Exhibit 1
CAPITAL TRUST
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
December 10, 1997
Capital Trust Investors Limited Partnership
V2 Holdings LLC
Veqtor Finance Company, LLC
c/o Capital Trust
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Veqtor Finance Company, LLC ("Veqtor") owns as of the date
hereof 6,959,593 class A common shares of beneficial interest, $1.00 par value
("Class A Common Shares"), in Capital Trust (the "Company") and 12,267,658 class
A 9.5% cumulative convertible preferred shares of beneficial interest, $1.00 par
value, in the Company ("Class A Preferred Shares"). Capital Trust Investors
Limited Partnership ("CTILP") and V2 Holdings LLC ("V2") are the sole common
members of Veqtor.
The Company proposes to issue and sell to certain underwriters
(the "Underwriters") for reoffer and resale 8,000,000 Class A Common Shares
(plus not more than an additional 1,200,000 Class A Common Shares) (the
"Offering") pursuant to and upon the terms and conditions of that certain
underwriting agreement, dated December 10, 1997 with the Underwriters (the
"Underwriting Agreement").
Veqtor has outstanding $50 million principal amount of 12%
convertible redeemable notes issued by Veqtor (the "Veqtor Notes"). Pursuant to
the terms of the Veqtor Notes, the Company may redeem the Veqtor Notes for cash
on or after July 15, 2000, subject to the right of the holders of the Veqtor
Notes on or after July 15, 2000 to convert the Veqtor Notes into preferred units
of Veqtor that are entitled to a 6% annual preferred distribution (the "Veqtor
Preferred Units"). Pursuant to the terms of the limited liability company
agreement of Veqtor, dated as of June 16, 1997 (the "Operating Agreement"), the
Veqtor Preferred Units are redeemable under certain circumstances and at certain
times by the holders thereof or by Veqtor for a specified portion of the Class A
Common Shares and Class A Preferred Shares owned by Veqtor (the "Specified
Company Shares").
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Veqtor, CTILP and V2 acknowledge and agree that they will
benefit from the Offering. In consideration of the foregoing benefit, Veqtor,
CTILP and V2 agree that if and when all of the Veqtor Notes either have been (i)
redeemed for cash or (ii) converted into Veqtor Preferred Units and at such time
as all such units have in turn been redeemed for the Specified Company Shares,
Veqtor will convert into Class A Common Shares any Class A Preferred Shares
owned by Veqtor following the retirement of the Veqtor Notes or the redemption
of the Veqtor Preferred Units, as the case may be (the "Remaining Class A
Preferred Shares"). Therefore, in order to induce the Company to undertake the
Offering, Veqtor, CTILP and V2 agree with the Company that immediately following
the redemption for cash of all of the outstanding Veqtor Notes or the redemption
of all of the outstanding Veqtor Preferred Units into the Specified Company
Shares, as the case may be (the "Final Retirement/Conversion Time"), Veqtor
shall convert the Remaining Class A Preferred Shares owned by it in accordance
with the conversion provisions thereof into Class A Common Shares. In connection
with the foregoing, Veqtor further agrees that it shall redeem the Veqtor
Preferred Units for the Specified Company Shares at the earliest date upon which
Veqtor has the right to effectuate such redemption and CTILP and V2 agree that
they shall take all actions as may reasonably be required to enable Veqtor to
effect such redemption.
The Company agrees with Veqtor, CTILP and V2 that the
agreements of Veqtor, CTILP and V2 herein may not be waived by the Company or
amended or modified in any manner by the parties hereto without the approval of
those trustees of the Company who have no direct or indirect personal interest
in Veqtor, CTILP, V2 or any of their affiliated persons or entities (other than
the Company). The Company acknowledges that the foregoing agreement of the
Company is made to induce the Underwriters to enter into the Underwriting
Agreement and proceed with the Offering.
The foregoing agreement shall terminate and be of no force and
effect if the Underwriting Agreement is not consummated by the Closing Date
specified in such agreement or upon the termination of the Underwriting
Agreement in accordance with its terms.
Please confirm your agreement with the foregoing by signing
and returning one fully executed copy of this agreement to the undersigned,
where upon this agreement shall become a binding agreement between the parties
hereto.
Very truly yours,
CAPITAL TRUST
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice Chairman
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Accepted and Agreed this day
of December 10, 1997
CAPITAL TRUST INVESTORS LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxx
--------------------------
Name: Xxxxxx Xxxx
Title: President of Indirect Managing Member
V2 HOLDINGS LLC
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Member
VEQTOR FINANCE COMPANY, LLC
By: CAPITAL TRUST INVESTORS
LIMITED PARTNERSHIP,
its managing member
By: V2 HOLDINGS LLC,
its attorney-in-fact
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxx
Title: Member
By: V2 HOLDINGS LLC,
its managing member
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxx
Title: Member
651637.5
