UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 9)*
Starwood Financial Trust
- --------------------------------------------------------------------------------
(Name of Issuer)
Class A Shares, par value $1.00
- --------------------------------------------------------------------------------
(Title of Class of Securities)
85568W 104
- --------------------------------------------------------------------------------
(CUSIP Number)
Jay Sugarman, 1114 Avenue of the Americas, 27th Floor
New York, New York 10036 (212) 930-9400
with a copy to James B. Carlson, Esq., Mayer, Brown & Platt
1675 Broadway, New York, New York 10019 (212) 506-2515
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 15, 1999 and various
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
<PAGE>
CUSIP NO. 85568W 104 13D Page 2 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Mezzanine Investors, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
10,759,890 (See Item 5)
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 10,759,890 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,759,890 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 3 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Mezzanine Holdings, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 10,759,890 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
10,759,890 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,759,890 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 4 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Capital Group I, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 10,759,890 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
10,759,890 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,759,890 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 5 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
BSS Capital Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 10,759,890 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
10,759,890 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,759,890 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 6 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Sternlicht Holdings II, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 10,759,890 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
10,759,890 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,759,890 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 7 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFI-IV SMT Holdings, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
41,079,912 (See Item 5)
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 41,079,912 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,079,912 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.3% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 8 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Opportunity Fund IV, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7a SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 41,079,912 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
41,079,912 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,079,912 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.3% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 9 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFI IV Management, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 41,079,912 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
41,079,912 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,079,912 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.3% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 10 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Capital Group, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 41,079,912 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
41,079,912 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,079,912 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.3% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 85568W 104 13D Page 11 of 31 Pages
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Barry S. Sternlicht
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO, PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
2,120
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 51,839,802 (See Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 2,120
10 SHARED DISPOSITIVE POWER
51,839,802 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
51,841,922 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
98.8% (See Item 5)
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 12 of 31 Pages
AMENDMENT NO. 9 TO SCHEDULE 13D
-------------------------------
This Amendment No. 9 to the Schedule 13D filed on November 29, 1993
(the "Schedule 13D"), as amended on January 13, 1994, February 9, 1994, March
15, 1994, March 22, 1996, September 26, 1996, January 22, 1997, March 18, 1998
and October 14, 1998 is on behalf of Starwood Mezzanine Investors, L.P., a
Delaware limited partnership ("Starwood Investors"), Starwood Mezzanine
Holdings, L.P., a Delaware limited partnership ("Starwood Holdings"), Starwood
Capital Group I, L.P., a Delaware limited partnership ("Starwood Capital"), BSS
Capital Partners, L.P., a Delaware limited partnership ("BSS"), Sternlicht
Holdings II, Inc., a Delaware corporation ("Sternlicht Holdings"), SOFI-IV SMT
Holdings, L.L.C., a Delaware limited liability company ("SMT"), Starwood
Opportunity Fund IV, L.P., a Delaware limited partnership ("SOFI IV"), SOFI IV
Management, L.L.C., a Connecticut limited liability company ("SOFI IV
Management"), Starwood Capital Group, L.L.C., a Connecticut limited liability
company ("SCG") and Barry S. Sternlicht.
Unless otherwise defined herein, all capitalized terms used herein have
the meanings ascribed to them in Amendment No. 8 to the Schedule 13D. Unless
specifically amended and/or restated herein, the disclosure set forth in the
Schedule 13D, as amended through Amendment No. 8, shall remain unchanged.
Item 1. Security and Issuer
No amendment.
Item 2. Identity and Background
No amendment.
Item 3. Source and Amount of Funds or Other Consideration
The information previously furnished in response to Item 3 is hereby
amended by adding at the end thereto the following:
Mr. Sternlicht has acquired Shares as a result of distributions from
partnerships in which he has an interest.
Item 4. Purpose of Transaction
The information previously furnished in response to Item 4 is hereby
amended by adding at the end thereto the following:
On November 25, 1998, Starwood Investors distributed 26,234 Shares to
its partners. Barry Sternlicht received 204 shares in this distribution. The
remainder of the Shares were distributed to parties not within this group.
On December 14, 1998, Starwood Investors distributed 80 Shares to
parties not within this group.
<PAGE>
Page 13 of 31 Pages
On June 16, 1999, Starwood Financial Trust ("Starwood Financial")
announced that it entered into an Agreement and Plan of Merger, dated as of June
15, 1999 (the "Merger Agreement"), with TriNet Corporate Realty Trust, Inc.
("TriNet"), pursuant to which TriNet will merge with and into a subsidiary of
Starwood Financial, with TriNet surviving as a subsidiary of Starwood Financial
(the "Merger").
In the Merger, each issued and outstanding share of common stock of
TriNet will be exchanged for 1.15 shares of beneficial interest of Starwood
Financial and each issued and outstanding share of Preferred Stock of TriNet
will be converted into a preferred share of beneficial interest of Starwood
Financial, with substantially identical terms. The Merger is expected to close
in the third or fourth quarter of 1999, subject to receipt of approval by TriNet
shareholders and satisfaction of customary closing conditions.
Contemporaneously with the consummation of the Merger, Starwood
Financial will acquire all of the outstanding membership interests of Starwood
Financial Advisors, LLC, Starwood Financial's external advisor, in exchange for
aggregate consideration of four million Shares (the "Advisor Transaction"). The
Advisor Transaction will be accomplished principally through a merger of the
advisor's controlling shareholder with and into a subsidiary of Starwood
Financial. The consummation of the Advisor Transaction and the Merger are
conditions to each other.
Prior to the consummation of the Merger and the Advisor Transaction,
Starwood Financial intends to change its form from a Maryland real estate
investment trust to a Maryland corporation through a merger with a wholly-owned
subsidiary of Starwood Financial formed solely to effect such merger (the
"Incorporation Merger"). In the Incorporation Merger, the Class B Shares of
beneficial interest of Starwood will be converted into shares of common stock on
49-for-one basis and the Shares will be converted into common stock on a
one-for-one basis. B Holdings, L.L.C., an entity controlled by certain of the
Reporting Persons that is the record owner of the Class B Shares ("BLLC") will
receive approximately 535,420 shares of common stock upon consummation of the
Incorporation Merger in exchange for Class B Shares.
SMT, Starwood Investors and BLLC entered into a Shareholder Agreement
(the "Shareholder Agreement") with TriNet, pursuant to which, among other
things, those holders have granted to TriNet irrevocable proxies ("Proxies") to
vote their shares in favor of the Merger and against any proposal which would
compete with the Merger. These holders have also agreed to vote all of their
Shares in favor of the Advisor Transaction and the Incorporation Merger. SMT,
Starwood Investors and BLLC have also agreed not to vote their shares for the
removal, other than for cause, of certain members of Starwood Financial's Board
of Directors appointed by TriNet or the amendment to the charter document of
Starwood Financial that would change the classification or shorten the initial
term of such directors and, in the event the Incorporation Merger does not
occur, to vote their Shares in favor of amendments to Starwood Financial's
Declaration of Trust and Regulations to conform them to the form of charter
document attached to the Merger Agreement.
Pursuant to the Merger, Starwood Financial will increase the number of
members of its Board of Trustees from eight to fifteen, with five of the
nominees appointed by TriNet and two additional members appointed by the
existing trustees.
In connection with the Merger and the Incorporation Merger, the charter
documents of Starwood Financial will be amended and restated. Starwood Financial
currently intends, after consummation of the Merger to have its common equity
delisted from the American Stock Exchange and listed on the New York Stock
Exchange.
<PAGE>
Page 14 of 31 Pages
Item 5. Interest in Securities of the Issuer
The information previously furnished in response to Item 5 is hereby
amended and restated as follows:
Based on information provided by the Issuer, the total number of Shares
outstanding for purposes of calculating the percentage ownership of Shares for
each Reporting Person equaled 52,470,951.
(a) Aggregate Number and Percentage of the Class of Securities
Identified Pursuant to Item 1 Beneficially Owned by Each Person Named in Item 2:
As of June 15, 1999, Starwood Investors beneficially owned 20.1% of the
issued and outstanding Shares, or 10,759,890 Shares.
As of June 15, 1999, Starwood Holdings may be deemed to have
beneficially owned 20.1% of the issued and outstanding Shares, or 10,759,890
Shares, by virtue of being a general partner of Starwood Investors. This
Reporting Person disclaims beneficial ownership of these securities except to
the extent of its pecuniary interest therein.
As of June 15, 1999, Starwood Capital may be deemed to have
beneficially owned 20.1% of the issued and outstanding Shares, or 10,759,890
Shares, by virtue of being a general partner of Starwood Investors, and the
general partner of Starwood Holdings, which is the other general partner of
Starwood Investors. This Reporting Person disclaims beneficial ownership of
these securities except to the extent of its pecuniary interest therein.
As of June 15, 1999, BSS may be deemed to have beneficially owned 20.1%
of the issued and outstanding Shares, or 10,759,890 Shares, by virtue of being a
general partner of Starwood Capital, which is a general partner of Starwood
Investors and the general partner of Starwood Holdings, which is the other
general partner of Starwood Investors. This Reporting Person disclaims
beneficial ownership of these securities except to the extent of its pecuniary
interest therein.
As of June 15, 1999, Sternlicht Holdings may be deemed to have
beneficially owned 20.1% of the issued and outstanding Shares, or 10,759,890
Shares, by virtue of being the general partner of BSS, which is the general
partner of Starwood Capital, which is a general partner of Starwood Investors
and the general partner of Starwood Holdings, which is the other general partner
of Starwood Investors. This Reporting Person disclaims beneficial ownership of
these securities except to the extent of its pecuniary interest therein.
As of June 15, 1999, SMT beneficially owned 78.3% of the issued and
outstanding Shares, or 41,079,912 Shares.
As of June 15, 1999, SOFI IV may be deemed to have beneficially owned
78.3% of the issued and outstanding Shares, or 41,079,912 Shares, by virtue of
being the sole member and manager of SMT. This Reporting Person disclaims
beneficial ownership of these securities except to the extent of its pecuniary
interest therein.
<PAGE>
Page 15 of 31 Pages
As of June 15, 1999, SOFI IV Management may be deemed to have
beneficially owned 78.3% of the issued and outstanding Shares, or 41,079,912
Shares, by virtue of being a general partner of SOFI IV, which is the sole
member and manager of SMT. This Reporting Person disclaims beneficial ownership
of these securities except to the extent of its pecuniary interest therein.
As of June 15, 1999, SCG may be deemed to have beneficially owned 78.3%
of the issued and outstanding Shares, or 41,079,912 Shares, by virtue of being a
general manager of SOFI IV Management, which is the general partner of SOFI IV,
which is the sole member and manager of SMT. This Reporting Person disclaims
beneficial ownership of these securities except to the extent of its pecuniary
interest therein.
As of June 15, 1999, Barry S. Sternlicht may be deemed to have
beneficially owned 98.8% of the issued and outstanding Shares, or 51,841,922
Shares, by virtue of his control of (i) Sternlicht Holdings, which is the
general partner of BSS, which is the general partner of Starwood Capital, which
is a general partner of Starwood Investors, and the general partner of Starwood
Holdings, which is the other general partner of Starwood Investors and (iii)
SCG, which is the general manager of SOFI IV Management, which is the general
partner of SOFI IV, which is the sole member and manager of SMT. This Reporting
Person disclaims beneficial ownership of these securities except to the extent
of his pecuniary interest therein. Mr. Sternlicht also personally owns 2,120
Shares.
(b) Number of Shares as to Which There is Sole Power to Vote or to
Direct the Vote, Shared Power to Vote or to Direct the Vote, and Sole or Shared
Power to Dispose or to Direct the Disposition:
As of June 15, 1999:
Starwood Investors has the sole power to vote and dispose of 10,759,890
Shares. Starwood Investors does not share the power to vote or dispose of any
Shares.
By virtue of being a general partner of Starwood Investors, Starwood
Holdings shares the power to vote and dispose of 10,759,890 Shares. Starwood
Holdings does not have the sole power to vote or dispose of any Shares.
By virtue of being a general partner of Starwood Investors and the
general partner of Starwood Holdings (the other general partner of Starwood
Investors), Starwood Capital shares the power to vote and dispose of 10,759,890
Shares. Starwood Capital does not have the sole power to vote or dispose of any
Shares.
By virtue of being the general partner of Starwood Capital (which is a
general partner of Starwood Investors and the general partner of Starwood
Holdings, which is the other general partner of Starwood Investors), BSS shares
the power to vote and dispose of 10,759,890 Shares. BSS does not have the sole
power to vote or dispose of any Shares.
By virtue of being a general partner of BSS (which is the general
partner of Starwood Capital, which is a general partner of Starwood Investors
and the general partner of Starwood Holdings, which is the other general partner
of Starwood Investors), Sternlicht Holdings shares the power to vote and dispose
of 10,759,890 Shares. Sternlicht Holdings does not have the sole power to vote
or dispose of any Shares.
<PAGE>
Page 16 of 31 Pages
SMT has the sole power to vote and dispose of 41,079,912 Shares. SMT
does not share the power to vote or dispose of any Shares.
By virtue of being the sole member and manager of SMT, SOFI IV shares
the power to vote and dispose of 41,079,912 Shares. SOFI IV does not have the
sole power to vote or dispose of any Shares.
By virtue of being a general partner of SOFI IV, which is the sole
member and manager of SMT, SOFI IV Management shares the power to vote and
dispose of 41,079,912 Shares. SOFI IV Management does not have the sole power to
vote or dispose of any Shares.
By virtue of being a general manager of SOFI IV Management, which is
the general partner of SOFI IV, which is the sole member and manager of SMT, SCG
shares the power to vote and dispose of 41,079,912 Shares. SCG does not have the
sole power to vote or dispose of any Shares.
By virtue of being (i) the sole owner of Sternlicht Holdings (which is
the general partner of BSS, which is the general partner of Starwood Capital,
which is a general partner of Starwood Investors and the general partner of
Starwood Holdings, which is the other general partner of Starwood Investors,
Partners) and (ii) the general manager of SCG (which is the general manager of
SOFI IV Management, which is the general partner of SOFI IV, which is the
general manager of SMT, Barry S. Sternlicht shares the power to vote and dispose
of 51,839,802 Shares. Mr. Sternlicht has the sole power to vote or dispose of
2,120 Shares held personally by him.
(c) Except as specified in Item 4 or as previously reported in the
Schedule 13D, no Reporting Person has effected any transactions in Shares during
the 60 day period preceding June 15, 1999 or since the filing of Amendment No. 8
to this Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The information previously furnished in response to Item 6 is hereby
amended by adding at the end thereof the following:
The following summaries of the Shareholders Agreement , the Proxies,
the Lock-up Agreements and the Advisor Transaction are qualified in their
entirety by reference to the Shareholder Agreement (Exhibit 2 hereto), the
Proxies (Exhibit 3 hereto), the Lock-up Agreements (Exhibits 4, 5, 6 and 7
hereto) and the Agreement and Plan of Merger and Interest Contribution Agreement
(the "Advisor Merger Agreement") (Exhibit 8 hereto).
Pursuant to the Shareholder Agreement, SMT, Starwood Investors and BLLC
have granted to TriNet Proxies to vote their shares in favor of the Merger and
against any proposal which would compete with the Merger. These holders have
also agreed to vote all of their Shares in favor of the Advisor Transaction and
the Incorporation Merger. SMT, Starwood Investors and BLLC have also agreed not
to vote their shares for the removal, other than for cause, of certain members
of Starwood Financial's Board of Directors appointed by TriNet or the amendment
to the charter document of Starwood Financial that would change the
classification or shorten the initial term of such directors and, in the event
the Incorporation
<PAGE>
Page 17 of 31 Pages
Merger does not occur to vote their Shares in favor of amendments to
Starwood Financial's Declaration of Trust and Regulations to conform them to the
form of charter document attached to the Merger Agreement.
Pursuant to the Advisor Merger Agreement and contemporaneously with the
consummation of the Merger, Starwood Financial will acquire all of the
outstanding membership interests of Starwood Financial Advisors, LLC, in
exchange for aggregate consideration of four million Shares. The consummation of
the Advisor Transaction and the Merger are conditions to each other.
Pursuant to Lock-up Agreements, each of Starwood Investors, SMT, Barry
Sternlicht and SCG has agreed not to sell or otherwise transfer or enter into
any voting agreement with respect to the Shares held by such Reporting Person
(subject to certain exceptions in the case of Starwood Investors, SMT and SCG)
for (i) a period of twelve months after the closing of the Merger (the "Closing
Date") in the case of Mr. Sternlicht and (ii) a period of six months of the
Closing Date in the case of Starwood Investors, SMT and SCG. Starwood Investors,
SMT and SCG have further agreed not to sell or otherwise transfer or enter into
any voting agreement (i) with respect to more than one-third of the Shares held
by each during the period from the six month anniversary of the Closing Date to
the 12 month anniversary of the Closing Date and (ii) with respect to more than
two-thirds of the Shares held by each during the period from the 12 month
anniversary of the Closing Date to the 18 month anniversary of the Closing Date.
SMT previously pledged all of the Shares owned by it to NationsBank,
N.A., as administrative agent for a syndicate of lenders that provided SMT a
loan. This loan has been repaid. SMT has pledged all of the Shares owned by it
to General Electric Credit Corporation. The pledge agreement and related loan
agreement with respect to the pledge contains standard provisions with respect
to restrictions on SMT's ability to transfer the Shares and standard default and
similar provisions.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1. Amended and Restated Joint Filing Agreement, dated June 21, 1999
among the Reporting Persons pursuant to Rule 13d-1(f) of the
Securities Exchange Act of 1934.
Exhibit 2. Shareholder Agreement, dated as of June 15, 1999, among TriNet
Corporate Realty Trust, Inc., SMT, Starwood Investors and
B Holdings, L.L.C.
Exhibit 3. Proxy given by SMT, Starwood Investors, and B Holdings, L.L.C.
Exhibit 4. Lockup Agreement between Barry Sternlicht and Greenhill & Co.,
L.L.C.
Exhibit 5. Lockup Agreement between SMT and Greenhill & Co., L.L.C.
Exhibit 6. Lockup Agreement between Starwood Investors and Greenhill & Co.
Exhibit 7. Lockup Agreement between SCG and Greenhill & Co.
<PAGE>
Page 18 of 31 Pages
Exhibit 8. Agreement and Plan of Merger and Interest Contribution Agreement,
dated as of June 15, 1999, by and between STW Holdings I, Inc., SCG,
TriNet Corporate Realty Trust and the stockholders named therein.
<PAGE>
Page 19 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 20 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
STARWOOD MEZZANINE HOLDINGS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 21 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
STARWOOD CAPITAL GROUP I, L.P.
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 22 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
BSS CAPITAL PARTNERS, L.P.
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 23 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
STERNLICHT HOLDINGS II, INC.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 24 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
Its: Sole Member and Manager
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 25 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 26 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
SOFI IV MANAGEMENT, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 27 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
STARWOOD CAPITAL GROUP, L.L.C.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 28 of 31 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 21, 1999
/S/ BARRY S. STERNLICHT
Barry S. Sternlicht
<PAGE>
Page 29 of 31 Pages
EXHIBIT 1
---------
JOINT FILING AGREEMENT
----------------------
This will confirm the agreement by and among all the undersigned that
the Amendment No. 9 to the Schedule 13D filed on or about this date with respect
to the beneficial ownership of the undersigned of Class A Shares, par value
$1.00 per share, and Starwood Financial Trust, is being, and any and all further
amendments to the Schedule 13D may be, filed on behalf of each of the
undersigned.
This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together shall constitute one
and the same instrument.
Dated: June 21, 1999
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD MEZZANINE HOLDINGS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 30 of 31 Pages
STARWOOD CAPITAL GROUP I, L.P.
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
BSS CAPITAL PARTNERS, L.P.
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STERNLICHT HOLDINGS II, INC.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
Its: Sole Member and Manager
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 31 of 31 Pages
SOFI IV MANAGEMENT, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD CAPITAL GROUP, L.L.C.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
/S/ BARRY S. STERNLICHT
-----------------------
Barry S. Sternlicht
<PAGE>
EXHIBIT 2
---------
SHAREHOLDER AGREEMENT
This SHAREHOLDER AGREEMENT, dated as of June 15, 1999 (this
"Agreement"), is made and entered into among TriNet Corporate Realty Trust,
Inc., a Maryland corporation ("Company") and each of the shareholders of
Starwood Financial Trust, a Maryland real estate investment trust ("Starwood"),
listed on the signature page of this Agreement (each, individually, a
"Shareholder" and together, the "Shareholders").
RECITALS:
A. Starwood, ST Merger Sub, Inc., a Maryland corporation and
wholly-owned subsidiary of Starwood ("Merger Sub"), and Company are,
simultaneously herewith, entering into an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), pursuant to which Merger Sub will
merge with and into Company (the "Merger") on the terms and subject to the
conditions set forth in the Merger Agreement and, as a result (and after giving
effect to the Incorporation Merger and the Advisor Transaction (each as defined
in the Merger Agreement)), Company will become a wholly-owned Subsidiary of
Starwood Financial, Inc. (or, in connection with Section 1.7 of the Merger
Agreement, of Starwood), a Maryland corporation ("New Starwood"), Starwood's
successor-in-interest. Except as otherwise defined herein, capitalized terms
used herein without definition have the respective meanings ascribed to them in
the Merger Agreement.
B. As of the date hereof, each Shareholder beneficially owns and is
entitled to vote (or to direct the voting of) the number of Class A shares of
beneficial interest, par value $1.00 per share ("Class A Shares"), of Starwood
and the number of Class B shares of beneficial interest, par value $.01 per
share, of Starwood ("Class B Shares," and, together with the Class A Shares, the
"Starwood Shares") set forth opposite such Shareholder's name on Annex A hereto
(such Starwood Shares, together with any other Starwood Shares or other equity
or voting interests in Starwood the beneficial ownership of which is hereafter
acquired by such Shareholder and any shares of common stock of New Starwood or
other equity interests of New Starwood into which such Starwood Shares or other
equity or voting interests are converted, are collectively referred to herein as
such Shareholder's "Subject Shares").
C. As a condition and inducement to Company's willingness to enter into
the Merger Agreement, Company has requested that each Shareholder agree, and
each Shareholder has agreed, to enter into this Agreement and to irrevocably
grant to Company an irrevocable proxy in the form attached hereto as Exhibit A
(each a7 "Proxy").
<PAGE>
D. Simultaneously with the execution and delivery of this Agreement,
each Shareholder has irrevocably granted Company a Proxy to vote its shares in a
manner consistent with the covenants set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
VOTING OF SUBJECT SHARES
Section 1.1 Agreement to Vote Subject Shares. At any meeting of the
shareholders of Starwood called to consider and vote upon the approval of the
Advisor Transaction or the Merger or adoption of the Advisor Transaction
Agreement or the Merger Agreement or the issuance of Starwood Shares to the
shareholders of Company pursuant to the Merger or to the Shareholders, the
stockholders of STW Holdings I, Inc., a Delaware corporation ("Advisor"), the
members of Starwood Capital Group, L.L.C., a Delaware limited liability company
("SCG") and/or SCG pursuant to the Advisor Transaction (including any and all
postponements and adjournments thereof), and in connection with any action to be
taken in respect of the adoption of the Advisor Transaction Agreement or the
Merger Agreement or approval of the issuance of Starwood Shares to the
shareholders of the Company pursuant to the Merger or to the Shareholders, the
stockholders of Advisor, the members of SCG and/or SCG pursuant to the Advisor
Transaction by written consent of the shareholders of Starwood, each Shareholder
shall vote or cause to be voted (including by written consent, if applicable)
all of such Shareholder's Subject Shares in favor of the approval and adoption
of the Advisor Transaction Agreement, the Merger Agreement and the issuance of
Starwood Shares to the shareholders of Company pursuant to the Merger and to the
Shareholders, the stockholders of Advisor, the members of SCG and/or SCG
pursuant to the Advisor Transaction and in favor of any other matter necessary
for the consummation of the transactions contemplated by the Advisor Transaction
Agreement and the Merger Agreement and considered and voted upon at any such
meeting or made the subject of any such written consent, as applicable. At any
meeting of the shareholders of Starwood called to consider and vote upon any
Adverse Proposal (as defined below) (and at any and all postponements and
adjournments thereof), and in connection with any action to be taken in respect
of any Adverse Proposal by written consent of shareholders of Starwood, each
Shareholder shall vote or cause to be voted (including by written consent, if
applicable) all of such Shareholder's Subject Shares against such Adverse
Proposal. For purposes of this Agreement, the term "Adverse Proposal" means any
(a) proposal or action that would reasonably be expected to result in a breach
of any covenant, representation or warranty of Starwood set forth in the Advisor
Transaction
2
<PAGE>
Agreement or the Merger Agreement or (b) proposal or action that is intended or
would reasonably be expected to impede, interfere with, delay or materially and
adversely affect the Advisor Transaction, the Merger or any of the other
transactions contemplated by the Merger Agreement, the Incorporation Merger
Agreement, the Advisor Transaction Agreement or this Agreement.
Section 1.2 Actions Regarding Former Company Directors. Each
Shareholder agrees that it will not vote or cause to be voted its Subject
Shares, at any special or annual meeting of the shareholders of Starwood or New
Starwood (including any postponement or adjournment thereof) or in connection
with any action to be taken by written consent of the shareholders of Starwood
or the stockholders of New Starwood, in favor of (and shall vote such Subject
Shares against) any of the following actions:
(a) the removal (other than for cause) of any of the persons listed on
Schedule I to this Agreement (collectively, the "Class T Directors") as a
director of New Starwood at any time prior to the date on which such person
shall have served as a member of the Board of Directors through the expiration
of such member's initial term; or
(b) the amendment of the Charter of New Starwood changing the
classification or term of service of directors of New Starwood in any manner
that would shorten the initial term to be served by any Class T Director on the
Board of Directors of New Starwood.
Section 1.3 Actions to be Taken if the Incorporation Merger does not
Occur. If the Incorporation Merger does not occur prior to or on the Closing
Date, the Shareholders, prior to or on the Closing Date, shall cause (either by
a vote of the shareholders of the Company at a general or special meeting of the
Company or by written consent) Starwood to amend its declaration of trust and
bylaws in the manner provided by Maryland law to substantially conform such
declaration of trust and bylaws, to the extent permitted by applicable Maryland
law governing Maryland's real estate investment trusts, to the forms of charter
and bylaws of New Starwood, respectively, set forth as Exhibits J and K to the
Merger Agreement, including, without limitation, to eliminate the Starwood Class
B Common Shares and cause the conversion of all Starwood Class B Common Shares
into Starwood Class A Common Shares on the basis of 49 Starwood Class B Common
Shares for one Starwood Class A Common Shares.
3
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Certain Representations and Warranties of the Shareholders.
Each Shareholder, severally and not jointly, represents and warrants as of the
date hereof to Company as follows:
(a) Ownership. Such Shareholder is the sole record and beneficial owner
of the number of Starwood Shares set forth opposite such Shareholder's name on
Annex A hereto and has full, unrestricted and sole power to dispose of and to
vote such Starwood Shares, except, in the case of SOFI-IV SMT Holdings, L.L.C.,
a Delaware limited liability company ("SMT"), as such power may be limited by
the exercise of the rights of foreclosure, sale and other realization upon
security with respect to the Starwood Shares held by SMT (the "SMT Shares")
pursuant to the lien of General Electric Capital Corporation, a New York
corporation ("GECC"), and its successors and assigns (collectively, together
with GECC, the "GECC Parties") granted pursuant to the Pledge and Security
Agreement, Facility B (the "GECC Pledge Agreement"), dated as of May 27, 1999,
among SMT, Starwood Opportunity Fund IV, L.P., a Delaware limited partnership
("SOF-IV LP"), certain pledgors named therein and GECC and the related Credit
and Guaranty Agreement (the "GECC Credit Agreement"), dated as of May 27, 1999,
by and among SMT, SOF-IV LP, certain guarantors named therein and GECC. Such
Starwood Shares are now, and at all times prior to the Closing Date will be,
held by such Shareholder, or by a nominee or custodian for the benefit of such
Shareholder, free and clear of all liens, voting trusts or agreements, powers of
attorney, proxies or any other arrangement or agreement with any person or
entity limiting or affecting the Shareholders' legal power or authority to vote
or sell the Starwood Shares, except for those restrictions arising hereunder or
under the Proxy delivered by such Shareholder or set forth under applicable
securities laws and except, in the case of SMT, for the lien on the SMT Shares
granted to the GECC Parties pursuant to the GECC Pledge Agreement and the
conditional rights to the SMT Shares granted to the GECC Parties in Article 5(b)
of the GECC Pledge Agreement upon the occurrence of an "Event of Default" or
"Additional Acceleration Event" under the GECC Credit Agreement. Except as set
forth in Annex A hereto and except with respect to the issuance of (i)
additional Class B Shares in accordance with the Declaration of Trust of
Starwood, (ii) additional Class A Shares upon the conversion of Class B Shares,
(iii) additional Class A Shares upon the exercise of outstanding options and
(iv) additional Class A Shares pursuant to the Stock Dividend (as defined in the
Merger Agreement), such Shareholder does not beneficially own or hold any rights
to acquire any additional securities of Starwood on the date hereof other than
such Starwood Shares.
(b) Power and Authority; Execution and Delivery. Such Shareholder has
all requisite power and authority to enter into this Agreement to grant the
Proxy and to consummate the transactions contemplated hereby. The execution
4
<PAGE>
and delivery of this Agreement and the Proxy by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby have
been duly authorized by all necessary action, if any, on the part of such
Shareholder. This Agreement and the Proxy have been duly executed and delivered
by such Shareholder and, assuming that this Agreement constitutes the valid and
binding obligation of the other parties hereto, each of this Agreement and the
Proxy constitutes a valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to general principles of equity. The Proxy is an irrevocable proxy, coupled
with an interest, and Company shall, by operation of the Proxy, have the power
to vote such Shareholder's Subject Shares in accordance with, and as
contemplated by, Section 1.1 and by the terms of the Proxy, except, with respect
to SMT, that the GECC Parties may be entitled to exercise voting and consensual
rights with respect to the SMT Shares pursuant to Article 5(b) of the GECC
Pledge Agreement upon the occurrence of an "Event of Default" or "Additional
Acceleration Event" under the GECC Credit Agreement.
(c) No Conflicts. The execution and delivery of this Agreement or of
the Proxy does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to a material obligation, a right of termination,
cancellation, or acceleration of any obligation or a loss of a material benefit
under, or require notice to or the consent of any person under any
organizational documents of such Shareholder or any agreement, instrument,
undertaking, Law, judgment, order, injunction, decree, determination or award
binding on such Shareholder, other than any such conflicts, breaches,
violations, defaults, obligations, rights or losses that, individually or in the
aggregate, would not reasonably be expected to (i) impair the ability of such
Shareholder to perform such Shareholder's obligations under this Agreement or
(ii) prevent or delay the consummation of any of the transactions contemplated
hereby.
(d) Other Proxies Revoked. Any proxies (other than the Proxy)
heretofore given in respect of such Shareholder's Subject Shares are not
irrevocable and all such proxies are hereby revoked, except, with respect to
SMT, that the GECC Parties may be entitled to exercise voting and consensual
rights with respect to the SMT Shares pursuant to Article 5(b) of the GECC
Pledge Agreement upon the occurrence of an "Event of Default" or "Additional
Acceleration Event" under the GECC Credit Agreement.
5
<PAGE>
ARTICLE III
CERTAIN COVENANTS
Section 3.1 Certain Covenants of Shareholders.
(a) Restriction on Transfer of Subject Shares, Proxies and
Noninterference. No Shareholder shall, prior to the Closing Date, directly or
indirectly: (A) (i) except pursuant to the terms of this Agreement, (ii) except
for the conversion of Subject Shares at the Effective Time under the
Incorporation Merger Agreement or the Advisor Transaction and (iii) except, with
respect to SMT, for a transfer or sale of the SMT Shares in connection with a
foreclosure or other realization upon security under the GECC Pledge Agreement,
offer for sale, sell, transfer, pledge, tender, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, encumbrance, assignment or other disposition of, any or all of such
Shareholder's Subject Shares; (B) (i) except pursuant to the terms of this
Agreement, (ii) except for the execution and delivery of the Proxy and (iii)
except, with respect to SMT, for the right of the GECC Parties to exercise
voting, consensual, foreclosure or other realization rights with respect to the
SMT Shares pursuant to Article 5(b) of the GECC Pledge Agreement upon the
occurrence of an "Event of Default" or "Additional Acceleration Event" under the
GECC Credit Agreement, grant any proxies or powers of attorney, deposit any of
such Shareholder's Subject Shares into a voting trust or enter into a voting
agreement with respect to any of such Shareholder's Subject Shares; or (C) take
any action that would reasonably be expected to make any representation or
warranty contained herein untrue or incorrect or, except with respect to SMT for
the exercise by the GECC Parties of voting, consensual, foreclosure or other
realization rights with respect to the SMT Shares pursuant to Article 5(b) of
the GECC Pledge Agreement upon the occurrence of an "Event of Default" or
"Additional Acceleration Event" under the GECC Credit Agreement, have the effect
of impairing the ability of such Shareholder to perform such Shareholder's
obligations under this Agreement or preventing or delaying the consummation of
any of the transactions contemplated hereby or revoke or invalidate the Proxy;
provided, however, that a Shareholder may pledge its Subject Shares to a lender
in order to effect a bona-fide loan or financing transaction with such lender
(an "Exempt Transaction"), and such lender may foreclose upon or sell such
pledged Subject Shares so long as (i) such Exempt Transaction is not intended to
circumvent the transfer restrictions of this Section 3.1(a) and (ii) the
documentation relating to such Exempt Transaction provides that any party
acquiring such pledged Subject Shares in connection with such Exempt Transaction
will, upon acquiring such pledged Subject Shares, become a party to this
Agreement as a holder of Subject Shares and issue to Company a proxy
substantially in the form of the Proxy, except that any party acquiring any SMT
Shares in connection with a foreclosure, sale or other realization upon security
under the GECC Pledge Agreement shall not be required to become a party to this
Agreement or issue a proxy to Company. For the
6
<PAGE>
avoidance of doubt, the transactions entered into by SMT under the GECC Credit
Agreement and the GECC Pledge Agreement are acknowledged hereby as transactions
not intended to circumvent the restrictions of this Section 3.1(a).
(b) Reliance by Company; Cooperation. The Shareholder understands and
acknowledges that Company is entering into the Merger Agreement in reliance upon
the Shareholders' execution and delivery of this Agreement and the Proxy. Each
Shareholder shall cooperate fully with Starwood and Company in connection with
the respective reasonable best efforts of Starwood and Company to fulfill the
conditions to the Merger set forth in Article VI of the Merger Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Fees and Expenses. Each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Section 4.2 Indemnification. Each Shareholder jointly and severally
shall indemnify and hold harmless Company and its directors, officers,
employees, affiliates, successors and assigns from and against any and all
losses, lawsuits, liabilities (including, without limitation, liability arising
under principles of strict or joint and several liability), damages (including,
without limitation, such amounts as constitute punitive damages), deficiencies,
demands, claims (including, without limitation, demands, allegations, orders or
other actions by governmental agencies or other third parties), actions,
judgments or causes of action, assessments, costs, all amounts paid in
investigation, defense or settlement of any of the foregoing and expenses
(including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements or other third party claims) based upon, arising out of
or otherwise in connection with any inaccuracy in, or any breach of, any
representation, warranty, covenant or agreement of such Shareholder in this
Agreement.
Section 4.3 Amendment; Termination. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. This Agreement shall terminate immediately upon the termination of the
Merger Agreement in accordance with its terms. In addition, this Agreement may
be terminated (i) prior to the Effective Time, by mutual written consent of
Company and the Shareholders and (ii) following the Effective Time, by the
mutual written consent of New Starwood (as Starwood's successor in interest),
the Shareholders and a majority of the Class T Directors (as beneficiaries
hereof). In the event of termination of this Agreement pursuant to this Section
4.3, this Agreement shall become null and void and of no effect with no
liability on the part of any party hereto and all Proxies shall automatically
terminate; provided, however, that no such
7
<PAGE>
termination shall relieve any party hereto from any liability for any breach of
this Agreement occurring prior to such termination, and provided further that
the representations and warranties set forth in Section 2.1 shall survive the
termination of this Agreement. All covenants and agreements which contemplate
performance after the Effective Time shall survive the Effective Time.
Section 4.4 Extension, Waiver. Any agreement on the part of a party to
waive any provision of this Agreement, or to extend the time for any performance
hereunder, shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
Section 4.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, and subject to the succeeding proviso, is not
intended to confer upon any person other than the parties any rights or
remedies; provided, however, that this Agreement is intended to be for the
benefit of and shall be enforceable by any Class T Director.
SECTION 4.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF, EXCEPT TO THE EXTENT THAT THIS AGREEMENT IS REQUIRED TO BE
GOVERNED BY THE LAWS OF THE STATE OF MARYLAND.
Section 4.7 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, by hand delivery or telecopy (with a confirmation
copy sent for next day delivery via courier service, such as Federal Express),
or sent by overnight courier, such as Federal Express (providing proof of
delivery). All communications hereunder shall be delivered to the respective
parties at the following addresses:
If to the Shareholders:
to the address set forth on Annex A hereto.
8
<PAGE>
with copies to:
Katten, Muchin & Zavis
525 W. Monroe St. #1600
Chicago, IL 60661
Attention: Nina Matis, Kenneth M. Jacobson
Telecopy: (312) 902-1061
If to Company:
Trinet Corporate Realty Trust, Inc.
One Embarcadero Center, 33rd Floor
San Francisco, CA 94111
Attention: Geoff Dugan, Esq.
Telecopy: (415) 391-3092
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: James M. Dubin, Esq.
Telecopy: (212) 757-3990
Section 4.8 Assignment. Subject to the terms of the GECC Pledge
Agreement and the GECC Credit Agreement, neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of law or otherwise, by any
Shareholder without the prior written consent of Company, or by Company without
the prior written consent of the Shareholders and any such assignment or
delegation that is not consented to shall be null and void. Subject to the
preceding sentence, and to the terms of the GECC Pledge Agreement, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns (including, without
limitation, any person to whom any Subject Shares are sold, transferred or
assigned).
Section 4.9 Further Assurances. Each Shareholder shall execute and
deliver such other documents and instruments and take such further actions as
may be necessary or appropriate or as may be reasonably requested by Company or
any Class T Director in order to ensure that Company and each Class T Director
receives the full benefit of this Agreement.
Section 4.10 Enforcement. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
shall
9
<PAGE>
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the federal court of the United States located in the State of New York, this
being in addition to any other remedy to which they are entitled at law or in
equity. Each of the parties hereto (i) shall submit itself to the jurisdiction
of the federal courts of the United States of America located in the State of
New York in the event any dispute arises out of this Agreement or any of the
transactions contemplated hereby, (ii) shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) shall not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than the federal courts of
the United States of America located in the State of New York.
Section 4.11 Severability. Whenever possible, each provision or portion
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 4.12 No Personal Liability. No partner or member in a
Shareholder shall have any individual or personal liability on account of this
Agreement, and no officer, director, member, shareholder or partner of such
partner or member shall have any individual or personal liability on account of
this Agreement unless, in either case, such Person has executed an instrument in
writing stating that it wishes to be bound hereby as a Shareholder. For the
avoidance of doubt, no negative or deficit capital accounts shall be considered
to be assets of a Shareholder or other Person, and no obligation of a partner or
member to contribute capital or make loans shall be considered such an asset.
Section 4.13 GECC. It is agreed (a) that nothing contained in this
Agreement, in the Proxy or in any other document executed and delivered pursuant
to this Agreement is binding upon the GECC Parties, as secured parties under the
GECC Pledge Agreement, or upon any person who acquires the SMT Shares pursuant
to the exercise of the foreclosure, other realization or sale rights and
remedies under the GECC Pledge Agreement, GECC Credit Agreement or applicable
law; and (b) that the Proxy with respect to the SMT Shares shall be
automatically revoked upon the acquisition of the SMT Shares pursuant to the
exercise of such rights and remedies. In the event of any conflict under this
Agreement, the provisions of this Section 4.13 shall control.
Section 4.14 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same instrument
10
<PAGE>
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other parties.
11
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
signed as of the day and year first written above.
TRINET CORPORATE REALTY TRUST, INC.
By: /S/ ROBERT W. HOLMAN, JR.
Name: Mr. Robert W. Holman, Jr.
Title: Chairman and Chief Executive Officer
12
<PAGE>
SHAREHOLDERS:
------------
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
(General Partner)
By: BSS Capital Partners, L.P.
(General Partner)
By: Sternlicht Holdings II, Inc.
(General Partner)
By: /S/ JEROME C. SILVEY
------------------------
Name: Jerome C. Silvey
Title: Vice President
13
<PAGE>
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
(Managing Member)
By: SOFI IV Management, L.L.C.
(General Partner)
By: Starwood Capital Group, L.L.C.
(Managing Member)
By: /S/ JEROME C. SILVEY
--------------------------
Name: Jerome S. Silvey
Title: Senior Vice President
14
<PAGE>
B HOLDINGS, L.L.C.
By: /S/ MADISON GROSE
--------------------------
Name: Madison Grose
Title: Senior Managing Director
15
<PAGE>
ANNEX A
Total Number of
Company Shares of
Starwood Common Stock
---------------------
Name and Address of Shareholder Owned
- ------------------------------- -----
Class A Class B
------- -------
STARWOOD MEZZANINE 10,759,890 -
INVESTORS, L.P.
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Jerome C. Silvey
Telecopy: (203) 861-2101
SOFI-IV SMT HOLDINGS, L.L.C. 41,079,912 -
c/o SOFI IV Management, L.L.C.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Jerome C. Silvey
Telecopy: (203) 861-2101
B HOLDINGS, L.L.C. - 26,235,475
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Jerome C. Silvey
Telecopy: (203) 861-2101
<PAGE>
SCHEDULE I
Willis Andersen, Jr.
Robert W. Holman, Jr.
John G. McDonald
Stephen B. Oresman
George R. Puskar
<PAGE>
EXHIBIT 3
---------
STARWOOD FINANCIAL TRUST
IRREVOCABLE PROXY
The undersigned shareholder of Starwood Financial Trust, a Maryland
real estate investment trust ("Starwood"), hereby appoints TriNet Corporate
Realty Trust, Inc., a Maryland corporation ("Company"), as proxy for the
undersigned, with full power of substitution, to attend any annual or special
meeting of the shareholders of Starwood (including any and all adjournments and
postponements thereof), and in respect of any written consent in lieu of such
meeting, held or made for the purpose of considering or voting upon the matters
described in Section 1.1 of the Shareholder Agreement, dated the date hereof,
among Company, the undersigned and certain other shareholders of Starwood (the
"Shareholder Agreement"), in accordance with such Section 1.1, and to cast all
votes that the undersigned is entitled to cast at such a meeting (or in
connection with such written consent) with respect to all of the undersigned's
Subject Shares with respect to the matters described in Section 1.1 of the
Shareholder Agreement. The undersigned hereby revokes any proxy heretofore given
with respect to such a meeting (or written consent in lieu thereof) or with
respect to such a vote cast, except that the GECC Parties may be entitled to
exercise voting and consensual rights with respect to the SMT Shares pursuant to
Article 5(b) of the GECC Pledge Agreement upon the occurrence of an "Event of
Default" or "Additional Acceleration Event" under the GECC Credit Agreement. The
undersigned affirms that this proxy is a power coupled with an interest and
shall be irrevocable. The undersigned shall take such further action or execute
such other instruments as may be necessary to effectuate the intent of this
irrevocable proxy. This proxy shall terminate upon termination of the
Shareholder Agreement. Any capitalized terms used but not otherwise defined
herein shall have the meanings given to them in the Shareholder Agreement.
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
(Managing Member)
By: SOFI IV Management, L.L.C.
Please sign exactly as name appears on (General Partner)
the records of Starwood and date. When By: Starwood Capital Group, L.L.C.
signing as attorney, executor, admini (Managing Member)
strator, trustee, guardian, officer of a
corporation or other entity or in another
representative capacity, please give the By: /s/ JEROME C. SILVEY
full title under signature(s). ----------------------------
Name: Jerome C. Silvey
Title: Senior Vice President
Dated: June 15, 1999
<PAGE>
STARWOOD FINANCIAL TRUST
IRREVOCABLE PROXY
The undersigned shareholder of Starwood Financial Trust, a Maryland
real estate investment trust ("Starwood"), hereby appoints TriNet Corporate
Realty Trust, Inc., a Maryland corporation ("Company"), as proxy for the
undersigned, with full power of substitution, to attend any annual or special
meeting of the shareholders of Starwood (including any and all adjournments and
postponements thereof), and in respect of any written consent in lieu of such
meeting, held or made for the purpose of considering or voting upon the matters
described in Section 1.1 of the Shareholder Agreement, dated the date hereof,
among Company, the undersigned and certain other shareholders of Starwood (the
"Shareholder Agreement"), in accordance with such Section 1.1, and to cast all
votes that the undersigned is entitled to cast at such a meeting (or in
connection with such written consent) with respect to all of the undersigned's
Subject Shares (as defined in the Shareholder Agreement) with respect to the
matters described in Section 1.1 of the Shareholder Agreement. The undersigned
hereby revokes any proxy heretofore given with respect to such a meeting (or
written consent in lieu thereof) or with respect to such a vote cast. The
undersigned affirms that this proxy is a power coupled with an interest and
shall be irrevocable. The undersigned shall take such further action or execute
such other instruments as may be necessary to effectuate the intent of this
irrevocable proxy. This proxy shall terminate upon termination of the
Shareholder Agreement.
B HOLDINGS, L.L.C.
Please sign exactly as name
appears on the records of
Starwood and date. When signing
as attorney, executor, admini By: /S/ MADISON GROSE
strator, trustee, guardian, officer -----------------------------
of a corporation or other entity or Name: Madison Grose
in another representative capacity, Title: Senior Managing Director
please give the full title under
signature(s). Dated: June 15, 1999
<PAGE>
STARWOOD FINANCIAL TRUST
IRREVOCABLE PROXY
The undersigned shareholder of Starwood Financial Trust, a Maryland
real estate investment trust ("Starwood"), hereby appoints TriNet Corporate
Realty Trust, Inc., a Maryland corporation ("Company"), as proxy for the
undersigned, with full power of substitution, to attend any annual or special
meeting of the shareholders of Starwood (including any and all adjournments and
postponements thereof), and in respect of any written consent in lieu of such
meeting, held or made for the purpose of considering or voting upon the matters
described in Section 1.1 of the Shareholder Agreement, dated the date hereof,
among Company, the undersigned and certain other shareholders of Starwood (the
"Shareholder Agreement"), in accordance with such Section 1.1, and to cast all
votes that the undersigned is entitled to cast at such a meeting (or in
connection with such written consent) with respect to all of the undersigned's
Subject Shares (as defined in the Shareholder Agreement) with respect to the
matters described in Section 1.1 of the Shareholder Agreement. The undersigned
hereby revokes any proxy heretofore given with respect to such a meeting (or
written consent in lieu thereof) or with respect to such a vote cast. The
undersigned affirms that this proxy is a power coupled with an interest and
shall be irrevocable. The undersigned shall take such further action or execute
such other instruments as may be necessary to effectuate the intent of this
irrevocable proxy. This proxy shall terminate upon termination of the
Shareholder Agreement.
STARWOOD MEZZANINE
INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
(General Partner)
By: BSS Capital Partners, L.P.
Please sign exactly as name (General Partner)
appears on the records of By: Sternlicht Holdings II, Inc.
Starwood and date. When signing (General Partner)
as attorney, executor, admini
strator, trustee, guardian, officer
of a corporation or other entity or By: /S/ JEROME C. SILVEY
in another representative capacity, -------------------------------
please give the full title under Name: Jerome C. Silvey
signature(s). Title: Vice President
Dated: June 15, 1999
<PAGE>
EXHIBIT 4
---------
LOCK-UP AGREEMENT
LOCK-UP AGREEMENT (this "Agreement"), dated as of June 15, 1999,
between Mr. Barry Sternlicht (the "Original Shareholder") and Greenhill & Co.,
LLC, a New York limited liability company (the "Representative").
RECITALS
A. Pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of June ___, 1999, by and among Starwood Financial Trust,
a Maryland real estate investment trust ("Starwood"), ST Merger Sub, Inc., a
Maryland corporation ("Starwood Sub"), and TriNet Corporate Realty Trust, Inc.,
a Maryland corporation ("TriNet"), Starwood, Starwood Sub and TriNet have
agreed, among other things, to enter into a transaction (the "Merger") in which,
subject to the terms and conditions of the Merger Agreement, Starwood Sub will
merge with and into TriNet, with TriNet being the surviving corporation.
B. Pursuant to an Agreement and Plan of Merger (the "Incorporation
Merger Agreement"), dated as of June __, 1999, by and between Starwood and
Starwood Financial, Inc., a newly-formed Maryland corporation ("New Starwood"),
Starwood intends to merge with and into New Starwood (the "Incorporation
Merger").
C. Immediately prior to the consummation of the Merger, pursuant to the
Agreement and Plan of Merger and Contribution Agreement, dated as of June __,
1999 (the "Advisor Transaction Agreement"), STW Holdings I, Inc., a Delaware
corporation, intends, among other things, to merge with and into a subsidiary of
New Starwood and Starwood Capital Group, a Connecticut limited liability
company, will contribute interests in certain other companies to such subsidiary
of New Starwood (the "Advisor Transaction"). Pursuant to the Advisor Transaction
Agreement, upon the consummation of the Advisor Transaction, the Original
Shareholder will receive Common Stock (as defined below). The parties hereto
wish to restrict the transfer of such Common Stock.
D. The continuing force and effect of this Agreement is a condition
precedent to the consummation of the Merger by TriNet.
In consideration of the foregoing and of the mutual covenants contained
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. The following terms shall have the following
meanings for purposes of this Agreement:
<PAGE>
2
"Affiliate" means, with respect to a Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control," when used with respect
to any Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreed Counsel" means a reputable law firm other than those retained
by the parties to an Enforcement Action, which law firm is jointly selected by
the attorneys representing such parties and agreed-upon by such parties.
"Board of Directors" means, with respect to a Person, the board of
directors, board of trustees, board of managers or similar body of such Person.
"Change of Control" means that the common shareholders of the Company
immediately prior to the consummation of a merger, consolidation, acquisition of
assets or securities or a disposition of assets or securities (other than a
public offering of common stock), own less than 50% of the equity of the
surviving or successor entity resulting from such transaction.
"Closing Date" shall have the meaning ascribed to it in the Merger
Agreement.
"Common Stock" means, (i) prior to the consummation of the
Incorporation Merger, Starwood Common Stock and (ii) subsequent to the
consummation of the Incorporation Merger, New Starwood Common Stock.
"Company" means, prior to the consummation of the Incorporation Merger,
Starwood and, subsequent to the consummation of the Incorporation Merger, New
Starwood.
"Deed of Adherence" means a Deed of Adherence to this Agreement
substantially in the form of Exhibit 1 hereto.
"Enforcement Action" shall have the meaning ascribed to it in Section
4.2 hereof.
"New Starwood Common Stock" means the common stock, par value $0.001
per share, of New Starwood.
"Permitted Holders" means (i) with respect to a Person other than a
natural person, all Affiliates of such Person and (ii) with respect to a Person
who is a natural person, the spouse or any lineal descendant of such Person, a
trust established for the benefit of any of the foregoing or any personal
representative, estate or
<PAGE>
3
executor under any will of such Person or pursuant to the laws of intestate
succession, that, in either case (i) or (ii), has executed a Deed of Adherence.
"Permitted Transfer" means a Transfer permitted by Section 3 hereof.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pro Rata Share" means, (i) with respect to a Person other than the
Representative, the fraction, the numerator of which is the number of shares of
Common Stock then owned as of record by such Person and the denominator of which
is the total number of shares of Common Stock then outstanding and (ii) with
respect to the Representative, zero.
"Rightholder" means each of (i) the Representative and (ii) each
third-party beneficiary described in Section 7.2 hereof.
"Representative Contact Persons" means those individuals listed on
Schedule A hereto and any other employees or agents of the Representative
appointed to be Representative Contact Persons by written notice provided to the
Original Shareholder.
"Restricted Security" means all Starwood Common Stock, New Starwood
Common Stock and any other securities convertible into, exchangeable for or
exercisable for, Starwood Common Stock or New Starwood Common Stock, in each
case, that was received by the Original Shareholder in connection with the
Advisor Transaction but only for so long as such securities are subject to the
transfer restrictions contained in Section 2.1 and 2.2 hereof.
"Shareholder" means each of the Original Shareholder and any other
Persons who hold Restricted Securities and execute a Deed of Adherence in
accordance with Section 2.2 hereof.
"Starwood Common Stock" means the Class A shares of beneficial
interest, par value $1.00 per share, and the Class B shares of beneficial
interest, par value $0.01 per share, of Starwood.
"Stock Dividend" shall have the meaning ascribed to it in the Merger
Agreement.
"Transfer" shall have the meaning ascribed to it in Section 2.1 hereof.
<PAGE>
4
"Warranted" means, with respect to an Enforcement Action, that such
Enforcement Action was based on the best knowledge, information and belief,
formed after an inquiry reasonable under the circumstances, of the parties
bringing such Enforcement Action that this Agreement has been breached and that
such Enforcement Action was not presented for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in litigation costs.
References in this Agreement to a "party" or "parties" are references to a party
or parties (respectively) to this Agreement unless the context requires
otherwise. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings ascribed to them by the Merger Agreement.
Section 2. Transfer Restrictions. Except as provided in Section 3
hereof:
2.1 During the period from the date hereof until the date falling 12
months after the Closing Date, no Shareholder shall directly or indirectly sell,
pledge, encumber, transfer, enter into any voting or similar agreement with
respect to or otherwise dispose of (collectively, "Transfer") or enter into any
agreement or series of agreements to Transfer, any Restricted Securities other
than to a Permitted Holder. For the avoidance of doubt, the term "Transfer"
shall not include any conversion or exchange occurring by operation of law.
2.2 No Shareholder shall adopt a plan for liquidation or dissolution of
such Shareholder or make any distributions of the Restricted Securities to any
Persons in respect of such Shareholder's capital stock or other ownership
interests unless all Persons that will receive Restricted Securities in
connection with such liquidation, dissolution or distribution have executed a
Deed of Adherence.
Section 3. Exceptions to Transfer Restrictions. The restrictions set
forth in Section 2 hereof shall not apply to (i) a Transfer of Restricted
Securities that is made by the Shareholder in response to a "tender offer" with
respect to which the completion of such tender offer is conditioned upon such
completion resulting in a Change of Control; (ii) a Transfer of Restricted
Securities that is made to the Person (or any Affiliate of such Person)
receiving control of the Company as a result of a Change of Control; (iii) a
pledge of Restricted Securities that is made in order to establish a margin
account at a reputable brokerage firm; (iv) a pledge of Restricted Securities to
a lender in order to effect a bona-fide loan or financing transaction with such
lender which transaction is not intended to circumvent the transfer restrictions
of Section 2 hereof; (v) a Transfer of Restricted Securities to the lender or
brokerage firm that is the pledgee with respect to a pledge described in clause
(iii) or (iv) above, or to an Affiliate of such lender or such brokerage firm or
to a purchaser in a foreclosure sale; and (vi) a Transfer that occurs because of
entry by the Shareholders into a voting agreement, proxy or other arrangement
deemed reasonably necessary by the Board of Directors of the Company to
effectuate a merger, consolidation,
<PAGE>
5
amalgamation or other business combination that has been approved by the Board
of Directors of the Company; and (vii) the granting of a proxy with respect to
any annual or special meeting of the shareholders of the Company. For the
avoidance of doubt, all Restricted Securities Transferred pursuant to exceptions
(i), (ii) and (v) listed in this Section 3 shall no longer be deemed to be
Restricted Securities subsequent to such Transfer.
Section 4. Remedies.
4.1 The parties declare and agree that it is impossible to measure in
money the damages that would be suffered by a party by reason of the failure by
any other party to perform any of its obligations under this Agreement.
Therefore, if any party institutes any action or proceeding to enforce the
provisions of this Agreement, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the other party has
an adequate remedy at law and, consequently, the parties hereby agree that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement.
4.2 If any Rightholder or group of Rightholders institutes any action
or proceeding (an "Enforcement Action") to enforce the provisions of this
Agreement against a Shareholder:
4.2.1 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was Warranted, each Rightholder bringing such Enforcement Action
shall pay such Shareholder an amount equal to the product of (x) such
Rightholder's Pro Rata Share times (y) the reasonable costs and
expenses (including the fees and disbursements of attorneys other than
Agreed Counsel) of such Shareholder incurred in connection with the
resolution of such Enforcement Action, and the fees and disbursements
of Agreed Counsel shall be borne equally among all parties to such
Enforcement Action.
4.2.2 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was not Warranted, the Rightholders bringing such Enforcement
Action (other than the Representative) shall pay such Shareholder an
amount equal to the reasonable costs and expenses (including the fees
and disbursements of attorneys other than Agreed Counsel) of such
Shareholder incurred in connection with the resolution of such
Enforcement Action, and the fees and disbursements of Agreed Counsel
shall be borne equally among the Rightholders instituting such
Enforcement Action.
4.2.3 If such Enforcement Action results in a court of
competent jurisdiction entering a final judgment against such
Shareholder, the
<PAGE>
6
Shareholder shall pay each Rightholder bringing such Enforcement Action
an amount equal to the reasonable costs and expenses (including the
fees and disbursements of attorneys) of such Rightholder incurred in
connection with the resolution of such Enforcement Action.
4.2.4 Otherwise, each party shall bear its own expenses
incurred in connection with the resolution of Enforcement Actions.
4.3 If any amount payable under Section 4.2 hereof is not paid in full
by the party liable for such amount (the "Liable Party") within 30 calendar days
after written notice requesting such payment is provided to the Liable Party by
the party entitled to such amount (the "Entitled Party"), the Entitled Party may
provide written notice to the Company of such failure to pay and the amount owed
by the Liable Party. Upon receipt of such notice, the Company shall not make any
distributions (whether cash or otherwise) to the Liable Party in respect of its
equity interests in the Company and shall make such distributions to the
Entitled Party until the amount of such distributions made to the Entitled Party
equals the amount owed by the Liable Party.
4.4 Any Rightholder (other than the Representative) bringing an
Enforcement Action shall not hold fewer than 100 shares of Common Stock during
the pendency of such Enforcement Action.
Section 5. Term and Termination. Unless earlier terminated by a writing
executed by all parties, this Agreement shall terminate on the date falling 12
months and one day after the Closing Date.
Section 6. Representations and Warranties. The Original Shareholder
represents and warrants that:
6.1 As of the date hereof, the Original Shareholder has all requisite
power and authority to enter into this Agreement, and the consummation of all
transactions contemplated by this Agreement have been duly authorized by all
necessary action on its part;
6.2 As of the date hereof, this Agreement has been duly executed and
delivered by the Original Shareholder and constitutes the valid and binding
agreement of it and is enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity;
6.3 As of the date hereof, the execution, delivery and performance of
this Agreement by the Original Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound;
<PAGE>
7
6.4 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will be the record holder and beneficial
owner of the securities described on Schedule 6.4 hereto, free and clear of any
and all liens, charges, encumbrances, pledges, voting agreements or other
commitments of any kind (in each case, assuming the consummation of the Merger,
the Advisor Transaction and the Incorporation Merger), other than Permitted
Transfers;
6.5 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will own (either beneficially or of
record) no Restricted Securities other than the securities described on Schedule
6.4 hereto (in each case, assuming the consummation of the Merger, the Advisor
Transaction and the Incorporation Merger) except for (i) Class B shares of
beneficial interest of Starwood, par value $0.01 per share ("Class B Shares"),
and (ii) Class A shares of beneficial interest of Starwood, par value $1.00 per
share ("Class A Shares"), issued to the Original Shareholder pursuant to the
Stock Dividend; provided that between the date hereof and the Closing Date,
Restricted Securities may be Transferred in a Permitted Transfer;
6.6 The Original Shareholder will be, on both the date the Advisor
Transaction is consummated and the Closing Date, the record holder and
beneficial owner of the securities described on Schedule 6.6 hereto, free and
clear of any and all liens, charges, encumbrances, pledges, voting agreements or
other commitments of any kind (in each case, assuming the consummation of the
Merger and the Advisor Transaction but not the consummation of the Incorporation
Merger), other than Permitted Transfers; and
6.7 As of the date hereof, the Original Shareholder owns (either
beneficially or of record), and on the Closing Date, will own (either
beneficially or of record), no Restricted Securities other than the securities
described on Schedule 6.6 hereto (in each case, assuming the consummation of the
Merger and the Advisor Transaction but not the consummation of the Incorporation
Merger) except for (i) Class B Shares and (ii) Class A Shares issued to the
Original Shareholder pursuant to the Stock Dividend; provided that between the
date hereof and the Closing Date, Restricted Securities may be Transferred in a
Permitted Transfer.
Section 7. Miscellaneous.
7.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally or sent by registered mail
or overnight delivery service, in either case postage prepaid, or delivered by
telecopy, facsimile or similar telecommunications equipment. Any such notice
shall be deemed given when so delivered personally or, if sent by registered
mail, five days after the date of deposit in the mails or, if sent by overnight
delivery service, on the
<PAGE>
8
business day following deposit with such delivery service or, if delivered by
telecopy, facsimile or similar telecommunications equipment, at the time of
receipt thereof, as follows:
If to the Original Shareholder, to:
c/o Starwood Capital Group, L.L.C.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Madison Grose
Telecopy: (203) 861-2101
with copies to:
Katten, Muchin & Zavis
525 W. Monroe St. #1600
Chicago, IL 60661
Attention: Nina Matis, Kenneth M. Jacobson
Telecopy: (312) 902-1061
If to the Representative, to:
Greenhill & Co., LLC
31 West 52nd Street, 16th Floor
New York, NY 10019
Telecopy: (212) 408-0660
All correspondence must be sent to the attention of
a Representative Contact Person
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: John A. Marzulli, Jr.
Any party may, by notice to the other parties, designate another address or
person for receipt of notices hereunder. Any additional parties agreeing to be
bound by the terms of this Agreement who execute a Deed of Adherence shall
receive notices hereunder at the location specified in such Deed of Adherence.
7.2 At any given time, all holders of Common Stock who then hold 100 or
more shares of Common Stock are hereby acknowledged (as of such time) as
intended third-party beneficiaries of this Agreement. The rights and
<PAGE>
9
privileges granted under this Agreement to the Rightholders shall inure to the
benefit of such holders, and the provisions of this Agreement shall be binding
upon any such holder who brings an Enforcement Action. Any waiver of a provision
of this Agreement granted by the Representative pursuant to Section 7.5 hereof
shall be binding upon and effective against all Rightholders.
7.3 In the event any provision hereof is held void or unenforceable by
any court, such provision shall be severable and shall not affect the remaining
provisions hereof.
7.4 This Agreement reflects the entire agreement among the parties and
supersedes all prior agreements and communications, either oral or in writing,
among the parties with respect to the subject matter hereof; provided that, for
the avoidance of doubt, this provision shall not affect the validity of the
Engagement Letter (the "Engagement Letter") between the Representative and
TriNet, dated as of June __, 1999, and, in the event of any conflict between the
terms and provisions of this Agreement and those of the Engagement Letter, the
terms and provisions of the Engagement Letter shall prevail.
7.5 This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived (i) in the case of a waiver by the
Rightholders, by a written instrument signed on behalf of the Representative by
any Representative Contact Person; (ii) in the case of a waiver by any other
parties, by an written instrument signed by all such parties waiving compliance.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The
Representative shall not be liable for any error of judgment or any action
taken, suffered or omitted to be taken under this Agreement except in the case
of its gross negligence, bad faith or willful misconduct. The Representative may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it under this
Agreement in good faith and in accordance with the opinion of such counsel.
7.6 This Agreement may not be assigned by any party without the prior
written consent of the other parties except in connection with a transfer of
Restricted Securities in accordance with this Agreement. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted transferees from and after the date
hereof.
<PAGE>
10
7.7 Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby.
7.8 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT REGARD TO THE CONFLICTS OF LAWS,
PRINCIPLES OF SUCH STATE).
7.9 Each party to this Agreement agrees that all disputes between them
arising out of or relating to the relationship established between them in
connection with this Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by federal courts located in New York, New
York, to the extent such courts have jurisdiction. Each of the parties waives
any objection that each may have (including, without limitation, any objection
to the laying of venue or based on forum non conveniens) to the location of the
court in which any proceeding is commenced in accordance with this paragraph.
Each party waives personal service of any process upon him or it and irrevocably
consents to service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage pre-paid, to such persons address specified in this Agreement or
such other address designated by such person in accordance with the terms of
this Agreement.
7.10 No partner or member in, a Shareholder or the Representative shall
have any individual or personal liability on account of this Agreement, and no
officer, director, member, shareholder or partner of any such partner or member
shall have any individual or personal liability on account of this Agreement
unless, in either case, such Person has executed a Deed of Adherence. For the
avoidance of doubt, no negative or deficit capital accounts shall be considered
to be assets of a Shareholder or other Person, and no obligation of a partner or
member to contribute capital or make loans shall be considered such an asset.
7.11 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
[Name of Original Shareholder]
/S/ BARRY STEINLICHT
------------------------------
S-1
<PAGE>
GREENHILL & CO., LLC
By: /S/ SCOTT L. BOK
Name: Scott L. Bok
Title: Managing Director
S-2
<PAGE>
Accepted and agreed
as to Section 4.3:
STARWOOD FINANCIAL TRUST
By /S/ SPENCER HABER
------------------------
Name: Spencer Haber
Title: Chief Financial Officer
S-3
<PAGE>
Exhibit 1
---------
DEED OF ADHERENCE
-----------------
THIS DEED OF ADHERENCE is made the __________ day of _________
AMONG:
(#) [The Persons then party to the Agreement]; and
(#) [Name of New Shareholder] (the "New Shareholder").
WHEREAS:
(A) On the ___ day of June 1999, the Original Shareholder and the
Rightholders entered into a Lock-up Agreement (the "Agreement") to
which a form of this Deed is attached as Exhibit 1.
(B) The New Shareholder wishes to [have transferred to him/her/it] [______]
shares of [designate security to be transferred] (the "Shares"), from
[name of Old Shareholder] (the "Old Shareholder") and in accordance
with Section 2.3 of the Agreement or as a Permitted Transferee has
agreed to enter into this Deed.
NOW THIS DEED WITNESSES as follows:
1. Interpretation.
In this Deed, except as the context may otherwise require, all
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
2. Covenant.
The New Shareholder hereby covenants with and to the Rightholders and
the other Shareholders, to adhere to and be bound by all the duties,
burdens and obligations of a Shareholder under the Agreement and all
documents expressed in writing to be supplemental or ancillary thereto
as if the New Shareholder had been a Shareholder under the Agreement
since the date thereof.
3. Enforceability.
Each other Shareholder and the Rightholders shall be entitled to
enforce the Agreement against the New Shareholder, and the New
Shareholder shall be entitled to all rights and benefits of the Old
Shareholder (other than those that
<PAGE>
2
are non-assignable) under the Agreement in each case as if the New
Shareholder had been a Shareholder under the Agreement since the date
thereof.
4. Representations and Warranties.
The New Shareholder represents and warrants as of the date hereof that:
(i) the New Shareholder has all requisite power and authority to enter
into this Deed and the Agreement, and the consummation of all
transactions contemplated by this Deed and the Agreement have been duly
authorized by all necessary action on its part; (ii) this Deed has been
duly executed and delivered by the New Shareholder, and this Deed and
the Agreement constitute the valid and binding agreements of it and are
enforceable against it in accordance with their terms; and (iii) the
execution, delivery of this Deed and performance of this Deed and the
Agreement by the New Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound.
5. Notices.
All notices to the New Shareholder under Section 7.1 of the Agreement
shall be delivered to:
[Contact Information]
6. Governing Law.
THIS DEED OF ADHERENCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed
on the date first above written.
[Appropriate Signature Block]
<PAGE>
Schedule 6.4
------------
<PAGE>
Schedule 6.6
------------
<PAGE>
Schedule A
----------
The Representative Contact Persons shall be:
1. Mr. Robert F. Greenhill
2. Mr. Scott L. Bok
<PAGE>
EXHIBIT 5
---------
LOCK-UP AGREEMENT
LOCK-UP AGREEMENT (this "Agreement"), dated as of June 15, 1999,
between SOFI-IV SMT Holdings, L.L.C., a Delaware limited liability company (the
"Original Shareholder"), and Greenhill & Co., LLC, a New York limited liability
company (the "Representative").
RECITALS
A. Pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of June 15, 1999, by and among Starwood Financial Trust, a
Maryland real estate investment trust ("Starwood"), ST Merger Sub, Inc., a
Maryland corporation ("Starwood Sub"), and TriNet Corporate Realty Trust, Inc.,
a Maryland corporation ("TriNet"), Starwood, Starwood Sub and TriNet have
agreed, among other things, to enter into a transaction (the "Merger") in which,
subject to the terms and conditions of the Merger Agreement, Starwood Sub will
merge with and into TriNet, with TriNet being the surviving corporation.
B. Pursuant to an Agreement and Plan of Merger (the "Incorporation
Merger Agreement"), dated as of June ___, 1999, by and between Starwood and
Starwood Financial, Inc., a newly-formed Maryland corporation ("New Starwood"),
Starwood intends to merge with and into New Starwood (the "Incorporation
Merger"), with New Starwood being the surviving corporation.
C. The parties hereto wish to restrict the transfer of certain
securities of Starwood and New Starwood that will be held by the Original
Shareholder or certain successors in interest thereto.
D. The continuing force and effect of this Agreement is a condition
precedent to the consummation of the Merger by TriNet.
In consideration of the foregoing and of the mutual covenants contained
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Certain Definitions. The following terms shall have the
following meanings for purposes of this Agreement:
"Affiliate" means, with respect to a Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control," when used with respect
to any Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
<PAGE>
2
"Agreed Counsel" means a reputable law firm other than those retained
by the parties to an Enforcement Action, which law firm is jointly selected by
the attorneys representing such parties and agreed-upon by such parties.
"Board of Directors" means, with respect to a Person, the board of
directors, board of trustees, board of managers or similar body of such Person.
"Change of Control" means that the common shareholders of the Company
immediately prior to the consummation of a merger, consolidation, acquisition of
assets or securities or a disposition of assets or securities (other than a
public offering of common stock), own less than 50% of the equity of the
surviving or successor entity resulting from such transaction.
"Closing Date" shall have the meaning ascribed to it in the Merger
Agreement.
"Common Stock" means, (i) prior to the consummation of the
Incorporation Merger, Starwood Common Stock and (ii) subsequent to the
consummation of the Incorporation Merger, New Starwood Common Stock.
"Company" means, prior to the consummation of the Incorporation Merger,
Starwood and, subsequent to the consummation of the Incorporation Merger, New
Starwood.
"Deed of Adherence" means a Deed of Adherence to this Agreement
substantially in the form of Exhibit 1 hereto.
"Enforcement Action" shall have the meaning ascribed to it in Section
4.2 hereof.
"Initial Holdings" shall have the meaning ascribed to it in Section 6.8
hereof.
"New Starwood Common Stock" means the common stock, par value $0.001
per share, of New Starwood.
"Permitted Foreclosure" means any foreclosure or other realization upon
security upon the Restricted Securities (i) permitted by Section 3.1(a) of the
Shareholder Agreement or (ii) pursuant to the exercise of such remedies with
respect to the lien of General Electric Capital Corporation ("GECC") pursuant to
the Pledge and Security Agreement, Facility B, dated as of May 27, 1999 among
Starwood Opportunity Fund IV, L.P., certain other pledgors named therein and
GECC (the "GECC Pledge Agreement").
<PAGE>
3
"Permitted Holders" means (i) with respect to a Person other than a
natural person, all Affiliates of such Person and (ii) with respect to a Person
who is a natural person, the spouse or any lineal descendant of such Person, a
trust established for the benefit of any of the foregoing or any personal
representative, estate or executor under any will of such Person or pursuant to
the laws of intestate succession, that, in either case (i) or (ii), has executed
a Deed of Adherence.
"Permitted Liens" means any pledges of Restricted Securities permitted
by Section 3.1(a) of the Shareholder Agreement, the lien of GECC pursuant to the
GECC Pledge Agreement and the conditional voting and consensual rights of GECC
pursuant to Section 5(b) of the GECC Pledge Agreement.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pro Rata Share" means, (i) with respect to a Rightholder other than
the Representative, the fraction, the numerator of which is the number of shares
of Common Stock then owned as of record by such Rightholder and the denominator
of which is the total number of shares of Common Stock then outstanding and (ii)
with respect to the Representative, zero.
"Public Offering" means a public offering of securities in which a
Shareholder has the right to participate pursuant to Section 3 of the Amended
and Restated Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of March 18, 1998 among Starwood Financial Trust, a
California business trust (as predecessor in interest to Starwood), Starwood
Mezzanine Investors, L.P., a Delaware limited partnership, SAHI Partners, a
Delaware general partnership and SOFI-IV SMT Holdings, L.L.C., a Delaware
limited liability company.
"Rightholder" means each of (i) the Representative and (ii) each
third-party beneficiary described in Section 7.2 hereof.
"Representative Contact Persons" means those individuals listed on
Schedule A hereto and any other employees or agents of the Representative
appointed to be Representative Contact Persons by written notice provided to the
Original Shareholder.
"Restricted Security" means all Starwood Common Stock, New Starwood
Common Stock and any other securities convertible into, exchangeable for or
exercisable for, Starwood Common Stock or New Starwood Common Stock, in each
case, that was received by the Original Shareholder in connection with the
Merger but only for so long as such securities are subject to the transfer
restrictions contained in Sections 2.1, 2.2, 2.3 and 2.4 hereof.
<PAGE>
4
"Shareholder" means each of the Original Shareholder and any other
Persons who hold Restricted Securities and execute a Deed of Adherence in
accordance with Section 2.6 hereof.
"Shareholder Agreement" means the Shareholder Agreement, of even date
herewith, among TriNet, SOFI-IV SMT Holdings, L.L.C., a Delaware limited
liability company, and Starwood Mezzanine Investors, L.P., a Delaware limited
partnership.
"Stock Dividend" shall have the meaning ascribed to it in the Merger
Agreement.
"Starwood Common Stock" means the Class A shares of beneficial
interest, par value $1.00 per share, and the Class B shares of beneficial
interest, par value $0.01 per share, of Starwood.
"Six-Month Anniversary" shall have the meaning ascribed to it in
Section 2.1 hereof.
"Six-Month Holdings" means the number of shares of Common Stock
represented by all Restricted Securities owned as of record by all Shareholders
on the Six-Month Anniversary.
"Warranted" means, with respect to an Enforcement Action, that such
Enforcement Action was based on the best knowledge, information and belief,
formed after an inquiry reasonable under the circumstances, of the parties
bringing such Enforcement Action that this Agreement has been breached and that
such Enforcement Action was not presented for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in litigation costs.
References in this Agreement to a "party" or "parties" are references to a party
or parties (respectively) to this Agreement unless the context requires
otherwise. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings ascribed to them by the Merger Agreement.
Section 2. Transfer Restrictions. Except as provided in Section 3
hereof:
2.1 During the period from the Closing Date until the date (the
Six-Month Anniversary") falling six months after the Closing Date, the
Shareholders shall not directly or indirectly sell, pledge, encumber, transfer,
enter into any voting or similar agreement with respect to or otherwise dispose
of (collectively, "Transfer") or enter into any agreement or series of
agreements to Transfer any Restricted Securities other than to a Permitted
Holder; provided, however, that during such six-month period, the Shareholders
may Transfer to a party
<PAGE>
5
other than a Permitted Holder: (i) Restricted Securities representing, in the
aggregate, no more than 5% of the Initial Holdings (the "Initial Exemption");
(ii) Restricted Securities representing, in the aggregate, up to 30% of the
Initial Holdings in a transaction or series of transactions not consummated on
any securities exchange, quotation system or other form of securities market
(the "Off-Market Sale Exemption"); and (iii) Restricted Securities representing,
in the aggregate, up to 20% of the Initial Holdings in a Public Offering in
accordance with Section 3 of the Registration Rights Agreement (the "Public
Offering Exemption"). All Restricted Securities sold under any one of (x) the
Initial Exemption, (y) the Off-Market Sale Exemption and (z) the Public Offering
Exemption shall count as Restricted Securities sold under the other two of the
Initial Exemption, the Off-Market Sale Exemption and the Public Offering
Exemption. For the avoidance of doubt, all Restricted Securities Transferred
pursuant to the Initial Exemption, the Off-Market Sale Exemption or the Public
Offering Exemption shall be deemed not to be Restricted Securities after such
Transfer. For the avoidance of doubt, the term "Transfer" shall not include any
conversion or exchange occurring by operation of law. If any Restricted
Securities that are (a) registered under the Securities Act of 1933, as amended,
or (b) entitled to registration rights exercisable prior to the Six-Month
Anniversary, are Transferred to a purchaser by a Shareholder using the
Off-Market Sale Exemption, such Transfer shall not be for the purpose of
circumventing the restrictions set forth in this Section 2, and such Transfer
shall not occur until such purchaser has signed a Deed of Adherence agreeing to
abide by the terms and provisions of this Section 2.1.
2.2 During the period from the day after the Six-Month Anniversary
until the date falling 12 months after the Closing Date, the Shareholders shall
not Transfer or enter into any agreement or series of agreements to Transfer,
Restricted Securities representing, in the aggregate, more than one-third of the
Six-Month Holdings to a party other than a Permitted Holder.
2.3 During the period from the day after the Six-Month Anniversary
until the date falling 18 months after the Closing Date, the Shareholders shall
not Transfer or enter into any agreement or series of agreements to Transfer,
Restricted Securities representing, in the aggregate, more than two-thirds of
the Six-Month Holdings to a party other than a Permitted Holder.
2.4 After the date falling 18 months and one day after the Closing
Date, the Shareholders may Transfer 100% of the Six-Month Holdings to a party
other than a Permitted Holder.
2.5 For the avoidance of doubt, all Restricted Securities Transferred
as permitted by Section 2.2, 2.3 or 2.4 hereof shall be deemed not to be
Restricted Securities after such Transfer.
2.6 No Shareholder shall adopt a plan for liquidation or dissolution of
such Shareholder or make any distributions of the Restricted Securities
<PAGE>
6
to any Persons in respect of such Shareholder's capital stock or other ownership
interests unless all Persons that will receive Restricted Securities in
connection with such liquidation, dissolution or distribution have executed a
Deed of Adherence.
Section 3. Exceptions to Transfer Restrictions. The restrictions set
forth in Section 2 hereof shall not apply to (i) a Transfer of Restricted
Securities that is made by the Shareholder in response to a "tender offer" with
respect to which the completion of such tender offer is conditioned upon such
completion resulting in a Change of Control; (ii) a Transfer of Restricted
Securities that is made to the Person (or any Affiliate of such Person)
receiving control of the Company as a result of a Change of Control; (iii) a
pledge of Restricted Securities that is made in order to establish a margin
account at a reputable brokerage firm; (iv) a pledge of Restricted Securities to
a lender in order to effect a bona-fide loan or financing transaction with such
lender which transaction is not intended to circumvent the transfer restrictions
of Section 2 hereof; (v) a Transfer of Restricted Securities to the lender or
brokerage firm that is the pledgee with respect to a pledge described in clause
(iii) or (iv) above or to an Affiliate of such lender or such brokerage firm or
to a purchaser in a foreclosure sale; (vi) a Transfer that occurs because of
entry by the Shareholders into a voting agreement, proxy or other arrangement
deemed reasonably necessary by the Board of Directors of the Company to
effectuate a merger, consolidation, amalgamation or other business combination
that has been approved by the Board of Directors of the Company; and (vii) the
granting of a proxy with respect to any annual or special meeting of the
shareholders of the Company. For the avoidance of doubt, all Restricted
Securities Transferred pursuant to exceptions (i), (ii) or (v) listed in this
Section 3 shall no longer be deemed to be Restricted Securities subsequent to
such Transfer.
Section 4. Remedies.
4.1 The parties declare and agree that it is impossible to measure in
money the damages that would be suffered by a party by reason of the failure by
any other party to perform any of its obligations under this Agreement.
Therefore, if any party institutes any action or proceeding to enforce the
provisions of this Agreement, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the other party has
an adequate remedy at law and, consequently, the parties hereby agree that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement.
4.2 If any Rightholder or group of Rightholders institutes any action
or proceeding (an "Enforcement Action") to enforce the provisions of this
Agreement against a Shareholder:
4.2.1 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and
<PAGE>
7
(ii) Agreed Counsel determines that such Enforcement Action was
Warranted, each Rightholder bringing such Enforcement Action shall pay
such Shareholder an amount equal to the product of (x) such
Rightholder's Pro Rata Share times (y) the reasonable costs and
expenses (including the fees and disbursements of attorneys other than
Agreed Counsel) of such Shareholder incurred in connection with the
resolution of such Enforcement Action, and the fees and disbursements
of Agreed Counsel shall be borne equally among all parties to such
Enforcement Action.
4.2.2 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was not Warranted, the Rightholders bringing such Enforcement
Action (other than the Representative) shall pay such Shareholder an
amount equal to the reasonable costs and expenses (including the fees
and disbursements of attorneys other than Agreed Counsel) of such
Shareholder incurred in connection with the resolution of such
Enforcement Action, and the fees and disbursements of Agreed Counsel
shall be borne equally among the Rightholders instituting such
Enforcement Action.
4.2.3 If such Enforcement Action results in a court of
competent jurisdiction entering a final judgment against such
Shareholder, the Shareholder shall pay each Rightholder bringing such
Enforcement Action an amount equal to the reasonable costs and expenses
(including the fees and disbursements of attorneys) of such Rightholder
incurred in connection with the resolution of such Enforcement Action.
4.2.4 Otherwise, each party shall bear its own expenses
incurred in connection with the resolution of Enforcement Actions.
4.3 If any amount payable under Section 4.2 hereof is not paid in full
by the party liable for such amount (the "Liable Party") within 30 calendar days
after written notice requesting such payment is provided to the Liable Party by
the party entitled to such amount (the "Entitled Party"), the Entitled Party may
provide written notice to the Company of such failure to pay and the amount owed
by the Liable Party. Upon receipt of such notice, the Company shall not make any
distributions (whether cash or otherwise) to the Liable Party in respect of its
equity interests in the Company and shall make such distributions to the
Entitled Party until the amount of such distributions made to the Entitled Party
equals the amount owed by the Liable Party.
4.4 Any Rightholder (other than the Representative) bringing an
Enforcement Action shall not hold fewer than 100 shares of Common Stock during
the pendency of such Enforcement Action.
<PAGE>
8
Section 5. Term and Termination. Unless earlier terminated by a writing
executed by all parties, this Agreement shall terminate on the date falling 24
months and one day after the Closing Date.
Section 6. Representations and Warranties. The Original Shareholder
represents and warrants that:
6.1 As of the date hereof, the Original Shareholder has all requisite
power and authority to enter into this Agreement, and the consummation of all
transactions contemplated by this Agreement have been duly authorized by all
necessary action on its part;
6.2 As of the date hereof, this Agreement has been duly executed and
delivered by the Original Shareholder and constitutes the valid and binding
agreement of it and is enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity;
6.3 As of the date hereof, the execution, delivery and performance of
this Agreement by the Original Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound;
6.4 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will be the record holder and beneficial
owner of the securities described on Schedule 6.4 hereto, free and clear of any
and all liens, charges, encumbrances, pledges, voting agreements or other
commitments of any kind (in each case, assuming the consummation of both the
Merger and the Incorporation Merger) other than Permitted Liens;
6.5 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will own (either beneficially or of
record) no Restricted Securities other than the securities described on Schedule
6.4 hereto (in each case, assuming the consummation of both the Merger and the
Incorporation Merger), except for (i) Class B shares of beneficial interest of
Starwood, par value $0.01 per share ("Class B Shares"), and (ii) Class A shares
of beneficial interest of Starwood, par value $1.00 per share ("Class A
Shares"), issued to the Original Shareholder pursuant to the Stock Dividend;
provided that between the date hereof and the Closing Date, Restricted
Securities may be Transferred in a Permitted Foreclosure;
6.6 The Original Shareholder is, as of the date hereof, and will be, on
the Closing Date, the record holder and beneficial owner of the securities
described on Schedule 6.6 hereto, free and clear of any and all liens, charges,
encumbrances, pledges, voting agreements or other commitments of any kind (in
each
<PAGE>
9
case, assuming the consummation of the Merger but not the consummation of the
Incorporation Merger), other than Permitted Liens;
6.7 As of the date hereof, the Original Shareholder owns (either
beneficially or of record), and will own (either beneficially or of record), on
the Closing Date, no Restricted Securities other than the securities described
on Schedule 6.6 hereto (in each case, assuming the consummation of the Merger
but not the consummation of the Incorporation Merger), except for (i) Class B
Shares and (ii) Class A Shares issued to the Original Shareholder pursuant to
the Stock Dividend; provided that between the date hereof and the Closing Date,
Restricted Securities may be Transferred in a Permitted Foreclosure; and
6.8 On the Closing Date, the Original Shareholder will own (either
beneficially or of record) a number of shares of Common Stock other than Class B
Shares (the "Initial Holdings") equal to 41,079,912 shares of Common Stock owned
as of the date hereof plus additional Common Stock to be issued to it pursuant
to the Stock Dividend.
Section 7. Miscellaneous.
7.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally or sent by registered mail
or overnight delivery service, in either case postage prepaid, or delivered by
telecopy, facsimile or similar telecommunications equipment. Any such notice
shall be deemed given when so delivered personally or, if sent by registered
mail, five days after the date of deposit in the mails or, if sent by overnight
delivery service, on the business day following deposit with such delivery
service or, if delivered by telecopy, facsimile or similar telecommunications
equipment, at the time of receipt thereof, as follows:
If to the Original Shareholder, to:
c/o Starwood Capital Group, L.L.C.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Madison Grose
Telecopy: (203) 861-2101
with copies to:
Katten, Muchin & Zavis
525 W. Monroe St. #1600
Chicago, IL 60661
Attention: Nina Matis, Kenneth M. Jacobson
Telecopy: (312) 902-1061
<PAGE>
10
If to the Representative, to:
Greenhill & Co., LLC
31 West 52nd Street, 16th Floor
New York, NY 10019
Telecopy: (212) 408-0660
All correspondence must be sent to the attention of
a Representative Contact Person
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: John A. Marzulli, Jr.
Any party may, by notice to the other parties, designate another address or
person for receipt of notices hereunder. Any additional parties agreeing to be
bound by the terms of this Agreement who execute a Deed of Adherence shall
receive notices hereunder at the location specified in such Deed of Adherence.
7.2 At any given time, all holders of Common Stock who then hold 100 or
more shares of Common Stock are hereby acknowledged (as of such time) as
intended third-party beneficiaries of this Agreement. The rights and privileges
granted under this Agreement to the Rightholders shall inure to the benefit of
such holders, and the provisions of this Agreement shall be binding upon any
such holder who brings an Enforcement Action. Any waiver of a provision of this
Agreement granted by the Representative pursuant to Section 7.5 hereof shall be
binding upon and effective against all Rightholders.
7.3 In the event any provision hereof is held void or unenforceable by
any court, such provision shall be severable and shall not affect the remaining
provisions hereof.
7.4 This Agreement reflects the entire agreement among the parties and
supersedes all prior agreements and communications, either oral or in writing,
among the parties with respect to the subject matter hereof; provided that, for
the avoidance of doubt, this provision shall not affect the validity of the
Engagement Letter (the "Engagement Letter") between the Representative and
TriNet, dated as of June __, 1999, and, in the event of any conflict between the
terms and provisions of this Agreement and those of the Engagement Letter, the
terms and provisions of the Engagement Letter shall prevail.
<PAGE>
11
7.5 This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived (i) in the case of a waiver by the
Rightholders, by a written instrument signed on behalf of the Representative by
any Representative Contact Person; (ii) in the case of a waiver by any other
parties, by an written instrument signed by all such parties waiving compliance.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The
Representative shall not be liable for any error of judgment or any action
taken, suffered or omitted to be taken under this Agreement except in the case
of its gross negligence, bad faith or willful misconduct. The Representative may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it under this
Agreement in good faith and in accordance with the opinion of such counsel.
7.6 This Agreement may not be assigned by any party without the prior
written consent of the other parties except in connection with a transfer of
Restricted Securities in accordance with this Agreement. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted transferees from and after the date
hereof.
7.7 Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby.
7.8 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT REGARD TO THE CONFLICTS OF LAWS,
PRINCIPLES OF SUCH STATE).
7.9 Each party to this Agreement agrees that all disputes between them
arising out of or relating to the relationship established between them in
connection with this Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by federal courts located in New York, New
York, to the extent such courts have jurisdiction. Each of the parties waives
any objection that each may have (including, without limitation, any objection
to the laying of venue or based on forum non conveniens) to the location of the
court in which any proceeding is commenced in accordance with this paragraph.
Each party waives personal service of any process upon him or it and irrevocably
consents to service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage pre-paid, to such
<PAGE>
12
persons address specified in this Agreement or such other address designated by
such person in accordance with the terms of this Agreement.
7.10 No partner or member in a Shareholder or the Representative shall
have any individual or personal liability on account of this Agreement, and no
officer, director, member, shareholder or partner of any such partner or member
shall have any individual or personal liability on account of this Agreement
unless, in either case, such Person has executed a Deed of Adherence. For the
avoidance of doubt, no negative or deficit capital accounts shall be considered
to be assets of a Shareholder or other Person, and no obligation of a partner or
member to contribute capital or make loans shall be considered such an asset.
Section 7.11 It is agreed that nothing contained in this Agreement is
binding upon the GECC or its successors and assigns, as secured parties under
the GECC Pledge Agreement, or upon any Person who acquires Restricted Securities
pursuant to the exercise of the foreclosure, other realization or sale rights
and remedies under the GECC Pledge Agreement, the GECC Credit Agreement (as
defined in the Shareholder Agreement) or applicable law unless GECC or such
Person (as the case may be) has executed a Deed of Adherence (it being
understood neither GECC nor such Person is obligated under this Agreement to
execute such a Deed of Adherence with respect to such Restricted Securities). In
the event of any conflict under this Agreement, the provisions of this Section
7.11 shall control.
7.12 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
(Managing Member)
By: SOFI IV Management, L.L.C.
(General Partner)
By: Starwood Capital Group, L.L.C.
(Managing Member)
By: /S/ JEROME C. SILVEY
----------------------------------
Name: Jerome C. Silvey
Title: Senior Vice President
S-1
<PAGE>
GREENHILL & CO., LLC
By: /S/ SCOTT L. BOK
Name: Scott L. Bok
Title: Managing Director
S-2
<PAGE>
Accepted and agreed
as to Section 4.3:
STARWOOD FINANCIAL TRUST
By: /S/ SPENCER HABER
-------------------------
Name: Spencer Haber
Title: Chief Financial Officer
S-3
<PAGE>
Exhibit 1
---------
DEED OF ADHERENCE
-----------------
THIS DEED OF ADHERENCE is made the __________ day of _________
AMONG:
(#) [The Persons then party to the Agreement]; and
(#) [Name of New Shareholder] (the "New Shareholder").
WHEREAS:
(A) On the ___ day of June 1999, the Original Shareholder and the
Representative entered into a Lock-up Agreement (the "Agreement") to
which a form of this Deed is attached as Exhibit 1.
(B) The New Shareholder wishes to [have transferred to him/her/it] [______]
shares of [designate security to be transferred] (the "Shares"), from
[name of Old Shareholder] (the "Old Shareholder") and in accordance
with Section 2.3 of the Agreement or as a Permitted Transferee has
agreed to enter into this Deed.
NOW THIS DEED WITNESSES as follows:
1. Interpretation.
In this Deed, except as the context may otherwise require, all
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
2. Covenant.
The New Shareholder hereby covenants with and to the Rightholders and
the other Shareholders, to adhere to and be bound by all the duties,
burdens and obligations of a Shareholder under the Agreement and all
documents expressed in writing to be supplemental or ancillary thereto
as if the New Shareholder had been a Shareholder under the Agreement
since the date thereof.
3. Enforceability.
Each other Shareholder and the Rightholders shall be entitled to
enforce the Agreement against the New Shareholder, and the New
Shareholder shall be entitled to all rights and benefits of the Old
Shareholder (other than those that
<PAGE>
2
are non-assignable) under the Agreement in each case as if the New
Shareholder had been a Shareholder under the Agreement since the date
thereof.
4. Representations and Warranties.
The New Shareholder represents and warrants as of the date hereof that:
(i) the New Shareholder has all requisite power and authority to enter
into this Deed and the Agreement, and the consummation of all
transactions contemplated by this Deed and the Agreement have been duly
authorized by all necessary action on its part; (ii) this Deed has been
duly executed and delivered by the New Shareholder, and this Deed and
the Agreement constitute the valid and binding agreements of it and are
enforceable against it in accordance with their terms; and (iii) the
execution, delivery of this Deed and performance of this Deed and the
Agreement by the New Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound.
5. Notices.
All notices to the New Shareholder under Section 7.1 of the Agreement
shall be delivered to:
[Contact Information]
6. Governing Law.
THIS DEED OF ADHERENCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed
on the date first above written.
[Appropriate Signature Block]
<PAGE>
Schedule 6.4
------------
<PAGE>
Schedule 6.6
------------
<PAGE>
Schedule A
----------
The Representative Contact Persons shall be:
1. Mr. Robert F. Greenhill
2. Mr. Scott L. Bok
<PAGE>
EXHIBIT 6
---------
LOCK-UP AGREEMENT
LOCK-UP AGREEMENT (this "Agreement"), dated as of June 15, 1999,
between Starwood Mezzanine Investors, L.P., a Delaware limited partnership (the
"Original Shareholder"), and Greenhill & Co., LLC, a New York limited liability
company (the "Representative").
RECITALS
A. Pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of June 15, 1999, by and among Starwood Financial Trust,
a Maryland real estate investment trust ("Starwood"), ST Merger Sub, Inc., a
Maryland corporation ("Starwood Sub"), and TriNet Corporate Realty Trust, Inc.,
a Maryland corporation ("TriNet"), Starwood, Starwood Sub and TriNet have
agreed, among other things, to enter into a transaction (the "Merger") in which,
subject to the terms and conditions of the Merger Agreement, Starwood Sub will
merge with and into TriNet, with TriNet being the surviving corporation.
B. Pursuant to an Agreement and Plan of Merger (the "Incorporation
Merger Agreement"), dated as of June ___, 1999, by and between Starwood and
Starwood Financial, Inc., a newly-formed Maryland corporation ("New Starwood"),
Starwood intends to merge with and into New Starwood (the "Incorporation
Merger"), with New Starwood being the surviving corporation.
C. The parties hereto wish to restrict the transfer of certain
securities of Starwood and New Starwood that will be held by the Original
Shareholder or certain successors in interest thereto.
D. The continuing force and effect of this Agreement is a condition
precedent to the consummation of the Merger by TriNet.
In consideration of the foregoing and of the mutual covenants contained
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Certain Definitions. The following terms shall have the
following meanings for purposes of this Agreement:
"Affiliate" means, with respect to a Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control," when used with respect
to any Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
<PAGE>
2
"Agreed Counsel" means a reputable law firm other than those retained
by the parties to an Enforcement Action, which law firm is jointly selected by
the attorneys representing such parties and agreed-upon by such parties.
"Board of Directors" means, with respect to a Person, the board of
directors, board of trustees, board of managers or similar body of such Person.
"Change of Control" means that the common shareholders of the Company
immediately prior to the consummation of a merger, consolidation, acquisition of
assets or securities or a disposition of assets or securities (other than a
public offering of common stock), own less than 50% of the equity of the
surviving or successor entity resulting from such transaction.
"Closing Date" shall have the meaning ascribed to it in the Merger
Agreement.
"Common Stock" means, (i) prior to the consummation of the
Incorporation Merger, Starwood Common Stock and (ii) subsequent to the
consummation of the Incorporation Merger, New Starwood Common Stock.
"Company" means, prior to the consummation of the Incorporation Merger,
Starwood and, subsequent to the consummation of the Incorporation Merger, New
Starwood.
"Deed of Adherence" means a Deed of Adherence to this Agreement
substantially in the form of Exhibit 1 hereto.
"Enforcement Action" shall have the meaning ascribed to it in Section
4.2 hereof.
"Initial Holdings" shall have the meaning ascribed to it in Section 6.8
hereof.
"New Starwood Common Stock" means the common stock, par value $0.001
per share, of New Starwood.
"Permitted Foreclosure" means any foreclosure or other realization upon
security upon the Restricted Securities permitted by Section 3.1(a) of the
Shareholder Agreement.
"Permitted Holders" means (i) with respect to a Person other than a
natural person, all Affiliates of such Person and (ii) with respect to a Person
who is a natural person, the spouse or any lineal descendant of such Person, a
trust established for the benefit of any of the foregoing or any personal
representative, estate or
<PAGE>
3
executor under any will of such Person or pursuant to the laws of intestate
succession, that, in either case (i) or (ii), has executed a Deed of Adherence.
"Permitted Liens" means any pledges of Restricted Securities permitted
by Section 3.1(a) of the Shareholder Agreement.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pro Rata Share" means, (i) with respect to a Rightholder other than
the Representative, the fraction, the numerator of which is the number of shares
of Common Stock then owned as of record by such Rightholder and the denominator
of which is the total number of shares of Common Stock then outstanding and (ii)
with respect to the Representative, zero.
"Public Offering" means a public offering of securities in which a
Shareholder has the right to participate pursuant to Section 3 of the Amended
and Restated Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of March 18, 1998 among Starwood Financial Trust, a
California business trust (as predecessor in interest to Starwood), Starwood
Mezzanine Investors, L.P., a Delaware limited partnership, SAHI Partners, a
Delaware general partnership and SOFI-IV SMT Holdings, L.L.C., a Delaware
limited liability company.
"Rightholder" means each of (i) the Representative and (ii) each
third-party beneficiary described in Section 7.2 hereof.
"Representative Contact Persons" means those individuals listed on
Schedule A hereto and any other employees or agents of the Representative
appointed to be Representative Contact Persons by written notice provided to the
Original Shareholder.
"Restricted Security" means all Starwood Common Stock, New Starwood
Common Stock and any other securities convertible into, exchangeable for or
exercisable for, Starwood Common Stock or New Starwood Common Stock, in each
case, that was received by the Original Shareholder in connection with the
Merger but only for so long as such securities are subject to the transfer
restrictions contained in Sections 2.1, 2.2, 2.3 and 2.4 hereof.
"Shareholder" means each of the Original Shareholder and any other
Persons who hold Restricted Securities and execute a Deed of Adherence in
accordance with Section 2.6 hereof.
<PAGE>
4
"Shareholder Agreement" means the Shareholder Agreement, of even date
herewith, among TriNet, SOFI-IV SMT Holdings, L.L.C., a Delaware limited
liability company, and Starwood Mezzanine Investors, L.P., a Delaware limited
partnership.
"Stock Dividend" shall have the meaning ascribed to it in the Merger
Agreement.
"Starwood Common Stock" means the Class A shares of beneficial
interest, par value $1.00 per share, and the Class B shares of beneficial
interest, par value $0.01 per share, of Starwood.
"Six-Month Anniversary" shall have the meaning ascribed to it in
Section 2.1 hereof.
"Six-Month Holdings" means the number of shares of Common Stock
represented by all Restricted Securities owned as of record by all Shareholders
on the Six-Month Anniversary.
"Warranted" means, with respect to an Enforcement Action, that such
Enforcement Action was based on the best knowledge, information and belief,
formed after an inquiry reasonable under the circumstances, of the parties
bringing such Enforcement Action that this Agreement has been breached and that
such Enforcement Action was not presented for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in litigation costs.
References in this Agreement to a "party" or "parties" are references to a party
or parties (respectively) to this Agreement unless the context requires
otherwise. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings ascribed to them by the Merger Agreement.
Section 2. Transfer Restrictions. Except as provided in Section 3
hereof:
2.1 During the period from the Closing Date until the date (the
Six-Month Anniversary") falling six months after the Closing Date, the
Shareholders shall not directly or indirectly sell, pledge, encumber, transfer,
enter into any voting or similar agreement with respect to or otherwise dispose
of (collectively, "Transfer") or enter into any agreement or series of
agreements to Transfer any Restricted Securities other than to a Permitted
Holder; provided, however, that during such six-month period, the Shareholders
may Transfer to a party other than a Permitted Holder: (i) Restricted Securities
representing, in the aggregate, no more than 5% of the Initial Holdings (the
"Initial Exemption"); (ii) Restricted Securities representing, in the aggregate,
up to 30% of the Initial Holdings in a transaction or series of transactions not
consummated on any securities exchange,
<PAGE>
5
quotation system or other form of securities market (the "Off-Market Sale
Exemption"); and (iii) Restricted Securities representing, in the aggregate, up
to 20% of the Initial Holdings in a Public Offering in accordance with Section 3
of the Registration Rights Agreement (the "Public Offering Exemption"). All
Restricted Securities sold under any one of (x) the Initial Exemption, (y) the
Off-Market Sale Exemption and (z) the Public Offering Exemption shall count as
Restricted Securities sold under the other two of the Initial Exemption, the
Off-Market Sale Exemption and the Public Offering Exemption. For the avoidance
of doubt, all Restricted Securities Transferred pursuant to the Initial
Exemption, the Off-Market Sale Exemption or the Public Offering Exemption shall
be deemed not to be Restricted Securities after such Transfer. For the avoidance
of doubt, the term "Transfer" shall not include any conversion or exchange
occurring by operation of law. If any Restricted Securities that are (a)
registered under the Securities Act of 1933, as amended, or (b) entitled to
registration rights exercisable prior to the Six-Month Anniversary, are
Transferred to a purchaser by a Shareholder using the Off-Market Sale Exemption,
such Transfer shall not be for the purpose of circumventing the restrictions set
forth in this Section 2, and such Transfer shall not occur until such purchaser
has signed a Deed of Adherence agreeing to abide by the terms and provisions of
this Section 2.1.
2.2 During the period from the day after the Six-Month Anniversary
until the date falling 12 months after the Closing Date, the Shareholders shall
not Transfer or enter into any agreement or series of agreements to Transfer,
Restricted Securities representing, in the aggregate, more than one-third of the
Six-Month Holdings to a party other than a Permitted Holder.
2.3 During the period from the day after the Six-Month Anniversary
until the date falling 18 months after the Closing Date, the Shareholders shall
not Transfer or enter into any agreement or series of agreements to Transfer,
Restricted Securities representing, in the aggregate, more than two-thirds of
the Six-Month Holdings to a party other than a Permitted Holder.
2.4 After the date falling 18 months and one day after the Closing
Date, the Shareholders may Transfer 100% of the Six-Month Holdings to a party
other than a Permitted Holder.
2.5 For the avoidance of doubt, all Restricted Securities Transferred
as permitted by Section 2.2, 2.3 or 2.4 hereof shall be deemed not to be
Restricted Securities after such Transfer.
2.6 No Shareholder shall adopt a plan for liquidation or dissolution of
such Shareholder or make any distributions of the Restricted Securities to any
Persons in respect of such Shareholder's capital stock or other ownership
interests unless all Persons that will receive Restricted Securities in
connection with such liquidation, dissolution or distribution have executed a
Deed of Adherence.
<PAGE>
6
Section 3. Exceptions to Transfer Restrictions. The restrictions set
forth in Section 2 hereof shall not apply to (i) a Transfer of Restricted
Securities that is made by the Shareholder in response to a "tender offer" with
respect to which the completion of such tender offer is conditioned upon such
completion resulting in a Change of Control; (ii) a Transfer of Restricted
Securities that is made to the Person (or any Affiliate of such Person)
receiving control of the Company as a result of a Change of Control; (iii) a
pledge of Restricted Securities that is made in order to establish a margin
account at a reputable brokerage firm; (iv) a pledge of Restricted Securities to
a lender in order to effect a bona-fide loan or financing transaction with such
lender which transaction is not intended to circumvent the transfer restrictions
of Section 2 hereof; (v) a Transfer of Restricted Securities to the lender or
brokerage firm that is the pledgee with respect to a pledge described in clause
(iii) or (iv) above or to an Affiliate of such lender or such brokerage firm or
to a purchaser in a foreclosure sale; (vi) a Transfer that occurs because of
entry by the Shareholders into a voting agreement, proxy or other arrangement
deemed reasonably necessary by the Board of Directors of the Company to
effectuate a merger, consolidation, amalgamation or other business combination
that has been approved by the Board of Directors of the Company; and (vii) the
granting of a proxy with respect to any annual or special meeting of the
shareholders of the Company. For the avoidance of doubt, all Restricted
Securities Transferred pursuant to exceptions (i), (ii) or (v) listed in this
Section 3 shall no longer be deemed to be Restricted Securities subsequent to
such Transfer.
Section 4. Remedies.
4.1 The parties declare and agree that it is impossible to measure in
money the damages that would be suffered by a party by reason of the failure by
any other party to perform any of its obligations under this Agreement.
Therefore, if any party institutes any action or proceeding to enforce the
provisions of this Agreement, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the other party has
an adequate remedy at law and, consequently, the parties hereby agree that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement.
4.2 If any Rightholder or group of Rightholders institutes any action
or proceeding (an "Enforcement Action") to enforce the provisions of this
Agreement against a Shareholder:
4.2.1 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was Warranted, each Rightholder bringing such Enforcement Action
shall pay such Shareholder an amount equal to the product of (x) such
Rightholder's Pro Rata Share times (y) the reasonable costs and
expenses (including the fees and disbursements of attorneys other than
<PAGE>
7
Agreed Counsel) of such Shareholder incurred in connection with the
resolution of such Enforcement Action, and the fees and disbursements
of Agreed Counsel shall be borne equally among all parties to such
Enforcement Action.
4.2.2 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was not Warranted, the Rightholders bringing such Enforcement
Action (other than the Representative) shall pay such Shareholder an
amount equal to the reasonable costs and expenses (including the fees
and disbursements of attorneys other than Agreed Counsel) of such
Shareholder incurred in connection with the resolution of such
Enforcement Action, and the fees and disbursements of Agreed Counsel
shall be borne equally among the Rightholders instituting such
Enforcement Action.
4.2.3 If such Enforcement Action results in a court of
competent jurisdiction entering a final judgment against such
Shareholder, the Shareholder shall pay each Rightholder bringing such
Enforcement Action an amount equal to the reasonable costs and expenses
(including the fees and disbursements of attorneys) of such Rightholder
incurred in connection with the resolution of such Enforcement Action.
4.2.4 Otherwise, each party shall bear its own expenses
incurred in connection with the resolution of Enforcement Actions.
4.3 If any amount payable under Section 4.2 hereof is not paid in full
by the party liable for such amount (the "Liable Party") within 30 calendar days
after written notice requesting such payment is provided to the Liable Party by
the party entitled to such amount (the "Entitled Party"), the Entitled Party may
provide written notice to the Company of such failure to pay and the amount owed
by the Liable Party. Upon receipt of such notice, the Company shall not make any
distributions (whether cash or otherwise) to the Liable Party in respect of its
equity interests in the Company and shall make such distributions to the
Entitled Party until the amount of such distributions made to the Entitled Party
equals the amount owed by the Liable Party.
4.4 Any Rightholder (other than the Representative) bringing an
Enforcement Action shall not hold fewer than 100 shares of Common Stock during
the pendency of such Enforcement Action.
Section 5. Term and Termination. Unless earlier terminated by a writing
executed by all parties, this Agreement shall terminate on the date falling 24
months and one day after the Closing Date.
<PAGE>
8
Section 6. Representations and Warranties. The Original Shareholder
represents and warrants that:
6.1 As of the date hereof, the Original Shareholder has all requisite
power and authority to enter into this Agreement, and the consummation of all
transactions contemplated by this Agreement have been duly authorized by all
necessary action on its part;
6.2 As of the date hereof, this Agreement has been duly executed and
delivered by the Original Shareholder and constitutes the valid and binding
agreement of it and is enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity;
6.3 As of the date hereof, the execution, delivery and performance of
this Agreement by the Original Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound;
6.4 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will be the record holder and beneficial
owner of the securities described on Schedule 6.4 hereto, free and clear of any
and all liens, charges, encumbrances, pledges, voting agreements or other
commitments of any kind (in each case, assuming the consummation of both the
Merger and the Incorporation Merger) other than Permitted Liens;
6.5 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will own (either beneficially or of
record) no Restricted Securities other than the securities described on Schedule
6.4 hereto (in each case, assuming the consummation of both the Merger and the
Incorporation Merger), except for (i) Class B shares of beneficial interest of
Starwood, par value $0.01 per share ("Class B Shares"), and (ii) Class A shares
of beneficial interest of Starwood, par value $1.00 per share ("Class A
Shares"), issued to the Original Shareholder pursuant to the Stock Dividend;
provided that between the date hereof and the Closing Date, Restricted
Securities may be Transferred in a Permitted Foreclosure;
6.6 The Original Shareholder is, as of the date hereof, and will be, on
the Closing Date, the record holder and beneficial owner of the securities
described on Schedule 6.6 hereto, free and clear of any and all liens, charges,
encumbrances, pledges, voting agreements or other commitments of any kind (in
each case, assuming the consummation of the Merger but not the consummation of
the Incorporation Merger), other than Permitted Liens;
<PAGE>
9
6.7 As of the date hereof, the Original Shareholder owns (either
beneficially or of record), and will own (either beneficially or of record), on
the Closing Date, no Restricted Securities other than the securities described
on Schedule 6.6 hereto (in each case, assuming the consummation of the Merger
but not the consummation of the Incorporation Merger), except for (i) Class B
Shares and (ii) Class A Shares issued to the Original Shareholder pursuant to
the Stock Dividend; provided that between the date hereof and the Closing Date,
Restricted Securities may be Transferred in a Permitted Foreclosure; and
6.8 On the Closing Date, the Original Shareholder will own (either
beneficially or of record) a number of shares of Common Stock other than Class B
Shares (the "Initial Holdings") equal to 10,759,890 shares of Common Stock owned
as of the date hereof plus additional Common Stock to be issued to it pursuant
to the Stock Dividend.
Section 7. Miscellaneous.
7.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally or sent by registered mail
or overnight delivery service, in either case postage prepaid, or delivered by
telecopy, facsimile or similar telecommunications equipment. Any such notice
shall be deemed given when so delivered personally or, if sent by registered
mail, five days after the date of deposit in the mails or, if sent by overnight
delivery service, on the business day following deposit with such delivery
service or, if delivered by telecopy, facsimile or similar telecommunications
equipment, at the time of receipt thereof, as follows:
If to the Original Shareholder, to:
c/o Starwood Capital Group, L.L.C.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Madison Grose
Telecopy: (203) 861-2101
with copies to:
Katten, Muchin & Zavis
525 W. Monroe St. #1600
Chicago, IL 60661
Attention: Nina Matis, Kenneth M. Jacobson
Telecopy: (312) 902-1061
<PAGE>
10
If to the Representative, to:
Greenhill & Co., LLC
31 West 52nd Street, 16th Floor
New York, NY 10019
Telecopy: (212) 408-0660
All correspondence must be sent to the attention of
a Representative Contact Person
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: John A. Marzulli, Jr.
Any party may, by notice to the other parties, designate another address or
person for receipt of notices hereunder. Any additional parties agreeing to be
bound by the terms of this Agreement who execute a Deed of Adherence shall
receive notices hereunder at the location specified in such Deed of Adherence.
7.2 At any given time, all holders of Common Stock who then hold 100 or
more shares of Common Stock are hereby acknowledged (as of such time) as
intended third-party beneficiaries of this Agreement. The rights and privileges
granted under this Agreement to the Rightholders shall inure to the benefit of
such holders, and the provisions of this Agreement shall be binding upon any
such holder who brings an Enforcement Action. Any waiver of a provision of this
Agreement granted by the Representative pursuant to Section 7.5 hereof shall be
binding upon and effective against all Rightholders.
7.3 In the event any provision hereof is held void or unenforceable by
any court, such provision shall be severable and shall not affect the remaining
provisions hereof.
7.4 This Agreement reflects the entire agreement among the parties and
supersedes all prior agreements and communications, either oral or in writing,
among the parties with respect to the subject matter hereof; provided that, for
the avoidance of doubt, this provision shall not affect the validity of the
Engagement Letter (the "Engagement Letter") between the Representative and
TriNet, dated as of June __, 1999, and, in the event of any conflict between the
terms and provisions of this Agreement and those of the Engagement Letter, the
terms and provisions of the Engagement Letter shall prevail.
<PAGE>
11
7.5 This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived (i) in the case of a waiver by the
Rightholders, by a written instrument signed on behalf of the Representative by
any Representative Contact Person; (ii) in the case of a waiver by any other
parties, by an written instrument signed by all such parties waiving compliance.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The
Representative shall not be liable for any error of judgment or any action
taken, suffered or omitted to be taken under this Agreement except in the case
of its gross negligence, bad faith or willful misconduct. The Representative may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it under this
Agreement in good faith and in accordance with the opinion of such counsel.
7.6 This Agreement may not be assigned by any party without the prior
written consent of the other parties except in connection with a transfer of
Restricted Securities in accordance with this Agreement. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted transferees from and after the date
hereof.
7.7 Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby.
7.8 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT REGARD TO THE CONFLICTS OF LAWS,
PRINCIPLES OF SUCH STATE).
7.9 Each party to this Agreement agrees that all disputes between them
arising out of or relating to the relationship established between them in
connection with this Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by federal courts located in New York, New
York, to the extent such courts have jurisdiction. Each of the parties waives
any objection that each may have (including, without limitation, any objection
to the laying of venue or based on forum non conveniens) to the location of the
court in which any proceeding is commenced in accordance with this paragraph.
Each party waives personal service of any process upon him or it and irrevocably
consents to service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage pre-paid, to such
<PAGE>
12
persons address specified in this Agreement or such other address designated by
such person in accordance with the terms of this Agreement.
7.10 No partner or member in a Shareholder or the Representative shall
have any individual or personal liability on account of this Agreement, and no
officer, director, member, shareholder or partner of any such partner or member
shall have any individual or personal liability on account of this Agreement
unless, in either case, such Person has executed a Deed of Adherence. For the
avoidance of doubt, no negative or deficit capital accounts shall be considered
to be assets of a Shareholder or other Person, and no obligation of a partner or
member to contribute capital or make loans shall be considered such an asset.
7.11 It is agreed that nothing contained in this Agreement is binding
upon the GECC or its successors and assigns, as secured parties under the GECC
Pledge Agreement, or upon any Person who acquires Restricted Securities pursuant
to the exercise of the foreclosure, other realization or sale rights and
remedies under the GECC Pledge Agreement, the GECC Credit Agreement (as defined
in the Shareholder Agreement) or applicable law unless GECC or such Person (as
the case may be) has executed a Deed of Adherence (it being understood neither
GECC nor such Person is obligated under this Agreement to execute such a Deed of
Adherence with respect to such Restricted Securities). In the event of any
conflict under this Agreement, the provisions of this Section 7.11 shall
control.
7.12 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
13
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
(Managing Member)
By: BSS Capital Partners, L.P.
(General Partner)
By: Sternlicht Holdings II, Inc.
(General Partner)
By: /S/ JEROME C. SILVEY
----------------------------------
Name: Jerome C. Silvey
Title: Vice President
S-1
<PAGE>
GREENHILL & CO., LLC
By: /S/ SCOTT L. BOK
Name: Scott L. Bok
Title: Managing Director
S-2
<PAGE>
Accepted and agreed
as to Section 4.3:
STARWOOD FINANCIAL TRUST
By: /S/ SPENCER HABER
--------------------------------
Name: Spencer Haber
Title: Chief Financial Officer
S-3
<PAGE>
Exhibit 1
---------
DEED OF ADHERENCE
-----------------
THIS DEED OF ADHERENCE is made the __________ day of _________
AMONG:
(#) [The Persons then party to the Agreement]; and
(#) [Name of New Shareholder] (the "New Shareholder").
WHEREAS:
(A) On the ___ day of June 1999, the Original Shareholder and the
Representative entered into a Lock-up Agreement (the "Agreement") to
which a form of this Deed is attached as Exhibit 1.
(B) The New Shareholder wishes to [have transferred to him/her/it] [______]
shares of [designate security to be transferred] (the "Shares"), from
[name of Old Shareholder] (the "Old Shareholder") and in accordance
with Section 2.3 of the Agreement or as a Permitted Transferee has
agreed to enter into this Deed.
NOW THIS DEED WITNESSES as follows:
1. Interpretation.
In this Deed, except as the context may otherwise require, all
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
2. Covenant.
The New Shareholder hereby covenants with and to the Rightholders and
the other Shareholders, to adhere to and be bound by all the duties,
burdens and obligations of a Shareholder under the Agreement and all
documents expressed in writing to be supplemental or ancillary thereto
as if the New Shareholder had been a Shareholder under the Agreement
since the date thereof.
3. Enforceability.
Each other Shareholder and the Rightholders shall be entitled to
enforce the Agreement against the New Shareholder, and the New
Shareholder shall be entitled to all rights and benefits of the Old
Shareholder (other than those that
<PAGE>
2
are non-assignable) under the Agreement in each case as if the New
Shareholder had been a Shareholder under the Agreement since the date
thereof.
4. Representations and Warranties.
The New Shareholder represents and warrants as of the date hereof that:
(i) the New Shareholder has all requisite power and authority to enter
into this Deed and the Agreement, and the consummation of all
transactions contemplated by this Deed and the Agreement have been duly
authorized by all necessary action on its part; (ii) this Deed has been
duly executed and delivered by the New Shareholder, and this Deed and
the Agreement constitute the valid and binding agreements of it and are
enforceable against it in accordance with their terms; and (iii) the
execution, delivery of this Deed and performance of this Deed and the
Agreement by the New Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound.
5. Notices.
All notices to the New Shareholder under Section 7.1 of the Agreement
shall be delivered to:
[Contact Information]
6. Governing Law.
THIS DEED OF ADHERENCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed
on the date first above written.
[Appropriate Signature Block]
<PAGE>
Schedule 6.4
------------
<PAGE>
Schedule 6.6
------------
<PAGE>
Schedule A
----------
The Representative Contact Persons shall be:
1. Mr. Robert F. Greenhill
2. Mr. Scott L. Bok
<PAGE>
EXHIBIT 7
---------
LOCK-UP AGREEMENT
LOCK-UP AGREEMENT (this "Agreement"), dated as of June 15, 1999,
between Starwood Capital Group, L.L.C., a Delaware limited liability company
(the "Original Shareholder"), and Greenhill & Co., LLC, a New York limited
liability company (the "Representative").
RECITALS
A. Pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of June 15, 1999, by and among Starwood Financial Trust, a
Maryland real estate investment trust ("Starwood"), ST Merger Sub, Inc., a
Maryland corporation ("Starwood Sub"), and TriNet Corporate Realty Trust, Inc.,
a Maryland corporation ("TriNet"), Starwood, Starwood Sub and TriNet have
agreed, among other things, to enter into a transaction (the "Merger") in which,
subject to the terms and conditions of the Merger Agreement, Starwood Sub will
merge with and into TriNet, with TriNet being the surviving corporation.
B. Pursuant to an Agreement and Plan of Merger (the "Incorporation
Merger Agreement"), dated as of June 15, 1999, by and between Starwood and
Starwood Financial, Inc., a newly-formed Maryland corporation ("New Starwood"),
Starwood intends to merge with and into New Starwood (the "Incorporation
Merger").
C. Immediately prior to the consummation of the Merger, pursuant to the
Agreement and Plan of Merger and Contribution Agreement, dated as of June 15,
1999 (the "Advisor Transaction Agreement"), STW Holdings I, Inc., a Delaware
corporation, intends, among other things, to merge with and into a subsidiary of
New Starwood and Starwood Capital Group, a Connecticut limited liability
company, will contribute interests in certain other companies to such subsidiary
of New Starwood (the "Advisor Transaction"). Pursuant to the Advisor Transaction
Agreement, upon the consummation of the Advisor Transaction, the Original
Shareholder will receive Common Stock (as defined below). The parties hereto
wish to restrict the transfer of such Common Stock.
D. The continuing force and effect of this Agreement is a condition
precedent to the consummation of the Merger by TriNet.
In consideration of the foregoing and of the mutual covenants contained
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. The following terms shall have the following
meanings for purposes of this Agreement:
<PAGE>
2
"Affiliate" means, with respect to a Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control," when used with respect
to any Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreed Counsel" means a reputable law firm other than those retained
by the parties to an Enforcement Action, which law firm is jointly selected by
the attorneys representing such parties and agreed-upon by such parties.
"Board of Directors" means, with respect to a Person, the board of
directors, board of trustees, board of managers or similar body of such Person.
"Change of Control" means that the common shareholders of the Company
immediately prior to the consummation of a merger, consolidation, acquisition of
assets or securities or a disposition of assets or securities (other than a
public offering of common stock), own less than 50% of the equity of the
surviving or successor entity resulting from such transaction.
"Closing Date" shall have the meaning ascribed to it in the Merger
Agreement.
"Common Stock" means, (i) prior to the consummation of the
Incorporation Merger, Starwood Common Stock and (ii) subsequent to the
consummation of the Incorporation Merger, New Starwood Common Stock.
"Company" means, prior to the consummation of the Incorporation Merger,
Starwood and, subsequent to the consummation of the Incorporation Merger, New
Starwood.
"Deed of Adherence" means a Deed of Adherence to this Agreement
substantially in the form of Exhibit 1 hereto.
"Enforcement Action" shall have the meaning ascribed to it in Section
4.2 hereof.
"New Starwood Common Stock" means the common stock, par value $0.001
per share, of New Starwood.
"Permitted Holders" means (i) with respect to a Person other than a
natural person, all Affiliates of such Person and (ii) with respect to a Person
who is a natural person, the spouse or any lineal descendant of such Person, a
trust established for the benefit of any of the foregoing or any personal
representative, estate or
<PAGE>
3
executor under any will of such Person or pursuant to the laws of intestate
succession, that, in either case (i) or (ii), has executed a Deed of Adherence.
"Permitted Transfer" means a Transfer permitted by Section 3 hereof.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pro Rata Share" means, (i) with respect to a Person other than the
Representative, the fraction, the numerator of which is the number of shares of
Common Stock then owned as of record by such Person and the denominator of which
is the total number of shares of Common Stock then outstanding and (ii) with
respect to the Representative, zero.
"Rightholder" means each of (i) the Representative and (ii) each
third-party beneficiary described in Section 7.2 hereof.
"Representative Contact Persons" means those individuals listed on
Schedule A hereto and any other employees or agents of the Representative
appointed to be Representative Contact Persons by written notice provided to the
Original Shareholder.
"Restricted Security" means all Starwood Common Stock, New Starwood
Common Stock and any other securities convertible into, exchangeable for or
exercisable for, Starwood Common Stock or New Starwood Common Stock, in each
case, that was received by the Original Shareholder in connection with the
Advisor Transaction but only for so long as such securities are subject to the
transfer restrictions contained in Section 2.1 and 2.2 hereof.
"Shareholder" means each of the Original Shareholder and any other
Persons who hold Restricted Securities and execute a Deed of Adherence in
accordance with Section 2.2 hereof.
"Starwood Common Stock" means the Class A shares of beneficial
interest, par value $1.00 per share, and the Class B shares of beneficial
interest, par value $0.01 per share, of Starwood.
"Stock Dividend" shall have the meaning ascribed to it in the Merger
Agreement.
"Transfer" shall have the meaning ascribed to it in Section 2.1 hereof.
<PAGE>
4
"Warranted" means, with respect to an Enforcement Action, that such
Enforcement Action was based on the best knowledge, information and belief,
formed after an inquiry reasonable under the circumstances, of the parties
bringing such Enforcement Action that this Agreement has been breached and that
such Enforcement Action was not presented for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in litigation costs.
References in this Agreement to a "party" or "parties" are references to a party
or parties (respectively) to this Agreement unless the context requires
otherwise. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings ascribed to them by the Merger Agreement.
Section 2. Transfer Restrictions. Except as provided in Section 3
hereof:
2.1 During the period from the date hereof until the date falling 12
months after the Closing Date, no Shareholder shall directly or indirectly sell,
pledge, encumber, transfer, enter into any voting or similar agreement with
respect to or otherwise dispose of (collectively, "Transfer") or enter into any
agreement or series of agreements to Transfer, any Restricted Securities other
than to a Permitted Holder. For the avoidance of doubt, the term "Transfer"
shall not include any conversion or exchange occurring by operation of law.
2.2 No Shareholder shall adopt a plan for liquidation or dissolution of
such Shareholder or make any distributions of the Restricted Securities to any
Persons in respect of such Shareholder's capital stock or other ownership
interests unless all Persons that will receive Restricted Securities in
connection with such liquidation, dissolution or distribution have executed a
Deed of Adherence.
Section 3. Exceptions to Transfer Restrictions. The restrictions set
forth in Section 2 hereof shall not apply to (i) a Transfer of Restricted
Securities that is made by the Shareholder in response to a "tender offer" with
respect to which the completion of such tender offer is conditioned upon such
completion resulting in a Change of Control; (ii) a Transfer of Restricted
Securities that is made to the Person (or any Affiliate of such Person)
receiving control of the Company as a result of a Change of Control; (iii) a
pledge of Restricted Securities that is made in order to establish a margin
account at a reputable brokerage firm; (iv) a pledge of Restricted Securities to
a lender in order to effect a bona-fide loan or financing transaction with such
lender which transaction is not intended to circumvent the transfer restrictions
of Section 2 hereof; (v) a Transfer of Restricted Securities to the lender or
brokerage firm that is the pledgee with respect to a pledge described in clause
(iii) or (iv) above, or to an Affiliate of such lender or such brokerage firm or
to a purchaser in a foreclosure sale; and (vi) a Transfer that occurs because of
entry by the Shareholders into a voting agreement, proxy or other arrangement
deemed reasonably necessary by the Board of Directors of the Company to
effectuate a merger, consolidation,
<PAGE>
5
amalgamation or other business combination that has been approved by the Board
of Directors of the Company; and (vii) the granting of a proxy with respect to
any annual or special meeting of the shareholders of the Company. For the
avoidance of doubt, all Restricted Securities Transferred pursuant to exceptions
(i), (ii) and (v) listed in this Section 3 shall no longer be deemed to be
Restricted Securities subsequent to such Transfer.
Section 4. Remedies.
4.1 The parties declare and agree that it is impossible to measure in
money the damages that would be suffered by a party by reason of the failure by
any other party to perform any of its obligations under this Agreement.
Therefore, if any party institutes any action or proceeding to enforce the
provisions of this Agreement, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the other party has
an adequate remedy at law and, consequently, the parties hereby agree that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement.
4.2 If any Rightholder or group of Rightholders institutes any action
or proceeding (an "Enforcement Action") to enforce the provisions of this
Agreement against a Shareholder:
4.2.1 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was Warranted, each Rightholder bringing such Enforcement Action
shall pay such Shareholder an amount equal to the product of (x) such
Rightholder's Pro Rata Share times (y) the reasonable costs and
expenses (including the fees and disbursements of attorneys other than
Agreed Counsel) of such Shareholder incurred in connection with the
resolution of such Enforcement Action, and the fees and disbursements
of Agreed Counsel shall be borne equally among all parties to such
Enforcement Action.
4.2.2 If (i) such Enforcement Action results in a court of
competent jurisdiction entering a final judgment in favor of such
Shareholder and (ii) Agreed Counsel determines that such Enforcement
Action was not Warranted, the Rightholders bringing such Enforcement
Action (other than the Representative) shall pay such Shareholder an
amount equal to the reasonable costs and expenses (including the fees
and disbursements of attorneys other than Agreed Counsel) of such
Shareholder incurred in connection with the resolution of such
Enforcement Action, and the fees and disbursements of Agreed Counsel
shall be borne equally among the Rightholders instituting such
Enforcement Action.
4.2.3 If such Enforcement Action results in a court of
competent jurisdiction entering a final judgment against such
Shareholder, the
<PAGE>
6
Shareholder shall pay each Rightholder bringing such Enforcement Action
an amount equal to the reasonable costs and expenses (including the
fees and disbursements of attorneys) of such Rightholder incurred in
connection with the resolution of such Enforcement Action.
4.2.4 Otherwise, each party shall bear its own expenses
incurred in connection with the resolution of Enforcement Actions.
4.3 If any amount payable under Section 4.2 hereof is not paid in full
by the party liable for such amount (the "Liable Party") within 30 calendar days
after written notice requesting such payment is provided to the Liable Party by
the party entitled to such amount (the "Entitled Party"), the Entitled Party may
provide written notice to the Company of such failure to pay and the amount owed
by the Liable Party. Upon receipt of such notice, the Company shall not make any
distributions (whether cash or otherwise) to the Liable Party in respect of its
equity interests in the Company and shall make such distributions to the
Entitled Party until the amount of such distributions made to the Entitled Party
equals the amount owed by the Liable Party.
4.4 Any Rightholder (other than the Representative) bringing an
Enforcement Action shall not hold fewer than 100 shares of Common Stock during
the pendency of such Enforcement Action.
Section 5. Term and Termination. Unless earlier terminated by a writing
executed by all parties, this Agreement shall terminate on the date falling 12
months and one day after the Closing Date.
Section 6. Representations and Warranties. The Original Shareholder
represents and warrants that:
6.1 As of the date hereof, the Original Shareholder has all requisite
power and authority to enter into this Agreement, and the consummation of all
transactions contemplated by this Agreement have been duly authorized by all
necessary action on its part;
6.2 As of the date hereof, this Agreement has been duly executed and
delivered by the Original Shareholder and constitutes the valid and binding
agreement of it and is enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity;
6.3 As of the date hereof, the execution, delivery and performance of
this Agreement by the Original Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound;
<PAGE>
7
6.4 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will be the record holder and beneficial
owner of the securities described on Schedule 6.4 hereto, free and clear of any
and all liens, charges, encumbrances, pledges, voting agreements or other
commitments of any kind (in each case, assuming the consummation of the Merger,
the Advisor Transaction and the Incorporation Merger), other than Permitted
Transfers;
6.5 Both upon consummation of the Incorporation Merger and on the
Closing Date, the Original Shareholder will own (either beneficially or of
record) no Restricted Securities other than the securities described on Schedule
6.4 hereto (in each case, assuming the consummation of the Merger, the Advisor
Transaction and the Incorporation Merger) except for (i) Class B shares of
beneficial interest of Starwood, par value $0.01 per share ("Class B Shares"),
and (ii) Class A shares of beneficial interest of Starwood, par value $1.00 per
share ("Class A Shares"), issued to the Original Shareholder pursuant to the
Stock Dividend; provided that between the date hereof and the Closing Date,
Restricted Securities may be Transferred in a Permitted Transfer;
6.6 The Original Shareholder will be, on both the date the Advisor
Transaction is consummated and the Closing Date, the record holder and
beneficial owner of the securities described on Schedule 6.6 hereto, free and
clear of any and all liens, charges, encumbrances, pledges, voting agreements or
other commitments of any kind (in each case, assuming the consummation of the
Merger and the Advisor Transaction but not the consummation of the Incorporation
Merger), other than Permitted Transfers; and
6.7 As of the date hereof, the Original Shareholder owns (either
beneficially or of record), and on the Closing Date, will own (either
beneficially or of record), no Restricted Securities other than the securities
described on Schedule 6.6 hereto (in each case, assuming the consummation of the
Merger and the Advisor Transaction but not the consummation of the Incorporation
Merger) except for (i) Class B Shares and (ii) Class A Shares issued to the
Original Shareholder pursuant to the Stock Dividend; provided that between the
date hereof and the Closing Date, Restricted Securities may be Transferred in a
Permitted Transfer.
Section 7. Miscellaneous.
7.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally or sent by registered mail
or overnight delivery service, in either case postage prepaid, or delivered by
telecopy, facsimile or similar telecommunications equipment. Any such notice
shall be deemed given when so delivered personally or, if sent by registered
mail, five days after the date of deposit in the mails or, if sent by overnight
delivery service, on the
<PAGE>
8
business day following deposit with such delivery service or, if delivered by
telecopy, facsimile or similar telecommunications equipment, at the time of
receipt thereof, as follows:
If to the Original Shareholder, to:
Starwood Capital Group, L.L.C.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Attention: Madison Grose
Telecopy: (203) 861-2101
with copies to:
Katten, Muchin & Zavis
525 W. Monroe St. #1600
Chicago, IL 60661
Attention: Nina Matis, Kenneth M. Jacobson
Telecopy: (312) 902-1061
If to the Representative, to:
Greenhill & Co., LLC
31 West 52nd Street, 16th Floor
New York, NY 10019
Telecopy: (212) 408-0660
All correspondence must be sent to the attention of
a Representative Contact Person
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: John A. Marzulli, Jr.
Any party may, by notice to the other parties, designate another address or
person for receipt of notices hereunder. Any additional parties agreeing to be
bound by the terms of this Agreement who execute a Deed of Adherence shall
receive notices hereunder at the location specified in such Deed of Adherence.
7.2 At any given time, all holders of Common Stock who then hold 100 or
more shares of Common Stock are hereby acknowledged (as of such time) as
intended third-party beneficiaries of this Agreement. The rights and
<PAGE>
9
privileges granted under this Agreement to the Rightholders shall inure to the
benefit of such holders, and the provisions of this Agreement shall be binding
upon any such holder who brings an Enforcement Action. Any waiver of a provision
of this Agreement granted by the Representative pursuant to Section 7.5 hereof
shall be binding upon and effective against all Rightholders.
7.3 In the event any provision hereof is held void or unenforceable by
any court, such provision shall be severable and shall not affect the remaining
provisions hereof.
7.4 This Agreement reflects the entire agreement among the parties and
supersedes all prior agreements and communications, either oral or in writing,
among the parties with respect to the subject matter hereof; provided that, for
the avoidance of doubt, this provision shall not affect the validity of the
Engagement Letter (the "Engagement Letter") between the Representative and
TriNet, dated as of June 15, 1999, and, in the event of any conflict between the
terms and provisions of this Agreement and those of the Engagement Letter, the
terms and provisions of the Engagement Letter shall prevail.
7.5 This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived (i) in the case of a waiver by the
Rightholders, by a written instrument signed on behalf of the Representative by
any Representative Contact Person; (ii) in the case of a waiver by any other
parties, by an written instrument signed by all such parties waiving compliance.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The
Representative shall not be liable for any error of judgment or any action
taken, suffered or omitted to be taken under this Agreement except in the case
of its gross negligence, bad faith or willful misconduct. The Representative may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it under this
Agreement in good faith and in accordance with the opinion of such counsel.
7.6 This Agreement may not be assigned by any party without the prior
written consent of the other parties except in connection with a transfer of
Restricted Securities in accordance with this Agreement. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted transferees from and after the date
hereof.
<PAGE>
10
7.7 Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby.
7.8 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT REGARD TO THE CONFLICTS OF LAWS,
PRINCIPLES OF SUCH STATE).
7.9 Each party to this Agreement agrees that all disputes between them
arising out of or relating to the relationship established between them in
connection with this Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by federal courts located in New York, New
York, to the extent such courts have jurisdiction. Each of the parties waives
any objection that each may have (including, without limitation, any objection
to the laying of venue or based on forum non conveniens) to the location of the
court in which any proceeding is commenced in accordance with this paragraph.
Each party waives personal service of any process upon him or it and irrevocably
consents to service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage pre-paid, to such persons address specified in this Agreement or
such other address designated by such person in accordance with the terms of
this Agreement.
7.10 No partner or member in, a Shareholder or the Representative shall
have any individual or personal liability on account of this Agreement, and no
officer, director, member, shareholder or partner of any such partner or member
shall have any individual or personal liability on account of this Agreement
unless, in either case, such Person has executed a Deed of Adherence. For the
avoidance of doubt, no negative or deficit capital accounts shall be considered
to be assets of a Shareholder or other Person, and no obligation of a partner or
member to contribute capital or make loans shall be considered such an asset.
7.11 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
STARWOOD CAPITAL GROUP, L.L.C.
By: /S/ JEROME C. SILVEY
------------------------------
Name: Jerome C. Silvey
Title: Senior Vice President
S-1
<PAGE>
GREENHILL & CO., LLC
By: /S/ SCOTT L. BOK
---------------------------
Name: Scott L. Bok
Title: Managing Director
S-2
<PAGE>
Accepted and agreed
as to Section 4.3:
STARWOOD FINANCIAL TRUST
By: /S/ SPENCER HABER
-------------------------------
Name: Spencer Haber
Title: Chief Financial Officer
S-3
<PAGE>
Exhibit 1
---------
DEED OF ADHERENCE
-----------------
THIS DEED OF ADHERENCE is made the __________ day of _________
AMONG:
(#) [The Persons then party to the Agreement]; and
(#) [Name of New Shareholder] (the "New Shareholder").
WHEREAS:
(A) On the 15th day of June 1999, the Original Shareholder and the
Rightholders entered into a Lock-up Agreement (the "Agreement") to
which a form of this Deed is attached as Exhibit 1.
(B) The New Shareholder wishes to [have transferred to him/her/it] [______]
shares of [designate security to be transferred] (the "Shares"), from
[name of Old Shareholder] (the "Old Shareholder") and in accordance
with Section 2.3 of the Agreement or as a Permitted Transferee has
agreed to enter into this Deed.
NOW THIS DEED WITNESSES as follows:
1. Interpretation.
In this Deed, except as the context may otherwise require, all
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
2. Covenant.
The New Shareholder hereby covenants with and to the Rightholders and
the other Shareholders, to adhere to and be bound by all the duties,
burdens and obligations of a Shareholder under the Agreement and all
documents expressed in writing to be supplemental or ancillary thereto
as if the New Shareholder had been a Shareholder under the Agreement
since the date thereof.
3. Enforceability.
Each other Shareholder and the Rightholders shall be entitled to
enforce the Agreement against the New Shareholder, and the New
Shareholder shall be entitled to all rights and benefits of the Old
Shareholder (other than those that
<PAGE>
2
are non-assignable) under the Agreement in each case as if the New
Shareholder had been a Shareholder under the Agreement since the date
thereof.
4. Representations and Warranties.
The New Shareholder represents and warrants as of the date hereof that:
(i) the New Shareholder has all requisite power and authority to enter
into this Deed and the Agreement, and the consummation of all
transactions contemplated by this Deed and the Agreement have been duly
authorized by all necessary action on its part; (ii) this Deed has been
duly executed and delivered by the New Shareholder, and this Deed and
the Agreement constitute the valid and binding agreements of it and are
enforceable against it in accordance with their terms; and (iii) the
execution, delivery of this Deed and performance of this Deed and the
Agreement by the New Shareholder does not and will not violate or
conflict with any organizational document, Law, contract, instrument or
arrangement to which it is a party or by which it is bound.
5. Notices.
All notices to the New Shareholder under Section 7.1 of the Agreement
shall be delivered to:
[Contact Information]
6. Governing Law.
THIS DEED OF ADHERENCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed
on the date first above written.
[Appropriate Signature Block]
<PAGE>
Schedule 6.4
------------
<PAGE>
Schedule 6.6
------------
<PAGE>
Schedule A
----------
The Representative Contact Persons shall be:
1. Mr. Robert F. Greenhill
2. Mr. Scott L. Bok
<PAGE>
Exhibit 8
---------
AGREEMENT AND PLAN OF MERGER
AND
INTEREST CONTRIBUTION AGREEMENT
Dated as of June 15, 1999
by and among
STARWOOD FINANCIAL TRUST,
SA MERGER SUB, INC.,
STW HOLDINGS I, INC.,
<PAGE>
the STOCKHOLDERS named herein,
STARWOOD CAPITAL GROUP, LLC
and, to the extent described herein,
TRINET CORPORATE REALTY TRUST, INC.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Page
ARTICLE I THE ADVISOR MERGER AND THE CONTRIBUTION TRANSACTIONS............................................ 2
Section 1.1. The Advisor Merger.............................................................................. 2
Section 1.2. The Contribution Transactions................................................................... 2
Section 1.3. Closing......................................................................................... 3
Section 1.4. Effective Time.................................................................................. 3
Section 1.5. Charter and Bylaws.............................................................................. 3
Section 1.6. Directors....................................................................................... 3
Section 1.7. Officers........................................................................................ 3
Section 1.8. Election Not to Proceed With Incorporation Merger............................................... 3
ARTICLE II EFFECTS OF THE ADVISOR MERGER; EXCHANGE OF CERTIFICATES......................................... 4
Section 2.1. Effect on Stock................................................................................. 4
(a) Stock Owned by Advisor.......................................................................... 4
(b) Conversion of Advisor Stock Into New Starwood Common Stock...................................... 4
(c) Shares of New Starwood Sub Stock................................................................ 4
Section 2.2. Exchange of Certificates........................................................................ 4
(a) Exchange Agent.................................................................................. 4
(b) Starwood to Provide Merger Consideration........................................................ 4
(c) Exchange Procedure.............................................................................. 5
(d) Distributions with Respect to Unexchanged Shares................................................ 5
(e) No Further Ownership Rights in Advisor Common Stock............................................. 5
(f) Unclaimed Merger Consideration.................................................................. 6
(g) No Fractional Shares............................................................................ 6
(h) Withholding..................................................................................... 6
(i) No Dissenters' Rights........................................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................................................. 7
Section 3.1. Representations and Warranties of Advisor....................................................... 7
(a) Organization, Standing and Corporate Power of the Advisor....................................... 7
(b) Advisor Subsidiaries; Interests in Other Persons................................................ 7
(c) Capital Structure............................................................................... 8
(d) Authority; Noncontravention; Consents........................................................... 8
(e) Operations of Advisor and the Advisor Subsidiaries.............................................. 9
(f) Litigation...................................................................................... 9
(g) Taxes........................................................................................... 9
(h) Absence of Changes in Benefit Plans; ERISA Compliance........................................... 10
(i) No Loans or Payments to Employees, Officers or Directors........................................ 11
(j) Brokers; Schedule of Fees and Expenses.......................................................... 11
(k) Compliance with Laws............................................................................ 11
(l) Contracts; Debt Instruments, Liabilities........................................................ 11
(m) Title to Assets................................................................................. 11
<PAGE>
(n) Books and Records............................................................................... 12
(o) State Takeover Statutes......................................................................... 12
(p) Investment Company Act of 1940.................................................................. 12
(q) Proxy Statement and Registration Statement...................................................... 12
(r) Vote Required................................................................................... 12
(s) Year 2000 Issues................................................................................ 12
Section 3.2. Representations and Warranties of Starwood and New Starwood Sub................................. 13
(a) Organization, Standing and Corporate Power of Starwood.......................................... 13
(b) Authority; Noncontravention; Consents........................................................... 13
(c) Opinion of Financial Advisor.................................................................... 14
Section 3.3. Representations and Warranties of SCG........................................................... 14
(a) Organization, Standing and Power of SCG......................................................... 14
(b) Authority; Noncontravention; Consents........................................................... 14
(c) Title to Interests.............................................................................. 15
(d) Accredited Investor............................................................................. 15
(e) Investment...................................................................................... 15
ARTICLE IV COVENANTS....................................................................................... 15
Section 4.1. Conduct of Business by Advisor.................................................................. 15
Section 4.2. Other Actions................................................................................... 17
ARTICLE V ADDITIONAL COVENANTS............................................................................ 17
Section 5.1. Preparation of the Registration Statement and the Proxy Statement;
Shareholders'............................................................................... 17
Meetings; Consents.............................................................................. 17
Section 5.2. Commercially Reasonable Efforts; Notification................................................... 18
Section 5.3. Affiliates...................................................................................... 18
Section 5.4. AMEX De-Listing; NYSE Listing................................................................... 19
Section 5.5. Indemnification of Directors and Officers; Directors'
and Officers' Insurance..................................................................... 19
Section 5.6. Indemnification Against Loss Due to Inaccuracies in Representations
and Warranties; Tax......................................................................... 20
Indemnity....................................................................................... 20
Section 5.7. Limit on Claims Regarding Representations and Warranties........................................ 21
ARTICLE VI CONDITIONS PRECEDENT............................................................................ 22
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger and the
Contribution................................................................................ 22
Transactions.................................................................................... 22
(a) Shareholder Approvals........................................................................... 22
(b) Listing of Shares............................................................................... 22
(c) Registration Statement.......................................................................... 22
(d) No Injunctions or Restraints.................................................................... 23
(e) Incorporation Merger and Merger................................................................. 23
Section 6.2. Conditions to Obligations of Starwood........................................................... 23
(a) Representations and Warranties.................................................................. 23
(b) Performance of Obligations of Advisor........................................................... 23
(c) Material Adverse Effect......................................................................... 23
(d) Assignment of SFA II and SFA Interest........................................................... 23
Section 6.3. Conditions to Obligation of Advisor and SCG..................................................... 23
(a) Representations and Warranties.................................................................. 23
(b) Performance of Obligations of Starwood.......................................................... 24
(c) Material Adverse Effect......................................................................... 24
(d) Consents........................................................................................ 24
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................................................... 24
Section 7.1. Termination..................................................................................... 24
Section 7.2. Expenses........................................................................................ 25
Section 7.3. Effect of Termination........................................................................... 25
Section 7.4. Amendment....................................................................................... 25
Section 7.5. Extension; Waiver............................................................................... 25
ARTICLE VIII GENERAL PROVISIONS.............................................................................. 25
Section 8.1. Survival........................................................................................ 25
<PAGE>
Section 8.2. Notices......................................................................................... 25
Section 8.3. Interpretation.................................................................................. 27
Section 8.4. Counterparts.................................................................................... 27
Section 8.5. Entire Agreement; No Third-Party Beneficiaries.................................................. 27
Section 8.6. GOVERNING LAW................................................................................... 27
Section 8.7. Assignment...................................................................................... 28
Section 8.8. Enforcement..................................................................................... 28
Section 8.9. Exhibits; Disclosure Letters.................................................................... 28
ARTICLE IX CERTAIN DEFINITIONS............................................................................. 28
Section 9.1. Certain Definitions............................................................................. 28
</TABLE>
<PAGE>
INDEX OF DEFINED TERMS
Page
1940 Act............................................................ 12
Advisor............................................................. 1
Advisor Benefit Plan................................................ 10
Advisor Common Stock................................................ 1
Advisor Disclosure Letter........................................... 7
Advisor ERISA Affiliate............................................. 10
Advisor Information Technology...................................... 13
Advisor Material Adverse Effect..................................... 7
Advisor Merger...................................................... 1
Advisor Proposal.................................................... 2
Advisor Shareholder Approvals....................................... 12
Advisor Subsidiary.................................................. 28
affiliate........................................................... 28
Agreement........................................................... 1
AMEX................................................................ 19
Board............................................................... 3
Certificate......................................................... 4
Closing............................................................. 3
Closing Date........................................................ 3
Code................................................................ 1
Contribution Consideration.......................................... 2
Contribution Transactions........................................... 1
DGCL................................................................ 2
Effective Time...................................................... 3
Employee Plan....................................................... 28
ERISA............................................................... 10
Exchange Agent...................................................... 4
Exchange Ratio...................................................... 4
Fair Market Value................................................... 21
Fairness Opinion.................................................... 2
Governmental Entity................................................. 9
Incorporation Merger................................................ 1
Incorporation Merger Agreement...................................... 1
Indemnified Liabilities............................................. 19
Indemnified Parties................................................. 19
Indemnifying Parties................................................ 19
Knowledge........................................................... 28
<PAGE>
Laws................................................................ 9
Liens............................................................... 8
Losses.............................................................. 20
Maximum Amount...................................................... 21
Merger.............................................................. 2
Merger Agreement.................................................... 2
Merger Consideration................................................ 4
New Starwood........................................................ 1
New Starwood Common Stock........................................... 1
New Starwood Sub.................................................... 1
NYSE................................................................ 19
Person.............................................................. 28
Proxy Statement..................................................... 17
Qualifying Income................................................... 22
Registration Statement.............................................. 17
REIT................................................................ 1
REIT Requirements................................................... 22
SCG................................................................. 1
SCG Material Adverse Effect......................................... 15
SFA II.............................................................. 1
SFA II Interest..................................................... 2
SFA Interest........................................................ 2
Special Committee................................................... 2
Starwood............................................................ 1
Starwood Class A Common Shares...................................... 3
Starwood Class B Common Shares...................................... 1
Starwood Disclosure Letter.......................................... 13
Starwood Indemnification Tax Opinion................................ 22
Starwood Material Adverse Effect.................................... 13
Starwood Shareholders Meeting....................................... 17
Starwood Sub........................................................ 2
Starwood Subsidiary................................................. 29
Stockholders........................................................ 1
Sub-Advisory Agreements............................................. 29
Subsidiary.......................................................... 29
Surviving Corporation............................................... 1
Takeover Statute.................................................... 18
Tax Damages......................................................... 21
Tax Return.......................................................... 10
Taxes or Tax........................................................ 10
Taxing Authority.................................................... 9
TriNet.............................................................. 1
Year 2000 Ready..................................................... 13
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A Form of Incorporation Merger Agreement
Exhibit B Form of Merger Agreement
Exhibit C Form of Articles of Incorporation of Surviving Corporation
Exhibit D Form of Bylaws of Surviving Corporation
Exhibit E Form of Affiliate Letter
<PAGE>
Schedule A Directors of Surviving Corporation
Schedule B Officers of Surviving Corporation
AGREEMENT
AGREEMENT AND PLAN OF MERGER AND INTEREST CONTRIBUTION AGREEMENT
("Agreement"), dated as of June 15, 1999, by and among STARWOOD FINANCIAL TRUST,
a Maryland real estate investment trust ("Starwood"), SA MERGER SUB, INC., a
Delaware corporation ("New Starwood Sub"), STW HOLDINGS I, INC., a Delaware
corporation ("Advisor"), STARWOOD CAPITAL GROUP, LLC, a Connecticut limited
liability company ("SCG"), each of the individual stockholders named on the
signature pages of this Agreement (the "Stockholders") and, to the extent
described on the signature page hereto, TRINET CORPORATE REALTY TRUST, INC., a
Maryland corporation ("TriNet").
RECITALS
A. The Boards of Trustees and Directors, as the case may be, of
Starwood, New Starwood Sub and Advisor each have declared that it is advisable
and in the best interest of their respective companies and shareholders that
upon the terms and subject to the conditions set forth in this Agreement, New
Starwood Sub will merge with and into Advisor, with Advisor being the surviving
corporation (the "Surviving Corporation"), in a merger (the "Advisor Merger") in
which each issued and outstanding share of common stock, no par value per share
of Advisor (the "Advisor Common Stock"), will be converted into the Merger
Consideration (as defined below).
B. The parties hereto anticipate that the Advisor Merger will further
certain of their business objectives including, without limitation, allowing
Starwood to become an entirely self-administered and self-managed real estate
investment trust.
C. Concurrently with the consummation of the Advisor Merger, SCG will
contribute its 0.1% managing member interest in each of Starwood Financial
Advisors II, L.L.C., a Delaware limited liability company ("SFA II") and
Starwood Financial Advisors, L.L.C., a Connecticut limited liability company
("SFA"), to Starwood in exchange for the Contribution Consideration (as defined
below) (collectively, the "Contribution Transactions"). As a result of the
Advisor Merger and the Contribution Transactions, Starwood will, directly and
through its Subsidiaries, own 100% of the interests in SFA II and SFA.
D. Prior to the consummation of the Advisor Merger and the Contribution
Transactions, Starwood intends to merge with and into Starwood Financial, Inc.,
a newly formed Maryland corporation ("New Starwood"), for the purpose of
changing Starwood's form from a Maryland real estate investment trust to a
Maryland corporation (the "Incorporation Merger") all in accordance with the
terms of the Agreement and Plan of Merger, dated the date hereof, between New
Starwood and Starwood, a copy of which is attached as Exhibit A hereto (the
"Incorporation Merger Agreement"). As part of the Incorporation Merger, the
Class B shares of beneficial interest, par value $.01 per share, of Starwood
("Starwood Class B Common Shares") will be converted into shares of common
stock, par value $.001 per share, of New Starwood ("New Starwood Common Stock")
on the basis of 49 Starwood Class B Common Shares for one share of New Starwood
Common Stock. Upon consummation of the Incorporation Merger, New Starwood will
succeed to all of Starwood's rights, obligations and liabilities under this
Agreement.
E. The parties intend that for federal income tax purposes the Advisor
Merger will qualify as a tax-free reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that, following the
Advisor Merger, New Starwood will continue to be subject to taxation as a real
estate investment trust (a "REIT") within the meaning of the Code.
F. The Special Committee (the "Special Committee") of the independent
members of the Board of Trustees of Starwood has received a fairness opinion
(the "Fairness Opinion") from Houlihan Lokey Howard & Zukin ("Houlihan") that
the consideration to be paid to those shareholders of Starwood who hold
ownership interests in the Advisor is fair from a financial point of view to the
shareholders of Starwood who do not hold any ownership interests in the Advisor.
G. The Special Committee has recommended the Advisor Merger and the
Contribution Transactions to the Board of Trustees of Starwood and the Board of
Trustees of Starwood has approved the proposal to approve the Advisor Merger and
<PAGE>
the Contribution Transactions (the "Advisor Proposal") and the related
transactions and has resolved to recommend that the shareholders of Starwood
approve the Advisor Proposal.
H. The Board of Directors of Advisor has approved the Advisor Proposal
and the related transactions and has resolved to recommend that the shareholders
of Advisor approve the Advisor Proposal.
I. Concurrently with the consummation of the Advisor Merger and the
Contribution Transactions, TriNet will merge with and into Starwood Sub, Inc., a
newly-formed Maryland corporation ("Starwood Sub"), (the "Merger"), all in
accordance with the terms of the Agreement and Plan of Merger, dated the date
hereof, by and among Starwood, Starwood Sub and TriNet, a copy of which is
attached as Exhibit B hereto (the "Merger Agreement"). Upon consummation of the
Merger, TriNet, as the surviving corporation, will be a wholly owned subsidiary
of New Starwood.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:
ARTICLE I
THE ADVISOR MERGER AND THE CONTRIBUTION TRANSACTIONS
Section 1.1. The Advisor Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as hereinafter defined), New Starwood Sub
shall be merged with and into Advisor in accordance with the Delaware General
Corporation Law (the "DGCL"), whereupon the separate corporate existence of New
Starwood Sub shall cease and Advisor shall continue as the Surviving
Corporation.
(b) The Advisor Merger shall have the effects set forth in the DGCL.
Accordingly, from and after the Effective Time (as defined below), the Surviving
Corporation shall possess all the rights, privileges, powers and franchises and
be subject to all of the restrictions, disabilities, liabilities and duties of
New Starwood Sub and Advisor.
Section 1.2. The Contribution Transactions.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, concurrently with the Effective Time, SCG shall contribute its 0.1%
managing member interest in SFA II (the "SFA II Interest") and its 0.1% managing
member interest in SFA (the "SFA Interest") to Starwood, in each case free and
clear of all Liens, in exchange for an aggregate of 8,000 shares of New Starwood
Common Stock (the "Contribution Consideration").
Section 1.3. Closing. The closing of the Advisor Merger (the "Closing") will
take place at 10:00 a.m. New York City time on the fifth business day after
satisfaction or waiver of the conditions set forth in Article VI (the "Closing
Date"), at the offices of Rogers & Wells LLP, 200 Park Avenue, New York, New
York 10166, unless another date or place is agreed to in writing by the parties.
Section 1.4. Effective Time.
(i) On the Closing Date, the parties shall execute and file a
Certificate of Merger or other appropriate documents in accordance with
the DGCL, and shall make all other filings or recordings required with
respect to the Advisor Merger under the DGCL. The Advisor Merger shall
become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware or at such other time or
times as may be agreed by Starwood, New Starwood Sub and Advisor and
specified in the Certificate of Merger described in this Section 1.3
(the time the Advisor Merger becomes effective being the "Effective
Time"), it being understood that the parties shall cause the Effective
Time to occur as soon as practicable on or after the Closing Date.
(ii) On the Closing Date, SCG shall deliver to New Starwood
customary written instruments of transfer to effect the contribution of
the SFA Interest and the SFA II Interest to New Starwood and in
exchange therefor, New
<PAGE>
Starwood shall deliver to SCG certificates representing shares of fully
paid and non-assessable New Starwood Common Stock in an amount equal to
the aggregate Contribution Consideration, in such denominations and in
such names as SCG shall have advised Starwood in writing prior to the
Closing Date.
Section 1.5. Charter and Bylaws. Upon the Effective Time, the certificate
of incorporation and bylaws of the Surviving Corporation shall be amended and
restated in their entirety to be as set forth in Exhibits C and D hereto, until
further amended in accordance with applicable Delaware law.
Section 1.6. Directors. Immediately following the Effective Time, the Board
of Directors of the Surviving Corporation (the "Board") shall consist of the
persons named on Schedule A hereto.
Section 1.7. Officers. The executive officers of the Surviving Corporation
immediately following the Effective Time shall include the persons named on
Schedule B hereto, each of whom shall hold the position indicated on Schedule B
hereto.
Section 1.8. Election Not to Proceed With Incorporation Merger.
Notwithstanding anything in this Agreement to the contrary, if after the date of
this Agreement Starwood reasonably determines that the consummation of the
Incorporation Merger would have an adverse impact on Starwood, Starwood may
elect not to proceed with the Incorporation Merger and Starwood shall provide
written notice to Advisor of any such determination. In such event, (i) all
references in this Agreement to "New Starwood" shall be deemed to refer to and
become references to Starwood and all references to shares of common stock of
New Starwood shall be deemed to refer to and become references to common shares
of beneficial interest of Starwood in each case mutatis mutandis and (ii)
Starwood shall submit to its shareholders a proposal to amend its declaration of
trust and bylaws in the manner provided by Maryland law substantially to conform
such declaration of trust and bylaws, to the extent permitted by Maryland law
governing Maryland real estate investment trusts, to the forms of charter and
bylaws of New Starwood, respectively, set forth as Exhibits J and K to the
Merger Agreement, including without limitation, to eliminate the Starwood Class
B Common Shares and cause the conversion of all Starwood Class B Common Shares
into Class A Common Shares of beneficial interest of Starwood, $1.00 par value
per share, ("Starwood Class A Common Shares") on the basis of 49 Starwood Class
B Common Shares for one Starwood Class A Common Share. Starwood and Advisor
agree to cooperate and work together in good faith to amend and restate this
Agreement to give effect to any determination made by Starwood in accordance
with this Section 1.7.
ARTICLE II
EFFECTS OF THE ADVISOR MERGER;
EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Stock.
(a) Stock Owned by Advisor. As of the Effective Time, any shares of capital
stock that are owned by Advisor automatically shall be cancelled and retired and
all rights with respect thereto shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(b) Conversion of Advisor Stock Into New Starwood Common Stock. At the
Effective Time, except as provided in Section 2.1(a), each issued and
outstanding share of Advisor Common Stock shall be converted by virtue of the
Advisor Merger, automatically and without any action on the part of the holder
thereof, into 2,661.3 (the "Exchange Ratio") fully paid and nonassessable shares
of New Starwood Common Stock (the "Merger Consideration"). At the Effective
Time, each holder of a certificate representing any shares of Advisor Common
Stock (or affidavit of loss, in form and substance reasonably acceptable to New
Starwood, in lieu thereof) (a "Certificate") shall cease to have any rights with
respect thereto, except the right to receive, upon surrender of such Certificate
in accordance with Section 2.2(c), a certificate or certificates representing
the shares of New Starwood Common Stock into which those shares are converted
pursuant to this Section 2.1(b) and any cash in lieu of fractional shares of New
Starwood Common Stock to be issued or paid in consideration therefor upon
surrender of such Certificate (the "Merger Consideration") and any dividends or
other distributions to which such holder is entitled pursuant to Section 2.2(d),
in each case without interest and less any required withholding taxes.
Notwithstanding the foregoing, the right of each Advisor shareholder to receive
shares of New Starwood Common Stock under this Section 2.1 will be subject to
the ownership limitations and other related provisions contained in New
Starwood's charter and bylaws.
<PAGE>
(c) Shares of New Starwood Sub Stock. Upon the Effective Time, each share
of stock of New Starwood Sub outstanding immediately prior to the Effective Time
shall remain outstanding and shall represent one share of validly issued, fully
paid and nonassessable stock of the same class and designation.
Section 2.2. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Starwood shall appoint a
bank or trust company that is reasonably acceptable to Advisor to act as
exchange agent (the "Exchange Agent") for the exchange of certificates
representing shares of stock of New Starwood for Certificates representing
issued and outstanding shares of Advisor Common Stock.
(b) Starwood to Provide Merger Consideration. Starwood shall provide, or
cause to be provided, to the Exchange Agent on and after the Effective Time from
time to time as required pursuant to Section 2.2(c) and 2.2(g), for the benefit
of the holders of Advisor Common Stock certificates representing the shares of
New Starwood Common Stock into which the issued and outstanding shares of
Advisor Common Stock are converted pursuant to Section 2.1(b), together with the
cash payable in respect of fractional shares pursuant to Section 2.2(g).
(c) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates whose shares were converted into the Merger
Consideration pursuant to Section 2.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in a form and have such other provisions as Starwood may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates, in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Starwood, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration and any dividends or
other distributions to which such holder is entitled pursuant to Section 2.2(d),
and the Certificate so surrendered shall forthwith be cancelled. In the event of
a transfer of ownership of Advisor Common Stock which is not registered in the
transfer records of Advisor, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment either shall pay any transfer or
other taxes required by reason of such payment being made to a person other than
the registered holder of such Certificate or establish to the satisfaction of
Starwood that such tax or taxes have been paid or are not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without interest, into
which the shares theretofore represented by such Certificate shall have been
converted pursuant to Section 2.1 and any dividends or other distributions to
which such holder is entitled pursuant to Section 2.2(d). No interest will be
paid or will accrue on the applicable Merger Consideration upon the surrender of
any Certificate or on any amount payable pursuant to Section 2.2(d) or Section
2.2(g).
(d) Distributions with Respect to Unexchanged Shares. All shares of New
Starwood Common Stock to be issued pursuant to the Merger shall be deemed issued
and outstanding as of the Effective Time and whenever a dividend or other
distribution is declared by New Starwood in respect of the New Starwood Common
Stock, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares of New Starwood Common Stock issuable pursuant to this Agreement.
Notwithstanding the foregoing, no dividends or other distributions with respect
to New Starwood Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares represented thereby, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(g), in each case until
the surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable abandoned property, escheat or similar laws, following
surrender of any such Certificate there shall be paid to the holder of such
Certificate without interest, (A) at the time of such surrender, the amount of
any cash payable in lieu of any fractional share of Advisor Common Stock to
which such holder is entitled pursuant to Section 2.2(g) and (B) if such
Certificate is exchangeable for one or more whole shares of New Starwood Common
Stock, (x) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of New Starwood Common Stock, and (y) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and with a
payment date subsequent to such surrender payable with respect to such whole
shares of New Starwood Common Stock.
<PAGE>
(e) No Further Ownership Rights in Advisor Common Stock. All Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of this Article II (and any cash paid pursuant to Section 2.2(g)) shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Advisor Common Stock theretofore represented by such Certificate;
subject, however, to the obligation of the Advisor to pay or make, without
interest, any dividends or make any other distributions with a record date prior
to the Effective Time which may have been declared or paid by Advisor on such
shares in accordance with the terms of this Agreement or prior to the date of
this Agreement and which remain unpaid at the Effective Time and have not been
paid or made prior to such surrender, and there shall be no further registration
of transfers on the transfer books of the Advisor of the shares of Advisor
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are properly presented to New Starwood
they shall be cancelled and exchanged as provided in this Article II.
(f) Unclaimed Merger Consideration. Any portion of the Merger Consideration
delivered to the Exchange Agent pursuant to this Agreement that remains
unclaimed for 12 months after the Effective Time shall be redelivered by the
Exchange Agent to New Starwood, upon demand, and any holders of Certificates who
have not theretofore complied with Section 2.2(b) shall thereafter look only to
New Starwood for delivery of the Merger Consideration, subject to applicable
abandoned property, escheat and other similar laws. New Starwood shall have no
liability to any holder of shares of Advisor Common Stock for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any Merger Consideration remaining
unclaimed by any holder of shares of Advisor Common Stock on the day immediately
prior to the time such amounts otherwise would escheat to or become the property
of any governmental entity shall, to the extent permitted by law, become the
property of New Starwood, free and clear of any claim or interest of any Persons
previously entitled thereto.
(g) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of
New Starwood Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote, to receive dividends or to any other
rights of a stockholder of New Starwood.
<PAGE>
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Advisor Common Stock who would otherwise have
been entitled to receive a fraction of a share of New Starwood Common
Stock (after taking into account all Certificates delivered by such
holder) shall receive from the Exchange Agent upon surrender of such
holder's Certificates in accordance with Section 2.1, a cash payment in
lieu of such fractional shares of New Starwood Common Stock equal to
the same fractional proportion of the arithmetic mean of the closing
sales price per share of New Starwood Common Stock on the principal
stock exchange on which the New Starwood Common Stock is then listed
(less, if New Starwood Common Stock is trading cum dividend on any of
those days, the amount of that dividend) on each of the three trading
days immediately after the Closing Date.
(h) Withholding. New Starwood or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of shares of Advisor Common Stock such amounts as
New Starwood or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by New
Starwood or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Advisor Common Stock in respect of which such deduction and withholding was made
by New Starwood or the Exchange Agent.
(i) No Dissenters' Rights. Each of the stockholders of Advisor has
consented in writing to the Advisor Merger pursuant to Section 228 of the DGCL;
therefore, no dissenters' or appraisal rights shall be available with respect to
the Advisor Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Advisor. Except as set forth
in the letter of even date herewith (with sections organized in accordance with
Section 8.9) signed by the President or Chief Executive Officer and the Chief
Financial Officer of Advisor and delivered to Starwood prior to the execution of
this Agreement (the "Advisor Disclosure Letter"), (i) each of the Stockholders,
severally and not jointly, represents and warrants, to Starwood and (ii) Advisor
represents and warrants to Starwood, that:
(a) Organization, Standing and Corporate Power of the Advisor. Advisor is a
corporation duly organized and validly existing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. Advisor is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing of its properties or management of properties
for others makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a material adverse effect on the business, properties, financial
condition, results of operations or prospects of Advisor or the Advisor
Subsidiaries, after giving effect to any indemnification to which the Advisor
and the Advisor Subsidiaries may be entitled under the Advisory Agreement, as
defined herein (an "Advisor Material Adverse Effect").
(b) Advisor Subsidiaries; Interests in Other Persons.
(i) SFA and SFA II are the only Advisor Subsidiaries. SFA is a
limited liability company duly organized and validly existing under the
laws of the State of Connecticut and SFA II is a limited liability
company duly organized and validly existing under the laws of the State
of Delaware and has the requisite power and authority to carry on its
business as now being conducted. Each of SFA and SFA II is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership,
leasing of its properties or management of properties for others makes
such qualification or licensing necessary, except where the failure to
be so qualified or licensed, individually or in the aggregate, would
not have an Advisor Material Adverse Effect.
(ii) Except for membership interests in SFA and SFA II and
options issued under Starwood's 1996 Long Term Incentive Plan to
purchase Class A shares of beneficial interest of Starwood, Advisor
does not own, directly or indirectly (including through any Advisor
Subsidiary), any capital stock or other equity interest, with a fair
market value as of the date of this Agreement greater than $50,000 in
any Person or which represents 5% or more of the
<PAGE>
outstanding voting power, capital stock or other ownership interest of
any class in any Person. Neither Advisor nor any Advisor Subsidiary is
in default of any provision of any documents governing or otherwise
relating to its rights in any Advisor Subsidiary other than such
defaults that would not, individually or in the aggregate, have an
Advisor Material Adverse Effect. All such documents are set forth in
Section 3.1(b)(ii) of the Advisor Disclosure Letter and are in full
force and effect and true and correct copies of all such documents have
been previously delivered or made available to Starwood.
(iii) Except as contemplated by this Agreement, there are no
outstanding contractual obligations of Advisor or any Advisor
Subsidiary to repurchase, redeem or otherwise acquire any shares of
stock of Advisor or any capital stock, voting securities or other
ownership interests in Advisor or any Advisor Subsidiary, and there are
no outstanding contractual obligations of Advisor or any Advisor
Subsidiary to make any investment of $50,000 or more (in the form of a
loan, capital contribution or otherwise) in any Person (other than an
Advisor Subsidiary).
(c) Capital Structure. On the date hereof, Advisor owns a 99.9% membership
interest in SFA II, and SFA II owns a 99.9% membership interest in SFA, in each
case free and clear of all Liens. Upon consummation of the Contribution
Transactions, the entire outstanding equity interests in SFA and SFA II will be
owned beneficially and of record by Advisor and another Advisor Subsidiary. The
authorized stock of Advisor consists of 1,500 shares of Advisor Common Stock,
all of which are owned by the Stockholders. One thousand five hundred shares of
Advisor Common Stock constitute all of the issued and outstanding capital stock
of Advisor. There are no outstanding stock or equity appreciation rights
relating to the capital stock or equity interests of Advisor or the Advisor
Subsidiaries. All outstanding shares of Advisor Common Stock are duly
authorized, validly issued, and nonassessable are not subject to any preemptive
rights. All the outstanding membership interests of each of SFA and SFA II have
been duly authorized, validly issued and are not subject to preemptive rights.
Other than the SFA Interest, the SFA II Interest, the membership interests in
SFA II owned by Advisor and the membership interests in SFA owned by SFA II, no
other shares of Advisor Common Stock or other economic or voting membership
interests in Advisor or any Advisor Subsidiary are issued, reserved for issuance
or outstanding. There are no bonds, debentures, notes or other indebtedness of
Advisor or any Advisor Subsidiary having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which shareholders of Advisor or members of any Advisor Subsidiary may vote.
There are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Advisor or any Advisor Subsidiary is a party or by which Advisor or any Advisor
Subsidiary is bound, obligating Advisor or any Advisor Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sol, additional shares of
capital stock, voting securities, membership interests or other ownership
interests of Advisor or any Advisor Subsidiary or obligating Advisor or any
Advisor Subsidiary to issue, grant extend or enter into any such security,
option, warrant, call right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations of Advisor or any Advisor
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock, voting securities, membership interests or other ownership interest in
Advisor or any Advisor Subsidiary or make any material investment (in the form
of a loan, capital contribution or otherwise) in any Person.
(d) Authority; Noncontravention; Consents. Advisor has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement and each other agreement
contemplated by this Agreement to which Advisor is a party and the Contribution
Transactions. The execution and delivery of this Agreement and any other
agreement contemplated by this Agreement by Advisor and the consummation by
Advisor of the transactions contemplated hereby and thereby to which Advisor is
a party and the Contribution Transactions have been duly authorized by all
necessary corporate action on the part of the Advisor. This Agreement has been
duly executed and delivered by Advisor and constitutes the valid and binding
obligation of Advisor enforceable against Advisor in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity. The execution and
delivery of this Agreement by Advisor does not, the consummation of the
transactions contemplated hereby and the Contribution Transactions and
compliance by Advisor with the provisions of this Agreement does not and will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to loss of a material
benefit under, or result in the creation of any pledges, claims, liens, charges,
encumbrances or security interests of any kind or nature whatsoever
(collectively, "Liens") upon any of the assets of Advisor or any Advisor
Subsidiary under, (i) the charter or bylaws or other comparable organizational
documents of Advisor or any Advisor Subsidiary, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement agreement, lease
or other agreement, instrument, permit, concession, contract, franchise or
license applicable to Advisor or any Advisor Subsidiary or either of their
respective assets or (iii) subject to the governmental filings and other matters
referred to in the
<PAGE>
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation (collectively, "Laws") applicable to Advisor or any Advisor
Subsidiary, or either of their respective assets, other than, in the case of
clause (ii) or (iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not (x) have an Advisor Material
Adverse Effect or (y) materially delay or prevent the consummation of the
Advisor Merger. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency (a "Governmental Entity"), is required by or
with respect to Advisor or any Advisor Subsidiary in connection with the
execution and delivery of this Agreement or the other agreements contemplated by
this Agreement by Advisor or the consummation by Advisor of any of the other
transactions contemplated hereby and thereby or the Contribution Transactions,
except for (i) the filing of the Certificate of Merger for the Advisor Merger
with the Secretary of State of the State of Delaware, and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as are set forth in Section 3.1(d) of the Advisor Disclosure Letter or
(A) as may be required under (x) federal, state, local or foreign environmental
laws or (y) the "blue sky" laws of various states or (B) which, if not obtained
or made, would not prevent or delay in any material respect the consummation of
any of the transactions contemplated by this Agreement or the Contribution
Transactions or otherwise prevent Advisor from performing its obligations under
this Agreement in any material respect or have, individually or in the
aggregate, an Advisor Material Adverse Effect.
(e) Operations of Advisor and the Advisor Subsidiaries. Advisor was formed
solely for the purpose of owning a membership interest in SFA II and has not
engaged in any business activities or conducted any operations other than in
conjunction with such ownership. SFA II was formed solely for the purpose of
owning a membership interest in SFA and has not engaged in any business
activities or conducted any operations other than in conjunction with such
ownership. SFA was formed solely for the purpose of acting as the external
advisor to Starwood pursuant to the Investment Advisory Agreement, dated as of
March 13, 1998, between Starwood and SFA (the "Advisory Agreement") and has not
engaged in any business activities or conducted any operations other than its
capacity as the external advisor to Starwood.
(f) Litigation. There is no suit, action or proceeding pending or, to the
Knowledge of Advisor, threatened against or affecting Advisor or the Advisor
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to (i) have an Advisor Material Adverse Effect or (ii) prevent the
consummation of any of the transactions contemplated herein, including, without
limitation, the Contribution Transactions or the Merger, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Advisor or the Advisor Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the future would have, any such
effect.
(g) Taxes. Each of Advisor and each Advisor Subsidiary has timely filed all
Tax Returns (as defined below) and reports required to be filed by it (after
giving effect to any filing extension properly granted by a Governmental Entity
having authority to do so). Each such Tax Return is true, correct and complete
in all material respects. Each of Advisor and each Advisor Subsidiary has paid,
within the time and manner prescribed by law, all Taxes (as defined herein) that
are due and payable. The Tax Returns of Advisor and each Advisor Subsidiary have
not been audited by any Governmental Entity responsible for tax matters (a
"Taxing Authority"). Advisor, with the requisite consent of its stockholders,
has validly and timely filed an election to be taxed as an S corporation for
federal and applicable state tax purposes, which election was effective on
January 1, 1999, and will continue to qualify as a S corporation through the
Effective Time. Neither Advisor nor any Advisor Subsidiary will have any
liability for any Taxes under Section 1374 of the Code in connection with the
transactions contemplated by this Agreement. There are no Tax liens upon the
assets of Advisor or any Advisor Subsidiary other than liens for Taxes not yet
due. Since January 1, 1999, neither Advisor nor any Advisor Subsidiary has
incurred any liability for federal taxes, other than withholding and employment
taxes, under the Code. To the Knowledge of Advisor, no event has occurred, and
no condition or circumstance exists, which presents a material risk that any
material Tax described in the preceding sentence will be imposed upon Advisor or
any Advisor Subsidiary. No deficiencies for any Taxes have been proposed,
asserted or assessed against Advisor or any Advisor Subsidiary, and no requests
for waivers of the time to assess any such Taxes have been granted or are
pending. As used in this Agreement, "Taxes" or "Tax" shall mean any federal,
state, local or foreign income, gross receipts, license, payroll, employment
withholding, property, recording, stamp, sales, excise or other tax or
governmental charges of any nature whatsoever, together with any penalties,
interest or additions thereto and "Tax Return" shall mean any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
(h) Absence of Changes in Benefit Plans; ERISA Compliance.
<PAGE>
(i) Section 3.1(h)(i) of the Advisor Disclosure Letter sets
forth each Advisor Benefit Plan (as defined below) as in effect on the
date hereof. For purposes of this Agreement, "Advisor Benefit Plan"
shall mean any Employee Plan sponsored or maintained by Advisor or any
Advisor ERISA Affiliate, or with respect to which Advisor or any
Advisor ERISA Affiliate has any obligation to contribute, has liability
under or is otherwise a party to, or which otherwise provides benefits
for any current or former employees, officers, directors or other
independent contractors (or their dependents and beneficiaries) of
Advisor. For purposes of this Agreement, "Advisor ERISA Affiliate"
means any entity required to be aggregated with Advisor under Sections
414(b), (c), (m) or (o) of the Code or Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(ii) Except as would not reasonably be expected to result in
an Advisor Material Adverse Effect, (A) all Advisor Benefit Plans,
including any such plan that is an "employee benefit plan" as defined
in Section 3(3) of ERISA, have been made available to Starwood and
TriNet and are in compliance with the terms of such plan and all
applicable requirements of law, including ERISA and the Code and,
without limitation, the requirements of ERISA and all tax rules for
which favorable tax treatment is intended, and (B) there are no
liabilities or obligations with respect to any such Advisor Benefit
Plan, whether accrued, contingent or otherwise (other than obligations
by Advisor and the Advisor Subsidiaries to make contributions, and for
such plan to pay benefits and administrative costs, incurred in the
ordinary course), nor to the Knowledge of Advisor are any such
liabilities or obligations expected to be incurred. The execution of,
and performance of the transactions contemplated in, this Agreement
will not (either alone or together with the occurrence of any
additional or subsequent events) constitute an event under any Advisor
Benefit Plan, policy, program, arrangement or agreement, trust or loan
that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director, will not result in any "golden
parachute payments" being due (as defined for purposes of Section 280G
of the Code), or result in any breach or violation of, or a default
under, any of the Advisor Benefit Plans. The only severance agreements
or severance policies applicable to Advisor or the Advisor Subsidiaries
are the agreements and policies specifically referred to in Section
3.1(h)(ii) of the Advisor Disclosure Letter.
(iii) Without limiting the foregoing, each Advisor Benefit
Plan which is intended to be tax-qualified under Section 401(a) of the
Code has been determined by the IRS to be so qualified and such
determination has not been modified, revoked or limited, and no
circumstances have occurred that would adversely affect the
tax-qualified status of any such plan. No Advisor Benefit Plan is or
has ever been subject to Part III of Subtitle B of Title I of ERISA or
Title IV of ERISA or Section 412 of the Code. None of Advisor or any
Advisor Subsidiary, or any "party in interest" (as defined in Section
3(14) of ERISA) or any "disqualified person" (as defined in Section
4975 of the Code) with respect to any Advisor Benefit Plan, has engaged
in a non-exempt "prohibited transaction" within the meaning of Section
4975 of the Code or Section 406 of ERISA that would reasonably be
expected to result in a an Advisor Material Adverse Effect. No Advisor
Benefit Plan provides for health or life insurance for employees after
termination of employment (except as required by law).
(i) No Loans or Payments to Employees, Officers or Directors. There is no
(i) loan outstanding from or to any employee, officer or director of Advisor or
an Advisor Subsidiary, (ii) employment, severance or consulting contract,
policy, agreement, program or arrangement, (iii) agreements requiring payments
to be made on a change of control or otherwise as a result of the consummation
of the Advisor Merger or any of the other transactions contemplated by this
Agreement with respect to any employee, officer or director of Advisor or any
Advisor Subsidiary or (iv) any agreement to appoint or nominate any person as a
director of Advisor or any Advisor Subsidiary.
(j) Brokers; Schedule of Fees and Expenses. No broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Advisor Merger or based upon arrangements made by or on behalf of Advisor or any
Advisor Subsidiary.
(k) Compliance with Laws. Neither Advisor nor any Advisor Subsidiary has
violated or failed to comply with any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity applicable to its business,
properties or operations, except for violations and failures to comply that
would not, individually or in the aggregate, reasonably be expected to result in
an Advisor Material Adverse Effect.
(l) Contracts; Debt Instruments, Liabilities.
<PAGE>
(i) Neither Advisor nor any Advisor Subsidiary has any
outstanding indebtedness and neither is a party to any loan or credit
agreement, note, bond, mortgage or indenture, or any material lease,
permit, concession, franchise or license, or any agreement to acquire
real property, or any other material contract, agreement, arrangement
or understanding, except for the Advisory Agreement and the Sub
Advisory Agreements. None of Advisor and the Advisor Subsidiary has
received written notice that it is in violation of or in default under,
in any material respect (nor does there exist any condition which upon
the passage of time or the giving of notice or both would cause such a
violation of or default under), any material loan or credit agreement,
note, bond, mortgage or indenture or any material lease, permit,
concession, franchise or license, or any material agreement to acquire
real property, or any other material contract, agreement, arrangement
or understanding, to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that
would not individually or in the aggregate, result in an Advisor
Material Adverse Effect.
(ii) Neither Advisor nor any Advisor Subsidiary has any
liability (contingent or accrued, liquidated or unliquidated) except
for liabilities (i) for which indemnification may be sought by the
Advisor and the Advisor Subsidiaries pursuant to the Advisory Agreement
or (ii) that would not result in an Advisor Material Adverse Effect.
(m) Title to Assets. Advisor or an Advisor Subsidiary has good title to, or
a valid leasehold interest in, the assets used by them in the operation of their
business, free and clear of all Liens, except for non-material assets disposed
of in the ordinary course of business. Advisor and the Advisor Subsidiaries do
not own any real property.
(n) Books and Records.
(i) The books of account and other financial records of
Advisor and the Advisor Subsidiaries are in all material respects true,
complete and correct, have been maintained in accordance with good
business practices and were made available to Starwood and TriNet prior
to the date of this Agreement.
(ii) Advisor has previously delivered or made available to
Starwood and TriNet true and correct copies of the certificates of
formation and limited liability company agreements of SFA and SFA II
and the charter and bylaws of Advisor, each as amended to date. All
such documents are listed in Section 3.1(n)(ii) of the Advisor
Disclosure Letter.
(iii) The minute books and other records of corporate
proceedings of Advisor and the Advisor Subsidiaries have been made
available to Starwood and TriNet, contain in all material respects
accurate records of all meetings and accurately reflect in all material
respects all other action of the shareholders or member(s)of Advisor
and the Advisor Subsidiaries.
(iv) The stock ledger of Advisor has been made available to
Starwood and TriNet and accurately reflects the number of outstanding
shares of capital stock of Advisor.
(o) State Takeover Statutes. Advisor has taken all actions necessary, if
any, to exempt the Advisor Merger, this Agreement or any of the transactions
contemplated by this Agreement from the operation of any Takeover Statute (as
defined below) of the State of Delaware.
(p) Investment Company Act of 1940. None of Advisor and the Advisor
Subsidiaries is, or at the Effective Time will be, required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act") or under
the Investment Advisors Act of 1940, as amended.
(q) Proxy Statement and Registration Statement. The information furnished
by Advisor for inclusion in the Registration Statement (as defined in Section
5.1) and any amendment or supplement thereto will not, as of the date the
Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. The information furnished by Advisor for inclusion in the Proxy
Statement (as defined in Section 5.1) will not, on the date the Proxy Statement
is first mailed or furnished to securityholders of TriNet or Starwood or on the
respective meeting dates of TriNet or Starwood, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading. Notwithstanding the foregoing,
<PAGE>
Advisor makes no representation or warranty with respect to any information
furnished by Starwood or TriNet for inclusion or incorporation by reference in
any of the foregoing documents.
(r) Vote Required. The affirmative vote or written consent of at least a
majority of the outstanding shares of Advisor Common Stock is the only vote or
consent of the holders of any series of Advisor's capital stock necessary (under
applicable law or otherwise) to approve the Advisor Merger, this Agreement and
the other transactions contemplated hereby (the "Advisor Shareholder Approval").
The Advisor Shareholder Approval has been obtained.
(s) Year 2000 Issues.
(i) To the best Knowledge of Advisor, based on representations
and warranties made by third parties and publicly available
information, the software, hardware and equipment of Advisor and the
Advisor Subsidiaries owned, leased or licensed by them and used in the
conduct of its business (the "Advisor Information Technology") are or
will be prior to December 31, 1999 Year 2000 ready.
(ii) "Year 2000 Ready" means that the software, hardware,
equipment and systems will: (A) handle date information involving any
and all dates before, during and/or after January 1, 2000, including
accepting input, providing output and performing date calculations in
whole or in part; (B) operate, accurately and without interruption on
and in respect of any and all dates before, during and/or after January
1, 2000 and without any change in performance; and (C) store and
provide properly-entered date input information without creating any
ambiguity as to the century.
Section 3.2. Representations and Warranties of Starwood and New Starwood
Sub. Except as set forth in the letter of even date herewith (with section
references organized in accordance with Section 8.9 signed by the President or
Chief Executive Officer and the Chief Financial Officer of Starwood and
delivered to the Advisor prior to the execution of this Agreement (the "Starwood
Disclosure Letter"), each of Starwood and New Starwood Sub, jointly and
severally represents and warrants to Advisor as follows:
(a) Organization, Standing and Corporate Power of Starwood. Starwood is a
real estate investment trust duly organized and validly existing under the laws
of the State of Maryland. New Starwood Sub is a corporation duly organized and
validly existing under the laws of the state of Delaware. Each of Starwood and
New Starwood Sub has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Starwood and New Starwood Sub is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing of
its properties or management of properties for others makes such qualification
or licensing necessary, except where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse effect on
the business, properties, financial condition or results of operations or
prospects of Starwood and the Starwood Subsidiaries, taken as a whole (a
"Starwood Material Adverse Effect").
(b) Authority; Noncontravention; Consents. Subject to receipt of the
requisite approval of Starwood's shareholders, Starwood has the requisite
corporate power and authority to enter into this Agreement, the Incorporation
Merger Agreement and the Merger Agreement, to consummate the transactions
contemplated by this Agreement, the Incorporation Merger Agreement and the
Merger Agreement. New Starwood Sub has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement, subject to receipt of the requisite approval of
Starwood's shareholders. The execution and delivery of this Agreement, the
Incorporation Merger Agreement and the Merger Agreement by Starwood and the
consummation by Starwood of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of Starwood. The
execution and delivery of this Agreement by New Starwood Sub and the
consummation by New Starwood Sub of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of New Starwood Sub.
This Agreement, the Incorporation Merger Agreement and the Merger Agreement have
been duly executed and delivered by Starwood, and in the case of this Agreement,
by New Starwood Sub, and constitute the valid and binding obligations of
Starwood and New Starwood Sub, as applicable, and are enforceable against
Starwood and New Starwood Sub, as applicable, in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity. The execution and
delivery of this Agreement, the Incorporation Merger Agreement and the Merger
Agreement by Starwood does not, and the consummation of the transactions
contemplated hereby and thereby and compliance by Starwood and New Starwood Sub,
as applicable, and the execution and delivery of this Agreement by New
<PAGE>
Starwood Sub do, with the provisions of this Agreemen, the Incorporation Merger
Agreement and the Merger Agreement do not and will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Starwood or,
any Starwood Subsidiary under, (i) the amended and restated declaration of trust
or the amended and restated bylaws of Starwood or the comparable charter or
organizational documents or partnership or similar agreement (as the case may
be) of any Starwood Subsidiary, each as amended or supplemented to the date of
this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, contract, franchise or license applicable to Starwood or any
Starwood Subsidiary or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any Laws applicable to Starwood or any Starwood Subsidiary or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Starwood Material Adverse
Effect or (y) materially delay or prevent the consummation of the Advisor
Merger, the Incorporation Merger and the Merger. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Starwood or, any Starwood Subsidiary in
connection with the execution and delivery of this Agreement, the Incorporation
Merger Agreement and the Merger Agreement by Starwood the consummation by
Starwood and, the Starwood Subsidiaries of any of the transactions contemplated
hereby and thereby, except for (i) the filing with the SEC of (x) the Proxy
Statement and the Registration Statement and (y) such reports under Section 13
and Section 16 of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (ii) the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware, (iii) such filings as may be required in connection with the payment
of any Transfer and Gains Taxes, and (iv) the requisite approval of Starwood's
shareholders or (A) as may be required under (x) federal, state or local
environmental laws or (y) the "blue sky" laws of various states or (B) which, if
not obtained or made, would not prevent or delay in any material respect the
consummation of the Advisor Merger or any of the transactions contemplated by
this Agreement or otherwise prevent Starwood from performing its obligations
under this Agreement in any material respect or have, individually or in the
aggregate, a Starwood Material Adverse Effect.
(c) Opinion of Financial Advisor. The Special Committee has received the
opinion of Houlihan, the Special Committee's financial advisor, satisfactory to
the Special Committee, a written copy of which was, or upon receipt by the
Special Committee will be, provided to TriNet, to the effect that, as of the
date of such opinion, the consideration to be paid to those shareholders of
Starwood who hold ownership interests in the Advisor is fair from a financial
point of view to the Starwood shareholders who do not hold any ownership
interests in the Advisor. It is agreed and understood that such opinion is for
the benefit of the Special Committee and may not be relied upon by TriNet,
Advisor or any of their affiliates.
Section 3.3. Representations and Warranties of SCG. SCG represents and
warrants to Starwood as follows:
(a) Organization, Standing and Power of SCG. SCG is a limited liability
company duly organized and validly existing under the laws of the State of
Connecticut. SCG has the requisite power and authority to carry on its business
as now being conducted.
(b) Authority; Noncontravention; Consents. SCG has the requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
SCG and the consummation by SCG of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of SCG. This Agreement
has been duly executed and delivered by SCG and constitutes the valid and
binding obligation of SCG, enforceable against SCG in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity. The execution and
delivery of this Agreement by SCG does not, the consummation of the transactions
contemplated hereby and compliance by SCG, with the provisions of this Agreement
does not and will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of SCG under, (i) the amended and restated limited
liability company agreement of SCG, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, reciprocal easement agreement, lease or other
agreement, instrument, permit, concession, contract, franchise or license
applicable to SCG or its assets or (iii) any Laws applicable to SCG, other than,
in the case of clause (ii) or (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) reasonably
be expected to result in a material adverse effect on the business, properties,
financial condition or results of operations or prospects of SCG (an "SCG
Material Adverse Effect") or (y) materially
<PAGE>
delay or prevent the consummation of the Contribution Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to SCG in
connection with the execution and delivery of this Agreement by SCG or the
consummation by SCG of any of the transactions contemplated hereby which, if not
obtained or made, would prevent or delay in any material respect the
consummation of the Contribution Transactions or any of the transactions
contemplated by this Agreement or otherwise prevent SCG from performing its
obligations under this Agreement in any material respect or reasonably be
expected to result in, individually or in the aggregate, an SCG Material Adverse
Effect.
(c) Title to Interests. SCG is the sole beneficial and record owner of the
SFA Interest and the SFA II Interest, free and clear of all Liens. The transfer
and delivery of the SFA Interest and the SFA II Interest in the Contribution
Transactions will, upon consummation of the Contribution Transactions, transfer
good and marketable title thereto to New Starwood, free and clear of all Liens.
(d) Accredited Investor. SCG is an "accredited investor" as such term is
defined in Regulation D under the Securities Act of 1933, as amended.
(e) Investment. SCG will be acquiring shares of New Starwood Common Stock
for investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof in violation
of the Securities Act of 1933, as amended. SCG understands that the New Starwood
Common Stock to be acquired by it in exchange for the SFA Interest and the SFA
II Interest have not been, and will not be, registered under the Securities Act
by reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of SCG's
representations as expressed herein.
ARTICLE IV
COVENANTS
Section 4.1. Conduct of Business by Advisor. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the earlier of
(i) the termination of this Agreement and (ii) the Effective Time, Advisor
shall, and shall cause each Advisor Subsidiary to, carry on its businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact, in all material respects, its current
business organization, goodwill and ongoing businesses. Without limiting the
generality of the foregoing, the following additional restrictions shall apply:
during the period from the date of this Agreement to the earlier of (i) the
termination of this Agreement or (ii) the Effective Time, except as otherwise
contemplated by this Agreement or as otherwise disclosed in Section 4.1 of the
Advisor Disclosure Letter, Advisor shall not, and shall cause each Advisor
Subsidiary not to:
(a) (i) make any distributions of assets (other than cash) in respect of
any of its stock;
(b) issue, deliver, sell or grant any option or other right in respect of
any shares of capital stock, any other voting or redeemable securities of it or
any securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible or redeemable securities,
except as permitted under Section 4.1(e);
<PAGE>
(c) amend its charter or bylaws or certificate of formation or limited
liability company agreement;
(d) merge, consolidate or enter into any other business combination
transaction with any Person;
(e) (i) acquire or agree to acquire by merging or consolidating with, or by
purchasing all or a substantial portion of the equity securities or assets of,
or by any other manner, any business or any corporation, partnership, limited
liability company, joint venture, association, business trust or other business
organization or division thereof or interest therein or any assets; (ii)
mortgage or otherwise encumber or subject to any Lien or sell, lease or
otherwise dispose of any of its material properties or assets or assign or
encumber the right to receive income, dividends, distributions and the like or
agree to do any of the foregoing; or (iii) incur indebtedness for borrowed money
or guarantee any indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of it,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing, prepay or refinance any indebtedness or make any loans, advances or
capital contributions to, or investments in, any other person;
(f) make any election relating to Taxes;
(g) (i) change in any material manner any of its methods, principles or
practices of accounting in effect at the date of this Agreement, or (ii) settle
or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes or change any
of its methods of reporting income or deductions for federal income tax purposes
from those employed in the preparation of its federal income tax return for the
taxable year ended December 31, 1997, except, in the case of clause (i), as may
be required applicable Law or GAAP;
(h) adopt any new employee benefit plan, incentive plan, severance plan,
bonus plan, stock option or similar plan, grant new stock appreciation rights or
amend any existing plan or rights, or enter into or amend any employment
agreement or similar agreement or arrangement or, except in the ordinary course
consistent with past practice, grant or become obligated to grant any increase
in the compensation of officers or employees, except such changes as are
required by law or which are not more favorable to participants than provisions
currently in effect;
(i) settle any shareholder derivative or class action claims arising out of
or in connection with any of the transactions contemplated by this Agreement;
and
(j) enter into or amend or otherwise modify any of the material terms of
any agreement or arrangement with persons that are affiliates or, as of the date
hereof, are officers or directors of the Advisor or any Advisor Subsidiary
without prior written notice to Starwood and the approval of a majority of the
"disinterested" members of the Board of Directors of Advisor, on behalf of
itself and as member of SFA.
Section 4.2. Other Actions. Each of Advisor and Starwood shall use its
commercially reasonable efforts not to, and shall use its commercially
reasonable efforts to cause its respective subsidiaries not to take any action
that would result in (i) any of the representations and warranties of such party
(without giving effect to any "Knowledge" qualification) set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties (without giving effect to any "Knowledge"
qualification) that are not so qualified becoming untrue in any material respect
or (iii) any of the conditions' to the Advisor Merger set forth in Article VI
not being satisfied.
ARTICLE V
ADDITIONAL COVENANTS
Section 5.1. Preparation of the Registration Statement and the Proxy
Statement; Shareholders' Meetings; Consents.
<PAGE>
(a) As soon as practicable following the date of this Agreement, Starwood
shall (i) prepare and file with the SEC a proxy statement under the Securities
Exchange Act of 1934 soliciting the approval of the shareholders of Starwood of
the Advisor Merger (the "Proxy Statement"), with appropriate requests for
confidential treatment, and Starwood will provide on a supplemental basis to the
SEC a registration statement on Form S-4 with regard to the shares of New
Starwood Common Stock to be issued in the Advisor Merger (the "Registration
Statement"), in which the Proxy Statement will be included as a prospectus. The
Proxy Statement shall state that in the opinion of counsel (which shall be a
reputable, national law firm), the Advisor Merger will (or will more likely than
not) qualify as a tax-free reorganization under Section 368(a) of the Code. The
Proxy Statement will also include solicitations by Starwood of approvals by
Starwood's shareholders for the Merger and the Incorporation Merger, and the
Registration Statement also will include the shares of capital stock of New
Starwood to be issued in the Merger. Starwood shall use its commercially
reasonable efforts to (i) respond to any comments of the staff of the SEC and
(ii) have the Registration Statement declared effective under the Securities Act
and the rules and regulations promulgated thereunder as promptly as practicable
after such filing and to keep the Registration Statement effective as long as is
necessary to consummate the Merger and the Advisor Merger. Starwood will use its
commercially reasonable efforts to cause the Proxy Statement to be mailed to
Starwood's shareholders, as promptly as practicable after the Registration
Statement is declared effective under the Securities Act. Starwood will notify
Advisor promptly of the receipt of any comments from the SEC and of any request
by the SEC for amendments or supplements to the Registration Statement or the
Proxy Statement or for additional information and will supply Advisor with
copies of all correspondence between such party or any of its representatives
and the SEC with respect to the Registration Statement or the Proxy Statement.
The Registration Statement and the Proxy Statement shall comply in all material
respects with all applicable requirements of Law. Whenever any event occurs
which is required to be set forth in an amendment or supplement to the
Registration Statement or the Proxy Statement, Starwood shall promptly inform
Advisor of such occurrences and cooperate in filing with the SEC and/or mailing
to the shareholders of Starwood such amendment or supplement.
(b) Starwood will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Starwood Shareholders Meeting") (but in no event shall such
meeting be held sooner than 20 business days following the date the Proxy
Statement is mailed to its shareholders), for the purpose of obtaining the
Starwood Shareholder Approvals. Starwood covenants that Starwood will, through
its Board of Trustees, recommend to its shareholders approval of the Advisor
Merger, this Agreement, the Merger, the Merger Agreement, the Incorporation
Merger and the Incorporation Merger Agreement and the transactions contemplated
hereby and thereby and further covenants that the Proxy Statement will include
such recommendation. Advisor shall furnish all information concerning Advisor
Common Stock as may reasonably be requested in connection with any action
required to be taken under any applicable state securities or "blue sky" laws in
connection with the issuance of Advisor Common Stock pursuant to the Advisor
Merger.
Section 5.2. Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of Starwood, the Stockholders, SCG and Advisor agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other in doing,
all things necessary, proper or advisable to fulfill all conditions applicable
to such party pursuant to this Agreement and to consummate and make effective,
in the most expeditious manner practicable, the Advisor Merger, the Contribution
Transactions and the other transactions contemplated hereby, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval, waiver or exemption from, or to avoid an action
or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals, waivers or exemption from non-governmental third parties;
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging the Advisor Merger, the Contribution
Transactions, the Merger, the Incorporation Merger or the consummation of the
transactions contemplated by this Agreement, the Merger Agreement, the
Incorporation Merger Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by and to fully carry out
the purposes of, this Agreement, the Merger Agreement and the Incorporation
Merger Agreement. In connection with and without limiting the foregoing,
Advisor, Starwood and their respective Boards of Directors or Trustees, as
applicable, shall (x) take all action necessary so that no "fair price,"
"business combination," "moratorium," "control share acquisition" or any other
anti-takeover statute or similar statute enacted under state or federal laws of
the United States or similar statute or regulation (a "Takeover Statute") is or
becomes applicable to the Advisor Merger or the Merger, and (y) if any Takeover
Statute becomes applicable to the Advisor Merger, take all action necessary so
that the Advisor Merger may be consummated as promptly as practicable on the
terms contemplated by this
<PAGE>
Agreement or the Merger Agreement, as applicable, or otherwise to minimize the
effect of such Takeover Statute on the Advisor Merger and the Merger. From the
date hereof through the Effective Time, Starwood shall timely file with the SEC
all Starwood SEC Documents required to be so filed.
(b) Advisor shall give prompt notice to Starwood, and Starwood shall give
prompt notice to Advisor, if (i) any representation or warranty made by it
contained in this Agreement, the Merger Agreement or the Incorporation Merger
Agreement, that is qualified as to materiality becomes untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becomes untrue or inaccurate in any material respect or (ii) it fails to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, the Merger Agreement
or the Incorporation Merger Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
Section 5.3. Affiliates. Prior to the Closing Date, Advisor, Starwood and
SCG shall exchange letters identifying all persons who are, at the time this
Agreement is submitted to the shareholders of Starwood, their respective
"affiliates" for purposes of Rule 145 under the Securities Act. The Advisor and
Starwood shall use their respective commercially reasonable efforts to cause
each of their respective affiliates to deliver on or prior to the Closing Date a
written agreement substantially in the form attached as Exhibit E hereto.
Section 5.4. AMEX De-Listing; NYSE Listing. Starwood shall prepare and
submit to the New York Stock Exchange, Inc. ("NYSE") a listing application
covering the New Starwood Common Stock to be issued in the Advisor Merger and
the Contribution Transactions, and shall use its commercially reasonable efforts
to have the NYSE approve for listing, upon official notice of issuance, the New
Starwood Common Stock. In the event that such securities are approved for
listing on the NYSE, Starwood shall take such steps as are necessary to cause
all Starwood securities listed on the American Stock Exchange ("AMEX") to be
de-listed as of the Effective Time.
Section 5.5. Indemnification of Directors and Officers; Directors' and
Officers' Insurance.
(a) (i) Advisor shall, and, from and after the Effective Time, Starwood
(collectively, the "Indemnifying Parties") shall, jointly and severally,
indemnify, defend and hold harmless each Person who is now or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of Advisor (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorneys' fees and expenses),
liabilities or judgments or amounts that are paid in settlement of, with the
approval of the Indemnifying Parties (which approval shall not be unreasonably
withheld or delayed), or otherwise in connection with any threatened or actual
claim, action, suit, proceeding or investigation based on or arising out of the
fact that such person is or was a director or officer of Advisor at or prior to
the Effective Time, whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based on, or arising out of, or pertaining to this Agreement or the
transactions contemplated by this Agreement, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors or
officers, as the case may be (and Starwood will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law subject to the limitations set forth in Section
5.5(a)(iii)).
(ii) Any Indemnified Parties proposing to assert the right to
be indemnified under this Section 5.5 shall, promptly after receipt of
notice of commencement of any action against such Indemnified Parties
in respect of which a claim is to be made under this Section 5.5
against Advisor and, from and after the Effective Time, Starwood,
notify the Indemnifying Parties of the commencement of such action,
enclosing a copy of all papers served; provided, that the failure to so
notify shall not limit in any way or otherwise affect the obligations
of the Indemnifying Parties except to the extent such failure to notify
materially prejudices such party. If any such action is brought against
any of the Indemnified Parties and such Indemnified Parties notify the
Indemnifying Parties of its commencement, the Indemnifying Parties will
be entitled to participate in and, to the extent that they elect by
delivering written notice to such Indemnified Parties promptly after
receiving notice of the commencement of the action from the Indemnified
Parties, to assume the defense of the action and after notice from the
Indemnifying Parties to the Indemnified Parties of their election to
assume the defense, the Indemnifying Parties will not be liable to the
Indemnified Parties for any legal or other expenses except as provided
below and except for the reasonable costs of investigation subsequently
incurred by the Indemnified Parties in connection with the defense. The
Indemnifying Parties shall not settle any such action without the
consent of the Indemnified Parties; provided, however, that such
consent shall not be unreasonably
<PAGE>
withheld, it being understood that it shall not be deemed unreasonable
to withhold such consent if the settlement includes any admission of
wrongdoing or payment of any money by or on the part of the Indemnified
Parties or any decree or restriction on the Indemnified Parties or
their officers or directors; provided, further, that no Indemnifying
Parties, in the defense of any such action shall, except with the
consent of the Indemnified Parties, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnified Parties of a release from all liability with respect to
such action. The Indemnified Parties will have the right to employ
their own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such Indemnified
Parties unless (i) the employment of counsel by the Indemnified Parties
has been authorized in writing by the Indemnifying Parties, (ii) the
Indemnified Parties have reasonably concluded (based on advice of
counsel) that there may be legal defenses available to them that are
different from or in addition to those available to the Indemnifying
Parties, (iii) a conflict or potential conflict exists (based on advice
of counsel to the Indemnified Parties) between the Indemnified Parties
and the Indemnifying Parties (in which case the Indemnifying Parties
will not have the right to direct the defense of such action on behalf
of the Indemnified Parties) or (iv) the Indemnifying Parties have not
in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the Indemnifying
Parties.
(iii) It is understood that the Indemnifying Parties shall
not, in connection with any proceeding or related proceedings, be
liable for the reasonable fees, disbursements and other charges of more
than one separate firm (and one local counsel in each jurisdiction in
which such counsel is reasonably required) at any one time for all such
Indemnified Parties unless (a) the employment of more than one counsel
has been authorized in writing by the Indemnifying Parties, (b) any of
the Indemnified Parties has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to them that are
different from or in addition to those available to other Indemnified
Parties or (c) a conflict or potential conflict exists (based on advice
of counsel to the Indemnified Parties) between any of the Indemnified
Parties and the other Indemnified Parties, in each case of which the
Indemnifying Parties shall be obligated to pay the reasonable fees and
expenses of such additional counsel or counsels.
(iv) The Indemnifying Parties will not be liable for any
settlement of any action or claim effected without their written
consent (which consent shall not be unreasonably withheld or delayed).
(b) At or prior to the Effective Time, Starwood shall purchase directors'
and officers' liability insurance "tail" policy coverage for Advisor's directors
and executive officers for a period of six years which will provide the
directors and officers with coverage on substantially similar terms as (but
which shall be no less favorable than those) currently provided by Advisor to
such directors and officers for claims based on activity prior to the Effective
Time; provided, however, that Starwood shall have no obligation to pay aggregate
premiums for such coverage in excess of $350,000.
(c) The provisions of this Section 5.5 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of Starwood and Advisor.
Section 5.6. Indemnification Against Loss Due to Inaccuracies in
Representations and Warranties; Tax Indemnity.
(i) Each of the Stockholders and SCG, severally and not
jointly, indemnifies Starwood and New Starwood Sub against, and agrees
to hold Starwood and New Starwood Sub harmless from, all losses, costs,
damages, liabilities, claims, demands, judgments, settlements and
expenses of any nature whatsoever, governmental or non-governmental
(including, but not limited to, reasonable fees and expenses of counsel
and expenses of investigation) (collectively, "Losses") incurred
directly or indirectly because or resulting from or arising out of (i)
the fact that any matter which is the subject of a representation or
warranty contained in Section 3.1, in the case of the Stockholders, or
Section 3.3, in the case of SCG, is not as represented or warranted,
but only up to a Maximum Amount (as defined in Section 5.7(i)) or (ii)
the failure of any Stockholder, SCG or Advisor to fulfill in any
respect any of its obligations under this Agreement or under any
document delivered in accordance with this Agreement which is required
to be fulfilled before or after the Effective Time.
(ii) Starwood indemnifies the Stockholders and SCG against,
and agrees to hold the Stockholders and SCG harmless from, all Losses
incurred directly or indirectly because or resulting from or arising
out of (i) the fact that any
<PAGE>
matter which is the subject of a representation or warranty contained
in Section 3.2 is not as represented or warranted, but only up to a
maximum amount equal to the Fair Market Value (as defined in Section
5.8(i)) of the sum of the Merger Consideration and the Contribution
Consideration or (ii) the failure of Starwood to fulfill in any respect
any of its obligations under this Agreement or under any document
delivered in accordance with this Agreement which is required to be
fulfilled before or after the Effective Time.
(iii) Each of the Stockholders, severally and not jointly,
indemnifies Starwood and New Starwood Sub against, and agrees to hold
Starwood and New Starwood Sub harmless from, any and all Taxes and
other Losses ("Tax Damages") arising out of (i) the fact that, as a
result of events occurring before or after the Effective Time, the
Advisor Merger does not qualify as a tax-free reorganization under
Section 368 of the Code, (ii) any other Taxes attributable to Advisor
or which become payable solely on account of the Advisor Merger or
(iii) any and all Taxes relating to Advisor or any Advisor Subsidiary
in respect of any period (or portion thereof) that ends on or prior to
the Closing Date or, if later, the date on which the Effective Time
occurs. The indemnities provided for in this Section 5.6(iii) shall
survive until 60 days after the end of the statute of limitations
period applicable to the matters which are the subject of the
indemnities.
Section 5.7. Limit on Claims Regarding Representations and Warranties. (i)
The maximum amount (the "Maximum Amount") for which each of the Stockholders and
SCG shall be liable on account of all Losses for which indemnification may be
sought is the fair market value of the Merger Consideration or the Contribution
Consideration, as the case may be, received by the Stockholder or SCG, as the
case may be, pursuant to this Agreement; provided, however, that notwithstanding
anything to the contrary, indemnification made with respect to any matter which
is the subject of a representation or warranty contained in Section 3.1(c) or
Section 3.3(c), shall not be subject to any limitations as to amount. The fair
market value (the ("Fair Market Value") shall be determined based on the average
of the closing prices of New Starwood Common Stock on the principal stock
exchange on which it is listed for the five consecutive trading days beginning
with the fourth trading day after the Effective Time or, if greater, the average
closing prices of New Starwood Common Stock on such exchange for the five
consecutive trading days on which the relevant payments in respect of such
indemnification is made hereunder. All liabilities of the Stockholders and SCG
pursuant to Sections 5.6 and 5.7 shall be satisfied exclusively by the
Stockholder or SCG, as applicable, tendering shares of New Starwood Common Stock
received by the Stockholder or SCG, as applicable, in the Advisor Merger or the
Contribution Transactions, as applicable, to Starwood or New Starwood.
(ii) The indemnification in Sections 5.6(i) and (ii) will be
the sole remedy because any matter which is the subject of a
representation or warranty contained in Section 3.1, 3.2 or 3.3 is not
as represented or warranted. Any claim for that indemnification
pursuant to Section 5.6(i) or (ii) must be made not later than the one
year anniversary of the Effective Time; provided that, any claim for
indemnification made with respect to any matter which is the subject of
a representation or warranty contained in Section 3.1(c) or 3.3(c), may
be made at any time and any matter which is the subject of a
representation or warranty contained in Section 3.1(g) may be made at
any time prior to 60 days after the end of the statue of limitations
period applicable to the matter which is the subject of the claim. Any
claim for indemnification pursuant to Section 5.6(iii) must be made
prior to 60 days after the end of the statute of limitations period
applicable to the matter which is the subject of the claim. A claim
must be made by a written notification to the party from which
indemnification is sought which reasonably summarizes the nature of the
claim and the facts on which it is based. None of the Stockholders,
Advisor, SCG, Starwood or New Starwood will have any liability pursuant
to Section 5.6 unless the claim is described in a notification given in
substantial compliance with this Section.
(iii) Payment of any indemnification amounts shall be made as
directed by Starwood promptly, but in no event later than two business
days after the amount is due as provided herein. The indemnification
amounts each year shall not exceed (A) the maximum amount that can be
paid to Starwood for the taxable year without causing Starwood to fail
to meet the requirements of Sections 856(c)(2) and (3) of the Code
determined as if the payment of such amount did not constitute income
described in Sections 856(c)(2) and (3) of the Code ("Qualifying
Income"), as determined by outside counsel or independent accountants
to Starwood, and (B) in the event Starwood receives a letter from
outside counsel (the "Starwood Indemnification Tax Opinion") indicating
its opinion that the receipt by Starwood of the indemnification
payments would constitute Qualifying Income as to Starwood with respect
to Starwood's proportionate share thereof or would be excluded from
Starwood's gross income for purposes of Sections 856(c)(2) and (3) of
the Code (the "REIT Requirements"), the amounts indicated in such
letter. In the event that Starwood is not able to receive the full
amount of the indemnification amounts the Stockholders shall place the
unpaid amount in
<PAGE>
escrow and shall not release any portion thereof to Starwood unless and
until Starwood receives any one or combination of the following: (i) a
letter(s) from Starwood's outside counsel or independent accountants
indicating the maximum amount that can be paid at that time to Starwood
without causing Starwood to fail to meet the REIT Requirements for any
relevant taxable year together with an IRS ruling or opinion of tax
counsel to the effect that such payment would not be treated as
included in income for any prior taxable year, in which event such
maximum amount shall be paid to Starwood, or (ii) a tax opinion
indicating that Starwood's receipt of the indemnification amounts would
satisfy the REIT Requirements, in which event the Stockholders shall
pay to Starwood the unpaid indemnification amount.
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger and
the Contribution Transactions. The respective obligations of Advisor, Starwood
and SCG to effect the Advisor Merger and the Contribution Transactions and to
consummate the other transactions contemplated by this Agreement on the Closing
Date are subject to the satisfaction or waiver on or prior to the Effective Time
of the following conditions:
(a) Shareholder Approvals. The affirmative vote of at least a majority of
the outstanding shares of Starwood Class A Common Stock and the Starwood Class B
Common Stock, voting as one class, at the Starwood Shareholders meeting, or any
adjournment thereof, to approve this Agreement and the Advisor Merger shall have
been obtained.
(b) Listing of Shares. The NYSE or the AMEX shall have approved for listing
the New Starwood Common Stock to be issued in the Advisor Merger and the
Contribution Transactions.
(c) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings by the SEC seeking a stop order.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Advisor Merger, the Contribution Transactions, the Merger,
the Incorporation Merger or any of the other transactions or agreements
contemplated by this Agreement shall be in effect.
(e) Incorporation Merger and Merger. Unless Starwood shall have delivered
the written notice to Advisor contemplated by Section 1.7, the Incorporation
Merger shall have occurred in accordance with the Incorporation Merger
Agreement. The Merger Agreement shall be in full force and effect and the Merger
shall occur simultaneously with the Advisor Merger and the Contribution
Transactions in accordance with the Merger Agreement.
Section 6.2. Conditions to Obligations of Starwood. The obligation of
Starwood to effect the Advisor Merger, the Contribution Transactions and the
Merger and to consummate the other transactions contemplated by this Agreement
on the Closing Date are further subject to the following conditions, any one or
more of which may be waived by Starwood:
(a) Representations and Warranties. The representations and warranties of
Advisor, the Stockholders and SCG (without giving effect to any "materiality,"
Material Adverse Effect" or similar qualification or limitation in any such
representation or warranty) set forth in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, other than the
representations made in Section 3.1(c) which shall be true and correct in all
respects, in each case as though made on and as of the Closing Date, except to
the extent the representation or warranty is expressly limited by its terms to
another date, and Starwood shall have received a certificate (which certificate
may be qualified by Knowledge to the same extent as such representations and
warranties are so qualified) signed by the Chief Executive Officer and the Chief
Financial Officer of each of Advisor and SCG to such effect.
(b) Performance of Obligations of Advisor. Advisor and SCG shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Starwood shall
have received a certificate signed by the Chief Executive Officer and the Chief
Financial Officer of each of Advisor and SCG to such effect.
(c) Material Adverse Effect. Since the date of this Agreement, no event
shall have occurred or circumstance shall have arisen that, individually or
taken together with all other facts, circumstances or events, is reasonably
likely to have an Advisor Material Adverse Event. Starwood shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of
Advisor to the effect that there has been no such Advisor Material Adverse
Effect.
<PAGE>
(d) Assignment of SFA II and SFA Interest. SCG shall have assigned its 0.1%
managing member interest in each of SFA II and SFA to Advisor, free and clear of
all Liens and, as a result of such assignments and the Advisor Merger, New
Starwood will own, directly and through its Subsidiaries, 100% of the membership
interests of SFA and SFA II.
Section 6.3. Conditions to Obligation of Advisor and SCG. The obligations
of Advisor to effect the Advisor Merger and of SCG to consummate the
Contribution Transactions and to consummate the other transactions contemplated
by this Agreement on the Closing Date is further subject to the following
conditions, any one or more of which may be waived by Advisor:
(a) Representations and Warranties. The representations and warranties of
Starwood set forth in this Agreement shall be true and correct in all material
respects on and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and Advisor shall have received a certificate
(which certificate may be qualified by Knowledge to the same extent as such
representations and warranties are so qualified) signed on behalf of Starwood by
the Chief Executive Officer and the Chief Financial Officer of Starwood to such
effect.
(b) Performance of Obligations of Starwood. Starwood shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Advisor shall have
received a certificate signed on behalf of Starwood by the Chief Executive
Officer and the Chief Financial Officer of Starwood to such effect; provided,
however, that for purposes of this Section 6.3(b) and Section 7.1(b), the Proxy
Statement requirement set forth in the second sentence of Section 5.1(a) shall
be deemed not to be an obligation required to be performed by Starwood.
(c) Material Adverse Effect. Since the date of this Agreement, no event
shall have occurred or circumstance shall have arisen that, individually or
taken together with all other facts, circumstances or events, is reasonably
likely to have a Material Adverse Effect. Starwood shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of
Starwood to the effect that there has been no such Starwood Material Adverse
Effect.
(d) Consents. All consents and waivers from third parties necessary in
connection with the consummation of the transactions shall have been obtained,
other than such consents and waivers from third parties, which, if not obtained,
would not result, individually or in the aggregate, a Starwood Material Adverse
Effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, whether before or after the requisite approval of
Starwood's shareholders is obtained:
(a) by mutual written consent duly authorized by the respective Board of
Directors of Advisor, the Board of Directors of New Starwood Sub, the Board of
Trustees of Starwood and the managers of SCG;
(b) by Starwood, upon a breach of any representation, warranty, covenant or
agreement on the part of Advisor set forth in this Agreement, or if any
representation or warranty of the Advisor shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b), as
the case may be, would be incapable of being satisfied by December 31, 1999 (as
otherwise extended);
(c) by Advisor or SCG, upon a breach of any representation, warranty,
covenant or agreement on the part of Starwood set forth in this Agreement, or if
any representation or warranty of Starwood shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b), as
the case may be, would incapable of being satisfied by December 31, 1999 (as
otherwise extended);
<PAGE>
(d) by Starwood, Advisor or SCG, if any judgment, injunction, order, decree
or action by; any Governmental Entity of competent authority preventing the
consummation of the Advisor Merger or the Contribution Transactions shall have
become final and nonappealable;
(e) by either Starwood, Advisor or SCG, if the Advisor Merger or the
Contribution Transactions shall not have been consummated before December 31,
1999; provided, however, that a party that has materially breached a
representation, warranty or covenant of such party set forth in this Agreement
shall not be entitled to exercise its right to terminate under this Section
7.1(e); or
(f) by Starwood, Advisor or SCG, if the requisite approval of Starwood's
shareholders shall not have been obtained, as contemplated by Section 6.1.
Section 7.2. Expenses. Except as otherwise specified in this Section 8.2 or
agreed in writing by the parties, all out-of-pocket costs and expenses incurred
in connection with this Agreement, the Advisor Merger, the Contribution
Transactions, and the other transactions contemplated hereby shall be paid by
the party incurring such cost or expense.
Section 7.3. Effect of Termination. In the event of termination of this
Agreement by Advisor, Starwood or SCG as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Starwood, Advisor or SCG, and except to the extent
that such termination results from a willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
Section 7.4. Amendment. Subject to the provisions of the Merger Agreement,
this Agreement may be amended by the parties in writing by action of their
respective Boards of Directors or Trustees or managers, as the case may be, at
any time before or after any required shareholder approvals are obtained and
prior to the acceptance of the Certificate of Merger for the Advisor Merger with
the Secretary of State of the State of Delaware; provided, however, that, after
any of the required shareholder approvals are obtained, no such amendment,
modification or supplement shall alter the amount or change the form of the
consideration to be delivered to Advisor's or Starwood's members/shareholders or
alter or change any of the terms or conditions of this Agreement if such
alteration or change would adversely affect Advisor's or Starwood's
shareholders.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
each of Advisor, Starwood and SCG may (a) extend the time for the performance of
any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.4, waive compliance with any of the
agreements or conditions of the other party contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Survival. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time. This Section 8 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time shall survive the consummation of the Advisor Merger and the
Contribution Transactions.
Section 8.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):
<PAGE>
(a) if to Starwood or New Starwood Sub, to
Starwood
1114 Avenue of the Americas
27th Floor
New York, New York 10036
Attn: Spencer B. Haber and Nina Matis, Esq.
Fax: (212) 930-9494
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
Attn: John A. Healy, Esq.
Fax: (212) 878-8375
(b) if to the Advisor, to
STW Holdings I, Inc.
(until June 28, 1999)
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
(after June 28, 1999)
591 West Putnam
Greenwich, Connecticut 06830
Attention: Madison Grose
Fax: (203) 861-2101
<PAGE>
(c) if to the Stockholders, to
Starwood Capital Group, LLC
(until June 28, 1999)
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
(after June 28, 1999)
591 West Putnam
Greenwich, Connecticut 06830
Attention: Madison Grose, Esq.
Fax: (203) 861-2101
<PAGE>
(d) if to SCG, to
Starwood Capital Group, LLC
(until June 28, 1999)
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
(after June 28, 1999)
591 West Putnam
Greenwich, Connecticut 06830
Attention: Madison Grose, Esq.
Fax: (203) 861-2101
(e) if to TriNet, to
TriNet Corporate Realty Trust, Inc.
One Embarcadero Center
Suite 3150
San Francisco, California 94111
Attention: A. William Stein and Geoff Dugan, Esq.
Fax: (415) 391-3092
Section 8.3. Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 8.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Merger Agreement, the Incorporation Merger Agreement and the
other agreements entered into in connection with the transactions contemplated
hereby and thereby constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter of this Agreement. This Agreement, the Merger
Agreement, the Incorporation Merger Agreement and the other agreements entered
into in connection with the transactions contemplated hereby and thereby are not
<PAGE>
intended to confer upon any person other than the parties hereto any rights or
remedies except that the agreements, covenants and representations and
warranties of the parties hereto are intended to be for the benefit of, and
shall be enforceable by, TriNet.
Section 8.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO CONFLICTS OF LAWS PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE
ADVISOR MERGER OR OTHER TRANSACTIONS CONTEMPLATED HEREBY ARE REQUIRED TO BE
GOVERNED BY THE DGCL OR THE LAWS OF THE STATE OF DELAWARE.
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
Section 8.8. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in any New York State court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself (without
making such submission exclusive) to the personal jurisdiction of any federal
court located in the State of New York or any New York State court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.
Section 8.9. Exhibits; Disclosure Letters. All Exhibits referred to herein
and in the Advisor Disclosure Letter and the Starwood Disclosure Letter are
intended to be and hereby are specifically made a part of this Agreement. All
references herein to Articles, Sections, Exhibits and Disclosure Letters shall
be deemed references to such parts of this Agreement, unless the context
otherwise requires. Each exception to a representation or warranty of Starwood
or the Advisor that is set forth in the applicable Starwood or Advisor
Disclosure Letter is identified by reference to, or has been grouped under a
heading referring to, a specific individual Section of this Agreement.
ARTICLE IX
CERTAIN DEFINITIONS
Section 9.1. Certain Definitions. For purposes of this Agreement:
An "Advisor Subsidiary" means each Subsidiary of Advisor.
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Employee Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock, equity
(or equity-based) leave of absence, layoff, vacation, day or dependent care,
legal services, cafeteria, life, health, medical, accident, disability,
workmen's compensation or other insurance, severance, separation, termination,
change of control or other benefit plan, agreement (including any collective
bargaining agreement), practice, policy or arrangement of any kind, whether
written or oral, and whether or not subject to ERISA, including, but not limited
to, any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
<PAGE>
"Knowledge" where used herein with respect to Advisor or any Advisor
Subsidiary shall mean the knowledge, after due inquiry, of the persons named in
Section 10 of the Advisor Disclosure Letter and where used with respect to
Starwood shall mean the actual knowledge of the persons named in Section 10 of
the Starwood Disclosure Letter.
"Law" means any statute, law, regulation or ordinance of any Government
Entity applicable to Starwood or TriNet or any of their respective Subsidiaries.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity.
"Starwood Subsidiary" means each Subsidiary of Starwood.
"Sub-Advisory Agreements" means the Investment Sub-Advisory Agreement made
as of April 1, 1999 by and between SFA and New York Financial Advisors and the
Investment Sub-Advisory Agreement made as of April 1, 1999 by and between SFA
and Starwood Capital Operations, L.L.C.
"Subsidiary" of any person means any corporation, partnership, limited
liability company, joint venture or other legal entity of which such person
(either directly or through or together with another Subsidiary of such person)
owns 50% or more of the voting stock, value of or other equity interests (voting
or non-voting) of such corporation, partnership, limited liability company,
joint venture or other legal entity.
IN WITNESS WHEREOF, Starwood, New Starwood Sub, Advisor, TriNet and the
Stockholders have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first written above.
STARWOOD FINANCIAL TRUST
By: /s/ Spencer Haber
--------------------------------
Name: Spencer Haber
Title: Chief Financial Officer
SA MERGER SUB, INC.
By: /s/ Spencer Haber
--------------------------------
Name: Spencer Haber
Title: Chief Financial Officer
STW HOLDINGS I, INC.
By: /s/ Barry S. Sternlicht
--------------------------------
Name: Barry S. Sternlicht
Title: Chief Executive Officer
STARWOOD CAPITAL GROUP, LLC
By: /s/ Barry S. Sternlicht
--------------------------------
Name: Barry S. Sternlicht
Title: Chief Executive Officer
TRINET CORPORATE REALTY TRUST, INC. (solely in its
capacity as an intended third party beneficiary of
the designated representations, warranties and
covenants in the Agreement)
By: /s/ Robert W. Holman, Jr.
--------------------------------
Name: Robert W. Holman, Jr.
Title: Chairman and Chief Executive Officer
STOCKHOLDERS
<PAGE>
EXHIBIT A
FORM OF INCORPORATION MERGER AGREEMENT
<PAGE>
EXHIBIT B
FORM OF MERGER AGREEMENT
<PAGE>
EXHIBIT C
FORM OF ARTICLES OF INCORPORATION
OF SURVIVING CORPORATION
<PAGE>
EXHIBIT D
FORM OF BYLAWS OF SURVIVING CORPORATION
<PAGE>
EXHIBIT E
FORM OF AFFILIATE LETTER
<PAGE>
SCHEDULE A
DIRECTORS OF SURVIVING CORPORATION
<PAGE>
Jay Sugarman
Spencer B. Haber
Madison F. Grose
<PAGE>
SCHEDULE B
OFFICERS OF SURVIVING CORPORATION
Jay Sugarman President
Spencer B. Haber Treasurer
Madison F. Grose Secretary
