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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ______________)*
WELLSFORD REAL PROPERTIES, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
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(Title of Class of Securities)
950240101
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(CUSIP Number)
Roger S. Begelman, Esq.
Goldman, Sachs & Co.
85 Broad Street, New York, New York 10004
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 28, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
SEC 1746(12-91)
<PAGE>
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CUSIP NO. PAGE 2 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WHWEL REAL ESTATE LIMITED PARTNERSHIP
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,230
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,230
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,230
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
PN
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<PAGE>
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CUSIP NO. 950240101 PAGE 3 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WHATR GEN-PAR, INC.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,230
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,230
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,230
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
CO
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<PAGE>
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CUSIP NO. 950240101 PAGE 4 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,230
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,230
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,230
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
PN
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<PAGE>
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CUSIP NO. 950240101 PAGE 5 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WH ADVISORS, L.P. VII
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,230
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,230
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,230
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
PN
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<PAGE>
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CUSIP NO. 950240101 PAGE 6 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WH ADVISORS, INC. VII
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,230
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,230
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,230
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
CO
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<PAGE>
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CUSIP NO. 950240101 PAGE 7 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GOLDMAN SACHS GROUP L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,480
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,480
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,480
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
HC/PN
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<PAGE>
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CUSIP NO. 950240101 PAGE 8 OF 21 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GOLDMAN, SACHS & CO.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[X]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7. SOLE VOTING POWER
NUMBER OF 0
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,132,480
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,132,480
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,132,480
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0%
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14. TYPE OF REPORTING PERSON
PN/BD/IA
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<PAGE>
CUSIP No. 950240101 PAGE 9 OF 21 PAGES
Item 1. Security and Issuer.
The title of the class of equity securities to which this statement
relates is the common stock, par value $0.01 per share (the "Common Stock"), of
Wellsford Real Properties, Inc., a Maryland corporation (the "Company"). The
address of the principal executive offices of the Company is 610 Fifth Avenue,
New York, New York 10020.
Item 2. Identity and Background.
This statement is being filed by WHWEL Real Estate Limited Partnership
("WHWEL"), WHATR Gen-Par, Inc. ("WHATR Gen-Par"), Whitehall Street Real Estate
Limited Partnership VII ("Whitehall"), WH Advisors, L.P. VII ("WH Advisors,
L.P."), WH Advisors, Inc. VII ("WH Advisors, Inc."), The Goldman Sachs Group,
L.P. ("GS Group") and Goldman, Sachs & Co. ("GS&Co."; and collectively with
WHWEL, WHATR Gen-Par, Whitehall, WH Advisors, L.P., WH Advisors, Inc. and GS
Group, the "Reporting Persons").*
The address of the principal business and principal office of each
Reporting Person is 85 Broad Street, New York, New York 10004.
WHWEL is a Delaware limited partnership that engages in the business of
investing in real estate assets indirectly through its membership interest in
Wellsford/Whitehall Properties, L.L.C., a Delaware limited liability company
("Wellsford/Whitehall"). WHATR Gen-Par, a Delaware corporation, acts as the sole
general partner of WHWEL. WHATR Gen-Par is a wholly-owned subsidiary of
Whitehall and does not engage in any business other than in connection with its
role as a general partner of WHWEL.
Whitehall is a Delaware limited partnership that engages in the
business of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.P., a Delaware limited partnership, acts as the sole
general partner of Whitehall; WH Advisors, Inc., a Delaware corporation, acts as
the sole general partner of WH Advisors, L.P.; and neither WH Advisors, L.P. nor
WH Advisors, Inc. engages in any business other than in connection with its role
as a general partner of Whitehall and WH Advisors, L.P., respectively. WH
Advisors, Inc. is indirectly wholly-owned by GS Group.
GS&Co., a New York limited partnership, is an investment banking firm
and a member of the New York Stock Exchange, Inc. and other national exchanges.
GS Group, one of the general partners of GS&Co., owns approximately a 99%
interest in GS&Co. GS Group is a Delaware limited partnership and holding
partnership that engages (directly and indirectly through subsidiaries or
affiliated companies or both) in the business of buying and selling securities,
both foreign and domestic, and in making investments on behalf of its partners.
The other general partner of GS&Co. is The Goldman, Sachs & Co., L.L.C., a
Delaware limited liability company ("GS L.L.C."), which is wholly-owned by GS
Group and The Goldman Sachs Corporation, a Delaware corporation ("GS Corp."). GS
Corp. is the sole general partner of GS Group.
As of August 28, 1997, GS&Co. and GS Group may be deemed to indirectly
own beneficially 4,132,230 shares of Common Stock through WHWEL. In addition, as
of August 28, 1997, GS&Co., and GS Group indirectly, may be deemed to own
beneficially 250 shares of Common Stock held in client accounts with respect to
which GS&Co. or employees of GS&Co. have voting or investment discretion, or
both ("Managed Accounts"). GS&Co. and GS Group each disclaims beneficial
ownership of shares of Common Stock (i) owned by WHWEL to the extent
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* Neither the present filing nor anything contained herein shall be construed
as an admission that any Reporting Person constitutes a "person" for any
purpose other than Section 13(d) of the Securities Exchange Act of 1934 or
that any such person constitutes a "group" for any purpose.
<PAGE>
CUSIP No. 950240101 PAGE 10 OF 21 PAGES
of partnership interests in WHWEL held by persons other than GS&Co., GS Group or
their affiliates and (ii) held in Managed Accounts.
The names, business addresses, and present principal occupation or
employment and citizenship of each executive officer and director of WHATR
Gen-Par are listed on Schedule 2A hereto and are incorporated herein by
reference. The names, business addresses, and present principal occupation or
employment and citizenship of each executive officer and director of WH
Advisors, Inc. are listed on Schedule 2B hereto and are incorporated herein by
reference. The name, business address, present principal occupation or
employment and citizenship of each director and of each member of the Executive
Committee of GS Corp. and GS L.L.C. and of each member of the Executive
Committee of GS Group and GS&Co. are set forth in Schedule 2C hereto and are
incorporated herein by reference.
During the last five years, none of the Reporting Persons, or, to the
knowledge of each of the Reporting Persons, any of the persons listed on
Schedules 2A, 2B or 2C hereto, (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) except as set
forth in Schedule 2D to this Schedule 13D, has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws, or finding any violation with
respect to such laws.
This Item 2 is qualified in its entirety by reference to Schedule 2A,
Schedule 2B, Schedule 2C and Schedule 2D which are attached hereto and
incorporated into this Item by reference.
Item 3. Source and Amount of Funds or Other Consideration.
WHWEL acquired 5,000,000 warrants (the "Warrants") issued under 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, in connection with the execution and delivery of the Limited Liability
Company Operating Agreement of Wellsford/Whitehall dated as of August 28, 1997
(the "Wellsford/Whitehall LLC Agreement"), between WHWEL and Wellsford
Commercial Properties Trust, a Maryland real estate investment trust ("WCPT"),
pursuant to which WHWEL and WCPT have contributed and will in the future
contribute certain office properties owned by subsidiaries of Whitehall and the
Company and other assets to Wellsford/Whitehall and its wholly-owned
subsidiaries. The exercise price of each Warrant is, at the sole election of the
holder, either (i) one membership unit of Wellsford/Whitehall or (ii) $10.00 in
cash; provided that, holders of Warrants may not elect to use membership units
of Wellsford/Whitehall as the exercise price prior to August 28, 1999. When
multiple warrants are exercised, the exercise price may consist of cash,
membership units of Wellsford/Whitehall or any combination thereof. Upon
exercise, the holder of a Warrant will receive, at the sole election of the
Company, either (i) 0.826446 shares of Common Stock (as adjusted pursuant to the
terms of the Warrant Agreement, the "Shares Amount") or (ii) cash in an amount
equal to the product of the closing price of the Common Stock as of the date of
exercise multiplied by the Shares Amount. None of the persons listed on
Schedules 2A, 2B or 2C hereto has contributed any funds or other consideration
towards the purchase of the securities of the Company.
As of August 28, 1997, GS&Co. held 250 shares of Common Stock for
Managed Accounts. GS&Co. purchased these shares of Common Stock in the ordinary
course of its business. All such transactions that were effected during the past
60 days are set forth on Schedule 5A hereto and were effected in the
over-the-counter market or through the American Stock Exchange. The aggregate
consideration for the purchases listed on Schedule 5A was $19,975.00.
Each Reporting Person expects to evaluate on an ongoing basis the
Company's financial condition, business operations and prospects, the status of
any business combination involving the Company, the market price of the Common
Stock, conditions in the securities markets generally, general economic and
industry conditions and other factors. Accordingly, each Reporting Person
reserves the right to change its plans and intentions at any time, as it deems
appropriate. In particular, each Reporting Person may at any time and from time
to time acquire additional shares of Common Stock or other securities
convertible or exchangeable for Common Stock in public or private transactions;
dispose of shares of Common Stock or other securities in public or
<PAGE>
CUSIP No. 950240101 PAGE 11 OF 21 PAGES
private transactions; and/or enter into privately negotiated derivative
transactions with institutional counterparties to hedge the market risk of some
or all of its positions in the Common Stock or other securities. Any such
transactions may be effected at any time and from time to time. To the knowledge
of each Reporting Person, each of the persons listed on Schedules 2A, 2B and 2C
hereto may make the same evaluation and may reserve the same rights.
Item 4. Purpose of the Transaction.
WHWEL acquired the Warrants as part of the formation of
Wellsford/Whitehall and the contribution by WHWEL (and certain of its
affiliates) of real estate assets consisting of office properties to
Wellsford/Whitehall. WHWEL is holding the Warrants for investment purposes. As
of the date of this statement, none of the Reporting Persons has any plan or
proposal which relates to or would result in any of the actions set forth in
parts (a) though (j) of Item 4 of Schedule 13D , other than in connection with
the registration rights granted in the Warrant Agreement (as described in Item 6
below) and the Letter Agreements (as defined and described in Item 6 below).
Item 5. Interest in Securities of the Issuer.
(a) & (b)
1. The Warrants are exercisable for 4,132,230 shares of Common
Stock, representing approximately 20.0% of the Common Stock reported to
be outstanding as of August 11, 1997 (as reported in the Company's Form
10-Q for the quarter ended June 30, 1997 (the "Company's 10-Q")). As of
August 28, 1997, WHWEL beneficially owned such shares of Common Stock.
2. As of August 28, 1997, WHATR Gen-Par, as the general
partner of WHWEL, may be deemed to beneficially own 4,132,230 shares of
Common Stock, which are beneficially owned by WHWEL as described above,
representing approximately 20.0% of the shares of Common Stock reported
to be outstanding as of August 11, 1997 (as reported in the Company's
10-Q).
3. As of August 28, 1997, Whitehall, as the direct beneficial
owner of all of the capital stock of WHATR Gen-Par, may be deemed to
beneficially own 4,132,230 shares of Common Stock, which are
beneficially owned by WHWEL as described above, representing
approximately 20.0% of the shares of Common Stock reported to be
outstanding as of August 11, 1997(as reported in the Company's 10-Q).
4. As of August 28, 1997, WH Advisors, L.P., as the general
partner of Whitehall, may be deemed to beneficially own 4,132,230
shares of Common Stock, which are beneficially owned by WHWEL as
described above, representing approximately 20.0% of the shares of
Common Stock reported to be outstanding as of August 11, 1997 (as
reported in the Company's 10-Q).
5. As of August 28, 1997, WH Advisors, Inc., as the general
partner of WH Advisors, L.P., may be deemed to beneficially own
4,132,230 shares of Common Stock, which are beneficially owned by WHWEL
as described above, representing approximately 20.0% of the shares of
Common Stock reported to be outstanding as of August 11, 1997 (as
reported in the Company's 10-Q).
6. As of August 28, 1997, GS&Co., as the investment advisor to
Whitehall, may be deemed to beneficially own an aggregate of 4,132,480
shares of Common Stock, including (i) the 4,132,230 shares of Common
Stock beneficially owned by WHWEL described above, and (ii) 250 shares
of Common Stock held in Managed Accounts, representing in the aggregate
approximately 20.0% of the Common Stock reported to be outstanding as
of August 11, 1997 (as reported in the Company's 10-Q).
7. As of August 28, 1997, GS Group, as the direct beneficial
owner of all of the capital stock of WH Advisors, Inc. and as a general
partner of GS&Co., may be deemed to beneficially own an aggregate of
4,132,480 shares of Common Stock, including (i) the 4,132,230 shares of
Common Stock beneficially owned by WHWEL described above, and (ii) 250
shares of Common Stock held in Managed Accounts,
<PAGE>
CUSIP No. 950240101 PAGE 12 OF 21 PAGES
representing in the aggregate approximately 20.0% of the Common Stock
reported to be outstanding as of August 11, 1997 (as reported in the
Company's 10-Q).
8. GS Group and GS&Co. disclaim beneficial ownership of (i)
the shares of Common Stock beneficially owned by WHWEL to the extent of
partnership interests in WHWEL held by persons other than GS Group,
GS&Co. or their affiliates and (ii) the shares of Common Stock held in
Managed Accounts.
9. None of the Reporting Persons beneficially owns any shares
of Common Stock as of August 28, 1997 other than as set forth herein.
(c) Each Reporting Person shares the power to vote or direct the vote
and to dispose or direct the disposition of shares of Common Stock
beneficially owned by such Reporting Person as indicated in the second
through eighth pages of this filing.
(d) Except as set forth in 5A, no transactions in the Common Stock were
effected by the Reporting Persons or, to their knowledge, any of the
persons listed on Schedules 2A, 2B or 2C hereto, during the past 60
days. Schedule 5A sets forth transactions in the Common Stock which
have been effected by GS&Co. during the period from June 29, 1997
through August 28, 1997. The purchases by GS&Co. set forth on Schedule
5A were made in the ordinary course of business.
(e) To the knowledge of the Reporting Persons, no other person has the
right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, any shares of Common Stock deemed
beneficially owned by the Reporting Persons.
(f) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Each Warrant is exercisable at any time on or prior to August 28, 2002
for, at the sole election of the Company, either (i) 0.826446 shares of Common
Stock (the "Shares Amount") or (ii) an amount of cash equal to the product of
the closing price of the Common Stock as of the date of exercise multiplied by
the Shares Amount (the "Cash Amount"). The exercise price of the Warrants is, at
the sole election of the holder, either (i) one membership unit of
Wellsford/Whitehall or (ii) $10.00 in cash; provided that, holders of Warrants
may not elect to use membership units of Wellsford/Whitehall as the exercise
price prior to August 28, 1999. When multiple Warrants are exercised, the
exercise price may consist of cash, membership units of Wellsford/Whitehall or
any combination thereof.
The Shares Amount and the Cash Amount are subject to adjustments upon
(i) the payment of dividends payable in shares of Common Stock; (ii) the payment
of a dividend or other distribution or issuance to all holders of Common Stock
of rights or warrants to subscribe for or purchase shares of Common Stock at
less than the current market price, (iii) subdivisions and combinations of
Common Stock, (iv) the dividend or distribution to all holders of Common Stock
of debt or equity securities, cash or assets (other than as described in (ii)
above and other than in the case of certain excluded dividends and
distributions), (v) a tender or exchange offer by the Company for Common Stock
at a price in excess of the current market price therefor, and (vi) the
consummation by the Company of any reclassification, consolidation, merger or
sale or exchange of all or substantially all of the Company's assets or other
similar transaction.
The Warrant Agreement grants WHWEL demand registration rights to cause
the Company to register under the Securities Act of 1933, as amended the
Warrants and shares of Common Stock into which the Warrants are exercisable. The
holders of Warrants and the Common Stock into which the Warrants are exercisable
will be permitted to make two demands for registration of such securities and up
to four demands per year for registration of such securities pursuant to an
existing shelf registration statement. The Warrant Agreement provides that the
costs and expenses of such registration, including the fees and expenses of one
counsel for the requesting holders and up to a 5% underwriting discount or
commission, will be paid by the Company. In addition, the Company has granted
the holders of the Warrants and the shares of Common Stock into which the
Warrants are exercisable the
<PAGE>
CUSIP No. 950240101 PAGE 13 OF 21 PAGES
right to be included in any registration of securities effected by the Company,
subject to possible proration. In connection with any such registration, the
Warrant Agreement provides that the Company will indemnify and hold harmless, or
will contribute to certain losses incurred by, the requesting holders.
The foregoing description of the Warrant Agreement is subject
to, and qualified in its entirety by reference to, the Warrant Agreement, which
is filed as an exhibit to this Schedule 13D.
WHWEL and the Company are parties to a letter agreement, dated
August 28, 1997, concerning certain additional issuance to WHWEL of shares of
Common Stock and WHWEL, the Company and WCPT are parties to a letter agreement,
dated August 28, 1997, concerning sales of shares of Common Stock and shares of
WCPT (together, the "Letter Agreements").
The foregoing description of the Letter Agreements is subject
to, and qualified in its entirety by reference to, the Letter Agreements, which
are filed as exhibits to this Schedule 13D.
Except as described in this Schedule 13D, none of the
Reporting Persons or, to the knowledge of the Reporting Persons, any of the
persons listed on Schedule 2A, Schedule 2B or Schedule 2C hereto is a party to
any contract, arrangement, understanding or relationship with respect to any
securities of the Company.
Item 7. Material to be Filed as Exhibits.
The following exhibits are filed with this statement:
Exhibit No. Exhibit Page
4 Warrant Agreement between Wellsford Real 23
Properties, Inc. and United States Trust
Company of New York, as warrant agent,
dated as of August 28, 1997.
99.1 Letter Agreement between WHWEL Real Estate 78
Limited Partnership and Wellsford Real
Properties, Inc., dated August 28, 1997.
99.2 Letter Agreement among WHWEL Real Estate 81
Limited Partnership, Wellsford Real
Properties, Inc. and Wellsford Commercial
Properties Trust, dated August 28, 1997
<PAGE>
CUSIP No. 950240101 PAGE 14 OF 21 PAGES
SIGNATURE
Each Reporting Person certifies that, after reasonable inquiry and to
the best of such Reporting Person's knowledge and belief, the information set
forth in this Statement is true, complete and correct.
Dated: September 5, 1997 WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Elizabeth A. O'Brien
----------------------------------
Name: Elizabeth A. O'Brien
Title: Vice President
Dated: September 5, 1997 WHATR GEN-PAR, INC.
By: /s/ Elizabeth A. O'Brien
--------------------------------------
Name: Elizabeth A. O'Brien
Title: Vice President
Dated: September 5, 1997 WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII,
General Partner
By: WH Advisors, Inc. VII,
General Partner
By: /s/ Elizabeth A. O'Brien
----------------------------
Name: Elizabeth A. O'Brien
Title: Vice President
Dated: September 5, 1997 WH ADVISORS, L.P. VII
By: WH Advisors, Inc. VII,
General Partner
By: /s/ Elizabeth A. O'Brien
---------------------------------
Name: Elizabeth A. O'Brien
Title: Vice President
<PAGE>
CUSIP No. 950240101 PAGE 15 OF 21 PAGES
Dated: September 5, 1997 WH ADVISORS, INC. VII
By: /s/ Elizabeth A. O'Brien
--------------------------------------
Name: Elizabeth A. O'Brien
Title: Vice President
Dated: September 5, 1997 THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation,
General Partner
By: /s/ David A. Viniar
---------------------------------
Name: David A. Viniar
Title: Executive Vice President
Dated: September 5, 1997 GOLDMAN, SACHS & CO.
By:/s/ David A. Viniar
--------------------------------------
Name: David A. Viniar
Title: Vice President
<PAGE>
CUSIP No. 950240101 PAGE 16 OF 21 PAGES
Exhibit Index
Exhibit Description
4. Warrant Agreement between Wellsford Real Properties, Inc. and
United States Trust Company of New York, as warrant agent,
dated as of August 28, 1997.
99.1 Letter Agreement between WHWEL Real Estate Limited Partnership
and Wellsford Real Properties, Inc., dated August 28, 1997.
99.2 Letter Agreement among WHWEL Real Estate Limited Partnership,
Wellsford Real Properties, Inc. and Wellsford Commercial
Properties Trust, dated August 28, 1997
<PAGE>
CUSIP No. 950240101 PAGE 17 OF 21 PAGES
SCHEDULE 2A
The names and occupations of each of the executive officers of WHATR
Gen-Par are set forth below:
Daniel M. Neidich President
Stuart M. Rothenberg Vice President
Todd A. Williams Vice President, Assistant
Secretary and Assistant
Treasurer
Michael Klingher Vice President
Ralph F. Rosenberg Vice President and Assistant
Secretary
Edward M. Siskind Vice President and Assistant
Treasurer
David M. Weil Vice President
Kevin D. Naughton Vice President, Secretary and
Treasurer
Elizabeth A. O'Brien Vice President and
Assistant Secretary
Angie D. Madison Vice President
G. Douglas Gunn Vice President
The sole director of WHATR Gen-Par is Stuart M. Rothenberg.
Todd A. Williams, Angie D. Madison and G. Douglas Gunn have their
principal place of business at 100 Crescent Court, Suite 1000, Dallas, Texas
75201. All other persons named in this schedule have their principal place of
business at 85 Broad Street, New York, NY 10004. Unless otherwise indicated,
each person named in this schedule is a citizen of the United States of America.
<PAGE>
CUSIP No. 950240101 PAGE 18 OF 21 PAGES
SCHEDULE 2B
The names and occupations of each of the executive officers of WH
Advisors, Inc. are set forth below:
Daniel M. Neidich President
Ralph F. Rosenberg Vice President and Assistant
Secretary
G. Douglas Gunn Vice President
David M. Weil Vice President
Kevin D. Naughton Vice President, Secretary and
Treasurer
Elizabeth A. O'Brien Vice President and
Assistant Secretary
Todd A. Williams Vice President, Assistant
Secretary and Assistant
Treasurer
Stuart M. Rothenberg Vice President
Michael K. Klingher Vice President
Richard E. Georgi III Vice President
Edward M. Siskind Vice President and Assistant
Treasurer
The sole director of WH Advisors, Inc. is Stuart M. Rothenberg.
G. Douglas Gunn and Todd A. Williams have their principal place of
business at 100 Crescent Court, Suite 1000, Dallas, Texas 75201. Richard E.
Georgi III has his principal place of business at 133 Fleet Street, London EC4A
2BB, England. All other persons named in this schedule have their principal
place of business at 85 Broad Street, New York, NY 10004. Unless otherwise
indicated, each person named in this schedule is a citizen of the United States
of America.
<PAGE>
CUSIP No. 950240101 PAGE 19 OF 21 PAGES
SCHEDULE 2C
The name and business address of each member of the executive committee
of GS Group and GS&Co. are set forth below. The present principal occupation or
employment of each of the listed persons is as a managing director of GS&Co. or
another Goldman Sachs operating entity and as a member of the executive
committee.
Unless otherwise indicated, the business address of each person listed
below is 85 Broad Street, New York, NY 10004, and unless otherwise indicated
each person is a citizen of the United States of America.
Name Business Address
- ---- ----------------
Jon Z. Corzine
Henry M. Paulson, Jr.
Roy J. Zuckerberg
Robert J. Hurst
John A. Thain 133 Fleet Street
London EC4A 2BB, England
John L. Thornton 3 Garden Road
Hong Kong
<PAGE>
CUSIP No. 950240101 PAGE 20 OF 21 PAGES
SCHEDULE 2D
In settlement of SEC Administrative Proceeding File No. 3-7646 In the
Matter of the Distribution of Securities Issued by Certain Government Sponsored
Enterprises, Goldman, Sachs & Co., (the "Firm") without admitting or denying the
findings consented to the entry of an Order dated January 16, 1992 along with
numerous other securities firms. The SEC found that the Firm in connection with
its participation in the primary distributions of certain unsecured debt
securities issued by Government Sponsored Enterprises ("GSEs") made and kept
certain records that did not accurately reflect the Firm's customers' orders for
GSEs' securities and/or offers, purchases or sales by the Firm of the GSEs'
securities effected by the Firm in violation of Section 17(a) of the Exchange
Act and 17 C.F.R. (S)(S) 240.17a-3 and 240.17a-4.
The Firm was ordered to cease and desist from committing or causing
future violations of the aforementioned sections of the Exchange Act in
connection with any primary distributions of unsecured debt securities issued by
the GSEs, pay a civil money penalty to the United States Treasury in the amount
of $100,000 and maintain policies and procedures reasonably designed to ensure
the Firm's future compliance with the aforementioned sections of the Exchange
Act in connection with any primary distributions of unsecured debt securities
issued by the GSES.
In SEC Administrative Proceeding File No. 3-8282 In the Matter of
Goldman, Sachs & Co., the Firm without admitting or denying the allegations
settled administrative proceedings involving alleged books and records and
supervisory violations relating to eleven trades in the secondary markets for
U.S. Treasury securities in 1985 and 1986. The SEC alleged that the Firm had
failed to maintain certain records required pursuant to Section 17(a) of the
Exchange Act and had also failed to supervise activities relating to the
aforementioned trades in violation of Section 15(b)(4)(E) of the Exchange Act.
The Firm was ordered to cease and desist from committing or causing any
violations of the aforementioned sections of the Exchange Act, pay a civil money
penalty to the SEC in the amount of $250,000 and establish policies and
procedures reasonably designed to assure compliance with Section 17(a) of the
Exchange Act and Rules 17a-3 and 17a-4 thereunder.
<PAGE>
CUSIP No. 950240101 PAGE 21 OF 21 PAGES
SCHEDULE 5A
WELLSFORD REAL PROPERTIES, INC.
PURCHASES SALES PRICE TRADE DATE SETTLEMENT DATE
- --------- ----- ----- ---------- ---------------
1,400 11.0625 16-Jul-97 21-Jul-97
- --------- ----- ------- ---------- ---------------
1,400 11.0625 16-Jul-97 21-Jul-97
- --------- ----- ------- ---------- ---------------
1,400 11.125 17-Jul-97 22-Jul-97
- --------- ----- ------- ---------- ---------------
400 11 30-Jun-97 3-Jul-97
- --------- ----- ------- ---------- ---------------
400 10.875 30-Jun-97 3-Jul-97
- --------- ----- ------- ---------- ---------------
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.
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<PAGE>
"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.
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<PAGE>
"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.
-3-
<PAGE>
"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.
-4-
<PAGE>
"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
-5-
<PAGE>
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
-6-
<PAGE>
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.
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<PAGE>
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 sur rendered 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,
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<PAGE>
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 purchaser, 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:
(i) 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.
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(ii) 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.
(iii) 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).
(iv) 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
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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).
(v) 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,
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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.
(vi) 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.
(vii) 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
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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.
(viii) 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
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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.
(ix) No adjustment in the Shares Amount shall be required unless such
adjust ment 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.
(x) Whenever the Shares Amount is adjusted as herein provided:
(1) 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
(2) 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
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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:
(i) 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
(ii) 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
(iii) 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
(iv) 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
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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:
(i) "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).
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(ii) "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.
(iii) "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, liquidation, 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.
(iv) "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
(v) "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
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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 distribution,
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.
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(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
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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) (i) 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.
(ii) 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)
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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 Company 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 continuously 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.
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(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 registra-
tion 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
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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).
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(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:
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(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.
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(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
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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 incorporated 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 under writers 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.
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(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.
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(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
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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:
(i) 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;
(ii) 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;
(iii) 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);
(iv) 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;
(v) 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;
(vi) 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
(vii) up to a 5% underwriting discount or commission payable to the
underwriters or agents in connection with the sale of the Registered
Securities.
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(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:
(i) 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;
(ii) 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
(iii) 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;
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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 commence ment 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
(i) 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
(ii) 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
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there may be one or more legal defenses available to the indemnified party
which are not available to the indemnifying party; or
(iii) 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
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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.
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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 Registration 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
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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.
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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
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<PAGE>
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.
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<PAGE>
(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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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
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<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.
A-1
<PAGE>
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.
A-2
<PAGE>
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.
A-3
<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:
A-4
<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:
*
(Signature of Owner)
(Street Address)
(City) (State) (Zip Code)
[Signature Guaranteed by:
]
Securities and/or check to be issued to:
Please insert social security or identifying number:
- ----------------------------
* 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.
A-5
<PAGE>
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:
A-6
<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
A-7
<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.
A-8
<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
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<PAGE>
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
-ii-
<PAGE>
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
-iii-
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
<PAGE>
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: Assistant Vice President
Acknowledged and agreed
as of the date first above written:
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
---------------------------------
Name: Edward Lowenthal
Title: President
WHWEL Real Estate Limited Partnership
c/o Whitehall Street Real Estate Limited Partnership VII
85 Broad Street, 19th Floor
New York, New York 10004
August 28, 1997
Wellsford Commercial Properties Trust
Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, New York 10020
Gentlemen:
Reference is hereby made to the Limited Liability Company Operating
Agreement (the "Agreement") of Wellsford/Whitehall Properties, L.L.C. (the
"Company"), dated the date hereof, between WHWEL Real Estate Limited Partnership
("Whitehall") and Wellsford Commercial Properties Trust ("WCPT"), pursuant to
which Whitehall and WCPT are setting forth the terms and conditions by which the
Company intends to operate. Capitalized terms not otherwise defined herein shall
have the definitions set forth in the Agreement.
Subject to the provisions regarding restrictions on ownership and
transfer, and in addition to any rights set forth in the Agreement, including
without limitation the rights set forth in Section 8.3 thereof, in the event
Whitehall and/or any of its Affiliates, either individually or together,
intend(s) to sell, whether in a registered or private offering or otherwise, in
one or more series of related transactions, any combination of shares of common
stock, par value $.01 per share, of Wellsford Real Properties, Inc. ("WRP
Shares"), or shares of beneficial interest, par value $.01 per shares, of WCPT
("WCPT Shares"), having an aggregate proposed purchase price of $10 million or
more, Whitehall shall provide WRP and WCPT, respectively, (i) with two business
days prior written notice of its intention to commence such a sale and (ii)
during such two business day period, the opportunity to offer to purchase from
Whitehall such WRP Shares and/or WCPT Shares. Notwithstanding the foregoing,
Whitehall shall have no obligation to accept any such offer from WRP or WCPT.
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.
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc.,
as General Partner
By: /s/ Ronald Bernstein
Name: Ronald Bernstein
Title: Assistant Vice President
Acknowledged and agreed as of the date first above written:
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
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