investing Participant or Co-Investing Participants in writing. Each such
Co-Investing Participant shall have the right to advise the Lender, within five
(5) days of receipt of such notice, that it is likely that the laws of the state
in which said action is to be taken either prohibit such action if taken in the
name of such Co-Investing Participant or that such Co-Investing Participant
would be adversely affected under the "doing business" or tax laws of such
state, or any federal or state regulatory laws, if such action is taken in its
name. Upon receipt of any such notice from a Co-Investing Participant, the
Lender shall, in lieu of taking the action in question in the name of such
Co-Investing Participant, take action in the name of such Person or Persons, as
agent of or in trust for such Co-Investing Participant, as shall be requested by
such Co-Investing Participant, it being understood and agreed that all costs and
expenses incurred by the Lender in complying with the foregoing provisions of
this sentence at the request of a particular Co-Investing Participant shall be
borne by such Co- Investing Participant and shall be reimbursed to the Lender
upon demand, provided that Lender has furnished to such Co-Investing Participant
evidence reasonably satisfactory to such Co-Investing Participant,
substantiating such expenditures. Such Person or Persons shall
736730.10
-4-
acknowledge in writing that such action is being taken by it in the name of such
Co-Investing Participant in question. Each Co-Investing Participant hereby
acknowledges that the Lender has made no representations or warranties with
respect to the Loan, other than as expressly set forth in this Agreement, and
that the Lender shall have no responsibility for (i) the collectibility of the
Loan, (ii) the validity, enforceability or legal effect of any of the Loan
Documents or the Title Insurance Policy, if any, described in Exhibit A attached
hereto, or any survey furnished or to be furnished to the Lender in connection
with the Loan, (iii) the validity, sufficiency or effectiveness of the lien
created or to be created by the Loan Documents, or (iv) the financial condition
of the Borrower or any Guarantor or the accuracy of any information supplied by
or to be supplied in connection with the Borrower, any Guarantor, the Premises,
the Improvements or otherwise with respect to the Loan or the collateral for the
Loan. Each Co-Investing Participant assumes all risk of loss in connection with
its respective undivided interest in the Loan to the full extent of its
respective undivided percentage interest therein. The Lender assumes all risk of
loss in connection with its undivided interest in the Loan to the full extent of
its undivided percentage interest therein. The Lender, in its capacity as lead
lender and servicer, shall retain all rights under the Loan Documents with
respect to enforcement, collection and administration of the Loan and the
security for the Loan, which rights of the Lender shall be subject to the
provisions of paragraph 4 of this Agreement. At all times and until such time as
the Loan has been paid in full, the Lender shall act as lead lender and shall
service the Loan on behalf of itself and the Co-Investing Participants in
accordance with the provisions of this Agreement. The Lender shall exercise the
same care in handling the Loan and the security therefor as the Lender exercises
with respect to loans which are held solely by the Lender for its own account
(without regard to any other loan by the Lender to the Borrower which is
subordinate in priority to the Loan or any obligation of the Borrower to the
Lender other than in connection with the Loan), and the Lender, in its capacity
as lead lender and servicer, shall have no responsibility to the Co-Investing
Participants, other than to exercise such standard of care and, in any event,
the Lender shall have no liability with respect to any Co-Investing
Participant's undivided interest in the Loan, except for any liability arising
from Lender's gross negligence, bad faith or willful misconduct. For purposes of
this Agreement, the term "Business Day" shall mean any day on which the Lender
and commercial banks are open for business in New York City.
3. Expenses. From and after the date hereof, the Lender and
the Co-Investing Participants shall share, in accordance with their respective
undivided percentage interests in the Loan, any expenses and costs reasonably
sustained or incurred in connection with the Loan as set forth below in this
paragraph. Each Co-Investing Participant shall promptly upon request by the
Lender pay to the Lender such Co-Investing Participant's pro rata share of any
reasonable out-of-pocket expenses and costs actually incurred by the Lender and
documented in connection with the Loan, to the extent any such expenses or costs
are not paid or covered by the Borrower, excluding any expenses and costs
incurred by the Lender in connection with any dispute with any Co-Investing
Participant but including without limitation any and all loan servicing fees
payable to the Loan Servicer in connection with the servicing and administration
of the Loan (the "Servicing Charges"), provided that the Lender shall require
the Loan
736730.10
-5-
Servicer to service and administer the Loan in compliance with the terms,
provisions and conditions of this Agreement and all of the material terms,
provisions and conditions of the Loan Servicer's agreement or agreements with
Lender applicable to the Loan. The Lender shall promptly upon request by any
Co-Investing Participant pay to such Co-Investing Participant its pro rata share
of any reasonable out-of-pocket expenses and costs actually incurred by such
Co-Investing Participant in connection with the Loan, to the extent any such
expenses or costs are not paid or covered by the Borrower (excluding any
expenses and costs incurred by such Co-Investing Participant in connection with
any dispute with the Lender), it being agreed, however, that no Co-Investing
Participant shall seek reimbursement for any such out-of-pocket expenses or
costs if the same were incurred without obtaining the prior consent of the
Lender. Notwithstanding anything to the contrary contained herein, each of the
Lender and the Co-Investing Participants agrees for itself that it shall be
responsible for the payment of the day-to-day expenses incurred by it in
connection with its own administration and servicing of its respective undivided
interest in the Loan. No provision of this Agreement shall be deemed to limit or
modify the Lender's right to reimbursement by each Co-Investing Participant for
its pro rata share of the Servicing Charges, to the extent that such Servicing
Charges are incurred in accordance with the foregoing provisions of this
paragraph.
4. Default by the Borrower. The Lender shall promptly, after
the Lender's having knowledge thereof, inform the Co-Investing Participants in
writing of any material default under the Loan Documents and of all material
facts relating to such default or relating to any other aspect of the Loan which
facts are likely to have a materially adverse effect on the value of the
security for the Loan or on the ability of the Borrower or any Guarantor to
perform its obligations under the Loan Documents and shall keep the Co-Investing
Participants informed and up to date with respect to such default and such facts
and any actions taken by the Lender, in its capacity as lead lender and
servicer, in connection therewith, in written notices delivered on a reasonably
timely basis in connection with the material developments relating thereto. Upon
the occurrence of a material default under the Loan Documents, and within 10
days after written notification to the Co-Investing Participants by the Lender
of such default or within such shorter period of time after notification as may
be deemed advisable by the Lender, the Lender and the Co-Investing Participants
shall consult to determine a mutually acceptable course of action to take with
respect to such default and then to pursue such course of action without delay
and with due diligence. Notwithstanding any contrary or inconsistent provision
of this paragraph, no Co-Investing Participant shall be obligated or required
hereunder to approve or disapprove of the actual taking of title to the Premises
and the Improvements by the Lender and the Co-Investing Participants (whether at
a foreclosure sale, the consummation of a deed in lieu of foreclosure
transaction or otherwise) unless and until the Lender has furnished such
Co-Investing Participant with a recent appraisal and an updated environmental
report concerning the Premises and the Improvements. No action whatsoever shall
be taken by the Lender in response to any such default unless the Lender and the
Co- Investing Participants unanimously agree upon a mutually acceptable course
of action to pursue. If foreclosure is the action taken, then after payment of
all reasonable costs and expenses of foreclosure and collection, the Lender
shall promptly remit to each Co-Investing
736730.10
-6-
Participant its pro rata share of all net proceeds received by the Lender as a
consequence of such foreclosure proceeding, including, without limitation, net
proceeds of foreclosure sale, net income from operation of the Premises and the
Improvements pending liquidation, and net proceeds of any resale of the Premises
and the Improvements. If the Premises and the Improvements are acquired through
foreclosure, deed in lieu of foreclosure or otherwise, the Lender and the
Co-Investing Participants shall have undivided interests in the Premises and the
Improvements equal to their respective undivided percentage interests in the
Loan and title shall be taken in the name of the Lender (or a subsidiary
thereof) and the Co-Investing Participants (or their respective nominees or
affiliates, as applicable). If such title is taken, the Lender and the
Co-Investing Participants respectively waive any statutory or common law right
of partition or any other similar rights or remedies, and the Lender and the
Co-Investing Participants agree to consult as to the best manner in which to
proceed with respect to the operation, management, maintenance, development and
disposition of the Premises and the Improvements. No action whatsoever shall be
taken by the Lender with respect to the operation, management, maintenance,
development and disposition of the Premises and the Improvements in response to
any such default unless the Lender and the Co-Investing Participants unanimously
agree upon a mutually acceptable course of action to pursue. The Lender shall,
subject to the provisions of this paragraph, retain in its capacity as lead
lender and servicer, all rights with respect to the operation, management and
maintenance of the Premises and the Improvements pending the disposition thereof
in accordance with the provisions of this paragraph. The Co-Investing
Participants shall promptly execute and deliver to the Lender all documents and
instruments which may be reasonably requested or required by the Lender to
enable the Lender to operate, manage and maintain the Premises and the
Improvements and to effect a disposition thereof in accordance with the
provisions of this paragraph. Without limiting the generality of the foregoing
provisions, the Lender and the Co- Investing Participants shall undertake
promptly upon any such taking of title, and shall thereafter diligently and
expeditiously and in good faith negotiate, execute and deliver a partnership,
operating, joint venture or other similar agreement setting forth the respective
rights and obligations of the Lender and the Co-Investing Participants with
respect to the Premises and the Improvements, which rights and obligations shall
be substantially equivalent to the rights set forth in this Agreement. All
reasonable out-of-pocket expenses actually incurred in connection with any
action taken pursuant to the provisions of this paragraph shall be shared by the
Lender and the Co-Investing Participants on a pro rata basis. The Lender and the
Co-Investing Participants shall share in accordance with their respective
undivided percentage interests in the Loan any losses, expenses, costs or
liabilities (including, without limitation, reasonable attorneys' fees)
sustained or incurred by the Lender or any Co-Investing Participant as a result
of any action taken or not taken by the Lender in accordance with the provisions
of this paragraph.
5. Approval of Documents. Each Co-Investing Participant
represents and warrants for itself that it has examined and approved (i) the
Note, the Mortgage and the other Security Documents, as the case may be, and
such other of the Loan Documents as such Co- Investing Participant has deemed
necessary or appropriate, (ii) the state of title to the Premises
736730.10
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reflected in the Title Insurance Policy, if any, described in Exhibit A attached
hereto to the extent such Co-Investing Participant has deemed necessary or
appropriate, (iii) the title insurance arrangements with respect to the
Mortgage, if any, inclusive of the identity of the co- insuring and reinsuring
title insurance companies, if any, and their respective levels and amounts of
liability thereunder to the extent such Co-Investing Participant has deemed
necessary or appropriate and (iv) other due diligence items regarding the Loan
and the Premises and the Improvements to the extent such Co-Investing
Participant has deemed necessary or appropriate.
6. Files and Records. The Lender shall keep and maintain at
its offices, or the offices of its loan servicer, complete and accurate files
and records of all matters pertaining to the Loan, which files and records shall
be available for inspection and copying by the Co-Investing Participants and
their respective employees and agents during normal business hours upon
reasonable prior notice to the Lender. The Lender shall promptly upon request of
any Co-Investing Participant deliver to such Co-Investing Participant such
information with respect to the Loan, the Borrower, the Premises, the
Improvements, or any Guarantor which may reasonably be requested by such
Co-Investing Participant and which is otherwise within the Lender's reasonable
ability to provide.
7. Other Security. So far as each Co-Investing Participant's
undivided interest in the Loan is concerned, the security for the advances made
pursuant to the Loan Documents shall include only that security specifically
listed or described in the Loan Documents, together with any permitted
substitutions therefor, and any additional security specifically pledged to
secure the advances made pursuant to the Loan Documents. No Co-Investing
Participant shall have any interest in any property or guaranty taken as
security for any other loans made by the Lender to the Borrower (other than any
such loans in which such Co-Investing Partiticipant otherwise owns an interest)
or in any other property or guaranty now or hereafter in the Lender's possession
or control which may be or become security for the undivided interest in the
Loan held by the Lender by reason of the general description contained in such
guaranty or in any general loan and collateral agreement or collateral note held
by the Lender or by reason of applicable law now or hereafter in effect or
otherwise, provided, however, that if any such property, guaranty or the
proceeds thereof shall be applied in reduction of the Loan, then each
Co-Investing Participant shall be entitled to receive its pro rata share of such
application. Neither the Lender nor any other Co-Investing Participant shall
have any interest in any property or guaranty taken as security for any other
loans made by a particular Co-Investing Participant to the Borrower (other than
any such loans in which the Lender of such other Co-Investing Partiticipant
otherwise owns an interest) or in other property or guaranty now or hereafter in
such Co-Investing Participant's possession or control which may be or become
security for the undivided interest in the Loan held by such Co-Investing
Participant by reason of the general description contained in such guaranty or
in any general loan and collateral agreement or collateral note held by such
Co-Investing Participant or by reason of applicable law now or hereafter in
effect or otherwise, provided, however, that if any such property, guaranty or
the proceeds thereof shall be applied in reduction of any portion of the Loan,
736730.10
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including, without limitation, any application in reduction of such Co-Investing
Participant's undivided interest in the Loan, then the Lender and each other
Co-Investing Participant shall be entitled to receive its pro rata share of such
application.
8. Amounts Received by Co-Investing Participants. Each
Co-Investing Participant agrees that if at any time it shall receive from any
sources whatsoever any payment on account of the Loan in excess of its pro rata
share thereof, it will promptly remit to the Lender the amount of such excess,
and Lender shall retain its share of such excess and shall promptly remit to the
other Co-Investing Participants their respective shares in such excess, in each
case pro rata in accordance with the respective undivided percentage interests
of the Lender and such other Co-Investing Participants in the Loan and the Loan
Documents or as otherwise provided on Exhibit B. The Lender agrees that if at
any time it shall receive from any sources whatsoever any payment on account of
the Loan in excess of its pro rata share thereof, it will promptly remit to the
Co-Investing Participants the amount of such excess, pro rata in accordance with
the Co-Investing Participants' respective undivided percentage interests in the
Loan and the Loan Documents or as otherwise provided on Exhibit B.
9. Assignments and Subparticipations. (a) The Lender shall,
subject to the terms of this paragraph hereinafter set forth, have the right
after the date of this Agreement to (i) pledge the entire Loan and Loan
Documents, subject to the express right of the Co-Investing Participants'
undivided interests in the Loan, to a third party lender in connection with any
financing provided to the Lender, and such third party lender shall be permitted
to exercise its remedies against the Lender and shall, at such third party
lender's option, succeed to the interest of the Lender and be entitled to all of
the rights and benefits of the Lender under the Loan and the Loan Documents,
subject, however to the provisions of subparagraph (e) below (and any and all
other applicable provisions of this Agreement), (ii) subject to the provisions
of subparagraph (c) below (and any and all other applicable provisions of this
Agreement), sell, in whole but not in part, its undivided interest in the Loan,
and (iii) subject to the provisions of subparagraph (d) below (and any and all
other applicable provisions of this Agreement), sell one or more
subparticipation interests in the Lender's undivided interest in the Loan to any
domestic or foreign banks, insurance companies, pension funds, trusts or other
institutional lenders or other persons, parties or investors (including, but not
limited to, grantor trusts, owner trusts, special purpose corporations, REMICs,
real estate investment trusts or other similar or comparable investment
vehicles) selected by the Lender and on terms satisfactory to the Lender,
provided that if the Lender elects to subparticipate its interest in the Loan,
(x) the Lender and affiliates or subsidiaries of the Lender (specifically
excluding EOPLP and its affiliates) shall at all times and until the Loan is
paid in full retain an aggregate undivided interest in the Loan, which interest
will not be subparticipated, in an amount not less than 20% of the outstanding
principal balance of the Loan from time to time (the calculation of which
retained amount shall be made without regard to any interest of the Lender in
the Loan which has been pledged to a third party lender as provided in this
Agreement), (y) the Lender shall remain the lead lender and servicer of the Loan
as provided in this Agreement and (z) the Lender shall under no circumstance
sell, transfer, assign, alienate or delegate to any
736730.10
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subparticipant any of the voting, consent or approval rights of the Lender with
respect to the Loan, the Premises or the Improvements, the sale of undivided
participation interests or subparticipations in the Loan, or any other matters
provided for in this Agreement, and any purported assignment of such voting,
consent or approval rights shall be void and not binding on the Co-Investing
Participants. If the Lender elects to subparticipate its undivided interest in
the Loan, no Co-Investing Participant shall in any event have any obligation to
look to any person, party or entity (including, without limitation, any such
bank, insurance company, pension fund, trust, other institutional lender,
person, party or investor or affiliate or subsidiary of the Lender to whom the
Lender has sold and assigned a participation interest in the Lender's undivided
interest in the Loan from time to time) other than the Lender for the observance
and performance by the Lender of its obligations under this Agreement including,
without limitation, those set forth in paragraph 3 of this Agreement.
(b) Each Co-Investing Participant shall, subject to the terms
of this paragraph herein set forth, have the right after the date of this
Agreement to (i) subject to the provisions of subparagraph (c) below, sell, in
whole but not in part, its undivided interest in the Loan and (ii) subject to
the provisions of subparagraph (d) below, sell one or more subparticipation
interests in such Co-Investing Participant's undivided interest in the Loan to
any domestic or foreign banks, insurance companies, pension funds, trusts or
other institutional lenders or other persons, parties or investors (including,
but not limited to, grantor trusts, owner trusts, special purpose corporations,
REMICs, real estate investment trusts or other similar or comparable investment
vehicles) selected by such Co-Investing Participant and on terms satisfactory to
such Co-Investing Participant, provided the Lender shall have the right to
approve any proposed subparticipation by such Co-Investing Participant and the
form of agreement between such Co-Investing Participant and each subparticipant
(which approval will not be unreasonably withheld), and provided further that if
such Co-Investing Participant elects to subparticipate its interest in the Loan,
(x) such Co-Investing Participant and affiliates or subsidiaries of the
Co-Investing Participant shall at all times and until the Loan is paid in full
retain an aggregate undivided interest in the Loan, which interest will not be
subparticipated, in an amount greater than 50% of the undivided participation
interest in the Loan held by such Co-Investing Participant on the date hereof
(as such amount may be proportionately increased in connection with any approved
future advances under the Loan) and (y) such Co-Investing Participant shall
under no circumstance sell, transfer, assign, alienate or delegate to any
subparticipant any of the voting, consent or approval rights of such
Co-Investing Participant with respect to the Loan, the Premises or the
Improvements, the sale of undivided participation interests or subparticipations
in the Loan, or any other matters provided for in this Agreement, and any
purported assignment of such voting, consent or approval rights shall be void
and not binding on the Lender or the other Co-Investing Participants. If any
Co-Investing Participant elects to subparticipate its undivided interest in the
Loan, neither the Lender nor any other Co-Investing Participant shall in any
event have any obligation to look to any person, party or entity (including,
without limitation, any such bank, insurance company, pension fund, trust, other
institutional lender, person, party or investor or affiliate or subsidiary of
such Co-Investing Participant to whom such Co-Investing Participant has sold and
assigned a
736730.10
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participation interest in such Co-Investing Participant's retained undivided
interest in the Loan from time to time) other than such Co-Investing Participant
for the observance and performance by such Co-Investing Participant of its
obligations under this Agreement, including, without limitation, those set forth
in paragraph 3 of this Agreement.
(c) Any and each sale or transfer by the Lender or any
Co-Investing Participant of its undivided interest in the Loan shall be subject
to the terms and provisions set forth in this subparagraph (c).
(i) If any party to this Agreement (an "Offeror")
desires to sell or transfer its undivided interest in the Loan, such
Offeror shall give written notice (the "Sale Notice") to the other
parties to this Agreement (each an "Offeree"; collectively, the
"Offerees") of its desire to do so and of the price and other terms
under which the Offeror proposes to dispose of its undivided interest
in the Loan, which Sale Notice shall constitute an offer on the part of
the Offeror to sell to the Offerees the Offeror's undivided
participation interest in the Loan, upon the terms and conditions set
forth in such notice. Within ten (10) days after the giving of the Sale
Notice by the Offeror, any one or more of the Offerees may give written
notice (a "Response Notice") to the Lender, as agent and servicer,
stating (x) that such Offeree or Offerees commit to purchase the
Offeror's undivided interest in the Loan at the aggregate price and
under the terms specified in the Sale Notice or (y) that such Offeree
or Offerees elect to exercise their right of inclusion in such sale
pursuant to clause (iii) below. Any Offeree that shall not have
delivered a Response Notice within such 10-day period shall be deemed
to have rejected the Offeror's offer to sell its undivided interest in
the Loan to such Offeree, and the Offeror shall be free to sell its
undivided interest in the Loan to one or more other Offerees that have
delivered Response Notices electing to purchase all or a portion of
such undivided interest in the Loan or to any other Person, subject to
the terms, provisions and conditions set forth below in this paragraph
(including, without limitation, clauses (iii), (v) and (vii) hereof).
The Lender shall promptly notify the Offeror of any and all Response
Notices and the respective contents thereof. If no Offeree has
delivered a Response Notice to the Lender within such 10-day period,
the Offeror shall be free to sell or transfer its undivided interest in
the Loan to any Permitted Institutional Transferee, subject to the
terms, provisions and conditions set forth below in this paragraph
(including, without limitation, clauses (iii) and (v) hereof). The
Offeror's undivided interest in the Loan, if it is the subject of
Response Notices by more than one Offeree, shall be purchased and paid
for by and divided among such Offerees in proportion to their
respective percentage interests in the Loan, or as otherwise agreed
among the Offerees that have committed to purchase the Offeree's
undivided participation interest in the Loan as provided above in this
clause (i). For purposes of this Agreement, the term "Permitted
Institutional Transferee" shall mean an insurance company, bank,
investment bank, savings and loan association, real estate investment
trust ("REIT"), Real Estate Mortgage Investment Conduit ("REMIC"),
trust company, commercial credit corporation, pension plan, pension
fund
736730.10
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or pension fund advisory firm, mutual fund or other investment company,
governmental plan or entity, "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act of 1933, as amended
(other than a broker/dealer), or an institution substantially similar
to any of the foregoing, or any entity wholly owned by any one or more
of such institutions, in each case having not less than one billion
dollars in assets and not less than $250,000,000 in equity.
(ii) Notwithstanding any provision to the contrary
contained in clause (i) above, if, after the Offerees have declined, or
have been deemed to have declined, the offer to purchase the Offeror's
undivided participation interest in the Loan in accordance with clause
(i) above, the proposed sale price of the Offeror's undivided interest
to a third party shall be less than 90% of the price specified in the
applicable Sale Notice, then the Offeror shall again offer to sell its
undivided interest in the Loan to the Offerees, in accordance with the
provisions of clause (i) above, before the Offeror may complete any
such sale. Furthermore, the Offeror's undivided interest in the Loan
shall again be subject to the provisions of clause (i) of this
paragraph if, within ninety (90) days after the giving of the
applicable Sale Notice, the Offeror shall not have completed the
disposition of its undivided interest in the Loan as contemplated by
such Sale Notice.
(iii) If and only if the Offeror is the Lender, any
Co-Investing Participant not electing to purchase all or any portion of
the Lender's undivided interest in the Loan pursuant to clause (i)
above, may elect in the alternative, in a Response Notice delivered in
accordance with the provisions of clause (i) above, to cause the Lender
to offer to a third party purchaser such Co-Investing Participant's
undivided interest in the Loan, together with the Lender' s undivided
interest therein. It shall be a condition of the sale by the Lender of
its undivided interest in the Loan to a third party that each
Co-Investing Participant that so elects shall have the right to have
its undivided participation interest in the Loan purchased by the
purchaser of the Lender's undivided participation interest in the Loan,
at the same price (adjusted proportionately in accordance with such
Co-Investing Participant's percentage interest in the Loan, as compared
with the Lender's) and on the same terms and conditions as specified in
the Sale Notice.
(iv) If any one or more Offerees irrevocably commit to
purchase the Offeror's undivided participation interest in the Loan in
a Response Notice or Notices as contemplated by clause (i) above, the
closing of such purchase shall take place at the principal place of
business of the Offeror (or its attorneys) at 10:00 A.M. (New York City
time) on the twentieth (20th) day following the date on which the
Offeror delivered the Sale Notice, or if such day is not a Business
Day, then the next day that is a Business Day. If any Offeree that has
elected to purchase all or (in the event that more than one Offeree
executes and delivers a Response Notice exercising such Offeree's right
to purchase) a portion of the Offeror's undivided participation
interest in the Loan
736730.10
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in accordance with the provisions of this paragraph fails to purchase
such participation interest pursuant to the provisions hereof, then
such Offeree shall be in default under this Agreement, and the Offeror
shall be entitled to exercise any and all rights and remedies available
to it against such Offeree.
(v) No party to this Agreement shall be permitted to sell or
transfer less than all of its undivided interests in the Loan (except
for a sale of subparticipation interests as expressly provided in this
paragraph). Any attempted transfer of any party's undivided
participation interest in the Loan in violation of the terms of this
paragraph shall be ineffective to vest in any transferee any interest
in the Loan. Anything contained in this paragraph to the contrary
notwithstanding, any purchaser or other transferee of an undivided
participation interest in the Loan pursuant to this paragraph which
purchaser or transferee is not the Lender or a Co-Investing Partcipant
shall agree in writing in advance with the parties hereto to be bound
by and comply with all applicable provisions of this Agreement and to
assume in writing, upon the consummation of such purchase or transfer,
the obligations of the transferor under this Agreement and shall
thenceforth be deemed to be a Co-Investing Participant for all purposes
of this Agreement.
(vi) Notwithstanding the foregoing, the provisions of clauses
(i) through (v) above shall not apply to transfers or proposed
transfers of undivided participation interests in the Loan (u) by EOPLP
to (1) any entity (other than Capital Trust) in which EOPLP holds,
directly or indirectly, an economic interest of greater than 50% (an
"EOPLP Entity") or (2) any EOP-sponsored "Paper Clip" enterprise or any
Affiliate or subsidiary thereof (it being understood and agreed that
EOPLP and each EOPLP Entity shall have the right to transfer its
undivided participation interest in the Loan to EOPLP or any other
EOPLP Entity), (v) by GMIM to (1) one or more GM Pension Plans or (2)
any entity in which GMIM holds, directly or indirectly, an economic
interest of greater than 50% (a "GMIM Entity") (it being understood and
agreed that GMIM and each GMIM Entity shall have the right to transfer
its undivided participation interest in the Loan to GMIM or any other
GMIM Entity), (w) by VRLP to (1) any entity in which VRLP holds,
directly or indirectly, an economic interest of greater than 50% (a
"VRLP Entity") or (2) Vornado Operating Inc. or any Affiliate or
subsidiary of Vornado Operating Inc. (it being understood and agreed
that VRLP and each VRLP Entity shall have the right to transfer its
undivided participation interest in the Loan to VRLP or any other VRLP
Entity) or (x) by the Lender to any Affiliate of the Lender, other than
an Affiliate of Capital Trust the affairs of which are managed and
controlled, directly or indirectly, by ββββββ ββββ or (y) by the Lender
or any Co-Investing Participant to a Loan Pledgee (hereinafter defined)
as contemplated by the provisions of subparagraph (e) below or (z) with
respect to any undivided participation interest in the Loan acquired by
a Loan Pledgee through the exercise of its remedies against the Lender
or any Co-Investing Participant, by such Loan Pledgee to any other
individual, corporation, partnership, business trust, trust,
unincorporated association or
736730.10
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other entity, or a governmental entity of any country (each a
"Person"). For purposes of this Agreement, the term "Affiliate" shall
have the meaning given to such term in Rule 405 under the Securities
Act of 1933, as amended.
(vii) Notwithstanding any contrary or inconsistent provision
contained in this Agreement, neither the Lender nor any of the
Co-Investing Participants nor any of the respective successors or
assigns of the foregoing (including without limitation any Loan Pledgee
that acquires an undivided participation interest in the Loan as a
result of such Loan Pledgee's realizing on its security interest
therein and any transferee of any Loan Pledgee) shall transfer its
respective interest in the Loan to any Person that is not a Permitted
Institutional Transferee under any circumstances, except for (x) a
transfer in accordance with the provisions of paragraphs 9(c)(i)
through 9(c)(iv) of this Agreement to a Co-Investing Participant or to
the Lender (as the case may be) pursuant to the exercise of its right
of first offer to purchase such interest in the Loan as set forth
hereinabove or (y) a transfer pursuant to and in accordance with the
express provisions of paragraph 9(c)(vi) of this Agreement.
(d) Any and each sale of a subparticipation interest in the
Loan by any party hereto shall be subject to the following provisions of this
subparagraph (d).
(i) Any sale by the Lender of a subparticipation in
its respective undivided interest in the Loan as provided in
subparagraph (a) above shall be subject to the Co-Investment Right of
each Co-Investing Participant. For purposes of this clause (i), the
term "Co-Investment Right" shall have the meaning given to such term in
the Co-Investment Agreement, modified as necessary to reflect an
offering by the Lender to the Co-Investing Participants of a
subparticipation interest in the Lender's undivided interest in the
Loan, rather than a co-investment in the applicable Target Investment
(as such term is defined in the Loan Agreement).
(ii) Any sale by a Co-Investment Participant of a
subparticipation in its respective undivided interest in the Loan as
provided in subparagraph (b) above shall be subject to the
Co-Investment Right of each of the Lender and the other Co-Investing
Participants. For purposes of this clause (ii), the term "Co-Investment
Right" shall have the meaning given to such term in the Co-Investment
Agreement, modified as necessary to reflect an offering by a
Co-Investing Participant to Lender and the other Co-Investing
Participants (rather than by Lender to the Co-Investing Participants)
of a subparticipation interest in such Co-Investment Participant's
undivided interest in the Loan, rather than a co-investment in the
applicable Target Investment.
(iii) Each subparticipation agreement entered into
between, on one hand, the Lender or any Co-Investing Participant (as
the case may be) and, on the other hand, the purchaser or purchasers of
a subparticipation in such party's undivided interest in the Loan shall
incorporate the requirements of paragraph 9(d) of this Agreement
736730.10
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relating to the rights of subparticipants. As a condition precedent to
the delivery of any such subparticipation agreement by a Co-Investing
Participant or the Lender (as the case may be), the terms and
provisions of such agreement shall be subject to the approval of the
other parties to this Agreement, which approval shall not be withheld,
conditioned or delayed provided that such other parties shall be
reasonably satisfied that the terms and provisions of such
subparticipation agreement do not derogate the rights of such other
parties to this Agreement or otherwise contravene the material terms
and provisions of this Agreement.
(iv) Notwithstanding any contrary or inconsistent
provision contained in this Agreement, neither the Lender nor any of
the Co-Investing Participants shall under any circumstances sell or
transfer a subparticipation interest in the Loan to any Person that is
not a Permitted Institutional Transferee.
In no event shall the provisions of this subparagraph (d) be deemed to apply to
any pledge by the Lender or any Co-Investing Participant of any of interest in
the Loan to a Loan Pledgee as contemplated by the provisions of subparagraph (e)
below. Any attempted transfer of a subparticipation interest in the Loan in
violation of the terms and provisions of this paragraph shall be ineffective to
vest in any transferee any direct or indirect interest in the Loan.
(e) Notwithstanding anything contained in this Agreement to
the contrary:
(i) Each Co-Investing Participant hereby consents to
the pledge by the Lender to (x) German American Capital Corporation, a
Maryland corporation, or an affiliate thereof ("GACC"), (y) ββββββ
βββββββ Mortgage Capital Inc. or ββββββ βββββββ & Co. International
Limited or an affiliate thereof (collectively, "ββββββ βββββββ") or (z)
any other entity which has extended a credit facility to the Lender, as
the case may be (GACC, ββββββ βββββββ, or any entity described in the
foregoing clause (z), a "Lender Loan Pledgee"), of all right, title and
interest of the Lender in and to the Loan and the Loan Documents
(subject to the Co-Investing Participants' respective undivided
interests therein), as security for one or more advances by the
applicable Lender Loan Pledgee to the Lender under any such credit
facility.
(ii) The Lender and each of the Co-Investing
Participants hereby consent to the pledge by any Co-Investing
Participant to any entity which has extended a credit facility to such
Co-Investing Participant or any of its Affiliates (any entity described
in the foregoing provisions of this clause, a "Participant Loan
Pledgee"; a Participant Loan Pledgee or Lender Loan Pledgee, as the
case may be, shall hereinafter be referred to from time to time as a
"Loan Pledgee"), of all right, title and interest of such Co-Investing
Participant in and to the Loan and the Loan Documents (subject to the
Lender's and the Co-Investing Participants' respective undivided
interests therein), as security for one or more advances by the
applicable Participant Loan Pledgee to such
736730.10
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Co-Investing Participant (or Affiliate of a Co-Investing Participant)
under any such credit facility.
(iii) The Lender and the Co-Investing Participants
other than the Pledgor (as hereinafter defined), and any one or more of
the foregoing, shall have the right, in the event that all of the
undivided interest in the Loan of the Lender or any Co-Investing
Participant (the Lender or any such Co-Investing Participant, as the
case may be, the "Pledgor") is transferred or conveyed to a Loan
Pledgee as a result of a default under a credit facility secured by a
pledge of such interest, to purchase such undivided interest in the
Loan for an aggregate purchase price equal to the amount of the
Pledgor's undivided interest in the outstanding principal balance of
the Loan, plus all interest and other sums due to the Pledgor with
respect to such portion of the outstanding principal balance of the
Loan, all as of the date of the closing of such purchase. Such right
shall be exercisable by the Lender and the Co-Investing Participants
(other than the Pledgor) as follows. Not later than sixty (60) days
from and after the date of such transfer to the Loan Pledgee, the
Lender and all of the Co-Investing Participants desiring to purchase
such undivided interest in the Loan (excluding the Pledgor) shall
confer and shall thereafter execute and deliver to such Loan Pledgee a
notice (the "Pledgee Buyout Notice"). The execution and delivery of a
Pledgee Buyout Notice shall create a binding obligation of the
signatories thereto to purchase the undivided interest in the Loan of
the Loan Pledgee in accordance with the provisions of this
subparagraph. Such undivided interest in the Loan, if it is the subject
of a Pledgee Buyout Notice executed and delivered by more than one
party, shall be purchased by such parties and paid for and divided
among such parties in proportion to their respective percentage
interests in the Loan, or as otherwise agreed among such parties. The
closing date of any such purchase from the Loan Pledgee shall be a date
unanimously agreed upon by the Loan Pledgee and the Lender (if it has
executed and delivered the Pledgee Buyout Notice) and all of the
Co-Investing Participants that have elected to purchase from the Loan
Pledgee such undivided interest in the Loan in accordance with the
provisions of this subparagraph (e)(iii), but in any event no later
than thirty (30) days from and after the last day of the 60-day period
described above in this subparagraph. If neither the Lender nor any
Co-Investing Participant delivers a Pledgee Buyout Notice within such
60-day period, then the Lender and all of the Co-Investing Participants
(excluding the Pledgor) shall be deemed to have waived the right to
purchase set forth herein, and the Loan Pledgee shall retain its
undivided interest in the Loan and the Loan Documents, together with
all of the rights and benefits and obligations that had, prior to such
realization by the Loan Pledgee of its security interests therein,
inured to and bound the Pledgor under and pursuant to the terms and
provisions of this Agreement.
10. Withholding Taxes. In the event the Lender or the Borrower
shall be required by law to deduct and withhold Taxes (as hereinafter defined)
from interest, fees or other amounts payable to any Co-Investing Participant
with respect to the Loan as a result of
736730.10
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such Co-Investing Participant constituting a Non-Exempt Person (as hereinafter
defined), the Lender, in its capacity as lead lender and servicer, shall be
entitled to do so with respect to such Co-Investing Participant's interest in
such payment (all withheld amounts being deemed paid to such Co-Investing
Participant), provided the Lender shall furnish such Co-Investing Participant a
statement setting forth the amount of Taxes withheld, the applicable rate and
other information which may reasonably be requested for the purposes of
assisting such Co-Investing Participant to seek any allowable credits or
deductions for the Taxes so withheld in each jurisdiction in which such
Co-Investing Participant is subject to tax. A "Non-Exempt Person" is any Person
other than a Person that is either (i) a United States Person (as such term is
defined in Section 7701(a)(30) of the United States Internal Revenue Code of
1986, as amended), or (ii) has on file with the Lender for the year involved
such duly executed form(s) or statement(s) which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (a) an income
tax treaty between the United States and the country of residence of such
Person, (b) the United States Internal Revenue Code of 1986, as amended, and as
such may hereafter be amended, or (c) any applicable rules or regulations in
effect under (a) or (b) above, permit the Lender to make such payments free of
any obligation or liability for withholding. For the purposes of this paragraph,
"Taxes" shall mean any income or other taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature, now or hereafter imposed by any
jurisdiction or by any department, agency, state or other political subdivision
thereof or therein. Each Co-Investing Participant for itself agrees to indemnify
the Lender and the Borrower against and to hold the Lender and the Borrower
harmless from any Taxes, interests, penalties and reasonable counsel fees
arising from any failure of the Lender or the Borrower to withhold Taxes from
payments made to such Co-Investing Participant in reliance upon any
representation, certificate, statement, document or instrument made or provided
by such Co-Investing Participant to the Lender or the Borrower in connection
with the obligation of the Lender or the Borrower to withhold Taxes from
payments made to such Co-Investing Participant, it being expressly understood
and agreed that (i) the Lender and the Borrower shall be absolutely and
unconditionally entitled to accept any such representation, certificate,
statement, document or instrument as being true and correct in all respects and
to fully rely thereon without any obligation or responsibility to investigate or
to make any inquiries with respect to the accuracy, veracity, conclusory
correctness, or validity of the same, and (ii) each Co-Investing Participant
upon request of the Lender shall, at its sole cost and expense, defend any claim
relating to the foregoing indemnification by counsel selected by such
Co-Investing Participant and reasonably satisfactory to the Lender. Each
Co-Investing Participant for itself represents to the Lender (and agrees that
the Borrower may rely upon such representation) that it is not a Non-Exempt
Person. Contemporaneously with the execution of this Agreement, and from time to
time as necessary during the term of this Agreement, each Co-Investing
Participant shall deliver to the Lender evidence reasonably satisfactory to the
Lender substantiating that it is not a Non-Exempt Person and such other evidence
as the Lender or the Borrower may reasonably request to establish that neither
the Lender nor the Borrower is obligated under applicable law to withhold Taxes
on sums paid to it with respect to the Loan or otherwise.
736730.10
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11. Reserve Requirements and Capital Adequacy. The Lender and
the Co-Investing Participants agree that no proceeds realized on a foreclosure
of the Mortgage or other Security Documents or otherwise with respect to the
collateral held under the Loan Documents or any portion thereof or any sums
received after the Debt (as hereinafter defined) has been declared due and
payable shall be applied towards the payment of additional amounts due pursuant
to the provisions of the Loan Documents regarding reserve requirements or
capital adequacy, unless and until all other sums constituting part of the Debt
have been paid in full, and any sums available for application towards
additional amounts due under such provisions after the payment in full of the
balance of the Debt shall be applied to the respective additional amounts due to
the parties to whom such additional amounts are due in accordance with the
provisions of the Note or any other Loan Documents on a proportionate basis,
calculated in accordance with the respective additional amounts which are due.
Any additional amounts charged to the Borrower pursuant to the terms and
provisions of the Note or any other Loan Documents which amounts are paid by the
Borrower prior to the Debt being declared due and payable shall be distributed
to the parties to whom such additional amounts are payable in accordance with
the applicable provision of the Note or other Loan Documents. If any
Co-Investing Participant shall be entitled to receive additional amounts from
the Borrower in accordance with the provisions of the Note or the other Loan
Documents regarding reserve requirements or capital adequacy, such Co-Investing
Participant (i) shall certify to the Lender in a timely manner the additional
amounts due to it and the manner of calculation of such additional amounts,
which certification may be relied upon by the Lender, and (ii) shall indemnify
and agree to hold the Lender harmless from and against any loss, liability, cost
or expense of any nature whatsoever which the Lender or any other Co-Investing
Participant may incur as the result of any demand which is made on the Borrower
for the payment of such additional amounts or as a result of the payment of any
such additional amounts by the Borrower. The Lender shall not have the
obligation to request the Borrower to pay any additional amounts pursuant to the
Note or other Loan Documents regarding reserve requirements or capital adequacy
insofar as such additional amounts pertain to any person or party to whom any
Co-Investing Participant has assigned or subparticipated its undivided interest
in the Loan pursuant to the provisions of this Agreement, and the Borrower shall
not have the obligation to pay any such additional amounts pertaining to the
capital adequacy or reserve requirements applicable to such person or party,
unless the Lender shall agree to the contrary in its sole and absolute
discretion. The Lender reserves the right, but in no event shall have any
obligation, to purchase, or to arrange for the purchase of by another foreign or
domestic bank, insurance company, pension fund, trust or other institutional
Lender, the undivided interest in the Loan and the Loan Documents held by any
Co-Investing Participant who requests the payment of additional amounts pursuant
to the Note with respect to any period of time during which the Lender is not
also requesting payment for its own account of comparable amounts for a purchase
price equal to the funded principal amount of such Co-Investing Participant's
undivided interest in the Loan plus interest accrued and unpaid thereon and
other sums due with respect thereto, which right of purchase may be enforced by
the Lender in an action for specific performance and shall remain in effect for
so long as such Co-Investing Participant is requesting payment of such
additional amounts. The term "Debt" as
736730.10
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used in this paragraph shall mean all principal, interest or other sums of any
nature whatsoever which may or shall become due and payable in accordance with
the provisions of the Note, the Mortgage, the Security Documents and the other
Loan Documents.
12. Entire Agreement. This Agreement (together with the
Exhibits attached hereto) contains, and is intended as, a complete statement of
all the terms of the arrangements between the parties with respect to the
matters provided for, and supersedes any previous agreements and understandings
between the parties with respect to those matters.
13. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of New York,
without regard to its principles of conflicts of law.
14. Notices. All notices or other communications under this
Agreement shall be sufficient if in writing and delivered by hand or sent by
telecopy, or sent, postage prepaid by registered, certified or express mail, or
by recognized overnight air courier service and shall be deemed given when so
delivered by hand or telecopied, or if mailed or sent by overnight courier
service, on the third (3rd) Business Day after mailing (one Business Day in the
case of express mail or overnight courier service) to the parties at the
following addresses:
If to the Lender:
Capital Trust
βββ βββββ ββββββ - ββββ βββββ
βββ ββββ, βββ ββββ βββββ
Attention: Loan Administration
βββββ ββββββββ, Esq.
ββββ βββββββββ
Facsimile: (βββ) βββ-ββββ
with a copy to:
Battle ββββββ LLP
ββ ββββ ββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: ββββ β. ββββββ, Esq.
Facsimile: (βββ) βββ-ββββ
If to VRLP to:
Vornado Realty L.P.
β/β βββββββ ββββββ βββββ
ββββ ββ ββββ, βββββ ββ
736730.10
-ββ-
ββββββ βββββ, βββ ββββββ βββββ
Attention: βββββ βββββββββββ
Facsimile: (βββ) βββ-ββββ
with a copy to:
ββββββββ & ββββββββ
βββ βββββ ββββββ
βββ ββββ, βββ ββββ βββββ-ββββ
Attention: ββββ β. ββββββββββ, Esq.
Facsimile: (βββ) βββ-ββββ
If to EOPLP to:
EOP Operating Limited Partnership
βββ βββββ βββββββββ βββββ
βββββββ, ββββββββ βββββ
Attention: βββββββ β. βββββββ, Esq.
βββββββ β. βββββββ
Facsimile: (βββ) βββ-ββββ
with a copy to:
βββββββββ & βββββββββββ, P.C.
Two βββββ βββββββββ βββββ, βββββ ββββ
βββββββ, ββββββββ βββββ
Attention: ββββββββ β. βββββββββ, Esq.
Facsimile: (βββ) βββ-ββββ
If to GMIM:
General Motors Investment Management Corporation
βββ βββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: βββββ βββββ
Facsimile: (βββ) βββ-ββββ
736730.10
-20-
with a copy to:
Weil, Gotshal & ββββββ LLP
βββ βββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: ββββββ β. βββββββ, Esq.
Facsimile: (βββ) βββ-ββββ
or at such other address as the addressee may have furnished in writing to the
sender as provided herein.
15. Undivided Interests Not Securities. The undivided interest
in the Loan sold by the Lender to the Co-Investing Participants shall not be
deemed to be securities within the meaning of the Securities Act of l933, as
amended, or the Securities Exchange Act of l934, as amended. No representations
with respect to the Loan, the Borrower or any Guarantor have been made by the
Lender to the Co-Investing Participants except those, if any, contained herein
and except those representations, if any, heretofore made by the Lender to the
Co-Investing Participants in writing.
16. Parties' Intent. It is the intent and purpose of the
parties hereto that this Agreement represent a sale by the Lender to the
Co-Investing Participants of undivided interests in the Loan and the Loan
Documents and the rights, benefits and obligations arising therefrom. This
Agreement shall not be deemed to represent a pledge of any interest in the Loan
by the Lender to the Co-Investing Participants, or a loan from the Co-Investing
Participants (or any of them) to the Lender.
17. Captions. The titles and headings of the paragraphs of
this Agreement have been inserted for convenience of reference only and are not
intended to summarize or otherwise describe the subject matter of such
paragraphs and shall not be given any consideration in the construction of this
Agreement.
18. Counterparts. This Agreement may be executed in one or
more counterparts by some or all of the parties hereto, each of which
counterparts shall be an original and all of which together shall constitute a
single agreement.
19. Severability. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
20. Amendment; Waiver. This Agreement shall not be modified,
amended or terminated, except by an agreement in writing signed by the parties
hereto. Any party may waive compliance by another with respect to any of the
provisions of this Agreement. No
736730.10
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waiver of any provision hereof shall be construed as a waiver of any other
provision. A waiver must be in writing.
21. Successors and Assigns. This Agreement and all of the
provisions hereof shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
22. Due Execution. The Lender and each Co-Investing
Participant respectively represents for itself that this Agreement has been duly
executed and delivered by it and constitutes its binding and enforceable
obligation in accordance with its terms.
23. Trustees. The Co-Investing Participants acknowledge and
agree that the trustees of the Lender shall have no personal liability hereunder
to any Co-Investing Participant and any obligation of the Lender hereunder to
any Co-Investing Participant or Co-Investing Participants shall be satisfied
solely from the assets of the Lender.
[Signatures begin on next page]
736730.10
-22-
IN WITNESS WHEREOF, the Lender and the Co-Investing
Participants have caused this Agreement to be duly executed as of the day and
year first above written.
LENDER:
CAPITAL TRUST
By:
------------------------------------------
Name:
Title:
CO-INVESTING PARTICIPANT[S]:
VORNADO REALTY L.P.
By: Vornado Realty Trust, its general partner
By:
-------------------------------------
Name:
Title:
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties Trust, its general partner
By:
-------------------------------------
Name:
Title:
GENERAL MOTORS INVESTMENT MANAGEMENT
CORPORATION
By:
-----------------------------------------
Name:
Title:
-23-
ADDENDUM
The parties will endeavor in good faith to negotiate a mechanism, or series of
mechanisms, reasonably acceptable to the parties, such that if the parties fail
to reach unanimous consent with respect to any matter on which unanimous consent
by the Co-Investing Participants and the Lender is required, such disagreement
will trigger: (i) a buyout right as between two differing Co-Investing
Participants and (ii) a buyout right as between the Co-Investing Participant (if
there is only one) or the remaining Co-Investing Partcipant (if such
Co-Investing Participant has previously purchased the interest of another,
dissenting Co-Investing Participant) and the Lender.
-24-
EXHIBIT A
Co-Investment Agreement: That certain Co-Investment Agreement, dated as
of July __, 1998, by and among Capital Trust, Vornado Realty L.P., EOP
Operating Limited Partnership and General Motors Investment Management
Corporation, as agent for the GM Pension Plans.
Improvements:
Loan Documents: Collectively, the Note, the Mortgage, the Security
Documents and all other documents and instruments of any nature
whatsoever now or hereafter executed and delivered in connection with
the Loan, or otherwise relating thereto, as all of the same may be
modified and amended from time to time after the date of this
Agreement.
Mortgage:
Note:
Premises:
Security Documents:
Title Insurance Policy:
-25-
EXHIBIT B
Loan Reference Name or
Number: ______________________________
Outstanding Principal Balance
of Loan as of __/__/__1: $_____________
Maximum Amount of Increase
in Principal for Protective Advances: ***[$________ per advance; $_________
in the aggregate during the term of the
Loan]***
Interests of Lender and
Co-Investment Participants;
Other Key Features:
Principal Percentage Interest
Name Amount Interest Rate Fees2
---- --------- ---------- -------- -----
Lender $ %
[VRLP] $ %
[EOPLP] $ %
[GMIM] $ %
--------
1 Insert date of Agreement or, if different, date of purchase of participation
interests.
2 Include other material features of participation arrangements for this
particular transaction, as applicable, e.g., the obligations of the
Co-Investing Participants with respect to future advances under the Loan, if
contemplated, increases in the interest rate, etc.
