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
TABLE OF CONTENTS
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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
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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
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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
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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 XXXX XX"), Travelers Limited Real Estate Mezzanine Investments II,
LLC, a Delaware limited liability company ("Limited XXXX XX") (collectively, xxx
"XXX Xxxxxxx"), XX-X0, 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:
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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;
WHEREAS, General XXXX XX 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 XXXX XX 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 XX XX 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 XXXX XX 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 Xxxxxxx Xxxxx Xxxxxx 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
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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 XXXX XX 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 XXXX XX
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 XXXX XX 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
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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 XXXX XX 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 Xx. Xxxx Xxxxx and
Mr. Xxxxxxx Xxxxxx.
"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 XXXX XX 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
7
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
8
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 XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX" 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.
11
"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 XXXX XX" 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.
13
"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 XXXX XX 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
14
(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 XXXX XX 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,
15
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 XXXX XX 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 XXXX XX 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
16
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 XXXX XX 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 XXXX XX 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 XXXX XX and CT-F2-GP shall cause the Fund II General
Partner to sell and assign to General XXXX XX 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 XXXX XX and CT-F2-GP shall
also cause the Fund II General Partner to assign and deliver to Limited XXXX XX
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
XXXX XX as the record owner of such Fund II Purchase Warrant and Limited XXXX XX
as the record owner of such Fund II Service Warrant on its books and records as
the record holders thereof.
17
(v) General XXXX XX and the Fund II General Partner shall execute
and deliver to each other the Fund II Warrant Purchase Agreement, and General
XXXX XX shall execute and deliver the Fund II Initial Closing Purchase Warrant
Promissory Note to the Fund II General Partner;
(vi) General XXXX XX 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 XXXX XX 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 XXXX XX 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").
18
(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 XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX
or, in the case of a Subsequent Fund, to its Affiliate as the record owner of
such Subsequent Funds Purchase Warrant and Limited XXXX XX or, in the case of a
Subsequent Fund, its Affiliate as the record owner of such Subsequent Funds
Service Warrant. In addition, General XXXX XX 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 XXXX XX 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 XXXX XX, 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 XXXX XX (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
XXXX XX 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
19
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 XXXX XX 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 XXXX XX 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
20
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 XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX 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
21
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 XXXX XX 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 XXXX XX 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 XXXX XX shall have
delivered a Definitive Proposed Fund Acceptance shall be deemed to be an Other
Fund. If General XXXX XX delivers to CT a Definitive Proposed Fund Acceptance
within the Option Period, CT and General XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX 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 XXXX XX shall have delivered
or shall be deemed to have delivered a Definitive Proposed Fund Rejection
22
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 XXXX XX 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 XXXX XX delivered or was deemed to have delivered a
Definitive Proposed Fund Rejection) then any such rejection by General XXXX XX
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 XXXX
XX 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 XXXX XX 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
XXXX XX thereof and General XXXX XX 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 XXXX XX 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 XXXX XX acquires any entity that sponsors or co-sponsors
23
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 XXXX XX 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 XXXX XX 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 XXXX XX 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
24
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 XXXX XX 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 XXXX
XX shall notify CT whether General XXXX XX 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 XXXX XX 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
XXXX XX 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 XXXX XX, 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 XXXX XX 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 XXXX XX 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
25
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 XXXX XX
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 XXXX XX. 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 XXXX XX from time to time, CT shall (i) certify
to General XXXX XX 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 XXXX XX.
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
26
Management Fee from their respective Funds. With respect to each quarter, CTIMCO
shall deliver to General XXXX XX 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
27
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
28
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 XXXX XX shall have no right to purchase the Fund II
Purchase Warrant or the Subsequent Funds Purchase Warrant, and Limited XXXX XX
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
29
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 Xxxx X. Xxxxx, Vice
Chairman and Chief Executive Officer; and Xxxxx X. Xxxxxxx, 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 XXXX XX. CT
hereby agrees that it shall not amend or modify any such
30
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 XXXX XX 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
31
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
XXXX XX 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 XXXX XX, Limited XXXX XX, 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 XXXX XX, Limited XXXX XX, 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 XXXX XX, Limited XXXX XX, 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.
32
(iii) Due Authorization; Enforceability. In the case of Limited
REMI I, General XXXX XX, Limited XXXX XX, 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.
33
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 Xxxxxxx Xxxxx Barney)
experienced in the valuation of businesses engaged in the Business and their
securities.
34
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
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.
36
(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 XXXX XX 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
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 XXXX XX and Limited XXXX XX and their
respective Affiliates shall be treated as one party, and CT, XX-X0, XX-X0-XX,
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 XXXX XX or Limited XXXX XX or any of
their Affiliates shall not constitute a disclosure by General XXXX XX under
clauses (i) through (iii) of Section 6.2(b) hereof that shall give rise to a
disclosure by Limited REMI I, General XXXX XX or Limited XXXX XX 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.
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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
000 Xxxxxxxx Xxxx., 0XX
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Real Estate Investment Number: 12832
With Copies to: Citigroup Investments Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxxxx Xxxxxx
Real Estate Investment Number: 12832
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
If to General XXXX XX: Travelers General Real Estate Mezzanine
---------------------- Investments II, LLC
000 Xxxxxxxx Xxxx., 0XX
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Real Estate Investment Number: 12833
39
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.
If to Limited XXXX XX: Travelers Limited Real Estate Mezzanine
---------------------- Investments II, LLC
000 Xxxxxxxx Xxxx., 0XX
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Real Estate Investment Number: 12833
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.
If to Capital Trust: Capital Trust, Inc.
-------------------- 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
With Copies to: Battle Xxxxxx LLP
--------------- 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
40
If to a CT Party
----------------- c/o Capital Trust, Inc.
to such party: 000 Xxxxx Xxxxxx, 00xx Floor
-------------- Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
With Copies to: Battle Xxxxxx LLP
--------------- 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, 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.
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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.
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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/ Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
Chief Executive Officer ------------------------------
Xxxxxxx Xxxxxx
Vice President
CT-F1, LLC TRAVELERS GENERAL REAL ESTATE
By: Capital Trust, Inc., sole Member MEZZANINE INVESTMENTS II, LLC
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Wztson
------------------------------- -------------------------------
Xxxx X. Xxxxx Xxxxxxx Xxxxxx
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/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
------------------------------- ------------------------------
Xxxx X. Xxxxx Xxxxxxx Xxxxxx
Chief Executive Officer Vice President
CT-F2-LP, LLC
By: Capital Trust, Inc., sole Member
By: /s/ Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx
Chief Executive Officer
CT INVESTMENT MANAGEMENT CO., LLC
By: Capital Trust, Inc., sole Member
By: /s/ Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx
Chief Executive Officer
43