SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 11, 1997
(August 28, 1997)
Wellsford Real Properties, Inc.
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(Exact name of registrant as specified in its charter)
1-12917 13-3926898
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(Commission File Number) (IRS Employer Identification No.)
Maryland
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(State or other jurisdiction of incorporation)
610 Fifth Avenue, New York, New York 10020
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(Address of principal executive offices)
(Zip code)
(212) 333-2300
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(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Wellsford Commercial
On August 28, 1997, Wellsford Real Properties, Inc. ("WRP"), through its
subsidiary Wellsford Commercial Properties Trust ("WCPT"), in a joint
venture with WHWEL Real Estate Limited Partnership ("Whitehall"), an
affiliate of Goldman, Sachs & Co., formed a private real estate operating
company, Wellsford/Whitehall Properties, L.L.C. ("Wellsford Commercial").
Wellsford Commercial will focus initially on opportunistic acquisitions of
underperforming or vacant properties, in excellent locations within
recovering markets, where management can create significant value through
redevelopment. Wellsford Commercial's initial target markets include New
York, New Jersey, Connecticut and the Boston and Washington D. C.
metropolitan areas. WCPT will manage Wellsford Commercial on a day-to-day
basis, and certain major decisions will require the consent of both partners.
WCPT intends to qualify as a real estate investment trust ("REIT") and has a
50.1% interest in Wellsford Commercial. Except in certain limited
circumstances, all of WRP's office property activities will be conducted
through Wellsford Commercial.
Wellsford Commercial will initially own and operate nine properties
containing approximately 2.0 million square feet ("SF") of office space in
New Jersey and Washington, D.C. The initial properties consist of the
Pointview Corporate Park, 1700 Valley Road, 1800 Valley Road, the Greenbrook
Corporate Center and the Chatham office building, which were contributed by
WRP upon formation of Wellsford Commercial, and 300 Atrium Drive, 400 Atrium
Drive, 500 Atrium Drive and 1275 K Street, which were contributed by
Whitehall upon formation of Wellsford Commercial. The properties contributed
by Whitehall were encumbered by approximately $48 million of debt bearing
interest at LIBOR plus 3% which was assumed by Wellsford Commercial. Three
additional properties in New Jersey and Boston, representing approximately
$30 million in value, are under contract and are expected to be closed within
60 days. Upon closing of such acquisitions, Wellsford Commercial will have
land sites adjacent to its developed properties allowing for over 1.0 million
SF of additional development.
WRP is entitled to incentive compensation equal to 17.5% of available cash
after a return of capital and a 17.5% return on equity ("IRR") to WRP and
Whitehall, and 22.5% of available cash after a 22.5% IRR to such partners.
WRP and Whitehall have committed to make additional equity contributions of
$50 million each for new acquisitions, capital needs, and working capital.
Whitehall may exchange the membership units it receives in Wellsford
Commercial relating to capital contributions in excess of an additional $25
million up to an additional $50 million, for shares of WRP Common Stock or,
in WRP's sole discretion, cash, based upon the price paid for such membership
units and the current market value of WRP Common Stock. Wellsford Commercial
is currently negotiating a $150 million credit facility to fund future
growth.
In connection with the transactions described above, WRP issued 5,000,000
warrants (the "Warrants") to Whitehall. Each Warrant is exercisable for
five years for either .826446 shares of WRP Common Stock or the cash
equivalent based upon the market value of such shares subject to certain
adjustments. The exercise price for each Warrant is payable either by one
membership unit in Wellsford Commercial or $10.00 in cash.
In addition, WRP entered into a Term Loan Agreement ("TLA") with Wellsford
Commercial pursuant to which WRP would loan to Wellsford Commercial up to
approximately $86.3 million for a period of 90 days ending on November 26,
1997. Approximately $61.7 million has been advanced under the TLA. The loan
bears interest at LIBOR plus 3% and may be extended for an additional 90 days
at LIBOR plus 4%.
Item 5. Other Events
Value Property Trust
On August 29, 1997, WRP entered into a letter of intent with Value Property
Trust (NYSE: VLP), a real estate investment trust, pursuant to which WRP
would acquire VLP in a merger transaction for cash and stock valued at
approximately $169 million.
Pursuant to the terms of the contemplated merger agreement, WRP would pay to
VLP shareholders $112 million in cash and issue an aggregate of approximately
4.8 million shares of its Common Stock resulting in each VLP shareholder
receiving $10 in cash and 0.4259 common shares of WRP for each share of VLP.
The amount of cash will increase and the number of shares of Common Stock
will decrease in the event WRP's shareholders do not approve the issuance of
such WRP shares. VLP primarily owns 21 properties (with 2.1 million SF) and
currently has approximately $64 million in net cash. The portfolio is
diversified both by property type and geographic location. Seven
office/industrial properties with 600,000 SF are located in Southern
California and 14 office/industrial and retail properties with 1.5 million SF
are located primarily throughout the mid-Atlantic region.
The letter of intent provides that VLP will negotiate the terms of a
definitive agreement exclusively with WRP until September 19, 1997. The
closing of the transaction under such agreement will be subject to the
satisfaction of various closing conditions, including approval of VLP
shareholders. The proposed acquisition, which will be accounted for as a
purchase, is expected to be completed by December, 1997 or January, 1998.
The Abbey Company
On August 28, 1997, WRP and Morgan Guaranty Trust Company of New York ("MGT")
originated a $70 million secured credit facility to affiliates of The Abbey
Company, Inc. ("Abbey"), an owner and operator of office, industrial and
retail properties in Southern California.
The loan facility will be made available to Abbey for three years. Advances
under the facility can be made for up to 80% of the value of the borrowing
base collateral which will initially consist of 10 properties (all of Abbey's
currently owned properties), all cross-collateralized, totaling approximately
1.1 million SF and having an average occupancy rate of 94%. The initial
advance under the facility was for approximately $48.4 million.
Under the terms of its participation agreement with MGT, WRP will take a 50%
junior participation on all advances under the facility. Payments on WRP's
participation will be subordinated to those due MGT. WRP will be entitled to
receive interest on its advances under the facility at LIBOR plus 400 basis
points.
Abbey is a fully integrated real estate company owning properties in Southern
California. It is owned 90% by Don Abbey and 10% by Mace Siegel and
associates. Mr. Siegel is the Chairman of Macerich, a $1 billion REIT traded
on the New York Stock Exchange.
Item 7. Financial Statements, Proforma Financial Information and Exhibits
(A) Financial Statements
The financial statements required to be filed with this Report on Form
8-K will be filed under cover of a Form 8-K/A as soon as practicable, but not
later than 60 days after the date that this Report on Form 8-K must be filed.
(B) Proforma Financial Information
The proforma financial information required to be filed with this Report
on Form 8-K will be filed under cover of a Form 8-K/A as soon as practicable,
but not later than 60 days after the date that this Report on Form 8-K must
be filed.
(C) Exhibits
2.1 Limited Liability Company Operating Agreement of Wellsford/Whitehall
Properties, L.L.C. dated as of August 28, 1997.
4.1 Warrant Agreement, dated as of August 28, 1997, between Wellsford Real
Properties, Inc. and United States Trust Company of New York, as warrant
agent, and Warrant Certificate No. 1 of Wellsford Real Properties, Inc.
for 5,000,000 Warrants registered in the name of WHWEL Real Estate
Limited Partnership.
10.1 Term Loan Agreement between Wellsford Real Properties, Inc. and
Wellsford/Whitehall Properties, L.L.C. dated as of August 28, 1997.
10.2 $61,699,440 Term Note A, dated August 28, 1997, payable to the order of
Wellsford Real Properties, Inc. by Wellsford/Whitehall Properties,
L.L.C.
10.3 Letter Agreement, dated as of August 28, 1997, between Wellsford Real
Properties, Inc. and WHWEL Real Estate Limited Partnership, relating to
warrants to be issued to WHWEL Real Estate Limited Partnership.
10.4 Revolving Credit Agreement for $70 million, dated as of August 28, 1997,
between AP-Anaheim LLC, AP-Arlington LLC, AP-Atlantic LLC, AP-Cityview
LLC, AP-Farrell Ramon LLC, AP-Palmdale LLC, AP-Redlands LLC, AP-Victoria
LLC, AP-Victorville LLC, AP-Sierra LLC, each a California limited
liability company (collectively, the "Abbey Affiliates"), as Borrower,
and Morgan Guaranty Trust Company of New York, as Lender.
10.5 Loan Participation Agreement, dated as of August 28, 1997, between
Morgan Guaranty Trust Company of New York and Wellsford Real Properties,
Inc.
10.6 $70 million promissory note, dated August 28, 1997, payable to the order
of Morgan Guaranty Trust Company of New York by the Abbey Affiliates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized .
Wellsford Real Properties, Inc.
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(Registrant)
By:/s/ Gregory F. Hughes
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Date September 11, 1997 Gregory F. Hughes
Chief Financial Officer
<PAGE>
Exhibit Index
2.1 Limited Liability Company Operating Agreement of Wellsford/Whitehall
Properties, L.L.C. dated as of August 28, 1997.
4.1 Warrant Agreement, dated as of August 28, 1997, between Wellsford Real
Properties, Inc. and United States Trust Company of New York, as warrant
agent, and Warrant Certificate No. 1 of Wellsford Real Properties, Inc.
for 5,000,000 Warrants registered in the name of WHWEL Real Estate
Limited Partnership.
10.1 Term Loan Agreement between Wellsford Real Properties, Inc. and
Wellsford/Whitehall Properties, L.L.C. dated as of August 28, 1997.
10.2 $61,699,440 Term Note A, dated August 28, 1997, payable to the order of
Wellsford Real Properties, Inc. by Wellsford/Whitehall Properties,
L.L.C.
10.3 Letter Agreement, dated as of August 28, 1997, between Wellsford Real
Properties, Inc. and WHWEL Real Estate Limited Partnership, relating to
warrants to be issued to WHWEL Real Estate Limited Partnership.
10.4 Revolving Credit Agreement for $70 million, dated as of August 28, 1997,
between AP-Anaheim LLC, AP-Arlington LLC, AP-Atlantic LLC, AP-Cityview
LLC, AP-Farrell Ramon LLC, AP-Palmdale LLC, AP-Redlands LLC, AP-Victoria
LLC, AP-Victorville LLC, AP-Sierra LLC, each a California limited
liability company (collectively, the "Abbey Affiliates"), as Borrower,
and Morgan Guaranty Trust Company of New York, as Lender.
10.5 Loan Participation Agreement, dated as of August 28, 1997, between
Morgan Guaranty Trust Company of New York and Wellsford Real Properties,
Inc.
10.6 $70 million promissory note, dated August 28, 1997, payable to the order
of Morgan Guaranty Trust Company of New York by the Abbey Affiliates.
Exhibit 2.1
_________________________________________________________________
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
Dated as of August 28, 1997
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2. Terms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3. Filing of Certificate and Amendments . . . . . . . . . . . . . . . . 14
2.4. Purpose and Business; Powers; Scope of Members' Authority. . . . . . 14
2.5. Principal Office; Registered Agent . . . . . . . . . . . . . . . . . 15
2.6. Names and Addresses of Members . . . . . . . . . . . . . . . . . . . 15
2.7. Pre-Closing Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.8. Post-Closing Receipts. . . . . . . . . . . . . . . . . . . . . . . . 16
2.9. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control . . . . . . . . . . . . . . . . . . . . . . . 17
3.2. Enumeration of Specific Duties . . . . . . . . . . . . . . . . . . . 18
3.3. No Authority to Hire Employees . . . . . . . . . . . . . . . . . . . 21
3.4. Decisions Requiring Approval of the Management Committee . . . . . . 21
3.5. Management Committee . . . . . . . . . . . . . . . . . . . . . . . . 26
3.6. Limited Authorization. . . . . . . . . . . . . . . . . . . . . . . . 28
3.7. Members Shall Not Have Power to Bind Company . . . . . . . . . . . . 29
3.8. Status as "Operating Company"; Participation in Management by Members29
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property. . . . . . . . . . . . . . . . . . . . . . . 29
4.2. Exclusivity; Other Activities of the Members . . . . . . . . . . . . 29
4.3. Indemnification with Respect to the Manager. . . . . . . . . . . . . 33
4.4. Compensation of Members and Affiliates . . . . . . . . . . . . . . . 33
4.5. Investment Representations . . . . . . . . . . . . . . . . . . . . . 34
4.6. Dealing with Members . . . . . . . . . . . . . . . . . . . . . . . . 34
4.7. Designation of Tax Matters Member. . . . . . . . . . . . . . . . . . 34
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts of the Members. . 34
5.2. Additional Capital Contributions . . . . . . . . . . . . . . . . . . 40
5.3. Failure to Fund Capital Contributions. . . . . . . . . . . . . . . . 40
5.4. Dilution for Failure to Fund Capital Calls . . . . . . . . . . . . . 42
5.5. Capital of the Company . . . . . . . . . . . . . . . . . . . . . . . 42
5.6. Liability of Members . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7. Return of Capital Contribution . . . . . . . . . . . . . . . . . . . 43
5.8. Calculation of Members' Percentage Interest. . . . . . . . . . . . . 43
5.9. Issuance of Additional Membership Units. . . . . . . . . . . . . . . 43
5.10. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.2. Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions . . . . . . . . . . . . . . . . . . . 48
7.2. Restoration of Excess Distributions. . . . . . . . . . . . . . . . . 49
7.3. Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.4. Repayment of Member Loans. . . . . . . . . . . . . . . . . . . . . . 50
7.5. Revisions to Reflect Issuance of Additional Membership Units.. . . . 50
7.6. Initial Public Offering; Sale of Units. . . . . . . . . . . . . . . 50
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members . . . . . . . . . 51
8.2. Sale of Properties, the Company or its Subsidiaries. . . . . . . . . 52
8.3. Conversion Right . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.4. Certain Transfer Provisions. . . . . . . . . . . . . . . . . . . . . 58
8.5 Assignment Binding on Company . . . . . . . . . . . . . . . . . . . . 59
8.6. Bankruptcy of a Member . . . . . . . . . . . . . . . . . . . . . . . 59
8.7. Substituted Members. . . . . . . . . . . . . . . . . . . . . . . . . 59
8.8. Acceptance of Prior Acts . . . . . . . . . . . . . . . . . . . . . . 59
8.9. Additional Limitations . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE IX.
MANAGER
9.1. Removal of Manager . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.2. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination . . . . . . . . . . . . . . . . . . . . 61
10.2. Distribution Upon Liquidation . . . . . . . . . . . . . . . . . . . 61
10.3. Sale of Company Assets. . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account. . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.2. Availability of Books of Account. . . . . . . . . . . . . . . . . . 63
11.3. Financial Reports and Statements; Annual Budgets. . . . . . . . . . 63
11.4. Accounting Expenses . . . . . . . . . . . . . . . . . . . . . . . . 65
11.5. Bank Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.6. Fidelity Bonds and Insurance. . . . . . . . . . . . . . . . . . . . 65
ARTICLE XII.
AMENDMENTS
12.1. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 65
13.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.3. Headings and Captions . . . . . . . . . . . . . . . . . . . . . . . 66
13.4. Variance of Pronouns. . . . . . . . . . . . . . . . . . . . . . . . 66
13.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.6. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.7. Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.8. Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.9. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 67
13.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.11. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.12. Maintenance as a Separate Entity . . . . . . . . . . . . . . . . . 67
13.13. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.14. Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . 68
13.15. Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . 69
13.16. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . 69
13.17. Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
EXHIBITS
EXHIBIT A Transaction Summary
EXHIBIT B-1 Description of Real Property Contributed by Whitehall
EXHIBIT B-2 Description of Personal, Tangible and Intangible Property
Contributed by Whitehall
EXHIBIT B-3 Description of Excluded Assets
EXHIBIT B-4 Whitehall Properties
EXHIBIT B-5 Whitehall Additional Properties
EXHIBIT C-1 Description of Real Property Contributed by WCPT
EXHIBIT C-2 Description of Personal, Tangible and Intangible Property
Contributed by WCPT
EXHIBIT C-3 Description of Excluded Assets
EXHIBIT C-4 WCPT Properties
EXHIBIT E-1 Representations and Warranties of Whitehall
EXHIBIT E-2 Representations and Warranties of WCPT
EXHIBIT E-3 Representations and Warranties of Whitehall Concerning the
Whitehall Additional Properties
SCHEDULES
SCHEDULE 2.9 Certain Post-Closing Expenses
SCHEDULE 3.2(a)(vi) Approved Leases and Lease Documentation
SCHEDULE 5.4 Example of Squeeze-Down Formula Calculation
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT is made and
entered into as of August 28, 1997 by and between WHWEL Real Estate Limited
Partnership, a Delaware limited partnership ("Whitehall") and Wellsford
Commercial Properties Trust, a Maryland real estate investment trust
("WCPT").
R E C I T A L S
WHEREAS, the Company intends to acquire, hold, develop, redevelop
and operate real estate assets directly or indirectly through one or more
Subsidiaries; and
WHEREAS, the Members and their Affiliates have, contemporaneously
with the execution of this Agreement, taken the steps described on Exhibit A
to this Agreement.
NOW, THEREFORE, in order to carry out their intent as expressed
above and in consideration of the mutual agreements hereinafter contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby covenant and agree as
follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. As used in this Agreement and the Exhibits,
Schedules and Annexes hereto, the following terms shall have the meanings set
forth below:
"Act" shall mean the Delaware Limited Liability Company Act (6 Del.
C. Section 18-101 et seq.), as amended from time to time.
"Additional Closing" shall mean the consummation of the
transactions whereby the Company acquires the Whitehall Additional
Properties.
"Additional Closing Date" shall mean the date upon which the
Additional Closing occurs.
"Administration Fee" shall mean the administration fee in the
amount of $300,000 per annum payable in four $75,000 installments quarterly
in arrears to WCPT for so long as WCPT shall act as Manager. The
Administration Fee shall be prorated for partial years or quarters commencing
on September 30, 1997.
"Affiliate" shall mean with respect to any Person (i) any other
Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with such Person,
(ii) any other Person owning or controlling 10% or more of the outstanding
voting securities of, or other ownership interests in, such Person, (iii) any
officer, director or member of such Person and (iv) if such Person is an
officer, director or member of any company, the company for which such Person
acts in any such capacity. For purposes of this definition and Section
8.1(c), "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"agreed net fair market value" shall have the meaning set forth in
Section 6.1(b).
"Agreement" shall mean this Limited Liability Company Operating
Agreement, as it may hereafter be amended or modified from time to time.
"Annual Capital Budget" shall have the meaning set forth in Section
11.3(c).
"Annual Operating Budget" shall have the meaning set forth in
Section 11.3(c).
"Applicable Closing Date" shall have the meaning set forth in
Section 8.2(c).
"Appointing Member" shall have the meaning set forth in Section
3.5(c).
"Approved Budget" shall mean, with respect to each Property, the
Annual Capital Budget and Annual Operating Budget for such Property for the
Budget Year in question, in each case which has been approved by the
Management Committee.
"Assumed Financing" shall mean the credit facility made available
to WHATR Real Estate Limited Partnership pursuant to the Loan Agreement dated
as of May 14, 1997 by and among WHATR Real Estate Limited Partnership,
Goldman Sachs Mortgage Company, as syndication agent and lender, and the
other lenders from time to time parties thereto.
"Available Cash" shall mean, for any fiscal period, the excess, if
any, of (A) the sum of (i) the amount of all cash receipts of the Company
during such period from whatever source and (ii) any cash reserves of the
Company existing at the start of such period over (B) the sum of (i) all cash
amounts paid or payable (without duplication) in such period on account of
expenses and capital expenditures incurred in connection with the Company's
business (including, without limitation, general operating expenses, taxes
and amortization or interest on any debt of the Company) and (ii) such cash
reserves which may be required for the working capital and future needs of
the Company in an amount approved by the Management Committee or, failing
such approval, in an amount equal to the cash reserves of the Company
existing at the start of such period.
"Back-to-Back Debt" shall mean any Indebtedness incurred by the
Company that (i) is issued exclusively to WCPT, (ii) is issued simultaneously
with the issuance by WCPT of Funding Debt that has identical terms (including
principal amount, interest rate, payment amounts and frequency, maturity
date, covenants and defaults) to the Back-to-Back Debt issued by the Company
and (iii) is funded by WCPT exclusively through the issuance of such Funding
Debt.
"Bankruptcy" shall mean, with respect to the affected party,
(i) the adjudication that such party is bankrupt or insolvent, or the entry
of a final and nonappealable order for relief under Title 11 of the United
States Code or any other applicable federal or state bankruptcy or insolvency
law, (ii) the admission by such party of its inability to pay its debts as
they mature, (iii) the making by it of an assignment for the benefit of
creditors, (iv) the filing by it of a petition in bankruptcy or a petition
for relief under Title 11 of the United States Code or any other applicable
federal or state bankruptcy or insolvency law, (v) the expiration of sixty
(60) days after the filing of an involuntary petition under Title 11 of the
United States Code, an application for the appointment of a receiver for the
assets of such party, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other
federal or state insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such sixty (60)-day period, (vi) the
imposition of a judicial or statutory lien on all or a substantial part of
its assets unless such lien is discharged or vacated or the enforcement
thereof stayed within sixty (60) days after its effective date, (vii) the
filing by such party of an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of the nature described in clause (iv) above, and (viii) the
expiration of sixty (60) days after the commencement of any stay referred to
in clause (v) or (vi) above provided that the subject of such stay shall not
have been vacated or set aside within such sixty (60)-day period.
"Book Value" with respect to any Company Asset shall mean its
adjusted basis for federal income tax purposes, except that the initial Book
Value of any asset contributed by a Member to the Company shall be an amount
equal to the fair market value of such asset, as determined by the Members,
and such Book Value shall thereafter be adjusted in a manner consistent with
Treasury Regulations Section 1.704-l(b)(2)(iv)(g) for revaluations pursuant
to Section 6.1(b) and for the Depreciation taken into account with respect to
such asset.
"Budget Year" shall mean the period beginning on the date hereof
and ending on December 31, 1997; and beginning January 1, 1998, "Budget Year"
shall mean a period beginning on January 1, 1998 and ending on December 31,
1998 and any successive yearly period thereafter.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banks in New York are required or permitted to be
closed.
"Business Plan" shall mean, with respect to any Property, the
master business plan (which shall include the Annual Capital Budget, Annual
Operating Budget, the Leasing Plan and Marketing Plan) for such Property
prepared annually by the Manager and approved by the Management Committee,
setting forth the operating strategy and estimated receipts and expenditures
for the period covered by the Business Plan; provided that, the initial
Business Plan for any Property shall be the business plan for such property
prepared by or on behalf of the relevant WCPT Current Owner or Whitehall
Current Owner, a copy of which shall have been provided to Whitehall or WCPT,
as appropriate, prior to the Closing and, provided further that, new Business
Plans will be prepared by the Manager and submitted to the Management
Committee by no later than November 1, 1997 for calendar year 1998. The
Business Plan may be amended or replaced from time to time with the approval
of the Management Committee.
"Capital Account" when used in respect of any Member shall mean the
Capital Account maintained for such Member in accordance with Section 6.1, as
said Capital Account may be increased or decreased from time to time pursuant
to the terms of Section 6.1.
"Capital Call" shall mean any written notice to the Members
delivered in accordance with Section 5.2 hereof requesting a contribution in
cash to the Company, which notice shall state the total amount of the
required contributions by all Members and each Member's pro rata share of
such total based on such Member's Percentage Interest.
"Capital Contribution" when used with respect to any Member shall
mean the amount of capital contributed by such Member to the Company in
accordance with Article V (other than pursuant to Sections 5.1(c), (e), (i)
and (j))..
"Cause" shall mean (a) fraud, criminal felony indictment, gross
negligence or willful misconduct by WCPT, WRP or any of Jeffrey H. Lynford,
Edward Lowenthal or Gregory Hughes (or any successor occupying one or more of
the officer positions currently occupied by any of them in WCPT or WRP) if
such fraud, criminal felony indictment, gross negligence or willful
misconduct relates to any action or omission in connection with the business
of the Company or any of its Subsidiaries, (b) failure of WCPT to fund any
Capital Call in accordance with Section 5.2(b) (but not Section 5.2(a)), (c)
a breach of Section 4.2 by WCPT or its Affiliate or (d) the occurrence of any
Bankruptcy with respect to WCPT or WRP.
"Certificate of Formation" shall mean the Certificate of Formation
of the Company filed with the State of Delaware on August 18, 1997, as the
same may hereafter be amended and/or restated from time to time.
"Closing" shall mean the transactions whereby the Company and/or
its Subsidiaries acquire the WCPT Contributed Assets and the Whitehall
Contributed Assets in exchange for Membership Units.
"Closing Date Prorations" shall have the meaning set forth in
Section 2.9(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any corresponding provision(s) of succeeding law.
"Committee Representative" shall mean each individual appointed
from time to time by Whitehall or WCPT pursuant to Section 3.5, and
"Committee Representatives" shall mean all of such individuals, collectively.
"Company" shall mean Wellsford/Whitehall Properties, L.L.C., a
Delaware limited liability company, as said Company may from time to time be
hereafter constituted.
"Company Assets" shall mean all right, title and interest of the
Company in and to all or any portion of the assets of the Company and any
property (real or personal) or estate acquired in exchange therefor or in
connection therewith.
"Company Loan" shall mean any loan made by a Member to the Company
pursuant to Section 5.3(c).
"Contributing Member" shall have the meaning set forth in
Section 5.3.
"Conversion Factor" shall mean 1.0; provided that, if WCPT
(i) declares or pays a dividend on its outstanding Shares in Shares or makes
a distribution to all holders of its outstanding Shares in Shares, or
(ii) subdivides its outstanding Shares, or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the record date
for such dividend, distribution, subdivision, combination, or other action
(assuming for such purposes that such dividend, distribution, subdivision,
combination or other action has occurred as of such time) and the denominator
of which shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision, combination or other action. Whitehall's
agreement to the foregoing definition of "Conversion Factor" contained herein
is based upon the agreement of WCPT and WRP not to take any action which
would have a dilutive effect on the value of the Shares as compared to the
value of the Membership Units (so that the value of one Share would be less
than the value of one Membership Unit). In the event that any such action is
nevertheless taken by or on behalf of WCPT or its shareholders, the
Conversion Factor set forth in the first sentence of this definition shall be
adjusted in the manner set forth in the proviso in the first sentence of this
definition or, if otherwise applicable, in the same manner and in the same
instances provided in Article 6 of the Warrant Agreement (except that no such
adjustment shall be made if and to the extent that WCPT distributes to its
shareholders amounts received from the Company on account of its Interest or
the Administration Fee or the Promote). Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of the
event retroactive to the record date, if any, for the event giving rise
thereto, it being intended that (x) adjustments to the Conversion Factor are
to be made to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Membership Units and (y) if
a specified redemption date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion
Factor applicable to such redemption shall be adjusted to take into account
such event.
"Conversion Right" shall have the meaning set forth in Section 8.3.
"Damages" shall have the meaning set forth in Section 5.1(c).
"Debtor Member" shall have the meaning set forth in Section 7.4.
"Declaration of Trust" shall mean the amended and restated
declaration of trust of WCPT filed with the State Department of Assessment
and Taxation of the State of Maryland on August 25, 1997, as the same may be
restated and amended from time to time.
"Deemed Value Per Membership Unit" shall mean (i) prior to the date
any New Member acquires Membership Units, $10 (ten dollars) and (ii) after
the date any New Member acquires Membership Units, an amount equal to the
quotient (expressed as a dollar amount) of (x) the sum of the cash plus the
agreed net fair market value of property contributed to the Company by the
Person who most recently became a New Member, divided by (y) the total number
of Membership Units issued to such New Member in respect of such
contributions.
"Default Rate" shall mean an interest rate equal to the lesser of
(i) 15% per annum and (ii) the maximum rate permitted by law.
"Depreciation" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to
Company Assets, including any improvements made thereto and any tangible
personal property located therein, or amortization of the cost of any intan-
gible property or other assets acquired by the Company, which have a useful
life exceeding one year, provided, however, that with respect to any Company
Asset whose tax basis differs from its Book Value at the beginning of such
Fiscal Year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Book Value as the depreciation, amortization or
other cost recovery deduction for such period with respect to such asset for
federal income tax purposes bears to its adjusted tax basis as of the
beginning of such Fiscal Year; provided, however, that if the federal income
tax depreciation, amortization or other cost recovery deduction for such
Fiscal Year is zero, Depreciation shall be determined using any reasonable
method selected by the Management Committee.
"Dispute Notice" shall have the meaning set forth in Section
5.1(c).
"Distribution Amount" shall have the meaning set forth in Section
7.1(a).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Extraordinary Transaction" shall mean, with respect to any Person,
the occurrence of one or more of the following events: (i) a merger
(including a triangular merger), consolidation or other combination with or
into another Person; (ii) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of its assets in one transaction
or a series of related transactions; (iii) any reclassification,
recapitalization or change of its outstanding equity interests (other than a
change in par value, or from par value to no par value, or as a result of a
split, dividend or similar subdivision); (iv) any issuance of equity
securities of such Person in exchange for assets (other than an issuance of
securities for cash or an issuance of securities pursuant to an employee
benefit plan); (v) any change of control (as defined below) of such Person or
(vi) the adoption of any plan of liquidation or dissolution of such Person.
For purposes of this definition, "change of control" with respect to any
Person means (a) the acquisition by another Person of more than 20% of the
voting stock in such Person or (b) the change in membership of a majority of
such Person's board of directors.
"Failed Contribution" shall have the meaning set forth in
Section 5.3.
"Fiscal Year" shall mean the fiscal year of the Company, which
shall be the calendar year; but upon termination of the Company, "Fiscal
Year" shall mean the period from the end of the last preceding Fiscal Year to
the date of such termination.
"Funding Debt" shall mean any Indebtedness incurred by WCPT in
compliance with the terms and provisions of Section 4.2(g).
"Indebtedness" shall mean, with respect to any Person, (i) all
indebtedness and obligations of or assumed by such Person in respect of money
borrowed (including any indebtedness which is non-recourse to the credit of
such Person but which is secured by a Lien on any asset of such Person) or
evidenced by a promissory note, bond, debenture, letter of credit
reimbursement agreement or other written obligations to pay money for
borrowed money; (ii) any indebtedness or obligation of others secured by a
Lien on any asset of such Person, whether or not such indebtedness or
obligation is assumed by such Person; (iii) any guaranty, endorsement,
suretyship or other undertaking pursuant to which such Person may be liable
on account of any obligation of any third party other than a Subsidiary;
(iv) indebtedness for the deferred purchase price of property or services;
(v) obligations of such Person incurred in connection with entering into a
Lease which, in accordance with generally accepted accounting principles,
should be capitalized; and (vi) the indebtedness or obligations of a
partnership or joint venture in which such Person is a general partner or
joint venturer.
"Initial Capital Contribution" shall mean those capital
contributions made pursuant to Section 5.1(a) and (d).
"Initial Closing Date" shall mean the date upon which (i) this
Agreement is fully executed and (ii) the Closing occurs.
"Initial Members" shall mean WCPT and Whitehall.
"Institutional Lender" shall mean an Affiliate of any Member and/or
any one or more of the following other entities, provided that for any such
other entity to qualify as an Institutional Lender hereunder, such other
entity, together with its Affiliates, must have total assets of at least
$5,000,000,000 and stockholders' equity or net worth of at least $250,000,000
(or, in either case, the equivalent thereof in a foreign currency) as of the
date the loan is made: a savings bank, a savings and loan association, a
commercial bank or trust company, an insurance company subject to regulation
by any governmental authority or body, a real estate investment trust, a
union, governmental or secular employees' welfare, benefit, pension or
retirement fund, a pension fund property unit trust (whether authorized or
unauthorized), an investment company or trust, a merchant or investment bank
or any other entity generally viewed as an institutional lender. In each of
the foregoing cases, such Affiliate or other entity shall constitute an
Institutional Lender whether (i) acting for itself or (ii) as trustee, in a
fiduciary, management or advisory capacity or, in the case of a bank, as
agent bank, for any number of lenders, so long as in the case of clause (ii)
the day-to-day management decisions relating to the loan are either exercised
by or recommended by such Institutional Lender and, during the life of the
loan, such Institutional Lender shall only be removed from its clause (ii)
capacity if it is replaced by another Institutional Lender also so acting
under clause (ii).
"Insurance Program" shall have the meaning set forth in
Section 3.4.
"Interest" shall mean the entire interest of a Member in the
Company at any particular time, including the Percentage Interest of such
Member, together with the right of such Member to any and all benefits to
which a Member may be entitled as provided in this Agreement, together with
the obligations of such Member to comply with all the terms and provisions of
this Agreement. The Interest of any Member may be expressed as a number of
Membership Units.
"Internal Rate of Return" shall mean, with respect to any Member,
that such Member has achieved an internal rate of return of a specified
percentage per annum, which shall occur when the total Capital Contributions
made from time to time by such Member are returned to such Member together
with an annual return equal to such specified percentage calculated
commencing on the date such Capital Contributions are made and compounded
annually to the extent not paid on a current basis, taking into account the
timing and amounts of all previous Capital Contributions by such Member to
the Company and all previous distributions by the Company to such Member.
For purposes of computing such internal rate of return, any Capital
Contribution made by such Member and any distribution of funds received by
such Member at any time during a month shall be deemed to be made or received
on the first day of such month. In addition, solely for purposes of
calculating the Internal Rate of Return in Sections 7.1(b)(ii) and
7.1(b)(iii), the amount of each Initial Member's Capital Contributions as of
the Closing Date shall be deemed to be such Member's actual Capital
Contributions as of the date hereof less such Initial Member's Percentage
Interest (as of the Closing Date) multiplied by $1 million.
"IRS" shall mean the Internal Revenue Service.
"Leasing Plan" shall mean, with respect to any Property, the
leasing guidelines prepared by the Manager for each type of planned use of
such Property (e.g. commercial, industrial or retail) containing parameters
for minimum rents, tenant allowances, operating expense recaptures, financial
condition of tenants, free rent, lease assignments and assumptions, overages
and tenant improvements to the extent such information is available and
pertinent.
"Lien" shall mean any lien, mortgage, charge, restriction, option,
right of first refusal or offer, contractual restriction on transfer,
security interest, tax lien, pledge, encumbrance, conditional sale or title
retention arrangement, or any other claim of any kind or nature against any
Property securing any Indebtedness, or any agreement to create or confer any
of the foregoing, in each case whether arising by agreement or under any
statute or law or otherwise.
"Losses" shall have the meaning set forth in Section 6.2(a).
"Major Decisions" shall have the meaning set forth in Section 3.4.
"Management Committee" shall have the meaning set forth in Section
3.5 hereof.
"Manager" (i) shall mean WCPT upon the execution and delivery
hereof, (ii) except as set forth in clause (iii) below, if for any reason
WCPT ceases to be the Manager, shall thereafter mean another Person appointed
by the Management Committee or (iii) if WCPT ceases to be the Manager
pursuant to Section 9.1, shall thereafter mean another Person appointed by
Whitehall.
"Mandatory Capital Call" shall mean a Capital Call for any capital
contributions that would be required to fund Necessary Expenditures.
"Marketing Period" shall have the meaning set forth in Section
8.2(e).
"Marketing Plan" shall mean, with respect to any Property or
appropriate part thereof, the comprehensive plan for marketing and leasing
the space in such Property, which plan shall be submitted by the Manager to,
and approved by, the Management Committee; provided, that the initial
Marketing Plan for any Property shall be the marketing plan for such property
prepared by or on behalf of the relevant WCPT Current Owner or Whitehall
Current Owner, a copy of which shall have been provided to Whitehall or WCPT,
as appropriate, prior to the Closing and provided further that, new Marketing
Plans will be prepared by the Manager and submitted to the Management
Committee by no later than November 1, 1997 for calendar year 1998.
"Member-Funded Debt" shall mean any non-recourse debt of the
Company which is loaned or guaranteed by any Member and/or is treated as
Member non-recourse debt with respect to a Member under Treasury Regulations
Section 1.704-2(b)(4).
"Member Loan" shall mean any loan made by a Member to another
Member pursuant to Section 5.3(b).
"Members" shall mean Whitehall and WCPT (for as long as such
Persons are still members of the Company), their successors and permitted
assigns and any other members admitted to the Company in accordance with
Article VIII.
"Membership Unit" shall mean a fractional, undivided share of the
Interest of all Members issued pursuant to Section 5.1(h) or Section 5.9
hereof. As of the Initial Closing Date, there shall be considered to be
5,000,000 Membership Units outstanding, with each Membership Unit
representing a .00002% Percentage Interest in the Company. The Management
Committee may create and authorize the issuance of new Membership Units and
may designate one or more new classes of Membership Units and establish the
designations, preferences and relative, participating, optional or other
special rights, powers and duties of each class of Membership Units. The
number of Membership Units owned by any Member may be expressed as such
Member's Percentage Interest. The Membership Units are not intended to be
characterized as "securities" for any purpose (including any securities
laws).
"Minimum Gain" shall mean an amount equal to the excess of the
principal amount of debt, for which no Member is liable ("non-recourse
debt"), secured by Company Assets, over the adjusted basis of such Company
Assets which represents the minimum taxable gain which would be recognized by
the Company if the non-recourse debt were foreclosed upon and the Company
Assets were transferred to the creditor in satisfaction thereof, and which is
referred to as "minimum gain" in Treasury Regulations Sec-
tion 1.704-1(b)(4)(iv). A Member's share of Minimum Gain shall be determined
pursuant to the above-cited Treasury Regulations.
"Necessary Expenditure" shall mean, (i) to the extent Available
Cash is not sufficient to pay for any expenditure whether or not of a
recurring nature (x) that is necessary, in the reasonable discretion of
either the Manager or Whitehall, to preserve or protect the assets of the
Company, including, without limitation, real estate taxes, insurance
payments, costs of restoring the assets of the Company after a casualty or
condemnation thereof, costs of any capital expenditure necessary to protect
the structural integrity of any asset of the Company or human health or
safety, utility costs, costs of compliance with law, payments on or of
contractual obligations and debts of the Company, tenant improvements and
leasing commissions, or (y) that is required to effectuate or pay for any
cost, expense or transaction provided for in an Approved Budget and (ii) to
the extent Available Cash is not sufficient to repay the WRP Loans in full at
maturity.
"net equity" shall mean, with respect to an entity, the book value
(before depreciation) of such entity's assets less the liabilities of such
entity, and, with respect to any property, the book value (before
depreciation) of such property less the liabilities with respect to such
property.
"New Member" shall mean any Member other than one of the Initial
Members. Any New Member may be issued a new class of Membership Units with
such classifications and designations as the Management Committee shall
determine.
"Non-Contributing Member" shall have the meaning set forth in
Section 5.3.
"Non-Triggering Party" shall have the meaning set forth in
Section 8.2(a).
"Notice of Conversion" shall mean a Notice of Conversion
substantially in the form of Exhibit D.
"Objection Notice" shall have the meaning set forth in
Section 11.3(c).
"Offer" shall have the meaning set forth in Section 8.2(b).
"Office Property" shall mean any office building property,
including, without limitation, a research and development facility or a
mixed-use complex, not less than 40% of the rentable square footage of which
is used for offices and/or research and development space.
"Operational Decisions" shall have the meaning set forth in
Section 3.4.B.
"Organizational Document" of a Person shall mean (i) with respect
to a corporation, such Person's certificate of incorporation and by-laws, and
any shareholder agreement, voting trust or similar arrangement applicable to
any of such Person's authorized shares of capital stock, (ii) with respect to
a partnership, such Person's certificate of limited partnership, partnership
agreement, voting trusts or similar arrangements applicable to any of its
partnership interests or (iii) with respect to a limited liability company,
such Person's certificate of formation, limited liability company agreement
or other document affecting the rights of holders of limited liability
company interests.
"Percentage Interest" shall mean the percentage interest listed for
each Member in Section 5.1(h) as the same may be adjusted pursuant to the
terms of Section 5.4 and Section 5.8.
"Permitted Liens" shall mean (i) Liens for taxes and other similar
charges not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves have been established
(and as to which the property subject to such Lien is not yet subject to
foreclosure, sale or loss on account thereof); (ii) Liens in respect of
property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's and other like Liens; provided that
such Liens secure only amounts not yet due and payable or amounts being
contested in good faith by appropriate proceedings for which adequate
reserves have been established (and as to which the property subject to such
lien is not yet subject to foreclosure, sale or loss on account thereof);
(iii) easements, rights-of-way, restrictions (including zoning restrictions),
defects or irregularities in title and other similar charges or encumbrances
not, in any material respect, interfering with the ordinary conduct of
business at the relevant property; (iv) leases or subleases granted to
others, whether existing now or hereafter entered into, in the ordinary
course of business; (v) any attachment or judgment lien, unless the judgment
it secures shall not, within thirty (30) days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall not have
been discharged within thirty (30) days after the expiration of any such stay
and (vi) any Lien set forth on Schedule B (or any equivalent schedule) as an
exception to the title insurance policies insuring the title of the Company
or any of its Subsidiaries in and to the Properties.
"Person" shall mean any individual, partnership, corporation,
limited liability company, trust or other legal entity.
"Plan Asset Regulation" shall mean the Department of Labor
Regulation Section 2510.3-101, as amended.
"Pledgee" shall have the meaning set forth in Section 8.1(b).
"Profits" shall have the meaning set forth in Section 6.2(a).
"Promote" shall mean the aggregate distributions that would be made
to the Manager pursuant to Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y),
7.1(c)(iii)(y) and 7.1(c)(iv)(y).
"Property" and "Properties" shall have the meanings set forth in
Section 2.4(a).
"Property Loan" shall mean any bridge, permanent or construction
financing obtained by the Company or any of its Subsidiaries in accordance
with the provisions hereof relating to one or more Properties which may be
secured by a mortgage, or similar security in the nature of a mortgage, on
such Properties, and which is to be entered into for the purpose of financing
or refinancing the acquisition, construction, development, and/or operation
of such Properties. The term "Property Loan" shall also include the Assumed
Financing.
"recapture income" shall have the meaning set forth in the Code and
the applicable Treasury Regulations.
"Required Committee Approval" shall mean, with respect to any Major
Decision, the affirmative approval of no fewer than two Committee
Representatives appointed by each Appointing Member, and with respect to any
Operational Decision, the affirmative approval of no fewer than one Committee
Representative appointed by each Appointing Member.
"Rights" shall mean any rights, options, warrants or convertible or
exchangeable securities (or instruments exchangeable or convertible into any
of the foregoing) that in any case entitle the holder to subscribe for or
purchase or otherwise receive one or more Shares or any other securities or
property of WCPT.
"Sales Notice" shall have the meaning set forth in Section 8.2(a).
"Sales Response Notice" shall have the meaning set forth in
Section 8.2(c).
"700 Atrium Purchase Contract" shall mean the Purchase Contract
between S/A - 700 Atrium Drive Limited Partnership and WHMAB Real Estate
Limited Partnership, dated as of June 30, 1997.
"Share" shall mean a share of beneficial interest (or other
comparable equity interest) of WCPT. If there is more than one class or
series of Shares, the term "Shares" shall, as the context requires, be deemed
to refer to the class or series of Shares that correspond to the class or
series of Membership Interests for which the reference to Shares is made.
"Shares Amount" shall mean a number of Shares equal to the product
of the number of Membership Units offered for conversion times the Conversion
Factor; provided that, if WCPT, at any time, issues any Rights to the holders
of Shares, then the Shares Amount shall also include such Rights that a
holder of that number of Shares would have been entitled to receive.
"Specified Conversion Date" shall mean the tenth Business Day after
receipt by WCPT of a Notice of Conversion.
"Subsidiary" shall mean any Person more than 50% owned, directly or
indirectly, by the Company and over which the Company has management control.
No Subsidiary may be a corporation without the consent of the Management
Committee. As of the date of the Initial Closing, "Subsidiary" shall mean
WEL/WH Point View/1800 Valley, L.L.C., WEL/WH 1700 Valley, L.L.C., WEL/WH
Chatham, L.L.C., WEL/WH Greenbrook, L.L.C., WEL/WH 1275 K Street, L.L.C.,
WEL/WH 345 ATR, L.L.C. and WEL/WH 700 ATR, L.L.C.
"Substituted Member" shall mean any Person admitted to the Company
as a Member pursuant to the provisions of Section 8.7.
"Target Territory" shall mean the States of Connecticut,
Massachusetts, New Jersey, New York and Virginia, the greater metropolitan
region (including central business district and suburban markets) of
Washington, D.C. and each other greater metropolitan region (including
central business district and suburban markets) in which the Company and/or
its Subsidiaries own one or more Office Properties having a total purchase
price of $15 million in the aggregate.
"Third Party" shall have the meaning set forth in Section 8.2(a).
"Third Party Offer" shall have the meaning set forth in
Section 8.2(f).
"Third Party Offer Price" shall have the meaning set forth in
Section 8.2(f).
"Third Party Response Notice" shall have the meaning set forth in
Section 8.2(g).
"Total Price" shall have the meaning set forth in Section 8.2(a).
"Transfer" shall have the meaning set forth in Section 8.1(a).
"Treasury Regulations" shall mean the regulations promulgated under
the Code, as such regulations are in effect on the date hereof.
"Triggering Party" shall have the meaning set forth in
Section 8.2(a).
"Warrant Agreement" shall mean the Warrant Agreement dated as of
the date hereof between WRP and United States Trust Company of New York, as
warrant agent.
"WCPT" shall have the meaning set forth in the first paragraph of
this Agreement.
"WCPT Contributed Assets" shall have the meaning set forth in
Section 5.1(d).
"WCPT Current Owners" shall mean North American Medical Research
Corp., Wellsford Wayne Corp., Wellsford Chatham Corp. and Wellsford
Greenbrook Corp.
"WCPT Properties" shall mean each of the real properties listed on
Exhibit C-4.
"Whitehall" shall have the meaning set forth in the first paragraph
of this Agreement.
"Whitehall Additional Contributed Assets" shall have the meaning
set forth in Section 5.1(i).
"Whitehall Additional Properties" shall mean each of the real
properties listed on Exhibit B-5.
"Whitehall Contributed Assets" shall have the meaning set forth in
Section 5.1(a).
"Whitehall Current Owners" shall mean WHATR Real Estate Limited
Partnership, WHPKS Real Estate Limited Partnership and WHMAB Real Estate
Limited Partnership.
"Whitehall Properties" shall mean each of the real properties
listed on Exhibit B-4.
"WRP" shall mean Wellsford Real Properties, Inc., a Maryland
corporation.
"WRP At-Market Shares" shall mean the shares of WRP issued to
Whitehall pursuant to the WRP Letter Agreement in exchange for Membership
Units owned by Whitehall.
"WRP Letter Agreement" shall mean the letter agreement, dated as of
the date hereof, between Whitehall and WRP concerning the conversion of
Whitehall's Membership Units into WRP At-Market Shares.
"WRP Loans" shall have the meaning set forth in Section 3.4.
"WRP Shares" shall mean shares of common stock, $.01 par value per
share, of WRP.
"WRP Warrants" shall mean the warrants issued on the Initial
Closing Date to Whitehall by WRP pursuant to the Warrant Agreement.
1.2. Terms Generally. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include both the plural and the singular;
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(c) the words "including" and "include" and other words of similar
import shall be deemed to be followed by the phrase "without limitation."
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name. The business of the Company shall be conducted
under the name of "Wellsford/Whitehall Properties, L.L.C." in the State of
Delaware and under such name or such assumed names as the Management
Committee deems necessary or appropriate to comply with the requirements of
any other jurisdiction in which the Company may be required to qualify.
2.2. Term. The term of the Company will commence on the date of
this Agreement and shall continue in full force and effect until December 31,
2045, unless sooner terminated or dissolved as hereinafter provided.
2.3. Filing of Certificate and Amendments. The Manager shall (and
shall have the power and authority to) execute and file the Certificate of
Formation and any required amendments thereto and do all other acts requisite
for the constitution of the Company as a limited liability company pursuant
to the laws of the State of Delaware or any other applicable law and for
enabling the Company or its Subsidiaries to conduct business in each
jurisdiction where the Properties are located.
2.4. Purpose and Business; Powers; Scope of Members' Authority.
(a) The Company is organized primarily for the purpose of directly or
indirectly acquiring, owning, financing, managing, maintaining, operating,
improving, developing and selling real property (each real property owned by
the Company or one of its Subsidiaries, together with all improvements
thereon and personal property owned by the Company or its Subsidiary related
thereto, a "Property," and all properties collectively, the "Properties").
After giving effect to the Closing, the Properties will be the real
properties set forth on Exhibit B-4 and Exhibit C-4 and after giving effect
to the Additional Closing, the Properties will be the real properties set
forth on Exhibit B-4, Exhibit C-4 and Exhibit B-5. The Company is empowered
to do any and all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and benefit of
the Company and its Subsidiaries, including, without limitation, full power
and authority, directly or through its Subsidiaries, to enter into, perform
and carry out contracts of any kind, borrow money and issue evidences of
indebtedness whether or not secured by mortgage, deed of trust, pledge or
other lien, acquire, own, manage, improve and develop any Property, and
lease, sell, transfer and dispose of any Property. The Company will at all
times operate in a manner so as to be exempt from the provisions of the
Investment Company Act of 1940, as amended.
(b) Except as otherwise expressly and specifically provided in
this Agreement, no Member shall have any authority to bind or act for, or
assume any obligations or responsibility on behalf of, any other Member.
Neither the Company nor any Member shall, by virtue of executing this Agree-
ment, be responsible or liable for any indebtedness or obligation of the
other Members or otherwise relating to any Property incurred or arising
either before or after the execution of this Agreement, except as to those
joint responsibilities, liabilities, indebtedness, or obligations expressly
assumed by the Company as of the date of this Agreement or incurred
thereafter pursuant to and as limited by the terms of this Agreement.
2.5. Principal Office; Registered Agent. The principal office of
the Company shall be 610 Fifth Avenue, New York, New York 10020. The Company
may change its place of business to such location or locations as may at any
time or from time to time be determined by the Management Committee. The
mailing address of the Company shall be c/o Wellsford Commercial Properties
Trust, 610 Fifth Avenue, New York, New York 10020, or such other address as
may be selected from time to time by the Management Committee. The Company
shall maintain a registered office at The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801. The name and address of the Company's registered agent is
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
2.6. Names and Addresses of Members. The names and addresses of
the Initial Members are as follows:
WHWEL Real Estate Limited Partnership
c/o Whitehall Street Real Estate
Limited Partnership VII
85 Broad Street, 19th Floor
New York, New York 10004
Attention: Chief Financial Officer
Wellsford Commercial Properties Trust
610 Fifth Avenue
New York, New York 10020
Attention: President
2.7. Pre-Closing Costs. Except as otherwise provided herein to
the contrary, each of the Members will bear all costs and expenses incurred
by such Member prior to the date hereof, including, without limitation, all
costs and expenses (including transfer and recordation taxes with respect to
properties transferred by such Member) relating to the contribution of assets
to the Company in connection with the Closing.
2.8. Post-Closing Receipts. (a) The Subsidiaries of the Company
shall be entitled to receive, and WCPT shall pay to the Company if received
by WCPT or any of its Affiliates, all income with respect to the WCPT
Properties that is received on or after the Initial Closing Date which
relates to any event or period after the Closing, provided that WCPT shall be
entitled to receive, and the Company and its Subsidiaries shall pay to WCPT
if received by any of them, all rents and other receivables with respect to
the WCPT Properties owing by tenants or other Persons at the WCPT Properties
which accrued prior to the Closing unless and to the extent any amounts are
then due and payable by the payor of such income to the Company or one of its
Subsidiaries on account of any period after the Closing and such payment is
not specifically designated to be applied to amounts owing which relate to
events or periods prior to the Closing.
(b) The Subsidiaries of the Company shall be entitled to receive,
and Whitehall shall pay to the Company if received by Whitehall or any of its
Affiliates, all income with respect to the Whitehall Properties that is
received on or after the Initial Closing Date which relates to any event or
period after the Closing, provided that Whitehall shall be entitled to
receive, and the Company and its Subsidiaries shall pay to Whitehall if
received by any of them, all rents and other receivables with respect to the
Whitehall Properties owing by tenants or other Persons at the Whitehall
Properties which accrued prior to the Closing unless and to the extent any
amounts are then due and payable by the payor of such income to the Company
or one of its Subsidiaries on account of any period after the Closing and
such payment is not specifically designated to be applied to amounts owing
which relate to events or periods prior to the Closing.
(c) The Subsidiaries of the Company shall be entitled to receive,
and Whitehall shall pay to the Company if received by Whitehall or any of its
Affiliates, all income with respect to the Whitehall Additional Properties
that is received on or after the Additional Closing Date which relates to any
event or period after the Additional Closing, provided that Whitehall shall
be entitled to receive, and the Company and its Subsidiaries shall pay to
Whitehall if received by any of them, all rents and other receivables with
respect to the Whitehall Properties owing by tenants or other Persons at the
Whitehall Additional Properties which accrued prior to the Additional Closing
unless and to the extent any amounts are then due and payable by the payor of
such income to the Company or one of its Subsidiaries on account of any
period after the Additional Closing and such payment is not specifically
designated to be applied to amounts owing which relate to events or periods
prior to the Additional Closing.
2.9. Prorations. (a) The agreed upon value of the assets
contributed to the Company pursuant to Section 5.1(a) and (d) were derived
taking into account capital expenditures incurred prior to the date hereof
and without taking into account prorations for items that would customarily
be pro rated between buyers and sellers of real estate.
(b) On or before September 20, 1997, Whitehall and WCPT shall
collectively determine and calculate, with respect to each Property, the
apportionment of real estate taxes, utilities and other expense items (but
not items of income, which are to be allocated as provided in Section 2.8)
which are customarily apportioned between buyers and sellers of real estate
(the "Closing Date Prorations").
(c) On the first Business Day of October, 1997, with respect to
each Property and with reference to the Initial Closing Date or Additional
Closing Date, as appropriate, if (i) the Closing Date Proration shall be a
credit to sellers of such Property, the Company shall remit to WCPT (if such
Property is a WCPT Property) or to Whitehall (if such Property is a Whitehall
Property or a Whitehall Additional Property) an amount equal to the Closing
Date Proration or (ii) the Closing Date Proration shall be a credit to the
buyer of such Property, WCPT (if such Property is a WCPT Property) or
Whitehall (if such Property is a Whitehall Property or a Whitehall Additional
Property) shall remit to the Company an amount equal to the Closing Date
Proration.
(d) If the first Business Day of October, 1997, shall occur before
the tax rate or the assessed valuation of any Property is fixed for the then
current year, the apportionment of taxes to be made pursuant to this
Section 2.9 shall be made upon the basis of the tax rate for the preceding
year applied to the latest assessed valuation (or upon the best estimate
available). Subsequent thereto, when the actual tax assessment is fixed, the
parties hereto agree to adjust such proration.
(e) Notwithstanding anything to the contrary contained herein, the
unfunded tenant improvement allowances and outstanding brokerage commissions
relating to certain Whitehall Properties, as set forth on Schedule 2.9
hereto, shall be payable by, and be the responsibility of, the party set
forth in such Schedule. To the extent that the Company pays any of such
amounts for which Whitehall is the responsible party (as set forth on
Schedule 2.9), Whitehall shall promptly reimburse the Company therefor
without any increase in its Capital Account, Percentage Interests or
Membership Units.
(f) No amounts paid pursuant to this Section 2.9 or Section 2.8
above by or to WCPT, Whitehall, the Company or any Subsidiary of the Company
shall in any way affect the Capital Account or Percentage Interest of any
Member or the number of Membership Units owned by any Member.
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control.
(a) Except as otherwise specifically set forth in this Agreement,
including, without limitation, Sections 3.1(c), 3.2, 3.3, 3.4, 3.5 and 3.6,
the Manager shall have the right, power and authority to conduct the business
and affairs of the Company (whether for the Company itself or where the
Company is acting in its capacity as a direct or indirect member, partner or
owner of any Subsidiary) and to do all things necessary to carry on the
business of the Company, and is hereby authorized to take any action of any
kind and to do anything and everything the Manager deems necessary or
appropriate in accordance with the provisions of this Agreement and
applicable law. The Manager shall have the authority to carry out the
Business Plan approved by the Management Committee for each Property subject
to the limitations therein and in the Approved Budget.
(b) As long as WCPT shall be the Manager, WCPT agrees to cause
experienced and qualified personnel of WCPT to supervise the business of the
Company and to devote such time to the business of the Company and its
Subsidiaries as may be necessary to carry out the business and purpose of the
Company and its Subsidiaries in a prudent and efficient manner.
(c) The Manager shall not, without the prior approval of the
Management Committee, take any action on behalf of or in the name of the
Company (whether for the Company itself or where the Company is acting in its
capacity as a direct or indirect member, partner or owner of any Subsidiary),
or enter into any commitment or obligation binding upon the Company, except
for (i) actions authorized under this Agreement and (ii) actions authorized
by the Members or the Management Committee in the manner set forth herein.
The Manager shall indemnify and hold harmless the Company, its Subsidiaries
and the Members and their Affiliates from and against any and all claims,
demands, losses, damages, liabilities, lawsuits and other proceedings,
judgments and awards, and costs and expenses (including but not limited to
reasonable attorneys' fees) arising, directly or indirectly, in whole or in
part, out of any breach of the provisions of this Section 3.1(c) by the
Manager or its Affiliates.
(d) The Management Committee shall have the full and exclusive
right, power and authority to act on behalf of the Company (whether the
Company is acting in its own behalf or in its capacity as a direct or
indirect member, partner or owner of any Subsidiary) to the extent provided
herein, including, without limitation, Sections 3.4, 3.5 and 3.7.
3.2. Enumeration of Specific Duties. (a) Subject to the other
provisions of this Article III, the Manager shall have the right, power,
authority and (to the extent there are available funds from the Company or
the appropriate Subsidiary) duty, all at the Company's expense, to manage the
day-to-day business of the Company and the Subsidiaries and to implement the
decisions made and the actions authorized for and on behalf of the Company by
the Management Committee, including, without limitation, all of the
following:
(i) applying for and using diligent efforts to obtain any and
all necessary consents, approvals and permits required for the occupancy
and operation of each Property;
(ii) supervising and managing the performance of all contrac-
tors performing work (including construction) including direct
observation, inspection and supervision during the progress thereof;
making final inspection of the completed work and approving bills for
payment; obtaining the necessary receipts, releases, waivers, discharges
and assurances to keep each Property free from mechanics' and material-
men's liens and other claims;
(iii) paying, before delinquency and prior to the addition of
interest or penalties, all taxes, assessments and other impositions
applicable to each Property and other assets owned by the Company, and
undertaking any action or proceeding seeking to reduce such taxes,
assessments or other impositions;
(iv) procuring all necessary insurance to the extent
available at commercially reasonable rates for the Company and its
Subsidiaries in accordance with the Insurance Program adopted by the
Company from time to time pursuant to clause (b) of the definition of
"Operational Decision" set forth in Section 3.4.B. below (provided that
the Manager shall increase any insurance coverage carried by the Company
and its Subsidiaries or procure any additional insurance coverage
(whether or not provided for in the Insurance Program) if required under
the terms of any Property Loan or if requested to do so by the
Management Committee to the extent it is commercially reasonable to do
so); causing the Members to be named as additional insureds on all
liability policies maintained by the Company and its Subsidiaries; deli-
vering to the members of the Management Committee copies of all
insurance policies maintained by the Company and its Subsidiaries from
time to time, including renewals or replacements of any expiring
policies prior to the expiration thereof;
(v) verifying that appropriate insurance (including any
required by the terms of any Property Loan) is maintained by each
contractor performing work on a Property;
(vi) executing and delivering leases and other legal
documents necessary to carry out the business of the Company (which
legal documents shall have first been approved by the Management
Committee if its approval is required pursuant to this Agreement,
including, without limitation, Section 3.4 below) provided that, the
Management Committee shall be deemed to have approved the legal
documents and tenants in respect of the leases described on Schedule
3.2(a)(vi);
(vii) demanding, receiving, acknowledging and instituting
legal action for recovery of any and all revenues, receipts and
considerations due and payable to the Company, in accordance with
prudent business practices;
(viii) keeping all books of account and other records of the
Company and delivering all reports in the manner provided in Article XI
below and maintaining (or causing to be maintained) books of account and
other records of the Subsidiaries separate and distinct from the books
and records of the Company;
(ix) maintaining all funds of the Company in a Company bank
account in the manner provided in Article XI below, which funds shall
not be commingled with the funds of the Subsidiaries or any other
Person, conducting any and all banking transactions on behalf of the
Company and adjusting and settling checking, savings, and other accounts
with such institutions as the Management Committee shall deem
appropriate;
(x) delivering to the Management Committee members copies of
any notices received from lenders, or other persons with whom the
Company has material contractual obligations, alleging any material
deficiencies or defaults by the Company under the said contractual
arrangements;
(xi) protecting and preserving the title and interests of the
Company (and its Subsidiaries) in the Properties and all other assets of
the Company, including keeping each Property and all other assets of the
Company free from mechanics' and materialmen's liens;
(xii) coordinating the defense of any claims, demands, suits
or legal proceedings made or instituted against the Company (or its
Subsidiaries) or the Members (as members of the Company) by other
parties, through legal counsel for the Company engaged in accordance
with the terms of this Agreement; giving the members of the Management
Committee prompt notice of the receipt of any material claim or demand
or the commencement of any suit or legal proceeding and, upon request,
promptly providing the members of the Management Committee all
information relevant or necessary thereto;
(xiii) monitoring and complying with (A) the terms and
provisions of any restrictive covenants or easement agreements affecting
any Property or any portion thereof, and any and all contracts entered
into or assumed by the Company (or its Subsidiaries), including, without
limitation, the exceptions noted in any title policy and (B) the terms
and provisions of any note, mortgage and other loan documents assumed or
executed by the Company, including any Property Loan documents;
(xiv) coordinating the marketing and leasing of each
Property;
(xv) paying (or causing to be paid), prior to delinquency,
all insurance premiums, debts and other obligations of the Company and
its Subsidiaries, including amounts due under any loans to the Company
or its Subsidiaries and costs of construction, operation and maintenance
of each Property;
(xvi) at Company expense (except as otherwise provided
herein) and subject to the provisions of this Agreement, operating,
maintaining and otherwise managing each Property in an efficient manner
and at all times maintaining an organization sufficient to enable it to
carry out all of its duties, obligations and functions as Manager under
this Agreement, and rendering advice concerning sales and rental values
in the manner set forth in this Agreement;
(xvii) during the term of this Agreement, complying with all
present and future laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments, courts,
departments, commissions, boards and officers, the requirements of any
insurance policy (or any insurer thereunder) covering any Property, any
national or local Board of Fire Underwriters, or any other body
exercising functions similar to those of any of the foregoing, which may
be applicable to any Property and the operation and management thereof,
and, when appropriate and prudent to do so, contesting the validity or
application of any such law, ordinance, order, rule, regulation or
requirement;
(xviii) performing all other services reasonably necessary or
required for the ownership, development, maintenance, marketing and
operation by the Company or its Subsidiaries of each Property or
otherwise required to be performed by the Manager pursuant to this
Agreement and not otherwise prohibited hereunder;
(xix) requesting the Management Committee's consent to any
matter which the Company (or any Subsidiary) has the right to consent
to, waive or approve under or with respect to the partnership agreement
or other governing instrument of any Subsidiary to the extent such
matter would require the approval or consent of the Management Committee
hereunder;
(xx) delivering to each member of the Management Committee
promptly upon its receipt, copies of all (1) material summonses and
complaints served on the Company or any Subsidiary, (2) notices of
default on any loan or other indebtedness of the Company or any material
contract to which the Company or any Subsidiary is a party and (3)
notices of the incurrence of or discovery by the Manager of any Lien
against any Property (other than a Permitted Lien);
(xxi) executing on behalf of the Company and filing the
certificate of formation, certificate of limited partnership or
certificate of incorporation for any Subsidiary of the Company (the
formation of which has been approved by the Management Committee) and
any required amendments thereto and executing the operating company
agreement or limited partnership agreement or adopting by-laws of any
such Subsidiary and any required amendments thereto to the extent the
operative provisions of such agreement or by-laws or amendment has been
approved by the Management Committee; and doing all other acts requisite
for the constitution of such Subsidiary pursuant to the laws of the
State of Delaware or any other applicable law and for enabling such
Subsidiary to conduct its business in each jurisdiction where the
Properties are located; and
(xxii) taking any action directed by the Management Committee
(as evidenced by a written consent thereof).
(b) The Manager shall devote such time to the Company, its
Subsidiaries and their respective businesses as shall be reasonably necessary
to conduct the business of the Company and its Subsidiaries in an efficient
manner and to carry out the Manager's responsibilities set forth in this
Agreement. The Manager shall act and carry out its duties hereunder with
reasonable diligence and in a prompt and businesslike manner, exercising such
care and skill as a prudent property manager with sophistication and
experience in managing and developing real estate assets like the Properties
would exercise in dealing with its own property. Provided that the Manager
satisfies the standard of care, skill and performance set forth in this
paragraph (b), the Manager shall not be deemed to be in default of its duties
under this Section 3.2 with respect to its acts or omissions in carrying out
such duties.
3.3. No Authority to Hire Employees. The Company shall have no
employees and the Manager shall have no authority to hire any employees of
the Company. The Manager shall at its own expense (subject to reimbursement
as otherwise specifically provided in this Agreement) maintain an
organization sufficient to enable the Manager to carry out all its duties,
obligations and functions hereunder. Without limiting the generality of the
foregoing, the Manager shall maintain, at the Company's (or the applicable
Subsidiary's) expense, workers' compensation insurance, employer's liability
insurance, fidelity bonds for employees with authority to sign checks or make
withdrawals from Company and/or Subsidiary bank accounts, and other
appropriate insurance insuring the Company (and each Subsidiary) against any
loss due to embezzlement or other dishonest acts or errors or omissions of
any employees of the Company, the Manager or any of its Affiliates.
3.4. Decisions Requiring Approval of the Management Committee.
Notwithstanding anything to the contrary in this Agreement, no act shall be
taken, sum expended, decision made or obligation incurred by the Company (in
its own behalf or in its capacity as a member, partner or other equity holder
of any Subsidiary) or the Manager with respect to a matter within the scope
of any of the Major Decisions or Operational Decisions, unless and until the
Required Committee Approval shall have been obtained pursuant to and in
accordance with this Section 3.4 and Section 3.5. The provisions of this
Agreement relating to the management and control of the business and affairs
of the Company shall also be construed to be fully applicable to the
management and control of each Subsidiary and any and all matters listed in
part A below in this Section 3.4 shall constitute Major Decisions for
purposes hereof whether such matter relates to the Company or any Subsidiary
of the Company and any and all matters listed in part B below in this Section
3.4 shall constitute Operational Decisions for purposes hereof whether such
matter relates to the Company or any Subsidiary of the Company. In the event
of any need for consent of the Management Committee to any Major Decision or
Operational Decision, the Manager shall make such request of the Management
Committee in writing and shall provide each member of the Management
Committee with any information reasonably necessary for the Management
Committee to make an informed decision. The Manager shall use its reasonable
efforts to keep the Management Committee informed of the status of any matter
regarding which the Manager intends to request the Management Committee's
consent under this Section 3.4.
A. The "Major Decisions" are:
(a) altering the nature of the business of the Company or its
Subsidiaries from the businesses permitted by Section 2.4(a);
(b) taking any action in contravention of, amending, modifying or
waiving, the provisions of this Agreement or the Certificate of
Formation, or taking any action in contravention of, amending, modifying
or waiving the provisions of any Organizational Documents for any
Subsidiary;
(c) making a Capital Call except as permitted by Section 5.2;
(d) instituting proceedings to adjudicate the Company or any
Subsidiary a bankrupt, or consent to the filing of a bankruptcy
proceeding against the Company or any Subsidiary, or file a petition or
answer or consent seeking reorganization of the Company or any
Subsidiary under the Federal Bankruptcy Act or any other similar
applicable federal or state law, or consent to the filing of any such
petition against the Company or any Subsidiary, or consent to the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or any Subsidiary or of its
property, or make an assignment for the benefit of creditors of the
Company or any Subsidiary, or admit the Company's or any Subsidiary's
inability to pay its debts generally as they become due;
(e) extending the term of the Company or any of its Subsidiaries
beyond December 31, 2045;
(f) approving any Annual Capital Budget, Annual Operating Budget
or Business Plan or modifying (or deviating from) any of the foregoing
except to the extent the Manager is so permitted by this Section 3.4);
(g) establishing any reserve for the Company in excess of $1
million (less any reserves held by the Company's Subsidiaries other than
Property-level reserves) or establishing any Property-level reserves in
excess of 0.5% of the book value of the applicable Property (before
depreciation);
(h) selecting or varying depreciation and accounting methods which
would have a material effect on the income, loss, gain or deduction of
the Company or any of its Subsidiaries and making any other decisions or
elections with respect to federal, state, local or foreign tax matters
or other financial purposes;
(i) except as WCPT and Whitehall are each permitted by Section 8.2
hereof, directly or indirectly selling, transferring, assigning,
hypothecating, pledging or otherwise disposing of all or any portion of
any Property or any Subsidiary or any interest in any of the foregoing;
(j) extending credit, making loans or becoming or acting as a
surety, guarantor, endorser or accommodation endorser (or materially
modifying any obligations relating to the foregoing), except in connec-
tion with negotiating checks or other instruments received by the
Company (or any Subsidiary) and except for immaterial amounts in the
ordinary course of business;
(k) selecting the Company's or any Subsidiary's accountants and
independent auditors (unless such accountants or auditors are Ernst &
Young); and approving financial statements prepared by the Company's or
any Subsidiary's auditors;
(l) making or agreeing to any material changes to the zoning of
any Property; and approving the material terms and provisions of any
material restrictive covenants or easement agreements (other than
utility easements or other non-material easements necessary for the
operation or development of a Property) or any material documents
establishing a cooperative, condominium or similar association or
related entity affecting any Property or any portion thereof;
(m) obtaining financing or refinancing for, or otherwise incurring
any Indebtedness or issuing any debt or equity securities (including
Back-to-Back Debt) of, the Company (or any Subsidiary) or any assets of
the Company (or any Subsidiary) including, without limitation, any
Property Loan and any financing of the operations of the Company (or any
Subsidiary), except for unsecured loans for working capital specifically
set forth in an Approved Budget; placing or suffering of any other Lien
or encumbrance (other than leases permitted under paragraph (a) of the
definition of "Operational Decision" in this Section 3.4) on or
affecting any Property or any portion thereof or any other material
property or asset owned by the Company (or any Subsidiary) or selling
any debt securities of the Company or any Subsidiary in a public or
private offering or otherwise (or taking any action which has
substantially the same effect or commits the Company or any Subsidiary
to any of the foregoing); approving any document (including any
amendment, supplement or other modification) containing or evidencing
any material modification of any term of any such financing, refinancing
or encumbrance which was previously approved by the Management
Committee; and approving the terms of a workout of any such financing or
refinancing with the lender thereof;
(n) approving the admission to the Company of a successor or a New
Member or removing any Member, designating or approving the
classification of any new class of Membership Units issued to a New
Member (and establishing the designations, preferences and relative,
participating, optional or other special rights, powers and duties of
each class of Membership Units) or approving the admission to any
Subsidiary of a successor or an additional partner or member or other
equity owner;
(o) terminating and dissolving the Company (or causing or
consenting to any such action relating to a Subsidiary) except in
accordance with Article X below;
(p) acquiring any land or other real property or any interest
therein;
(q) making or approving any material change or modification to the
Marketing Plan applicable to any Property, it being agreed that it shall
not be deemed to be material if the proposed change (i) was necessitated
by the occurrence of an event which was not in the control of the
Manager, (ii) relates to a non-discretionary expenditure (e. g., taxes,
utilities or insurance) or (iii) would not cause either (1) more than a
5% increase in expenditures or decrease in revenues from the line item
in question set forth in the Approved Budget (taking into account all
other changes affecting such line item during the same Budget Year not
previously approved by the Management Committee); provided that, the
amount of such increase or decrease (together with all prior increases
in expenditures and decreases in revenues in such Approved Budget) shall
not exceed 2% of the total expenditures or revenues, as the case may be,
in the Approved Budget or (2) any Property Loan to be in default;
(r) modifying the material terms of (i) any loan documentation or
(ii) any other material agreement after the same has been approved by
the Members or the Management Committee (but only in the case of clause
(ii) if the consent of the Management Committee shall have been required
as a condition to the Manager's executing such other material
agreement);
(s) except as WCPT and Whitehall are each permitted by Section
8.2, approving or entering into an Extraordinary Transaction with
respect to the Company or any Subsidiary or causing the Company (or any
Subsidiary) to sell ownership interests or other securities in a public
or private offering or otherwise (or taking any action which has
substantially the same effect or commits the Company or any Subsidiary
to do any of the foregoing);
(t) taking any action or giving or withholding any consent, waiver
or approval or exercising any right that is specifically delegated to or
requires the approval of the Management Committee pursuant to the terms
of this Agreement; or
(u) forming any subsidiary of the Company.
Notwithstanding anything herein to the contrary, (i) the loans
being made and to be made by WRP to the Company (the "WRP Loans") pursuant to
the loan documents being entered into simultaneously herewith and said loan
documents shall be deemed to have been approved by the Management Committee
and (ii) the assumption of the Assumed Financing by the Company and the
execution and delivery by the Company of the documentation related thereto
shall be deemed to have been approved by the Management Committee. In
addition, without the consent of the Management Committee, either of the
Initial Members may elect to extend the WRP Loans in accordance with the
terms for their Extension Period (as defined in the loan documents evidencing
the WRP Loans) and in such instance, WCPT shall have the sole and exclusive
right (and is hereby directed) to execute, deliver and perform such mortgages
and other documents and take such other actions as may be required pursuant
to the loan documents evidencing the WRP Loans.
B. The "Operational Decisions" are:
(a) executing, modifying, accepting the surrender of or
terminating any lease or other arrangement involving the rental, use or
occupancy of any Property or any part thereof, except in accordance with
the applicable Leasing Plan; provided, however, that the Manager may
modify a lease of all or any portion of any Property if such lease would
still satisfy the applicable Leasing Plan as modified; and provided
further, however, that the Manager may terminate any lease (and bring
eviction and legal proceedings against the tenant thereunder) where the
tenant has defaulted in its rent payments or is otherwise in material
default;
(b) approving an insurance program for the Company (and its
Subsidiaries) and each Property (the "Insurance Program");
(c) retaining legal counsel for the Company (or its Subsidiaries)
in connection with any major financing or other capital event (including
a merger, combination or public offering of the Company);
(d) taking any action in respect of any Property relating to
environmental matters other than to obtain environmental studies and
reports and conduct (or arrange for) evaluations and analyses thereof
and other than to remediate any environmental contamination or other
similar matters as required by law if the cost of such remediation would
not exceed $250,000;
(e) settling an insurance claim or condemnation action involving a
claim in excess of Five Hundred Thousand Dollars ($500,000) or which,
when added to all other insurance or condemnation claims during a single
calendar year, exceeds One Million Dollars ($1,000,000);
(f) unless required pursuant to the terms of any ground lease or
mortgage encumbering any Property, deciding whether to repair or rebuild
in case of material damage to any of the improvements on such Property,
or any part thereof, arising out of a casualty or condemnation (except
such emergency repairs as may be necessary to protect such Property);
(g) making any expenditure or incurring any cost or obligation
which, when added to any other expenditure, cost or obligation of the
Company (or its Subsidiaries, as the case may be), either exceeds the
applicable Approved Budget applicable to the Budget Year when such
expenditure was made or cost or obligation was incurred or exceeds any
line items specified in such Approved Budget; provided, however, that
the Manager may, without the approval of the Management Committee, make
expenditures or incur obligations in excess of an Approved Budget if
(i) the making of such expenditure or incurrence of such obligation
either (1) was necessitated by the occurrence of an event which was not
in the control of the Manager or (2) relates to a non-discretionary
expenditure (e.g., taxes, utilities and insurance), (ii) such
expenditure or obligation is within a 5% variance from the line item in
question set forth in such Approved Budget (taking into account all
other expenditures in excess of such line item during the same Budget
Year not previously approved by the Management Committee) and the amount
of all variances for such Budget Year (including the pending variance)
would not exceed 5% of the total expenditures in the Approved Budget and
(iii) such expenditure or obligation would not cause the applicable
Property Loan, if any, to be in default;
(h) giving or withholding any consent, waiver or approval or
exercising any right that the Company (or any Subsidiary) has the right
to give, withhold or exercise under or with respect to the
Organizational Document of any Subsidiary to the extent that the
Management Committee would have the right to approve, consent or
exercise rights hereunder regarding such matter;
(i) entering into any property management, leasing, development or
similar agreement.
3.5. Management Committee.
(a) A committee consisting of the Committee Representatives (the
"Management Committee") is hereby established and is granted the sole and
exclusive right, power and authority to make all Major Decisions and
Operational Decisions on behalf of the Company and its Subsidiaries, and is
hereby authorized to designate an authorized signatory to execute and deliver
on behalf of the Company (or to cause the Manager to so execute and deliver)
any and all such contracts, certificates, agreements, instruments and other
documents, and to take any such action, as the Management Committee deems
necessary or appropriate relating to Major Decisions and Operational
Decisions.
(b) The Manager shall cause such reports as the Management
Committee shall reasonably request to be prepared and delivered on a timely
basis to the members of the Management Committee. Unless and until a new
Approved Budget shall be established, the Company shall operate under the
most recent Approved Budget. The Manager may from time to time submit
amendments to any Business Plan for the approval of the Management Committee.
The Management Committee will meet promptly after the submission of a
Business Plan or proposed amendment thereto with the object of reaching some
conclusion thereon within not later than thirty (30) days after the
submission of the same.
(c)(i) Four (4) Committee Representatives shall be
appointed by each of Whitehall and WCPT (each in such capacity, an
"Appointing Member") and each Committee Representative shall serve at
the pleasure of the Appointing Member that appointed such Committee
Representative. The Management Committee shall at all times consist of
the Committee Representatives appointed by the Appointing Members.
Whitehall shall cease to be an Appointing Member if it no longer owns
Membership Units and/or Shares having an aggregate original cost or fair
market value, whichever is greater, of at least $10 million (unless, at
such time, the aggregate cost or fair market value, whichever is
greater, of WRP's Shares and/or Membership Units (excluding Membership
Units owned through WCPT) is also less than $10 million); in which case,
all decisions, consents and approvals to be made or given by the
Management Committee or the Manager hereunder shall be made exclusively
by WCPT. If WRP no longer owns Shares and/or Membership Units (excluding
Membership Units owned through WCPT) having an aggregate original cost
or fair market value, whichever is greater, of at least $10 million
(unless, at such time, the aggregate cost or fair market value,
whichever is greater, of Whitehall's Membership Units and Shares is also
less than $10 million) then all decisions, consents and approvals to be
made or given by the Management Committee or the Manager hereunder
described in Section 3.4(1)(i), (m), (p), (r) and (s) shall be made
exclusively by Whitehall.
(ii) Each Appointing Member shall have the power to remove any
Committee Representative appointed by it and simultaneously to appoint a
replacement Committee Representative by delivering notice to the Company
and to the other Appointing Member 5 Business Days in advance of such
removal and appointment. Vacancies on the Management Committee shall be
filled by the Appointing Member that appointed the Committee
Representative previously holding the position which is then vacant.
Each Appointing Member agrees that its appointed Committee
Representatives shall have the authority to act on such Appointing
Member's behalf to effectuate the purposes of this Agreement and to
execute documents on its behalf (unless such Appointing Member provides
to the other Appointing Members notice to the contrary), except that the
Committee Representatives shall not have the authority to appoint
successor Committee Representatives. Each Appointing Member's Committee
Representatives shall have the right to rely on the authority of the
other Appointing Members' Committee Representatives to act for its
designating Appointing Member until such time as it receives written
notice from such Appointing Members that a Committee Representative has
been removed or its authority limited.
(iii) The individuals appointed as Committee Representatives must
always be Affiliates or employees of their respective Appointing Member
or their respective Affiliates. Such individuals shall cease to be
Committee Representatives and shall be immediately removed by their
respective Appointing Member (or the other Appointing Member if such
Appointing Member fails to do so) in the event such individuals cease to
be so affiliated with their respective Appointing Member.
(iv) The initial Committee Representatives shall be as follows:
Whitehall: Stuart M. Rothenberg, Steven M. Feldman, Ronald L.
Bernstein and Todd A. Williams.
WCPT: Jeffrey H. Lynford, Edward Lowenthal, Gregory Hughes and
Richard Previdi.
(d) The Management Committee shall act with respect to all matters
(whether to approve any Major Decision and any Operational Decision or to
exercise any other right (or to grant any consent or approval) accorded to
the Management Committee hereunder) by Required Committee Approval. Each
Committee Representative shall have one (1) vote on all matters that arise
before the Management Committee. For avoidance of doubt and notwithstanding
anything to the contrary herein, no matter may be approved and no action
taken by the Management Committee without Required Committee Approval.
(e) (i) The Management Committee shall meet regularly not less
often than quarterly, unless the Appointing Members jointly agree that the
meeting is unnecessary or that a different schedule is appropriate. Special
meetings of the Management Committee may be called by any Committee
Representative on at least five (5) business days' prior written notice of
time and place of such meeting; provided, however, that such notice
requirement shall be deemed waived by any Committee Representative who is
present at the commencement of any such special meeting. Regular and special
meetings may be held at any place designated from time to time by the
Manager, including meetings by telephone conference. Six (6) Committee
Representatives (at least two of which shall have been appointed by each
Appointing Member) shall constitute a quorum for Management Committee action
with respect to any Major Decision and three (3) Committee Representatives
(at least one of which shall have been appointed by each Appointing Member)
shall constitute a quorum for Management Committee action with respect to any
Operational Decision.
(ii) Actions taken or approved by the Management Committee
will be evidenced by a written resolution prepared within ten (10) business
days of a meeting of the Management Committee by the Manager and approved in
writing by the Committee Representatives who were present at such meeting and
who adopted such resolutions.
(iii) Any action required or permitted to be taken at a
meeting of the Management Committee may be taken without a meeting if a
written consent setting forth the action so taken is signed by the Committee
Representatives whose approval is required to constitute the Required
Committee Approval. Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of such
Committee Representatives. An action so taken shall be deemed to have been
taken at a meeting held on the effective date so certified. Copies of all
such written consents shall be sent to each Member.
(iv) Each Committee Representative may authorize any other
Committee Representative to act for him or her by proxy on all matters in
which a Committee Representative is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Committee Representative. No proxy shall
be valid after the expiration of eleven (11) months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Committee Representative executing it, such revocation to
be effective upon the Company's receipt of written notice thereof.
(v) All out-of-pocket expenses (including travel expenses)
incurred by each of the Committee Representatives in connection with their
service on the Management Committee shall be borne by the Company.
3.6. Limited Authorization. Any provision hereof to the contrary
notwithstanding, except for expenditures made and obligations incurred which
were (i) previously approved by the Management Committee, (ii) included in an
Approved Budget, or (iii) otherwise not required to be approved by the
Management Committee in accordance herewith, the Manager shall have no
authority to make any expenditure or incur any obligation or liability on
behalf of the Company or any Subsidiary. The Manager shall not expend more
than the amount which the Manager in good faith believes to be the fair and
reasonable market value at the time and place of contracting for any goods
purchased or services engaged on behalf of the Company or any Subsidiary.
The Manager shall not enter into any agreement or other arrangement for the
furnishing to or by the Company or any Subsidiary of goods or services with
itself or any Person that is an Affiliate of the Manager unless such
agreement or arrangement has been approved by the Management Committee.
Notwithstanding anything to the contrary contained herein, the Manager is
hereby authorized to make expenditures for emergencies (not to exceed
$100,000 per Property per Fiscal Year) to the extent necessary to protect a
Property or the occupants thereof from damage or harm; provided that, the
Manager notifies the Management Committee in writing of any such expenditure
promptly after the incurrence thereof.
3.7. Members Shall Not Have Power to Bind Company. No Member
shall transact business for the Company nor shall any Member have the power
or authority to sign, act for or bind the Company, all of such powers being
vested solely and exclusively in the Manager and the Management Committee,
provided that (i) each of Whitehall and WCPT, acting alone, shall have the
authority to sell or cause the sale of Properties, Subsidiaries of the
Company and/or the Company itself as set forth in Section 8.2, (ii)
Whitehall, acting alone, shall have the authority to sell or cause the sale
of Properties, Subsidiaries of the Company and/or the Company itself as set
forth in Sections 8.2 and 9.1, and (iii) Whitehall shall have the right to
appoint a new Manager as provided in Section 9.1.
3.8. Status as "Operating Company"; Participation in Management by
Members. The Company intends to operate its business in a manner so as to
qualify as an "operating company" for purposes of ERISA and the Plan Asset
Regulation. For purposes of ERISA and the Plan Asset Regulation, the
Management Committee is intended to be the functional equivalent of a board
of directors of a corporation incorporated under the laws of the State of
Delaware. Each Initial Member that has the right to appoint a Committee
Representative to the Management Committee shall have the right, directly or
through its Committee Representative on the Management Committee, to partici-
pate substantially in the management and conduct of the Company (both in the
Company's own behalf and in the Company's capacity as the controlling member
or partner in the Subsidiaries). The Manager shall from time to time meet
with the members of the Management Committee to discuss the business and
affairs of the Company or to discuss any particular matter requested by a
member of the Management Committee.
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property. No Member shall make use of the
funds or property of the Company or any Subsidiary, or assign its rights to
specific Company property except as otherwise specifically permitted by this
Agreement. The Manager and the Management Committee can make use of the
funds or property of the Company or any Subsidiary but only for the business
or benefit of the Company.
4.2. Exclusivity; Other Activities of the Members.
(a) Notwithstanding anything else to the contrary herein, until such time as
Whitehall no longer owns Membership Units and/or Shares having an aggregate
original cost or fair market value, whichever is greater, of at least $10
million neither WCPT nor any of its Affiliates (including WRP) may make any
investment in or otherwise acquire or own, directly or indirectly, any Office
Property located in North America, except through its Interest in the Company
or as specifically set forth in Section 4.2(b), (c) and (d). Once the book
value (before depreciation) of the Company's assets reaches $750,000,000,
neither WCPT nor any of its Affiliates shall be entitled to make any
investment pursuant to Section 4.2(b). For purposes of the first sentence of
this Section 4.2(a), the direct or indirect ownership by WCPT or any of its
Affiliates (including WRP) of any indebtedness or debt security which (i) is
secured by one or more Office Properties, and (ii) when added to any senior
and pari passu debt secured by such Office Property, had a loan-to-value
ratio in excess of ninety percent (90%) at the time of origination shall
constitute ownership of an Office Property by WCPT and a breach of this
Section 4.2(a). WCPT acknowledges that this covenant is a material
inducement to Whitehall entering into this Agreement and that a breach of
this covenant shall constitute a material breach of this Agreement entitling
Whitehall to exercise the remedies provided elsewhere in this Agreement and
at law.
(b) At any time after the first anniversary of the Initial Closing
Date, an Affiliate of WCPT (including WRP) may acquire and own an Office
Property if, and only if each of the following conditions are satisfied: (i)
such Office Property is not located within the Target Territory, (ii) a
property manager is hired by WRP or its Affiliate (other than WCPT) to manage
the day-to-day operations at such Office Property, (iii) the net equity value
of such Office Property plus the aggregate net equity value of all other
Office Properties acquired by all such Affiliates pursuant to this
Section 4.2(b) (determined at the time of acquisition) does not exceed the
lesser of 25% of the net equity value of WCPT and 25% of the net equity value
of WRP, (iv) WCPT or its Affiliate, as the case may be, shall have first
offered the opportunity to acquire such Office Property to the Company in
accordance with subparagraph (e) below and the Company shall have declined
such opportunity in accordance therewith, (v) an Affiliate of WRP other than
WCPT with its own corporate staff and acquisition personnel (distinct from
the Company's) is established to acquire and own such Office Property, and
(vi) the Company has not previously achieved a book value (before
depreciation) of $750,000,000 or more.
(c) If the Company has first been offered the opportunity,
pursuant to subparagraph (e) below, to purchase an interest in the Office
Property known as "First Canadian Place" located in Toronto and has declined
such opportunity, an Affiliate of WCPT may purchase such Office Property as
long as the conditions set forth in clauses (ii) and (v) of subparagraph (b)
above are satisfied.
(d) If WCPT or its Affiliate shall have offered the opportunity to
acquire Office Properties in accordance with subparagraph (e) below and the
Committee Representatives appointed by Whitehall shall have declined not less
than five of such opportunities each having a purchase price of at least
$15 million individually at any time since the later of (x) the first
anniversary of the Initial Closing Date and (y) the date twelve months prior
to the date of determination, then at any time thereafter (i) an Affiliate of
WCPT (but not WCPT itself) may acquire Office Properties that have been
offered to the Company pursuant to subparagraph (e) and declined by the
Committee Representatives appointed by Whitehall and (ii) either party may
trigger the provisions of Section 8.2(l).
(e) If an Affiliate of WCPT (including WRP) wishes to make any
investment in or otherwise acquire or own, directly or indirectly, any Office
Property prior to the end of the term of this Agreement, then in such
instance, WCPT shall provide written notice of such investment opportunity
(an "Investment Notice") to each Committee Representative appointed by
Whitehall. WCPT shall promptly provide to the Committee Representatives
appointed by Whitehall all such information and copies of documents in WCPT's
(or its Affiliate's) possession or reasonably available to WCPT (or its
Affiliate) concerning any such Office Property. At the request of any
Committee Representative appointed by Whitehall, WCPT shall deliver to
Whitehall copies of all additional information and documents concerning such
Office Property which are reasonably available to WCPT and are reasonably
necessary for Whitehall to evaluate whether such Office Property is a
suitable and desirable investment for the Company or one of its Subsidiaries,
including all third-party reports and internal analyses or investment
memoranda. The additional information and documents required to be provided
to Whitehall or its Committee Representatives pursuant to this Section 4.2(e)
shall be provided at the Company's expense. An Affiliate of WCPT (including
WRP) may proceed with the investment in or acquisition of such Office
Property if, and only if, (i) such investment or acquisition is not
prohibited by Section 4.2(a) and (ii) within 15 Business Days after WCPT's
delivery of an Investment Notice, or within 10 Business Days after the
delivery of an Additional Information Request (as defined below), WCPT shall
not have received notice from any Committee Representative appointed by
Whitehall that either (x) the investment in or other acquisition of the
specified Office Property would be a desirable investment for the Company or
one of its Subsidiaries or (y) it reasonably requires additional information
to make the determination whether the investment in or other acquisition of
the specified Office Property would be a desirable investment for the
Company or one of its Subsidiaries (an "Additional Information Request"). No
more than two (2) Additional Information Requests may be made with respect to
any investment opportunity. The fact that any information or document
contained in an Additional Information Request shall be subject to a
confidentiality agreement pursuant to which such information or document may
not be disclosed to Whitehall shall not render an Additional Information
Request unreasonable for purposes of clause (y) of the immediately preceding
sentence. If, within 30 days after delivery of an Additional Information
Request which contains a request for one or more documents subject to a
confidentiality agreement to which WCPT or one of its Affiliates is bound,
either (i) an appropriate modification or waiver of the relevant
confidentiality agreement is not obtained or (ii) the relevant part of the
Additional Information Request is not rescinded by Whitehall in writing,
neither WCPT nor any of its Affiliates may make any investment in or
otherwise acquire any interest in the relevant Office Property.
(f) If the Company or one of its Subsidiaries does not elect to
invest in or otherwise acquire an interest in any Office Property in
accordance with Section 4.2 (e) and the financial terms of the transaction
relating to such Office Property are later materially changed and, in the
case of a change in financial terms, are expected to materially enhance the
economic return of the Office Property, then the right of first refusal set
forth in Section 4.2(e) shall again apply to such Office Property (it being
understood that the economic return will be deemed to be "materially
enhanced" in the event that either (i) the projected internal rate of return
increases by at least one percent (1%) or (ii) the projected gross profits
increase by at least $500,000.00 over the expected life of the investment).
(g) Except as contemplated by this Agreement, WCPT shall not
directly or indirectly enter into or conduct any business or own any assets
other than through its Interest in the Company and shall not incur any
Indebtedness or other liabilities or issue any debt or equity securities or
Rights whatsoever without the prior written consent of Whitehall; provided
that, WCPT may (i) issue additional Shares to WRP if (x) all proceeds
received by WCPT are contributed to the Company to fund a Capital Call issued
in accordance with Article V and (y) the price per Share paid in cash by WRP
to WCPT is equal to the price per Membership Unit paid in cash by WCPT to the
Company for such Capital Call and (ii) with the approval of Whitehall, issue
Funding Debt if (x) the Company issues Back-to-Back Debt with identical terms
to such Funding Debt and (y) all of the proceeds received by WCPT in
connection with the issuance of such Funding Debt are used to purchase such
Back-to-Back Debt. WCPT will not enter into a debt or equity financing
unless, prior to entering into such financing, WCPT has first given the
Company an opportunity to enter into such financing for the Company's account
(rather than WCPT entering into such financing) substantially in the manner
specified in Section 4.2(e).
(h) Subject to this Section 4.2, each of WRP (but not WCPT),
Whitehall and their respective Affiliates may engage or invest in any other
activity or venture or possess any interest therein independently or with
others. None of the Company, the Members, the creditors of the Company or
any other person having any interest in the Company shall have (i) any claim,
right or cause of action against any of the Members or any other Person
employed by, related to or in any way affiliated with, any of the Members by
reason of any direct or indirect investment or other participation, whether
active or passive in any such activity or venture or interest therein, or
(ii) any right to any such activity or venture or interest therein or the
income or profits derived therefrom. Notwithstanding anything to the
contrary herein, neither Whitehall nor any of its Affiliates nor any Person
related to or in any way affiliated with Whitehall shall have any duty or
obligation to disclose or offer to the Company or the Members, or obtain for
the benefit of the Company or the Members, any activity or venture or
interest therein and, except as otherwise specifically set forth herein
(including, without limitation, in Section 4.2), neither WCPT nor any of its
Affiliates nor any other Person related to or in any way affiliated with WCPT
shall have any duty or obligation to disclose or offer to the Company or the
Members, or obtain for the benefit of the Company or the Members, any
activity or venture or interest therein. In addition, in the event that
Whitehall introduces any investment opportunity to the Company and the
Management Committee declines such opportunity, Whitehall shall not in any
way be restricted with respect to such opportunity.
(i) Whitehall hereby agrees that, with respect to any Office
Property that has previously been offered to the Company by WCPT (or its
Affiliate) and that the Committee Representatives appointed by Whitehall
disapproved pursuant to subparagraph (e) above, (x) neither Whitehall nor any
of its Affiliates shall be permitted to make any investment in or otherwise
acquire or own, directly or indirectly, such Office Property and (y) it shall
keep confidential all information concerning such Office Property that WCPT
(or its Affiliate) provided to Whitehall (or any of its Affiliates) to the
extent that such information constitutes Confidential Information (as defined
below). The covenant set forth in clause (y) in the immediately preceding
sentence shall cease to be applicable to any information either to the extent
it no longer constitutes Confidential Information or more than two years has
elapsed since the date of delivery thereof to Whitehall or its Affiliates.
For purposes of this subparagraph (i), "Confidential Information" shall
include all information furnished to Whitehall and its Affiliates by or on
behalf of WCPT and/or its Affiliates concerning an Office Property.
Notwithstanding the foregoing, any such information shall not constitute
"Confidential Information" to the extent it (i) is or becomes generally
available to the public other than as a result of a disclosure by Whitehall
or its Affiliate in contravention of this Agreement, (ii) was already in the
possession of Whitehall or its Affiliate prior to its disclosure to Whitehall
or its Affiliate by or on behalf of WCPT or its Affiliate, (iii) is or
becomes available to Whitehall or its Affiliate from a source (other than
WCPT or its Affiliates) not bound, to the knowledge of Whitehall or its
Affiliate, by any legal or other obligation prohibiting the disclosure of
Confidential Information by such source to WCPT or its Affiliate or (iv) the
Company or its Subsidiary acquires such Office Property.
(j) Notwithstanding anything to the contrary set forth in this
Agreement, WCPT or its Affiliates shall be entitled to acquire and own
certain Office Properties (i) that may be acquired in connection with WRP's
or its Affiliates' possible acquisition of a real estate company, which
transaction has previously been identified to Whitehall or (ii) in accordance
with the letter agreement dated the date hereof, among the Company, WCPT,
Whitehall and WRP pursuant to which Affiliates of WCPT may make certain
entity-level investments.
4.3. Indemnification with Respect to the Manager. (a) None of
the Manager, its Affiliates or their respective officers, directors,
trustees, employees, representatives or agents (collectively, the
"Indemnified Parties") shall be liable, responsible or accountable in damages
or otherwise to the Company, any third party or to any Member for (i) any act
performed or omission within the scope of the authority conferred on the
Indemnified Party by this Agreement except for the gross negligence, fraud,
breach of fiduciary duty or willful misconduct of any Indemnified Party in
carrying out its obligations hereunder, (ii) the Indemnified Party's
performance of, or failure to perform, any act on the reasonable reliance on
advice of legal counsel to the Company or (iii) the negligence, dishonesty or
bad faith of any agent, consultant or broker of the Company selected, engaged
or retained in good faith and with reasonable prudence. In any threatened,
pending or completed action, suit or proceeding, each Indemnified Party shall
be fully protected and indemnified and held harmless by the Company against
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, proceedings, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, reasonable attorneys' fees, costs
of investigation, fines, judgments and amounts paid in settlement, actually
incurred by such Indemnified Party in connection with such action, suit or
proceeding) by virtue of its status as an Indemnified Party or with respect
to any action or omission taken or suffered in good faith, other than
liabilities and losses resulting from the gross negligence, fraud, breach of
fiduciary duty or willful misconduct of any Indemnified Party; provided, how-
ever, that the Indemnified Parties shall not be so indemnified for any acts
or omissions determined to be in contravention of this Agreement. The indem-
nification provided by this Section 4.3(a) shall be recoverable only out of
the assets of the Company, and no Member shall have any personal liability on
account thereof.
(b) The Manager shall indemnify and hold the Company and the
Members harmless against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses, and
disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorney's fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by the Company in
connection with any action, suit or proceeding) resulting from the gross
negligence, fraud, breach of fiduciary duty or willful misconduct of the
Manager.
4.4. Compensation of Members and Affiliates. Until the earlier of
(i) such time as Whitehall no longer owns Membership Units and/or Shares in
WCPT having an aggregate original cost or fair market value, whichever is
greater, of at least $10 million and (ii) such time as WCPT makes an initial
public offering (and in connection with an initial public offering by WCPT),
the Company agrees that, to the extent the Company seeks to retain an
investment bank for any financial or related services with respect to actions
of the Company (including an initial public offering by WCPT), the Company
will retain Goldman, Sachs & Co. or one or more of its Affiliates to provide
such services; provided, that the foregoing requirement shall not apply to
the sale or financing of a single Property or to the sale or financing of
Properties having an aggregate book value of less than $50 million. If
Goldman, Sachs & Co. or such Affiliate agrees to accept any such engagement,
Goldman, Sachs & Co. and/or such Affiliate shall be entitled to receive its
customary indemnification, and fees and commissions at rates that are
consistent with the then prevailing rates for such services charged by
similar quality providers of such services, for acting in such capacity.
4.5. Investment Representations. The Members each represent that
they are acquiring their interests as Members for their own account for
investment purposes only and not with a view to the distribution or resale
thereof, in whole or in part, and each agrees that it will not transfer, sell
or dispose of all or any portion of, or offer to transfer, sell, or dispose
of all or any portion of its interest as a Member, or solicit offers to buy
from or otherwise approach or negotiate in respect thereof with any person or
persons whomsoever, all or any portion of its Interest in any manner which
would violate or cause the Company or any Member to violate applicable
federal or state securities laws.
4.6. Dealing with Members. The fact that a Member, an Affiliate
of a Member or any officer, director, employee, partner, consultant or agent
of a Member or an Affiliate of a Member, is directly or indirectly interested
in or connected with any person, firm or corporation employed by the Company
to render or perform a service, or from or to whom the Company may buy or
sell any property or have other business dealings, shall not prohibit the
Company from employing such person, firm or corporation or from dealing with
him or it on customary terms and at competitive rates of compensation, and
neither the Company nor any of the Members shall have any rights in or to any
income or profits derived therefrom.
4.7. Designation of Tax Matters Member. The Manager, as long as
it is a Member, shall act as the Tax Matters Member of the Company, as
provided in the regulations pursuant to Section 6231 of the Code. Each
Member hereby approves of such designation and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be deemed necessary or appropriate to evidence
such approval. To the extent and in the manner provided by applicable Code
sections and regulations thereunder, the Tax Matters Member (a) shall furnish
the name, address, profits interest and taxpayer identification number of
each Member to the IRS and (b) shall inform each Member of administrative or
judicial proceedings for the adjustment of Company items required to be taken
into account by a Member for income tax purposes. The Tax Matters Member
shall not enter into an agreement with the IRS or any other taxing authority
to extend the limitation period for assessment of any federal, state or local
income, franchise or unincorporated business tax of any Member or owner
thereof nor settle with the IRS or any other taxing authority to disallow
deductions or increase income from this Company with respect to any Member,
unless all of the Members shall have agreed thereto.
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts of the
Members.
(a) On the Initial Closing Date, Whitehall shall contribute, or
cause the contribution of, the following property to the Company (or one of
its Subsidiaries) in exchange for the Membership Units specified in Section
5.1(h), all in accordance with Exhibit A:
(i) the real property known as 1275 K Street which is more
particularly described on Exhibit B-1, together with any and all
improvements located thereon and the rights of the Whitehall Current
Owners to any and all personal, tangible and intangible property located
on or otherwise related to any Whitehall Property, including, without
limitation, the property described on Exhibit B-2 but specifically
excluding any such property described on Exhibit B-3;
(ii) 100% of the legal and beneficial ownership of WHATR Real
Estate Limited Partnership; and
(iii) all right, title and interest of WHMAB Real Estate Limited
Partnership in and under the 700 Atrium Purchase Contract (including,
without limitation, the deposits made by purchaser thereunder prior to
the Initial Closing).
Upon the Closing, all liabilities and duties under the 700 Atrium
Purchase Contract (other than as explicitly provided in the assignment
agreement in respect thereof), including, without limitation, payment of
the purchase price thereunder, will be borne solely by the Company and
neither Whitehall nor WHMAB Real Estate Limited Partnership shall have
any further liability or obligation with respect thereto.
All of the foregoing property described in subclauses (i), (ii),
and (iii) above are herein referred to as the "Whitehall Contributed Assets".
(b) The contribution by Whitehall to the Company (and/or one or
more of its Subsidiaries) of the Whitehall Contributed Assets on the Initial
Closing Date shall be made subject to the Assumed Financing and on the date
of the Initial Closing, the Company and/or one or more of its Subsidiaries
shall assume the Assumed Financing. Unless Whitehall and its Affiliates are
unconditionally released from any obligations under the Assumed Financing,
the Company shall indemnify and hold Whitehall and its Affiliates (as
transferors and not as Members) harmless from and against any liability
related to the Assumed Financing.
(c) The Whitehall Contributed Assets have an agreed upon value,
net of any distributions made to Whitehall contemporaneously with the Closing
and net of the outstanding principal and accrued and unpaid interest of the
Assumed Financing (calculated as of the Initial Closing Date) equal to
Whitehall's Capital Account on the Initial Closing Date. To support this
valuation, Whitehall is making the representations and warranties set forth
in Exhibit E-1. Each Member agrees, however, that the Whitehall Contributed
Assets net of the amounts set forth in the first sentence of this
subparagraph (c) may be worth more or less than an amount equal to
Whitehall's Capital Account on the Initial Closing Date. The representations
and warranties of Whitehall set forth in Exhibit E-1 are made as of and shall
survive the Closing for a period of two years and neither the Company, any
Subsidiary nor any Member or other Person may make a claim for indemnity for
a breach of a representation or warranty made by Whitehall hereunder either
(i) at any time after the expiration of such two-year period or (ii) which
breach is based upon or arises from information or facts contained in any
Lease (as defined in Exhibit E-1), brokerage contract, environmental report,
structural report, title commitment (including any copies of recorded
documents), documents included in closing binders, legal memorandum
concerning zoning or legal compliance of the Properties, rent rolls, title
policies, surveys and service contracts, in each case which was delivered to
WCPT or its Affiliate prior to the Closing. Subject to the time limitations
in the immediately preceding sentence, Whitehall agrees to indemnify, defend,
and hold the Company, its Subsidiaries and their respective officers,
directors, members, controlling persons, affiliates and agents harmless
against all claims, demands, actions, causes of action and losses
(collectively "Damages") suffered or incurred by, or asserted against, any of
them relating to or arising from any inaccuracy in or breach of any
representation or warranty of Whitehall made pursuant to this Agreement. In
the event that any representation or warranty made by Whitehall in Exhibit E-
1 is inaccurate or breached, WCPT shall notify Whitehall in writing of such
inaccuracy or breach and the amount of Damages suffered or incurred by the
Company (or any of its Subsidiaries) as a result of such breach or
inaccuracy. Within thirty (30) days after receipt of the foregoing notice,
Whitehall shall either (i) make a capital contribution to the Company of cash
in an amount equal to the Damages claimed in such notice to have been
suffered or incurred by the Company as a result of the foregoing breach or
inaccuracy or (ii) notify the Company in writing that it disputes the
circumstances giving rise to or the amount of such claim for indemnification
(such notice, a "Dispute Notice"). If (x) within the thirty (30) day period
specified in the immediately preceding sentence Whitehall shall neither have
made a capital contribution to the Company in the amount of the Damages
claimed in the notice nor have delivered a Dispute Notice to the Company or
(y) within thirty (30) days after Whitehall has received notice from the
arbitrator selected in accordance with Section 5.10 Whitehall shall not have
made a capital contribution to the Company in an amount equal to the amount
of Damages which such arbitrator shall have determined to have been suffered
or incurred by the Company as a result of the foregoing breach or inaccuracy,
then WCPT may (i) elect on behalf of the Company to reduce Whitehall's
Capital Account by the amount of the Damages suffered or incurred (or the
amount determined by the arbitrator pursuant to Section 5.10 to have been
suffered or incurred) by the Company in respect of such breach or inaccuracy
and (ii) elect to reduce the number of Membership Units attributable to
Whitehall (and the aggregate number of Membership Units of the Company
outstanding) by an amount equal to the above-referenced amount of Damages
divided by $10.00 (and thereby reduce Whitehall's Percentage Interest by a
proportionate amount). If the Company fails to submit the subject matter of
any Dispute Notice for binding arbitration as provided in Section 5.10 within
thirty (30) days after receipt of such Dispute Notice, Whitehall shall be
relieved of any responsibility or obligation in respect of the Damages which
are the subject of such Dispute Notice.
(d) On the Initial Closing Date, WCPT shall contribute the
following property to the Company (and/or one or more of its Subsidiaries) in
exchange for the Membership Units specified in Section 5.1(h), all in
accordance with Exhibit A:
(i) the real property known as 1700 Valley Road which is more
particularly described on Exhibit C-1, together with any and all
improvements located thereon and the rights of the WCPT Current Owners
to any and all personal, tangible and intangible property located on or
otherwise related to any WCPT Property, including, without limitation,
the property described on Exhibit C-2 but specifically excluding any
such Property described on Exhibit C-3; and
(ii) 100% of the legal and beneficial ownership of the WCPT
Current Owners other than North American Medical Research Corp., a New
Jersey corporation.
All of the foregoing property described in subclauses (i) and (ii)
above are herein referred to as the "WCPT Contributed Assets".
(e) The WCPT Contributed Assets have an agreed upon value net of
any distributions made to WCPT contemporaneously with the Closing equal to
WCPT's Capital Account on the Initial Closing Date. To support this
valuation, WCPT is making the representations and warranties set forth in
Exhibit E-2. Each Member agrees, however, that the WCPT Contributed Assets
net of the amounts set forth in the first sentence of this subparagraph (e)
may be worth more or less than an amount equal to WCPT's Capital Account on
the Initial Closing Date. The representations and warranties of WCPT set
forth in Exhibit E-2 are made as of and shall survive the Closing for a
period of two years and neither Whitehall, the Company nor any Subsidiary or
other Person may make a claim for indemnity for a breach of a representation
made by WCPT hereunder either (i) at any time after the expiration of such
two-year period or (ii) which breach is based upon or arises from information
or facts contained in any Lease (as defined in Exhibit E-2), brokerage
contract, environmental report, structural report, title commitment
(including any copies of recorded documents), documents included in closing
binders, legal memorandum concerning zoning or legal compliance of the
Properties, rent rolls, title policies, surveys and service contracts, in
each case which was delivered to Whitehall or its Affiliate prior to the
Closing. Subject to the time limitations in the immediately preceding
sentence, WCPT agrees to indemnify, defend and hold the Company, its
Subsidiaries and their respective officers, directors, members, controlling
persons, affiliates and agents harmless against all Damages suffered or
incurred by, or asserted against, any of them relating to or arising from any
inaccuracy or breach of any representation or warranty of WCPT made pursuant
to this Agreement. In the event that any representation or warranty made by
WCPT in Exhibit E-2 is inaccurate or breached, Whitehall shall notify WCPT in
writing of such inaccuracy or breach and the amount of Damages suffered or
incurred by the Company (or any of its Subsidiaries) as a result of such
breach or inaccuracy. Within thirty (30) days after receipt of the foregoing
notice, WCPT shall either (i) make a capital contribution to the Company of
cash in an amount equal to the Damages claimed in such notice to have been
suffered or incurred by the Company as a result of the foregoing breach or
inaccuracy or (ii) deliver a Dispute Notice to the Company. If (x) within
the thirty (30) day period specified in the immediately preceding sentence
WCPT shall neither have made a capital contribution to the Company in the
amount of the Damages claimed in the notice nor have delivered a Dispute
Notice to the Company or (y) within thirty (30) days after WCPT has received
notice from the arbitrator selected in accordance with Section 5.10 WCPT
shall not have made a capital contribution to the Company in an amount equal
to the amount of Damages which such arbitrator shall have determined to have
been suffered or incurred by the Company as a result of the foregoing breach
or inaccuracy, then Whitehall may elect on behalf of the Company (i) to
reduce WCPT's Capital Account by the amount of the Damages suffered or
incurred (or the amount determined by the arbitrator pursuant to Section 5.10
to have been suffered or incurred) by the Company in respect of such breach
or inaccuracy and (ii) to reduce the number of Membership Units attributable
to WCPT (and the aggregate number of Membership Units of the Company
outstanding) by an amount equal to the above-referenced amount of Damages
divided by $10.00 (and thereby reduce WCPT's Percentage Interest by a
proportionate amount). If the Company fails to submit the subject matter of
any Dispute Notice for binding arbitration as provided in Section 5.10 within
thirty (30) days after receipt of such Dispute Notice, WCPT shall be relieved
of any responsibility or obligation in respect of the Damages which are the
subject of such Dispute Notice.
(f) The Company shall not consummate the transactions contemplated
by the 700 Atrium Purchase Contract if the Management Committee determines in
good faith that it would not be in the best interests of the Company. Any
and all costs associated with the termination of the 700 Atrium Purchase
Contract pursuant to this Section 5.1(f) shall be for the account of the
Company.
(g) Contemporaneously with the contribution to the Company and its
Subsidiaries of the Whitehall Contributed Assets and the WCPT Contributed
Assets in the manner set forth in 5.1(a) and (d) above, the Company will
enter into the WRP Loans. The proceeds of the Term Loan A (as defined in the
loan documentation evidencing the WRP Loans) (apart from $1,500,000 which
will be retained by the Company as working capital) will be used as follows:
(i) $7,551,124 will be distributed to Whitehall (for further distribution to
its partners), (ii) $22,972,172 will be used to repay the existing financing
secured by 1275 K Street and (iii) $29,676,144 will be distributed to WCPT.
The effect of such distribution will be to reduce the Capital Account of
Whitehall to $24,950,000 and the Capital Account of WCPT to $25,050,000, each
as of the Initial Closing Date. In the event that the closing under the
700 Atrium Purchase Contract is not consummated, Whitehall agrees to remit
$1 million in cash to the Company as liquidated damages to be used for
working capital of the Company; provided that, no increase or decrease in any
Member's Capital Account, Percentage Interest or Membership Units shall be
made on account of such remittance.
(h) Upon the Initial Closing, the Initial Percentage Interest and
Capital Account of each Members and the number of Membership Units issued to
each Member as of the Initial Closing shall be as follows:
Member<PAGE>
Initial
Percentage
Interest<PAGE>
Capital
Account<PAGE>
Membership
Units<PAGE>
WCPT <PAGE>
50.10% $
25,050,000<PAGE>
2,505,000<PAGE>
Whitehal
l<PAGE>
49.90%<PAGE>
$
24,950,000<PAGE>
2,495,000<PAGE>
TOTAL 100.00% $ 50,000,000 5,000,000
(i) Subject to subparagraph (j) below and to Whitehall and/or its
Affiliates obtaining the Necessary Whitehall Consents (as defined below),
Whitehall shall, within ten (10) Business Days of obtaining such Necessary
Whitehall Consents, contribute, or cause the contribution of, the following
property to the Company (or one of its Subsidiaries) in accordance with
Exhibit A:
(1) the real property known as 600 Atrium located in Somerset
County, New Jersey, together with any and all improvements located
thereon and the rights of the Whitehall Additional Owners to any and all
personal, tangible and intangible property located on or otherwise
related to any Whitehall Additional Property, specifically excluding any
such property identified to WCPT in writing prior to determining the
value of such property as provided in subparagraph (j) below; and
(2) the real property known as 15 Broad Street located in Boston,
Massachusetts, together with any and all improvements located thereon
and the rights of the Whitehall Additional Owners to any and all
personal, tangible and intangible property located on, or otherwise
related to, any Whitehall Additional Property, specifically excluding
any such property identified to WCPT in writing prior to determining the
value of such property as provided in subparagraph (j) below.
All of the foregoing property described in subclauses (i) and (ii) above
are herein referred to as the "Whitehall Additional Contributed Assets."
As used in this subparagraph (i), the term "Necessary Whitehall
Consents" means each and every consent of (i) the limited partners of
Whitehall Street Real Estate Limited Partnership VII and Whitehall Street
Real Estate Limited Partnership V, each a Delaware limited partnership, and
(ii) the lenders under the financings secured by the Whitehall Additional
Contributed Assets that are necessary in order to consummate the Additional
Closing. Whitehall hereby agrees to use good faith efforts to obtain all
Necessary Whitehall Consents as soon as practicable, provided that if
Whitehall is not able to obtain one or more Necessary Whitehall Consents on
or prior to December 15, 1997, Whitehall's obligations under this paragraph
(i) shall terminate and be of no further force and effect. If the Whitehall
Additional Contributed Assets are contributed to the Company, then Whitehall
will receive cash in an amount equal to the agreed upon value of the
Whitehall Additional Contributed Assets.
(j) At the time of their contribution to the Company, the
Whitehall Additional Contributed Assets will have a value as agreed upon by
the Initial Members on or prior to the Additional Closing Date. To support
such valuation, Whitehall will make the representations and warranties set
forth in Exhibit E-3 as of the Additional Closing Date. Not later than five
(5) Business Days prior to the Additional Closing Date, Whitehall shall
furnish to WCPT copies of all disclosure schedules described in Exhibit E-3;
provided that Whitehall will endeavor to deliver the same to WCPT at an
earlier date to the extent any such schedules are available. To the extent
that the Initial Members cannot in good faith agree upon the value of either
or both of the Whitehall Additional Properties, the Company will not accept
or be entitled to the contribution of such Property or Properties and
Whitehall's obligations and the Company's rights herein with respect to such
Property or Properties shall terminate and no longer have any force or
effect. Each Member agrees that the Whitehall Additional Contributed Assets
may be worth more or less than the agreed-upon value at the time of
contribution. The representations and warranties of Whitehall set forth in
Exhibit E-3 are made as of and shall survive the Additional Closing Date for
a period of two years and neither the Company, any Subsidiary, any Member nor
any other Person may make a claim for indemnity for a breach of a
representation or warranty made by Whitehall hereunder as of the Additional
Closing Date either (i) at any time after the expiration of such two-year
period or (ii) which breach is based upon or arises from information or
facts contained in any Lease (as defined in Exhibit E-3), brokerage contract,
environmental report, structural report, title commitment (including copies
of recorded documents), documents included in closing binders, legal
memorandum concerning zoning or legal compliance of the Properties, rent
rolls, title policies, surveys and service contracts, in each case which was
delivered to WCPT prior to the Additional Closing. Subject to the time
limitations in the immediately preceding sentence, Whitehall agrees to
indemnify, defend, and hold the Company, its Subsidiaries and their
respective officers, directors, members, controlling persons, affiliates and
agents harmless against all Damages, suffered or incurred by, or asserted
against, any of them relating to or arising from any inaccuracy in or breach
of any representation or warranty of Whitehall in Exhibit E-3. In the event
that any representation or warranty made by Whitehall in Exhibit E-3 is
inaccurate or breached, WCPT shall notify Whitehall in writing of such
inaccuracy or breach and the amount of Damages suffered or incurred by the
Company (or any of its Subsidiaries) as a result of such breach or
inaccuracy. Within thirty (30) days after receipt of the foregoing notice,
Whitehall shall either (i) make a capital contribution to the Company of cash
in an amount equal to the Damages claimed in such notice to have been
suffered or incurred by the Company as a result of the foregoing breach or
inaccuracy or (ii) deliver a Dispute Notice to the Company. If (x) within
the thirty (30) day period specified in the immediately preceding sentence
Whitehall shall neither have made a capital contribution to the Company in
the amount of the Damages claimed in the notice nor have delivered a Dispute
Notice to the Company or (y) within thirty (30) days after Whitehall has
received notice from the arbitrator selected in accordance with Section 5.10
Whitehall shall not have made a capital contribution to the Company in an
amount equal to the amount of Damages which such arbitrator shall have
determined to have been suffered or incurred by the Company as a result of
the foregoing breach or inaccuracy, then WCPT may (i) elect on behalf of the
Company to reduce Whitehall's Capital Account by the amount of the Damages
suffered or incurred (or the amount determined by the arbitrator pursuant to
Section 5.10 to have been suffered or incurred) by the Company in respect of
such breach or inaccuracy and (ii) elect to reduce the number of Membership
Units attributable to Whitehall (and the aggregate number of Membership Units
of the Company outstanding) by an amount equal to the above-referenced amount
of Damages divided by $10.00 (and thereby reduce Whitehall's Percentage
Interest by a proportionate amount). If the Company fails to submit the
subject matter of any Dispute Notice for binding arbitration as provided in
Section 5.10 within thirty (30) days after receipt of such Dispute Notice,
Whitehall shall be relieved of any responsibility or obligation in respect of
the Damages which are the subject of such Dispute Notice.
5.2. Additional Capital Contributions
(a) If either the Manager or Whitehall shall reasonably determine
that funds are required for a Necessary Expenditure, it shall have the right
to make a Mandatory Capital Call describing the amount and nature of the
Necessary Expenditure, in which event each of the Members shall, within
twenty (20) days after receipt of such Mandatory Capital Call, fund a portion
of such amount equal to such Member's Percentage Interest. Notwithstanding
anything to the contrary herein, neither WCPT nor Whitehall shall be required
to contribute or lend any funds to the Company (and no Mandatory Capital Call
may be issued to such Member) pursuant to this Section 5.2 or otherwise (i)
to the extent such Member has previously made Capital Contributions (other
than the Initial Capital Contributions) to the Company and its Subsidiaries
in an amount equal to or in excess of an aggregate amount of $100 million
multiplied by the initial Percentage Interest of such Member set forth in
Section 5.1(h), (ii) in response to a Capital Call made at any time after the
second anniversary of the Initial Closing (irrespective of the amounts
previously contributed) or (iii) at any time after an initial public offering
of Shares by WCPT.
(b) If the Management Committee shall have authorized a Capital
Call, the Manager shall make such Capital Call describing in brief detail the
use of proceeds of such Capital Call, in which event each of the Members
shall, within (20) days after receipt of such Capital Call, fund a portion of
such amount equal to such Member's Percentage Interest.
(c) Following receipt of a Capital Call in compliance with the
requirements of this Section 5.2, each Member shall contribute to the Company
the amount applicable to such Member, in accordance with such Member's
Percentage Interest, set forth in the Capital Call delivered pursuant to this
Section 5.2 on the due date specified in such notice.
5.3. Failure to Fund Capital Contributions. If any Member shall
fail to make a capital contribution required to be made pursuant to Section
5.2 in the amount and within the time period specified in the Capital Call
(such Member is hereinafter referred to as a "Non-Contributing Member"), the
Manager shall give notice of such failure to all other Members and the amount
of the capital contribution not funded by the Non-Contributing Member (such
amount is hereinafter referred to as the "Failed Contribution"), and any
Member or Members may fund all or part of such Failed Contribution (each such
funding Member is hereinafter referred to as a "Contributing Member"). If
more than one Member desires to be a Contributing Member, each such Member
shall have the right to fund the amount the Non-Contributing Member(s) failed
to fund pro rata in proportion to the relative Percentage Interests of such
Contributing Members; provided that, if any such Member funds less than its
pro rata share, the other Members shall have the right to fund an amount
equal to the difference between such first Member's pro rata share and the
amount such first Member actually contributed pursuant to this sentence, on a
pro rata basis in proportion to the relative Percentage Interests of such
other Members. Upon funding all or any part of a Failed Contribution, any
Contributing Member may elect the following treatment for the portion (the
"Funded Portion") of the Failed Contribution funded by such Contributing
Member:
(a) The Contributing Member may at any time (even after first
electing to proceed under paragraph (b) below) elect to treat the Funded
Portion as a capital contribution by such Contributing Member with the
dilution provided for in Section 5.4 below.
(b) The Contributing Member may elect to treat the Funded Portion
as a loan (a "Member Loan") by the Contributing Member to the Non-
Contributing Member, which Member Loan shall be treated as (i) a demand
loan made by the Contributing Member to the Non-Contributing Member
(bearing interest at the Default Rate), and (ii) as a Capital
Contribution by the Non-Contributing Member. Any such Loan (to the
extent of unpaid principal and interest) shall be recourse only to the
Non-Contributing Member's Interest and shall also be payable by the Non-
Contributing Member on demand of the Contributing Member and shall be
repaid (i) directly by the Company on behalf of the Non-Contributing
Member to the Contributing Member from funds otherwise distributable to
the Non-Contributing Member pursuant to Section 7.4 or (ii) upon the
closing of the transactions contemplated by Section 8.2 hereof. A
Contributing Member may, by delivering a notice to the Non-Contributing
Member at any time prior to full repayment of such Member Loan, elect to
terminate such loan and have the Non-Contributing Member's Percentage
Interest diluted as set forth in Section 5.4, with the entire outstand-
ing principal and interest treated as the amount of the Failed Contribu-
tion and the Capital Accounts of the Contributing and Non-Contributing
Members adjusted accordingly to reflect the outstanding amount of a
Member Loan as a Capital Contribution by the Contributing Member, not
the Non-Contributing Member. Repayment of any Member Loan shall be
secured by the Non-Contributing Member's Interest, and the Non-
Contributing Member hereby grants a security interest in such Interest
to the Contributing Member who has advanced such Member Loan and hereby
irrevocably appoints such Contributing Member, and any of its agents,
officers or employees, as its attorneys-in-fact with full power and
authority to prepare and execute any documents, instruments and agree-
ments, including, but not limited to, any note evidencing the Member
Loan, and such Uniform Commercial Code financing statements,
continuation statements, and other security instruments as may be
appropriate to perfect and continue such security interest in favor of
such Contributing Member.
(c) The Contributing Member may elect to treat the total amount
funded by such Member (equal to the sum of (i) the Funded Portion plus
(ii) the portion of the related capital contribution that such
Contributing Member was required to fund on account of its Percentage
Interest) as a loan (a "Company Loan") by the Contributing Member to the
Company, which Company Loan shall bear interest at the Default Rate. Any
such Company Loan shall be repaid (i) prior to any distributions
pursuant to Section 7.1 hereof or (ii) upon closing of the transactions
contemplated by Section 8.2. If more than one Member has a Company Loan
owing to it, such repayment shall be made pro rata in proportion to the
relative principal amount of Company Loans that each such Member has
outstanding as a percentage of total outstanding Company Loans made by
all Members. All payments on Company Loans shall be applied first to
pay any accrued interest (at the rates specified in Section 5.4(b)) and
then to pay the principal amount thereof, until all such Members shall
have received the full amount of principal and accrued interest on such
Company Loans.
5.4. Dilution for Failure to Fund Capital Calls. (a) If one or
more Contributing Members elect to treat the Funded Portion as a capital
contribution (including after electing to terminate a Member Loan pursuant to
Section 5.3(b)), the Percentage Interest of each such Contributing Member
shall be increased by a percentage equal to the quotient (rounded up to the
nearest one hundredth of one percent) obtained when (x) two times the
remaining Funded Portion funded by such Contributing Member is divided by
(y) the sum of all Members' Capital Contributions as of such date (including
the remaining Funded Portions).
(b) Notwithstanding the terms of paragraph (a) above, if (i) any
New Member has purchased Membership Units from the Company and continues to
own any of such Membership Units, and (ii) one or more Contributing Members
elect to treat the Funded Portion as a capital contribution (including after
electing to terminate a Member Loan pursuant to Section 5.3(b)), the
Percentage Interest of each such Contributing Member shall be increased by a
percentage equal to the quotient (rounded up to the nearest one hundredth of
one percent) obtained when (x) the remaining Funded Portion funded by such
Contributing Member is divided by (y) the Deemed Value Per Membership Unit
times the aggregate number of Membership Units then issued by the Company
plus the amount of the remaining Funded Portion.
(c) In the case of either (a) or (b) above, the Percentage
Interest of the Non-Contributing Member shall be decreased by the aggregate
amount of the increase in the Percentage Interests of all Contributing
Members made pursuant to paragraph (a) or (b), as the case may be. Schedule
5.4 attached hereto illustrates the manner in which the parties intend the
squeeze-down formula set forth in this Section 5.4 to be calculated.
(d) In order to give effect to the dilution of the Non-
Contributing Member's Percentage Interest as set forth above in this Section
5.4, a number of the Non-Contributing Member's Membership Units corresponding
to the Percentage Interest forfeited under Section 5.4(a) or (b) shall be
deemed to be assigned to the Contributing Members pro rata to the relative
amounts of their remaining Funded Portions such that the percentage of all
Membership Units then owned by each such Contributing Member shall equal each
such Contributing Member's Percentage Interest (taking into account the
additional Membership Units issued to the Contributing Members pursuant to
Section 5.9), and the Manager is hereby authorized and directed to reflect
such assignment on the books of the Company.
5.5. Capital of the Company. The capital of the Company shall be
the sum of the Members' Capital Contributions. Except as otherwise provided
herein, no Member shall be entitled to withdraw or receive any interest or
other return on its Capital Contribution.
5.6. Liability of Members. The Members shall not be bound by, nor
be personally liable for, the expenses, liabilities, indebtedness or obli-
gations of the Company or of any other Member. The liability of each Member
shall be limited solely to the amount of its Capital Contributions;
provided, however, that after a Member has received a distribution from the
Company, such Member may be liable to the Company for the amount of the
distribution but only to the extent provided by the Act. The Members shall
not be required to contribute any amounts in excess of the amounts set forth
in Sections 5.1, and 5.2 hereof, provided, however, that any Member's failure
to fund a Capital Call made pursuant to Section 5.2 shall be subject to the
provisions of this Article V.
5.7. Return of Capital Contribution. Except as otherwise provided
in this Agreement, no Member shall have the right to withdraw as a Member or
demand the return of all or any part of its Capital Contribution until the
Company has been dissolved and terminated, or to demand or receive property
other than cash in return for its Capital Contribution. No Member shall be
liable for the return of the Capital Contribution of any other Member.
5.8. Calculation of Members' Percentage Interest. At any time, a
Member's Percentage Interest shall be equal to the number of Membership Units
owned by such Member at the date of determination divided by the aggregate
number of Membership Units owned by all of the Members at such date.
5.9. Issuance of Additional Membership Units. (a) The Manager is
hereby authorized and directed to cause the Company to issue to the Initial
Members on the Initial Closing Date the number of Membership Units set forth
in Section 5.1(h).
(b) The Manager is hereby authorized and directed to cause the
Company to issue to any Member (including a New Member) that makes a Capital
Contribution (excluding the contribution of the WCPT Contributed Assets and
the Whitehall Contributed Assets on the Initial Closing Date and the
contribution of the Whitehall Additional Contributed Assets on the Additional
Closing Date) to the Company (including a capital contribution made by a
Contributing Member in accordance with Section 5.3), the number of Membership
Units equal to the amount of such contributing Member's Capital Contribution
divided by a price per Membership Unit determined by the Management
Committee; provided that, if the Management Committee is unable to determine
such price, the price per Membership Unit shall be equal to the Deemed Value
Per Membership Unit. Unless specifically resolved otherwise by the Management
Committee, any Membership Units issued after the Initial Closing Date shall
have the same rights, powers and duties as the Membership Units issued on the
Initial Closing Date; provided that, in any event, the Management Committee
may authorize the classification of multiple classes of Membership Units and
may establish the designations, preferences and relative, participating,
optional or other special rights, powers or duties of each class of
Membership Units.
(c) The Manager is hereby authorized and directed to cause the
Company to issue Membership Units (i) to WRP as required in connection with
the exercise of the WRP Warrants in exchange for Membership Units, (ii) to
WCPT in connection with Whitehall's exercise of its rights set forth in
Section 8.3 and (iii) to WRP in connection with the exchange of Membership
Units for the WRP At-Market Shares.
5.10. Arbitration. Any matter arising pursuant to any provision
hereunder which specifies that such matter shall be resolved by arbitration
and any other dispute involving an alleged breach or violation of this
Agreement (including, without limitation, an alleged breach or violation by
WCPT that would entitle Whitehall to remove WCPT pursuant to Section 9.1)
shall be submitted to arbitration ("Arbitration") in accordance with the
provisions of this Section 5.10. The party having the right to submit a
matter to Arbitration and exercising its rights to do so shall have the right
to request an arbitration which shall be conducted in accordance with the
Rules of Arbitration of the American Arbitration Association for a single
arbitrator arbitration (the "Rules") in New York, New York, or at such other
location as may be agreed between the parties. The Arbitration shall be
conducted by a single arbitrator chosen in accordance with the Rules,
provided that, such arbitrator shall be a person having at least ten (10)
years experience in the matter in dispute including valuing real estate. The
determination of the arbitrator shall be made within thirty (30) days
following the appointment of such arbitrator and shall be conclusive and
binding upon the parties and judgment upon the same may be entered in any
court having jurisdiction thereof. Each party shall pay the fees and
expenses of the arbitrator as determined by the arbitrator. The arbitrator
shall not have the right to amend any provision of this Agreement.
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts.
(a) The Company shall maintain a Capital Account for each Member
in accordance with federal income tax accounting principles.
(b) The Capital Account of each Member shall be increased by (i)
the amount of any cash and the agreed net fair market value (as used herein,
"agreed net fair market value" of property shall mean the gross fair market
value of the property reduced by all liabilities encumbering the property) as
of the date of contribution of any property subsequently contributed as a
Capital Contribution to the capital of the Company by such Member and (ii)
the amount of any Profits allocated to such Member. The Capital Account of
each Member shall be decreased by (i) the amount of any Losses allocated to
such Member and (ii) the amount of distributions to such Member. In all
respects, the Member's Capital Accounts shall be determined in accordance
with the detailed capital accounting rules set forth in Treasury Regulation
Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of
certain events as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(f). Company Loans shall not be added to Capital Accounts
and payments with respect to such Loans shall not be debited from Capital
Accounts. The Initial Members hereby agree that upon the Closing, the
Capital Account of each Initial Member shall be as set forth in Section
5.1(h).
(c) A transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account)
attributable to the transferred Interest.
(d) Notwithstanding anything to the contrary contained herein, no
increase in any Member's Capital Account, Percentage Interest or number of
Membership Units shall be made on account of a contribution made by an
Initial Member pursuant to Section 5.1(c), (e), (i) or (j).
6.2. Profits and Losses.
(a) The profits and losses of the Company ("Profits" and "Losses")
shall be the net income or net loss (including capital gains and losses,
income and gain exempt from tax, and items of loss, deduction of expense not
deductible from Company income or capitalizable into the basis of Company
property), respectively, of the Company determined for each Fiscal Year in
accordance with the accounting method followed for federal income tax
purposes except that (i) in computing Profits and Losses, all depreciation
and cost recovery deductions shall be deemed equal to Depreciation and (ii)
gain or loss on the sale or other disposition of a Company Asset shall be
determined by reference to Book Value.
(b) Whenever a proportionate part of the Profits or Losses is
allocated to a Member, every item of income, gain, loss, deduction or credit
entering into the computation of such Profits or Losses or arising from the
transactions with respect to which such Profits or Losses were realized shall
be credited or charged, as the case may be, to such Member in the same
proportion; provided, however, that "recapture income", if any, shall be
allocated to the Members who were allocated the corresponding depreciation
deductions.
(c) If any Member transfers all or any part of its Interest during
any Fiscal Year or its Interest is increased or decreased, Profits and Losses
attributable to such Interest for such Fiscal Year shall be apportioned
between the transferor and transferee ratably on a daily basis, provided in
all events that any apportionment described above shall be permissible under
the Code and applicable regulations thereunder.
(d) Profits shall be allocated each year among the Members as
follows:
(i) First, to all the Members in proportion to the amounts
previously allocated pursuant to Section 6.2(e)(iv) until the amount
allocated pursuant to this Section 6.2(d)(i) equals such amounts
previously allocated pursuant to Section 6.2(e)(iv);
(ii) Second, to all the Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections 7.1(b)(ii)
(assuming that the Company had received all the cash attributable to the
income being allocated) until the amount allocated pursuant to this
Section 6.2(d)(ii) (and not reversed by Section 6.2(e)(iii)) equals such
amounts previously distributed and distributable pursuant to Sections
7.1(b)(ii);
(iii) Third, to all the Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections 7.1(b)(iii)
(assuming that the Company had received all the cash attributable to the
income being allocated) until the amount allocated pursuant to this
Section 6.2(d)(iii) (and not reversed by Section 6.2(e)(ii)) equals such
amounts previously distributed and distributable pursuant to Sections
7.1(b)(iii); and
(iv) Thereafter, to all the Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections 7.1(b)(iv)
(assuming that the Company had received all the cash attributable to the
income being allocated) until the amount allocated pursuant to this
Section 6.2(d)(iv) (and not reversed by Section 6.2(e)(i)) equals such
amounts previously distributed and distributable pursuant to Sections
7.1(b)(iv).
(e) Losses shall be allocated each year among the Members as
follows:
(i) First, to all the Members in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(iv) until the amount
allocated pursuant to this Section 6.2(e)(i) equals such amounts
previously allocated pursuant to Section 6.2(d)(iv);
(ii) Second, to all the Members in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(iii) until the amount
allocated pursuant to this Section 6.2(e)(ii) equals such amounts
previously allocated pursuant to Section 6.2(d)(iii);
(iii) Third, to all the Members in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(ii) until the amount
allocated pursuant to this Section 6.2(e)(iii) equals such amounts
previously allocated pursuant to Section 6.2(d)(ii); and
(iv) Thereafter, to all the Members pro rata (in proportion to
their relative Percentage Interests).
(f) Notwithstanding Sections 6.2(d) and (e) hereof,
(i) For federal income tax purposes but not for purposes of
crediting or charging Capital Accounts, depreciation or gain or loss
realized by the Company with respect to any property that was
contributed to the Company or that was held by the Company at a time
when the Book Value of the Company assets was adjusted pursuant to the
third sentence of Section 6.1(b) shall, in accordance with the
"traditional method" under Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(d) and (f), be allocated among the
Members in a manner which takes into account the differences between the
adjusted basis for federal income tax purposes to the Company of its
interest in such property and the fair market value of such interest at
the time of its contribution or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the Company
during a taxable year (including any Minimum Gain attributable to
Member-Funded Debt), each Member at the end of such year shall be
allocated, prior to any other allocations required under this Article
VI, items of gross income for such year (and, if necessary, for
subsequent years) in the amount and proportions described in Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) Notwithstanding the allocations provided for in Sections
6.2(d) and (e), no allocation of an item of loss or deduction shall be
made to a Member to the extent such allocation would cause or increase a
deficit balance in such Member's Capital Account as of the end of the
taxable year to which such allocation relates. If any Member receives
an adjustment, allocation or distribution that causes or increases such
a deficit balance, taking into account the rules of Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), such Member shall be
allocated (after taking into account any allocations made pursuant to
Section 6.2(f)(ii)) items of income and gain in an amount and manner to
eliminate the Member's Capital Account deficit attributable to such
adjustment, allocation or distribution as quickly as possible. For
purposes of this Section 6.2(f)(iii), there shall be excluded from a
Member's deficit Capital Account balance at the end of a taxable year of
the Company (a) such Member's share, determined in accordance with
Section 704(b) of the Code and Treasury Regulation Section 1.704-2(g) of
Minimum Gain (provided that, in the case of Minimum Gain attributable to
Member-Funded Debt, such Minimum Gain shall be allocated to the Member
or Members to whom such debt is attributable pursuant to Treasury
Regulation Section 1.704-2(i)), and (b) the amount that such Member is
obligated to restore to the Company under Treasury Regulation Section
1.704-1(b)(2)(ii)(c).
(iv) Notwithstanding the allocations provided for in subsection
(ii) of this Section 6.2(f) and Sections 6.2(d) and (e), if there is a
net increase in Minimum Gain of the Company during a taxable year of the
Company that is attributable to Member-Funded Debt, then first
Depreciation, to the extent the increase in such Minimum Gain is
allocable to depreciable property, and then a proportionate part of
other deductions and expenditures described in Section 705(a)(2)(B) of
the Code, shall be allocated to the lending or guaranteeing Member (and
to joint lenders or guarantors in proportion to their relative obli-
gations), provided that the total amount of deductions so allocated for
any year shall not exceed the increase in Minimum Gain attributable to
such Member-Funded Debt in such year.
(v) Any special allocation under Sections 6.2(f)(ii) through (iv)
shall be taken into account in computing subsequent allocations of
Profits and Losses of any item thereof pursuant to this Article VI so
that the net amount of any items so allocated and the Profits, Losses
and all items thereof allocated to each Member pursuant to this
Article VI shall, to the extent permissible under Section 704(b) of the
Code and the Treasury Regulations promulgated thereunder, be equal to
the net amount that would have been allocated to each Member pursuant to
this Article VI if such special allocation had not occurred.
(vi) It is intended that prior to a distribution of the proceeds
from a liquidation of the Company pursuant to Section 10.2(vi) hereof,
the positive Capital Account balance of each Member shall be equal to
the amount that such Member would receive if liquidation proceeds were
distributed in accordance with Section 7.1. Accordingly,
notwithstanding anything to the contrary in this Section 6.2, to the
extent permissible under Sections 704(b) and 514(c)(9) of the Code and
the Treasury Regulations promulgated thereunder, Profits and Losses and,
if necessary, items of gross income and gross deductions, of the Company
for the year of liquidation of the Company (or, if the liquidation spans
more than one year, each such year) shall be allocated among the Members
so as to bring the positive Capital Account balance of each Member as
close as possible to the amount that such Member would receive if
liquidation proceeds were distributed in accordance with Section 7.1.
(vii) Appropriate adjustments shall be made to the provisions of
this Section 6.2 if a New Member is admitted to the Company.
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions.
(a) Distributions shall be made by the Manager to the Members of
all or a portion of Available Cash as determined by the Management Committee
(such amount, the "Distribution Amount") in accordance with Section 7.1(b)
and (c) within thirty (30) days after the end of each quarter of each Fiscal
Year. The Members acknowledge and agree that the Company shall make
distributions to the Members in an amount at least sufficient to provide WCPT
the amount that WCPT would be required to distribute to its shareholders, on
account of taxable income of the Company allocable to WCPT, so that WCPT is
able to satisfy the distribution requirements of a real estate investment
trust with respect to such taxable income.
(b) An amount equal to the combined Percentage Interest of
Whitehall and WCPT multiplied by the Distribution Amount shall be distributed
as follows:
(i) First, to WCPT and Whitehall pro rata (in proportion to the
unreturned Capital Contributions of such Members) until each of WCPT and
Whitehall shall have received the full amount of all Capital
Contributions made by such Member through the date of distribution;
(ii) Second, to WCPT and Whitehall pro rata (in proportion to their
relative Percentage Interests) until each of WCPT and Whitehall shall
have received, taking into account the timing and amount of all prior
contributions and distributions (other than the Promote), an Internal
Rate of Return equal to 17.5% per annum;
(iii) Third, (x) 82.5% to WCPT and Whitehall pro rata (in
proportion to their relative Percentage Interests) and (y) 17.5% to the
Manager until WCPT and Whitehall shall have received, taking into
account the timing and amount of all prior contributions and distribu-
tions (other than the Promote), an Internal Rate of Return equal to
22.5% per annum; and
(iv) Thereafter, (x) 77.5% to WCPT and Whitehall pro rata (in
proportion to their relative Percentage Interests) and (y) 22.5% to the
Manager.
(c) An amount equal to the Percentage Interest of each New Member
multiplied by the Distribution Amount shall be distributed as follows:
(i) First, to such New Member until such New Member shall have
received the full amount of all Capital Contributions made by such New
Member through the date of distribution;
(ii) Second, to such New Member until such New Member shall have
received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to a
percentage to be approved by the Management Committee;
(iii) Third, (x) a percentage to be approved by the Management
Committee to such New Member and (y) a percentage to be approved by the
Management Committee to the Manager, until such New Member shall have
received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to a
percentage to be approved by the Management Committee; and
(iv) Thereafter, (x) a percentage to be approved by the Management
Committee to such New Member and (y) a percentage to be approved by the
Management Committee to the Manager.
(d) If WCPT is entitled to receive payments pursuant to
Section 7.1(c)(iii) or (iv) or pursuant to Section 7.6 (from any Member other
than Whitehall) on account of any Promote, then all such amounts entitled to
be received by WCPT shall instead be distributed among WCPT and Whitehall in
accordance with Section 7.1(b). Except as provided in the immediately
preceding sentence, Whitehall acknowledges and agrees that, notwithstanding
its existing or future direct or indirect ownership of Shares, (i) it shall
not have any direct or indirect interest in the Promote or the Administrative
Fee payable to WCPT pursuant to this Agreement, (ii) WCPT shall structure the
receipt of the Promote and the Administrative Fee, or enter into one or more
transactions, so that Whitehall will not have any direct or indirect interest
therein, including, without limitation, by distributing or causing the
distribution of the proceeds of or assigning its right to receive all or any
portion of the Promote and the Administrative Fee to an Affiliate of or
Person(s) employed by WCPT and not to WCPT itself, and (iii) it and the
Company will cooperate with WCPT, its Affiliates and their respective
shareholders, in good faith, but without additional costs to Whitehall or the
Company, to accomplish the foregoing.
(e) Notwithstanding the terms of Section 7.1(b) or 7.1(c), if WCPT
shall cease to be the Manager, then, at the election of Whitehall, the amount
of Available Cash that would otherwise be distributed pursuant to Sections
7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) or 7.1(c)(iv)(y) to the Manager
shall not be distributed to WCPT, but shall be distributed to Whitehall and
WCPT in proportion to their relative Percentage Interests, and appropriate
adjustments shall be made in the allocations to be made pursuant to Article
6; provided, however, that if WCPT is removed as Manager pursuant to Section
9.1 Whitehall shall have the right, in its sole and absolute discretion, to
provide for the payment to one or more successor managers (which may be
Members or Affiliates of Members) of all or a portion of the amounts that
would otherwise be distributed to the Manager pursuant to Sections
7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) or 7.1(c)(iv)(y) but are not to
be so distributed by reason of this Section 7.1(e).
7.2. Restoration of Excess Distributions. Subject to Section 7.3:
(a) In the event that distributions have been made to WCPT and
Whitehall under Section 7.1(b)(iii) and subsequently, Whitehall or WCPT makes
a Capital Contribution, then, to the extent required to cause Whitehall and
WCPT to receive on a cumulative basis, taking into account the timing and
amount of all prior contributions and distributions (other than the Promote),
an Internal Rate of Return equal to 17.5% per annum, amounts previously
distributed to a Manager under Section 7.1(b)(iii)(y) shall be returned by
such Manager to the Company for immediate distribution to Whitehall and WCPT
pro rata in accordance with their relative Percentage Interests, and, to the
extent permissible under Sections 704(b) and 514(c)(9) of the Code and the
Treasury Regulations promulgated thereunder, appropriate adjustments shall be
made in the allocations pursuant to Article VI hereof.
(b) In the event that distributions have been made to the WCPT and
Whitehall under Section 7.1(b)(iv) and subsequently, Whitehall or WCPT makes
a Capital Contribution, then, to the extent required to cause Whitehall and
WCPT to receive on a cumulative basis, taking into account the timing and
amount of all prior contributions and distributions (other than the Promote),
an Internal Rate of Return equal to 22.5% per annum, amounts previously
distributed to the Manager under Section 7.1(b)(iv)(y) shall be returned by
such Manager to the Company for immediate distribution to Whitehall and WCPT
pro rata in accordance with their relative Percentage Interests, and, to the
extent permissible under Sections 704(b) and 514(c)(9) of the Code and the
Treasury Regulations promulgated thereunder, appropriate adjustments shall be
made in the allocations pursuant to Article VI hereof.
7.3. Liquidation. In the event of the sale or other disposition
of all Properties owned by the Company and its Subsidiaries, the Company
shall be dissolved and the proceeds of such sale or other disposition shall
be distributed to the Members in liquidation as provided in Article X.
7.4. Repayment of Member Loans. If any Member shall be a borrower
under one or more Member Loans (a "Debtor Member"), then any distributions
that would otherwise be payable to such Debtor Member pursuant to Section
7.1, 7.2 or 10.2 shall instead be paid to the Member or Members which made
such Member Loans (each, a "Lender Member"), first to pay any accrued
interest (at the Default Rate) and then to pay the principal amount thereof,
until such Member Loans (including any accrued and unpaid interest) shall be
repaid in full. In the event there are two or more Lender Members with
respect to any Debtor Member, distributions under this Section 7.4 shall be
made pro rata to each Lender Member in proportion to the relative principal
amount of Member Loans (including accrued and unpaid interest) that such
Lender Member has outstanding as a percentage of total outstanding Member
Loans made to such Debtor Member by all Lender Members. Any amounts
distributed pursuant to this Section 7.4 shall for all other purposes of this
Agreement be treated as if distributed to the Debtor Member.
7.5. Revisions to Reflect Issuance of Additional Membership Units.
In the event that the Company issues additional Membership Units pursuant to
Section 5.9 hereof with rights, preferences or privileges different from
those issued on the Initial Closing Date, the Manager shall make such
revisions to this Article VII as it deems necessary to reflect the issuance
of such additional Membership Units and any special rights, duties or powers
with respect thereto.
7.6. Initial Public Offering; Sale of Units. (a) In the event
of a public offering of Shares by WCPT and provided that WCPT shall be acting
as the Manager at the time of such offering, each Member and WRP agree to
take all actions necessary or appropriate, including, without limitation,
amending any Organizational Document of WCPT and the Company (including this
Agreement) in order that the Manager receives additional compensation (either
in cash, or if the parties agree, in the form of Membership Units or
otherwise) equal in value to the Promote (as defined below) that the Manager
would have received if all of the Company Assets were sold for a price equal
to the total valuation of the Company (implied by reference to the public
offering price of the shares sold by WCPT) and the proceeds of such sale were
distributed pursuant to Section 10.2. If, in connection with a public
offering of WCPT, the Members are restricted from selling their Membership
Units or Shares until a specified lock-up period has lapsed after such
offering, then the Promote payable to WCPT under this subparagraph (a) shall
be calculated and paid to WCPT promptly after such lock-up period expires.
The Members (other than WCPT) agree to pay to the Manager or its designee
contemporaneously with the closing of the public offering (or on the day
after expiration of any lock-up as described in the immediately preceding
sentence) such amount in cash or, if the Members and WRP agree otherwise, in
the form of Membership Units or otherwise (based upon the relative Percentage
Interests of such Members). Without in any way limiting the restrictions
contained in Article 8, Whitehall agrees not to distribute its Membership
Units or Shares to any of its constituent partners prior to payment of the
Promote payable under this subparagraph (a). Each Member and WRP will work
together in good faith to achieve the optimal tax consequences for WCPT;
provided, that there is no adverse impact on the other Members.
(b) Unless the full Promote has already been, or is due to be,
paid to Manager under subparagraph (a), in the event that any Member other
than WCPT, to the extent permitted under this Agreement, either sells (or
otherwise disposes of) all or any of its Membership Units to a third-party or
converts all or any of its Membership Units into Shares or WRP Shares, such
Member shall pay to the Manager on the Determination Date (as defined below)
an amount equal to the amount of the Promote that would have been payable to
the Manager if the proceeds received by such Member (or the cash value
thereof as of the Determination Date if such proceeds are not cash) were
first distributed to such Member pursuant to Section 7.1 (ignoring for this
purpose only any Interest of any other Member) to the extent required for the
Manager to receive the Promote. For purposes of this subparagraph (b), the
Determination Date shall be the date of the relevant sale, disposition or
conversion of the Membership Units; provided that, if the Shares or WRP
Shares received by such Member upon conversion of any Membership Units are
subject to any "lock-up" agreement prohibiting the sale of such Shares or WRP
Shares for a specified period, the "Determination Date" shall mean the date
upon which such lock-up period expires.
(c) Upon payment of any amounts (whether in cash, Shares, WRP
Shares, Membership Units or other consideration) to the Manager pursuant to
this Section 7.6 in respect of the sale, disposition or conversion of any
Membership Units, no further amounts shall be payable to the Manager pursuant
to this Section 7.6 or Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y)
or 7.1(c)(iv)(y) or any successor provision to any of the foregoing in
respect of any such sold, disposed of or converted Membership Units or in
respect of any subsequent sale, transfer or other disposition of the proceeds
from or consideration received on account of any such sale, disposition or
conversion of Membership Units.
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members.
(a) Except as provided in Section 8.1(b) and Section 8.2, no
Member shall Transfer (as hereinafter defined) all or any portion of its
Interest or permit such a Transfer or contract to do so, without the consent
of each of the Initial Members (which consent may be withheld in such Initial
Member's sole discretion for any reason or no reason) and in strict compli-
ance with the provisions of this Article VIII. As used herein "Transfer" of
an Interest means, with respect to any Member, any transfer, sale, pledge,
hypothecation, encumbrance, assignment or other disposition of any portion of
the Interest of such Member or the proceeds thereof (whether voluntarily,
involuntarily, by operation of law or otherwise). Notwithstanding the
foregoing, a transfer, sale, pledge, hypothecation, encumbrance, assignment
or other disposition of ownership interests in WCPT (including by virtue of
an Extraordinary Transaction but excluding any transfer of up to 6,000 shares
of WCPT issued to holders other than WRP on or about the Initial Closing
Date) shall constitute a "transfer" of WCPT's Interest and shall be subject
to the provisions of this Article VIII. Any purported Transfer in violation
of this Article VIII shall be void ab initio, and shall not bind the Company,
and the Members making such purported transfer, sale or assignment shall
indemnify and hold the Company and the other Members harmless from and
against any federal, state or local income taxes, or transfer taxes, includ-
ing without limitation, transfer gains taxes, arising as a result of, or
caused directly or indirectly by, such purported Transfer. The giving of any
consent to a Transfer in any one or more instances shall not limit or waive
the need for such consent in any other or subsequent instances.
(b) Subject to compliance with the remaining provisions of this
Article VIII and with Section 4.2 and notwithstanding anything to the
contrary set forth in Section 8.1(a) above, each of WCPT and Whitehall may,
from time to time and without any consent or approval, pledge or otherwise
grant a security interest in all or part of such Member's Interest to an
Institutional Lender to secure a loan made to such Member (a "Pledgor") by
such Institutional Lender (a "Pledgee"); provided that, (i) such pledged
Interest may not be transferred to the Pledgee by foreclosure, assignment in
lieu thereof or other enforcement of such pledge and (ii) WCPT and Whitehall
may pledge only their respective economic interests in the Company and no
other rights hereunder. In addition, notwithstanding anything to the
contrary set forth herein, Whitehall shall have the right at any time to
transfer all or any part of its Interest without the prior consent of any
Member (including WCPT and the Manager) pursuant to Section 8.3 or in
connection with (i) its exercise of the WRP Warrants in exchange for its
Membership Units or (ii) the exchange of its Membership Units for the WRP At-
Market Shares.
(c) At all times prior to an initial public offering by WCPT, any
one or more of Whitehall Street Real Estate Limited Partnership V, Whitehall
Street Real Estate Limited VII and/or Whitehall Street Real Estate Limited
Partnership IX, each a Delaware limited partnership, shall control Whitehall.
8.2. Sale of Properties, the Company or its Subsidiaries. (a)
Notwithstanding any other provisions herein, at any time prior to an initial
public offering by WCPT and after the fourth anniversary of the Initial
Closing, either Whitehall or WCPT may (as long as it is still an Appointing
Member), by delivering written notice (a "Sales Notice") to the other (the
person delivering such Sales Notice being referred to as the "Triggering
Party" and the recipient of such Sales Notice being referred to as the "Non-
Triggering Party"), require the Company to sell any and all of the Properties
(or sell the Subsidiary(ies) owning any Property(ies)) in one or more bona
fide transactions to a Person not Affiliated with the Triggering Party (a
"Third Party"), subject to the terms and conditions of this Section 8.2. Each
Property (or Subsidiary) which is the subject of a Sales Notice is referred
to herein as a "Subject Property" (or "Subject Subsidiary"). The Sales Notice
shall state the price (the "Total Price") at which the Triggering Party
desires to sell the Subject Property(ies) and/or Subject Subsidiary(ies).
(b) Concurrently with the delivery of the Sales Notice referred to
in Section 8.2(a), the Triggering Party shall submit to the Non-Triggering
Party an offer (the "Offer"), to sell (or cause the Company or the applicable
Subsidiaries to sell) to the Non-Triggering Party (or its designees) for cash
in exchange for the Non-Triggering Party (or its designees) paying to the
Company or the Subsidiary(ies) owning the Subject Property(ies) the Total
Price, failing which the Triggering Party shall be entitled to market the
Subject Property(ies) and/or Subject Subsidiary(ies), as more particularly
set forth below in this Section 8.2. The Offer shall also set forth any
other material economic terms of the purchase; provided that, any Offer (x)
shall be an all cash offer and shall contain an exculpation of the Members
and their direct and indirect owners and Affiliates from any liabilities
relating to the Subject Property(ies) and/or Subject Subsidiary(ies) and (y)
notwithstanding such exculpation, may include a holdback for breaches of
representations or warranties (which may survive for claims made within no
more than one year from the transfer of the Subject Property(ies) and/or
Subject Subsidiary(ies)) by the Company (which in each case shall be as
outlined by the Triggering Party in the Offer) not to exceed 3% of the
purchase price, which holdback amount may be available for no more than the
survival period of the representations and warranties.
(c) Within thirty (30) days after receiving the Offer, the Non-
Triggering Party shall deliver a notice (a "Sales Response Notice") to the
Triggering Party, stating the election by the Non-Triggering Party of one of
the two following options:
(1) to purchase (or have its designee purchase) for the Total
Price the Subject Property(ies) and /or Subject Subsidiary(ies) on or
before the date (the "Applicable Closing Date") specified in such Sales
Response Notice (which date shall be no later than sixty (60) days after
the Sales Response Notice is delivered) and in accordance with the terms
set forth in the Offer; concurrently with the delivery of a Sales
Response Notice, and as a condition to its effectiveness under this
Section 8.2(c), the Non-Triggering Party shall also deliver to the Com-
pany a down payment equal to 5% of the Total Price, which shall not be
refundable except if the Company or its Subsidiary defaults as a seller
of the Subject Property(ies) and/or Subject Subsidiary(ies); or
(2) to agree to the sale of the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of the Offer,
subject to such changes therein as are contemplated by the terms of this
Section 8.2 provided below, in which event, the Non-Triggering Party
shall have no further rights to purchase any Subject Property or Subject
Subsidiary, except as may be expressly provided for below in this
Section 8.2.
If the Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that the Non-Triggering Party elected option (2) above
(and the Non-Triggering Party hereby consents to such sale in such case).
(d) Promptly after an election by the Non-Triggering Party
pursuant to Section 8.2(c)(1), the Company (and/or the applicable Subsidiary
or Subsidiaries) and the Non-Triggering Party (or its designee(s)) shall
proceed with such purchase and sale, the closing for which shall be held on
or before the Applicable Closing Date, during normal business hours at the
offices of counsel to the Non-Triggering Party. The Non-Triggering Party
shall have one five (5) Business Day adjournment, whereupon time shall be of
the essence with respect to the Non-Triggering Party's obligation to close on
the purchase of the Subject Property(ies) and/or Subject Subsidiary(ies) in
accordance with the terms of this Section 8.2(d) on or before the Applicable
Closing Date, and if the Non-Triggering Party does not close in accordance
with this paragraph, the Triggering Party shall be entitled, as the sole and
exclusive remedies of the Triggering Party, to market and sell the Subject
Property(ies) and/or Subject Subsidiary(ies) on behalf of the Company (or the
applicable Subsidiary(ies)) in accordance with this Section 8.2 as if the
Non-Triggering Party made the election described in Section 8.2(c)(2) and to
keep (for the Company's account) the downpayment described in Section
8.2(c)(1) above (unless the failure to close is due to the default of the
Company or its Subsidiary, in which case the Triggering Party shall not be
entitled to the foregoing remedies).
(e) Upon an election (or deemed election) by the Non-Triggering
Party pursuant to Section 8.2(c)(2), the Triggering Party shall have the
right to cause the Company or the applicable Subsidiary(ies) to market the
Subject Property(ies) and/or Subject Subsidiary(ies) for a period (the
"Marketing Period") of one hundred and eighty (180) days commencing with the
earlier to occur of (i) the thirtieth (30th) day after the delivery of the
Offer to the Non-Triggering Party or (ii) the notice by the Non-Triggering
Party to the Triggering Party of the Non-Triggering Party's election to
proceed under Section 8.2(c)(2). The Members shall cooperate fully with the
efforts of the Triggering Party to market the Subject Property(ies) and/or
Subject Subsidiary(ies) and shall use their good faith efforts to cause the
sale of the Subject Property(ies) and/or Subject Subsidiary(ies) on the terms
set forth in the Offer.
(f) If (i) during the Marketing Period, the Company receives a
third-party offer to purchase the Subject Property(ies) and/or Subject
Subsidiary(ies) for all cash (a "Third Party Offer") that the Triggering
Party desires to accept, (ii) the sale price provided for therein (the "Third
Party Offer Price") is equal to 100% or more of the Total Price and (iii) the
terms are otherwise no less favorable to the Company than those set forth in
the Offer and shall not provide for any additional or separate consideration
to the Triggering Party (or its Affiliates), then the Company or the
applicable Subsidiary(ies) shall sell the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of such Third Party
Offer (the Triggering Party being fully authorized and empowered to execute
and deliver all necessary documents, agreements and instruments on their
behalf and to make the representations and warranties on their behalf that
were outlined in the Offer) and no Non-Triggering Party shall have any right
to purchase any Subject Property or Subject Subsidiary or to object to or
otherwise interfere with such sale, provided that the closing of such sale
shall occur not later than the ninetieth (90th) day after the expiration of
the Marketing Period. In the event that the closing shall not occur within
such ninety (90)-day period, or the Company does not receive a Third Party
Offer that satisfies the conditions of this Section 8.2(f) during the
Marketing Period, then the Triggering Party shall have the right at any time
thereafter to further attempt to sell the Subject Property(ies) and/or
Subject Subsidiary(ies), subject to the rights of the Non-Triggering Party
under Section 8.2(a), which shall be reinstated with respect to any such
further decision on the part of Triggering Party to sell the Subject
Property(ies) and /or Subject Subsidiary(ies).
(g) If during the Marketing Period, the Company receives a Third
Party Offer that satisfies the conditions of Section 8.2(f), except that the
Third Party Offer Price is less than 100% of the Total Price, then the
Triggering Party, if it wishes to accept such Third Party Offer, shall so
notify the Non-Triggering Party. Within thirty (30) days after receiving
such notice, the Non-Triggering Party shall deliver to the Triggering Party a
notice (a "Third Party Response Notice"), stating its election of one of the
two following options:
(1) to purchase (or have its designee purchase) for the Third
Party Offer Price the Subject Property(ies) and/or Subject
Subsidiary(ies) on or before the date which is no later than thirty (30)
days after delivery of such Third Party Response Notice and otherwise in
accordance with the terms set forth in the Third Party Offer;
concurrently with the delivery of a Third Party Response Notice, and as
a condition to its effectiveness under this Section 8.2(g), the Non-
Triggering Party shall also deliver to the Company a down payment equal
to 5% of the Third Party Offer Price, which shall not be refundable
except if the Company or its Subsidiary defaults as a seller of the
Subject Property(ies) and/or Subject Subsidiary(ies); or
(2) to agree to the sale of the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of the Third Party
Offer, in which event, the Non-Triggering Party shall have no further
rights to purchase any Subject Property or Subject Subsidiary, except as
may be expressly provided for below in this Section 8.2.
If the Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that the Non-Triggering Party elected option (2) above
(and the Non-Triggering Party hereby consents to such sale in such case).
(h) Promptly after an election by the Non-Triggering Party
pursuant to Section 8.2(g)(1), the Company and/or the applicable Subsidiary
or Subsidiaries and the Non-Triggering Party (or its designee(s)) shall
proceed with such purchase and sale, the closing for which shall be held on
or before the closing date specified in the Third Party Response Notice
pursuant to Section 8.2(g)(1) above, during normal business hours at the
offices of counsel to the Non-Triggering Party. The Non-Triggering Party
shall have one five (5) Business Day adjournment, whereupon time shall be of
the essence with respect to the Non-Triggering Party's obligation to close on
the purchase of the Subject Property(ies) and/or Subject Subsidiary(ies) in
accordance with the terms of this Section 8.2(h) on or before the thirtieth
(30th) day after such election is made, and if the Non-Triggering Party does
not close in accordance with this paragraph, the Triggering Party shall be
entitled, as the sole and exclusive remedies of the Triggering Party, to
market and sell the Subject Property(ies) and/or the Subject Subsidiary(ies)
on behalf of the Company (or the applicable Subsidiary) in accordance with
this Section 8.2 as if the Non-Triggering Party made the election described
in Section 8.2(g)(2) and to keep (for the Company's account) the down payment
described in Section 8.2(g)(1) above (unless the failure to close is due to
the default of the Company or its Subsidiary, in which case the Triggering
Party shall not be entitled to the foregoing remedies).
(i) If the Non-Triggering Party, having elected to proceed under
either Section 8.2(c)(1) or Section 8.2(g)(1), defaults on its obligation to
purchase the Subject Property(ies) and/or Subject Subsidiary(ies) as required
thereunder, then the Triggering Party shall be entitled to retain (for the
Company's account), as liquidated damages, the down payment received in
contemplation of such sale, it being agreed that the amount represents a fair
and equitable estimate of the damages to be suffered by the Triggering Party,
the Company or its Subsidiaries if the Non-Triggering Party were to so
default and that actual damages would be highly impracticable to determine.
(j) Notwithstanding anything to the contrary, the Triggering Party
shall, subject to and in accordance with this Section 8.1, have full right,
power and authority (acting alone) to execute, deliver and perform, for and
in the name of the Company, of the applicable Subsidiary(ies) and, in the
case of a sale of the Company, of the Members, and each Member hereby agrees
to execute, deliver and perform, any and all documents, agreements and
instruments, and to take any other actions as may be required or desirable
for the purpose of transferring the Subject Property(ies) and/or Subject
Subsidiary(ies), to the maker of the Third Party Offer or the Non-Triggering
Party, as the case may be.
(k) No Property may be a Subject Property if the sale of such
Property would cause WCPT to lose its REIT status or to incur a 100% tax on
the profits allocable to WCPT).
(l) Notwithstanding any other provisions herein, at any time
after the occurrence of a Triggering Event (as defined below) and prior to an
initial public offering by WCPT, the Marketing Member (as defined below) may
require the Company or its Subsidiary(ies) to sell any or all of the
Properties (or sell the Subsidiary(ies) owning such Property(ies)) , and may
sell the Company as a whole, in one or more bona fide transactions to a
Person not Affiliated with the Marketing Member, subject to the terms and
conditions of this Section 8.2(l). Prior to commencing any sale of a
Property or Subsidiary (or the Company) pursuant to this Section 8.2(l), the
Marketing Member shall notify the other Members of its intention to sell the
subject Property(ies) and/or Subsidiary(ies) (or the Company) in writing and
shall keep the other Members reasonably informed of the status and terms of
the marketing efforts with respect to such assets of the Company. The
Marketing Member shall have full right, power and authority (acting alone) to
execute, deliver and perform, for and in the name of the Company, of the
applicable Subsidiary(ies) and, in the case of a sale of the Company, of the
Members, and each Member hereby agrees to execute, deliver and perform, any
and all documents, agreements and instruments, and to take any other actions
as may be required or desirable for the purpose of transferring the subject
Property(ies) and/or Subsidiary(ies) or the Company to the purchaser thereof.
For purposes of this Section 8.2(l), the term "Triggering Event" shall mean
(i) with respect to either Whitehall or WCPT, the fifth anniversary of the
Initial Closing Date, (ii) with respect to Whitehall only, the occurrence of
any event constituting Cause and (iii) with respect to either Whitehall or
WCPT, at any time since the later of (x) the first anniversary of the Initial
Closing Date and (y) the date twelve months prior to the date of
determination, the Committee Representatives appointed by Whitehall declined
not less than five opportunities to purchase one or more Office Properties
each having a purchase price of at least $15 million individually after WCPT
or one of its Affiliates shall have offered the Company the opportunity to
purchase such Office Properties in accordance with Section 4.2(e). For
purposes of this Section 8.2(l), the term "Marketing Member" shall mean, with
respect to any Property or Subsidiary (or of the Company), the first of
Whitehall or WCPT (provided such Person is still an Appointing Member) to
receive a binding offer from a Person who is not Affiliated with such Member
to purchase such Property or Subsidiary (or the Company) and if Whitehall and
WCPT shall each contemporaneously receive such an offer, the Member receiving
the offer with the higher purchase price for such Property or Subsidiary (or
the Company); provided that, at any time after the occurrence of a Triggering
Event specified in clause (ii) only Whitehall may be a Marketing Member.
8.3. Conversion Right. (a) At any time and from time to time
after WCPT shall have Shares or other capital stock issued to the public in a
public offering or shall engage in an Extraordinary Transaction, Whitehall
shall have the right (the "Conversion Right") to require WCPT to convert part
or all of Whitehall's Membership Units into Shares, with such conversion to
occur on the Specified Conversion Date and at a conversion price equal to and
in the form of the Shares Amount. Any such Conversion Right shall be
exercised pursuant to a Notice of Conversion delivered to WCPT. Whitehall
may exercise the Conversion Right from time to time after WCPT shall have
Shares or other capital stock issued to the public in a public offering or
shall engage in an Extraordinary Transaction, without limitation as to
frequency, with respect to part or all of the Membership Units that it owns,
as selected by Whitehall. If the Shares Amount is not a whole number of
Shares, Whitehall shall be paid (i) that number of Shares which equals the
nearest whole number less than such amount plus (ii) an amount of cash which
WCPT determines, in its reasonable discretion, to represent the fair value of
the remaining fractional Share which would otherwise be payable to Whitehall.
Whitehall shall have no right with respect to any Membership Units so
converted to receive any distributions paid after the Specified Conversion
Date with respect to such Membership Units. Any permitted successor or
permitted assignee of Whitehall may exercise Whitehall's rights pursuant to
this Section 8.3. In connection with any exercise of such rights by such
permitted successor or permitted assignee of Whitehall, the Shares Amount
shall be paid by WCPT directly to such permitted successor or permitted
assignee and not to Whitehall. Whitehall and WCPT acknowledge that Whitehall
is not an "Excepted Holder" (as defined in Section 7.1 of the Declaration of
Trust) and that, unless it becomes an "Excepted Holder", Whitehall's
Conversion Right may be limited. Therefore, Whitehall and WCPT agree to
cooperate in good faith to cause Whitehall to become an "Excepted Holder"
before the Conversion Right is exercised or to deliver to Whitehall cash
instead of Shares upon such exercise equal in amount to the fair market value
of the Shares that would otherwise have been delivered, but for the fact
that Whitehall is not an "Excepted Holder". Subject to the foregoing, in the
event that Whitehall exercises its Conversion Rights before an initial public
offering of WCPT, (i) any Shares received by Whitehall pursuant to such
exercise may not, prior to an initial public offering of WCPT, be transferred
unless Whitehall first offers WRP the opportunity to purchase such Shares in
accordance with the following sentence and (ii) Whitehall will remain
obligated hereunder (including without limitation with respect to its
obligations in Section 5.2) until an initial public offering of WCPT occurs
(upon which Whitehall will have no further obligations hereunder except with
respect to any Interest it then owns). If Whitehall desires to sell any or
all of its Shares to any Person that is not an Affiliate of Whitehall,
Whitehall shall, not less than ten (10) Business Days prior to any such sale,
notify WRP in writing (the "Offer Notice") of such intended sale setting
forth in such Offer Notice the number of Shares which Whitehall intends to
sell and the aggregate purchase price therefor and if WRP either has not
notified Whitehall in writing within ten (10) Business Days of receipt of the
Offer Notice that it wishes to purchase such Shares on terms and conditions
identical to those set forth in the Offer Notice, Whitehall may sell to a
non-Affiliate the number of Shares set forth in the Offer Notice for a price
not less than the aggregate purchase price set forth therein. If WRP
notifies Whitehall in writing within ten (10) Business Days of receipt of the
Offer Notice that it accepts the offer in the Offer Notice for all of the
Shares described therein, WRP shall pay to Whitehall the aggregate purchase
price set forth in the Offer Notice not later than ten (10) Business Days
after delivery to Whitehall of its notice of acceptance of the offer set
forth in the Offer Notice and Whitehall shall deliver to WRP the requisite
Shares free and clear of all Liens.
(b) All Membership Units delivered for conversion shall be
delivered to WCPT free and clear of all Liens, and, notwithstanding anything
contained herein to the contrary, WCPT shall not be under any obligation to
acquire Membership Units which are or may be subject to any Lien.
(c) If Whitehall converts all of its Membership Units pursuant to
the terms of this Section 8.3 at any time prior to an initial public offering
by WCPT, until an initial public offering by WCPT, Whitehall (but not its
successors or assigns unless such successor or assign is an Affiliate of
Whitehall) shall be entitled to all of the same rights and powers with
respect to the management and governance of WCPT that Whitehall has been
granted under this Agreement and WCPT shall take such further actions as may
be necessary (including by classifying its board of directors and amending
its Declaration of Trust and other organizational documents) to give effect
to this provision. Upon full implementation of such documentation as is
necessary to grant Whitehall such rights and powers, the Committee
Representatives appointed by Whitehall shall no longer serve on the
Management Committee and all rights and obligations of Whitehall with respect
to the Company shall terminate.
(d) Upon conversion by Whitehall (or its permitted successor or
permitted assign) of all or any of its Membership Units pursuant to the terms
of this Section 8.3, Whitehall (or such permitted successor or assign) shall
receive demand and piggyback registration rights with respect to the Shares
received in such conversion, which registration rights shall be exercisable
after any Shares of WCPT become publicly traded (subject to any lock-up
agreement entered into by Whitehall) and shall be no less favorable to
Whitehall than the registration rights granted with respect to WRP Shares
pursuant to the Warrant Agreement. Promptly upon Whitehall's request, WCPT
shall enter into a separate registration rights agreement with Whitehall in
form and substance no less favorable to Whitehall than the Warrant Agreement
(or, if more favorable, than those granted to WRP at the time of the initial
public offering of WCPT).
8.4. Certain Transfer Provisions. The following provisions shall
apply to a purchase by a Non-Triggering Party of any Subject Property or
Subject Subsidiary:
(a) The purchase price shall be paid in cash, by wire transfer of
the funds to the accounts of the Company or the applicable Subsidiary.
All transfer costs (including transfer taxes and attorneys' fees) shall
be borne by the Company (unless the Offer provided otherwise) and there
shall be an adjustment of the purchase price at closing to reflect a
proration of any accrued income and expenses, excluding non-cash items.
Within forty-five (45) days after the closing, the Non-Triggering Party
shall direct the independent accountants for the Company to complete an
audit of such Members' proration and such independent accountants shall
deliver their audit report to the Members. If such audit report shall
adjust such proration, the party in whose favor such adjustment is made
shall promptly be paid by the other party the amount of such adjustment.
(b) On payment of the purchase price, the Non-Triggering Party
shall, with respect to each Company and/or Subsidiary debt, obligation
and claim against the Company and/or a Subsidiary for which the Company,
a Subsidiary or any Member (or any guarantor affiliated therewith or
which delivered the guaranty on behalf of such Person) is or may be per-
sonally liable with respect to the Subject Property or Subject
Subsidiary, at the option of the Non-Triggering Party either (i) obtain
a release of the Company, any applicable Subsidiary and each Member (and
any guarantor affiliated therewith or which delivered the guaranty on
behalf of such Person) from all liability, direct or contingent, from
holders of such debt, obligation or claim or (ii) cause such
indebtedness, obligation or claim to be paid in full at the closing, or
(iii) deliver to the Company, any applicable Subsidiary and each Member,
an agreement in form and substance reasonably satisfactory to the
Company, such Subsidiary and each Member, which satisfaction may require
a creditworthy guarantor, to defend, indemnify and hold the Company,
such Subsidiary and each Member (and any guarantor affiliated therewith
or which delivered the guaranty on behalf of such Person) harmless from
any actions, including attorneys' fees and costs of litigation, claims
or loss arising from such debt, obligation or claim. In no event shall
such indemnity apply to liabilities resulting from the breach by any
Member of its obligations under this Agreement. This subparagraph (b)
shall not apply to any debt, obligation or claim which is fully insured
by public liability insurer(s) reasonably acceptable to the Company, any
applicable Subsidiary and each Member.
8.5 Assignment Binding on Company. No assignment or transfer of
all or any part of the Interest of a Member permitted to be made under this
Agreement shall be binding upon the Company unless and until a duplicate
original of such assignment or instrument of transfer, duly executed and
acknowledged by the assignor or transferor, has been delivered to the
Company, and such instrument evidences (i) the written acceptance by the
assignee of all of the terms and provisions of this Agreement, (ii) the
assignee's representation that such assignment was made in accordance with
all applicable laws and regulations and (iii) the unanimous consent of all of
the Members to the transfer of the Interest unless such Transfer is pursuant
to the last sentence of Section 8.1(b).
8.6. Bankruptcy of a Member. In the event a Member becomes
subject to a Bankruptcy, the trustee or receiver of the estate shall have all
the rights of a Member for the purpose of settling or managing the estate and
such power as such Member possessed to assign all or any part of the Inter-
ests and to join with the assignee thereof in satisfying conditions precedent
to such assignee becoming a Substituted Member; provided, however, in such
event, such Member shall cease to be an Appointing Member for purposes of
Article III. The Company shall not be dissolved or terminated by reason of
the Bankruptcy, removal, dissolution or admission of any Member.
8.7. Substituted Members. (a) Members who assign all their
Interests pursuant to an assignment or assignments permitted under this
Agreement shall cease to be Members of the Company except that unless and
until a Substituted Member is admitted in his stead, the assigning Member
shall not cease to be a Member of the Company under the Act and shall retain
the rights and powers of a member under the Act and hereunder, provided that
such assigning Member may, prior to the admission of a Substituted Member,
assign its economic interest in the Interest, to the extent otherwise
permitted under this Article VIII, including, without limitation, Section
8.5. Any Person who is an assignee of any of the Interests of a Member and
who has satisfied the requirements of Sections 8.1 and 8.5 shall become a
Substituted Member only when (i) the Manager has entered such assignee as a
Member on the books and records of the Company, which the Manager is hereby
directed to do upon satisfaction of such requirements, and (ii) such assignee
shall have paid all reasonable legal fees and filing costs in connection with
the substitution as Member.
(b) Any Person who is an assignee of all or any portion of the
Interest of a Member but who does not become a Substituted Member and desires
to make a further assignment of any such Interest, shall be subject to all
the provisions of this Article VIII to the same extent and in the same manner
as any Member desiring to make an assignment of the Interest.
8.8. Acceptance of Prior Acts. Any person who becomes a Member,
by becoming a Member, accepts, ratifies and agrees to be bound by all actions
duly taken pursuant to the terms and provisions of this Agreement by the
Company prior to the date it became a Member and, without limiting the gener-
ality of the foregoing, specifically ratifies and approves all agreements and
other instruments as may have been executed and delivered on behalf of the
Company prior to said date and which are in force and effect on said date.
8.9. Additional Limitations. Notwithstanding anything contained
in this Agreement, no Transfer shall be made and any Member shall have the
right to prohibit and may refuse to accept any Transfer unless (i)
registration is not required under the Securities Act of 1933, as amended, in
respect of such transaction; and (ii) such assignment or transfer does not
violate any applicable federal or state securities, real estate syndication,
or comparable laws. Any Member may elect prior to any Transfer to require an
opinion of counsel with respect to any of the foregoing matters.
ARTICLE IX.
MANAGER
9.1. Removal of Manager. (a) Whitehall may in its sole discretion
elect, by ten (10) days' prior written notice, to remove WCPT as the Manager
for Cause. Thereupon, WCPT shall cease to be an Appointing Member and
Whitehall may appoint a new Manager. Nothing herein shall be deemed to limit
the indemnification obligations under Section 4.3 if WCPT is removed as
Manager of the Company, and this Section 9.1 shall not constitute a waiver of
exculpation from claims by, or indemnification from, the Company with respect
to any matter arising prior to the removal of WCPT.
(b) Notwithstanding anything to the contrary herein, Whitehall may
deliver a Sales Notice to WCPT at any time upon the removal of WCPT as
Manager pursuant to Section 9.1(a) and require the Company to sell any and
all of the Properties (or sell the Subsidiary(ies) owning such
Property(ies)), and may sell the Company as a whole, in one or more
transactions to a Third Party in the manner provided in Sections 8.2 and 8.4,
without having to first offer the Property(ies), the Subsidiary(ies) or the
Company to WCPT. If WCPT shall notify the Company in writing that it
disputes any of the grounds for its removal as Manager (setting forth in such
notice WCPT's grounds for such dispute) no later than fifteen (15) days after
receipt of any Sales Notice delivered to WCPT in accordance with the
immediately preceding sentence, the Initial Members shall submit the subject
matter of WCPT's notice for binding arbitration as provided in Section 5.10
no later than fifteen (15) days after receipt of the foregoing notice from
WCPT. If the arbitrator shall rule that WCPT may be removed as Manager
pursuant to this Agreement, the Company shall sell any and all of the
Properties (or the Company's Subsidiary(ies)) as selected by Whitehall in one
or more transactions to Third Parties and Whitehall shall also have the full
and exclusive right, power and authority on behalf of all Members to sell the
Company itself to such a Third Party.
9.2. Fees. Except as provided in this Section 9.2 and elsewhere
in this Agreement (including the provisions of Articles VI and VII regarding
distribution, payments and allocations to which it may be entitled), the
Manager shall not be compensated for its services as manager of the Company.
Notwithstanding the foregoing, the Manager (for so long as the Manager is
WCPT) shall be paid the Administration Fee on a quarterly basis in arrears
and shall be reimbursed, on a monthly basis, for all expenses that it incurs
relating to the ownership and operation of or for the benefit of, the
Company (including without limitation, (i) expenses relating to the ownership
of interests in and the management and operation of the Company and its
Subsidiaries and (ii) compensation of WCPT officers and employees to the
extent they devoted substantially all of their working time to the business
of the Company and its Subsidiary(ies). The Members acknowledge that all
such expenses of the Manager are deemed to be for the benefit of the Company.
Such reimbursement shall be in addition to any reimbursement made as a result
of indemnification pursuant to Section 4.3(a) hereof.
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination.
(a) The Company shall be dissolved and liquidated only upon the
occurrence of any of the following:
(i) December 31, 2045;
(ii) the sale or other disposition of all of the Company Assets
and receipt of the final payment of any installment obligation received
as a result of any such sale or disposition;
(iii) the written consent of all Members;
(iv) any event which makes it unlawful for the Company's
business to be continued; or
(v) the issuance of a decree by any court of competent
jurisdiction that the Company be dissolved and liquidated.
Upon dissolution, the Company shall promptly wind up its affairs and shall
promptly be liquidated and a certificate of cancellation of the Company's
Certificate of Formation, as required by law, shall be filed.
(b) In the event of the dissolution and liquidation of the
Company, its business activities shall promptly be wound up, any amounts due
from the Members shall be collected, its debts and liabilities shall be paid
and its remaining assets, if any, shall be distributed as set forth in
Section 10.2 below. Dissolution shall be effective on the date of the
occurrence of an event set forth in Section 10.1(a) but the Company shall not
terminate until all of the Company assets have been liquidated and the
proceeds distributed in accordance with the provisions of this Article X.
Notwithstanding the dissolution of the Company, prior to the termination of
the Company as aforesaid, the business of the Company and the affairs of the
Members as such, shall continue to be governed by this Agreement.
10.2. Distribution Upon Liquidation. Upon dissolution of the
Company, the Manager or other Members, as provided in this Agreement, or if
there shall be none, a duly appointed trustee or liquidator as provided in
this Agreement, shall promptly proceed with the liquidation of the Company,
its Subsidiaries and the Company Assets and the proceeds of such liquidation
shall be applied and distributed in the following order of priority:
(i) to the payment of expenses of the liquidation;
(ii) to the payment of debts and liabilities of the Company, in
order of priority as provided by law, other than debts or liabilities
owed to Members;
(iii) to the setting up of any reserves that the Manager or such
trustee or liquidator, as the case may be, shall determine are
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company or the Members;
(iv) to the payment of Company Loans owed to the Members in
accordance with Section 5.3;
(v) to the payment of other debts and liabilities of the
Company owed to Members; and
(vi) except to the extent otherwise provided in Section 7.4, to
the Members in accordance with their respective Capital Account balances
after allocation of Profits and Losses for the period ending immediately
prior to such distribution.
10.3. Sale of Company Assets.
(a) As expeditiously as possible, the Manager, or any such trustee
or liquidator, shall pay all Company liabilities, establish the reserves and
make the distributions provided for in Section 10.2. Except as agreed by the
Management Committee, no Member shall have the right to demand or receive
property other than cash upon liquidation, and the Management Committee, or
any such trustee or liquidator, shall, in any event, have the power to sell
Company assets for cash as necessary to provide for the payment of all
Company liabilities and the establishment of reserves.
(b) In connection with the sale by the Company and reduction to
cash of its assets, although the Company has no obligation to offer to sell
any property to the Members, any Member or any Affiliate of any Member may
bid on and purchase any Company Assets. If the Manager, or any such trustee
or liquidator, determines that an immediate sale of part or all of the
Company assets would cause undue loss to the Members, the Manager, or any
such trustee or liquidator, may, with the written consent of the Management
Committee, defer liquidation of and withhold from distribution for a
reasonable time any assets of the Company (except those necessary to satisfy
the Company's current obligations).
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account. At all times during the continuance of
the Company, the Manager shall keep or cause to be kept true and complete
books of account in which shall be entered fully and accurately each trans-
action of the Company. Such books shall be kept on the basis of the Fiscal
Year in accordance with the accrual method of accounting, and shall reflect
all Company transactions in accordance with generally accepted accounting
principles. In addition, the Manager shall cause each Subsidiary to keep all
books of account and other records of such Subsidiary separate and distinct
from the books and records of Company and with the standards set forth in
this Section 11.1.
11.2. Availability of Books of Account. All of the books of
account referred to in Section 11.1, together with an executed copy of this
Agreement and the Certificate of Formation, and any amendments thereto and
any other books and financial records of the Company, shall at all times be
maintained at the principal office of the Company or such other place in the
State of New York as the Manager may designate in writing to the Members, and
upon reasonable notice to the Manager, shall be open to the inspection and
examination of the Members or their representatives during reasonable
business hours.
11.3. Financial Reports and Statements; Annual Budgets.
(a) The Manager shall prepare or cause the Company's independent
accountants to prepare (under the oversight of the Manager), on an accrual
basis, all federal, state and local tax returns required to be filed. The
Manager (or, if pursuant to the preceding sentence the tax returns are
prepared by the independent accountants, such preparer) shall submit the
returns and completed IRS Schedules K-1 to each member of the Management
Committee for review and approval and the Manager shall deliver such approved
K-1 to each Member no later than ten (10) days prior to the due date of the
returns, but in no event later than March 1st of each year. Each Member
shall notify the other Members upon receipt of any notice of tax examination
of the Company by federal, state or local authorities.
(b) For each Fiscal Year, the Manager shall send to each Person
who was a Member at any time during such Fiscal Year, within sixty (60) days
after the end of such Fiscal Year, an annual report of the Company including
an annual balance sheet, profit and loss statement, a statement of cash flow
and a statement of changes in Member's capital, all as prepared in accordance
with generally accepted accounting principles consistently applied and
audited by the Company's independent public accountants, which shall be Ernst
& Young, unless another "Big Six" independent public accountants of
recognized standing is selected by the Management Committee, and a statement
showing allocations to the Members of taxable income, gains, losses,
deductions and credits, as prepared by such accountants. For each quarter,
the Manager shall send to each Person who was an Initial Member at any time
during such quarter, within forty-five (45) days after the end of such
quarter, quarterly financial statements of the Company including a quarterly
balance sheet, profit and loss statement, a statement of cash flow and a
statement of changes in Member's capital, all as prepared in accordance with
generally accepted accounting principles consistently applied. In addition,
the Manager shall send (i) to each Initial Member within fifteen (15) days
after the end of each month of each Fiscal Year a monthly report setting
forth such financial and operating information as such Initial Member shall
reasonably request, and (ii) to each Member, such other information
concerning the Company and reasonably requested by such Member as is
necessary for the preparation of such Member's federal, state and local
income or other tax returns.
(c) (i) On or before the November 1st immediately preceding the
commencement of each Budget Year of the Company, the Manager shall submit to
the Management Committee for its approval (1) an annual capital budget for
each Property (an "Annual Capital Budget"), in such form as the Management
Committee shall have approved, for such Budget Year setting forth the
Manager's estimates reasonably itemized of all receipts and expenditures in
respect of capital transactions relating to such Property for such year
(including expenditures for alterations incident to space leases to be
recovered as rent from tenants) and (2) an annual operating budget for such
Property (an "Annual Operating Budget"), in such form as the Management
Committee shall have approved, for such year setting forth the Manager's
estimates reasonably itemized of all income and expenses relating to such
Property for such year and establishing reserves and working capital for such
Property. The Annual Operating Budget shall also contain (x) a schedule of
space that is vacant and space leases expiring during such year (including
the square footage thereof) and (y) the Leasing Plan for such year, maximum
tenant improvement allowances, maximum obligations on lease takeovers and any
other criteria for leases that may be executed without the specific approval
of the Management Committee. Not later than twenty (20) days after receipt
of a proposed Annual Capital Budget or Annual Operating Budget, the
Management Committee shall either approve the Annual Capital Budget and
Annual Operating Budget or shall deliver a notice (an "Objection Notice") to
the Manager stating that the Management Committee objects to any information
contained in or omitted from such proposed Annual Capital Budget or Annual
Operating Budget and setting forth the objections with reasonable
specificity. With respect to such proposed Annual Capital Budget or Annual
Operating Budget as to which no Objection Notice is delivered prior to such
twentieth (20th) day, the proposed Annual Capital Budget or Annual Operating
Budget will be deemed to have been accepted and consented to by the
Management Committee and shall be deemed an "Approved Budget." If the
Objection Notice is timely delivered, the Manager and the Management
Committee shall endeavor in good faith to reach an agreement as to the Annual
Capital Budget or Annual Operating Budget. Notwithstanding the foregoing, as
of the Closing, the Annual Capital Budget and Annual Operating Budget for
each Property shall be the capital budget and operating budget for such
Property as prepared by the WCPT Current Owner or Whitehall Current Owner, as
the case may be, copies of which shall have been delivered to Whitehall or
WCPT, as appropriate, prior to the Closing.
(ii) If the Management Committee shall consider for adoption a
proposed Annual Capital Budget for any Budget Year and shall fail to adopt it
in its entirety because of disagreement as to one or more line items although
the Management Committee shall agree on other line items, then such proposed
Annual Capital Budget, exclusive of the items as to which there is
disagreement, shall be deemed adopted as the Annual Capital Budget for such
Budget Year (and to such extent shall be deemed to be the Approved Budget for
such Budget Year); provided that, if any item or project is approved as part
of the Approved Capital Budget for one Budget Year but is not completed
within such Budget Year, the unexpended portion of such Approved Capital
Budget relating to such item or project shall be carried over to the
following Budget Year and deemed approved. If the Management Committee shall
consider for adoption a proposed Annual Operating Budget for any Budget Year
and shall fail to adopt it in its entirety, then the Annual Operating Budget
for the immediately preceding year shall be deemed adopted as the Annual
Operating Budget for such year except that any specific line items agreed to
in the proposed Annual Operating Budget shall control (and to such extent
shall be deemed to be the Approved Budget for such Budget Year).
11.4. Accounting Expenses. All out-of-pocket expenses payable to
Persons who are not Affiliated with any Member in connection with the keeping
of the books and records of the Company and the preparation of audited or
unaudited financial statements and federal and local tax and information
returns required to implement the provisions of this Agreement or required by
any governmental authority with jurisdiction over the Company shall be borne
by the Company as an ordinary expense of its business.
11.5. Bank Account. The Company shall within 10 days after the
date hereof arrange to maintain (and shall cause each Subsidiary which owns a
Property to maintain) its bank deposits in segregated accounts held for the
Company's (or such Subsidiary's) business, which accounts shall, to the
extent reasonably practicable, be interest-bearing. All funds of the Company
and each applicable Subsidiary shall be promptly deposited in the appropriate
segregated account. The Manager from time to time shall authorize
signatories for such accounts and withdrawals or checks in excess of $100,000
shall require the signature of Jeffrey H. Lynford, Edward Lowenthal or
Gregory Hughes.
11.6. Fidelity Bonds and Insurance. The Company will obtain
fidelity bonds with reputable surety companies, covering all persons having
access to the Company's (or any Subsidiary's) funds, indemnifying the Company
(or such Subsidiary) against loss resulting from fraud, theft and dishonest
and other wrongful acts of such persons. The Company shall carry or cause to
be carried on its behalf and on its Subsidiaries' behalf all property,
liability and workers' compensation insurance as shall be required under
applicable mortgages, leases, agreements, and other instruments and statutes,
but in any event in the amounts and with the insurers required by the
Insurance Program.
ARTICLE XII.
AMENDMENTS
12.1. Amendments Amendments may be made to this Agreement from
time to time by the Manager with the written consent of each of the Members.
In making any amendments, there shall be prepared and filed for recordation
by the Manager such documents and certificates as shall be required to be
prepared and filed.
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and
things, as may be required by law or as, in the reasonable judgment of the
Management Committee, may be necessary or advisable to carry out the intent
and purpose of this Agreement.
13.2. Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party
to this Agreement may desire or be required to give hereunder shall be in
writing and shall be given by hand, by depositing the same in the United
States mail, first class postage prepaid, certified mail, return receipt
requested, by facsimile transmission with delivery of an original thereafter
by any other method provided by this Section 13.2, or by a recognized
overnight courier service providing confirmation of delivery, addressed as
follows:
(a) To the Company, c/o Wellsford Commercial Properties Trust,
610 Fifth Avenue, New York, New York 10020, or at such other address as
may be designated by the Manager upon written notice to all of the
Members; and
(b) To the Members at their respective addresses set forth in
Section 2.6 herein. Each Member shall have the right to designate
another address or change in address by written notice to the Company in
the manner prescribed herein.
All notices given pursuant to this Section 13.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date
delivery was refused by the addressee, (ii) if delivered by United States
mail or by overnight courier, on the date of delivery as established by the
return receipt or courier service confirmation (or the date on which the
return receipt or courier service confirms that acceptance of delivery was
refused by the addressee) or (iii) if delivered by facsimile, on the date of
delivery thereof.
13.3. Headings and Captions. All headings and captions contained
in this Agreement and the table of contents hereto are inserted for
convenience only and shall not be deemed a part of this Agreement.
13.4. Variance of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or entity may require.
13.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one Agreement.
13.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
13.7. Partition. The Members hereby agree that no Member nor any
successor-in-
interest to any Member shall have the right, while this Agreement remains in
effect, to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the
property of the Company partitioned, and each Member, on behalf of himself,
his successors, representatives, heirs and assigns, hereby waives any such
right.
13.8. Invalidity. Every provision of this Agreement is intended
to be severable. The invalidity and unenforceability of any particular
provision of this Agreement in any jurisdiction shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as
if such invalid or unenforceable provision were omitted.
13.9. Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and permitted legal assigns and
shall inure to the benefit of the parties hereto and, except as otherwise
provided herein, their respective successors, executors, administrators,
legal representatives, heirs and permitted legal assigns. No Person other
than the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and permitted legal assigns,
shall have any rights or claims under this Agreement.
13.10. Entire Agreement. This Agreement, together with all
Exhibits, Schedules, and Annexes hereto and all letter agreements executed by
the Company, the Initial Members and/or their respective Affiliates on the
date hereof (which are incorporated herein by this reference), supersedes all
prior agreements among the parties with respect to the subject matter hereof
and contains the entire agreement among the parties with respect to such
subject matter. This instrument may not be amended, supplemented or
discharged, and no provisions hereof may be modified or waived, except
expressly by an instrument in writing signed by the Manager and each Member
and, in the case of an amendment, modification or supplement, in compliance
with Section 13.1. No waiver of any provision hereof by any party hereto
shall be deemed a waiver by any other party nor shall any such waiver by any
party be deemed a continuing waiver of any matter by such party. No
amendment, modification, supplement, discharge or waiver hereof or hereunder
shall require the consent of any person not a party to this Agreement.
13.11. No Brokers. Each of the parties hereto warrants to each
other that there are no brokerage commissions or finders' fees (or any basis
therefor) resulting from any action taken by such party or any Person acting
or purporting to act on its behalf in connection with entering into this
Agreement. Each Member agrees to indemnify and hold harmless each other
Member for all costs, damages or other expenses arising out of any
misrepresentation made in this Section 13.11.
13.12. Maintenance as a Separate Entity. The Company shall
maintain books and records and bank accounts separate from those of its
Affiliates; shall at all times hold itself out to the public as a legal
entity separate and distinct from any of its Affiliates (including in its
leasing activities, in entering into any contract, in preparing its financial
statements, and in its stationery and on any signs it posts), and shall cause
its Affiliates to do the same and to conduct business with it on an arm's-
length basis; shall not commingle its assets with assets of any of its
Affiliates; shall not guarantee any obligation of any of its Affiliates;
shall cause its business to be carried on by the Manager and shall keep
minutes of all meetings of the Members and the Management Committee.
13.13. Confidentiality. Each Member agrees not to disclose or
permit the disclosure of any of the terms of this Agreement or of any
information relating to the Company's assets or business, provided that such
disclosure may be made (a) to any person who is a Member, officer, director
or employee of such Member or counsel to, accountants of, investment bankers
for or consultants to, such Member or the Company solely for their use and on
a need-to-know basis, (b) with the prior consent of the other Members,
(c) pursuant to a subpoena or order issued by a court, arbitrator or govern-
mental body, agency or official or in order to comply with any law, rule or
regulation (including the rules and regulations of the Securities and
Exchange Commission, the American Stock Exchange and any other applicable
national securities exchange), (d) in connection with and to the extent
necessary to sell or market any Property in accordance with this Agreement,
or (e) to any lender or investor providing financing to the Company.
In the event that a Member shall receive a request to disclose any
of the terms of this Agreement under a subpoena or order, such Member shall
(i) promptly notify the other Members thereof, (ii) consult with the other
Members on the advisability of taking steps to resist or narrow such request
and (iii) if disclosure is required or deemed advisable, cooperate with any
of the other Members in any attempt it may make to obtain an order or other
assurance that confidential treatment will be accorded those terms of this
Agreement that are disclosed.
13.14. Power of Attorney.
(a) Each Member does irrevocably constitute and appoint the
Manager, with full power of substitution, as its true and lawful attorney, in
its name, place and stead, to execute, acknowledge, swear to, deliver, record
and file, as appropriate and in accordance with this Agreement (i) the
original Certificate of Formation and all amendments thereto required or
permitted by law or the provisions of this Agreement, (ii) all certificates
and other instruments requiring execution by the Members or any of them and
deemed necessary or advisable by the Manager to qualify or continue the
Company as a limited liability company in the jurisdictions where the Company
may be conducting its operations, (iii) all instruments, agreements or
documents that the Management Committee so directs pursuant to Section 3.5(e)
and (iv) all conveyances and other instruments deemed necessary or advisable
by the Manager to effect the dissolution and termination of the Company in
accordance with this Agreement. Nothing contained in this Section 13.14
shall empower the Manager to take any action requiring the consent of the
Management Committee or any Member(s) hereunder unless such consent is first
obtained.
(b) The powers of attorney granted pursuant to this Section 13.14
are coupled with an interest and shall be irrevocable and survive and not be
affected by the subsequent death, incapacity, disability, Bankruptcy or
dissolution of the grantor; may be exercised by the Manager either by signing
separately as attorney-in-fact for each Member or by the Manager acting as
attorneys-in-fact for all of them; and shall survive the delivery of an
assignment by a Member of the whole or any fraction of its Interest, except
that, where the whole of such Member's Interest has been assigned or diluted
in accordance with this Agreement, the power of attorney of the assignor
shall survive the delivery of such assignment for the sole purpose of
enabling the Manager to execute, acknowledge, swear to, deliver, record and
file any instrument necessary or appropriate to effect such substitution. In
the event of any conflict between this Agreement and any document,
instrument, conveyance or certificate executed or filed by the Manager
pursuant to such power of attorney, this Agreement shall control.
(c) In addition to the foregoing, each of Whitehall and WCPT are
hereby irrevocably constituted and appointed, with full power of
substitution, as the true and lawful attorney of the Manager and each Member
of the Company to execute, acknowledge, swear to, deliver, record and file
any and all instruments, agreements and other documents (in the name, place
and stead of the Manager and each such Member and the Company) and to take
any and all such other actions as may be necessary or desirable to carry out
the provisions of Sections 8.2 and 8.3.
13.15. Time of the Essence. Time is of the essence in the
performance of each and every term of this Agreement.
13.16. No Third Party Beneficiaries. The right or obligation of
the Manager or Management Committee to call for any capital contribution or
of any Member to make a capital contribution or otherwise to do, perform,
satisfy or discharge any liability or obligation of any Member hereunder, or
to pursue any other right or remedy hereunder or at law or in equity
provided, shall not confer any right or claim upon or otherwise inure to the
benefit of any creditor or other third party having dealings with the
Company, it being understood and agreed that the provisions of this Agreement
shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and assigns except as may be
otherwise agreed to by the Company in writing with the prior written approval
of the Management Committee.
13.17. Exculpation. The parties agree that the individuals
executing this Agreement on behalf of the Initial Members have done so in
their respective capacities as officers or trustees of the Initial Members
(or, in the case of Whitehall, its general partner) and not individually, and
none of the direct or indirect partners, trustees, officers or shareholders
of either Initial Member shall be bound or have any personal liability
hereunder. Each Initial Member shall look solely to the Interest of the
other Initial Member for satisfaction of any liability of such other Initial
Member in respect of this Agreement and will not seek recourse or commence
any action against any of the direct or indirect partners, trustees, officers
or shareholders of such other Initial Member or any of their personal assets
for the performance or payment of any obligation hereunder. The foregoing
shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Ronald Bernstein
--------------------------------
Name: Ronald Bernstein
Title:
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Edward Lowenthal
--------------------------------
Name: Edward Lowenthal
Title: President
The undersigned has executed this
Agreement solely for purposes of Section 4.2. and 7.6.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
Name: Edward Lowenthal
Title: President
<PAGE>
EXHIBITS
INTENTIONALLY NOT FILED.
WARRANT AGREEMENT
This WARRANT AGREEMENT is made and entered into as of August 28,
1997 by and between Wellsford Real Properties, Inc., a Maryland corporation
(together with its successors and permitted assigns, the "Company"), and
United States Trust Company of New York (together with its successors and
permitted assigns, the "Warrant Agent").
R E C I T A L S
WHEREAS, WHWEL Real Estate Limited Partnership, a Delaware limited
partnership ("Whitehall"), and Wellsford Commercial Properties Trust, a
Maryland real estate investment trust and a subsidiary of the Company
("WCPT"), have agreed to form, and contribute certain real property and other
assets to, Wellsford/Whitehall Properties, L.L.C., a Delaware limited
liability company ("Wellsford/Whitehall"), subject to the concurrent issuance
by the Company to Whitehall of five million (5,000,000) warrants to purchase
shares of the Company's Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is so willing to act, in connection with
the issuance, transfer or exercise of Warrants and other matters as provided
herein;
NOW, THEREFORE, in order to induce Whitehall to enter into
Wellsford/Whitehall and in consideration of the foregoing premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Warrant Agreement, as it may be amended
or modified from time to time.
"Articles of Incorporation" shall mean the Company's Articles of
Amendment and Restatement, as amended from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banks in New York are authorized or required to close.
"Cash Amount" shall mean, with respect to any Warrant, an amount of
cash equal to the product of (i) the Closing Price of the Common Stock as of
the date of exercise of such Warrant multiplied by (ii) the Shares Amount in
effect on such date.
"Close of Business" shall mean, for any day, 5:00 P.M., New York
City time, on such date.
"Closing Price" shall mean the last reported sale price regular way
on the day in question or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way of the
Common Stock, in each case on the American Stock Exchange ("AMEX"), or, if
the Common Stock is not listed or admitted to trading on the AMEX, on the
principal national securities exchange or quotation system on which the
Common Stock is listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a similarly
generally accepted reporting service, or, if not so available in such manner,
as furnished by any AMEX member firm selected from time to time by the board
of directors of the Company for the purpose. In the case of a closing price
of Common Stock on the AMEX, such price shall mean the closing price reported
in the AMEX composite transactions reporting system (as reported in the New
York City edition of The Wall Street Journal or, if not so reported, another
authoritative source).
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company and any other stock of the Company into which such
common stock may be converted or reclassified (other than stock of the
Company into which unissued Common Stock has been reclassified) or that may
be issued in respect of, in exchange for, or in substitution of, such common
stock by reason of any stock splits, stock dividends, distributions, mergers,
consolidations, recapitalizations or other like events. For purposes of
Section 6.1, the term "Common Stock" shall include the Class A common stock,
$.01 par value per share, of the Company.
"Company" shall have the meaning set forth in the Recitals of this
Agreement.
"Company Shares" shall have the meaning set forth in Section
7.1(g).
"current market price" shall have the meaning set forth in Section
6.1(a)(vii).
"Demand Registration" shall mean a registration of Eligible
Securities pursuant to Section 7.1 hereof.
"Eligible Common Stock" shall mean all shares of Underlying Common
Stock that are Eligible Securities.
"Eligible Securities" shall mean (x) all shares of Underlying
Common Stock and unless otherwise provided herein, any related Warrants and
(y) any other securities of the Company or any other entity issued or
issuable with respect to the Underlying Common Stock or Warrants by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided, however, that particular shares of Underlying Common Stock or
particular Warrants shall cease to be Eligible Securities when (i) such
shares or Warrants, as the case may be, shall have been disposed of in
accordance with an effective registration statement covering the sale of such
shares or Warrants; (ii) such shares or Warrants, as the case may be, have
been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act; or (iii) in the case of a Warrant only,
such Warrant has been transferred by the Initial Holder to another Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning set forth in Section
3.1(b).
"Expiration Date" shall mean the fifth anniversary of the date of
this Agreement, provided that if such date is not a Business Day, the next
Business Day thereafter.
"Holders" shall mean, collectively, the holders from time to time
of Warrant Certificates and "Holder" shall mean any such holder. For
purposes of Articles 7 and 8 hereof, the term "Holder" shall mean the holder
of any Eligible Security.
"Initial Holder" shall mean Whitehall.
"Membership Unit" shall have the meaning set forth in the
Wellsford/Whitehall LLC Agreement.
"Partial Spin-Off" shall have the meaning set forth in
Section 6.1(a)(iv).
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in
Section 7.2(a).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any of the Eligible Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Registration Demand" shall have the meaning set forth in Section
7.1(a).
"Registration Rights" shall mean the rights of Holders set forth in
Sections 7.1 and 7.2 to have Eligible Securities registered under the
Securities Act for sale under one or more effective Registration Statements.
"Registration Statement" shall mean any registration statement
filed by the Company under the Securities Act that covers any of the Eligible
Securities, including the Prospectus, any amendments and supplements to such
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such registration statement.
"Representative" shall have the meaning set forth in Section
8.6(a), and "Representative(s)" shall mean one or more Representatives.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean the annual and quarterly reports and the
information, documents, and other reports that the Company is required to
file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"selling holder" shall have the meaning set forth in Section 8.1.
"Shares Amount" shall mean, with respect to any Warrant, 0.826446
shares of Common Stock, subject to all adjustments made pursuant to Article 6
hereof on or prior to the date of exercise of such Warrant.
"Shelf Registration" shall have the meaning set forth in Section
7.1(c).
"Shelf Registration Statement" shall have the meaning set forth in
Section 7.1(c).
"Subsequent Warrant Holder" shall mean any Holder other than the
Initial Holder.
"Takedown" shall have the meaning set forth in Section 7.1(c)(ii).
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares
of Common Stock are not listed or admitted to trading on any national
securities exchange, any Business Day.
"Transfer Agent" shall have the meaning set forth in Section 11.1.
"Transfer Restriction Termination Date" shall mean the first
anniversary of the date of this Agreement.
"Underlying Common Stock" shall mean all shares of Common Stock
either issuable upon the exercise of the Warrants or previously issued upon
the prior exercise of the Warrants.
"underwriter" shall have the meaning set forth in Section 8.1.
"underwriting or agency agreement" shall have the meaning set forth
in Section 8.1.
"Warrants" shall mean the warrants issued by the Company on the
date hereof pursuant to this Agreement, and any additional warrants issued in
accordance with this Agreement.
"Warrant Certificates" shall mean the certificates substantially in
the form of Exhibit A evidencing the Warrants.
"Warrant Agent" shall have the meaning set forth in the Recitals to
this Agreement.
"WCPT" shall have the meaning set forth in the Recitals to this
Agreement.
"Wellsford/Whitehall" shall have the meaning set forth in the
Recitals to this Agreement.
"Wellsford/Whitehall LLC Agreement" shall mean the limited
liability company agreement of Wellsford/Whitehall dated as of August 28,
1997, as the same may be amended from time to time.
"Whitehall" shall have the meaning set forth in the Recitals to
this Agreement.
Certain terms used principally in Articles 4, 7 and 8 are defined
in those Sections.
ARTICLE 2
ORIGINAL ISSUE OF WARRANTS
Section 2.1 Form of Warrant Certificates. Warrant Certificates
shall be in registered form only, substantially in the form attached hereto
as Exhibit A and dated the date on which countersigned by the Warrant Agent.
Pending the preparation of definitive Warrant Certificates,
temporary Warrant Certificates may be issued, which may be printed,
lithographed, typewritten, mimeographed or otherwise produced, which will be
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and which are not required to be countersigned by the
Warrant Agent.
If temporary Warrant Certificates are issued, the Company will
cause definitive Warrant Certificates to be prepared without unreasonable
delay. After the preparation of definitive Warrant Certificates, the
temporary Warrant Certificates shall be exchangeable for definitive Warrant
Certificates upon the surrender of the temporary Warrant Certificates to the
Warrant Agent, without charge to the Initial Holder. Until so exchanged the
temporary Warrant Certificates shall in all respects be entitled to the same
benefits under this Agreement as definitive Warrant Certificates.
Section 2.2 Execution and Delivery of Warrant Certificates.
(a) Simultaneously with the execution of this Agreement, Warrant
Certificates evidencing five million (5,000,000) Warrants, shall be executed
on behalf of the Company as provided in paragraph (b) below and delivered to
the Warrant Agent for countersignature and the Warrant Agent shall thereupon
countersign and deliver such Warrant Certificates to Whitehall. In addition,
the Warrant Agent is irrevocably authorized to countersign and deliver
Warrant Certificates as required by Sections 3.1(e), 5.1 and 5.2.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman, Chief Executive Officer or President, either
manually or by facsimile signature printed thereon. Warrant Certificates
shall be countersigned by the Warrant Agent, either manually or by facsimile
signature printed thereupon, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company whose signature shall have
been placed upon any Warrant Certificate shall cease to be such officer of
the Company before countersignature by the Warrant Agent and issue and
delivery thereof, such Warrant Certificates may, nevertheless, be
countersigned by the Warrant Agent and issued and delivered with the same
force and effect as though such person had not ceased to be such officer of
the Company.
ARTICLE 3
EXERCISE OF WARRANTS
Section 3.1 Exercise Procedures.
(a) Each Warrant shall be exercisable as provided in this Section
3 from time to time on any Business Day prior to the Close of Business on the
Expiration Date.
(b) When exercised in accordance with subparagraph (c) below, each
Warrant shall entitle the Holder to purchase, and the Company shall be
required to deliver, a number of shares of Common Stock equal to the Shares
Amount in effect on the day such Warrant is exercised in accordance with
Section 3.1(c), at an exercise price (the "Exercise Price") of, at the sole
election of the Holder, either (x) one Membership Unit or (y) $10.00 in cash;
provided, however, that the Company may, at its sole election, pay to the
Holder of each Warrant so exercised in respect of any one or more of such
Warrants cash in an amount equal to the Cash Amount in lieu of delivering the
shares of Common Stock. When multiple Warrants are exercised, the Exercise
Price may consist of cash, Membership Units or any combination thereof.
Notwithstanding the foregoing, the Holder may not elect to deliver Membership
Units as the Exercise Price upon the exercise of any Warrant before
August 28, 1999.
(c) In order to exercise a Warrant, the Holder must surrender the
Warrant Certificate evidencing such Warrant to the Warrant Agent, with the
form of election on the reverse of or attached to the Warrant Certificate
duly executed, together with any required payment or delivery, as the case
may be, of the Exercise Price, to the Warrant Agent at the principal office
of the Warrant Agent in New York, New York. In the event Holder elects to
tender Membership Units as provided in subparagraph (b) above, all such
Membership Units (and the corresponding Interest (as defined in
Wellsford/Whitehall LLC Agreement)) shall be assigned by the Warrant Agent to
the Company. In the event a Holder elects to pay the cash Exercise Price as
provided in subparagraph (b) above, such Holder shall transfer to the Warrant
Agent, together with the surrendered Warrant Certificate, the required
payment in full of the Exercise Price for each Warrant which is exercised.
Any such payment of the Exercise Price shall be by certified or official bank
check or wire transfer of same day funds, and such funds shall be deposited
by the Warrant Agent for the account of the Company, unless otherwise
instructed in writing by the Company.
(d) Upon surrender of a Warrant Certificate in conformity with the
foregoing, the Warrant Agent shall thereupon promptly notify the Company. In
the event the Company elects to deliver the Shares Amount as provided in
subparagraph (b) above, the Company shall transfer to the Holder of the
exercised Warrant share certificates representing the shares of Common Stock
to which such Holder is entitled and the Holder shall be deemed to own and
have all the rights associated with any shares of Common Stock to which it is
entitled pursuant to this Agreement upon the surrender of any Warrant
Certificate in accordance with this Section 3.1. If the Company elects to
deliver the Cash Amount as provided in subparagraph (b) above, the Company
shall deliver to the Holder of the exercised Warrant payment of the Cash
Amount in same day funds to the account specified on the form of election on
the reverse of or attached to the Warrant Certificate. The Holder
acknowledges that the Company does not currently intend to issue Common Stock
equal to 20% or more of its currently outstanding Common Stock upon the
exercise of any Warrants and, in the event of such an exercise that could
result in Common Stock being issued in excess of such limit, the Company will
instead deliver the Cash Amount.
(e) If fewer than all the Warrants represented by a Warrant
Certificate are exercised, such Warrant Certificate shall be surrendered by
the Warrant Agent to the Company with instructions for the issuance of a new
Warrant Certificate and the Company shall promptly execute such new Warrant
Certificate for the Warrants that were not exercised and deliver the same to
the Warrant Agent. The Warrant Agent shall promptly countersign the new
Warrant Certificate, register it and deliver it to the registered Holder
thereof.
ARTICLE 4
COMPLIANCE WITH THE SECURITIES ACT
Section 4.1 Transfers. The Initial Holder hereby acknowledges
that the Warrants and the shares of Common Stock which may be received by the
Initial Holder upon exercise of any Warrant are and will be subject to
certain restrictions on transfers under the Securities Act and the
regulations promulgated thereunder.
Section 4.2 Representations. The Initial Holder has been
afforded full and complete access to all information and other materials
relating to the Company and to the offer of the Warrants and has had the
opportunity to have answered any questions it had concerning the Company and
the offering of the Warrants.
The Initial Holder hereby represents that it is acquiring the
Warrants for its own account for investment and not with a view to the resale
or distribution of any interest therein.
ARTICLE 5
REGISTRATION OF TRANSFERS AND EXCHANGES
Section 5.1 Generally. The Warrant Certificates shall be issued
in registered form only. The Company shall cause to be kept at the office of
the Warrant Agent a register in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of the
transfers or exchanges of the Warrant Certificates as herein provided.
Notwithstanding anything to the contrary contained herein, the Initial Holder
may not assign, sell or otherwise transfer Warrants at any time before the
Transfer Restriction Termination Date.
The Warrant Agent shall from time to time register the transfer or
exchange of any outstanding Warrant, in the records to be maintained by it
for that purpose, upon surrender of such Warrant. Upon any such registration
of transfer or exchange, a new Warrant Certificate shall be issued to the
transferee in the case of a transfer or to the Holder making the exchange,
and the surrendered Warrant Certificate shall be canceled by the Warrant
Agent. Canceled Warrant Certificates shall be disposed of by the Warrant
Agent in accordance with its customary procedures and the Warrant Agent shall
deliver a certificate of their destruction to the Company.
All Warrant Certificates issued upon any registration of transfer
or exchange shall be valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrant Certificates surrendered for such registration of transfer or
exchange.
Every Warrant Certificate surrendered for registration of transfer
or exchange shall (if so required by the Company or the Warrant Agent) be
duly endorsed, or be accompanied by a written instrument of transfer in form
contained in Exhibit B hereto or such other form satisfactory to the Company
and the Warrant Agent, duly executed by the Holder thereof or his attorney
duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates. The Company may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or
exchange of the Warrant Certificates.
Any Warrant Certificate when duly endorsed in blank shall be deemed
negotiable and when any Warrant Certificate shall have been so endorsed, the
Holder thereof may be treated by the Company, the Warrant Agent and all other
persons dealing therewith as the absolute owner thereof for any purpose and
as the Person entitled to either exercise the rights represented thereby or
to transfer the Warrants represented thereby on the register of the Company
maintained by the Warrant Agent, any notice to the contrary withstanding; but
until such transfer on such register, the Company and the Warrant Agent may
treat the registered Holder thereof as the owner for all purposes.
Section 5.2 Mutilated, Destroyed, Lost or Stolen Warrant
Certificates. If any mutilated Warrant Certificate is surrendered to the
Warrant Agent or the Company, or if the Warrant Agent receives evidence to
its satisfaction of the destruction, loss or theft of any Warrant
Certificate, and there is delivered to the Company and the Warrant Agent such
security or indemnity as may be reasonably required by them to save each of
them harmless, then, in the absence of notice to the Company or the Warrant
Agent that such Warrant Certificate has been acquired by a bona fide pur-
chaser, the Company shall execute and upon its written request the Warrant
Agent shall countersign and deliver, in exchange for any such mutilated
Warrant Certificate, or in lieu of any such destroyed, lost or stolen Warrant
Certificate, a new Warrant Certificate of like tenor and for a like aggregate
number of Warrants. Upon the issuance of any new Warrant Certificate under
this Section 5.2, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and other expenses (including the reasonable fees and expenses of the
Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to
this Section 5.2 in lieu of any destroyed, lost or stolen Warrant Certificate
shall constitute an original contractual obligation of the Company, whether
or not the destroyed, lost or stolen Warrant Certificate shall be at any time
enforceable as provided herein, and shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section 5.2 are exclusive and shall preclude (to the extent lawful) all other
rights or remedies with respect to the replacement of mutilated, destroyed,
lost or stolen Warrant Certificates.
ARTICLE 6
ADJUSTMENTS
Section 6.1 Adjustment upon Certain Transactions.
(a) The Shares Amount (and, by virtue thereof, the Cash Amount)
shall be subject to adjustment from time to time as follows:
a. In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall
pay or make a dividend or other distribution on any other class or
series of stock of the Company which dividend or distribution includes
Common Stock, the Shares Amount in effect at the opening of business on
the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
increased by multiplying such Shares Amount by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding at
the Close of Business on the date fixed for such determination and the
numerator shall be the sum of such number of shares plus the total
number of shares constituting such dividend or other distribution, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this subparagraph (i), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
2a In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue to all holders of its Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price per
share (determined as provided in subparagraph (vii) of this
Section 6.1(a)) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the Shares Amount in effect at the opening of business on the
day following the date fixed for such determination shall be increased
by multiplying the Shares Amount by a fraction of which the denominator
shall be the number of shares of Common Stock outstanding at the Close
of Business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the
total number of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the numerator
shall be the number of shares of Common Stock outstanding at the Close
of Business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this subparagraph (ii), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Company.
In case any rights or warrants referred to in this subparagraph (ii) in
respect of which an adjustment shall have been made shall expire
unexercised within 60 days after the same shall have been distributed or
issued by the Company, the Shares Amount shall be readjusted at the time
of such expiration to the Shares Amount that would have been in effect
if no adjustment had been made on account of the distribution or
issuance of such expired rights or warrants.
c. In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Shares Amount in
effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately
increased, and conversely, in case outstanding shares of Common Stock
shall each be combined into a smaller number of shares of Common Stock,
the Shares Amount in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately decreased, such reduction or increase, as the case may
be, to become effective immediately after the opening of business on the
day following the day upon which such subdivision or combination becomes
effective. No reduction in the Shares Amount may occur except pursuant
to this subparagraph (iii).
d. Subject to the last two sentences of this subparagraph (iv),
in case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any
class or series of stock, cash or assets (including securities, but
excluding any rights or warrants referred to in subparagraph (ii) of
this Section 6.1(a), any dividend or distribution paid exclusively in
cash and any dividend or distribution referred to in subparagraph (i) of
this Section 6.1(a)), the Shares Amount shall be increased so that the
same shall equal the number determined by multiplying the Shares Amount
in effect immediately prior to the effectiveness of the Shares Amount
increase contemplated by this subparagraph (iv) by a fraction of which
the denominator shall be the current market price per share (determined
as provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the date fixed for the payment of such distribution (the
"Reference Date") less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidences of indebtedness, shares
of stock, cash and assets so distributed applicable to one share of
Common Stock and the numerator shall be such current market price per
share of the Common Stock, such increase to become effective immediately
prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the
actual or when issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such market
over the same period used in computing the current market price per
share of Common Stock pursuant to subparagraph (vii) of this
Section 6.1(a). For purposes of this subparagraph (iv), any dividend or
distribution that includes shares of Common Stock or rights or warrants
to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (1) a dividend or distribution of the evidences of
indebtedness, cash, assets or shares of stock other than such shares of
Common Stock or such rights or warrants (making any Shares Amount
increase required by this subparagraph (iv)) immediately followed by
(2) a dividend or distribution of such shares of Common Stock or such
rights or warrants (making any further Shares Amount increase required
by subparagraph (i) or (ii) of this Section 6.1(a), except (A) the
Reference Date of such dividend or distribution as defined in this
subparagraph (iv) shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution, "the date fixed for the determination of stockholders
entitled to receive such rights or warrants" and "the date fixed for
such determination" within the meaning of subparagraphs (i) and (ii) of
this Section 6.1(a) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the Close
of Business on the date fixed for such determination" within the meaning
of subparagraph (i) of this Section 6.1(a)). Notwithstanding anything
to the contrary contained in this Article 6, the Company may one time in
any twelve-month period pay a dividend or distribution on its Common
Stock exclusively in the form of securities of (or other ownership
interests in) any subsidiary of the Company (a "Partial Spin-Off")
without any adjustment to the Shares Amount on account thereof if the
fair market value (determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of
the Board of Directors) of the Partial Spin-Off distributed per share of
Common Stock outstanding on the date fixed for such determination does
not exceed 8% of the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a) of the Common
Stock on the Trading Day next preceding the date of declaration of such
dividend).
e. In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the
case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the greater of (x) the per share amount of
the next preceding quarterly cash dividend on the Common Stock (as
adjusted to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this
Section 6.1(a)), and (y) the per share amount which, when multiplied by
four, and added to the fair market value (as determined in the last
sentence of (iv) above) of any Partial Spin-Off distributed per share of
Common Stock during the preceding twelve-month period, is equal to or
less than 8% of the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the Trading Day next preceding the date of declaration of such
dividend), the Shares Amount shall be increased so that the same shall
equal the number determined by multiplying the Shares Amount in effect
immediately prior to the effectiveness of the Shares Amount increase
contemplated by this subparagraph (v) by a fraction of which the
denominator shall be the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the date fixed for the payment of such distribution less the
amount of cash so distributed and not excluded as provided above
applicable to one share of Common Stock and the numerator shall be such
current market price per share of Common Stock, such increase to become
effective immediately prior to the opening of business on the day
following the date fixed for the payment of such distribution.
f. In case a tender or exchange offer made by the Company or by
any subsidiary of the Company for all or any portion of the Company's
Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Company or such subsidiary of consideration
per share of Common Stock having a fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) at
the last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it shall have been
amended) that exceeds the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the Trading Day next succeeding the Expiration Time, the Shares
Amount shall be increased so that the same shall equal the number
determined by multiplying the Shares Amount in effect immediately prior
to the effectiveness of the Shares Amount increase contemplated by this
subparagraph (vi) by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in subparagraph (vii) of
this Section 6.1(a)) of the Common Stock on the Trading Day next
succeeding the Expiration Time and the numerator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares)
at the Expiration Time and the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a)) of
the Common Stock on the Trading Day next succeeding the Expiration Time,
such increase to become effective immediately prior to the opening of
business on the day following the Expiration Time.
g. For the purpose of any computation under subparagraph (ii),
(iv) and (v) of this Section 6.1(a), the "current market price" per
share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for the five consecutive Trading
Days prior to and including the date in question; provided, however,
that (1) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution requiring such computation) that
requires an adjustment to the Shares Amount pursuant to subparagraph
(i), (ii), (iii), (iv), (v) or (vi) above ("Other Event") occurs after
the fifth Trading Day prior to the day in question and prior to the "ex"
date for the issuance or distribution requiring such computation (the
"Current Event"), the Closing Price for each Trading Day prior to the
"ex" date for such Other Event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Shares
Amount is so required to be adjusted as a result of such Other Event,
(2) if the "ex" date for any Other Event occurs after the "ex" date for
the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
fraction by which the Shares Amount is so required to be adjusted as a
result of such Other Event, (3) if the "ex" date of any Other Event
occurs on the "ex" date for the Current Event, one of those events shall
be deemed for purposes of clauses (1) and (2) of this proviso to have an
"ex" date occurring prior to the "ex" date for the other event, and
(4) if the "ex" date for the Current Event is on or prior to the date in
question, after taking into account any adjustment required pursuant to
clause (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of
any cash and the fair market value on the date in question (as
determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of
paragraph (iv) or (v) of this Section 6.1(a), whose determination shall
be conclusive and described in a resolution of the Board of Directors)
of the portion of the rights, warrants, evidences of indebtedness,
shares of stock or assets being distributed applicable to one share of
Common Stock. For the purpose of any computation under
subparagraph (vi) of this Section 6.1(a), the current market price per
share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for such date in question and the
next two succeeding Trading Days; provided, however, that if the "ex"
date for any event (other than the tender or exchange offer requiring
such computation) that requires an adjustment to the Shares Amount
pursuant to subparagraph (i), (ii), (iii), (iv), (v) or (vi) above
occurs after the Expiration Time for the tender or exchange offer
requiring such computation and on or prior to the second Trading Day
following the date in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the fraction by which the Shares
Amount is so required to be adjusted as a result of such other event.
For purposes of this paragraph, the term "ex" date, (1) when used with
respect to any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such subdivision
or combination becomes effective, and (3) when used with respect to any
tender or exchange offer, means the first date on which the Common Stock
trades regular way on such exchange or in such market after the
Expiration Time of such offer.
h. The Company may make such increase in the Shares Amount, in
addition to those required by subparagraphs (i), (ii), (iii), (iv), (v)
and (vi) of this Section 6.1(a), as it considers to be advisable to
avoid or diminish an income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes. The Company from time to time may increase the
Shares Amount by any amount for any period of time if the period is at
least twenty days, the increase is irrevocable during the period, and
the Board of Directors of the Company shall have made a determination
that such increase would be in the best interest of the Company, which
determination shall be conclusive. Whenever the Shares Amount is
increased pursuant to the preceding sentence, the Company shall mail to
Holders a notice of the increase at least fifteen days prior to the date
the increased Shares Amount takes effect, and such notice shall state
the increased Shares Amount and the period it will be in effect.
i. No adjustment in the Shares Amount shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Shares Amount; provided, however, that any adjustments which by
reason of this subparagraph (ix) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
j. Whenever the Shares Amount is adjusted as herein provided:
(i) the Company shall compute the adjusted Shares Amount
and shall prepare a certificate signed by the Chief Financial Officer of
the Company setting forth the adjusted Shares Amount and showing in
reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Warrant Agent; and
(ii) a notice stating the Shares Amount have been
adjusted and setting forth the adjusted Shares Amount shall forthwith be
required, and as soon as practicable after it is required such notice
shall be mailed by the Company to all Holders.
(b) No Fractional Shares. No fractional shares of Common Stock
shall be issued upon exercise of the Warrants. If more than one Warrant is
exercised by the same Holder at one time, the number of full shares issuable
upon such exercise shall be computed on the basis of the aggregate number of
Warrants so exercised. Instead of any fractional share of Common Stock that
would otherwise be issuable to a holder upon exercise of the Warrants, the
Company shall pay a cash adjustment in respect of such fractional share in an
amount equal to the same fraction of the Closing Price per share of Common
Stock as of the date of such exercise.
(c) Reclassification, Consolidation, Merger or Sale of Assets. In
the event that the Company shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common
Stock (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock and other than the reclassification of
unissued Common Stock into other stock of the Company), any consolidation of
the Company with, or merger of the Company into, any other Person, any merger
of another person into the Company (other than a merger which does not result
in a reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), any sale or transfer of all or
substantially all of the assets of the Company or any compulsory share
exchange) pursuant to which the Common Stock is converted into the right to
receive other securities, cash or other property, then lawful provisions
shall be made as part of the terms of such transaction whereby the holder of
each Warrant then outstanding shall have the right thereafter to exercise
such Warrant only for (i) in the case of any such transaction other than a
Common Stock Fundamental Change and subject to funds being legally available
for such purpose under applicable law at the time of such exercise, the kind
and amount of securities, cash and other property receivable upon such
transaction by a holder of the number of shares of Common Stock of the
Company for which such Warrant could have been exercised immediately prior to
such transaction, and (ii) in the case of a Common Stock Fundamental Change,
common stock of the kind received by holders of Common Stock as a result of
such Common Stock Fundamental Change in an amount determined pursuant to the
provisions of Section 6.1(e). The Company or the Person formed by such
consolidation or resulting from such merger or which acquires such assets or
which acquires the Company's shares, as the case may be, shall execute an
agreement in form and substance reasonably acceptable to the Holders
evidencing such right. Such agreement shall provide for adjustments which,
for events subsequent to the effective date of such agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Article 6. The above provisions shall similarly apply to each and every
successive transaction of the foregoing type.
(d) Prior Notice of Certain Events. In case:
a. the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash in an amount
not greater than its retained earnings other than any special or
nonrecurring or other extraordinary dividend or (2) declare or authorize
a redemption or repurchase of in excess of 10% of the then-outstanding
shares of Common Stock; or
b. the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any
share of stock of any class or series or of any other rights or
warrants; or
c. of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to
par value and other than the reclassification of unissued Common Stock
into other stock of the Company), or of any consolidation or merger to
which the Company is a party and for which approval of any shareholders
of the Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
d. of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be mailed to the Holders, at least 10 days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date
on which a record (if any) is to be taken for the purpose of such dividend,
distribution, redemption, repurchase, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no
failure to mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the corporate action required to be specified in
such notice).
(e) Adjustments in Case of Fundamental Changes. Notwithstanding
any other provision in this Article 6 to the contrary, if any Fundamental
Change (as defined in Section 6.1(f)) occurs, then the Shares Amount in
effect will be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock Fundamental
Change (as defined in Section 6(f)), each Warrant shall be exercisable solely
in exchange for common stock of the kind and amount received by holders of
Common Stock as a result of such Common Stock Fundamental Change as more
specifically provided below in this Section 6.1(e).
For purposes of calculating any adjustment to be made pursuant to
this Section 6.1(e) in the event of a Fundamental Change, immediately after
such Fundamental Change in the case of a Common Stock Fundamental Change, the
Shares Amount in effect immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other prior adjustments effected
pursuant to this Section 6, shall thereupon be adjusted by multiplying such
Shares Amount by a fraction of which the denominator shall be the Purchaser
Stock price (as defined in Section 6.1(f)) and the numerator shall be the
Applicable Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% by value of the consideration received
by a holder of Common Stock is common stock of the successor, acquiror or
other third party (and cash, if any, is paid with respect to any fractional
interests in such common stock resulting from such Common Stock Fundamental
Change) and (B) all of the Common Stock shall have been exchanged for,
converted into or acquired for common stock (and cash with respect to
fractional interests) of the successor, acquiror or other third party, the
Shares Amount in effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by multiplying such Shares Amount by the
number of shares of common stock of the successor, acquiror, or other third
party received by a shareholder for one share of Common Stock as a result of
such Common Stock Fundamental Change.
(f) Definitions. The following definitions shall apply to terms
used in this Article 6:
a. "Applicable Price" shall mean (1) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only
cash, the amount of cash received by a shareholder for one share of
Common Stock and (2) in the event of any other Non-Stock Fundamental
Change or any Common Stock Fundamental Change, the average of the daily
Closing Prices of the Common Stock for the ten consecutive Trading Days
prior to and including the record date for the determination of the
holders of Common Stock entitled to receive securities, cash or other
property in connection with such Non-Stock Fundamental Change or Common
Stock Fundamental Change, or, if there is no such record date, the date
upon which the holders of the Common Stock shall have the right to
receive such securities, cash or other property, in each case, as
adjusted in good faith by the Board of Directors of the Company to
appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 6.1(a).
b. "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% by value (as determined in good faith by
the Board of Directors of the Company) of the consideration received by
holders of Common Stock consists of common stock that for each of the
ten consecutive Trading Days referred to with respect to such
Fundamental Change in Section 6.1(f)(i) above has been admitted for
listing or admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the NASDAQ National Market
System; provided, however, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (1) the Company continues
to exist after the occurrence of such Fundamental Change and the
outstanding Warrants continue to exist as outstanding Warrants, or
(2) not later than the occurrence of such Fundamental Change, the
outstanding Warrants are converted into or exchanged for warrants of a
corporation succeeding to the business of the Company, which warrants
have terms identical to those of the Warrants.
c. "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive securities,
cash or other property (whether by means of an exchange offer, liquida-
tion, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided, however, in
the case of a plan involving more than one such transaction or event,
for purposes of adjustment of the Shares Amount, such Fundamental Change
shall be deemed to have occurred when substantially all of the Common
Stock of the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive cash, securities,
property or other assets, but the adjustment shall be based upon the
highest weighted average of consideration per share which a holder of
Common Stock could have received in such transactions or events as a
result of which more than 50% of the Common Stock of the Company shall
have been exchanged for, converted into, or acquired for or constitute
solely the rights to receive cash, securities, property or other assets.
d. "Non-Stock Fundamental Change" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
e. "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the
ten consecutive Trading Days prior to and including the record date for
the determination of the holders of Common Stock entitled to receive
such common stock, or, if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to receive
such common stock, in each case, as adjusted in good faith by the Board
of Directors of the Company to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of
Section 6.1(a); provided, however, if no such Closing Prices of the
common stock for such Trading Days exist, then the Purchaser Stock price
shall be set at a price determined in good faith by the Board of
Directors of the Company.
(g) Certain Additional Rights. In case the Company shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section 6(a)(iv) or 6(a)(v) (including, without limitation,
dividends or distributions referred to in the last two sentences of
Section 6(a)(iv)), the holder of each Warrant, upon the exercise thereof
subsequent to the Close of Business on the date fixed for the determination
of shareholders entitled to receive such distribution and prior to the
effectiveness of the Shares Amount adjustment in respect of such distribu-
tion, shall also be entitled to receive for each share of Common Stock for
which such Warrant is exercised, the portion of the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of stock, cash and assets
so distributed applicable to one share of Common Stock; provided, however,
that, at the election of the Company (whose election shall be evidenced by a
resolution of the Board of Directors) with respect to all holders so
exercising, the Company may, in lieu of distributing to such holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors). If any exercise of a Warrant described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of the Warrant so exercised is
entitled to receive in accordance with the immediately preceding sentence,
the Company may elect (such election to be evidenced by a resolution of the
Board of Directors) to distribute to such holder a due bill for the shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of stock,
cash or assets to which such holder is so entitled, provided that such due
bill (i) meets any applicable requirements of the principal national
securities exchange or other market on which the Common Stock is then traded
and (ii) requires payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of stock, cash or assets no later
than the date of payment or delivery thereof to holders of shares of Common
Stock receiving such distribution.
(h) Reservation of Shares, Etc. The Company shall at all times
reserve and keep available, free from preemptive rights out of its authorized
and unissued stock, solely for the purpose of allowing the exercise of the
Warrants, such number of shares of its Common Stock as shall from time to
time be sufficient to permit the Company to deliver the Shares Amount in the
event all of the Warrants from time to time outstanding were exercised. The
Company shall from time to time, in accordance with the laws of the State of
Maryland, increase the authorized number of shares of Common Stock if at any
time the number of shares of authorized and unissued Common Stock shall not
be sufficient to permit the Company to deliver the Shares Amount upon the
exercise of all of the then-outstanding Warrants (taking into account the
adjustments to the Shares Amount that are provided for herein).
If any shares of common stock required to be reserved for purposes
of the exercise of the Warrants hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued upon exercise, and an exemption under Section
3(a)(9) of the Securities Act or similar exemption is not available, the
Company will in good faith and as expeditiously as possible endeavor to cause
such shares to be duly registered or approved as the case may be. If the
Common Stock is quoted on the NASDAQ National Market System or listed on any
U.S. national securities exchange, the Company will, if permitted by the
rules of such exchange, list and keep listed on such exchange, upon official
notice of issuance, all shares of Common Stock issuable upon exercise of the
Warrants. The second sentence of this paragraph shall apply only when the
Warrants shall have become freely transferable pursuant to Rule 144(k) under
the Securities Act or if the shares of Common Stock issuable upon exercise of
the Warrants are exempt from the registration requirements of the Securities
Act by operation of an exemption referred to in the first sentence of this
paragraph.
(i) Dividend or Interest Reinvestment Plans or Other Plans.
Notwithstanding the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan (a
"DRIP"), and the issuance of any shares of Common Stock or options or rights
to purchase such shares pursuant to any employee or director benefit plan or
program of the Company or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date
hereof shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which
any of the adjustment provisions described above applies. There shall also
be no adjustment of the Shares Amount in case of the issuance of any stock
(or securities convertible into or exchangeable for stock) of the Company
except as specifically described in this Article 6. If any action would
require adjustment of the Shares Amount pursuant to more than one of the
provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value to holders of the Warrants.
ARTICLE 7
REGISTRATION RIGHTS
Section 7.1 Demand Registration.
(a) At any time after June 1, 1998, the Holders shall have the
right to request (each such request, a "Registration Demand") that the
Company file a registration statement under the Securities Act in respect of
all or any portion of such Holder's Eligible Securities; provided that if any
Holders shall request that a portion, but not all, of its Eligible Securities
be registered in accordance with this Section 7.1 (including a requested
Takedown pursuant to subsection (c)(ii) below), such portion shall include
not less than two hundred and fifty thousand (250,000) shares of Eligible
Common Stock (or such lesser number of such shares having a market valuation
of at least $5,000,000 as of the date the Registration Demand is made, based
on the Closing Price on such date). A Registration Demand shall specify the
number of shares of Eligible Common Stock (and, in the case of a Registration
Demand by the Initial Holder, the number of Warrants) that each such Holder
proposes to sell in the offering. If no Shelf Registration Statement shall
be effective as of the date of the Registration Demand, the demanding Holders
may elect to register such Eligible Securities in accordance with either
Section 7.1(c)(i) or Section 7.1(d). If a Shelf Registration Statement shall
be effective as of the date of the Registration Demand, then all demanding
Holders shall be deemed to have elected to register their Eligible Securities
pursuant to Section 7.1(c)(ii). The Holders may make in the aggregate two
(2) Registration Demands pursuant to Sections 7.1(c)(i) and 7.1(d) and four
(4) Registration Demands per year pursuant to an existing Shelf Registration
Statement pursuant to Section 7.1(c)(ii) for which the Company will pay and
bear all costs and expenses in accordance with Section 8.3 and thereafter the
Holders may make an unlimited number of Registration Demands for which such
requesting Holders shall pay and bear all costs and expenses.
(b) Upon receipt of a Registration Demand (other than a Takedown),
the Company shall give written notice thereof to all of the other Holders at
least thirty (30) days prior to the initial filing of a Registration
Statement relating to such Registration Demand. Each of the other Holders
shall have the right, within twenty (20) days after the delivery of such
notice, to request that the Company include all or a portion of such Holder's
Eligible Securities in such Registration Statement. Upon receipt of a
Registration Demand that is a Takedown, a representative of the selling
holders shall give written notice thereof to all of the other Holders at
least three (3) Business Days prior to the initial filing of a prospectus
relating to such Registration Demand. Each of the other Holders shall have
the right, within one (1) Business Day after the delivery of such notice, to
request that the Company include all or a portion of such Holder's Eligible
Securities in such Registration Statement.
(c) a. As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to
register Eligible Securities pursuant to this paragraph (c), the Company
shall file under the Securities Act a "shelf" registration statement (the
"Shelf Registration Statement") providing for the registration and the sale
on a continuous or delayed basis of all the Eligible Securities, pursuant to
Rule 415 under the Securities Act and/or any similar rule that may be adopted
by the SEC (the "Shelf Registration"). The Company agrees to use its
reasonable best efforts to cause such Shelf Registration Statement to become
or be declared effective as soon as practicable but no later than 75 calendar
days after the filing (the "75 Day Effective Date") and to keep such Shelf
Registration continuously effective for a period ending on the occurrence of
the earlier of: (x) the third anniversary of such Registration Demand and
(y) notification by all of the requesting Holders that such Holders have sold
all of the Eligible Securities owned by them. The Company further agrees to
supplement or make amendments to the Shelf Registration Statement and the
prospectus included therein (x) as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the period set
forth in the previous sentence and (y) as may be required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration or by the Securities Act or rules and
regulations thereunder for shelf registration. The Company agrees to furnish
to the Holders of the securities registered thereby copies of any such
supplement or amendment (but excluding any periodic reports required to be
filed with the SEC under the Exchange Act of 1934) so that the Initial
Holder, or if the Initial Holder is no longer a Holder, the Holders, through
the Representative(s), have a reasonable opportunity to comment thereon prior
to its being used and/or filed with the SEC.
b. As promptly as practicable after the Company receives a
Registration Demand from a Holder or Holders pursuant to which a Holder is
deemed to have elected to register Eligible Securities pursuant to an
existing Shelf Registration Statement (a "Takedown"), the Company shall,
subject to the Takedown Blackout Period described below, file a Prospectus
with the SEC and otherwise comply with the Securities Act and all rules,
regulations and instructions thereunder applicable to such Takedown. In the
event that no Prospectus or other filing is required nor any other action
necessitating the Company's participation is required to effect a sale of
Eligible Securities pursuant to an effective Shelf Registration Statement
filed pursuant to Section 7.1(c)(i), each selling Holder agrees to provide
the Company with at least three (3) Business Days' notice of the proposed
sale (which may or may not include the amount of Eligible Securities to be
registered) pursuant to the effective Shelf Registration Statement; provided,
however, that the Company shall, subject to Section 7.3(g), have the right to
postpone any such sale whether before or after the filing of the applicable
Prospectus or Shelf Registration Statement for a reasonable period of time
not to exceed ninety (90) days (a "Takedown Blackout Period") if: (i) the
Company determines in its good faith judgment that it would, in connection
with such sale, be required to disclose in such Registration Statement (or
any prospectus supplement to be used in connection therewith) information not
otherwise then required by law to be publicly disclosed and (ii) either (x)
in the good faith judgment of the Board of Directors of the Company, such
disclosure would adversely affect any material corporate development or
business transaction contemplated by the Company or (y) the Company has a
bona fide purpose for preserving as confidential such information; provided
further that the Takedown Blackout Period shall earlier terminate upon the
completion or abandonment of the relevant corporate development or business
transaction or upon public disclosure by the Company or public disclosure by
the Company or public admission by the Company of such information specified
in (i) above.
(d) As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to
register Eligible Securities pursuant to this Section 7.1(d), the Company
shall file with the SEC a Registration Statement, on any form that shall be
available and appropriate for the sale of the Eligible Securities in
accordance with the intended method of distribution thereof. The Company
shall include in such Registration Statement all of the Eligible Securities
of such requesting Holders that such Holders have requested to be included
therein pursuant to Sections 7.1(a) and 7.1(b); provided, however, that, if
the requested registration involves an underwritten offering, the Eligible
Securities to be registered may be reduced if the managing underwriter
delivers a notice (a "Cutback Notice") pursuant to Section 7.1(g). The Com-
pany shall use its reasonable best efforts to cause each such Registration
Statement to be declared effective (and to obtain acceleration of such
effectiveness) as soon as practicable but no later than 75 days after filing
such Registration Statement and to keep such Registration Statement continu-
ously effective and usable for resale of such Eligible Securities, for a
period of one hundred eighty (180) days from the date on which the SEC
declares such Registration Statement effective or such shorter period as is
necessary to complete the distribution of the securities registered
thereunder.
(e) The Initial Holder or, if the Initial Holder is not a selling
holder, the Representative(s) shall determine the method of distribution of
Eligible Securities pursuant to a Registration Demand.
(f) If a Registration Demand involves an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer such offering will be selected by the Initial Holder or, if the
Initial Holder is not a selling holder, the Representative(s); provided that
the Persons so selected shall be reasonably satisfactory to the Company.
(g) In the event that the proposed offering is an underwritten
offering and includes securities to be offered for the account of the Company
(the "Company Shares"), the provisions of this Section 7.1(g) shall be
applicable if the managing underwriter delivers a Cutback Notice stating
that, in its opinion, the aggregate number of shares of Eligible Common
Stock, plus the Company Shares proposed to be sold therein, exceeds the
maximum number of shares specified by the managing underwriter in such
Cutback Notice that may be distributed without adversely affecting the price,
timing or distribution of the Common Stock being distributed. If the
managing underwriter delivers such Cutback Notice, the number of shares of
Eligible Common Stock requested to be registered and Company Shares shall be
reduced in the following order until the number of shares to be offered has
been reduced to the maximum number of shares specified by the managing
underwriter in the Cutback Notice: first, the Company Shares and second, the
Eligible Common Stock in proportion to the respective number of shares of
Eligible Common Stock that each Holder has requested to be registered.
(h) The Company will pay all Registration Expenses (as set forth
in Section 8.3) in connection with a registration under this Section 7.1.
(i) No Registration Demand (other than a Takedown) may be made
until the expiration of six (6) months following the completion of the
distribution of the securities registered under any Registration Statement
that has been filed and has become effective pursuant to a prior Registration
Demand.
(j) A Registration Demand will not be deemed satisfied (and will
not count for purposes of the limitations in Section 7.1(a)) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 180 days (or such
shorter period which shall terminate when all Eligible Securities covered by
such registration statement have been sold), (ii) if, after it has become
effective, such registration is interfered with by any stop order, injunction
or other order or requirement of the SEC or other governmental agency or
court for any reason not attributable to the selling holders participating in
such registration and has not thereafter become effective, or (iii) if the
conditions to closing specified in the relevant underwriting or agency
agreement entered into in connection with such offering are not satisfied or
waived, other than by reason of a breach of such agreement by the selling
holders participating in such offering or wilful failure on the part of the
selling holders participating in such offering.
Section 7.2 Piggyback Registration Rights.
(a) If, at any time, the Company proposes to file a Registration
Statement with the SEC respecting an offering, whether primary, secondary or
combined, of any equity securities of the Company, the Company shall give
written notice to all Holders at least thirty (30) days prior to the initial
filing of the Registration Statement relating to each such offering. Such
notice shall specify, at a minimum, the number and the type of equity
securities so proposed to be registered, the proposed date of filing of such
registration statement, any proposed means of distribution of such
securities, any proposed managing underwriter or underwriters of such
securities and a good faith estimate by the Company of the proposed maximum
offering price thereof, as such price is proposed to appear on the facing
page of such registration statement. Each Holder shall have the right,
within twenty (20) days after delivery of such notice, to request in writing
that the Company include not less than 50,000 shares of Eligible Common Stock
(or such lesser amount as is then owned by such Holder) in such Registration
Statement (a "Piggyback Registration").
(b) In the event that the proposed offering is an underwritten
offering covering Company Shares, the provisions of this paragraph (b) shall
be applicable if the managing underwriter delivers a Cutback Notice stating
that, in its opinion, the aggregate number of shares of Eligible Common Stock
and the Company Shares that the Holders have requested to be registered,
exceeds the maximum number of shares specified by the managing underwriter in
such Cutback Notice that may be distributed without adversely affecting the
price, timing or distribution of the Common Stock being distributed. If the
managing underwriter delivers such Cutback Notice, the number of shares of
Eligible Common Stock and Company Shares requested to be included in such
offering shall be reduced in the following order until the number of shares
to be offered has been reduced to the maximum number of shares specified by
the managing underwriter in the Cutback Notice: first, the Eligible Common
Stock in proportion to the respective number of shares of Eligible Common
Stock that each Holder has requested to be registered and second, the Company
Shares.
(c) No Piggy-Back Registration effected under this Section 7.2
shall be deemed to have been effected pursuant to Section 7.1 hereof or shall
release the Company of its obligations to effect any Demand Registration upon
request as provided in Section 7.1.
(d) The Company will pay all Registration Expenses (as set forth
in Section 8.3) in connection with a registration under this Section 7.2.
(e) The provisions of this Section 7.2 shall not be applicable in
connection with a transaction in which a registration statement is filed by
the Company on Form S-4 or S-8 or any successor or similar form or a
registration statement is filed by the Company that registers securities
issued pursuant to a DRIP.
Section 7.3 Company's Ability to Postpone Registration Rights.
(a) The Company shall have the right to postpone the filing of any
Registration Statement relating to a Demand Registration for a reasonable
period of time not to exceed ninety (90) days (the "Blackout Period") if:
(i) the Company determines in its good faith judgment that it would be
required to disclose in such Registration Statement information not otherwise
then required by law to be publicly disclosed and (ii) either (x) in the good
faith judgment of the Board of Directors of the Company, such disclosure
would adversely affect any material corporate development or business
transaction contemplated by the Company or otherwise would be materially
harmful to the Company and its stockholders or (y) the Company has a bona
fide purpose for preserving as confidential such information or; provided,
however, that the Blackout Period shall earlier terminate upon the completion
or abandonment of the relevant corporate development or business transaction
or upon public disclosure by the Company or public admission by the Company
of such information specified in (i) above.
(b) If at any time after the Company notifies the Holders of its
intention to file a Registration Statement that would trigger Piggyback
Registration Rights, the Board of Directors of the Company in good faith
shall determine for any reason not to effect such registration or to postpone
such registration, the Company shall (i) in the case of a determination not
to effect such registration, be relieved of its obligation to register any
Eligible Securities of Holders requesting inclusion in such registration, and
(ii) in the case of a determination to postpone such registration, be
permitted to postpone registering the Eligible Securities of Holders
requesting inclusion in such registration.
(c) After the expiration of any Blackout Period and without
further request from any Holder, the Company shall effect the filing of the
relevant Demand Registration and shall use its reasonable best efforts to
cause any such Demand Registration to be declared effective as promptly as
practicable unless the requesting Holder or Holders shall have, prior to the
effective date of such Demand Registration withdrawn in writing its initial
request, in which case, such withdrawn request shall not constitute a
Registration Demand or reduce the number of Registration Demands available
under Section 7.1(a).
(d) Any request by a Holder for a Demand Registration which is
subsequently withdrawn prior to such Demand Registration becoming effective
shall not constitute a Registration Demand or reduce the number of
Registration Demands available under Section 7.1(a); provided, however, that
other than with respect to a withdrawal which is made as a result of or after
the expiration of any Blackout Period as specified in subsection (c) above,
the Holder or Holders, as appropriate, shall reimburse the Company for all
expenses relating to the preparation of such withdrawn Demand Registration.
(e) The Company shall as promptly as practicable notify the
Holders of any postponement pursuant to this Section 7.3 or
Section 7.1(c)(ii), specifying the reasons therefor.
(f) If the Company exercises its right to postpone the filing of
any Registration Statement pursuant to Section 7.3 or if the Company
exercises its right to postpone any Takedown pursuant to Section 7.1(c)(ii)
and the Company notifies any Holder of such postponement or if the Company
gives the notice described in Section 8.7(a), such Holder agrees to keep
confidential the exercise by the Company of its postponement right and any
information related thereto which is given to such Holder by the Company.
(g) Notwithstanding the provisions of this Section 7.3 or
Section 7.1(c)(ii), the aggregate number of days (whether or not consecutive)
during which the Company may delay the effectiveness of the Registration
Statement or prevent offerings, sales or distributions by the Holders
pursuant to this Section 7.3 or Section 7.1(c)(ii) shall in no event exceed
120 days during any 12-month period. In addition, no such delay shall exceed
such number of days that the Company determines in good faith to be
reasonably necessary.
Section 7.4 Holder Withdrawal Rights. The Company shall
withdraw from registration any Eligible Securities on request of a Holder.
The Company shall not be obligated to maintain the effectiveness of any
Registration Statement if, after any withdrawal of Eligible Securities by a
Holder, the number of Eligible Securities remaining subject to such
Registration Statement represents less than 5% of the shares of Eligible
Common Stock deemed outstanding, unless the Company is also registering
securities on such Registration Statement for its own account.
ARTICLE 8
REGISTRATION PROCEDURES
Section 8.1 Covenants of the Company Applicable to All
Registration Statements. This Section 8.1 applies to all Registration
Statements filed by the Company and referred to in Section 7.1 and 7.2. The
securities covered by each such Registration Statement are referred to as the
"Registered Securities". Each underwriter (including any qualified
independent underwriter), agent, selling broker, dealer manager or similar
securities industry professional participating in any offering of the
Registered Securities is referred to as an "underwriter" or "agent" and any
agreement entered into with an underwriter or agent is referred to as an
"underwriting or agency agreement". In connection with each such
registration, the Company covenants with each Holder participating in such
offering (each, a "selling holder") and each underwriter or agent
participating therein as follows:
(a) The Company will notify the selling holders and the managing
underwriter or agent, immediately, and confirm the notice in writing, (i)
when the Registration Statement or any pre-effective amendment, post-
effective amendment, prospectus or prospectus supplement is filed or when the
Registration Statement, or any post-effective amendment to the Registration
Statement, shall have become effective, (ii) of the receipt of any comments
from the SEC, (iii) of any request by the SEC or any state securities
authority for additional information or to amend the Registration Statement
or amend or supplement the Prospectus or any notification of an intention to
proceed for that purpose, (iv) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Registered Securities for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for any of such purposes, (v) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of
the Registered Securities the representations and warranties of the Company
contemplated by Section 8.1(i) cease to be true and correct and (vi) of the
existence of any fact that results or may result in the Registration
Statement, the Prospectus or any document incorporated therein by reference
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make any
statement therein not misleading in light of the circumstances then existing.
(b) The Company will use its best efforts to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus and, if any such order is issued, to obtain the lifting thereof at
the earliest possible moment.
(c) The Company will afford the Representative(s) and the managing
underwriters a reasonable opportunity, prior to its being filed with the SEC,
to comment on any Registration Statement, any amendment thereto, or any
amendment of or supplement to the Prospectus.
(d) The Company will furnish to each selling holder and to the
managing underwriter or agent, without charge, as many signed copies of the
Registration Statement (as originally filed) and of all amendments thereto,
whether filed before or after the Registration Statement becomes effective,
copies of all exhibits and documents filed therewith, including documents
incorporated by reference into the Prospectus, and signed copies of all
consents and certificates of experts, as such selling holder or the managing
underwriter or agent may reasonably request, and will furnish to the managing
underwriter, for each other underwriter participating in an underwritten
offering, one conformed copy of the Registration Statement as originally
filed and of each amendment thereto (including documents incorporated by
reference into the Prospectus but without exhibits).
(e) The Company will deliver to each selling holder and each
underwriter or agent participating in such offering, without charge, as many
copies of each preliminary prospectus as such selling holder or such
underwriter or agent may reasonably request, and the Company hereby consents
to the use of such copies for purposes permitted by the Securities Act. The
Company will deliver to each selling holder and each underwriter or agent
participating in such offering, without charge, from time to time during the
period when the Prospectus is required to be delivered under the Securities
Act, such number of copies of the Prospectus (as supplemented or amended) as
such selling holder or such underwriter or agent may reasonably request.
(f) The Company will comply with the Securities Act and the rules
and regulations of the SEC thereunder, the Exchange Act and the rules and
regulations of the SEC thereunder and any state securities laws or rules so
as to permit the completion of the distribution of the Registered Securities
in accordance with the intended method or methods of distribution
contemplated in the Prospectus. If at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registered Securities any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the selling
holders, counsel for the underwriters or agents or counsel for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in
the opinion of any such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the Securities Act or the rules and regulations of the SEC
thereunder, the Company will promptly prepare and file with the SEC, subject
to Section 8.1(c), such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements and will promptly
furnish each selling holder and underwriter or agent with a reasonable number
of copies of such amendment or supplement.
(g) The Company will use its best efforts, in cooperation with the
selling holders or the underwriters or agents, as the case may be, to
register or qualify the Registered Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions as the
selling holders or the managing underwriter or agents, as the case may be,
may designate and to keep such registration or qualification in effect for so
long as such Registration Statement remains effective; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Registered Securities have been qualified as above provided.
(h) The Company will effect the listing of the Registered
Securities covered by a Registration Statement on each national securities
exchange on which similar securities issued by the Company are then listed
and make all other necessary or appropriate filings with each such securities
exchange.
(i) The Company shall make such representations and warranties to
the selling holders and the underwriters or agents, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten public offerings.
(j) On the effective date of the Registration Statement or, in the
case of an underwritten offering, on the date of delivery of the
Registered Securities sold pursuant thereto, the Company shall cause to be
delivered to the selling holders and the underwriters or agents, if any,
opinions of counsel for the Company with respect to, among other things, the
due incorporation and good standing of the Company; the qualification of the
Company to transact business as a foreign corporation; the due authorization,
execution and delivery of this Agreement; the due authorization, execution,
authentication and issuance, and the validity and enforce ability, of the
Warrants and/or the Eligible Common Stock, as the case may be; the absence of
material legal or governmental proceedings involving the Company; the absence
of a material breach by the Company of, or a material default under,
agreements binding the Company; the absence of governmental approvals
required to be obtained in connection with the registration, offering and
sale of the Warrants and/or Eligible Common Stock, as the case may be; the
compliance as to form of the Registration Statement and any documents incor-
porated by reference therein with the requirements of the Securities Act; the
effectiveness of such Registration Statement under the Securities Act; and a
statement that, as of the date of the opinion and of the Registration
Statement or most recent post-effective amendment thereto, as the case may
be, nothing has come to the attention of such counsel which causes them to
believe that either the Registration Statement or the Prospectus included
therein, as then amended or supplemented, or the documents incorporated by
reference therein (in the case of such documents, in the light of the
circumstances existing at the time that such documents were filed with the
Commission under the Exchange Act), contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein not misleading (it being understood that such counsel need
express no opinion as to the financial statements and other financial data
included therein or omitted therefrom).
In the event that any broker-dealer registered under the Exchange
Act shall be an "affiliate" of, or shall have a "conflict of interest" with,
the Company (each such term as defined in Schedule E to the By-Laws of the
National Association of Securities Dealers ("NASD")), and such broker-dealer
shall underwrite any Eligible Securities or participate as a member of an
underwriting syndicate or selling group or otherwise "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-
Laws of the NASD) thereof, whether as a Holder or as an underwriter, a
placement or sales agent or a broker or dealer in respect of such Eligible
Securities or otherwise, the Company shall assist such broker-dealer, in
complying with the requirements of such Rules and By-Laws, including, without
limitation, by (1) if such Rules or By-Laws, including Schedule E thereto,
shall so require, engaging a "qualified independent underwriter" (as defined
in such Schedule) to participate in the preparation of the registration
statement relating to such Eligible Securities, to exercise usual standards
of due diligence in respect thereto and, if any portion of the offering
contemplated by the Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the maximum public
offering price of such Eligible Securities, (2) paying the fees and expenses
of any such qualified independent underwriter and indemnifying the qualified
independent underwriter to the extent of the indemnification of underwriters
provided in Section 8.4 hereof, and (3) providing to such broker-dealer such
information concerning the Company and its affiliates, officers, directors,
employees and security holders as may be required in order for such broker-
dealer to comply with the requirements of Schedule E to the NASD Bylaws and
Section 44 of the Rules of Fair Practice.
(k) Immediately prior to the effectiveness of the Registration
Statement or, in the case of an underwritten offering, at the time of
delivery of any Registered Securities sold pursuant thereto, the Company
shall cause to be delivered to the selling holders and the underwriters or
agents, if any, letters from the Company's independent public accountants
stating that such accountants are independent public accountants with respect
to the Company within the meaning of the Securities Act and the applicable
published rules and regulations of the SEC thereunder, and otherwise in
customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent public accountants
delivered in connection with primary underwritten public offerings.
(l) If the managing underwriter or agent so requests, the
underwriting or agency agreement shall set forth in full the provisions
hereof relating to covenants, registration expenses, lock-up agreements,
indemnification and contribution contained in this Article 8, with such
changes therein as may be agreed to by the managing underwriter or agent, the
Company and the selling holders.
(m) The Company shall deliver such documents and certificates as
may be requested by any selling holder or the underwriters or agents, if any,
to evidence compliance with Section 8.1(i) and with any customary conditions
contained in the underwriting or agency agreement, if any.
(n) The Company will make available for inspection by
representatives of the selling holders and the underwriters or agents
participating in such offering, any attorney or accountant retained by such
selling holders or underwriters or agents and, with respect to any private
placement of Warrants or Underlying Common Stock, upon notice to the Company,
prospective purchasers, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter or agent, attorney or accountant in
connection with the preparation of the Registration Statement; provided,
however, that any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by each
such person (by, among other things, if so requested by the Company, entering
into a confidentiality agreement in form and substance satisfactory to the
Company) unless such records, information or documents become part of the
public domain through no fault of such person or unless disclosure thereof is
required by court or administrative order or the SEC (including the federal
securities law). Without limitation of the foregoing, the Company will give
the selling holders, their underwriters or agents and their respective
counsel, accountants and other representatives and agents the opportunity to
participate in the preparation of any prospectus or offering circular
included therein or filed with the SEC, and, to review all information
reasonably requested by each of them as shall be necessary or appropriate, in
the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
(o) The Company will make generally available to its security
holders as soon as practicable, but not later than forty-five (45) days after
the close of the period covered thereby (or ninety (90) days if such period
is a fiscal year), an earnings statement of the Company (in form complying
with the provisions of Rule 158 under the rules and regulations of the SEC
under the Securities Act), covering a period of twelve (12) months beginning
after the effective date of the Registration Statement but not later than the
first day of the Company's fiscal quarter next following such effective date.
(p) The Company will enter into such customary agreements,
including a customary underwriting or agency agreement with the underwriters
or agents, if any, and take all other reasonable actions in connection with
the offering in order to expedite or facilitate the disposition of the
Registered Securities.
(q) The Company will provide a transfer agent and registrar for
all such Eligible Securities covered by such registration statement not later
than the effective date of such registration statement.
(r) The Company will provide a CUSIP number for all Eligible
Securities being offered, not later than the effective date of the
registration statement.
(s) The Company will take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or facilitate the
disposition of such Eligible Securities.
(t) The Company shall cooperate with the selling holders and the
underwriters or agents participating in such offering to facilitate the
timely preparation and delivery of certificates representing such Registered
Shares to be sold, which certificates shall not bear any restrictive legends
except as required by law or the Articles of Incorporation or the Company's
By-laws; and, in the case of an underwritten offering, enable such Registered
Shares to be in such denominations and registered in such names as the
managing underwriter or underwriters may request in writing at least two
business days prior to any sale of the Registered Shares to the underwriters
or agents participating in such offering.
Section 8.2 Covenants of the Selling Holders.
(a) Each selling holder shall use its best efforts to furnish to
the Company such information regarding the distribution of such Registered
Securities as is customarily requested from selling holders in underwritten
public offerings to the extent necessary to permit the Company to comply with
the Securities Act; provided, that the Company will not include in any
Registration Statement, Prospectus or prospectus supplement information
concerning or relating to any Holder or selling holder to which such Holder
or selling holder shall reasonably object (unless the inclusion of such
information is required by applicable law or the regulation of any securities
exchange to which the Company may be subject), and the Company will not file
any Registration Statement, Prospectus or amendment or supplement thereto to
which such Holder or selling holder shall reasonably object; provided that,
if such Holder or selling holder objected to a registration statement to be
filed in connection with a Piggyback Registration, such Holder or selling
holder may withdraw any or all of its Eligible Securities from such
registration statement and the Company may file such registration statement.
(b) Each selling holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 8.1(a)(vi), such selling holder will forthwith discontinue the
disposition of its Registered Securities pursuant to the Registration
Statement until such selling holder's receipt of the copies of a supplemented
or amended Prospectus contemplated by Section 8.1(f), or until it is advised
in writing by the Company that the use of such Prospectus may be resumed. If
the Company shall give any such notice, the Company shall extend the period
of time during which the Company is required to keep the Registration
Statement effective and usable by the number of days during the period from
the date of receipt of such notice to the date when each selling holder of
Registered Securities covered by such Registration Statement either receives
the copies of a supplemented or amended Prospectus contemplated by Section
8.1(f) or is advised in writing by the Company that the use of such
Prospectus may be resumed.
(c) No selling holders, as such, shall be required to make any
representation or warranty as to the accuracy or completeness of the
Registration Statement or otherwise relating to the offering (except solely
as to written information furnished to the Company by such selling holder
expressly for use in the Registration Statement).
Section 8.3 Registration Expenses.
(a) The Company will pay and bear all costs and expenses incident
to the performance of its obligations under this Agreement with respect to
each registration pursuant to Section 7.1 or 7.2, including, without
limitation:
a. the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), as originally
filed and as amended, any preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the selling holders or the underwriters or agents, as
the case may be;
b. the preparation, printing and distribution of any underwriting
or agency agreement, agreement among underwriters, selling agreements,
certificates representing the Registered Securities, any Blue Sky or
legal investment survey and other documents relating to the performance
of and compliance with this Agreement;
c. the fees and disbursements of the Company's counsel,
accountants and experts and the reasonable fees and disbursements of one
counsel retained by the selling holders pursuant to Section 8.3(b);
d. except as provided in Section 8.3(c), the fees and
disbursements of the underwriters or agents customarily paid by issuers
or sellers of securities and the reasonable fees and expenses of any
special experts retained in connection with the Registration Statement,
but excluding underwriting discounts and commissions and transfer taxes,
if any;
e. the qualification of the Registered Securities under
applicable securities laws in accordance with Section 8.1(g) and any
filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the selling holders and the underwriters or
agents, as the case may be, in connection therewith, in connection with
any Blue Sky or legal investment survey and in connection with any
reserve share program;
f. all fees and expenses incurred in connection with the listing,
if any, of any of the Registered Securities on any securities exchange
pursuant to Section 8.1(h); and
g. up to a 5% underwriting discount or commission payable to the
underwriters or agents in connection with the sale of the Registered
Securities.
(b) In connection with the filing of each Registration Statement,
the Company will reimburse the selling holders for the reasonable fees and
disbursements of one firm of legal counsel, which shall be chosen by the
Initial Holder, or if the Initial Holder is not then a selling holder, the
Representative(s) and shall be reasonably satisfactory to the Company.
(c) Each selling holder will pay and bear all costs and expenses
incident to the delivery of the Registered Securities to be sold by it,
including any stock transfer taxes payable upon the sale of such Registered
Securities to the purchaser thereof and, to the extent not paid pursuant to
Section 8.3(a)(vii) above, any underwriting discounts or commissions payable
to underwriters or agents in connection therewith.
Section 8.4 Indemnification and Contribution.
(a) In connection with each registration pursuant to Section 7.1
or 7.2, the Company shall and hereby does indemnify and hold harmless each
selling holder of Eligible Securities, each underwriter or agent
participating in such offering, each person, if any, who controls any selling
holder or any such underwriter or agent within the meaning of Section 15 of
the Securities Act, and each officer, director, employee, agent, stockholder,
member, partner or direct or indirect owner of any of the foregoing (all of
the foregoing being referred to collectively as "Seller Parties" and
individually as a "Seller Party"), as follows:
a. against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of an untrue statement of a material fact included in any
preliminary or summary prospectus or the Prospectus (or any amendment or
supplement thereto or any document incorporated therein by reference) or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
b. against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or alleged omission, if
such settlement is effected with the written consent of the Company,
which shall not be unreasonably withheld or delayed; and
c. against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by the Seller Parties),
reasonably incurred in investigating, preparing, defending against or
appealing any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that, with respect to any Seller Party, this indemnity
does not apply to any loss, liability, claim, damage or expense to the extent
arising out of an untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by such Seller Party, expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary or
summary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Each selling holder agrees severally, and not jointly or
jointly and severally, to indemnify and hold harmless the Company, its
directors, each of its officers who signed a Registration Statement, each
underwriter or agent participating in such offering and the other selling
holders, and each person, if any, who controls the Company, any such
underwriter or agent and any other selling holder within the meaning of
Section 15 of the Securities Act and each officer, director, employee, agent,
stockholder, member, partner or direct or indirect owner of any of the
foregoing, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 8.4(a), as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment thereto),
or any preliminary or summary prospectus or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such selling holder expressly for use
in the Registration Statement (or any amendment thereto), or any preliminary
or summary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, however, that the liability of any selling holder under
this Section 8.4(b) shall be limited to the amount of net proceeds received
by such selling holder in the offering giving rise to such liability.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve the indemnifying party from any liability it may have
under this Agreement, except to the extent that the indemnifying party is
materially prejudiced thereby and shall not relieve the indemnifying party
from any liability it may have had to any indemnified party otherwise than
under this Section 8.4. In case any action or proceeding is brought against
the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, unless in the reasonable judgment of the indemnified party a
conflict may exist between the indemnifying party and the indemnified party
in respect of such claim or proceeding, to assume the defense thereof,
jointly with any other indemnifying party so notified, with counsel
reasonably satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
a. if the indemnifying party fails to take reasonable steps
necessary to defend diligently the claim within twenty (20) days after
receiving notice from the indemnified party that the indemnified party
believes it has failed to do so; or
b. if the indemnified party who is a defendant in any action or
proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal
defenses available to the indemnified party which are not available to
the indemnifying party; or
c. if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional
conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction, except
to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or
parties which are not available to the other indemnified parties or to
the extent representation of all indemnified parties by the same counsel
is otherwise inappropriate under applicable standards of professional
conduct) and the indemnifying party shall be liable for any reasonable
expenses therefor. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending
or threatened action or in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If for any reason the forgoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified
party as a result of any loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other
from such offering of securities. If, however, the allocation provided in
the immediately preceding sentence is not permitted by applicable law, or if
the indemnified party failed to give the notice required by subparagraph (c)
above and the indemnifying party is materially prejudiced thereby, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the indemnifying party
and the indemnified party as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this subparagraph (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the preceding sentences of
this subparagraph (d). The amount paid or payable in respect of any claim
shall be deemed to include any legal or other expenses incurred by such
indemnified party in connection with investigation or defending any such
claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act or the equivalent thereof under any
applicable law) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything in
this subparagraph (d) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this subparagraph (d) to contribute
any amount in excess of the net proceeds received by such indemnifying party
from the sale of securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate, less the amount of
any indemnification payment made pursuant to this subparagraph (d).
(e) Any indemnity and reimbursement agreements contained herein
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract. The
indemnity and contribution agreements contained in this Section 8.4 and the
representations and warranties of the Company referred to in Section 8.1(i)
shall remain operative and in full force and effect regardless of (i) any
termination of any underwriting or agency agreement, (ii) any investigation
made by or on behalf of the selling holders, the Company or any underwriter
or agent or controlling person or (iii) the consummation of the sale or
successive resales of the Registered Securities.
(f) The indemnification and contribution required herein shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
Section 8.5 Rule 144. The Company covenants that it will
continue to file on a timely basis the reports required to be filed by it
under the Securities Act and the rules and regulations of the SEC thereunder
and the Exchange Act and the rules and regulations of the SEC thereunder and
it will take such further action as any Holder of Eligible Securities may
reasonably request, all to the extent required from time to time to enable
such Holder to sell Eligible Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time.
Upon the request of any Holder of Eligible Securities, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
Section 8.6 Participation in Underwritten Offerings. No Holder
may participate in any underwritten offering hereunder unless:
(a) Such Holder (other than the Initial Holder) executes a power
of attorney appointing one or more (up to three (3)) attorneys (each, a
"Representative") designated by the selling holders proposing to sell a
majority of the Eligible Securities proposed to be sold by all selling
holders. Each such Representative shall be authorized, on customary
terms, to execute the underwriting agreement on behalf of each selling
holder and to otherwise act for the selling holders in connection with
the offering.
(b) Such Holder (other than the Initial Holder) directly through
its Representative, enters into an underwriting agreement with the
Company, the other selling holders, any selling stockholders and the
underwriters, which underwriting agreement shall comply with the
provisions of this Article 8.
(c) Such Holder executes all questionnaires and other documents
required by the underwriting agreement to be executed by such Holder.
Section 8.7 Lock-Up Agreements.
(a) Provided that the Company, within 10 Business Days after
receiving a Registration Demand, has not given notice to the Holder making
such Registration Demand to the effect that it is unable to provide a "lock-
up" as described in this Section 8.7(a) because it intends to issue
securities within the following 90 days, the Company agrees that it will not,
directly or indirectly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any share of Common Stock or securities
convertible into or exchangeable or exercisable for any share of Common
Stock, other than any (i) such sale or distribution of Common Stock upon
exercise of Warrants in the case of any registration pursuant to Section 7.l
and (ii) Excluded Securities (as defined below), for a period of ninety (90)
days (or such shorter period as the managing underwriter of such registration
shall determine) from the effective date of any Registration Statement
pertaining to such Eligible Common Stock."Excluded Securities" shall mean
(1) options or other securities issued to employees or directors of the
Company, (2) securities issued in exchange for interests in real property,
(3) shares issued in connection with the Company's DRIP, (4) securities
issued upon conversion of convertible securities issued by the Company and
(5) non-convertible preferred stock of the Company and non-convertible debt
securities of the Company.
(b) Each Holder of Eligible Common Stock whose Eligible Common
Stock is covered by a Registration Statement filed pursuant to Sections 7.1
or 7.2 agrees that it will not, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any shares of
Common Stock (other than the Eligible Common Stock covered by such Registra-
tion Statement) or any Warrants or other securities convertible into or
exchangeable or exercisable for Common Stock, for a period of ninety (90)
days (or such shorter period as the managing underwriter of such registration
shall determine) days from the effective date of the Registration Statement
pertaining to such Eligible Common Stock.
(c) The lock-up agreements set forth in Sections 8.7(a) and 8.7(b)
shall be subject to customary exceptions that may be contained in an
underwriting agreement if any such registration involves an underwritten
offering.
ARTICLE 9
WARRANT AGENT
Section 9.1 Nature of Duties and Responsibilities Assumed.
(a) The Company hereby appoints the Warrant Agent to act as agent
of the Company as set forth in this Agreement. The Warrant Agent hereby
accepts such appointment as agent of the Company and agrees to perform that
agency upon the terms and conditions herein set forth, by all of which the
Company and the Holders, by their acceptance thereof, shall be bound.
(b) The Warrant Agent shall not by countersigning the Warrant
Certificates or by any other act hereunder be deemed to make any
representations as to (i) the validity or authorization of the Warrants or
the Warrant Certificates (except as to its countersignature thereon), or of
any securities or other property delivered upon exercise or tender of any
Warrant, (ii) the accuracy of the computation of the Exercise Price or the
number or kind or amount of stock or other securities or other property
deliverable upon exercise of any Warrant, or (iii) the correctness of the
representations of the Company made in such certificates that the Warrant
Agent receives.
(c) The Warrant Agent shall not have any duty to calculate or
determine any adjustments with respect either to the Exercise Price, the kind
and amount of shares or other securities or any property receivable by
Holders upon the exercise or tender of Warrants, and the Warrant Agent shall
have no duty or responsibility in determining the accuracy or correctness of
such calculation. The Warrant Agent shall not (i) be liable for any recital
or statement of fact contained herein, or in the Warrant Certificates, or for
any action taken, suffered or omitted by it in good faith on the belief that
any Warrant Certificate, or any other documents or any signatures are genuine
or properly authorized, (ii) be responsible for any failure on the part of
the Company to comply with any of its covenants and obligations contained in
this Agreement or in the Warrant Certificates, or (iii) be liable for any act
or omission in connection with this Agreement except for its own negligence
or willful misconduct.
(d) The Warrant Agent is hereby authorized to accept instructions
with respect to the performance of its duties hereunder from the Chairman,
Chief Executive Officer or President of the Company and to apply to any such
officer for instructions (which instructions will be promptly given in
writing when requested) and the Warrant Agent shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
the instructions of any such officer, but in its discretion the Warrant Agent
may in lieu thereof accept other evidence of such or may require such further
or additional evidence as it may deem reasonable.
(e) The Warrant Agent may execute and exercise any of the rights
and powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys, agents or employees, provided reasonable care
has been exercised in the selection and in the continued employment of any
such attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in or defend any action, suit or
legal proceeding in respect hereof, unless first indemnified to its
reasonable satisfaction, but this provision shall not affect the power of the
Warrant Agent to take such action as the Warrant Agent may consider proper,
whether with or without such indemnity. The Warrant Agent shall promptly
notify the Company in writing of any claim made or action, suit or proceeding
instituted against it arising out of or in connection with this Agreement.
(f) The Company will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Warrant
Agent in order to enable it to carry out or perform its duties under this
Agreement.
(g) The Warrant Agent shall act solely as agent of the Company
hereunder. The Warrant Agent shall not be liable except for the failure to
perform such duties as are specifically set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the
Warrant Agent, whose duties and obligations shall be determined solely by the
express provisions hereof.
Section 9.2 Right to Consult Counsel. The Warrant Agent may at
any time consult with competent legal counsel, and the Warrant Agent shall
incur no liability or responsibility to the Company and to the Holders for
any action taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Section 9.3 Compensation and Reimbursement. The Company agrees
to pay to the Warrant Agent from time to time compensation for all services
rendered by it hereunder as the Company and the Warrant Agent may agree from
time to time, and to reimburse the Warrant Agent for reasonable expenses and
disbursements incurred in connection with the execution and administration of
this Agreement (including the reasonable compensation and the expenses of its
counsel), and further agrees to indemnify the Warrant Agent for, and to hold
it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
Section 9.4 Warrant Agent May Hold Company Securities. The
Warrant Agent and any stockholder, director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the securities of the Company
or its Affiliates or become pecuniarily interested in transactions in which
the Company or its Affiliates may be interested, or contract with or lend
money to the Company or its Affiliates or otherwise act as fully and freely
as though it were not the Warrant Agent under this Agreement. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
Section 9.5 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Warrant Agent and no
appointment of a successor warrant agent shall become effective until the
acceptance of appointment by the successor warrant agent as provided herein.
The Warrant Agent may resign its duties and be discharged from all further
duties and liability hereunder (except liability arising as a result of the
Warrant Agent's own negligence or willful misconduct) after giving written
notice to the Company.
(b) The Company may remove the Warrant Agent upon written notice,
and the Warrant Agent shall thereupon in like manner be discharged from all
further duties and liabilities hereunder, except as aforesaid. The Warrant
Agent shall, at the Company's expense, cause to be mailed (by first-class
mail, postage prepaid) to the Holders at their last address as shown on the
register of the Company maintained by the Warrant Agent a copy of said notice
of resignation or notice of removal, as the case may be.
(c) Upon such resignation or removal, the Company shall appoint in
writing a new warrant agent. If the Company shall fail to make such
appointment within a period of twenty (20) days after it has been notified in
writing of such resignation by the resigning Warrant Agent or after such
removal, then the Holders may apply to any court of competent jurisdiction
for the appointment of a new warrant agent. Any new warrant agent, whether
appointed by the Company or by such a court, shall be a corporation doing
business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than
$50,000,000. The combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as set forth in the
most recent annual report of its condition published by such warrant agent
prior to its appointment, provided that such reports are published at least
annually pursuant to law or to the requirements of a Federal or state
supervising or examining authority.
(d) After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant
Agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning or removed Warrant Agent. Not later than the effective date of any
such appointment, the Company shall give notice thereof to the resigning or
removed Warrant Agent. Failure to give any notice provided for in this
Section, however, or any defect therein, shall not affect the legality or
validity of the resignation of the Warrant Agent or the appointment of a new
warrant agent, as the case may be.
(e) Any corporation into which the Warrant Agent or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, shall be a successor Warrant Agent under this Agreement without any
further act, provided that such corporation would be eligible for appointment
as successor to the Warrant Agent under the provisions of Section 9.5(c).
Any such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be mailed (by first-class mail, postage
prepaid) to the Holders at their last address as shown on the register of the
Company maintained by the Warrant Agent.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties. The Company hereby
represents and warrants that, as of the date of this Agreement:
(a) Authorization. It has the corporate power and authority to
enter into this Agreement and to perform its obligations under, and
consummate the transactions contemplated by, this Agreement and has by proper
action duly authorized the execution and delivery of this Agreement.
(b) No Conflicts or Consents. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated
herein, nor the performance of and compliance with the terms and provisions
hereof will: (i) violate or conflict with any provision of its Articles of
Incorporation or By-laws; (ii) violate any law, regulation (including without
limitation Regulation G, T, U or X), order, writ, judgment, injunction,
decree or permit applicable to it; (iii) violate or materially conflict with
any contractual provisions of, or cause an event of default under, any
indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound; or (iv) result in or require the creation of any
lien, security interest or other charge or encumbrance (other than those
contemplated in or in connection with this Agreement) upon or with respect to
its properties.
(c) Consents. No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental
authority or other Person is required in connection with the execution,
delivery or performance of this Agreement or the Warrants.
(d) Enforceable Obligations. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(e) Capitalization. As of the date hereof, the Company's
authorized stock consists of (i) 197,650,000 shares of Common Stock of which
16,572,043 have been issued and are outstanding, (ii) 350,000 shares of Class
A Common Stock, $.01 par value per share, of which 339,806 have been issued
and are outstanding, (iii) 2,000,000 shares of Series A 8% Convertible
Redeemable Preferred Stock, .$.01 par value per share, of which no shares
have been issued and are outstanding. As of the date hereof, no shares of
Common Stock are held in treasury, 1,326,235 shares of Common Stock have been
reserved for issuance under the Company's Rollover Stock Option Plan of which
options to acquire all 1,326,235 shares of Common Stock have been granted and
1,750,000 shares of Common Stock have been reserved for issuance under the
Company's 1997 Management Incentive Plan of which options to acquire 547,375
shares of Common Stock have been granted. The Company also grants shares of
Common Stock to directors in consideration of their service as directors.
ARTICLE 11
COVENANTS
Section 11.1 Reservation of Common Stock for Issuance on Exercise
of Warrants. The Company covenants that it will at all times reserve and
keep available, free from pre-emptive rights, out of its authorized but
unissued shares of Common Stock, solely for the purpose of issue upon
exercise of Warrants, as herein provided, such number of shares of Common
Stock as shall then be issuable upon the exercise of all Warrants issuable
hereunder. The transfer agent for the Common Stock (the "Transfer Agent")
will be irrevocably authorized and directed at all times to reserve such
number of authorized shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent.
The Warrant Agent is hereby irrevocably authorized to requisition from time
to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company covenants that all shares of Common Stock which
shall be so issuable shall, upon payment therefor as set forth in this
Agreement and such issue, be duly and validly issued and fully paid and non-
assessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof.
Section 11.2 Notice of Dividends. At any time when and if the
Company declares any dividend on its Common Stock, it shall give notice to
the Holders of all the then outstanding Warrants of any such declaration not
less than ten (10) days prior to the related record date for payment of the
dividend so declared.
Section 11.3 Reports. For so long as any Warrants remain
outstanding and not expired by their terms, the Company shall furnish to the
Holders the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. In addition, the Company shall file with the
Warrant Agent within 15 days after it files them with the Commission copies
of its SEC Reports. In the event the Company shall cease to be required to
file SEC Reports pursuant to the Exchange Act, the Company shall nevertheless
mail such SEC Reports to Holders upon their request. The Company shall
furnish copies of its SEC Reports to Holders promptly after the Company files
the same with the Warrant Agent. The Company shall make all such information
available to investors, securities analysts and broker-dealers who request it
in writing.
ARTICLE 12
WARRANT HOLDERS
Section 12.1 Warrant Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Warrant Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise or conversion of the Warrants represented thereby, nor shall
anything contained herein or in any Warrant Certificate be construed to
confer upon the holder of any Warrant Certificate, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
specifically provided herein), or to receive dividends or subscriptions
rights, or otherwise, until the Warrant or Warrants evidenced by such Warrant
Certificate shall have been exercised and the Company shall have elected to
deliver Common Stock (and not cash) upon such exercise.
Section 12.2 Right of Action. All rights of action in respect of
this Agreement are vested in the Holders of the Warrants, and any Holder of
any Warrant, without consent of the Warrant Agent or any other Holder, may on
such Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's right to
exercise or exchange such Holder's Warrants in the manner provided in this
Agreement.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Money and Other Property Deposited with the Warrant
Agent. Any moneys, securities or other property which at any time shall be
deposited by the Company or by Holders with the Warrant Agent pursuant to
this Agreement shall be and are hereby assigned, transferred and set over to
the Warrant Agent in trust for the purpose for which such moneys, securities
or other property shall have been deposited; but such moneys, securities or
other property need not be segregated from other funds, securities or other
property except to the extent required by law. The Warrant Agent shall
distribute any money deposited with it for payment and distribution to the
Company or to Holders by a wire transfer in the appropriate amount to an
account designated by each such Person. Any money deposited with the Warrant
Agent for payment and distribution to the Company or the Holders that remains
unclaimed for two years after the date the money was deposited with the
Warrant Agent shall be returned to the Company or the relevant Holder(s) upon
its or their request therefor.
Section 13.2 Payment of Taxes. The Company shall pay all
transfer, stamp and other similar taxes that may be imposed in respect of the
issuance or delivery of Warrants, or in respect of the issuance or delivery
by the Company of any securities upon exercise of Warrants with respect
thereto. The Company shall not be required, however, to pay any tax or other
charge imposed in connection with any transfer involved in the issue of any
certificate for shares of Common Stock or other securities underlying the
Warrants or payment of cash to any Person other than the Holder of a Warrant
Certificate surrendered upon the exercise or purchase of a Warrant, and in
case of such transfer or payment, the Warrant Agent and the Company shall not
be required to issue any stock certificate or pay any cash until such tax or
charge has been paid or it has been established to the Warrant Agent's and
the Company's satisfaction that no such tax or other charge is due.
Section 13.3 Notices. (a) Any notice, demand or delivery
authorized by this Agreement shall be in writing and shall be sufficiently
given or made when delivered or on the third Business Day following the date
sent by first-class mail, postage prepaid, addressed (i) to any Holder at
such Holder's address shown on the register of the Company maintained by the
Warrant Agent, (ii) to the Company or the Warrant Agent as follows:
If to the Company: Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, New York 10020
Attention: President
If to the Warrant Agent: United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
or (iii) such other address as shall have been furnished to the party giving
or making such notice, demand or delivery.
(b) The Company hereby irrevocably authorizes the Warrant Agent,
in the name and at the expense of the Company, to mail to the Holders any
such notice upon receipt thereof from the Company.
Section 13.4 APPLICABLE LAW. THIS AGREEMENT, EACH WARRANT
CERTIFICATE AND EACH WARRANT ISSUED HEREUNDER AND ALL RIGHTS ARISING
HEREUNDER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 13.5 Persons Benefitting. This Agreement shall be
binding upon and inure to the benefit of any Holders (each of whom is an
intended third party beneficiary), the Company and the Warrant Agent, and
their respective successors, assigns, beneficiaries, executors and
administrators. Nothing in this Agreement is intended or shall be construed
to confer upon any Person, other than the Company, the Warrant Agent and the
Holders (and such successors, assigns, beneficiaries, executors and
administrators), any right, remedy or claim under or by reason of this
Agreement or any part hereof.
Section 13.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
Section 13.7 Supplements and Amendments. The Company and the
Warrant Agent may from time to time, without the consent of the Holders, by
supplemental agreement or otherwise, make any changes or corrections in this
Agreement in order to (a) cure any ambiguity or to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, (b) add to the covenants and agreements of the Company for
the benefit of the Holders, or surrender any rights or power reserved to or
conferred upon the Company in this Agreement, (c) modify the restrictions on,
and procedures for, resale and other transfers of the Warrants to the extent
required or permitted by any change in applicable law or regulation (or the
interpretation thereof) of the United States of America or in practices
relating to the resale or transfer of restricted securities generally or (d)
evidence the succession of another Person to the Company or the Warrant Agent
and the assumption by such successor of this Agreement as provided herein;
provided, that, in each case, such changes or corrections shall in any
respect not adversely affect the interests of the Holders. The Warrant Agent
shall send a copy of any such supplemental agreement or amendment to each of
the Holders by first-class mail at the Company's expense. The Warrant Agent
shall join with the Company in the execution and delivery of any such
supplemental agreements and amendments unless it affects the Warrant Agent's
own rights, duties or immunities hereunder, in which case the Warrant Agent
may, but shall not be required to, join in such execution and delivery. Any
amendment or supplement to this Agreement that has an adverse effect on the
rights of Holders as set forth in this Agreement shall require the written
consent of registered Holders of two-thirds (2/3) of the then outstanding
Warrants. Notwithstanding the foregoing, the consent of each Holder of a
Warrant affected shall be required for any amendment pursuant to which the
Shares Amount would be decreased.
Section 13.8 Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience and shall not control
or affect the meaning or construction of any of the provisions hereof.
Section 13.9 Remedies. In the event of a breach by the Company
or by a holder of Eligible Securities, of any of their obligations under this
Agreement, each holder of Eligible Securities or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and each holder of Eligible
Securities agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
_______________________________
Name: Edward Lowenthal
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: /s/ Cynthia Chaney
_______________________________
Name: Cynthia Chaney
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
WARRANTS TO PURCHASE COMMON STOCK
OF WELLSFORD REAL PROPERTIES, INC.
No._______ Certificate for ______ Warrants
This certifies that [HOLDER] , or registered assigns, is
the registered holder of the number of Warrants set forth above. Each
Warrant entitles the holder thereof (a "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to below, to purchase,
from Wellsford Real Properties, Inc., a Maryland corporation (the "Company"),
the number of shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), as provided in the Warrant Agreement, at an exercise
price and subject to all of the terms and conditions set forth in the Warrant
Agreement. At the sole election of the Company, upon the exercise of any
Warrant, the Company may pay to the Holder a certain amount of cash, as
provided in the Warrant Agreement, in lieu of delivering the shares of Common
Stock.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of August 28, 1997 (the "Warrant Agreement"),
between the Company and United States Trust Company of New York, as warrant
agent (the "Warrant Agent", which term includes any successor Warrant Agent
under the Warrant Agreement), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Warrant Agreement for a full
statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Warrant Agent and
the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the
Close of Business on August 28, 2002.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable from time to
time on any Business Day beginning on August 28, 1997, and ending on the
Expiration Date.
The Exercise Price and the number of shares of Common Stock
issuable upon the exercise of each Warrant are subject to adjustment as
provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the
exercise of Warrants shall, upon payment therefor as set forth in the Warrant
Agreement and such issue, be duly and validly issued and fully paid and non-
assessable.
In order to exercise a Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the
Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly
executed by the Holder hereof, with signature guaranteed as therein
specified, together with any required payment in full of the Exercise Price
then in effect for the share(s) of Underlying Common Stock as to which the
Warrant(s) represented by this Warrant Certificate are submitted for
exercise, all subject to the terms and conditions hereof and of the Warrant
Agreement. Any such payment of the cash Exercise Price shall be by certified
or official bank check drawn on a New York City bank payable to the order of
the Company.
The Company shall pay all transfer, stamp and other similar taxes
that may be imposed in respect of the issuance or delivery of the Warrants or
in respect of the issuance or delivery by the Company of any securities upon
exercise of the Warrants. The Company shall not be required, however, to pay
any tax or other charge imposed in connection with any transfer involved in
the issuance of any certificate for shares of Common Stock or other
securities underlying the Warrants or payment of cash to any Person other
than the Holder of a Warrant Certificate surrendered upon the exercise or
purchase of a Warrant, and in case of such transfer or payment, the Warrant
Agent and the Company shall not be required to issue any stock certificate or
pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge is
due.
Subject to the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered holder hereof, in whole
or in part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified
in the attached Form of Assignment. Upon any partial transfer, the Company
will issue and deliver to such holder a new Warrant Certificate or
Certificates with respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Each taker and holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the holder hereof may be treated by
the Company, the Warrant Agent and all other persons dealing with this
Warrant Certificate as the absolute owner hereof for any purpose and as the
person entitled to exercise the rights represented hereby, or to the transfer
hereof on the register of the Company maintained by the Warrant Agent, any
notice to the contrary notwithstanding, but until such transfer on such
register, the Company and the Warrant Agent may treat the registered Holder
hereof as the owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at the following
address: 610 Fifth Avenue, New York, New York 10020.
<PAGE>
This Warrant Certificate shall not be valid for any purpose until
it shall have been countersigned by the Warrant Agent.
Dated: __________
WELLSFORD REAL PROPERTIES, INC.
By: _________________________
Name:
Title:
Countersigned:
UNITED STATES TRUST COMPANY
OF NEW YORK, Warrant Agent
By: _________________________
Name:
Title:
<PAGE>
FORM OF REVERSE OF WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Wellsford Real Properties, Inc.
The undersigned irrevocably exercises __________of the Warrants
for, at your election, either (i) the Shares Amount or (ii) the Cash Amount
and herewith makes payments of $_____________ and/or delivers __________
membership units of Wellsford\Whitehall Properties, L.L.C. (such cash payment
being by certified or official bank check drawn on a New York City bank
payable to the order of Wellsford Real Properties, Inc.), all at the Exercise
Price and on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to, surrenders this
Warrant Certificate and all right, title and interest therein to Wellsford
Real Properties, Inc. and directs that any shares of Common Stock deliverable
upon the exercise of such Warrants be registered in the name and delivered at
the address specified below or any Cash Amount be wired to the account
specified below.
Date: ________________
________________________________________(1)
(Signature of Owner)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
_______________________________________]
Securities and/or check to be issued to:
_______________________
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
<PAGE>
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Wire transfer instructions:
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants
constituting a part of the Warrants evidenced by the within Warrant
Certificate not being assigned hereby) all of the rights of the undersigned
under the within Warrant Certificate, with respect to the number of Warrants
set forth below:
Social
Security or
other
Identifying
Names of Number of Number of
Assignees Address Assignee(s) Warrants
- --------- ------- ----------- --------
<PAGE>
and does hereby irrevocably constitute and appoint ________________ the
undersigned's attorney to make such transfer on the books of _______________
maintained for that purpose, with full power of substitution in the premises.
Date: _______________
______________________________________(1)
(Signature of Owner)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
______________________________________
___________________
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2 ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates. . . . . . . . . . . . . . . . .5
Section 2.2. Execution and Delivery of Warrant Certificates. . . . . . . .6
ARTICLE 3 EXERCISE OF WARRANTS
Section 3.1. Exercise Procedures . . . . . . . . . . . . . . . . . . . . .6
ARTICLE 4 COMPLIANCE WITH THE SECURITIES ACT
Section 4.1. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 4.2. Representations . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE 5 REGISTRATION OF TRANSFERS AND EXCHANGES
Section 5.1. Generally . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 5.2. Mutilated, Destroyed, Lost or Stolen Warrant Certificates . .8
ARTICLE 6 ADJUSTMENTS
Section 6.1. Adjustment upon Certain Transactions. . . . . . . . . . . . .9
ARTICLE 7 REGISTRATION RIGHTS
Section 7.1. Demand Registration . . . . . . . . . . . . . . . . . . . . 19
Section 7.2. Piggyback Registration Rights . . . . . . . . . . . . . . . 22
Section 7.3. Company's Ability to Postpone Registration Rights . . . . . 23
Section 7.4. Holder Withdrawal Rights. . . . . . . . . . . . . . . . . . 24
ARTICLE 8 REGISTRATION PROCEDURES
Section 8.1. Covenants of the Company Applicable to All
Registration Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.2. Covenants of the Selling Holders. . . . . . . . . . . . . . 29
Section 8.3. Registration Expenses . . . . . . . . . . . . . . . . . . . 30
Section 8.4. Indemnification and Contribution. . . . . . . . . . . . . . 31
Section 8.5. Rule 144. . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.6. Participation in Underwritten Offerings . . . . . . . . . . 34
Section 8.7. Lock-Up Agreements. . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9 WARRANT AGENT
Section 9.1. Nature of Duties and Responsibilities Assumed . . . . . . . 35
Section 9.2. Right to Consult Counsel. . . . . . . . . . . . . . . . . . 37
Section 9.3. Compensation and Reimbursement. . . . . . . . . . . . . . . 37
Section 9.4. Warrant Agent May Hold Company Securities . . . . . . . . . 37
Section 9.5. Resignation and Removal; Appointment of Successor . . . . . 37
ARTICLE 10 REPRESENTATIONS AND WARRANTIES
Section 10.1. Representations and Warranties. . . . . . . . . . . . . . . 38
ARTICLE 11 COVENANTS
Section 11.1. Reservation of Common Stock for Issuance on
Exercise of Warrants.. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.2. Notice of Dividends . . . . . . . . . . . . . . . . . . . . 40
Section 11.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 12 WARRANT HOLDERS
Section 12.1. Warrant Certificate Holder Not Deemed a
Shareholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 12.2. Right of Action . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 13 MISCELLANEOUS
Section 13.1. Money and Other Property Deposited with the
Warrant Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.2. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . 41
Section 13.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.4. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . 42
Section 13.5. Persons Benefitting . . . . . . . . . . . . . . . . . . . . 42
Section 13.6. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 42
Section 13.7. Supplements and Amendments. . . . . . . . . . . . . . . . . 42
Section 13.8. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 13.9. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 43
<PAGE>
WARRANTS TO PURCHASE COMMON STOCK
OF WELLSFORD REAL PROPERTIES, INC.
No. 1 Certificate for 5,000,000 Warrants
This certifies that WHWEL REAL ESTATE LIMITED PARTNERSHIP, or
registered assigns, is the registered holder of the number of Warrants set
forth above. Each Warrant entitles the holder thereof (a "Holder"), subject
to the provisions contained herein and in the Warrant Agreement referred to
below, to purchase, from Wellsford Real Properties, Inc., a Maryland
corporation (the "Company"), the number of shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), as provided in the
Warrant Agreement, at an exercise price and subject to all of the terms and
conditions set forth in the Warrant Agreement. At the sole election of the
Company, upon the exercise of any Warrant, the Company may pay to the Holder
a certain amount of cash, as provided in the Warrant Agreements, in lieu of
delivering the shares of Common Stock.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of August 28, 1997 (the "Warrant Agreement"),
between the Company and United States Trust Company of New York, as warrant
agent (the "Warrant Agent", which term includes any successor Warrant Agent
under the Warrant Agreement"), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Warrant Agreement for a full
statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Warrant Agent and
the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the
Close of Business on August 28, 2002.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable from time to
time on any Business Day beginning on August 28, 1997, and ending on the
Expiration Date.
The Exercise Price and the number of shares of Common Stock
issuable upon the exercise of each Warrant are subject to adjustment as
provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the
exercise of Warrants shall, upon payment therefor as set forth in the Warrant
Agreement and such issue, be duly and validly issued and fully paid and non-
assessable.
In order to exercise a Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the
Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly
executed by the Holder hereof, with signature guaranteed as therein
specified, together with any required payment in full of the Exercise Price
then in effect for the share(s) of Underlying Common Stock as to which the
Warrant(s) represented by this Warrant Certificate are submitted for
exercise, all subject to the terms and conditions hereof and of the Warrant
Agreement. Any such payment of the cash Exercise Price shall be by certified
or official bank check drawn on a New York City Bank payable to the order of
the Company.
The Company shall pay all transfer, stamp and other similar taxes
that may be imposed in respect of the issuance or delivery of the Warrants or
in respect of the issuance or delivery by the Company of any securities upon
exercise of the Warrants. The Company shall not be required, however, to pay
any tax or other charge imposed in connection with any transfer involved in
the issuance of any certificate for shares of Common Stock to other
securities underlying the Warrants or payment of cash of any Person other
than the Holder or a Warrant Certificate surrendered upon the exercise of
purchase of a Warrant, and in case of such transfer or payment, the Warrant
Agent and the Company shall not be required to issue any stock certificate or
pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge is
due.
Subject to the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered holder hereof, in whole
or in part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified
in the attached Form of Assignment. Upon any partial transfer, the Company
will issue and deliver to such holder a new Warrant Certificate or
Certificates with respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Each taker and holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the Holder hereof may be treated by
the Company, the Warrant Agent and all other persons dealing with this
Warrant Certificate as the absolute owner hereof for any purpose and as the
person entitled to exercise the rights represented hereby, or to the transfer
hereof on the register of the Company maintained by the Warrant Agent, any
notice to the contrary notwithstanding, but until such transfer on such
register, the Company and the Warrant Agent may treat the registered Holder
hereof as the owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at the following
address: 610 Fifth Avenue, New York, New York 10020.
This Warrant Certificate shall not be valid for any purpose until
it shall have been countersigned by the Warrant Agent.
Dated: August 28, 1997
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
___________________________
Name: Edward Lowenthal
Title: President
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK, Warrant Agent
By: /s/ Cynthia Chaney
______________________________
Name: Cynthia Chaney
Title: Assistant Vice President
<PAGE>
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Wellsford Real Properties, Inc.
The undersigned irrevocably exercises ____________ of the Warrants
for, at your election, either (i) the Shares Amount of (ii) the Cash Amount
and herewith makes payments of $________ and/or delivers _____ membership
units of Wellsford/Whitehall Properties, L.L.C. (such cash payment being by
certified or official bank check drawn on a New York City bank payable to the
order of Wellsford Real Properties, Inc.), all at the Exercise Price and on
the terms and conditions specified in the within Warrant Certificate and the
Warrant Agreement therein referred to, surrenders this Warrant Certificate
and all right, title and interest therein to Wellsford Real Properties, Inc.
and directs that any shares of Common Stock deliverable upon the exercise of
such Warrants be registered in the name and delivered at the address
specified below or any Cash Amount be wired to the account specified below.
Date:
_______________________________*
(Signature of Owner)
_______________________________
(Street Address)
________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
_______________________________]
Securities and/or check to be issued to:
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
<PAGE>
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Wire transfer instructions:
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants
constituting a part of the Warrants evidenced by the within Warrant
Certificate not being assigned hereby) all of the rights of the undersigned
under the within Warrant Certificate, with respect to the number of Warrants
set forth below:
Social Security or
other Identifying
Names of Number of
Assignees Address Assignee(s) Number of Warrants
- --------- ------- ----------- ------------------
<PAGE>
and does hereby irrevocably constitute and appoint the undersigned's attorney
to make such transfer on the books of maintained for that purpose with full
power of substitution in the premises.
Date:
________________________________ *(Signature
of Owner)
________________________________
(Street Address)
________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
_______________________________]
______________________
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
TERM LOAN AGREEMENT
between
WELLSFORD REAL PROPERTIES, INC.
and
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
August 28, 1997
<PAGE>
TERM LOAN AGREEMENT dated as of August 28, 1997 between
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a Delaware limited liability company
(the "Borrower"), and WELLSFORD REAL PROPERTIES, INC. (the "Lender").
W I T N E S E T H:
WHEREAS, Borrower wishes to borrow a principal amount of up to
$86,293,190; and
WHEREAS, Lender is willing to provide Borrower with loans in the
aforesaid principal amount as follows: (i) an initial term loan of
$61,699,440, (ii) an additional term loan of $17,093,750 upon and subject to
the conditions set forth herein and (iii) an additional term loan of up to
$7,500,000 upon and subject to the conditions set forth herein.
NOW, THEREFORE, Borrower and Lender hereby agree as follows:
14 DEFINITIONS
As used in this Agreement:
"Advance Date" means the date each Term Loan is advanced by Lender.
"Agreement" means this Term Loan Agreement, as amended or
supplemented from time to time.
"Borrower" means Wellsford/Whitehall Properties, L.L.C.
"Business Day" means a day other than Saturday, Sunday or any other
day on which commercial banks in New York City are authorized or required by
law or executive order to close.
"Closing Date" means the date on which this Agreement has been duly
executed by Lender and Borrower, and all conditions precedent to the making
of Term Loan A have been met to the satisfaction of Lender and its counsel.
"Default" means any event specified in Section 8.01 hereof after
the expiration of any applicable cure period.
"Default Rate" means three (3%) percent in excess of the applicable
Interest Rate.
"Extension Period" means the period commencing on November 27, 1997
and terminating on February 25, 1998.
"Indebtedness" means all obligations, contingent and otherwise,
that in accordance with generally accepted accounting principles should be
classified upon the obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event and
whether or not so classified: (a) all debt and similar monetary obligations,
whether direct or indirect (including, without limitation, all obligations
evidenced by bonds, debentures, notes or similar debt instruments and
subordinated indebtedness); (b) all liabilities secured by any mortgage,
pledge, security interest, lien, charge or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; and (c) all guarantees, interest
rate and currency swap obligations, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including contingent obligations that in accordance with generally accepted
accounting principles are required to be footnoted on Borrower's consolidated
balance sheets and any obligation to supply funds to or in any manner to
invest directly or indirectly in a Person, to purchase indebtedness, or to
assure the owner of indebtedness against loss through an agreement to
purchase goods, supplies or services for the purpose of enabling the debtor
to make payment of the indebtedness held by such owner or otherwise, and the
obligation to reimburse the issuer in respect of any letter of credit; (d)
any obligation as a lessee or an obligor under a capitalized lease; and (e)
Borrower's pro rata share of any of the above-described obligations of its
unconsolidated affiliates.
"Initial Maturity Date" means November 26, 1997.
"Interest Rate" means (i) Three Hundred (300) basis points (3.0%)
above the LIBO Rate, as adjusted from time to time, through the Initial
Maturity Date or (ii) Four Hundred (400) basis points (4.0%) above the LIBOR
Rate, as adjusted from time to time, after the Initial Maturity Date.
"Lender" means Wellsford Real Properties, Inc. and its successors
and assigns.
"LIBO Period" means a thirty (30) day period commencing on each
Advance Date and upon the expiration thereof each and every thirty (30) day
period thereafter.
"LIBO Rate" means, with respect to each LIBO Period, the rate per
annum equal to the rate at which BankBoston, N.A. is offered United States
Dollar deposits in an amount comparable to the Term Loan for which the
applicable LIBO Rate is being determined, such determination to be made on
the date which is two (2) Business Days prior to the applicable LIBO Period,
in whatever interbank eurodollar market selected by BankBoston, N.A. in its
sole discretion, acting in good faith.
"Lien" means (a) a mortgage, lien, pledge, charge, security
interest, encumbrance or preference, priority or other security or
preferential arrangement of any kind or nature in respect of any asset, or
(b) the interest of a vendor under any conditional sale agreement, financing
lease or other title retention agreement relating to an asset.
"Loan Documents" mean, collectively, this Agreement, the Term
Notes, any guarantees and mortgages entered into by the Sub Guarantors and
any and all documents executed and delivered in connection therewith.
"Maturity Date" means the later of (i) the Initial Maturity Date or
(ii) the expiration of the Extension Period, if any.
"Operating Agreement" means the Limited Liability Company Operating
Agreement of Borrower dated as of August 28, 1997.
"Person" means an individual, a corporation, a limited liability
company, an association, a joint stock company, a business trust, a
partnership, a joint venture, an unincorporated organization, or a government
or any agency or political subdivision thereof.
"Properties" mean any of the following real properties known as
Point View - Main Campus, 1700 Valley Road, 1800 Valley Road, the Chatham
Building, Greenbrook, 1275 K Street, 600 Atrium, 700 Atrium and 15 Broad
Street.
"Sub Guarantors" means any of the following Subsidiaries, WEL/WH
Chatham, L.L.C., WEL/WH Point View/1800 Valley, L.L.C., WEL/WH 1700 Valley,
L.L.C., WEL/WH Greenbrook, L.L.C., WEL/WH 600 ATR, L.L.C., WEL/WH 700 ATR,
L.L.C., WEL/WH 1275 K Street, L.L.C. and WEL/WH 15 Broad Street, L.L.C.
"Subsidiaries" shall have the meaning set forth in the Operating
Agreement.
"Taxes" means any and all present and future taxes, levies,
imposts, duties, fees, deductions, withholdings or charges of a similar
nature imposed or assessed by any federal, state, county or any political
subdivision or taxing authority thereof, together with any interest thereon
and any penalties with respect thereto.
"Term Loan A" means the term loan made to Borrower under this
Agreement in the principal amount of $61,699,440.
"Term Loan B" means the term loan which may be made to Borrower
under this Agreement in the principal amount of $17,093,750.
"Term Loan C" means the term loan which may be made to Borrower
under this Agreement in the principal amount of up to $7,500,000.
"Term Loan B Notice" means a written notice, given to Lender by
Borrower requesting funding of Term Loan B.
"Term Loan C Notice" means a written notice, given to Lender by
Borrower requested funding of Term Loan C.
"Term Loan" mean, individually, Term Loan A, Term Loan B or Term
Loan C.
"Term Loans" mean, collectively, Term Loan A, Term Loan B and Term
Loan C.
"Term Notes" means each of the promissory notes issued by Borrower
to Lender in the form annexed hereto as Exhibits A-1, A-2 and A-3,
respectively.
1. THE TERM LOANS
2.01. Term Loan Commitment. Subject to the conditions set forth
in Section 5.01 and upon the terms of this Agreement, Lender shall make Term
Loan A to Borrower on the Closing Date, subject to the satisfaction of the
conditions set forth in Section 5.02 herein and upon the terms of this
Agreement, Lender shall make Term Loan B to Borrower on the third Business
Day following receipt of the Term Loan B Notice and subject to the
satisfaction of the conditions set forth in Section 5.03 herein and upon the
terms of this Agreement, Lender shall make Term Loan C to Borrower on the
third Business Day following receipt of the Term Loan C Notice.
2.02. Payment of Interest. Interest shall accrue and Borrower
shall pay interest on the aggregate outstanding principal amount of each Term
Loan, from time to time outstanding, at a rate per annum equal to the
Interest Rate in effect from time to time. Accrued interest on the Term
Loans shall be paid in arrears on the 1st day of each calendar month
commencing on the first day of the month following each Advance Date and on
the Maturity Date, except that with respect to Term Loan A the first interest
payment shall be due on October 1, 1997.
2.03. Default Interest. Notwithstanding anything to the contrary
in Section 2.02 hereof, if Borrower shall fail to make any payment, within
five (5) days after its due date, (whether at maturity, on acceleration or
otherwise), of any interest or principal amount owing under this Agreement or
the Term Notes, then Borrower shall pay interest on demand at a rate per
annum equal to the Default Rate from time to time in effect to the fullest
extent permitted by law on the amount of principal and interest overdue from
the date of default until payment in full of the principal and interest
amount overdue plus interest thereon.
2.04. Repayment of Principal. Borrower shall repay the principal
amount of the Term Loans on, or at Borrower's option as provided in Section
2.06 before, the Maturity Date.
2.05. The Term Notes. On the Closing Date, Borrower shall duly
issue and deliver to Lender, a single promissory note in the form of Exhibit
A-1 hereto.
2.06. Prepayment. (a) Voluntary Prepayment. Borrower may, upon
not less than three (3) Business Days irrevocable prior written notice to
Lender, prepay the Term Loans in whole or in part without premium or penalty.
Amounts repaid with respect to the Term Loans may not be reborrowed by
Borrower pursuant to the Agreement.
(b) Interest. Any prepayment of principal of the Term Loans
shall be paid together with unpaid accrued interest thereon to and including
the prepayment date.
2.07. Extension of Initial Maturity Date. (a) The principal
amount of the Term Loans plus any accrued and unpaid interest thereon shall
be due and payable to Lender on the Initial Maturity Date.
(b) Notwithstanding the provisions of Section 2.07(a),
Borrower may elect to extend the Initial Maturity Date, subject to the terms
and conditions of this Section 2.07 and Section 4.01 herein, upon written
notice received by Lender on or before November 5, 1997. If the conditions
set forth in Section 2.07(c) and Section 4.01 herein are not satisfied on or
prior to the Initial Maturity Date, the principal amount of the Term Loans
and any accrued and unpaid interest thereon shall be due and payable on the
Initial Maturity Date.
(c) The obligation of Lender to extend the Initial Maturity
Date is subject to the fulfillment of the following conditions by Borrower:
(i) no Default shall have occurred hereunder or under any Loan Document,
either before or after giving effect to such extension and (ii) Lender shall
have received the documents referred to in Section 4.01 prior to the Initial
Maturity Date.
2. TERMS APPLICABLE TO TERM LOANS
3.01. Payments and Computations. (a) Borrower shall make each
payment due hereunder and under the Term Notes not later than 1:00 P.M., on
the date when due, in same day funds as provided in the Term Notes or as
directed by Lender.
(b) All computations of interest hereunder shall be made by
Lender on the basis of a year of 360 days, in each case for the actual number
of days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable. Each
determination by Lender of an interest rate hereunder shall be conclusive and
binding for all purposes, absent error.
(c) Whenever any payment hereunder or under the Term Notes,
as the case may be, shall be due on a day other than a Business Day such
payment shall be made on the next succeeding Business Day and such extension
of time shall in such case be included in the computation of payment of
interest.
3.02. Taxes; Reserves; Additional Costs. All payments made by
Borrower hereunder shall be made free and clear of, and without reduction for
or on account of future income, stamp or other Taxes, levies, imposts,
duties, charges, fees, deductions, reserves or withholdings hereafter
imposed, levied, collected, withheld or assessed by any governmental and/or
taxing authority, excluding income, gross receipts, capital stock and
franchise taxes imposed on Lender by the United States of America or any
political subdivision or taxing authority thereof or therein. If any Taxes
are required to be withheld from any amounts payable to Lender hereunder, the
amounts so payable shall be increased to the extent necessary to yield to
Lender (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rate or in the amounts specified hereunder.
Borrower hereby indemnifies Lender for any incremental taxes, interest or
penalties that may become payable by Lender which may result from any failure
by Borrower to pay any such Tax when due to the appropriate taxing authority.
3.03. Fees and Costs. In order to induce Lender to enter into
this Agreement and make the Term Loans to Borrower, Borrower shall pay on the
Closing Date and on each subsequent Advance Date, all fees and costs
associated with documenting and closing the Term Loans, including all
reasonable out-of-pocket costs and expenses, including the fees and
disbursements of counsel to Lender, incurred by Lender in connection with the
preparation, execution and delivery of this Agreement, the Term Notes and any
other Loan Documents.
3. SECURITY
4.01. Security During Any Extension Period. As security for the
prompt payment of the amounts due hereunder, and under each of the Term Notes
and the fulfillment of all other obligations of Borrower hereunder and under
the Term Notes, during any Extension Period, Borrower shall cause each Sub
Guarantor to deliver to the Lender and Lender shall receive, prior to the
commencement of the Extension Period:
(a) One or more mortgages, in form and substance
substantially similar to the mortgage attached hereto as Exhibit B, and in
form for recording in the appropriate filing office in the jurisdiction in
which the Properties are located, creating cross-defaulted first priority
liens on the Properties, together with the payment of any and all mortgage
recording taxes in connection therewith, provided that the mortgage relating
to the property known as 1275 K Street shall only be recorded if there has
been a Default pursuant to Section 8.01 hereof during the Extension Period;
(b) Uniform Commercial Code Financing Statements Form UCC-1,
in form for recording in the appropriate filing offices in the jurisdiction
in which the Properties are located, creating a first priority lien in all
personal property located at the Properties;
(c) A joint and several guaranty of the amounts due
hereunder, and under each of the Term Notes and the fulfillment of all other
obligations of Borrower hereunder from the Sub Guarantors in such form
reasonably acceptable to Lender.
(d) Such other documents as may be required by Lender in its
sole discretion.
4. CONDITIONS PRECEDENT
5.01. Conditions Precedent to Term Loan A. The obligation of
Lender to disburse Term Loan A is subject to the fulfillment of the following
conditions by Borrower:
(a) The representations and warranties herein contained and
contained in the Loan Documents shall be true and correct in all respects on
and as of the Closing Date.
(b) Lender shall have received such consents or
acknowledgments, with respect to such of the transactions hereunder, from
such Persons as Lender or its counsel may reasonably determine to be
necessary or appropriate.
(c) Lender shall have received (i) copies of the certificate
of formation and all amendments thereto of Borrower, certified as of a recent
date by the Secretary of State of its jurisdiction of formation; and (ii) the
certificate of said Secretary of State as to the valid existence, good
standing (or equivalent) and other charter documents on file of Borrower, as
of a recent date.
(d) Borrower shall pay all of the fees and costs due pursuant
to Section 3.04 and as elsewhere provided for herein and Lender's actual
costs and expenses pursuant to Section 9.02 hereof.
Lender's disbursement of Term Loan A shall constitute its acknowledgment that
such conditions precedent relating to Term Loan A have been satisfied.
5.02. Conditions Precedent to Term Loan B. The obligation of
Lender to disburse Term Loan B shall be subject to the fulfillment of the
following conditions precedent:
(a) Lender shall have received a properly executed Term Loan
B Notice at least five (5) days prior to the Advance Date of such Term Loan,
but in any event prior to the Maturity Date.
(b) No Default hereunder or under any Loan Document shall
have occurred and be continuing, either before or after giving effect to such
Term Loan B; and Borrower shall have complied and shall then be in compliance
in all respects with all of the terms, covenants and conditions of this
Agreement, Term Note A and any Loan Document which is binding on it.
(c) Lender shall have received such consents or
acknowledgments, with respect to such of the transactions hereunder, from
such Persons as Lender or its counsel may reasonably determine to be
necessary or appropriate.
(d) Lender shall have received evidence satisfactory to it,
that Borrower, simultaneously with its receipt of the proceeds of the Advance
in connection with the Term B Loan, will purchase the property known as 700
Atrium, pursuant to the 700 Atrium Purchaser Contract (as such term is
defined in the Operating Agreement).
Lender's disbursement of Term Loan B shall constitute its acknowledgment that
such conditions precedent relating to Term Loan B have been satisfied.
5.03. Conditions Precedent to Term Loan C. The obligation of
Lender to disburse Term Loan C shall be subject to the fulfillment of the
following conditions precedent:
(a) Lender shall have received a properly executed Term Loan
C Notice at least five (5) days prior to the Advance Date of such Term Loan,
but in any event prior to the Maturity Date.
(b) No Default hereunder or under any Loan Document shall
have occurred and be continuing, either before or after giving effect to such
Term Loan C; and Borrower shall have complied and shall then be in compliance
in all respects with all of the terms, covenants and conditions of this
Agreement, Term Note A, Term Note B and any Loan Document which is binding on
it.
(c) Lender shall have received such consents or
acknowledgments, with respect to such of the transactions hereunder, from
such Persons as Lender or its counsel may reasonably determine to be
necessary or appropriate.
(d) Lender shall have received evidence satisfactory to it,
that Borrower will cause the properties known as 600 Atrium and 15 Broad
Street to be contributed to it pursuant to the Operating Agreement.
Lender's disbursement of Term Loan C shall constitute its acknowledgment that
such conditions precedent relating to Term Loan C have been satisfied.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
6.01. Organization of Borrower. Borrower and the Sub Guarantors
are limited liability companies duly formed, validly existing and in good
standing under the laws of the State of Delaware and have all powers and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as they are now being conducted. Borrower and the Sub
Guarantors are duly qualified to do business and are in good standing in all
jurisdictions in which the ownership of its property or the conduct of its
business makes such qualification necessary.
6.02. Authorization. The execution, delivery and performance of
this Agreement, the Term Notes and the other Loan Documents by Borrower are
within the power and authority of Borrower and have been authorized by all
necessary action, and require no action by or in respect of, or filing with,
any governmental body, agency or official.
6.03. Guarantees and Mortgages. The execution, delivery and
performance of the guarantees and mortgages by the Sub Guarantors are within
the power and authority of Sub Guarantors and have been authorized by all
necessary action, and require no action by or in respect of, or filing with,
any governmental body, agency or official.
6.04. Validity. The Loan Documents have been duly executed and
delivered by Borrower and constitute the legal, valid and binding obligations
of Borrower enforceable against Borrower in accordance with their respective
terms, except as the enforceability hereof and thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and by general principles of equity.
6.05. Consents. All consents, authorizations, approvals of or
filings or registrations with any commission, board, agency, court or other
governmental authority necessary in connection with the valid execution,
delivery and performance of the Loan Documents by Borrower have been obtained
or effected and are in full force and effect.
6.06. No Conflict. The execution and delivery by Borrower of the
Loan Documents do not, and the performance by Borrower of the Loan Documents
to which they are, respectively, a party, will not, (a) violate any provision
of the Operating Agreement or any law, rule, regulation, order, writ,
judgment, decree, determination or award applicable to Borrower, (b) result
in a breach of or constitute a default under any indenture, lease, loan or
other agreement or any instrument to which Borrower is a party or by which
they or their properties may be bound or affected, or (c) result in, or
require the creation or imposition of, any Lien upon or with respect to any
of the properties now owned or hereafter acquired by Borrower, other than the
Liens granted to Lender pursuant hereto.
6.07. No Default. Borrower is not in violation of any law, rule,
regulation, order, writ, judgment, decree, determination or award applicable
to it or any indenture, lease, loan or other agreement to which it is a party
or by which it or its properties may be bound or affected, the violation of
which would have a material adverse effect upon the ability of Borrower to
perform any of its respective obligations under the Loan Documents.
6. COVENANTS
Until the Term Notes have been paid in full in accordance with
their terms and until the performance of all obligations of Borrower
hereunder and under the other Loan Documents to which it is a party, Borrower
covenants that:
7.01. Negative Covenants. Except for the Assumed Financing (as
such term is defined in the Operating Agreement) and as otherwise consented
to by Wellsford Commercial Properties Trust pursuant to the Operating
Agreement, Borrower shall not, and will not permit any of its Subsidiaries
to:
(a) Incur any Indebtedness; or
(b) (i) create or incur or suffer to be created or incurred
or to exist any Lien, mortgage, negative pledge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or
profits therefrom; or (ii) transfer any of its property or assets or the
income or profits therefrom.
7. DEFAULTS
8.01. Events of Default. If any of the following events shall
occur and be continuing:
(a) Borrower or any Sub Guarantor shall fail to pay any
amounts of principal or interest due hereunder, under any of the Term Notes
or any Loan Document when due, whether at maturity, by acceleration or
otherwise; or
(b) Any representation or warranty made by Borrower or any
Sub Guarantor in this Agreement, or in any other Loan Document or any
certificate or notice delivered or made in connection herewith and therewith
shall prove to be false or misleading in any material respect when made; or
(c) Borrower or any Sub Guarantor shall fail to perform or
observe any other obligations, covenants or terms contained in this
Agreement, or any of the other Loan Documents (other than as described in (a)
or (b) above) to which it is a party, and such default shall continue for 5
days after written notice thereof from Lender to Borrower or the Sub
Guarantors, as the case may be; or
(d) An involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced
against Borrower or any Sub Guarantor, or a court shall enter a decree or
order appointing a receiver, liquidator, assignee, custodian, trustee,
sequester (or similar official) of or for any substantial part of their
respective properties, or ordering the winding-up or liquidation of their
affairs, and such case shall not be dismissed in 60 days, or such decree or
order shall remain unstayed and in effect for a period of 30 consecutive
days; or
(e) Borrower or any Sub Guarantor shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of or for all or any substantial
part of their respective property, or shall make any general assignment for
the benefit of creditors, or shall fail generally to pay their respective
debts as they become due, or shall take any action in furtherance of any of
the foregoing; or
(f) If at any time during the term of this Agreement, WHWEL
Real Estate Limited Partnership exercises its "Conversion Right" (as such
term is defined in the Operating Agreement) to require Wellsford Commercial
Properties Trust, a Maryland real estate investment trust, to convert any of
its Membership Units (as such term is defined in the Operating Agreement)
into shares of beneficial interest of Wellsford Commercial Properties Trust;
then in the case of any of the events specified in paragraphs (d) and (e),
the Term Loans shall be immediately terminated and all amounts payable by
Borrower or any Sub Guarantor, if applicable, to Lender under this Agreement
and the Term Notes, as the case may be, shall be immediately due and payable
without any action on the part of Lender, Borrower, Sub Guarantor, or any
other Person, and, in the case of any of the other events specified above,
Lender may, by notice to Borrower (i) declare the Term Loans to be forthwith
cancelled and terminated, whereupon the same shall be so cancelled and
terminated and/or (ii) declare the principal, interest and all other amounts
payable by Borrower to Lender under this Agreement and the Term Notes to be
immediately due and payable, whereupon the same shall become forthwith due
and payable.
8. GENERAL PROVISIONS
9.01. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of Borrower, Lender and their respective
successors and assigns, provided that Borrower may not assign or transfer any
of its rights or obligations hereunder without the prior written consent to
Lender. Lender may not at any time assign any of its rights hereunder.
9.02. Costs and Expenses. Borrower agrees to pay all reasonable
costs and expenses, including the fees and disbursements of Lender's counsel,
incurred in connection with the enforcement of this Agreement, the Term Notes
or any other Loan Documents.
9.03. Amendment; Waiver. No amendment, modification or waiver of
any provision of this Agreement, and no consent to any departure by Borrower
therefrom, shall in any event be effective unless the same be in writing and
signed by Lender. Any waiver of any provision of this Agreement, and any
consent to any departure by Borrower therefrom, shall be effective only in
the specific instance and for the specific purpose for which given. Neither
failure nor delay on the part of either party to exercise any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any right, power or remedy.
No notice to or demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in similar or other circumstances. The
rights herein provided are cumulative and not exclusive of any rights
provided by law.
9.04. Notices. Except as otherwise provided herein, all notices,
demands and other communications to either party hereto under this Agreement
shall be in writing and shall be delivered or sent to such party at the
following addresses:
To Borrower:
Wellsford/Whitehall Properties, L.L.C.
c/o Wellsford Commercial Properties Trust
610 Fifth Avenue
New York, New York 10020
Attention: President
with a copy to:
WHWEL Real Estate Limited Partnership
85 Broad Street, 19th Floor
New York, New York 10004
Attention: Chief Financial Officer
To Lender:
Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, New York 10020
Attention: President
or to such other address as it may by written notice to the other party
hereto have designated for such purpose. Any such notice, demand or other
communications shall be deemed given when sent.
9.05. Counterparts. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same instrument.
9.06. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the construction hereof.
9.07. Invalidity. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated
thereby and shall be given effect so far as possible.
9.08. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
9.09. Waiver of Jury Trial; Service of Process. BORROWER HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY
TO THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS. Borrower further agrees that
any process required to be served on it for purposes of any such proceeding
may be served on it, with the same effect as personal service on it within
the State of New York, by registered mail, return receipt requested,
addressed to it at its address for purposes of notices as provided in Section
9.04 hereof, provided that such process shall not be deemed served until
actual receipt by Borrower.
9.10. Indemnification. (a) Borrower agrees to pay, and protect,
indemnify and save harmless Lender and, in their capacity as such, its
officers, directors, shareholders, controlling persons, employees, agents and
servants from and against, all liabilities, losses, claims, damages,
penalties, causes of action, suits, judgments, costs, expenses or disburse-
ments (including, without limitation, reasonable attorneys' fees and
expenses) of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against Lender in any way relating to or arising out
of the Loan Documents or the transactions by and between Lender and Borrower,
as contemplated thereby, provided that, Borrower will not be liable to Lender
for such liabilities, losses, claims, damages, penalties, causes of action,
suits, judgments, costs, expenses or disbursements (including, without
limitation, attorneys' fees) or judgments arising from Lender's gross
negligence, wilful misconduct or failure to comply with applicable regulatory
requirements imposed on it with respect to the Term Loans, if any.
(b) Lender agrees that with respect to any action, suit or
proceeding against it, or any of its officers, directors, shareholders,
controlling persons, employees, agents and servants, in respect of which
indemnity may be sought hereunder, it will give written notice of the
commencement of such action to Borrower promptly after it or any of its
officers, directors, shareholders, controlling persons, employees, agents and
servants is made a party to such action or it otherwise has knowledge
thereof. Upon receipt of any such notice by Borrower, Borrower shall be
entitled to assume the defense of such action, including the employment of
counsel reasonably acceptable to Lender and the payment of all expenses in
connection with such defense, and shall have the right to negotiate and
consent to settlement. Failure of Lender to provide notice pursuant to this
Section 9.10(b) shall not negate any indemnification obligations of Borrower.
(c) Any indemnified party shall have the right to employ
separate counsel in any such action against it and to participate in the
defense thereof and the fees and expenses of such counsel shall be at the
expense of such party if an adequate defense is not being provided by the
indemnifying party in the reasonable judgment of the indemnified party.
Notwithstanding the foregoing, Borrower shall not have the right to defend
the indemnified party in any action or proceeding if such indemnified party
has been advised by its own counsel that there are legal defenses available
to such indemnified party which are different from, additional to or conflict
with the defenses available to Borrower. Borrower shall not be liable for
any settlement of any such action effected without its consent, which consent
shall not be unreasonably withheld.
(d) The provisions of this Section 9.10 shall survive the
repayment in full of the Term Notes and the satisfaction of all obligations
of Borrower under the Loan Documents.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have executed this
Agreement as of the date above written.
WELLSFORD/WHITEHALL PROPERTIES,
L.L.C.
By: Wellsford Commercial Properties Trust
By: /s/ Edward Lowenthal
__________________________________
Name: Edward Lowenthal
Title: President
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
_____________________________________
Name: Edward Lowenthal
Title: President
TERM NOTE A
$61,699,440.00 New York, New York
Date: August 28, 1997
FOR VALUE RECEIVED, Wellsford/Whitehall Properties, L.L.C., a
Delaware limited liability company ("Borrower") promises to pay to the order
of Wellsford Real Properties, Inc. or its successors or assigns
(collectively, the "Payee"), at the offices of Wellsford Real Properties,
Inc., 610 Fifth Avenue, New York, New York 10020, or at such other address as
to which the Payee shall give written notice to the Borrower, on or before
the Maturity Date in lawful money of the United States of America and in
immediately available funds, the sum of Sixty-One Million Six Hundred Ninety-
Nine Thousand Four Hundred Forty Dollars ($61,699,440.00). The Borrower
promises to pay interest at such address, in like money, from the date hereof
and through to the Maturity Date on the outstanding principal amount owing
hereunder from time to time, at the Interest Rate from time to time, in
arrears, on the first day of each month, commencing October 1, 1997 with all
accrued and unpaid interest on the outstanding principal amount due on the
Maturity Date. Interest on any overdue amount hereunder shall be payable at
a rate per annum equal to the Default Rate on the amount overdue or on the
entire unpaid balance of this Note plus interest if it has been accelerated.
In no event shall interest hereunder exceed the maximum rate permitted under
applicable law. If by the terms of this Note, the Borrower is required or
obligated to pay interest at a rate in excess of such maximum rate, then the
rate of interest hereunder shall be deemed to be reduced immediately and
automatically to such maximum rate, interest payable hereunder shall be
computed at such maximum rate and any prior interest payment made in excess
of such maximum rate shall be immediately and automatically applied to, and
shall be deemed to have been payment made in reduction of, the outstanding
principal amount due hereunder.
This Note is "Term Note A" referred to in that certain Term Loan
Agreement dated as of the date hereof between Borrower and Payee (as same may
be amended, modified, restated or supplemented from time to time, the "Loan
Agreement") and is subject to the terms and conditions set forth therein,
which terms and conditions are incorporated herein by reference. This Note
evidences the Term Loan A made by the Payee thereunder. All capitalized
terms used herein but not otherwise defined shall have the meanings given
them in the Loan Agreement.
If any payment of this Note becomes due and payable on a day other
than a Business Day, the maturity hereof shall be extended to the next
succeeding Business Day and interest hereon shall be payable at the rate set
forth above during such extension, or if such succeeding Business Day falls
in the next calendar month, any payment due hereunder shall be payable on the
preceding Business Day in the appropriate calendar month.
The Loan Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default and for prepayment
on the terms and conditions specified therein.
Presentment for payment, notice of dishonor, protest, and notice of
protest are hereby waived.
The Borrower agrees to pay all reasonable costs including all
reasonable attorneys' fees and costs incurred by the Payee in collecting or
enforcing payment of this Note in accordance with its terms.
This Note is secured, from and after the commencement Extension
Period, pursuant to the terms of Article 4 of the Loan Agreement and is
entitled to the benefit, to the extent applicable, of the mortgages referred
to therein, as same may be amended, modified, restated or supplemented from
time to time.
Failure of the Payee hereof to assert any right herein shall not be
deemed to be a waiver thereof.
This Note and the rights and obligations of the Borrower and the
Payee hereof shall be governed by and construed in accordance with the laws
of the State of New York. THE BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS NOTE. THE BORROWER
FURTHER AGREES THAT ANY PROCESS REQUIRED TO BE SERVED ON IT FOR PURPOSES OF
ANY ACTION OR PROCEEDING MAY BE SERVED ON IT, WITH THE SAME EFFECT AS
PERSONAL SERVICE ON IT WITHIN THE STATE OF NEW YORK, BY MAIL ADDRESSED TO IT
AT ITS ADDRESS FOR PURPOSE OF NOTICES AS PROVIDED IN THE LOAN AGREEMENT.
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
By: Wellsford Commercial Properties Trust
By: /s/ Edward Lowenthal
_____________________________________
Name: Edward Lowenthal
Title: President
ATTEST:
/s/ Richard Previdi
________________________
WHWEL REAL ESTATE LIMITED PARTNERSHIP
85 Broad Street
New York, New York 10004
August 28, 1997
Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, New York 10020
Ladies and Gentlemen:
We refer to the Limited Liability Company Operating Agreement (the
"Wellsford/Whitehall LLC Agreement") of Wellsford/Whitehall Properties,
L.L.C. ("Wellsford/Whitehall") dated as of the date hereof, between Wellsford
Commercial Properties Trust ("WCPT") and WHWEL Real Estate Limited
Partnership ("Whitehall") pursuant to which WCPT and Whitehall have
contributed and agreed to contribute certain assets to Wellsford/Whitehall.
Terms used and not defined herein shall have the meanings set forth in the
Wellsford/Whitehall LLC Agreement.
This letter agreement will confirm the agreement of Wellsford Real
Properties, Inc. ("WRP") and Whitehall regarding warrants to be issued to
Whitehall by WRP. It is hereby agreed by WRP that, within twenty (20)
Business Days after Whitehall has delivered a written request to WRP, WRP
will exchange shares of WRP Common Stock for Excess Membership Units (as
defined below) then held by Whitehall or, at WRP's election, all or part of
such Excess Membership Units shall be exchanged for cash at the fair market
value of the applicable number of shares of WRP Common Stock as determined
below. "Excess Membership Units" shall mean the Membership Units received by
Whitehall in exchange for Capital Contributions to Wellsford/Whitehall made
by Whitehall in excess of $50,000,000 up to $75,000,000. The number of
shares of WRP Common Stock issued to Whitehall in exchange for each Excess
Membership Unit shall be equal to the quotient of (i) the Membership Unit
Purchase Price (as defined below) divided by (ii) the Closing Price (as
defined in the Warrant Agreement) as of the Trading Day (as defined in the
Warrant Agreement) immediately prior to the date the written request
described above is delivered to WRP. For purposes of this letter agreement
"WRP Common Stock" shall mean the common stock, par value $.01 per share, of
WRP and any other stock of WRP into which such common stock may be converted
or reclassified (other than stock of the Company into which unissued Common
Stock has been reclassified) or that may be issued in respect of, in exchange
for, or in substitution of, such common stock by reason of any stock splits,
stock dividends, distributions, mergers, consolidations, recapitalizations or
other like events. For purposes of this letter agreement, "Membership Unit
Purchase Price" shall mean the aggregate purchase price paid for all Excess
Membership Units held by Whitehall on the date of determination divided by
the number of Excess Membership Units held by Whitehall on such date.
This letter agreement and all rights arising hereunder shall be
governed by the internal laws of the State of New York.
This letter agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
If the foregoing correctly reflects our understanding, please
confirm your acceptance by executing the enclosed counterpart of this letter
agreement and return it to the undersigned, whereupon it will become a
binding agreement between the parties hereto in accordance with its terms.
Very truly yours.
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By:WHATR Gen-Par, Inc.
By: /s/ Ronald Bernstein
_________________________
Name: Ronald Bernstein
Title:
Acknowledged and agreed
as of the date first above written:
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
Name: Edward Lowethal
Title: President
_____________________________________________________________________________
______________________________
AP-ANAHEIM LLC, a California limited liability company
AP-ARLINGTON LLC, a California limited liability company
AP-ATLANTIC LLC, a California limited liability company
AP-CITYVIEW LLC, a California limited liability company
AP-FARRELL RAMON LLC, a California limited liability company
AP-PALMDALE LLC, a California limited liability company
AP-REDLANDS LLC, a California limited liability company
AP-VICTORIA LLC, a California limited liability company
AP-VICTORVILLE LLC, a Delaware limited liability company
AP-SIERRA LLC, a California limited liability company
as Borrower
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Lender
___________
$70,000,000
REVOLVING CREDIT AGREEMENT
Dated as of August 28, 1997
_____________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS: CONSTRUCTION
Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II. AMOUNT AND TERMS OF THE LOANS
Section 2.01 The Loans . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE III. FEES
Section 3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Closing. . . . . . . . . . . . .5
Section 4.02 Conditions Precedent to Loans. . . . . . . . . . . . . .6
ARTICLE V. COLLATERAL VALUE AND RELEASES OF COLLATERAL
Section 5.01 Determinations of Collateral Value by Lender . . . . . 10
Section 5.02 Recalculations of Collateral Value at Borrower's Request10
Section 5.03 Release of Collateral. . . . . . . . . . . . . . . . . 11
Section 5.04 Calculations of Collateral Value and LTV Ratio . . . . 11
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01 Representations and Warranties . . . . . . . . . . . . 11
Section 6.02 Financial Reports. . . . . . . . . . . . . . . . . . . 19
Section 6.03 Litigation . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII. EVENTS OF DEFAULT
Section 7.01 Events of Default. . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII. MISCELLANEOUS
Section 8.01 Notices. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.02 Performance by Lender. . . . . . . . . . . . . . . . . 20
Section 8.03 No Oral Change . . . . . . . . . . . . . . . . . . . . 21
Section 8.04 No Waiver: Remedies Cumulative . . . . . . . . . . . . 21
Section 8.05 Fees and Expenses. . . . . . . . . . . . . . . . . . . 21
Section 8.06 Indemnification. . . . . . . . . . . . . . . . . . . . 22
Section 8.07 Benefits of Agreement. . . . . . . . . . . . . . . . . 22
Section 8.08 Participations . . . . . . . . . . . . . . . . . . . . 22
Section 8.09 Assignments. . . . . . . . . . . . . . . . . . . . . . 23
Section 8.10 Governing Law. . . . . . . . . . . . . . . . . . . . . 23
Section 8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . 24
Section 8.12 Waiver of Counterclaim, Etc. . . . . . . . . . . . . . 24
Section 8.13 Severable Provisions . . . . . . . . . . . . . . . . . 24
Section 8 14 Right of Setoff. . . . . . . . . . . . . . . . . . . . 24
Section 8.15 Confidentiality. . . . . . . . . . . . . . . . . . . . 25
Section 8.16 Exhibits Incorporated. . . . . . . . . . . . . . . . . 25
Section 8.17 Sole Discretion of Lender. . . . . . . . . . . . . . . 25
Section 8.18 Waiver of Notice . . . . . . . . . . . . . . . . . . . 25
Section 8.19 Remedies of Borrower . . . . . . . . . . . . . . . . . 25
Section 8.20 Waiver of Statute of Limitations . . . . . . . . . . . 25
Section 8.21 Application of Default Rate Not a Waiver . . . . . . . 25
Section 8.22 No Joint Venture or Partnership. . . . . . . . . . . . 25
Section 8.23 Time of the Essence. . . . . . . . . . . . . . . . . . 26
Section 8.24 Publicity. . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.25 Securitization . . . . . . . . . . . . . . . . . . . . 26
Section 8.26 Offsets, Counterclaims and Defenses. . . . . . . . . . 26
Section 8.27 Headings; Construction of Documents; etc.. . . . . . . 26
Section 8.28 Joint and Several. . . . . . . . . . . . . . . . . . . 27
EXHIBITS
Exhibit A-1 - Form of Borrowing Request
Exhibit A-2 - Form of Preliminary Borrowing Request
Exhibit B - Form of Mortgage
Exhibit C - Form of Secured Promissory Note
Exhibit D - Form of Assignment of Leases and Rents and Security
Deposits
<PAGE>
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as of August __,
1997 between the various limited liability companies who are signatories to
this Agreement (said limited liability companies, together with any New
Borrower (as defined below) who hereafter becomes a signatory to this
Agreement, are hereinafter collectively referred to as the "Borrower") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation
("Lender").
W I T N E S S E T H:
WHEREAS, in order to purchase existing commercial properties, Borrower
desires to borrow from Lender, on a secured revolving credit basis, loans in
an aggregate principal sum outstanding from time to time not exceeding
Seventy Million Dollars ($70,000.000.00); and
WHEREAS, Lender is willing to make loans (individually, a "Loan", and
collectively, the "Loans") to Borrower on such basis for such purposes,
subject to the terms and conditions hereof.
NOW THEREFORE, in consideration of the mutual promises and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree follows:
ARTICLE I. DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions.
(a) Defined terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in the Mortgages.
(b) As used herein and in the Note, the following terms shall have
the meanings herein specified (to be equally applicable to both the singular
and plural forms of the terms defined).
(c) As used herein with respect to a specific Subject Property,
the term "Borrower" shall mean the owner of the fee or leasehold interest in
that Subject Property.
"Agreement" means this Revolving Credit Agreement, as amended,
supplemented or modified from time to time in accordance with its terms.
"Borrowing" means a borrowing under this Agreement consisting of
Loans made to Borrower by Lender pursuant to Section 2.01 of this Agreement.
"Borrowing Date" with respect to a particular Borrowing shall mean
the Business Day, identified by the Borrower in the related Borrowing
Request, as the date on which the Borrower requests that Lender make Loans.
"Borrowing Request" means a Borrowing Request in the form of
Exhibit A-1.
"Closing Date" means the date hereof.
"Collateral" shall mean collectively, the real property and
improvements thereon secured by the Mortgages together with any additional
collateral pledged to Lender in accordance with Section 5.01 hereof.
"Collateral Value" means the aggregate value assigned by Lender to
the Collateral as of any date of determination, which value shall be
calculated in accordance with Lender's standard underwriting practices.
"Commitment" means the obligation of Lender to make Loans to
Borrower pursuant to Section 2.01 in an aggregate amount not to exceed
$70,000,000 at any one time outstanding.
"Commitment Period" means the period commencing with the Closing
Date and ending on the Expiration Date, unless otherwise extended by Lender
in writing or unless otherwise terminated pursuant to the terms hereof.
"Expiration Date" means September 1, 2000.
"Guarantor" means Donald G. Abbey.
"Initial Loans" shall mean the Loan to be made on the Closing Date
in the original principal amount of $48,400,000.
"Lender" shall have the meaning set forth in the preamble hereof,
which term shall include, as applicable, any other office of Lender
designated by it from time to time for the purpose of making or maintaining
any Loans hereunder.
"Lien" means any interest in property, real or personal, tangible
or intangible, securing an obligation owed to, or a claim by, a Person other
than the owner of such property, whether such interest is based on the common
law, statute or contract, and including, but not limited to, the security
interest, security title or lien arising from a security agreement, mortgage,
deed of trust, deed to secure debt, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting such property.
"Loan(s)" is defined in the preamble to this Agreement.
"LTV Ratio" shall have the meaning set forth in Section 5.01
hereof.
"Maturity Date" means, with respect to each Loan, the Expiration
Date.
"Mortgage(s)" shall mean each mortgage, deed of trust, deed to
secure debt, security agreement, assignment of rents and fixture filings,
each substantially in the form of Exhibit B, and as otherwise originally
executed or as same may hereafter from time to time be supplemented, amended,
modified or extended by one or more indentures supplemental thereto granted
by Borrower to Lender as security for the Note.
"New Borrower" shall mean a new single purpose entity to be
approved by Lender for the purpose of acquiring and holding a Subject
Property, the acquisition of which will be financed by a subsequent Loan.
"Note" means the Secured Promissory Note in the maximum principal
amount of $70,000,000 in the form of Exhibit C, together with any amendments
thereto or supplements thereof.
"Participant" shall have the meaning set forth in Section 8.08.
"Preliminary Borrowing Request" means a request by Borrower in the
form of Exhibit A-2.
"Subject Property" means the property, real or personal, tangible
or intangible, which is, or which is proposed to be, subject to the Lien of
each Mortgage.
ARTICLE II. AMOUNT AND TERMS OF THE LOANS
Section 2.01 The Loans.
(a) Lender agrees, upon the terms and subject to the conditions
and relying upon the representations, warranties and covenants hereinafter
set forth, to make one or more Loans on a revolving credit basis, to Borrower
up to the amount of the Commitment, provided, however, that notwithstanding
anything to the contrary contained herein or in any other Loan Document, in
no event will Lender be obligated to re-advance more than $10,000,000 of Loan
proceeds such that the aggregate principal amount of all Loans made hereunder
(including such re-advances) shall in no event exceed $80,000,000 over the
term of this Agreement. Borrower and Lender acknowledge and agree that on the
Closing Date the Initial Loans in the aggregate principal amount of
$48,400,000 will be made to Borrower subject to the satisfaction of all
applicable terms and conditions hereinafter set forth.
(b) Each Loan shall be in an aggregate amount of not less than One
Million Dollars ($1,000,000.00), and in integral multiples of Fifty Thousand
Dollars ($50,000.00); provided, however, that the aggregate amount of Loans
at any time outstanding shall not exceed the lesser of (x) the amount of the
Commitment or (y) 80% of the Collateral Value.
(c) In connection with each Loan to be made hereunder:
(i) Borrower shall deliver a Preliminary Borrowing Request to
Lender, accompanied by each of the instruments, documents and agreements set
forth on Schedule I, together with such other information as Lender may
reasonably request, and with respect to items 9 through 13 of said Schedule
I, performed by Persons previously approved by Lender, as set forth on
Schedule II hereof, and engaged by Lender at the sole cost and expense of
Borrower, except to the extent that any such instrument, document or
agreement has been previously delivered to Lender;
(ii) Lender shall approve, which approval may be granted or
denied in Lender's sole and absolute discretion, or disapprove any such
Preliminary Borrowing Request received by Lender from Borrower within ten
(10) Business Days of the receipt thereof; and
(iii) In the event that Lender approves the Loan for which
the Preliminary Borrowing Request relates, such Loan shall be made subject to
the terms and conditions hereof, including, without limitation, Borrower
delivering a Borrowing Request not less than three (3) Business Days prior to
the proposed Borrowing Date, which Borrowing Request shall be irrevocable and
must be received by Lender not later than 1:00 p.m. (New York City time),
unless otherwise agreed to in writing by Lender. Subject to the terms and
conditions hereof, Lender shall make the amount of funds evidencing the Loan
requested available by wire transfer in accordance with the instructions set
forth in the applicable Borrowing Request.
(d) The Loans shall be evidenced by the Note, duly executed by
Borrower, dated the Closing Date and payable to the order of Lender. Upon the
closing of any Subsequent Loan, the Note shall be modified to provide for the
assumption thereof on a joint and several basis by the applicable New
Borrower. All Loans to Borrower pursuant to this Agreement and all payments
of the principal of such Loans to Lender shall be recorded by Lender on the
schedule attached to the Note and by specific reference made a part thereof.
The amounts of principal indicated by said schedule as outstanding or accrued
and unpaid, as the case may be, shall constitute rebuttable presumptive
evidence of the principal outstanding and the accrued and unpaid interest on
the Loans; provided, that any failure or error on the part of Lender in
recording any Loan on such schedule shall not limit the obligation of
Borrower to pay all principal of and interest accruing on the Loans.
Section 3.01 Fees.
(a) Borrower has previously paid to Lender a non-refundable
arrangement fee in the amount of $25,000.00, which fee shall be credited
towards the initial payment due under Section 3.01(b). below.
(b) On each Borrowing Date, Borrower shall pay to Lender a loan
fee equal to (i) the principal amount of each Loan to be made on such
Borrowing Date, multiplied by (ii) 0.5%; provided, however, that Borrower
shall have no further liability to pay any fee in connection with this
Section 3.01(b) after the aggregate amount of all fees paid under this
Section 3.01(b) shall exceed Three Hundred Fifty Thousand Dollars
($350,000.00).
(c) All fees paid under this Section 3.01 shall be non-refundable.
Each payment thereof and any other charges or amounts payable under this
Agreement shall be paid by Borrower in accordance with Section 2.2 of the
Note.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Closing. On the Closing Date, in
addition to the other documents and instruments required by this Agreement,
Borrower shall deliver the following documents to Lender, all of which shall
be satisfactory in form and substance to Lender in its sole and absolute
discretion:
(a) Corporate Action. Certified copies of (i) the certificate and
agreement of partnership of Borrower and the charter and bylaws of General
Partner, and (ii) all partnership and corporate action, as applicable, taken
by Borrower and General Partner approving the Loans and the Loan Documents,
(including, without limitation, a certificate setting forth the resolutions
of the Board of Directors of General Partner, both in its individual capacity
and as general partner of Borrower, adopted in respect of the transactions
contemplated thereby).
(b) Incumbency. A certificate of General Partner's officers
stating (i) the Persons authorized to sign the Loan Documents on behalf of
Borrower and General Partner, and (ii) who will, until replaced by another
officer or officers duly authorized for that purpose, act on behalf of
Borrower and General Partner for the purposes of signing documents and giving
notices and other communications in connection with the Loan Documents and
the transactions contemplated thereby (and Lender may conclusively rely on
such certificate until it receives notice in writing from Borrower and
General Partner, signed by any of such officers, to the contrary).
(c) Officer's Certificate. The conditions set forth in paragraphs
(a), (d) and (e) of Section 4.02 hereof shall be satisfied on and as of the
Closing Date and Lender shall have received a certificate of Borrower
certifying that such conditions have been satisfied.
(d) Opinion of Counsel. An opinion of counsel to Borrower and
General Partner in form and substance satisfactory to Lender.
(e) Loan Documents. This Agreement, the Note and each of the other
Loan Documents shall have been duly executed and delivered by the parties
thereto.
(f) Perfection of Security Interests. Evidence that all actions
necessary or, in the opinion of Lender, desirable to perfect and protect the
Liens and security interests created by the Loan Documents have been taken.
(g) Fees and Expenses. Evidence (including, without limitation,
payment instructions given by Borrower) that all fees and expenses payable to
Lender, including without limitation, the fees and expenses referred to in
each of Section 3.01 and Section 8.05, to the extent then due and payable,
have been paid in full.
(h) Other Documents. Such other documents relating to the
transactions contemplated hereby as Lender may reasonably request.
Section 4.02 Conditions Precedent to Loans. The obligation of Lender
to make any Loan to Borrower upon the occasion of any proposed Borrowing
hereunder is subject, in addition to the continued satisfaction of the
conditions in Section 4.01 hereof, to the fulfillment of the following
conditions, which, unless otherwise expressly stated below, shall be
satisfied both immediately prior and after giving effect to such Borrowing
and the application of the proceeds therefrom:
(a) Borrowing Request. A Borrowing Request and Preliminary
Borrowing Request, each executed and delivered on behalf of Borrower or the
New Borrower, as the case may be, by a duly authorized officer thereof, shall
have each been delivered to Lender and Lender shall have, in its sole and
absolute discretion, approved the Loan requested in the Preliminary Borrowing
Request and Borrowing Request.
(b) Due Diligence and Loan Documents. Lender shall have completed
its due diligence and underwriting of the proposed Loan and Subject Property,
all of which shall be satisfactory in form and substance to Lender in its
sole and absolute discretion. Lender shall have received, not less than
fifteen (15) Business Days prior to the date of the proposed Borrowing (or,
if a later delivery date is expressly set forth below, on or prior to such
later date), each of the following documents, instruments and agreements,
each of which shall be satisfactory in form and substance to Lender in its
reasonable discretion:
(i) Title Insurance. Policies of title insurance on forms
of, and issued by, one or more title insurance companies satisfactory to
Lender in its sole and absolute discretion (the "Title Companies"), showing
fee simple title vested in the relevant Borrower with respect to, or, if
applicable, showing the relevant Borrower's interest as a tenant under a
ground lease of, the applicable Subject Property and insuring the first
priority of the Liens created under the Mortgage thereon in an amount
satisfactory to Lender in its sole and absolute discretion, subject only to
such Liens as are acceptable to Lender, together with, as may be required by
Lender, such reinsurance schedules, endorsements and agreements in respect of
all then existing title insurance policies for such properties and the other
Subject Properties in amounts and otherwise in form and substance
satisfactory to Lender and executed by the Title Companies. Such policies
shall also contain such endorsements and affirmative insurance provisions as
Lender may reasonably require. In addition, Borrower shall have paid to the
Title Companies (and shall have delivered to Lender evidence of such payment)
all expenses of the Title Companies in connection with the issuance of such
policies, reinsurance schedules, endorsements and agreements and an amount
equal to the recording and stamp taxes (including, without limitation,
mortgage recording taxes) payable in connection with recording the Mortgages
in the appropriate county land offices.
(ii) Searches. Copies of the UCC filing searches, tax lien
searches, judgment searches and real estate tax searches and municipal
department searches setting forth any and all building violations (if
available) in each county where the applicable Subject Property is located
(and in the case of UCC filing searches, in the office of the Secretary of
State or other applicable State office of the State where such Subject
Property is located), demonstrating as of a recent date the existence of no
other financing statements, tax liens, judgments, building violations or
delinquent real estate taxes, together with evidence that all fees payable in
connection with any such searches have been paid.
(iii) Survey. A survey of the applicable Subject Property,
prepared by a land surveyor licensed or registered in the State in which such
Subject Property is located and otherwise satisfactory to Lender, in
compliance with the minimum standard detail requirements for land title
surveys adopted by the American Land Title Association and American Congress
on Surveying and Mapping, and certified to Lender, Borrower, the Title
Companies and any other parties requested by Lender, as of a date not more
than two months prior to the date of any Borrowing.
(iv) Ground Leases. Certified copies of all ground leases
affecting the applicable Subject Property, including all amendments and
modifications thereto, and a ground lessor estoppel and consent reasonably
satisfactory, in form and substance, to Lender.
(v) Material Contractual Obligations. Certified copies of
all documents, instruments or agreements constituting material Contractual
Obligations relating to the applicable Subject Property, together with a
certificate signed by Borrower stating that such documents, instruments and
agreements reflect the only material Contractual Obligations relating to such
property.
(vi) Counsel Opinions. Such legal opinions (including an
opinion of local counsel in the State in which such Subject Property is
located) with respect to such matters as Lender shall request and otherwise
in form and substance satisfactory to the Lender.
(vii) Rent Roll. A rent roll for the applicable Subject
Property, together with a certificate signed by Borrower stating that such
rent roll is true, complete and correct and contains the aforesaid
information required by such Mortgage.
(viii) Leases. (a) Copies of all leases for the applicable
Subject Property, together with a certificate signed by Borrower to the
effect that each such copy is true, complete and correct and (b) an estoppel
certificate from each tenant at the applicable Subject Property in form and
substance satisfactory to Lender.
(ix) Management Agreement. A management agreement for the
applicable Subject Property in form and substance acceptable to Lender in its
sole and absolute discretion.
(x) Zoning Compliance, Etc. Evidence satisfactory to Lender
that all improvements have been constructed and are being used and operated
in compliance with (A) all applicable zoning, subdivision, environmental and
other laws, orders, rules, regulations and requirements of all governmental
or quasi-governmental authorities having jurisdiction with respect to the
Subject Properties and (B) all building permits issued in respect of the
Subject Properties and (if available) a copy of all certificates of occupancy
for each such property.
(xi) Contract of Sale. Copies of the contracts of sale
executed in connection with the purchase of the applicable Subject Property.
(xii) Title Updates. On or before the date of each
Borrowing, Lender shall have received a notice of title continuation and an
endorsement to each of the existing title insurance policies covering the
Subject Properties insuring that since the later of (A) the Closing Date and
(B) the date on which such a notice of title continuation and endorsement
shall have been last delivered to Lender pursuant to this paragraph (xii),
there has been no change in the state of title or priority of Lender's Lien
and no survey exceptions not theretofore approved by Lender, together with
other evidence satisfactory to Lender in its sole and absolute discretion
that no mechanics' liens or other Liens have been filed and remain filed with
respect to the Subject Properties (other than Liens expressly permitted by
the relevant Mortgages), which endorsement shall have the effect of (1)
updating the date of the existing title insurance policies covering the
Subject Properties to the date of such Borrowing and insuring that the
priority of Lender's Lien is not subject to any intervening Liens arising
between the date of the existing title policies and the date of such
Borrowing, and (2) increasing the coverage of the existing title insurance
policies by an amount equal to the Borrowing, if any, then being made.
(xiii) Perfection of Security Interests. Evidence that all
actions necessary or, in the opinion of Lender, desirable to perfect and
protect the Liens created by the Loan Documents have been taken, including,
without limitation, evidence that the Mortgage on the applicable Subject
Property has been duly filed and recorded in the appropriate governmental
offices and that the related UCC financing statements have been duly filed in
the appropriate governmental offices.
(xiv) Fees and Expenses. Evidence (including, without
limitation, payment instructions given by Borrower) that all fees and
expenses payable to Lender, including, without limitation, the fees and
expenses referred to in Section 3.01 and Section 8.05 hereof, to the extent
then due and payable, have been paid in full.
(xv) Other Documents. Such other documents relating
to the transactions contemplated hereby as Lender may reasonably request,
including, without limitation, an assignment of leases and rents in
substantially the form of Exhibit D attached hereto and a reaffirmation of
guaranty executed by the Guarantor in form and substance satisfactory to
Lender.
(c) Loan Documents. On or before the date of each Borrowing, the
Mortgages shall constitute valid first mortgage liens on the fee simple title
to, or, if applicable, on the relevant Borrower's interest as a tenant under
a ground lease of, the Subject Properties and which shall secure all of the
Debt, subject only to such defects, Liens, encumbrances, assessments,
security interests, restrictions, easements and other title exceptions as
shall be acceptable to Lender or permitted by the express terms of the
relevant Mortgage; and UCC-1 financing statements covering fixtures owned by
the relevant Borrower and affixed to, or used in connection with each such
property, in each case appropriately completed and duly executed and
delivered to Lender for filing in the appropriate county and State offices
shall have been filed to perfect Lender's Lien in the collateral described
therein.
(d) Default. No Event of Default or Default shall have occurred
and be continuing and no Default will occur as the result of the consummation
of any of the transactions contemplated by the Loan Documents.
(e) Representations. The representations and warranties of
Borrower and Guarantor included and incorporated by reference in this
Agreement and each of the other Loan Documents shall be true, correct and
complete on and as of the date of such Borrowing (or, for purposes of Section
4.01(c), on and as of the Closing Date) with the same force and effect as if
made on and as of such date. On the date of funding of each Subsequent Loan,
the applicable New Borrower shall execute a certification to Lender stating
that all representations and warranties made by the Borrower in this
Agreement are true and correct as they relate to the New Borrower.
(f) Material Adverse Effect. Since the date of the most recent
financial statements of Borrower or Guarantor delivered to Lender, nothing
shall have occurred which would or could have a Material Adverse Effect on
Borrower or Guarantor.
(g) Recording Taxes. Borrower shall have paid all mortgage
recording taxes payable (if any) in each jurisdiction in which the applicable
Subject Property is located and shall have delivered to Lender any and all
supplemental or additional mortgages, in form and substance satisfactory to
Lender, as may be required by Lender. Without limiting the generality of the
foregoing, and notwithstanding anything to the contrary contained in any Loan
Document, Borrower acknowledge and agree that to the extent there is a
payment of principal of the Loans which results in the aggregate outstanding
principal amount of the Loans being less than the aggregate maximum principal
amount of the Loans secured by any Jurisdictional Capped Mortgage(s) (whether
or not such aggregate outstanding principal amount of the Loans was
originally less than the aggregate maximum principal amount of the Loans
secured by such Jurisdictional Capped Mortgage(s) prior to such payment),
then (A) Borrower may thereafter be required to pay additional mortgage
recording taxes in connection with any future Borrowing pursuant to this
Agreement so that the Jurisdictional Capped Mortgages in existence at or
prior to such Borrowing will secure, in accordance with applicable law, the
amount of such Borrowing up to the aggregate maximum original principal
amount secured by such Jurisdictional Capped Mortgage(s), and (B) if and to
the extent that Lender determines in good faith that any such additional
mortgage recording taxes are so due and payable in connection with any such
future Borrowing and unless Borrower shall have presented to Lender evidence,
satisfactory to Lender, that any such additional mortgage recording taxes are
not so due and payable, Borrower shall pay such additional mortgage recording
taxes to the appropriate governmental taxing authorities, and shall duly
execute and deliver to Lender any and all supplemental or additional
mortgages and consolidation agreements, as may be required by Lender in
connection therewith. As used herein, "Jurisdictional Capped Mortgages" shall
collectively mean, for each State, all of the Mortgage(s) now or hereafter
covering Subject Properties located in such State which secure a maximum
original principal amount of indebtedness which is less than the Commitment,
whether for the purpose of limiting the debt secured by such Mortgages and
any mortgage recording taxes payable in connection therewith or otherwise
with approval of Lender; and the "aggregate maximum principal amount of the
Loans secured by any such Jurisdictional Capped Mortgage(s)" shall mean, at
any time, the aggregate maximum original principal amount of indebtedness
secured by all of the Mortgages covering Subject Properties in such State at
such time, as specified in such Mortgages.
(h) Loan Amount. The aggregate amount of all Loans then
outstanding, prior to and after giving effect to the making of the Loan on
the Borrowing Date, does not exceed the lesser of (i) the amount of the
Commitment or (ii) 80% of the Collateral Value.
Each Borrowing Request hereunder shall be deemed to constitute a
certification by Borrower to the effect set forth in the above clauses of
this Section 4.02 (as of the date of such notice and, unless Borrower
otherwise notifies Lender prior to the date of such Borrowing, as of the date
of such Borrowing, both immediately prior to and after giving effect to such
Borrowing and the application of proceeds therefrom).
ARTICLE V COLLATERAL VALUE AND RELEASES OF COLLATERAL
Section 5.01 Determinations of Collateral Value by Lender.Lender shall
have the right at any time to recalculate the Collateral Value. In the event
that Lender determines at any time, whether pursuant to this Section 5.01 or
5.02 below, that the ratio of the aggregate outstanding principal balances of
all Loans to the then current Collateral Value (the "LTV Ratio") exceeds
eighty percent (80%), Borrower shall, within ten (10) days following Lender's
demand therefor, either (a) pay down the principal balance of the Loans in an
amount necessary to reduce the LTV Ratio to eighty percent (80%) or (b)
deliver to Lender such additional collateral in form, type and amount
satisfactory to Lender in its sole and absolute discretion, which additional
collateral shall be subject to a first lien security interest in favor of
Lender. In the event that Borrower elects to deliver additional collateral,
Borrower shall also deliver such additional materials and assurances with
respect thereto as Lender may request based upon the nature of the
collateral. Upon Lender's receipt of a first lien security interest in such
additional approved collateral, such additional collateral shall, so long as
Lender continues to hold a first lien security interest therein, be included
in all future calculations of Collateral Value.
Section 5.02 Recalculations of Collateral Value at Borrower's
Request. Borrower shall have the right to request that Lender recalculate
the Collateral Value once in each calendar quarter during the term of this
Agreement. In the event the recalculated Collateral Value results in an LTV
Ratio in excess of eighty percent (80%), Borrower shall be prepay the Loans
or deliver additional collateral to Lender in accordance with the
requirements set forth in Section 5.01 above. In the event that the
recalculated Collateral Value results in an LTV Ratio of less than eighty
percent (80%), Borrower shall have the right, subject to the satisfaction of
all applicable conditions set forth herein, to receive additional advances
hereunder until the LTV Ratio reaches eighty percent (80%), but in no event
shall the aggregate outstanding balance at any time exceed $70,000,000.
Section 5.03 Release of Collateral.Provided there exists no Default or
Event of Default hereunder (other than a Default or Event of Default which
is non-monetary in nature and relates only to the property encumbered by the
Mortgage to be reconveyed), Lender shall fully reconvey any Mortgage upon the
request of the Borrower (but Lender shall not partially reconvey any
Mortgage) provided that after giving effect to such reconveyance, (a) the LTV
Ratio does not exceed eighty percent (80%) and (b) there shall exist no
Default or Event of Default. As a condition to any such reconveyance,
Borrower shall remit to Lender the release price calculated by Lender as
necessary to achieve an eighty percent (80%) LTV Ratio after giving effect to
the reconveyance of the Mortgage. As additional conditions to any such
reconveyance, Borrower shall (i) at Borrower's sole cost and expense, deliver
to Lender an endorsement to each title policy insuring the lien of a Mortgage
that will remain in effect after such reconveyance, insuring Lender that such
Mortgage will not lose any priority as a result of such reconveyance and (ii)
pay all fees, costs and expenses, including reasonable attorneys' fees and
expenses, incurred by Lender in connection with such reconveyance. In
connection with a reconveyance of a particular Mortgage, Lender shall also,
at Borrower's expense, release the related Assignment of Rents and UCC-1 in
connection with that particular Mortgage as well as release the Borrower who
owns the reconveyed mortgaged property from its obligations under the Note.
Section 5.04 Calculations of Collateral Value and LTV Ratio.All
calculations of Collateral Value and LTV Ratio shall be made by Lender in
accordance with its customary underwriting standards and shall be deemed
binding and conclusive upon Borrower.
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01 Representations and Warranties. In order to induce
Lender to enter into this Agreement and to make the Loans hereunder, each
entity which comprises Borrower hereby represents and warrants to Lender as
of the date hereof or such other date as is set forth below:
(a) Organization and Authority. Borrower (i) is a limited
liability company, general partnership, limited partnership or corporation,
as the case may be, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation, (ii) has all requisite
power and authority and all necessary licenses and permits to carry on its
business as now conducted and as presently proposed to be conducted and (iii)
is duly qualified, authorized to do business and in good standing in each
other jurisdiction where the conduct of its business or the nature of its
activities makes such qualification necessary. If Borrower is a limited
liability company, limited partnership or general partnership, each general
partner or managing member, as applicable, of Borrower which is a corporation
is duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation.
(b) Power. Borrower and, if applicable, each General Partner has
full power and authority to execute, deliver and perform, as applicable, the
Loan Documents to which it is a party.
(c) Authorization of Borrowing. The execution, delivery and
performance of the Loan Documents to which Borrower is a party, are within
the powers of Borrower and have been duly authorized by Borrower and, if
applicable, the General Partners, by all requisite action (and Borrower
hereby represents that no approval or action of any limited partner or
shareholder, as applicable, of Borrower is required to authorize any of the
Loan Documents to which Borrower is a party) and will constitute the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their terms, except as enforcement may be stayed or limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in proceedings at law or in equity) and will not (i) violate any
provision of its partnership agreement or partnership certificate or
certificate of incorporation or bylaws, or operating agreement, or articles
of organization, as applicable, or, to its knowledge, any law, judgment,
order, rule or regulation of any court, arbitration panel or other
Governmental Authority, domestic or foreign, or other Person affecting or
binding upon Borrower or the Subject Property, or (ii) violate any provision
of any indenture, agreement. mortgage, contract or other instrument to which
Borrower or, if applicable, any General Partner is a party or by which any of
their respective properties, assets or revenues are bound, or be in conflict
with, result in an acceleration of any obligation or a breach of or
constitute (with notice or lapse of time or both) a default or require any
payment or prepayment under, any such indenture, agreement, mortgage,
contract or other instrument, or (iii) result in the creation or imposition
of any lien, except those in favor of Lender as provided in the Loan
Documents to which it is a party.
(d) Consent Neither Borrower nor, if applicable, any General
Partner, is required to obtain any consent, approval or authorization from,
or to file any declaration or statement with, any Governmental Authority or
other agency in connection with or as a condition to the execution, delivery
or performance of this Agreement, the Note or the other Loan Documents which
has not been so obtained or filed.
(e) Interest Rate The rate of interest paid under the Note and
the method and manner of the calculation thereof do not violate any usury or
other law or applicable Legal Requirement.
(f) Other Agreements. Borrower is not a party to nor is otherwise
bound by any agreements or instruments which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect. Neither
Borrower nor, if applicable, any General Partner, is in violation of its
organizational documents or other restriction or any agreement or instrument
by which it is bound, or any judgment, decree, writ, injunction, order or
award of any arbitrator, court or Governmental Authority, or any Legal
Requirement, in each case, applicable to Borrower or the Subject Property,
except for such violations that would not, individually or in the aggregate,
have a Material Adverse Effect.
(g) Maintenance of Existence.
(i) Each entity which comprises Borrower is familiar with all
of the requirements of Lender to qualify as a special-purpose bankruptcy-
remote entity, which requirements are set forth below in this paragraph (g)
and in the Mortgages, and each Borrower and, if applicable, each General
Partner at all times since their formation have been duly formed and existing
and shall preserve and keep in full force and effect their existence as a
Single Purpose Entity.
(ii) Borrower and, if applicable, each General Partner, at
all times since their organization have complied, and will continue to
comply, with the provisions of its certificate and agreement of partnership
or certificate of incorporation and by-laws or articles of organization and
operating agreement, as applicable, and the laws of its jurisdiction of
organization relating to partnerships, corporations or limited liability
companies, as applicable.
(iii) All customary formalities regarding the partnership, or
corporate, or company existence, as applicable, of Borrower, and if,
applicable, each General Partner have been observed at all times since its
formation and will continue to be observed.
(iv) Borrower and, if applicable, each General Partner, have
at all times accurately maintained, and will continue to accurately maintain,
their respective financial statements, accounting records and other
partnership, company or corporate documents separate from those of any other
Person. Borrower and, if applicable, each General Partner have not at any
time since their formation commingled, and except for deposits into and
withdrawals from the Revenue Account, will not commingle, their respective
assets with those of any other Person. Except for the Revenue Account which
is held jointly in the name of each entity comprising Borrower, Borrower has,
at all times since its formation accurately maintained, and will continue to
accurately maintain, its own bank accounts, payroll and separate books of
account.
(v) Borrower and, if applicable, each General Partner, have
at all times paid, and will continue to pay, their own liabilities from their
own separate assets.
(vi) Borrower and, if applicable, each General Partner, have
at all times identified themselves, and will continue to identify themselves,
in all dealings with the public, under their own names and as separate and
distinct entities. Borrower and, if applicable, each General Partner, have
not at any time identified themselves, and will not identify themselves, as
being a division of any other Person.
(vii) Borrower and, if applicable, each General Partner, have
been at all times, and will continue to be, adequately capitalized in light
of the nature of their respective businesses.
(viii) Borrower (A) does not own and will not own any
encumbered asset other than the Subject Properties, (B) is not engaged and
will not engage in any business other than the ownership, management and
operation of the Subject Properties, (C) will not enter into any contract or
agreement with any Affiliate of Borrower or, if applicable, any Affiliate of
a General Partner except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an arm's-
length basis with third parties other than an Affiliate, (D) has not incurred
and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Loan, and (E) has not
made and will not make any loans or advances to any Person (including any
Affiliate).
(ix) Borrower will not change its name or principal place of
business.
(x) Borrower does not have, and will not have, any
subsidiaries.
(xi) Borrower will preserve and maintain its existence as a
limited liability company under its respective state of formation and all
material rights, privileges, tradenames and franchises.
(xii) Neither Borrower, nor, if applicable, any General
Partner, will merge or consolidate with, or sell all or substantially all of
its respective assets to any Person, or liquidate, wind up or dissolve itself
(or suffer any liquidation, winding up or dissolution). Borrower, will not
acquire any business or assets from, or capital stock or other ownership
interest of, or be a party to any acquisition of, any Person.
(xiii) Borrower has not at any time since its formation
assumed or guaranteed, and will not assume or guarantee, the liabilities of
its partners, shareholders or members or any predecessor company, corporation
or partnership, each as applicable, any Affiliates, or any other Persons.
Borrower has not at any time since its formation acquired, and will not
acquire, obligations or securities of its partners or shareholders, members
or any predecessor company, corporation or partnership, each as applicable,
or any Affiliates. Borrower has not at any time since its formation made, and
will not make, loans to its partners, members or shareholders or any
predecessor company, corporation or partnership, each as applicable, or any
Affiliates of any of such Persons. Borrower has no known contingent
liabilities nor does it have any material financial liabilities under any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Person is a party or by which it is otherwise bound
other than obligations incurred in the ordinary course of the operation of
the Subject Properties and other than obligations under the Loan Document.
(xiv) Borrower has not at any time since its formation
entered into and was not a party to, and, will not enter into or be a party
to, any transaction with its members, partners or shareholders, as
applicable, or any Affiliates thereof except in the ordinary course of
business of Borrower on terms which are no less favorable to Borrower than
would be obtained in a comparable arm's length transaction with an unrelated
third party.
(h) No Defaults. No Default or Event of Default has occurred and
is continuing or would occur as a result of the consummation of the
transactions contemplated by the Loan Documents. Borrower is not in default
in the payment or performance of any of its Contractual Obligations in any
respect.
(i) Governmental Consents and Approvals. Borrower and, if
applicable, each General Partner, have obtained or made all necessary (i)
consents, approvals and authorizations, and registrations and filings of or
with all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
nongovernmental Persons, in each case, which are required to be obtained or
made by Borrower or, if applicable, the General Partner, in connection with
the execution and delivery of, and the performance by Borrower of its
obligations under, the Loan Documents.
(j) Investment Company Act Status. Borrower is not an "investment
company," or a company "controlled" by an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended.
(k) Compliance with Law. Borrower is and shall remain in
compliance in all material respects with all Legal Requirements to which it
is subject, including, without limitation, all Environmental Statutes, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities
Act and ERISA.
(l) Financial Information. All financial data that has been
delivered by Borrower to Lender (i) is true, complete and correct in all
material respects, (ii) accurately represents the financial condition and
results of operations of the Persons covered thereby as of the date on which
the same shall have been furnished, and (iii) has been prepared on a cash
basis in accordance with sound accounting principles consistently applied (or
such other accounting basis as is reasonably acceptable to Lender) throughout
the periods covered. As of the date hereof, neither Borrower nor, if
applicable, any General Partner, has any contingent liability, liability for
taxes or other unusual or forward commitment not reflected in such financial
statements delivered to Lender; since the date of the last financial
statements delivered by Borrower to Lender except as otherwise disclosed in
such financial statements or notes thereto, there has been no change in the
assets, liabilities or financial position of Borrower nor, if applicable, any
General Partner, or in the results of operations of Borrower which would have
a Material Adverse Effect. Neither Borrower nor, if applicable, any General
Partner, has incurred any obligation or liability, contingent or otherwise
not reflected in such financial statements which would have a Material
Adverse Effect.
(m) Transaction Brokerage Fees. Borrower has not dealt with any
financial advisors, brokers, underwriters, placement agents, agents or
finders in connection with the transactions contemplated by this Agreement
except for Lender and its Affiliates. All brokerage fees, commissions and
other expenses payable in connection with the transactions contemplated by
the Loan Documents have been paid in full contemporaneously with the
execution of the Loan Documents and the funding of the Loan. Borrower hereby
agrees to indemnify and hold Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from (i) a claim by any Person that such Person acted on behalf of
Borrower in connection with the transactions contemplated herein or (ii) any
breach of the foregoing representation. The provisions of this subsection
shall survive the repayment of the Debt.
(n) Federal Reserve Regulations. No part of the proceeds of any
Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System or for any other purpose which would
be inconsistent with such Regulations G, T, U or X or any other Regulations
of such Board of Governors, or for any purposes prohibited by Legal
Requirements or by the terms and conditions of the Loan Documents.
(o) Pending Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of Borrower, threatened against or
affecting Borrower in any court or before any Governmental Authority which if
adversely determined either individually or collectively has or is reasonably
likely to have a Material Adverse Effect.
(p) Solvency; No Bankruptcy. Each of Borrower and, if applicable,
the General Partner, (i) is and has at all times been Solvent and will remain
Solvent immediately upon the consummation of the transactions contemplated by
the Loan Documents and (ii) is free from bankruptcy, reorganization or
arrangement proceedings or a general assignment for the benefit of creditors
and is not contemplating the filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
such Person's assets or property and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or, if applicable,
the General Partner. None of the transactions contemplated hereby will be or
have been made with an intent to hinder, delay or defraud any present or
future creditors of Borrower and Borrower has received reasonably equivalent
value in exchange for its obligations under the Loan Documents. Borrower's
assets do not, and immediately upon consummation of the transaction
contemplated in the Loan Documents will not, constitute unreasonably small
capital to carry out its business as presently conducted or as proposed to be
conducted. Borrower does not intend to, nor believe that it will, incur debts
and liabilities beyond its ability to pay such debts as they may mature.
(q) Use of Proceeds. The proceeds of the Loan shall be applied by
Borrower to, inter alia, (i) satisfy certain mortgage loans presently
encumbering all or a part of the applicable Subject Property or to be
purchased with such proceeds, (ii) fund the Leasing Replacement Account and
any other reserve required by Lender in connection with a particular Loan,
(iii) purchase the Subject Property (as to any subsequent property), (iv)
pay certain transaction costs incurred by Borrower in connection with the
Loan and (v) for any other business purposes approved by Lender. No portion
of the proceeds of the Loan will be used for family, personal, agricultural
or household use.
(r) Tax Filings. Borrower and, if applicable, each General
Partner, have filed all federal, state and local tax returns required to be
filed and have paid or made adequate provision for the payment of all
federal, state and local taxes, charges and assessments payable by Borrower
and, if applicable, the General Partners. Borrower and, if applicable, the
General Partners, believe that their respective tax returns properly reflect
the income and taxes of Borrower and said General Partner, if any, for the
periods covered thereby, subject only to reasonable adjustments required by
the Internal Revenue Service or other applicable tax authority upon audit.
(s) Not Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.
(t) ERISA.
(i) The assets of Borrower and Guarantor are not and will not
become treated as "plan assets", whether by operation of law or under
regulations promulgated under ERISA. Each Plan and Welfare Plan, and, to the
knowledge of Borrower, each Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material respects in
compliance with, its terms and the applicable provisions of ERISA, the Code
and any other applicable Legal Requirement, and no event or condition has
occurred and is continuing as to which Borrower would be under an obligation
to furnish a report to Lender under clause (ii)(A) of this subsection. Other
than an application for a favorable determination letter with respect to a
Plan, there are no pending issues or claims before the Internal Revenue
Service, the United States Department of Labor or any court of competent
jurisdiction related to any Plan or Welfare Plan under which Borrower,
Guarantor or any ERISA Affiliate, directly or indirectly (through an
indemnification agreement or otherwise), could be subject to any material
risk of liability under Section 409 or 502(i) of ERISA or Section 4975 of the
Code. No Welfare Plan provides or will provide benefits, including, without
limitation, death or medical benefits (whether or not insured) with respect
to any current or former employee of Borrower, Guarantor or any ERISA
Affiliate beyond his or her retirement or other termination of service other
than (A) coverage mandated by applicable law, (B) death or disability
benefits that have been fully provided for by fully paid up insurance or (C)
severance benefits.
(ii) Borrower will furnish to Lender as soon as
possible, and in any event within ten (10) days after Borrower knows or has
reason to believe that any of the events or conditions specified below with
respect to any Plan, Welfare Plan or Multiemployer Plan has occurred or
exists, an Officer's Certificate setting forth details respecting such event
or condition and the action, if any, that Borrower or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC (or any other relevant
Governmental Authority) by Borrower or an ERISA Affiliate with respect to
such event or condition, if such report or notice is required to be filed
with the PBGC or any other relevant Governmental Authority:
(A) any reportable event, as defined in Section 4043(b)
of ERISA and the regulations issued thereunder, with respect
to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified
within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding standard
of Section 412 of the Code of Section 302 of ERISA, including,
without limitation, the failure to make on or before its due
date a required installment under Section 412(m) of the Code
of Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code), and any request for a waiver
under Section 412(d) of the Code for any Plan;
(B) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by
Borrower or an ERISA Affiliate to terminate any Plan;
(C) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by Borrower or
any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by PBGC with respect to such
Multiemployer Plan;
(D) the complete or partial withdrawal from a
Multiemployer Plan by Borrower or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by Borrower or
any ERISA Affiliate of notice from a Multiemployer Plan that
it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(E) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against Borrower or any ERISA Affiliate
to enforce Section 515 of ERISA, which proceeding is not
dismissed within thirty (30) days;
(F) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the
trust of which such Plan is a part if Borrower or an ERISA
Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections; or
(G) the imposition of a lien or a security interest in
connection with a Plan.
(iii) Borrower shall not knowingly engage in or permit any
transaction in connection with which Borrower, Guarantor or any ERISA
Affiliate could be subject to either a civil penalty or tax assessed pursuant
to Section 502(i) or 502(1) of ERISA or Section 4975 of the Code, permit any
Welfare Plan to provide benefits, including without limitation, medical
benefits (whether or not insured), with respect to any current or former
employee of Borrower, Guarantor or any ERISA Affiliate beyond his or her
retirement or other termination of service other than (A) coverage mandated
by applicable law, (B) death or disability benefits that have been fully
provided for by paid up insurance or otherwise or (C) severance benefits,
permit the assets of Borrower or Guarantor to become "plan assets", whether
by operation of law or under regulations promulgated under ERISA or adopt,
amend (except as may be required by applicable law) or increase the amount of
any benefit or amount payable under, or permit any ERISA Affiliate to adopt,
amend (except as may be required by applicable law) or increase the amount of
any benefit or amount payable under, any employee benefit plan (including,
without limitation, any employee welfare benefit plan) or other plan, policy
or arrangement, except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result
in a material increase in benefits expense to Borrower, Guarantor or any
ERISA Affiliate.
(u) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
Section 6.02 Financial Reports.
(a) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, on a cash basis in accordance with sound
accounting principles consistently applied (or such other accounting basis
reasonably acceptable to Lender), proper and accurate books, records and
accounts reflecting all of the financial affairs of Borrower. Lender shall
have the right from time to time at all times during normal business hours
upon reasonable notice to examine such books, records and accounts at the
office of Borrower or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Lender shall desire.
After the occurrence of an Event of Default, Borrower shall pay any costs and
expenses incurred by Lender to examine Borrower's accounting books and
records, as Lender shall determine to be necessary or appropriate in the
protection of Lender's interest.
(b) Borrower will furnish Lender annually, within one hundred
twenty (120) days following the end of each Fiscal Year of Borrower, with a
complete copy of Borrower's financial statement certified to be true, correct
and complete by a certified public accountant acceptable to Lender and
prepared on a cash basis in accordance with sound accounting principles
consistently applied (or such other accounting basis reasonably acceptable to
Lender) covering all of the financial affairs of Borrower and containing a
statement of revenues and expenses, a statement of assets and liabilities and
a statement of Borrower's equity. Together with Borrower's annual financial
statements, Borrower shall supplement the combined financial statement with
information on a property by-property basis that was used in the preparation
of the combined statement and shall furnish to Lender an Officer's
Certificate certifying as of the date thereof (i) that the annual financial
statements accurately represent the results of operation and financial
condition of Borrower (or, in the case of a combined financial statement, the
results of operation and financial condition of Borrower) all in accordance
with sound accounting principles consistently applied, and (ii) whether there
exists an event or circumstance which constitutes, or which upon notice or
lapse of time or both would constitute, a Default under the Note or any other
Loan Document executed and delivered by Borrower, and if such event or
circumstance exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy such event or circumstance.
(c) Borrower shall furnish to Lender, within fifteen (15) days
following the end of each calendar quarter, income and expense statements and
an updated rent roll with respect to each of the Mortgaged Properties, in
each case certified by Borrower to be true and correct.
(d) Borrower shall furnish Lender, within thirty (30) days after
Lender's request therefor, with such further detailed information with
respect to the financial affairs of Borrower as may be reasonably requested
by Lender.
Section 6.03 Litigation. Borrower will give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
(in writing) against Borrower which might have a Material Adverse Effect.
ARTICLE VII. EVENTS OF DEFAULT
Section 7.01 Events of Default. If any Event of Default shall occur
and be continuing then, and in any such event, and in addition to any other
rights or remedies Lender may have hereunder, under any other Loan Document,
including, without limitation, pursuant to Section 13.02 of the Mortgages, or
at law or equity, (A) if such event is an Event of Default specified in
Section 13.01(i) of the Mortgages, the Commitment hereunder shall immediately
terminate and the outstanding principal amount of the Note together with
accrued and unpaid interest thereon and all other amounts owing under this
Agreement and the Note shall immediately become due and payable, and (B) if
such event is any other Event of Default, Lender may, by written notice of
default to Borrower, terminate the Commitment hereunder and/or declare the
outstanding principal amount of the Note, together with accrued and unpaid
interest thereon and all other amounts owing under this Agreement and the
Note to be due and payable forthwith, whereupon the same shall immediately
become due and payable. Except as expressly provided above herein or in any
of the other Loan Documents, presentment, demand, protest and all other
notices of any kind are hereby expressly waived by Borrower.
ARTICLE VIII. MISCELLANEOUS
Section 8.01 Notices. All notices, requests and other communications
to any party hereunder or under the Note shall be given in the manner and to
the address of each party as set forth in Article XI of the Mortgages.
Section 8.02 Performance by Lender. Should Borrower fail to perform
any covenant, duty or agreement in accordance with the terms and conditions
of any of the Loan Documents to which it is party, or of the Mortgage Loans,
Lender may, at its option, perform, or attempt to perform, such covenant,
duty or agreement on behalf of Borrower. In such event, the appropriate
entity shall, at the request of Lender, promptly pay any amount expended by
Lender in such performance or attempted performance to Lender at the office
of Lender designated for receipt of payments of principal and interest on the
Loan, together with interest thereon at the Default Rate from the date of
such expenditure by Lender until paid. Notwithstanding the foregoing, it is
expressly understood that Lender does not assume and shall never have, except
by express written consent, any liability or responsibility for the
performance of any duties of Borrower hereunder, or under or in connection
with any of the other Loan Documents.
Section 8.03 No Oral Change. The terms of this Agreement, together
with the terms of the Note and the other Loan Documents constitute the entire
understanding and agreement of the parties hereto and supersede all prior
agreements, understandings and negotiations between Borrower and Lender with
respect to the Loans. This Agreement, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally
or by any act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
Section 8.04 No Waiver: Remedies Cumulative. No failure or delay on
the part of Lender in exercising any right, remedy, power or privilege
hereunder or under the other Loan Documents and no course of dealing between
Borrower and Lender shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder or
under the other Loan Documents preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege hereunder or
thereunder. The rights and remedies provided herein and in the other Loan
Documents are cumulative and not exclusive of any rights or remedies provided
by law. The giving of notice to or demand on Borrower, which notice or demand
is not required hereunder or under the other Loan Documents, shall not
entitle Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights, remedies, powers or
privileges of Lender in any circumstances not requiring notice or demand.
Section 8.05 Fees and Expenses. Borrower agrees to pay or reimburse
Lender for:
(a) all reasonable expenses (including, without limitation, the
fees, which shall not exceed $50,000, and the reasonable disbursements of
Swidler & Berlin, Chartered and any local counsel retained by Lender)
incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement:
(b) all reasonable expenses (including, without limitation, the
fees, which shall not exceed $10,000 per Mortgage Loan, and the reasonable
disbursements of Swidler & Berlin, Chartered) incurred in connection with the
closing of each Mortgage Loan;
(c) all costs and expenses (including, without limitation,
reasonable fees and disbursements of counsel) incurred in connection with any
Default and any enforcement or collection proceedings resulting therefrom
including, without limitation, in connection with any bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings
involving Borrower or a "workout" of the Loans, as applicable, or in
connection with any seizure or sale of any Subject Property or any related or
similar proceedings;
(d) all Taxes, and all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement, any other Loan Documents or any other
document referred to herein or therein, and all costs, expenses, Taxes and
other charges incurred in connection with any filing, registration, recording
or perfection of any security interest or Lien contemplated by this
Agreement, any other Loan Documents or any document referred to therein; and
(e) all Taxes and assessments, recording fees, registration taxes,
title insurance premiums, appraisal fees, costs of surveys, fees of third-
party consultants and all other fees and expenses reasonably incurred by
Lender in connection with any Subject Property, all of which sums shall be
paid on demand with interest thereon at the Default Rate.
Section 8.06 Indemnification. Borrower agrees to indemnify Lender and
its respective directors, officers, attorneys, employees and agents from, and
to hold each of them harmless against, any and all losses, liabilities,
claims, damages or expenses (in contract, tort or otherwise) incurred by any
of them, as incurred, arising out of or by reason of any claim of any Person
relating to or arising out of this Agreement or any other Loan Document or
any transaction contemplated hereby or thereby or resulting from the
ownership or financing of any Subject Property or any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to this Agreement or any other Loan
Document or any actual or proposed use by Borrower of any of the proceeds of
any of the Loans (including, without limitation, the reasonable fees and
disbursements of counsel), but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of any Person to be indemnified hereunder. Notwithstanding
any other provision of this Agreement, the obligation of Borrower under this
Section 8.06 shall survive the repayment of the Loans.
Section 8.07 Benefits of Agreement. This Agreement shall be binding
upon and inure to the benefit of Borrower, Lender and their respective
successors and assigns, except that Borrower may not assign or transfer any
of its rights or obligations under this Agreement or the Note without the
prior written consent of Lender.
Section 8.08 Participations. Lender may at any time grant to one or
more banks or other institutions (each a "Participant") participating
interests in its Commitment or any portion or all of the Loan. In the event
of any such grant by Lender of a participating interest to a Participant,
whether or not upon notice to Borrower, Lender shall remain responsible for
the performance of its obligations hereunder, and Borrower shall continue to
deal solely and directly with Lender in connection with Lender's rights and
obligations under this Agreement. Any agreement pursuant to which Lender may
grant such a participating interest shall provide that Lender shall retain
the sole right and responsibility to enforce the obligations of Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that Lender will not agree to any
modification, amendment or waiver of this Agreement (a) which increases or
decreases the Commitment, (b) reduces the principal of or rate of interest on
the Loan or fees hereunder or (c) postpones the date fixed for any payment of
principal of or interest on the Loan or any fees hereunder without the
consent of the Participant. Lender shall have the right to deliver from time
to time to any Participant or prospective Participant copies of all financial
and other information in the possession of Payee with respect to any Loan,
the Borrower, any guarantor or any other related person or entity, all of
which information may be retained by such Participant and/or prospective
Participant.
Section 8.09 Assignments. Lender may at any time assign to one or
more banks or other institutions (each an "Assignee") all, or a proportionate
part of all, of its rights and obligations under this Agreement and the Note,
and such Assignee shall assume such rights and obligations, pursuant to an
assignment and assumption agreement executed by such Assignee and Lender,
with (and subject to) the subscribed consent of Borrower, which shall not be
unreasonably withheld; provided that if an Assignee is an Affiliate of
Lender, no such consent shall be required. Upon execution and delivery of
such instrument and payment by such Assignee to Lender of an amount equal to
the purchase price agreed between Lender and such Assignee, such Assignee
shall be a party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this Section
8.09, Lender and Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. In addition to the foregoing,
Lender may assign or transfer any of its rights or obligations hereunder and
under the Note to an Affiliate or other branch of Lender.
Section 8.10 Governing Law.
(a) This Agreement was negotiated and executed in New York, and
the proceeds of the Note delivered pursuant hereto will be disbursed from New
York, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in all
respects, including, without limiting the generality of the foregoing,
matters of construction, validity and performance. This Agreement and the
obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
made and performed in such State and any applicable law of the United States
of America, except that at all times the provisions for the creation,
perfection, and enforcement of the liens and security interests created
pursuant to the Mortgages and pursuant to the other Loan Documents shall be
governed by and construed according to the law of the State in which the
Subject Property is located, it being understood that, to the fullest extent
permitted by law of such State, the law of the State of New York shall govern
the validity and the enforceability of all Loan Documents, and the Debt or
obligations arising hereunder or thereunder. To the fullest extent permitted
by law, Borrower hereby unconditionally and irrevocably waives any claim to
assert that the law of any other jurisdiction governs this Agreement and this
Agreement shall be governed by and construed in accordance with the laws of
the State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) Any legal suit, action or proceeding against Borrower or Payee
arising out of or relating to this Agreement shall be instituted in any
federal or state court in New York, New York, pursuant to Section 5-1402 of
the New York General Obligations Law, and Borrower waives any objection which
it may now or hereafter have to the laying of venue of any such suit, action
or proceeding, and Borrower hereby irrevocably submits to the jurisdiction of
any such court in any suit, action or proceeding. Borrower does hereby
designate and appoint CT Corporation System, 1633 Broadway, New York, New
York 10019 as its authorized agent to accept and acknowledge on its behalf
service of any and all process which may be served in any such suit, action
or proceeding in any federal or state court in New York, New York, and agrees
that service of process upon said agent at said address and written notice of
said service of Borrower mailed or delivered to Maker in the manner provided
in Section 8.01 hereof, shall be deemed in every respect effective service of
process upon Borrower, in any such suit, action or proceeding in the State of
New York. Borrower (i) shall give prompt notice to the Lender of any changed
address of its authorized agent hereunder, (ii) may at any time and from time
to time designate a substitute authorized agent with an office in New York,
New York (which office shall be designated as the address for service of
process), and (iii) shall promptly designate such a substitute if its
authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
Section 8. 11 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which shall together constitute one and the same
agreement.
Section 8.12 Waiver of Counterclaim, Etc. BORROWER HEREBY WAIVES THE
RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY
ACTION OR PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS AGENTS, AND WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO
AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED TO ASSERT
HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST BORROWER,
OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT OR THE DEBT.
Section 8.13 Severable Provisions. If any term, covenant or condition
of the Loan Documents including, without limitation, the Note or this
Agreement, is held to be invalid, illegal or unenforceable in any respect,
such Loan Document shall be construed without such provision.
Section 8.14 Right of Setoff. In addition to any other rights now or
hereafter granted under applicable law or otherwise and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
Borrower hereby authorizes Lender and each Affiliate of Lender at any time or
from time to time, without presentment, demand, protest or other notice of
other kind to Borrower or any other Person, each of which is hereby expressly
waived by Borrower, to the extent permitted by applicable law, to set-off and
appropriate and apply any and all deposits (general or special) in any
currency and any amount owing from Lender to Borrower, to any amount owing by
Borrower hereunder and under the other Loan Documents to which it is a party
to Lender.
Section 8.15 Confidentiality. Except as provided herein to the
contrary, all correspondence from Lender to Borrower and all of the Loan
Documents are confidential and may not be shown by Borrower to or discussed
by Borrower with any third party (other than on a confidential basis with
Borrower's legal counsel and independent public accountants and Borrower's
investors) without Lender's prior written consent.
Section 8.16 Exhibits Incorporated. The information set forth on the
cover hereof, and the Exhibits annexed hereto, are hereby incorporated herein
as a part of this Agreement with the same effect as if set forth in the body
hereof.
Section 8.17 Sole Discretion of Lender. Whenever Lender exercises any
right given to it to approve or disapprove, or any arrangement or term is to
be satisfactory to Lender, the decision of Lender to approve or disapprove or
to decide that arrangements or terms are satisfactory or not satisfactory
shall be in the sole discretion of Lender and shall be final and conclusive,
except as may be otherwise specifically provided herein.
Section 8.18 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement specifically and expressly provides for the giving
of notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice.
Section 8.19 Remedies of Borrower. In the event that a claim or
adjudication is made that Lender has acted unreasonably or unreasonably
delayed acting in any case where by law or under the Note, this Agreement or
the other Loan Documents, it has an obligation to act reasonably or promptly,
Lender shall not be liable for any monetary damages, and Borrower's remedies
shall be limited to injunctive relief or declaratory judgment.
Section 8.20 Waiver of Statute of Limitations. The pleadings of any
statute of limitations as a defense to any and all obligations secured by
this Agreement are hereby waived to the full extent permitted by Legal
Requirements.
Section 8.21 Application of Default Rate Not a Waiver. Application of
the Default Rate shall not be deemed to constitute a waiver of any Default or
Event of Default or any rights or remedies of Lender under this Agreement,
any other Loan Document or applicable Legal Requirements, or a consent to any
extension of time for the payment or performance of any obligation with
respect to which the Default Rate may be invoked.
Section 8.22 No Joint Venture or Partnership. Borrower and Lender
intend that the relationship created hereunder be solely that of a borrower
and a lender. Nothing herein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender.
Section 8.23 Time of the Essence. Time shall be of the essence in the
performance of all obligations of Borrower hereunder.
Section 8.24 Publicity. All promotional news releases, publicity or
advertising by Borrower or its Affiliates through any media intended to reach
the general public shall not refer to the Loan Documents or the financing
evidenced by the Loan Documents, or to Lender or any of its Affiliates
without the prior written approval of Lender or its Affiliates, as
applicable, in each instance, such approval not to be unreasonably withheld
or delayed. Lender shall be authorized to provide information relating to the
Loans and matters relating thereto to rating agencies, underwriters,
potential securities investors, auditors, regulatory authorities and to any
Persons which may be entitled to such information by operation of law.
Section 8.25 Securitization. In the event the Loans or any portion
thereof are to be included as an asset of a Securitization, Borrower, without
cost to Borrower (except any costs incurred by Borrower in connection with
its representation by legal counsel), shall, at the request of Lender,
promptly, but in any event within ten (10) Business Days of Lender's request
(a) amend the Loan Documents with respect to those Loans which are to be
included in the Securitization to extend the maturity date thereof for a
period to be determined by Lender in its sole discretion which shall in no
event be more than two (2) additional years, (b) split the Note into two or
more notes with principal balances aggregating not more than $70,000,000, (c)
amend any cross-default provisions and/or cross-collateralization provisions
in the Loan Documents so that any Loans or portions thereof which are not to
be included as an asset in the Securitization shall not be cross-defaulted or
cross-collateralized with any Loans or portions thereof which are not to be
included within such Securitization and (d) amend the Loan Documents and
enter into additional Loan Documents as may be reasonably requested by
Lender, provided, that no such amendments or additional documentation shall
materially and adversely affect Borrower.
Section 8.26 Offsets, Counterclaims and Defenses. Any assignee of
this Agreement, the Mortgage, the Assignment and the Note shall take the same
free and clear of all offsets, counterclaims or defenses which are unrelated
to this Agreement, the Mortgages, the Assignment or the Note which Borrower
may otherwise have against any assignor of this Agreement, the Mortgages, the
Assignment and the Note and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by
any such assignee upon this Agreement, the Mortgages, the Assignment or the
Note and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.
Section 8.27 Headings; Construction of Documents: etc. The table of
contents, headings and captions of various paragraphs of this Agreement are
for convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof. Borrower
acknowledges that it was represented by competent counsel in connection with
the negotiation and drafting of this Agreement and the other Loan Documents
and that neither this Agreement nor the other Loan Documents shall be subject
to the principle of construing the meaning against the Person who drafted
same.
Section 8.28. Joint and Several.
If Borrower consists of more than one Person or party, the obligations
and liabilities of each such Person or party hereunder shall be joint and
several.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, as of
the date first above written.
BORROWER:
AP - ANAHEIM LLC
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
_______________________________
Name: Donald G. Abbey
Title: President
AP - ARLINGTON LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
________________________________
Name: Donald G. Abbey
Title: President
[Signatures Continue on Following Page]
<PAGE>
AP - ATLANTIC LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
__________________________________
Name: Donald G. Abbey
Title: President
AP - CITYVIEW LLC,
a California liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
________________________________
Name: Donald G. Abbey
Title: President
AP - REDLANDS LLC
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
________________________________
Name: Donald G. Abbey
Title: President
AP - PALMDALE LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
_________________________________
Name: Donald G. Abbey
Title: President
[Signatures Continue on Following Page]
AP - FARRELL RAMON LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
_________________________________
Name: Donald G. Abbey
Title: President
AP - SIERRA LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
_________________________________
Name: Donald G. Abbey
Title: President
AP - VICTORIA LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G Abbey
________________________________
Name: Donald G. Abbey
Title: President
AP - VICTORVILLE LLC,
a Delaware limited liability company
By: DA Investments Properties, Inc.,
a Delaware corporation, its Manager
By: /s/ Donald G. Abbey
_______________________________
Name: Donald G. Abbey
Title: President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ L. Blume
__________________________________
Name: L. Blume
Title: Vice President
By: /s/ Benjamin J. Costello
__________________________________
Name: Benjamin J. Costello
Title: Vice President
<PAGE>
EXHIBIT A
BORROWING REQUEST
From: _____________________________
12383 Lewis Street
Suite 200
Garden Grove, California 92640
To: Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Securities Inc.,
its agent
60 Wall Street, l8th Floor
New York, New York 10260
1. ______________________ ("Borrower") requests a Borrowing from
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("Lender") pursuant to the
Revolving Credit Agreement, dated August ___, 1997 between Borrower and
Lender (as the same may be amended from time to time, the "Agreement").
Capitalized terms used herein and defined in the Agreement shall be used
herein as so defined.
2. Borrowing requested:
(a) Borrower hereby requests a Borrowing in the principal amount
of $ ______________________; and
(b) Requested Borrowing Date: ________________, 199__
3. The undersigned officer of Borrower represents and warrants to
Lender:
(a) no Default has occurred and is continuing; and
(b) no change or event which has a Material Adverse Effect has
occurred.
4. The representations and warranties of Borrower contained in the
Agreement and those contained in each other Loan Document to which Borrower
is a party are true and correct in all respects on and as of the date hereof.
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this request to be duly executed
by its officer thereunto duly authorized, as of ________________________.
____________________________________
By: _________________________________
By: _______________________________
Name:
Title:
<PAGE>
EXHIBIT A-2
PRELIMINARY BORROWING REQUEST
From: ________________________
12383 Lewis Street
Suite 200
Garden Grove, California 92640
To: Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Securities Inc.,
its agent
60 Wall Street, l8th Floor
New York, New York 10260
1. _______________________, a _____________________ ("Borrower")
hereby submits for your approval a preliminary request for a Borrowing from
MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Lender") pursuant to the
Revolving Credit Agreement, dated as of August ___, 1997 between Borrower and
Lender (as the same may be amended from time to time, the "Agreement").
Capitalized terms used herein and defined in the Agreement shall be used
herein as so defined.
2. Borrowing requested:
(a) Borrower hereby requests a Borrowing in the principal
amount of $ ________________________; and
(b) Requested Borrowing Date: on or about , 199_.
3. The undersigned officer of Borrower represents and warrants to
Lender:
(a) each of the documents, instruments and agreements
required to be delivered pursuant to Section 2.01(c) of the Agreement has
been previously delivered to you or accompanies this request, and each such
document, instrument and agreement is either the original or a true and
accurate copy thereof and has not been amended, modified or terminated since
the date submitted to you;
(b) no Default has occurred and is continuing under the
Agreement;
(c) no change or event which constitutes a Material Adverse
Effect
4. The representations and warranties of Borrower contained in the
Agreement and those contained in each other Loan Document to which Borrower
is a party are true and correct in all respects on and as of the date hereof.
IN WITNESS WHEREOF, Borrower has caused this request to be duly executed
by its officer thereunto duly authorized, as of _____________________.
BORROWER
By: _________________________________________
Name:
Title:
<PAGE>
Schedule I
Document No. Item
1. Checklist of Credit File Contents
2. Loan Summary Memorandum
3. Exhibit 1 - Site Plan or Building Layout/Floor Plan
4. Exhibit 2 - Color Photographs
5. Exhibit 3 - Property Operating Statements (2 prior years), current
year-to date and budget or trailing 12 - Months
6. Exhibit 4 - Rent Roll (or other evidence of leasing status) and
Lender rent roll form, if applicable
7. Exhibit 5 - Capital Expenditures Schedule and Budget
8. Signed Tenant Estoppel Certificates for commercial leases only
9. Appraisals (2 originals and 1 copy) to be ordered by Lender
10. Environmental Site Assessment (2 originals and 1 copy) to be
ordered by Lender
11. Physical Assessment Report (2 originals and 1 copy) to be ordered
by Lender
12. Seismic (2 originals) to be ordered by Lender
13. Site inspection - to be ordered by Lender
14. Real Estate Tax Bills (2 years)
15. Monthly Occupancy History (2 years)
16. Tenant Delinquency Report (1 year)
17. Standard Lease Form - all properties except Hotel and Nursing Home
18. Executed Ground Lease - if applicable
19. Tenant Leases - Retail, Industrial, Office only
20. Financial Statements for Tenants - Retail, Industrial, Office only
21. List of all current tenant concessions - Retail, Industrial, Office
only
22. Sales History (2 years) for Anchor Tenants and other Major Tenants
- Retail only
23. Updated Rent Roll - Multifamily and Self-Storage only
24. Termite Inspection Report - Multifamily only
25. Executed Property Management Agreement
26. All known current property code violations for the Mortgaged
Property
27. All known current litigation for the Mortgaged Property
28. Property Insurance Policies and Paid Receipts
29. Certificates of Occupancy
30. Licenses and Permits
31. Evidence of Zoning
32. Major Vendor/Service Contracts and Equipment Leases - Hotel,
Congregate Care and Nursing Home only
33. Letter of Rebuildability, if legal non-conforming use
<PAGE>
Schedule II
APPROVED PROFESSIONAL CONSULTANTS
FIRM NAME CONTACT NAME CONTACT NUMBER
- --------- ------------ --------------
APPRAISERS
CB Commercial Ron Neyhart (770) 851-7874
Cushman & Wakefield Bruce Kellogg (404) 853-5227
ENGINEERS AND ENVIRONMENTAL CONSULTANTS
Aaron & Wright Richard Dagnall (312) 573-0327
Certified Environments Inc. Gregory F. Paulay (301) 622-7100
Eckland Consultants Bob Splain (214) 490-4010
EMG Fritzi Beale (410) 785-6200
Law Engineering Steve Taylor (214) 934-0800
Property Solutions, Inc. Tim Downes (609) 764-6000
SEISMIC CONSULTANTS
Dames & Moore Craig Tillman (714) 433-2000
Eckland Consultants Sterling Ault (520) 577-0108
Project Resources Inc. Noreen L. Clindinning (619) 505-1000
LOAN PARTICIPATION AGREEMENT
LOAN PARTICIPATION AGREEMENT (this "Agreement") dated as of August _,
1997 between MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank") and
WELLSFORD REAL PROPERTIES, INC. (the "Participant").
Reference is made to the Revolving Credit Agreement dated as of August
_, 1997 (the "Credit Agreement") between the various entities named therein
as "Borrower" (said entities, together with any other entity who becomes
liable under the terms of the Credit Agreement, are hereinafter collectively
referred to as the "Borrower") and the Bank, a copy of which has been
furnished to the Participant. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the Credit
Agreement. Pursuant to the terms of the Credit Agreement, the Bank is
committed, subject to the terms and conditions thereof, to make a loan
(collectively, the "Loan") in advances to the Borrower from time to time in
an aggregate principal amount not to exceed $70,000,000 at any one time
outstanding and with the aggregate principal amount of all Advances made
under the Credit Agreement not to exceed $80,000,000 (the "Commitment").
On the following terms and conditions, the Bank hereby agrees to sell
and the Participant hereby agrees to purchase an undivided junior interest
(the "Junior Participation") in the Loan and each of the Advances. The
maximum aggregate outstanding principal amount of the Junior Participation is
$35,000,000, and the relationship which the aggregate outstanding principal
amount of (a) as to the Participant, the Junior Participation, and (b) as to
the Bank, the sum of (i) the Senior Participation (as hereinafter defined)
plus (ii) any Default Senior Interest (as hereinafter defined) plus (iii) any
Bank Junior Participation (as hereinafter defined), as the case may be, bears
to the aggregate outstanding principal amount of the Loan made or to be made
by the Bank (determined at any given time after giving effect to any
assignment by the Bank of any of its right, title and interest under the
Credit Agreement but without giving effect to the sale of this or any other
participation therein) is hereinafter called the "Participation Percentage".
The Junior Participation will be payable in accordance with Section 2 below
and shall bear interest at an annual rate equal to 1.50% in excess of the
interest rate payable under the Note as in effect from time to time (the
"Junior Participation Rate"). The Bank will retain a senior interest in the
Loans (the "Senior Participation") payable in accordance with Section 2
below, which Senior Participation shall bear interest at an annual rate equal
to the interest rate payable under the Note as in effect from time to time
less 1.50% (the "Senior Participation Rate"). For purposes of this
Agreement, the term "Note" shall mean the promissory note executed by
Borrower in favor of the Bank in the maximum principal amount of $70,000,000
together with any modification thereof made in accordance with Section 4(f)
below.
1. ADVANCES; SERVICING ADVANCES
(a) Upon the Bank's receipt of a Preliminary Borrowing Request from the
Borrower and all required documentation in support thereof, the Bank shall,
provided it has approved such Preliminary Borrowing Request, promptly furnish
to the Participant a copy thereof as well as all documents and information
furnished by or on behalf of the Borrower in connection therewith. The
Participant shall have five (5) Business Days to review the Preliminary
Borrowing Request.
In the event that upon receiving a Preliminary Borrowing Request the
Participant delivers a certification to the Bank (a "Dispute Notice"), which
Dispute Notice must be received by the Bank within five (5) Business Days
following Participant's receipt of the Preliminary Borrowing Request,
certifying that the Participant has determined in good faith that the
Collateral Value calculated by the Bank after giving effect to the new
Advance is too high, the Participant shall not be obligated to fund its share
of the new Advance. In the event the Participant does not deliver to the
Bank a written revocation of the Dispute Notice within one Business Day after
delivering the Dispute Notice, the Participant shall be deemed to have
elected not to fund its share of such new Advance and shall also be deemed to
have automatically waived its right to fund any future Advance made pursuant
to the Credit Agreement. In the event that the Participant fails to deliver
a Dispute Notice by the end of such fifth Business Day, the Participant shall
be deemed to have waived its rights under this paragraph (a) and shall be
obligated to fund its share of the new Advance in accordance with paragraph
(c) of this Section 1. Any Dispute Notice shall include reasonable back-up
for such determination.
(b) In the event the Participant timely delivers a Dispute Notice, the
Bank shall fund one hundred percent (100%) of the Advance and shall be deemed
to be the owner of a fifty percent (50%) Senior Participation in such Advance
and a new junior participation (a "Bank Junior Participation") evidencing the
remaining fifty percent (50%) interest in such Advance, which Bank Junior
Participation shall be pari passu with the Junior Participation held by the
Participant and shall bear interest at the Junior Participation Rate in
accordance with Section 2 below, provided, however, that all payments
received by the Bank on account of such Advance shall nonetheless be
aggregated with payments received by the Bank on account of the balance of
the Loan for purposes of distributions under Section 2.
(c) Provided that the Preliminary Borrowing Request has been approved
by the Bank, and unless a Dispute Notice has been timely delivered in
accordance with paragraph (a) above and not revoked, upon the Bank's receipt
of a Borrowing Request, a copy of which the Bank shall promptly furnish to
the Participant, the Participant will before 10:00 a.m. (New York City time)
on the date of the requested borrowing set forth in the Borrowing Request,
make available to the Bank at its office at 60 Wall Street, New York, New
York 10260, funds immediately available in the amount of fifty percent (50%)
of the new Advance. The Note evidencing, and all other documents relating
to, the Loan will be retained by the Bank but copies thereof will be
furnished to the Participant. To evidence the Junior Participation the Bank
has provided the Participant with a loan participation certificate (the
"Junior Certificate") in the form annexed hereto and hereby authorizes the
Participant to endorse on the Junior Certificate the dates and the amount of
each advance in respect of the Junior Participation and the amount of each
payment of principal which the Bank advises the Participant has been credited
to its account.
(d) In the event that the Participant fails to advance the funds
requested in connection with any Advance when required, the Bank shall, to
the extent required to comply with its obligations under the Credit
Agreement, fund 100% of such Advance or obtain an alternative source of
funding for such portion of the Advance. If the Bank funds 100% of such
Advance, the Participant covenants and agrees that it shall, subject to the
terms of the penultimate sentence of this paragraph (d), reimburse the Bank
in the amount of 50% of such Advance together with interest on such amount
calculated at the interest rate of two percent in excess of the Junior
Participation Rate payable from the day such Advance was made by the Bank
through and including the day the Participant reimburses the Bank for funding
the Participant's share of such Advance, which repayment obligation as to
both principal and interest shall be subject to a credit in the amount of any
principal or interest, respectively, received from time to time by the Bank
or the provider of any alternative financing as the holder of the applicable
Default Senior Interest (as defined below). Such reimbursement shall be made
by wire transfer to the account indicated by the Bank. In the event that the
Participant fails to reimburse the Bank as provided in this paragraph within
three (3) Business Days after the Bank funds on behalf of the Participant, or
in the event that an alternative source of funding is obtained by the Bank,
then the Bank or such alternative source of funding shall be deemed the owner
of a new senior participation interest (a "Default Senior Interest")
evidencing a senior participation as to the portion of such Advance that was
payable by the Participant, payable at the same senior priority as the Senior
Participation in the balance of the Loan in accordance with Section 2 below,
provided, further, that any Default Senior Interest shall bear interest at
the Junior Participation Rate for so long as it remains outstanding. At any
time following the issuance of a Default Senior Interest, the Participant,
prior to reimbursing the holder of the Default Senior Interest, shall provide
ten (10) days prior written notice of its intention to effect such
reimbursement. The holder of the Default Senior Interest shall notify the
Participant within five (5) Business Days of its receipt of such notice of
its election to either (i) accept reimbursement from the Participant in which
case upon receipt of such full reimbursement of principal and interest the
Default Senior Interest shall be assigned to the Participant and
automatically immediately converted to a Junior Participation or (ii) reject
the reimbursement and retain the Default Senior Interest in which case the
reimbursement obligation of the Participant under this paragraph (d) shall
automatically terminate with respect to the subject Advance. Nothing herein
shall be deemed a waiver of any other rights or remedies of the Bank provided
hereunder, at law or in equity in connection with any refusal by the
Participant to fund its share of any Advance.
(e) The Bank reserves the right, but is not obligated, to make advances
of all amounts necessary for the payment of hazard insurance premiums, water
rates, real estate taxes, assessments or other public charges, or other items
necessary for the protection of the security of any mortgage or deed of trust
securing the Loan or the preservation of any mortgaged property to the extent
funds held in mortgage escrows are insufficient to pay for such items. In
the event that the Bank determines that such an advance (a "Servicing
Advance") is necessary or appropriate in connection with the Loan or any
property which has been converted to real estate owned status following the
exercise of any remedies, the Bank shall, in the absence of an emergency, use
reasonable efforts to consult with the Participant prior to making a
Servicing Advance. While the Bank shall use reasonable efforts to consult
with the Participant, other than in the case of an emergency, the
determination of the Bank shall be conclusive in the event that the parties
disagree. In the event, however, that the Participant is servicing the Loan
in accordance with Section 4(d) and 4(e) below, the Participant shall have
the right, after consulting with the Bank, to make a Servicing Advance with
respect to the Loan in the event that the Participant reasonably determines
that such an advance is necessary to protect the security of the collateral
or preserve the then existing condition of the mortgaged property. Servicing
Advances shall bear interest from the date advanced until repaid at the same
rate of interest payable by the Borrower under the Loan Documents (the
"Servicing Advance Rate") with respect to such advances and will be
reimbursed to the Bank and/or the Participant, as the case may be, together
with interest thereon, in accordance with Section 2 below.
(f) In the event that the Participant fails to fund the amount
requested in connection with the funding of any Advance within the applicable
time period, the Participant shall reimburse the Bank for all reasonable and
necessary out-of-pocket costs and expenses actually incurred by the Bank,
directly or indirectly, as a result of the Participant's failure to fund
within the applicable time period, which reimbursement shall be made within
10 days after receipt by the Participant of copies of invoices and/or
statements from the Bank itemizing such costs and expenses.
2. DISTRIBUTIONS
(a) With respect to prepayments of principal actually received by the
Bank in respect of the Loan such prepayments shall be promptly applied:
(i) First, to the Bank and the Participant, on a pari passu basis
in relation to the respective amounts of unreimbursed Servicing
Advances and Asset Audit Expenses owing to the Bank and the
Participant, to reimburse the Bank and the Participant for any
unreimbursed Servicing Advances together with interest thereon at
the Servicing Advance Rate and to reimburse the Bank and the
Participant for any unreimbursed Asset Audit Expenses; and
(ii) Second, to the Bank and the Participant, on a pari passu
basis, based upon their respective Participation Percentages.
(b) With respect to all other payments of principal actually received
by the Bank in respect of the Loan, such payments shall be promptly applied:
(i) First, to the Bank and the Participant on a pari passu basis
in relation to the respective amounts of unreimbursed Servicing
Advances and Asset Audit Expenses owing to the Bank and the
Participant, to reimburse the Bank and the Participant for any
unreimbursed Servicing Advances together with interest thereon at
the Servicing Advance Rate and to reimburse the Bank and the
Participant for any unreimbursed Asset Audit Expenses;
(ii) Second, to the Bank to repay all principal amounts due and
owing to the Bank as the holder of the Senior Participation and any
Default Senior Interest in the Loan; and
(iii) Third, only to the extent of any remaining funds
representing such principal payments, to the Bank and the
Participant on a pari passu basis, to the extent of the Junior
Participation held by the Participant and any Bank Junior
Participation held by the Bank.
(c) With respect to payments of interest actually received by the Bank
in respect of the Loan, such payments will be promptly applied:
(i) First, to the Bank and the Participant on a pari passu basis,
to repay any accrued and unpaid interest on any Servicing Advances
by such party at the Servicing Advance Rate;
(ii) Second, to the Bank to repay all accrued and unpaid interest
on the Senior Participation at the Senior Participation Rate and
any Default Senior Interest at the Junior Participation Rate; and
(ii) Third, to the Bank and the Participant on a pari passu basis,
to repay all accrued and unpaid interest on any Bank Junior
Participation held by the Bank and the Junior Participation held by
the Participant, at the Junior Participation Rate.
(d) Notwithstanding anything herein to the contrary, the fees payable
under Section 3.01 of the Credit Agreement shall be solely for the account of
the Bank and shall be retained by the Bank for its own account. In addition,
any late fees and, notwithstanding anything to the contrary set forth in
Section 2(c) above, any incremental increases in the interest rate under the
Loan paid by the Borrower on account of a default rate of interest being in
effect (but only to the extent of the incremental increase in the interest
rate as opposed to the base rate of interest which shall remain payable in
accordance with Section 2(c) above) shall be divided between the Bank and the
Participant in accordance with their respective Participation Percentage at
the time of payment.
(e) In addition to the payments of debt service on the Loan to be
distributed as set forth above, payments received by the Bank under any
guaranty or indemnification provision under any Loan Document shall (i) be
distributed in accordance with paragraphs (a) through (c) above of this
Section 2 to the extent such payments relate to principal or interest on the
Loan and (ii) in the event such payment relates to obligations of the
Borrower other than the payment of the Loan, such payment shall be
distributed to the Bank and the Participant based upon the actual losses
suffered by each such party in connection with the event giving rise to such
payment.
3. RETURN OF FUNDS
If the Bank should for any reason make any payment to the Participant in
anticipation of the receipt of funds from the Borrower or any guarantor and
such funds are not received by the Bank from the Borrower or any guarantor on
the date payment is due, then the Participant shall, on demand of the Bank,
forthwith return to the Bank any such amounts transferred to the Participant
by the Bank in respect of the Junior Participation plus interest thereon from
the day such amounts were transferred by the Bank to the Participant to, but
not including, the day such amounts are returned by the Participant at a rate
per annum equal to the effective Federal Funds Rate. If the Bank is required
at any time to return to the Borrower or any guarantor or to a trustee,
receiver, liquidator, custodian or other similar official any portion of the
payments made by the Borrower or any guarantor to the Bank, then the
Participant shall, on demand of the Bank, forthwith return to the Bank any
such payments transferred to the Participant by the Bank in respect of the
Junior Participation, but without interest on such payments (unless the Bank
is required to pay interest on such amounts to the person recovering such
payments).
4. SERVICING
(a) The Bank will exercise the same care in making and in handling the
Loan as the Bank exercises with respect to loans in which no participations
are granted. All moneys received by the Bank under the Loan shall be held by
the Bank as trustee for the Participant to be disbursed in accordance with
Section 2 above. Except as expressly provided herein, the Bank does not
assume any other duties or responsibility.
(b) The Bank may make such inspections of the mortgaged properties from
time to time in accordance with its customary practices. The Bank shall
notify the Participant at least three Business Days prior to any such
inspection such that representatives of the Participant can, at their own
expense, accompany the Bank on any such inspection. Any written report
prepared by or on behalf of the Bank in connection with an inspection shall
be promptly furnished to the Participant. In no event shall the Bank be
obligated to take any action to effect repairs and correct any deficient
structural, environmental or physical conditions on any of the mortgaged
properties.
(c) The Bank shall promptly furnish to the Participant copies of all
quarterly and
annual financial statements received from the Borrower. At any time that the
Bank recalculates the Collateral Value, the Bank shall promptly furnish to
the Participant the results of its determination. In the event that the
Participant requests that the Bank recalculate the Collateral Value, the Bank
shall perform such recalculation, provided, however, that the Bank shall not
be obligated to recalculate the Collateral Value more than once every two
months. In addition, upon the request of the Participant, the Bank shall
also furnish to the Participant, at the Participant's cost, such other
information within the Bank's possession relating to the Loan, any Advance or
a mortgaged property as the Participant may from time to time reasonably
request.
(d) To the extent there occurs an Event of Default under any Mortgage
or the Note, the Participant shall assume the servicing of the Loan and shall
complete an asset audit containing a discussion of the economics of the Loan
and the related mortgaged property and a recommended course of action for the
Loan within 10 days of receiving notice from the Bank that such a default has
occurred unless such default is cured prior thereto. The results of any
asset audit shall be put into a concise memorandum format by the Participant
and forwarded, together with a copy of all documents prepared by or on behalf
of the Participant in connection with such asset audit, to the Bank. The cost
of such asset audit (the "Asset Audit Expense") will be borne by Participant,
subject to reimbursement in accordance with Section 2 above. To the extent
that Participant is not fully reimbursed for an Asset Audit Expense within
thirty (30) days following the incurrence of such expense pursuant to
distributions under Section 2, then the Bank shall promptly reimburse the
Participant for fifty percent (50%) of the applicable Asset Audit Expense,
subject to reimbursement in accordance with Section 2.
(e) In the event that the Bank agrees with the recommendations of the
Participant set forth in the asset audit, or in the event that the Bank does
not object to such recommendations within ten (10) days following receipt of
the asset audit, the Participant shall, in the name of the Bank, implement
the course of action set forth in the approved (or deemed approved) asset
audit. Prior to commencing the pursuit of such remedies, however, the
Participant shall instruct outside counsel acceptable to the Bank to review
the documents evidencing and securing the Loan for enforceability, the effect
of any laws affecting remedies (including, without limitation, election of
remedies doctrines, anti-deficiency rules and single action rules) and any
technical defaults, and, subject to outside counsel's recommendations and
findings regarding state laws affecting remedies, commence enforcing such
agreed upon remedies. In the event the Bank disagrees with the
recommendations of the Participant set forth in the asset audit and if the
Bank and the Participant are unable to reach an agreement as to the course of
action to be taken within thirty (30) days following delivery of the original
asset audit, the Participant shall have the right to accelerate the Loan and
commence foreclosure proceedings under any Mortgage or Mortgages, provided,
however, that no foreclosure or similar proceeding shall be completed and no
deed-in-lieu of foreclosure shall be accepted unless the Participant has
previously obtained an updated phase I environmental study (and phase II if
necessary) with respect to the property or properties subject to such
foreclosure action which is reasonably acceptable to the Bank. In connection
with any foreclosure proceeding or any other action taken by the Participant
pursuant to the first sentence of this paragraph (e), the Bank shall
cooperate with the Participant so as to enable the Participant to accelerate
the Loan and legally commence foreclosure proceedings or take such other
agreed upon actions, whether through the execution and delivery of a limited
power of attorney or otherwise. Notwithstanding anything herein to the
contrary, in the event that the Participant has defaulted in any of its
obligations under this Agreement beyond any applicable grace period,
including, without limitation, failing to deliver an asset audit in
accordance with this Section, all decisions as to the election and pursuit of
remedies shall belong to the Bank. In no event shall any other remedies be
pursued without the written consent of the Bank, which consent shall not be
unreasonably withheld or delayed.
(f) Except as otherwise provided in this Agreement, the Bank reserves
the sole right and responsibility to enforce the obligations of the Borrower
and any other entity obligated in respect of the Loan, and may, in its sole
discretion, and shall have the sole and exclusive right to (i) agree to any
modification of any of the terms of the Loan or the Note or any other
agreement or instrument evidencing, securing or otherwise relating to the
Loan, (ii) waive any of such terms or give or withhold consents or approvals
to any action or failure to act by the Borrower or any such other agreement
or instrument and (iii) exercise or refrain from exercising, or waive, any
rights or powers the Bank may have in respect thereof, provided that (x)
prior to agreeing to any such amendment or waiver (except as otherwise set
forth in clause (y) below), the Bank shall consult with the Participant,
provided that in the event that the Bank and the Participant disagree, the
decision of the Bank shall be final and conclusive and (y) no amendment or
waiver shall increase the Junior Participation or subject the Participant to
any additional obligation, reduce the principal of the Junior Participation
or the rate of interest on the Note, increase the amount of the Commitment,
modify the eighty (80%) percent loan to value requirement set forth in the
Credit Agreement, postpone the date fixed for payment of principal of or
interest on the Junior Participation or the Note or otherwise modify or grant
a waiver with respect to the Loan or any document relating thereto in a
manner which would materially adversely affect the Participant's rights
thereunder or hereunder without the prior written consent of the Participant.
(g) In the event that the Participant is servicing the Loan as
contemplated by paragraphs (d) and (e) above of this Section 4, the
Participant will exercise the same care in servicing the Loan as the
Participant exercises with respect to loans held by the Participant for its
own account. All moneys received by the Participant under or in respect of
the Loan shall be held by the Participant as trustee for the Bank and shall
be immediately remitted to the Bank to be disbursed in accordance with
Section 2 above. Except as expressly provided herein, the Participant does
not assume any other duties or responsibilities.
(h) The Bank shall maintain customary books and records in respect of
the Loan in accordance with its standard practices. Such books and records
shall be made available for copying and inspection by the Participant at the
Participant's cost and expenses during normal business hours upon not less
than three Business Days' prior written notice. The Bank and the Participant
shall notify each other as to any material default under the Loan which comes
to such party's attention or any other matter which in the Bank's or the
Participant's respective judgment might adversely affect the parties'
respective interests hereunder or any documents relating thereto.
5. LIMITATIONS ON LIABILITY
The Bank shall not, in the absence of gross negligence or willful
misconduct, be under any liability to the Participant with respect to
anything which it may do or refrain from doing which may seem to the Bank to
be necessary or desirable in connection with its obligations hereunder.
Without in any way limiting the foregoing, the Bank may rely upon the advice
of counsel concerning legal matters and upon any written communication or
telephone conversation which it believes to be genuine and correct or to have
been signed, sent or made by the proper person and shall not be required to
make an inquiry concerning the performance by the Borrower of its obligations
under the Credit Agreement or in respect of the Loan. Except for the Bank's
obligation to cooperate with the Participant under Section 4(e) above in
order to enable the Participant to accelerate the Loan and commence
foreclosure proceedings, the Bank shall have no obligation to make any claim
on, or assert any lien upon, or assert any setoff against, any property held
by it, and if it elects to do so with respect to any property other than
collateral for the Loan, the Bank may in its discretion apply the same
against indebtedness of the Borrower other than its indebtedness in respect
of the Loan. The Bank may accept deposits from, make loans or otherwise
extend credit to, and generally engage in any kind of Bank or trust business
with, the Borrower or any other entity obligated in respect of the Loan.
6. INDEMNIFICATION OF THE BANK
The Participant agrees to indemnify the Bank for its Participation
Percentage of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature against it in any way relating to or arising out of the Loan,
the Note or the transactions contemplated thereby or the enforcement of any
of the terms thereof, provided that the Participant shall not be liable for
any of the foregoing to the extent they arise from the Bank's gross
negligence or willful misconduct. This indemnity shall survive termination
of this Agreement.
7. DISCLAIMERS BY THE BANK
The Bank makes no representation or warranty in connection with, and
shall have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrower, or the validity and enforceability
of the obligations of the Borrower in respect of the Loan or Note. The
Participant acknowledges that it has, independently and without reliance on
the Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to purchase the Junior
Participation and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of the
Borrower.
8. ASSIGNMENT AND TRANSFERS
This Agreement may not be assigned by one party without the prior
written consent of the other party, nor may the Participant transfer the
Junior Participation in whole or in part to any other person without the
prior written consent of the Bank, which consent in the case of a transfer by
the Participant of all or any portion of the Junior Participation shall not
be unreasonably withheld or delayed. The Bank may sell other participation
in the Loan and/or assign any of its right, title or interest therein,
provided that the aggregate principal amount of all such participations does
not exceed the aggregate principal amount of such loans made or to be made by
the Bank, after giving effect to any such assignment. In addition, the Bank
shall have the right at any time to delegate any of its servicing
responsibilities hereunder without obtaining the consent of the Participant,
provided, however, that as between the Bank and the Participant, the Bank
shall be remain primarily liable for such delegated activities subject to the
limitations set forth in this Agreement.
9. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
10. NOTICES
Any communications provided for or permitted hereunder shall be in
writing and, unless otherwise expressly provided herein, shall be sent as
follows to:
(i) in the case of the Bank:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Attention: Larry Blume
Fax No.: (212) 648-5138
with a copy to:
Swidler & Berlin, Chartered
3000 K Street, N.W.
Washington, D.C. 20007
Attention: Kenneth G. Lore, Esq
Fax No. 202-424-7645
(ii) in the case of the Participant:
Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, New York 10020
Attention: Gregory F. Hughes
Fax: (212) 333-2323
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10014
Attn: Alan S. Pearce, Esq.
Fax: (212) 541-1411
or as to each such person such other address as may hereafter be furnished by
such person to the parties hereto in writing. Any communication required or
permitted to be delivered to any of the foregoing shall be deemed to have
been duly given when sent by electronic means to the facsimile number listed
above, with a copy mailed first class, postage prepaid, to the address of the
party.
11. SEVERAL NATURE
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement.
12. SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall be binding upon and, subject to
the limitations set forth in Section 8 above, inure to the benefit of the
respective successors and assigns of the parties hereto. No other person,
including, without limitation, the Borrower, shall be entitled to any benefit
or equitable right, remedy or claim under this Agreement.
13. HEADINGS; CONSTRUCTION OF AGREEMENT
The headings of various sections of this Agreement are for convenience
of reference only and are not to be construed as defining or limiting, in any
way, the scope or intent of the provisions hereof. The Participant
acknowledges that it was represented by competent counsel in connection with
the negotiation and drafting of this Agreement and that this Agreement shall
not be subject to the principle of construing the meaning against the Person
who drafted same.
14. NO PARTNERSHIP
Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between the Bank and the
Participant.
15. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, and all of which shall
together constitute one and the same agreement.
[signatures follow on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ L. Blume
____________________________________
Name: L. Blume
Title: Vice President
By: /s/ Benjamin J. Costello
____________________________________
Name: Benjamin J. Costello
Title: Vice President
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Gregory F. Hughes
___________________________________
Name: Gregory F. Hughes
Title: CFO
<PAGE>
LOAN PARTICIPATION CERTIFICATE
Morgan Guaranty Trust Company of New York (the "Bank") hereby certifies
that it has sold to Wellsford Real Properties, Inc. (the "Participant") a
participation (the "Junior Participation") and has received from the
Participant funds in the aggregate amount endorsed on the grid attached
hereto shown at any time as outstanding and unpaid in respect of the Junior
Participation, both pursuant to the Loan Participation Agreement dated as of
August__, 1997 between the Bank and the Participant (the "Participation
Agreement") relating to a Loan under the Credit Agreement dated as of
August__, 1997 between the various borrowing entities named therein (the
"Borrower"), and Morgan Guaranty Trust Company of New York, the Bank (the
"Credit Agreement"). The Junior Participation shall bear interest at an
annual rate equal to 1.50% in excess of the interest rate payable under the
Note as in effect from time to time.
This Loan Participation Certificate is issued pursuant to, and the
Junior Participation evidenced hereby is subject to, the terms of the
Participation Agreement and the Credit Agreement. Terms used but not defined
herein shall have the meanings set forth in the Credit Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ L. Blume
____________________________________
Name: L. Blume
Title: Vice President
By: /s/ Benjamin J. Costello
Name: Benjamin J. Costello
Title: Vice President
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of Outstanding
Date of Amount of Principal Principal Notation
Advance Participation Repaid Balance Made By
PROMISSORY NOTE
Date of Note: August 28, 1997
Note Amount: $70,000,000.00
FOR VALUE RECEIVED, each of the undersigned, as maker (each of the
undersigned, together with any other person or entity who hereafter assumes
the obligations hereunder, individually and collectively, the "Maker"),
hereby jointly and severally promises to pay to the order of MORGAN GUARANTY
TRUST COMPANY OF NEW YORK ("Payee"), on or before September 1, 2000, at its
office located at 60 Wall Street, l8th Floor, New York, New York 10260 or to
such other location or account as Payee shall specify to Maker from time to
time, in federal or other immediately available funds in lawful money of the
United States, the principal amount of SEVENTY MILLION AND NO/100 DOLLARS
($70,000,000.00) or, if less, the aggregate unpaid principal amount of such
Loans made by Payee to the Maker pursuant to the Revolving Credit Agreement
dated as of even date herewith (such agreement as it may from time to time be
amended, modified or supplemented being the "Loan Agreement") between Maker
and Payee, and as recorded by Payee on the schedule attached to this Note and
by specific reference made a part thereof (the "Schedule"). The amounts of
principal indicated by said Schedule as outstanding or accrued and unpaid, as
the case may be, shall constitute rebuttable presumptive evidence of the
principal outstanding and the accrued and unpaid interest on the Loans;
provided, that any failure or error on the part of Payee in recording any
Loan on such Schedule shall not limit the obligation of Maker to pay all
principal of and interest and other amounts accruing on the Loans. The
principal amount evidenced hereby may be repaid and subsequently readvanced
in accordance with the terms of the Loan Agreement.
SECTION 1 DEFINITIONS
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Note
shall include in the singular number the plural and in the plural number the
singular. All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Mortgage or the Loan Agreement.
"Adjusted LIBOR" means, at any date of determination, the quotient of
(i) the LIBO Rate then in effect divided by (ii) the difference between (A)
1.0, minus (B) the reserve percentage (expressed as a decimal) applicable
during such Interest Accrual Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those days
in such Interest Accrual Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board for
determining the maximum reserve requirement (including, any emergency,
supplemental or other marginal reserve requirement) of Payee with respect to
liabilities or assets consisting of or including "Eurocurrency liabilities"
(as such term is defined in Regulation D of the Board) having a term equal to
such Interest Accrual Period.
"Base Rate" means, for any day the Federal Funds Rate for such day plus
2.50%.
"Board" means the Board of Governors of the Federal Reserve System, and
any successor thereof.
"Business Day" means any a Business Day as defined in the Mortgages, and
when used in the context of a Loan bearing interest at the LIBO Rate, is also
a day of trading by and between banks in the London interbank market.
"Capital Adequacy Rule" means any law, rule or regulation regarding
capital adequacy, or any interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency.
"Dollar" and the sign "$" means lawful money of the United States of
America.
"Federal Funds Rate" means, for any date, the rate set forth in the
weekly statistical release designated as H.15(519) or any successor
publication, published by the Board for such day opposite the caption
"Federal Funds Effective". If on the relevant day such rate is not yet so
published, the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York for such date under the caption "Federal Funds
Effective Rate". If on any relevant date the appropriate rate for such date
is not yet published in either of the foregoing publications, the rate for
such day will be the arithmetic mean (rounded upwards if necessary, to the
nearest 1/l00th of one percent) of the rates for the last transaction in
overnight Federal Funds arranged prior to 9:00 a.m. (New York City time) on
that day by three leading brokers or dealers of Federal Funds transactions in
New York City, selected by Payee.
"Interest Accrual Period" means each one-month period commencing on the
first day of each calendar month and ending on the last day of such calendar
month; provided that, if any Borrowing is made on a day other than the first
day of a calendar month, then the first Interest Accrual Period with respect
to such Borrowing shall be deemed to have begun on the date of such Borrowing
and shall end on the last day of the calendar month in which such Borrowing
was made. Notwithstanding the foregoing, with respect to any Loan (a) if any
Interest Accrual Period would otherwise commence before and end after the
applicable Maturity Date, such Interest Accrual Period shall end on such
Maturity Date; and (b) each Interest Accrual Period which would otherwise end
on a day which is not a Business Day shall end on the next succeeding day
which is a Business Day (or if such next succeeding Business Day falls in the
next succeeding calendar month, such Interest Accrual Period shall end on the
next preceding Business Day) and the first day of the next succeeding
Interest Accrual Period shall be adjusted to fall on the last day of such
preceding Interest Accrual Period.
"LIBOR Lending Office" means the office of Payee located at Nassau,
Bahamas or such other branch (or Affiliate) of Payee as Payee may designate
as its LIBOR Lending Office.
"LIBO Rate" means the rate per annum at which deposits in Dollars appear
with respect to the applicable Interest Accrual Period on the Telerate Page
3750 (or any successor page), in each case as of 11:00 a.m. (London time) two
Business Days prior to the beginning of such Interest Accrual Period, or if
such rate is not available, then the average (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of the rates quoted to Payee in the London
Interbank market at or about 11:00 a.m. (London time) two Business Day prior
to the first day of the applicable Interest Accrual Period for the offering
to Payee of Dollar deposits for such Interest Accrual Period in an amount
approximately equal to the aggregate amount of all Loans to be outstanding on
the first day of such Interest Accrual Period and with a maturity equal to
such Interest Accrual Period.
"Maturity Date" shall mean September 1, 2000.
"Mortgages" shall mean collectively (i) those ten (10) Deeds of Trust,
Security Agreements, Assignments of Rents and Fixture Filings from each Maker
for the benefit of Payee dated the date hereof securing certain properties
located in the Counties of Orange, Los Angeles, San Bernardino and Riverside,
California and (ii) any other deeds of trust hereafter delivered to Payee
pursuant to the terms of the Loan Agreement.
"Parent" means, with respect to Payee, any Person controlling Payee.
SECTION 2 INTEREST, PAYMENTS, ETC.
Section 2.1 Interest.
2.1.1 Maker shall pay interest (computed on the basis of the
actual number of days elapsed in a year of 360 days) on the outstanding
principal amount of each Loan from the date of the making of such Loan until
the principal amount thereof shall be paid in full, at a rate per annum equal
to Adjusted LIBOR, plus two and 50/100 percent (2.50%).
2.1.2 Except as otherwise provided in Section 2.1.3., interest
on all Loans shall be payable monthly in arrears on (i) the first day of the
next succeeding Interest Accrual Period for such Loan, (ii) upon repayment of
any Loan or any portion thereof (whether scheduled or otherwise), and (iii)
on the Maturity Date.
2.1.3 If Maker shall default in the payment of the principal of
or interest on the Loans or any fee, charge or other amount due and payable
hereunder or under any of the other Loan Documents beyond any applicable
notice or grace period, Maker shall on demand pay interest on such overdue
principal amount and, to the extent permitted by applicable law, on such
overdue interest and any other overdue amount, at the Default Rate, accruing
from the date such payment was due until such amount is paid in full (after
as well as before judgment).
2.1.4 Payee shall determine the LIBO Rate, Base Rate, and
Federal Funds Rate as in effect from time to time, and each such
determination of the LIBO Rate, Base Rate and Federal Funds Rate shall be
conclusive and binding absent manifest error.
Section 2.2 Payments.
2.2.1 Maker shall repay the unpaid principal amount of each
Loan on the Maturity Date.
2.2.2 Any prepayment of any Loan shall be governed by Section
15.01 of the Mortgages and Article V of the Loan Agreement. In addition
thereto, any such prepayment of any Loan permitted by Payee hereunder shall
be accompanied by the payment of any costs, loss or expenses incurred by
Payee in connection with such prepayment as provided in Section 2.4. Any
amounts so prepaid may (a) be reborrowed by Maker on or prior to the
Expiration Date in accordance with the terms and conditions of the Loan
Agreement and (b) be applied in such order of priority as Payee shall
determine in its sole discretion.
Section 2.3 Funds; Manner of Payment; Taxes.
2.3.1 Each payment of principal of and interest on any Loan,
and each payment on account of any other fees, charges or other amounts
payable under this Note or under any of the other Loan Documents shall be
paid by Maker, without set-off or counterclaim, by wire transfer to Payee at
its office set forth in the preamble hereof or to such other location or
account as Payee may specify to Maker from time to time, in Federal or other
immediately available funds in lawful money of the United States of America,
not later than 12:00 Noon, New York City time, on the date on which any such
payment is payable. If any payment hereunder or under any of the other Loan
Documents becomes due and payable on a day (the "Due Date") other than a
Business Day, such payment shall not be payable until the next succeeding
Business Day, provided, however, if such next succeeding Business Day falls
within the next calendar month, such payment shall be due and payable on the
immediately preceding Business Day. If the date for any payments of principal
is extended on account of the foregoing or on account of operation of law or
otherwise, interest thereon shall be payable at the then applicable rate
during such extension.
2.3.2 All payments made by Maker under this Note and any of the
Loan Documents shall be made free and clear of, and without reduction for or
on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding income and franchise taxes of the United States of
America or any political subdivision or taxing authority thereof or therein
(such non-excluded taxes being called "Additional Taxes"). If any Additional
Taxes are required to be withheld from any amounts payable to Payee hereunder
or under any of the other Loan Documents, the amounts so payable to Payee
shall be increased to the extent necessary to yield to Payee (after payment
of all Additional Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Note.
Section 2.4 Indemnity. Maker agrees to indemnify Payee and to hold
it harmless from any cost, loss or expense which Payee may sustain or incur
as a consequence of (a) Maker making a payment or prepayment of principal on
a Loan on a day which is not the first day of an Interest Accrual Period with
respect thereto, (b) any failure by Maker to borrow a Loan hereunder after a
Borrowing Request has been given pursuant to this Note, (c) default by Maker
in making any prepayment after Maker has given a notice of prepayment, and
(d) any acceleration of the maturity of the Loans by Payee in accordance with
the terms of this Note, including, but not limited to, any such reasonable
cost, loss or expense arising in liquidating the Loans and from interest or
fees payable by Payee to lenders of funds obtained by it in order to maintain
the Loans hereunder.
Section 2.5 Increased Cost and Reduced Return.
2.5.1 If, on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by Payee (or its
LIBOR Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board
(but excluding with respect to any such requirement reflected in the then
effective LIBO Rate)), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Payee (or its LIBOR Lending Office) or shall impose on Payee (or
its LIBOR Lending Office) or on the London interbank market any other
condition affecting any Loan bearing interest at the LIBO Rate, and the
result of any of the foregoing is to increase the cost to Payee (or its LIBOR
Lending Office) of making or maintaining any Loan at the LIBO Rate, or to
reduce the amount of any sum received or receivable by Payee (or its LIBOR
Lending Office) under this Note, by an amount deemed by Payee to be material,
then, within sixty (60) days after demand by Payee, Maker shall pay to Payee
such additional amount or amounts as will compensate Payee for such increased
cost or reduction.
2.5.2 If Payee shall have determined that, after the date
hereof, the adoption of any Capital Adequacy Rule has or would have the
effect of reducing the rate of return on capital of Payee (or its Parent) as
a consequence of Payee's obligations hereunder to a level below that which
Payee (or its Parent) could have achieved but for such adoption (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by Payee to be material, then from time to time, within fifteen (15)
days after demand by Payee, Maker shall pay to Payee such additional amount
or amounts as will compensate Payee (or its Parent) for such reduction.
2.5.3 Payee will promptly notify Maker of any event of which it
has knowledge, occurring after the date hereof, which will entitle Payee to
compensation pursuant to this Section 2.5.3 and will designate a different
LIBOR Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the reasonable judgment of
Payee, be otherwise disadvantageous to Payee. A certificate of Payee
claiming compensation under either Section 2.5.1 or 2.5.2 and setting forth
the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error; provided that any certificate
delivered by Payee pursuant to this Section 2.5.3 shall (i) in the case of a
certificate in respect of amounts payable pursuant to Section 2.5.1, set
forth in reasonable detail the basis for and the calculation of such amounts,
and (ii) in the case of a certificate in respect of amounts payable pursuant
to Section 2.5.2, (A) set forth at least the same amount of detail in respect
of the calculation of such amount as Payee provides in similar circumstances
to other similarly situated borrowers from Payee, and (B) include a statement
by Payee that it has allocated to the Commitment or outstanding Loans a
proportionately equal amount of any reduction of the rate of return on
Payee's capital due to a Capital Adequacy Rule as it has allocated to each of
its other commitments to lend or to each of its other outstanding loans that
are affected similarly by such Capital Adequacy Rule.
Section 2.6 Deposits Unavailable. In the event, and on each
occasion, that (i) Payee shall have reasonably determined that dollar
deposits in the principal amounts of the Loan are not generally available to
Payee in the London interbank market, for such periods and amounts then
outstanding hereunder or that reasonable means do not exist for ascertaining
the LIBO Rate, or (ii) Payee reasonably determines that the rate at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to Payee of making or maintaining the Loans at the LIBO Rate during
such month, Payee shall, as soon as practicable thereafter, give written
notice of such determination to Maker. In the event of any such
determination, until the circumstances giving rise to such notice no longer
exist, the Loan shall bear interest at the Base Rate. After an Event of
Default, interest shall accrue on the outstanding principal balance of this
Note at a rate per annum equal to the Default Rate.
Section 2.7 Illegality. If, on or after the date of this Note, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by Payee (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for
Payee (or its LIBOR Lending Office) to make, maintain or fund Loans at the
LIBO Rate, Payee shall forthwith give notice thereof to Maker, whereupon
until Payee notifies Maker that the circumstances giving rise to such
suspension no longer exist, the obligation of Payee to make Loans at the LIBO
Rate shall be suspended. Before giving any notice to Maker pursuant to this
Section 2.7, Payee shall designate a different LIBOR Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of Payee, be otherwise disadvantageous to Payee. If Payee shall
reasonably determine that it may not lawfully continue to maintain and fund
any outstanding Loans at the LIBO Rate to maturity and shall so specify in
such notice, Maker shall immediately prepay in full the then outstanding
principal amount of each such Loan, together with accrued interest thereon.
Concurrently with prepaying each such Loan, Maker shall borrow a Loan which
shall accrue interest at the Base Rate in an equal principal amount from
Payee for an Interest Accrual Period coincident with the remaining term of
the Interest Accrual Period applicable to such Loan repaid, and Payee shall
make such a Loan accruing interest at the Base Rate.
SECTION 3 DEFAULTS
Section 3.1. Events of Default.
This Note is secured by, among other things, the Mortgages which specify
various Events of Default, upon the happening of which all or portions of the
sums owing under this Note may be declared immediately due and payable as
more specifically provided therein. Any Event of Default under any Mortgage
or any one or more of the other Loan Documents shall be an Event of Default
hereunder. To the extent that Maker makes a Payment or Payee receives any
Payment or proceeds for Maker's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid
to a trustee, debtor in possession, receiver, custodian or any other party
under any bankruptcy law, common law or equitable cause, then, to such
extent, the obligations of Maker hereunder intended to be satisfied shall be
revived and continue as if such Payment or proceeds had not been received by
Payee.
Section 3.2. Remedies.
If an Event of Default shall occur hereunder or under any other Loan
Document, interest on the Principal Amount and, to the extent permitted by
applicable law, all accrued but unpaid interest on the Principal Amount
shall, commencing on the date of the occurrence of such Event of Default, at
the option of Payee, immediately and without notice to Maker, accrue interest
at the Default Rate until such Event of Default is cured. The foregoing
provision shall not be construed as a waiver by Payee of its right to pursue
any other remedies available to it under the Mortgages, or any other
instrument evidencing or securing the Loan, nor shall it be construed to
limit in any way the application of the Default Rate. If there is more than
one Maker of this Note, the undersigned parties shall each be jointly and
severally liable to pay the entire Loan Amount and all other sums becoming
due hereunder or under the other Loan Documents.
SECTION 4 MISCELLANEOUS
Section 4.1. Further Assurances.
Maker shall execute and acknowledge (or cause to be executed and
acknowledged) and deliver to Payee all documents, and take all actions,
reasonably required by Payee from time to time to confirm the rights created
or now or hereafter intended to be created under this Note and the other Loan
Documents, to protect and further the validity, priority and enforceability
of this Note and the other Loan Documents, to subject to the Loan Documents
any property of Maker intended by the terms of any one or more of the Loan
Documents to be encumbered by the Loan Documents, or otherwise carry out the
purposes of the Loan Documents and the transactions contemplated thereunder;
provided, however, that no such further actions, assurances and confirmations
shall increase Maker's obligations under this Note.
Section 4.2. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or waiver
(a "Modification") of any provision of this Note, the Mortgages or any one or
more of the other Loan Documents, nor consent to any departure by Maker
therefrom, shall in any event be effective unless the same shall be in a
writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly provided herein,
no notice to, or demand on, Maker shall entitle Maker to any other or future
notice or demand in the same, similar or other circumstances. Payee does not
hereby agree to, nor does Payee hereby commit itself to, enter into any
Modification. However, in the event Payee does ever agree to a Modification,
such Modification shall only be upon the terms and conditions set forth in
the Mortgages.
Section 4.3. Costs of Collection.
Maker agrees to pay all costs and expenses of collection incurred by
Payee, in addition to principal, interest and late or delinquency charges
(including, without limitation, reasonable attorneys' fees and disbursements)
and including all costs and expenses incurred in connection with the pursuit
by Payee of any of its rights or remedies referred to in Section 3 hereof or
its rights or remedies referred to in any of the Loan Documents or the
protection of or realization of collateral or in connection with any of
Payee's collection efforts, whether or not suit on this Note, on any of the
other Loan Documents or any foreclosure proceeding is filed, and all such
costs and expenses shall be payable on demand, together with interest at the
Default Rate thereon, and also shall be secured by the Mortgages and all
other collateral at any time held by Payee as security for Maker's
obligations to Payee.
Section 4.4. Maximum Amount.
4.4.1 It is the intention of Maker and Payee to conform
strictly to the usury and similar laws relating to interest from time to time
in force, and all agreements between Maker and Payee, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever, whether by acceleration of
maturity hereof or otherwise, shall the amount paid or agreed to be paid in
the aggregate to Payee as interest hereunder or under the other Loan
Documents or in any other security agreement given to secure the Debt, or in
any other document evidencing, securing or pertaining to the Debt, exceed the
maximum amount permissible under applicable usury or such other laws (the
"Maximum Amount"). If under any circumstances whatsoever fulfillment of any
provision hereof, or any of the other Loan Documents, at the time performance
of such provision shall be due, shall involve transcending the Maximum
Amount, then ipso facto, the obligation to be fulfilled shall be reduced to
the Maximum Amount. For the purposes of calculating the actual amount of
interest paid and/or payable hereunder, in respect of laws pertaining to
usury or such other laws, all sums paid or agreed to be paid to the holder
hereof for the use, forbearance or detention of the Debt, outstanding from
time to time shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread from the date of disbursement of the proceeds
of this Note until payment in full of all of the Debt, so that the actual
rate of interest on account of the Debt is uniform through the term hereof.
The terms and provisions of this Section 4.4 shall control and supersede
every other provision of all agreements between Maker or any endorser and
Payee.
4.4.2 If under any circumstances Payee shall ever receive an
amount which would exceed the Maximum Amount, such amount shall be deemed a
payment in reduction of the Loan Amount owing hereunder and any other
obligation of Maker in favor of Payee, and shall be so applied in accordance
with Section 2.2 hereof, or if such excessive interest exceeds the unpaid
balance of the Loan Amount and any other obligation of Maker in favor of
Payee, the excess shall be deemed to have been a payment made by mistake and
shall be refunded to Maker.
Section 4.5. Waivers.
Maker hereby expressly and unconditionally waives presentment, demand,
protest, notice of protest or notice of any kind, including, without
limitation, any notice of intention to accelerate and notice of acceleration,
except as expressly provided herein, and in connection with any suit, action
or proceeding brought by Payee on this Note, any and every right it may have
to (a) a trial by jury, (b) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Payee on this Note and cannot be maintained in a separate action)
and (c) have the same consolidated with any other or separate suit, action or
proceeding.
Section 4.6. Governing Law.
(a) This Note was negotiated in New York, and made by Maker
and accepted by Payee in the State of New York, and the proceeds of the Note
delivered pursuant hereto were disbursed from New York, which State the
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby, and in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity and performance. This Note and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State
of New York applicable to contracts made and performed in such State and any
applicable law of the United States of America, except that at all times the
provisions for the creation, perfection, and enforcement of the liens and
security interests created pursuant to the Mortgage and pursuant to the other
Loan Documents shall be governed by and construed according to the law of the
State in which the Mortgaged Property is located, it being understood that,
to the fullest extent permitted by law of such State, the law of the State of
New York shall govern the validity and the enforceability of all Loan
Documents, and the Debt or obligations arising hereunder or thereunder. To
the fullest extent permitted by law, Maker hereby unconditionally and irrevo-
cably waives any claim to assert that the law of any other jurisdiction
governs this Note and this Note shall be governed by and construed in
accordance with the laws of the State of New York pursuant to Section 5-1401
of the New York General Obligations Law.
(b) Any legal suit, action or proceeding against Maker or
Payee arising out of or relating to this Note shall be instituted in any
federal or state court in New York, New York, pursuant to Section 5-1402 of
the New York General Obligations Law, and Maker waives any objection which
it may now or hereafter have to the laying of venue of any such suit, action
or proceeding, and Maker hereby irrevocably submits to the jurisdiction of
any such court in any suit, action or proceeding. Maker does hereby
designate and appoint CT Corporation System, 1633 Broadway, New York, New
York 10019 as its authorized agent to accept and acknowledge on its behalf
service of any and all process which may be served in any such suit, action
or proceeding in any federal or state court in New York, New York, and
agrees that service of process upon said agent at said address and written
notice of said service of Maker mailed or delivered to Maker in the manner
provided in the Mortgages, shall be deemed in every respect effective
service of process upon Maker, in any such suit, action or proceeding in
the State of New York. Maker (i) shall give prompt notice to the Payee of
any changed address of its authorized agent hereunder, (ii) may at any time
and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly designate such
a substitute if its authorized agent ceases to have an office in New York,
New York or is dissolved without leaving a successor.
Section 4.7. Headings.
The Section headings in this Note are included herein for convenience of
reference only and shall not constitute a part of this Note for any other
purpose.
Section 4.8. Assignment; Participations.
(a) Subject to Section 7.09 of the Loan Agreement, Payee shall have the
right to transfer, sell and assign this Note, the Mortgages and/or any of the
other Loan Documents, and the obligations hereunder, to any Person. All
references to "Payee" hereunder shall be deemed to include the assigns of the
Payee.
(b) Payee may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in the Loans. In
the event of any such grant by the Payee of a participating interest to a
Participant, whether or not upon notice to the Maker, the Payee shall remain
responsible for the performance of its obligations hereunder and under the
other Loan Documents, and the Maker shall continue to deal solely and
directly with the Payee in connection with the Payee's rights and obligations
under this Note and the other Loan Documents. Any agreement pursuant to
which the Payee may grant such a participating interest shall provide that
the Payee shall retain the sole right and responsibility to enforce the
obligations of the Maker hereunder and under the other Loan Documents
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Note or the other Loan
Documents; provided that such participation agreement may provide that the
Payee will not agree to any modification, amendment or waiver of this Note or
any other Loan Document (i) which increases or decreases the Loan Amount,
(ii) reduces the principal of or rate of interest on any Loan or fees with
respect thereto or (iii) postpones the date fixed for any payment of
principal of or interest on any Loan or any fees with respect thereto without
the consent of the Participant. Maker agrees that each Participant shall, to
the extent provided in its participation agreement, be entitled to the
benefits of Section 2.4, 2.5 and 2.6 hereof as well any indemnification or
similar provision contained in this Note or any other Loan Document with
respect to its participating interest. Payee shall have the right to deliver
from time to time to any Participant or prospective Participant copies of all
financial and other information in the possession of Payee with respect to
the Loans, the Maker, any guarantor or any other related person or entity,
all of which information may be retained by such Participant and/or
prospective Participant.
Section 4.9. Severability.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.
Section 4.10. Joint and Several.
The obligations and liabilities of each Maker hereunder shall be joint
and several.
IN WITNESS WHEREOF, this Note has been duly executed by the Maker the
day and year first written above.
AP - ANAHEIM LLC
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - ARLINGTON LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
[Signatures Continue on Following Page]
<PAGE>
AP - ATLANTIC LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - CITYVIEW LLC,
a California liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - REDLANDS LLC
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - PALMDALE LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
[Signatures Continue on Following Page]
<PAGE>
AP - FARRELL RAMON LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - SIERRA LLC (formerly known as Abbey
Sierra LLC), a California limited liability
company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - VICTORIA LLC,
a California limited liability company
By: Abbey Investments, Inc., a California
corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
AP - VICTORVILLE LLC,
a Delaware limited liability company
By: DA Investments Properties, Inc.,
a Delaware corporation, its Manager
By: /s/ Donald G. Abbey
--------------------------
Name: Donald G. Abbey
Title: President
<PAGE>
SCHEDULE
Principal
Date Amount of Loan Principal Repaid
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