Exhibit 10.5

AGREEMENT AND PLAN OF MERGER

by and among

MARATHON RENTAL INVESTMENTS LLC

PARAMOUNT GROUP, INC.,

a Maryland corporation,

and

THE EQUITY HOLDER

of

MARATHON RENTAL INVESTMENTS LLC

Dated as of November 24, 2014

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TABLE OF CONTENTS

 

              Page   ARTICLE I THE MERGER      2     

Section 1.01

   The Merger      2     

Section 1.02

   Merger Closing      2     

Section 1.03

   Effective Time      2     

Section 1.04

   Effect of the Merger      2     

Section 1.05

   Organizational Documents      2     

Section 1.06

   Directors and Officers of the Surviving Entity      2     

Section 1.07

   Conversion of Equity Interests      3     

Section 1.08

   Tax Treatment      3     

Section 1.09

   Payment of Merger Consideration      3   

ARTICLE II CLOSING

     4     

Section 2.01

   Conditions Precedent      4    ARTICLE III COVENANTS; ADDITIONAL AGREEMENTS
     6     

Section 3.01

   Tax Covenants      6     

Section 3.02

   Liability For Transfer Taxes      6     

Section 3.03

   Indemnification      7   

ARTICLE IV GENERAL PROVISIONS

     7     

Section 4.01

   General Provisions      7     

Section 4.02

   Amendments      7     

Section 4.03

   Counterparts      7   

SCHEDULES

 

Schedule 1.07    Merger Consideration Exhibit A    Form of Letter of Transmittal

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (including all exhibits and schedules, this
“Merger Agreement”) is made and entered into as of November 6, 2014, by and
among PARAMOUNT GROUP, INC., a Maryland corporation (the “Company”), MARATHON
RENTAL INVESTMENTS LLC, a Delaware limited liability company (“Marathon LLC”),
and the equity holder whose name appears on the signature pages hereto (the
“Equity Holder”). Defined terms used herein and not defined in the body of this
Merger Agreement shall have the meanings set forth in the Contribution Agreement
(as defined below).

RECITALS

WHEREAS, reference is made to that certain Contribution Agreement, dated as of
November 6, 2014 (the “Contribution Agreement”), by and among the Company,
Marathon Rental Investments, Inc., a Delaware corporation (“Marathon”), and the
sole stockholder of Marathon (the “Stockholder”) pursuant to which, among other
matters, the parties thereto will effect the Contribution;

WHEREAS, the board of directors of Marathon and the Stockholder have approved,
subject to, and following the closing of the Contribution, the conversion of
Marathon from a Delaware corporation to a Delaware limited liability company
named Marathon Rental Investments LLC (the “Conversion”), which will be the
successor of Marathon;

WHEREAS, as part of the Formation Transactions, following the Conversion,
Marathon LLC will merge with and into the Company, with the Company as the
surviving entity (the “Merger”) and in consideration thereof the Equity Holder
will receive shares of Company Common Stock (“Company Shares”);

WHEREAS, the board of directors of the Company and the stockholder of the
Company have approved and authorized, subject to and following the closing of
the Conversion, the Merger in accordance with applicable Laws and the Company’s
Organizational Documents;

WHEREAS, Marathon LLC and the Equity Holder have approved and authorized,
subject to and following the closing of the Conversion, the Merger in accordance
with applicable Laws and Marathon LLC’s Organizational Documents; and

WHEREAS, the Conversion became effective as of the date hereof upon the filing
of the Certificate of Conversion and the Certificate of Formation.

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and other terms contained in this Merger Agreement, the
receipt and sufficiency of which is hereby acknowledged and agreed, the parties
hereto, intending to be legally bound hereby, agree as follows:

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ARTICLE I

THE MERGER

Section 1.01 The Merger. At the Effective Time, subject to and upon the terms
and conditions of this Merger Agreement and in accordance with applicable Laws,
Marathon LLC shall be merged with and into the Company, whereby the separate
existence of Marathon LLC shall cease, and the Company shall continue its
existence under Maryland General Corporation Law as the surviving entity in the
Merger (sometimes referred to as the “Surviving Entity”).

Section 1.02 Merger Closing. The closing of the Merger and the other
transactions contemplated hereby (the “Merger Closing” or the “Merger Closing
Date”) shall occur after the Conversion and concurrently with the closing of the
IPO (the “IPO Closing”), or up to one (1) day prior to, but conditioned upon the
prior occurrence of the Conversion and subsequent occurrence of, the IPO
Closing. The Merger Closing shall take place at the offices of Goodwin Procter
LLP, 620 Eighth Avenue, New York, NY 10018, or as mutually agreed between the
Company and Marathon LLC. In connection with the foregoing, the parties hereto
hereby agree that the specific order in which the Contribution, the Merger
Closing, the IPO Closing and the closing of the other transactions that are part
of or related to the Formation Transactions occur shall be as determined by the
Company, provided, however, that the Contribution shall precede the Conversion
and the Conversion shall precede the Merger Closing.

Section 1.03 Effective Time. On the Merger Closing Date (or on such other date
as the Company and Marathon LLC may agree) the Company and Marathon LLC shall
file, or shall cause to be filed, a certificate of merger or similar document
with respect to the Merger (the “Certificate of Merger”) as may be required by
applicable Laws with the Secretary of State of each applicable jurisdiction,
providing that the Merger shall become effective upon filing or, if agreed upon
by the Company and Marathon LLC, as of such other date or time as is set forth
in the Certificate of Merger (the “Effective Time”), together with any
certificates and other filings or recordings related thereto, in such forms as
are required by, and executed in accordance with, the relevant provisions of
applicable Laws.

Section 1.04 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Merger Agreement, the Certificate of Merger
and applicable Laws.

Section 1.05 Organizational Documents. At the Effective Time, the Organizational
Documents of the Company, as in effect immediately prior to the Effective Time,
shall be the Organizational Documents of the Surviving Entity until thereafter
amended as provided therein or in accordance with applicable Laws.

Section 1.06 Directors and Officers of the Surviving Entity. The directors and
officers of the Company immediately prior to the Effective Time shall be and
become the directors and officers of the Surviving Entity as of the Effective
Time, each to hold office in accordance with the Organizational Documents of the
Surviving Entity.

 

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Section 1.07 Conversion of Equity Interests.

(a) Under and subject to the terms and conditions of this Merger Agreement, the
Equity Holder is entitled to receive as a result of and upon consummation of the
Merger, the Merger Consideration set forth under the heading “Marathon LLC” in
Schedule 1.07.

(b) At the Effective Time, by virtue of the Merger and without any action on the
part of the Company, Marathon LLC or the Equity Holder, each outstanding equity
interest in Marathon LLC (each an “Equity Interest”) shall be converted
automatically into the right of the Equity Holder to receive Company Shares, in
the amount set forth opposite her name under the heading “Marathon LLC” in
Schedule 1.07 (the “Merger Consideration”).

(c) No fractional Company Shares shall be issued to the Equity Holder pursuant
to this Merger Agreement. If aggregating all Company Shares that the Equity
Holder otherwise would be entitled to receive as a result of the Merger would
require the issuance of a fractional Company Share, the Equity Holder shall
instead be entitled to receive one full Company Share in lieu of such fractional
Company Share.

(d) From and after the Effective Time, each Equity Interest converted into the
right to receive the Merger Consideration pursuant to Section 1.07(b) shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and the holder of such Equity Interest so converted shall
thereafter cease to have any rights as an equity holder, except the right to
receive the Merger Consideration applicable thereto.

Section 1.08 Tax Treatment. It is intended that, for U.S. federal income tax
purposes, that the Contribution, Conversion and Merger shall, taken together,
qualify as a “reorganization” within the meaning of Section 368(a) of the Code,
and that this Merger Agreement and the Contribution Agreement constitute, and
hereby is adopted as, a “plan of reorganization” within the meaning of Treasury
Regulations Sections 1.368-2(g) and 1.368-3.

Section 1.09 Payment of Merger Consideration.

(a) After the Effective Time, upon surrender by the Equity Holder of her Equity
Interests together with a duly executed letter of transmittal in the form
attached hereto as Exhibit A and the certificates, if any, evidencing such
Equity Interests to the Company, the Equity Holder shall be entitled to receive
from the Company in exchange therefor the Merger Consideration to which the
Equity Holder is entitled (less the Indemnity Holdback Amount). Risk of loss and
title to the Equity Interests of the Equity Holder shall pass only upon delivery
to the Company of such duly executed letter of transmittal and the certificates,
if any, evidencing such Equity Interests. The full amount of the Indemnity
Holdback Amount shall be retained from the Merger Consideration otherwise
deliverable to the Equity Holder.

(b) Notwithstanding any other provisions of this Merger Agreement, dividends or
other distributions payable on any portion of the Merger Consideration after the
Effective Time, but prior to the delivery of such portion of the Merger
Consideration to the Equity Holder pursuant to Section 1.09(a) above, shall be
paid promptly by the Company to the Equity Holder of record, as set forth in
Schedule 1.07(b), entitled to receive such portion of the Merger Consideration
upon compliance with the procedures set forth in this Section, less the

 

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amount of any withholding taxes which may be required thereon as reasonably
determined by the Company. At and after the Effective Time, there shall be no
transfers on the applicable record books of the Equity Interests that are
outstanding immediately prior to the Effective Time.

(c) On the Merger Closing Date, the Company will deposit the Indemnity Holdback
Amount with the Escrow Agent (as defined in the Escrow Agreement) in accordance
with the terms and conditions of the Escrow Agreement. The approval of the
Merger and this Merger Agreement by the Equity Holder shall constitute approval
of the Escrow Agreement and of all of the arrangements relating thereto,
including without limitation the placement of the Indemnity Holdback Amount in
escrow and the appointment of the Equity Holder’s Representative pursuant to the
Contribution Agreement.

ARTICLE II

CLOSING

Section 2.01 Conditions Precedent.

(a) Condition to Each Party’s Obligations. The respective obligation of each
party to effect the transactions contemplated by this Merger Agreement to occur
on the Merger Closing Date is subject to the satisfaction or waiver on or prior
to the Merger Closing of the following conditions:

(i) Consent. The requisite consent of the Equity Holder approving the Merger
shall have been obtained. This condition may not be waived by any party.

(ii) Contribution. The Contribution shall have been completed. This condition
may not be waived by any party.

(iii) Conversion. The Conversion shall have been completed. This condition may
not be waived by any party.

(iv) IPO Proceeds. The Company shall have received substantially currently with
the Merger Closing hereunder the proceeds from the IPO. This condition may not
be waived by any party.

(v) No Injunction. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent), in any case which is in effect and which prevents or prohibits
consummation of any of the transactions contemplated in this Merger Agreement
nor shall any of the same brought by a Governmental Authority of competent
jurisdiction be pending that seeks the foregoing.

 

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(b) Conditions to Obligations of the Company. The obligation of the Company to
effect the transactions contemplated by this Merger Agreement and to consummate
the other transactions contemplated hereby to occur on the Merger Closing Date
are further subject to satisfaction of the following conditions (any of which
may be waived by the Company in whole or in part):

(i) Representations and Warranties of the Contributor. (i) The representations
and warranties of the Contributor set forth in Section 4.16 of the Contribution
Agreement shall be true and correct in all respects as of the date of this
Merger Agreement and as of the Effective Time, (ii) each representation and
warranty of the Contributor in the Contribution Agreement (other than in
Section 4.16) that is qualified by materiality or Contributor Material Adverse
Effect shall be true and correct in all respects as of the date of this Merger
Agreement and as of the Effective Time as if made again at that time (except to
the extent that any representation or warranty speaks as of an earlier date, in
which case it must be true and correct only as of that earlier date), and
(iii) each representation and warranty of the Contributor contained in the
Contribution Agreement (other than in Section 4.16) that is not qualified by
materiality or Contributor Material Adverse Effect shall be true and correct as
of the date of this Merger Agreement and as of the Merger Closing as if made
again at that time (except to the extent that any representation or warranty
speaks as of an earlier date, in which case it must be true and correct only as
of that earlier date), except where the failure of such representations and
warranties to be true and correct would not reasonably be expected to have a
Contributor Material Adverse Effect.

(ii) Consents, Etc. All necessary consents and approvals of Governmental
Authorities or third parties (including lenders) for Marathon LLC to consummate
the transactions contemplated hereby (except for those the absence of which
would not have a material adverse effect on the ability of Marathon LLC to
consummate the transactions contemplated by this Merger Agreement) shall have
been obtained.

(iii) Operating Company Agreement. Marathon LLC shall have executed and
delivered to the Company the operating company agreement of Marathon LLC.

(c) Conditions to Obligations of Marathon LLC. The obligation of Marathon LLC to
effect the transactions contemplated by this Merger Agreement and to consummate
the other transactions contemplated hereby to occur on the Merger Closing Date
are further subject to satisfaction of the following conditions (any of which
may be waived by Marathon LLC in whole or in part):

(i) Representations and Warranties. (i) Each representation and warranty of the
Company contained in the Contribution Agreement that is qualified by materiality
or Company Material Adverse Effect shall be true and correct in all respects as
of the date of the Contribution Agreement and as of the Effective Time as if
made again at that time (except to the extent that any representation or
warranty speaks as of an earlier date, in which case it must be true and correct
only as of that earlier date), and (ii) each representation and warranty of the
Company contained in the Contribution Agreement that is not qualified by
materiality or Company Material Adverse Effect shall be true and correct as of
the date of the Contribution Agreement and as of the Effective Time as if made
again at that time (except to the extent that any representation or

 

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warranty speaks as of an earlier date, in which case it must be true and correct
only as of that earlier date), except where the failure of such representations
and warranties to be true and correct would not reasonably be expected to have a
Company Material Adverse Effect.

(ii) Consents, Etc. All necessary consents and approvals of Governmental
Authorities or third parties (including lenders) for the Company to consummate
the transactions contemplated hereby (except for those the absence of which
would not have a material adverse effect on the ability of the Company to
consummate the transactions contemplated by this Merger Agreement) shall have
been obtained.

ARTICLE III

COVENANTS; ADDITIONAL AGREEMENTS

Section 3.01 Tax Covenants.

(a) Each party hereto (i) shall cause all Tax returns relating to the
Contribution, Conversion and Merger to be filed on the basis of treating the
Contribution, Conversion and Merger, taken together, as a “reorganization”
within the meaning of Section 368(a) of the Code and (ii) shall not take any
position on any Tax return, or take any other reporting position, that is
inconsistent with such treatment, unless otherwise required by applicable Laws.

(b) The Equity Holder shall provide the Company with such reasonable cooperation
and information relating to Marathon LLC, any Marathon LLC Subsidiary and any JV
Entity as the Company reasonably requires in (i) filing any Tax return, amended
Tax return or claim for Tax refund, (ii) determining any liability for Taxes or
a right to a Tax refund, (iii) conducting or defending any proceeding in respect
of Taxes or (iv) performing Tax diligence, including with respect to the impact
of the transactions contemplated herein on the Company’s qualification as a REIT
for U.S. federal income Tax purposes.

(c) The Company shall be responsible for the prosecution of any claim or audit
instituted after the Merger Closing Date with respect to Taxes of Marathon LLC,
any Marathon LLC Subsidiary or any JV Entity attributable to any taxable period,
or portion thereof, ending on or before the Merger Closing Date.

Section 3.02 Liability For Transfer Taxes. Without duplication of the indemnity
set forth in Section 6.05 of the Contribution Agreement, the Equity Holder
agrees to indemnify the Company for any Incremental Transfer Taxes incurred as a
result of any direct or indirect transfers of the Company Shares or interests
therein within two years after the IPO Closing Date; provided that such Company
Shares shall be the Company’s sole recourse with respect to such indemnification
obligation. Without duplication of the indemnity set forth in Section 6.05 of
the Contribution Agreement, the Equity Holder hereby grants a security interest
in 50% of the Company Shares received as Merger Consideration to the Company and
hereby irrevocably appoints the Company, and any of its agents, officers, or
employees as its attorney-in fact, which shall be deemed coupled with an
interest, with full power to prepare, execute and deliver any

 

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documents, instruments and agreements as may be appropriate to perfect and
continue such security interest in favor of the Company. The security interest
granted pursuant to this Section 3.02 shall attach to the Company Shares that
are not included in the Indemnity Holdback Amount. The Company agrees that the
security interest in the Company Shares received by the Equity Holder in the
Merger may be released, or collateral may be substituted, in accordance with the
terms of the Escrow Agreement.

Section 3.03 Indemnification. The parties agree that the provisions of Article V
(Indemnification) and Section 6.04 of Article VI of the Contribution Agreement
(Tax Protection Provisions) shall apply mutatis mutandis to this Merger
Agreement.

ARTICLE IV

GENERAL PROVISIONS

Section 4.01 General Provisions. The provisions of Article VII (General
Provisions) of the Contribution Agreement shall apply mutatis mutandis to this
Merger Agreement.

Section 4.02 Amendments. This Merger Agreement may be amended by appropriate
instrument, without the consent of the Contributor and the Equity Holder, at any
time prior to the Merger Closing Date; provided, that no such amendment,
modification or supplement shall be made that alters the amount or changes the
form of the Merger Consideration to be delivered to the Equity Holder.

Section 4.03 Counterparts. This Merger Agreement may be executed in
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
party and delivered to each other party. All counterparts shall collectively
constitute one agreement (or amendment, as applicable). The exchange of
counterparts of this Merger Agreement among the parties by means of facsimile
transmission or by electronic transmission (pdf) which shall contain authentic
reproductions shall constitute a valid exchange of this Merger Agreement and
shall be binding upon the parties hereto.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to be
signed by their respective duly authorized officers or representatives, all as
of the date first written above.

 

PARAMOUNT GROUP, INC., a Maryland corporation By:  

/s/ David P. Spence

Name:   David P. Spence Title:   Senior Vice President

MARATHON RENTAL INVESTMENTS LLC,

a Delaware limited liability company

By:   Paramount Group, Inc., a Maryland corporation, its manager By:  

/s/ Gage R. Johnson

  Name:   Gage R. Johnson   Title:   Senior Vice President

[Signature Page to Merger Agreement – Marathon]

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STOCKHOLDER

/s/ Maren Otto

Name: Maren Otto

[Signature Page to Merger Agreement – Marathon]

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EXHIBIT A

Form of Letter of Transmittal

[See attached]

 

Exhibit A

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FORM

OF

LETTER OF TRANSMITTAL

representing Equity Interests of

[Name of Entity]

This Letter of Transmittal is being delivered in connection with the merger (the
“Merger”) of [Name of Entity], a Delaware corporation, with and into Paramount
Group, Inc., a Maryland corporation (the “Company”), pursuant to the Agreement
and Plan of Merger (the “Merger Agreement”), dated as of                     ,
2014, by and among the Company, [Name of Entity] and the Stockholder[s]. The
undersigned Stockholder hereby surrenders all of [her or his] Equity Interests
in [Name of Entity], which consists of [list shares owned by the Stockholder] in
[Name of Entity], for the purpose of receiving in exchange such Stockholder’s
portion of the Merger Consideration as provided for and subject to the terms of
the Merger Agreement and the terms of the Escrow Agreement.

Capitalized terms used and not defined in this Letter of Transmittal have the
respective meanings ascribed to them in the Merger Agreement.

The undersigned agrees and acknowledges a portion of the Merger Consideration
will be held by the Escrow Agent under the terms and conditions of the Escrow
Agreement.

In exchange for the Equity Interests, the undersigned understands that the
Company Shares to be issued as Merger Consideration to the undersigned will be
issued by the Agent in book-entry form in the name of [Name of Stockholder].

[Signature page follows]

 

Exhibit A

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SCHEDULE 1.07

Merger Consideration

Marathon LLC

 

Equity Holder

   Merger Consideration      Indemnity
Holdback Amount  

Maren Otto

     2,013,329 Company Shares         30,199 Company Shares   

 

Schedule 1.07