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 XXXX XX").
Preliminary Statement
A. General XXXX XX, 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 XXXX XX will enter into the Limited Liability
Company Agreement of CT XX XX LLC, a Delaware limited liability company ("CT XX
XX") (the "LLC Agreement"), and have agreed that CT XX XX will act as the
general partner of CT Mezzanine Partners II LP, a Delaware limited partnership
(the "Partnership").
C. CT-F2-GP and General XXXX XX will cause CT XX XX 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 XX XX or its Affiliate, as the
case may be, whereupon certain of the Warrants will be sold to General XXXX XX
or its Affiliate, as the case may be, and the other of such Warrants will be
assigned by CT XX XX or its Affiliate, as the case may be, to Limited XXXX XX or
its Affiliate, as the case may be, as compensation for services in procuring
capital commitments.
1. Payment Rights. As additional consideration for General XXXX XX
entering into the Venture Agreement and the LLC Agreement, and performing its
obligations thereunder, and for General XXXX XX (with CT-F2-GP) causing CT XX XX
to enter into the Partnership Agreement, CT grants to General XXXX XX 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.
(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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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 XXXX XX or a
permitted transferee to whom General XXXX XX 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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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 XX XX or its Affiliate,
as the case may be, and then from CT XX XX or its Affiliate, as the case may be,
to General XXXX XX 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.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
With a copy to: Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
If to the Holder, to: Travelers General Real Estate
Mezzanine Investments II, LLC
000 Xxxxxxxx Xxxxxxxxx, 0XX
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Real Estate Investment Number: 12833
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With copies to: Citigroup Investments Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxxxx Xxxxxx
Real Estate Investment Number: 12833
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, 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.
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IN WITNESS WHEREOF, CT and General XXXX XX have caused this Agreement
to be executed as of March 8, 2000.
CAPITAL TRUST, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
TRAVELERS GENERAL REAL ESTATE
MEZZANINE INVESTMENTS II, LLC
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
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