As filed with the Securities and Exchange Commission on March 23, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) March 8, 2000
-------------
CAPITAL TRUST, INC.
-------------------
(Exact name of registrant as specified in its charter)
Maryland 1-14788 94-6181186
- --------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
605 Third Avenue, 26th Floor
New York, New York 10016
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 655-0220
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
931233.6
<PAGE>
ITEM 5. Other Events
On March 8, 2000, Capital Trust, Inc. ("CT") entered into a strategic
relationship with Citigroup Investments Inc., a Delaware corporation ("CIG"),
pursuant to which, among other things, their respective affiliates will
co-sponsor, commit to invest capital in and manage high yield commercial real
estate mezzanine investment opportunity funds ("Mezzanine Funds"). CT's and
CIG's affiliates have agreed, subject to certain terms and conditions, to make
capital commitments to the Mezzanine Funds of up to an aggregate of $112.5
million and $400 million, respectively.
The strategic relationship is governed by a venture agreement, dated as
of March 8, 2000 (the "Venture Agreement"), amongst Travelers Limited Real
Estate Mezzanine Investments I, LLC, a Delaware limited liability company
("Limited REMI I"), Travelers General Real Estate Mezzanine Investments II, LLC,
a Delaware limited liability company ("General REMI II"), Travelers Limited Real
Estate Mezzanine Investments II, LLC, a Delaware limited liability company
("Limited REMI II" and together with Limited REMI I and General REMI II, the
"CIG Parties"), CT-F1, LLC, a Delaware limited liability company ("CT-F1"),
CT-F2-GP, LLC, a Delaware limited liability company ("CT-F2-GP"), CT-F2-LP, LLC,
a Delaware limited liability company ("CT-F2-LP"), CT Investment Management Co.,
LLC, a Delaware limited liability company ("CTIMCO" and together with CT-F1,
CT-F2-GP and CT-F2-LP, the "CT Parties") and CT. The CIG Parties are affiliates
of CIG and the CT Parties are wholly owned subsidiaries of CT.
Pursuant to the Venture Agreement:
o CT-F1 and Limited REMI I entered into a limited
liability company agreement, dated as of March 8,
2000, to organize and capitalize CT Mezzanine
Partners I LLC, a Delaware limited liability company
("Fund I"), and in connection therewith made capital
commitments to Fund I of $50 million and $150
million, respectively, subject to each party's
satisfaction with respect to each investment to be
made by Fund I.
o CT-F2-GP and General REMI II entered into a limited
liability company agreement, dated as of March 8,
2000, to organize CT MP II LLC, a Delaware limited
liability company (the "Fund II General Partner")
that will serve as the general partner of CT
Mezzanine Partners II LP, a Delaware limited
partnership ("Fund II"). Fund II will be organized
and managed in accordance with the Venture Agreement,
and will be capitalized, in accordance with the
Venture Agreement, by CT-F2-LP, Limited REMI II and
third-party investors.
o The CIG Parties agreed to make up to an aggregate of
$250 million in capital commitments to Fund II and
subsequent Mezzanine Funds sponsored pursuant to the
Venture Agreement that close prior to December 31,
2001 ("Subsequent Funds") in a ratio of one dollar
for every three dollars of capital commitments made
by third party investors and CT agreed to make up to
an aggregate of $62.5 million in capital commitments
to Fund II and Subsequent Funds in a ratio of one
dollar for every four dollars of capital commitments
made by the CIG Parties or their designated
affiliates.
931233.6
<PAGE>
o In connection with the organization of Fund I, CT
issued warrants to purchase 4,250,000 shares of class
A common stock, par value $.01 per share ("Class A
Common Stock"), of CT at $5.00 per share which were
ultimately transferred to Limited REMI I (the "Fund I
Warrants").
o In connection with the organization and
capitalization of Fund II and any Subsequent Funds,
CT has agreed, subject to stockholder approval, to
issue warrants to purchase up to 5,250,000 shares of
Class A Common Stock at $5.00 per share for ultimate
transfer to Limited REMI II or a designated affiliate
thereof, the actual number covered by such warrants
to be determined pursuant to a formula based on the
aggregate dollar amount of capital commitments made
by the CIG Parties and the clients of Citibank's
private bank ("Fund II Warrants" and together with
the Fund I Warrants, the "Warrants")) or
alternatively, if the required stockholder approval
of the issuance of such shares underlying such
warrants is not obtained, to provide contingent cash
rights designed to provide equivalent value.
o CT granted General REMI II a right of first refusal
exercisable after the initial closing of Fund II to
co-sponsor any subsequent Mezzanine Fund ("Other
Fund") that CT or any of its affiliates shall propose
to organize and market to investors.
o During the period commencing on the initial closing
of Fund II and continuing through the respective
investment periods of Fund II or any Subsequent Fund
or Other Fund:
o The real estate division of CIG ("CIG Real Estate")
is obligated to present defined high yield commercial
real estate mezzanine investment opportunities to the
general partner or the managing member of the
relevant fund.
o CIG Real Estate agreed not to sponsor or
co-sponsor any funds that invest in defined
high yield commercial real estate mezzanine
investment opportunities (the "Business")
other than as a co-sponsor with CT.
o CT agreed that its sole involvement in the
Business shall be as a manager of, an
advisor to and/or an investor in the funds
formed with the CIG Parties, provided that
CT may acquire any Business asset that has
been declined by the CIG Parties or their
relevant affiliates as an investment for any
fund.
o CT agreed that it will offer any Business
assets acquired by it for cash or equity
securities for purchase at fair market value
by the relevant fund.
o CT and The Travelers Insurance Company, a Connecticut
corporation and affiliate of CIG, agreed to guarantee
certain obligations under the Venture Agreement of
their respective affiliates.
931233.6
2
<PAGE>
o CTIMCO was engaged by Fund I as the investment
manager of Fund I and by the Fund II General Partner
as the investment manager for Fund II, and CTIMCO
shall be engaged as the investment manager for each
Subsequent Fund and Other Fund. Under those
engagements, CTIMCO shall earn cumulative investment
management fees according to a schedule set forth in
the Venture Agreement.
o The number of directorships on CT's board of
directors was increased by two, and Marc Weill and
Michael Watson, designees of the CIG Parties, were
appointed directors of CT. Management and related
stockholders ("Management Stockholders") who
currently own in the aggregate 7,955,552 shares of
Class A Common Stock (representing approximately
32.3% of the 25,596,413 shares of voting stock
outstanding) agreed to vote in favor of their
continued election.
o John R. Klopp and Craig M. Hatkoff, executive
officers of CT, were designated key individuals who
are required to devote specified professional time to
the management of the funds co-sponsored with the CIG
Parties.
o CT agreed as soon as possible to take the steps
necessary for it to be taxed as a real estate
investment trust (a "REIT") on terms mutually
satisfactory to CT and the CIG Parties subject to
changes in law, acts of God or force majeure, or good
faith inability to meet the requisite qualifications.
Management Stockholders, and certain other associated
stockholders who currently own in the aggregate
1,487,979 shares of Class A Common Stock
(representing approximately 6.0% of the shares of
voting stock outstanding), agreed to vote in favor of
all matters necessary for REIT election submitted for
stockholder approval.
o Salomon Smith Barney Inc., an affiliate of CIG
("SSB"), was engaged by CT-F2- GP and by Limited REMI
I, pursuant to advisory agreements, to serve as
financial advisor in connection with the planning and
structure of the transactions contemplated by the
Venture Agreement and was engaged by the Fund II
General Partner, pursuant to a placement agent
agreement, to serve as the placement agent for Fund
II.
The Venture Agreement contains provisions governing the unwinding of
the Mezzanine Funds and termination of Venture Agreement and related agreements
upon certain prescribed events of default, including SSB's termination of the
Fund II placement agent agreement. A copy of the Venture Agreement is attached
hereto as Exhibit 10.1 and its full text is incorporated by reference herein.
In connection with the Venture Agreement, CT and the holders of the
150,000 8.25% step up convertible trust preferred securities with an aggregate
liquidation amount of $150 million (the "CTP Securities") issued by CT's
consolidated Delaware statutory business trust subsidiary, CT Convertible Trust
I (the "Trust"), entered into an agreement in principle, subject to completion
and execution of definitive documentation, to terminate the co-investment
agreement, dated as of July 28, 1998, to which CT and the holders of the CTP
Securities are parties and to amend the terms of the CTP Securities to, among
other things:
931233.6
3
<PAGE>
o raise the current coupon rate payable by the Trust to
the holders of the CTP Securities from 8.25% per
annum to a blended rate of 10.16% per annum;
o change the coupon step provisions such that the
coupon applied to approximately 60% in liquidation
amount of the CTP Securities steps up commencing on
April 1, 2002 to the greater of 10% (subject to an
automatic step-up by 75 basis points on October 1,
2004 and on each October 1 thereafter) or the
dividend yield on the underlying Class A Common Stock
calculated pursuant to a formula prescribed therein;
o change the coupon step provisions such that the
coupon applied to approximately 40% in liquidation
amount of the CTP Securities automatically steps up
by 75 basis points on October 1, 2004 and on each
October 1 thereafter;
o change the redemption provisions such that
approximately 40% in liquidation amount of the CTP
Securities is redeemable, in whole or in part, at any
time and such that the balance in liquidation amount
of the CTP Securities is redeemable, in whole or in
part, on or after September 30, 2004; and
o eliminate the conversion provisions with respect to
approximately 40% in liquidation amount of the CTP
Securities and reduce the conversion price (measured
in liquidation amount of the CTP Securities) at which
the balance in liquidation amount of the CTP
Securities can be converted into shares of Class A
Common Stock from $11.70 to $7.00 per share of Class
A Common Stock. As a result, the total number of
shares of Class A Common Stock issuable on conversion
of all of the amended CTP Securities will not exceed
12,820,512, the number issuable on conversion of the
original CTP Securities.
In connection with the Venture Agreement, CT and the CIG Parties also
entered into a registration rights agreement, dated as of March 8, 2000,
pursuant to which CT agreed to register for resale the shares of Class A Common
Stock issuable upon exercise of the Warrants no later than thirty days prior to
the date upon which the Warrants become exercisable in accordance with their
terms.
On March 9, 2000, the Registrant issued a press release, a copy of
which is attached hereto as Exhibit 99.1 and the full text of which is
incorporated by reference herein, announcing the Venture Agreement and related
transactions.
931233.6
4
<PAGE>
ITEM 7. Financial Statements, Supplemental Financial Information
and Exhibits.
(c) Exhibits.
10.1 Venture Agreement amongst Travelers Limited Real Estate
Mezzanine Investments I, LLC, Travelers General Real Estate
Mezzanine Investments II, LLC, Travelers Limited Real Estate
Mezzanine Investments II, LLC, CT-F1, LLC, CT-F2-GP, LLC,
CT-F2-LP, LLC, CT Investment Management Co., LLC and Capital
Trust, Inc., dated as of March 8, 2000.
10.2 Limited Liability Company Agreement of CT Mezzanine Partners
I LLC, by and among Travelers Limited Real Estate Mezzanine
Investments I, LLC and CT-F1, LLC, dated as of March 8, 2000.
10.3 Limited Liability Company Agreement of CT MP II LLC, by and
among Travelers General Real Estate Mezzanine Investments II,
LLC and CT-F2- GP, LLC, dated as of March 8, 2000.
10.4 Fund I Class A Common Stock Warrant Agreement, by Capital
Trust, Inc. granting warrant to Travelers Limited Real Estate
Mezzanine Investment I, LLC, dated as of March 8, 2000.
10.5 Contingent Cash Rights Agreement, by and among Capital Trust,
Inc. and Travelers General Real Estate Mezzanine Investments
II, LLC, dated as of March 8, 2000.
10.6 Guaranty of Payment, by Capital Trust, Inc. in favor of
Travelers Limited Real Estate Mezzanine Investments I, LLC,
Travelers General Real Estate Mezzanine Investments II, LLC
and Travelers Limited Real Estate Mezzanine Investments II,
LLC, dated as of March 8, 2000.
10.7 Guaranty of Payment, by The Travelers Insurance Company in
favor of Capital Trust, Inc., CT-F1, LLC, CT-F2-GP, LLC,
CT-F2-LP, LLC and CT Investment Management Co., LLC, dated as
of March 8, 2000.
10.8 Investment Management Agreement, by and among CT Investment
Management Co., LLC and CT Mezzanine Partners I LLC, dated as
of March 8, 2000.
10.9 Investment Management Agreement, by and among CT Investment
Management Co., LLC, CT MP II LLC and CT Mezzanine Partners
II L.P., dated as of March 8, 2000.
10.10 Registration Rights Agreement, by and among Capital Trust,
Inc., Travelers Limited Real Estate Mezzanine Investments I,
LLC, Travelers General Real Estate Mezzanine Investments II,
LLC and Travelers Limited Real Estate Mezzanine Investments
II, LLC, dated as of March 8, 2000.
99.1 Press Release, dated March 9, 2000.
931233.6
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAPITAL TRUST, INC.
(Registrant)
Date: March 23, 2000 By:
------------------------------
Name: Edward L. Shugrue III
Title: Chief Financial Officer
931233.6
6
Exhibit 10.1
VENTURE AGREEMENT
amongst
TRAVELERS LIMITED REAL ESTATE MEZZANINE INVESTMENTS I, LLC
TRAVELERS LIMITED REAL ESTATE MEZZANINE INVESTMENTS II, LLC
TRAVELERS GENERAL REAL ESTATE MEZZANINE INVESTMENTS II, LLC
AND
CAPITAL TRUST, INC.
CT-F1, LLC
CT-F2-GP, LLC
CT-F2-LP, LLC
CT INVESTMENT MANAGEMENT CO., LLC
MARCH 8, 2000
<PAGE>
TABLE OF CONTENTS
-----------------
Page
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ARTICLE I DEFINED TERMS........................................................4
1.1. Definitions......................................................4
1.2. General References..............................................15
ARTICLE II THE VENTURE........................................................16
2.1. Agreements Executed and Delivered Simultaneously with this
Agreement.......................................................16
2.2. Agreements to be Executed and Delivered in Connection with the
Closings of Fund II and Subsequent Funds........................16
2.3. Approval by CT's Stockholders...................................19
2.4. Business Plan...................................................20
2.5. The CIG Parties Commitment; CT Parties Commitment...............20
2.6. General REMI II's Right of First Refusal........................21
2.7. CIG Real Estate Exclusivity.....................................23
2.8. CT Exclusivity..................................................24
2.9. Mutual Cooperation..............................................25
2.10. CIG Parties' Representation on CT's Board of Directors..........25
2.11. Investment Management Fees......................................26
2.12. Unwind Right; Unwind............................................28
2.13. Key Individuals.................................................30
2.14. REIT Status.....................................................31
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARTIES.....................32
3.1. Reciprocal Representations and Warranties.......................32
3.2. Representations and Warranties of CT............................33
ARTICLE IV DISPUTE RESOLUTION.................................................34
4.1. Appraisal Procedure.............................................34
4.2. Arbitration.....................................................35
ARTICLE V INDEMNIFICATION.....................................................36
5.1. Indemnification.................................................36
ARTICLE VI CONFIDENTIALITY AND NON-DISCLOSURE.................................37
6.1. Confidentiality.................................................37
i
<PAGE>
Page
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ARTICLE VII TERMINATION AND SURVIVAL..........................................38
7.1. Termination.....................................................38
7.2. Survival........................................................38
ARTICLE VIII MISCELLANEOUS....................................................39
8.1. Expenses of the Transaction.....................................39
8.2. Notices........................................................ 39
8.3. Entire Agreement................................................41
8.4. Modification....................................................41
8.5. Waivers and Consents............................................41
8.6. Severability....................................................41
8.7. Further Assurances..............................................41
8.8. Governing Law...................................................41
8.9. Counterparts....................................................42
8.10. Brokers and Finders.............................................42
8.11. Construction and Interpretation.................................42
8.12. Successors and Assigns..........................................42
8.13. Cumulative Remedies.............................................42
ii
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TABLE OF CONTENTS
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Page
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EXHIBITS
A. Business Plan
B. Fund I Agreement
C. Fund I Warrant Agreement
D. Fund I Promissory Note
E. Fund I Investment Management Agreement
F. Fund II General Partner Agreement
G. Fund II Management Agreement
H. Fund II Investment Management Agreement
I. CT-F2-GP Capital Formation Agreement
J. Limited REMI I Capital Formation Agreement
K. Placement Agent Agreement
L. Stockholder Approval Agreement
M. Stockholder Voting and Lock-Up Agreement
N. CTP Term Sheet
O. CT's Business Plan
P. CT Guaranty
Q. TIC Guaranty
R. CT Board Certificate
S. CT D&O Certificate
T. Fund IIWarrant Purchase Agreement
U. Registration Rights Agreement
i
<PAGE>
VENTURE AGREEMENT
This VENTURE AGREEMENT ("Agreement") is entered into this 8th day of
March 2000, amongst Travelers Limited Real Estate Mezzanine Investments I, LLC,
a Delaware limited liability company ("Limited REMI I"), Travelers General Real
Estate Mezzanine Investments II, LLC, a Delaware limited liability company
("General REMI II"), Travelers Limited Real Estate Mezzanine Investments II,
LLC, a Delaware limited liability company ("Limited REMI II") (collectively, the
"CIG Parties"), CT-F1, LLC, a Delaware limited liability company ("CT-F1"),
CT-F2-GP, LLC, a Delaware limited liability company ("CT-F2-GP"), CT-F2-LP, LLC,
a Delaware limited liability company ("CT-F2-LP"), CT Investment Management Co.,
LLC, a Delaware limited liability company ("CTIMCO") (collectively, the "CT
Parties"), and Capital Trust, Inc., a Maryland corporation ("CT").
WITNESSETH:
-----------
WHEREAS, the CIG Parties, the CT Parties and CT wish to jointly engage
in the Business (as herein defined) through a series of co-sponsored pooled
investment vehicles and have jointly adopted the business plan attached hereto
as Exhibit A (the "Business Plan") relating to such co-sponsored pooled
investment vehicles other than Fund I (singly a "Fund", and collectively
"Funds");
WHEREAS, the CIG Parties and CT wish to commence their venture by
forming CT Mezzanine Partners I LLC, a Delaware limited liability company ("Fund
I") in which Limited REMI I and CT-F1 shall be the only members and the only
investors as set forth more fully in the limited liability company agreement of
Fund I entered into between Limited REMI I and CT-F1 on the date hereof, a copy
of which is attached hereto as Exhibit B (the "Fund I Agreement");
WHEREAS, in connection with the formation of Fund I, CT has on the date
hereof issued to CT-F1 a warrant to purchase 4,250,000 shares of CT's class A
common stock, par value $.01 per share ("CT Class A Common Stock"), at $5.00 per
share (the "Fund I Warrant"), pursuant to the terms and conditions of the
warrant agreement attached hereto as Exhibit C (the "Fund I Warrant Agreement");
WHEREAS, CT-F1 has on the date hereof contributed the Fund I Warrant to
Fund I as part of its capital contribution to Fund I pursuant to the Fund I
Agreement;
WHEREAS, Limited REMI I has on the date hereof purchased the Fund I
Warrant from Fund I pursuant to the Fund I Warrant Purchase Agreement and in
consideration thereof has delivered to Fund I a promissory note in the form
attached hereto as Exhibit D (the "Fund I Promissory Note");
WHEREAS, CTIMCO and Fund I have on the date hereof entered into the
management agreement attached hereto as Exhibit E (the "Fund I Investment
Management Agreement") setting forth the terms and conditions pursuant to which
CTIMCO will manage certain matters for Fund I;
<PAGE>
WHEREAS, General REMI II and CT-F2-GP wish to co-sponsor a second
pooled investment vehicle, CT Mezzanine Partners II LP, a Delaware limited
partnership ("Fund II"), to engage in the Business and to offer limited
partnership interests to third parties, including Citibank Private Banking
Clients (as herein defined);
WHEREAS, the parties hereto also wish to co-sponsor other pooled
investment vehicles to engage in the Business (collectively, "Other Funds" or
singly, an "Other Fund"), the terms, conditions and structure of which shall be
the same as those of Fund II unless the parties otherwise mutually agree as
provided herein; Other Funds the initial closing of which occur on or before
December 31, 2001 are hereinafter collectively referred to as "Subsequent Funds"
and singly as a "Subsequent Fund";
WHEREAS, General REMI II and CT-F2-GP have on the date hereof entered
into the limited liability company agreement attached hereto as Exhibit F (the
"Fund II General Partner Agreement") relating to CT MP II LLC, a Delaware
limited liability company, to form the entity that will serve as the general
partner of Fund II (the "Fund II General Partner");
WHEREAS, pursuant to the provisions of this Agreement, the parties
hereto have agreed on the form of the general partner management agreement
attached hereto as Exhibit G (the "Fund II Management Agreement") to be entered
into between the Fund II General Partner and Fund II relating to the management
of Fund II by the Fund II General Partner, subject to modification pursuant to
the mutual agreement of General REMI II and CT-F2-GP based on market conditions
and other factors present at the time of the formation and marketing of Fund II;
WHEREAS, pursuant to the provisions of this Agreement, the parties have
agreed on the form of investment management agreement attached hereto as Exhibit
H (the "Fund II Investment Management Agreement") to be entered into between the
Fund II General Partner, Fund II and CTIMCO pursuant to which CTIMCO will
provide the services and receive the fees set forth in the Fund II Investment
Management Agreement;
WHEREAS, CT-F2-GP and Salomon Smith Barney Inc. ("SSB") have on the
date hereof executed and delivered to each other the capital formation agreement
attached hereto as Exhibit I (the "CT-F2-GP Capital Formation Agreement");
WHEREAS, Limited REMI I and SSB have on the date hereof executed and
delivered to each other the capital formation agreement attached hereto as
Exhibit J (the "Limited REMI I Capital Formation Agreement");
WHEREAS, the Fund II General Partner and SSB have on the date hereof
executed and delivered to each other the placement agent agreement attached
hereto as Exhibit K (the "Placement Agent Agreement");
WHEREAS, in connection with the formation of Fund II and Subsequent
Funds and in consideration of the CIG Parties Commitment (as defined herein) and
Limited REMI II's procuring Private Banking Client Commitments, CT has on the
date hereof agreed to issue, concurrently with the Fund II Initial Closing (as
defined herein), to CT-F2-GP with respect to the Fund II General Partner, and,
as applicable, concurrently with any Subsequent Closing (as
2
<PAGE>
defined herein), to CT-F2-GP with respect to the Fund II General Partner or to
any CT Fund Control Person Member (as defined herein) of each Subsequent Fund,
as the case may be (and in each case subject to the procedures and limitations
set forth in Section 2.2 hereof), certain warrants containing the right to
purchase an aggregate number of shares of CT Class A Common Stock at $5.00 per
share determined in accordance with the formula set forth in Section 2.2 hereof,
each to be issued pursuant to a form of warrant agreement substantially in the
form of the Fund I Warrant Agreement (any such warrant constituting either a
Fund II Purchase Warrant, a Fund II Service Warrant, a Subsequent Funds Purchase
Warrant or a Subsequent Funds Service Warrant (as each term is defined herein),
as the case may be);
WHEREAS, CT-F2-GP has agreed to contribute the Fund II Purchase Warrant
and the Fund II, Service Warrant or the Subsequent Funds Purchase Warrant and
the Subsequent Funds Service Warrant, as the case may be, when, as and if issued
and contributed to it in accordance with the foregoing, containing the right to
purchase a number of shares of CT Class A Common Stock equal to the applicable
number of shares of CT Class A Common Stock as set forth in Section 2.2 hereof,
to the Fund II General Partner as part of its capital contribution to the Fund
II General Partner pursuant to the Fund II General Partner Agreement, and the CT
Parties will cause each CT Fund Control Person Member of a Subsequent Fund's
Fund Control Person (as defined herein) to contribute the Subsequent Funds
Purchase Warrant and the Subsequent Funds Service Warrant when, as and if issued
and contributed to it in accordance with the foregoing, containing the right to
purchase a number of shares of CT Class A Common Stock equal to the applicable
number of shares of CT Class A Common Stock as set forth in Section 2.2 hereof,
to such Fund Control Person as part of its capital contribution to such Fund
Control Person pursuant to the applicable agreement governing such Fund Control
Person;
WHEREAS, the Fund II General Partner and each Fund Control Person, as
the case may be, will sell pursuant to the Fund II Warrant Purchase Agreement
(as herein defined), as the case may be, to General REMI II or its Affiliates
(as defined herein) any Fund II Purchase Warrant or Subsequent Funds Purchase
Warrant, as the case may be, contributed to it in accordance with the foregoing,
containing the right to purchase a number of shares of CT Class A Common Stock
equal to the Initial Closing Purchase Warrant Number and the Subsequent Closing
Purchase Warrant Number, as the case may be, as set forth in Section 2.2 hereof;
WHEREAS, in connection with services to be rendered by Limited REMI II
or its Affiliates for the Fund II General Partner and each Subsequent Fund's
Fund Control Person, as the case may be, in connection with raising Private
Banking Client Commitments to Fund II or any Subsequent Fund, as the case may
be, the Fund II General Partner and each Fund Control Person, as the case may
be, will transfer to Limited REMI II or its Affiliates any Fund II Service
Warrant or Subsequent Funds Service Warrant contributed to it in accordance with
the foregoing, containing the right to purchase a number of shares of CT Class A
Common Stock equal to the Initial Closing Service Warrant Number and the
Subsequent Closing Service Warrant Number, as the case may be, as set forth in
Section 2.2 hereof.
WHEREAS, since the Warrant Issuance (as defined herein) is subject to
the approval of CT stockholders in accordance with the rules of the New York
Stock Exchange ("NYSE"), CT has agreed to certain covenants herein with respect
to obtaining such approval and certain members of CT's management and/or
entities controlled by and/or for the benefit of their
3
<PAGE>
family's ("CT Management Stockholders") and certain other persons who are
associates of CT's chairman of the board ("Associated Stockholders") who are
listed in and who each have on the date hereof separately entered into a
stockholder approval agreement with General REMI II attached hereto as Exhibit L
(the "Stockholder Approval Agreement") pursuant to which they agree to vote
their shares of CT Class A Common Stock in favor of the Warrant Issuance;
WHEREAS, each CT Management Stockholder has on the date hereof entered
into an agreement with Limited REMI I attached as Exhibit M hereto (the
"Stockholder Voting and Lock-Up Agreement") pursuant to which each such
stockholder agrees, among other things, to vote its shares of CT Class A Common
Stock in favor of the election of the CIG Parties Designees (as herein defined)
as directors of CT and to be bound by certain restrictions and limitations on
sales of CT Class A Common Stock owned by such stockholder as of the date
hereof;
WHEREAS, in order to obtain a termination of the co-investment right
held by the CTP Holders (as herein defined), and alter certain terms of the CTP
Securities (as herein defined) to provide CT with significantly greater
flexibility with respect to electing to be taxed as a REIT (as herein defined),
all of the CTP Holders have on the date hereof signed a term sheet attached
hereto as Exhibit N (the "CTP Term Sheet") setting forth the general terms on
which the CTP Holders and CT will negotiate with a view toward entering into (i)
a modification agreement (the "CTP Modification Agreement") pursuant to which
the CTP Holders will agree to amend or restate the indenture underlying, and the
declaration of trust governing, the CTP Securities as provided in the CTP Term
Sheet; and (ii) a termination agreement pursuant to which the CTP Holders will
agree to terminate that certain co-investment agreement with CT (the
"Co-Investment Termination Agreement");
WHEREAS, CT's current corporate business plan adopted by CT's board of
directors is attached hereto as Exhibit O ("CT's Business Plan");
WHEREAS, CT has on the date hereof executed and delivered to the CIG
Parties the guaranty of payment attached hereto as Exhibit P (the "CT
Guaranty");
WHEREAS, The Travelers Insurance Company ("TIC") has on the date hereof
executed and delivered to CT and the CT Parties the guaranty of payment attached
hereto as Exhibit Q (the "TIC Guaranty");
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. Definitions. Unless the context otherwise requires, the following
terms shall have the following meanings:
"Acquisition Notice" shall have the meaning specified in Section 2.8
of this Agreement.
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"Affiliate" shall mean, with respect to any Person, a Person which,
directly or indirectly, Controls or is Controlled by or is under common Control
with that Person or is Controlled by a principal executive officer of that
Person.
"Appraisal Procedures" shall have the meaning given to such term in
Section 4.1 hereof.
"Associate" when used to indicate the relationship with any person,
means (i) any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a similar
capacity, and (ii) any relative or spouse of such person, or any relative of
such spouse, who has the same home as such person or who is a director or
officer of such person if such person is a corporation or other juridical
entity.
"Associated Stockholders" shall have the meaning given to such term in
the Whereas clauses hereof.
"Bankruptcy" of a party means the institution of any proceedings under
any federal or state law for the relief of debtors, including the filing by or
against that party of a voluntary or involuntary case under the United States
Bankruptcy Code, which proceedings, if involuntary, are not dismissed within
sixty (60) days after their filing; an assignment of the property of that party
for the benefit of creditors; the appointment of a receiver, trustee or
conservator of any substantial portion of the assets of that party, which
appointment, if obtained ex parte, is not dismissed within sixty (60) days
thereafter; the seizure by a sheriff, receiver, trustee or conservator of any
substantial portion of the assets of that party; the failure by that party
generally to pay its debts as they become due within the meaning of Section
303(h)(1) of the United States Bankruptcy Code, as determined by the Bankruptcy
Court; or that party's admission in writing of its inability to pay its debts as
they become due.
"Base Share Number" shall have the meaning given to such term in
Section 2.2 of this Agreement.
"Board Right Shares" shall mean without duplication the total number
of shares of CT Class A Common Stock issued upon exercise of the Warrants, the
total number of shares of CT Class A Common Stock issuable upon exercise of the
Warrants and the total number of shares related to any contingent cash rights
that may be granted by CT in connection with the transactions contemplated
herein.
"Business" shall mean the making or acquisition of Mortgage Loans,
Mezzanine Investments and the making of or acquisition of investments in
Subordinated Interests.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
applicable law to close.
"Business Plan" shall have the meaning given to such term in the
Whereas clauses of this Agreement.
"Candidate Mezzanine Business Transaction" shall have the meaning
given to such term in Section 2.7 hereof.
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"CIG" shall mean Citigroup Investments Inc., a Delaware corporation,
an Affiliate of Citigroup Inc.
"CIG Parties" shall have the meaning given such term in the preamble
of this Agreement.
"CIG Parties Board Right" shall have the meaning given to such term in
Section 2.10 of this Agreement.
"CIG Parties Commitment" shall have the meaning specified in Section
2.5 of this Agreement.
"CIG Parties Designee" or "CIG Parties Designees" shall have the
respective meanings given to such terms in Section 2.10 hereof.
"CIG Parties Initial Board Designees" shall mean Mr. Marc Weill and
Mr. Michael Watson.
"CIG Parties Ownership Requirement" shall mean the requirement that
the CIG Parties and/or their Affiliates shall be the legal and beneficial owners
of at least 4,250,000 Board Right Shares.
"CIG Real Estate" shall mean the real estate division of CIG.
"Citibank Private Banking Clients" shall mean high net worth
individuals or institutions who are clients of Citibank's private bank.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Co-Investment Termination Agreement" shall have the meaning given to
such term in the Whereas clauses of this Agreement.
"Competing Fund Restriction" shall have the meaning given to such term
in Section 2.7(a)(ii) of this Agreement.
"Control" or "Controlled" means possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting interests, by contract or
otherwise.
"CT" shall have the meaning given to such term in the preamble of this
Agreement.
"CT Board Certificate" shall mean the certificate and attached copy of
the applicable resolutions of CT's board of directors, in the form of Exhibit R
hereto, signed by the Vice Chairman and Chief Executive Officer of CT and dated
the date hereof certifying to General REMI II that the Board of Directors of CT
at a meeting duly called and held has created two vacancies on CT's Board of
Directors as provided in the By-Laws of CT and has filled such vacancies by
nominating the CIG Parties Initial Board Designees as directors to serve until
the
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next annual meeting of the stockholders of CT or until their successors have
been elected and have qualified.
"CT's Business Plan" shall have the meaning given to such term in the
Whereas clauses of this Agreement.
"CT-F2-GP Capital Formation Agreement" shall have the meaning given to
such term in the Whereas clauses of this Agreement.
"CT Class A Common Stock" shall have the meaning given to such term in
the Whereas clauses of this Agreement.
"CT D&O Certificate" shall mean the certificate in the form of Exhibit
S hereto signed by the Vice Chairman and Chief Executive Officer of CT and dated
the date hereof certifying to the CIG Parties that the directors' and officers'
liability insurance policies attached to such certificate are in full force and
effect and that they cover the CIG Parties Designees as provided in Section 2.10
hereof.
"CT Fund Control Person Member" shall mean the Affiliate of CT that is
a member of a Fund Control Person of a Subsequent Fund.
"CT Guaranty" shall have the meaning given to such term in the Whereas
clause hereof.
"CT Management Stockholders" shall have the meaning given to such term
in the Whereas clauses of this Agreement.
"CT Parties Commitment" shall have the meaning given to such term in
Section 2.5(b) of this Agreement.
"CT-F1" shall have the meaning given to such term in the preamble of
this Agreement.
"CT-F2-GP" shall have the meaning given to such term in the preamble
of this Agreement.
"CT-F2-LP" shall have the meaning given to such term in the preamble
of this Agreement.
"CT Parties" shall have the meaning given to such term in the preamble
of this Agreement.
"CTIMCO" shall have the meaning given to such term in the preamble of
this Agreement.
"CTP" shall mean the $150,000,000 in the aggregate liquidation amount
of 8.25% step up convertible trust preferred securities representing undivided
beneficial interest in the assets of the CT Convertible Trust I, a Delaware
statutory business trust and consolidated
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subsidiary of CT (the "Trust"), which was organized pursuant to that certain
declaration of trust, dated and effective as of July 28, 1998, as amended, by CT
and the Trustees as defined therein and the holders, from time to time, of
undivided beneficial interest in the Trust and commonly referred to by CT as the
"CTP."
"CTP Holders" shall mean the holders of one hundred percent (100%) of
the aggregate liquidation amount of the CTP.
"CTP Modification Agreement" shall have the meaning given to such term
in the Whereas clauses of this Agreement.
"CTP Securities" shall have the meaning given to such term in the CTP
Modification Agreement.
"CTP Term Sheet" has the meaning given to such term in the Whereas
clauses hereof.
"Cumulative Investment Management Fee" shall have the meaning given to
such term in Section 2.11 hereof.
"Cumulative Investment Management Fee Base" shall mean the aggregate
Investment Management Fee Base for all the Investment Management Fee Base Funds
determined as at a date that is five (5) Business Days prior to the end of each
calendar quarter and applicable with respect to the then next succeeding
calendar quarter calculated as provided in Section 2.11 hereof.
"Cumulative Investment Management Fee Base Certificate" shall have the
meaning given to such term in Section 2.11 hereof.
"Cumulative Investment Management Fee Deficiency Amount" shall have
the meaning given to such term in Section 2.11 of this Agreement.
"Cumulative Management Fee" shall mean the aggregate Management Fee
payable by each of the Investment Management Fee Base Funds to its respective
Fund Control Person on the first day of a calendar quarter with respect to that
calendar quarter.
"Definitive Proposed Fund Acceptance" shall have the meaning given to
such term in Section 2.6 of this Agreement.
"Definitive Proposed Fund Offer" shall have the meaning given to such
term in Section 2.6 of this Agreement.
"Definitive Proposed Fund Rejection" shall have the meaning given to
such term in Section 2.6 of this Agreement.
"Disability" or "Disabled" with respect to any Key Individual shall
mean the determination of a qualified licensed physician reasonably acceptable
to the subject Key Individual having admission privileges at a hospital located
in the Borough of Manhattan in New
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York City that such Key Individual is unable to engage in substantially all of
the activities required by him under the Fund I Investment Management Agreement,
the Fund II Investment Management Agreement and all similar investment
management agreements entered into between CTIMCO (or affiliated investment
manager) and Fund Control Persons and/or Funds by reason of any medically
determined physical or mental impairment which has lasted or can be expected to
last for a continuous period of not less than five months.
"Equity Securities" shall have the meaning given to such term in
Section 2.8(b) hereof.
"Experienced Appraiser" shall have the meaning given to such term in
Section 4.1 hereof.
"Extension Date" shall mean the later of the three-month period ended
on March 31, 2001 if the Extension Right is exercised to extend the date on
which the Unwind Right becomes exercisable for one three-month period, or the
three-month period ended on June 30, 2001 if the Extension Right is exercised to
extend the date upon which the Unwind Right becomes exercisable for a second
three-month period.
"Extension Right" shall mean the right of each of Limited REMI I and
CT-F1 to extend the date upon which the Fund II Initial Closing must have
occurred before either Limited REMI I or CT-F1 shall have the right to exercise
the Unwind Right pursuant to Section 2.12 hereof for two successive three-month
periods following December 31, 2000, which may not be exercised by either
Limited REMI I or CT-F1 to extend such date upon which the Unwind Right becomes
exercisable past June 30, 2001.
"Fair Market Value" shall mean, with respect to an asset, the price at
which that asset would be sold between a willing buyer and a willing seller,
each having reasonable knowledge of all relevant facts concerning the asset and
neither acting under any compulsion to buy or sell.
"Fiscal Year" shall mean any twelve month period ended December 31.
"Fund" or "Funds" shall have the meaning given to such terms,
respectively, in the Whereas clauses of this Agreement.
"Fund Control Person" shall mean the general partner of Fund II and
each Other Fund or if an Other Fund shall not be structured as a partnership
then the managing member of an Other Fund if structured as a limited liability
company or such other Person as may have effective Control of an Other Fund if
such Other Fund is structured in a manner other than as a partnership or limited
liability company.
"Fund I" shall have the meaning given to such term in the Whereas
clauses of this Agreement.
"Fund I Agreement" shall have the meaning given to such term in the
Whereas clauses of this Agreement.
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"Fund I Investment Management Agreement" shall have the meaning given
to such term in the Whereas clauses of this Agreement.
"Fund I Promissory Note" shall have the meaning given to such term in
the Whereas clauses of this Agreement.
"Fund I Warrant" shall have the meaning given to such term in the
Whereas clauses of this Agreement.
"Fund I Warrant Agreement" shall have the meaning given to such term
in the Whereas clauses of this Agreement.
"Fund I Warrant Purchase Agreement" shall mean the Warrant Purchase
Agreement pursuant to which Limited REMI I shall purchase the Fund I Warrant
from Fund I in consideration of the delivery of the Fund I Promissory Note to
Fund I.
"Fund II" shall have the meaning given to such term in the Whereas
clauses of this Agreement.
"Fund II General Partner" shall have the meaning given to such term in
the Whereas clauses of this Agreement.
"Fund II General Partner Agreement" shall have the meaning given to
such term in the Whereas clauses of this Agreement.
"Fund II Initial Closing" shall have the meaning given to such term in
Section 2.2 of this Agreement.
"Fund II Investment Management Agreement" shall have the meaning given
to such term in the Whereas clauses of this Agreement.
"Fund II Management Agreement" shall have the meaning given to such
term in the Whereas clauses of this Agreement.
"Fund II Partnership Agreement" shall mean the amended and restated
agreement of limited partnership of Fund II.
"Fund II PPM" shall mean the confidential private placement memorandum
of Fund II to be prepared by General REMI II and CT-F2-GP.
"Fund II Purchase Warrant" shall mean the warrant which, as set forth
in Section 2.2(b) hereof and subject to the conditions described in Section
2.2(b) hereof, shall be (i) executed and delivered by CT to CT-F2-GP, (ii)
contributed by CT-F2-GP to the Fund II General Partner, and (iii) sold by the
Fund II General Partner to General REMI II concurrently with the Initial Closing
of Fund II, and which shall contain the right to purchase a number of shares of
CT Class A Common Stock as set forth in Section 2.2(b)(iv) hereof.
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"Fund II Purchase Warrant Promissory Note" shall have the meaning
given to such term in Section 2.2 hereof.
"Fund II Service Warrant" shall mean that warrant which, as set forth
in Section 2.2(b) hereof and subject to the conditions described in Section
2.2(b) hereof, shall be (i) executed and delivered by CT to CT-F2-GP, (ii)
contributed by CT-F2-GP to the Fund II General Partner, and (iii) assigned by
the Fund II General Partner to Limited REMI II concurrently with the Initial
Closing of Fund II, and which shall contain the right to purchase a number of
shares of CT Class A Common Stock as set forth in Section 2.2(b)(iv) hereof.
"Fund II Warrant Purchase Agreement" shall mean the Warrant Purchase
Agreement entered into on the date hereof pursuant to which General REMI II or
its Affiliate shall purchase forward the Fund II Purchase Warrant or the
Subsequent Funds Purchase Warrant, as the case may be, from the Fund II General
Partner or Subsequent Fund's Fund Control Person, as the case may be, in
consideration of the delivery of, or an adjustment to, the Fund II Purchase
Warrant Promissory Note in the form of Exhibit T hereto.
"GAAP" shall mean generally accepted accounting principles in effect
from time to time in the United States, applied on a consistent basis throughout
the term of this Agreement.
"General REMI II" shall have the meaning given to such term in the
preamble of this Agreement.
"Initial Closing Purchase Warrant Number" shall have the meaning given
to such term in Section 2.2 hereof.
"Initial Closing Service Warrant Number" shall have the meaning given
to such term in Section 2.2 hereof.
"Initial Share Number" shall have the meaning given to such term in
Section 2.2 hereof.
"Invested Capital" shall mean with respect to any Fund the aggregate
capital invested by partners or members in the Fund net of that portion of
distributions made to such partners or members constituting the cost basis
return of capital and net of realized losses.
"Investment Management Fee" shall have the meaning given to such term
in Section 2.11 of this Agreement.
"Investment Management Fee Base" with respect to any Fund (i) during
such Fund's Investment Period shall mean (y) the aggregate capital commitments
to such Fund, and, without duplication, (z) aggregate capital contributions made
by investors pursuant to their capital commitments to such Fund, and (ii) after
such Fund's Investment Period shall mean Invested Capital.
"Investment Management Fee Base Funds" shall mean Fund II and each
Subsequent Fund or Other Fund.
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"Investment Period" with respect to any Fund shall mean the period
commencing on the first closing of such Fund and ending on such date as is
provided in such Fund's partnership agreement or other governing instrument
during which the Fund shall be permitted to invest the capital of such Fund in
Business assets.
"Key Individuals" shall have the meaning given to such term in Section
2.13 of this Agreement.
"Key Individuals Requirement" shall mean the covenants of CTIMCO set
forth in Section 1.3 of the Fund I Investment Management Agreement, Section 1.4
of the Fund II Investment Management Agreement, and substantially the same
covenants relating to Key Individuals to be set forth in each investment
management agreement between CTIMCO (or its affiliated investment management
company) and each Fund Control Person and each Fund.
"LIBOR" shall mean, with respect to the Cumulative Management Fee
Deficiency Amount outstanding at the time of payment thereof pursuant to Section
2.11(c)(i) of this Agreement, an interest rate per annum (calculated as simple
interest, not compounded) equal to the rate of the offered quotation, if any, to
first class banks in the 30 day London Interbank Offer Rate market for US dollar
deposits of amounts in immediately available funds comparable to the principal
amount of the Cumulative Management Fee Deficiency Amount outstanding at the
time of payment thereof pursuant to Section 2.11(c)(i) of this Agreement with
maturities comparable to the period of time from the initial determination of
the Cumulative Management Fee Deficiency Amount until the payment thereof in
accordance with Section 2.11(c)(i) of this Agreement as of 10:00 a.m. (New York
time) on the date of the such initial determination.
"Limited REMI I" shall have the meaning given to such term in the
preamble of this Agreement.
"Limited REMI I Capital Formation Agreement" shall have the meaning
given to such term in the Whereas clauses of this Agreement.
"Limited REMI II" shall have the meaning given to such term in the
preamble of this Agreement.
"Management Fee" shall mean the management fee payable by each Fund
other than Fund I to its respective Fund Control Person or affiliated management
company.
"Mezzanine Business" shall mean the making of Mezzanine Investments.
"Mezzanine Investments" shall mean high-yielding loans to commercial
real estate owners and property developers that are subordinate to senior
financing and are evidenced by a subordinate mortgage, a subordinate
participation in an integrated whole loan, or a pledge of the ownership
interests in the borrowing property owner. In some cases, the investment may
take the form of certificates in a trust or a preferred equity interest in the
property owning entity.
"Mortgage Loans" shall mean senior and subordinated loans, whether
interim, mid-term or long-term or a combination of the foregoing, to commercial
real estate owners and property developers.
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"Notice" shall have the meaning given to such term in Section 8.2
hereof.
"NYSE" shall mean the New York Stock Exchange.
"Option Period" shall have the meaning given to such term in Section
2.6 of this Agreement.
"Other Funds" or "Other Fund" shall have the respective meanings given
to such terms in the Whereas clauses of this Agreement.
"Placement Agent Agreement" shall have the meaning given to such term
in the Whereas clauses of this Agreement.
"Private Banking Client Commitments" shall mean any capital
commitments made by Citibank Private Banking Clients to Fund II, Subsequent
Funds or any Other Funds, as the case may be.
"Person" shall mean any entity, corporation, company, association,
joint venture, joint stock company, partnership, trust, limited liability
company, limited liability partnership, real estate investment trust,
organization, individual (including personal representatives, executors and
heirs of a deceased individual), nation, state, government (including agencies,
departments, bureaus, boards, divisions and instrumentalities thereof), trustee,
receiver or liquidator.
"Proposed Fund" shall have the meaning given to such term in Section
2.6 of this Agreement.
"Proposed Fund Key Items" shall have the meaning given to such term in
Section 2.6 hereof.
"Proposed Fund Notice" shall have the meaning given to such term in
Section 2.6 of this Agreement.
"Proposed Fund Offer" shall have the meaning given to such term in
Section 2.6 of this Agreement.
"Pro Rata Share" shall have the meaning given to such term in Section
2.11 of this Agreement.
"Registration Rights Agreement" shall mean the agreement pursuant to
which CT agrees to register the CT Class A Common Stock issuable pursuant to the
Fund I Warrant, the Fund II Purchase Warrant, the Fund II Service Warrant, the
Subsequent Funds Purchase Warrant and the Subsequent Funds Service Warrant
substantially in the form of Exhibit U hereto (the "Registration Rights
Agreement").
"REIT" shall mean a real estate investment trust within the meaning of
Section 856 of the Code.
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"REIT Tax Matters" shall have the meaning given to such term in
Section 2.14 of this Agreement.
"SEC" shall mean the United States Securities and Exchange Commission.
"SSB" shall have the meaning given to such term in the Whereas clauses
of this Agreement.
"Shortfall Amount" shall have the meaning given such term in Section
2.11 hereof.
"Stockholder Approval Agreement" shall have the meaning given to such
term in the Whereas clauses of this Agreement.
"Stockholder Voting and Lock-Up Agreement" shall have the meaning
given to such term in the Whereas clauses of this Agreement.
"Subordinated Interests" shall mean rated and unrated interests in
public and private commercial mortgage backed securities.
"Subsequent Closing" shall have the meaning given to such term in
Section 2.2 hereof.
"Subsequent Closing Purchase Warrant Number" shall have the meaning
given to such term in Section 2.2 hereof.
"Subsequent Closing Service Warrant Number" shall have the meaning
given to such term in Section 2.2 hereof.
"Subsequent Funds" shall have the meaning given to such term in the
Whereas clauses of this Agreement.
"Subsequent Funds Purchase Warrant" shall mean any warrant which, as
set forth in Section 2.2(c) hereof and subject to the conditions described in
Section 2.2(c) hereof, shall be (i) executed and delivered by CT to either
CT-F2-GP or the applicable CT Fund Control Person Member, as the case may be,
(ii) contributed by either CT-F2-GP or the applicable CT Fund Control Person
Member, as the case may be, to the Fund II General Partner or the Fund Control
Person of the applicable Subsequent Fund, as the case may be, and (iii) sold by
the Fund II General Partner or the Fund Control Person of the applicable
Subsequent Fund, as the case may be, to General REMI II or its Affiliate,
concurrently with a subsequent closing of Fund II or a closing of a Subsequent
Fund, as the case may be, and which shall contain the right to purchase a number
of shares of CT Class A Common Stock pursuant to Section 2.2(c)(ii) hereof.
"Subsequent Funds Purchase Warrant Promissory Note" shall have the
meaning given to such term in Section 2.2(c)(ii) hereof.
"Subsequent Funds Service Warrant" shall mean any warrant which, as
set forth in Section 2.2(c) hereof and subject to the conditions described in
Section 2.2(c) hereof, shall be
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(i) executed and delivered by CT to either CT-F2-GP or the applicable CT Fund
Control Person Member, as the case may be, (ii) contributed by either CT-F2-GP
or the applicable CT Fund Control Person Member, as the case may be, to the Fund
II General Partner or the Fund Control Person of the applicable Subsequent Fund,
as the case may be, and (iii) assigned by the Fund II General Partner or the
Fund Control Person of the applicable Subsequent Fund, as the case may be, to
Limited REMI II or its Affiliate, concurrently with a Subsequent Closing and
which shall contain the right to purchase a number of shares of CT Class A
Common Stock pursuant to Section 2.2(c)(ii) hereof.
"Subsequent Share Number" shall have the meaning given to such term in
Section 2.2 hereof.
"Termination Right" shall have the meaning given to such term in
Section 2.12(e) hereof.
"Transaction Documents" shall mean all of the documents attached
hereto as Exhibit A through Exhibit U hereof.
"Unwind" shall have the meaning given to such term in the Fund I
Agreement.
"Unwind Right" shall mean the respective rights of Limited REMI I and
CT-F1 set forth in Section 2.12 of this Agreement to cause the Unwind to occur
pursuant to the Fund I Agreement.
"Warrant Issuance" shall mean the issuance of the Fund II Purchase
Warrant, the Fund II Service Warrant, the Subsequent Funds Purchase Warrant, and
the Subsequent Fund Service Warrant by CT to CT-F2-GP for subsequent
contribution to the Fund II General Partner with respect to Fund II and to
C2-F2-GP or its Affiliate for subsequent contribution to the Fund Control
Persons in connection with any Subsequent Funds as provided herein.
"Warrant Purchase Agreement" shall mean the Fund II Warrant Purchase
Agreement as such may be modified and assigned from time to time as contemplated
in Section 2.2 hereof.
1.2. General References. References in this Agreement to "Articles,"
"Sections," "Exhibits" and "Schedules," shall be to the Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specifically
provided; any of the terms defined in this Agreement may, unless the context
otherwise requires, be used in the singular or the plural and in any gender
depending on the reference; the words "herein", "hereof" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
except as otherwise specified in this Agreement, all references in this
Agreement (a) to any Person shall be deemed to include such Person's permitted
heirs, personal representatives, successors and assigns; and (b) to any
agreement, any document or any other written instrument shall be a reference to
such agreement, document or instrument together with all exhibits, schedules,
attachments and appendices thereto, and in each case as amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof; and (c) to any law, statute or regulation shall be deemed
references to such law, statute or regulation as the same may be supplemented,
amended, consolidated,
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superseded or modified from time to time with an effective date rendering such
change applicable to the event or transaction in question.
ARTICLE II
THE VENTURE
2.1. Agreements Executed and Delivered Simultaneously with this Agreement.
Simultaneously with the execution and delivery of this Agreement, the respective
parties to the following agreements have executed and delivered such agreements
to the respective other parties to such agreements: the CT-F2-GP Capital
Formation Agreement, the CT Guaranty, the Fund I Agreement, the Fund I
Investment Management Agreement, the Fund I Promissory Note, the Fund I Warrant
Agreement, the Fund I Warrant Purchase Agreement, the Fund II Investment
Management Agreement, the Fund II General Partner Agreement, the Fund II Warrant
Purchase Agreement, the Limited REMI I Capital Formation Agreement, the
Placement Agent Agreement, the Stockholder Voting and Lock-Up Agreement, the
Stockholder Approval Agreement and the TIC Guaranty. As soon as practicable
after the date hereof, (i) CT shall deliver to the CIG Parties copies of the
fully executed Co-Investment Termination Agreement, the CTP Modification
Agreement (and the documents and agreements referenced therein), and (ii) CT and
the CIG Parties shall cooperate in good faith to finalize the Registration
Rights Agreement and to execute and deliver the same to each other.
2.2. Agreements to be Executed and Delivered in Connection with the
Closings of Fund II and Subsequent Funds.(a) The parties hereby agree that
promptly after the date hereof each will cooperate with the other and SSB in
good faith to prepare the Fund II PPM and the Fund II Partnership Agreement. The
parties hereby agree to use their reasonable commercial efforts to market and
promote Fund II to potential third party investors (including Citibank Private
Banking Clients) and to effectuate the Fund II Initial Closing on or prior to
December 31, 2000 (or the Extension Date), or earlier if practicable.
(b) The initial closing of Fund II (the "Fund II Initial Closing")
shall take place promptly after the capital commitments to Fund II aggregate at
least $495,833,334, which sum shall include the capital commitment pursuant to
the CIG Parties Commitment and shall include the capital commitment of the CT
Parties pursuant to the CT Parties Commitment. If the Fund II Initial Closing
occurs on or prior to December 31, 2000, or any Extension Date, then at the Fund
II Initial Closing:
(i) Limited REMI II shall execute and deliver the Fund II
Partnership Agreement to the Fund II General Partner and shall commit to
contribute to the capital of Fund II pursuant to the CIG Parties Commitment, and
CT-F2-LP shall execute and deliver the Fund II Partnership Agreement to the Fund
II General Partner and shall commit to contribute to the capital of Fund II
pursuant to the CT Parties Commitment;
(ii) General REMI II and CT-F2-GP shall cause the Fund II General
Partner to execute and deliver the Fund II Partnership Agreement and all related
subscription agreements and other agreements and documents to be executed by the
Fund II General Partner pursuant to the Fund II Partnership Agreement (other
than the Fund II Investment Management
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Agreement which shall be executed and delivered by and between the parties
thereto pursuant to Section 2.1 hereof);
(iii) If the approval by CT's stockholders of the Warrant
Issuance as provided in Section 2.3 has been obtained, CT shall execute and
deliver a Fund II Purchase Warrant and a Fund II Service Warrant as set forth in
this Section 2.2(b) to CT-F2-GP, in which case CT-F2-GP shall contribute the
Fund II Purchase Warrant and the Fund II Service Warrant to the Fund II General
Partner, that contain the right to purchase an aggregate number of shares of CT
Class A Common Stock (subject to adjustment as provided therein) equal to (w)
500,000 (the "Base Share Number") plus (x) the number (the "Initial Share
Number") obtained by multiplying 4,750,000 by the lesser of (a) one (1) or (b)
the fraction obtained by dividing the sum of the aggregate dollar amount
committed by the CIG Parties and the aggregate Private Banking Client
Commitments made at the Fund II Initial Closing by $250,000,000; provided
however, CT shall not be obligated to issue pursuant to Sections 2.2(b) and
2.2(c) warrants to purchase more than 5,250,000 shares of CT Class A Common
Stock in the aggregate. CT shall issue a Fund II Purchase Warrant and a Fund II
Service Warrant for subsequent purchase or assignment, as the case may be, as
follows. The number of shares issuable upon exercise of the Fund II Purchase
Warrant that may be purchased by General REMI II from the Fund II General
Partner pursuant to the Fund II Warrant Purchase Agreement at the Fund II
Initial Closing shall be the sum of (y) the Base Share Number and (z) a number
determined by multiplying the Initial Share Number by a fraction the numerator
of which is the dollar amount committed by the CIG Parties at the Fund II
Initial Closing and the denominator of which is the sum of the aggregate dollar
amount committed by the CIG Parties and the aggregate Private Banking Client
Commitments at the Fund II Initial Closing (the "Initial Closing Purchase
Warrant Number"). The number of shares issuable upon exercise of the Fund II
Service Warrant to which Limited REMI II shall be entitled to have the Fund II
General Partner assign to it at the Fund II Initial Closing shall be determined
by multiplying the Initial Share Number by a fraction the numerator of which is
the aggregate Private Banking Client Commitments made at the Fund II Initial
Closing and the denominator of which is the sum of the aggregate Private Banking
Client Commitments and the aggregate dollar amount committed by the CIG Parties
at the Fund II Initial Closing (the "Initial Closing Service Warrant Number");
(iv) General REMI II and CT-F2-GP shall cause the Fund II General
Partner to sell and assign to General REMI II pursuant to the Fund II Warrant
Purchase Agreement the Fund II Purchase Warrant containing the right to purchase
a number of shares of CT Class A Common Stock equal to the Initial Closing
Purchase Warrant Number in consideration of the execution and delivery to the
Fund II General Partner of a promissory note substantially in the form of the
Fund I Promissory Note in a principal amount equal to $0.32 per share of CT
Class A Common Stock times the Initial Closing Purchase Warrant Number (the
"Fund II Purchase Warrant Promissory Note"). General REMI II and CT-F2-GP shall
also cause the Fund II General Partner to assign and deliver to Limited REMI II
the Fund II Service Warrant containing the right to purchase a number of shares
of CT Class A Common Stock equal to the Initial Closing Service Warrant Number.
CT hereby consents to such sales and/or assignments and agrees to enter General
REMI II as the record owner of such Fund II Purchase Warrant and Limited REMI II
as the record owner of such Fund II Service Warrant on its books and records as
the record holders thereof.
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(v) General REMI II and the Fund II General Partner shall execute
and deliver to each other the Fund II Warrant Purchase Agreement, and General
REMI II shall execute and deliver the Fund II Initial Closing Purchase Warrant
Promissory Note to the Fund II General Partner;
(vi) General REMI II and CT-F2-GP shall cause the Fund II General
Partner to execute and deliver, and the Fund II General Partner shall cause Fund
II to execute and deliver, the Fund II Management Agreement; and
(vii) General REMI II and CT-F2-GP shall execute and deliver to
each other, and shall cause their Affiliates, agents and counsel to execute and
deliver, customary documentation, certificates, schedules and opinions related
to the Fund II Initial Closing.
(c) (i) At each subsequent closing of Fund II and each closing of each
Subsequent Fund (each a "Subsequent Closing") until the aggregate CIG Parties
Commitment has been made in accordance with Section 2.5, if the approval by CT's
stockholders of the Warrant Issuance as provided in Section 2.3 has been
obtained, CT shall execute and deliver a Subsequent Funds Purchase Warrant and a
Subsequent Funds Service Warrant to either CT-F2-GP or the applicable CT Fund
Control Person Member, as the case may be, in which case CT-F2-GP or the CT Fund
Control Person Member shall contribute the Subsequent Funds Purchase Warrant and
the Subsequent Funds Service Warrant to the Fund II General Partner or the Fund
Control Person of the applicable Subsequent Fund, as the case may be, that
contain the right to purchase an aggregate number of shares of CT Class A Common
Stock (subject to adjustment as provided therein) equal to the number obtained
by multiplying 4,750,000 by the lesser of (a) one (1) or (b) the fraction
obtained by dividing the additional aggregate dollar amount committed by the CIG
Parties and the Private Banking Client Commitments at such Subsequent Closing
(i.e., excluding commitments made at prior closings) by $250,000,000 (each a
"Subsequent Share Number"). CT shall issue a Subsequent Funds Purchase Warrant
and a Subsequent Funds Service Warrant for subsequent purchase and/or assignment
as follows. The number of shares issuable upon exercise of the Subsequent Funds
Purchase Warrant that may be purchased pursuant to a Warrant Purchase Agreement
at each such Subsequent Closing shall be determined by multiplying the
Subsequent Share Number by a fraction the numerator of which is the additional
dollar amount committed by the CIG Parties at such Subsequent Closing (i.e.,
excluding commitments made at prior closings) and the denominator of which is
the sum of the aggregate dollar amount committed by the CIG Parties and the
additional aggregate Private Banking Client Commitments at such Subsequent
Closing (i.e., excluding commitments made at prior closings) (the "Subsequent
Closing Purchase Warrant Number"). The number of shares issuable upon exercise
of the Subsequent Funds Service Warrant to which Limited REMI II or its
Affiliates shall be entitled to have assigned and delivered to it at such
Subsequent Closing shall be determined by multiplying the Subsequent Share
Number by a fraction the numerator of which is the aggregate additional Private
Banking Client Commitments made at such Subsequent Closing (i.e., excluding
commitments made at prior closings) and the denominator of which is the sum of
the additional aggregate Private Banking Client Commitments and the additional
aggregate dollar amount committed by the CIG Parties at such Subsequent Closing
(the "Subsequent Closing Service Warrant Number").
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(ii) At each such closing, the Fund II General Partner or each
Subsequent Fund's Fund Control Person, as the case may be, shall sell and assign
to General REMI II or, in the case of a subsequent Fund, to its designated
Affiliate pursuant to a Warrant Purchase Agreement the Subsequent Funds Purchase
Warrant containing the right to purchase a number of shares of CT Class A Common
Stock equal to the Subsequent Closing Purchase Warrant Number in consideration
of, in the case of Fund II, an adjustment by the Fund II General Partner and
General REMI II of Exhibit A to the Fund II Purchase Warrant Promissory Note as
set forth in the Fund II Warrant Purchase Agreement and, in the case of a
Subsequent Fund, the execution and delivery to such Subsequent Fund's Fund
Control Person of a promissory note substantially in the form of the Fund II
Purchase Warrant Promissory Note in the principal amount equal to $0.32 per
share (the "Subsequent Funds Purchase Warrant Promissory Note") and shall assign
and deliver the Subsequent Funds Service Warrant containing the right to
purchase a number of shares of CT Class A Common Stock equal to the Subsequent
Closing Service Warrant Number to Limited REMI II or, in the case of a
Subsequent Fund, to its designated Affiliate. CT hereby consents to such sale
and/or assignments and agrees to enter on its books and records General REMI II
or, in the case of a Subsequent Fund, to its Affiliate as the record owner of
such Subsequent Funds Purchase Warrant and Limited REMI II or, in the case of a
Subsequent Fund, its Affiliate as the record owner of such Subsequent Funds
Service Warrant. In addition, General REMI II in the case of Fund II shall
execute and deliver the Fund II Purchase Warrant Promissory Note to the Fund II
General Partner and, in the case of a Subsequent Fund, General REMI II's
Affiliate shall execute and deliver the Subsequent Funds Purchase Warrant
Promissory Note to each Subsequent Fund's Fund Control Person. Furthermore,
General REMI II shall cause each Subsequent Fund's Fund Control Person from
which General REMI II's Affiliate shall have purchased such Subsequent Funds
Purchase Warrant to treat the effect of the foregoing on the books and records
of each such Fund Control Person in substantially the same manner as the
purchase and assignment of the Fund I Warrant are treated in the Fund I
Agreement.
(d) The Fund II General Partner and Limited REMI II, for themselves
and on behalf of each such Fund Control Person, acknowledge that the Fund II
Service Warrants and the Subsequent Funds Service Warrants issuable pursuant to
Section 2.2(b) and 2.2(c) are the only compensation to which Limited REMI II (or
with respect to Subsequent Funds, its Affiliates) shall be entitled in
consideration of its raising capital from the Citibank Private Banking Clients.
2.3. Approval by CT's Stockholders. The CIG Parties acknowledge that the
Warrant Issuance is subject to the prior approval by CT's stockholders. CT,
acting through its board of directors, shall in accordance with Maryland law,
duly call, give notice of, and convene and hold a special meeting of
stockholders (the "Special Meeting") to be held as soon as reasonably
practicable for the purpose of voting on the approval of the Warrant Issuance.
Subject to any duties of directors under Maryland law based on advice of
counsel, CT's board of directors shall, in connection with such meeting,
unanimously recommend that CT's stockholders approve the Warrant Issuance and
shall take all other commercially reasonable action necessary or advisable to
secure the vote or consent of the stockholders in favor of the Warrant Issuance.
Without limiting the foregoing, CT shall: (i) within thirty (30) days (subject
to extension for an additional fifteen (15) days upon request by CT to General
REMI II and General REMI II's consent thereto, which consent shall not be
withheld if CT is diligently pursuing such preparation and filing) of the date
of this Agreement prepare and file a preliminary proxy statement and form of
proxy
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relating to the approval of the Warrant Issuance with the SEC in compliance with
applicable securities laws and regulations (ii) as soon as practicable after the
date any SEC comments thereon or on any revised materials have been cleared,
shall mail to CT's stockholders definitive proxy materials and (iii) as soon as
practicable after the date of mailing shall hold the Special Meeting.
2.4. Business Plan. General REMI II and CT-F2-GP hereby approve the
Business Plan for the Funds. The Business Plan may be modified or amended, and
variances therefrom may be made, only with the prior written consent of both
General REMI II and CT-F2-GP, which consent may be withheld or granted in each
party's sole discretion. The Business Plan shall be applicable to all of the
Funds other than Fund I, it being agreed between the parties that the business
of Fund I shall be determined as set forth in the Fund I Agreement. The
respective definitions of "Business" and "Mezzanine Business" as used in this
Agreement may not be modified or amended, whether by modifications or amendments
to the Business Plan or otherwise, except by an amendment to this Agreement as
provided in this Agreement and no usage of such terms in the Business Plan or
other documents or agreements amongst the parties shall affect or modify, or be
interpreted to affect or modify, the respective definitions of such terms in
this Agreement or in any amendment to this Agreement.
2.5. The CIG Parties Commitment; CT Parties Commitment. (a) The CIG Parties
hereby commit to contribute to the capital of Fund II (including any capital
commitment to the Fund II General Partner or to the Fund Control Person of any
Subsequent Fund necessary to permit the Fund II General Partner or such Fund
Control Person to make its capital commitments to Fund II or to such Subsequent
Fund and to pay any placement fees and any organizational costs not paid by the
applicable Fund) at the Fund II Initial Closing and at each subsequent closing
of Fund II, one dollar for every three dollars committed by third party
investors (excluding commitments made by CT or its Affiliates, but including
Private Banking Client Commitments) at such closing, provided, however, that the
CIG Parties shall have no obligation to make aggregate capital commitments to
Fund II in an amount greater than $250,000,000. To the extent that the CIG
Parties' aggregate capital commitments to Fund II pursuant to the foregoing
sentence are less than $250,000,000, at each successive closing of each
Subsequent Fund proposed by CT pursuant to the procedures set forth in Section
2.6 (a) hereof that occurs on or prior to December 31, 2001, the CIG Parties in
the aggregate shall commit, or cause one or more of their Affiliates to commit,
to contribute to the capital of such Subsequent Fund (either directly or through
the applicable Fund Control Person) one dollar for every three dollars committed
by third party investors (excluding commitments made by CT or its Affiliates,
but including Private Banking Client Commitments) at such closing until the
aggregate capital commitments of the CIG Parties and/or their Affiliates to Fund
II and such Subsequent Fund shall equal $250,000,000. Any capital commitments
made by the CIG Parties or any of their Affiliates shall first be made in an
amount sufficient (together with the commitments made by the CT Parties or their
Affiliates) to permit the Fund II General Partner or the Fund Control Person of
each Subsequent Fund, as the case may be, to meet its capital commitment to Fund
II or such Subsequent Fund and then as limited partners in Fund II or as limited
partners or members in any Subsequent Funds. Any commitment made by the CIG
Parties or their Affiliates as a limited partner or member to any Fund shall be
made on the same basis and same terms and conditions as those made by third
party investors in the applicable Fund. The aggregate capital commitments by the
CIG Parties and its Affiliates at the Fund II Initial Closing, each subsequent
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closing of Fund II and each closing of each Subsequent Fund made in accordance
with the foregoing are collectively referred to herein as the "CIG Parties
Commitment."
(b) The CT Parties hereby agree that for each four dollars committed
by the CIG Parties or their Affiliates in the aggregate pursuant to the CIG
Parties Commitment, the CT Parties will commit one dollar to the capital of Fund
II and any Subsequent Funds (including any capital commitment to the Fund II
General Partner or to the Fund Control Person of any Subsequent Fund necessary
to permit the Fund II General Partner or such Fund Control Person to make its
capital commitments to Fund II or to such Subsequent Fund and to pay any
placement fees and any organizational costs not paid by the applicable Fund)
proposed by CT pursuant to Section 2.6 hereof at the same time as the CIG
Parties or their Affiliates invest pursuant to Section 2.5(a) hereof; provided,
however that CT will have no obligation to make aggregate capital commitments in
an amount greater than $62,500,000. Any capital commitments made by the CT
Parties shall first be made in an amount sufficient (together with the
commitments made by the CIG Parties and their Affiliates) to permit the Fund II
General Partner or the Fund Control Person of each Subsequent Fund, as the case
may be, to meet its capital commitment to Fund II or such Subsequent Fund and
then as a limited partner in Fund II or as a limited partner or member in any
Subsequent Funds. Any commitment made by the CT Parties as a limited partner or
member to any Fund shall be made on the same terms and conditions as the CIG
Parties as provided in Section 2.5(a) hereof. The aggregate capital commitments
by the CT Parties at the Fund II Initial Closing, each subsequent closing of
Fund II and each closing of each Subsequent Fund made in accordance with the
foregoing are collectively referred to herein as the "CT Parties Commitment."
2.6. General REMI II's Right of First Refusal. (a) Subject to Section 2.7
below, if at any time after the Fund II Initial Closing, CT or any of its
Affiliates desires to form an Other Fund (a "Proposed Fund"), it shall deliver
notice (the "Proposed Fund Notice") thereof to General REMI II which sets forth
a term sheet summary of the material terms and conditions of the Proposed Fund
(providing particular details with respect to (i) the proposed management fee
payable by the Proposed Fund to the Fund Control Person, (ii) the "promote" or
"carried interest" to be distributed to the Fund Control Person, (iii) the
preferred return to the limited partners or members, (iv) the Investment Period,
(v) the term of the Proposed Fund, (vi) the Proposed Fund's investment strategy
and business plan, (vii) the anticipated timing of the offering, (viii) the
proposed placement agent(s), (ix) the minimum dollar size of the Proposed Fund,
(x) the amount of the CT Parties commitment, if any, to the Proposed Fund, and
(xi) such other items as the parties may from time to time mutually agree -- all
of the foregoing are herein after referred to collectively as the "Proposed Fund
Key Items" or individually as a "Proposed Fund Key Item"). The Proposed Fund
Notice shall be deemed an offer by CT to General REMI II or its designated
Affiliate to co-sponsor the Proposed Fund, to share ownership of the Fund
Control Person on a 50/50 basis, to share in the "promote" or "carried interest"
to be distributed to the Fund Control Person of the Proposed Fund on a 50/50
basis, and share on a 50/50 basis the net management profits (after payment of
the applicable Investment Management Fee and any other costs) (the "Proposed
Fund Offer"). Except as provided below, General REMI II shall have sixty days
from the date of its receipt of the Proposed Fund Notice (the "Option Period")
to consider such Proposed Fund Offer. During such period, CT shall afford
General REMI II or its Affiliates, as well as any prospective placement agents,
full opportunity to conduct customary due diligence with respect to CT and such
Proposed Fund. During such sixty-day period the
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parties shall cooperate in good faith to agree on the Proposed Fund Key Items.
If after 30 days from the date of the Proposed Fund Notice the parties are
unable to agree on the Proposed Fund Key Items, and any one of the investment
banking firms listed on Schedule 2.6 hereof selected by CT informs the parties
in writing that it believes the Proposed Fund Key Items, as modified, if at all,
pursuant to such good faith discussions between the parties, are then "market"
terms and that such investment banking firm is willing to serve as placement
agent of the Proposed Fund on a contingent and success fee basis in accordance
with such Proposed Fund Key Items, then upon the parties receipt of such written
notice from the investment banking firm the Proposed Fund Offer shall be deemed
definitive (a "Definitive Proposed Fund Offer"). On or before the expiration of
a ten-day period from the date the Proposed Fund is first deemed a Definitive
Proposed Fund Offer, General REMI II shall deliver to CT either a notice of
acceptance of the Definitive Proposed Fund Offer (a "Definitive Proposed Fund
Acceptance") or a notice of rejection of the Definitive Proposed Fund Offer (a
"Definitive Proposed Fund Rejection"). If General REMI II shall fail to deliver
either a Definitive Proposed Fund Acceptance or a Definitive Proposed Fund
Rejection within the Option Period, it shall be deemed to have delivered a
Definitive Proposed Fund Rejection as at the last day of the Option Period.
(b) A Proposed Fund with respect to which General REMI II shall have
delivered a Definitive Proposed Fund Acceptance shall be deemed to be an Other
Fund. If General REMI II delivers to CT a Definitive Proposed Fund Acceptance
within the Option Period, CT and General REMI II or its designated Affiliate
shall cooperate in good faith to prepare all offering materials, forms of
agreements and all other materials related to the Proposed Fund and to market
the Proposed Fund in as expeditious a manner as is practicable under the
circumstances. Subject to Section 2.5(a), the Definitive Proposed Fund
Acceptance shall be deemed to constitute the obligation of General REMI II or
its Affiliate to commit to contribute to the capital of the Proposed Fund at
each closing of the Proposed Fund one dollar for every four dollars committed by
third party investors (excluding commitments made by CT or its Affiliates, but
including Private Banking Client Commitments) at such closing, provided,
however, that neither General REMI II nor its Affiliates shall be obligated to
make aggregate capital commitments to the Proposed Fund in an amount greater
than $200,000,000, including 50% of any capital commitment to such Proposed
Fund's Fund Control Person necessary to permit such Fund Control Person to make
its capital commitment to such Proposed Fund and to pay any placement fees and
any organizational costs not paid by such Proposed Fund. CT shall not be
required to make any capital commitment to such Proposed Fund other than 50% of
any capital commitment to such Proposed Fund's Fund Control Person necessary to
permit such Fund Control Person to make its capital commitment to such Proposed
Fund and to pay any placement fees and any organizational costs not paid by such
Proposed Fund. All additional capital commitments made by General REMI II or any
of its Affiliates pursuant to the foregoing provisions of this Section 2.6(b),
and any additional capital commitments made by CT or its Affiliates in a
Proposed Fund, shall be made on the same basis and same terms and conditions as
those made by the third party investors in the Proposed Fund.
(c) If General REMI II delivers or is deemed to have delivered a
Definitive Proposed Fund Rejection with respect to a Definitive Proposed Fund
Offer, CT shall have the right to sponsor the Proposed Fund (even where the
Proposed Fund Key Items of the Proposed Fund are modified). If pursuant to the
foregoing procedures of this Section 2.6, General REMI II shall have delivered
or shall be deemed to have delivered a Definitive Proposed Fund Rejection
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with respect to two Proposed Funds, CT shall have the right to terminate General
REMI II's right of first refusal set forth in this Section 2.6 and CT may
exercise such right by providing General REMI II with written notice of such
termination; provided, however, if the CT Parties or their Affiliates are unable
to close a Proposed Fund (whether or not on the same or different Proposed Fund
Key Items for which General REMI II delivered or was deemed to have delivered a
Definitive Proposed Fund Rejection) then any such rejection by General REMI II
shall not constitute a Definitive Proposed Fund Rejection for purposes of this
sentence.
2.7. CIG Real Estate Exclusivity. (a) During the period commencing on the
date of the Fund II Initial Closing and continuing through the respective
Investment Periods of Fund II, Subsequent Funds and any Other Funds, the
following shall apply:
(i) During the applicable Fund's Investment Period, if CIG Real
Estate is presented with a candidate transaction relating directly to the
Mezzanine Business in the United States and CIG Real Estate has developed enough
information about the candidate transaction to conclude preliminarily that it is
interested in pursuing it (a "Candidate Mezzanine Business Transaction"), CIG
Real Estate shall provide notice (a "Candidate Transaction Notice") thereof to
CT, with a copy to the applicable Fund Control Person, for consideration by CT
and the applicable Fund Control Person on behalf of the applicable Fund. To the
extent such information is known to CIG Real Estate, the Candidate Transaction
Notice shall set forth (v) the particular property that is the subject of the
Candidate Mezzanine Business Transaction, (w) the name of the owner or developer
of the particular property, (x) the name or names of the persons who CT should
contact in order for CT to pursue the Candidate Mezzanine Business Transaction
on behalf of the applicable Fund, (y) the name of the lead senior lender, and
(z) the terms and conditions of the Candidate Mezzanine Business Transaction and
shall take reasonable efforts to cooperate with CT in its pursuit of the
candidate transaction. CT shall have until the close of business on the second
Business Day after the date of its receipt of a Candidate Transaction Notice
(the "Candidate Transaction Notice Period") to elect by notice to General REMI
II whether or not it wishes to pursue the Candidate Mezzanine Business
Transaction on behalf of the applicable Fund (the "Election Notice"). If CT
shall fail to deliver the Election Notice within the Candidate Transaction
Notice Period, CT, on behalf of the applicable Fund, shall be deemed to have
rejected the Candidate Mezzanine Transaction as of the last day of the Candidate
Transaction Notice Period. If CT, on behalf of the applicable Fund, shall have
elected or shall be deemed to have elected not to pursue the Candidate Mezzanine
Business Transaction, General REMI II or any of its Affiliates shall have the
right to pursue and conclude such Candidate Mezzanine Business Transaction on
substantially the same terms. If CT on behalf of the applicable Fund shall have
elected to pursue the Candidate Mezzanine Transaction, but later shall elect to
abandon such transaction, it shall promptly provide written notice to General
REMI II thereof and General REMI II or any of its Affiliates after receipt of
such notice shall have the right to pursue such Candidate Mezzanine Business
Transaction.
(ii) CIG Real Estate shall not sponsor or co-sponsor any pooled
investment vehicle primarily engaged in the Business other than as a co-sponsor
of such vehicle along with CT; provided, however, that the foregoing shall not
limit or restrict General REMI II or its Affiliates from in any manner investing
in, or allowing its customers to invest in any manner in, Business assets other
than investments in the Mezzanine Business; and provided further, that if any
Affiliate of General REMI II acquires any entity that sponsors or co-sponsors
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pooled investment vehicles engaged in the Business and if the management of any
such pooled investment vehicles is subsequently assigned to and undertaken by
CIG Real Estate, CIG Real Estate shall have a twelve-month period following the
effective date of such assignment and undertaking to cause the entity to cease
investing new capital in Business assets and to cease raising capital in any
such pooled investment vehicle. The restrictions contained in this clause (ii)
of Section 2.7(a) are referred to herein as the "Competing Fund Restriction".
(b) In the event that CIG Real Estate shall not have complied with
Section 2.7(a)(i) or 2.7(a)(ii), CT's exclusive remedy shall be the right to
terminate General REMI II's right of first refusal set forth in Section 2.6
hereof with respect to subsequent Proposed Funds. If CT desires to terminate
General REMI II's right of first refusal with respect to subsequent Proposed
Funds, it shall provide thirty days' notice thereof to General REMI II stating
the specific grounds for such termination provided, however, that such notice of
termination shall be of no effect if CIG Real Estate shall have cured such
failure to comply to the reasonable satisfaction of CT within 30 days of General
REMI II's receipt of such notice of termination or if such failure to comply is
not susceptible to cure within such 30-day period, CIG Real Estate has commenced
within such 30-day period reasonable steps to cure such failure to the
reasonable satisfaction of CT and General REMI II actually cures such failure
within 60 days of receipt of such notice.
2.8. CT Exclusivity. (a) During the period commencing on the date of the
Fund II Initial Closing and continuing through the respective Investment Periods
of Fund II, Subsequent Funds and any Other Funds, the CT Parties and their
Affiliates' sole involvement (except as otherwise provided in this Agreement) in
the Business shall be as a manager of, an advisor to and/or an investor in such
Funds jointly with the CIG Parties and/or their Affiliates as provided herein
and in the agreements and documents applicable to a particular Fund; provided,
however, that the CT Parties may acquire any Business asset that has been
declined by the CIG Parties or their affiliated member or partner of the
applicable Fund Control Person as an investment for the applicable Fund.
(b) In the event that CT shall propose to acquire Business assets in
consideration of the issuance by CT of its equity or equity-related securities
("Equity Securities") or for cash or part Equity Securities/part cash, CT shall
notify General REMI II as soon as practicable in advance of its intended
acquisition of such Business assets but in any event no later than the date on
which a term sheet is submitted to the target entity (an "Acquisition Notice").
The Acquisition Notice shall describe such Business assets in reasonable detail,
include a preliminary due diligence package with respect to such Business
assets, state the name(s) of the proposed seller or other transferor, state the
purchase price for such Business assets, state the number and type of CT's
Equity Securities and/or cash to be delivered in consideration for the sale or
other transfer of such Business assets, describe any liens or other encumbrances
that burden such Business assets, state CT's estimate of the Fair Market Value
of any such Equity Securities, state the basis for any allocation of the
estimated Fair Market Value of any such Equity Securities as between such
Business assets and any other assets to be acquired by CT in connection with
such transaction, state that CT is willing to sell such Business assets to the
applicable Fund at CT's cost therefor (which cost may include CT's expenses
allocable to its acquisition of such Business assets and their transfer to the
applicable Fund), state the manner in which the foregoing expenses were
determined, and state CT's intention to temporarily hold title to such Business
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assets with the purpose of transferring such Business assets to the applicable
Fund as promptly as practicable after CT's acquisition thereof. Within 10 days
of the Acquisition Notice, General REMI II shall have the right in its sole
discretion to require additional due diligence materials with respect to such
Business assets and the Equity Securities to be delivered to the seller or
transferor in consideration thereof and the manner of determining the Fair
Market Value of such Business assets and such Equity Securities. Within 30 days
of General REMI II's receipt of all such due diligence materials, General REMI
II shall notify CT whether General REMI II approves or rejects CT's proposed
transfer of such Business assets to the applicable Fund at the stated purchase
price (together with CT's expenses related thereto). If General REMI II shall
reject such proposed sale of such Business assets to the applicable Fund, CT
shall have the right to acquire such Business assets for its own account on
substantially the same terms as set forth in the Acquisition Notice. If General
REMI II shall approve such sale of such Business assets to the applicable Fund,
then, subject to any restrictions or limitations set forth in the documentation
relating to the applicable Fund, as soon as practicable after CT's acquisition
of such Business assets, CT shall sell, convey and transfer such Business assets
to the applicable Fund for the purchase price (together with CT's expenses
related thereto) stated in the Acquisition Notice, payable in cash. Upon the
closing of such transfer of such Business assets to the applicable Fund, CT
shall, in form reasonably satisfactory to General REMI II, transfer good and
marketable title to such Business assets free and clear of all liens, claims and
encumbrances (other than any liens or encumbrances set forth in the Acquisition
Notice), and shall assign all the rights and remedies that CT may have vis-a-vis
its seller or transferor to the applicable Fund.
2.9. Mutual Cooperation. Each of the CIG Parties and CT shall use their
reasonable commercial efforts to structure each Fund so that they are able to
comply with the provisions of Section 2.7 and 2.8 hereof, respectively.
2.10. CIG Parties' Representation on CT's Board of Directors. (a) CT has on
the date hereof delivered to General REMI II the CT Board Certificate and each
of the CIG Parties Initial Board Designees has delivered to CT a letter
accepting his appointment to CT's board of directors. The CIG Parties Initial
Board Designees and all subsequent CIG Designees designated pursuant to the
Stockholder Voting and Lock-Up Agreement who serve on CT's board of directors
are hereinafter sometimes referred to collectively as the "CIG Parties
Designees" and singly as a "CIG Parties Designee." In the event that one or both
of the CIG Parties' Designees shall not be elected by CT's stockholders to CT's
board of directors, such CIG Parties Designee(s) shall have (subject to mutually
acceptable confidentiality agreements) the right to receive notices of meetings
of CT's board of directors, to attend and participate in such meetings, and to
receive all materials sent to members of CT's board of directors when and as
sent to such members. The right to designate persons for election as directors
pursuant to the Stockholder Voting and Lock-Up Agreement and, if not so elected,
to attend and participate in board of directors meetings pursuant to this
Section 2.10(a) are referred to herein as the "CIG Parties Board Right."
(b) Upon request from CT from time to time, General REMI II shall
certify to CT that the CIG Parties and/or their Affiliates are the legal and
beneficial owners of at least 4,250,000 of the Board Right Shares. In the event
that (i) the CIG Parties and/or their Affiliates shall cease to comply with the
CIG Parties Ownership Requirement, (ii) CIG Real Estate shall have breached the
provisions of Section 2.7(a)(ii) hereof, (iii) the Fund II Initial Closing shall
not
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have occurred by the latter of December 31, 2000 or, if applicable, any
Extension Date, or (iv) either Limited REMI I or CT-F1 shall have exercised the
Termination Right pursuant to Section 2.12(e) hereof, CT shall have the right to
terminate the CIG Parties Board Right upon notice thereof to General REMI II
stating the effective date of such termination. Thereupon, the CIG Parties Board
Right shall terminate as at such effective date and the CIG Parties shall cause
their designees on CT's board of directors to resign therefrom as at such date
provided, however, (A) that in the event of a termination by CT or CT-F1 of the
CIG Parties Board Right pursuant to the foregoing clause (iii), or clause (iv),
CT or CT-F1 shall only have such right to terminate if CT or CT-F1 or Limited
REMI I shall have exercised the Unwind Right and (B) that in the event of a
termination pursuant to the Termination Right under Section 2.12(e) hereof then
such termination of the CIG Parties Board Right shall take effect only upon
completion of the Unwind or the liquidation or dissolution of Fund I pursuant to
the provisions of the Fund I Agreement.
(c) CT shall indemnify and hold harmless the CIG Parties and every CIG
Parties Designee from any and all liabilities arising from or related to the CIG
Parties Designee's or the CIG Parties Designees' having served on CT's board of
directors in the same manner and to the same extent as other persons who serve
on CT's board of directors as set forth in CT's Certificate of Incorporation,
and CT's By-Laws and to the fullest extent provided by Maryland law. CT has on
the date hereof delivered the CT D&O Certificate to General REMI II. CT hereby
agrees that it shall maintain the directors' and officers' liability insurance
policy or policies referenced in the CT D&O Certificate (or comparable policies
issued by comparable insurance companies) in a face amount or face amounts at
least equal to the current amount of directors' and officers' insurance
maintained by CT at all times from the date hereof through the effective date of
termination of the CIG Parties Board Right insuring the CIG Parties Designees
and the CIG Parties as named insured parties thereunder. In the event that a
policy or policies are on a "claims made" basis, CT shall purchase an "Extended
Reporting" policy following the effective termination date of any such policy.
Such Extended Reporting policy shall have the same policy limits and extend
coverage for a minimum of three years following the original date of the
cancellation of the foregoing policy or policies and for a minimum of three
years following the effective date of termination of the CIG Parties Board
Right. Upon request from General REMI II from time to time, CT shall (i) certify
to General REMI II that such policies are in full force and effect, (ii) certify
the face amount(s) of such policy or policies, and (iii) deliver copies of such
policy or policies and all riders and amendments thereto to General REMI II.
2.11. Investment Management Fees. (a) CTIMCO, the Fund II General Partner
and Fund II have on the date hereof entered into the Fund II Investment
Management Agreement applicable to Fund II from and after the Fund II Initial
Closing. The parties hereto agree that with respect to each Subsequent Fund and
each Other Fund, CTIMCO and the applicable Fund Control Person shall enter into
an investment management agreement in the form of the Fund II Investment
Management Agreement pursuant to which CTIMCO shall perform the investment
management services referenced therein and the applicable Fund Control Person
shall pay to CTIMCO its Pro Rata Share of the Cumulative Investment Management
Fee determined in accordance with the provisions of this Section 2.11.
(b) The Investment Management Fee with respect to all Investment
Management Fee Base Funds shall be paid to CTIMCO quarterly in advance promptly
after receipt by the Fund Control Persons of each Investment Management Fee Base
Fund of their respective
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Management Fee from their respective Funds. With respect to each quarter, CTIMCO
shall deliver to General REMI II and to each Fund Control Person of each
Investment Management Fee Base Fund a certificate (the "Cumulative Investment
Management Fee Base Certificate") setting forth the Cumulative Investment
Management Fee Base and an explanation of the breakdown of the Cumulative
Investment Management Fee amongst the Investment Management Fee Base Funds. The
CIG Parties and the CT Parties shall cause the Fund Control Persons of each of
the Investment Management Fee Base Funds to pay their Pro Rata Share (as defined
herein) of Cumulative Investment Management Fees (the "Investment Management
Fee") to CTIMCO within three (3) Business Days of the delivery of and
certificate to the CIG Parties and such Fund Control Persons. Each Fund Control
Person's pro rata share of the Cumulative Investment Management Fee for the
applicable quarter shall be determined by multiplying (i) the Cumulative
Investment Management Fee by (ii) a fraction, expressed as a percentage, the
numerator of which is the Investment Management Fee Base of that Fund Control
Person's respective Fund, and the denominator of which is the Cumulative
Investment Management Fee Base (the "Pro Rata Share").
(c) The Cumulative Investment Management Fee (the "Cumulative
Investment Management Fee") shall be determined annually and payable
prospectively on a quarterly basis with appropriate adjustments for partial
quarters as follows:
(i) if at the date of a Cumulative Investment Management Fee Base
Certificate the Cumulative Investment Management Fee Base is less than
$700,000,000, each Fund Control Person shall pay to CTIMCO 100% of such Fund
Control Person's Management Fee for the applicable quarter to the extent
necessary to cause CTIMCO to receive Cumulative Investment Management Fees for
such quarter equal to $1,750,000 plus any Shortfall Amounts, provided that the
amount of Cumulative Management Fees payable by the Fund Control Persons of all
the Investment Management Fee Base Funds shall not in any Fiscal Year exceed
$7,000,000 plus any amounts required to cover any Shortfall Amounts. In the
event and to the extent that Cumulative Investment Management Fees payable to
CTIMCO in any Fiscal Year are less than $6,250,000 (the "Shortfall Amount"), the
Shortfall Amount shall accrue simple interest at LIBOR and each Fund Control
Person shall pay its Pro Rata Share of the Shortfall Amount, together with
interest thereon, on a priority basis in subsequent periods; provided, however,
that if and to the extent Cumulative Investment Management Fees in such
subsequent periods are not sufficient to permit the Fund Control Persons of the
Investment Management Fee Base Funds to pay the Shortfall Amount together with
interest thereon in full (the "Cumulative Investment Management Fee Deficiency
Amount"), then each Fund Control Person shall pay its Pro Rata Share of the
Cumulative Investment Management Fee Deficiency Amount as a priority payment
from such Fund Control Person's "carried interest" or "promote" from its
respective Fund as such "carried interest" or "promote" is realized by the
respective Fund Control Person and from its respective Management Fee; provided,
further, however, that the parties shall cause the Fund Control Persons of the
Investment Management Fee Base Funds to make such adjustments and payments as
between them necessary to assure that no Fund Control Person pays more than its
Pro Rata Share of any Cumulative Investment Management Deficiency Amount.
(ii) if at the date of a Cumulative Investment Management Fee
Base Certificate the Cumulative Investment Management Fee Base is $700,000,000
or more but less than $1,200,000,000, the Cumulative Investment Management Fee
for the next succeeding
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quarter shall be one-fourth the sum of (A) $7,000,000 plus (B) with respect to
the amount of Cumulative Investment Management Fee Base exceeding $700,000,000
the product of such excess amount times 0.75% (75 basis points) and each Fund
Control Person shall promptly pay CTIMCO its Pro Rata Share thereof;
(iii) if at the date of a Cumulative Investment Management Fee
Base Certificate the Cumulative Investment Management Fee Base is $1,200,000,000
or more, the Cumulative Investment Management Fee for the next succeeding
quarter shall be one-fourth the sum of (A) $10,750,000 plus (B) with respect to
the amount of Cumulative Investment Management Fee Base exceeding $1,200,000,000
the product of such excess amount times 0.50% (50 basis points) and each Fund
Control Person shall promptly pay CTIMCO its Pro Rata Share thereof; provided,
however, that the CIG Parties and CTIMCO shall cooperate in good faith to adjust
the Cumulative Investment Management Fee under clause (B) of the foregoing
clause (iii), upwards or downwards, to take into account the actual services
rendered by CTIMCO pursuant to the various investment management agreements with
the Fund Control Persons of the Investment Management Fee Base Funds, provided
further that if the parties are unable to agree on any such adjustment, the
formula set forth in clause (B) of the foregoing clause (iii) shall continue to
apply until such time as the parties agree on any such adjustment; provided
further, that within 90 days of the end of each Fiscal Year, Cumulative
Investment Management Fees shall be adjusted to take into account any
overpayments or underpayments during the prior Fiscal Year. Overpayments shall
be deducted from, and underpayments shall be added to, Cumulative Investment
Management Fees payable in the then next succeeding quarter after such annual
adjustment.
For the avoidance of doubt, until the aggregate Cumulative Investment
Management Fee paid to CTIMCO by all Fund Control Persons in any Fiscal Year
equals $7,000,000 plus any amount required to pay any Shortfall Amounts, the
quarterly Investment Management Fee paid by each Fund Control Person shall equal
100% of such Fund Control Person's Management Fee for the applicable quarter to
the extent necessary to cause CTIMCO to receive in such quarter a Cumulative
Investment Management Fee equal to $1,750,000.
2.12. Unwind Right; Unwind. (a) In the event that the Fund II Initial
Closing shall not have occurred by the later of December 31, 2000 or any
Extension Date resulting from an exercise of the Extension Right, either Limited
REMI I or CT-F1 shall have the right to exercise the Unwind Right. Either
Limited REMI I or CT-F1 may exercise the Extension Right upon notice to the
other provided that such notice is given at least 60 days prior to December 31,
2000 or 30 days prior to any Extension Date. Neither Limited REMI I nor CT-F1
may exercise the Unwind Right as a result of the failure of the Fund II Initial
Closing to occur on or before December 31, 2000 or by the failure of the Fund II
Initial Closing to occur on or before any Extension Date if the other has
already given notice to it of its exercise of the Extension Right.
(b) In the event that there shall have been a failure to comply with
the Key Individuals Requirement set forth in the Fund I Investment Management
Agreement or in the event that CT-F1 shall have breached the Fund I Investment
Management Agreement, Limited REMI I shall have the right to exercise the Unwind
Right. In the event that Limited REMI I elects to exercise the Unwind Right
pursuant to this Section 2.12(b), it shall give written notice thereof to CT-F1
stating the specific grounds therefor; provided, however, that such notice shall
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be of no effect if CT-F1 shall have cured such failure to comply to the
reasonable satisfaction of Limited REMI I within 30 days of CT-F1's receipt of
such notice or if such failure to comply is not susceptible to cure within such
30-day period, CT-F1 has commenced within such 30-day period reasonable steps to
cure such failure to the reasonable satisfaction of Limited REMI I, and CT-F1
actually cures such failure within 60 days of receipt of such notice.
(c) Upon receipt by either Limited REMI I or CT-F1 of the other's
notice that it is exercising the Unwind Right pursuant to Section 2.12(a)
hereof:
(i) Limited REMI I and CT-F1 shall carry out the Unwind as set
forth in the Fund I Agreement;
(ii) the Fund I Warrant Agreement shall remain in full force and
effect;
(iii) General REMI II shall have no right to purchase the Fund II
Purchase Warrant or the Subsequent Funds Purchase Warrant, and Limited REMI II
shall have no right to receive the Fund II Service Warrant or the Subsequent
Funds Service Warrant;
(iv) as of the date of the completion of the Unwind, the CT-F2-GP
Capital Formation Agreement, the Fund I Agreement, the Fund I Investment
Management Agreement, the Fund II General Partner Agreement, the Stockholder
Voting and Lock-Up Agreement, the Placement Agent Agreement, and this Agreement
shall terminate automatically, except that the respective provisions of the
foregoing agreements which by their terms survive the termination of such
agreement shall survive; and
(v) the members of Fund I shall cause a Certificate of
Cancellation to be filed with the State of Delaware, and in each state where
Fund I has been qualified to do business, canceling Fund I in accordance with
the Delaware Limited Liability Company Act and in accordance with the laws of
each state where Fund I has been qualified to do business, respectively.
(d) Upon receipt by CT-F1 of Limited REMI I's notice that it is
exercising the Unwind Right pursuant to Section 2.12(b) hereof:
(i) Limited REMI I and CT-F1 shall carry out the Unwind as set
forth in the Fund I Agreement;
(ii) the Fund I Warrant Agreement shall remain in full force and
effect;
(iii) the Fund II Purchase Warrant and Subsequent Funds Purchase
Warrant and the Fund II Service Warrant and Subsequent Funds Service Warrant if,
and to the extent, issued shall remain in full force and effect;
(iv) as of the date of the completion of the Unwind, the CT-F2-GP
Capital Formation Agreement, the Fund I Agreement, the Fund I Investment
Management Agreement, the Stockholder Voting and Lock-Up Agreement, the
Placement Agent Agreement, this Agreement, and (if the Fund II Initial Closing
has not occurred as of the date of completion of the Unwind) the Fund II General
Partner Agreement shall terminate automatically, except that
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the respective provisions of the foregoing agreements which by their terms
survive the termination of such agreement shall survive; and
(v) the members of Fund I shall cause a Certificate of
Cancellation to be filed with the State of Delaware, and in each state where
Fund I has been qualified to do business, canceling Fund I in accordance with
the Delaware Limited Liability Company Act and in accordance with the laws of
each state where Fund I has been qualified to do business, respectively.
(e) Termination by SSB. Notwithstanding anything contained in this
Agreement to the contrary, if within 30 days of the date hereof SSB shall have
delivered a notice of termination to CT terminating the placement agent
engagement pursuant to Section 5 of the Placement Agent Agreement (a "SSB
Termination Notice"), Limited REMI I or CT-F1 shall have the right (the
"Termination Right") to terminate this Agreement as provided below upon notice
to the other within 5 days of the date of the SSB Termination Notice. The
Termination Right may be exercised by either Limited REMI I or CT-F1 by delivery
to the other of notice that it is exercising the Termination Right whereupon
this Agreement and the Transaction Documents shall terminate except as provided
below:
(i) (A) Limited REMI I and CT-F1 shall carry out the Unwind as
set forth in the Fund I Agreement if Fund I has prior to the date of such
exercise made Investments (as defined in the Fund I Agreement) and dissolve Fund
I pursuant to Delaware law upon completion of the Unwind or (B) if Fund I has
made no Investments prior to such exercise, dissolve Fund I pursuant to Delaware
law promptly after such exercise of the Termination Right;
(ii) The CIG Parties Initial Board Designees shall resign from
CT's board of directors upon completion of the Unwind or if Fund I has made no
Investments then promptly after the exercise of the Termination Right;
(iii) (A) The Fund I Warrant Agreement, (B) Section 2.10(c) and
Articles IV, V and VIII of this Agreement, (C) the respective provisions of the
Fund I Agreement and the Fund I Investment Management Agreement (but only if
Fund I shall have made Investments prior to the date of the Exercise of the
Termination Right) which by their express terms survive a termination thereof,
and (D) the provisions of the Placement Agent Agreement which by their express
terms survive any termination of the placement agent engagement thereunder shall
remain in full force and effect; and
(iv) Upon completion of any such Unwind, or immediately upon the
exercise of the Termination Right if Fund I has made no Investments, the
parties' respective obligations under Article II of this Agreement and under
each Transaction Document shall terminate other than as set forth in clause
(iii) of this Section 2.12(e).
2.13. Key Individuals. The "Key Individuals" of CT are John R. Klopp, Vice
Chairman and Chief Executive Officer; and Craig M. Hatkoff, Vice Chairman and
Chairman of the Executive Committee. CT hereby represents and warrants to the
CIG Parties and CIG that it has delivered true and correct copies of the
respective employment agreements of the Key Individuals to General REMI II. CT
hereby agrees that it shall not amend or modify any such
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employment agreement in any manner that would, or could reasonably, decrease the
term thereof. CT hereby covenants that it shall cause CTIMCO and any other
entity that CT elects to serve as investment manager to any Fund to agree to the
Key Individuals Requirement in its investment management agreement unless at the
time of the formation of any such Fund and the entering into any such investment
management agreement the Key Individuals Requirement could not be met.
2.14. REIT Status. CT shall take such steps as are necessary for it to be
taxed as a REIT under Part II of Subchapter M of Chapter 1 of Subtitle A of the
Code whether through merger, election or otherwise on terms mutually acceptable
to CT and the CIG Parties as soon as possible after the date hereof. Such steps
shall include, but shall not be limited to, the submission to CT's stockholders
of any matters customarily necessary for them to approve in order for CT to be
so taxed as a REIT. Unless there shall have (i) been a change in the Code or
formally published administrative or judicial interpretations of the Code the
result of which is that election of REIT status would have a material adverse
effect on CT as is evidenced by a written opinion of tax counsel to CT
reasonably acceptable to the CIG Parties, (ii) occurred an Act of God or other
force majeure that prevents CT from electing to be taxed as a REIT under Part II
of Subchapter M of Chapter 1 of Subtitle A of the Code or (iii) despite good
faith efforts on the part of CT, it is not able to comply with the conditions
required by the Code to qualify as a REIT (by way of example and not limitation,
income/asset tests, concentration of ownership, and other such tests and
conditions), CT shall submit to its stockholders all matters necessary for them
to approve in order for CT to be taxed as a REIT ("REIT Tax Matters") and CT
shall actively solicit the adoption of such matters by CT's stockholders. If
there shall not have occurred any event or act described in the foregoing
clauses (i) and (ii) of this Section 2.14 and CT shall have met the conditions
described in clause (iii) of this Section 2.14 and CT shall nevertheless not
have submitted the foregoing matters to its stockholders for approval in a
manner timely enough for CT to elect to be taxed as a REIT under the Code for
the period beginning January 1, 2002 or has otherwise not become a REIT through
merger or otherwise by January 1, 2002, General REMI II shall have the right to
invoke the Appraisal Procedures set forth in Section 4.1 hereof pursuant to
which the Experienced Appraiser shall determine (x) the Fair Market Value of the
CIG Parties' and their Affiliates' Board Right Shares with CT being valued as a
"C" corporation under the Code and (y) the Fair Market Value of the CIG Parties'
and their Affiliates' Board Right Shares with CT being valued as a REIT. To the
extent that (x) is less than (y), CT shall promptly pay such amount to the
respective CIG Parties and their Affiliates in proportion to their respective
holdings of Board Right Shares. The above notwithstanding, if the REIT Tax
Matters shall have been submitted to the stockholders of CT and the stockholders
of CT do not approve the REIT Tax Matters, the CIG Parties shall not have the
foregoing right to invoke the Appraisal Procedures or to receive such payment.
2.15. Fees. (a) The CIG Parties and the CT Parties, as the case may be, for
themselves and their Affiliates, agree that in the event that any of them or
their Affiliates propose to earn any fee, whether directly related to a Business
transaction to be conducted by any Fund (including Fund I) or ancillary to any
such Business transaction, it shall notify the CT Parties or the CIG Parties, as
the case may be, of such fee and the circumstances related to such fee. All fees
directly related to a Business transaction (by way of example and not
limitation, a commitment fee to be received in connection with a Mortgage Loan
to be made by a Fund, including Fund I) to be conducted by a Fund (including
Fund I) shall be for the account of such fund, and shall be
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promptly paid over to such fund upon such party's receipt thereof. All fees that
are ancillary to a Business transaction (by way of example and not limitation,
an advisory fee to be earned by an Affiliate pursuant to an engagement entered
into prior to a Business transaction being proposed to such fund or pursuant to
an engagement that is broader than the Business) to be conducted by a Fund
(including Fund I) shall not be for the account of such fund but instead shall
be for the account of such party or its Affiliate. In each instance where a
party is to receive any such direct or ancillary fee, such fee shall be on
reasonable commercial terms determined on an arm's-length basis to the
reasonable satisfaction of the CT Parties or the CIG Parties, as the case may
be. Any dispute with respect to whether a fee is direct or ancillary to a
Business transaction being conducted by a Fund (including Fund I) and any
dispute as to whether a fee is on reasonable commercial terms determined on an
arm's-length basis shall be resolved pursuant to Section 4.2 hereof.
(b) The parties agree that each fee required to be paid pursuant to this
Venture Agreement, including without limitation, the fees payable to Limited
REMI II or its Affiliates for raising funds, are considered ancillary,
commercially reasonable and arm's-length, and may be retained by the recipient.
Such fees constitute reasonable compensation and are the only fees to be
received for the services specified herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
3.1. Reciprocal Representations and Warranties. Each of Limited REMI I,
General REMI II, Limited REMI II, CT-F1, CT-F2-GP, CT-F2-LP, CTIMCO and CT
hereby represent and warrant to each other that:
(a) Organization; Authority; Due Authorization.
(i) Organization and Good Standing. It is a limited liability
company (in the case of Limited REMI I, General REMI II, Limited REMI II, CT-F1,
CT-F2-GP, and CT-F2-LP) duly organized, validly existing and in good standing
under the applicable laws of its jurisdiction of formation/incorporation or is a
corporation (in the case of CT) duly incorporated and existing under and by
virtue of the laws of the State of Maryland and is in good standing with the
State Department of Assessments and Taxation of Maryland; has all requisite
power to own, lease and operate its assets, properties and business and to carry
on its business as now conducted; and is in good standing in every jurisdiction
in which the nature of its business or the location of its properties requires
such qualification, except for such jurisdictions where the failure to so
qualify would not have a material adverse effect upon its ability to perform
fully its obligations under this Agreement or the Transaction Documents.
(ii) Authority to Execute and Perform Agreements. It has all
requisite limited liability company power and authority (in the case of Limited
REMI I, General REMI II, Limited REMI II, CT-F1, CT-F2-GP, and CT-F2-LP) to
enter into, execute and deliver this Agreement, and each Transaction Document to
which it is a party, and to perform fully its obligations hereunder and
thereunder, or has the requisite corporate power (in the case of CT) to execute
and deliver this Agreement and each Transaction Document to which it is a party,
and to carry out the terms and conditions thereof applicable to it.
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(iii) Due Authorization; Enforceability. In the case of Limited
REMI I, General REMI II, Limited REMI II, CT-F1, CT-F2-GP, and CT-F2-LP, it has
taken all limited liability company actions necessary to authorize it to enter
into and perform fully its obligations under this Agreement and the Transaction
Documents to be executed by it and to consummate the transactions contemplated
herein and therein. In the case of CT, the execution, delivery and performance
by CT of this Agreement and the Transaction Documents have been duly authorized
by all necessary corporate action on the part of the Company.
(iv) Enforceability. This Agreement has been duly and validly
executed by it and constitutes the legal, valid and binding obligation of it,
enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
applicable laws affecting creditors' rights generally or by general equitable
principles affecting the enforcement of contracts.
(b) No Violation. Neither its execution or delivery of this Agreement
nor the consummation of the transactions contemplated herein will: (a) violate
any provision of its limited liability company operating agreement, certificate
of incorporation, by-laws or other charter documents; or (b) violate in any
material respect any applicable law or order.
(c) Regulatory and Other Approvals. No consent, approval,
authorization, notice, filing, exemption or other requirement must be obtained
by it from any authority or Person or must otherwise be satisfied by it in order
that the consummation of the transactions contemplated in this Agreement or any
related documents will not violate in any material respect any applicable law or
order or any material contract to which it is a party.
(d) Litigation. It is not (i) subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, and (ii) there is no material claim,
action, proceeding or investigation pending or, to its knowledge, threatened
against or relating to it before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator which challenges the ability or legality of such party's entering
into this Agreement or any Transaction Documents to which it is a party.
3.2. Representations and Warranties of CT. CT hereby represents and
warrants to the other parties hereto that: The parties to the various
Stockholder Approval Agreements and the Stockholder Voting and Lock-Up
Agreements who are CT Management Stockholders or Associated Stockholders are the
record owners of the number of shares of CT Class A Common Stock set forth in
the respective Stockholder Approval Agreements or Stockholder Voting and Lock-Up
Agreement and are not the record owners of any other shares of CT Class A Common
Stock. To the best of CT's knowledge, after reasonable inquiry, CT Management
Stockholders and Associated Stockholders as well as their respective Affiliates,
Associates, family members or trusts for the benefit of family members do not
beneficially own any shares of CT Class A Common Stock other than those set
forth in the respective Stockholder Approval Agreements and in the Stockholder
Voting and Lock-Up Agreement.
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ARTICLE IV
DISPUTE RESOLUTION
4.1. Appraisal Procedure.(a) In the event of a dispute between the parties
hereto or between the parties to any Transaction Document as to the Fair Market
Value of a particular asset or assets, interest or right of a party hereto and
such dispute has not been resolved after good faith discussions amongst the
concerned parties after 30 days notice of such dispute from one party to the
other parties, either party may invoke the Appraisal Procedures.
(b) "Appraisal Procedures" means the following procedures, by which
the Fair Market Value of a particular asset or assets, interest or right of a
party hereto shall be determined. If a party (the "Notifying Party") wishes to
invoke the Appraisal Procedures it shall provide notice (the "Appraisal Notice")
of such election to the other party (the "Other Party") and the Notifying
Party's determination of the Fair Market Value of the particular asset or
assets, interest or right. Within 15 days of the Other Party's receipt of the
Appraisal Notice, it shall notify the Notifying Party whether it accepts or
rejects the Notifying Party's determination of Fair Market Value. In the event
the Other Party fails to notify the Notifying Party within the foregoing 15 day
period that it rejects said determination, the Other Party shall be deemed to
have accepted the Notifying Party's determination of Fair Market Value. If the
Other Party gives the Notifying Party timely notice of its rejection of the
Notifying Party's determination, the Notifying Party and the Other Party
acknowledge and agree that the appraisal process hereinafter set forth shall
determine the Fair Market Value. Each party, at its own expense, shall then
designate an Experienced Appraiser who shall determine and promptly report (and
in no event later than the thirtieth (30th) day following the Other Party's
receipt of the Appraisal Notice) to both parties in writing the Fair Market
Value. If the report indicates proposed values that are within five (5%) percent
of each other, the Notifying Party and the Other Party agree that the Fair
Market Value shall be an average of such amounts. However, if after receiving
the report, the parties are unable to agree on the Fair Market Value (and the
amounts are not within five (5%) percent of each other) within five (5) days,
both parties shall jointly appoint an Experienced Appraiser who shall determine
the Fair Market Value by selecting either the Fair Market Value as reported by
the Notifying Party's Experienced Appraiser or the Fair Market Value as reported
by the Other Party's Experienced Appraiser, according to whichever of the two
valuations is closer to the actual Fair Market Value in the opinion of such
third Experienced Appraiser. The third Experienced Appraiser shall have no
discretion other than to select one or the other report as aforesaid. The costs
of such third Experienced Appraiser shall be shared equally by the Notifying
Party and the Other Party. The parties shall work together and coordinate
efforts to obtain such third Experienced Appraiser's report in writing no later
than the forty-fifth (45th) day following the latter of the Other Party's
receipt of the Appraisal Notice. The parties shall be obligated to enter into
engagement agreements with the foregoing Experienced Appraisers containing
customary terms and conditions, including customary indemnification provisions.
(c) "Experienced Appraiser" means a nationally recognized "bulge
bracket" independent investment banking firm (other than Salomon Smith Barney)
experienced in the valuation of businesses engaged in the Business and their
securities.
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4.2. Arbitration. Should any dispute arise under this Agreement that is not
subject to the provisions of Section 4.1 hereof; then the parties shall meet to
attempt to resolve such dispute before any proceeding, including arbitration, is
commenced, and neither party shall seek other relief prior to such meeting. In
the event such a meeting does not resolve such dispute and such dispute shall
remain unresolved for a period of thirty (30) days, then the following shall
apply:
(a) Dispute Resolution. Subject to the provisions of Section 4.1
hereof, the parties shall submit any dispute, claim or controversy arising out
of or relating to this Agreement or any Transaction Document (including, without
limitation, with respect to the meaning, effect, validity, termination,
interpretation, performance or enforcement of this Agreement or any Transaction
Document) or any alleged breach (including any action in tort, contract equity
or otherwise) to binding arbitration before an arbitrator (the "Arbitrator"), to
be heard pursuant to the provisions of the Commercial Arbitration Rules of the
American Arbitration Association. The parties agree that, except as otherwise
provided herein respecting temporary or preliminary injunctive relief, binding
arbitration shall be the sole means of resolving any dispute, claim, or
controversy arising out of or relating to this Agreement or the Transaction
Documents (including, without limitation, with respect to the meaning, effect,
validity, termination, interpretation, performance or enforcement of this
Agreement or the Transaction Documents) or any alleged breach (including any
claim in tort, contract, equity or otherwise).
(b) Location. Any arbitration shall be held in New York County, New
York.
(c) Costs. The CIG Parties, on the one hand, and the CT Parties, on
the other hand, shall equally bear any arbitration fees and administrative costs
associated with the arbitration. No party shall be entitled to recover costs or
attorneys' fees incurred during the course of arbitration.
(d) Award. The Arbitrator's award may not include punitive damages.
The arbitration award in any such arbitration may be confirmed by any court of
competent jurisdiction.
(e) Submission to Jurisdiction, Waiver of Jury Trial. In the event
that the parties waive the foregoing arbitration provisions or in the event that
such provisions shall for any reason not be available or enforceable, the
parties hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York County. In any such event, each party hereto hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. Each party irrevocably consents
to service of process in the manner provided for notices in Section 8.2 hereof,
but nothing in this sentence shall affect the right of any party to serve
process in any other manner permitted by law. EACH OF THE PARTIES HEREBY WAIVES
ITS RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS
AGREEMENT OR ANY TRANSACTION DOCUMENT.
35
<PAGE>
ARTICLE V
INDEMNIFICATION
5.1. Indemnification.(a) Each party (an "Indemnifying Party") hereto hereby
agrees to indemnify and hold harmless the other parties and their directors,
officers, members, employees and agents and its Affiliates and its directors,
officers, members, employees and agents and each other Person, if any,
controlling any of the foregoing (collectively, "Indemnitees"), to the full
extent lawful, from and against any and all losses, penalties, actions,
judgments, suits, claims, costs, expenses, disbursements and damages of any kind
or nature whatsoever (including fees and disbursements of counsel for such
Indemnitee) (collectively, "Losses") caused by, arising from or in connection
with (i) any false or misleading misrepresentation or warranty contained in this
Agreement or in any Transaction Document, (ii) any breach of this Agreement or
any Transaction Document, or (iii) (A) any untrue statement or alleged untrue
statement of a material fact contained in the Fund II PPM or related offering
materials or any subsequent offering memorandum or related offering materials
related to any Other Funds or the omission or alleged omission to state therein
a material fact necessary in order to make the statements made therein not
misleading, in light of the circumstances under which they were made, or (B) any
other action or failure to act by an Indemnitee undertaken at the Indemnifying
Party's request except that this clause (B) shall not apply to the extent that
any Damages are finally judicially determined to have resulted primarily from
the Indemnitee's bad faith or gross negligence.
(b) In the event that the foregoing indemnity in clause (iii) of
Section 5.1(a) is unavailable to an Indemnitee for any reason, the parties agree
to contribute to any Losses related to or arising out of the Fund II PPM and the
related offering of securities and any subsequent offering memorandum and the
related offering with respect to an Other Fund or any transaction or conduct in
connection therewith as follows. For Losses referred to in clause (iii) of the
preceding paragraph, each party involved in the particular offering shall
contribute in such proportion as is appropriate to reflect the relative fault of
each such party in connection with the statements, omissions or other conduct
which resulted in such Losses, as well as any other relevant equitable
considerations. For any other Losses, or for Losses referred to in clause (iii)
of the preceding paragraph, if the allocation provided by the immediately
preceding sentence is unavailable or can not be reasonably determined for any
reason, each party involved in the particular offering shall contribute in such
proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by it from the actual or proposed offering or
transaction. Relative fault with respect to Losses arising out of or based upon
an untrue statement or alleged untrue statement of a material fact or an
omission or alleged omission to state a material fact in the Fund II PPM or
related offering materials or any subsequent offering memorandum or related
materials related to any Other Funds shall be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
relative benefits of the CIG Parties, on the one hand, and the CT Parties, on
the other hand, shall be 50/50. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to above.
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(c) Each party, for itself and on behalf of its affiliated Indemnitee,
will not, without the prior written consent of the Indemnifying Party, settle
any pending or threatened claim or proceeding related to any Losses referenced
in Section 5.1(a) hereof unless such settlement includes a provision
unconditionally releasing the Indemnifying Party and its directors, officers,
members, employees and agents and its Affiliates and their directors, officers,
members, employees and agents and each other Person, if any, controlling any of
the foregoing from and holding the Indemnifying Party and its directors,
officers, members, employees and agents and its Affiliates and their directors,
officers, members, employees and agents and each other Person, if any,
controlling any of the foregoing harmless against all liability in respect of
claims by any releasing party related to or arising out of the matters referred
to in clauses (i) through (ii) of Section 5.1(a) hereof. The Indemnifying Party
shall also promptly reimburse each Indemnitee for all expenses (including
counsel fees) as they are incurred by an Indemnitee in connection with
investigating, preparing or defending, or providing evidence in, any pending or
threatened claim or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnitee is a party
to such claim or proceeding) or in enforcing this Agreement.
ARTICLE VI
CONFIDENTIALITY AND NON-DISCLOSURE
6.1. Confidentiality.(a) Except as otherwise provided in this Article VI,
each of the parties to this Agreement for itself and on behalf of its Affiliates
shall keep confidential and shall not disclose the transactions contemplated
herein, including, but not limited to, any information relating to the
Investment Management Fee, the Business Plan, any Candidate Mezzanine Business
Transaction, the CT Business Plan, any Proposed Fund, the Appraisal Procedures,
any arbitration under Section 4.2 hereof, and any confidential information
conveyed by one party to another in connection with a party's due diligence with
respect to the transactions contemplated herein.
(b) The obligation of confidentiality and non-disclosure set forth in
Section 6.1(a) hereof shall not apply to any information that (i) was in the
public domain prior to the date of this Agreement or prior to its conveyance by
one party to another party hereunder as contemplated herein or subsequently came
into the public domain through no fault of such party or its Affiliates, (ii)
was disclosed without restriction by, or with the prior approval of, the other
party, (iii) was lawfully obtained by the party without a binder of
confidentiality from a source other than a party, (iv) to the extent a party has
been advised by counsel that such disclosure or delivery is necessary for such
party to comply with applicable laws and regulations or to comply with any rules
of any applicable stock exchange or over-the-counter market, (v) is required to
be disclosed in order to enforce the provisions of this Agreement or any
Transaction Document, (vi) is compelled by legal or regulatory process, (vii)
has been approved by General REMI II and CT jointly for dissemination to the
public, or (viii) to the extent reasonably necessary to the conduct of such
party's business to disclose to auditors, attorneys, agents and advisers
provided each party notifies such person of the confidentiality provisions
hereof.
(c) Each party shall give the other party reasonable advance notice of
any proposed written disclosure by it under Section 6.2(b) hereof, shall use its
reasonable commercial efforts to secure confidential treatment of such
information and shall cooperate in
37
<PAGE>
good faith with the other parties to limit or restrict such disclosure upon
notice from a party to another that it wishes to so limit or restrict such
disclosure. The parties agree that notwithstanding the provisions of Section
4.2, the remedies afforded in Section 4.2 and afforded by law may be inadequate
to protect against breach of this Article VI, and hereby agree to the granting
of injunctive relief in favor of a party seeking to prevent any breach of this
Article VI without the posting of any bond or other security. For purposes of
this Article VI, Limited REMI I, General REMI II and Limited REMI II and their
respective Affiliates shall be treated as one party, and CT, CT-F1, CT-F2-GP,
CTIMCO, and CT-F2-LP and their Affiliates shall be treated as one party, so
that, by way of example and not limitation, disclosure of confidential
information by Limited REMI I to General REMI II or Limited REMI II or any of
their Affiliates shall not constitute a disclosure by General REMI II under
clauses (i) through (iii) of Section 6.2(b) hereof that shall give rise to a
disclosure by Limited REMI I, General REMI II or Limited REMI II or their
Affiliates as a lawful disclosure under such clauses (i) through (iii).
Likewise, a consent to disclose by one of the CIG Parties shall be deemed to be
a consent to such disclosure by all the CIG Parties.
(d) The parties hereto have agreed on the form, content and timing of
a mutual press release announcing the execution and delivery of this Agreement
by them and disclosing the general terms of the transactions contemplated herein
and in the Transaction Documents. The parties hereto will not, and will not
permit any of their Affiliates to, issue any other press release or make any
written public announcement relating to this Agreement or the transactions
contemplated herein or in the Transaction Documents without the prior consent of
the other parties unless such disclosure is permitted pursuant to clauses (i)
through (iv) of Section 6.1(b) hereof. Subject to the provisions of such clauses
(i) through (iv) of Section 6.1(b) hereof, no party hereto shall issue any
subsequent press releases relating to the transactions contemplated herein or in
the Transaction Documents without the prior consent of the other parties, which
consent shall not be unreasonably withheld. The CT Parties and CT shall use
reasonable efforts to preview with the CIG Parties any scripts for interviews
and the like in connection with analysts meetings, real estate industry
conferences and conventions at least 24 hours prior to their use.
ARTICLE VII
TERMINATION AND SURVIVAL
7.1. Termination. This Agreement may be terminated by the CIG Parties, on
the one hand, and by the CT Parties, on the other hand, (i) if the Fund II
Initial Closing shall not have occurred, then upon the completion of the Unwind
or upon any other liquidation/dissolution of Fund I, (ii) if the Fund II Initial
Closing shall have occurred, then upon the liquidation and dissolution of the
last to exist of all of the Funds (including Fund I), or (iii) pursuant to
Section 2.12(e) hereof.
7.2. Survival. Section 2.10(c) and Articles IV, V and VIII shall survive
the termination of this Agreement.
38
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1. Expenses of the Transaction. Each party shall pay its own legal fees
and other expenses in connection with this Agreement and all agreements and
documents related to Fund I. Expenses with respect to final documentation
related to Fund II (e.g., the Fund II PPM, the Fund II General Partner
Agreement, the Fund II Management Agreement and the Fund II Investment
Management Agreement) will generally be borne by Fund II, provided that any
expenses not reimbursed by Fund II will be borne by the parties equally. If the
Fund II Initial Closing does not occur or if and to the extent Fund II does not
otherwise reimburse the parties' expenses incurred on behalf of Fund II,
expenses with respect to Fund II will be borne equally by the CIG Parties, on
the one hand, and the CT Parties, on the other hand.
7.2. Notices.
(a) Form and Addresses. All notices, consents, approvals, waivers,
elections and other communications (collectively, "Notices") required to be
given pursuant to this Agreement shall be given in writing and,
If to Limited REMI I: Travelers Limited Real Estate Mezzanine
--------------------- Investments I, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12832
With Copies to: Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12832
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to General REMI II: Travelers General Real Estate Mezzanine
---------------------- Investments II, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
39
<PAGE>
With Copies to: Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12833
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to Limited REMI II: Travelers Limited Real Estate Mezzanine
---------------------- Investments II, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
With Copies to: Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12833
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to Capital Trust: Capital Trust, Inc.
-------------------- 605 Third Avenue, 26th Floor
New York, New York 10016
Attn: Chief Executive Officer
With Copies to: Battle Fowler LLP
--------------- 75 East 55th Street
New York, New York 10022
Attn: Thomas E. Kruger, Esq.
40
<PAGE>
If to a CT Party
----------------- c/o Capital Trust, Inc.
to such party: 605 Third Avenue, 26th Floor
-------------- New York, New York 10016
Attn: Chief Executive Officer
With Copies to: Battle Fowler LLP
--------------- 75 East 55th Street
New York, New York 10022
Attn: Thomas E. Kruger, Esq.
(b) Delivery. All notices and other communications required or
permitted by this Agreement shall be deemed to have been duly given if
personally delivered to the intended recipient at the proper address determined
pursuant to this Section 8.2 or sent to such recipient at such address by air
courier, or by hand and will be deemed given, unless earlier received: (a) if
sent by courier when recorded on the records of the courier as received by the
receiving party; and (b) if delivered by hand, on the date of receipt.
8.3. Entire Agreement. This Agreement and the Transaction Documents
supersede all prior and contemporaneous agreements and understandings among the
parties with respect to the subject matter hereof.
8.4. Modification. No change or modification of this Agreement shall be of
any force unless such change or modification is in writing and has been signed
by all of the parties hereto.
8.5. Waivers and Consents. No waiver of any breach of any of the terms of
this Agreement shall be effective unless such waiver is in writing and signed by
the Member against whom such waiver is claimed. No waiver of any breach shall be
deemed to be a waiver of any other or subsequent breach. Any consent of a party
required hereunder must be in writing and signed by such party to be effective.
No consent given by a party in any one instance shall be deemed to waive the
requirement for such party's consent in any other or future instance.
8.6. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
8.7. Further Assurances. Each party shall execute such deeds, assignments,
endorsements, evidences of transfer and other instruments and documents and
shall give such further assurances as shall be consistent with the provisions of
this Agreement and necessary to perform its obligations hereunder.
8.8. Governing Law. This Agreement shall be governed by and be construed in
accordance with the laws of the State of New York without regard to its conflict
of laws principles.
41
<PAGE>
8.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
8.10. Brokers and Finders. Except as set forth in the Placement Agent
Agreement, the CT-F2-GP Capital Formation Agreement and the Limited REMI I
Capital Formation Agreement, each party shall indemnify and hold the other party
harmless from and against any commission, fee or other payment due any broker,
finder or other Person in connection herewith.
8.11. Construction and Interpretation. This Agreement shall not be
construed more strictly against one party than against another by reason of the
fact that it may have been prepared by counsel for one of the parties.
8.12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of each party and their respective successors and permitted
assigns.
8.13. Cumulative Remedies. Except as otherwise expressly provided in this
Agreement, the rights and remedies provided by this Agreement are cumulative and
the use of any one right or remedy by any party shall not preclude or waive its
right to use any or all other remedies. Said rights and remedies are given in
addition to any other rights the parties may have by law, statute, ordinance or
otherwise.
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above stated.
CAPITAL TRUST, INC. TRAVELERS LIMITED REAL ESTATE
MEZZANINE INVESTMENTS I, LLC
By: /s/ John R. Klopp
-------------------------------
John R. Klopp By: /s/ Michael Watson
Chief Executive Officer ------------------------------
Michael Watson
Vice President
CT-F1, LLC TRAVELERS GENERAL REAL ESTATE
By: Capital Trust, Inc., sole Member MEZZANINE INVESTMENTS II, LLC
By: /s/ John R. Klopp By: /s/ Michael Wztson
------------------------------- -------------------------------
John R. Klopp Michael Watson
Chief Executive Officer Vice President
CT-F2-GP, LLC TRAVELERS LIMITED REAL ESTATE
By: Capital Trust, Inc., sole Member MEZZANINE INVESTMENTS II, LLC
By: /s/ John R. Klopp By: /s/ Michael Watson
------------------------------- ------------------------------
John R. Klopp Michael Watson
Chief Executive Officer Vice President
CT-F2-LP, LLC
By: Capital Trust, Inc., sole Member
By: /s/ John R. Klopp
-------------------------------
John R. Klopp
Chief Executive Officer
CT INVESTMENT MANAGEMENT CO., LLC
By: Capital Trust, Inc., sole Member
By: /s/ John R. Klopp
-------------------------------
John R. Klopp
Chief Executive Officer
43
Exhibit 10.2
===============================================================================
LIMITED LIABILITY COMPANY AGREEMENT
OF
CT Mezzanine Partners I LLC
a Delaware limited liability company
Effective as of: March 8, 2000
===============================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINED TERMS......................................1
1.1. Definitions.................................................1
1.2. General References..........................................6
ARTICLE II FORMATION AND DURATION......................................6
2.1. Formation...................................................6
2.2. Name........................................................6
2.3. Agent and Office............................................6
2.4. Principal Place of Business.................................6
2.5. Qualification in Other Jurisdictions........................7
2.6. Term........................................................7
2.7. Intent......................................................7
2.8. Limited Liability...........................................7
2.9. Sale of Warrant. ..........................................7
ARTICLE III PURPOSE OF THE COMPANY......................................7
3.1. Purpose.....................................................7
3.2. Powers of the Company.......................................7
3.3. Limitations on Company Powers. ............................8
ARTICLE IV CAPITAL CONTRIBUTIONS.......................................9
4.1. Initial Contributions.......................................9
4.2. Additional Capital Contributions............................9
4.3. Loans by Members; Compensation.............................11
ARTICLE V MANAGEMENT OF THE COMPANY..................................11
5.1. Management of the Company..................................11
ARTICLE VI DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS..................11
6.1. Distributions..............................................11
6.2. Allocation of Net Profits and Net Losses...................12
6.3. Withholding................................................12
6.4. Restoration of Funds.......................................12
ARTICLE VII TAX ELECTIONS; TAX MATTERS MEMBER; TAX CAPITAL ACCOUNTS....12
7.1. Federal Income Tax Elections; Tax Matters Member...........12
7.2. Tax Matters................................................13
ARTICLE VIII OTHER RIGHTS AND OBLIGATIONS OF MEMBERS....................13
8.1. Resignation of a Member....................................13
8.2. Admission of New Members...................................14
8.3. Indemnification by Company.................................14
8.4. Indemnification by Members.................................14
i
<PAGE>
Page(s)
-------
8.5. Exculpation................................................14
8.6. Reimbursement of Members...................................15
8.7. Particular Covenants of Members............................15
ARTICLE IX TRANSFERS OF COMPANY MEMBERSHIP INTERESTS..................15
9.1. Condition to Transfer of Any Membership Interest...........15
9.2. Transfers of Membership Interests..........................16
9.3. Purchase/Sale Option.......................................17
ARTICLE X DISSOLUTION AND LIQUIDATION................................18
10.1. Dissolution................................................18
10.2. Winding up Affairs and Distribution of Assets..............18
10.3. No Liability...............................................19
10.4. Limitations on Payments Made in Dissolution................19
10.5. Certificate of Cancellation................................20
ARTICLE XI DEFAULT AND REMEDIES.......................................20
11.1. Default....................................................20
11.2. Remedies Upon Event of Default.............................21
11.3. Dispute Resolution. ......................................21
11.4. Waiver of Partition and Certain Other Rights...............21
ARTICLE XII REPRESENTATIONS AND WARRANTIES OF THE MEMBERS..............22
12.1. Reciprocal Representations and Warranties..................22
ARTICLE XIII BOOKS, RECORDS AND REPORTS.................................23
13.1. Maintenance of Books.......................................23
13.2. Records to be Maintained...................................23
13.3. Inspection by Members; Confidential Information............23
13.4. Books and Tax Reports......................................24
ARTICLE XIV MISCELLANEOUS..............................................24
14.1. Notices....................................................24
14.2. Certificate Requirements...................................25
14.3. Modification...............................................25
14.4. Waivers and Consents.......................................26
14.5. Severability...............................................26
14.6. Further Assurances.........................................26
14.7. Governing Law..............................................26
14.8. Counterparts...............................................26
14.9. Limitation on Rights of Others.............................26
14.10. Brokers and Finders........................................26
14.11. Construction and Interpretation............................26
14.12. Successors And Assigns.....................................26
14.13. Survival...................................................26
ii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF CT MEZZANINE PARTNERS I LLC
This LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") of CT MEZZANINE
PARTNERS I LLC (the "Company") is entered into this 8th day of March 2000,
between Travelers Limited Real Estate Mezzanine Investments I, LLC a Delaware
limited liability company ("Limited REMI I"), and CT-F1, LLC, a Delaware limited
liability company ("CT-F1"), as members of the Company.
RECITALS
--------
WHEREAS, Limited REMI I and CT-F1 wish to engage jointly in the
Business (as defined herein);
WHEREAS, Limited REMI I and certain of its Affiliates and CT-F1 and
certain of its Affiliates are parties to that certain Venture Agreement; dated
the date hereof (the "Venture Agreement") pursuant to which, among other things,
the parties or their Affiliates will co-sponsor, commit to invest capital in and
manage real estate mezzanine investment opportunity funds;
WHEREAS, Limited REMI I and CT-F1 wish to form the Company in which
Limited REMI I and CT-F1 shall be the only Members and the only investors;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the Members hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. Definitions. Unless the context otherwise requires, the following
terms shall have the following meanings:
"Additional Capital Contributions" means the additional
capital contributions made by the Members pursuant to, and determined in
accordance with, Section 4.2(a).
"Additional Payment" has the meaning specified in Section
4.2(a) hereof.
"Affiliate" means, with respect to any Person, a Person which
directly or indirectly controls, or is controlled by, or is under common control
with that Person, or is controlled by a principal executive officer of that
Person. As used in this definition, "control" means possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting interests, by
contract or otherwise.
<PAGE>
"Agreement" means this Limited Liability Company Agreement of the
Company.
"Annual Operating Budget" means, collectively, with respect to each
Fiscal Year of the Company any annual operating budget, working capital budget,
marketing budget and expenditures relating to the operation of the Company
approved by the Members. The Annual Operating Budget shall be prepared in
accordance with GAAP and approved by the Members and shall show the estimated
receipts, expenditures (operating and capital) and reserves of the Company for
the subject Fiscal Year. "Annual Operating Budget" also includes all subsequent
amendments and revisions to the foregoing approved by the Members.
"Bankruptcy" of a Person means the institution of any proceedings under
any federal or state law for the relief of debtors, including the filing by or
against that Person of a voluntary or involuntary case under the United States
Bankruptcy Code, which proceedings, if involuntary, are not dismissed within
sixty (60) days after their filing; an assignment of the property of that Person
for the benefit of creditors; the appointment of a receiver, trustee or
conservator of any substantial portion of the assets of that Person, which
appointment, if obtained ex parte, is not dismissed within sixty (60) days
thereafter; the seizure by a sheriff, receiver, trustee or conservator of any
substantial portion of the assets of that Person; the failure by that Person
generally to pay its debts as they become due within the meaning of Section
303(h)(1) of the United States Bankruptcy Code, as determined by the Bankruptcy
Court; or that Person's admission in writing of its inability to pay its debts
as they become due.
"Business" shall have the meaning given to such term in the Venture
Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
applicable law to close.
"Calculation Date" means, for purposes of computing Net Cash Flow to be
distributed with respect to a particular fiscal quarter, the last day in that
quarter.
"Candidate Transaction" shall have the meaning specified in Section
4.2(b) hereof.
"Candidate Transaction Notice" shall have the meaning specified in
Section 4.2(b) hereof.
"Candidate Transaction Notice Period" shall have the meaning specified
in Section 4.2(b) hereof.
"Capital Account" of a Member with respect to the Company means the
capital account of that Member which, except as otherwise provided herein, shall
be determined from the inception of the Company in accordance with GAAP. The
initial Capital Account of each Member is set forth on Exhibit "A".
"Capital Contributions" of a Member at anytime means, as of a
particular date, the aggregate amount of money and the Fair Market Value of any
property (other than money), net of encumbrances, theretofore contributed to the
Company by that Member pursuant to this
2
<PAGE>
Agreement, which shall consist of the Member's Initial Capital Contribution and
any Additional Capital Contribution made by the Member.
"Certificate of Formation" means the Certificate of Formation of the
Company filed on behalf of the Company with the office of the Secretary of State
of the State of Delaware pursuant to the Delaware Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means CT Mezzanine Partners I LLC, the limited liability
company formed and existing under and pursuant to the Delaware Act, the
Certificate of Formation and this Agreement.
"Contribution Date" means the date which is specified in a call for
Additional Payment.
"CT-F1" shall have the meaning given to such term in the Preamble to
this Agreement.
"Default" has the meaning specified in Section 11.1(a) hereof.
"Defaulting Member" has the meaning specified in Section 11.1(b)
hereof.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.
C.ss. 18-101, et seq.
"Distribution" means the transfer of money or property by the Company
to one or more Members, in their capacity as Members, without separate
consideration.
"Effective Date" means March 8, 2000.
"Event of Default" has the meaning specified in Sections 11.1(c)
hereof.
"Fair Market Value" of an asset means the price at which that asset
would be sold between a willing buyer and a willing seller, each having
reasonable knowledge of all relevant facts concerning the asset and neither
acting under any compulsion to buy or sell the assets, as agreed upon by the
Members or if the Members cannot agree within thirty (30) days, the price
determined pursuant to Section 4.1(b) of the Venture Agreement.
"Fiscal Year" means the calendar year.
"Fund I Investment Management Agreement" means that certain management
agreement by and between the Investment Manager and the Company, dated the date
hereof.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis throughout the
term of this Agreement.
"Indemnitee" has the meaning specified in Section 8.3 hereof.
3
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"Initial Capital Contribution" of a Member means the capital
contributions made by that Member pursuant to Section 4.1 hereof.
"Investment Management Fee" means the fee that the Investment Manager
is entitled to receive pursuant to the Fund I Investment Management Agreement.
"Investment Manager" shall mean CT Investment Management Co., LLC, a
Delaware limited liability Company.
"Investment Period" means the period, commencing on the date hereof,
during which the Company may make new Investments and ending on the earlier of
(i) the Fund II Initial Closing (as defined in the Venture Agreement), (ii) the
date on which either CT-F1 or Limited REMI I shall have given notice to the
other of its exercise of the Unwind Right pursuant to Section 11.2 hereof, or
(iii) notice from one party to the other, which notice may not be given earlier
than December 31, 2000, subject to exercise of the Extension Right (as defined
in the Venture Agreement).
"Key Individuals" shall have the meaning specified in the Venture
Agreement.
"Key Individuals Requirement" shall mean the Investment Manager's
covenants under Section 1.3 of the Fund I Investment Management Agreement.
"Investments" shall have the meaning specified in Section 4.2(b)
hereof.
"Member" means each of Limited REMI I and CT-F1 and includes any Person
admitted as a Substitute Member pursuant to the provisions of this Agreement, in
such Person's capacity as a member of the Company; "Members" means two (2) or
more of such Persons when acting in their capacities as members of the Company.
For purposes of the Delaware Act, the Members shall constitute one (1) class or
group of members.
"Membership Interest" means a Member's total interest as a Member of
the Company, including that Member's rights to allocations of Net Profits, Net
Losses, special allocations, Net Cash Flow and other Distributions, its right to
inspect the books and records of the Company and its right, to the extent
specifically provided in this Agreement or in the Delaware Act and not otherwise
restricted herein, to participate in the business, affairs and management of the
Company and to vote or grant consent with respect to matters coming before the
Company.
"Net Cash Flow" has the meaning specified in Section 6.1(a) hereof.
"Net Profits" and "Net Losses" means, for each fiscal period, the net
income and net loss, respectively, of the Company determined in accordance with
GAAP.
"Nonrecourse Exception Indemnitee" has the meaning specified in Section
8.4 hereof.
"Notice of Default" has the meaning specified in Section 11.1(b)
hereof.
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"Notices" has the meaning specified in Section 14.1(a) hereof.
"Percentage Interest" of a Member means 75% in the case of Limited REMI
I and 25% in the case of CT-F1.
"Person" means any entity, corporation, company, association, joint
venture, joint stock company, partnership, trust, limited liability company,
limited liability partnership, real estate investment trust, organization,
individual, nation, state, government (including agencies, departments, bureaus,
boards, divisions and instrumentalities thereof), trustee, receiver or
liquidator.
"Securities Act" means the Securities Act of 1933, as amended.
"Substitute Member" means a Person who is admitted to the Company as a
Member pursuant to Article IX.
"Tax Matters Member" means the "tax matters partner" referred to in
Section 6231(a)(7) of the Code.
"Transfer" of all or any portion of a Membership Interest means any
direct or indirect sale, assignment, gift, hypothecation, pledge or other
disposition, whether voluntary, involuntary or by operation of law, of all or
any portion of a Membership Interest, including, without limitation, the right
to receive Distributions from the Company. Notwithstanding that a Transfer of
all or any portion of a Membership Interest by way of hypothecation or pledge
has occurred, any subsequent transfer, sale or other disposition of such
Membership Interest or portion thereof at foreclosure shall also constitute a
separate Transfer hereunder and shall also be subject to all of the provisions
of this Agreement.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code.
"Unwind" means the division of assets and procedures set forth in
Section 11.2 hereof.
"Unwind Right" shall have the meaning set forth in the Venture
Agreement.
"Venture Agreement" shall have the meaning set forth in the Whereas
clauses.
"Warrant" means the warrant to purchase up to 4,250,000 shares of class
A common stock, $.01 par value per share, of Capital Trust, Inc., a Maryland
corporation, which the parties agree have a Fair Market Value of $.32 per share.
"Warrant Purchase Agreement" means the agreement between the Company
and Limited REMI I in the form attached as Exhibit S to the Venture Agreement.
"Warrant Purchase Note" means the promissory note issued by Limited
REMI I to purchase the Warrant, which is in the form of Exhibit D to the Venture
Agreement.
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1.2. General References. References in this Agreement to "Articles,"
"Sections," "Exhibits" and "Schedules" shall be to the Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specifically
provided; the term "including" means "including without limitation"; any of the
terms defined in this Agreement may, unless the context otherwise requires, be
used in the singular or the plural and in any gender depending on the reference;
the words "herein", "hereof" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and except as otherwise specified in
this Agreement, all references in this Agreement (a) to any Person shall be
deemed to include such Person's permitted heirs, personal representatives,
successors and assigns; and (b) to any agreement, any document, certificate or
any other written instrument shall be a reference to such agreement, document,
certificate or instrument together with all exhibits, schedules, attachments and
appendices thereto, and in each case as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof; and
(c) to any law, statute or regulation shall be deemed references to such law,
statute or regulation as the same may be supplemented, amended, consolidated,
superseded or modified from time to time with an effective date rendering such
change applicable to the event or transaction in question.
ARTICLE II
FORMATION AND DURATION
2.1. Formation.
(a) Formation. Unless expressly provided otherwise in this
Agreement, the rights, duties and liabilities of the Members of the Company
shall be as provided in the Delaware Act. The Company has been organized as a
Delaware limited liability company under the Delaware Act by the filing of the
Certificate of Formation on February 24, 2000 with the Secretary of State of the
State of Delaware.
(b) Information as to Members. As of the Effective Date, the name
of each Member shall be as listed in Exhibit "A". The Members shall be required
to update Exhibit "A" from time to time as necessary to reflect accurately any
changes in the Members. Any amendment or revision to Exhibit "A" made in
accordance with this Agreement shall not be deemed an amendment to this
Agreement.
2.2. Name. The name of the Company is CT Mezzanine Partners I LLC.
However, the business of the Company may be conducted under any other name
designated by the Members from time to time.
2.3. Agent and Office. The Company's registered agent and office in
Delaware shall be United Corporate Services, 15 East North Street, Dover, County
of Kent, Delaware 19901. At any time, the Members may designate another
registered agent and/or registered office.
2.4. Principal Place of Business. The principal place of business of
the Company shall be at the CT offices currently located at 605 Third Avenue,
26th Floor, New York, New York, 10016, or at such other place as the Members may
determine from time to time.
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2.5. Qualification in Other Jurisdictions. The Members shall cause the
Company to be qualified or registered (a) as a foreign limited liability company
under the provisions of the New York Act, and shall cause such status to be
maintained for so long as the Company owns any real property, or otherwise
transacts business, in the State of New York, and (b) under the assumed or
fictitious name statutes or similar laws in the State of New York and in any
other jurisdiction in which the Company transacts business. The Company shall
execute, deliver and file any certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in the
State of New York or in any other jurisdiction in which the Company may wish to
conduct business.
2.6. Term. The term of the Company commenced on the date the
Certificate of Formation was filed in the office of the Delaware Secretary of
State and shall continue until the cancellation of the Certificate of Formation
in the manner required by the Delaware Act.
2.7. Intent. It is the intent of the Members that the Company be
operated in a manner consistent with its treatment as a "partnership" for
Federal and state income tax purposes. It also is the intent of the Members that
the Company not be operated or treated as a "partnership" for purposes of
Section 303 of the United States Bankruptcy Code. No Member shall take any
action inconsistent with that express intent.
2.8. Limited Liability. Except as otherwise provided in the Delaware
Act, the debts, obligations and liabilities of the Company (whether arising in
contract, tort or otherwise) shall be solely the debts, obligations and
liabilities of the Company, and no Member (including the Tax Matters Member
acting in such capacity and any Person who formerly held such status) shall be
liable or shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of that status. No individual trustee,
officer, director, shareholder, member, manager, constituent partner, employee,
agent or attorney of any entity Member, in his, her or its individual capacity
as such, shall have any personal liability for the performance of any obligation
of that Member under this Agreement.
2.9. Sale of Warrant. On the Effective Date, the Company shall sell the
Warrant to Limited REMI I pursuant to the Warrant Purchase Agreement in exchange
for the Warrant Purchase Note.
ARTICLE III
PURPOSE OF THE COMPANY
3.1. Purpose. The Company is formed for the object and purpose of
conducting the Business. The Company may engage in all activities reasonably
deemed incidental or convenient to the foregoing.
3.2. Powers of the Company. The Company shall have the power and
authority to take any and all actions necessary, convenient, desirable or
incidental to the purpose set forth in Section 3.1, including, without
limitation, the power:
(a) to conduct its business, carry on its operations, open bank
accounts and brokerage accounts and have and exercise the powers granted to a
limited liability company by the Delaware Act in the State of New York or in any
other state, territory, district or possession
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of the United States, or any foreign country that may be necessary, convenient
or incidental to the accomplishment of the purpose of the Company;
(b) to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any Member and/or Affiliate
thereof (if approved by the other Member) or any agent of the Company necessary,
convenient, desirable or incidental to the accomplishment of the purpose of the
Company;
(c) to sue and be sued, complain and defend and participate in
administrative or other proceedings, in its name;
(d) to appoint officers, employees and agents of the Company,
define their duties and fix their compensation, if any;
(e) to indemnify any Person in accordance with the Delaware Act
and to obtain any and all types of insurance;
(f) to cease its activities and cancel its Certificate of
Formation;
(g) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other action
with respect to any contract, agreement, deed of trust, mortgage, loan agreement
or other loan document or security agreement;
(h) to borrow money and issue evidences of indebtedness, and to
secure the same by a mortgage, deed of trust, security agreement, pledge,
collateral assignment, or other lien on the assets of the Company;
(i) to pay, collect, compromise, litigate, arbitrate or otherwise
adjust or settle any and all other claims or demands of or against the Company
or to hold such proceeds against the payment of contingent liabilities;
(j) to make, execute, acknowledge and file any and all documents
or instruments necessary, convenient, desirable or incidental to the
accomplishment of the purpose of the Company; and
(k) to sell Company assets to Members in exchange for cash or a
promissory note, including to sell the Warrant to Limited REMI I pursuant to the
Warrant Purchase Agreement in exchange for the Warrant Purchase Note.
3.3. Limitations on Company Powers. Notwithstanding Sections 3.1 and
3.2, the Company shall not do business in any jurisdiction the laws of which do
not give full faith and credit to the limitations on liability afforded to the
Members under the Delaware Act or this Agreement.
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ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1. Initial Contributions. As at the Effective Date, Limited REMI I
contributed $75 and CT-F1 contributed $25 and the Warrant to the capital of the
Company.
4.2. Additional Capital Contributions.
(a) Additional Payment. Each Member shall be required to make such
additional payments ("Additional Payments") to the Company in cash upon the
terms and conditions, at the times and in the amounts as set forth in this
Section 4.2. No Member shall be required to make any further payments to the
Company during the term of this Agreement except as specifically required in
this Agreement. In the event that further funds are required by the Company to
(i) pay the expenses of the Company in accordance with Section 4.2(c) in excess
of the funds available from (a) the Members' Initial Capital Contributions and
any prior contributions of Additional Payments, and (b) the Net Cash Flows, or
(ii) to invest in a Candidate Transaction in accordance with the terms and
conditions of this Section 4.2, then the Members shall make Additional Payments
in cash to pay those obligations as set forth herein. Any Additional Payment by
Limited REMI I shall first be applied to repay the Warrant Purchase Note. Once
the Warrant Purchase Note is repaid any Additional Payment by Limited REMI I
shall constitute an Additional Capital Contribution. Any Additional Payment by
CT-F1 shall constitute an Additional Capital Contribution. Additional Payments
shall be made by the Members in accordance with the provisions of Section 4.2(d)
hereof. Notwithstanding anything herein to the contrary, Limited REMI I shall
not be required to make Additional Payments to the Company in excess of
$150,000,000 in the aggregate and CT-F1 shall not be required to make Additional
Payments to the Company in excess of $50,000,000 in the aggregate. If both
Members make their Capital Contributions as required, any Additional Capital
Contribution shall be credited to the Capital Accounts in the ratio of 75% to
Limited REMI I and 25% to CT-F1.
(b) Candidate Transactions. At all times during the Investment
Period, the Company shall have a priority right to consummate for the benefit of
the Company all Business transactions sourced by CT-F1 and any of its Affiliates
to the extent and in the manner provided in this Section 4.2(b). If at any time
during the Investment Period CT-F1 or any of its Affiliates shall become aware
of a Business transaction which it determines is appropriate for the Company
("Candidate Transaction"), CT-F1 shall deliver notice thereof to Limited REMI I
setting forth, to the extent known, all material terms and conditions of the
Candidate Transaction (including, (i) the estimated amount of each Member's
Capital Contribution necessary to fund the Company's equity component of such
Candidate Transaction and related expenses (the "Equity Component"), (ii) the
anticipated date on which the Members would be required to make Additional
Payments to the Company to fund such Equity Component, and (iii) the debt
component, if any of such Candidate Transaction) and shall include a preliminary
due diligence package containing all due diligence materials then in the
possession of CT-F1 (a "Candidate Transaction Notice"). Limited REMI I shall
have two (2) Business Days from the date of its receipt of such Candidate
Transaction Notice during which it shall have the right in its sole discretion
to require additional due diligence materials, which Limited REMI I shall
specify on a supplemental due diligence request. Within five (5) Business Days
of Limited REMI I's receipt of all the requested due diligence materials (the
"Candidate Transaction Notice Period"), Limited
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REMI I shall notify CT-F1 whether or not it is electing to participate in the
Candidate Transaction (a "Candidate Transaction Acceptance" or a "Candidate
Transaction Rejection", as the case may be). If Limited REMI I shall fail to
deliver either a Candidate Transaction Acceptance or a Candidate Transaction
Rejection within the Candidate Transaction Notice Period, it shall be deemed to
have delivered a Candidate Transaction Rejection as at the close of business on
the last Business Day of the Candidate Transaction Notice Period. If Limited
REMI I shall have delivered or shall have been deemed to have delivered a
Candidate Transaction Rejection, CT-F1 shall have the right, independent of the
Company, to pursue and conclude such Candidate Transaction on substantially the
same terms and conditions as those set forth in the Candidate Transaction
Notice. If Limited REMI I shall have delivered to CT-F1 a Candidate Transaction
Acceptance within the Candidate Transaction Notice Period and if CT-F1
determines that the Company should conclude such Candidate Transaction, then
both Limited REMI I and CT-F1 shall be obligated to make Additional Payments to
the Company to permit the Company to fund the Equity Component of the Candidate
Transaction in accordance with the provisions of Section 4.2(d) hereof. If
Limited REMI I delivers a Candidate Transaction Acceptance with respect to a
Candidate Transaction and CT-F1 later determines that the Company should not
pursue and conclude such Candidate Transaction, CT-F1 may not later pursue or
conclude such Candidate Transaction independent of the Company without first
making such Candidate Transaction available to the Company pursuant to this
Section 4.2(b). Candidate Transactions with respect to which Limited REMI I
shall have delivered a Candidate Transaction Acceptance to CT-F1 and which have
been consummated are herein referred to as "Investments." Additional Payments to
the Company pursuant to a Candidate Transaction Acceptance and in accordance
with Section 4.2(d) hereof which Candidate Transaction is ultimately not
consummated shall be returned to the Members who made the Additional Payments,
without interest, net of related expenses, promptly after such time as the
Members shall have determined that such Candidate Transaction will not close,
and all entries on the Company's books and records resulting from such
Additional Payments shall be reversed as if such Additional Payments were never
made.
(c) Expenses. Each Member shall make Additional Payments to the
Company from time to time sufficient to fund (i) the Investment Management Fee,
(ii) expenses payable by the Company as set forth in Section 2.3 of the Fund I
Investment Management Agreement, (iii) expenses incurred by the Company in the
ordinary course of its business, (but in no event exceeding $50,000 in any
Fiscal Year), or as otherwise set forth in the Annual Operating Budget, (iv)
expenses approved by the Members and (v) expenses otherwise required by this
Agreement. All such Additional Payments shall be made in accordance with the
provisions of Section 4.2(d) hereof. Expenses incurred by CT-F1 with respect to
a Candidate Transaction with respect to which Limited REMI I shall have given,
or shall be deemed to have given, a Candidate Transaction Rejection, shall be
borne by CT-F1 and not by the Company or Limited REMI I unless such expense was
specifically approved by Limited REMI I prior to the expenditure in which case
it shall be borne by the Company.
(d) Call Procedures; Payment of Call. Whenever the Members are
required to make Additional Payments to the Company as provided in this Section
4.2, each Member shall be obligated to contribute its share of the requested
Additional Payment in cash in an amount equal to (a) that Member's Percentage
Interest multiplied by (b) the aggregate dollar amount of the requested
Additional Payment. To satisfy any call for Additional Payment, a Member shall
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cause to be paid to the Company, by the date specified by the Investment
Manager, which date shall be the "Contribution Date," in immediately available
funds in the full amount of such Member's share of the requested Additional
Payment.
4.3. Loans by Members; Compensation. No Member shall be required to
lend any funds to the Company, and no Member shall have any personal liability
for the repayment of any Capital Contribution of any other Member. No Member
shall receive any interest, salary or drawing with respect to its Capital
Contributions or its Capital Account or for services rendered on behalf of the
Company or otherwise in its capacity as a Member, except as otherwise provided
in this Agreement.
ARTICLE V
MANAGEMENT OF THE COMPANY
5.1. Management of the Company. The business and affairs of the Company
shall be managed by the Members, except to the extent that such management is
delegated to the Investment Manager pursuant to the Fund I Investment Management
Agreement. No decision of the Company may be made or action of the Company taken
without the consent of all the Members, which decisions may be made at a meeting
of the Members or pursuant to written consent. Members may participate in and
hold meetings by means of telephone or similar communications equipment, by
means of which all Persons participating in the meeting can hear each other. As
soon as practicable after the Effective Date, the Members will prepare an Annual
Operating Budget for the first Fiscal Year of the Company. Notwithstanding the
foregoing, the enforcement of any rights that the Company may have against any
Member (or Affiliate of a Member) shall be determined solely by the other
Member.
ARTICLE VI
DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS
6.1. Distributions.
(a) Net Cash Flow. Not later than ten (10) days after the
applicable Calculation Date, the Members shall determine the amount of cash, if
any, which in their judgment is in excess of amounts necessary or appropriate
for operations, expenses and reserves of the Company. Such excess (the "Net Cash
Flow") shall, as soon as possible following the applicable Calculation Date, but
in no event later than three (3) Business Days following the determination of
Net Cash Flow, be distributed to the Members in accordance with this Section
6.1(a). The Net Cash Flow of the Company shall not be reduced by depreciation,
amortization, cost recovery deductions, depletion, similar allowances or other
noncash items, but shall be increased by any release or reduction of reserves
previously established (other than for the payment of expenses reserved
against). The Net Cash Flow of the Company shall be calculated effective as of
the applicable Calculation Date with respect to which the Net Cash Flow is being
distributed, regardless of the actual date of distribution. Distributions of Net
Cash Flow shall be made in accordance with a Member's respective Percentage
Interest. Notwithstanding anything herein to the contrary, no Distributions
(other than Distributions pursuant to Section 10.2) may be made by the Company
after a Notice of Default has been given pursuant to Section 11.1
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hereof unless the Default to which the Notice of Default relates has been cured
as set forth in Section 11.1(c) hereof, or as the Members may otherwise agree.
(b) Withdrawal of Capital; Limitation on Distributions. No Member
shall be entitled to withdraw any part of its Capital Contributions to, or to
receive any Distributions from, the Company except as provided in Sections
6.1(a) and 10.2. No Member shall be entitled to demand or receive interest on
its Capital Contributions or, except as set forth in Article X hereof, any
property from the Company other than cash.
6.2. Allocation of Net Profits and Net Losses. Net Profits and Net
Losses shall be allocated in accordance with each Member's Percentage Interest.
6.3. Withholding. Should the Company be required, pursuant to the Code,
the laws of any state or any other provision of law, to withhold any amount from
amounts otherwise distributable to any Member or on the basis of income
allocable to any Member, the Company shall withhold those amounts, and any
amounts so withheld shall be deemed to have been distributed to that Member
under this Agreement. If any sums are withheld pursuant to this provision, the
Company shall remit the sums so withheld to, and file the required forms with,
the Internal Revenue Service, the appropriate authority of any such state or
other applicable government agency. In the event of any claimed
over-withholding, if such claimed over-withholding was made by the Company in
good faith upon the advice of its tax advisors, a Member shall be limited to an
action against the Internal Revenue Service, the appropriate authority of any
such state or other applicable government agency for refund, and each Member
hereby waives any claim or right of action against the Company on account of
such withholding. Furthermore, if the amounts required to be withheld exceed the
amounts which would otherwise have been distributed to a Member, the Member
shall contribute any deficiency to the Company within ten (10) Business Days
after notice from the Company. If the deficiency is not contributed within that
time, such failure shall be considered a demand loan from the Company to that
Member, with interest at a rate equal to the lesser of fifteen percent (15%) or
the highest rate permitted by law, which interest shall be treated as an item of
Company income and accrue until discharged by the Member by repayment. Such
demand loan shall be repaid in full within ten (10) Business Days after demand
(and for this purpose any Member other than the Member on whose account such
loan was made may unilaterally make such demand for and on behalf of the
Company), and otherwise shall be repaid, without prejudice to any other remedies
at law or in equity that the Company may have, out of Distributions to which the
debtor Member would otherwise subsequently be entitled under this Agreement.
6.4. Restoration of Funds. Except as otherwise provided by law, no
Member shall be required to restore to the Company any funds properly
distributed to it pursuant to Section 6.1 or 10.2. If any Member receives
Distributions from the Company contrary to the provisions of this Agreement,
that Member shall promptly return the same to the Company.
ARTICLE VII
TAX ELECTIONS; TAX MATTERS MEMBER; TAX CAPITAL ACCOUNTS
7.1. Federal Income Tax Elections; Tax Matters Member.
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(a) Tax Elections. The Members shall determine all elections to be made
by the Company for tax purposes.
(b) Tax Matters Member. Limited REMI I is hereby designated the Tax
Matters Member. The Tax Matters Member will take no action (other than
ministerial action) without the prior approval of the Members. The Tax Matters
Member will not be required to take any action or incur any expenses for the
prosecution of any administrative or judicial remedies in its capacity as Tax
Matters Member unless the Members agree on a method of sharing expenses incurred
in connection with the prosecution of such remedies.
7.2. Tax Matters.
(a) The Company shall maintain a capital account for each Member
in accordance with the rules set forth in Treasury Regulation Section
1.704-1(b)(2)(iv). In the event an asset of the Company other than cash is
distributed in kind to a Member, such capital accounts shall be adjusted for the
hypothetical "book" gain or loss that would have been realized by the Company if
the distributed asset had been sold for its Fair Market Value in a cash sale (in
order to reflect unrealized gain or loss).
(b) For tax capital account maintenance purposes, except as
otherwise required by Section 704(c) of the Code,
(i) if the Company is dissolved pursuant to Section 10.1
during a Fiscal Year, gross income and/or deductions of the Company for such
Fiscal Year and each Fiscal Year thereafter shall be first allocated to the
Members in the amount necessary to cause the tax capital account of each Member
to be equal to its Capital Account;
(ii) if the Company is required to recognize any interest
income pursuant to Section 483 or Sections 1271 through 1288 of the Code in
connection with any transaction with a Member or any loss with respect to the
transfer of the Warrants to a Member, such interest income or loss shall be
specially allocated to such Member for tax purposes; and
(iii) Net income or loss as determined for purposes of
Section 704(b) of the Code, as adjusted by the amount, if any, specially
allocated pursuant to clause (i) or (ii) above shall be allocated in accordance
with Section 6.2.
(c) For income tax purposes, income, gain loss, and deduction
shall be allocated in accordance with the corresponding item under Section
7.2(b), except as otherwise required by Section 704(c) of the Code.
ARTICLE VIII
OTHER RIGHTS AND OBLIGATIONS OF MEMBERS
8.1. Resignation of a Member. No Member may withdraw or resign from the
Company without the consent of the Members, which consent may be given or
withheld in their absolute discretion. In the event of any withdrawal or
resignation in violation of this Section 8.1, such withdrawal or resignation
shall be void ab initio, and the withdrawing or resigning Member shall be
subject to any and all remedies available to the Company or the Members under
this
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Agreement, at law or in equity in respect of such default, and the Company
shall have the right to offset the damages against any amounts otherwise
distributable to the withdrawing or resigning Member. Termination of a Member's
Membership Interest upon consummation of a right to purchase under Sections 9.3
or 9.4 shall not be deemed a withdrawal or resignation in violation of this
Section 8.1.
8.2. Admission of New Members. Other than Members that may be admitted
to the Company pursuant to Section 9.2(b), no new or additional Members may be
admitted to the Company without the written consent of the Members.
8.3. Indemnification by Company. To the maximum extent permitted by
law, the Company shall defend, indemnify and hold harmless each Member and its
partners, shareholders and members, and their respective directors, officers,
employees and shareholders and the Investment Manager (each such Person being an
"Indemnitee") from and against any and all liabilities, losses, claims,
judgments, fines, settlements and damages incurred by the Indemnitee or by the
Company, arising out of any claim based upon any acts performed or omitted to be
performed by the Indemnitee in connection with the organization, management,
business or property of the Company (including in any Member's capacity as Tax
Matters Member), including costs, expenses and attorneys' fees (which may be
paid as incurred) expended in the settlement or defense of any such claims,
except to the extent that the claim giving rise to such indemnification rights:
(a) arises out of any gross negligence (which for purposes of this Agreement
shall mean an act or failure to act with reckless disregard of the consequences
thereof), willful misconduct, breach of fiduciary duty or a material breach of
this Agreement by the Indemnitee; or (b) is governed by Section 8.4. Except as
required by Section 8.4, all judgments against the Company and/or an Indemnitee
wherein an Indemnitee is entitled to indemnification or other amounts payable to
an Indemnitee pursuant to this Section 8.3 shall be satisfied only from the
assets of the Company.
8.4. Indemnification by Members. To the maximum extent permitted by
law, each Member shall defend, indemnify and hold harmless the Company and the
other Members and each of their respective directors, officers, employees,
partners and shareholders (each such Person being a "Nonrecourse Exception
Indemnitee") from and against any and all liabilities, losses, claims,
judgments, fines, settlements and damages, and any costs and expenses (including
attorneys' fees and disbursements) incurred in connection therewith, suffered or
incurred by any Nonrecourse Exception Indemnitee or arising out of any claim
that the Company or any Nonrecourse Exception Indemnitee is liable under any
exceptions or "carve-outs" to any nonrecourse provisions in any loan documents
entered into by the Company to the extent (a) such liability is attributable to
any gross negligence, willful misconduct, breach of fiduciary duty or material
breach of this Agreement by the indemnifying Member or any of its Affiliates,
shareholders, members, partners, officers, directors, employees or agents,
whether on behalf of the Company or otherwise, in violation of the requirements
of any such loan documents (unless the Members agree to violate such loan
document requirements) and (b) such liability exceeds any economic benefit
received by the Nonrecourse Exception Indemnitee as a direct result of the
breach, act or omission giving rise to the claim.
8.5. Exculpation. Except to the extent required by law, neither the
Members nor any of their respective directors, officers, employees or
shareholders shall be liable or responsible to
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the Company or the other Members for any act or failure to act, or any loss,
liability, damage, settlement cost or other expense incurred by reason of any
act or failure to act, of any such Person, provided such Person acted in good
faith and in a manner reasonably believed to be in, or not opposed to, the
interests of the Company, except to the extent such loss, liability, damage,
settlement cost or other expense resulted from the gross negligence, willful
misconduct, breach of fiduciary duty or material breach of this Agreement by
such Person. The termination of any action, suit or proceeding by judgment,
order or settlement shall not, of itself, create a presumption that a Person did
not act in good faith and in a manner reasonably believed to be in, or not
opposed to, the best interests of the Company. Furthermore, no Affiliate of a
Member shall be entitled to exculpation hereunder in respect of any act or
omission committed or omitted in its capacity as an independent contractor to
the Company, but, rather, the terms of the contract between such Affiliate and
the Company shall control with respect to exculpation.
8.6. Reimbursement of Members. Each of the Members, including, the Tax
Matters Member acting in such capacity, shall be entitled to reimbursement from
the Company for out-of-pocket expenses reasonably, properly and directly
incurred by such Member on behalf of the Company and provided for in an Annual
Operating Budget; provided, however, that no Member shall seek reimbursement
from the Company for any "overhead" or general and administrative expenses
incurred by that Member.
8.7. Particular Covenants of Members.
(a) Defend Against Creditors. Each Member shall defend at its sole
cost and expense any claim made against its Membership Interest (including its
right to Distributions from the Company) resulting from the personal
indebtedness of that Member or the claims of its individual creditors.
(b) Notice of Claims. Each Member shall promptly notify the other
Members as to any claims asserted or threatened against its Membership Interest
(including its right to Distributions from the Company).
ARTICLE IX
TRANSFERS OF COMPANY MEMBERSHIP INTERESTS
9.1. Condition to Transfer of Any Membership Interest. Without limiting
any other provisions of this Article IX, no Transfer of a Membership Interest
may be made unless all of the following requirements are satisfied, and any
purported Transfer of a Membership Interest failing to meet the following
requirements shall be void ab initio:
(a) Required Documents. The transferee executes and delivers to
the Company an instrument pursuant to which it agrees to be bound by the terms
of this Agreement, and such additional instruments and documents as shall be
reasonably required by the Members (including opinions of counsel to any
transferor satisfactory to the Members with respect to the matters set forth in
Section 9.1(b)).
(b) Restrictions. Such Transfer would not:
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(i) Securities Laws. Result in the violation of the Securities
Act, or any regulation issued pursuant thereto, or any state securities law or
regulation or any other applicable federal or state laws or order of any court
having jurisdiction over the Company;
(ii) Events of Default. Be a violation of or an event of default
under, or give rise to a right to accelerate any indebtedness described in, any
note, mortgage, loan agreement or similar instrument or document to which the
Company is a party, unless the violation or event of default is waived by the
parties thereto;
(iii) Regulatory Requirements. Cause the Company or any Member to
be subject to any additional regulatory requirements;
(iv) Tax Status. Cause a substantial risk, in the opinion of
counsel to the Company, that the classification of the Company as a
"partnership" for Federal or state income tax purposes could be adversely
affected;
(v) Prohibited Transaction. Result in or create a "prohibited
transaction" or cause the Company or a Member or an Affiliate of a Member to be
or become a "party in interest", as defined in Section 3(14) of ERISA, or a
"disqualified person", as defined in Section 4975 of the Code with respect to
any plan, as defined in Section 3(3) of ERISA and/or Section 4975 of the Code,
or result in or cause the Company or any Member or any Affiliate of a Member to
be liable for tax under Chapter 42 of the Code or otherwise cause any such
Person to incur tax liabilities;
(vi) Not Legally Competent. Be a Transfer to an individual who is
not legally competent or who has not achieved his or her majority under
applicable law (excluding trusts for the benefit of minors); or
(vii) Transfer to a Foreign Person. Be a Transfer to a Person who
constitutes a "foreign person" under Section 1445 of the Code.
(c) Costs. The transferor or transferee pays to the Company any and all
costs incurred and to be incurred by the Company in connection with the
Transfer, to the extent such costs would not have been incurred by the Company
if the Transfer had not been proposed or made.
9.2. Transfers of Membership Interests.
(a) Transfers Restricted. No Member may Transfer all or any
portion of its Membership Interest, except as set forth in Section 9.2(b), and
any purported Transfer of Membership Interest failing to meet the requirements
of Sections 9.1 and 9.2(b) shall be void ab initio.
(b) Transfers of Membership Interest to Affiliates. Subject only
to the provisions of Section 9.1, a Member, with Notice to (but without consent
of) the other Member, may Transfer all (but not less than all) of its Membership
Interest at any time as follows:
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(i) CT-F1 may Transfer its Membership Interest to any wholly
owned entity of CT; and
(ii) Limited REMI I may Transfer its Membership Interest to
Citigroup Inc. or to any of its direct or indirect wholly owned entities, or to
Travelers Property Casualty Corp., or any of its direct or indirect wholly owned
entities.
In accepting any such assignment, any such assignee shall automatically become a
Substitute Member with all of the rights and powers granted to the assigning
Member herein but no such Transfer shall release the transferring Member of any
of its obligations hereunder, unless such release is approved in writing by the
other Member.
9.3 Purchase/Sale Option.
(a) Right to Purchase. In the case of an Event of Default under
Section 11.1(a)(i) or (iv) with respect to a Member, the Non-Defaulting Member
shall have the right, pursuant to Section 11.2 hereof, to purchase, or to cause
a Person designated by it to purchase, all (but not less than all) of the
Membership Interest of the Defaulting Member at a price equal to 90% of the
excess, if any, of (x) the Defaulting Member's aggregate Additional Payments
over (y) the excess, if any, of (A) aggregate Distributions previously made to
the Defaulting Member over (B) the excess, if any, of (i) the aggregate Net
Profits allocated as provided below to the Defaulting Member over (ii) aggregate
Net Losses allocated as provided below to the Defaulting Member. Such
Non-Defaulting Member may within thirty (30) days after such Event of Default
(the "Election Period") elect to purchase, or to cause another Person designated
by it to purchase, the Membership Interest of the Defaulting Member, and the
Non-Defaulting Member shall give a Notice (the "Election Notice") to the
Defaulting Member setting forth: (i) such election, (ii) the price and (iii) a
closing date for the purchase (the "Purchase Date"), which shall be no later
than ten (10) days after the date of the Election Notice. For purposes of this
Section 9.3, the Company shall close its books as at the date of the Election
Notice. Net Profits and Net Losses, as the case may be of a Defaulting Member
shall be determined by calculating the aggregate Net Profits and aggregate Net
Losses allocated to the Defaulting Member for Fiscal Years prior to the Fiscal
Year in which any purchase under this Section 9.3 takes place together with Net
Profits and Net Losses allocated to the Defaulting Member during the Fiscal Year
in which the Election Notice is given through and including the date of the
Election Notice. On the Purchase Date, the Defaulting Member shall sell, and the
Non-Defaulting Member shall purchase, the Defaulting Member's Membership
Interest to be sold under the Election Notice for such price, which shall be
paid in immediately available funds. Any loans previously made to the Company by
the Defaulting Member shall be due and payable on the Purchase Date. In the
event an Election Notice is not delivered within the Election Period, the
Non-Defaulting Member shall have waived its rights under this Section 9.3 with
respect to that Event of Default.
(b) Representations. At the closing of the purchase and sale of a
Membership Interest pursuant to Section 9.3, the Defaulting Member shall warrant
to the Non-Defaulting Member or its designee that the Membership Interest sold
is free and clear of all liens, security interests and other legal and equitable
claims of third parties. Such warranty shall survive the closing of the purchase
and sale of the Membership Interest, and in the event of any breach of such
warranty, the Non-Defaulting Member or its designee may proceed against any and
all
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personal assets of the Defaulting Member to recover damages on account of
such breach, notwithstanding the provisions hereof and Section 18-303 of the
Delaware Act. Notwithstanding the foregoing, however, if the Defaulting Member's
Membership Interest is subject to any lien, security interest and other legal
and equitable claims of third parties, the Non-Defaulting Member or its designee
may elect (a) to cause all amounts (or a portion thereof) payable to the
Defaulting Member to first be applied to discharge such lien, security interest
and other legal and equitable claims of third parties, and pay only the balance,
if any, to the Defaulting Member (b) to take the Membership Interest subject to
such lien, security interest and other legal and equitable claims of third
parties, and to reduce the amount otherwise payable by the Non-Defaulting Member
or its designee to the Defaulting Member by the amount of such lien, security
interest and other legal and equitable claims of third parties, or (c) to
terminate the purchase and sale proceedings because of the existence of such
lien, security interest and other legal and equitable claims of third parties,
and in such event to pursue any and all remedies available at law or in equity.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1. Dissolution. The Company shall be dissolved upon the first to
occur of the following:
(a) Bankruptcy of the Company. The Bankruptcy of the Company;
(b) Agreement to Dissolve. The decision of the Members to dissolve
the Company pursuant to Section 11.2 or for any reason;
(c) Judicial Dissolution. The entry of a decree of judicial
dissolution under Section 18-802 of the Delaware Act;
(d) End of Term. The tenth anniversary date hereof; or
(e) Unwind. The completion of the Unwind.
The occurrence of an Event of Default as to any Member shall not dissolve the
Company.
10.2. Winding up Affairs and Distribution of Assets.
(a) Liquidation. Upon the dissolution of the Company, other than
as set forth in Section 10.2(c) hereof, the Members shall choose a liquidating
Member ("Liquidating Member"), and the Liquidating Member shall proceed to wind
up the affairs of the Company, liquidate the remaining property and assets of
the Company and wind up and terminate the business of the Company. Any such
Liquidating Member shall cause a full accounting of the assets and liabilities
of the Company to be taken and shall cause the assets to be liquidated and the
business to be wound up as promptly as possible.
(b) Payments of Proceeds Upon Liquidation. The proceeds of
liquidation of the Company shall be applied in the following order of priority:
(i) first, to the expenses of such liquidation; (ii) second, to the debts and
liabilities of the Company owing to third parties
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(including payment owed to the Investment Manager pursuant to the Investment
Management Agreement); (iii) third, a reasonable reserve shall be set up to
provide for any contingent or unforeseen liabilities or obligations of the
Company owing to third parties, and at the expiration of such period as the
Members may deem advisable, the balance remaining in such reserve shall be
distributed as provided herein; (iv) fourth, to the debts and liabilities of the
Company owing to the Members, including any reimbursements payable under this
Agreement; (v) fifth, the Warrant Purchase Note shall be distributed to Limited
REMI I, and (vi) sixth, unless either party shall have exercised the purchase
right pursuant to Section 9.3 hereof or the Unwind Right, to the Members, in
accordance with their respective Capital Accounts (after taking into account all
allocations and prior Distributions). Assets distributed in kinds shall be taken
into account at their Fair Market Value.
(c) Unwind; Unwind Rights. If the Unwind Right shall have been
exercised pursuant to the Venture Agreement, the Members shall determine the
Fair Market Value of the Company's assets remaining after setting aside or
paying out sums and assets referred to in clauses (i) through (v) of Section
10.2(b) hereof (the "Net Unwind Assets"). The Net Unwind Assets shall be divided
into four pools with as nearly equal Fair Market Values as is reasonably
practicable, whereupon the first three pools shall be distributed in kind as
follows: Limited REMI I shall select the first pool and it shall be distributed
to Limited REMI I; CT-F1 shall select the second pool and it shall be
distributed to CT-F1; and Limited REMI I shall select the third pool and it
shall be distributed to Limited REMI I. Limited REMI I shall have the option to
cause the fourth pool to be distributed to it in kind or to sell the fourth pool
for cash, provided, however, that if Limited REMI I elects to sell the fourth
pool for cash it shall provide CT-F1 with five (5) days Notice of such election
and CT-F1 shall have ten (10) days from the date of distribution of the third
pool to exercise its right but not the obligation to purchase the fourth pool
from Limited REMI I for cash at the value previously agreed upon and provided,
further, that if CT-F1 does not purchase such fourth pool from Limited REMI I
for cash payable promptly after any such exercise of such right by CT-F1, the
parties shall cause the fourth pool to be liquidated. The proceeds from any such
liquidation shall be distributed to Limited REMI I. A Member that receives a
distribution of pools (or proceeds thereof) with an aggregate Fair Market Value
in excess of such Member's Percentage Interest in the aggregate Fair Market
Value of all the pools shall promptly pay the amount of such excess to the other
Member in cash; provided, however, that in making such calculation, if the
fourth pool is sold as provided herein, the net proceeds from the sale shall be
used in lieu of the Fair Market Value of the fourth pool.
10.3. No Liability. Notwithstanding anything to the contrary in this
Agreement, no Member shall have any obligation to make any contribution to the
capital of the Company on account of any negative balance on its Capital Account
or tax capital account, whether at liquidation or otherwise, and the negative
balance of that Member's Capital Account or tax capital account shall not be
considered a debt owned by that Member to the Company or to any other person for
any purpose whatsoever.
10.4. Limitations on Payments Made in Dissolution. Except as otherwise
specifically provided in this Agreement, each Member shall be entitled to look
only to the assets of the Company for the return of that Member's positive
Capital Account balance and shall have no recourse for its Capital Contributions
and/or share of Net Profits (upon dissolution or otherwise) against any other
Member.
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10.5. Certificate of Cancellation. Upon completion of the winding up of
the Company's affairs, the Liquidating Member shall file a Certificate of
Cancellation with the Delaware Secretary of State.
ARTICLE XI
DEFAULT AND REMEDIES
11.1. Default.
(a) Default. The occurrence of any of the following shall
constitute a default ("Default") hereunder by the affected Member:
(i) A Member Transfers its Membership Interest other than as
set forth in Article IX;
(ii) The voluntary dissolution of the Member;
(iii) The Bankruptcy of the Member;
(iv) A Member materially breaches any of its obligations
hereunder other than as described in clause (vii) of this Section 11.1(a);
(v) A Member commits an act of fraud involving the Company
(which materially damages the Company) or intentionally misappropriates
significant funds of the Company;
(vi) the Investment Manager commits an act of fraud involving
the Company (which materially damages the Company) or intentionally
misappropriates significant funds of the Company;
(vii) There shall have been a failure by CT-F1 to cause
compliance with the Key Individuals Requirement, or the Investment Manager shall
have materially breached the Fund I Investment Management Agreement other than
as set forth in the foregoing clause (vi).
(viii) A Member causes the Company to default in an
obligation required to be performed by the Company pursuant to the Venture
Agreement or the Investment Management Agreement.
(b) Notice of Default. If a Default occurs with respect to a
Member, the other Member (the "Non-Defaulting Member") shall have the right to
give that Member (the "Defaulting Member") Notice of that Default (a "Notice of
Default"). The Notice of Default shall set forth the nature of the Default with
reasonable specificity.
(c) Period to Cure. A Member who shall have received a Notice of
Default with respect to a Default under any of clauses (i), (iv), (vii) or
(viii) of Section 11.1(a) shall have a period of thirty (30) days after receipt
of such Notice of Default to cure such Default and the Notice of Default with
respect thereto shall not be effective unless such Default is not cured within
such thirty (30) day period. In such case, the Defaulting member shall lose no
rights
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hereunder with respect to a Default that has been so cured. However, if such
Default was not cured within thirty (30) days of receipt of the Notice of
Default, then the Default shall constitute an "Event of Default", and Limited
REMI I or CT-F1, as the case may be, shall have the rights set forth in Section
11.2.
11.2. Remedies Upon Event of Default. (A) Subject to Section 11.1(c),
upon the occurrence of an Event of Default by a Defaulting Member under Section
11.1(a)(i), the Non-Defaulting Member may elect to do any one or more of (i),
(ii) and/or (iii) under this Section 11.2 after Notice to the Defaulting Member;
(B) upon the occurrence of an Event of Default by a Defaulting Member under
Section 11.1(a)(ii) or (iii), the Non-Defaulting Member may only elect to do
(ii) under this Section 11.2 after Notice to the Defaulting Member; (C) Subject
to Section 11.1(c) upon the occurrence of an Event of Default by a Defaulting
Member under Section 11.1(a)(iv), the Non-Defaulting Member may elect to do
either (i) or (ii) under this Section 11.2 after Notice to the Defaulting
Member; (D) upon the occurrence of an Event of Default by a Defaulting Member
under Section 11.1(a)(v), the Non-Defaulting Member may elect to do (i), (ii)
and/or (iii) under this Section 11.2 after Notice to the Defaulting Member; (E)
upon the occurrence of an Event of Default by the Investment Manager under
Section 11.1(a)(vi), the Member not affiliated with the Investment Manager may
elect to do any one or more of (i), (ii) and/or (iii) under this Section 11.2
after Notice to the Defaulting Member; (F) upon the occurrence of an Event of
Default by a Defaulting Member hereunder or by the Investment Manager under the
Investment Management Agreement as set forth in Section 11.1(a)(vii) of this
Agreement, the Non-Defaulting Member (or the Member not affiliated with the
Investment Manager in the case of such a Default by the Investment Manager) may
do only (ii) under this Section 11.2 after Notice to the Defaulting Member or
the Investment Manager as the case may be, and (G) upon the occurrence of an
Event of Default by a Defaulting Member under Section 11.1(a)(viii) the
Non-Defaulting Member may elect to do any one or more of (i), (ii) and/or (iii)
under Section 11.2 after Notice to the Defaulting Member:
(i) Purchase or cause a Person designated by it to purchase
the Defaulting Member's Interest pursuant to Section 9.3, in which case the Fund
I Investment Management Agreement shall terminate upon the closing of such
purchase;
(ii) Exercise the Unwind Right, in which case the Fund I
Investment Management Agreement shall terminate upon the completion of the
Unwind; or
(iii) Pursue, and/or cause the Company to pursue, any other
remedy provided in this Agreement, at law or in equity.
11.3. Dispute Resolution. Should any dispute arise under this Agreement
other than with respect to Fair Market Value, then the parties shall resolve
such dispute pursuant to Section 4.2 of the Venture Agreement.
11.4. Waiver of Partition and Certain Other Rights. Except with respect
to any exercise of the Unwind Right, each of the Members irrevocably waives any
right or power that it might have: (a) to cause the Company or any of its assets
to be partitioned; (b) to compel any sale of all or any portion of the assets of
the Company under any applicable law; (c) to cause the appointment of a receiver
for all or any portion of the assets of the Company; or (d) to file a
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complaint, or to institute proceedings at law or in equity, to cause the
dissolution or liquidation of the Company, other than in accordance with this
Agreement. Each of the Members has been induced to enter into this Agreement in
reliance upon the waivers of this Section 11.4, and without those waivers no
Member would have entered into this Agreement.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
12.1. Reciprocal Representations and Warranties. Each Member hereby
represents and warrants to the Company and each other Member that:
(a) Organization; Authority; Due Authorization.
(i) Organization and Good Standing. It is a limited liability
company duly organized, validly existing and in good standing under the
applicable laws of its jurisdiction of formation; has all requisite power to
own, lease and operate its assets, properties and business and to carry on its
business as now conducted; and is duly qualified or licensed to do business as a
foreign limited liability company and is in good standing in every jurisdiction
in which the nature of its business or the location of its properties requires
such qualification or licensing, except for such jurisdictions where the failure
to so qualify or be licensed would not have a material adverse effect upon its
ability to perform fully its obligations under this Agreement or any other
related agreement.
(ii) Authority to Execute and Perform Agreements. It has all
requisite limited liability company power and authority to enter into, execute
and deliver this Agreement, and all other related agreements to be executed by
it and to perform fully its obligations hereunder and thereunder.
(iii) Due Authorization; Enforceability. It has taken all
limited liability company actions necessary to authorize it to enter into and
perform fully its obligations under this Agreement and all other related
agreements to be executed by it and to consummate the transactions contemplated
herein and therein. This Agreement has been duly and validly executed by each
Member and constitutes the legal, valid and binding obligation of each Member,
enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
applicable laws affecting creditors' rights generally or by general equitable
principles affecting the enforcement of contracts.
(iv) United States Person. It is a "United States person" (as
defined in Section 7701 of the Code).
(v) Limited REMI I is a wholly owned indirect entity of
Citigroup Inc. and Travelers Property Casualty Corp., and CT-F1 is a wholly
owned direct subsidiary of CT.
(b) No Violation. Neither its execution or delivery of this
Agreement nor the consummation of the transactions contemplated herein will (i)
violate any provision of its organizational documents or limited liability
company agreement; or (ii) violate in any material respect any applicable law or
order.
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(c) Regulatory and Other Approvals. No consent, approval,
authorization, notice, filing, exemption or other requirement must be obtained
by it from any authority or Person or must otherwise be satisfied by it in order
that the consummation of the transactions contemplated in this Agreement or any
related documents will not violate in any material respect any applicable law or
order or any material contract to which it is a party.
(d) Securities Matters. It (i) is acquiring its Membership
Interest for itself for investment purposes only, and not with a view to any
resale or distribution of such Membership Interest, (ii) has been advised and
understands that such Membership Interest has not been and will not be
registered under the Securities Act, or any applicable state securities laws
and, therefore, cannot be resold unless such Membership Interest is registered
under the Securities Act and all applicable state securities laws, or unless
exemptions from registration are available, and (iii) has, either alone or with
its "purchaser representatives," as that term is defined in Rule 501(h) under
the Securities Act, such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in the Company. It further acknowledges that the Company has made available to
such Member, at a reasonable time prior to its acquisition of its Membership
Interest, the opportunity to ask questions and receive answers concerning the
terms and conditions of such acquisition and to obtain any additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
furnished by the Company in connection with such acquisition.
ARTICLE XIII
BOOKS, RECORDS AND REPORTS
13.1. Maintenance of Books. The Company shall keep complete and
accurate books and records of accounts maintained in accordance with GAAP. Tax
records shall be maintained in accordance with the accrual method of accounting.
The books of account for the Company shall be maintained at the principal office
of the Company.
13.2. Records to be Maintained. The Company shall maintain the
following records:
(a) A current list of the full name, set forth in alphabetical
order, and last known mailing address together with the Capital Contribution and
the share of profit and losses of each Member or information from which such
share can be readily derived;
(b) A copy of the Certificate of Formation and all amendments
thereto or restatements thereof, together with executed copies of any powers of
attorney pursuant to which such Certificate of Formation have been executed;
(c) A copy of this Agreement, any amendments hereto and any
restatements hereof; and
(d) A copy of the Company's Federal, state and local income tax
returns or informational returns and reports, if any, for the past ten (10)
years.
13.3. Inspection by Members; Confidential Information. (a) Any Member
shall have the right to inspect and copy at such Member's expense, any
documents, including financial
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statements maintained by the Company and other information regarding the affairs
of the Company, as is reasonable.
(b) The Members acknowledge that from time to time, they may
receive information from or regarding the Company in the nature of trade secrets
or that otherwise is confidential, the release of which may be damaging to the
Company or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives which is subject to a confidentiality
agreement binding on the Company or any of its employees, whether as a principal
or as an agent, and may not disclose such information to any Person other than
another Member except for disclosures (i) compelled by law (but such Member must
notify the other Member promptly of any request for that information, before
disclosing it if practicable), (ii) to advisers or representatives of the Member
or Persons to which that Member's Membership Interest may be assigned as
permitted by this Agreement, but only if the recipients have agreed to be bound
by the provisions of this Section 13.3(b), (iii) of information that Member also
has received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality, (iv) in accordance with the terms of such confidentiality
agreements or (v) upon the consent of each Member, but only if such employee is
informed that such information is to be held in strict confidence. The Members
acknowledge that breach of the provisions of this Section 13.3(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 13.3(b) may be enforced by specific performance.
13.4. Books and Tax Reports. The books of account shall be closed
promptly after the end of each Fiscal Year. Within ninety (90) days after the
conclusion of each Fiscal Year, each Member shall be provided with a Form K-1
and/or other information statement with respect to its distributive share of
income, gains, deductions, losses and credits for income tax reporting purposes
for the previous Fiscal Year, together with any other information concerning the
Company necessary for the preparation of a Member's income tax return(s), all
under the supervision and as determined by the Tax Matters Member in its
reasonable discretion. With the sole exception of mathematical errors in
computation, these tax statements and the information contained therein shall be
deemed conclusive and binding upon such Member. Each Member agrees that it shall
not (i) treat, on its income tax returns, any item of income, gain, loss,
deduction or credit relating to its interest in the Company in a manner
inconsistent with the treatment of such item by the Members as reflected on the
Form K-1 or other information statement furnished by the Company to such Member
for use in preparing its income tax returns or (ii) file any claim for refund
relating to any such item based on, or which would result in, such inconsistent
treatment. Notwithstanding anything herein to the contrary, Limited REMI I shall
cause the Company's income tax returns for its first Fiscal Year to be prepared
and furnished to CT-F1 for its review and comments at least fifteen (15)
Business Days before the due date of the tax return. If CT-F1 does not furnish
comments to Limited REMI I within fifteen (15) Business Days, Limited REMI I may
cause the Company to file such tax returns.
ARTICLE XIV
MISCELLANEOUS
14.1. Notices.
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(a) Form and Addresses. All notices, consents, approvals, waivers,
elections and other communications (collectively, "Notices") required to be
given pursuant to this Agreement shall be given in writing and,
If to Limited REMI I: Travelers Limited Real Estate Mezzanine
--------------------- Investments I, LLC
205 Columbus Blvd, 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12832
With Copies to: Citigroup Investments Inc.
--------------- 388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12832
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to CT: Capital Trust, Inc.
--------- 605 Third Avenue, 26th Floor
New York, New York 10016
Attn: John R. Klopp
With a Copy to: Battle Fowler LLP
--------------- 75 East 55th Street
New York, New York 10022
Attn: Thomas E. Kruger, Esq.
(b) Delivery. All notices and other communications required or
permitted by this Agreement shall be deemed to have been duly given if
personally delivered to the intended recipient at the proper address determined
pursuant to this Section 14.1 or sent to such recipient at such address by air
courier, overnight courier, or by hand and will be deemed given, unless earlier
received: (a) if sent by courier when recorded on the records of the courier as
received by the receiving party; and (b) if delivered by hand, on the date of
receipt.
14.2. Certificate Requirements. From time to time the Members shall
sign and acknowledge all such writings as are required to amend the Certificate
of Formation, for the carrying out of the terms of this Agreement, or, upon
dissolution of the Company, to cancel such certificate.
14.3. Modification. No change or modification of this Agreement shall
be of any force unless such change or modification is in writing and has been
signed by all of the Members.
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14.4. Waivers and Consents. No waiver of any breach of any of the terms
of this Agreement shall be effective unless such waiver is in writing and signed
by the Member against whom such waiver is claimed. No waiver of any breach shall
be deemed to be a waiver of any other or subsequent breach. Any consent of a
Member required hereunder must be in writing and signed by such Member to be
effective. No consent given by a Member in any one instance shall be deemed to
waive the requirement for such Member's consent in any other or future instance.
14.5. Severability. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
14.6. Further Assurances. Each Member shall execute such deeds,
assignments, endorsements, evidences of Transfer and other instruments and
documents and shall give such further assurances as shall be consistent with the
provisions of this Agreement and necessary to perform its obligations hereunder.
14.7. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its
conflict of laws principles.
14.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
14.9. Limitation on Rights of Others. No Person other than a Member
shall have any legal or equitable right, remedy or claim under or in respect of
this Agreement; no third party (i.e., Person other than a Member) shall be a
beneficiary of any provision of this Agreement.
14.10. Brokers and Finders. Except as set forth in the Placement Agent
Agreement and in the CT-F2-GP Capital Formation Agreement and the General REMI
II Capital Formation Agreement (each as defined in the Venture Agreement) (i)
there are no brokers, finders or placement agents, and (ii) each Member shall
indemnify and hold all of the other Members and the Company harmless from and
against any commission, fee or other payment due any broker, finder or other
Person in connection with such Member's decision to invest in the Company.
14.11. Construction and Interpretation. This Agreement shall not be
construed more strictly against one party than against another by reason of the
fact that it may have been prepared by counsel for one of the parties.
14.12. Successors And Assigns. This Agreement shall be binding upon and
inure to the benefit of the Members and their respective successors and
permitted assigns. This Agreement and the rights and obligations set forth
herein are for the sole benefit of the parties hereto and their respectable
Affiliates. Nothing contained herein is intended to confer upon any other person
any rights or remedies hereunder.
14.13. Survival. Sections 8.3 through 8.7, and Articles XI through XIV
hereof shall survive termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
MEMBERS:
TRAVELERS LIMITED REAL
ESTATE MEZZANINE INVESTMENTS I, LLC
By: /s/ Michael Watson
--------------------------------------
Michael Watson
Vice President
CT-F1, LLC
By: Capital Trust, Inc.,
its sole member
By: /s/ John R. Klopp
----------------------------------
John R. Klopp
Chief Executive Officer
27
<PAGE>
EXHIBIT "A"
-----------
Names and Initial Capital Accounts
Initial Capital
---------------
Member Name Account
----------- -------
Travelers Limited Real Estate $1,020,075
Mezzanine Investments I, LLC
CT-F1, LLC $ 340,025
Exhibit 10.3
________________________________________________________________________________
LIMITED LIABILITY COMPANY AGREEMENT
OF
CT MP II LLC
a Delaware limited liability company
Effective as of: March 8, 2000
________________________________________________________________________________
<PAGE>
ARTICLE I DEFINED TERMS.......................................1
1.1. Definitions..................................................1
1.2. General References...........................................6
ARTICLE II FORMATION AND DURATION..............................6
2.1. Formation....................................................6
2.2. Name.........................................................7
2.3. Agent and Office.............................................7
2.4. Principal Place of Business..................................7
2.5. Qualification in Other Jurisdictions.........................7
2.6. Term.........................................................7
2.7. Intent.......................................................7
2.8. Limited Liability............................................7
2.9. Transfer of Warrants.........................................7
ARTICLE III PURPOSE AND POWERS OF THE COMPANY...................8
3.1. Purposes and Powers..........................................8
3.2. Limitations on Company Powers................................8
ARTICLE IV CAPITAL CONTRIBUTIONS...............................8
4.1. Initial Contributions........................................8
4.2. Additional Capital Contributions.............................9
4.3. Failure to Contribute Additional Payments...................10
4.4. Loans by Members; Compensation..............................10
ARTICLE V MANAGEMENT OF THE COMPANY..........................11
5.1. Management of the Company...................................11
5.2. Management Committee and Related Matters....................11
5.3. Conduct of Management Committee Meetings; Minutes...........12
ARTICLE VI DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS..........13
6.1. Distributions...............................................13
6.2. Allocation of Net Profit and Net Loss.......................13
6.3. Withholding.................................................13
6.4. Restoration of Funds........................................14
ARTICLE VII TAX ELECTIONS; TAX MATTERS MEMBER; TAX
CAPITAL ACCOUNTS...................................14
7.1. Federal Income Tax Elections; Tax Matters Member............14
7.2. Tax Matters.................................................14
ARTICLE VIII OTHER RIGHTS AND OBLIGATIONS OF MEMBERS............15
8.1. Resignation of a Member.....................................15
8.2. Admission of New Members....................................15
8.3. Indemnification by Company..................................15
8.4. Indemnification by Members..................................16
8.5. Exculpation.................................................16
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Page(s)
8.6. Reimbursement of Members....................................16
8.7. Particular Covenants of Members.............................16
ARTICLE IX TRANSFERS OF COMPANY MEMBERSHIP INTERESTS..........17
9.1. Condition to Transfer of Any Membership Interest............17
9.2. Transfers of Membership Interests...........................18
ARTICLE X DISSOLUTION AND LIQUIDATION........................18
10.1. Dissolution.................................................18
10.2. Winding up Affairs and Distribution of Assets...............19
10.3. No Liability................................................19
10.4. Limitations on Payments Made in Dissolution.................19
10.5. Certificate of Cancellation.................................19
ARTICLE XI DEFAULT AND REMEDIES...............................20
11.1. Default.....................................................20
11.2. Remedies Upon Event of Default..............................21
11.3. Dispute Resolution. .......................................21
11.4. Waiver of Partition and Certain Other Rights. .............21
ARTICLE XII REPRESENTATIONS AND WARRANTIES OF THE MEMBERS......22
12.1. Reciprocal Representations and Warranties...................22
ARTICLE XIII BOOKS, RECORDS AND REPORTS.........................23
13.1. Maintenance of Books........................................23
13.2. Records to be Maintained....................................23
13.3. Inspection by Members; Confidential Information.............23
13.4. Books and Tax Reports.......................................24
ARTICLE XIV MISCELLANEOUS......................................25
14.1. Notices.....................................................25
14.2. Certificate Requirements....................................25
14.3. Modification................................................26
14.4. Waivers and Consents........................................26
14.5. Severability................................................26
14.6. Further Assurances..........................................26
14.7. Governing Law...............................................26
14.8. Counterparts................................................26
14.9. Limitation on Rights of Others..............................26
14.10. Brokers and Finders.........................................26
14.11. Construction and Interpretation.............................26
14.12. Successors And Assigns......................................26
14.13. Survival....................................................27
ii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF CT MP II LLC
This LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") of CT MP II LLC
(the "Company") is entered into this 8th day of March 2000, between Travelers
General Real Estate Mezzanine Investments II, LLC a Delaware limited liability
company ("General REMI II"), and CT-F2-GP, LLC, a Delaware limited liability
company ("CT-F2"), as members of the Company.
WHEREAS, General REMI II and certain of its Affiliates and CT-F2 and
certain of its Affiliates are parties to that certain Venture Agreement dated
the date hereof (the "Venture Agreement") pursuant to which, among other things,
the parties or their Affiliates will co-sponsor, commit to invest capital in and
manage real estate mezzanine investment opportunity funds;
WHEREAS, General REMI II and CT-F2 wish to form the Company in which
General REMI II and CT-F2 shall be the only Members and the only investors;
WHEREAS, the Company will serve as the general partner of CT Mezzanine
II, LP, a Delaware limited partnership ("Fund II").
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the Members hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. Definitions. Unless the context otherwise requires, the following
terms shall have the following meanings:
"Additional Capital Contributions" means the additional Capital
Contributions made by the Members pursuant to, and determined in accordance
with, Section 4.2(a) hereof.
"Additional Payment" has the meaning specified in Section 4.2(a)
hereof, as adjusted by Section 4.3(a) hereof.
"Affiliate" means, with respect to any Person, a Person which directly
or indirectly controls, or is controlled by or is under common control with that
Person, or is controlled by a principal executive officer of that Person. As
used in this definition, "control" means possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting interests, by contract or
otherwise.
<PAGE>
"Agreement" means this Limited Liability Company Agreement of the
Company.
"Annual Operating Budget" means, collectively, with respect to each
Fiscal Year of the Company any annual operating budget, working capital budget,
marketing budget and expenditures relating to the operation of the Company as
and when approved by the Management Committee. The Annual Operating Budget shall
be prepared in accordance with GAAP by the Management Committee and shall show
the estimated receipts, expenditures (operating and capital) and reserves of the
Company for the subject Fiscal Year. "Annual Operating Budget" also includes all
subsequent amendments and revisions to the foregoing approved by the Management
Committee.
"Bankruptcy" of a Person means the institution of any proceedings under
any federal or state law for the relief of debtors, including the filing by or
against that Person of a voluntary or involuntary case under the United States
Bankruptcy Code, which proceedings, if involuntary, are not dismissed within
sixty (60) days after their filing; an assignment of the property of that Person
for the benefit of creditors; the appointment of a receiver, trustee or
conservator of any substantial portion of the assets of that Person, which
appointment, if obtained ex parte, is not dismissed within sixty (60) days
thereafter; the seizure by a sheriff, receiver, trustee or conservator of any
substantial portion of the assets of that Person; the failure by that Person
generally to pay its debts as they become due within the meaning of Section
303(h)(1) of the United States Bankruptcy Code, as determined by the Bankruptcy
Court; or that Person's admission in writing of its inability to pay its debts
as they become due.
"Business" shall have the meaning given to such term in the Venture
Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
applicable law to close.
"Calculation Date" means, for purposes of computing Net Cash Flow to be
distributed with respect to a particular fiscal quarter, the last day in that
quarter.
"Capital Account" of a Member with respect to the Company means the
capital account of that Member which, except as otherwise provided herein, shall
be determined from the inception of the Company in accordance with GAAP. The
Initial Capital Account of each Member is set forth on Exhibit "A".
"Capital Contributions" of a Member means, as of a particular date, the
aggregate amount of money and the Fair Market Value of any property (other than
money), net of encumbrances, theretofore contributed to the Company by that
Member pursuant to this Agreement, which shall consist of the Member's Initial
Capital Contribution, Additional Capital Contributions, Default Payments (in the
case of General REMI II after the Warrant Purchase Notes have been paid) that
are not treated as loans under Section 4.3(b)(ii) hereof, and Warrant
Contributions.
"Certificate of Formation" means the Certificate of Formation of the
Company filed on behalf of the Company with the office of the Secretary of State
of the State of Delaware pursuant to the Delaware Act (as defined below).
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<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means CT MP II LLC, the limited liability company formed and
existing under and pursuant to the Delaware Act, the Certificate of Formation
and this Agreement.
"Contribution Date" means the date which is specified in a call for
Additional Capital.
"CT-F2" has the meaning given to such term in the Preamble of this
Agreement.
"CT Stock" means the class A common stock, $.01 par value per share, of
Capital Trust, Inc., a Maryland corporation.
"Default" has the meaning specified in Section 11.1(b) hereof.
"Default Payment" has the meaning specified in Section 4.3(a) hereof.
"Defaulting Member" has the meaning specified in Section 11.1(b)
hereof.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.
C.ss. 18-101, et seq.
"Distribution" means the transfer of money or property by the Company
to one or more Members, in their capacity as Members, without separate
consideration.
"Effective Date" means March 8, 2000.
"Event of Default" has the meaning specified in Sections 11.1(c)
hereof.
"Fair Market Value" of an asset means the price at which that asset
would be sold between a willing buyer and a willing seller, each having
knowledge of all relevant facts concerning the asset and neither being under any
compulsion to buy or sell the asset, as agreed upon by the Members or if the
Members cannot agree within thirty (30) days, the price shall be determined by
Section 4.1(b) of the Venture Agreement.
"Fiscal Year" means the calendar year.
"Fund II Investment Management Agreement" means that certain investment
management agreement by and between CTIMCO and the Company, dated the date
hereof.
"Fund II" shall have the meaning set forth in the Whereas clauses.
"Fund II Initial Closing" shall have the meaning given to such term in
the Venture Agreement.
"Fund II Management Agreement" means the management agreement between
the Company and Fund II.
3
<PAGE>
"Fund II Partnership Agreement" shall mean the agreement of limited
partnership of Fund II.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis throughout the
term of this Agreement.
"Indemnitee" has the meaning specified in Section 8.3.
"Initial Capital Contribution" of a Member means the capital
contributions made by that Member pursuant to Section 4.1 hereof.
"Investments" shall have the meaning specified in the Fund II
Partnership Agreement.
"Investment Management Fee" means the fee that the Investment Manager
is entitled to receive pursuant to the Fund II Investment Management Agreement.
"Investment Manager" shall mean CT Investment Management Co., LLC, a
Delaware limited liability company.
"Investment Period" means the period, commencing on the date of the
Fund II Initial Closing, during which Fund II may make new Investments pursuant
to the Fund II Partnership Agreement.
"Key Individuals" shall have the meaning given to such term in the
Venture Agreement.
"Key Individuals Requirement" shall mean the Investment Manager's
covenants under Section 1.4 of the Fund II Investment Management Agreement.
"Management Committee" means the committee described in Section 5.2.
"Management Fee" shall have the meaning given such term in the Fund II
Management Agreement.
"Member" means each of General REMI II and CT-F2 and includes any
Person admitted as a Substitute Member pursuant to the provisions of this
Agreement, in such Person's capacity as a member of the Company; "Members" means
two (2) or more of such Persons when acting in their capacities as members of
the Company. For purposes of the Delaware Act, the Members shall constitute one
(1) class or group of members.
"Membership Interest" means a Member's total interest as a Member of
the Company, including that Member's rights to allocations of Net Profits, Net
Losses, special allocations, Net Cash Flow and other Distributions, its right to
inspect the books and records of the Company and its right, to the extent
specifically provided in this Agreement or in the Delaware Act and not otherwise
restricted herein, to participate in the business, affairs and management of the
Company and to vote or grant consent with respect to matters coming before the
Company.
4
<PAGE>
"Net Cash Flow" has the meaning specified in Section 6.1(a) hereof.
"Net Profits" and "Net Losses" means, for each fiscal period, the net
income and net loss, respectively, of the Company determined in accordance with
GAAP.
"Nonrecourse Exception Indemnitee" has the meaning specified in Section
8.4 hereof.
"Notice of Default" has the meaning specified in Section 11.1(b)
hereof.
"Notices" has the meaning specified in Section 14.1(a) hereof.
"Percentage Interest" of a Member means in the case of each of General
REMI II and CT-F2, 50%, as may be subsequently adjusted as provided in Section
4.3(b)(i).
"Person" means any entity, corporation, company, association, joint
venture, joint stock company, partnership, trust, limited liability company,
limited liability partnership, real estate investment trust, organization,
individual, nation, state, government (including agencies, departments, bureaus,
boards, divisions and instrumentalities thereof), trustee, receiver or
liquidator.
"Purchase Warrants" means the warrants to purchase such number of
shares of CT Stock to be sold by the Company to General REMI II, as determined
with respect to Fund II, pursuant to the Venture Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Service Warrants" means the warrants to purchase such number of shares
of CT Stock to be transferred by the Company to Limited REMI II, as determined
with respect to Fund II, pursuant to the Venture Agreement as consideration for
services rendered by Limited REMI II, as provided in the Venture Agreement.
"Substitute Member" means a Person who is admitted to the Company as a
Member pursuant to Article IX.
"Tax Matters Member" means the "tax matters partner" referred to in
Section 6231(a)(7) of the Code.
"Transfer" of all or any portion of a Membership Interest means any
direct or indirect sale, assignment, gift, hypothecation, pledge or other
disposition, whether voluntary, involuntary or by operation of law, of all or
any portion of a Membership Interest, including, without limitation, the right
to receive Distributions from the Company. Notwithstanding that a Transfer of
all or any portion of a Membership Interest by way of hypothecation or pledge
has occurred, any subsequent transfer, sale or other disposition of such
Membership Interest or portion thereof at foreclosure shall also constitute a
separate Transfer hereunder and shall also be subject to all of the provisions
of this Agreement.
5
<PAGE>
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code.
"Venture Agreement" shall have the meaning set forth in the Whereas
clauses.
"Warrants" means Service Warrants and/or Purchase Warrants, as the
context may require. The parties agree that the Warrants have a Fair Market
Value of $0.32 per share.
"Warrant Contribution" has the meaning specified in Section 4.2(c)
hereof.
"Warrant Purchase Agreement" means the forward purchase agreement
pursuant to which General REMI II will purchase Purchase Warrants from the
Company, which is in the form of Exhibit S to the Venture Agreement.
"Warrant Purchase Note" means the Fund II Purchase Warrant Promissory
Note as defined in the Venture Agreement.
1.2. General References. References in this Agreement to "Articles,"
"Sections," "Exhibits" and "Schedules" shall be to the Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specifically
provided; the term "including" means "including without limitation;" any of the
terms defined in this Agreement may, unless the context otherwise requires, be
used in the singular or the plural and in any gender depending on the reference;
the words "herein", "hereof" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and except as otherwise specified in
this Agreement, all references in this Agreement (a) to any Person shall be
deemed to include such Person's permitted heirs, personal representatives,
successors and assigns; and (b) to any agreement, any document, certificate or
any other written instrument shall be a reference to such agreement, document,
certificate or instrument together with all exhibits, schedules, attachments and
appendices thereto, and in each case as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof; and
(c) to any law, statute or regulation shall be deemed references to such law,
statute or regulation as the same may be supplemented, amended, consolidated,
superseded or modified from time to time with an effective date rendering such
change applicable to the event or transaction in question.
ARTICLE II
FORMATION AND DURATION
2.1. Formation.
(a) Formation. Unless expressly provided otherwise in this Agreement,
the rights, duties and liabilities of the Members of the Company shall be as
provided in the Delaware Act. The Company has been organized as a Delaware
limited liability company under the Delaware Act by the filing of the
Certificate of Formation on February 28, 2000 with the Secretary of State of the
State of Delaware.
(b) Information as to Members. As of the Effective Date, the name of
each Member shall be as listed in Exhibit "A". The Members shall be required to
update Exhibit "A"
6
<PAGE>
from time to time as necessary to reflect any change in Members. Any amendment
or revision to Exhibit "A" made in accordance with this Agreement shall not be
deemed an amendment to this Agreement.
2.2. Name. The name of the Company is CT MP II LLC. However, the business
of the Company may be conducted under any other name designated by the Members
from time to time.
2.3. Agent and Office. The Company's registered agent and office in
Delaware shall be United Corporate Services, 15 East North Street, Dover, County
of Kent, Delaware 19901. At any time, the Members may designate another
registered agent and/or registered office.
2.4. Principal Place of Business. The principal place of business of the
Company shall be at the CT offices currently located at 605 Third Avenue, 26th
Floor, New York, New York, 10016, or at such other place as the Members may
determine from time to time.
2.5. Qualification in Other Jurisdictions. The Members shall cause the
Company to be qualified or registered (a) as a foreign limited liability company
under the provisions of the New York Act, and shall cause such status to be
maintained for so long as the Company owns any real property, or otherwise
transacts business, in the State of New York, and (b) under the assumed or
fictitious name statutes or similar laws in the State of New York and in any
other jurisdiction in which the Company transacts business. The Company shall
execute, deliver and file any certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in the
State of New York or in any other jurisdiction in which the Company may wish to
conduct business.
2.6. Term. The term of the Company commenced on the date the Certificate of
Formation was filed in the office of the Delaware Secretary of State and shall
continue until the cancellation of the Certificate of Formation in the manner
required by the Delaware Act.
2.7. Intent. It is the intent of the Members that the Company be operated
in a manner consistent with its treatment as a "partnership" for Federal and
state income tax purposes. It also is the intent of the Members that the Company
not be operated or treated as a "partnership" for purposes of Section 303 of the
United States Bankruptcy Code. No Member or member of the Management Committee
shall take any action inconsistent with that express intent.
2.8. Limited Liability. Except as otherwise provided in the Delaware Act,
the debts, obligations and liabilities of the Company (whether arising in
contract, tort or otherwise) shall be solely the debts, obligations and
liabilities of the Company, and no Member (including the Tax Matters Member
acting in such capacity and any Person who formerly held such status) shall be
liable or shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of that status. No individual trustee,
officer, director, shareholder, member, manager, constituent partner, employee,
agent or attorney of any entity Member, in his, her or its individual capacity
as such, shall have any personal liability for the performance of any obligation
of that Member under this Agreement.
2.9. Transfer of Warrants. At the times and in the amounts required in the
Venture Agreement, the Company shall sell the Purchase Warrants to General REMI
II pursuant to the
7
<PAGE>
Warrant Purchase Agreement in exchange for Warrant Purchase Notes. At the times
and in the amounts required in the Venture Agreement, the Company shall assign
the Service Warrants to Limited REMI II as consideration for services provided
by it as set forth in the Venture Agreement.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
3.1. Purposes and Powers.
(a) The sole business and purposes of the Company shall be to:
(i) form Fund II as contemplated by the Venture Agreement;
(ii) enter into the Fund II Partnership Agreement, acquire an
interest as general partner of Fund II and serve as the general partner of Fund
II;
(iii) hold, sell, dispose of, exchange, transfer, vote or
otherwise exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to the interests of the Company in Fund II;
and
(iv) to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any Member and/or Affiliate
thereof (approved by the other Member) or any agent of the Company necessary,
convenient, desirable or incidental to the accomplishment of the purpose of the
Company; including assigning Service Warrants to Limited REMI II as compensation
for services rendered by it.
(b) In order to carry out the business and purposes set forth in
Section 3.1(a) hereof, the Company shall have the power to do everything
necessary, suitable or proper for the accomplishment of or in furtherance of any
of the purposes set forth herein, and to do every other act or acts, thing or
things, incidental or appurtenant to or arising from or connected with any of
such purposes. Without limiting the generality of the foregoing, the Company
shall have the power to sell Company assets to Members in exchange for cash or a
promissory note in payment of such assets, including to sell the Purchase
Warrants to General REMI II pursuant to the Purchase Agreement in exchange for
Warrant Purchase Notes.
3.2. Limitations on Company Powers. Notwithstanding Section 3.1, the
Company shall not do business in any jurisdiction the laws of which do not give
full faith and credit to the limitations on liability afforded to the Members
under the Delaware Act or this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1. Initial Contributions. As at the Effective Date, each of General REMI
II and CT-F2 are contributing $50 to the capital of the Company.
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<PAGE>
4.2. Additional Capital Contributions.
(a) Additional Payments. No Member shall be required to make any
further payments in cash to the Company during the term of this Agreement unless
and until the Management Committee has approved such further payments; provided,
however, that each Member shall cause its representatives on the Management
Committee to approve such further payments as are necessary to permit the
Company to pay any further capital that it is required to contribute to Fund II
in cash pursuant to the Fund II Partnership Agreement or to permit the Company
to pay Salomon Smith Barney, Inc.'s placement agent fees and expenses pursuant
to the Placement Agent Agreement and any organizational costs with respect to
the formation and marketing of Fund II required by the Fund II Partnership
Agreement ("Additional Payments"). Any Additional Payment and any Default
Payment that is not treated as a loan under Section 4.3(b)(ii) hereof by General
REMI II shall first be applied to repay the Warrant Purchase Notes. Once the
Warrant Purchase Notes are repaid, any Additional Payment by General REMI II
shall constitute an Additional Capital Contribution. Any Additional Payment by
CT-F2 shall constitute an Additional Capital Contribution.
(b) Call Procedures; Payment of Call. Whenever the Management Committee
has determined that the Members will be required to make Additional Payments to
the Company as provided in this Section 4.2, each Member shall be obligated to
contribute its share of the requested Additional Payment in cash in an amount
equal to (a) that Member's Percentage Interest multiplied by (b) the aggregate
dollar amount of the requested Additional Payment. To satisfy any call for an
Additional Payment, a Member shall cause to be paid to the Company, on the date
specified by the Management Committee which date shall be the "Contribution
Date," in immediately available funds in the full amount of such Member's share
of the requested Additional Payment.
(c) Contribution of Warrants. CT-F2 shall contribute to the capital of
the Company the Service Warrants and the Purchase Warrants in such amounts and
at such times as required by the Venture Agreement (a "Warrant Contribution").
The parties agree that the Fair Market Value of each Warrant contributed is, and
the amount of the capital contribution shall be considered to be, $0.32 per
share.
(d) Credit to Capital Accounts. Upon any Additional Capital
Contribution or Warrant Contribution, the aggregate amount contributed shall be
credited to the Capital Accounts of the Members in proportion to their
Percentage Interests at such time. Notwithstanding the foregoing, in the event
the Non-Defaulting Member makes the Default Payment, the Additional Capital
Contribution of the Non-Defaulting Member with respect to the call that resulted
in the Defaulting Member's default and the Default Payment that is not treated
as a loan under Section 4.3(b)(ii) hereof shall, if CT-F2 is the Non-Defaulting
Member, be credited solely to the Capital Account of CT-F2, and if General REMI
II is the Non-Defaulting Member, be applied first to repay the Warrant Purchase
Notes and thereafter be credited solely to the Capital Account of General REMI
II.
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4.3. Failure to Contribute Additional Payments.
(a) Default Payment. In the event that a call is issued pursuant to
Section 4.2 for an Additional Payment and any Member does not contribute its
required share of such Additional Payment, then the Non-Defaulting Member may,
in addition to any other right or remedy available under this Agreement, at law
or in equity, make an additional payment (a "Default Payment") to the Company in
cash equal to the amount of the Additional Payment which the Defaulting Member
has failed to make. The Non-Defaulting Member shall give Notice to the
Defaulting Member within thirty (30) days after making a Default Payment (or, if
sooner, by the date the next Distributions to the Members are scheduled to be
made by the Company) designating its election under Section 4.3(b). If the
Non-Defaulting Member does not make the Default Payment, the Additional Payment
made by the Non-Defaulting Member with respect to the call that resulted in the
Defaulting Member's default shall be treated as a demand loan from the
Non-Defaulting Member to the Company having the terms set forth in Section
4.3(b)(ii), and shall not constitute an Additional Payment.
(b) Effect of a Default Payment. At the election of the Non-Defaulting
Member, its Default Payment shall have one of the following effects:
(i) As to each contribution of Default Payment, the Percentage
Interest of each Member shall be redetermined to be a fraction (expressed as a
percentage), the numerator of which is the sum of (1) the Initial Capital
Contribution of that Member, plus the Additional Payments by that Member, plus
(2) 1.5 times the Default Payments by that Member that are not treated as loans
pursuant to Section 4.3(b)(ii) hereof, if any, and the denominator of which is
the sum of (3) the Initial Capital Contributions of all the Members, plus the
Additional Payments of all the Members, plus (4) 1.5 times the Default Payment
of all Members that are not treated as loans pursuant to Section 4.3(b)(ii)
hereof. All amounts shall be determined through the date of the adjustment.
Notwithstanding that Percentage Interests are generally determined to be in
proportion to Initial Capital Contributions and Additional Payments, it is
intended that the Non-Defaulting Member's Default Payment is to receive 1.5
times credit for purposes of redetermining the Percentage Interests of the
Members; or
(ii) The amount of such Default Payment shall be treated as a
demand loan from the Non-Defaulting Member to the Company. Such loan shall bear
interest, compounded daily, at a rate per annum (based on a year of 360 days)
equal to the lower of eighteen percent (18%) or the highest rate permitted by
the usury laws of the State of New York until such loan shall have been paid in
full.
4.4. Loans by Members; Compensation. No Member shall be required to lend
any funds to the Company, and no Member shall have any personal liability for
the repayment of any Capital Contribution of any other Member. No Member shall
receive any interest, salary or drawing with respect to its Additional Payments,
Default Payments, Capital Contributions or its Capital Account or for services
rendered on behalf of the Company or otherwise in its capacity as a Member,
except as otherwise provided in this Agreement.
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ARTICLE V
MANAGEMENT OF THE COMPANY
5.1. Management of the Company. The business and affairs of the Company
shall be managed by the Management Committee, except to the extent management is
delegated to the Investment Manager pursuant to the Fund II Investment
Management Agreement.
5.2. Management Committee and Related Matters.
(a) Management Committee. Except to the extent expressly delegated to
the Investment Manager pursuant to Section 5.1 hereof and the Fund II Investment
Management Agreement or as otherwise provided in this Section 5.2, the Members,
acting through a management committee (the "Management Committee") established
by the Members pursuant to this Section 5.2, shall have all of the rights and
powers granted to the Members pursuant to the Delaware Act and this Agreement,
and shall have all authority, rights and powers in the management of the Company
to do any and all acts and things necessary, proper, appropriate, advisable,
incidental or convenient to effectuate the purposes of this Agreement. Where
reference is made in this Agreement to the consent, approval or agreement of the
Members, such consent, approval or agreement may be granted or withheld by the
Members in their sole and absolute discretion acting through their respective
representatives on the Management Committee. No Member shall have the authority
to bind the Company except with the written approval of all Members or by the
action of the Management Committee.
(b) Members of Management Committee. The Management Committee shall
consist of four (4) members. General REMI II, and any Person succeeding to the
entire Membership Interest of General REMI II hereunder, shall designate two (2)
representatives to serve on the Management Committee, and CT-F2, and any Person
succeeding to the entire Membership Interest of CT-F2 hereunder, shall designate
two (2) representatives to serve on the Management Committee. For purposes of
Article V, any reference to General REMI II shall include any Person succeeding
to its entire Membership Interest, and CT-F2 shall include any Person succeeding
to its entire Membership Interest. The initial representatives of General REMI
II on the Management Committee shall be Ms. Susan W. Lewis and Mr. Michael
Watson. The initial representatives of CT-F2 on the Management Committee shall
be Mr. John R. Klopp and Mr. Craig M. Hatkoff. CT-F2 and General REMI II may by
ten (10) days prior written Notice to the other Member designate a new
representative to replace an existing representative designated by it, but the
failure of any Member to appoint a representative shall not limit the right of
the Management Committee to carry on the business of the Company.
(c) Actions By Management Committee.
(i) The Management Committee shall act only by the agreement of a
majority of its members, including at least one representative designated by
each of General REMI II and CT-F2. Notwithstanding the foregoing, the
enforcement of any rights that the Company may have against any Member (or
Affiliate of a Member) shall be determined solely by the members of the
Management Committee designated by the other Member. In the event of a deadlock
on the Management Committee between General REMI II's representatives and
CT-F2's representatives, all such representatives shall attempt to resolve the
deadlock in good faith.
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In the event of any such deadlock, any disputes, other than with respect to the
determination of Fair Market Value of an asset shall be resolved pursuant to the
provisions of Section 11.3 hereof.
(ii) As soon as practicable after the Effective Date, the
Management Committee will prepare an Annual Operating Budget for the first
Fiscal Year of the Company.
(d) Meetings of the Management Committee. The Management Committee
shall meet from time to time at meetings called by any member of the Management
Committee for the purpose of discussing or voting on any action as to which the
Management Committee is authorized to act, but shall in any case meet at least
monthly. Such meetings may be held at the principal office of the Company or at
such other place or places as the Management Committee may designate from time
to time. Notices of such meeting shall be given not less than five (5) days in
advance of the meeting to all members of the Management Committee; provided,
however, that in the case of an emergency, such meeting may be called on two (2)
Business Days' notice. Any member of the Management Committee may grant any
other member a proxy to act in his or her place at any meeting of the Management
Committee. Subject to Section 5.2(c)(i), the presence, either in person or by
proxy, of at least a majority of the members of the Management Committee
including at least one representative of each of General REMI II and CT-F2 shall
constitute a quorum. Meetings of the Management Committee may be held in person
or by telephone conference call. In addition, any action which may be taken at a
meeting of the Management Committee may be taken without a meeting if a consent
in writing, setting forth the action so taken, is signed by members of the
Management Committee sufficient to cause such action to be taken at a meeting of
the Management Committee at which all members of the Management Committee are
present. Such written consents shall be retained in the Company's minute book.
(e) Delegation of Powers by Members. The compensation and benefits of
officers, agents and employees appointed by the Management Committee to act on
behalf of the Company shall be fixed by the Management Committee. The Management
Committee may from time to time also appoint one or more officers of the
Company, such as a President, one or more Vice-Presidents, a Secretary and a
Treasurer, who shall have such powers and duties, and shall serve for such term
and compensation, as the Management Committee may determine. Such officers may
but need not be officers or employees of a Member.
5.3. Conduct of Management Committee Meetings; Minutes. A majority of the
members of the Management Committee shall nominate a Chair of each meeting, who
shall conduct the business of that meeting, and a Secretary of the meeting, who
shall keep the minutes and faithfully record all actions taken at that meeting.
The position of Chair of the first meeting shall be held by a Management
Committee representative appointed by General REMI II, and shall rotate
thereafter at each successive meeting from a representative appointed by General
REMI II to a representative appointed by CT-F2 and vice versa. All such minutes
shall be signed by such Chair and Secretary and shall be retained in the minute
book of the Company.
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ARTICLE VI
DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS
6.1. Distributions.
(a) Net Cash Flow. Not later than ten (10) days after the applicable
Calculation Date, the Members shall, unless they otherwise agree, determine the
amount of cash which in their judgment is in excess of amounts necessary or
appropriate for operating expenses (including, without limitation, payments of
the Investment Management Fee to the Investment Manager pursuant to the Fund II
Investment Management Agreement), contingency reserves and other needs of the
Company. Such excess (the "Net Cash Flow") shall, as soon as possible following
the applicable Calculation Date, but in no event later than three (3) Business
Days following the determination of Net Cash Flow, be distributed to the Members
in accordance with this Section 6.1(a). The Net Cash Flow of the Company shall
not be reduced by depreciation, amortization, cost recovery deductions,
depletion, similar allowances or other noncash items, but shall be increased by
any release or reduction of reserves previously established (other than for the
payment of expenses reserved against). The Net Cash Flow of the Company shall be
calculated effective as of the applicable Calculation Date with respect to which
the Net Cash Flow is being distributed, regardless of the actual date of
distribution. Distributions of Net Cash Flow shall be made in accordance with a
Member's respective Percentage Interest. Notwithstanding anything herein to the
contrary, no Distributions (other than Distributions pursuant to Section 10.2)
may be made by the Company after a Notice of Default has been given pursuant to
Section 11.1 hereof until the Default to which the Notice of Default relates has
been cured as set forth in Section 11.1(c) hereof or the period to cure expires,
or as otherwise agreed by the Management Committee.
(b) Withdrawal of Capital; Limitation on Distributions. No Member shall
be entitled to withdraw any part of its Capital Contributions to, or to receive
any Distributions from, the Company except as provided in Sections 6.1(a) and
10.2. No Member shall be entitled to demand or receive interest on its Capital
Contributions or, except as set forth in Article X hereof, any property from the
Company other than cash.
6.2. Allocation of Net Profit and Net Loss. Net Profits and Net Losses
shall be allocated in accordance with each Member's Percentage Interest.
6.3. Withholding. Should the Company be required, pursuant to the Code, the
laws of any state or any other provision of law, to withhold any amount from
amounts otherwise distributable to any Member or on the basis of income
allocable to any Member, the Company shall withhold those amounts, and any
amounts so withheld shall be deemed to have been distributed to that Member
under this Agreement. If any sums are withheld pursuant to this provision, the
Company shall remit the sums so withheld to, and file the required forms with,
the Internal Revenue Service, the appropriate authority of any such state or
other applicable government agency. In the event of any claimed
over-withholding, a Member shall be limited to an action against the Internal
Revenue Service, the appropriate authority of any such state or other applicable
government agency for refund, and each Member hereby waives any claim or right
of action against the Company on account of such withholding. Furthermore, if
the amounts required to be withheld exceed the amounts which would otherwise
have been
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distributed to a Member, the Member shall contribute any deficiency to the
Company within ten (10) Business Days after notice from the Investment Manager.
If the deficiency is not contributed within that time, such failure shall be
considered a demand loan from the Company to that Member, with interest at a
rate equal to the lesser of fifteen percent (15%) or the highest rate permitted
by law, which interest shall be treated as an item of Company income and accrue
until discharged by the Member by repayment. Such demand loan shall be repaid in
full within ten (10) Business Days after demand (and for this purpose any Member
other than the Member on whose account such loan was made may unilaterally make
such demand for and on behalf of the Company), and otherwise shall be repaid,
without prejudice to any other remedies at law or in equity that the Company may
have, out of Distributions to which the debtor Member would otherwise
subsequently be entitled under this Agreement.
6.4. Restoration of Funds. Except as otherwise provided by law, no Member
shall be required to restore to the Company any funds properly distributed to it
pursuant to Section 6.1. or 10.2 If any Member receives Distributions from the
Company contrary to the provisions of this Agreement, that Member shall promptly
return the same to the Company.
ARTICLE VII
TAX ELECTIONS; TAX MATTERS MEMBER; TAX CAPITAL ACCOUNTS
7.1. Federal Income Tax Elections; Tax Matters Member.
(a) Tax Elections. The Members shall determine all elections to be made
by the Company for tax purposes.
(b) Tax Matters Member. General REMI II is hereby designated the Tax
Matters Member. The Tax Matters Member will take no action (other than
ministerial action without the prior approval of the Members. The Tax Matters
Member will not be required to take any action or incur any expenses for the
prosecution of any administrative or judicial remedies in its capacity as Tax
Matters Member unless the Members agree on a method of sharing expenses incurred
in connection with the prosecution of such remedies.
7.2. Tax Matters.
(a) The Company shall maintain a capital account for each Member in
accordance with the rules set forth in Treasury Regulation Section
1.704-1(b)(2)(iv). In the event an asset of the Company other than cash is
distributed in kind to a Member, such capital accounts shall be adjusted for the
hypothetical "book" gain or loss that would have been realized by the Company if
the distributed asset had been sold for its Fair Market Value in a cash sale (in
order to reflect unrealized gain or loss).
(b) For tax capital account maintenance purposes, except as otherwise
required by Section 704(c) of the Code,
(i) If the Company is dissolved pursuant to Section 10.1 during a
Fiscal Year, gross income and/or deductions of the Company for such Fiscal Year
and each Fiscal Year thereafter shall be first allocated to the Members in the
amount necessary to cause the tax capital account of each Member to be equal to
its Capital Account.
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(ii) If the Company is required to recognize any interest income
pursuant to Section 483 or Sections 1271 through 1288 of the Code in connection
with any transaction with a Member or any loss with respect to the transfer of
the Purchase Warrants to a Member, such interest income or loss shall be
specially allocated to such Member for tax purposes.
(iii) Any deduction allowed to the Company with respect to the
Service Warrants shall be specifically allocated to CT-F2.
(iv) Net income or loss as determined for purposes of Section
704(b) of the Code, as adjusted by the amount, if any, specially allocated
pursuant to clause (i), (ii) or (iii) above, shall be allocated in accordance
with Section 6.2.
(c) For income tax purposes, income, gain, loss and deduction shall be
allocated in accordance with the corresponding item under Section 7.2(b), except
as otherwise required by Section 704(c) of the Code.
ARTICLE VIII
OTHER RIGHTS AND OBLIGATIONS OF MEMBERS
8.1. Resignation of a Member. No Member may withdraw or resign from the
Company without the written consent of the Members, which consent may be given
or withheld in their absolute discretion. In the event of any withdrawal or
resignation in violation of this Section 8.1, such withdrawal or resignation
shall be void ab initio, and the withdrawing or resigning Member shall be
subject to any and all remedies available to the Company or the Members under
this Agreement, at law or in equity in respect of such default, and the Company
shall have the right to offset the damages against any amounts otherwise
distributable to the withdrawing or resigning Member.
8.2. Admission of New Members. Other than Members that may be admitted to
the Company pursuant to Section 9.2(b), no new or additional Members may be
admitted to the Company without the written consent of the Members.
8.3. Indemnification by Company. To the maximum extent permitted by law,
the Company shall defend, indemnify and hold harmless each Members and its
respective partners, shareholders and members, and their respective directors,
officers, employees and shareholders (each such Person being an "Indemnitee")
from and against any and all liabilities, losses, claims, judgments, fines,
settlements and damages incurred by the Indemnitee or by the Company, arising
out of any claim based upon any acts performed or omitted to be performed by the
Indemnitee in connection with the organization, management, business or property
of the Company (including in any Member's capacity as Tax Matters Member),
including costs, expenses and attorneys' fees (which may be paid as incurred)
expended in the settlement or defense of any such claims, except to the extent
that the claim giving rise to such indemnification rights: (a) arises out of any
gross negligence (which for purposes of this Agreement shall mean an act or
failure to act with reckless disregard of the consequences thereof), willful
misconduct, breach of fiduciary duty or a material breach of this Agreement by
the Indemnitee; or (b) is governed by Section 8.4. Except as required by Section
8.4, all judgments against the Company
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and/or an Indemnitee wherein an Indemnitee is entitled to indemnification or
other amount payable to an Indemnitee pursuant to this Section 8.3 shall be
satisfied only from the assets of the Company.
8.4. Indemnification by Members. To the maximum extent permitted by law,
each Member shall defend, indemnify and hold harmless the Company and the other
Members and each of their respective directors, officers, employees, partners
and shareholders (each such Person being a "Nonrecourse Exception Indemnitee")
from and against any and all liabilities, losses, claims, judgments, fines,
settlements and damages, and any costs and expenses (including attorneys' fees
and disbursements) incurred in connection therewith, suffered or incurred by any
Nonrecourse Exception Indemnitee or arising out of any claim that the Company or
any Nonrecourse Exception Indemnitee is liable under any exceptions or
"carve-outs" to any nonrecourse provisions in any loan documents entered into by
the Company to the extent (a) such liability is attributable to any gross
negligence, willful misconduct, breach of fiduciary duty or material breach of
this Agreement by the indemnifying Member or any of its Affiliates,
shareholders, members, partners, officers, directors, employees or agents,
whether on behalf of the Company or otherwise, in violation of the requirements
of any such loan documents (unless the Management Committee agrees to violate
such loan document requirement) and (b) such liability exceeds any economic
benefit received by the Nonrecourse Exception Indemnitee as a direct result of
the breach, act or omission giving rise to the claim.
8.5. Exculpation. Except to the extent required by law, neither the Members
nor any of their respective directors, officers, employees or shareholders shall
be liable or responsible to the Company or the other Members for any act or
failure to act, or any loss, liability, damage, settlement cost or other expense
incurred by reason of any act or failure to act, of any such Person, provided
such Person acted in good faith and in a manner reasonably believed to be in, or
not opposed to, the interests of the Company, except to the extent such loss,
liability, damage, settlement cost or other expense resulted from the gross
negligence, willful misconduct, breach of fiduciary duty or material breach of
this Agreement by such Person. The termination of any action, suit or proceeding
by judgment, order or settlement shall not, of itself, create a presumption that
a Person did not act in good faith and in a manner reasonably believed to be in,
or not opposed to, the best interests of the Company. Furthermore, no Affiliate
of a Member shall be entitled to exculpation hereunder in respect of any act or
omission committed or omitted in its capacity as an independent contractor to
the Company, but, rather, the terms of the contract between such Affiliate and
the Company shall control with respect to exculpation.
8.6. Reimbursement of Members. Each of the Members, including the Tax
Matters Member acting in such capacity, shall be entitled to reimbursement from
the Company for out-of-pocket expenses reasonably, properly and directly
incurred by such Member on behalf of the Company and provided for in an approved
Annual Operating Budget; provided, however, that no Member shall seek
reimbursement from the Company for any "overhead" or general and administrative
expenses incurred by that Member.
8.7. Particular Covenants of Members.
(a) Defend Against Creditors. Each Member shall defend at its sole cost
and expense any claim made against its Membership Interest (including its right
to Distributions
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from the Company) resulting from the personal indebtedness of that Member or
the claims of its individual creditors.
(b) Notice of Claims. Each Member shall promptly notify the other
Members as to any claims asserted or threatened against its Membership Interest
(including its right to Distributions from the Company).
ARTICLE IX
TRANSFERS OF COMPANY MEMBERSHIP INTERESTS
9.1. Condition to Transfer of Any Membership Interest. Without limiting
any other provisions of this ARTICLE IX, no Transfer of a Membership Interest
may be made unless all of the following requirements are satisfied, and any
purported Transfer of a Membership Interest failing to meet the following
requirements shall be void ab initio:
(a) Required Documents. The transferee executes and delivers to the
Company an instrument pursuant to which it agrees to be bound by the terms of
this Agreement, and such additional instruments and documents as shall be
reasonably required by the Members (including opinions of counsel to any
transferor satisfactory to the Members with respect to the matters set forth in
Section 9.1(b)).
(b) Restrictions. Such Transfer would not:
(i) Securities Laws. Result in the violation of the Securities
Act, or any regulation issued pursuant thereto, or any state securities law or
regulation or any other applicable federal or state laws or order of any court
having jurisdiction over the Company;
(ii) Events of Default. Be a violation of or an event of default
under, or give rise to a right to accelerate any indebtedness described in, any
note, mortgage, loan agreement or similar instrument or document to which the
Company is a party, unless the violation or event of default is waived by the
parties thereto;
(iii) Regulatory Requirements. Cause the Company or any Member to
be subject to any additional regulatory requirements;
(iv) Tax Status. Cause a substantial risk, in the opinion of
counsel to the Company, that the classification of the Company as a
"partnership" for Federal and state income tax purposes could be adversely
affected;
(v) Prohibited Transaction. Result in or create a "prohibited
transaction" or cause the Company or a Member or an Affiliate of a Member to be
or become a "party in interest", as defined in Section 3(14) of ERISA, or a
"disqualified person", as defined in Section 4975 of the Code with respect to
any plan, as defined in Section 3(3) of ERISA and/or Section 4975 of the Code,
or result in or cause the Company or any Member or any Affiliate of a Member to
be liable for tax under Chapter 42 of the Code or otherwise cause any such
Person to incur tax liabilities;
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(vi) Not Legally Competent. Be a Transfer to an individual who is
not legally competent or who has not achieved his or her majority under
applicable law (excluding trusts for the benefit of minors); or
(vii) Transfer to a Foreign Person. Be a Transfer to a Person who
constitutes a "foreign person" under Section 1445 of the Code.
(c) Costs. The transferor or transferee pays to the Company any and all
costs incurred and to be incurred by the Company in connection with the
Transfer, to the extent such costs would not have been incurred by the Company
if the Transfer had not been proposed or made.
9.2. Transfers of Membership Interests.
(a) Transfers Restricted. No Member may Transfer all or any portion of
its Membership Interest, except as set forth in Section 9.2(b), and any
purported Transfer of its Membership Interest failing to meet the requirements
of Sections 9.1 and 9.2(b) shall be void ab initio.
(b) Transfers of Membership Interest to Affiliates. Subject only to the
provisions of Section 9.1, a Member, with Notice to (but without consent of) the
other Member, may Transfer all (but not less than all) of its Membership
Interest at any time as follows:
(i) CT-F2 may Transfer its Membership Interest to any wholly owned
entity of CT; and
(ii) Limited REMI I may Transfer its Membership Interest to
Citigroup Inc. or to any of its direct or indirect wholly owned entities, or to
Travelers Property Casualty Corp. or any of its direct or indirect wholly owned
entities.
In accepting any such assignment, any such assignee shall automatically become a
Substitute Member with all of the rights and powers granted to the assigning
Member herein but no such Transfer shall release the transferring Member of any
of its obligations hereunder, unless such release is approved in writing by the
other Member.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1. Dissolution. The Company shall be dissolved upon the first to occur
of the following:
(a) Bankruptcy of the Company. The Bankruptcy of the Company;
(b) Agreement to Dissolve. The decision of the Members to dissolve the
Company pursuant to Section 11.2 or for any reason;
(c) Election of Non-Defaulting Member. The election of the
Non-Defaulting Member pursuant to Section 11.2(f); or
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(d) Judicial Dissolution. The entry of a decree of judicial dissolution
under Section 18-802 of the Delaware Act with respect to the Company or Fund II.
10.2. Winding up Affairs and Distribution of Assets.
(a) Liquidation. Upon the dissolution of the Company, the Members shall
choose a liquidating Member ("Liquidating Member"), and the Liquidating Member
shall proceed to wind up the affairs of the Company, liquidate the remaining
property and assets of the Company and wind up and terminate the business of the
Company. Any such Liquidating Member shall cause a full accounting of the assets
and liabilities of the Company to be taken and shall cause the assets to be
liquidated and the business to be wound up as promptly as possible.
(b) Payments of Proceeds Upon Liquidation. The proceeds of liquidation
of the Company shall be applied in the following order of priority: (i) first,
to the expenses of such liquidation; (ii) second, to the debts and liabilities
of the Company owing to third parties (including payments owed to the Investment
Manager pursuant to the Fund II Investment Management Agreement), in the order
of priority provided by law; (iii) third, a reasonable reserve shall be set up
to provide for any contingent or unforeseen liabilities or obligations of the
Company owing to third parties and at the expiration of such period as the
Members may deem advisable, the balance remaining in such reserve shall be
distributed as provided herein; (iv) fourth, to the debts and liabilities of the
Company owing to the Members or their Affiliates, including any reimbursements
payable under this Agreement; (v) fifth, the Warrant Purchase Note shall be
distributed to General REMI II; and (vi) sixth, to the Members in accordance
with their respective Capital Accounts (after taking into account all
allocations and prior distributions). Assets distributed in kind shall be taken
into account at their Fair Market Value.
10.3. No Liability. Notwithstanding anything to the contrary in this
Agreement, no Member shall have any obligation to make any contribution to the
capital of the Company on account of any negative balance on its Capital Account
or tax capital account, whether at liquidation or otherwise, and the negative
balance of that Member's Capital Account or tax capital account shall not be
considered a debt owned by that Member to the Company or to any other person for
any purpose whatsoever.
10.4. Limitations on Payments Made in Dissolution. Except as otherwise
specifically provided in this Agreement, each Member shall be entitled to look
only to the assets of the Company for the return of that Member's positive
Capital Account balance and shall have no recourse for its Capital Contributions
and/or share of Net Profits (upon dissolution or otherwise) against any other
Member.
10.5. Certificate of Cancellation. Upon completion of the winding up of the
Company's affairs, the Liquidating Member shall file a Certificate of
Cancellation with the Delaware Secretary of State.
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ARTICLE XI
DEFAULT AND REMEDIES
11.1. Default.
(a) Default. The occurrence of any of the following shall constitute a
default ("Default") hereunder by the affected Member:
(i) A Member assigns or otherwise Transfers its Membership
Interest other than as set forth in Article IX;
(ii) The voluntary dissolution of the Member;
(iii) The Bankruptcy of the Member;
(iv) A Member materially breaches any of its obligations
hereunder;
(v) A Member commits an act of fraud involving the Company (which
materially damages the Company) or intentionally misappropriates significant
funds of the Company;
(vi) The Investment Manager commits an act of fraud involving Fund
II (which materially damages Fund II) or intentionally misappropriates
significant funds of Fund II;
(vii) A Member's Affiliate that is a limited partner in Fund II
materially breaches any of its obligations under the Fund II Partnership
Agreement, including any failure by such Affiliate to comply with the CIG
Parties Commitment or the CT Parties Commitment (as such terms are defined in
the Venture Agreement), as the case may be, pursuant to the Venture Agreement;
or
(viii) A Member or the members of the Management Committee
designated by such Member causes the Company to default in an obligation
required to be performed by the Company pursuant to the Venture Agreement or the
Fund II Investment Management Agreement.
(b) Notice of Default. If a Default occurs with respect to a Member,
the other Member (the "Non-Defaulting Member") shall have the right to give that
Member (the "Defaulting Member") Notice of that Default (a "Notice of Default").
The Notice of Default shall set forth the nature of the Default with reasonable
specificity.
(c) Period to Cure. A Member who shall have received a Notice of
Default with respect to a Default under any of clauses (i), (iv), (vii) or
(viii) of Section 11.1(a) shall have a period of thirty (30) days after receipt
of such Notice of Default to cure such Default and the Notice of Default with
respect thereto shall not be effective unless such Default is not cured within
such thirty (30) day period. In such case, the Defaulting Member shall lose no
rights hereunder with respect to a Default that has been so cured. However, if
such Default was not cured within thirty (30) days of receipt of the Notice of
Default, then the Default shall constitute
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an "Event of Default", and Limited REMI I or CT-F2, as the case may be, shall
have the rights set forth in Section 11.2.
11.2. Remedies Upon Event of Default. Subject to Section 11.1(c), upon the
occurrence of an Event of Default by a Defaulting Member, then in addition to
the remedies set forth in Section 4.3(b) hereof, the Non-Defaulting Member may
elect to do any one or more of the following by Notice to the Defaulting Member.
(a) Terminate the Defaulting Member's right to designate
representatives to serve on the Management Committee, participate in any
decision with respect to the Company's Business and to consent to or approve any
matter which, but for the Event of Default, would require the Defaulting
Member's consent or approval;
(b) Cause the Company to withhold any Distributions payable on account
of the Defaulting Member's Membership Interest and apply such Distributions,
instead, to the damages suffered by the Non-Defaulting Member as a result of the
Event of Default;
(c) Cause Fund II to withhold any distributions payable on account of
the Defaulting Member's Affiliate's limited partnership interest in Fund II and
apply such distributions, instead, to the damages suffered by the Non-Defaulting
Member as a result of the Event of Default;
(d) Cause the Company to pay the Non-Defaulting Member all Management
Fees not yet accrued and owing, subject to year end adjustment for any
overpayment or underpayments;
(e) If CT-F2 is the Defaulting Member, or if its Affiliate that is the
limited partner in Fund II is in default as set forth in Section 11.1(a)(v)
hereof, then General REMI II shall have the right to terminate the Fund II
Investment Management Agreement;
(f) Cause the Company to dissolve pursuant to Section 10.1 hereof; and
(g) Pursue, and/or cause the Company to pursue, any other remedy
provided in this Agreement, at law or in equity.
11.3. Dispute Resolution. Should any dispute arise under this Agreement,
other than with respect to Fair Market Value, then the parties shall resolve
such dispute pursuant to Section 4.2 of the Venture Agreement.
11.4. Waiver of Partition and Certain Other Rights. Each of the Members
irrevocably waives any right or power that it might have: (a) to cause the
Company or any of its assets to be partitioned; (b) to compel any sale of all or
any portion of the assets of the Company under any applicable law; (c) to cause
the appointment of a receiver for all or any portion of the assets of the
Company; or (d) to file a complaint, or to institute proceedings at law or in
equity, to cause the dissolution or liquidation of the Company, other than in
accordance with this Agreement. Each of the Members has been induced to enter
into this Agreement in reliance upon the waivers of this Section 11.4, and
without those waivers no Member would have entered into this Agreement.
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ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
12.1. Reciprocal Representations and Warranties. Each Member hereby
represents and warrants to the Company and each other Member that:
(a) Organization; Authority; Due Authorization.
(i) Organization and Good Standing. It is a limited liability
company duly organized, validly existing and in good standing under the
applicable laws of its jurisdiction of formation; has all requisite power to
own, lease and operate its assets, properties and business and to carry on its
business as now conducted; and is duly qualified or licensed to do business as a
foreign limited liability company and is in good standing in every jurisdiction
in which the nature of its business or the location of its properties requires
such qualification or licensing, except for such jurisdictions where the failure
to so qualify or be licensed would not have a material adverse effect upon its
ability to perform fully its obligations under this Agreement or any other
related agreement.
(ii) Authority to Execute and Perform Agreements. It has all
requisite limited liability company power and authority to enter into, execute
and deliver this Agreement, and all other related agreements to be executed by
it and to perform fully its obligations hereunder and thereunder.
(iii) Due Authorization; Enforceability. It has taken all limited
liability company actions necessary to authorize it to enter into and perform
fully its obligations under this Agreement and all other related agreements to
be executed by it and to consummate the transactions contemplated herein and
therein. This Agreement has been duly and validly executed by each Member and
constitutes the legal, valid and binding obligation of each Member, enforceable
in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar applicable laws
affecting creditors' rights generally or by general equitable principles
affecting the enforcement of contracts.
(iv) United States Person. It is a "United States" person
(as defined in Section 7701 of the Code).
(v) Ownership. General REMI II is a wholly owned indirect entity
of Citigroup Inc. and Travelers Property Casualty Corp., and CT-F2 is a wholly
owned direct entity of CT.
(b) No Violation. Neither its execution or delivery of this Agreement
nor the consummation of the transactions contemplated herein will (i) violate
any provision of its organizational documents limited liability company
agreement; or (ii) violate in any material respect any applicable law or order.
(c) Regulatory and Other Approvals. No consent, approval,
authorization, notice, filing, exemption or other requirement must be obtained
by it from any authority or Person or must otherwise be satisfied by it in order
that the consummation of the transactions
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contemplated in this Agreement or any related documents will not violate in any
material respect any applicable law or order or any material contract to which
it is a party.
(d) Securities Matters. It (i) is acquiring its Membership Interest for
itself for investment purposes only, and not with a view to any resale or
distribution of such Membership Interest, (ii) has been advised and understands
that such Membership Interest has not been and will not be registered under the
Securities Act, or any applicable state securities laws and, therefore, cannot
be resold unless such Membership Interest is registered under the Securities Act
and all applicable state securities laws, or unless exemptions from registration
are available, and (iii) has, either alone or with its "purchaser
representatives," as that term is defined in Rule 501(h) under the Securities
Act, such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Company. It
further acknowledges that the Company has made available to such Member, at a
reasonable time prior to its acquisition of its Membership Interest, the
opportunity to ask questions and receive answers concerning the terms and
conditions of such acquisition and to obtain any additional information which
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of the information furnished by the Company
in connection with such acquisition.
ARTICLE XIII
BOOKS, RECORDS AND REPORTS
13.1. Maintenance of Books. The Company shall keep complete and accurate
books and records of accounts maintained in accordance with GAAP. Tax records
shall be maintained in accordance with the accrual method of accounting. The
books of account for the Company shall be maintained at the principal office of
the Company.
13.2. Records to be Maintained. The Company shall maintain the following
records:
(a) A current list of the full name, set forth in alphabetical order,
and last known mailing address together with the Capital Contribution and the
share of profit and losses of each Member or information from which such share
can be readily derived;
(b) A copy of the Certificate of Formation and all amendments thereto
or restatements thereof, together with executed copies of any powers of attorney
pursuant to which such Certificate of Formation have been executed;
(c) A copy of this Agreement, any amendments hereto and any
restatements hereof; and
(d) A copy of the Company's Federal, state and local income tax returns
or informational returns and reports, if any, for the past ten (10) years.
13.3. Inspection by Members; Confidential Information. (a) Any Member shall
have the right to inspect and copy at such Member's expense, any documents,
including financial statements maintained by the Company and other information
regarding the affairs of the Company, as is reasonable.
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(b) The Members acknowledge that from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives which is subject to a confidentiality
agreement binding on the Company or any of its employees, whether as a principal
or as an agent, and may not disclose such information to any Person other than
another Member except for disclosures (i) compelled by law (but such Member must
notify the other Member promptly of any request for that information, before
disclosing it if practicable), (ii) to advisers or representatives of the Member
or Persons to which that Member's Membership Interest may be assigned as
permitted by this Agreement, but only if the recipients have agreed to be bound
by the provisions of this Section 13.3(b), (iii) of information that Member also
has received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality, (iv) in accordance with the terms of such confidentiality
agreements or (v) upon the consent of each Member but only if such employee is
informed that such information is to be held in strict confidence. The Members
acknowledge that breach of the provisions of this Section 13.3(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 13.3(b) may be enforced by specific performance.
13.4. Books and Tax Reports. The books of account shall be closed promptly
after the end of each Fiscal Year. Within ninety (90) days after the conclusion
of each Fiscal Year, each Member shall be provided with a Form K-1 and/or other
information statement with respect to its distributive share of income, gains,
deductions, losses and credits for income tax reporting purposes for the
previous Fiscal Year, together with any other information concerning the Company
necessary for the preparation of a Member's income tax return(s), all under the
supervision and as determined by the Tax Matters Member in its reasonable
discretion. With the sole exception of mathematical errors in computation, these
tax statements and the information contained therein shall be deemed conclusive
and binding upon such Member. Each Member agrees that it shall not (i) treat, on
its income tax returns, any item of income, gain, loss, deduction or credit
relating to its interest in the Company in a manner inconsistent with the
treatment of such item by the Members as reflected on the Form K-1 or other
information statement furnished by the Company to such Member for use in
preparing its income tax returns or (ii) file any claim for refund relating to
any such item based on, or which would result in, such inconsistent treatment.
Notwithstanding anything herein to the contrary, General REMI II shall cause the
Company's income tax returns for each Fiscal Year through and including the
Fiscal Year in which the aggregate amounts committed by the CIG Parties (as
defined in the Venture Agreement) and the aggregate Private Banking Client
Commitments (within the meaning of, and pursuant to, the Venture Agreement)
equal or exceed $250,000,000. Such returns will be prepared and furnished to
CT-F2 for its review and comment at least fifteen (15) Business Days before the
due date of the tax return. If CT-F2 does not furnish comments to General REMI
II within fifteen (15) Business Days, General REMI II may cause the Company to
file such tax returns.
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ARTICLE XIV
MISCELLANEOUS
14.1. Notices.
(a) Form and Addresses. All notices, consents, approvals, waivers,
elections and other communications (collectively, "Notices") required to be
given pursuant to this Agreement shall be given in writing and,
If to Limited REMI I: Travelers General Real Estate Mezzanine
--------------------
Investments II LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
With Copies to: Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12833
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to CT: Capital Trust. Inc.
605 Third Avenue, 26th Floor
New York, New York 10016
Attn: John R. Klopp
With a Copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Thomas E. Kruger, Esq.
(b) Delivery. All notices and other communications required or
permitted by this Agreement shall be deemed to have been duly given if
personally delivered to the intended recipient at the proper address determined
pursuant to this Section 14.1 or sent to such recipient at such address by air
courier, by overnight courier, or by hand and will be deemed given, unless
earlier received: (a) if sent by courier when recorded on the records of the
courier as received by the receiving party; and (b) if delivered by hand, on the
date of receipt.
14.2. Certificate Requirements. From time to time the Members shall sign
and acknowledge all such writings as are required to amend the Certificate of
Formation, for the
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carrying out of the terms of this Agreement, or, upon dissolution of the
Company, to cancel such certificate.
14.3. Modification. No change or modification of this Agreement shall be of
any force unless such change or modification is in writing and has been signed
by all of the Members.
14.4. Waivers and Consents. No waiver of any breach of any of the terms of
this Agreement shall be effective unless such waiver is in writing and signed by
the Member against whom such waiver is claimed. No waiver of any breach shall be
deemed to be a waiver of any other or subsequent breach. Any consent of a Member
required hereunder must be in writing and signed by such Member to be effective.
No consent given by a Member in any one instance shall be deemed to waive the
requirement for such Member's consent in any other or future instance.
14.5. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
14.6. Further Assurances. Each Member shall execute such deeds,
assignments, endorsements, evidences of Transfer and other instruments and
documents and shall give such further assurances as shall be consistent with the
provisions of this Agreement and necessary to perform its obligations hereunder.
14.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its conflict
of laws principles.
14.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
14.9. Limitation on Rights of Others. No Person other than a Member shall
have any legal or equitable right, remedy or claim under or in respect of this
Agreement; no third party (i.e., Person other than a Member) shall be a
beneficiary of any provision of this Agreement.
14.10. Brokers and Finders. Except as set forth in the Placement Agent
Agreement and in the CT-F2-GP Capital Formation Agreements and the General REMI
II Capital Formation Agreement (each as defined in the Venture Agreement), there
are no brokers, finders or placement agents, and (ii) each Member shall
indemnify and hold all of the other Members and the Company harmless from and
against any commission, fee or other payment due any broker, finder or other
Person in connection with such Member's decision to invest in the Company.
14.11. Construction and Interpretation. This Agreement shall not be
construed more strictly against one party than against another by reason of the
fact that it may have been prepared by counsel for one of the parties.
14.12. Successors And Assigns. This Agreement shall be binding upon and
inure to the benefit of the Members and their respective successors and
permitted assigns. This Agreement
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and the rights and obligations set forth herein are for the sole benefit of the
parties hereto and their respective Affiliates. Nothing contained herein is
intended to confer upon any other Person any rights or remedies hereunder.
14.13. Survival. Sections 8.3 through 8.7, and Articles X through XIV
hereof shall survive termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
MEMBERS:
TRAVELERS GENERAL REAL
ESTATE MEZZANINE INVESTMENTS
II, LLC
By: /s/ Michael Watson
----------------------------------
Michael Watson
Vice President
CT-F2-GP, LLC
By: Capital Trust, Inc.,
its sole member
By: /s/ John R. Klopp
----------------------------------
John R. Klopp
Chief Executive Officer
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EXHIBIT "A"
Names and Initial Capital Account
Member Name Initial Capital
Account
Travelers General Real Estate Mezzanine $50
Investments II, LLC
CT-F2-GP, LLC $50
29
Exhibit 10.4
The warrants represented by this certificate and the securities issuable upon
exercise thereof have not been registered under the Securities Act of 1933 or
the securities laws of any state. Neither such warrants nor such securities may
be sold, pledged, hypothecated or otherwise transferred without such
registration, except upon delivery to the Company of such evidence as may be
satisfactory to counsel for the Company to the effect that any such transfer
shall not be in violation of the Securities Act of 1933 or applicable state
securities laws or any rule or regulation promulgated thereunder.
CAPITAL TRUST, INC.
Fund I Class A Common Stock Warrant Agreement
FOR VALUE RECEIVED, Capital Trust, Inc., a Maryland corporation (the
"Company"), hereby grants, pursuant hereto (this "Warrant"), to Travelers
Limited Real Estate Mezzanine Investments I, LLC, a Delaware limited liability
company, or its permitted assigns, the right to purchase from the Company, at
any time or from time to time commencing on March 8, 2001 and prior to 5:00
p.m., Eastern Time, on March 8, 2005, up to four million, two hundred and fifty
thousand (4,250,000) (subject to adjustment as provided herein) fully paid and
non-assessable shares of class A common stock, par value $.01 per share, of the
Company for five dollars ($5.00) per share (subject to adjustment as provided
herein) for an aggregate purchase price (assuming full exercise) of twenty-one
million, two hundred and fifty thousand dollars ($21,250,000) (not subject to
adjustment).
Hereinafter, (i) said class A common stock, par value $.01 per share,
of the Company, is referred to as the "Common Stock," (ii) the shares of the
Common Stock purchasable hereunder or under any other Warrant (as hereinafter
defined) are referred to as the "Warrant Shares," (iii) the aggregate purchase
price payable for the Warrant Shares purchasable hereunder is referred to as the
"Aggregate Exercise Price," (iv) the price payable for each of the Warrant
Shares is referred to as the "Per-Share Exercise Price," (v) this Warrant, and
all warrants hereafter issued in exchange for, in substitution for or upon
transfer of this Warrant are referred to as the "Warrants" and (vi) the holder
of this Warrant is referred to as the "Holder." Definitions of other capitalized
terms used herein are set forth in Section 15 hereof.
The Aggregate Exercise Price is not subject to adjustment.
929955.1
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1. Exercise of Warrant.
(a) Cash Exercise. This Warrant may be exercised in whole at any
time, or in part from time to time, commencing on March 8, 2001 and prior
to 5:00 p.m., Eastern Time, on March 8, 2005 or March 8, 2008 if the period
during which this Warrant may be exercised is extended pursuant to Section
4 (the "Exercise Period") by the Holder by the surrender of this Warrant
(with the subscription form at the end hereof duly executed) to the Company
at the address set forth in Section 11 hereof, together with proper payment
of the Aggregate Exercise Price, or the proportionate part thereof if this
Warrant is exercised in part, with payment for the Warrant Shares made by
wire transfer of immediately available funds or certified or official bank
check payable to the order of the Company. If this Warrant is exercised in
part, it must be exercised for a number of whole shares of Common Stock.
(b) Cashless Exercise. At any time during the Exercise Period, the
Holder may, at its option, exchange this Warrant, in whole or in part (a
"Warrant Exchange"), into the number of Warrant Shares determined in
accordance with this subsection, by surrendering this Warrant to the
Company at the address set forth in Section 11 hereof, accompanied by a
notice stating such Holder's intent to effect such exchange ("Notice of
Exchange"), the number of Warrant Shares corresponding to the portion of
the Warrant to be exchanged and the date on which the Holder requests that
such Warrant Exchange occur (the "Exchange Date"). In connection with any
Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Warrant Shares (rounded to the next highest
integer) equal to (i) the number of Warrant Shares specified by the Holder
in its Notice of Exchange (the "Total Number") less (ii) the number of
Warrant Shares equal to the quotient obtained by dividing (A) the product
of the Total Number and the Per-Share Exercise Price then in effect by (B)
the current market price (determined as provided in subsection (e) of
Section 3) per share of Common Stock on the Exchange Date.
(c) After any partial exercise or exchange, the Holder will be
entitled to receive a new Warrant covering the Warrant Shares as to which
this Warrant has not been exercised or exchanged and setting forth the
proportionate part of the Aggregate Exercise Price applicable to such
Warrant Shares.
(d) As soon as practicable, but within ten (10) days following the
surrender of this Warrant and the receipt of payment of the Aggregate
Exercise Price, or the proportionate part thereof, as the case may be,
pursuant to subsection (a) or subsection (b), the Company, within seven (7)
days,
(i) will issue a certificate or certificates in the name of
the Holder for the largest number of whole shares of Common Stock to
which the
929955.1
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<PAGE>
Holder shall be entitled by the exercise (full or partial, in
accordance with the subscription form) or exchange of this Warrant;
(ii) will, if this Warrant is exercised in whole, in lieu of
any fractional share of Common Stock to which the Holder shall be
otherwise entitled, pay to the Holder cash in an amount equal to the
fair value of such fractional share (determined in such reasonable
manner as the Board of Directors shall determine), and
(iii) will deliver the other securities and properties
receivable upon the exercise or exchange of this Warrant, or the
proportionate part thereof if this Warrant is exercised or exchanged in
part, pursuant to the provisions of this Warrant.
2. Reservation of Warrant Shares; Listing. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, for the purpose of effecting the
exercise of Warrants, the full number of shares of Common Stock then issuable
upon the exercise of all outstanding Warrants. Throughout the period of time
during which this Warrant may be exercised, the Company shall use its
commercially reasonable efforts to keep the Warrant Shares authorized for
listing on the New York Stock Exchange or on any other successor national
securities exchange or other relevant market on which the Common Stock is
listed, admitted to trading or traded.
3. Protection Against Dilution. The Per-Share Exercise Price and the
number of Warrant Shares purchasable upon the exercise of the Warrants shall be
subject to adjustment from time to time as set forth in this Section 3. Whenever
the Per-Share Exercise Price is adjusted by operation of this Section 3, the
number of Warrant Shares to be delivered upon exercise of the Warrants shall be
adjusted as provided in subsection (n) hereof.
(a) In case the Company shall, while any of the Warrants are
outstanding, (i) pay a dividend or make any other distribution with respect
to shares of Common Stock in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock, (iii) combine outstanding shares of
Common Stock into a smaller number of shares or (iv) issue by
reclassification of its Common Stock any shares of stock of the Company
(other than the reclassifications covered by subsection (d)), the Per-Share
Exercise Price shall be adjusted to be equal to a fraction, the numerator
of which shall be the Aggregate Exercise Price and the denominator of which
shall be the number of shares of Common Stock or other stock of the Company
that the Holder would have owned immediately following such action had such
Warrant been exercised immediately prior thereto or, in the case of a
dividend, distribution, subdivision, combination or reclassification with
respect to which a record date has been established, prior to such record
date. An adjustment made pursuant to this subsection shall be
929955.1
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<PAGE>
made immediately prior to the opening of business on the day following (x)
the date of the payment of the dividend or distribution (retroactive to the
record date) or (y) the effective date in the case of a subdivision,
combination or reclassification (retroactive to the record date, if any).
If the Board of Directors shall declare any dividend or distribution or
resolve to take any action referred to in this subsection, it shall provide
written notice thereof to the Holder not less than 10 days prior to the
record date fixed for determining the stockholders entitled to participate
therein.
(b) In case the Company shall, while any of the Warrants are
outstanding, issue rights or warrants to purchase, or securities
convertible into or exchangeable for, Common Stock ("Rights") to any
holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for, purchase, convert or exchange shares of Common Stock at a
price per share less than the current market price per share of Common
Stock (as determined pursuant to subsection (e) below) on the record date
mentioned below, provided the purchase price is less than the Per-Share
Exercise Price theretofore in effect, the Per-Share Exercise Price shall be
adjusted so that the same shall equal the amount determined by multiplying
the Per-Share Exercise Price theretofore in effect by a fraction the
numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such Rights plus the number of
shares which the aggregate offering price would purchase at such current
market price, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such Rights plus the
number of additional shares of Common Stock offered for subscription or
purchase. "Aggregate offering price," as used in the preceding sentence,
shall mean the amount received or receivable by the Company in
consideration of the issuance or sale of Rights plus any additional
consideration payable to the Company upon exercise thereof, in each case
with reference to the total number of shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made immediately prior
to the opening of business on the day following the date of issuance of
Rights, retroactive to the record date for the determination of
stockholders entitled to receive Rights.
(c) In case the Company shall, by dividend or otherwise,
distribute to any holders of its outstanding shares of Common Stock
evidences of its indebtedness, shares of any class or series of its stock,
assets, securities convertible into or exchangeable for any of its stock or
rights or warrants to subscribe for or purchase any of its securities
(excluding any Rights referred to in subsection (b), any dividend or other
distribution paid exclusively in cash and any dividend or other
distribution referred to in subsection (a) of this Section 3), the
Per-Share Exercise Price shall be reduced so that the same shall equal the
price determined by multiplying the Per-Share Exercise Price theretofore in
effect by a fraction the numerator of which shall be the current market
price (determined as provided in subsection (e)) per share of Common Stock
on the record date referred to below less the fair market value (as
determined in
929955.1
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<PAGE>
good faith by the Board of Directors, whose determination shall be
conclusive unless the Holder shall, within five (5) days of receipt of the
Adjustment Certificate (as defined below) setting forth the adjustment
made, request that the determination be made pursuant to the Appraisal
Procedures), on the record date referred to below, of the portion of the
evidences of indebtedness, shares of stock, assets, convertible or
exchangeable securities, rights or warrants (including fractions) so
distributed with respect to each share of Common Stock and the denominator
of which shall be such current market price per share of Common Stock. Such
adjustment shall be made immediately prior to the opening of business on
the day following the date on which any such distribution is made,
retroactive to the record date for the determination of stockholders
entitled to receive such distribution. In the event that no such dividend
or other distribution is so paid or made, the Per-Share Exercise Price
shall again be adjusted to be the Per-Share Exercise Price which would then
be in effect if such dividend or other distribution had not occurred. If
the Board of Directors determines the fair market value of any distribution
for purposes of this subsection (c) by reference to the actual or
when-issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period
used in computing the current market price per share of Common Stock
(determined as provided in subsection (e)).
(d) In the case of any capital reorganization of the Company or
reclassification of the Common Stock, or any consolidation or merger to
which the Company is a party other than a merger or consolidation in which
the Company is the continuing corporation, or in the case of any sale or
conveyance to another entity of the property of the Company as an entirety
or substantially as an entirety, or in the case of any statutory exchange
of securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Company), the
Holder shall have the right thereafter to receive on the exercise of this
Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after
such reorganization, reclassification, consolidation, merger, statutory
exchange, sale or conveyance had this Warrant been exercised immediately
prior to the effective date of such reorganization, reclassification
consolidation, merger, statutory exchange, sale or conveyance and in any
such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 3 with respect to
the rights and interests thereafter of the Holder to the end that the
provisions set forth in this Section 3 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares
of stock or other securities or property thereafter deliverable on the
exercise of the Warrant. Notice of any such reorganization,
reclassification, consolidation, merger, exchange, sale or conveyance shall
be mailed to the Holder not less than 30 days prior to such event. The
above provisions of this subsection (d) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances. The Company shall require the issuer of
any shares of stock or other
929955.1
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securities or property thereafter deliverable on the exercise of the
Warrant to be responsible for all of the agreements and obligations of the
Company hereunder.
(e) For the purpose of any computation under subsection (b) of
Section 1, or subsection (b) or (c) of this section, the current market
price per share of Common Stock on any date in question shall be deemed to
be the average of the daily Closing Prices for the five (5) Trading Day
period ending on the earlier of the day in question and, if applicable, the
last Trading Day before the "ex" date with respect to the issuance or
distribution requiring such computation; provided, however, that if more
than one event occurs that would require an adjustment pursuant to
subsections (a) through (d), inclusive, the Board of Directors shall in
good faith make such adjustments to the Closing Prices during such five (5)
Trading Day period as it reasonably deems appropriate to effectuate the
intent of the adjustment provisions in this Section 3, in which case any
such determination by the Board of Directors shall be conclusive unless the
Holder shall within five (5) days of receipt of the Adjustment Certificate
setting forth the adjustment made, request that the determination be made
pursuant to the Appraisal Procedures. For purposes of this paragraph, the
term "ex" date means the first date on which the shares of Common Stock
trade regular way, without the right to receive such issuance or
distribution, on the New York Stock Exchange or on such successor
securities exchange as the shares of Common Stock may be listed on or in
the relevant market from which the Closing Prices were obtained.
(f) No adjustment in the Per-Share Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Per-Share Exercise Price; provided, however, that any
adjustments which by reason of this subsection (g) are not required to be
made shall be carried forward and taken into account in determining whether
any subsequent adjustment shall be required.
(g) If any action would require adjustment of the Per-Share
Exercise Price pursuant to more than one of the provisions described above,
only one adjustment shall be made and such adjustment shall be the amount
of adjustment that has the highest absolute value to the Holder.
(h) Except as stated above, the Per-Share Exercise Price will not
be adjusted for the issuance of shares of Common Stock or any securities
convertible into, or exchangeable for, shares of Common Stock, or carrying
the right to purchase any of the foregoing.
(i) In case the Company shall, by dividend or otherwise, declare
or make a distribution on the shares of Common Stock referred to in Section
3(c), the Holder, upon the exercise thereof subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the
Per-Share Exercise Price adjustment in respect of such
929955.1
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<PAGE>
distribution, shall also be entitled to receive, for each share of Common
Stock for which the Warrant is exercised, the portion of the evidences of
indebtedness, shares of stock, assets, securities convertible into or
exchangeable for any of its stock, or rights or warrants to subscribe for
or purchase any of its securities (including fractions) so distributed with
respect to each share of Common Stock; provided, however, that, at the
election of the Company with respect to all Holders so exercising, the
Company may, in lieu of distributing to such Holder any portion of such
distribution not consisting of cash or securities of the Company, pay such
Holder an amount in cash equal to the fair market value thereof (as
determined in good faith by the Board of Directors, whose determination
shall be conclusive unless the Holder shall, within five (5) days of
receipt of the Adjustment Certificate setting forth the adjustment made,
request that the determination be made pursuant to the Appraisal
Procedures). If any exercise of a Warrant described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of shares of Common Stock which the Holder of a Warrant so
exercised is entitled to receive in accordance with the immediately
preceding sentence, the Company may elect to distribute to such Holder a
due bill for the evidences of indebtedness, shares of stock, assets,
securities convertible into or exchangeable for any of its stock, or rights
or warrants to subscribe for or purchase any of its securities to which
such Holder is so entitled, provided, that such due bill (a) meets any
applicable requirements of the principal national securities exchange or
other market on which the shares of Common Stock are then traded and (b)
requires payment or delivery of such evidences of indebtedness, shares of
stock, assets, securities convertible into or exchangeable for any of its
stock, or rights or warrants to subscribe for or purchase any of its
securities no later than the date of payment or delivery thereof to holders
of Common Stock receiving such distribution.
(j) Whenever the Per-Share Exercise Price is adjusted as provided
in this Section 3 and upon any modification of the rights of the Holder in
accordance with this Section 3, the Company shall promptly prepare a
certificate signed by the chief financial officer or the treasurer setting
forth the adjusted Per-Share Exercise Price and showing in reasonable
detail the facts requiring such adjustment or modification and the manner
of computing the same ("Adjustment Certificate") and cause copies of such
certificate to be mailed to the Holder.
(k) If the Board of Directors shall authorize and the Company
shall declare any dividend or other distribution with respect to the Common
Stock other than a distribution exclusively in cash, the Company shall mail
notice thereof to the Holder not less than ten (10) days prior to the
record date fixed for determining stockholders entitled to participate in
such dividend or other distribution.
(l) If, as a result of an adjustment made pursuant to this Section
3, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of stock or other
securities, the Board of
929955.1
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Directors shall in good faith determine the allocation of the adjusted
Per-Share Exercise Price between or among such classes of stock or other
securities (whose determination shall be conclusive unless the Holder
shall, within five (5) days of receipt of the Adjustment Certificate
setting forth the adjustment made, request that the determination be made
pursuant to the Appraisal Procedures).
(m) Upon the expiration of any rights, options, warrants or
conversion privileges with respect to the issuance of which an adjustment
to the Per-Share Exercise Price had been made, if such shall not have been
exercised, the Per-Share Exercise Price, to the extent this Warrant has
not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (A) the Common Stock, if any, actually issued or sold
upon the exercise of such rights, options, warrants or conversion
privileges, and (B) such shares of Common Stock, if any, that were issued
or sold for the consideration actually received by the Company upon such
exercise plus the consideration, if any, actually received by the Company
for the issuance, sale or grant of all such rights, options, warrants or
conversion privileges whether or not exercised; provided, however, that no
such readjustment shall have the effect of increasing the Per-Share
Exercise Price by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale or grant of such rights,
options, warrants or conversion privileges.
(n) Whenever the Per-Share Exercise Price is adjusted as provided
pursuant to this Section 3, the number of Warrant Shares purchasable upon
the exercise of this Warrant shall be adjusted by multiplying such number
of Warrant Shares immediately prior to such adjustment by a fraction, the
numerator of which shall be the Per-Share Exercise Price immediately prior
to such adjustment, and the denominator of which shall be the Per-Share
Exercise Price immediately thereafter.
(o) In case any event shall occur as to which the other provisions
of this Section 3 are not strictly applicable but as to which the failure
to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles hereof then, in each such case, the Board of Directors shall in
good faith determine the adjustment, if any, on a basis consistent with the
essential intent and principles established herein, necessary to preserve
the purchase rights represented by the Warrants (whose determination shall
be conclusive, unless the Holder shall, within five (5) days of receipt of
the Adjustment Certificate setting forth the adjustment made, request that
the determination be made pursuant to the Appraisal Procedures) and shall
promptly make the adjustments described therein.
929955.1
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<PAGE>
4. Put Right. If, at any time during the period commencing on March 8,
2004 and expiring on March 8, 2005,
(a) the average daily per-share Closing Price of the Common Stock
(the "Average Price") during any period of ninety (90) consecutive Trading
Days preceding and including the date of measurement (the "Measurement
Date") is greater than the Per-Share Exercise Price in effect on the
Measurement Date (the "Measurement Date Exercise Price"), and
(b) the number of shares of Common Stock held by stockholders
other than the shares of Common Stock held by CT Management Stockholders
and the Associated Stockholders as of the close of business on the
Measurement Date is less than twenty-five million (25,000,000) (as adjusted
for any stock dividend, stock split, combination or similar
recapitalization),
then the Initial Holder and/or any Related Holder(s), as the case may be (and
not any other Holder) shall have the right (the "Put Right") to require the
Company to purchase, subject to the following sentence, the Warrant(s), in whole
or in part, held by the Initial Holder and/or the Related Holder. If the Initial
Holder and/or any Related Holder, as the case may be, elect(s) to exercise the
Put Right, then such Holder(s) shall surrender this Warrant to the Company at
the address set forth in Section 11 hereof, accompanied by written notice (the
"Put Notice") to the Company of the election of the Holder(s) to require the
purchase of the Warrant(s) or a part thereof as specified in the Put Notice (any
such part to be expressed in terms of a portion of the number of whole Warrant
Shares corresponding to the portion of the Warrant(s) to be purchased) (the "Put
Portion") and the Company shall, within sixty (60) days after the Put Notice is
given, either as determined in its sole discretion: (x) purchase the Put Portion
at the Put Purchase Price and, if only a part of a Holder's Warrant is purchased
pursuant to an exercise of the Put Right, issue and deliver to such Holder a new
Warrant covering the balance of the shares remaining subject to this Warrant
(i.e., those Warrant Shares not included in the Put Portion) and setting forth
the proportionate part of the Aggregate Exercise Price applicable to such
balance of Warrant Shares; or (y) elect not to purchase the Put Portion and
provide written notice to such Holder that the Exercise Period shall be extended
to continue until March 8, 2008 whereupon this Warrant may continue to be
exercised through such date without any further action by the Company or such
Holder. If the Company elects not to purchase the Put Portion pursuant to clause
(y) of the foregoing sentence, the Company shall issue and deliver to such
Holder a new Warrant reflecting the extended Exercise Period and the Put Right
governed in this Section 4 shall terminate and be of no further force and effect
without any further action by the Company or such Holder. The "Put Purchase
Price" shall be the amount equal to the product obtained by multiplying (x) the
amount by which the Average Price exceeds the Measurement Date Exercise Price
and (y) the number of shares of Common Stock for which the Put Portion is
exercisable as of the date the Put Notice is given. The Company may elect to pay
the Put Purchase Price in cash or in the form of an assignment of the Company's
Interest(s) in the Fund(s) or Fund Control Persons, or
929955.1
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<PAGE>
in any combination of cash and such an assignment, with an aggregate value equal
to the Put Purchase Price. The fair market value of any Interest(s) in the
Fund(s) or Fund Control Person(s) to be assigned in accordance with the
foregoing shall be determined in accordance with the Appraisal Procedures. The
Company shall, in connection with any assignment(s) of such Interest(s), execute
and deliver written assignment(s) and any additional documents requested by such
exercising Holder to complete, confirm or perfect the assignment of the assigned
Interests.
5. Acceleration of Exercise Period. Notwithstanding the provisions of
Section 1, prior to the commencement of the Exercise Period, this Warrant may be
exercised in whole or part immediately upon the date of commencement of a third
party tender offer for more than 33% of the shares of Common Stock outstanding
on the date of commencement of such tender offer.
6. Fully Paid Stock; Taxes. The shares of the Common Stock
represented by each and every certificate for Warrant Shares delivered upon the
exercise of this Warrant shall at the time of such delivery, be duly authorized,
validly issued and outstanding, fully paid and nonassessable, and not subject to
preemptive rights or rights of first refusal. The Company shall pay all
documentary, stamp or similar taxes and other similar governmental charges that
may be imposed with respect to the issuance or delivery of any shares of Common
Stock upon exercise of the Warrants (other than income taxes); provided,
however, that if the shares of Common Stock are to be delivered in a name other
than the name of the Holder or any Related Holder, no such delivery shall be
made unless the person requesting the same has paid to the Company the amount of
transfer taxes or charges incident thereto, if any.
7. HSR. To the extent required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") following any exercise or exchange of
this Warrant pursuant to subsections (a) or (b) of Section 1 by the Holder and
prior to the issuance and delivery of the certificates for the shares of Common
Stock required thereby, the Company and the Holder shall cooperate in the
preparation of, and file with the United States Federal Trade Commission and the
United States Department of Justice, the notification and report form required
for such and any supplemental or additional information which may be reasonably
requested in connection therewith pursuant to the HSR Act and shall comply in
all material respects with the requirements of the HSR Act. The fees to be paid
in connection with any such filing under the HSR Act shall be paid by the
Holder.
8. Transfer; Etc.
(a) This Warrant may be transferred by execution of the form of
assignment attached hereto or a substantially equivalent assignment form.
Until this Warrant is transferred on the books of the Company, the Company
may treat the registered Holder of this Warrant as he or it appears on the
Company's books at any time as the Holder for all purposes. The Company
shall permit any Holder of a
929955.1
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<PAGE>
Warrant or his duly authorized attorney, upon written request during
ordinary business hours, to inspect and copy or make extracts from its
books showing the registered holders of Warrants.
(b) This Warrant may not be sold, transferred, assigned or
hypothecated by the Holder except in compliance with the provisions of the
Securities Act of 1933 and the applicable state securities "blue sky" laws,
and is so transferable only upon the books of the Company which it shall
cause to be maintained for such purpose.
(c) All Warrants issued upon the transfer or assignment of this
Warrant or part thereof or upon a partial exercise, exchange or purchase of
this Warrant will be dated the same date as this Warrant, and all rights of
the holder thereof shall be identical to those of the Holder.
9. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.
10. Warrant Holder Not Stockholder. This Warrant does not confer upon
the Holder any right to vote on or consent to or receive notice as a stockholder
of the Company, as such, in respect of any matters whatsoever, nor any other
rights or liabilities as a stockholder, prior to the exercise hereof; this
Warrant does, however, require certain notices to the Holder as set forth
herein.
11. Communication. Any notice or other communication to be given
hereunder shall be given by hand delivery, by overnight carrier, in each case at
the addresses set forth in this section, and shall be deemed to have been given
when received. The Company or the Holder may change its address for receiving
notices by giving written notice of such change to the other.
If to the Company, to:
Capital Trust, Inc.
605 Third Avenue, 26th Floor
New York, New York 10016
Attn: Chief Financial Officer
929955.1
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<PAGE>
If to the Holder, to:
Travlers Limited Real Estate
Mezzanine Investments I, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12832
12. Headings. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
13. Applicable Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
the principles of conflicts of law thereof.
14. Amendment, Waiver, etc. Except as expressly provided herein,
neither this Warrant nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated upon the written consent of the Company and the majority in
interest of the Holders.
15. Certain Definitions.
"Appraisal Procedures" has the meaning set forth in the Venture
Agreement.
"Associated Stockholders" has the meaning set forth in the Venture
Agreement.
"Board of Directors" means the board of directors of the Company.
"Closing Price", with respect to any security on any day, means the
last reported sale price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Composite Tape, or, if such
security is not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security is listed or
admitted to trading, or, if such security is not listed or admitted to trading
on a national securities exchange, on the NASDAQ Stock Market of the National
Association of Securities Dealers, Inc., or, if such security is not quoted or
admitted to trading on such quotation system, on the principal quotation system
on which such security is listed or admitted to trading or quoted, or, if not
listed or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security in the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available in such manner, as furnished by any
New York Stock Exchange member firm selected from
929955.1
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<PAGE>
time to time by the Board of Directors (or any committee duly authorized by the
Board of Directors) for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors (or any committee
duly authorized by the Board of Directors).
"CT Management Stockholders" has the meaning set forth in the Venture
Agreement.
"Fund" has the meaning set forth in the Venture Agreement.
"Fund Control Person" has the meaning set forth in the Venture
Agreement.
"Initial Holder" means Travelers Limited Real Estate Mezzanine
Investments I, LLC, a Delaware limited liability company.
"Interest" means (i) rights to distributions from the Fund(s),
including but not limited to, the "carried interest" or "promote," and (ii)
rights to management fees.
"Related Holder(s)" means any Holder who is Citigroup Inc. or any of
its direct or indirect wholly owned entities or Travelers Property Casualty
Corp. or any of its direct or indirect wholly owned entities.
"Trading Day" means a day on which any securities are traded on the
national securities exchange or quotation system used to determine the Closing
Price.
"Venture Agreement" means that certain venture agreement, dated as of
the date hereof, by and between the Company, CT-F1, LLC, a Delaware limited
liability company, CT-F2-GP, LLC, a Delaware limited liability company,
CT-F2-LP, LLC, a Delaware limited liability company, CT Investment Management
Co., LLC, a Delaware limited liability company, Travelers Limited Real Estate
Mezzanine Investments I, LLC, a Delaware limited liability company, Travelers
General Real Estate Mezzanine Investments II, LLC, a Delaware limited liability
company and Travelers Limited Real Estate Mezzanine Investments II, LLC, a
Delaware limited liability company.
929955.1
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed this 8th day of March, 2000.
CAPITAL TRUST, INC.
By: /s/ John R. Klopp
-------------------------------
John R. Klopp
Chief Executive Officer
929955.1
<PAGE>
SUBSCRIPTION
The undersigned, ___________________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe for and purchase ________________
____ shares of the Common Stock, par value $.01 per share, of Capital Trust,
Inc. covered by said Warrant, and makes payment therefor in full at the price
per share provided by said Warrant.
Dated:_______________ Signature:________________________
Address:__________________________
ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers
unto ____________________ the foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint _____________________,
attorney, to transfer said Warrant on the books of Capital Trust, Inc.
Dated:_______________ Signature:________________________
Address:__________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby assigns and transfers unto
____________________ the right to purchase _______ shares of Common Stock, par
value $.01 per share, of Capital Trust, Inc. covered by the foregoing Warrant,
and a proportionate part of said Warrant and the rights evidenced thereby, and
does irrevocably constitute and appoint ____________________, attorney, to
transfer such part of said Warrant on the books of Capital Trust, Inc.
Dated:_______________ Signature:________________________
Address:__________________________
929955.1
AGREEMENT dated as of March 8, 2000 by and between, Capital Trust,
Inc., a Maryland corporation ("CT"), and Travelers General Real Estate Mezzanine
Investments II, LLC, a Delaware limited liability company ("General REMI II").
Preliminary Statement
A. General REMI II, Travelers Limited Real Estate Mezzanine Investments
I, LLC, a Delaware limited liability company, and Travelers Limited Real Estate
Mezzanine Investments II, LLC, a Delaware limited liability company, CT,
CT-F2-GP, LLC, a Delaware limited liability company that is wholly-owned by CT
("CT-F2-GP") and certain of their affiliates have entered into the Venture
Agreement, dated as of March 8, 2000 to provide for various common business
enterprises in the area of mezzanine financing.
B. CT-F2-GP and General REMI II will enter into the Limited Liability
Company Agreement of CT MP II LLC, a Delaware limited liability company ("CT MP
II") (the "LLC Agreement"), and have agreed that CT MP II will act as the
general partner of CT Mezzanine Partners II LP, a Delaware limited partnership
(the "Partnership").
C. CT-F2-GP and General REMI II will cause CT MP II to enter into the
Partnership Agreement of the Partnership with various limited partner investors
(the "Partnership Agreement").
D. Pursuant to the Venture Agreement, CT has agreed to contribute,
provided that CT has obtained the approval of stockholders of CT required under
the rules of the New York Stock Exchange (the "Stockholder Approval"), certain
warrants (the "Warrants") to purchase shares of Common Stock, as defined below,
to CT-F2-GP or its Affiliates, in which case CT-F2-GP or its Affiliate, as the
case may be, will contribute the Warrants to CT MP II or its Affiliate, as the
case may be, whereupon certain of the Warrants will be sold to General REMI II
or its Affiliate, as the case may be, and the other of such Warrants will be
assigned by CT MP II or its Affiliate, as the case may be, to Limited REMI II or
its Affiliate, as the case may be, as compensation for services in procuring
capital commitments.
1. Payment Rights. As additional consideration for General REMI II
entering into the Venture Agreement and the LLC Agreement, and performing its
obligations thereunder, and for General REMI II (with CT-F2-GP) causing CT MP II
to enter into the Partnership Agreement, CT grants to General REMI II contingent
cash rights to receive payments from CT as provided herein (the "Rights").
2. Certain Definitions.
(a) "500,000 Reference Number" means 500,000 as adjusted pursuant to
Section 4.
(b) "4,750,000 Reference Number" means 4,750,000 as adjusted
pursuant to Section 4.
<PAGE>
(c) "Amount Committed" at any time means the aggregate capital
commitments made by the CIG Parties or high net worth individuals
institutions who are clients of Citibank's private bank to the Partnership
or other Funds co-sponsored by the CIG Parties and the CT Parties.
(d) "Base Price" means five dollars ($5.00), subject to adjustment
as provided herein.
(e) "Board of Directors" means the board of directors of CT.
(f) "Calculation Date" has the meaning set forth in Section 3(c)
hereof.
(g) "Closing Price" with respect to Common Stock, on any day, means
the last reported sale price per share of Common Stock, regular way on such
day, or, if no sale takes place on such day, the average of the reported
closing bid and asked prices per share of Common Stock on such day, regular
way, in either case as reported on the NYSE Composite Tape, or, if the
Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on a national securities exchange, on the
NASDAQ Stock Market of the National Association of Securities Dealers,
Inc., or, if the Common Stock is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which the Common
Stock is listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices per share
of Common Stock in the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such
manner, as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors (or any committee duly
authorized by the Board of Directors) for that purpose or, if not so
available in such manner, as otherwise determined in good faith by the
Board of Directors (or any committee duly authorized by the Board of
Directors). In the event the Common Stock is converted into or exchanged
for other securities, or other securities are issued with respect to Common
Stock, the Closing Price with respect to such securities shall refer to the
price (including fractions) determined in accordance with this subsection
(g) of the securities that would be obtained upon the conversion or
exchange of, or issued to an owner of, one (1) share of Common Stock.
(h) "Common Stock" means the class A common stock, par value $.01
per share, of CT.
(i) "Commencement Date" means the later of March 8, 2001 or the date
of the initial closing of the Partnership.
(j) "Current Market Price" on any date in question means the average
of the daily Closing Prices for the five (5) Trading Day period ending on
the earlier of the day in question and, if applicable, the last Trading Day
before the "ex" date with respect to the issuance or distribution requiring
such computation; provided, however, that if
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<PAGE>
more than one event occurs that would require an adjustment pursuant to
Sections 4 (a) through (d), inclusive, the Board of Directors shall in good
faith make such adjustments to the Closing Prices during such five (5)
Trading Day period as it reasonably deems appropriate to effectuate the
intent of the adjustment provisions in Section 4 hereof, in which case any
such determination by the Board of Directors shall be conclusive unless the
Holder shall, within five (5) days of receipt of the Adjustment Certificate
setting forth the adjustment made, request that the determination be made
pursuant to the Appraisal Procedures. For purposes of this paragraph, the
term "ex" date means the first date on which the shares of Common Stock
trade regular way, without the right to receive such issuance or
distribution, on the New York Stock Exchange or on such successor
securities exchange as the shares of Common Stock may be listed on or in
the relevant market from which the Closing Prices were obtained.
(k) "Fund" means a pooled investment vehicle to engage in the making
or acquisition of (a) senior and subordinated loans (whether interim,
mid-term or long-term or a combination of the foregoing) to commercial real
estate owners and property developers, (b) high-yield loans that are
subordinate to the first lien mortgage loan on commercial real estate and
are secured either by a second lien mortgage or a pledge of all or a
portion of the ownership interest in the borrowing property owner (which
investment may take the form of investments in certificates in trust or a
preferred equity interest in the property owning entity), or (c) rated or
unrated interests in public and private commercial mortgage backed
securities.
(l) "Maximum Number" at any time means the sum of (1) the 500,000
Reference Number plus (2) the 4,750,000 Reference Number multiplied by a
fraction (not greater than one), the numerator of which is the Amount
Committed at such time and the denominator of which is $250,000,000.
(m) "Trading Day" means a day on which any securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
3. Exercise of Rights. This Agreement shall enable General REMI II or a
permitted transferee to whom General REMI II assigns its Rights (the "Holder")
to receive payment from CT in accordance with this section.
(a) The Holder may exercise its Rights under this Agreement in whole
at any time, or in part from time to time, commencing on the Commencement
Date and prior to 5:00 p.m., Eastern Time, on March 8, 2005, by giving
notice of its election to exercise such Right to CT (the "Exercise
Notice"); provided, however, that the Holder may exercise its Rights only
once per fiscal quarter of CT. Any exercise of such Rights shall be
effective on the date and at the time the Exercise Notice is received by CT
(the "Exercise Date").
(b) The Exercise Notice shall specify the whole number of Rights
with respect to which the Rights are being exercised (each, an "Exercised
Right"), provided that the number of Rights so specified (i) shall not
exceed the excess, if any, of the
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<PAGE>
Maximum Number at such time over the aggregate number of previously
Exercised Rights (as adjusted pursuant to this Agreement) and (ii) shall
not be less than 100,000.
(c) With respect to each Exercised Right, CT shall pay to the Holder
an amount (the "Proceeds") equal to the excess of:
(i) the Current Market Price on the day preceding the Exercise
Date (the "Calculation Date") over
(ii) the Base Price on the Calculation Date.
CT shall pay the Proceeds to the Holder in cash within ten (10) days after the
Exercise Date.
4. Adjustments. The Base Price, the number of previously Exercised
Rights, the 500,000 Reference Number, the 4,750,000 Reference Number and the
Proceeds shall be subject to adjustment from time to time as set forth in this
Section 4. Whenever the Base Price is adjusted by operation of this Section 4,
the number of previously Exercised Rights, the 500,000 Reference Number and the
4,750,000 Reference Number shall be adjusted as provided in subsection (e)
hereof.
(a) In case CT shall, while any of the Rights are outstanding, (i)
pay a dividend or make any other distribution with respect to shares of
Common Stock in shares of Common Stock, (ii) subdivide outstanding shares
of Common Stock, (iii) combine outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its Common
Stock any shares of stock of CT (other than the reclassifications covered
by subsection (d)), the Base Price shall be adjusted to be equal to a
fraction, the numerator of which shall be the Base Price theretofore in
effect and the denominator of which shall be the number of shares of Common
Stock or other stock of CT that an owner of one share of Common Stock would
own immediately following such action or, in the case of a dividend,
distribution, subdivision, combination or reclassification with respect to
which a record date has been established, prior to such record date. An
adjustment made pursuant to this subsection shall be made immediately prior
to the opening of business on the day following (x) the date of the payment
of the dividend or distribution (retroactive to the record date) or (y) the
effective date in the case of a subdivision, combination or
reclassification (retroactive to the record date, if any). If the Board of
Directors shall declare any dividend or other distribution or resolve to
take any action referred to in this subsection, it shall provide written
notice thereof to the Holder not less than 10 days prior to the record date
fixed for determining the stockholders entitled to participate therein.
(b) In case CT shall, while any of the Rights are outstanding, issue
rights or warrants to purchase, or securities convertible into or
exchangeable for, Common Stock (the "Stock Rights") to any holders of its
outstanding shares of Common Stock entitling them (for a period expiring
within forty-five (45) days after the record date mentioned below) to
subscribe for, purchase, convert or exchange shares of Common Stock at a
price per share less than the Current Market Price on the record date
mentioned below, provided the purchase price per share is less than the
Base Price theretofore in effect, the
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Base Price shall be adjusted so that the same shall equal the amount
determined by multiplying the Base Price theretofore in effect by a
fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such Stock Rights plus the
number of shares which the Aggregate Offering Price would purchase at such
Current Market Price, and the denominator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of such Stock
Rights plus the number of additional shares of Common Stock offered for
subscription or purchase. "Aggregate Offering Price," as used in the
preceding sentence, shall mean the amount received or receivable by CT in
consideration of the issuance or sale of such Stock Rights plus any
additional consideration payable to CT upon exercise thereof, in each case
with reference to the total number of shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made immediately prior
to the opening of business on the day following the date of issuance of
such Stock Rights, retroactive to the record date for the determination of
stockholders entitled to receive such Stock Rights.
(c) In case CT shall, by dividend or otherwise, distribute to any
holders of its outstanding shares of Common Stock evidences of its
indebtedness, shares of any class or series of its stock, assets,
securities convertible into or exchangeable for any of its stock, or rights
or warrants to subscribe for or purchase any of its securities (excluding
any Stock Rights referred to in subsection (b), any dividend or other
distribution paid exclusively in cash and any dividend or other
distribution referred to in subsection (a) of this Section 4), the Base
Price shall be reduced so that the same shall equal the price determined by
multiplying the Base Price theretofore in effect by a fraction, the
numerator of which shall be the Current Market Price on the record date
referred to below less the fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive unless
the Holder shall, within five (5) days of receipt of the Adjustment
Certificate setting forth the adjustment made, request that the
determination be made pursuant to the Appraisal Procedures), on the record
date referred to below, of the portion of the evidences of indebtedness,
shares of stock, assets, convertible or exchangeable securities, rights or
warrants (including fractions) so distributed with respect to each share of
Common Stock and the denominator of which shall be such Current Market
Price. Such adjustment shall be made immediately prior to the opening of
business on the day following the date on which any such distribution is
made, retroactive to the record date for the determination of stockholders
entitled to receive such distribution. In the event that no such dividend
or other distribution is so paid or made, the Base Price shall again be
adjusted to be the Base Price which would then be in effect if such
dividend or other distribution had not occurred. If the Board of Directors
determines the fair market value of any distribution for purposes of this
subsection (c) by reference to the actual or when-issued trading market for
any securities comprising such distribution, it must in doing so consider
the prices in such market over the same period used in computing the
Current Market Price.
(d) In the case of any capital reorganization of CT or
reclassification of the Common Stock, or any consolidation or merger to
which CT is a party other than a merger or consolidation in which CT is the
continuing corporation, or in the case of any sale or conveyance to another
entity of the property of CT as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with
another
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corporation (including any exchange effected in connection with a merger of
a third corporation into CT), the Proceeds with respect to each Exercised
Right shall be adjusted to equal the excess of (i) the fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive unless the Holder shall (within five (5) days of
receipt of the Adjustment Certificate (as defined below)) on the
Calculation Date of the kind and amount of securities, cash or other
property (including fractions) which an owner of one (1) share of Common
Stock would have received immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or
conveyance over (ii) the Base Price on the Calculation Date; and in any
such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 4 with respect to
the rights and interests thereafter of the Holder to the end that the
provisions set forth in this Section 4 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to the
Proceeds thereafter payable upon exercise of the Rights. Notice of any such
reorganization, reclassification, consolidation, merger, exchange, sale or
conveyance shall be mailed to the Holder not less than thirty (30) days
prior to such event. The above provisions of this subsection (d) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, statutory exchanges, sales or conveyances. CT
shall require the issuer of such securities, cash or property in the
transaction to be responsible for all of the agreements and obligations of
CT hereunder.
(e) Whenever the Base Price is adjusted as provided pursuant to this
Section 4, the aggregate number of previously Exercised Rights the 500,000
Reference Number and the 4,750,000 Reference Number shall be adjusted by
multiplying such number thereof immediately prior to such adjustment by a
fraction, the numerator of which shall be the Base Price immediately prior
to such adjustment, and the denominator of which shall be the Base Price
immediately thereafter.
(f) No adjustment in Base Price shall be required unless such
adjustment would require an increase or decrease of at least one percent
(1%) in the Base Price; provided, however, that any adjustments which by
reason of this subsection (f) are not required to be made shall be carried
forward and taken into account in determining whether any subsequent
adjustment shall be required.
(g) If any action would require adjustment of the Base Price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to the Holder.
(h) Except as stated above, the Base Price will not be adjusted for
the issuance of shares of Common Stock or any securities convertible into,
or exchangeable for, shares of Common Stock, or carrying the right to
purchase any of the foregoing.
(i) In case CT shall, by dividend or otherwise, declare or make a
distribution on the shares of Common Stock referred to in Section 4(c), the
Holder, upon the exercise of Rights subsequent to the close of business on
the date fixed for the determination of stockholders entitled to receive
such distribution and prior to the
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effectiveness of the Base Price adjustment in respect of such distribution,
shall also be entitled to receive, for each such Exercised Right, cash
equal to the fair market value of the shares of Common Stock, evidences of
indebtedness, shares of stock, assets, securities convertible into or
exchangeable for any of its stock, or rights or warrants to subscribe for
or purchase any of its securities (including fractions) so distributed with
respect to each share of Common Stock (as determined in good faith by the
Board of Directors, whose determination shall be conclusive unless the
Holder shall, within five (5) days of receipt of the Adjustment Certificate
setting forth the adjustment made, request that the determination be made
pursuant to the Appraisal Procedures).
(j) Whenever the Base Price is adjusted as provided in this Section
4 and upon any modification of the rights of the Holder in accordance with
this Section 4, CT shall promptly prepare a certificate signed by the chief
financial officer or the treasurer setting forth the adjusted Base Price
and showing in reasonable detail the facts requiring such adjustment or
modification and the manner of computing the same ("Adjustment
Certificate") and cause copies of such certificate to be mailed to the
Holder.
(k) If the Board of Directors shall authorize and the Company shall
declare any dividend or other distribution with respect to the Common Stock
other than a distribution exclusively in cash, CT shall mail notice thereof
to the Holder not less than ten (10) days prior to the record date fixed
for determining stockholders entitled to participate in such dividend or
other distribution.
(l) If the Common Stock is converted into or exchanged for, or the
owners of Common Stock become entitled to receive, shares of two or more
classes of stock or other securities, the Board of Directors shall in good
faith determine the allocation of the adjusted Base Price between or among
such classes of stock or securities (whose determination shall be
conclusive unless the Holder shall, within five (5) days of receipt of the
Adjustment Certificate setting forth the adjustment made, request that the
determination be made pursuant to the Appraisal Procedures).
(m) Upon the expiration of any rights, options, warrants or
conversion privileges with respect to the issuance of which an adjustment
to the Base Price had been made, if such shall not have been exercised, the
Base Price shall, upon such expiration, be readjusted and shall thereafter
be such as they would have been had they been originally adjusted (or had
the original adjustment not been required, as the case may be) on the basis
of (A) the Common Stock, if any, actually issued or sold upon the exercise
of such rights, options, warrants or conversion privileges, and (B) such
shares of Common Stock, if any, that were issued or sold for the
consideration actually received by CT upon such exercise plus the
consideration, if any, actually received by CT for the issuance, sale or
grant of all such rights, options, warrants or conversion privileges
whether or not exercised; provided, however, that no such readjustment
shall have the effect of increasing the Base Price by an amount in excess
of the amount of the adjustment initially made thereto in respect of the
issuance, sale or grant of such rights, options, warrants or conversion
privileges.
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(n) In case any event shall occur as to which the other provisions
of this Section 4 are not strictly applicable but as to which the failure
to make any adjustment would not fairly protect the Rights pursuant to this
Agreement in accordance with the essential intent and principles hereof
then, in each such case, the Board of Directors shall in good faith
determine the adjustment, if any, on a basis consistent with the essential
intent and principles established herein, necessary to preserve the Rights
pursuant to this Agreement (whose determination shall be conclusive unless
the Holder shall, within five (5) days of receipt of the Adjustment
Certificate setting forth the adjustment made, request that the
determination be made pursuant to the Appraisal Procedures) and shall
promptly make the adjustments described therein.
5. Termination. This Agreement and the Rights shall automatically
terminate without further action upon completion of the transfer of Warrants
from CT-F2-GP or its Affiliate, as the case may be to CT MP II or its Affiliate,
as the case may be, and then from CT MP II or its Affiliate, as the case may be,
to General REMI II or its Affiliates, as the case may be, in accordance with the
Preliminary Statement hereof.
6. Transfer. The Rights are not transferable except to any partner of
the Partnership and thereafter to a direct or indirect wholly owned entity of
Citigroup Inc. or Travelers Property Casualty Corp.
7. Communication. Any notice or other communication to be given
hereunder shall be given by hand delivery, by overnight carrier, in each case at
the addresses set forth in this section, and shall be deemed to have been given
when received. CT or the Holder may change its address for receiving notices by
giving written notice of such change to the other.
If to CT, to: Capital Trust, Inc.
605 Third Avenue, 26th Floor
New York, New York 10016
Attn: Chief Financial Officer
With a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Thomas E. Kruger
If to the Holder, to: Travelers General Real Estate
Mezzanine Investments II, LLC
205 Columbus Boulevard, 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
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With copies to: Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12833
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
8. Headings. The headings of this Agreement have been inserted as a
matter of convenience and shall not affect the construction hereof.
9. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflicts of law thereof.
10. Amendment, Waiver, etc. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated upon the written consent of CT and the majority in interest of the
Holders.
9
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IN WITNESS WHEREOF, CT and General REMI II have caused this Agreement
to be executed as of March 8, 2000.
CAPITAL TRUST, INC.
By: /s/ John R. Klopp
-----------------------------
Name: John R. Klopp
Title: Chief Executive Officer
TRAVELERS GENERAL REAL ESTATE
MEZZANINE INVESTMENTS II, LLC
By: /s/ Michael Watson
-----------------------------
Name: Michael Watson
Title: Vice President
10
Exhibit 10.6
GUARANTY OF PAYMENT
This GUARANTY OF PAYMENT (this "Guaranty of Payment"), dated as of
March 8, 2000, made by Capital Trust, Inc. ("CT") in favor of Travelers Limited
Real Estate Mezzanine Investments I, LLC, a Delaware limited liability company
("Limited REMI I"), Travelers General Real Estate Mezzanine Investments II, LLC
("General REMI II"), a Delaware limited liability company, and Travelers Limited
Real Estate Mezzanine Investments II, LLC, a Delaware limited liability company
("Limited REMI II" and collectively with Limited REMI I and General REMI II, the
"CIG Parties"). Terms not otherwise defined herein shall have the meanings
assigned to such terms in the Venture Agreement, as defined below.
PRELIMINARY STATEMENTS
WHEREAS, CT, its wholly owned subsidiaries, CT-F1, LLC, a Delaware
limited liability company ("CT-F1"), CT-F2-GP, LLC, a Delaware limited liability
company ("CT-F2-GP"), CT-F2-LP, LLC, a Delaware limited liability company
("CT-F2-LP"), and CT Investment Management Co., LLC, a Delaware limited
liability company ("CTIMCO" and collectively with CT-F1, CT-F2-GP and CT-F2-LP,
the "CT Parties"), and the CIG Parties intend to enter into that certain venture
agreement, dated as of the date hereof, pursuant to which, among other things,
the parties thereto will co-sponsor, commit to invest capital in and manage real
estate mezzanine opportunity funds (the "Venture Agreement").
WHEREAS, as a condition to the Parties entering into the Venture
Agreement, CT has agreed to execute and deliver this Guaranty of Payment.
NOW, THEREFORE, in consideration of the promises and in order to induce
CIG Parties to enter into the Venture Agreement, CT hereby agrees as follows:
SECTION 1. Unconditional Guarantee; Enforcement.
(a) CT hereby unconditionally and irrevocably guarantees for
the benefit of the CIG Parties the full and prompt payment when and as
due of the CT Parties' funding, contribution and indemnification
obligations under the Venture Agreement subject to any defense, right
of set-off or counterclaim, other than on account of or resulting from
the Bankruptcy of any of the CT Parties, that the CT Parties may have
or assert, which defense, right of set-off or counterclaim shall be
available to CT hereunder to the same extent that it would be available
to the applicable CT Party ("Guaranteed Obligations.")
(b) It shall not be a condition to the obligation of CT
hereunder to guarantee and ensure the performance, observance or
payment of any of the Guaranteed Obligations that the CIG Parties shall
have first made any request of or demand upon or given any notice to
the CT Parties, or have instituted any action or proceeding against the
CT Parties in
926594.4
<PAGE>
respect thereof. The CIG Parties may proceed to enforce the Guaranteed
Obligations of CT hereunder without first pursuing or exhausting any
right or remedy that it may have against the CT Parties.
SECTION 2. Obligations Absolute. CT guarantees, undertakes and agrees
with and for the benefit of the CIG Parties to ensure the performance of all the
Guaranteed Obligations strictly in accordance with the terms of the Venture
Agreement. The obligations of CT under this Guaranty of Payment are independent
of the Guaranteed Obligations, and a separate action or actions may be brought
and prosecuted against CT to enforce this Guaranty of Payment, irrespective of
whether any action is brought against the CT Parties or whether the CT Parties
are joined in any such action(s). The obligations of CT under this Guaranty of
Payment shall be absolute and unconditional irrespective of:
(a) any Bankruptcy of any CT Parties;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Venture Agreement or any other agreement entered into in connection
therewith or as contemplated thereby;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Guaranteed Obligations or any other assets of the CT Parties or any of
their subsidiaries; or
(e) any change, restructuring or termination of the corporate
structure or existence of the CT Parties or any of their subsidiaries.
This Guaranty of Payment shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the CIG Parties upon the insolvency,
bankruptcy or reorganization of the CT Parties or otherwise, all as though such
payment had not been made.
SECTION 3. Waiver. CT hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty of Payment and any requirement that the CIG
Parties protect, secure, perfect or insure any security interest or lien or any
collateral subject thereto or exhaust any right or take any action against the
CT Parties or any other Person or any collateral.
926594.4
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<PAGE>
SECTION 4. Subrogation. CT hereby irrevocably confirms that it will
subordinate to the claims and rights of the CIG Parties any claims or other
rights it may have against the CT Parties or any of their respective properties
that arise solely from the existence, payment, performance or enforcement of any
obligation under this Guaranty of Payment or the Guaranteed Obligations,
including (without limitation): (a) any right of subrogation, reimbursement,
exoneration, contribution or indemnification or (b) any right to participate in
any claim or remedy of the CIG Parties against the CT Parties, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including (without limitation) the right to take or receive from the
CT Parties, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim, remedy or
right. The provisions of this paragraph shall apply solely to claims made under
the Guaranty of Payment and shall not apply to any other rights or claims CT may
have now or in the future against the CT Parties. CT acknowledges that it will
receive direct and indirect benefits from the Venture Agreement and that the
confirmation set forth in this paragraph is knowingly made in contemplation of
such benefits.
SECTION 5. Consent to Jurisdiction. Subject to Section 6, CT hereby
irrevocably submits to the non-exclusive jurisdiction of the courts of the
County of New York, State of New York and of any Federal court located in the
County of New York, State of New York (and any appellate court from any thereof)
in any action or proceeding arising out of or relating to this Guaranty of
Payment or the transactions contemplated hereby. CT hereby irrevocably waives
any objection that it may have to the laying of venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.
SECTION 6. Dispute Resolution. Any dispute arising under this Guaranty
of Payment shall be subject to and settled pursuant to the procedures in Section
4.2 of the Venture Agreement.
SECTION 7. Representations and Warranties. CT hereby makes the
representations and warranties set forth in Section 3.1 of the Venture Agreement
and all references therein to the Transaction Documents and CT shall be deemed
to be references to this Guaranty of Payment and CT, respectively, hereby
incorporated herein by reference.
SECTION 8. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty of Payment, and no consent to any departure by CT herefrom, shall
be effective unless the same shall be in writing and signed by the CIG Parties,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 9. Addresses for Notices. All notices and other communications
provided for hereunder shall (a) be in writing, (b) be delivered pursuant to
Section 8.2 of the Venture Agreement and (c) be effective as and when described
in such section.
SECTION 10. No Waiver; Remedies. No failure on the part of the CIG
Parties to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor
926594.4
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<PAGE>
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 11. Binding Agreement. The obligations of CT hereunder shall
(a) remain in full force and effect until the performance in full of the
Guaranteed Obligations, (b) be binding upon CT, its successors and assigns, and
(c) inure to the benefit of, and be enforceable by, the CIG Parties and their
successors, transferees and assigns.
SECTION 12. No Third Party Beneficiaries. This Guaranty of Payment is
not intended to confer upon any person other than the CIG Parties any rights or
remedies hereunder.
SECTION 13. Governing Law. This Guaranty of Payment shall be governed
by, and construed in accordance with, the internal laws of the State of New York
(including Section 5- 1401 of the New York General Obligations Law).
SECTION 14. Waiver of Jury Trial. CT hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Guaranty of
Payment or the actions of CT in the negotiation, performance or enforcement
thereof.
SECTION 15. Execution in Counterparts. Delivery of an executed
counterpart of a signature page to this Guaranty of Payment by telecopier shall
be effective as delivery of a manually executed counterpart of this Guaranty of
Payment.
[Signature Page Follows]
926594.4
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty of Payment
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
CAPITAL TRUST, INC.
By: /s/ John R. Klopp
-----------------------------------------
John R. Klopp
Vice Chairman and Chief Executive Officer
926594.4
Exhibit 10.7
GUARANTY OF PAYMENT
This GUARANTY OF PAYMENT (this "Guaranty of Payment"), dated as of
March 8, 2000, made by The Travelers Insurance Company, a Connecticut
corporation ("TIC") in favor of Capital Trust, Inc., a Maryland corporation
("CT"), and its wholly owned subsidiaries, CT-F1, LLC, a Delaware limited
liability company ("CT-F1"), CT-F2-GP, LLC, a Delaware limited liability company
("CT-F2-GP"), CT-F2-LP, LLC, a Delaware limited liability company ("CT- F2-LP"),
and CT Investment Management Co., LLC, a Delaware limited liability company
("CTIMCO" and collectively with CT-F1, CT-F2-GP, CT-F2-LP and CTIMCO, the "CT
Parties"). Terms not otherwise defined herein shall have the meanings assigned
to such terms in the Venture Agreement, as defined below.
PRELIMINARY STATEMENTS
WHEREAS, Travelers Limited Real Estate Mezzanine Investments I, LLC, a
Delaware limited liability company ("Limited REMI I"), Travelers General Real
Estate Mezzanine Investments II, LLC, a Delaware limited liability company
("General REMI II"), and Travelers Limited Real Estate Mezzanine Investments II,
LLC, a Delaware limited liability company ("Limited REMI II" and collectively
with Limited REMI I and General REMI II, the "CIG Parties"), CT and the CT
Parties intend to enter into that certain venture agreement, dated as of the
date hereof, pursuant to which, among other things, the parties thereto will
co-sponsor, commit to invest capital in and manage real estate mezzanine
opportunity funds (the "Venture Agreement").
WHEREAS, as a condition to the Parties entering into the Venture
Agreement, TIC has agreed to execute and deliver this Guaranty of Payment.
NOW, THEREFORE, in consideration of the promises and in order to induce
CT and the CT Parties to enter into the Venture Agreement, TIC hereby agrees as
follows:
SECTION 1. Unconditional Guarantee; Enforcement.
(a) TIC hereby unconditionally and irrevocably guarantees for
the benefit of CT and the CT Parties the full and prompt payment when
and as due of the CIG Parties' funding, contribution and
indemnification obligations under the Venture Agreement subject to any
defense, right of set-off or counterclaim, other than on account of or
resulting from the Bankruptcy of any of the CIG Parties, that the CIG
Parties may have or assert, which defense, right of set-off or
counterclaim shall be available to TIC hereunder to the same extent
that it would be available to the applicable CIG Party ("Guaranteed
Obligations").
(b) It shall not be a condition to the obligation of
TIC hereunder to guarantee and ensure the performance, observance
or payment of any of the Guaranteed Obligations
926916.4
<PAGE>
that CT and the CT Parties shall have first made any request of or
demand upon or given any notice to the CIG Parties, or have instituted
any action or proceeding against the CIG Parties in respect thereof. CT
and the CT Parties may proceed to enforce the Guaranteed Obligations of
TIC hereunder without first pursuing or exhausting any right or remedy
that they may have against the CIG Parties.
SECTION 2. Obligations Absolute. TIC guarantees, undertakes and agrees
with and for the benefit of CT and the CT Parties to ensure the performance of
all the Guaranteed Obligations strictly in accordance with the terms of the
Venture Agreement. The obligations of TIC under this Guaranty of Payment are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against TIC to enforce this Guaranty of Payment,
irrespective of whether any action is brought against the CIG Parties or whether
the CIG Parties are joined in any such action(s). The obligations of TIC under
this Guaranty of Payment shall be absolute and unconditional irrespective of:
(a) any Bankruptcy of any CIG Parties;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Venture Agreement or any other agreement entered into in connection
therewith or as contemplated thereby;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Guaranteed Obligations or any other assets of the CIG Parties or any of
their subsidiaries; or
(e) any change, restructuring or termination of the corporate
structure or existence of the CIG Parties or any of their
subsidiaries.
This Guaranty of Payment shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by CT and the CT Parties upon the
insolvency, bankruptcy or reorganization of the CIG Parties or otherwise, all as
though such payment had not been made.
SECTION 3. Waiver. TIC hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty of Payment and any requirement that CT and the CT
Parties protect, secure, perfect or insure any security
926916.4
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<PAGE>
interest or lien or any collateral subject thereto or exhaust any right or take
any action against the CIG Parties or any other Person or any collateral.
SECTION 4. Subrogation. TIC hereby irrevocably confirms that it will
subordinate to the claims and rights of CT and the CT Parties any claims or
other rights it may have against the CIG Parties or any of their respective
properties that arise solely from the existence, payment, performance or
enforcement of any obligation under this Guaranty of Payment or the Guaranteed
Obligations, including (without limitation): (a) any right of subrogation,
reimbursement, exoneration, contribution or indemnification or (b) any right to
participate in any claim or remedy of CT and the CT Parties against the CIG
Parties, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including (without limitation) the right to
take or receive from the CIG Parties, directly or indirectly, in cash or other
property or by set- off or in any other manner, payment or security on account
of such claim, remedy or right. The provisions of this paragraph shall apply
solely to claims made under the Guaranty of Payment and shall not apply to any
other rights or claims TIC may have now or in the future against the CIG
Parties. TIC acknowledges that it will receive direct and indirect benefits from
the Venture Agreement and that the confirmation set forth in this paragraph is
knowingly made in contemplation of such benefits.
SECTION 5. Consent to Jurisdiction. Subject to Section 6, TIC hereby
irrevocably submits to the non-exclusive jurisdiction of the courts of the
County of New York, State of New York and of any Federal court located in the
County of New York, State of New York (and any appellate court from any thereof)
in any action or proceeding arising out of or relating to this Guaranty of
Payment or the transactions contemplated hereby. TIC hereby irrevocably waives
any objection that it may have to the laying of venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.
SECTION 6. Dispute Resolution. Any dispute arising under this Guaranty
of Payment shall be subject to and settled pursuant to the procedures in Section
4.2 of the Venture Agreement.
SECTION 7. Representations and Warranties. TIC represents and
warrants as follows:
(a) Organization and Good Standing. It is a corporation duly
organized, validly existing and in good standing under the applicable
laws of its jurisdiction of incorporation; has all requisite power to
own, lease and operate its assets, properties and business and to
carry on its business as now conducted; and is in good standing in
every jurisdiction in which the nature of its business or the location
of its properties requires such qualification, except for such
jurisdictions where the failure to so qualify would not have a
material adverse effect upon its ability to perform fully its
obligations under this Guaranty of Payment.
926916.4
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<PAGE>
(b) Authority to Execute and Perform Agreements. It has all
requisite corporate power and authority to enter into, execute and
deliver this Guaranty of Payment and to perform fully its obligations
hereunder.
(c) Due Authorization; Enforceability. It has taken all corporate
actions necessary to authorize it to enter into and perform fully its
obligations under this Guaranty of Payment and to consummate the
transactions contemplated herein. This Guaranty of Payment has been
duly and validly executed by it and constitutes the legal, valid and
binding obligation of it, enforceable in accordance with its terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar applicable laws
affecting creditors' rights generally or by general equitable
principles affecting the enforcement of contracts.
(d) No Violation. Neither its execution or delivery of this
Guaranty of Payment nor the consummation of the transactions
contemplated herein will: (a) violate any provision of its certificate
of incorporation or by-laws; or (b) violate in any material respect
any applicable law or order.
(e) Regulatory and Other Approvals. No consent, approval,
authorization, notice, filing, exemption or other requirement must be
obtained by it from any authority or Person or must otherwise be
satisfied by it in order that the consummation of the transactions
contemplated in this Guaranty of Payment will not violate in any
material respect any applicable law or order or any material contract
to which it is a party.
(f) Litigation. It is not (i) subject to any outstanding
injunction, judgment, order, decree, ruling, or charge, and (ii) there
is no material claim, action, proceeding or investigation pending or,
to its knowledge, threatened against or relating to it before any
court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator which
challenges the ability or legality of such party' s entering into this
Guaranty of Payment.
SECTION 8. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty of Payment, and no consent to any departure by TIC herefrom, shall
be effective unless the same shall be in writing and signed by CT and the CT
Parties, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 9. Addresses for Notices. All notices and other communications
provided for hereunder shall (a) be in writing, (b) be delivered pursuant to
Section 8.2 of the Venture Agreement and (c) be effective as and when described
in such section and, in the case of TIC, shall be addressed to the mailing
address as shown on the signature page hereto, with copies as indicated below
its address, or at such other address designated by TIC to CT and the CT Parties
in writing.
926916.4
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<PAGE>
SECTION 10. No Waiver; Remedies. No failure on the part of CT and the
CT Parties to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 11. Binding Agreement. The obligations of TIC hereunder shall
(a) remain in full force and effect until the performance in full of the
Guaranteed Obligations, (b) be binding upon TIC, its successors and assigns, and
(c) inure to the benefit of, and be enforceable by, CT and the CT Parties and
their successors, transferees and assigns.
SECTION 12. No Third Party Beneficiaries. This Guaranty of Payment is
not intended to confer upon any person other than CT and the CT Parties any
rights or remedies hereunder.
SECTION 13. Governing Law. This Guaranty of Payment shall be governed
by, and construed in accordance with, the internal laws of the State of New York
(including Section 5- 1401 of the New York General Obligations Law).
SECTION 14. Waiver of Jury Trial. TIC hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Guaranty of
Payment or the actions of TIC in the negotiation, performance or enforcement
thereof.
SECTION 15. Execution in Counterparts. Delivery of an executed
counterpart of a signature page to this Guaranty of Payment by telecopier shall
be effective as delivery of a manually executed counterpart of this Guaranty of
Payment.
[Signature Page Follows]
926916.4
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty of Payment
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
TRAVELERS INSURANCE COMPANY
By: /s/ Michael Watson
-------------------------------
Michael Watson
Vice President
With copies to:
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
926916.4
Exhibit 10.8
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FUND I INVESTMENT MANAGEMENT AGREEMENT
Dated as of March 8, 2000
- --------------------------------------------------------------------------------
914393.10
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TABLE OF CONTENTS
Page
ARTICLE I
RETENTION; SERVICES AND POWERS
OF INVESTMENT MANAGER.....................................................1
1.1 Retention of Investment Manager.........................1
1.2 Services to be Performed by Investment Manager..........2
1.4 Miscellaneous. ........................................3
ARTICLE II
COMPENSATION OF THE INVESTMENT MANAGER; FEES AND EXPENSES
.........................................................................4
2.1 Investment Manager Compensation.........................4
2.2 Investment Manager Expenses. ..........................4
2.3 Fund Expenses. ........................................4
ARTICLE III
EXCULPATION AND INDEMNIFICATION...........................................5
3.1 Exculpation and Indemnification.........................5
ARTICLE IV
MISCELLANEOUS.............................................................7
4.1 Duration and Termination................................7
4.2 Status of Investment Manager as Independent Contractor..7
4.3 Notices.................................................7
4.4 Governing Law...........................................8
4.5 Severability............................................8
4.6 Entire Agreement........................................9
4.7 Binding on Successors...................................9
4.8 Headings................................................9
4.9 Waiver..................................................9
4.10 Amendment...............................................9
914393.10
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FUND I INVESTMENT MANAGEMENT AGREEMENT
This FUND I INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") is
entered into as of March 8, 2000, by and between CT Investment Management Co.,
LLC, a Delaware limited liability company in its capacity as the investment
manager of the Fund as provided in this Agreement (the "Investment Manager"),
and CT Mezzanine Partners I, LLC, a Delaware limited liability company (the
"Fund"). All definitions not expressly provided herein shall be those set forth
in the form of Limited Liability Company Agreement of the Fund between CT-F1,
LLC, a Delaware limited liability company ("CT-F1") and Travelers Limited Real
Estate Mezzanine Investments I, LLC, a Delaware limited liability company
("Limited REMI I") (the "Fund Operating Agreement") and as may be amended from
time to time and the Venture Agreement (as defined below).
PRELIMINARY STATEMENT
A. The Fund desires to retain the Investment Manager to
provide certain investment management services in connection with the day-to-day
management of the Fund.
B. Capital Trust, Inc., a Maryland corporation ("CT"),
CT-F1, CT-F2-GP, LLC, a Delaware limited liability company ("CT-F2-GP"),
CT-F2-LP, LLC, a Delaware limited liability company ("CT-F2-LP") and the
Investment Manager (collectively, the "CT Parties") and Limited REMI I,
Travelers General Real Estate Mezzanine Investments II, LLC, a Delaware limited
liability company ("General REMI II"), and Travelers Limited Real Estate
Mezzanine Investments II, LLC, a Delaware limited liability company ("Limited
REMI II") (collectively, the "CIG Parties") are parties to a Venture Agreement,
dated as of the date hereof (the "Venture Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Investment Manager and the Fund agree as
follows:
ARTICLE I
RETENTION; SERVICES AND POWERS
OF INVESTMENT MANAGER
1.1 Retention of Investment Manager. The Fund hereby appoints the
Investment Manager (subject to the following provisions of this Agreement)
exclusively to act as the investment manager of the Fund and to provide the
services to the Fund described in Section 1.2 of this Agreement.
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1.2 Services to be Performed by Investment Manager. Subject to the
provisions of the Fund Operating Agreement, the Investment Manager shall be
responsible for the day-to-day management of the Fund. Services to be rendered
by the Investment Manager to the Fund shall include the following:
(a) The Investment Manager shall identify, evaluate and
present Investment opportunities (including any financing plans associated with
such Investments) to the Members of Fund I. If the Members of Fund I determine
to make such Investments presented by the Investment Manager, the Investment
Manager shall have the authority to, (i) make such Investments on behalf of the
Fund, (ii) monitor Investments on a day-to-day basis, including arranging for
the accounting, budgeting, safekeeping and administration of Investments, (iii)
arrange debt financing for the Fund and Investments on the terms approved by the
Members of the Fund, (iv) advise the Fund with a view to optimizing the returns
from Investments; and (vi) execute all decisions of the Members of Fund I
regarding the disposition and refinancing of Investments.
(b) The Investment Manager shall develop and administer the
Fund's financial and accounting reporting functions, treasury and cash or
management functions and internal control and audit functions.
(c) The Investment Manager shall identify, recommend and
oversee necessary third-party independent contractors and, upon the consent of
Limited REMI I, select or discharge the Fund's accountants and legal counsel.
(d) The Investment Manager shall submit to each Member the
following reports:
(i) An unaudited monthly activity report on the
Fund's operations which shall include an
income statement, a balance sheet, a
commentary report on both a monthly basis
and a year-to-date basis and a list of all
Fund assets and the status thereof. Such
report shall be delivered to the Members
within 10 business days after the last day
of each month.
(ii) An unaudited quarterly report of the Fund's
operations which will include an income
statement, a balance sheet, a statement of
cash flows, and statement of the Fund's
equity. The report will present the income
statement and statement of cash flows on
both a quarterly basis and a year-to-date
basis. The report also will compare actual
operations to those projected in the Fund's
Annual Operating Budget, to the extent
adopted by the Members of the Fund. The
report will be delivered to the Members
within 30 business days after the last day
of each quarter.
914393.10
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<PAGE>
(iii) An annual audited financial statement certified
to be in accordance with GAAP within 60 days of the
fiscal year end.
(e) The Investment Manager shall obtain, at the expense of the
Fund, director and officer/manager liability insurance, and other customary
liability insurance and liability insurance customary for businesses like that
of the Fund. The liability insurance coverages set forth above shall provide for
full tail coverage (on an occurrence basis during the term of the Fund) for a
minimum of three years following the date of the dissolution of the Fund.
1.3 Key Personnel. The Investment Manager shall cause each of John R.
Klopp and Craig M. Hatkoff (the "Key Individuals") to commit to devote a
substantial portion of their professional time and energy to the performance of
the Investment Manager's duties under this Agreement; it being understood and
agreed that so long as Mr. Klopp is an employee of CT and continues to provide
services to the Investment Manager in accordance with this Section 1.3, Mr.
Hatkoff may devote up to 50% of his professional time to activities not related
to the Fund. The Investment Manager shall cause at least one additional Senior
Manager of the Investment Manager to devote a substantial portion of his or her
professional time and energy to the performance of the Investment Manager's
duties under this Agreement; provided, however, that the identity of such Senior
Manager is reasonably acceptable to the Fund. The Fund and Limited REMI I agree
that either of Steven Plavin or Edward Shugrue would be acceptable as the Senior
Manager. In the event of (i) Mr. Klopp's death or Disability (but not
termination of his employment for any other reason) during the term of this
Agreement, and (ii) Mr. Hatkoff and Mr. Plavin each devote a substantial portion
of his professional time and energy to the performance of the Investment
Manager's duties under this Agreement, then the death or Disability of Mr. Klopp
shall not be deemed a breach by the Investment Manager of this Section 1.3. If
Mr. Hatkoff either dies, becomes Disabled or his employment with the Investment
Manager is terminated during the term of this Agreement and Mr. Klopp and either
Mr. Plavin, Mr. Shugrue or another Senior Manager (which is reasonably
acceptable to Limited REMI I) each devote a substantial portion of his
professional time and energy to the performance of the Investment Manager's
duties under this Agreement, then the death or disability of Mr. Hatkoff or the
termination of Mr. Hatkoff's employment shall not be deemed a breach of this
Section 1.3.
1.4 Miscellaneous. To the extent that the performance of the duties set
forth in this Agreement places any affirmative regulatory obligations upon the
Investment Manager, the Investment Manager shall not be deemed to have accepted
such duties unless and until it complies with any and all applicable laws and
regulations. The Investment Manager, in its performance of its duties hereunder,
shall act in conformity with the instructions and directions of the General
Partner and/or the Fund shall comply with and conform to the requirements of all
applicable federal and state laws, regulations and rulings.
914393.10
3
<PAGE>
ARTICLE II
COMPENSATION OF THE INVESTMENT MANAGER; FEES AND EXPENSES
2.1 Investment Manager Compensation. As compensation for its services
in acting as Investment Manager of the Fund, the Fund shall pay to the
Investment Manager a investment management fee (the "Investment Management Fee")
equal to 0.75% per annum of the Fund's aggregate Invested Capital (as defined in
the Venture Agreement). The Investment Management Fee shall accrue and be
payable monthly in arrears. Within 90 days of the end of each calendar year, the
Members of the Fund and the Investment Manager shall jointly calculate and
determine the aggregate Investment Management Fee that accrued to the Investment
Manager for such year based on the formula provided above. As provided in the
Venture Agreement, to the extent the amount of Investment Management Fee
payments actually received by the Investment Manager during such year exceeded
the calculated amount, such excess shall be applied to the Investment Management
Fee payments to be made to the Investment Manager in the next quarter(s) until
recouped; provided, however, that if upon termination of this Agreement any
portion of such excess amount remains unpaid, the Investment Manager shall pay
the Fund such remaining excess amount in full as promptly as practicable after
such termination. As provided in the Venture Agreement, to the extent the
calculated amount exceeds the amount of Investment Management Fee payments
actually received by the Investment Manager, the Fund shall pay the Investment
Manager the difference between such amounts as promptly as practicable after the
calculation of such excess amount.
2.2 Investment Manager Expenses. The Investment Manager shall bear the
following ordinary day-to-day expenses incidental to the administration of the
Fund (i) all costs and expenses of providing to the Fund and the Investment
Manager the office space, facilities, utility service, supplies and necessary
administrative and clerical functions connected with the Fund's, and the
Investment Manager's, operations; and (ii) compensation of all employees who are
engaged in the operation or management of the Fund's or the Investment Manager's
business (collectively, "Administrative Expenses").
2.3 Fund Expenses. Except as provided in Section 2.2 above, the Fund
shall bear and be charged with all other costs and expenses of the Fund's
activities and operations, including all activities and operations prior to the
date of this Agreement as set forth on Schedule 2.3 hereto, and including,
without limitation, to the extent directly related to the Fund and its
Investments: (i) all costs and expenses incurred in developing, negotiating,
structuring, acquiring or financing any proposed Investment, whether or not the
Fund actually invests therein including, without limitation, any travel, legal
and accounting expenses and other fees and out-of-pocket costs related thereto,
and the costs of rendering financial assistance to or arranging for financing
for any assets or businesses constituting any such proposed Investment
(provided, however, that either such proposed Investment is specifically
approved by Limited REMI I or the expenses incurred in connection with such
proposed Investment are approved by Limited REMI I); (ii) all costs and
expenses, if any, incurred in monitoring Investments, including without
limitation any travel, legal
914393.10
4
<PAGE>
and accounting expenses and other fees and out-of-pocket costs related thereto;
(iii) all costs and expenses, if any, incurred in disposing of or otherwise
dealing with Investments, including, without limitation, any travel, legal and
accounting expenses and other fees and out-of-pocket costs related thereto, and
the costs of rendering financial assistance to or arranging for financing for
any assets or businesses constituting Investments; (iv) taxes of the Fund, fees
of auditors, counsel and other advisors of the Fund, insurance costs of the Fund
and costs related to litigation and threatened litigation involving the Fund;
(v) expenses associated with third party accountants, attorneys and tax advisors
with respect to the Fund and its activities, including assisting the Investment
Manager in the preparation and auditing of financial reports and statements and
other similar matters, and costs associated with the distribution of financial
and other reports and capital call notices to the Members, and costs associated
with Fund meetings (it being understood that this clause (v) does not permit the
Investment Manager to outsource its accounting department); (vi) brokerage
commissions and other investment costs incurred by or on behalf of the Fund and
paid to third parties unaffiliated with the Investment Manager, and to the
extent approved by Limited REMI I, brokerage commissions and other investment
costs incurred by and on behalf of the Fund and paid to affiliates of the
Investment Manager, (vii) all costs and expenses associated with obtaining and
maintaining insurance as provided in Section 1.2(e), including, without
limitation, customary liability insurance to insure the Investment Manager and
other parties whom the Fund has agreed to indemnify against liability under the
Fund Operating Agreement; (viii) fees incurred in connection with the
maintenance of bank and custodian accounts; (ix) all expenses incurred in
connection with the registration of the Fund's securities under applicable
securities laws or regulations; and (x) all expenses of the Fund that are not
recurring normal operating expenses (all such expenses, collectively, the
"Operating Expenses"). To the extent any Operating Expenses are paid by the
Investment Manager, such Operating Expenses shall be reimbursed by the Fund.
ARTICLE III
EXCULPATION AND INDEMNIFICATION
3.1 Exculpation and Indemnification. (a) Neither the Investment Manager
nor any of its partners, affiliates, directors, officers, employees,
shareholders, members and other agents (each, an "Indemnified Party"), shall be
liable to the Fund or to the Members for monetary damages for any losses,
claims, damages or liabilities ("Damages") arising from any act performed or
omitted by such parties arising out of or in connection with the performance by
Investment Manager of its services under this Agreement or the Fund's business
or affairs, except to the extent that any such Damages are primarily
attributable to the gross negligence or willful misconduct of such Indemnified
Party.
(b) (1) The Fund shall, to the fullest extent permitted by applicable
law, indemnify, defend and hold harmless the Indemnified Parties
against any Damages to which the Indemnified Party may become subject
in connection with any matter arising out of or in connection with the
performance by Investment Manager of its services under this
914393.10
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<PAGE>
Agreement or the Fund's business or affairs, except, with respect to
any Indemnified Party to the extent that any such Damages are primarily
attributable to the gross negligence or willful misconduct of such
Indemnified Party. If the Indemnified Party becomes involved in any
capacity in any action, proceeding or investigation in connection with
any matter arising out of or in connection with the performance by
Investment Manager of its services under this Agreement or the Fund's
business or affairs, the Fund shall reimburse the Indemnified Party for
its reasonable legal and other expenses (including the cost of any
investigation and preparation) as they are incurred in connection
therewith, provided, however, that the Indemnified Party shall promptly
repay to the Fund the amount of any such reimbursed expenses paid to it
if it shall ultimately be finally determined that the Indemnified Party
was not entitled to be indemnified by the Fund in connection with such
action, proceeding or investigation. If for any reason (other than by
reason of the exclusions from indemnification hereinabove set forth)
the foregoing indemnification is unavailable to the Indemnified Party,
or insufficient to hold it harmless, then the Fund shall contribute to
the amount paid or payable by the Indemnified Party as a result of such
loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect the relative benefits received by the Fund on
the one hand and the Indemnified Party on the other hand or, if such
allocation is not permitted by applicable law, to reflect not only the
relative benefits referred to above but also any other relevant
equitable considerations.
(2) The provisions of this Section 3.1(b) shall survive for a
period of three years from the date of dissolution of the Fund;
provided however, that if at the end of such period there are any
actions, proceedings or investigations then pending, the Indemnified
Party shall notify the Members (which notice shall include a brief
description of each such action, proceeding or investigation and the
liabilities asserted therein) and the provisions of this Section 3.1(b)
shall survive with respect to each such action, proceeding or
investigation set forth in such notice (or any related action,
proceeding or investigation based upon the same or similar claim) until
the date that such action, proceeding or investigation is finally
resolved; and provided, further, that the obligations of the Fund under
this Section 3.1(b) shall be satisfied solely out of Fund assets,
subject to the right of the liquidator of the Fund to establish
reserves, pursuant to the Fund Operating Agreement for contingent
obligations under this Section 3.1(b).
(c) No Member of the Fund shall have any obligation to the
Fund or any other Member of the Fund to bring or join in any action in defense
of an Indemnified Party pursuant to Section 3.1 (a) or (b). Nothing contained in
this Section 3.1 shall be construed as any waiver of insurance claims or
recoveries by the Fund or an Indemnified Party.
(d) The remedies of an Indemnified Party under this Article
III shall be non- exclusive and, without duplication, each such Indemnified
Party may pursue any other remedy provided in law or equity.
914393.10
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<PAGE>
(e) The provisions of this Article III shall inure to the
benefit of the Indemnified Parties, and any successors, assigns, heirs and
personal representatives of such Indemnified Parties.
ARTICLE IV
MISCELLANEOUS
4.1 Duration and Termination. If Limited REMI I has the right and
elects to purchase CT-F1's membership interest in the Fund pursuant to Section
9.3 of the Fund Operating Agreement, then this Agreement shall terminate
immediately upon the completion of such purchase. If either Member has the right
and elects to Unwind the Fund pursuant to Section 10.2(c) of the Fund Operating
Agreement and Section 2.12 of the Venture Agreement, then this Agreement shall
terminate upon the completion of the Unwind as provided in Section 11.2(a)(ii)
of the Fund Operating Agreement and Section 2.12 of the Venture Agreement. If
the Investment Manager commits an act of fraud involving the Fund (which results
in material damages to the Fund) or intentionally misappropriates significant
funds of the Fund, which results in an Event of Default under the Fund Operating
Agreement, then this Agreement may be terminated by the Fund by delivery of
written notice of termination from Limited REMI I to the Investment Manager. If
pursuant to the Limited Liability Company Agreement of CT MP II LLC, General
REMI II has caused CT MP II LLC to terminate the Fund II Investment Management
Agreement between CT MP II LLC and the Investment Manager, then Limited REMI I
shall have the right to elect to Unwind the Fund and this Agreement shall
terminate upon the completion of such Unwind.
The obligation of the Fund to pay all accrued and unpaid Management
Fees to the Investment Manager shall survive any termination of this Agreement.
Articles III and IV shall also survive any termination of this Agreement.
Any dispute which arises under this Agreement shall be resolved
pursuant to Section 4.2 of the Venture Agreement.
4.2 Status of Investment Manager as Independent Contractor. The
Investment Manager shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided herein or authorized
by the Fund from time to time, have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund.
4.3 Notices. Any notices required hereunder shall be in writing and
shall be deemed given when delivered in person or by courier or when sent by
first-class registered or certified mail or by national prepaid overnight
delivery service to the parties at such addresses as either party may from time
to time specify by notice.
914393.10
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If to the Fund at:
Travelers Limited Real Estate
Mezzanine Investments I, LLC
205 Columbus Boulevard, 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12832
with a copy to:
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to the Investment Manager at:
CT Investment Management, LLC
c/o Capital Trust, Inc.
605 Third Avenue
26th Floor
New York, NY 10158
Attn: John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attn: Thomas E. Kruger, Esq.
4.4 Governing Law. This Agreement shall be governed, construed,
administered and regulated in all respects under the laws of the State of New
York to the extent such laws are not preempted or superseded by the laws of the
United States.
4.5 Severability. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be held to be contrary to any
express provision of law or contrary to policy of express law, though not
expressly prohibited, or to be against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this
914393.10
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<PAGE>
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
4.6 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and
supersedes any prior agreement or understanding among the parties hereto with
respect to the subject matter hereof.
4.7 Binding on Successors. This Agreement shall be binding upon the
Fund, the General Partner, the Investment Manager and their respective
successors and assigns. However, no assignment of this Agreement shall be made
without the prior written consent of the Fund.
4.8 Headings. The headings used in this Agreement are inserted for
reference purposes only and shall not be deemed to limit or affect in any way
the meaning or interpretation of any of the terms or provisions herein.
4.9 Waiver. Any failure of any party to comply with any obligation or
agreement herein may be waived in writing by the other party but such waiver or
failure to insist upon strict compliance with such obligation or agreement shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
4.10 Amendment. This Agreement may be amended, modified, or
supplemented only by written agreement of the parties hereto.
914393.10
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IN WITNESS WHEREOF, this Agreement is hereby executed as of the date
first hereinabove written.
CT INVESTMENT MANAGEMENT CO., CT MEZZANINE PARTNERS I, LLC
LLC
By: Capital Trust, Inc., its sole member By: Travelers Limited Real Estate
Mezzanine Investments, LLC,
By: /s/ John R. Klopp a Member
-----------------------------
John R. Klopp
Chief Executive Officer By: /s/ Michael Watson
----------------------------
Michael Watson
Vice President
By: CT-F1, LLC, a Member
By: Capital Trust, Inc., its
sole member
By: /s/ John R. Klopp
------------------------
John R. Klopp
Chief Executive Officer
914393.10
Exhibit 10.9
================================================================================
FUND II INVESTMENT MANAGEMENT AGREEMENT
Dated as of March 8, 2000
================================================================================
911727.10
<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I
RETENTION; SERVICES AND POWERS
OF INVESTMENT MANAGER....................................................................................2
1.1 Retention of Investment Manager........................................................2
1.2 Services to be Performed by Investment Manager.........................................2
1.3 Actions Requiring the Approval of the Management Committee. ..........................3
1.4 Key Personnel. .......................................................................5
1.5 Miscellaneous. .......................................................................5
ARTICLE II
COMPENSATION OF THE INVESTMENT MANAGER; FEES AND EXPENSES................................................5
2.1 Investment Manager Compensation........................................................5
2.2 Investment Manager Expenses. .........................................................6
2.3 Fund Expenses. .......................................................................6
ARTICLE III
EXCULPATION AND INDEMNIFICATION..........................................................................7
3.1 Exculpation and Indemnification........................................................7
ARTICLE IV
MISCELLANEOUS............................................................................................9
4.1 Duration and Termination...............................................................9
4.2 Status of Investment Manager as Independent Contractor.................................9
4.3 Notices................................................................................9
4.4 Governing Law.........................................................................10
4.5 Severability..........................................................................10
4.6 Entire Agreement......................................................................11
4.7 Binding on Successors.................................................................11
4.8 Headings..............................................................................11
4.9 Waiver................................................................................11
4.10 Amendment.............................................................................11
</TABLE>
911727.10
-i-
<PAGE>
FUND II INVESTMENT MANAGEMENT AGREEMENT
---------------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") is entered into as
of March 8, 2000, by and between CT Investment Management Co., LLC, a Delaware
limited liability company (the "Investment Manager"), CT MP II, LLC, a Delaware
limited liability company (the "General Partner") and CT Mezzanine Partners II,
L.P., a Delaware limited partnership (the "Fund"). All definitions not expressly
provided herein shall be those set forth in the form of Limited Partnership
Agreement of the Fund (the "Fund Partnership Agreement") and as may be amended
from time to time and the Venture Agreement (as defined below).
PRELIMINARY STATEMENT
---------------------
A. The General Partner is the general partner of the Fund. Pursuant to
the Fund Partnership Agreement, the Fund will pay the General Partner a fund
management fee (the "Fund Management Fee") in consideration of certain fund
management services to be provided by the General Partner to the Fund.
B. The General Partner desires to retain the Investment Manager to
provide certain investment management services in connection with the day-to-day
management of the Fund subject to the supervision and direction of the General
Partner's management committee (the "Management Committee") as provided in the
Fund Partnership Agreement.
C. Capital Trust, Inc., a Maryland corporation ("CT") CT-F1, LLC, a
Delaware limited liability company ("CI-F1"), CT-F2-GP, LLC, a Delaware limited
liability company ("CT-F2-GP"), CT-F2-LP, LLC, a Delaware limited liability
company ("CT-F2-LP") and the Investment Manager (collectively, the "CT Parties")
and Travelers Limited Real Estate Mezzanine Investments I, LLC, a Delaware
limited liability company ("Limited REMI I"), Travelers General Real Estate
Mezzanine Investments II, LLC, a Delaware limited liability company ("General
REMI II"), Travelers Limited Real Estate Mezzanine Investments II, LLC, a
Delaware limited liability company ("Limited REMI II") (collectively, the "CIG
Parties") are parties to a Venture Agreement, dated as of the date hereof (the
"Venture Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Investment Manager, the General Partner and the Fund agree
as follows:
ARTICLE I
RETENTION; SERVICES AND POWERS
------------------------------
OF INVESTMENT MANAGER
---------------------
1.1 Retention of Investment Manager. The General Partner and the Fund
----------------------------------
hereby appoint the Investment Manager (subject to the following provisions of
this Agreement)
911727.10
<PAGE>
exclusively to act as the investment manager of the Fund and to provide the
services to the Fund described in Section 1.2 of this Agreement.
1.2 Services to be Performed by Investment Manager. The Investment Manager
----------------------------------------------
shall be responsible for the day-to-day management of the Fund, subject to the
supervision and direction of and any Approval required by the Management
Committee. Services to be rendered by the Investment Manager to the Fund shall
include the following:
(a) The Investment Manager shall manage the Investments in accordance
with and subject to the restrictions and limitations contained in Section 1.3
hereof;
(b) The Investment Manager shall (i) identify, evaluate and negotiate
Investment opportunities, (ii) make investment recommendations relating to the
making and realizing of Investments, (iii) monitor Investments on a day-to-day
basis, including arranging for the accounting, budgeting, safekeeping and
administration of Investments, (iv) arrange debt financing for the Fund and
Investments, and (v) advise the Fund with a view to optimizing the returns from
Investments.
(c) The Investment Manager shall develop and administer the Fund's
financial and accounting reporting functions, treasury and cash or management
functions and internal control and audit functions.
(d) The Investment Manager may make individual investments in assets
(as such assets are or will be reflected on the Fund's balance sheet) of up to
$25,000,000 and sell such individual investments without the approval of the
General Partner or the Management Committee.
(e) The Investment Manager shall identify, recommend and oversee
necessary third-party independent contractors to provide additional services to
the Fund.
(f) The Investment Manager shall work together with the Management
Committee to submit to the Members the following reports:
(i) An unaudited monthly activity report on operations which
will include an income statement, a balance sheet and a
commentary report on both a monthly basis and a year-to-date
basis and a list of all Fund assets and the status thereof.
The report will be delivered to the Members within 10
business days after the last day of each month.
(ii) An unaudited quarterly report on operations which will
include an income statement, a balance sheet, a statement of
cash flows, and statement of the Fund's equity. The report
will present the income statement and statement of cash
flows on both a quarterly basis and
911727.10
2
<PAGE>
a year-to-date basis. The report also will compare actual
operations to those projected in the Annual Operating Budget.
The report will be delivered to Members within 30 business
days after the last day of each month.
(iii)Annual audited financial statements certified to be in
accordance with GAAP within 60 days of the fiscal year end.
(iv) Any other reports the General Partner or the Investment
Manager are required to provide to the General Partner, the
Fund or its Limited Partners pursuant to the Fund
Partnership Agreement.
(g) The Investment Manager shall obtain, at the expense of the Fund,
director and officer/manager liability insurance, and other liability insurance
and business insurance customary for businesses like that of the Fund. The
liability insurance coverages shall provide for full tail coverage (on an
occurrence basis during the term of the Fund) for a minimum of three years
following the date of the dissolution of the Fund.
1.3 Actions Requiring the Approval of the Management Committee.
----------------------------------------------------------------------
Notwithstanding the provisions of Section 1.2 above, the Investment Manager
shall not take the following actions on behalf of the Investment Manager or the
Fund without the unanimous approval of the Management Committee:
(i) approving or amending the Business Plan;
(ii) the making of a loan or the purchase or sale of an asset (as
such asset is or will be reflected on the Fund's balance
sheet) amount in excess of $25,000,000;
(iii)any material modification or amendment of the provisions of
an asset (as such asset is or will be reflected on the
Fund's balance sheet) exceeding $25,000,000;
(iv) initiating any litigation, arbitration or other proceeding
on behalf of the Fund where the Fund's claims exceed
$5,000,000 or the settlement of any litigation, arbitration
or other proceeding that would require any expenditure by
the Fund of more than $5,000,000;
(v) entering into any contract or lease that (a) is not
consistent with the Annual Operating Budget then in effect
and (b) has a term exceeding one (1) year, other than those
contracts or leases that may be freely
911727.10
3
<PAGE>
terminated by the Fund, without penalty, upon thirty (30)
days' notice.
(vi) selling substantially all the assets of the Fund other than
in the ordinary course of business;
(vii)the sale of more than $100,000,000 in the aggregate of the
principal amount of the Fund's Investments in any given
12-month period;
(viii) establishing any credit facility greater than $100 million
or any transaction loan inconsistent with the guidelines
in the Annual Operating Budget;
(ix) making in-kind distributions of property to the Fund's
Members;
(x) entering into contracts with affiliates of a Member,
including any amendment, modification or waiver of this
Agreement;
(xi) causing the Fund to enter into a new line of business;
(xii)causing the Fund to file a voluntary case under the United
States Bankruptcy Code or to initiate any other proceeding
under federal or state law for the relief of debtors;
(xiii) selecting or discharging the General Partner's or the
Fund's accountants;
(xiv)selecting or discharging the General Partner's or the
Fund's legal counsel; and
(xv) undertaking general or administrative expenditures that
exceed by 10% the amount provided for any such expenses in
the Annual Operating Budget.
1.4 Key Personnel. The Investment Manager shall cause each of John R. Klopp
-------------
and Craig M. Hatkoff (the "Key Individuals") to commit to devote a substantial
portion of their professional time and energy to the performance of the
Investment Manager's duties under this Agreement; it being understood and agreed
that so long as Mr. Klopp is an employee of CT and continues to provide services
to the Investment Manager in accordance with this Section 1.4, Mr. Hatkoff may
devote up to 50% of his professional time to activities not related to the Fund.
The Investment Manager shall cause at least one additional Senior Manager of the
Investment Manager to devote a substantial portion of his or her professional
time and energy to the performance of the Investment Manager's duties under this
Agreement; provided, however, that the identity of
911727.10
4
<PAGE>
such Senior Manager is reasonably acceptable to the Fund. The Fund and General
REMI II agree that either of Steve Plavin or Edward Shugrue would be acceptable
as the Senior Manager. In the sole event of (i) Mr. Klopp's death or Disability
(but not the termination of his employment for any other reason) during the term
of this Agreement, and (ii) Mr. Hatkoff and Mr. Plavin each devote a substantial
portion of his professional time and energy to the performance of the Investment
Manager's duties under this Agreement, then the death or Disability of Mr. Klopp
shall not be deemed a breach by the Investment Manager of this Section 1.4. If
Mr. Hatkoff either dies, becomes Disabled or his employment with the Investment
Manager is terminated during the term of this Agreement and Mr. Klopp and either
Mr. Plavin, Mr. Shugrue or another Senior Manager (which is reasonably
acceptable to General REMI II) each devote a substantial portion of his
professional time and energy to the performance of the Investment Manager's
duties under this Agreement, then the death or Disability of Mr. Hatkoff or the
termination of Mr. Hatkoff's employment shall not be deemed a breach of this
Section 1.4.
1.5 Miscellaneous. To the extent that the performance of the duties set
-------------
forth in this Agreement places any affirmative regulatory obligations upon the
Investment Manager, the Investment Manager shall not be deemed to have accepted
such duties unless and until it complies with any and all applicable laws and
regulations. The Investment Manager, in its performance of its duties hereunder,
shall act in conformity with the instructions and directions of the General
Partner and/or the Fund shall the Management Committee and comply with and
conform to the requirements of all applicable federal and state laws,
regulations and rulings.
ARTICLE II
COMPENSATION OF THE INVESTMENT MANAGER; FEES AND EXPENSES
---------------------------------------------------------
2.1 Investment Manager Compensation. As compensation for its services in
---------------------------------
acting as Investment Manager of the Fund, the General Partner shall pay to the
Investment Manager a management fee which shall be equal to the Investment
Management Fee in accordance with Section 2.11 of the Venture Agreement. The
Investment Management Fee shall accrue and be payable quarterly in advance in
the manner and at the times set forth in Section 2.11 of the Venture Agreement
(which is incorporated herein by reference). Within 90 days of the end of each
calendar year, the General Partner and the Investment Manager shall jointly
calculate and determine the aggregate Investment Management Fee that accrued to
the Investment Manager for such year. As provided in the Venture Agreement, to
the extent the amount of Investment Management Fee payments actually received by
the Investment Manager during such year exceeded the calculated amount, such
excess shall be applied to the Investment Management Fee payments to be made to
the Investment Manager in the next quarter(s) until recouped; provided, however,
that if upon termination of this Agreement any portion of such excess amount
remains unpaid, the Investment Manager shall pay the General Partner such
remaining excess amount in full as promptly as practicable after such
termination. As provided in the Venture Agreement, to the extent the calculated
amount exceeds the amount of Investment Management Fee payments
911727.10
5
<PAGE>
actually received by the Investment Manager, the General Partner shall pay the
Investment Manager the difference between such amounts. The General Partner
shall fund the payment of the Investment Management Fee from funds obtained on
account of the Fund Management Fee (as well as from its "carried interest" or
"promote" as contemplated by the Venture Agreement) received from the Fund as
promptly as practicable after the calculation of such excess amount.
2.2 Investment Manager Expenses. The Investment Manager shall bear the
-----------------------------
following ordinary day-to-day expenses incidental to the administration of the
Fund (i) all costs and expenses of providing to the Fund, and the Investment
Manager, the office space, facilities, utility service, supplies and necessary
administrative and clerical functions connected with the Fund's, and the
Investment Manager's, operations; and (ii) compensation of all employees who are
engaged in the operation or management of the Fund's or the Investment Manager's
business (collectively, "Administrative Expenses").
2.3 Fund Expenses. Except as provided in Section 2.2 above, the Fund shall
-------------
bear and be charged with all other costs and expenses of the Fund's activities
and operations, including all activities and operations prior to the date of
this Agreement and including, without limitation, to the extent directly related
to the Fund and its Investments: (i) all costs and expenses, incurred in
developing, negotiating, structuring, acquiring or financing any proposed
Investment, whether or not the Fund actually invests therein including, without
limitation, any travel, legal and accounting expenses and other fees and
out-of-pocket costs related thereto, and the costs of rendering financial
assistance to or arranging for financing for any assets or businesses
constituting any such proposed Investment; (ii) all costs and expenses, if any,
incurred in monitoring Investments, including without limitation any travel,
legal and accounting expenses and other fees and out-of-pocket costs related
thereto; (iii) all costs and expenses, if any, incurred in disposing of or
otherwise dealing with Investments, including, without limitation, any travel,
legal and accounting expenses and other fees and out-of-pocket costs related
thereto, and the costs of rendering financial assistance to or arranging for
financing for any assets or businesses constituting Investments; (iv) taxes of
the Fund, fees of auditors, counsel and other advisors of the Fund, insurance
costs of the Fund and costs related to litigation and threatened litigation
involving the Fund; (v) expenses associated with third party accountants,
attorneys and tax advisors with respect to the Fund and its activities,
including the preparation and auditing of financial reports and statements and
other similar matters, and costs associated with the distribution of financial
and other reports and capital call notices to the Members and costs associated
with Fund meetings; (vi) brokerage commissions and other investment costs
incurred by or on behalf of the Fund and paid to third parties unaffiliated with
the Investment Manager, and to the extent approved by the Management Committee
pursuant to the Fund Partnership Agreement, brokerage commissions and other
investment costs incurred by and on behalf of the Fund and paid to affiliates of
the Investment Manager; (vii) all costs and expenses associated with the
obtaining and maintaining insurance as provided in Section 1.2(g), including,
without limitation, customary liability insurance to insure the Investment
Manager and other parties whom the Fund has agreed to indemnify against
liability under the Fund Partnership Agreement; (viii) fees incurred in
connection with the maintenance of bank or custodian accounts; (ix) all expenses
incurred in connection with the registration of the Fund's securities under
911727.10
6
<PAGE>
applicable securities laws or regulations; and (x) all expenses of the Fund that
are not recurring normal operating expenses, (all such expenses, collectively,
the "Operating Expenses"). To the extent any Operating Expenses are paid by the
Investment Manager, such Operating Expenses shall be reimbursed by the Fund.
ARTICLE III
EXCULPATION AND INDEMNIFICATION
-------------------------------
3.1 Exculpation and Indemnification. (a) Neither the Investment Manager nor
-------------------------------
any of its partners, affiliates, directors, officers, employees, shareholders,
members and other agents (each, an "Indemnified Party"), shall be liable to the
General Partner, the Fund or to the Members for monetary damages for any losses,
claims, damages or liabilities ("Damages") arising from any act performed or
omitted by such parties arising out of or in connection with the performance by
Investment Manager of its services under this Agreement or the Fund's business
or affairs, including, without limitation, all activities of the type or
character disclosed in the Fund's confidential offering memorandum, as it may
have been supplemented or amended, under the captions "Risk Factors," "Conflicts
of Interest" or elsewhere therein (such disclosure being incorporated herein by
reference), except to the extent that any such Damages are primarily
attributable to the gross negligence or willful misconduct of such Indemnified
Party.
(b) (1) The Fund shall, to the fullest extent permitted by applicable law,
indemnify, defend and hold harmless the Indemnified Parties against any
Damages to which the Indemnified Party may become subject in connection
with any matter arising out of or in connection with the performance by
Investment Manager of its services under this Agreement or the Fund's
business or affairs, except, with respect to any Indemnified Party to the
extent that any such Damages are primarily attributable to the gross
negligence or willful misconduct of such Indemnified Party. If the
Indemnified Party becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter arising out of or
in connection with the performance by Investment Manager of its services
under this Agreement or the Fund's business or affairs, the Fund shall
reimburse the Indemnified Party for its reasonable legal and other expenses
(including the cost of any investigation and preparation) as they are
incurred in connection therewith, provided that the Indemnified Party shall
promptly repay to the Fund the amount of any such reimbursed expenses paid
to it if it shall ultimately be finally determined that the Indemnified
Party was not entitled to be indemnified by the Fund in connection with
such action, proceeding or investigation. If for any reason (other than by
reason of the exclusions from indemnification hereinabove set forth) the
foregoing indemnification is unavailable to the Indemnified Party, or
insufficient to hold it harmless, then the Fund shall contribute to the
amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage, liability or expense in such proportion as is appropriate to
reflect the relative benefits received by the Fund on the one hand and the
Indemnified Party on the other hand or, if
911727.10
7
<PAGE>
such allocation is not permitted by applicable law, to reflect not only the
relative benefits referred to above but also any other relevant equitable
considerations.
(2) The provisions of this Section 3.1(b) shall survive for a period
of three years from the date of dissolution of the Fund; provided that if
at the end of such period there are any actions, proceedings or
investigations then pending, the Indemnified Party shall notify the General
Partner and the General Partner shall so notify the Fund and the Partners
of the Fund at such time (which notice shall include a brief description of
each such action, proceeding or investigation and the liabilities asserted
therein) and the provisions of this Section 3.1(b) shall survive with
respect to each such action, proceeding or investigation set forth in such
notice (or any related action, proceeding or investigation based upon the
same or similar claim) until the date that such action, proceeding or
investigation is finally resolved; and provided, further, that the
obligations of the Fund under this Section 3.1(b) shall be satisfied solely
out of Fund assets, subject to the right of the liquidator of the Fund to
establish reserves, pursuant to the Fund Partnership Agreement for
contingent obligations under this Section 3.1(b).
(c) No member of the General Partner or Partner of the Fund shall have
any obligation to the Fund or any other Partner of the Fund to bring or join in
any action in defense of an Indemnified Party pursuant to Section 3.1 (a) or
(b). Nothing contained in this Section 3.1 shall be construed as any waiver of
insurance claims or recoveries by the Fund or an Indemnified Party.
(d) The remedies of an Indemnified Party under this Article III shall
be non- exclusive and, without duplication, each such Indemnified Party may
pursue any other remedy provided in law or equity.
(e) The provisions of this Article III shall inure to the benefit of
the Indemnified Parties, and any successors, assigns, heirs and personal
representatives of such Indemnified Parties.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Duration and Termination. If any of the following events shall occur
-------------------------
(each a "Investment Manager Removal Event"): (i) a Bankruptcy or an event
specified in Section 17- 402(a)(8) of the Act occurs with respect to the
Investment Manager; (ii) the Investment Manager is grossly negligent or commits
willful misconduct in the performance of its material duties to the Fund,
resulting in material damages to the Fund; (iii) the Investment Manager commits
an act of fraud involving the Fund (which results in material damages to the
Fund), or intentionally misappropriates significant funds of the Fund; (iv) the
termination or liquidation of the Fund;(v)
911727.10
8
<PAGE>
the Investment Manager materially breaches this Agreement and such breach is not
remedied in all material respects within 30 days after the Investment Manager's
receipt of written notice from General REMI II; (vi) upon the occurrence of an
Event of Default as a result of a Default by CT- F2-GP (as such terms are
defined in Section 11.1 of the Limited Liability Company Agreement of CT MP II
LLC (the "GP Agreement")) and the election by General REMI II to pursue a remedy
pursuant to Section 11.2 of the GP Agreement; and (vii) upon the occurrence of
an event of default as a result of a default by CT-F2-LP under the Fund
Partnership Agreement where such default is not remedied in all material
respects within the cure period provided in the Fund Partnership Agreement and
the election by General REMI II, on behalf of CT MP II LLC, to pursue a remedy
as provided by the Fund Partnership Agreement; then General REMI II may deliver
a written notice to the Investment Manager and the General Partner (the
"Investment Manager Removal Notice") stating that the Investment Manager shall
be removed as Investment Manager under this Agreement and setting forth a
description of the relevant Investment Manager Removal Event(s). The Investment
Manager shall be deemed to be removed on the date of the Investment Manager
Removal Notice or, if such removal is pursuant to clause (iv), upon the end of
the liquidation of the Fund.
Any dispute which arises under this Agreement shall be resolved pursuant to
Section 4.2 of the Venture Agreement.
4.2 Status of Investment Manager as Independent Contractor. The Investment
------------------------------------------------------
Manager shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided herein or authorized by the Fund
from time to time, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
4.3 Notices. Any notices required hereunder shall be in writing and shall
-------
be deemed given when delivered in person or by courier or when sent by
first-class registered or certified mail or by national prepaid overnight
delivery service to the parties at such addresses as either party may from time
to time specify by notice.
If to the Fund at:
Travelers Limited Real Estate
Mezzanine Investments I, LLC
205 Columbus Boulevard, 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
911727.10
9
<PAGE>
with a copy to:
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1900
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq.
If to the Investment Manager at:
CT Investment Management, LLC
c/o Capital Trust, Inc.
605 Third Avenue
26th Floor
New York, NY 10158
Attn: John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attn: Thomas E. Kruger, Esq.
4.4 Governing Law. This Agreement shall be governed, construed,
---------------
administered and regulated in all respects under the laws of the State of New
York to the extent such laws are not preempted or superseded by the laws of the
United States.
4.5 Severability. If any one or more of the covenants, agreements,
------------
provisions or terms of this Agreement shall be held to be contrary to any
express provision of law or contrary to policy of express law, though not
expressly prohibited, or to be against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
4.6 Entire Agreement. This Agreement constitutes the entire agreement among
----------------
the parties hereto with respect to the subject matter hereof, and supersedes any
prior agreement or understanding among the parties hereto with respect to the
subject matter hereof.
4.7 Binding on Successors. This Agreement shall be binding upon the Fund,
---------------------
the General Partner, the Investment Manager and their respective successors and
assigns. However, no assignment of this Agreement shall be made without the
prior written consent of the Fund.
911727.10
10
<PAGE>
4.8 Headings. The headings used in this Agreement are inserted for
--------
reference purposes only and shall not be deemed to limit or affect in any way
the meaning or interpretation of any of the terms or provisions herein.
4.9 Waiver. Any failure of any party to comply with any obligation or
------
agreement herein may be waived in writing by the other party but such waiver or
failure to insist upon strict compliance with such obligation or agreement shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
4.10 Amendment. This Agreement may be amended, modified, or supplemented
---------
only by written agreement of the parties hereto.
911727.10
11
<PAGE>
IN WITNESS WHEREOF, this Agreement is hereby executed as of the date first
hereinabove written.
<TABLE>
<CAPTION>
<S> <C>
CT INVESTMENT MANAGEMENT CO., CT MP II LLC
LLC
By: Capital Trust, Inc., as sole Member By: Travelers General Real Estate
Mezzanine Investments II, LLC,
a Member
By: /s/ John R. Klopp By: /s/ Michael Watson
----------------------------- ----------------------------
John R. Klopp Michael Watson
Chief Executive Officer Vice President
By: CT-F2-GP, LLC, a Member
By: Capital Trust, Inc., as sole
Member
By: /s/ John R. Klopp
----------------------------
John R. Klopp
Chief Executive Officer
CT MEZZANINE PARTNERS II, L.P.
By: CT MP II LLC, as General Partner
By: Travelers General Real Estate
Mezzanine Investments II,
LLC, a Member
By: /s/ Michael Watson
----------------------------
Michael Watson
Vice President
By: CT-F2-GP, LLC, a Member
By: Capital Trust, Inc., as sole
Member
By: /s/ John R. Klopp
-----------------------
John R. Klopp
Chief Executive Officer
</TABLE>
911727.10
Exhibit 10.10
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
as of March 8, 2000 among Capital Trust, Inc., a Maryland corporation (the
"Company"), Travelers Limited Real Estate Mezzanine Investments I, LLC, a
Delaware limited liability company ("Limited REMI I"), Travelers Limited Real
Estate Mezzanine Investments II, LLC, a Delaware limited liability company
("Limited REMI II") and Travelers General Real Estate Mezzanine Investments II,
LLC, a Delaware limited liability company ("General REMI II") (collectively the
"CIG Parties") or any Affiliate of General REMI II or Limited REMI II who may
hereafter execute and agree to be bound by this Agreement and named as a Holder
on Schedule A attached hereto (which schedule shall be amended from time to time
to reflect such agreement of such Person). Capitalized terms not expressly
defined herein shall have the meaning ascribed to such terms in the Venture
Agreement (as defined below).
Recitals
WHEREAS, the Company and its affiliates, CT-F1, LLC, a
Delaware limited liability company ("CT-F1"), CT-F2-GP, LLC, a Delaware limited
liability company ("CT-F2- GP"), CT-F2-LP, LLC ("CT-F2-LP"), a Delaware limited
liability company, and CT Investment Management Co., LLC, a Delaware limited
liability company ("CTIMCO" and together with CT-F1, CT-F2-GP and CT-F2-LP, the
"CT Parties"), and the CIG Parties are parties that certain venture agreement
(the "Venture Agreement"), dated as of the date hereof, pursuant to which, among
other things, the parties thereto will co-sponsor, commit to invest capital in
and manage real estate mezzanine investment opportunity funds, subject to
certain conditions as provided in the Venture Agreement;
WHEREAS, in connection with the formation of Fund I, the
Company has on the date hereof issued to CT-F1 a warrant to purchase 4,250,000
shares of class A common stock, par value $.01 per share, of the Company
("Common Stock") at $5.00 per share, pursuant to the terms and conditions of a
Fund I Class A Common Stock Warrant Agreement entered into by the Company on the
date hereof (including any warrants hereafter issued in exchange therefor, in
substitution therefor or upon transfer thereof, the "Fund I Warrant"), whereupon
CT-F1 has on the date hereof contributed the Fund I Warrant to Fund I as part of
its capital contribution to Fund I pursuant to the Fund I Agreement, whereupon
Limited REMI I has on the date hereof purchased the Fund I Warrant from Fund I
pursuant to the Fund I Warrant Purchase Agreement and in consideration thereof
has delivered to Fund I the Fund I Promissory Note;
WHEREAS, in connection with the formation of Fund II and
Subsequent Funds and in consideration of the CIG Parties Commitment and Limited
REMI II's procuring Private Banking Client Commitments, CT has on the date
hereof agreed to issue, concurrently with the Fund II Initial Closing, to
CT-F2-GP, and, as applicable, concurrently with any Subsequent
923211.7
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Closing, to CT-F2-GP or to any CT Fund Control Person Member of each Subsequent
Fund's Fund Control Person, as the case may be (and in each case subject to the
procedures and limitations set forth in Section 2.2 of the Venture Agreement),
certain warrants containing the right to purchase an aggregate number of shares
of Common Stock at $5.00 per share determined in accordance with the formula set
forth in Section 2.2 of the Venture Agreement, each to be issued pursuant to a
form of warrant agreement substantially in the form of the Fund I Warrant (any
such warrant constituting either a Fund II Purchase Warrant, a Fund II Service
Warrant, a Subsequent Funds Purchase Warrant or a Subsequent Funds Service
Warrant, as the case may be, in accordance with Section 2.2 of the Venture
Agreements) (hereinafter such warrants and the Fund I Warrant are collectively
referred to as the "Venture Warrants";
WHEREAS, CT-F2-GP has agreed to contribute the Fund II
Purchase Warrant and the Fund II Service Warrant or the Subsequent Fund Purchase
Warrant and the Subsequent Fund Service Warrant, as the case may be, when, as
and if issued and contributed to it in accordance with the foregoing, containing
the right to purchase a number of shares of Common Stock equal to the applicable
number of shares of Common Stock as set forth in Section 2.2 of the Venture
Agreement, to the Fund II General Partner as part of its capital contribution to
the Fund II General Partner pursuant to the Fund II General Partner Agreement,
and the CT Parties will cause each CT Fund Control Person Member of a Subsequent
Fund's Fund Control Person to contribute the Subsequent Fund Purchase Warrant
and the Subsequent Fund Service Warrant when, as and if issued and contributed
to it in accordance with the foregoing, containing the right to purchase a
number of shares of Common Stock equal to the applicable number of shares of
Common Stock as set forth in Section 2.2 of the Venture Agreement, to such Fund
Control Person as part of its capital contribution to such Fund Control Person
pursuant to the applicable agreement governing such Fund Control Person;
WHEREAS, the Fund II General Partner and each Subsequent
Fund's Fund Control Person, as the case may be, will sell pursuant to the Fund
II Warrant Purchase Agreement or the Subsequent Funds Warrant Purchase
Agreement, as the case may be, to General REMI II or its Affiliates any Fund II
Purchase Warrant or Subsequent Funds Purchase Warrant, as the case may be,
contributed to it in accordance with the foregoing, containing the right to
purchase a number of shares of Common Stock equal to the Initial Closing
Purchase Warrant Number and the Subsequent Closing Purchase Warrant Number, as
the case may be, as set forth in Section 2.2 of the Venture Agreement;
WHEREAS, in connection with services to be rendered by Limited
REMI II or its Affiliates for the Fund II General Partner and each Subsequent
Fund's Fund Control Person, as the case may be, in connection with raising
Private Banking Client Commitments to Fund II or any Subsequent Fund, as the
case may be, the Fund II General Partner and each Fund Control Person, as the
case may be, will transfer to Limited REMI II or its Affiliates any Fund II
Service Warrant or Subsequent Funds Service Warrant contributed to it in
accordance with the foregoing, containing the right to purchase a number of
shares of Common Stock
923211.7
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equal to the Initial Closing Service Warrant Number and the Subsequent Closing
Service Warrant Number, as the case may be, as set forth in Section 2.2 of the
Venture Agreement;
WHEREAS, the Venture Warrants cannot be exercised before March
8, 2001 ("Exercise Commencement Date");
WHEREAS, the Company has agreed to issue shares of Common
Stock to the Holders (as defined below) upon exercise of the Venture Warrants
and to grant to the Holders the registration rights set forth in Section 2
hereof.
NOW, THEREFORE, the parties hereto, in consideration of the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
Section 1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"Advice" has the meaning set forth in Section 3(b) hereof.
"Business Day" means a day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York are permitted or
required by any applicable law to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning set forth in the Recitals.
"Company" has the meaning set forth in the Preamble and also
includes the Company's successors.
"Delay Period" has the meaning set forth in Section 2(c)
hereof.
"Effectiveness Period" has the meaning set forth in Section
2(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Exercise Commencement Date" has the meaning set forth in the
Recitals.
"Holder" or "Holders" means Limited REMI I, General REMI II,
Limited REMI II, any Affiliate of the foregoing Persons who agrees to be bound
by this Agreement and
923211.7
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named as a Holder on Schedule A hereto in accordance with the introductory
paragraph of this Agreement, or any Person who has acquired Registrable
Securities by Transfer, operation of law or otherwise, if such Person is an
owner of record of Registrable Securities, or of a security convertible into or
exercisable or exchangeable for Registrable Securities, whether or not such
conversion, exercise or exchange has actually been effected and disregarding any
legal restrictions upon the exercise of such rights. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company may act upon the basis
of the instructions, notice or election received from the registered owner of
such Registrable Securities.
"Inspectors" has the meaning set forth in Section 3(a)(xii)
hereof.
"NASD" means the National Association of Securities Dealers,
Inc.
"Person" means an individual, partnership, corporation,
limited liability company, trust, estate, or unincorporated organization, or
other entity, or a government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to a prospectus, including post-effective
amendments, and, in each case, including all documents incorporated by reference
therein.
"Registrable Securities" means (i) the shares of Common Stock
issuable upon exercise of the Venture Warrants; (ii) any shares of Common Stock
or other securities issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange by the Company generally for, or in
replacement by the Company generally of, such shares of Common Stock; and (iii)
any securities issued in exchange for such shares of Common Stock in any merger,
combination or reorganization of the Company; provided, however, that
Registrable Securities shall not include any securities which have theretofore
been registered and sold pursuant to the Securities Act or which have been sold
to the public pursuant to Rule 144 or any similar rules promulgated by the
Commission pursuant to the Securities Act, and, provided further, that the
Company shall have no obligation under Section 2 to register any Registrable
Securities of a Holder or keep any Shelf Registration Statement effective if the
Company shall deliver to the Holders requesting such registration an opinion of
counsel reasonably satisfactory to such Holders and their counsel to the effect
that the proposed sale or disposition of all of the Registrable Securities does
not require registration under the Securities Act for a sale or disposition in a
single public sale, and if the Company shall offer to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities. For
923211.7
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purposes of this Agreement, a Person will be deemed to be a Holder of
Registrable Securities whenever such Person has the then-existing right to
acquire such Registrable Securities (by conversion, purchase or otherwise),
whether or not such acquisition has actually been effected.
"Rule 144" and "Rule 145" mean Rule 144 and Rule 145
promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(a) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 2(a)
hereof which covers all of the Registrable Securities on an appropriate form
under Rule 415 under the Securities Act, or any similar rule that may be adopted
by the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all documents
incorporated by reference therein.
"Transfer" means and includes the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
security or any transfer upon any merger or consolidation) (and correlative
words shall have correlative meanings); provided however, that any transfer or
other disposition upon foreclosure or other exercise of remedies of a secured
creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as security shall constitute a Transfer.
"Violation" has the meaning set forth in Section 5(a)(i).
"Venture Warrants" has the meaning set forth in the Recitals.
Section 2. Registration under the Securities Act.
(a) Registration Requirement. The Company shall use
commercially reasonable efforts to cause there to be filed with the Commission a
Shelf Registration Statement meeting the requirements of the Securities Act at
least 30 days prior to the Exercise Commencement Date, or if any Venture
Warrants shall not have been issued by such date, within 30 days following the
date of issuance and subsequent transfer to the Holders thereof pursuant to the
Venture Agreement, and shall use commercially reasonable efforts to cause such
Shelf Registration Statement to be declared effective by the Commission within
120 days after the filing of any such Shelf Registration Statement, provided
however, the Company shall
923211.7
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<PAGE>
not be required to file a Shelf Registration Statement or cause it to be
declared effective during any Delay Period. No Holder of Registrable Securities
shall be entitled to include any of its Registrable Securities in any Shelf
Registration pursuant to this Agreement unless and until such Holder agrees in
writing to be bound by all of the provisions of this Agreement applicable to
such Holder and furnishes to the Company in writing, within 10 Business Days
after receipt of a request therefor, such information as the Company may, after
conferring with counsel with regard to information relating to Holders that
would be required by the Commission to be included in such Shelf Registration
Statement or Prospectus included therein, reasonably request for inclusion in
any Shelf Registration Statement or Prospectus included therein. Each Holder as
to which any Shelf Registration is being effected agrees to furnish to the
Company all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading.
(b) Effectiveness Requirement. The Company agrees to use its
commercially reasonable efforts to keep each Shelf Registration Statement
continuously effective and the Prospectus usable for resales for a period
commencing on the date that such Shelf Registration Statement is initially
declared effective by the SEC and terminating on the date when all of the
Securities covered by such Shelf Registration Statement have been sold pursuant
to such Shelf Registration Statement or cease to be Registrable Securities (the
"Effectiveness Period"); provided, however, the Company shall be permitted to
suspend sales of Securities during any Delay Period.
(c) The term "Delay Period" shall mean, with respect to any
obligation to file a Shelf Registration Statements or to keep any Prospectus
usable for resales pursuant to this Section 2, the period when there exist
circumstances relating to a material pending development, including but not
limited to a pending or contemplated material acquisition or merger or other
material transaction or similar event, which would require disclosure by the
Company in such Shelf Registration Statement or Prospectus of material
information which the Company determines in good faith that it has a bona fide
business purpose for keeping confidential and non-public and the non-disclosure
of which in such Shelf Registration Statement or Prospectus might cause such
Shelf Registration Statement or Prospectus to fail to comply with applicable
disclosure requirements. A Delay Period shall commence on and include the date
that the Company gives written notice (a "Delay Notice") to the Holders that it
is not required to file any Shelf Registration Statement or cause it to be
declared effective or the Prospectus is no longer usable as a result of a
material pending development pursuant to Section 2(b) hereof and shall end on
the date when the Holders are advised in writing by the Company that the current
Delay Period has terminated (it being understood that the Company shall give
such notice to all Holders promptly upon making the determination that the Delay
Period has ended); provided; however, that the Company shall not be entitled to
Delay Periods having durations that exceed one hundred and eighty (180) days in
the aggregate during any calendar year.
923211.7
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<PAGE>
(d) Each Holder agrees that it shall give the Company notice
of not less than 5 Business Days prior to disposing of any Registrable
Securities under a Shelf Registration Statement so that the Company may make any
determination to suspend sales of Securities as contemplated in Section 2(b).
The Company will, in the event a Shelf Registration Statement is declared
effective, provide to each Holder a reasonable number of copies of the
Prospectus which is a part of such Shelf Registration Statement, notify each
such Holder when such Shelf Registration Statement has become effective and take
such other actions as are required to permit unrestricted resales of the
Registrable Securities. The Company further agrees to supplement or amend each
Shelf Registration Statement if and as required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company agrees to
furnish to the Holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the Commission.
(e) Effective Shelf Registration Statement. A Shelf
Registration Statement will not be deemed to have become effective unless it has
been declared effective by the Commission; provided, however, that if, after it
has been declared effective, the offering of Registrable Securities pursuant to
such Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Shelf Registration Statement will be deemed
not to have been effective during the period of such interference, until the
offering of Registrable Securities pursuant to such Shelf Registration Statement
may legally resume. The Company will be deemed not to have used its commercially
reasonable efforts to cause a Shelf Registration Statement to become, or to
remain, effective during the requisite period if it voluntarily takes any action
that would result in any such Shelf Registration Statement not being declared
effective or that would result in the Holders of Registrable Securities covered
thereby not being able to offer and sell such Registrable Securities during that
period, unless such action is required by applicable law.
Section 3. Registration Procedures.
(a) Obligations of the Company. In connection with its
obligations under Section 2 hereof with respect to the Shelf Registration
Statement, the Company shall, as expeditiously as practicable:
(i) prepare and file with the Commission a Shelf
Registration Statement as prescribed by Section 2(a) within
the relevant time period specified in Section 2(a) hereof on
the appropriate form under the Securities Act, which form
shall (i) be selected by the Company, (ii) be available for
the sale of the Registrable Securities by the selling Holders
thereof, and (iii) comply as to form in all material respects
with the requirements of the applicable form and include all
financial statements required by the Commission to be filed
therewith; the
923211.7
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<PAGE>
Company shall use its commercially reasonable efforts to cause
such Shelf Registration Statement to become effective and
remain effective and the Prospectus usable for resales in
accordance with Section 2 hereof, subject to the proviso
contained in Section 2(b) hereof; provided, however, that,
before filing any Shelf Registration Statement or Prospectus
or any amendments or supplements thereto, the Company shall
furnish to and afford the Holders of the Registrable
Securities covered by such Shelf Registration Statement, their
counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed; and
the Company shall not file any Shelf Registration Statement or
Prospectus or any amendments or supplements thereto in respect
of which the Holders must be afforded an opportunity to review
prior to the filing of such document, other than filings
required under the Exchange Act, if the Holders, their counsel
or the managing underwriters of an underwritten offering of
Registrable Securities, if any, shall reasonably object in a
timely manner;
(ii) prepare and file with the Commission such
amendments and post- effective amendments to such Shelf
Registration Statement as may be necessary to keep such Shelf
Registration Statement effective for the Effectiveness Period,
subject to the proviso contained in the Section 2(b) hereof,
and cause each Prospectus to be supplemented, if so determined
by the Company or requested by the Commission, by any required
prospectus supplement and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force),
under the Securities Act, respond within a reasonable time to
any comments received from the Commission with respect to such
Shelf Registration Statement, or any amendment, post-effective
amendment or supplement relating thereto, and comply with the
provisions of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder applicable to it
with respect to the disposition of all Registrable Securities
covered by such Shelf Registration Statement during the
Effectiveness Period in accordance with the intended method or
methods of distribution by the selling Holders thereof
described in this Agreement;
(iii) register or qualify the Registrable Securities
under all applicable state securities or "Blue Sky" laws of
such jurisdictions by the time the applicable Shelf
Registration Statement is declared effective by the Commission
as any Holder of Registrable Securities covered by such Shelf
Registration Statement and each underwriter of an underwritten
offering of Registrable Securities shall reasonably request in
writing in advance of such date of effectiveness, and do any
and all other acts and things which may be reasonably
necessary or advisable to enable such Holder and underwriter
to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by
923211.7
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<PAGE>
such Holder; provided, however, that the Company shall not be
required to (A) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section
3(a)(iii) hereof, (B) file any general consent to service of
process in any jurisdiction where it would not otherwise be
subject to such service of process or (C) subject itself to
taxation in any such jurisdiction if it is not then so
subject;
(iv) promptly notify each Holder of Registrable
Securities, its counsel and the managing underwriters of an
underwritten offering of Registrable Securities, if any, and
promptly confirm such notice in writing (A) when the Shelf
Registration Statement covering such Registrable Securities
has become effective and when any post-effective amendments
thereto become effective, (B) of any request by the Commission
or any state securities authority for amendments and
supplements to such Shelf Registration Statement or Prospectus
or for additional information after such Shelf Registration
Statement has become effective, (C) of the issuance or
threatened issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of
such Shelf Registration Statement or the qualification of the
Registrable Securities in any jurisdiction described in
Section 3(a)(iii) hereof or the initiation of any proceedings
for that purpose, (D) if, between the effective date of such
Shelf Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations
and warranties of the Company contained in any purchase
agreement, securities sales agreement or other similar
agreement cease to be true and correct in all material
respects, (E) of the happening of any event or the failure of
any event to occur or the discovery of any facts, during the
Effectiveness Period, which makes any statement made in such
Shelf Registration Statement or the related Prospectus untrue
in any material respect or which causes such Shelf
Registration Statement or Prospectus to omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, and (F) of the reasonable
determination of the Company that a post-effective amendment
to such Shelf Registration Statement would be appropriate;
(v) take reasonable efforts to prevent the entry of
any stop order suspending the effectiveness of any Shelf
Registration Statement, or if entered, to obtain the
withdrawal of any such stop order at the earliest possible
moment;
(vi) furnish to each Holder of Registrable Securities
included within the coverage of a Shelf Registration
Statement, without charge, at least one conformed copy of the
Shelf Registration Statement relating to such Shelf
923211.7
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<PAGE>
Registration and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits
thereto, unless requested);
(vii) cooperate with the selling Holders of
Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends
and registered in such names as the selling Holders or any
underwriters may reasonably request at least two Business Days
prior to the closing of any sale of Registrable Securities
pursuant to the Shelf Registration Statement relating thereto;
(viii) as soon as practicable after the resolution of
any matter or event specified in Sections 3(a)(iii)(B),
3(a)(iii)(C), 3(a)(iii)(E) (subject to the proviso contained
in Section 2(b) hereof) and 3(a)(iii)(F) hereof, prepare a
supplement or post-effective amendment to the applicable Shelf
Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will
not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(ix) a reasonable time prior to the filing of any
document which is to be incorporated by reference into a Shelf
Registration Statement or a Prospectus after the initial
filing of such Shelf Registration Statement, provide a
reasonable number of copies of such document to the Holders
and make such of the representatives of the Company as shall
be reasonably requested by the Holders of Registrable
Securities available for discussion of such document;
(x) if requested by the Holders of Registrable
Securities in connection with a firm commitment underwritten
offering of at least $5 million in initial public offering
price of Registrable Securities: (i) enter into such
agreements (including underwriting agreements) as are
customary in underwritten offerings and make such
representations and warranties to the underwriters (if any),
with respect to the business of the Company and its
subsidiaries as then conducted and with respect to the
applicable Shelf Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm
the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof (which may be in
the form of a reliance letter) in form and substance
reasonably satisfactory to the managing underwriters covering
the matters customarily covered in opinions requested in
underwritten offerings and
923211.7
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<PAGE>
such other matters as may be reasonably requested by such
underwriters (it being agreed that the matters to be covered
by such opinion may be subject to customary qualifications and
exceptions); (iii) obtain "cold comfort" accountants' letters
and updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the independent
certified public accountants of the Company (and, if
necessary, any other independent certified public accountants
of any business acquired by the Company for which financial
statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and
such other matters as reasonably requested by such
underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification
provisions and procedures customary for such agreements;
(xi) if requested by Holders of Registrable
Securities in connection with a firm underwritten commitment
offering of at least $5 million in initial public offering
price of Registrable Securities, make reasonably available for
inspection by any selling Holder of Registrable Securities who
certifies to the Company that it has a current intention to
sell Registrable Securities pursuant to the Shelf
Registration, any underwriter participating in any such
disposition of Registrable Securities, if any, and any
attorney, accountant or other agent retained by any such
selling Holder or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during the
Company's normal business hours, all financial and other
records, and pertinent organizational and operational
documents of the Company and its subsidiaries (collectively,
the "Records") as shall be reasonably necessary to enable them
to exercise any applicable due diligence responsibilities, and
cause the officers, trustees and employees of the Company and
its subsidiaries to supply all relevant information in each
case reasonably requested by any such Inspector in connection
with such Shelf Registration Statement, records and
information which the Company, in good faith, determines to be
confidential and any Records and information which it notifies
the Inspectors are confidential shall not be disclosed to any
Inspector except where (i) the disclosure of such Records or
information is necessary to avoid or correct a material
misstatement or omission in the applicable Shelf Registration
Statement, (ii) the release of such Records or information is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or is necessary in connection with any
action, suit or proceeding, or (iii) such Records or
information previously has been made generally available to
the public; each selling Holder of such Registrable Securities
will be required to agree in writing that Records and
information obtained by it as a result of such inspections
shall be deemed confidential and
923211.7
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<PAGE>
shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until
such is made generally available to the public through no
fault of an Inspector or a selling Holder; and each selling
Holder of such Registrable Securities will be required to
further agree in writing that it will, upon learning that
disclosure of such Records or information is sought in a court
of competent jurisdiction, or in connection with any action,
suit or proceeding, give notice to the Company and allow the
Company at its expense to undertake appropriate action to
prevent disclosure of the Records and information deemed
confidential;
(xii) comply with all applicable rules and
regulations of the Commission so long as any provision of this
Agreement shall be applicable and make generally available to
its securityholders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any
twelve-month period (or 90 days after the end of any
twelve-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after
the effective date of a Shelf Registration Statement, which
statements shall cover said twelve-month periods, provided
that the obligations under this Section 3(l) shall be
satisfied by the timely filing of quarterly and annual reports
on Forms 10-Q and 10-K under the Exchange Act;
(xiii) cooperate with each seller of Registrable
Securities covered by a Shelf Registration Statement and each
underwriter, if any, participating in the disposition of such
Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD;
(xiv) take all other steps necessary to effect the
registration of the Registrable Securities covered by a Shelf
Registration Statement contemplated hereby.
(b) Holders' Obligations.
(i) Each Holder agrees that, upon receipt of any
notice from the Company of the occurrence of any event
specified in Sections 3(a)(iii)(B), 3(a)(iii)(C),
3(a)(iii)(E), 3(a)(iii)(F) hereof or any Delay Notice, such
Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the Shelf Registration Statement at
issue until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section
3(a)(viii)
923211.7
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<PAGE>
hereof or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be
resumed, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies
in such Holder's possession, other than permanent file copies
then in such Holder's possession, of the Prospectus covering
such Registrable Securities current at the time of receipt of
such notice.
(ii) Each Holder agrees that the Company may require
each seller of Registrable Securities as to which any
registration is being effected to furnish to it such
information regarding such seller as may be required by the
staff of the Commission to be included in the applicable Shelf
Registration Statement, the Company may exclude from such
registration the Registrable Securities of any seller who
fails to furnish such information within 10 Business Days
after receiving such request, and the Company shall have no
obligation to register under the Securities Act the
Registrable Securities of a seller who so fails to furnish
such information.
Section 4. Expenses of Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing, or
qualification of Registrable Securities with respect to a Shelf Registration
Statement for each selling Holder, including all registration, exchange listing,
accounting, filing and NASD fees, all fees and expenses of complying with
securities or Blue Sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the reasonable fees and disbursements
of counsel for the Company, and of the Company's independent public accountants,
including the expenses of "comfort letters" required by or incident to such
performance and compliance and reasonable fees and disbursements of one firm of
counsel for the Holders, underwriting discounts and commissions relating to the
Registrable Securities.
Section 5. Indemnification; Contribution.
(a) Indemnification by the Company. If any Registrable
Securities are included in a Shelf Registration Statement under this Agreement:
(i) To the extent permitted by applicable law, the
Company shall indemnify and hold harmless each selling Holder,
each Person, if any, who controls such selling Holder within
the meaning of the Securities Act, and each officer, director,
trustee, partner, and employee of such selling Holder and such
controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint or several),
including attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual
or threatened action, suit, proceeding or investigation, or to
which any of the foregoing Persons may become subject under
the Securities Act, the Exchange Act or other federal or state
laws, insofar as such losses, claims, damages,
923211.7
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liabilities and expenses arise out of or are based upon any of
the following statements, omissions or violations
(collectively, a "Violation"):
(A) Any untrue statement or alleged
untrue statement of a material fact contained in such
registration statement, including any preliminary
prospectus or final prospectus contained therein, or
any amendments or supplements thereto or any document
incorporated by reference therein;
(B) The omission or alleged omission
to state therein a material fact required to be
stated therein, or necessary to make the statements
therein not misleading; or
(C) Any violation or alleged
violation by the Company of the federal securities
laws any applicable state securities law or any rule
or regulation promulgated under the Securities Act,
the Exchange Act or any applicable state securities
law;
provided, however, that the indemnification required by this Section 5(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or
expense to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished to
the Company by the indemnified party expressly for use in connection with such
registration; provided, further, that the indemnity agreement contained in this
Section 5(a) shall not apply to any underwriter to the extent that any such loss
is based on or arises out of an untrue statement or alleged untrue statement of
a material fact, or an omission or alleged omission to state a material fact,
contained in or omitted from any preliminary prospectus if the final prospectus
shall correct such untrue statement or alleged untrue statement, or such
omission or alleged omission, and a copy of the final prospectus has not been
sent or given to such Person at or prior to the confirmation of sale to such
Person if such underwriter was under an obligation to deliver such final
prospectus and failed to do so. The Company shall also indemnify underwriters
participating in the distribution of the Registrable Securities, their officers,
directors, agents and employees and each Person who controls such Persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the selling Holders.
(b) Indemnification by Holder. If any of a selling Holder's
Registrable Securities are included in a registration statement under this
Agreement, to the extent permitted by applicable law, such selling Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who shall have signed the registration statement, each Person, if any,
who controls the Company within the meaning of the Securities Act, any other
923211.7
14
<PAGE>
selling Holder, any controlling Person of any such other selling Holder and each
officer, director, partner, and employee of such other selling Holder and such
controlling Person, against any and all losses, claims, damages, liabilities and
expenses (joint and several), including attorneys' fees and disbursements and
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation is based
on or arises from written information furnished by such selling Holder to the
Company expressly for use in connection with such registration; provided,
however, that (x) the indemnification required by this Section 5(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or expense if settlement is effected without the consent of the relevant selling
Holder of Registrable Securities, which consent shall not be unreasonably
withheld, and (y) in no event shall the amount of any indemnity under this
Section 5(b) exceed the gross proceeds from the applicable offering received by
such selling Holder. In no event shall a Holder be jointly liable with any other
Holder as a result of its indemnification obligations.
(c) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section 5 of notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing for which such indemnified party may make a claim under this
Section 5, such indemnified party shall deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties. The
failure to deliver written notice to the indemnifying party within a reasonable
time following the commencement of any such action, if not otherwise known by
the Company and materially prejudices or results in forfeiture of substantial
rights or defenses shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5 but shall not relieve the indemnifying
party of any liability that it may have to any indemnified party otherwise than
pursuant to this Section 5. Any fees and expenses incurred by the indemnified
party (including any fees and expenses incurred in connection with investigating
or preparing to defend such action or proceeding) shall be paid to the
indemnified party, as incurred, within thirty (30) days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses, (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding, or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there
923211.7
15
<PAGE>
may be one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party and that the assertion of
such defenses would create a conflict of interest such that counsel employed by
the indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one additional firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
(d) Contribution. If the indemnification required by this
Section 5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 5:
(i) The indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined
by reference to, among other things, whether any Violation has
been committed by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The amount
paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in
Section 5(a) and Section 5(b), any legal or other fees or
expenses reasonably incurred by such party in connection with
any investigation or proceeding.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section
5(d) were determined by pro rata allocation or by any other
method of allocation which does not take into account the
923211.7
16
<PAGE>
equitable considerations referred to in Section 5(d)(i). No
Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
(e) Full Indemnification. If indemnification is available
under this Section 5, the indemnifying parties shall indemnify each indemnified
party to the full extent provided in this Section 5 without regard to the
relative fault of such indemnifying party or indemnified party or any other
equitable consideration referred to in Section 5(d)(i) hereof.
(f) Survival. The obligations of the Company and the selling
Holders of Registrable Securities under this Section 5 shall survive the
completion of any offering of Registrable Securities pursuant to a registration
statement under this agreement, and otherwise.
Section 6. Covenants of the Company. The Company hereby agrees
and covenants as follows:
(a) Exchange Act Filings. The Company shall file as and when
applicable, on a timely basis, all reports required to be filed by it under the
Exchange Act. If the Company is not required to file reports pursuant to the
Exchange Act, upon the request of any Holder of Registrable Securities, the
Company shall make publicly available the information specified in subparagraph
(c)(2) of Rule 144. The Company shall take such further action as may be
reasonably required from time to time and as may be within the reasonable
control of the Company, to enable the Holders to Transfer Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 or any similar rule or regulation hereafter
adopted by the Commission.
In connection with any sale, transfer or other disposition by
a Holder of any Registrable Securities pursuant to Rule 144, the Company shall
cooperate with such Holder to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
Securities Act legend, and enable certificates for such Registrable Securities
to be for such number of shares and registered in such names as the Holder may
reasonably request at least two business days prior to any sale of Registrable
Securities.
(b) Merger, Consolidations and Sale of Assets. The Company
shall not, directly or indirectly, (x) enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation or
(y) Transfer or agree to Transfer all or substantially all the Company's assets,
unless prior to such merger, consolidation, reorganization or asset Transfer,
the surviving corporation or the transferee, respectively, shall have agreed in
writing to assume the obligations of the Company under this Agreement, and for
that purpose references hereunder to "Registrable Securities" shall be deemed to
include the
923211.7
17
<PAGE>
securities which the Holders of Registrable Securities would be entitled to
receive in exchange for Registrable Securities pursuant to any such merger,
consolidation or reorganization.
Section 7. Miscellaneous.
(a) Amendments and Waivers.
(i) The provisions of this Agreement, including the
provisions of this Section 7(a), may not be amended, modified
or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the written
consent of the Company and the Holders of a majority of the
outstanding Registrable Securities, provided that no
amendment, modification or supplement or waiver or consent to
a departure with respect to Section 5 hereof shall be
effective against any Holder unless consented to in writing by
such Holder. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each Holder, each
future Holder of Registrable Securities, and the Company.
(ii) Notice of any amendment, modification or
supplement to this Agreement adopted in accordance with this
Section 7 shall be provided by the Company to the Holders at
least thirty (30) days prior to the effective date of such
amendment, modification or supplement.
(b) Notices. All notices or other communications under this
Agreement shall be sufficient if in writing and delivered by hand or sent,
postage prepaid by registered, certified or express mail, or by recognized
overnight air courier service and shall be deemed given when so delivered by
hand, or if mailed or sent by overnight courier service, on the third Business
Day after mailing (one Business Day in the case of express mail or overnight
courier service) to the parties at the following addresses:
(i) if to Limited REMI I, to:
Travelers Limited Real Estate
Mezzanine Investments I, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12832
923211.7
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<PAGE>
with a copy to:
Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12832
(ii) if to General REMI II, to:
Travelers General Real Estate
Mezzanine Investments II, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
with a copy to:
Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12833
(iii) if to Limited REMI II, to:
Travelers Limited Real Estate
Mezzanine Investments II, LLC
205 Columbus Blvd., 9PB
Hartford, CT 06183-2030
Attn: Duane Nelson, Esq.
Real Estate Investment Number: 12833
with a copy to:
Citigroup Investments Inc.
388 Greenwich Street, 36th Floor
New York, New York 10013
Attn: Mr. Michael Watson
Real Estate Investment Number: 12833
923211.7
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<PAGE>
(iv) if to the Company, to:
Capital Trust, Inc.
605 Third Avenue,
26th Floor,
New York, New York 10016
Attention: John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Thomas E. Kruger
or at such other address as the addressee may have furnished in writing to the
sender as provided herein.
(c) Successors, Assigns and Transferees. This Agreement shall
inure to the benefit of and be binding upon the successors, assigns and
transferees of the Company and the Holders, including, without limitation and
without the need for an express assignment, subsequent Holders who have acquired
Registrable Securities by Transfer. If any transferee of any Holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities, such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such Person shall be
entitled to receive the benefits hereof.
(d) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(f) 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 THE CONFLICTS OF LAW PRINCIPLES THEREOF.
923211.7
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<PAGE>
(g) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
923211.7
21
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
CAPITAL TRUST, INC.
By: /s/ John R. Klopp
-------------------------------------
John R. Klopp
Chief Executive Officer
TRAVELERS LIMITED REAL ESTATE
MEZZANINE INVESTMENTS I, LLC
By: /s/ Michael Watson
-------------------------------------
Michael Watson
Vice President
TRAVELERS GENERAL REAL ESTATE
MEZZANINE INVESTMENTS II, LLC
By: /s/ Michael Watson
-------------------------------------
Michael Watson
Vice President
TRAVELERS LIMITED REAL ESTATE MEZZANINE
INVESTMENTS II, LLC
By: /s/ Michael Watson
-------------------------------------
Michael Watson
Vice President
923211.7
[LOGO]
CONTACT: Cindy McHugh at Capital Trust FOR IMMEDIATE RELEASE
(312) 928-1905 MARCH 9, 2000
Duncan King at Citigroup Inc.
(212) 816-4723
CAPITAL TRUST & CITIGROUP INVESTMENTS LAUNCH INVESTMENT MANAGEMENT BUSINESS
$400 MILLION CAPITAL COMMITMENT FROM CITIGROUP INVESTMENTS
NEW YORK, NY - March 9, 2000 - Capital Trust, Inc. (NYSE:CT) today
announced that the firm has formed a $200 million private investment fund, CT
Mezzanine Partners I, the first under a new investment management venture with
Citigroup Investments Inc., an affiliate of Citigroup Inc. (NYSE:C). Capitalized
with $150 million from an affiliate of Citigroup Investments and $50 million
from Capital Trust , CT Mezzanine Partners I will immediately commence making
high-yield commercial real estate "mezzanine" investments. The firms have
committed an additional $312.5 million (up to $250 million from Citigroup and
$62.5 million from CT) to launch the venture's second fund, CT Mezzanine
Partners II, contingent upon minimum total equity commitments of $500 million.
CT Mezzanine Partners I and II and all future funds will be managed
exclusively by Capital Trust's wholly- owned subsidiary, CT Investment
Management Co. Salomon Smith Barney Inc., a Citigroup subsidiary, acted as
financial advisor to the venture and has been named exclusive placement agent
for CT Mezzanine Partners II, which is expected to commence its third-party
capital raising efforts within 60 days.
"We are delighted to have Citigroup Investments as our partner in this
venture," said Sam Zell, Chairman of Capital Trust. "We believe that
sophisticated investors will increasingly demand investment products that offer
attractive risk-adjusted yields. With the global origination and distribution
power of the world's largest financial services company behind us, Capital Trust
is uniquely positioned to capitalize on this need."
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Capital Trust
Page 2
Under the new venture, CT and Citigroup Investments plan to co-sponsor,
capitalize and manage a series of private investment funds focusing on
high-yield commercial real estate "mezzanine" investments. The venture
represents a major strategic shift for Capital Trust, which will seek to
maximize value for its stockholders by emphasizing the investment management
business. Further, Capital Trust will pursue re-electing REIT status . Absent a
merger with an existing REIT, this re-election can occur no earlier than 2002
and will require compliance with REIT qualification tax laws, certain amendments
to the firm's charter and stockholder approval.
"Investment management provides fresh capital, a stream of recurring fee
income and a scalable platform to grow earnings," said John Klopp, Chief
Executive Officer of Capital Trust. "Conversion to REIT status, with its
favorable tax implications, will provide significant current returns to our
shareholders and a currency for consolidation. Together, these two initiatives
will allow us to increase liquidity and maximize shareholder value. With
Citigroup Investments, we intend to develop a powerful franchise which can
ultimately be expanded overseas."
Under the terms of the new venture, Capital Trust has agreed to provide the
funds a right of first offer on all mezzanine financing opportunities sourced by
CT during the funds' investment periods. CT and Citigroup Investments will split
net profits from the venture after payment of investment management fees to
Capital Trust. Citigroup Investments acquired warrants to purchase 4.25 million
Capital Trust Class A common shares at $5.00 per share exercisable over five
years. Subject to stockholder approval, Citigroup Investments can acquire up to
an additional 5.25 million warrants on the same terms, with the number of
additional warrants issued based on the amount of
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932013.1
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Capital Trust
Page 3
third-party equity raised for CT Mezzanine Partners II. Capital Trust's board of
directors has been expanded from 10 to 12 members, with Marc Weill, Chief
Executive Officer, and Michael Watson, Senior Vice President, of Citigroup
Investments Inc. joining immediately.
"We believe that mezzanine real estate investments provide compelling
relative value and, with Capital Trust, we have picked the best management team
in the industry to capture this opportunity", said Marc Weill, CEO of Citigroup
Investments Inc. "Citigroup Investments has committed substantial capital to the
venture and expects to make significant ongoing investments as we grow the
business. Our objective is to build a money management business that is the
dominant platform in the market for high-yield real estate finance."
To facilitate its entry into the investment management business and
conversion to REIT status, Capital Trust is modifying the terms of its existing
$150 million 8.25 percent step-up convertible trust preferred securities. This
will entail changes in the coupon structure and call provisions, and a reduction
in the conversion price from $11.70 to $7.00 per share, with no increase in the
total number of shares issuable on conversion.
The issuance of additional warrants to Citigroup Investments will be
submitted to a vote of Capital Trust's stockholders; the firm's management has
agreed to vote their shares in favor of the proposal.
Citigroup, the most global financial services company, provides some 100
million consumers, corporations, governments and institutions in 100 countries
with a broad range of financial products and services, including consumer
banking and credit, corporate and investment banking, insurance, securities
brokerage and asset management. The 1998 merger of Citicorp and Travelers Group
brought together such brand names as Citibank, Travelers, Salomon Smith
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932013.1
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Capital Trust
Page 4
Barney, Commercial Credit (now named CitiFinancial), and Primerica under
Citigroup's trademark red umbrella. Additional information may be found at
www.citigroup.com.
Capital Trust, Inc. is a fully integrated, self-managed specialty finance
company focused on the commercial real estate industry. Headquartered in New
York, the Company also provides investment banking and advisory services to
owners and operators of commercial real estate through its wholly owned
subsidiary, Victor Capital Group.
Capital Trust will host a conference call to discuss this transaction
Thursday, March 9, 2000 at 11:00am eastern. To participate please dial
1-888-855-5487. The confirmation code 313487 is necessary for participation.
###
932013.1
