SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number 001-12917
WELLSFORD REAL PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 13-3926898
(State of organization) (I.R.S. employer
identification number)
535 Madison Avenue, New York, NY 10022
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 838-3400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
Common Stock
$.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting shares held by non-affiliates of the
registrant was approximately $192.4 million based on the closing price on the
American Stock Exchange for such shares on March 8, 1999.
The number of the Registrant's shares of Common Stock outstanding was
20,750,411 as of March 8, 1999 (including 339,806 shares of Class A Common
Stock).
Documents Incorporated By Reference
Portions of the Definitive Proxy Statement for the Annual Shareholders'
Meeting to be held May 17, 1999 are incorporated by reference into Part III.
<PAGE>
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TABLE OF CONTENTS
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Form
10-K
Item Report
No. Page
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PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties. . . . . . . . . . . . . . . . . . . . . . . . .10
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . .11
4. Submission of Matters to a Vote of Security-Holders . . . .11
PART II
5. Market for Registrant's Common Equity
and Related Shareholder Matters. . . . . . . . . . . .12
6. Selected Consolidated Financial Data. . . . . . . . . . . .13
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . .14
7a. Quantitative and Qualitative Disclosures about Market
Risk . . . . . . . . . . . . . . . . . . . . . . . . . . ..20
8. Consolidated Financial Statements and Supplementary Data. .21
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . .21
PART III
10. Directors and Executive Officers of the Registrant. . . . .22
11. Executive Compensation. . . . . . . . . . . . . . . . . . .22
12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . . .22
13. Certain Relationships and Related Transactions. . . . . . .22
PART IV
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . .23
FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1998 and
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income for the Years Ended
December 31, 1998, 1997 and 1996 . . . . . . . . . . F-4
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended December 31, 1998, 1997
and 1996. . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996 . . . . . . . . . . F-6
Notes to Consolidated Financial Statements. . . . . . . . F-7
Wellsford/Whitehall Properties II, L.L.C. Consolidated
Financial Statements and Notes . . . . . . . . . . . . .F-28
FINANCIAL STATEMENTS SCHEDULE
III. Real Estate and Accumulated Depreciation. . . . . . . . . S-1
IV. Mortgage Loans on Real Estate . . . . . . . . . . . . . . S-2
All other schedules have been omitted because the required information for
such other schedules is not present, is not present in amounts sufficient to
require submission of the schedule or is included in the consolidated
financial statements.
PART I
Item 1. Business
Wellsford Real Properties, Inc. (and subsidiaries, collectively, the
"Company") was formed on January 8, 1997, as a corporate subsidiary of
Wellsford Residential Property Trust (the "Trust"). The Trust was formed in
1992 as the successor to Wellsford Group Inc. (and affiliates) which was
formed in 1986. On May 30, 1997, the Trust merged (the "Merger") with Equity
Residential Properties Trust ("EQR"). Immediately prior to the Merger, the
Trust contributed certain of its assets to the Company and the Company
assumed certain liabilities of the Trust. Immediately after the contribution
of assets to the Company and immediately prior to the Merger, the Trust
distributed to its common shareholders all of the outstanding shares of the
Company owned by the Trust (the "Spin-off"). On June 2, 1997, the Company
sold 12,000,000 shares of its common stock in a private placement (the
"Private Placement") to a group of institutional investors at $10.30 per
share, the Company's then book value per share.
The Company is a real estate merchant banking firm headquartered in New York
City which acquires, develops, finances and operates real properties and
organizes and invests in private and public real estate companies. The
Company has established three strategic business units ("SBUs") within which
it executes its business plan: an SBU for commercial property operations
which is held in its subsidiary, Wellsford/Whitehall Properties II, L.L.C.,
an SBU for debt and equity activities and an SBU for property development and
land operations. The Company currently has approximately 35 employees and
offices in New York, NY, Boston, MA, Chatham, NJ and Denver, CO.
See the accompanying consolidated financial statements for certain financial
information regarding the Company's industry segments.
Commercial Property Operations - Wellsford/Whitehall
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The Company seeks to acquire commercial properties below replacement cost and
operate and/or resell the properties after renovation, redevelopment and/or
repositioning. The Company believes that appropriate well-located commercial
properties which are currently underperforming can be acquired on
advantageous terms and repositioned with the expectation of achieving returns
which are greater than returns which could be achieved by acquiring a
stabilized property.
In August 1997 the Company, in a joint venture with WHWEL Real Estate Limited
Partnership ("Whitehall"), an affiliate of Goldman, Sachs & Co., formed a
private real estate operating company, now known as Wellsford/Whitehall
Properties II, L.L.C. ("Wellsford/Whitehall"). Wellsford/Whitehall's initial
target markets include New York, New Jersey, Connecticut and the Boston and
Washington D.C. metropolitan areas. The Company manages Wellsford/Whitehall
on a day-to-day basis, and certain major decisions require the consent of
both partners. The Company had a 47.7% interest in Wellsford/Whitehall at
December 31, 1998.
Wellsford/Whitehall owned and operated 35 office buildings containing
approximately 4.6 million square feet ("SF") of office space in its target
markets as of December 31, 1998, including approximately 1.4 million SF under
renovation, with an aggregate gross book value of approximately $501.7
million.
In February 1998, Wellsford/Whitehall acquired a 65,000SF office building in
Boston, MA for $5.5 million and 19 acres of undeveloped land in Somerset, NJ
for $2.0 million, which is adjacent to four buildings currently owned by
Wellsford/Whitehall.
In March 1998, Wellsford/Whitehall purchased an 82,000SF property in
Somerset, NJ for approximately $5.4 million.
In May 1998, Wellsford/Whitehall completed the acquisition of a 977,000SF
portfolio of 13 office buildings for $148.7 million (the "Boston Portfolio").
The Boston Portfolio was financed with (i) the assumption of $68.3 million of
mortgage debt (the "Nomura Mortgage"), (ii) $35.8 million of borrowings on
Wellsford/Whitehall's revolver/term loan, (iii) the issuance of $19.0 million
of Wellsford/Whitehall 6% convertible preferred units, (iv) $18.0 million of
capital contributions and (v) the issuance of $7.6 million of
Wellsford/Whitehall common units.
In May 1998, Wellsford/Whitehall acquired two warehouse buildings totaling
approximately 470,000SF for $28.4 million in Needham, MA.
Wellsford/Whitehall intends to convert the facilities into office buildings.
The two buildings were concurrently leased to the Polaroid Corporation for a
period of approximately 12 months.
In June 1998, Wellsford/Whitehall acquired an approximately 63,000SF office
building located in Andover, MA for approximately $7.4 million and two office
buildings totaling 104,000SF located in Basking Ridge, NJ for approximately
$15.0 million.
In July 1998, Wellsford/Whitehall modified its existing $375 million
revolver/term loan with BankBoston, N.A. ("BankBoston") and Goldman Sachs
Mortgage Company (the "Wellsford/Whitehall Bank Facility"). Under the new
terms, $300 million represents a senior secured credit facility bearing
interest at LIBOR + 1.65% and $75 million represents a secured mezzanine
facility bearing interest at LIBOR + 3.2%. Both facilities mature on December
15, 2000 and are extendable for one year by Wellsford/Whitehall. As of
December 31, 1998, approximately $276.2 million was outstanding under the
Wellsford/Whitehall Bank Facility ($207.3 million of which was under the
senior facility).
In September 1998, Wellsford/Whitehall purchased two office buildings
totaling approximately 199,000SF in Franklin Township, NJ for approximately
$22.8 million.
In November 1998, Wellsford/Whitehall purchased a 38,000SF office building in
Columbia, MD for approximately $2.6 million.
In December 1998, Wellsford/Whitehall purchased a 147,000SF office building
in Ridgefield Park, NJ for approximately $19.3 million.
The 1998 Wellsford/Whitehall acquisitions described above, other than the
Boston Portfolio, were funded primarily by capital contributions from the
Company and Whitehall, and by borrowing on the Wellsford/Whitehall Bank
Facility.
The Company is entitled to incentive compensation equal to (a) 17.5% of
available cash after a return of capital to the Company and Whitehall and a
17.5% return on equity to each of them, and (b) 22.5% of available cash after
a 22.5% return on equity to the Company and Whitehall. The Company and
Whitehall have committed to make additional equity contributions of $50
million each for new acquisitions, capital needs, and working capital, of
which $13.6 million remained unfunded by each at December 31, 1998. Whitehall
may exchange the membership units it receives in Wellsford/Whitehall relating
to capital contributions in excess of an additional $25 million up to an
additional $50 million, for shares of the Company's common stock or, in the
Company's sole discretion, cash, based upon the price paid for such
membership units and the current market value of the Company's common stock.
In connection with the formation of Wellsford/Whitehall, the Company issued
warrants (the "Whitehall Warrants") to Whitehall to purchase 4,132,230 shares
of the Company's common stock at an exercise price of $12.10 per share. The
Whitehall Warrants are exercisable for five years for either, at the
Company's option, shares of the Company's common stock or cash. The exercise
price for the Whitehall Warrants is payable in cash or, after August 28,
1999, either with cash or membership units in Wellsford/Whitehall.
The Company has agreed with Whitehall to conduct its business and activities
relating to office properties (but not other types of commercial properties)
located in North America solely through its interest in Wellsford/Whitehall
except, in certain circumstances, where Wellsford/Whitehall has declined the
investment opportunity.
Debt and Equity Activities - dba Wellsford Capital
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The Company makes loans that constitute, or will invest in, real estate-
related senior, junior or otherwise subordinated debt instruments, which may
be unsecured or secured by liens on real estate, interests therein or the
economic benefits thereof, and which have the potential for high yields or
returns more characteristic of equity ownership. These investments may
include debt that is acquired at a discount, mezzanine financing, commercial
mortgage-backed securities ("CMBS"), secured and unsecured lines of credit,
distressed loans, and loans previously made by foreign and other financial
institutions. The Company believes that there are opportunities to acquire
real estate debt, especially in the low or below investment grade tranches,
at significant returns as a result of inefficiencies in pricing, while
utilizing management's real estate expertise to analyze the underlying
properties and thereby effectively minimizing risk. At December 31, 1998,
the Company had $124.7 million of debt investments which bore interest at an
average yield of approximately 4.6% over LIBOR and had an average remaining
term to maturity of 4.1 years.
277 Park
The Company and BankBoston have provided an $80 million loan (the "277 Park
Loan") to entities which own substantially all of the equity interests (the
"Equity Interests") in the entity which owns an approximately 1.75 million SF
office building located in New York City (the "277 Park Property"). The
Company has advanced $25 million pursuant to the 277 Park Loan. The 277 Park
Loan is secured primarily by a pledge of the Equity Interests owned by the
borrowers. The 277 Park Loan is subordinated to a 10-year $345 million first
mortgage loan (the "REMIC Loan") on the 277 Park Property. The 277 Park Loan
bears interest at the rate of approximately 12% per annum for the first nine
years of its term and at a floating annual rate during the tenth year equal
to LIBOR plus 5.15% or BankBoston base rate plus 5.15%, as elected by the
borrowers. The principal amount of the 277 Park Loan and all accrued
interest will be payable in May 2007; the REMIC Loan is also due in May 2007.
The Abbey Company
In August 1997, the Company and Morgan Guaranty Trust Company of New York
("MGT") originated a $70 million secured credit facility (the "Abbey Credit
Facility") to affiliates of The Abbey Company, Inc. ("Abbey"). In May 1998,
the Company and MGT expanded the Abbey Credit Facility to $120 million. In
December 1998, Abbey repaid $20 million, thereby reducing the total available
to $100 million.
The Abbey Credit Facility will be made available to Abbey until September
2000. Advances under the facility can be made for up to 65% of the value of
the borrowing base collateral which consisted of 24 properties, all cross-
collateralized, totaling approximately 1.7 million SF at December 31, 1998.
As of December 31, 1998, approximately $46.0 million had been advanced by the
Company under the Abbey Credit Facility. Under the terms of its
participation agreement with MGT, the Company will fund a 50% junior
participation on all advances under the Abbey Credit Facility.
The Company is entitled to receive interest on its advances under the Abbey
Credit Facility at LIBOR plus 4%.
IPH Mezzanine Facility
In December 1997, Wellsford Ventures, Inc. ("Ventures"), a wholly-owned
subsidiary of the Company, joined with Fleet Real Estate, Inc. ("FRE"), a
subsidiary of Fleet Financial Group, to issue an approximately $32.5 million
subordinated credit facility (the "IPH Mezzanine Facility") to Industrial
Properties Holding, L.P. ("IPH"). Each of Ventures and FRE were committed to
advance up to 50% of the IPH Mezzanine Facility. Ventures advanced
approximately $9.8 million under the JPH Mezzanine Facility. The IPH
Mezzanine Facility was repaid in February 1998, at which time the Company
received a total of $0.8 million in interest and fees. Advances under the IPH
Mezzanine Facility bore interest at an annual rate of LIBOR plus 5%.
Woodlands
In December 1997, BankBoston, Morgan Stanley Senior Funding, Inc. and certain
other lenders made available to the owners and developers of a 25,000 acre
master-planned residential community located north of Houston (the "Woodlands
Property"), loans in the aggregate principal amount of $369 million (the
"Woodlands Loan"). The Woodlands Loan consists of a revolving credit loan in
the principal amount of $179 million (the "Revolving Loan"), a secured term
loan in the principal amount of $130 million (the "Secured Loan"), and a
second secured term loan in the principal amount of $60 million (the "Second
Secured Loan"). The Company has advanced $15 million pursuant to the Second
Secured Loan. The Second Secured Loan is subordinate to the Revolving Loan
and the Secured Loan and bears interest equal to LIBOR plus 4.40%. Interest
on the Second Secured Loan is payable monthly to the extent there is
available cash after payment of interest on the Revolving Loan and the
Secured Loan and provided no event of default has occurred under the
Woodlands Loan. The principal amount of the Woodlands Loan and all accrued
interest thereon will be payable on July 31, 2000, with two, one-year
extension options available to the borrower.
Park 80
In December 1997, the Company originated a $5.1 million loan bearing interest
at LIBOR plus 3% which was repaid in August 1998 (the "Park 80 Loan"). The
Park 80 Loan was secured by a mortgage on an 80,000SF mid-rise office
building in Saddlebrook, New Jersey.
Value Property Trust
In February 1998, the Company completed the previously announced merger (the
"VLP Merger") with Value Property Trust ("VLP") for total consideration of
approximately $169 million. As of December 31, 1998, approximately $5.1
million was recorded as a net deferred tax asset reflecting the value of
VLP's net operating loss carryforwards. Thirteen of the twenty VLP
properties, which were under contract to an affiliate of Whitehall, were
subsequently sold for an aggregate of approximately $64 million. The Company
retained seven of the VLP properties containing an aggregate of approximately
0.6 million square feet located primarily in the northeastern U.S.
In October 1998, the Company closed on $28 million of non-recourse mortgage
financing (the "Wellsford Capital Mortgage") on the portfolio of seven
commercial properties acquired in the VLP Merger. The loan bears interest at
LIBOR + 2.75 % and has a term of three years. The proceeds were used to repay
amounts outstanding on the Company's credit facility and for working capital
purposes.
Clairborne Investors
In January 1998, the Company acquired a 49% interest in Creamer Realty
Consultants, a real estate advisory and consulting firm, and formed Creamer
Vitale Wellsford, L.L.C. ("Creamer Vitale Wellsford").
Creamer Realty Consultants and Creamer Vitale Wellsford, together with
Prudential Real Estate Investors ("PREI"), a division of Prudential
Investment Corporation, have established the Clairborne Investors Mortgage
Investment Program to make opportunistic investments and to provide liquidity
to participants in large syndicated mortgage loan transactions. The parties
have agreed to contribute up to $150 million to fund acquisitions approved by
the parties, of which a subsidiary of the Company will fund 10%. Creamer
Vitale Wellsford will originate, co-invest, and manage the investments of the
program.
The Company's original investment in these entities was $1.3 million of cash
and 148,000 five-year warrants to purchase the Company's common shares at
$15.175 per share, valued at approximately $0.7 million. In November 1998,
Creamer Vitale Wellsford acquired a $17 million participation in a $56
million mortgage, bearing interest at LIBOR + 1.75% and due in 3.5 years, at
a significant discount to face value. The Company funded approximately $1.4
million of this participation.
DeBartolo
In July 1998, the Company purchased an $18 million participation in a $175
million loan (the "DeBartolo Loan"). The DeBartolo Loan is secured by
partnership units in Simon DeBartolo Group, L.P., the operating partnership
of a real estate investment trust which owns approximately 175 million square
feet of mall space nationwide. The DeBartolo Loan bears interest at 8.547%,
payable quarterly, pays principal based on a 20 year amortization schedule
and is due in July 2008.
REIT Bridge Loan
In August 1998, the Company funded a $15 million participation in a $100
million unsecured loan (the "REIT Bridge Loan") to a publicly traded real
estate investment trust which owns 22 regional malls, eight multifamily
apartment properties and five office properties nationwide. This loan bore
interest at 9.875% and was due in February 1999 with two three-month
extensions available to the borrower. In January 1999, the REIT Bridge Loan
was modified to extend the maturity date to August 1999 and increase the
interest rate to 12%. The borrower paid a 1.5% loan fee at origination and a
1% loan fee upon modification.
Liberty Hampshire
In July and August 1998, the Company invested a total of $2.1 million in The
Liberty Hampshire Company, L.L.C. ("Liberty Hampshire") which structures,
establishes and provides management and services for special purpose finance
companies ("SPFCs") formed to invest in financial assets. The Company also
invested a total of $5.0 million in a joint venture SPFC with Liberty
Hampshire. This SPFC has invested in a participation in the DeBartolo Loan
and has acquired an interest in REIS Reports, Inc., a leading provider of
real estate market information to institutional investors.
Safeguard
In December 1998, the Company and MGT originated a $90 million secured credit
facility (the "Safeguard Credit Facility") to Safeguard Capital Fund, L.P.
("Safeguard").
The Safeguard Credit Facility will be made available to Safeguard until April
2001. Advances under the facility can be made for up to 75% of the value of
the borrowing base collateral which consisted of 4 properties, all cross-
collateralized, totaling approximately 0.3 million SF at December 31, 1998.
As of December 31, 1998, approximately $5.9 million had been advanced by the
Company under the Safeguard Credit Facility. Under the terms of its
participation agreement with MGT, the Company will fund a 50% junior
participation on all advances under the Safeguard Credit Facility.
The Company is entitled to receive interest on its advances under the
Safeguard Credit Facility at LIBOR plus 4%.
Property Development and Land Operations - dba Wellsford Development
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The Company engages in selective development activities as opportunities
arise and when justified by expected returns. The Company believes that by
pursuing selective development activities it can achieve returns which are
greater than returns which could be achieved by acquiring stabilized
properties. Certain development activities may be conducted in joint
ventures with local developers who may bear the substantial portion of the
economic risks associated with the construction, development and initial
rent-up of properties. As part of its strategy, the Company may seek to
issue tax-exempt bond financing authorized by local governmental authorities
which generally bears interest at rates substantially below rates available
from conventional financing.
Palomino Park
The Company owns an approximate 80% interest in Phases I, II, III and IV of,
and in an option to acquire (at a fixed price) and develop phase V of, a
1,800-unit class A multifamily development ("Palomino Park") in a suburb of
Denver, Colorado. The Company has a related $14.8 million tax exempt
mortgage note payable which requires interest only payments at a variable
rate (currently approximately 4%) until it matures in December 2035 (the
"Palomino Park Bonds"). The tax exempt mortgage note payable is security for
tax-exempt bonds, which are backed by a letter of credit from a AAA rated
financial institution. The Company and an affiliate of EQR have guaranteed
the reimbursement of the financial institution in the event that the letter
of credit is drawn upon (the latter guarantee being the "EQR Enhancement").
In December 1997, Phase I, known as Blue Ridge, was completed at a cost of
approximately $41.5 million. At that time, the Company obtained a $34.5
million permanent loan (the "Blue Ridge Mortgage") secured by a mortgage on
Blue Ridge. The Blue Ridge Mortgage matures in January 2008 and bears
interest at a fixed rate of 6.92%. Principal payments are based on a 30-year
amortization schedule.
In November 1998, Phase II, known as Red Canyon, was completed at a cost of
approximately $33.9 million. At that time, the Company acquired Red Canyon
and the related construction loan was repaid with the proceeds of a $27
million permanent loan (the "Red Canyon Mortgage") secured by a mortgage on
Red Canyon. The Red Canyon Mortgage matures in December 2008 and bears
interest at a fixed rate of 6.68%. Principal payments are based on a 30-year
amortization schedule.
The Company has a gross investment of approximately $18.8 million at December
31, 1998 in the following multifamily development project, which is a phase
of Palomino Park, and related infrastructure costs:
Number of Estimated Estimated
Name Units Location Total Cost Stabilization Date
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Silver Mesa 264 Denver $40.0 million Second Qtr. 2000
This project is being developed pursuant to a fixed-price contract. The
Company is committed to purchase 100% of this project upon completion, which
is anticipated to occur in the second quarter of 2000. In addition, the
Company is obligated to fund the first 20% of construction costs on this
project as they are incurred.
Silver Mesa is owned by Silver Mesa at Palomino Park LLC ("Phase III LLC"), a
limited liability company, the members of which are Wellsford Park Highlands
Corp. (99%), a majority owned and controlled subsidiary of the Company, and
Al Feld ("Feld") (1%). Feld is a Denver-based developer specializing in the
construction of luxury residential properties. Feld has constructed over
3,000 units since 1984.
The construction loan on Silver Mesa is for approximately $27.7 million,
matures in June 2001 (with a 6-month extension at the option of the Phase III
LLC upon fulfillment of certain conditions), and bears interest at LIBOR plus
1.50%. Feld has guaranteed repayment of this loan.
In May 1998, the Company acquired the land for Phase IV for approximately
$3.2 million.
Sonterra
From the time of the Spin-off, the Company held a $17.8 million mortgage (the
"Sonterra Loan") on, and option to purchase, a 344-unit class A residential
apartment complex ("Sonterra at Williams Centre") located in Tucson, Arizona.
In January 1998, the Company exercised its option and acquired Sonterra at
Williams Centre for approximately $20.5 million, including satisfaction of
the mortgage. In February 1998, the Company closed on $16.4 million of
mortgage financing (the "Sonterra Mortgage") on this property, bearing
interest at 6.87% and maturing in March 2008. Principal payments are based
on a 30-year amortization schedule.
Segment Financial Information
See Note 10 to the Company's consolidated financial statements for additional
information regarding the Company's industry segments.
Future Investments
The Company may in the future make equity investments in entities owned
and/or operated by unaffiliated parties and which engage in real estate-
related businesses and activities or businesses that service the real estate
industry. Some of the entities in which the Company may invest may be start-
up companies or companies in need of additional capital. The Company may
also manage and lease properties owned by it or in which it has an equity or
debt investment.
Item 2. Properties.
Wellsford/Whitehall owned the following commercial properties and land
parcels at December 31, 1998:
Decem-
ber
Year 31,
Gross Con- 1998
Area structed/ 1998 En-
(square Rehabili- Occu- cum-
Property Location feet) tated pancy brance
- -------- -------- ------- --------- ----- ---
1800 Valley Road Wayne, NJ 56,000 1980 100% (A)
Greenbrook Fairfield, NJ 201,000 1987 91% (A)
Chatham Chatham, NJ 63,000 1972/1997 52% (A)
300 Atrium Drive Somerset, NJ 149,000 1983 77% (A)
400 Atrium Drive Somerset, NJ 355,000 1985 97% (A)
500 Atrium Drive Somerset, NJ 167,000 1984 87% (A)
700 Atrium Drive Somerset, NJ 181,000 1985 97% (A)
1275 K Street Washington, DC 225,000 1983 78% (A)
Mountain Heights #1 Berkeley Hts, NJ 183,000 1986 92% (A)
15 Broad Street Boston, MA 65,000 1920/1984 81% (A)
GS Exhibit Center Somerset, NJ 82,000 1968/1989 52% (A)
150 Wells Newton, MA 11,000 1987 100% (A)
72 River Park Needham, MA 22,000 1983 100% (A)
70 Wells Newton, MA 29,000 1979 100% (A)
160 Wells Newton, MA 19,000 1970/1997 100% (A)
2331 Congress Portland, ME 24,000 1980 84% (A)
60/74 Turner Waltham, MA 16,000 1970 100% (A)
100 Wells Newton, MA 21,000 1978 100% (A)
333 Elm (Norfolk Pl) Dedham, MA 48,000 1983 92% (A)(B)
Dedham Place Dedham, MA 160,000 1987 99% (A)(B)
128 Technology Ctr Waltham, MA 218,000 1986 100% (A)(B)
201 University Westwood, MA 82,000 1982 100% (A)(B)
7/57 Wells Newton, MA 88,000 1982 88% (A)(B)
75/85/95 Wells Newton, MA 242,000 1976/1986 100% (A)(B)
Shattuck Andover, MA 63,000 1985 100% (A)
Mt Airy Basking Ridge, NJ 104,000 1980 75% (A)
Campus Drive Franklin Twp, NJ 199,000 1984 100% (A)
Samsung Ridgefield Park, NJ 147,000 1992 66% (A)
Pointview Wayne, NJ 515,000 1976/1998 N/A* (A)
Morris Tech Ctr Parsippany, NJ 244,000 1963/77/98 N/A* (A)
Mountain Heights #2 Berkeley Hts, NJ 115,000 1968/1998 N/A* (A)
117 Kendrick St Needham, MA 209,000 1963 100%* (A)
140 Kendrick St Needham, MA 261,000 1963 100%* (A)
600 Atrium Drive
(land) Somerset, NJ N/A N/A N/A* (A)
6301 Stevens Forest Columbia, MD 38,000 1980 N/A* (A)
---------- ---
TOTAL/AVERAGE 4,602,000 90%
========== ===
*Building under renovation, not included in average.
(A) Encumbered by the Wellsford/Whitehall Bank Facility.
(B) Encumbered by the Nomura Mortgage.
Wellsford Capital owned the following commercial properties at December 31,
1998, which are encumbered by the $28.0 million Wellsford Capital Mortgage:
Year
Gross Con-
Area structed/ 1998
(square Reha- Occu-
Property Location feet) bilitated pancy
- -------- -------- ------- --------- -----
Hoes Lane Piscataway, NJ 37,000 1987 83%
Bradford Plaza West Chester, PA 124,000 1990 83%
Chestnut Street Philadelphia, PA 50,000 1857/1990 90%
Keewaydin Drive Salem, NH 125,000 1973 54%
Turnpike Street Canton, MA 43,000 1980 100%
Two Executive Cherry Hill, NJ 102,000 1970 68%
Bay City Holdings Santa Monica, CA 114,000 1985 100%
------- ----
TOTAL/AVERAGE 595,000 80%
======= ====
The Company owned the following multifamily properties at December 31, 1998:
Year
Con- December
structed/ 31, 1998
Reha- 1998 Encum-
Property Location Units bilitated Occupancy brance
-------- -------- ----- --------- --------- ---------
Blue Ridge Denver, CO 456 1997 93% $34,144,108
Red Canyon Denver, CO 304 1998 96%(A) 27,000,000
Sonterra Tucson, AZ 344 1995 94% 16,277,682
----- -------------------------
TOTAL/AVERAGE 1,104 93% $77,421,790
===== =========================
(A) Property acquired in November 1998, not included in average occupancy.
Item 3. Legal Proceedings.
Neither the Company nor Wellsford/Whitehall are presently defendants in any
material litigation nor, to the Company's knowledge, is any material
litigation threatened against the Company or Wellsford/Whitehall other than
routine litigation arising in the ordinary course of business and which is
expected to be covered by liability insurance.
Item 4. Submission of Matters to a Vote of Security-Holders.
Not applicable.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters.
(C) Market Information
The Company's common shares are traded on the American Stock Exchange under
the symbol "WRP". The high and low sales prices for the common shares on the
American Stock Exchange and the dividends declared since the Company's
inception are as follows:
Common Shares
---------------------------------
1998 High Low Dividends
---- ---- --- ---------
1st Quarter $15.63 $13.25 N/A
2nd Quarter $15.38 $13.00 N/A
3rd Quarter $14.88 $ 9.00 N/A
4th Quarter $10.50 $ 6.75 N/A
Common Shares
---------------------------------
1997 High Low Dividends
---- ---- --- ---------
June 2 - June 30 $11.19 $10.50 N/A
3rd Quarter $16.13 $10.81 N/A
4th Quarter $17.25 $14.25 N/A
(D) Holders
The approximate number of holders of record of the common shares and Class A
common shares (collectively, "Common Shares" or "Common Stock") were 3,200
and 1, respectively, as of March 8, 1999. These holders represent the
interests of approximately 7,000 beneficial shareholders.
(C) Dividends
The Company paid no dividends during 1997 or 1998. The Company does not plan
to distribute dividends for the foreseeable future, which will permit it to
accumulate, for reinvestment, cash flow from investments, disposition of
investments and other business activities.
Item 6. Selected Consolidated Financial Data.
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements included elsewhere in this Form 10-K.
Prior to the Company's 1997 investments, the Company's operations consisted
of earning interest income on the Sonterra Mortgage (originated in July 1996)
and the initial phase of construction development activity with respect to
Palomino Park.
Summary
Consolidated Statement of
Operations Data Year Ended December 31,
- ------------------------- ---------------------------------------------
(in thousands except per share data)
1998 1997 1996
---- ---- ----
Revenues $ 26,154 $ 9,070 $ 757
Expenses (17,383) (3,819) --
Income from joint ventures 3,523 15 --
--------- --------- --------
Income before taxes $ 12,294 $ 5,266 $ 757
========= ========= ========
Net income $ 9,444 $ 3,053 $ 757
========= ========= ========
Net income per
common share, basic $ 0.47 $ 0.18 $ 0.04
========= ========= ========
Net income per common
share, diluted $ 0.46 $ 0.18 $ 0.04
========= ========= ========
Weighted average number of
common shares outstanding 19,886 16,922 16,912
====== ====== ======
Summary
Consolidated Balance
Sheet Data December 31,
- ---------------------- ---------------------------------------------------
(in thousands except per share data)
1998 1997 1996 1995
---- ---- ---- ----
Real estate $150,322 $ 58,741 $ -- $ --
Notes receivable 124,706 105,632 17,800 --
Investment in joint ventures 80,776 44,780 -- --
Total assets 384,971 249,974 44,760 18,369
Mortgage notes payable 120,177 49,255 14,755 14,755
Credit facility 17,000 7,500 -- --
Shareholders' equity 231,625 181,158 30,005 3,614
The earnings per share amounts conform with Statement of Financial Accounting
Standards No. 128 "Earnings per share". For further discussion of earnings
per share and the impact of Statement No. 128, see the notes to the
consolidated financial statements beginning on page F-7.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
The following discussion should be read in conjunction with the "Selected
Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Form 10-K.
Results of Operations
- ---------------------
Prior to the Company's 1997 investments, the Company's operations consisted
of earning interest income on the Sonterra Loan (originated in July 1996) and
the initial phase of construction development activity with respect to
Palomino Park. Therefore, the increases in operating revenues and expenses
between 1996 and 1997 reflected in the financial statements are the result of
the acquisition of primarily all of the Company's operating assets during
1997.
The accompanying consolidated financial statements include the assets and
liabilities contributed to and assumed by the Company from the Trust, from
the time such assets and liabilities were acquired or incurred, respectively,
by the Trust. Such financial statements have been prepared using the
historical basis of the assets and liabilities and the historical results of
operations related to the Company's assets and liabilities.
Comparison of the year ended December 31, 1998 to the year ended December 31,
1997.
Rental income increased by $11.8 million. This increase is a result of the
acquisition of properties in connection with the VLP Merger in February 1998
($4.7 million), the completion of Blue Ridge ($5.3 million) and Red Canyon
($0.4 million) (Phases I and II of the Company's Palomino Park development)
in December 1997 and November 1998, respectively, and the acquisition of
Sonterra at Williams Centre in January 1998 ($2.7 million), net of the
decrease associated with the contribution of all of the Company's then owned
commercial properties to Wellsford/Whitehall in August 1997.
Interest income increased by $5.1 million. This increase is primarily a
result of the acquisition of approximately $157.5 million in notes receivable
during the period from April 1997 through December 1998 bearing interest at
rates between LIBOR +2% and approximately LIBOR +6% offset by the repayment
of $60.0 million of notes receivable during this period.
Property operating and maintenance expense, real estate tax expense,
depreciation and amortization, and property management expense increased by
$2.5 million, $1.1 million, $2.9 million, and $0.5 million, respectively.
These increases are a result of the factors which affected rental income, as
described above.
Interest expense increased by $4.6 million as a result of the issuance of
substantially all of the Company's debt other than the Palomino Park Bonds on
or after December 31, 1997. All of the interest on the Company's debt prior
to December 31, 1997 was capitalized to the Company's Palomino Park
development.
General and administrative expense increased by $1.9 million. This increase
is a result of the Company commencing operations subsequent to the Spin-off
in May 1997, as well as the Company's growth over the last year.
Gain on sale of investments results from the sale of certain notes receivable
acquired in the VLP Merger.
Income from joint ventures increased by $3.5 million. This increase is a
result of the Wellsford/Whitehall joint venture transaction in August 1997,
the Creamer Realty Consultants joint venture transaction in January 1998 and
the Liberty Hampshire joint venture transaction in July 1998.
Minority interest is a result of EQR's 20% interest in the Company's Palomino
Park development, as well as certain limited partnership interests
(aggregating approximately 10%) in one of the Company's commercial office
properties acquired in the VLP Merger. These limited partnership interests
were bought out by the Company in October 1998 for approximately $1.1
million.
The income tax provision increased $0.6 million as a result of the increase
from approximately $4.2 million of taxable income during the period from the
Spin-off through December 31, 1997 to approximately $12.3 million of taxable
income during the year ended December 31, 1998, net of the effects of the
utilization of the net operating loss carry forwards acquired in the VLP
Merger ($2.2 million).
Liquidity and Capital Resources
- -------------------------------
The Company expects to meet its short-term liquidity requirements generally
through its working capital and cash flow provided by operations. The
Company considers its ability to generate cash to be adequate and expects it
to continue to be adequate to meet operating requirements both in the short
and long terms.
The Company expects to meet its long-term liquidity requirements such as
refinancing mortgages, financing acquisitions and development, and financing
capital improvements by long-term borrowings, through the issuance of debt
and the offering of additional debt and equity securities.
The Company has (i) the commitment, until May 30, 2000, of an affiliate of
EQR to acquire at the Company's option up to $25 million of the Company's
Series A 8% Convertible Redeemable Preferred Stock ("Series A Preferred"),
each share of which is convertible into shares of common stock at a price of
$11.124 (the "EQR Preferred Commitment") and (ii) a $50 million two-year line
of credit (extendible for one year) from BankBoston and MGT (the "WRP Bank
Facility") which initially bears interest at an annual rate equal to LIBOR
+175 basis points. The EQR Preferred Commitment is pledged as security for
the WRP Bank Facility. If at May 30, 2000, the affiliate of EQR has
purchased less than $25 million of Series A Preferred, it has the right to
purchase the remainder of the $25 million not purchased prior to that time.
As of December 31, 1998, $17 million was outstanding under the WRP Bank
Facility which was repaid in January 1999.
With respect to its Palomino Park investment, the Company has obtained a
guarantee provided by the EQR Enhancement of $14.8 million.
The Company's long-term debt matures as follows: $17.8 million in 1999
(including the $17.0 million balance of the WRP Bank Facility which was
repaid in January 1999), $0.9 million in 2000, $29.0 million in 2001, $1.0
million in 2002, $1.1 million in 2003 and $87.4 million thereafter.
The WRP Bank Facility contains various customary loan covenants and requires
the Company to maintain a ratio of total consolidated liabilities to total
consolidated assets of not more than 0.6 to 1, to maintain an overall debt
service coverage ratio of at least 1.5 to 1 and to meet certain minimum
borrowing base and equity level requirements. The WRP Bank Facility also
limits the amount of undeveloped land the Company may hold.
For a discussion of the Company's development communities and related capital
commitments, see "Item 1. Business - Property Development and Land
Investments - dba Wellsford Development."
On June 2, 1997, the Company completed a Private Placement. The proceeds of
the Private Placement of approximately $123.6 million were applied to (a)
approximately $53 million to repay the WRP Bank Facility and other debt on
the date of the Private Placement and (b) the balance towards certain 1997
investments and working capital.
In December 1997, the Company closed on the Blue Ridge Mortgage.
In January 1998, the Company closed on the Sonterra Mortgage.
In February 1998, the Company completed the VLP Merger.
In October 1998, the Company closed on the Wellsford Capital Mortgage.
In November 1998, the Company closed on the Red Canyon Mortgage.
In January 1999, a wholly-owned subsidiary of the Company obtained a $35
million secured loan facility (the "Wellsford Finance Bank Facility") from
BankBoston, which can potentially be increased to $50 million. The Wellsford
Finance Bank Facility bears interest at LIBOR + 2.75% and has a term of 3
years. The Company immediately drew $35 million on this line, the proceeds
of which were used (a) to repay the $17 million balance of the WRP Bank
Facility, and (b) for working capital purposes. The Company is obligated to
pay a fee equal to one-quarter of one percent (0.25%) per annum on the
average daily amount of the unused portion of the Wellsford Finance Bank
Facility until maturity.
Wellsford/Whitehall expects to meet its liquidity requirements, such as
financing renovations to its properties, with operating cash flow from its
properties, equity contributions from the owners of Wellsford/Whitehall, and
the Wellsford/Whitehall Bank Facility.
The net cash flow of the Company provided by operating activities increased
from $6.0 million for the year ended December 31, 1997 to $7.0 million for
the year ended December 31, 1998 and increased from $5.5 million for the year
ended December 31, 1996 to $6.0 million for the year ended December 31, 1997.
These increases generally resulted from the acquisition of the Company's
investments as described in "Item 1. Business." Above.
Investing activities of the Company used $107.1 million, $156.9 million and
$31.2 million during the years ended December 31, 1998, 1997 and 1996,
respectively. Investing activities consisted primarily of the acquisition
and development of properties and the investments made in certain debt and
equity instruments, net of proceeds from the sale of certain assets and the
repayment of certain debt instruments. The Company currently has one
multifamily community under development.
Financing activities of the Company provided $80.3 million, $180.8 million
and $25.6 million during the years ended December 31, 1998, 1997 and 1996,
respectively. The Spin-off, Private Placement, Blue Ridge Mortgage, Sonterra
Mortgage, Wellsford Capital Mortgage, Red Canyon Mortgage and WRP Bank
Facility served as the primary sources of cash flow from financing
activities.
See the accompanying consolidated statements of cash flows included in the
consolidated financial statements for a reconciliation of the Company's cash
position for the years described therein.
Recurring Capital Expenditures
- ------------------------------
Regarding the Company's Blue Ridge (456 units), Red Canyon (304 units) and
Sonterra at Williams Centre (344 units) properties, the Company expects to
incur approximately $235 per unit in capital expenditures during the year
ending December 31, 1999.
Wellsford Capital expects to incur approximately $1.5 million of capital
expenditures, tenant improvements, and leasing commissions with respect to
the properties acquired in the VLP Merger during the year ending December 31,
1999.
Wellsford/Whitehall
Wellsford/Whitehall is currently involved in several projects to renovate,
expand or reposition certain of its properties. For the year ending December
31, 1999, Wellsford/Whitehall expects to incur approximately $66.4 million in
connection with these projects.
In connection with its fully operating properties, Wellsford/Whitehall
expects to incur approximately $3.1 million of capital expenditures,
approximately $7.2 million of tenant improvement expenditures, and
approximately $3.5 million of leasing costs during the year ending December
31, 1999.
Other Capital Commitments
- -------------------------
At December 31, 1998, the Company had the following discretionary capital
commitments. Draws under the Abbey Credit Facility and Safeguard Credit
Facility require additional collateral to be made available to the Company
which is subject to the Company's approval. Capital calls related to
investments to be made by the Company's joint ventures are also subject to
the Company's approval of such investments.
Item Amount
- ---- ------
Undrawn Abbey Credit Facility commitment $ 4.0 million
Undrawn Safeguard Credit Facility commitment $ 39.1 million
Undrawn Wellsford/Whitehall equity commitment $ 13.6 million
Undrawn Creamer Vitale Wellsford equity commitment $ 13.6 million
Undrawn Liberty Hampshire SPFC JV equity commitment $ 23.1 million
Inflation
Substantially all of Wellsford Capital's and Wellsford/Whitehall's office
leases provide for separate escalations of real estate taxes and operating
expenses over a base amount. In addition, many of the office leases provide
for fixed base rent increases or indexed escalations (based on the CPI or
other measures). The Company believes that inflationary increases in
expenses will generally be offset by the expense reimbursements and
contractual rent increases described above.
A substantial majority of the leases at the Company's multifamily properties
are for a term of one year or less which may enable the Company to seek
increased rents upon renewal or re-letting of apartment units. Such short-
term leases generally minimize the risk to the Company of the adverse effects
of inflation.
Approximately 66% of the Company's investments in debt securities bear
interest at floating rates or have remaining terms to maturity of less than
one year. As such, the Company expects the rates of interest earned to
increase in the event of high inflation.
Year 2000
- ---------
The Company has developed a plan to modify its information technology,
primarily its accounting software, to recognize the year 2000. The Company
currently expects the project to be substantially complete by the end of the
second quarter of 1999 at a cost of less than $0.1 million which will be
funded from operations, including costs incurred to date. The Company does
not expect this project to have a significant effect on its operations. The
timing and cost of this project will be closely monitored and are based on
management's best estimates. Actual results, however, could differ from those
anticipated.
The Company also has initiated discussions with its third-party property
management companies (the "Managers") to ensure that those parties have
appropriate plans to allay any year 2000 issues that may impact the Company's
operations. These issues would include both accounting/management software
and non-information technology ("IT") systems such as fire safety, security
and elevator systems. Wellsford/Whitehall has completed its analysis of such
systems and has determined that no material adverse consequences will likely
result from its year 2000 issues. Wellsford Capital and Wellsford Development
have initiated such analysis, which is expected to be completed by the end of
the second quarter of 1999. Under the most reasonably likely worst case
scenario, wherein the Managers fail to update their software and non-IT
systems, the Company has the ability to convert its accounting and management
systems to a spreadsheet-based system on a temporary basis and to utilize its
building engineers to manually override any non-IT systems which fail. While
the Company believes its planning efforts are adequate to address its year
2000 concerns, there can be no guarantee that the systems of other companies
on which the Company's systems and operations rely, primarily its banks,
payroll processing company, creditors, and debtors, will be converted on a
timely basis and will not have a material effect on the Company.
Funds From Operations
- ---------------------
The Company considers Funds From Operations ("FFO") to be one appropriate
measure of the performance of real estate companies because it is predicated
on a cash flow analysis, as opposed to a measure predicated on generally
accepted accounting principles ("GAAP"), which gives effect to non-cash items
such as depreciation. FFO, for the Company's purposes, represents net income
(loss) (computed in accordance with GAAP), plus real estate related
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures, and reflects gains (or losses) from the sale
of real estate assets included in the Company's consolidated net income since
the strategic sale of such assets is integral to the Company's operations.
Adjustments for unconsolidated partnerships and joint ventures are calculated
to reflect FFO on the same basis. FFO does not represent cash generated from
operating activities in accordance with GAAP and therefore should not be
considered an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure of
liquidity and is not necessarily indicative of cash available to fund cash
needs.
Summary Statements of Operating Data
Year Ended December 31,
1998 1997 1996
---- ---- ----
Revenues $ 26,154,351 $ 9,070,375 $757,000
Expenses (17,383,369) (3,819,426) -
Income from joint ventures 3,523,072 15,131 -
------------ ----------- --------
Income before taxes 12,294,054 5,266,084 757,000
Income tax expense ( 2,850,298) (2,213,007) -
------------ ----------- --------
Net income $ 9,443,756 $ 3,053,077 $757,000
Add:
Depreciation and amortization 3,115,555 259,731 -
JV depreciation and
amortization 3,564,206 611,144 -
------------ ----------- ---------
Funds From Operations $ 16,123,517 $ 3,923,952 $757,000
============ =========== =========
Risks Associated with Forward-Looking Statements.
This Form 10-K, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such factors include, among others, the following, which
are discussed in greater detail in the "Risk Factors" section of the
Company's registration statement on Form S-11 (file No. 333-32445) filed with
the Securities and Exchange Commission ("SEC") on July 30, 1997, as may be
amended, which is incorporated herein by reference: general economic and
business conditions, which will, among other things, affect demand for
commercial and residential properties, availability and credit worthiness of
prospective tenants, lease rents and the availability and cost of financing;
difficulty of locating suitable investments; competition; risks of real
estate acquisition, development, construction and renovation; vacancies at
existing commercial and multifamily properties; dependence on rental income
from real property; adverse consequences of debt financing; risks of
investments in debt instruments, including possible payment defaults and
reductions in the value of collateral; risks associated with equity
investments in and with third parties: illiquidity of real estate
investments; lack of prior operating history; and other risks listed from
time to time in the Company's reports filed with the SEC. Therefore, actual
results could differ materially from those projected in such statements.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk.
The Company held the following market risk sensitive instruments at December
31, 1998:
Balance Interest Maturity Fair Value
Item (thousands) Rate Date Other Terms (thousands)
- ---- ---------- -------- -------- ----------- ----------
277 Park Loan $ 25,000 12% 5/2007 Interest only $27,580(C)
Abbey Credit
Facility 46,019 LIBOR+ 4% 9/2000 Interest only 46,019(D)
Woodlands Loan 15,000 LIBOR+4.4% 7/2000 Interest only 15,000(D)
REIT Bridge
Loan 15,000 9.875%* 2/1999* Interest only 15,000(E)
DeBartolo Loan 17,678 8.547% 7/2008 20 Year Amort. 16,916(F)
Safeguard Loan 5,913 LIBOR+ 4% 4/2001 Interest only 5,913(D)
-------- --------
Total Notes Rec $124,610 $126,428
========= ========
WRP Bank
Facility $ 17,000 LIBOR+1.75% 5/1999 (B) $ 17,000(G)
Palomino Park
Bonds 14,755 (A) 12/2035 Interest only 14,755(G)
Blue Ridge Mtge 34,144 6.92% 1/2008 30 Yr. Amort. 34,144(H)
Red Canyon Mtge. 27,000 6.68% 12/2008 30 Yr. Amort. 27,000(I)
Wellsford Cap.
Mtge. 28,000 LIBOR+2.75% 10/2001 Interest only 28,000(G)
Sonterra Mtge. 16,278 6.87% 3/2008 30 Yr. Amort. 16,278(H)
-------- --------
Total Debt $137,177 $137,177
======== ========
* In January 1999, the interest rate and maturity date of this loan were
modified to 12% and August 1999, respectively.
(A) Rate approximates the Standard & Poor's/J.J. Kenney index for short-
term high grade tax-exempt bonds (currently approximately 4%).
(B) For more information on the WRP Bank Facility, see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations." above.
(C) The fair value of this investment was determined by reference to
various market data.
(D) The fair value of the Company's floating rate investments is considered
to be their carrying amount.
(E) The fair value of this short term investment is considered to be its
carrying amount.
(F) The fair value of this investment was determined by reference to
various market data.
(G) The fair value of the Company's floating rate debt is considered to be
its carrying amount.
(H) The fair value of this mortgage is considered to be its carrying amount
since it is similar in both terms and collateral to the Red Canyon
Mortgage which reflects current market conditions (see I below)
(I) The fair value of this mortgage is considered to be its carrying amount
as it is a recently executed transaction reflective of current market
conditions.
The Company's primary market risk exposure is to changes in interest rates.
The Company manages this risk by offsetting its investments and financing
exposures as well as by strategically timing and structuring its
transactions.
The Company has invested in $66.9 million of LIBOR-based debt instruments and
has obtained $45 million of LIBOR-based financing as of December 31, 1998.
The Company has invested in $57.7 million of fixed rate debt instruments and
has obtained $77.4 million of fixed rate financing as of December 31, 1998.
These exposures substantially offset one another. The Company believes that
its net exposure to both LIBOR-based and fixed rate instruments is minimal
because interest rates are currently near historical lows and increases in
interest rates would be beneficial to the Company's net exposures, subject to
credit risk.
Item 8. Consolidated Financial Statements and Supplementary Data.
The response to this Item 8 is included as a separate section of this annual
report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The executive officers and directors of the Company, their ages and their
positions are as follows:
Name Age Positions and Offices Held
---- --- --------------------------
Jeffrey H. Lynford 51 Chairman of the Board, Secretary and
Director *
Edward Lowenthal 54 President, Chief Executive Officer
and Director***
Gregory F. Hughes 35 Chief Financial Officer
David M. Strong 40 Vice President for Development
Douglas Crocker II 58 Director*
Rodney F. Du Bois 63 Director***
Richard S. Frary 51 Director****
Mark S. Germain 48 Director*
Frank J. Hoenemeyer 79 Director**
Frank J. Sixt 47 Director**
- ----------------------
* Term expires 1999.
** Term expires 2000.
*** Term expires 2001.
**** Mr. Frary joined the board effective December 1, 1998. He will stand for
re-election at the Company's 2000 annual meeting of shareholders.
The information contained in the sections captioned "Nominees for Election as
Directors", "Other Directors", "Executive Officers", and "Key Employees" of
the Company's definitive proxy statement for the 1999 annual meeting of
shareholders is incorporated herein by reference.
Item 11. Executive Compensation.
The information contained in the sections captioned "Executive
Compensation", "Compensation of Directors", "Board Committees", "Employment
Agreements", and "Management Incentive Plans" of the Company's definitive
proxy statement for the 1999 annual meeting of shareholders is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information contained in the section captioned "Security Ownership of
Certain Beneficial Owners and Management" of the Company's definitive proxy
statement for the 1999 annual meeting of shareholders is incorporated herein
by reference.
Item 13 Certain Relationships and Related Transactions.
The information contained in the section captioned "Certain Transactions" of
the Company's definitive proxy statement for the 1999 annual meeting of
shareholders is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
The following consolidated financial information is included as a
separate section of this annual report on Form 10-K:
Consolidated Balance Sheets as of December 31, 1998 and 1997.
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Changes in Shareholders' Equity for
the years ended December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules
III. Real Estate and Accumulated Depreciation
IV. Mortgage Loans on Real Estate
All other schedules have been omitted because the required
information of such other schedules is not present, is not present
in amounts sufficient to require submission of the schedule or is
included in the consolidated financial statements.
(3) Exhibits
(a) Exhibit No. Description+++
----------- --------------
3.1 Articles of Amendment and Restatement of the Company.****
3.2 Articles Supplementary Classifying 335,000 Shares of
Common Stock as Class A Common Stock.****
3.3 Articles Supplementary Classifying 2,000,000 Shares of
Common Stock as Series A 8% Convertible Redeemable
Preferred Stock.****
3.4 Bylaws of the Company.****
4.1 Specimen certificate for Common Stock.***
4.2 Specimen certificate for Class A Common Stock.****
4.3 Specimen certificate for Series A 8% Convertible
Redeemable Preferred Stock.****
4.4 Warrant Agreement, dated as of August 28, 1997, between
the Company and United States Trust Company of New York,
as warrant agent, and Warrant Certificate No. 1 of the
Company for 5,000,000 Warrants registered in the name of
WHWEL Real Estate Limited Partnership.+
4.5 Registration Rights Agreement, dated as of February 23,
1998, among the Company and Franklin Mutual Advisors,
Inc. and Angelo Gordon & Co., L.P.++++
10.1 Operating Agreement of Red Canyon at Palomino Park LLC
between Wellsford Park Highlands Corp. and Al Feld, dated
as of April 17, 1996, relating to Red Canyon.*
10.2 First Amendment to Operating Agreement of Red Canyon at
Palomino Park LLC between Wellsford Park Highlands Corp.
and Al Feld, dated as of May 19, 1997, relating to Red
Canyon.****
10.3 Tri-Party Agreement by and among NationsBank of Texas,
N.A., Red Canyon at Palomino Park LLC, Wellsford Park
Highlands Corp., Wellsford Residential Property Trust, Al
Feld and The Feld Company, dated May 29, 1997, relating
to Red Canyon.****
10.4 Assignment and Assumption of Tri-Party Agreement by and
among Wellsford Residential Property Trust, ERP Operating
Limited Partnership, Red Canyon at Palomino Park LLC,
Wellsford Park Highlands Corp., The Feld Company, Al Feld
and NationsBank of Texas, N.A. dated May 30, 1997,
relating to Red Canyon.****
10.5 Agreement and Acknowledgment Regarding Tri-Party
Agreement by and among NationsBank of Texas, N.A., Red
Canyon at Palomino Park LLC, Wellsford Park Highlands
Corp. and ERP Operating Limited Partnership dated May 30,
1997, relating to Red Canyon.****
10.6 Second Amended and Restated Vacant Land Purchase and Sale
Agreement between Mission Viejo Company and The Feld
Company dated March 23, 1995, as amended by First
Amendment, dated May 1, 1996, relating to the land
underlying Palomino Park.*
10.7 Trust Indenture, dated as of December 1, 1995, between
Palomino Park Public Improvements Corporation ("PPPIC")
and United States Trust Company of New York, as trustee,
securing Wellsford Residential Property Trust's
Assessment Lien Revenue Bonds Series 1995 -
$14,755,000.**
10.8 Letter of Credit Reimbursement Agreement, dated as of
December 1, 1995, between PPPIC, Wellsford Residential
Property Trust and Dresdner Bank AG, New York Branch.**
10.9 First Amendment to Letter of Credit Reimbursement
Agreement, dated as of May 30, 1997, between PPPIC,
Wellsford Residential Property Trust, Dresdner Bank AG,
New York Branch and the Company.****
10.10 Amendment to Wellsford Reimbursement Agreement by and
between PPPIC, Wellsford Residential Property Trust and
the Company, dated as of May 30, 1997.****
10.11 Assignment and Assumption Agreement by and between
Wellsford Residential Property Trust and the Company,
dated as of May 30, 1997.****
10.12 Credit Enhancement Agreement by and between the Company
and ERP Operating Limited Partnership, dated as of May
30, 1997, relating to Palomino Park.****
10.13 Reimbursement and Indemnification Agreement by and among
the Company and ERP Operating Limited Partnership, dated
as of May 30, 1997, relating to Palomino Park.****
10.14 Guaranty by ERP Operating Limited Partnership for the
benefit of Dresdner Bank AG, New York Branch, dated as of
May 30, 1997, relating to Palomino Park.****
10.15 Amended and Restated Promissory Note of the Company to
the order of Dresdner Bank AG, New York Branch, dated May
30, 1997, relating to Palomino Park.****
10.16 Common Stock and Preferred Stock Purchase Agreement by
and between the Company and ERP Operating Limited
Partnership dated as of May 30, 1997.****
10.17 Registration Rights Agreement by and between the Company
and ERP Operating Limited Partnership dated as of May 30,
1997.****
10.18 Credit Agreement, dated as of April 25, 1997, between
Park Avenue Financing Company LLC, PAMC Co-Manager Inc.,
PAFC Management, Inc., Stanley Stahl, The First National
Bank of Boston, the Company, Other Banks that may become
parties to the Agreement and The First National Bank of
Boston, as Agent, relating to 277 Park Avenue.**
10.19 Assignment of Member's Interest, dated as of April 25,
1997, by PAFC Management, Inc. and Stanley Stahl to The
First National Bank of Boston, relating to 277 Park
Avenue (relating to interests in the Park Avenue
Financing Company, LLC).**
10.20 Assignment of Member's Interest, dated as of April 25,
1997, by PAMC Co-Manager Inc. and Park Avenue Financing,
LLC to The First National Bank of Boston, relating to 277
Park Avenue (relating to interests in 277 Park Avenue,
LLC).**
10.21 Stock Pledge Agreement, dated as of April 25, 1997, by
Stanley Stahl to The First National Bank of Boston,
relating to 277 Park Avenue (relating to stock in Park
Avenue Management Corporation).**
10.22 Stock Pledge Agreement, dated as of April 25, 1997, by
Stanley Stahl to The First National Bank of Boston,
relating to 277 Park Avenue (relating to stock in PAMC
Co-Manager Inc.).**
10.23 Stock Pledge Agreement, dated as of April 25, 1997, by
Stanley Stahl to The First National Bank of Boston,
relating to 277 Park Avenue (relating to stock in PAFC
Management, Inc.).**
10.24 Conditional Guaranty of Payment and Performance, dated as
of April 25, 1997, by Stanley Stahl, relating to 277 Park
Avenue.**
10.25 Cash Collateral Account Security, Pledge and Assignment
Agreement, dated as of April 25, 1997, between 277 Park
Avenue, LLC, Park Avenue Management Corporation, Park
Avenue Financing Company LLC, PAMC Co-Manager Inc.,
Stanley Stahl and The First National Bank of Boston,
relating to 277 Park Avenue.**
10.26 Recognition Agreement, dated as of April 25, 1997,
between The First National Bank of Boston, the Company,
Column Financial, Inc., Park Avenue Financing Company
LLC, PAMC Co-Manager, Inc. and 277 Park Avenue, LLC,
relating to 277 Park Avenue.**
10.27 Intercreditor Agreement, dated as of April 25, 1997,
between the Company and The First National Bank of
Boston, as Agent, relating to 277 Park Avenue.**
10.28 Assignment and Acceptance Agreement, dated June 19, 1997,
between BankBoston, N.A. (formerly known as The First
National Bank of Boston) ("BankBoston") and the Company,
relating to 277 Park Avenue.****
10.29 Revolving Credit Agreement by and among the Company,
BankBoston, Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), other banks which may become parties
and BankBoston, as agent, and Morgan Guaranty, as co-
agent dated as of May 30, 1997.****
10.30 Agreement Regarding Common Stock and Preferred Stock
Purchase Agreement, dated as of May 30, 1997, among ERP
Operating Limited Partnership, the Company and
BankBoston, as agent.****
10.31 Assignment of Common Stock Agreements, dated as of May
30, 1997, between the Company and BankBoston, as
agent.****
10.32 Collateral Assignment of Documents, Rights and Claims
(including Collateral Assignment of Deed of Trust,
Assignment of Leases and Rents, Security Agreement and
Fixture Filing), made as of May 30, 1997, by the Company
to BankBoston, as agent.****
10.33 First Amended and Restated Loan Agreement, dated as of
July 16, 1998 (the "First Amended and Restated Loan
Agreement"), among Wellsford/Whitehall Holdings, L.L.C.,
as Borrower, and BankBoston, Goldman Sachs Mortgage
Company, and Other Banks, as Banks, and BankBoston, as
Administrative Agent and Co-Arranger and Co-Syndication
Agent, and Goldman Sachs Mortgage Company, as Co-Arranger
and Co-Syndication Agent.
10.34 Form of promissory note payable to the order of eight
lenders by Wellsford/Whitehall Properties, L.L.C. under
the First Amended and Restated Loan Agreement.
10.35 Amended and Restated Assignment of Member's Interest
under the First Amended and Restated Loan Agreement,
dated as of July 16, 1998, by Wellsford/Whitehall
Holdings, L.L.C. to BankBoston, as Agent.
10.36 Amended and Restated Cash Collateral Agreement under the
First Amended and Restated Loan Agreement, dated as of
July 16, 1998, by and among Wellsford/Whitehall Holdings,
L.L.C., WASH Manager L.L.C., Wells Avenue Holdings L.L.C.
and BankBoston, as Agent.
10.37 Indemnity Agreement Regarding Hazardous Materials under
the First Amended and Restated Loan Agreement, dated as
of July 16, 1998, by Wellsford/Whitehall Holdings,
L.L.C., Wellsford Commercial Properties Trust and WHWEL
Real Estate Limited Partnership for the benefit of
BankBoston.
10.38 Conditional Guaranty of Payment under the First Amended
and Restated Loan Agreement, dated as of July 16, 1998,
by Wellsford Commercial Properties Trust, WHWEL Real
Estate Limited Partnership, the Company, Whitehall Street
Real Estate Limited Partnership V, Whitehall Street Real
Estate Limited Partnership VI, Whitehall Street Real
Estate Limited Partnership VII and Whitehall Street Real
Estate Limited Partnership VIII in favor of BankBoston
and Goldman Sachs Mortgage Company.
10.39 Indemnity and Guaranty Agreement under the First Amended
and Restated Loan Agreement, dated as of July 16, 1998,
by Wellsford Commercial Properties Trust and WHWEL Real
Estate Limited Partnership in favor of BankBoston,
Goldman Sachs Mortgage Company and Other Banks.
10.40 Mezzanine Loan Agreement, dated as of July 16, 1998 (the
"Mezzanine Loan Agreement"), among Wellsford/Whitehall
Holdings II, L.L.C., as Borrower, and BankBoston, Goldman
Sachs Mortgage Company, and Other Banks, as Banks, and
BankBoston, as Administrative Agent and Co-Arranger and
Co-Syndication Agent, and Goldman Sachs Mortgage Company,
as Co-Arranger and Co-Syndication Agent.
10.41 Form of promissory note payable to the order of five
lenders by Wellsford/Whitehall Properties II, L.L.C.
under the Mezzanine Loan Agreement.
10.42 Assignment of Member's Interest under the Mezzanine Loan
Agreement, dated as of July 16, 1998, between
Wellsford/Whitehall Properties II, L.L.C. and BankBoston,
as Agent.
10.43 Indemnity Agreement Regarding Hazardous Materials under
the Mezzanine Loan Agreement, dated as of July 16, 1998,
by Wellsford/Whitehall Properties II, L.L.C., Wellsford
Commercial Properties Trust and WHWEL Real Estate Limited
Partnership for the benefit of BankBoston.
10.44 Nomura Conditional Guaranty of Payment under the
Mezzanine Loan Agreement, dated as of July 16, 1998, by
Wellsford Commercial Properties Trust, WHWEL Real Estate
Limited Partnership, the Company, Whitehall Street Real
Estate Limited Partnership V, Whitehall Street Real
Estate Limited Partnership VI, Whitehall Street Real
Estate Limited Partnership VII and Whitehall Street Real
Estate Limited Partnership VIII in favor of BankBoston
and Goldman Sachs Mortgage Company.
10.45 Conditional Guaranty of Payment under the Mezzanine Loan
Agreement, dated as of July 16, 1998, by Wellsford
Commercial Properties Trust, WHWEL Real Estate Limited
Partnership, the Company, Whitehall Street Real Estate
Limited Partnership V, Whitehall Street Real Estate
Limited Partnership VI, Whitehall Street Real Estate
Limited Partnership VII and Whitehall Street Real Estate
Limited Partnership VIII in favor of BankBoston and
Goldman Sachs Mortgage Company.
10.46 Indemnity and Guaranty Agreement under the Mezzanine Loan
Agreement, dated as of July 16, 1998, by Wellsford
Commercial Properties Trust and WHWEL Real Estate Limited
Partnership in favor of BankBoston, Goldman Sachs
Mortgage Company and Other Banks.
10.47 $50 million Revolving Credit Agreement, dated as of
January 12, 1999, among Wellsford Finance, Inc., as
Borrower, and BankBoston and Other Banks, as Lender, and
BankBoston, as Agent.
10.48 $50 million promissory note, dated January 12, 1999,
payable to BankBoston by Wellsford Finance, Inc.
10.49 Collateral Assignment of Documents, Rights and Claims,
dated January 12, 1999, from Wellsford Finance, Inc. to
BankBoston, as Agent.
10.50 Limited Liability Company Operating Agreement of
Wellsford/Whitehall Properties II, L.L.C., dated as of
July 16, 1998.
10.51 Letter Agreement, dated as of July 16, 1998, between the
Company and WHWEL Real Estate Limited Partnership,
relating to warrants to be issued to WHWEL Real Estate
Limited Partnership.
10.52 Fixed Rate Loan Agreement, dated as of August 11, 1998
(the "Fixed Rate Loan Agreement"), by and among First
Union Real Estate Equity and Mortgage Investments, as
Borrower, Bankers Trust Company, as Agent, and Bankers
Trust Company, Wellsford Capital and BankBoston, as
Lenders.
10.53 $15 million promissory note, dated August 11, 1998,
payable to the order of Wellsford Capital by First Union
Real Estate Equity and Mortgage Investments under the
Fixed Rate Loan Agreement.
10.54 First Amendment of Fixed Rate Loan Agreement, dated as of
January 8, 1999, among First Union Real Estate Equity and
Mortgage Investments, as Borrower, Bankers Trust Company,
Wellsford Capital and BankBoston, as Lenders, and Bankers
Trust Company, as Agent.
10.55 Letter dated January 8, 1999, among First Union Real
Estate Equity and Mortgage Investments, as Borrower,
Bankers Trust Company, Wellsford Capital and BankBoston,
as Lenders, and Bankers Trust Company, as Agent.
10.56 Revolving Credit Agreement for $70 million, dated as of
August 28, 1997, between AP-Anaheim LLC, AP-Arlington
LLC, AP-Atlantic LLC, AP-Cityview LLC, AP-Farrell Ramon
LLC, AP-Palmdale LLC, AP-Redlands LLC, AP-Victoria LLC,
AP-Victorville LLC, and AP-Sierra LLC, each a California
limited liability company (collectively, the "Abbey
Affiliates"), as Borrower, and Morgan Guaranty Trust
Company of New York, as Lender.+
10.57 Amendment to Revolving Credit Agreement, dated as of
April 6, 1998, by AP-Diamond Bar LLC, AP-Edinger LLC, AP-
Glendora LLC, AP- Anaheim LLC, AP- Arlington LLC, AP-
Atlantic LLC, AP- Cityview LLC, AP- Redlands LLC, AP-
Palmdale LLC, AP- Farrell Ramon LLC, AP- Sierra LLC, AP-
Victoria LLC and AP- Victorville LLC (collectively, the
"Amended Abbey Affiliates"), as Borrower, and Morgan
Guaranty Trust Company of New York, as Lender.
10.58 Loan Participation Agreement, dated as of August 28,
1997, between Morgan Guaranty Trust Company of New York
and the Company.+
10.59 First Amendment to Participation Agreement, dated as of
April 7, 1998, between Morgan Guaranty Trust Company of
New York and Wellsford Capital.
10.60 $70 million promissory note, dated August 28, 1997,
payable to the order of Morgan Guaranty Trust Company of
New York by the Abbey Affiliates.+
10.61 Amendment to Promissory Note, dated as of April 6, 1998,
between the Amended Abbey Affiliates and Morgan Guaranty
Trust Company of New York.
10.62 Purchase and Sale Agreement, dated as of September 18,
1997, among the Company, Wellsford Capital Corporation
and Whitehall Street Real Estate Limited Partnership
VII.++
10.63 First Amended and Restated Master Credit Agreement, dated
December 30, 1997, effective as of July 31, 1997, among
The Woodlands Commercial Properties Company, L.P., The
Woodlands Land Development Company, L.P., and BankBoston,
Morgan Stanley Senior Funding, Inc., as Documentation
Agent, and Other Banks, and BankBoston, as Managing Agent
and Syndication Agent.++++
10.64 Intercreditor Agreement, dated December 30, 1997,
effective as of July 31, 1997, by and between BankBoston,
Morgan Stanley Senior Funding, Inc. and the Other
Lenders, relating to Woodlands.++++
10.65 $4,186,991.87 Commercial Company Second Secured Term Loan
Note, dated December 30, 1997, payable to the order of
the Company by The Woodlands Commercial Properties
Company, L.P. and The Woodlands Land Development Company,
L.P.++++
10.66 $10,813,008.13 Land Company Second Secured Term Loan
Note, dated December 30, 1997, payable to the order of
the Company by The Woodlands Land Development Company,
L.P. and The Woodlands Commercial Properties Company,
L.P.++++
10.67 Revolving Credit Agreement, dated as of March 28, 1998,
among Safeguard Capital Fund, L.P., as Borrower, and
Morgan Guaranty Trust Company of New York, as Lender.
10.68 $90 million promissory note, dated March 28, 1998,
payable to Morgan Guaranty Trust Company of New York by
Safeguard Capital Fund, L.P.
10.69 Loan Participation Agreement, dated as of December 1,
1998, between Morgan Guaranty Trust Company of New York
and Wellsford Capital.
10.70 Program Agreement for Clairborne Investors Mortgage
Program between Creamer Realty Consultants and The
Prudential Investment Corporation, dated as of December
10, 1997.++++
10.71 Amended and Restated General Partnership Agreement of
Creamer Realty Consultants, dated as of January 1, 1998,
by and between Wellsford CRC Holding Corp. and FGC Realty
Consultants, Inc.++++
10.72 Limited Liability Company Agreement of Creamer Vitale
Wellsford, L.L.C., dated as of January 20, 1998, by and
between Wellsford CRC Holding Corp. and SX Advisors,
LLC.++++
10.73 Loan Agreement, dated as of February 27, 1998, between
Wellsford Sonterra L.L.C., as Borrower, and Nationsbank,
N.A., as Lender.++++
10.74 $16,400,000 promissory note, dated February 27, 1998,
payable to the order of NationsBank, N.A., by Wellsford
Sonterra, L.L.C.++++
10.75 Deed of Trust, Assignment of Leases and Rents and
Security Agreement, dated February 27, 1998 by Wellsford
Sonterra, L.L.C. in favor of NationsBank, N.A.++++
10.76 $34,500,000 Multifamily Note, dated December 24, 1997,
payable to the order of GMAC Commercial Mortgage
Corporation by Park at Highlands L.L.C.++++
10.77 Multifamily Deed of Trust, Assignment of Rents and
Security Agreement, dated December 24, 1997, by Park at
Highlands L.L.C. in favor of GMAC Commercial Mortgage
Corporation.++++
10.78 $28 million secured promissory note, dated October 22,
1998, payable to the order of Lehman Brothers Holdings
Inc. by Wellsford Capital Properties, L.L.C.
10.79 Conditional Guarantee, dated as of October 22, 1998, by
Wellsford Capital in favor of Lehman Brothers Holdings
Inc.
10.80 Mortgage and Security Agreement, dated as of October 22,
1998, by Wellsford Capital Properties, L.L.C. to Lehman
Brothers Holdings Inc.
10.81 1998 Management Incentive Plan of the Company.
10.82 1997 Management Incentive Plan of the Company.**
10.83 Rollover Stock Option Plan of the Company.**
10.84 Employment Agreement between the Company and Jeffrey H.
Lynford.****
10.85 Employment Agreement between the Company and Edward
Lowenthal.****
10.86 Employment Agreement between the Company and Gregory F.
Hughes.****
10.87 Employment Agreement between the Company and David M.
Strong.****
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
99.1 "Risk Factors" section of Amendment No. 2 to the
Company's Registration Statement on Form S-11 (file no.
333-32445), as may be amended.+++++
- --------------------------
* Previously filed as an exhibit to the Form 10 filed on April 23,
1997.
** Previously filed as an exhibit to the Form 10/A Amendment No. 1
filed on May 21, 1997.
*** Previously filed as an exhibit to the Form 10/A Amendment No. 2
filed on May 28, 1997.
**** Previously filed an exhibit to the Form S-11 filed on July 30,
1997.
***** Previously filed as an exhibit to Amendment No. 1 to Form S-11
filed on November 14, 1997.
+ Previously filed as an exhibit to the Form 8-K filed on September
11, 1997.
++ Previously filed as an exhibit to the Form 8-K filed on September
23, 1997.
+++ Wellsford acquired its interest in a number of these documents by
assignment.
++++ Previously filed as an exhibit to the Form 10-K filed on March 31,
1998.
+++++ Previously filed as part of Amendment No. 2 to the Registration
Statement on Form S-11 filed on December 3, 1997.
(b) During the last quarter of the period covered by this report,
the Company filed the following reports on Form 8-K:
Form 8-K dated December 1, 1998, regarding the addition of
Richard S. Frary to the Company's board of directors.
(c) The following exhibits are filed as exhibits to this Form 10-
K: See Item 14 (a)(3) above.
(d) The following documents are filed as a part of this report:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Jeffrey H. Lynford
---------------------------
(Jeffrey H. Lynford)
Chairman of the Board, Secretary
and Director
Dated: March 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
- ---------------------- ------------------------------ -------
/s/ Jeffrey H. Lynford Chairman of the Board, March 26, 1999
- ---------------------- Secretary and Director
(Jeffrey H. Lynford)
/s/ Edward Lowenthal President, Chief Executive March 26, 1999
- ---------------------- Officer and Director
(Edward Lowenthal) (Principal Executive Officer)
/s/ Gregory F. Hughes Chief Financial Officer March 26, 1999
- ---------------------- (Principal Financial and
(Gregory F. Hughes) Accounting Officer)
/s/ Rodney F. Du Bois Director March 26, 1999
- ---------------------
(Rodney F. Du Bois)
/s/ Mark S. Germain Director March 26, 1999
- ---------------------
(Mark S. Germain)
/s/ Frank J. Hoenemeyer Director March 26, 1999
- -----------------------
(Frank J. Hoenemeyer)
/s/ Frank J. Sixt Director March 26, 1999
- -----------------
(Frank J. Sixt)
/s/ Douglas Crocker II Director March 26, 1999
- ----------------------
(Douglas Crocker II)
/s/ Richard S. Frary Director March 26, 1999
- -------------------
(Richard S. Frary)
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page No. in
Form 10-K
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . .F-2
Consolidated Balance Sheets as of December 31, 1998 and 1997 . . . . . .F-3
Consolidated Statements of Income for the Years Ended
December 31, 1998, 1997 and 1996 . . . . . . . . . . . . . . . . . . . .F-4
Consolidated Statements of Changes in Shareholders' Equity for
the Years Ended December 31, 1998, 1997 and 1996 . . . . . . . . . . . .F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996 . . . . . . . . . . . . . . . . . . . .F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .F-7
Wellsford/Whitehall Properties II, L.L.C.
Consolidated Financial Statements and Notes. . . . . . . . . . . . . . F-28
FINANCIAL STATEMENT SCHEDULES
III - Real Estate and Accumulated Depreciation. . . . . . . . . . . . S-1
IV- Mortgage Loans on Real Estate . . . . . . . . . . . . . . . . . . S-2
All other schedules have been omitted because the required information for
such other schedules is not present, is not present in amounts sufficient to
require submission of the schedule or because the required information is
included in the consolidated financial statements.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
Wellsford Real Properties, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Wellsford
Real Properties, Inc. and subsidiaries (the "Company") as of December 31,
1998 and 1997, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. Our audits also included the financial statement
schedules listed in the Index at Item 14(a). These financial statements and
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Wellsford Real Properties, Inc. and subsidiaries at December 31, 1998 and
1997, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
/s/ Ernst & Young LLP
New York, New York
February 12, 1999
<PAGE>
WELSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
--------------------------------
1998 1997
-------------- --------------
ASSETS
Real estate assets,
at cost - Note 10
Land $ 18,813,000 $ 5,225,000
Buildings and improvements 115,425,760 36,338,624
-------------- --------------
134,238,760 41,563,624
Less, accumulated depreciation (2,707,390) -
-------------- --------------
131,531,370 41,563,624
Construction in progress 18,791,075 17,177,824
-------------- --------------
150,322,445 58,741,448
Notes receivable - Notes 4 and 10 124,706,499 105,631,611
Investment in joint ventures - Note 10 80,776,338 44,779,563
-------------- --------------
Total real estate assets 355,805,282 209,152,622
Cash and cash equivalents 10,122,037 29,895,212
Restricted cash - Note 3 8,007,850 7,695,910
Prepaid and other assets 11,035,489 3,229,956
------------- --------------
Total Assets $ 384,970,658 $ 249,973,700
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable - Notes 5 and 10 $ 120,176,790 $ 49,255,000
Credit facility - Notes 4 and 5 17,000,000 7,500,000
Accrued expenses and other liabilities 12,788,324 9,763,109
------------ --------------
Total Liabilities 149,965,114 66,518,109
------------- --------------
Commitments and contingencies -
Notes 4,5,6,7,8,9,10,11 and 13 - -
Minority Interest - Note 10 3,380,721 2,297,295
Shareholders' Equity:
Series A 8% Convertible Redeemable
Preferred Stock, $.01 par value per
share, 2,000,000 shares authorized,
no shares issued and outstanding
at December 31, 1998 or 1997 - -
Common Stock
197,650,000 shares authorized-
20,410,605 and 16,656,707 shares,
$.01 par value per share, issued
and outstanding at December 31, 1998
and 1997, respectively 204,106 166,567
Class A Common Stock, 350,000 shares
authorized - 339,806 shares, $.01
par value per share, issued
and outstanding at December 31,
1998 and 1997 3,398 3,398
Paid in capital in excess of
par value 228,212,205 179,721,827
Retained earnings 11,385,274 1,941,518
Deferred compensation - Note 7 (3,240,023) (675,014)
Treasury stock, 489,671 shares -
Note 7 (4,940,137) -
-------------- --------------
Total Shareholders' Equity -
Notes 1 and 7 231,624,823 181,158,296
-------------- --------------
Total Liabilities and
Shareholders' Equity $ 384,970,658 $ 249,973,700
============== ==============
See Accompanying Notes
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31,
--------------------------------------
1998 1997 1996
------------- ---------- -----------
REVENUE
Rental income $ 13,126,974 $1,291,354 $ -
Interest income 12,888,607 7,779,021 757,000
------------ ---------- ----------
Total Revenue 26,015,581 9,070,375 757,000
------------ ---------- ----------
EXPENSES
Property operating
and maintenance 2,786,839 241,257 -
Real estate taxes 1,201,051 105,692 -
Depreciation and amortization 3,157,129 294,563 -
Property management 498,596 18,356 -
Interest 4,599,309 - -
General and administrative 5,062,895 3,159,558 -
------------ ---------- ----------
Total Expenses 17,305,819 3,819,426 -
Gain on sale of investment 138,770 - -
Income from joint ventures 3,523,072 15,135 -
------------ ---------- ----------
Income before minority interest 12,371,604 5,266,084 757,000
Minority interest (77,550) - -
------------ ---------- ----------
Income before taxes 12,294,054 5,266,084 757,000
Income tax expense - Note 2 2,850,298 2,213,007 -
------------ ---------- ----------
Net income $ 9,443,756 $3,053,077 $ 757,000
============ ========== ==========
Net income per common share,
basic - Note 2 $ 0.47 $ 0.18 $ 0.04
============ ========== ==========
Net income per common share,
diluted - Note 2 $ 0.46 $ 0.18 $ 0.04
============ ========== ==========
Weighted average number of common
shares outstanding - Note 2 19,886,305 16,922,135 16,911,849
============ ========== ==========
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Common Shares* Total
------------------ Paid-in Retained Deferred Shareholders'
Shares Amount Capital** Earnings Compensation Equity
-------- -------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1995 - $ - $ 3,614,000 $ - $ - $ 3,614,000
Equity contributions - - 25,634,000 - - 25,634,000
Net income - - - 757,000 - 757,000
--------- --------- ------------- ------------ ------------- -----------
December 31, 1996 - - 29,248,000 757,000 - 30,005,000
Equity contributions
prior to Spin-off -
Note 1 - - 19,310,633 - - 19,310,633
Net income prior to
Spin-off - Note 1 - - - 1,111,559 - 1,111,559
Spin-off - Note 1 4,887,577 48,875 1,819,684 (1,868,559) - -
Private offering of
common shares (net
of issuance costs)
- Note 7 12,000,000 120,000 121,574,562 - - 121,694,562
Issuance of Warrants
- Note 7 - - 6,198,345 - - 6,198,345
Director and officer
share grants
- Note 7 108,936 1,090 1,570,603 - (675,014) 896,679
Net income subsequent
to Spin-off - - - 1,941,518 - 1,941,518
----------- --------- ------------- ------------ ----------- ------------
December 31, 1997 16,996,513 169,965 179,721,827 1,941,518 (675,014) 181,158,296
Shares issued in
connection with
VLP merger -
Note 7 3,350,000 33,500 39,329,000 - - 39,362,500
Issuance of warrants
- Note 7 - - 750,000 - - 750,000
Director and officer
share grants
- Note 7 403,898 4,039 3,471,241 - (2,700,023) 775,257
Amortization of
deferred compensation
- Note 7 - - - - 135,014 135,014
Net income - - - 9,443,756 - 9,443,756
----------- --------- ------------- ------------ ----------- ------------
December 31, 1998 20,750,411 $ 207,504 $ 223,272,068 $ 11,385,274 $(3,240,023) $231,624,823
=========== ========= ============= ============ =========== ============
*Includes 339,806 Class A Common Shares.
**Net of treasury stock
See Accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years Ended December 31,
------------------------------------------------------
1998 1997 1996
--------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,443,756 $ 3,053,077 $ 757,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 3,168,583 294,563 -
Undistributed joint venture
income (2,083,506) (15,135) -
Share grants 931,350 896,679 -
Gain on sale of investments (138,770) - -
Decrease (increase) in assets
Restricted cash (311,940) (2,175,910) 4,894,000
Prepaid and other assets (7,957,209) (3,164,296) (134,000)
(Decrease) increase in liabilities
Accrued expenses and
other liabilities 3,952,549 7,116,138 -
------------- ----------- -------------
Net cash provided by operating
activities 7,004,813 6,005,116 5,517,000
------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate assets (125,514,325) (85,551,813) (13,351,000)
Investments in joint ventures (33,511,554) (13,955,069) -
Investments in notes receivable (67,230,199) (162,845,982) (17,800,000)
Repayments of notes receivable 55,008,523 105,440,515 -
Proceeds from sale of real estate
assets 64,132,507 - -
------------- --------------------------------------
Net cash (used in)
investing activities (107,115,048) (156,912,349) (31,151,000)
------------- --------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from credit facility 86,500,000 64,400,000 -
Repayment of credit facility (77,000,000) (56,900,000) -
Proceeds from bridge loan - 6,000,000 -
Repayment of bridge loan - (6,000,000) -
Proceeds from mortgage
notes payable 71,400,000 34,500,000 -
Repayment of mortgage notes
payable (478,210) - -
Equity contributions prior to
Spin-off - 17,060,633 25,634,000
Equity contributions from
minority interest - 47,250 -
Distributions to minority
interest (84,730) - -
Proceeds from common shares - 121,694,562 -
-------------- --------------------------------------
Net cash provided by financing
activities 80,337,060 180,802,445 25,634,000
-------------- --------------------------------------
Net increase (decrease) in cash
and cash equivalents (19,773,175) 29,895,212 -
Cash and cash equivalents,
beginning of year 29,895,212 - -
-------------- ---------------------------------------
Cash and cash equivalents,
end of year $ 10,122,037 $ 29,895,212 $ -
============== =======================================
SUPPLEMENTAL INFORMATION:
Cash paid during the year
for interest $ 5,017,279 $ 1,506,508 $ 663,000
Cash paid during the year
for income taxes $ 2,228,336 $ 2,242,000 $ -
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Shares issued in connection
with acquisition of commercial
office properties and notes
receivable $ (39,362,500) $ (2,250,000) $ -
Warrants issued in connection with
acquisition of joint venture
investments $ (750,000) $ (6,198,345) $ -
See accompanying notes
</TABLE>
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Business
Wellsford Real Properties, Inc. (and subsidiaries, collectively the
"Company") was formed on January 8, 1997, as a corporate subsidiary of
Wellsford Residential Property Trust (the "Trust"). The Trust was
formed in 1992 as the successor to Wellsford Group Inc. (and
affiliates) which was formed in 1986. On May 30, 1997, the Trust
merged (the "Merger") with Equity Residential Properties Trust
("EQR"). Immediately prior to the Merger, the Trust contributed
certain of its assets to the Company and the Company assumed certain
liabilities of the Trust. Immediately after the contribution of
assets to the Company and immediately prior to the Merger, the Trust
distributed to its common shareholders all the outstanding shares of
the Company owned by the Trust (the "Spin-off"). On June 2, 1997, the
Company sold 12,000,000 shares of its common stock in a private
placement (the "Private Placement") to a group of institutional
investors at $10.30 per share, the Company's then book value per share
(Note 7).
The Company is a real estate merchant banking firm headquartered in New
York City which acquires, develops, finances and operates real
properties and organizes and invests in private and public real estate
companies. The Company has established three strategic business units
("SBUs") within which it executes its business plan: an SBU for
commercial property operations which is held in its subsidiary,
Wellsford/Whitehall Properties II, L.L.C., an SBU for debt and equity
activities and an SBU for property development and land operations.
See Note 10 for additional information regarding the Company's industry
segments.
(2) Summary of Significant Accounting Policies
Principles of Consolidation and Financial Statement Presentation. The
accompanying consolidated financial statements include the accounts of
Wellsford Real Properties, Inc. and its majority-owned and controlled
subsidiaries. Investments in entities where the Company does not have a
controlling interest, including Wellsford/Whitehall (see Note 10), are
accounted for under the equity method. All significant inter-company
accounts and transactions among Wellsford Real Properties, Inc. and its
subsidiaries have been eliminated in consolidation.
The accompanying consolidated financial statements include the assets
and liabilities contributed to and assumed by the Company from the
Trust, from the time such assets and liabilities were acquired or
incurred, respectively, by the Trust. Such financial statements have
been prepared using the historical basis of the assets and liabilities
and the historical results of operations related to the Company's assets
and liabilities.
Income Recognition. Commercial properties are leased under operating
leases. Rental revenue is recognized on a straight-line basis over the
terms of the respective leases. Residential communities are leased
under operating leases with terms of generally one year or less. Rental
revenue is recognized monthly as it is earned.
Cash and Cash Equivalents. The Company considers all demand and money
market accounts and short term investments in government funds with an
original maturity of three months or less to be cash and cash
equivalents.
Real Estate and Depreciation. Costs directly related to the acquisition
and improvement of real estate are capitalized, including all
improvements identified during the underwriting of a property
acquisition. Ordinary repairs and maintenance are expensed as incurred.
Tenant improvements and leasing commissions related to commercial
properties are capitalized and depreciated over the terms of the related
leases.
Depreciation is computed over the expected useful lives of depreciable
property on a straight line basis, principally 27.5 years for
residential buildings and improvements, 40 years for commercial
properties and 5 to 12 years for furnishings and equipment.
Depreciation expense was $3.2 million and $0.3 million in 1998 and 1997,
respectively, and included $0.3 million and $0.1 million of amortization
of certain assets capitalized to the Company's Investment in Joint
Ventures in 1998 and 1997, respectively.
The Company reviews its real estate assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. No impairment was recorded during the
years 1998, 1997 or 1996.
Mortgage Note Receivable Impairment. The Company considers a note
impaired if, based on current information and events, it is probable
that all amounts due under the note agreement are not collectable.
Impairment is measured based upon the fair value of the underlying
collateral. No impairment has been recorded through December 31, 1998.
Share Based Compensation. Statement of Financial Accounting Standard
("SFAS") 123 "Accounting for Stock-Based Compensation" establishes a
fair value based method of accounting for share based compensation
plans, including share options. However, registrants may elect to
continue accounting for share option plans under Accounting Principles
Board Opinion ("APB") 25, but are required to provide pro forma net
income and earnings per share information "as if" the new fair value
approach had been adopted (see Note 8). Because the Company has elected
to continue to account for its share based compensation plans under APB
25, there has been no impact on the Company's consolidated financial
statements resulting from SFAS 123.
Segment Reporting. Effective January 1, 1997, the Company adopted SFAS
131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS 131 superseded SFAS 14 "Financial Reporting for
Segments of a Business Enterprise." SFAS 131 establishes standards for
the way that public business enterprises report information about
operating segments in annual financial statements and requires that
those enterprises report selected information about operating segments
in interim financial reports. SFAS 131 also establishes standards for
related disclosures about products and services, geographic areas, and
major customers. The adoption of SFAS 131 did not affect results of
operations or financial position, but did affect the disclosure of
segment information. See Note 10.
Income Taxes. The Company accounts for income taxes under SFAS 109
"Accounting for Income Taxes." Deferred income tax assets and
liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured using
the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
The components of the income tax provision are as follows:
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------- -----------------
Current federal tax $2,756,165 $1,776,595
Current state and local tax 909,197 456,838
Deferred federal tax (693,965) (16,239)
Deferred state and local tax (121,099) (4,187)
----------- -----------
$2,850,298 $2,213,007
=========== ===========
The reconciliation of income tax computed at the U.S. federal statutory
rate to income tax expense is as follows:
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------- -----------------
Amount Percent Amount Percent
------ ------- ------ -------
Tax at U.S. statutory rate $4,302,919 35.00% $1,454,084 35.00%
State taxes, net of federal
benefit 944,153 7.68% 374,711 9.02%
Change in valuation (2,345,007) (19.07%) 381,490 9.18%
allowance
Non-deductible items 12,355 0.10% 2,722 0.07%
Effect of change in state
tax rate (64,122) (0.53%) -- --
----------- -------- ---------- -------
$2,850,298 23.18% $2,213,007 53.27%
=========== ======== ========== =======
The Company has net operating loss carryforwards of $76,557,331 for
income tax purposes at December 31, 1998, that expire in the years 2005
through 2012. The Company's net operating loss carryforwards reflect a
limit on utilization pursuant to Section 382 of the Internal Revenue
Code of 1986, as amended, which limits the amount of losses available
after an ownership change. Those carryforwards resulted from the
Company's acquisition of Value Property Trust in 1998, and are limited
in their use by the amount of income generated by Value Property Trust
(see Note 10).
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets
and liabilities are as follows:
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------- -----------------
Deferred Tax Assets:
Net operating loss $32,674,669 $ --
Deferred compensation plan 2,794,787 3,021,641
AMT credit carryforward 377,612 --
Restricted share grant 341,440 --
Other 407,844 32,908
------------ ------------
Subtotal 36,596,352 3,054,549
Valuation allowance (28,132,547) (2,361,603)
------------ ------------
Total deferred tax assets $ 8,463,805 $ 692,946
============ ============
Deferred tax liabilities:
Acquisition of Value Property
Trust $(2,236,945) $ --
Built-in gain on stock in
deferred compensation plan (640,200) (660,037)
Undistributed Whitehall joint
venture net income (595,506) --
Other (149,066) (12,483)
------------ -----------
Total deferred tax liabilities $(3,621,717) $ (672,520)
------------ -----------
Net deferred tax asset $ 4,842,088 $ 20,426
============ ===========
SFAS 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more
likely than not that some portion or all of the deferred tax assets will
not be realized. After consideration of all the evidence, both positive
and negative, management has determined that a $28,132,547 and
$2,361,603 valuation allowance at December 31, 1998 and 1997,
respectively, is necessary to reduce the deferred tax assets to the
amount that will more likely than not be realized. The valuation
allowance relates to NOL carryforwards and the deferred compensation
plan. The $25,770,944 change in the valuation allowance in 1998 is
primarily due to the Company's acquisition of Value Property Trust.
This acquisition resulted in an increase in the net deferred tax asset
of $4,006,598.
Per Share Data. In 1997, SFAS 128 "Earnings per Share" was issued.
SFAS 128 replaced the calculation of primary and fully diluted earnings
per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to fully diluted
earnings per share. All earnings per share amounts for all periods have
been presented to conform to the SFAS 128 requirements.
Earnings per common share are computed based upon the weighted average
number of common shares outstanding during the period, including Class A
common shares.
Diluted earnings per common share are based upon the increased number of
common shares that would be outstanding assuming the exercise of
dilutive common share options (196,082 in 1998 and 169,264 in 1997) and
warrants (296,775 in 1998 and 256,899 in 1997), under the treasury stock
method.
The Company was a corporate subsidiary of the Trust prior to the Spin-
off. Earnings per share was calculated using the weighted average
number of shares outstanding assuming that the Spin-off and Private
Placement (Note 7) occurred on January 1, 1996.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(3) Restricted Cash
Restricted cash primarily consists of retirement plan deposits and debt
service and construction reserve balances. At December 31, 1998 and
1997, retirement plan deposits amounted to $5,965,095 and $6,017,785,
respectively, and reserve balances amounted to $2,042,755 and $1,678,125
respectively. Retirement plan deposits are made solely by, and at the
discretion of, the Company's officers who participate in the plan.
(4) Notes Receivable
At December 31, 1998 and 1997, notes receivable consisted of the
following:
Interest Maturity Payment Balance
Note Rate Date Terms December 31,
- ---- -------- -------- ------- ------------------------
1998 1997
---- ----
277 Park Loan 12% 5/2007 Interest Only $ 25,000,000 $ 25,000,000
Abbey Credit
Facility LIBOR +4% 9/2000 Interest Only 46,019,350 28,626,650
IPH Mezzanine
Facility LIBOR +5% 6/1998* Interest Only - 9,821,036
Woodlands
Loan LIBOR +4.4% 7/2000 Interest Only 15,000,000 15,000,000
Park 80 Loan LIBOR +3% 3/1998 Interest Only - 5,100,000
Wellsford/
Whitehall
Bridge Loan LIBOR +4% 2/1998 Interest Only - 4,283,925
Sonterra Loan** 9% 7/1999** Interest Only - 17,800,000
REIT Bridge
Loan 9.875%*** 2/1999*** Interest Only 15,000,000 -
DeBartolo Loan 8.547% 7/2008 20 Year Amort. 17,677,943 -
Safeguard
Credit Fac. LIBOR +4% 4/2001 Interest Only 5,912,500 -
Other Various Various Various 96,706 -
------------ -----------
$124,706,499 $105,631,611
=========================
* Repaid in February 1998.
**Effectively repaid in January 1998 as part of the Sonterra
acquisition. See Note 12.
***In January 1999, the interest rate and maturity date of this loan
were modified to 12% and August 1999, respectively.
For additional information on the Company's notes receivable, see Note
10.
(5) Debt
At December 31, 1998 and 1997, the Company's debt consisted of the
following:
Maturity Stated Balance
Debt Date Interest Rate December 31,
---- -------- ------------- ------------------------
- -
1998 1997
---- ----
WRP Bank Facility (A) 5/1999 LIBOR +1.75% $ 17,000,000 $ 7,500,000
Palomino Park Bonds (B) 12/2035 Variable (C) 14,755,000 14,755,000
Blue Ridge Mortgage 1/2008 6.92% (D) 34,144,108 34,500,000
Red Canyon Mortgage 12/2008 6.68% (D) 27,000,000 -
Wellsford Capital Mtge. 10/2001 LIBOR +2.75% 28,000,000 -
Sonterra Mortgage 3/2008 6.87% (D) 16,277,682 -
------------ -----------
$137,176,790 $56,755,000
============ ===========
- ----------------------------
(A) The balance of the WRP Bank Facility was repaid in January 1999.
(B) Mortgage secures tax exempt bonds.
(C) Rate approximates the Standard & Poor's / J.J. Kenney index for
short-term high grade tax-exempt bonds (currently approximately
4%).
(D) Principal payments are made based on a 30-year amortization
schedule.
In December 1995, the Trust marketed and sold $14.8 million of tax-
exempt bonds to fund construction at Palomino Park. At December 31,
1998, $1.1 million of the bond proceeds were being held in escrow
pending their use for the funding of development. The bonds are secured
by a letter of credit from Dresdner Bank, AG, NY Branch ("Dresdner").
An affiliate of EQR has made its own credit available to Dresdner in the
form of a guaranty.
The Blue Ridge Mortgage is secured by the Blue Ridge property (Note 10).
The Red Canyon Mortgage is secured by the Red Canyon property (note 10).
The Sonterra Mortgage is secured by the Sonterra property (Note 10).
The Wellsford Capital Mortgage is secured by the properties acquired in
the VLP Merger (Note 10).
In May 1997, the Company obtained a $50 million two-year line of credit
(extendable for one year) from BankBoston, N.A. and Morgan Guaranty
Trust Company of New York (the "WRP Bank Facility"). The WRP Bank
Facility is secured by the EQR Preferred Commitment (Note 7) and the 277
Park Loan. The Company is obligated to pay a fee equal to one-quarter
of one percent (0.25%) per annum on the average daily amount of the
unused portion of the WRP Bank Facility until maturity.
The WRP Bank Facility contains various customary loan covenants and
requires the Company to maintain a ratio of total consolidated
liabilities to total consolidated assets of not more than 0.6 to 1, to
maintain an overall debt service coverage ratio of at least 1.5 to 1 and
to meet certain minimum borrowing base and equity level requirements.
The WRP Bank Facility also limits the amount of undeveloped land the
Company may hold.
The Company's long-term debt matures as follows: $17.8 million in 1999
(including the $17.0 million balance of the WRP Bank Facility which was
repaid in January 1999), $0.9 million in 2000, $29.0 million in 2001,
$1.0 million in 2002, $1.1 million in 2003 and $87.4 million thereafter.
The Company capitalizes interest related to buildings under construction
and renovation to the extent such assets qualify for capitalization.
Total interest capitalized during the years ended December 31, 1998,
1997 and 1996 was $0.8 million, $1.7 million and $0.7 million,
respectively.
(6) Transactions With Affiliates
In February 1997, the contracts to purchase certain commercial
properties were transferred to the Company by an entity ("Commercial
Partnership") of which Messrs. Lynford and Lowenthal and the wife of
Mark Germain (a director of the Company) are owners, for 218,447 shares
of common stock having an aggregate value of approximately $2.25 million
and the Company's agreement to repay a $1.0 million advance used for the
down payment on one of the properties. Upon liquidation of Commercial
Partnership, Mr. Lynford, Mr. Lowenthal and the wife of Mark Germain
each received approximately 16.4%, 16.4% and 13.8%, respectively, of the
shares of common stock issued to Commercial Partnership. The aggregate
purchase price for these commercial properties paid by the Company was
approximately $47.6 million, including the approximately $2.25 million
referred to above.
On May 30, 1997, the Company made short-term loans to Messrs. Lynford
and Lowenthal in the amounts of $590,000 and $119,000, respectively.
The proceeds of these loans, which were repaid on July 1, 1997, were
used to satisfy certain withholding tax obligations.
The Company earned approximately $0.1 million and $2.1 million in
interest income and $0.3 million and $0.1 million in management fees
during 1998 and 1997, respectively, from Wellsford/Whitehall (Note 10).
(7) Shareholders' Equity
On June 2, 1997, the Company completed the Private Placement. The
proceeds of the Private Placement of approximately $123.6 million have
been applied to (a) approximately $53 million to repay the WRP Bank
Facility and other debt on the date of the Private Placement and (b) the
balance towards certain investments described in Note 10 and working
capital.
In February 1998, the Company issued 3,350,000 shares of its common
stock in connection with the VLP Merger (see Note 10).
The WRP Bank Facility (Note 5) is secured by an affiliate of EQR's
commitment, until May 30, 2000, to acquire at the Company's option up to
$25 million of the Company's Series A 8% Convertible Redeemable
Preferred Stock ("Series A Preferred"), each share of which is
convertible into shares of common stock at a price of $11.124 (the "EQR
Preferred Commitment"). If at May 30, 2000, the affiliate of EQR has
purchased less than $25 million of Series A Preferred, it has the right
to purchase the remainder of the $25 million not purchased prior to that
time.
In December 1997, three of the Company's executive officers each
received a grant of 14,286 restricted common shares, which were issued
to the Company's non-qualified deferred compensation plan. Twenty
percent (20%) of each executive officer's restricted common shares vest
on each anniversary date of the grant (December 5, 1997) over a 5-year
period provided that the executive officer is still employed by the
Company (otherwise, any unvested restricted common shares will be
redeemed by the Company at $.01 per share). Based upon the market price
on the date of grant of $15.75 per common share, the restricted common
shares granted to each of the executive officers had a market value of
$225,000. The total deferred compensation is included in "Deferred
Compensation" and "General and Administrative Expense" on the Company's
consolidated financial statements.
In December 1998, four of the Company's executive officers received
grants of restricted common shares, which aggregated 304,228 shares and
were issued to the Company's non-qualified deferred compensation plan.
One third of each executive officer's restricted common shares vest on
each anniversary date of the grant (December 10, 1998) over a 3-year
period provided that the executive officer is still employed by the
Company (otherwise, any unvested restricted common shares will be
redeemed by the Company at $.01 per share). Based upon the market price
on the date of grant of $8.875 per common share, the restricted common
shares granted to the executive officers had an aggregate market value
of $2.7 million. The total deferred compensation is included in
"Deferred Compensation" and "General and Administrative Expense" on the
Company's consolidated financial statements.
In December 1997, two of the Company's executive officers each received
a grant of 19,048 common shares, which were issued to the Company's non-
qualified deferred compensation plan. Based upon the market price on
the date of grant of $15.75 per common share, the common shares granted
to each of the executive officers had a market value of approximately
$300,000, which is included in "General and Administrative" expense in
the Company's consolidated financial statements.
In December 1998, three of the Company's executive officers received
grants of common shares, which aggregated 90,142 shares and were issued
to the Company's non-qualified deferred compensation plan. Based upon
the market price on the date of grant of $8.875 per common share, the
common shares granted to the executive officers had an aggregate market
value of approximately $800,000, which is included in "General and
Administrative" expense in the Company's consolidated financial
statements.
The total value at the date of issuance of the Company's shares issued
to the Company's non-qualified deferred compensation plan, including
certain shares which were issued at the date of the Merger, is
approximately $4.9 million. Pursuant to Emerging Issues Task Force
Issue No. 97-14 (and 97-14A), "Accounting for Deferred Compensation
Arrangements where Amounts Earned are Held in a Rabbi Trust and
Invested," this amount has been classified as Treasury Stock in the
Company's consolidated financial statements.
In December 1998, the Company issued an aggregate of 6,353 common
shares, as compensation to the non-employee members of the Company's
board of directors pursuant to their related agreements, which were
valued at an aggregate of approximately $81,000.
Approximately $3.5 million of the Company's retained earnings relate to
the Company's joint venture investments.
The Company has warrants outstanding to issue a total of 4,280,230
shares of common stock (see Note 10).
The Company did not distribute any dividends during 1998 or 1997.
(8) Share Option Plan
The Company has adopted certain incentive plans for the purpose of
attracting and retaining the Company's directors, officers and
employees. The Company has established share option and management
incentive plans (the "Incentive Plans") which reserved 5,076,235 common
shares for issuance under the Incentive Plans. Options granted under
the Incentive Plans expire ten years from the date of grant, vest over
periods ranging generally from 6 months to 5 years, and generally
contain the right to receive reload options under certain conditions.
At December 31, 1998 and 1997, 572,117 and 115,545 of the Company's
outstanding options were exercisable, respectively. Options outstanding
for the periods ended December 31, 1998 and 1997, which had a weighted
average vesting period of approximately 4.1 years and 3.7 years,
respectively, are as follows:
Issued in 1997 as replacement options for Trust options
(exercise prices between $6.67 and $10.30 per share,
weighted average fair value of $5.19 per share) 1,326,235
Granted in 1997 (exercise prices between $10.30 and
$15.81 per share, weighted average fair value of
$7.31 per share) 1,622,375
Exercised in 1997 --
Forfeited in 1997 (1,000)
Expired in 1997 --
----------
December 31, 1997 (weighted average
exercise price of $12.20) 2,947,610
Granted in 1998 (exercise prices between $8.91 and
$20.00 per share, weighted average fair value of
$5.63 per share) 636,000
Exercised in 1998 --
Forfeited in 1998 (25,000)
Expired in 1998 --
----------
December 31, 1998 (weighted average exercise
price of $12.79) 3,558,610
=========
Pursuant to SFAS 123, described in Note 2, the pro forma net income
available to common shareholders as if the fair value approach to
accounting for share-based compensation had been applied would be $7.4
million or $0.37 per common share ($0.36 per diluted common share) in
1998 and $2.5 million or $0.14 per common share, basic and diluted, in
1997. The fair values of the options used in calculating these amounts
were calculated using the Black-Scholes option pricing model and the
following assumptions: (i) a risk-free interest rate of between 4.89%
and 6.27%, depending on the data available on the date of grant, (ii)
an expected life of 10 years, and (iii) an expected volatility between
20% and 38%, depending on the data available on the date of grant. The
Black-Scholes option pricing model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and
are fully transferable. In addition, option pricing models require the
input of highly subjective assumptions including the expected share
price volatility. Because the Company's employee share options have
characteristics significantly different from those of traded options,
and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair
value of its employee share options.
(9) Commitments and Contingencies
The Company has entered into employment agreements with four of its
officers. Such agreements are for terms which expire between 1999 and
2002, and provide for aggregate annual fixed payments of approximately
$1.0 million, $1.0 million and $0.6 million in 1997, 1998 and 1999
through 2002, respectively.
As a commercial real estate owner, the Company is subject to potential
environmental costs. At this point in time, management of the Company
is not aware of any environmental concerns that would have a material
adverse effect on the Company's financial position or future results of
operations.
In 1997 the Company adopted a defined contribution savings plan pursuant
to Section 401 of the Internal Revenue Code. Under such a plan there
are no prior service costs. All employees are eligible to participate
in the plan after one year of service. Employer contributions are made
based on a discretionary amount determined by the Company's management.
Employer contributions, if any, are based upon the amount contributed by
an employee. During 1998 and 1997, the Company made contributions of
approximately $12,000 and $4,000, respectively.
The Company has entered into an operating lease for its New York
headquarters. The lease is for 10 years and requires aggregate minimum
rental payments of $7.3 million over that period.
At December 31, 1998, the Company had the following discretionary
capital commitments. Draws under the Abbey Credit Facility and
Safeguard Credit Facility require additional collateral to be made
available to the Company which is subject to the Company's approval.
Capital calls related to investments to be made by the Company's joint
ventures are also subject to the Company's approval of such investments.
Item Amount
---- ------
Undrawn Abbey Credit Facility commitment $ 4.0 million
Undrawn Safeguard Credit Facility commitment $39.1 million
Undrawn Wellsford/Whitehall equity commitment $13.6 million
Undrawn Creamer Vitale Wellsford equity commitment $13.6 million
Undrawn Liberty Hampshire SPFC JV equity commitment $23.1 million
<PAGE>
<TABLE>
<CAPTION>
(10) Segment Information
Wellsford/ Commercial Debt and Development
Whitehall Property Equity and Land
Properties II, L.L.C.* Investments Investments Investments Other Consolidated
---------------------- ----------- ----------- ----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998 (000s)
- ------------------------
Real estate, net $ 493,177 $ - $ 37,666 $ 112,657 $ - $ 150,323
Notes receivable - - 124,707 - - 124,707
Investment in joint ventures - 69,529 11,248 - - 80,777
Cash and cash equivalents 8,585 49 2,999 1,528 13,553 18,129
Other assets 9,619 - 7,412 882 2,741 11,035
----------------- ---------- ---------- ------------ -------- ----------
Total assets $ 511,381 $ 69,578 $ 184,032 $ 115,067 $ 16,294 $ 384,971
================= ========== ========== ============ ======== ==========
Mortgage notes payable $ 68,043 $ - $ 28,000 $ 92,177 $ - $ 120,177
Credit facilities 276,197 - - - 17,000 17,000
Accrued expenses and
other liabilities 15,275 - 2,660 2,451 7,677 12,788
Minority interest - 47 - 3,334 - 3,381
Equity 151,866 69,531 153,372 17,105 (8,383) 231,625
----------------- ---------- ---------- ------------ -------- ----------
Total liabilities and equity $ 511,381 $ 69,578 $ 184,032 $ 115,067 $ 16,294 $ 384,971
================= ========== ========== ============ ======== ==========
Year Ended December 31, 1998 (000s)
- -----------------------------------
Rental income $ 53,460 $ - $ 4,761 $ 8,366 $ - $ 13,127
Interest income 163 - 12,130 401 357 12,888
----------------- ---------- ---------- ------------ -------- ----------
Total income 53,623 - 16,891 8,767 357 26,015
----------------- ---------- ---------- ------------ -------- ----------
Operating expenses 20,279 - 2,087 2,399 - 4,486
Depreciation and amortization 7,387 175 842 2,040 100 3,157
Interest 19,085 - 1,285 3,272 42 4,599
General and administrative 3,299 - 397 - 4,666 5,063
----------------- ---------- ---------- ------------ -------- ----------
Total expenses 50,050 175 4,611 7,711 4,808 17,305
----------------- ---------- ---------- ------------ -------- ----------
Gain on sale of investments 2,866 - 139 - - 139
Income from joint venture - 2,812 711 - - 3,523
Minority Interest - - (50) (28) - (78)
----------------- ---------- ---------- ------------ -------- ----------
Income (loss) before taxes $ 6,439 $ 2,637 $ 13,080 $ 1,028 $(4,451) $ 12,294
================= ========== ========== ============ ======== ==========
December 31, 1997 (000s)
- --------------------------
Real estate, net $ 218,846 $ - $ - $ 58,741 $ - $ 58,741
Notes receivable - - 87,832 17,800 - 105,632
Investment in joint venture - 44,780 - - - 44,780
Cash and cash equivalents 2,878 - - - 29,896 29,896
Other assets 7,311 - 1,313 3,040 6,572 10,925
----------------- ---------- ---------- ------------ -------- ----------
Total assets $ 229,035 $ 44,780 $ 89,145 $ 79,581 $ 36,468 $ 249,974
================= ========== ========== ============ ======== ==========
Mortgage notes payable $ 4,284 $ - $ - $ 49,255 $ - $ 49,255
Credit facilities 146,909 - - 7,500 - 7,500
Accrued expenses and
other liabilities 3,717 - - 1,838 7,925 9,763
Minority interest - - - 2,297 - 2,297
Equity 74,125 44,780 89,145 18,691 28,543 181,159
----------------- ---------- ---------- ------------ -------- ----------
Total liabilities and equity $ 229,035 $ 44,780 $ 89,145 $ 79,581 $ 36,468 $ 249,974
================= ========== ========== ============ ======== ==========
Year Ended December 31, 1997 (000s)
- -----------------------------------
Rental income $ 8,504 $ 1,291 $ - $ - $ - $ 1,291
Interest income 24 - 5,002 1,602 1,175 7,779
----------------- ---------- ---------- ------------ -------- ----------
Total income 8,528 1,291 5,002 1,602 1,175 9,070
----------------- ---------- ---------- ------------ -------- ----------
Operating expenses 3,494 365 - - - 365
Depreciation and amortization 1,220 188 - - 106 294
Interest 2,949 - - - - -
General and administrative 835 - - - 3,160 3,160
----------------- ---------- ---------- ------------ -------- ----------
Total expenses 8,498 553 - - 3,266 3,819
----------------- ---------- ---------- ------------ -------- ----------
Income from joint venture - 15 - - - 15
----------------- ---------- ---------- ------------ -------- ----------
Income (loss) before taxes $ 30 $ 753 $ 5,002 $ 1,602 $(2,091) $ 5,266
================= ========== ========== ============ ======== ==========
* The Company accounts for its investment in this joint venture under the equity method. This investment is held in the
Company's "Commercial Property Investments" segment.
/TABLE
<PAGE>
(10) Segment Information (continued)
Commercial Property Operations - Wellsford/Whitehall
Wellsford/Whitehall Properties II, L.L.C. ("Wellsford/Whitehall") owned
and operated 35 office buildings containing approximately 4.6 million
square feet ("SF") of office space as of December 31, 1998, including
approximately 1.4 million SF under renovation, with an aggregate gross
book value of approximately $501.7 million.
At the time of the Spin-off, the Company owned six commercial office
buildings, five of which were vacant at that time, containing an
aggregate of approximately 949,400SF and acquired for an aggregate of
approximately $47.6 million (the "WRP Commercial Properties").
In August 1997, the Company, in a joint venture with WHWEL Real Estate
Limited Partnership ("Whitehall"), an affiliate of Goldman, Sachs & Co.,
formed a private real estate operating company, Wellsford/Whitehall.
The Company contributed the WRP Commercial Properties and Whitehall
contributed four commercial properties upon formation of
Wellsford/Whitehall. The Company manages Wellsford/Whitehall on a day-
to-day basis, and certain major decisions require the consent of both
partners. The Company had a 47.7% interest in Wellsford/Whitehall at
December 31, 1998.
Two properties, 700 Atrium Drive and Mountain Heights (two buildings),
were acquired in September and December 1997, respectively, for $18.1
million and $29.1 million, respectively. In addition,
Wellsford/Whitehall purchased an industrial warehouse in New Jersey in
December 1997 for $7.1 million.
The Wellsford/Whitehall transactions described above were funded
primarily by capital contributions from the Company and Whitehall, by
$48 million in debt which encumbered certain of the properties
contributed by Whitehall (the "Atrium Loan") which was assumed by
Wellsford/Whitehall, and by a term loan agreement (the
"Wellsford/Whitehall Bridge Loan") between the Company and
Wellsford/Whitehall.
The Atrium Loan bore interest at LIBOR +3%. Wellsford/Whitehall has an
interest rate protection agreement which was related to this loan which
caps LIBOR at 7.69% on a notional balance of $64 million until June 15,
2000. The lender on this loan was Goldman Sachs Mortgage Company. The
Atrium Loan was repaid in December 1997. Wellsford/Whitehall has
retained the interest rate protection agreement to hedge other floating
rate borrowings.
Pursuant to the Wellsford/Whitehall Bridge Loan, the Company agreed to
loan Wellsford/Whitehall up to approximately $86.3 million bearing
interest at LIBOR +3% until November 26, 1997 and at LIBOR +4% until
maturity. The Wellsford/Whitehall Bridge Loan was fully repaid in 1998.
In December 1997, Wellsford/Whitehall obtained a $375 million loan
facility (the "Wellsford/Whitehall Bank Facility") from BankBoston and
Goldman Sachs Mortgage Company, consisting of a secured term loan
facility of up to $225 million and a secured revolving credit facility
of up to $150 million. The term loan facility bore interest at LIBOR
+1.6% and had a term of four years; the revolving credit facility bore
interest at LIBOR +2.5% and had a term of three years.
In February 1998, Wellsford/Whitehall acquired a 65,000SF building in
Boston, MA for $5.5 million and 19 acres of undeveloped land in
Somerset, NJ for $2.0 million, which is adjacent to four buildings
currently owned by Wellsford/Whitehall.
In March 1998, Wellsford/Whitehall purchased an 82,000 SF property in
Somerset, NJ for approximately $5.4 million.
In May 1998, Wellsford/Whitehall completed the acquisition of a
977,000SF portfolio of thirteen office buildings for $148.7 million (the
"Boston Portfolio"). The Boston Portfolio was financed with (i) the
assumption of $68.3 million of mortgage debt, (ii) a $35.8 million draw
on the Wellsford/Whitehall Bank Facility, (iii) the issuance of $19.0
million of Wellsford/Whitehall 6% convertible preferred units, (iv)
$18.0 million of capital contributions and (v) the issuance of $7.6
million of Wellsford/Whitehall common units.
In May 1998, Wellsford/Whitehall acquired two warehouse buildings
totaling approximately 470,000SF for $28.4 million in Needham, MA.
In June 1998, Wellsford/Whitehall acquired an approximately 63,000SF
building located in Andover, MA for approximately $7.4 million and two
office buildings totaling 104,000SF located in Basking Ridge, NJ for
approximately $15.0 million.
In July 1998, Wellsford/Whitehall modified the Wellsford/Whitehall Bank
Facility. Under the new terms, $300 million represents a senior secured
credit facility bearing interest at LIBOR +1.65% and $75 million
represents a secured mezzanine facility bearing interest at LIBOR +3.2%.
Both facilities mature on December 15, 2000 and are extendable for one
year by Wellsford/Whitehall. As of December 31, 1998, approximately
$276.2 million was outstanding under the Wellsford/Whitehall Bank
Facility ($207.3 million of which was under the senior facility).
In September 1998, Wellsford/Whitehall purchased two office buildings
totaling approximately 199,000SF in Franklin Township, NJ for
approximately $22.8 million.
In November 1998, Wellsford/Whitehall purchased a 38,000SF office
building in Columbia, MD for approximately $2.6 million.
In December 1998, Wellsford/Whitehall purchased a 147,000SF office
building in Ridgefield Park, NJ for approximately $19.3 million.
The 1998 Wellsford/Whitehall acquisitions described above, other than
the Boston Portfolio, were funded primarily by capital contributions
from the Company and Whitehall, and by draws on the Wellsford/Whitehall
Bank Facility.
The Company is entitled to incentive compensation equal to (a) 17.5% of
available cash after a return of capital to the Company and Whitehall
and a 17.5% return on equity to each of them, and (b) 22.5% of available
cash after a 22.5% return on equity to the Company and Whitehall. The
Company and Whitehall have committed to make additional equity
contributions of $50 million each for new acquisitions, capital needs,
and working capital, of which $13.6 million remained unfunded by each at
December 31, 1998. Whitehall may exchange the membership units it
receives in Wellsford/Whitehall relating to capital contributions in
excess of an additional $25 million up to an additional $50 million, for
shares of the Company's common stock or, in the Company's sole
discretion, cash, based upon the price paid for such membership units
and the current market value of the Company's common stock.
In connection with the formation of Wellsford/Whitehall, the Company
issued warrants (the "Whitehall Warrants") to Whitehall to purchase
4,132,230 shares of the Company's common stock at an exercise price of
$12.10 per share. The Whitehall Warrants are exercisable for five years
for either, at the Company's option, shares of the Company's common
stock or cash. The exercise price for the Whitehall Warrants is payable
in cash or, after August 28, 1999, either with cash or membership units
in Wellsford/Whitehall.
The Company has agreed with Whitehall to conduct its business and
activities relating to office properties (but not other types of
commercial properties) located in North America solely through its
interest in Wellsford/Whitehall except, in certain circumstances, where
Wellsford/Whitehall has declined the investment opportunity.
Debt and Equity Activities
At December 31, 1998, the Company had $124.7 million of debt investments
which bore interest at an average yield of approximately 4.6% over LIBOR
and had an average remaining term to maturity of 4.1 years.
277 Park
The Company and BankBoston have provided an $80 million loan (the "277
Park Loan") to entities which own substantially all of the equity
interests (the "Equity Interests") in the entity which owns an
approximately 1.75 million SF office building located in New York City
(the "277 Park Property"). The Company has advanced $25 million
pursuant to the 277 Park Loan. The 277 Park Loan is secured primarily
by a pledge of the Equity Interests owned by the borrowers. The 277
Park Loan is subordinated to a 10-year $345 million first mortgage loan
(the "REMIC Loan") on the 277 Park Property. The 277 Park Loan bears
interest at the rate of approximately 12% per annum for the first nine
years of its term and at a floating annual rate during the tenth year
equal to LIBOR +5.15% or the BankBoston base rate plus 5.15%, as elected
by the borrowers. The principal amount of the 277 Park Loan and all
accrued interest will be payable in May 2007; the REMIC Loan is also due
in May 2007. The Company earned approximately $3.0 million in interest
income, or 11.5% of its total non-joint venture revenues, on the 277
Park Loan during 1998.
The Abbey Company
In August 1997, the Company and Morgan Guaranty Trust Company of New
York ("MGT") originated a $70 million secured credit facility (the
"Abbey Credit Facility") to affiliates of The Abbey Company, Inc.
("Abbey"). In May 1998, the Company and MGT expanded the Abbey Credit
Facility to $120 million. In December 1998, Abbey repaid $20 million,
thereby reducing the total available to $100 million.
The Abbey Credit Facility will be made available to Abbey until
September 2000. Advances under the facility can be made for up to 65%
of the value of the borrowing base collateral which consisted of 24
properties, all cross-collateralized, totaling approximately 1.7 million
SF at December 31, 1998.
As of December 31, 1998, approximately $46.0 million had been advanced
by the Company under the Abbey Credit Facility. Under the terms of its
participation agreement with MGT, the Company will fund a 50% junior
participation on all advances under the Abbey Credit Facility.
The Company is entitled to receive interest on its advances under the
Abbey Credit Facility at LIBOR +4%. The Company earned approximately
$3.9 million, or 15.0% of its total non-joint venture revenues, on the
Abbey Credit Facility during 1998.
IPH Mezzanine Facility
In December 1997, Wellsford Ventures, Inc. ("Ventures"), a wholly-owned
subsidiary of the Company, joined with Fleet Real Estate, Inc. ("FRE"),
a subsidiary of Fleet Financial Group, to issue an approximately $32.5
million subordinated credit facility (the "IPH Mezzanine Facility") to
Industrial Properties Holding, L.P. ("IPH"). Each of Ventures and FRE
were committed to advance up to 50% of the IPH Mezzanine Facility.
Ventures advanced approximately $9.8 million under the IPH Mezzanine
Facility. The IPH Mezzanine Facility was repaid in February 1998, at
which time the Company received a total of $0.8 million in interest and
fees. Advances under the IPH Mezzanine Facility bore interest at an
annual rate of LIBOR +5%.
Woodlands
In December 1997, BankBoston, Morgan Stanley Senior Funding, Inc. and
certain other lenders made available to the owners and developers of a
25,000 acre master-planned residential community located north of
Houston (the "Woodlands Property"), loans in the aggregate principal
amount of $369 million (the "Woodlands Loan"). The Woodlands Loan
consists of a revolving credit loan in the principal amount of $179
million (the "Revolving Loan"), a secured term loan in the principal
amount of $130 million (the "Secured Loan"), and a second secured term
loan in the principal amount of $60 million (the "Second Secured Loan").
The Company has advanced $15 million pursuant to the Second Secured
Loan. The Second Secured Loan is subordinate to the Revolving Loan and
the Secured Loan and bears interest equal to LIBOR +4.40%. Interest on
the Second Secured Loan is payable monthly to the extent there is
available cash after payment of interest on the Revolving Loan and the
Secured Loan and provided no event of default has occurred under the
Woodlands Loan. The principal amount of the Woodlands Loan and all
accrued interest thereon will be payable on July 31, 2000, with two,
one-year extension options available.
Park 80
In December 1997, the Company originated a $5.1 million loan bearing
interest at LIBOR +3% which was repaid in August 1998 (the "Park 80
Loan"). The Park 80 Loan was secured by a mortgage on an 80,000SF mid-
rise office building in Saddlebrook, New Jersey.
Value Property Trust
In February 1998, the Company completed the previously announced merger
(the "VLP Merger") with Value Property Trust ("VLP") for total
consideration of approximately $169 million, which was accounted for as
a purchase. As of December 31, 1998, approximately $5.1 million was
recorded as a net deferred tax asset reflecting the value of VLP's net
operating loss carryforwards. Thirteen of the twenty VLP properties,
which were under contract to an affiliate of Whitehall, were
subsequently sold for an aggregate of approximately $64 million. The
Company retained seven of the VLP properties containing an aggregate of
approximately 0.6 million square feet located primarily in the
northeastern U.S. The following is a schedule by years of future
minimum rentals on non-cancelable operating leases related to these
properties as of December 31, 1998:
Year ending December 31:
1999 $ 3,932,869
2000 3,332,939
2001 2,719,396
2002 1,724,215
2003 1,152,237
Later years 3,981,242
-----------
Total minimum
future rentals $16,842,898
===========
In October 1998, the Company closed on $28 million of non-recourse
financing (the "Wellsford Capital Mortgage") on the portfolio of seven
commercial properties acquired in the VLP Merger. The loan bears
interest at LIBOR +2.75% and has a term of three years. The proceeds
were used to repay amounts outstanding on the WRP Bank Facility and for
working capital purposes.
Clairborne Investors
In January 1998, the Company acquired a 49% interest in Creamer Realty
Consultants, a real estate advisory and consulting firm, and formed
Creamer Vitale Wellsford, L.L.C. ("Creamer Vitale Wellsford").
Creamer Realty Consultants and Creamer Vitale Wellsford, together with
Prudential Real Estate Investors ("PREI), a division of Prudential
Investment Corporation, have established the Clairborne Investors
Mortgage Investment Program to make opportunistic investments and to
provide liquidity to participants in large syndicated mortgage loan
transactions. The parties have agreed to contribute up to $150 million
to fund acquisitions approved by the parties, of which a subsidiary of
the Company will fund 10%. Creamer Vitale Wellsford will originate, co-
invest, and manage the investments of the program.
The Company's original investment in these entities was $1.3 million of
cash and 148,000 five-year warrants to purchase the Company's common
shares at $15.175 per share, valued at approximately $0.7 million. In
November 1998, Creamer Vitale Wellsford acquired a $17 million
participation in a $56 million mortgage, bearing interest at LIBOR
+1.75% and due in 3.5 years, at a significant discount to face value.
The Company funded approximately $1.4 million of this participation.
DeBartolo
In July 1998, the Company purchased an $18 million participation in a
$175 million loan (the "DeBartolo Loan"). The DeBartolo Loan is secured
by partnership units in Simon DeBartolo Group, L.P., the operating
partnership of a real estate investment trust which owns approximately
175 million SF of mall space nationwide. The DeBartolo loan bears
interest at 8.547%, payable quarterly, pays principal based on a 20 year
amortization schedule and is due in July 2008.
REIT Bridge Loan
In August 1998, the Company funded a $15 million participation in a $100
million unsecured loan (the "REIT Bridge Loan") to a publicly traded
real estate investment trust which owns 22 regional malls, eight
multifamily apartment properties and five office properties nationwide.
This loan bore interest at 9.875% and was due in February 1999 with two
three-month extensions available to the borrower. In January 1999, the
REIT Bridge Loan was modified to extend the maturity date to August 1999
and increase the interest rate to 12%. The borrower paid a 1.5% loan
fee at origination and a 1% loan fee upon modification.
Liberty Hampshire
In July and August 1998, the Company invested a total of $2.1 million in
the Liberty Hampshire Company, L.L.C. ("Liberty Hampshire") which
structures, establishes and provides management and services for special
purpose finance companies ("SPFCs") formed to invest in financial
assets. The Company also invested a total of $4.4 million in a joint
venture SPFC with Liberty Hampshire. This SPFC has invested in a
participation in the DeBartolo Loan and has acquired an interest in REIS
Reports, Inc.("REIS"), a leading provider of real estate market
information to institutional investors. The primary shareholder of REIS
is the brother of Mr. Lynford; Mr. Lynford recused himself from the REIS
investment decision.
Safeguard
In December 1998, the Company and MGT originated a $90 million secured
credit facility (the "Safeguard Credit Facility") to Safeguard Capital
Fund, L.P. ("Safeguard").
The Safeguard Credit Facility will be made available to Safeguard until
April 2001. Advances under the facility can be made for up to 75% of
the value of the borrowing base collateral which consisted of 4
properties, all cross-collateralized, totaling approximately 0.3 million
SF at December 31, 1998.
As of December 31, 1998, approximately $5.9 million had been advanced by
the Company under the Safeguard Credit Facility. Under the terms of its
participation agreement with MGT, the Company will fund a 50% junior
participation on all advances under the Safeguard Credit Facility.
The Company is entitled to receive interest on its advances under the
Safeguard Credit Facility at LIBOR +4%.
Property Development and Land Operations
Palomino Park
The Company owns an approximate 80% interest in Phases I, II, III and IV
of, and in an option to acquire (at a fixed price) and develop phase V
of, a 1,800-unit class A multifamily development ("Palomino Park") in a
suburb of Denver, Colorado. The Company has a related $14.8 million
tax exempt mortgage note payable which requires interest only payments
at a variable rate (currently approximately 4%) until it matures in
December 2035 (the "Palomino Park Bonds"). The tax exempt mortgage note
payable is security for tax-exempt bonds, which are backed by a letter
of credit from a AAA rated financial institution. The Company and an
affiliate of EQR have guaranteed the reimbursement of the financial
institution in the event that the letter of credit is drawn upon (the
latter guarantee being the "EQR Enhancement").
In December 1997, Phase I, known as Blue Ridge, was completed at a cost
of approximately $41.5 million. At that time, the Company obtained a
$34.5 million permanent loan (the "Blue Ridge Mortgage") secured by a
mortgage on Blue Ridge. The Blue Ridge Mortgage matures in January 2008
and bears interest at a fixed rate of 6.92%. Principal payments are
based on a 30-year amortization schedule.
In November 1998, Phase II, known as Red Canyon, was completed at a cost
of approximately $33.9 million. At that time, the Company acquired Red
Canyon and the related construction loan was repaid with the proceeds of
a $27 million permanent loan (the "Red Canyon Mortgage") secured by a
mortgage on Red Canyon. The Red Canyon Mortgage matures in December
2008 and bears interest at a fixed rate of 6.68%. Principal payments
are based on a 30-year amortization schedule.
The Company had a gross investment of approximately $18.8 million
at December 31, 1998 in one multifamily development project, Silver
Mesa, which is Phase III of Palomino Park consisting of 264 units,
and related infrastructure costs. This project is being developed
pursuant to a fixed-price contract. The Company is committed to
purchase 100% of this project upon completion and the achievement
of certain occupancy levels. In addition, the Company is obligated
to fund the first 20% of construction costs on this project as they
are incurred. Silver Mesa is owned by Silver Mesa at Palomino Park
LLC, a limited liability company, the members of which are
Wellsford Park Highlands Corp. (99%), a majority owned and
controlled subsidiary of the Company, and Al Feld (1%).
In May 1997, the Company acquired the land for Silver Mesa for
approximately $2.1 million.
In May 1998, the Company acquired the land for Phase IV for
approximately $3.2 million.
Sonterra
From the time of the Spin-off, the Company held a $17.8 million mortgage
on, and option to purchase, a 344-unit class A residential apartment
complex ("Sonterra at Williams Centre") in Tucson, Arizona.
In January 1998, the Company exercised its option and acquired Sonterra
at Williams Centre for approximately $20.5 million, including
satisfaction of the mortgage. In February 1998, the Company closed on
$16.4 million of mortgage financing (the "Sonterra Mortgage") on this
property, bearing interest at 6.87% and maturing in March 2008.
Principal payments are based on a 30-year amortization schedule.
(11) Fair Value of Financial Instruments
The Company held the following financial instruments at December 31,
1998:
Balance Interest Maturity Other Fair Value
Item (thousands) Rate Date Terms (thousands)
---- ----------- -------- --------- ------ -----------
277 Park Loan $ 25,000 12% 5/2007 Interest only $ 27,580 (C)
Abbey Credit
Facility 46,019 LIBOR+ 4% 9/2000 Interest only 46,019 (D)
Woodlands Loan 15,000 LIBOR +4.4% 7/2000 Interest only 15,000 (D)
REIT Bridge Loan 15,000 9.875%* 2/1999* Interest only 15,000 (E)
DeBartolo Loan 17,678 8.547% 7/2008 20 Year Amort. 16,916 (F)
Safeguard Credit
Fac. 5,913 LIBOR+ 4% 4/2001 Interest only 5,913 (D)
------- --------
Total Notes Rec. $124,610 $126,428
======== =========
WRP Bank Facility $ 17,000 LIBOR+1.75% 5/1999 (B) $ 17,000 (G)
Palomino Park
Bonds 14,755 (A) 12/2035 Interest only 14,755 (G)
Blue Ridge Mtge. 34,144 6.92% 1/2008 30 Year Amort. 34,144 (H)
Red Canyon Mtge. 27,000 6.68% 12/2008 30 Year Amort. 27,000 (I)
Wellsford Cap.
Mtge. 28,000 LIBOR + 2.75% 10/2001 Interest Only 28,000 (G)
Sonterra Mortgage 16,278 6.87% 3/2008 30 Year Amort. 16,278 (H)
------- --------
Total Debt $137,177 $137,177
======= ========
*In January 1999, the interest rate and maturity date of this loan were
modified to 12% and August 1999, respectively.
(A) Rate approximates the Standard & Poor's/J.J. Kenney index for
short-term high grade tax-exempt bonds (currently approximately
4%).
(B) For more information on the WRP Bank Facility, see Note 5.
(C) The fair value of this investment was determined by reference to
various market data.
(D) The fair value of the Company's floating rate investments is
considered to be their carrying amount.
(E) The fair value of this short term investment is considered to be
its carrying amount.
(F) The fair value of this investment was determined by reference to
various market data.
(G) The fair value of the Company's floating rate debt is considered to
be its carrying amount.
(H) The fair value of this mortgage is considered to be its carrying
amount since it is similar in both terms and collateral to the Red
Canyon Mortgage, which reflects current market conditions (see (I)
below).
(I) The fair value of this mortgage is considered to be its carrying
amount as it is a recently executed transaction reflective of
current market conditions.
(12) Summarized Consolidated Quarterly Information (Unaudited)
Summarized consolidated quarterly financial information for the years
ended December 31, 1998 and 1997 is as follows:
Three Months Ended (Unaudited)
---------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1998
- ----------------
Revenue $ 6,225,168 $ 8,358,939 $ 6,777,822 $ 8,315,494
Expenses 3,499,879 4,160,672 4,790,082 4,932,736
----------- ----------- ----------- -----------
Income before taxes 2,725,289 4,198,267 1,987,740 3,382,758
Income tax expense 1,248,000 1,984,000 (1,029,000) 647,298
----------- ----------- ----------- -----------
Net income avail-
able for common
shareholders $ 1,477,289 $ 2,214,267 $ 3,016,740 $ 2,735,460
=========== =========== =========== ===========
Net income per
common share,
basic* $ 0.08 $ 0.11 $ 0.15 $ 0.13
=========== =========== =========== ===========
Net income per
common share,
diluted* $ 0.08 $ 0.10 $ 0.15 $ 0.13
=========== =========== =========== ===========
Weighted average
number of common
shares out-
standing 18,376,910 20,349,688 20,349,688 20,441,157
========== ========== ========== ==========
Three Months Ended (Unaudited)
------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1997
- ----------------
Revenue $ 400,500 $ 1,775,359 $ 3,369,120 $ 3,540,531
Expenses -- 475,728 1,631,215 1,712,483
----------- ----------- ----------- -----------
Income before taxes 400,500 1,299,631 1,737,905 1,828,048
Income tax expense -- 284,000 719,000 1,210,007
----------- ----------- ----------- -----------
Net income available
for common
shareholders $ 400,500 $ 1,015,631 $ 1,018,905 $ 618,041
=========== =========== =========== ===========
Net income per
common share,
basic* $ 0.02 $ 0.06 $ 0.06 $ 0.04
=========== =========== =========== ===========
Net income per
common share,
diluted* $ 0.02 $ 0.06 $ 0.06 $ 0.03
=========== =========== =========== ===========
Weighted average
number of common
shares out-
standing 16,911,849 16,911,849 16,911,849 16,935,776
=========== =========== =========== ===========
All earnings per share amounts conform with SFAS 128 requirements (Note 2).
* Aggregate quarterly earnings per share amounts may not equal annual
amounts presented elsewhere in these consolidated financial statements
due to rounding differences.
(13) Subsequent Events
In January 1999, the Company acquired a parcel of land in Broomfield, CO
for approximately $7.2 million. In connection with this transaction,
the Company collected $0.4 million of consulting fees in 1998 and
expects to receive a minimum of $0.9 million in 1999. A third party has
an option to purchase this parcel of land for $7.2 million until April
30, 1999.
In January 1999, a wholly-owned subsidiary of the Company obtained a $35
million secured loan facility (the "Wellsford Finance Bank Facility")
from BankBoston, which can potentially be increased to $50 million. The
Wellsford Finance Bank Facility bears interest at LIBOR + 2.75% and has
a term of 3 years. The Company immediately drew $35 million on this
line, the proceeds of which were used (a) to repay the $17 million
balance of the WRP Bank Facility, and (b) for working capital purposes.
The Company is obligated to pay a fee equal to one-quarter of one
percent (0.25%) per annum on the average daily amount of the unused
portion of the Wellsford Finance Bank Facility until maturity.
In January 1999, the REIT Bridge Loan was modified as described in Note
10.
<PAGE>
Consolidated Financial Statements
Wellsford/Whitehall Properties II, L.L.C.
and Subsidiaries
December 31, 1998
with Report of Independent Auditors
<PAGE>
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Page No.
--------
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . .3
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . .4
Consolidated Statements of Income. . . . . . . . . . . . . . . . . . . .5
Consolidated Statements of Changes in Members' Equity. . . . . . . . . .6
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . .7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
------------------------------
To the Members of Wellsford/Whitehall Properties II, L.L.C.
and Subsidiaries:
We have audited the accompanying consolidated balance sheets of
Wellsford/Whitehall Properties II, L.L.C. (formerly Wellsford/Whitehall
Properties, L.L.C.) and subsidiaries (the "Company") as of December 31, 1998
and 1997, and the related consolidated statements of income, changes in
members' equity and cash flows for the year ended December 31, 1998 and for
the period from August 28, 1997 (Inception) to December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Wellsford/Whitehall Properties II, L.L.C. and subsidiaries at December 31,
1998 and 1997, and the consolidated results of their operations and their
cash flows for the year ended December 31, 1998 and for the period from
August 28, 1997 (Inception) to December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
February 12, 1999
<PAGE>
Wellsford/Whitehall Properties II, L.L.C. and Subsidiaries
Consolidated Balance Sheets
December 31,
--------------------------------
1998 1997
-------------- --------------
ASSETS
Real estate assets,
at cost - Notes 3,4,5 and 6
Land $ 61,131,765 $ 26,884,000
Buildings and improvements 387,897,683 161,567,641
-------------- --------------
449,029,448 188,451,641
Less, accumulated depreciation (8,484,889) (1,219,849)
-------------- --------------
440,544,559 187,231,792
Construction in progress 52,662,902 31,510,074
-------------- --------------
493,207,461 218,741,866
Cash and cash equivalents 6,410,614 2,878,259
Restricted cash 2,174,026 --
Deferred costs, net of
accumulated amortization 3,764,980 4,774,774
Receivables, prepaids
and other assets (Note 7) 5,823,846 2,639,634
------------- --------------
Total Assets $ 511,380,927 $ 229,034,533
============== ==============
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Mortgage loan (Note 6) $ 68,043,333 $ --
Secured revolving credit
facility (Note 6) -- 38,984,000
Secured term loan (Note 6) -- 107,925,000
Secured senior credit facility (Note 6) 207,289,846 --
Secured mezzanine credit
facility (Note 6) 68,907,482 --
Unsecured loan (Note 6) -- 4,283,925
Accrued expenses and other liabilities
(Note 7) 11,224,384 3,122,371
Distributions payable (Note 8) 3,298,814 --
Security deposits 751,234 594,094
------------ --------------
Total Liabilities 359,515,093 154,909,390
------------- --------------
Commitments and contingencies -
Notes 6, 8, 9 and 11 -- --
Members' Equity (Note 8):
Membership units, $.01 par
value per unit 99,403 64,855
Paid in capital 130,032,663 74,030,079
Series A convertible preferred
membership units 19,000,000 --
Retained earnings 2,733,768 30,209
-------------- --------------
Total Members' Equity 151,865,834 74,125,143
-------------- --------------
Total Liabilities and
Members' Equity $ 511,380,927 $ 229,034,533
============== ==============
See Accompanying Notes
<PAGE>
Wellsford/Whitehall Properties II, L.L.C. and Subsidiaries
Consolidated Statements of Income
For the
Period From
For the August 28, 1997
Year Ended (Inception) to
December 31, 1998 December 31, 1997
----------------- -----------------
Revenues:
Rental income (Note 4) $ 52,514,859 $ 8,334,619
Interest and other income 1,108,437 193,086
--------------- ----------------
Total revenues 53,623,296 8,527,705
--------------- ----------------
Expenses:
Property operations and maintenance 13,379,303 2,346,644
Real estate taxes 5,550,662 970,501
Depreciation and amortization 7,387,077 1,219,849
Property and asset management 1,348,552 175,873
Interest (Note 6) 19,085,016 2,949,280
General and administrative 3,299,496 835,349
--------------- ----------------
Total Expenses 50,050,106 8,497,496
--------------- ----------------
Income before gain on disposition
and distributions to Series A
convertible preferred
membership unit holders 3,573,190 30,209
Gain on disposition (Note 3) 2,866,183 --
--------------- ----------------
Net income before distributions
to Series A convertible preferred
membership unit holders 6,439,373 30,209
Distributions to Series A convertible
preferred membership unit holders (728,333) --
--------------- ----------------
Net income available for membership
unit holders $ 5,711,040 $ 30,209
=============== ================
Net income per membership unit
(Note 2) $ 0.69 $ 0.01
=============== ================
Weighted average number of
membership units outstanding
(Note 2) $ 8,291,273 $ 5,277,314
=============== ================
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
Wellsford/Whitehall Properties II, L.L.C. and Subsidiaries
Consolidated Statement of Changes in Members' Equity
For the Period from August 28, 1997 (Inception) to December 31, 1998
Series A
Convertible
Membership Units Preferred Total
-------------------- Paid-in Membership Retained Members'
Units Amount Capital Units Earnings Equity
--------- --------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Initial equity
contributions -
August 28, 1997 5,000,000 $50,000 $49,950,000 $ -- $ -- $50,000,000
(Inception)
Additional equity
contributions 1,485,508 14,855 24,080,079 -- -- 24,094,934
Net income -- -- -- -- 30,209 30,209
-------- ------- ------------ ----------- --------- ------------
December 31, 1997 6,485,508 64,855 74,030,079 -- 30,209 74,125,143
Issuance of membership
units in connection
with contribution of
assets 468,557 4,686 7,595,309 19,000,000 -- 26,599,995
Additional equity
contributions 2,986,260 29,862 48,407,275 -- -- 48,437,137
Net income -- -- -- 728,333 5,711,040 6,439,373
Distributions -- -- -- (728,333) (3,007,481) (3,735,814)
---------- ------- ------------ ----------- ---------- ------------
December 31, 1998 9,940,325 $99,403 $130,032,663 $19,000,000 $2,733,768 $151,865,834
========== ======= ============ =========== ========== ============
</TABLE>
See Accompanying Notes
<PAGE>
Wellsford/Whitehall Properties II, L.L.C. and Subsidiaries
Consolidated Statement of Cash Flows
For the
Period From
For the August 28, 1997
Year Ended (Inception) to
December 31, 1998 December 31, 1997
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Basic Earnings $ 6,439,373 $ 30,209
Adjustments to reconcile net income
to net cash provided by operating
activities:
Gain on disposal of real estate
assets (2,866,183) --
Depreciation and amortization 7,387,077 1,233,889
Amortization of deferred
financing costs 1,672,413 --
Deferred rental revenue (1,476,178) (380,103)
Decrease (increase) in assets:
Receivables, prepaids and other
assets (851,453) 192,076
(Decrease) increase in liabilities:
Accrued expenses and other
liabilities 4,828,066 1,285,498
Security deposits 157,140 --
-------------- ------------
Net cash provided by operating
activities 15,290,255 2,361,569
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of real estate assets (163,082,206) (46,768,417)
Prepaid acquisition costs (1,124,579) --
Disposal of real estate assets, net of
selling expenses 4,561,013 --
Improvements to real estate assets (22,066,915) (15,519,011)
------------- ------------
Net cash used in investing activities (181,712,687) (62,287,428)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from term loans 23,587,620 107,925,000
Proceeds from credit facilities 67,037,844 38,984,000
Proceeds from mortgage loans -- 375,602
Proceeds from unsecured loan -- 48,025,000
Proceeds from secured senior credit
facility 207,289,846 --
Proceeds from secured mezzanine credit
facility 68,907,482 --
Repayment of term loans (131,512,620) --
Repayment of credit facilities (106,021,844) --
Repayment of mortgage loans (297,483) (48,468,556)
Repayment of unsecured loan (4,283,925) (105,440,515)
Increase in restricted cash (2,174,026) --
Deferred financing and organization
costs (578,244) (4,774,774)
Preferred distributions (437,000) --
Initial cash contribution -- 2,083,427
Equity contributions 48,437,137 24,094,934
------------- ------------
Net cash provided by financing
activities 169,954,787 62,804,118
------------- ------------
Net increase in cash & cash
equivalents 3,532,355 2,878,259
Cash & cash equivalents, beginning
of period 2,878,259 --
------------- ------------
Cash & cash equivalents, end of period $ 6,410,614 $ 2,878,259
============= ============
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $ 18,296,284 $ 2,953,786
============= ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Initial contribution of real estate
assets $157,927,131
Initial contribution of other assets 968,786
Assumption of unsecured loan (61,699,440)
Assumption of mortgage (48,092,954)
Assumption of other liabilities (1,186,950)
Initial equity contribution (50,000,000)
------------
Initial cash contribution $ (2,083,427)
============
Membership units issued in exchange
for contribution of real estate
assets $ 7,599,995
Series A convertible preferred
membership units issued in exchange
for contribution of real estate
assets 19,000,000
Assumption of mortgage loan 68,340,816
Purchase of real estate assets (94,940,811)
-------------
$ 0
=============
See Accompanying Notes
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C. AND SUBSIDIARIES
DECEMBER 31, 1998
(1) Organization and Business
Wellsford/Whitehall Properties II, L.L.C. (formerly Wellsford/Whitehall
Properties, L.L.C.) and subsidiaries (the "Company") was formed on
August 28, 1997 as a private real estate operating company. The Company
is a joint venture between Wellsford Commercial Properties Trust
("WCPT"), a subsidiary of Wellsford Real Properties, Inc. ("WRP"), and
WHWEL Real Estate Limited Partnership ("Whitehall"), an affiliate of
Goldman, Sachs & Co (the "Members"). The Company will terminate on
December 31, 2045, unless sooner by the written consent of the Members.
The Company seeks to acquire commercial properties and create value
through adaptive reuse. The Company believes that appropriate well-
located commercial properties which are currently underperforming can be
acquired on advantageous terms and repositioned with the expectation of
achieving enhanced returns which are greater than returns which could be
achieved by acquiring a stabilized property. The Company's current
target markets include New York, New Jersey, Connecticut and the Boston,
Baltimore and Washington D.C. metropolitan areas. WCPT manages the
Company on a day-to-day basis, and certain major and operational
decisions require the consent of both partners. WCPT intends to qualify
as a real estate investment trust ("REIT").
On May 15, 1998 thirteen office buildings located in suburban Boston
with an aggregate value of approximately $148.7 million were contributed
to the Company for a combination of cash, Series A convertible preferred
membership units and membership units (the "Saracen Transaction"). In
connection with this transaction, several shareholders of the Saracen
Companies (the "Saracen Members") were issued both Series A convertible
preferred membership units and membership units and the Company assumed
a mortgage loan on six of the properties aggregating approximately $68.3
million.
The Company currently owns and operates 35 commercial buildings
containing approximately 4.6 million square feet ("SF") of office space
in the Northeastern United States, including approximately 1.4 million
SF under renovation. The properties are located in Northern New Jersey
(16), Downtown Boston (1), Suburban Boston (16), Suburban Baltimore (1)
and Washington, D.C. (1).
(2) Summary of Significant Accounting Policies
Principles of Consolidation. The accompanying consolidated financial
statements include the accounts of Wellsford/Whitehall Properties II,
L.L.C. and its wholly owned subsidiaries. All significant inter-company
accounts and transactions among Wellsford/Whitehall Properties II,
L.L.C. and its subsidiaries have been eliminated in consolidation.
Income Recognition. Commercial properties are leased under operating
leases. Rental revenue is recognized on a straight-line basis over the
terms of the respective leases.
Cash and Cash Equivalents. The Company considers all demand and money
market accounts and short term investments in government funds with an
original maturity of three months or less to be cash and cash
equivalents.
Restricted Cash. Restricted cash primarily consists of debt service
reserve balances.
Real Estate and Depreciation. Real estate assets are stated at cost.
Costs directly related to the acquisition and improvement of real estate
are capitalized, including the purchase price, legal fees, acquisition
costs, interest, property taxes and other costs during the period of
development.
Ordinary repairs and maintenance items are expensed as incurred.
Replacements and betterments are capitalized and depreciated over their
estimated useful lives. Tenant improvements and leasing commissions are
capitalized and depreciated over the terms of the related leases.
Depreciation is computed over the expected useful lives of depreciable
property on a straight-line basis, principally 40 years for commercial
properties and 5 to 12 years for furnishings and equipment.
Statement of Financial Accounting Standard ("SFAS") 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed of" requires that long-lived assets to be held and used be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
SFAS 121 has not had an impact on the Company's consolidated financial
statements at December 31, 1998.
Deferred Costs. Deferred costs consist primarily of costs incurred to
obtain financing. Such deferred financing costs are amortized on a
straight-line basis over the term of the respective agreement and such
amortization is included in interest expense in the accompanying
Consolidated Statements of Income.
Fair Value of Financial Instruments. The Company's financial
instruments consist of cash and cash equivalents and long term debt.
The Company believes that the carrying amount of cash and cash
equivalents approximates fair value due to the short maturity of this
item. In addition, the Company believes that the carrying values of its
senior secured credit facility and its secured mezzanine credit facility
approximate fair value because such debt consists of variable rate debt
that reprices frequently. The Company believes that the carrying value
of its mortgage loan approximates fair value based upon an analysis of
various market data.
Interest-Rate Swap Agreement. To reduce the impact of certain changes
in interest rates on its long-term debt, the Company has entered into an
interest-rate swap agreement. This agreement involves the exchange of
amounts based on a variable interest rate for amounts based on a fixed
interest rate over the life of the agreement without an exchange of the
notional amount upon which the payments are based. The differential to
be paid or received as interest rates change is settled quarterly and
recognized as an adjustment to interest expense (the accrual accounting
method). The fair value of the swap agreements and changes in the fair
value as a result of changes in market interest rates are not recognized
in the accompanying financial statements. There have been no gains or
losses on terminations of interest-rate swap agreements in 1998.
Income Taxes. The Company is a limited liability company. In
accordance with the tax law regarding such entities, each of the
Company's membership unit holders is responsible for reporting their
share of the Company's taxable income or loss on their separate tax
returns. Accordingly, the Company has recorded no provision for
federal, state or local income taxes.
Per Unit Data. Net income per membership unit is computed based upon
the weighted average number of membership units outstanding during the
period. Conversion of the Series A convertible preferred membership
units is antidilutive and, accordingly, is not included in the
calculation.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications. Certain reclassifications have been made to the
prior period presentation to make it consistent with the current year.
Recently Issued Accounting Pronouncements. In June 1998 SFAS 133
"Accounting for Derivative Instruments and Hedging Activities" was
issued. SFAS 133 is required to be adopted in years beginning after
June 15, 1999. SFAS 133 permits early adoption as of the beginning of
any fiscal quarter after its issuance. The Company expects to adopt
SFAS 133 effective January 1, 2000. The Company does not anticipate
that the adoption of FAS 133 will have a material impact on its
financial position or results of operations.
<PAGE>
<TABLE>
<CAPTION>
(3) Commercial Properties
The Company owns the following commercial properties at December 31, 1998:
Year
Gross Area Constructed/ Gross
(square feet) Rehabilitated Investment
Property Location (unaudited) (unaudited) (000's)
- -------- -------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
Pointview Corporate Center Wayne, NJ 515,000 1976/1998 $ 32,369
(2 buildings)
1800 Valley Road Wayne, NJ 56,000 1980 4,122
Greenbrook Corporate Center Fairfield, NJ 201,000 1987 24,472
Chatham Executive Center Chatham, NJ 63,000 1972/1997 10,855
300 Atrium Drive Somerset, NJ 149,000 1983 18,489
400 Atrium Drive Somerset, NJ 355,000 1985 32,795
500 Atrium Drive Somerset, NJ 167,000 1984 20,721
700 Atrium Drive Somerset, NJ 181,000 1985 18,167
1275 K Street Washington, DC 225,000 1983 35,422
Mountain Heights Center Berkeley Hts, NJ 298,000 1968/1986/1998 35,196
(2 buildings)
Morris Technology Center Parsippany, NJ 244,000 1963/1977/1998 8,417
15 Broad Street Boston, MA 65,000 1920/1984 5,599
600 Atrium Drive (land) Somerset, NJ N/A N/A 2,075
Garden State Exhibit Center Somerset, NJ 82,000 1968/1989 5,832
150 Wells Avenue Newton, MA 11,000 1987 1,273
72 River Park Needham, MA 22,000 1983 2,630
70 Wells Avenue Newton, MA 29,000 1979 3,930
160 Wells Avenue Newton, MA 19,000 1970/1997 3,421
2331 Congress Street Portland, ME 24,000 1980 2,158
60/74 Turner Street Waltham, MA 16,000 1970 2,153
100 Wells Avenue Newton, MA 21,000 1978 2,548
333 Elm Street Dedham, MA 48,000 1983 5,814
Dedham Place Dedham, MA 160,000 1987 27,189
128 Technology Center Waltham, MA 218,000 1986 36,138
201 University Avenue Westwood, MA 82,000 1982 9,677
7/57 Wells Avenue Newton, MA 88,000 1982 12,089
75/85/95 Wells Avenue Newton, MA 242,000 1976/1986 40,127
117 Kendrick Street Needham, MA 209,000 1963 13,292
140 Kendrick Street Needham, MA 261,000 1963 16,266
Shattuck Office Center Andover, MA 63,000 1985 7,597
180/188 Mt Airy Road Basking Ridge, NJ 104,000 1980 15,649
377/379 Campus Drive Franklin Twp, NJ 199,000 1984 22,934
6301 Stevens Forest Lane Columbia, MD 38,000 1980 2,640
105 Challenger Road Ridgefield Park, NJ 147,000 1992 19,636
--------- --------
4,602,000 $501,692
========= ========
No individual tenant aggregated greater than 9% of rental revenue in 1998.
</TABLE>
<PAGE>
All of the above properties are encumbered by the Bank Facility (Note
6). In addition, 333 Elm Street, Dedham Place, 128 Technology Center,
201 University Avenue, 7/57 Wells Avenue and Wells Research Center are
encumbered by the Nomura Loan (Note 6).
The Company capitalizes interest related to buildings under renovation
to the extent such assets qualify for capitalization. Total interest
incurred and capitalized was $20,385,672 and $2,973,069, respectively,
for the year ended December 31, 1998 and $4,207,793 and $1,258,513,
respectively, for the period from August 28, 1997 (Inception) to
December 31, 1997 (the "Period").
In May 1998, the Company sold one office building to a prospective
tenant for net proceeds of approximately $4,561,000 and recorded a gain
of approximately $2.9 million.
(4) Leases
Office space in the properties is generally leased to tenants under
lease terms which provide for the tenants to pay base rents plus
increases in operating expenses in excess of specified amounts.
Non-cancelable operating leases with tenants expire on various dates
through 2013. The future minimum lease payments to be received under
leases existing as of December 31, 1998 are as follows (in 000s):
1999 $ 55,151
2000 50,055
2001 42,355
2002 30,961
2003 27,179
Thereafter 36,528
--------
Total $242,229
========
The above future minimum lease payments do not include specified
payments for tenant reimbursements of operating expenses which amounted
to approximately $4,878,000 and $602,000 for the year ended December 31,
1998 and the Period, respectively.
(5) Ground Lease
The leasehold interest in a 147,000 SF property located in Ridgefield
Park, NJ is subject to a ground lease held by the local municipality.
Future minimum rental payments under the lease until its expiration in
January 2084 are as follows (in 000s):
1999 $ 125
2000 125
2001 125
2002 125
2003 125
Thereafter 18,349
-------
Total $18,974
=======
(6) Long Term Debt
At December 31, 1998, the Company's long term debt consisted of the
following:
Balance
Maturity Stated (000s)
Debt Date Interest Rate 12/31/98
- ---- -------- ------------- --------
Mortgage Loan 2/2027 8.03% $ 68,043
Secured Senior Credit Facility 12/2000 LIBOR + 1.65% 207,290
Secured Mezzanine Credit Facility 12/2000 LIBOR + 3.20% 68,907
--------
$344,240
========
The Company's transactions described in Note 1 were funded primarily by
capital contributions from WCPT and Whitehall, by $48 million in debt
which encumbered certain of the properties contributed by Whitehall (the
"Atrium Loan") which was assumed by the Company, and by a mortgage
("Mortgage") between the Company and WRP.
The Atrium Loan bore interest at LIBOR +3% and was due on May 15, 2000.
The lender on this loan was Goldman Sachs Mortgage Company. This loan
was repaid in December 1997.
Pursuant to an unsecured loan, WRP had agreed to loan the Company up to
approximately $86.3 million bearing interest at LIBOR plus 3% until
November 1997 and at LIBOR plus 4% until maturity in June 1998 (the
"Unsecured Loan"). This loan, aggregating $4,283,925 at December 31,
1997, was repaid in June 1998. Interest expense on the Unsecured Loan
was $145,321 and $2,137,488 in 1998 and the Period, respectively.
In December 1997, the Company obtained the $375 million loan facility
(the "Prior Bank Facility") consisting of a secured term loan facility
("Secured Term Loan") of up to $225 million and a secured revolving
credit facility ("Secured Revolving Credit Facility") of up to $150
million. The term loan facility bore interest at LIBOR +1.6% and had a
term of four years; the revolving credit facility bore interest at LIBOR
+2.5% and had a term of three years. The Prior Bank Facility was
modified and repaid in July 1998.
In July 1998, the Company modified the Prior Bank Facility with
BankBoston and Goldman Sachs Mortgage to provide for a secured senior
credit facility ("Secured Senior Credit Facility") of up to $300 million
and a secured mezzanine credit facility ("Secured Mezzanine Credit
Facility") of up to $75 million (collectively, the "Bank Facility").
The loans bear interest at LIBOR + 1.65% and LIBOR + 3.20%,
respectively, and have a term of twenty-nine months, which may be
renewed by the Company for an additional twelve months, subject to
certain conditions. The proceeds from the Bank Facility were used to
repay amounts outstanding under the Prior Bank Facility.
In connection with the Saracen transaction, the Company assumed a
mortgage loan held by Nomura Asset Capital Corporation in the original
amount of approximately $68,341,000 (the "Nomura Loan"). The loan bears
interest at a rate of 8.03% and requires monthly payments of principal
and interest until maturity in February 2027.
The Bank Facility, the Prior Bank Facility and the Nomura Loan contain
various customary covenants regarding the ratio of liabilities to
assets, debt service coverage and minimum equity. As of December 31,
1998 and 1997, the Company was in compliance with the terms of these
covenants.
The aggregate maturities for the Company's long-term debt obligations
for each of the next five years and thereafter at December 31, 1998 are
as follows (in 000s):
1999 $ 574
2000 276,804
2001 674
2002 731
2003 793
Thereafter 64,664
--------
Total $344,240
========
To reduce the impact of certain changes in interest rates on its long-
term debt, the Company has an interest rate swap agreement and an
interest rate protection agreement. The interest rate swap agreement
fixes LIBOR at 5.9% for up to $220 million until May 2000. The interest
rate protection agreement caps LIBOR at 7.69% for up to $64 million
until June 15, 2000. The cost of the interest rate protection agreement
is being amortized on a straight-line basis over its life. The net
settlement amount of the interest-rate swap agreement and the
amortization of the interest rate protection agreement which is recorded
as an adjustment of interest expense in 1998 and 1997 aggregated
approximately $459,000 and $14,000, respectively. At December 31, 1998,
the fair value of the interest rate swap agreement was approximately
($2,700,000).
(7) Transactions With Affiliates
In connection with the transactions described in Note 1, on August 28,
1997 WRP issued 5,000,000 warrants (the "Warrants") to Whitehall to
purchase 4,132,230 shares of WRP common stock at an exercise price of
$12.10 per share. Such exercise price was based on the fair value of
the membership units of the Company at their issuance date. The
Warrants are exercisable for five years for either, at WRP's option,
shares of WRP's common stock or cash.
The exercise price for the Warrants is payable in cash or, after August
28, 1999, either with cash or membership units in the Company. Such
transaction would have no net impact on the number of membership units
outstanding.
Under the terms of the joint venture, WCPT is entitled to an
administrative fee of $300,000 per year for the reimbursement of
salaries and costs incurred relating to the operation of the Company.
The fees incurred by the Company were $300,000 for the year ended
December 31, 1998 and $100,000 for the Period. Such amounts were paid
during the first quarter of the subsequent year.
An affiliate of Whitehall performed asset management services for the
Company for which the Company incurred fees of approximately $133,000
for the year ended December 31, 1998 and $292,000 for the Period. This
contract expired February 25, 1998.
Affiliates of the Saracen Members performed asset management and
property management services for the Company. These fees amounted to
approximately $649,000 for the year ended December 31, 1998.
At December 31, 1998 and 1997, the Company has approximately $408,023
and $1,252,000, respectively, of receivables from its Members, which
amount is included in receivables, prepaids and other assets on the
accompanying Consolidated Balance Sheets.
WCPT leases space at Chatham Executive Center. Revenue related to this
lease for the year ended December 31, 1998 and for the Period amounted
to $0.
Affiliates of the Saracen Members lease space at 7/57 Wells Avenue.
Revenue related to these leases for the year ended December 31, 1998
amounted to $67,572.
(8) Members' Equity
WCPT is entitled to incentive compensation equal to (a) 17.5% of
available cash after a return of capital to WCPT and Whitehall and a
17.5% return on equity to each of them, and (b) 22.5% of available cash
after a 22.5% return on equity to WCPT and Whitehall. At December 31,
1998, WCPT and Whitehall have committed to make additional equity
contributions of approximately $13,633,000 and $13,835,000,
respectively, for new acquisitions, capital needs, and working capital.
Whitehall may exchange the membership units it receives in the Company
relating to capital contributions in excess of an additional $25 million
up to an additional $50 million, for shares of WRP's common stock or, at
WRP's sole discretion, cash, based upon the price paid for such
membership units and the current market value of WRP's common stock.
Such transaction would have no net impact on the number of membership
units outstanding.
At the formation of the Company, 2,505,000 membership units were issued
to WCPT, representing its 50.1% interest, and 2,495,000 units were
issued to Whitehall, representing its 49.9% interest.
Subsequently an additional 2,239,028 and 2,232,740 units were issued to
WCPT and Whitehall (1,495,966 and 1,490,294, respectively, in 1998),
respectively, in connection with additional capital contributions used
to fund acquisitions and renovations.
In connection with the Saracen Transaction, 468,557 membership units and
760,000 Series A convertible preferred membership units were issued to
the Saracen Members. The membership units were issued at a price of
$16.22 per membership unit. The Series A convertible preferred
membership units are convertible into membership units at a price of
$18.65 per membership unit. These units also provide for cumulative
dividend payments of the greater of (a) 6% or (b) the dividend payable
to membership unit holders, calculated on an as converted basis, payable
quarterly in arrears, and have a liquidation preference of $25 per
Series A convertible preferred membership unit plus accrued and unpaid
distributions.
The number of membership units issued and outstanding as of December 31,
1998 and 1997 is as follows:
December 31,
1998 1997
---- ----
[S] [C] [C]
WCPT 4,744,028 3,248,062
Whitehall 4,727,740 3,237,446
Saracen Members 468,557 --
--------- ---------
Total 9,940,325 6,485,508
========= =========
During the year ended December 31, 1998, preferred distributions of
$728,333 were declared. Of that amount, $437,000 was paid during the
year. The remainder was paid during first quarter 1999.
Distributions of $3,007,481 were declared on November 19, 1998 to
membership unit holders on record as of that date. These were paid
during first quarter 1999.
(9) Commitments and Contingencies
Under the terms of the joint venture agreement at any time prior to an
initial public offering by WCPT and after August 28, 2001, either WCPT
or Whitehall may require the Company to sell any and all of its
properties.
As a commercial real estate owner, the Company is subject to potential
environmental costs. At this point in time, management of the Company
is not aware of any environmental concerns that would have a material
adverse effect on the Company's financial position or future results of
operations.
The Company has management agreements with unaffiliated property
management companies to manage the operations of the properties.
Management fees are generally based on 2% to 3% of gross rentals
collected and are generally terminable on 30 days notice.
In November 1998, the Company entered into a contract to purchase a
property located in Morristown, NJ for $14 million. The property
consists of a 97,000 SF building and 15 acres of developable land.
The Company participates in WRP's defined contribution savings plan
which was established pursuant to Section 401 of the Internal Revenue
Code. All of the Company's employees are eligible to participate after
one year of service. Employer contributions are made based upon a
discretionary amount determined by the Company's management. Employer
contributions, if any, are based upon the amount contributed by an
employee. During 1998, the Company made contributions of approximately
$14,000.
(10) Subsequent Events
In February 1999, the Company executed an agreement to purchase two
properties located in Suburban Baltimore totaling 127,000 SF for $13.8
million. The purchase may be completed by May 1999, subject to certain
contingencies.
(11) Year 2000 (unaudited)
The Company has developed a plan to modify its information technology
("IT"), primarily its accounting software, to recognize the year 2000.
The Company currently expects the project to be substantially complete
by the end of the second quarter of 1999 at a cost of less than $0.1
million which will be funded from operations, including costs incurred
to date. The Company does not expect this project to have a significant
effect on its operations. The timing and cost of this project will be
closely monitored and are based on management's best estimates. Actual
results, however, could differ from those anticipated.
The Company also has initiated discussions with its third-party property
management companies (the "Managers") to ensure that those parties have
appropriate plans to allay any year 2000 issues that may impact the
Company's operations. These issues would include both
accounting/management software and non-information technology systems
such as fire safety, security and elevator systems. Wellsford/Whitehall
has completed its analysis of such systems and has determined that no
material adverse consequences will likely result from its year 2000
issues. Under the most reasonably likely worst case scenario, wherein
the Managers fail to update their software and non-IT systems, the
Company has the ability to convert its accounting and management systems
to a spreadsheet-based system on a temporary basis and to utilize its
building engineers to manually override any non-IT systems which fail.
While the Company believes its planning efforts are adequate to address
its year 2000 concerns, there can be no guarantee that the systems of
other companies on which the Company's systems and operations rely,
primarily its banks, payroll processing company, creditors, and debtors,
will be converted on a timely basis and will not have a material effect
on the Company.
<PAGE>
Schedule III
<TABLE>
<CAPTION>
Date Year # Of # Of
Property Name Acquired Location Built Sq. Ft. Units
- ------------- -------- -------- ----- ------- -----
<S> <C> <C> <C> <C> <C>
Blue Ridge - Garden Apts. 12/97 Denver, CO 1997 N/A 456
Red Canyon - Garden Apts. 11/98 Denver, CO 1998 N/A 304
Sonterra - Garden Apts. 1/98 Tucson, AZ 1995 N/A 344
Hoes Lane - Office 2/98 Piscataway, NJ 1987 37,238 N/A
Bradford Plaza - Retail 2/98 West Chester, PA 1990 123,881 N/A
Chestnut Street - Office 2/98 Philadelphia, PA 1857 (B) 49,953 N/A
Keewaydin Drive - Industrial 2/98 Salem, NH 1973 125,230 N/A
Turnpike Street - Industrial 2/98 Canton, MA 1980 43,160 N/A
Two Executive - Office 2/98 Cherry Hill, NJ 1970 102,310 N/A
Bay City Holdings - Office 2/98 Santa Monica, CA 1985 114,375 N/A
------- -----
Total 596,147 1,104
======= =====
<CAPTION>
December 31, 1998 (thousands)
----------------------------------------------------------------------------------------------------
Cost
Initial Cost Capitalized Total Cost (A) Total Cost
----------------------- Subsequent ------------------------ Net of
Bldgs & to Bldgs & Accum Accumulated
Property Name Land Improve Total Acquisition Land Improve Total Depr Depreciation Encumbrances
- ------------- ---- ------- ----- ----------- ---- ------- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Blue Ridge - Garden Apts. $5,225 $36,339 $41,564 $91 $5,225 $36,430 $41,655 $1,325 $40,330 $34,144
Red Canyon - Garden Apts. $5,060 $28,844 $33,904 $0 $5,060 $28,844 $33,904 $87 $33,817 $27,000
Sonterra - Garden Apts. $3,075 $17,272 $20,347 $0 $3,075 $17,272 $20,347 $628 $19,719 $16,278
Hoes Lane - Office $289 $1,652 $1,941 $5 $289 $1,657 $1,946 $34 $1,912 (D)
Bradford Plaza - Retail $1,692 $9,628 $11,320 $11 $1,692 $9,639 $11,331 $200 $11,131 (D)
Chestnut Street - Office $533 $3,018 $3,551 $1 $533 $3,019 $3,552 $63 $3,489 (D)
Keewaydin Drive - Industrial $502 $2,847 $3,349 $0 $502 $2,847 $3,349 $59 $3,290 (D)
Turnpike Street - Industrial $359 $3,037 $3,396 $0 $359 $3,037 $3,396 $64 $3,332 (D)
Two Executive - Office $517 $3,013 $3,530 $3 $517 $3,016 $3,533 $63 $3,470 (D)
Bay City Holdings - Office $1,561 $9,640 $11,201 $25 $1,561 $9,665 $11,226 $184 $11,042 (D)
------- -------- -------- ---- ------- -------- -------- ------ -------- -------
Total $18,813 $115,290 $134,103 $136 $18,813 $115,426 $134,239 $2,707 $131,532 $77,422
======= ======== ======== ==== ======= ======== ======== ====== ======== =======
(C)
(A) The aggregate cost for federal income tax purposes is $133.0 million.
(B) Renovated in 1986 and 1990.
(C) Reconciliation of carrying amount:
Balance at January 1, 1997 $0
Additions:
Acquisitions 85,552
Deductions:
Cost of real estate sold (43,988)
--------
Balance at January 1, 1998 41,564
Additions:
Acquisitions 156,533
Capital improvements 136
Deductions:
Cost of real estate sold (63,994)
--------
Balance at December 31, 1998 $134,239
========
(D) These properties are encumbered by the $28.0 million Wellsford Capital Mortgage.
</TABLE>
<PAGE>
Schedule IV
- -----------
<TABLE>
<CAPTION>
December, 31, 1998 (thousands)
-----------------------------------------------
Total
Principal
Type Subject To
of Interest Maturity Payment Prior Face Carrying Delinquent
Note Receivable Security Rate Date Terms Liens Amount Amount(A) Payments
- --------------- -------- -------- -------- ------- ----- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
277 Park Loan Office(B) 12.000% 5/07(I) Interest Only $345,000 $25,000 $25,000 $0
Abbey Credit Facility Mixed(C) LIBOR + 4% 9/00 Interest Only $0 $46,019(M) $46,019 $0
Woodlands Loan Mixed(D) LIBOR + 4.4% 7/00(J) Interest Only $309,000 $15,000 $15,000 $0
DeBartolo Loan Mixed(E) 8.547% 7/08(K) P & I(L) $0 $17,678 $17,678 $0
REIT Bridge Loan Unsecured(F) 9.875%(H) 2/99(H) Interest Only $444,600 $15,000 $14,949 $0
Safeguard Credit
Facility Storage Fac.(G) LIBOR + 4% 4/01 Interest Only $0 $5,913(N) $5,913 $0
REMICs Coops/condos Various Various Various $0 $253 $148 $21
---------- -------- -------- ---
Total $1,098,600 $124,863 $124,707 $21
(O)
(A) The aggregate carrying amount for federal income tax purposes is equal to the total face amount reflected in this schedule.
(B) This loan is secured by certain equity interests in an entity which owns a 52-story, 1.75 million sq. ft. office building in New
York, NY.
(C) This loan is secured by first mortgage liens on 24 office, industrial and retail properties located in CA and aggregating 1.7
million sq. ft.
(D) This loan is secured by certain equity interests and other collateral in a 25,000 acre master-planned community in Houston, TX.
(E) This loan is secured by certain equity interests in an entity which owns 175 million square feet of regional malls and other
invesetments.
(F) The borrower is an entity which owns regional malls, multifamily and office properties.
(G) This loan is secured by first mortgage liens on 4 storage facilities located in the U.S. and aggregating 0.3 million sq. ft.
(H) In January 1999, the interest rate and maturity date of this loan were modified to 12% and August 1999, respectively.
(I) This loan precludes prepayments until May 2003. From May 2003 to April 2006, a prepayment penalty based on a yield maintenance
formula (as defined in the related documents) is applicable. From May 2006 to maturity, no prepayment penalty is applicable.
(J) Two one-year extension options are available to the borrower.
(K) This loan requires any prepayments to be accompanied by a prepayment penalty based on a yield maintenance formula (as defined in
the related documents).
(L) This loan requires principal payments of varying amounts and a $12.6 million balloon payment at maturity.
(M) The maximum balance of the Company's 50% portion of this facility is $50 million.
(N) The maximum balance of the Company's 50% portion of this facility is $45 million.
(O) Reconcoliation of carrying amount.
Balance at January 1, 1997 $17,800
Additions:
New loans 164,645
Funding of credit facilities 28,627
Deductions:
Collection of principal (105,440)
----------
Balance at January 1, 1998 105,632
Additions:
New loans 40,604
Funding of credit facilities 33,305
Amortization of discount 410
Deductions:
Collection of principal (55,244)
----------
Balance at December 31, 1998 $124,707
==========
/TABLE
<PAGE>
EXHIBIT INDEX
Exhibit No. Description+++
- ---------- --------------
3.1 Articles of Amendment and Restatement of the Company.****
3.2 Articles Supplementary Classifying 335,000 Shares of Common
Stock as Class A Common Stock.****
3.3 Articles Supplementary Classifying 2,000,000 Shares of Common
Stock as Series A 8% Convertible Redeemable Preferred
Stock.****
3.4 Bylaws of the Company.****
4.1 Specimen certificate for Common Stock.***
4.2 Specimen certificate for Class A Common Stock.****
4.3 Specimen certificate for Series A 8% Convertible Redeemable
Preferred Stock.****
4.4 Warrant Agreement, dated as of August 28, 1997, between the
Company and United States Trust Company of New York, as
warrant agent, and Warrant Certificate No. 1 of the Company
for 5,000,000 Warrants registered in the name of WHWEL Real
Estate Limited Partnership.+
4.5 Registration Rights Agreement, dated as of February 23, 1998,
among the Company and Franklin Mutual Advisors, Inc. and
Angelo Gordon & Co., L.P.++++
10.1 Operating Agreement of Red Canyon at Palomino Park LLC between
Wellsford Park Highlands Corp. and Al Feld, dated as of April
17, 1996, relating to Red Canyon.*
10.2 First Amendment to Operating Agreement of Red Canyon at
Palomino Park LLC between Wellsford Park Highlands Corp. and
Al Feld, dated as of May 19, 1997, relating to Red Canyon.****
10.3 Tri-Party Agreement by and among NationsBank of Texas, N.A.,
Red Canyon at Palomino Park LLC, Wellsford Park Highlands
Corp., Wellsford Residential Property Trust, Al Feld and The
Feld Company, dated May 29, 1997, relating to Red Canyon.****
10.4 Assignment and Assumption of Tri-Party Agreement by and among
Wellsford Residential Property Trust, ERP Operating Limited
Partnership, Red Canyon at Palomino Park LLC, Wellsford Park
Highlands Corp., The Feld Company, Al Feld and NationsBank of
Texas, N.A. dated May 30, 1997, relating to Red Canyon.****
10.5 Agreement and Acknowledgment Regarding Tri-Party Agreement by
and among NationsBank of Texas, N.A., Red Canyon at Palomino
Park LLC, Wellsford Park Highlands Corp. and ERP Operating
Limited Partnership dated May 30, 1997, relating to Red
Canyon.****
10.6 Second Amended and Restated Vacant Land Purchase and Sale
Agreement between Mission Viejo Company and The Feld Company
dated March 23, 1995, as amended by First Amendment, dated May
1, 1996, relating to the land underlying Palomino Park.*
10.7 Trust Indenture, dated as of December 1, 1995, between
Palomino Park Public Improvements Corporation ("PPPIC") and
United States Trust Company of New York, as trustee, securing
Wellsford Residential Property Trust's Assessment Lien Revenue
Bonds Series 1995 - $14,755,000.**
10.8 Letter of Credit Reimbursement Agreement, dated as of December
1, 1995, between PPPIC, Wellsford Residential Property Trust
and Dresdner Bank AG, New York Branch.**
10.9 First Amendment to Letter of Credit Reimbursement Agreement,
dated as of May 30, 1997, between PPPIC, Wellsford Residential
Property Trust, Dresdner Bank AG, New York Branch and the
Company.****
10.10 Amendment to Wellsford Reimbursement Agreement by and between
PPPIC, Wellsford Residential Property Trust and the Company,
dated as of May 30, 1997.****
10.11 Assignment and Assumption Agreement by and between Wellsford
Residential Property Trust and the Company, dated as of May
30, 1997.****
10.12 Credit Enhancement Agreement by and between the Company and
ERP Operating Limited Partnership, dated as of May 30, 1997,
relating to Palomino Park.****
10.13 Reimbursement and Indemnification Agreement by and among the
Company and ERP Operating Limited Partnership, dated as of May
30, 1997, relating to Palomino Park.****
10.14 Guaranty by ERP Operating Limited Partnership for the benefit
of Dresdner Bank AG, New York Branch, dated as of May 30,
1997, relating to Palomino Park.****
10.15 Amended and Restated Promissory Note of the Company to the
order of Dresdner Bank AG, New York Branch, dated May 30,
1997, relating to Palomino Park.****
10.16 Common Stock and Preferred Stock Purchase Agreement by and
between the Company and ERP Operating Limited Partnership
dated as of May 30, 1997.****
10.17 Registration Rights Agreement by and between the Company and
ERP Operating Limited Partnership dated as of May 30,
1997.****
10.18 Credit Agreement, dated as of April 25, 1997, between Park
Avenue Financing Company LLC, PAMC Co-Manager Inc., PAFC
Management, Inc., Stanley Stahl, The First National Bank of
Boston, the Company, Other Banks that may become parties to
the Agreement and The First National Bank of Boston, as Agent,
relating to 277 Park Avenue.**
10.19 Assignment of Member's Interest, dated as of April 25, 1997,
by PAFC Management, Inc. and Stanley Stahl to The First
National Bank of Boston, relating to 277 Park Avenue (relating
to interests in the Park Avenue Financing Company, LLC).**
10.20 Assignment of Member's Interest, dated as of April 25, 1997,
by PAMC Co-Manager Inc. and Park Avenue Financing, LLC to The
First National Bank of Boston, relating to 277 Park Avenue
(relating to interests in 277 Park Avenue, LLC).**
10.21 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley
Stahl to The First National Bank of Boston, relating to 277
Park Avenue (relating to stock in Park Avenue Management
Corporation).**
10.22 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley
Stahl to The First National Bank of Boston, relating to 277
Park Avenue (relating to stock in PAMC Co-Manager Inc.).**
10.23 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley
Stahl to The First National Bank of Boston, relating to 277
Park Avenue (relating to stock in PAFC Management, Inc.).**
10.24 Conditional Guaranty of Payment and Performance, dated as of
April 25, 1997, by Stanley Stahl, relating to 277 Park
Avenue.**
10.25 Cash Collateral Account Security, Pledge and Assignment
Agreement, dated as of April 25, 1997, between 277 Park
Avenue, LLC, Park Avenue Management Corporation, Park Avenue
Financing Company LLC, PAMC Co-Manager Inc., Stanley Stahl and
The First National Bank of Boston, relating to 277 Park
Avenue.**
10.26 Recognition Agreement, dated as of April 25, 1997, between The
First National Bank of Boston, the Company, Column Financial,
Inc., Park Avenue Financing Company LLC, PAMC Co-Manager, Inc.
and 277 Park Avenue, LLC, relating to 277 Park Avenue.**
10.27 Intercreditor Agreement, dated as of April 25, 1997, between
the Company and The First National Bank of Boston, as Agent,
relating to 277 Park Avenue.**
10.28 Assignment and Acceptance Agreement, dated June 19, 1997,
between BankBoston, N.A. (formerly known as The First National
Bank of Boston) ("BankBoston") and the Company, relating to
277 Park Avenue.****
10.29 Revolving Credit Agreement by and among the Company,
BankBoston, Morgan Guaranty Trust Company of New York ("Morgan
Guaranty"), other banks which may become parties and
BankBoston, as agent, and Morgan Guaranty, as co-agent dated
as of May 30, 1997.****
10.30 Agreement Regarding Common Stock and Preferred Stock Purchase
Agreement, dated as of May 30, 1997, among ERP Operating
Limited Partnership, the Company and BankBoston, as agent.****
10.31 Assignment of Common Stock Agreements, dated as of May 30,
1997, between the Company and BankBoston, as agent.****
10.32 Collateral Assignment of Documents, Rights and Claims
(including Collateral Assignment of Deed of Trust, Assignment
of Leases and Rents, Security Agreement and Fixture Filing),
made as of May 30, 1997, by the Company to BankBoston, as
agent.****
10.33 First Amended and Restated Loan Agreement, dated as of July
16, 1998 (the "First Amended and Restated Loan Agreement"),
among Wellsford/Whitehall Holdings, L.L.C., as Borrower, and
BankBoston, Goldman Sachs Mortgage Company, and Other Banks,
as Banks, and BankBoston, as Administrative Agent and Co-
Arranger and Co-Syndication Agent, and Goldman Sachs Mortgage
Company, as Co-Arranger and Co-Syndication Agent.
10.34 Form of promissory note payable to the order of eight lenders
by Wellsford/Whitehall Properties, L.L.C. under the First
Amended and Restated Loan Agreement.
10.35 Amended and Restated Assignment of Member's Interest under the
First Amended and Restated Loan Agreement, dated as of July
16, 1998, by Wellsford/Whitehall Holdings, L.L.C. to
BankBoston, as Agent.
10.36 Amended and Restated Cash Collateral Agreement under the First
Amended and Restated Loan Agreement, dated as of July 16,
1998, by and among Wellsford/Whitehall Holdings, L.L.C., WASH
Manager L.L.C., Wells Avenue Holdings L.L.C. and BankBoston,
as Agent.
10.37 Indemnity Agreement Regarding Hazardous Materials under the
First Amended and Restated Loan Agreement, dated as of July
16, 1998, by Wellsford/Whitehall Holdings, L.L.C., Wellsford
Commercial Properties Trust and WHWEL Real Estate Limited
Partnership for the benefit of BankBoston.
10.38 Conditional Guaranty of Payment under the First Amended and
Restated Loan Agreement, dated as of July 16, 1998, by
Wellsford Commercial Properties Trust, WHWEL Real Estate
Limited Partnership, the Company, Whitehall Street Real Estate
Limited Partnership V, Whitehall Street Real Estate Limited
Partnership VI, Whitehall Street Real Estate Limited
Partnership VII and Whitehall Street Real Estate Limited
Partnership VIII in favor of BankBoston and Goldman Sachs
Mortgage Company.
10.39 Indemnity and Guaranty Agreement under the First Amended and
Restated Loan Agreement, dated as of July 16, 1998, by
Wellsford Commercial Properties Trust and WHWEL Real Estate
Limited Partnership in favor of BankBoston, Goldman Sachs
Mortgage Company and Other Banks.
10.40 Mezzanine Loan Agreement, dated as of July 16, 1998 (the
"Mezzanine Loan Agreement"), among Wellsford/Whitehall
Holdings II, L.L.C., as Borrower, and BankBoston, Goldman
Sachs Mortgage Company, and Other Banks, as Banks, and
BankBoston, as Administrative Agent and Co-Arranger and Co-
Syndication Agent, and Goldman Sachs Mortgage Company, as Co-
Arranger and Co-Syndication Agent.
10.41 Form of promissory note payable to the order of five lenders
by Wellsford/Whitehall Properties II, L.L.C. under the
Mezzanine Loan Agreement.
10.42 Assignment of Member's Interest under the Mezzanine Loan
Agreement, dated as of July 16, 1998, between
Wellsford/Whitehall Properties II, L.L.C. and BankBoston, as
Agent.
10.43 Indemnity Agreement Regarding Hazardous Materials under the
Mezzanine Loan Agreement, dated as of July 16, 1998, by
Wellsford/Whitehall Properties II, L.L.C., Wellsford
Commercial Properties Trust and WHWEL Real Estate Limited
Partnership for the benefit of BankBoston.
10.44 Nomura Conditional Guaranty of Payment under the Mezzanine
Loan Agreement, dated as of July 16, 1998, by Wellsford
Commercial Properties Trust, WHWEL Real Estate Limited
Partnership, the Company, Whitehall Street Real Estate Limited
Partnership V, Whitehall Street Real Estate Limited
Partnership VI, Whitehall Street Real Estate Limited
Partnership VII and Whitehall Street Real Estate Limited
Partnership VIII in favor of BankBoston and Goldman Sachs
Mortgage Company.
10.45 Conditional Guaranty of Payment under the Mezzanine Loan
Agreement, dated as of July 16, 1998, by Wellsford Commercial
Properties Trust, WHWEL Real Estate Limited Partnership, the
Company, Whitehall Street Real Estate Limited Partnership V,
Whitehall Street Real Estate Limited Partnership VI, Whitehall
Street Real Estate Limited Partnership VII and Whitehall
Street Real Estate Limited Partnership VIII in favor of
BankBoston and Goldman Sachs Mortgage Company.
10.46 Indemnity and Guaranty Agreement under the Mezzanine Loan
Agreement, dated as of July 16, 1998, by Wellsford Commercial
Properties Trust and WHWEL Real Estate Limited Partnership in
favor of BankBoston, Goldman Sachs Mortgage Company and Other
Banks.
10.47 $50 million Revolving Credit Agreement, dated as of January
12, 1999, among Wellsford Finance, Inc., as Borrower, and
BankBoston and Other Banks, as Lender, and BankBoston, as
Agent.
10.48 $50 million promissory note, dated January 12, 1999, payable
to BankBoston by Wellsford Finance, Inc.
10.49 Collateral Assignment of Documents, Rights and Claims, dated
January 12, 1999, from Wellsford Finance, Inc. to BankBoston,
as Agent.
10.50 Limited Liability Company Operating Agreement of
Wellsford/Whitehall Properties II, L.L.C., dated as of July
16, 1998.
10.51 Letter Agreement, dated as of July 16, 1998, between the
Company and WHWEL Real Estate Limited Partnership, relating to
warrants to be issued to WHWEL Real Estate Limited
Partnership.
10.52 Fixed Rate Loan Agreement, dated as of August 11, 1998 (the
"Fixed Rate Loan Agreement"), by and among First Union Real
Estate Equity and Mortgage Investments, as Borrower, Bankers
Trust Company, as Agent, and Bankers Trust Company, Wellsford
Capital and BankBoston, as Lenders.
10.53 $15 million promissory note, dated August 11, 1998, payable to
the order of Wellsford Capital by First Union Real Estate
Equity and Mortgage Investments under the Fixed Rate Loan
Agreement.
10.54 First Amendment of Fixed Rate Loan Agreement, dated as of
January 8, 1999, among First Union Real Estate Equity and
Mortgage Investments, as Borrower, Bankers Trust Company,
Wellsford Capital and BankBoston, as Lenders, and Bankers
Trust Company, as Agent.
10.55 Letter dated January 8, 1999, among First Union Real Estate
Equity and Mortgage Investments, as Borrower, Bankers Trust
Company, Wellsford Capital and BankBoston, as Lenders, and
Bankers Trust Company, as Agent.
10.56 Revolving Credit Agreement for $70 million, dated as of August
28, 1997, between AP-Anaheim LLC, AP-Arlington LLC, AP-
Atlantic LLC, AP-Cityview LLC, AP-Farrell Ramon LLC, AP-
Palmdale LLC, AP-Redlands LLC, AP-Victoria LLC, AP-Victorville
LLC, and AP-Sierra LLC, each a California limited liability
company (collectively, the "Abbey Affiliates"), as Borrower,
and Morgan Guaranty Trust Company of New York, as Lender.+
10.57 Amendment to Revolving Credit Agreement, dated as of April 6,
1998, by AP-Diamond Bar LLC, AP-Edinger LLC, AP- Glendora LLC,
AP- Anaheim LLC, AP- Arlington LLC, AP- Atlantic LLC, AP-
Cityview LLC, AP- Redlands LLC, AP- Palmdale LLC, AP- Farrell
Ramon LLC, AP- Sierra LLC, AP- Victoria LLC and AP-
Victorville LLC (collectively, the "Amended Abbey
Affiliates"), as Borrower, and Morgan Guaranty Trust Company
of New York, as Lender.
10.58 Loan Participation Agreement, dated as of August 28, 1997,
between Morgan Guaranty Trust Company of New York and the
Company.+
10.59 First Amendment to Participation Agreement, dated as of April
7, 1998, between Morgan Guaranty Trust Company of New York and
Wellsford Capital.
10.60 $70 million promissory note, dated August 28, 1997, payable to
the order of Morgan Guaranty Trust Company of New York by the
Abbey Affiliates.+
10.61 Amendment to Promissory Note, dated as of April 6, 1998,
between the Amended Abbey Affiliates and Morgan Guaranty Trust
Company of New York.
10.62 Purchase and Sale Agreement, dated as of September 18, 1997,
among the Company, Wellsford Capital Corporation and Whitehall
Street Real Estate Limited Partnership VII.++
10.63 First Amended and Restated Master Credit Agreement, dated
December 30, 1997, effective as of July 31, 1997, among The
Woodlands Commercial Properties Company, L.P., The Woodlands
Land Development Company, L.P., and BankBoston, Morgan Stanley
Senior Funding, Inc., as Documentation Agent, and Other Banks,
and BankBoston, as Managing Agent and Syndication Agent.++++
10.64 Intercreditor Agreement, dated December 30, 1997, effective as
of July 31, 1997, by and between BankBoston, Morgan Stanley
Senior Funding, Inc. and the Other Lenders, relating to
Woodlands.++++
10.65 $4,186,991.87 Commercial Company Second Secured Term Loan
Note, dated December 30, 1997, payable to the order of the
Company by The Woodlands Commercial Properties Company, L.P.
and The Woodlands Land Development Company, L.P.++++
10.66 $10,813,008.13 Land Company Second Secured Term Loan Note,
dated December 30, 1997, payable to the order of the Company
by The Woodlands Land Development Company, L.P. and The
Woodlands Commercial Properties Company, L.P.++++
10.67 Revolving Credit Agreement, dated as of March 28, 1998, among
Safeguard Capital Fund, L.P., as Borrower, and Morgan Guaranty
Trust Company of New York, as Lender.
10.68 $90 million promissory note, dated March 28, 1998, payable to
Morgan Guaranty Trust Company of New York by Safeguard Capital
Fund, L.P.
10.69 Loan Participation Agreement, dated as of December 1, 1998,
between Morgan Guaranty Trust Company of New York and
Wellsford Capital.
10.70 Program Agreement for Clairborne Investors Mortgage Program
between Creamer Realty Consultants and The Prudential
Investment Corporation, dated as of December 10, 1997.++++
10.71 Amended and Restated General Partnership Agreement of Creamer
Realty Consultants, dated as of January 1, 1998, by and
between Wellsford CRC Holding Corp. and FGC Realty
Consultants, Inc.++++
10.72 Limited Liability Company Agreement of Creamer Vitale
Wellsford, L.L.C., dated as of January 20, 1998, by and
between Wellsford CRC Holding Corp. and SX Advisors, LLC.++++
10.73 Loan Agreement, dated as of February 27, 1998, between
Wellsford Sonterra L.L.C., as Borrower, and Nationsbank, N.A.,
as Lender.++++
10.74 $16,400,000 promissory note, dated February 27, 1998, payable
to the order of NationsBank, N.A., by Wellsford Sonterra,
L.L.C.++++
10.75 Deed of Trust, Assignment of Leases and Rents and Security
Agreement, dated February 27, 1998 by Wellsford Sonterra,
L.L.C. in favor of NationsBank, N.A.++++
10.76 $34,500,000 Multifamily Note, dated December 24, 1997, payable
to the order of GMAC Commercial Mortgage Corporation by Park
at Highlands L.L.C.++++
10.77 Multifamily Deed of Trust, Assignment of Rents and Security
Agreement, dated December 24, 1997, by Park at Highlands
L.L.C. in favor of GMAC Commercial Mortgage Corporation.++++
10.78 $28 million secured promissory note, dated October 22, 1998,
payable to the order of Lehman Brothers Holdings Inc. by
Wellsford Capital Properties, L.L.C.
10.79 Conditional Guarantee, dated as of October 22, 1998, by
Wellsford Capital in favor of Lehman Brothers Holdings Inc.
10.80 Mortgage and Security Agreement, dated as of October 22, 1998,
by Wellsford Capital Properties, L.L.C. to Lehman Brothers
Holdings Inc.
10.81 1998 Management Incentive Plan of the Company.
10.82 1997 Management Incentive Plan of the Company.**
10.83 Rollover Stock Option Plan of the Company.**
10.84 Employment Agreement between the Company and Jeffrey H.
Lynford.****
10.85 Employment Agreement between the Company and Edward
Lowenthal.****
10.86 Employment Agreement between the Company and Gregory F.
Hughes.****
10.87 Employment Agreement between the Company and David M.
Strong.****
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
99.1 "Risk Factors" section of Amendment No. 2 to the Company's
Registration Statement on Form S-11 (file no. 333-32445), as
may be amended.+++++
- --------------------------
* Previously filed as an exhibit to the Form 10 filed on April
23, 1997.
** Previously filed as an exhibit to the Form 10/A Amendment No.
1 filed on May 21, 1997.
*** Previously filed as an exhibit to the Form 10/A Amendment No.
2 filed on May 28, 1997.
**** Previously filed an exhibit to the Form S-11 filed on July 30,
1997.
***** Previously filed as an exhibit to Amendment No. 1 to Form S-11
filed on November 14, 1997.
+ Previously filed as an exhibit to the Form 8-K filed on
September 11, 1997.
++ Previously filed as an exhibit to the Form 8-K filed on
September 23, 1997.
+++ Wellsford acquired its interest in a number of these documents
by assignment.
++++ Previously filed as an exhibit to the Form 10-K filed on March
31, 1998.
+++++ Previously filed as part of Amendment No. 2 to the
Registration Statement on Form S-11 filed on December 3, 1997.
FIRST AMENDED AND RESTATED LOAN AGREEMENT
DATED AS OF JULY 16, 1998
among
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., as Borrower
and
BANKBOSTON, N.A.,
GOLDMAN SACHS MORTGAGE COMPANY,
THE OTHER BANKS WHICH ARE PARTIES TO THIS AGREEMENT,
and
OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT, as Banks
and
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT AND CO-ARRANGER
AND CO-SYNDICATION AGENT
and
GOLDMAN SACHS MORTGAGE COMPANY,
AS CO-ARRANGER AND CO-SYNDICATION AGENT
<PAGE>
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . . .2
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . .2
Section 1.2. Rules of Interpretation.. . . . . . . . . . . . . . . . 23
Section 2. THE FACILITY.. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . . . 24
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . . . . 25
Section 2.3. Reduction of Commitment. . . . . . . . . . . . . . . 25
Section 2.4. Notes. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.5. Interest on Loans.. . . . . . . . . . . . . . . . . . . 26
Section 2.6. Requests for Loans. . . . . . . . . . . . . . . . . . . 26
Section 2.7. Funds for Loans.. . . . . . . . . . . . . . . . . . . . 28
Section 2.8. Extension of Maturity Date. . . . . . . . . . . . . . . 28
Section 2.9. Termination of Advances. . . . . . . . . . . . . . . . 29
Section 3. REPAYMENT OF THE LOANS.. . . . . . . . . . . . . . . . . . . . 29
Section 3.1. Stated Maturity. . . . . . . . . . . . . . . . . . . . 29
Section 3.2. Mandatory Prepayments.. . . . . . . . . . . . . . . . . 30
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . . . 30
Section 3.4. Partial Prepayments. . . . . . . . . . . . . . . . . . 31
Section 3.5. Effect of Prepayments. . . . . . . . . . . . . . . . . 31
Section 4. CERTAIN GENERAL PROVISIONS.. . . . . . . . . . . . . . . . . . 31
Section 4.1. Conversion Options. . . . . . . . . . . . . . . . . . . 31
Section 4.2. Closing Fee. . . . . . . . . . . . . . . . . . . . . . 32
Section 4.3. Agent's Fee. . . . . . . . . . . . . . . . . . . . . . 32
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . . . . 32
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . . . 32
Section 4.6. Inability to Determine Eurodollar Rate. . . . . . . . 33
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . . . 33
Section 4.8. Additional Interest. . . . . . . . . . . . . . . . . . 33
Section 4.9. Additional Costs, Etc. . . . . . . . . . . . . . . . . 34
Section 4.10. Capital Adequacy. . . . . . . . . . . . . . . . . . . 35
Section 4.11. Indemnity of Borrower. . . . . . . . . . . . . . . . 35
Section 4.12. Interest on Overdue Amounts; Late Charge. . . . . . . 35
Section 4.13. Intentionally Omitted. . . . . . . . . . . . . . . . . 35
Section 4.14. Certificate. . . . . . . . . . . . . . . . . . . . . 36
Section 4.15. Limitation on Interest. . . . . . . . . . . . . . . . 36
Section 4.16. Certain Provisions Relating to Increased Costs. . . . 36
Section 5. COLLATERAL SECURITY. . . . . . . . . . . . . . . . . . . . . . 37
Section 5.1. Collateral. . . . . . . . . . . . . . . . . . . . . . 37
Section 5.2. Appraisals. . . . . . . . . . . . . . . . . . . . . . 37
Section 5.3. Release of Collateral. . . . . . . . . . . . . . . . . 38
Section 5.4. Additional Collateral.. . . . . . . . . . . . . . . . . 41
Section 5.5. Holdback. . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.6. Disbursement of Tenant Improvement Reserve. . . . . . 42
Section 6. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . . 44
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . . . . 44
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . . . 45
Section 6.3. Title to Properties; Leases. . . . . . . . . . . . . . 46
Section 6.4. Financial Statements. . . . . . . . . . . . . . . . . 46
Section 6.5. No Material Adverse Changes. . . . . . . . . . . . . . 46
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . . . 47
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . . . 47
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . . . 47
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . . . 47
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . . . . . . 48
Section 6.11. No Event of Default. . . . . . . . . . . . . . . . . 48
Section 6.12. Holding Company and Investment Company Acts. . . . . 48
Section 6.13. Absence of UCC Financing Statements, Etc. . . . . . . 48
Section 6.14. Setoff, Etc. . . . . . . . . . . . . . . . . . . . . 48
Section 6.15. Certain Transactions. . . . . . . . . . . . . . . . . 48
Section 6.16. Employee Benefit Plans. . . . . . . . . . . . . . . . 49
Section 6.17. ERISA Taxes. . . . . . . . . . . . . . . . . . . . . 49
Section 6.18. Plan Payments. . . . . . . . . . . . . . . . . . . . 49
Section 6.19. Regulations U and X. . . . . . . . . . . . . . . . . 49
Section 6.20. Environmental Compliance. . . . . . . . . . . . . . . 50
Section 6.21. Subsidiaries. . . . . . . . . . . . . . . . . . . . . 51
Section 6.22. Leases. . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.23. Loan Documents. . . . . . . . . . . . . . . . . . . . 52
Section 6.24. Mortgaged Property and Mezzanine Property. . . . . . 52
(a) Off-Site Utilities. . . . . . . . . . . . . . . . . . . . 52
(b) Access, Etc. . . . . . . . . . . . . . . . . . . . . . . . 52
(c) Independent Building. . . . . . . . . . . . . . . . . . . 52
(d) Condition; No Asbestos. . . . . . . . . . . . . . . . . . 53
(e) Compliance with Law. . . . . . . . . . . . . . . . . . . . 53
(f) No Required Consents, Permits, Etc. . . . . . . . . . . . 53
(g) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 53
(h) Real Property Taxes; Special Assessments. . . . . . . . . 54
(i) Historic Status. . . . . . . . . . . . . . . . . . . . . . 54
(j) Eminent Domain; Casualty. . . . . . . . . . . . . . . . . 54
(k) Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 54
(l) Management Agreements. . . . . . . . . . . . . . . . . . . 55
(m) Other Material Real Property Agreements; No Options. . . . 55
Section 6.25. Mezzanine Mortgage Loan Documents. . . . . . . . . . 55
Section 6.26. Brokers. . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.27. Fair Consideration. . . . . . . . . . . . . . . . . . 56
Section 6.28. Solvency. . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.29. No Bankruptcy Filing. . . . . . . . . . . . . . . . . 56
Section 6.30. No Fraudulent Intent. . . . . . . . . . . . . . . . . 56
Section 6.31. Other Debt. . . . . . . . . . . . . . . . . . . . . . 56
Section 6.32. Ownership. . . . . . . . . . . . . . . . . . . . . . 57
Section 6.33. Special Purpose Entity. . . . . . . . . . . . . . . . 58
Section 6.34. Management Agreements. . . . . . . . . . . . . . . . 58
Section 6.35. Obligations as Members. . . . . . . . . . . . . . . . 58
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . 58
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . . . 58
Section 7.2. Maintenance of Office. . . . . . . . . . . . . . . . . 58
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . . . 59
Section 7.4. Financial Statements, Certificates and Information. . 59
Section 7.5. Notices.. . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.6. Existence; Maintenance of Properties. . . . . . . . . . 63
Section 7.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.9. Inspection of Properties and Books. . . . . . . . . . 70
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . . . 71
Section 7.12. Further Assurances. . . . . . . . . . . . . . . . . . 71
Section 7.13. Management Agreements. . . . . . . . . . . . . . . . 71
Section 7.14. ERISA Compliance. . . . . . . . . . . . . . . . . . . 72
Section 7.15. Condemnation. . . . . . . . . . . . . . . . . . . . . 72
Section 7.16. Intentionally Omitted. . . . . . . . . . . . . . . . . 73
Section 7.17. Compliance. . . . . . . . . . . . . . . . . . . . . . 73
Section 7.18. Intentionally Omitted. . . . . . . . . . . . . . . . . 73
Section 7.19. Leasing. . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.20. Special Purpose Entity. . . . . . . . . . . . . . . . 74
Section 7.21. Plan Assets, etc. . . . . . . . . . . . . . . . . . . 75
Section 7.22. Budgets. . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.23. Preservation and Maintenance. . . . . . . . . . . . . 75
Section 7.24. Use of Mezzanine Property. . . . . . . . . . . . . . 76
Section 7.25. Property Owner to Remain a Single-Purpose Entity. . . 76
Section 7.26. Condominium. . . . . . . . . . . . . . . . . . . . . . 77
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.. . . . . . . . . . 78
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . . . 78
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . . . 79
Section 8.3. Restrictions on Investments . . . . . . . . . . . . . . 80
Section 8.4. Merger, Consolidation. . . . . . . . . . . . . . . . . 82
Section 8.5. Sale and Leaseback; Ground Lease. . . . . . . . . . . 82
Section 8.6. Compliance with Environmental Laws. . . . . . . . . . 82
Section 8.7. Distributions. . . . . . . . . . . . . . . . . . . . . 84
Section 8.8. Intentionally Omitted.. . . . . . . . . . . . . . . . . 84
Section 8.9. Development Activity. . . . . . . . . . . . . . . . . 84
Section 8.10. Intentionally Omitted. . . . . . . . . . . . . . . . . 85
Section 8.11. Transfers. . . . . . . . . . . . . . . . . . . . . . 85
Section 8.12. Additional Covenants with Respect to Indebtedness,
Operations, Fundamental Changes. . . . . . . . . . . 85
Section 8.13. Additional Restrictions Concerning the Mezzanine
Property.. . . . . . . . . . . . . . . . . . . . . . . 87
Section 8.14. Mezzanine Mortgage Loan Documents. . . . . . . . . . 88
Section 9. FINANCIAL COVENANTS OF BORROWER. . . . . . . . . . . . . . . . 88
Section 9.1. Debt Service Coverage Test Amount. . . . . . . . . . . 89
Section 9.2. Designated Collateral Value. . . . . . . . . . . . . . 89
Section 9.3. WWP Financial Covenants. . . . . . . . . . . . . . . . 89
Section 10. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . 89
Section 10.1. Loan Documents. . . . . . . . . . . . . . . . . . . . 90
Section 10.2. Certified Copies of Organizational Documents. . . . . 90
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . . . . . 90
Section 10.4. Incumbency Certificate; Authorized Signers. . . . . . 90
Section 10.5. Opinion of Counsel. . . . . . . . . . . . . . . . . . 90
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . . . . . 90
Section 10.7. Appraisals. . . . . . . . . . . . . . . . . . . . . . 91
Section 10.8. Environmental Reports. . . . . . . . . . . . . . . . 91
Section 10.9. Insurance. . . . . . . . . . . . . . . . . . . . . . 91
Section 10.10. Performance; No Default. . . . . . . . . . . . . . . 91
Section 10.11. Representations and Warranties. . . . . . . . . . . 91
Section 10.12. Proceedings and Documents. . . . . . . . . . . . . . 91
Section 10.13. Eligible Real Estate Qualification Documents. . . . 91
Section 10.14. Compliance Certificate. . . . . . . . . . . . . . . 91
Section 10.15. Other Documents. . . . . . . . . . . . . . . . . . . 92
Section 10.16. No Condemnation/Taking. . . . . . . . . . . . . . . 92
Section 10.17. Governmental Policy. . . . . . . . . . . . . . . . . 92
Section 10.18. Other. . . . . . . . . . . . . . . . . . . . . . . . 92
Section 10.19. Satisfaction of Conditions as to Initial Collateral. 92
Section 11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . . . . . . . 92
Section 11.1. Prior Conditions Satisfied. . . . . . . . . . . . . . 92
Section 11.2. Representations True; No Default. . . . . . . . . . . 92
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . . . 93
Section 11.4. Governmental Regulation. . . . . . . . . . . . . . . 93
Section 11.5. Proceedings and Documents. . . . . . . . . . . . . . 93
Section 11.6. Borrowing Documents. . . . . . . . . . . . . . . . . 93
Section 11.7. Endorsement to Title Policy. . . . . . . . . . . . . 93
Section 11.8. Future Advances Tax Payment. . . . . . . . . . . . . 93
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . 94
Section 12.1. Events of Default and Acceleration. . . . . . . . . . 94
Section 12.lA. Limitation of Cure Periods. . . . . . . . . . . . . 98
Section 12.2. Termination of Commitments. . . . . . . . . . . . . . 98
Section 12.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.4. Distribution of Collateral Proceeds. . . . . . . . . 99
Section 12.5. Default under Mezzanine Mortgage Loan Documents. . . 99
Section 13. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . .101
Section 14. THE AGENT.. . . . . . . . . . . . . . . . . . . . . . . . . .101
Section 14.1. Authorization. . . . . . . . . . . . . . . . . . . .101
Section 14.2. Employees and Agents. . . . . . . . . . . . . . . . .101
Section 14.3. No Liability. . . . . . . . . . . . . . . . . . . . .101
Section 14.4. No Representations. . . . . . . . . . . . . . . . . .102
Section 14.5. Payments.. . . . . . . . . . . . . . . . . . . . . . .102
Section 14.6. Holders of Notes. . . . . . . . . . . . . . . . . . .103
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . . . . .103
Section 14.8. Agent as Bank. . . . . . . . . . . . . . . . . . . .103
Section 14.9. Resignation. . . . . . . . . . . . . . . . . . . . .103
Section 14.10. Duties in the Case of Enforcement. . . . . . . . . .104
Section 15. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . .104
Section 16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . .105
Section 17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . .107
Section 18. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . . .107
Section 18.1. Conditions to Assignment by Banks. . . . . . . . . .107
Section 18.2. Register. . . . . . . . . . . . . . . . . . . . . . .108
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . . . . .108
Section 18.4. Participations. . . . . . . . . . . . . . . . . . . .109
Section 18.5. Pledge by Bank. . . . . . . . . . . . . . . . . . . .109
Section 18.6. No Assignment by Borrower. . . . . . . . . . . . . .109
Section 18.7. Disclosure. . . . . . . . . . . . . . . . . . . . . .109
Section 18.8. Additional Restrictions on Assignments and
Participations. . . . . . . . . . . . . . . . . . . .109
Section 19. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . .110
Section 20. RELATIONSHIP. . . . . . . . . . . . . . . . . . . . . . . .111
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. . . . .111
Section 22. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . .112
Section 23. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . .112
Section 24. ENTIRE AGREEMENT, ETC.. . . . . . . . . . . . . . . . . . . .112
Section 25. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . .112
Section 26. DEALINGS WITH THE BORROWER. . . . . . . . . . . . . . . . . .113
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . . .113
Section 28. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . .113
Section 29. LIMITATION ON LIABILITY.. . . . . . . . . . . . . . . . . . .114
Section 30. NO UNWRITTEN AGREEMENTS.. . . . . . . . . . . . . . . . . . .114
Section 31. TIME OF THE ESSENCE.. . . . . . . . . . . . . . . . . . . . .114
Section 32. BANKRUPTCY. . . . . . . . . . . . . . . . . . . . . . . . . .114
SCHEDULES AND EXHIBITS:
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF REQUEST FOR LOAN
EXHIBIT C FORM OF COMPLIANCE CERTIFICATE
EXHIBIT D FORM OF REQUEST FOR EXTENSION OF LOAN
EXHIBIT E CERTIFICATE
SCHEDULE 1.1 BANKS AND COMMITMENTS
SCHEDULE 5.3 DESCRIPTION OF GREENBROOK CORPORATE CENTER AND POINT VIEW
VACANT LAND
SCHEDULE 6.3 TITLE TO PROPERTIES
SCHEDULE 6.4 ALL-IN ACQUISITION COST, DESIGNATED COLLATERAL VALUE AND
RELEASE PRICES
SCHEDULE 6.7 LITIGATION
SCHEDULE 6.17 ERISA PLANS
SCHEDULE 6.21 SUBSIDIARIES
SCHEDULE 6.24 AGREEMENTS
SCHEDULE 6.31-1 MEZZANINE MORTGAGE LOAN DOCUMENTS
SCHEDULE 6.31-2 ALLOCATION OF MORTGAGE LOAN
<PAGE>
FIRST AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDED AND RESTATED LOAN AGREEMENT is made as of the 16th
day of July, 1998, by and among WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company, having its principal place of business at
610 Fifth Avenue, 7th Floor, New York, New York 10020 ("Borrower"),
BANKBOSTON, N.A., a national banking association, GOLDMAN SACHS MORTGAGE
COMPANY, a New York limited partnership, the other lending institutions which
are parties to this Agreement as "Banks", and the other lending institutions
which may become parties hereto pursuant to Section 18 (collectively, the
"Banks"), and BANKBOSTON, N.A., as Agent for the Banks and Co-Arranger and
Co-Syndication Agent (the "Agent"), and GOLDMAN SACHS MORTGAGE COMPANY, as
Co-Arranger and Co-Syndication Agent.
RECITALS.
WHEREAS, Borrower (formerly known as WEL/WH 1275 K Street, L.L.C.),
BankBoston, N.A., Goldman Sachs Mortgage Company and Agent have entered into
that certain Term Loan Agreement dated as of December 15, 1997 (the "Original
Loan Agreement"); and
WHEREAS, Wellsford/Whitehall Properties, L.L.C. ("Revolver Borrower"),
BankBoston, N.A., Goldman Sachs Mortgage Company and Agent have entered into
that certain Revolving Credit Agreement dated as of December 15, 1997 (the
"Original Revolving Credit Agreement"); and
WHEREAS, Revolver Borrower has merged into and with Borrower, with
Borrower being the surviving entity, and accordingly, the assets and
liabilities of Revolver Borrower have been assumed by the Borrower; and
WHEREAS, in connection with such merger, Borrower has requested that the
Banks consolidate, amend and restate the provisions of the Original Loan
Agreement and the Original Revolving Credit Agreement; and
WHEREAS, Agent, Borrower and the Banks desire to consolidate, amend and
restate the Original Loan Agreement and the Original Revolving Credit
Agreement in their entirety;
NOW, THEREFORE, in consideration of the recitals herein and the mutual
covenants contained herein, the parties hereto hereby consolidate, amend and
restate the Original Loan Agreement and the Original Revolving Credit
Agreement in their entirety and covenant and agree as follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions. The following terms shall have the meanings
set forth in this Section l or elsewhere in the provisions of this Agreement
referred to below:
Acknowledgments. The Acknowledgments executed by Property Owner,
Manager and Member, respectively, in favor of the Agent.
Advance Termination Date. March 31, 2000.
Agent. BankBoston, N.A., a national banking association, its successors
and assigns, acting as agent for the Banks.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent
may designate from time to time by notice to the Borrower and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such other
counsel as may be approved by the Agent.
Agreement. This First Amended and Restated Loan Agreement, including
the Schedules and Exhibits hereto.
Agreement Regarding Fees. The Amended and Restated Agreement Regarding
Fees dated of even date herewith among Borrower, BKB and Goldman.
Appraisal. An MAI appraisal of the value of a parcel of Mortgaged
Property or Mezzanine Property, determined on an "as-is" fair market value
basis, performed by an independent appraiser selected by the Agent who is not
an employee of the Borrower, WWP, the Agent or a Bank, the form and substance
of such appraisal and the identity of the appraiser to be in accordance with
regulatory laws and policies (both regulatory and internal) applicable to the
Banks, including, without limitation, FIRREA, and otherwise acceptable to the
Majority Banks.
Appraised Value. The fair market value of a parcel of Mortgaged
Property or Mezzanine Property, determined by the most recent Appraisal of
such parcel or update obtained pursuant to Section 5.2 or Section 10.7,
subject, however, to such changes or adjustments to the value determined
thereby as may be required by the appraisal departments of the Majority Banks
in their good faith business judgment.
Approved Budget. The annual Budgets as approved by the Mezzanine
Mortgagee in accordance with the terms of the Mezzanine Mortgage Loan
Agreement.
Assignment of Interests. The Amended and Restated Assignment of
Member's Interest of even date herewith from Borrower to the Agent, as the
same may be modified or amended, pursuant to which there shall be assigned to
the Agent for the benefit of the Banks a security interest in the Equity
Interests, such assignment to be in form and substance satisfactory to the
Agent.
Assignment of Leases and Rents. Each of the absolute assignments of
leases and rents from the Borrower to the Agent pursuant to which there shall
be assigned to the Agent for the benefit of the Banks a security interest in
the interest of such party, as lessor with respect to all Leases of all or
any part of a Mortgaged Property, each such absolute assignment to be in form
and substance satisfactory to the Agent.
Balance Sheet Date. May 31, 1998.
Bankruptcy Code. Title 11, U.S.C.A., as amended from time to time or
any successor statute thereto.
Banks. BKB, Goldman, the other lending institutions which are a party
hereto and any other Person who becomes an assignee of any rights of a Bank
pursuant to Section 18 (but not including any Participant, as defined in
Section 18).
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts as its "base
rate", and (b) one-half of one percent (0.5%) above the Federal Funds
Effective Rate (rounded upwards, if necessary, to the next one-eighth of one
percent). Any change in the rate of interest payable hereunder resulting
from a change in the Base Rate shall become effective as of the opening of
business on the day on which such change in the Base Rate becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by reference
to the Base Rate.
BKB. BankBoston, N.A., a national banking association.
Borrower. As defined in the preamble hereto.
Budget. The annual budget of the Property Owner with respect to the
Mezzanine Property, prepared by Property Owner in accordance with the terms
of the Mezzanine Mortgage Loan Agreement.
Building. All of the buildings, structures and improvements now or
hereafter located on any Mortgaged Property or Mezzanine Property.
Building Service Equipment. All apparatus, fixtures and articles of
personal property owned by the Borrower or the Property Owner, now or
hereafter attached to or used or procured for use in connection with the
operation or maintenance of any building, structure or other improvement
located on or included in the Mortgaged Property or Mezzanine Property,
including, but without limiting the generality of the foregoing, all engines,
furnaces, boilers, stokers, pumps, heaters, tanks, dynamos, motors,
generators, switchboards, electrical equipment, heating, plumbing, lifting
and ventilating apparatus, air-cooling and air-conditioning apparatus, gas
and electric fixtures, elevators, escalators, fittings, and machinery and all
other equipment of every kind and description, used or procured for use in
the operation of a Building (except apparatus, fixtures or articles of
personal property belonging to lessees or other occupants of such building or
to persons other than the Borrower or the Property Owner, unless the same be
abandoned by any such lessee or other occupant or person and shall become the
Borrower's or the Property Owner's property by reason of such abandonment),
together with any and all replacements thereof and additions thereto.
Business Day. Any day on which banking institutions in the city in
which the Agent's Head Office is located are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, which also is a
Eurodollar Business Day.
Capital Improvement Project. With respect to any Real Estate now or
hereafter owned by the Borrower which is utilized principally as commercial
office space, capital improvements consisting of rehabilitation,
refurbishment, replacement and improvements (including Tenant Improvement
Projects and Leasing Commissions) to the existing Buildings on such Real
Estate which may be properly capitalized under generally accepted accounting
principles.
Capital Improvement Reserve. For any period an amount equal to seventy-
five cents ($0.75) per annum multiplied by the weighted average of rentable
square footage of the Mortgaged Property and the Mezzanine Property during
such period.
Cash Collateral Agreement. The Amended and Restated Cash Collateral
Agreement dated of even date herewith among Agent, Borrower, Property Owner,
Member and Manager.
CERCLA. See Section 6.20.
Closing Date. The first date on which all of the conditions set forth
in Section 10 and Section 11 have been satisfied.
Co-Agent. Goldman.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower
which are or are intended to be subject to the security interests, liens and
mortgages created by the Security Documents, including, without limitation,
the Mortgaged Property and the Mezzanine Collateral.
Commitment. With respect to each Bank, the amount set forth on Schedule
1.1 hereto as the amount of such Bank's Commitment to make or maintain Loans
to the Borrower, as the same may be reduced from time to time in accordance
with the terms of this Agreement; provided that from and after the Advance
Termination Date, the Commitment of each Bank shall equal its Commitment
Percentage of the aggregate principal amount of the Loans from time to time
outstanding.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1.1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. See Section 7.4(d).
Conditional Guaranty. The Conditional Guaranty of Payment made by
Wellsford Commercial, WHWEL, Wellsford Real Properties, Whitehall Street Real
Estate Limited Partnership V, Whitehall Street Real Estate Limited
Partnership VI, Whitehall Street Real Estate Limited Partnership VII and
Whitehall Street Real Estate Limited Partnership VIII, in favor of the Agent
and the Banks, as the same may be modified or amended.
Condominium. Dedham Place Condominium.
Condominium Documents. Collectively, (a) that certain Master Deed of
Dedham Place Condominium (and all exhibits annexed thereto) made by Dedham
Place Associates Joint Venture, and recorded in the Norfolk County,
Commonwealth of Massachusetts Registry of Deeds on November 27, 1991 at Book
9118, page 376 et al., and (b) the Dedham Place Condominium Trust and Bylaws
dated November 20, 1991 and made by Dominic J. Saraceno, as trustee.
Consolidated or combined. With reference to any term defined herein,
that term as applied to the accounts of WWP and its Subsidiaries,
consolidated or combined in accordance with generally accepted accounting
principles.
Consolidated Total Assets. With respect to WWP and its Subsidiaries,
the sum of (a) an amount equal to (i) an amount equal to the difference of
(A) the Net Operating Income of the Stabilized Properties of WWP and its
Subsidiaries for the period covered by the four previous consecutive fiscal
quarters (treated as a single accounting period) minus (B) the Capital
Improvement Reserve for such Stabilized Properties for such period divided by
(ii) a nine and one-fourth percent (9.25%) capitalization rate, (b) the sum
of (i) the Appraised Value of the Non-Stabilized Properties that are
Mortgaged Properties and Mezzanine Properties plus (ii) the historic cost of
capital improvements to such Non-Stabilized Properties (including Tenant
Improvement Projects and Leasing Commissions) from the date of the most
recent Appraisal thereof pursuant to this Agreement, (c) the sum of (i) the
all-in acquisition cost (including reasonable closing costs) of the Non-
Stabilized Properties of WWP and its Subsidiaries that are not Mortgaged
Properties or Mezzanine Properties plus (ii) the historic cost of capital
improvements to such Non-Stabilized Properties (if this clause (c) is
applicable thereto) from the date of acquisition thereof (provided that the
Agent shall have the right to obtain at Borrower's expense an Appraisal with
respect to any of such Non-Stabilized Properties, and the Appraised Value
determined from such Appraisal shall be substituted for the amount in clause
(c)(i) for the applicable property for the purposes of such calculation), (d)
the historic cost of investments in Investment Partnerships; and (e) the
aggregate cash and Short-term Investments of such Person; provided that prior
to such time as WWP or a Subsidiary has owned and operated any Stabilized
Property for four full fiscal quarters, the Net Operating Income with respect
to such Stabilized Property shall be annualized in such manner as the Agent
shall approve, such approval not to be unreasonably withheld.
Notwithstanding anything herein to the contrary, Leasing Commissions shall
only be included for the purposes of clause (b)(ii) after and only for so
long as the tenant under the applicable Lease takes occupancy and is paying
rent in accordance with the terms of the Lease approved pursuant to Section
5.6. The assets of WWP and its Subsidiaries shall be adjusted to reflect
WWP's allocable share of such assets for the relevant period or as of the
date of determination.
Contribution Agreement. The Contribution Agreement dated as of February
12, 1998 among WWP, as Contributee, and Saracen Properties, Inc. and certain
other parties, as Contributor, as amended by Amendment No. 1 to Contribution
Agreement dated as of May 15, 1998.
Construction Inspector. A firm of professional engineers or architects
selected by the Agent and reasonably acceptable to the Borrower.
Conversion Request. A notice given by the Borrower to the Agent of its
election to convert or continue a Loan in accordance with Section 4.1.
Debt Service Coverage Test Amount. For any period of four consecutive
fiscal quarters then ended, the sum of principal and interest which would
have been payable during such period on a loan in the original principal
amount equal to the outstanding principal balance of the Loan and the
Mezzanine Mortgage Loan as of the date of such determination bearing interest
at a rate per annum equal to the sum of the then current annual yield on
seven (7) year obligations issued by the United States Treasury most recently
prior to the date of such determination plus one and sixty-five one-
hundredths percent (1.65%) and with the principal thereof being payable based
on a 25 year mortgage style amortization schedule (expressed as a mortgage
constant percentage). Such determination of the Debt Service Coverage Test
Amount by the Agent shall be conclusive and binding absent manifest error.
For the initial twelve (12) months following December 15, 1997, such debt
service shall be determined by annualizing the debt service from and after
December 15, 1997 in a manner as reasonably determined by Borrower and
reasonably acceptable to the Agent (provided that in the event that as of the
date of any determination such amounts shall not have been determined as so
provided, then such amount shall be annualized in a manner reasonably
acceptable to the Agent).
Default. See Section 12.1.
Deposit Account Agreement. The Deposit Account Agreement dated as of
December 31, 1996 among LaSalle National Bank, Property Owner and Mezzanine
Mortgagee.
Designated Collateral Value. At the relevant time of reference thereto,
the sum of (a) the lesser of (i) sixty percent (60%) of the sum of (x) the
all-in acquisition cost (including reasonable closing costs) of a Mortgaged
Property plus (y) the historic cost of capital improvements (including any
Tenant Improvement Projects and Leasing Commissions) to such Mortgaged
Property after the date of such acceptance and (ii) sixty percent (60%) of
the sum of (x) the Appraised Value of a Mortgaged Property as determined in
connection with the acceptance of such Mortgaged Property as Collateral or as
most recently determined pursuant to Section 2.8 of this Agreement, subject
to the terms of Section 5.4, plus (y) the historic cost of Tenant Improvement
Projects and Leasing Commissions to such Mortgaged Property after the date of
such acceptance, plus (b) the current value of cash and Short-term
Investments, if any, at the time pledged to the Agent as Collateral pursuant
to a Pledge Agreement, plus (c) for so long as the Equity Interests are
pledged to the Agent as Collateral pursuant to the Assignment of Interests,
an amount equal to the sum of (i) the sum of sixty percent (60%) of the
Appraised Value of the Mezzanine Property as determined in connection with
the acceptance of the Equity Interests as Collateral or as most recently
determined pursuant to Section 2.8 of this Agreement, subject to the terms of
Section 5.4, minus (ii) the principal Indebtedness of the Property Owner as
of the date of acquisition of the Equity Interests (such amount being
$68,340,815.57), plus (d) the current value determined in a manner agreed to
by the Majority Banks of Collateral accepted by the Majority Banks under
clause (vi) of Section 5.1. Notwithstanding anything herein to the contrary,
Leasing Commissions shall only be included for the purposes of clauses
(a)(i)(y) and (a)(ii)(y) after and only for so long as the tenant under the
applicable Lease takes occupancy and is paying rent in accordance with the
terms of the Lease approved pursuant to Section 5.6 For the purposes of
clause (a) above, the lesser of the amount determined pursuant to clause
(a)(i) and (a)(ii) above shall be the Designated Collateral Value for each
such Mortgaged Property subject thereto, and the aggregate of the amounts
determined for each Mortgaged Property subject thereto shall be the
Designated Collateral Value for all such Mortgaged Properties; provided,
however, that with respect to the Mortgaged Properties listed in Schedule 6.4
hereto, the initial Designated Collateral Value for such properties is as set
forth on Schedule 6.4; provided further that in the event that the Maturity
Date is extended pursuant to Section 2.8, the Designated Collateral Value for
each of such Mortgaged Properties listed on Schedule 6.4 shall be the lesser
of the amount determined pursuant to clause (a)(i) and (a)(ii) above. The
initial Designated Collateral Value for the Mezzanine Property is set forth
on Schedule 6.4 hereto.
Distribution. The declaration or payment of any dividend or
distribution on or in respect of any shares of the Borrower, other than
dividends or distributions payable solely in equity securities of the
Borrower; the purchase, redemption, exchange or other retirement of any
shares of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in respect of any
shares of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1.1 hereto; thereafter, such other office of such Bank,
if any, located within the United States that will be making or maintaining
Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and
the date on which any Loan is converted or combined in accordance with
Section 4.1.
Eligible Real Estate. Real Estate:
(a) which is owned in fee by the Borrower;
(b) which is located within the northeastern United States,
excluding those States which prescribe a "single-action" or similar rule
limiting the rights of creditors secured by real property, except to the
extent such exclusion is waived in writing by the Majority Banks with
respect to a specific parcel of Real Estate;
(c) which is utilized principally for commercial office purposes;
(d) which is approved by the Majority Banks after the date hereof
in their sole judgment;
(e) as to which all of the representations set forth in Section 6
of this Agreement concerning Mortgaged Property are true and correct;
and
(f) as to which the Agent has received all Eligible Real Estate
Qualification Documents, so long as all of such documents remain in full
force and effect.
Eligible Real Estate Qualification Documents. With respect to any
parcel of Real Estate proposed to be included in the Eligible Real Estate
each of the following:
(a) Security Documents. Such Security Documents relating to such
Real Estate as the Agent shall require, in form and substance
satisfactory to the Agent and duly executed and delivered by the
respective parties thereto.
(b) Enforceability Opinion. The favorable legal opinion of
counsel to the Borrower reasonably acceptable to the Agent qualified to
practice in the State in which such Real Estate is located, addressed to
the Banks and in form and substance satisfactory to the Agent as to the
enforceability of such Security Documents and such other matters as the
Agent shall reasonably request.
(c) Perfection of Liens. Evidence reasonably satisfactory to the
Agent that the Security Documents are effective to create in favor of
the Agent a legal, valid and enforceable first (except for Permitted
Liens entitled to priority under applicable law) lien and security
interest in such Real Estate and that all filings, recordings,
deliveries of instruments and other actions necessary or desirable to
protect and preserve such liens or security interests have been duly
effected.
(d) Survey and Taxes. The Survey of such Real Estate, together
with the Surveyor Certification and evidence of payment of all real
estate taxes, assessments and municipal charges on such Real Estate
which on the date of determination are required to have been paid under
Section 7.8.
(e) Title Insurance; Title Exception Documents. The Title Policy
covering such Real Estate, including all endorsements thereto, and
together with proof of payment of all fees and premiums for such policy,
and true and accurate copies of all documents listed as exceptions under
such policy.
(f) UCC Certification. A certification from the Title Insurance
Company or counsel satisfactory to the Agent that a search of the public
records designated by the Agent disclosed no conditional sales
contracts, security agreements, chattel mortgages, leases of personalty,
financing statements or title retention agreements which affect any
property, rights or interests of the Borrower that are or are intended
to be subject to the security interest, assignments, and mortgage liens
created by the Security Documents relating to such Real Estate except to
the extent that the same are discharged and removed prior to or
simultaneously with the inclusion of such Real Estate in the Collateral.
(g) Management Agreement. A true copy of the Management Agreement
relating to such Real Estate.
(h) Leases. True and correct copies of all Leases for such Real
Estate and any lease summaries prepared by Borrower with respect
thereto, together with the forms of Lease to be used by the Borrower in
connection with future leasing of such Mortgaged Property, such forms of
Lease to be in form and substance satisfactory to the Agent.
(i) Subordination Agreements. A Subordination, Attornment and
Non-Disturbance Agreement from each tenant of such Real Estate as
required by the Agent, dated not more than sixty (60) days prior to the
inclusion of such Real Estate in the Collateral and satisfactory in form
and substance to the Agent.
(j) Estoppel Certificates. Estoppel certificates from each tenant
of such parcel of Real Estate as required by Agent, such certificates to
be dated not more than sixty (60) days prior to the inclusion of such
Real Estate in the Collateral and to be satisfactory in form and
substance to the Agent.
(k) Certificates of Insurance. Each of (i) a current certificate
of insurance as to the insurance maintained on such Real Estate
(including flood insurance if necessary) from the insurer or an
independent insurance broker dated as of the date of determination,
identifying insurers, types of insurance, insurance limits, and policy
terms; (ii) certified copies of all policies evidencing such insurance
(or certificates therefor signed by the insurer or an agent authorized
to bind the insurer); and (iii) such further information and
certificates from the Borrower, its insurers and insurance brokers as
the Agent may reasonably request, all of which shall be in compliance
with the requirements of this Agreement.
(l) Hazardous Substance Assessments. A hazardous waste site
assessment report concerning Hazardous Substances and asbestos on such
Real Estate dated or updated not more than three months prior to the
inclusion of such Real Estate in the Collateral unless otherwise
approved by the Agent, from an Environmental Engineer, such report to
contain no qualifications except those that are acceptable to the
Majority Banks in their sole discretion and to otherwise be in form and
substance satisfactory to the Majority Banks.
(m) Certificate of Occupancy. A copy of the certificate(s) of
occupancy issued to the Borrower for such parcel of Real Estate
permitting the use and occupancy of the Building thereon (or evidence
that any previously issued certificate(s) of occupancy is not required
to be reissued to the Borrower), or a legal opinion reasonably
satisfactory to the Agent that no certificates of occupancy are
necessary to the use and occupancy thereof.
(n) Appraisal. An Appraisal of such Real Estate, in form and
substance satisfactory to the Majority Banks and dated not more than
three months prior to the inclusion of such Real Estate in the
Collateral.
(o) Zoning and Land Use Opinion of Counsel. A favorable opinion
concerning the Real Estate addressed to the Agent and dated the date of
the inclusion of such Real Estate in the Collateral, in form and
substance satisfactory to the Agent, from counsel approved by the Agent
admitted to practice in the State in which such parcel is located, as to
zoning and land use compliance, or such other evidence regarding zoning
and land use compliance as the Agent may approve in its reasonable
discretion.
(p) Construction Inspector Report. A report or written
confirmation from the Construction Inspector satisfactory in form and
content to the Majority Banks, dated or updated not more than three
months prior to the inclusion of such Real Estate in the Collateral,
addressing such matters as the Majority Banks may reasonably require,
including without limitation that the Construction Inspector has
reviewed the plans and specifications or other available materials for
all Buildings on the Real Estate, that the condition of the Buildings is
good, that all Buildings were constructed and completed in a good and
workmanlike manner, that the Buildings satisfy all applicable building,
zoning, handicapped access and Environmental Laws applicable thereto,
and whether or not the Real Estate and the Buildings thereon are a
conforming use under applicable zoning laws.
(q) Permit and Legal Compliance Assurances. Evidence satisfactory
to the Agent that all activities being conducted on such Real Estate
which require federal, state or local licenses or permits have been duly
licensed and that such licenses or permits are in full force and effect,
and that the Real Estate, the Buildings and the use and occupancy
thereof are in compliance in all material respects with all applicable
federal, state or local laws, ordinances or regulations.
(r) Operating Statements. Operating statements for such Real
Estate in the form of such statements delivered to the Banks under
Section 6.4(b) covering each of the four fiscal quarters ending
immediately prior to the addition of such Mortgaged Property to the
Collateral.
(s) Doing Business Opinion. An opinion, dated the date of the
inclusion of such Real Estate in the Collateral, of legal counsel to the
Borrower reasonably acceptable to the Agent qualified to practice in the
State in which such Real Estate is located to the effect that neither
the Agent nor any Bank shall be required to qualify to do business in
such State or any political subdivision thereof or to become liable to
pay any taxes in such State or any political subdivision thereof solely
on account of the receipt of the lien on such Real Estate securing the
Obligation, such opinion to be satisfactory to the Agent.
(t) Additional Documents. Such other documents, certificates,
reports or assurances as the Agent or the Majority Banks may reasonably
require in their discretion.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
Environmental Engineer. A firm of independent professional engineers or
other scientists generally recognized as expert in the detection, analysis
and remediation of Hazardous Substances and related environmental matters and
reasonably acceptable to the Agent.
Environmental Laws. See Section 6.20(a).
Equity Interests. One hundred percent (100%) of the direct legal,
equitable and beneficial interests of the Borrower in and to Member.
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D or any
successor or similar regulation), if such liabilities were outstanding. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or
such other Eurodollar interbank market as may be selected by the Agent and
the Banks in their sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1.1 hereto; thereafter, such other office of
such Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the quotient (rounded upwards to the
nearest 1/16 of one percent) of (a) the rate at which the Reference Bank's
Eurodollar Lending Office is offered Dollar deposits two Eurodollar Business
Days prior to the beginning of such Interest Period in whatever interbank
Eurodollar market may be selected by the Reference Bank in its sole
discretion, acting in good faith, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to a Eurodollar Rate.
Event of Default. See Section 12.1.
Excess Property Income. As defined in the Cash Collateral Agreement.
Federal Funds Effective Rate. For any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
of the quotations for such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the
Agent.
generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time and (b) consistently applied with past financial statements of the
Borrower adopting the same principles; provided that a certified public
accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles)
as to financial statements in which such principles have been properly
applied.
Goldman. Goldman Sachs Mortgage Company.
Goldman Group. Collectively, the partners of WHWEL as of any date that
are affiliates of The Goldman Sachs Group L.P.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
Guarantor. Collectively, the WWP Members and any other Person which is
now or may hereafter become a party to a Guaranty, and individually any one
of them.
Guaranty. Collectively, the Indemnity and Guaranty Agreement by the WWP
Members in favor of Agent and the Banks, the Conditional Guaranty, the WWP
Member Indemnity Agreement and each other guaranty which may hereafter be
delivered to the Agent and the Banks in connection with the Loan, each in
form and substance satisfactory to Agent in its sole discretion.
Hazardous Substances. See Section 6.20(b).
Holdback. See Section 5.5.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect (including, without limitation, all obligations evidenced by bonds,
debentures, notes or similar debt instruments and subordinated indebtedness);
(b) all liabilities secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall have been
assumed; and (c) all guarantees, interest rate and currency swap obligations,
endorsements and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including contingent obligations that in
accordance with generally accepted accounting principles are required to be
footnoted on the Borrower's balance sheet and any obligation to supply funds
to or in any manner to invest directly or indirectly in a Person, to purchase
indebtedness, or to assure the owner of indebtedness against loss through an
agreement to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or
otherwise, and the obligation to reimburse the issuer in respect of any
letter of credit; and (d) any obligation as a lessee or an obligor under a
capitalized lease.
Indemnity Agreement. Collectively, the Indemnity Agreements Regarding
Hazardous Materials made by the Borrower and the WWP Members in favor of the
Agent and the Banks, pursuant to which such parties agree to indemnify the
Agent and the Banks with respect to Hazardous Substances and Environmental
Laws, such Indemnity Agreement to be in form and substance satisfactory to
the Agent.
Instruction Letter. That certain letter agreement dated May 15, 1998
among the Agent, the Property Owner, LaSalle National Bank and Amresco
Services, L.P., concerning the payment of Excess Property Income to Agent.
Interest Payment Date. (a) As to each Loan, the first day of each
January, April, July and October during the term of such Loan, and (b) also
as to each Eurodollar Rate Loan, the last day of the Interest Period relating
thereto.
Interest Period. With respect to each Eurodollar Rate Loan:
(a) initially, the period commencing on the Drawdown Date of such
Loan and ending one, two or three months thereafter; and
(b) thereafter, each period commencing on the day following the
last day of the next preceding Interest Period applicable to such Loan
and ending on the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request;
provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(A) if any Interest Period with respect to a Eurodollar
Rate Loan would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall end and
the next Interest Period shall commence on the next preceding
or succeeding Eurodollar Business Day as determined
conclusively by the Reference Bank in accordance with the then
current bank practice in the applicable Eurodollar interbank
market;
(B) if the Borrower shall fail to give notice as
provided in Section 4.1, the Borrower shall be deemed to have
requested a conversion of the affected Eurodollar Rate Loan to
a Base Rate Loan on the last day of the then current Interest
Period with respect thereto; and
(C) no Interest Period relating to any Eurodollar Rate
Loan shall extend beyond the Maturity Date.
Investment Partnerships. Investments in joint ventures, general
partnerships, limited partnerships, limited liability companies or any other
business association formed for the purpose of acquiring fee interests in
income-producing commercial office properties, provided that Borrower shall
have sufficient Voting Interests or other rights to veto or block any major
actions to be taken by any other Person owning an interest in such Investment
Partnership. Any wholly-owned Subsidiary of the Borrower shall not be deemed
to be an Investment Partnership.
Investments. With respect to any Person, all shares of capital stock,
evidences of Indebtedness and other securities issued by any other Person,
all loans, advances, or extensions of credit to, or contributions to the
capital of, any other Person, all purchases of the securities or business or
integral part of the business of any other Person and commitments and options
to make such purchases, all interests in real property, and all other
investments; provided, however, that the term "Investment" shall not include
(i) equipment, inventory and other tangible personal property acquired in the
ordinary course of business, or (ii) current trade and customer accounts
receivable for services rendered in the ordinary course of business and
payable in accordance with customary trade terms. In determining the
aggregate amount of Investments outstanding at any particular time: (a)
there shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is
paid; (b) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (c)
there shall not be deducted in respect of any Investment any amounts received
as earnings on such Investment, whether as dividends, interest or otherwise,
except that accrued interest included as provided in the foregoing clause (a)
may be deducted when paid; and (d) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
Leases. Leases, licenses and agreements whether written or oral,
relating to the use or occupation of space in or on the Building or on the
Mortgaged Property or the Mezzanine Property.
Leasing Commissions. Reasonable and customary commissions paid to a
licensed real estate broker in connection with a Lease for all or any portion
of the Mortgaged Properties commonly known as Point View, 15 Broad, Mountain
Heights, Morris Technology Center and the Polaroid Buildings, approved
pursuant to Section 5.6, pursuant to commission agreements containing such
terms and provisions as are then prevailing between third party, unaffiliated
owners and brokers for comparable leases of space at properties similar to
such Mortgaged Property in the market area in which such Mortgaged Property
is located.
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Security Documents, the
Guaranty, the Acknowledgments, and all other documents, instruments or
agreements executed or delivered by or on behalf of the Borrower, the
Guarantor, Property Owner, Manager, Member or the parties to the WWP Member
Indemnity Agreement evidencing or securing the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans to be made by the Banks hereunder.
Majority Banks. As of any date, the Bank or Banks whose aggregate
Commitment Percentage is equal to or greater than sixty-six and two-thirds
percent (66.67%).
Management Agreements. Agreements, whether written or oral, providing
for the management of the Mortgaged Property, the Mezzanine Property or any
of them.
Manager. WASH Manager L.L.C., a Delaware limited liability company.
Manager Organizational Agreements. That certain Certificate of Formation
for WASH Manager L.L.C., filed on April 7, 1998 with the Secretary of State
of the State of Delaware, and that certain Operating Agreement for WASH
Manager L.L.C., dated as of May 15, 1998.
Maturity Date. December 15, 2000, as the same may be extended as
provided in Section 2.8, or such earlier date on which the Loans shall become
due and payable pursuant to the terms hereof.
Member. Wells Avenue Holdings L.L.C., a Delaware limited liability
company.
Member Organizational Agreements. That certain Certificate of Formation
for Wells Avenue Holdings L.L.C. filed on April 2, 1998 with the Delaware
Secretary of State, and that certain Operating Agreement for Wells Avenue
Holdings L.L.C., a Delaware limited liability company, dated as of May 15,
1998
Mezzanine Collateral. All of the property, rights and interests of the
Borrower which are or are intended to be subject to the security interests,
security title and liens created by the Assignment of Interests and any
further collateral assignment for the benefit of the Agent relating to direct
or indirect interests in the Property Owner, including, without limitation,
UCC-1 financing statements executed and delivered in connection therewith.
Mezzanine Loan Documents. Collectively, this Agreement (to the extent
of provisions relating directly or indirectly to the Property Owner or
interests therein, the Mezzanine Collateral or the Mezzanine Property,
including without limitation Section 32), the Assignment of Interests, the
Cash Collateral Agreement, the Conditional Guaranty, any further assignments
or pledges to the Agent for the benefit of the Banks (including without
limitation UCC-1 Financing statements executed and delivered in connection
therewith), and all other documents, instruments, acknowledgments or
agreements executed or delivered to Agent or the Banks in connection with the
Mezzanine Collateral, the Mezzanine Property or the direct or indirect
interests in the Property Owner.
Mezzanine Management Agreement. As defined in Section 6.34.
Mezzanine Mortgagee. Initially, Nomura Asset Capital Corporation, and
its successors and assigns as the holder or holders of the Mezzanine Mortgage
Loan Documents, and any servicer or trustee acting on behalf of the holder or
holders of interests in the note secured thereby, as the case may be. As of
the date hereof, the servicer is Amresco Services, L.P.
Mezzanine Mortgage Loan. The first mortgage loan to the Property Owner,
in the original principal amount of $69,000,000.00.
Mezzanine Mortgage Loan Agreement. The Loan Agreement dated as of
December 31, 1996 between the Property Owner and the Mezzanine Mortgagee, as
amended by (i) that certain First Amendment to Loan Agreement dated as of
December 31, 1996 between the Property Owner and Nomura Asset Capital
Corporation and (ii) that certain Second Amendment to Loan Agreement and
Consent of Lender dated May 15, 1998 among Property Owner, Manager, Member
and LaSalle National Bank, as Trustee.
Mezzanine Mortgage Loan Documents. Collectively, the documents listed
on Schedule 6.30-1 attached hereto and made a part hereof.
Mezzanine Property. The real property owned by the Property Owner and
commonly known as 128 Tech Center, 7/57 Wells Avenue, 75/85/95 Wells Avenue,
201 University Avenue, Dedham Place and Norfolk Place (333 Elm Street).
Mortgaged Property. Collectively, the Eligible Real Estate which is
conveyed to and accepted by the Agent as security for the Obligations
pursuant to the Security Deeds.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Negative Carry. See Section 5.5.
Net Income (or Deficit). With respect to any Person (or any asset of
any Person) for any fiscal period, the net income (or deficit) of such Person
(or attributable to such asset), after deduction of all expenses, taxes and
other proper charges, determined in accordance with generally accepted
accounting principles.
Net Operating Income. With respect to any Person for any period, an
amount equal to the sum of (a) the Net Income of such Person (attributable to
the Mortgaged Properties or the Mezzanine Properties for such period) plus
(b) depreciation, amortization and interest deducted in calculating such Net
Income plus (c) any extraordinary or non-recurring losses deducted in
calculating such Net Income plus/minus (d) Rent Adjustments with respect to
Leases for the Mortgaged Properties or the Mezzanine Properties minus (e) any
income included in calculating such Net Income from the Mortgaged Properties
or the Mezzanine Properties from tenants which are 60 or more days delinquent
in the payment of any rent minus (f) any extraordinary or non-recurring gains
included in calculating such Net Income. Net Operating Income shall be
determined in a manner consistent with the manner in which it has previously
been calculated and provided to the Banks.
Nomura Mortgages. Individually, a Mortgage, Assignment of Leases and
Rents and Security Agreement dated as of December 31, 1996 by the Property
Owner for the benefit of Mezzanine Mortgagee, which relates to a Mezzanine
Property, and collectively, all of them.
Non-Stabilized Property. Any Real Estate owned by the Borrower or the
Property Owner which is not a Stabilized Property.
Notes. See Section 2.4.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent, individually or collectively,
under this Agreement or any of the other Loan Documents or in respect of any
of the Loans or the Notes, or other instruments at any time evidencing any of
the foregoing, whether existing on the date of this Agreement or arising or
incurred hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
Operating Agreement. That certain Amended and Restated Limited
Liability Company Operating Agreement of Wellsford/Whitehall Holdings,
L.L.C., dated as of July 16, 1998, being the operating agreement of the
Borrower.
Original Loan Agreement. As defined in the preamble hereto.
Original Revolving Credit Agreement. As defined in the preamble hereto.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 8.2. When such term is used with respect to the
Mezzanine Property, "Permitted Liens" shall mean only those liens and
encumbrances as are shown in the Pro Forma Marked Owner's Title Insurance
Commitment #9851-00015 issued by Chicago Title Insurance Company in
connection with the acquisition by the Borrower of the direct and indirect
interests in the Property Owner.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision
thereof.
Plan Assets. Assets of any employee benefit plan subject to Part 4,
Subtitle A, Title I of ERISA.
Pledge Agreement. Each agreement from time to time in effect in form
and substance satisfactory to the Agent pursuant to which the Borrower or the
Guarantor may pledge cash, Short-term Investments or other property referred
to in clause (v) of Section 5.1 as part of the Collateral securing the
Obligations.
Potential Collateral. Any property of the Borrower which is not at the
time included in the Collateral and which consists of (i) Eligible Real
Estate which is a Stabilized Property, (ii) Real Estate which is a Non-
Stabilized Property which is capable of becoming Eligible Real Estate through
the approval of the Majority Banks and the completion and delivery of
Eligible Real Estate Qualification Documents, (iii) cash, (iv) Short-term
Investments and (v) other property referred to in clause (vi) of Section 5.1.
Property Owner. Wells Avenue Senior Holdings LLC, a Massachusetts
limited liability company.
Property Owner Organizational Agreements. That certain Certificate of
Organization of Wells Avenue Senior Holdings LLC filed on December 31, 1996
with the Secretary of State of the Commonwealth of Massachusetts and that
certain Operating Agreement of Wells Avenue Senior Holdings LLC, dated as of
December 31, 1996, as amended by Amendment No. 1 dated May 15, 1998.
Rating Agencies. Collectively, the "Rating Agencies" as defined in the
Mezzanine Mortgage Loan Documents.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or the Property Owner.
REIT Status. With respect to Wellsford Commercial, its status as a real
estate investment trust as defined in Section 856(a) of the Code.
Record. The record, including computer records, maintained by the Agent
with respect to any Loan referred to in the Notes.
Reference Bank. BKB.
Register. See Section 18.2.
Release. See Section 6.20(c)(iii).
Rent Adjustments. For any Person, straight line adjustments to rent
payable under Leases, as determined in accordance with generally accepted
accounting principles.
Rent Roll. A report prepared by the Borrower or the Property Owner
showing for each tenant its occupancy status, lease expiration date, market
rent, lease rent and other information in such form as may have been approved
by the Agent, such approval not to be unreasonably withheld.
Reportable Event. Any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
Revolving Credit Termination Date. December 31, 1998.
SEC. The federal Securities and Exchange Commission.
Secured Mezzanine Loan Agreement. That certain Mezzanine Loan Agreement
dated of even date herewith by and among WWP, BKB, the other lending
institutions that are or become parties thereto and BKB in its capacity as
agent for itself and the other lending institutions that are or become
parties thereto, as the same may be amended, restated, consolidated,
supplemented, renewed, extended or replaced.
Secured Mezzanine Loan Agreement Lenders. The lenders from time to time
a party to the Secured Mezzanine Loan Agreement, which term shall include
without limitation any agent or nominee acting on behalf of such lenders.
Security Deeds. The Mortgages, Deeds to Secure Debt and Deeds of Trust
from the Borrower to the Agent for the benefit of the Banks (or to trustees
named therein acting on behalf of the Agent for the benefit of the Banks)
pursuant to which the Borrower has conveyed a Mortgaged Property as security
for the Obligations.
Security Documents. Collectively, the Security Deeds, the Assignments
of Rents and Leases, the Indemnity Agreement, the Guaranty, the Assignment of
Interests, any further collateral assignments to the Agent for the benefit of
the Banks, and each Pledge Agreement, including, without limitation, U.C.C.-1
financing statements executed and delivered in connection therewith.
Short-term Investments. Investments described in subsections (a)
through (g), inclusive, of Section 8.3. For all purposes of this Agreement
and the other Loan Documents, the value of Short-term Investments at any time
shall be the current market value thereof determined in a manner reasonably
satisfactory to the Agent.
Stabilized Property. Each parcel of Eligible Real Estate (a) which is
fully operational; (b) which is eighty percent (80%) leased and occupied
pursuant to bona-fide arm's length leases to third parties unaffiliated with
Borrower, any Guarantor or any of the Subsidiaries of the Borrower; (c) no
more than thirty-five percent (35%) of the Leases (based on the ratio of the
rentable square footage of such Real Estate that is occupied under such
Leases to the total rentable square footage of such Real Estate) for such
Real Estate are scheduled to expire (without regard to any extension options
not exercised) within two (2) years of the acceptance of such Real Estate as
a Mortgaged Property or the Equity Interests as Collateral with respect to
the Mezzanine Property (whether under this Agreement, the Original Loan
Agreement or the Original Revolving Credit Agreement); (d) less than all of
the Leases for such Real Estate are scheduled to expire (without regard to
any extension options not exercised) within five (5) years of the date of the
acceptance of such Real Estate as a Mortgaged Property or the Equity
Interests as Collateral with respect to the Mezzanine Property (whether under
this Agreement, the Original Loan Agreement or the Original Revolving Credit
Agreement); and (e) such Real Estate shall have a projected annual return to
Borrower of not less than 9% on acquisition cost based upon cash flows in
place as of the date of determination. The determination of whether a
property is a Stabilized Property for the purposes of determining the
Designated Collateral Value shall be made at such time as it is accepted as a
Mortgaged Property or Mezzanine Property as provided above, as applicable
provided that a property may be later determined to be a Stabilized Property
for the purposes of determining Consolidated Total Assets at such time as a
property satisfies the requirements for a Stabilized Property set forth in
the definition.
State. A state of the United States of America.
Subordination, Attornment and Non-Disturbance Agreement. An agreement
among the Agent, the Borrower and a tenant under a Lease pursuant to which
such tenant agrees to subordinate its rights under the Lease to the lien of
the Security Deed and agrees to recognize the Agent or its successor in
interest as landlord under the Lease in the event of a foreclosure under the
Security Deed, such agreement to be in form and substance satisfactory to the
Agent.
Subsidiary. Any corporation, association, partnership, limited
liability company, trust, or other business or other legal entity of which
the designated parent shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes or
controlling interests) of the outstanding Voting Interests.
Survey. An instrument survey of a Mortgaged Property or a Mezzanine
Property prepared by a registered land surveyor which shall show the location
of all buildings, structures, easements and utility lines on such property,
shall be sufficient to remove the standard survey exception from the Title
Policy, shall show that all buildings and structures are within the lot lines
of the Mortgaged Property or the Mezzanine Property and shall not show any
encroachments by others (or to the extent any encroachments are shown, such
encroachments shall be acceptable to the Agent in its sole discretion), shall
show rights of way, adjoining sites, establish building lines and street
lines, the distance to, and names of the nearest intersecting streets and
such other details as the Agent may reasonably require; shall show the zoning
district or districts in which the Mortgaged Property or the Mezzanine
Property is located and shall show whether or not the Mortgaged Property or
the Mezzanine Property is located in a flood hazard district as established
by the Federal Emergency Management Agency or any successor agency or is
located in any flood plain, flood hazard or wetland protection district
established under federal, state or local law and shall otherwise be in form
and substance reasonably satisfactory to the Agent.
Surveyor Certification. With respect to each parcel of Mortgaged
Property or Mezzanine Property, a certificate executed by the surveyor who
prepared the Survey with respect thereto, dated as of a recent date and
containing such information relating to such parcel as the Majority Banks or
the Title Insurance Company may reasonably require, such certificate to be
reasonably satisfactory to the Agent in form and substance.
Tenant Improvement Project. With respect to the Mortgaged Properties
commonly known as Point View, 15 Broad, Mountain Heights, Morris Technology
Center and the Polaroid Buildings, base building and/or tenant improvements
to the existing Buildings on such Mortgaged Property to be performed by the
Borrower in connection with any Lease approved pursuant to Section 5.6.
Tenant Improvement Reserve. The amount of $32,000,000.00, which amount
shall be reserved from the amounts available to be borrowed under this
Agreement and shall be disbursed as provided in Section 5.6.
Test Period. See Section 9.1.
Title Insurance Company. Commonwealth Land Title Insurance Company or
another title insurance company or companies reasonably approved by the
Agent.
Title Policy. With respect to each parcel of Mortgaged Property, an
ALTA standard form title insurance policy (or, if such form is not available,
an equivalent form of or legally promulgated form of mortgagee title
insurance policy reasonably acceptable to the Agent) issued by a Title
Insurance Company (with such reinsurance or co-insurance as the Agent may
require, any such reinsurance to be with direct access endorsements to the
extent available under applicable law) in such amount as the Agent may
require insuring the priority of the Security Deeds and that the Borrower
holds marketable fee simple title to such parcel, subject only to the
encumbrances permitted by the Security Deed and which shall not contain
standard exceptions for mechanics liens, persons in occupancy (other than
tenants as tenants only under Leases) or matters which would be shown by a
survey, shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Agent in its sole discretion, and
shall contain (a) a revolving credit endorsement and (b) such other
endorsements and affirmative insurance as the Agent reasonably may require
and is available in the State in which the Real Estate is located, including
but not limited to (i) a comprehensive endorsement, (ii) a variable rate of
interest endorsement, (iii) a usury endorsement, (iv) a doing business
endorsement, (v) in States where available, an ALTA form 3.1 zoning
endorsement, (vi) a "tie-in" endorsement, and (vii) a "first loss"
endorsement.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Under Development. Any Real Estate shall be considered under
development until such time as (a) a certificate of occupancy has been
obtained, (b) seventy-five percent (75%) of the net leasable area is leased
and occupied, and (c) the gross revenue from the operation of such Real
Estate shall have been not less than the operating costs (including amounts
properly allocable to such period for expenses which are not payable on a
regular basis during such period, such as taxes and insurance) for three (3)
consecutive months.
Voting Interests. Stock or similar ownership interests, of any class or
classes (however designated), the holders of which are at the time entitled,
as such holders, (a) to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation, association,
partnership, trust or other business entity involved, or (b) to control,
manage, or conduct the business of the corporation, partnership, association,
trust or other business entity involved.
Wellsford Commercial. Wellsford Commercial Properties Trust, a Maryland
real estate investment trust.
Wellsford Real Properties. Wellsford Real Properties, Inc., a Maryland
corporation.
WHWEL. WHWEL Real Estate Limited Partnership, a Delaware limited
partnership.
WWP. Wellsford/Whitehall Properties II, L.L.C., a Delaware limited
liability company.
WWP Member Indemnity Agreement. The Indemnity Agreement by Wellsford
Real Properties, Whitehall Street Real Estate Limited Partnership V,
Whitehall Street Real Estate Limited Partnership VI, Whitehall Street Real
Estate Limited Partnership VII and Whitehall Street Real Estate Limited
Partnership VIII in favor of the Agent and the Banks, as the same may be
modified or amended.
WWP Members. Wellsford Commercial and WHWEL.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time
in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles applied
on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) The words "approval" and "approved", as the context so
determines, means an approval in writing given to the party seeking approval
after full and fair disclosure to the party giving approval of all material
facts necessary in order to determine whether approval should be granted.
(h) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, have the meanings
assigned to them therein.
(i) Reference to a particular "Section ", refers to that section
of this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
Section 2. THE FACILITY.
Section 2.1. Commitment to Lend. Subject to the terms and conditions
set forth in this Agreement, each of the Banks severally agrees to lend to
the Borrower, and the Borrower may borrow from time to time between the
Closing Date and the Advance Termination Date upon notice by the Borrower to
the Agent given in accordance with Section 2.6, such sums as are requested by
the Borrower for the purposes set forth in Section 7.11 up to the lesser of
(a) a maximum aggregate principal amount outstanding (after giving effect to
all amounts requested) at any one time equal to such Bank's Commitment and
(b) such Bank's Commitment Percentage of the difference of (i) the aggregate
Designated Collateral Value minus (ii) an amount equal to the aggregate
Holdback; provided, that, in all events no Default or Event of Default shall
have occurred and be continuing; and provided, further, that the outstanding
principal amount of the Loans (after giving effect to all amounts requested)
shall not at any time exceed the Total Commitment. The Borrower may repay
and reborrow from time to time between the Closing Date and the Revolving
Credit Termination Date. Notwithstanding anything herein to the contrary, in
no event shall the amount of the Loans advanced for purposes permitted under
this Agreement, other than the purposes contemplated by Section 5.6, exceed
$268,000,000.00, and in no event shall the Borrower be permitted to request
Loans after the Revolving Credit Termination Date except for amounts
requested pursuant to Section 5.6. The Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. The Loan Request shall
constitute a representation and warranty by the Borrower that all of the
conditions set forth in Section 10 and Section 11, in the case of the initial
Loan, and Section 11, in the case of all other Loans, have been satisfied on
the date of such funding.
Section 2.2. Facility Fee. The Borrower agrees to pay to the Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a facility fee calculated at the rate of 0.1875% per annum on the
average daily amount by which the Total Commitment exceeds the outstanding
principal amount of Loans during each calendar quarter or portion thereof
commencing on the date hereof and ending on the Advance Termination Date;
provided, however, that from and after the Revolving Credit Termination Date
and ending on the Advance Termination Date, such fee shall be calculated at
the rate of 0.1875% per annum on the average daily amount by which the Tenant
Improvement Reserve exceeds the outstanding principal amount of Loans
disbursed pursuant to Section 5.6 from the Tenant Improvement Reserve. The
facility fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter or portion
thereof, or on any earlier date on which the Commitments shall be reduced or
shall terminate as provided in Section 2.3, with a final payment on the
Advance Termination Date.
Section 2.3. Reduction of Commitment. The Borrower shall have the
right at any time and from time to time upon five Business Days' prior
written notice to the Agent to reduce by $1,000,000 or an integral multiple
of $1,000,000 in excess thereof or to terminate entirely the unborrowed
portion of the Commitments, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment Percentages
of the amount specified in such notice or, as the case may be, terminated,
any such reduction to be without penalty (unless such reduction requires
repayment of a Eurodollar Rate Loan). Promptly after receiving any notice
of the Borrower delivered pursuant to this Section 2.3, the Agent will notify
the Banks of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the
respective accounts of the Banks the full amount of any facility fee under
Section 2.2 then accrued on the amount of the reduction. No reduction or
termination of the Commitments may be reinstated. Notwithstanding the
foregoing, in no event shall the aggregate Commitments be reduced to less
than $200,000,000.00.
Section 2.4. Notes. The Loans shall be evidenced by a single
promissory note of the Borrower to each Bank in substantially the form of
Exhibit A hereto (collectively, the "Notes"), dated as of the Closing Date
and completed with appropriate insertions. Each such Note shall be payable
to the order of each Bank in the principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Loans made by such
Bank, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes the Agent to make or cause to be made, at or about the
time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal thereof, an appropriate notation on the Agent's Record
reflecting the making of such Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Loans set forth on the Agent's
Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to each Bank, but the failure to record, or any error in so
recording, any such amount on the Agent's Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Note to make
payments of principal of or interest on any Note when due. By delivery of
the Notes, there shall not be deemed to have occurred, and there has not
otherwise occurred, any payment, satisfaction or novation of the Indebtedness
evidenced by the "Notes" described in the Original Revolving Credit Agreement
or the Indebtedness evidenced by the "Notes" described in the Original Loan
Agreement, which Indebtedness is instead allocated among the Banks as of the
date hereof and evidenced by the Notes and their respective Commitment
Percentages and the Banks shall as of the date hereof make such adjustments
to the outstanding Loans so that such outstanding Loans are consistent with
their respective Commitment Percentages.
Section 2.5. Interest on Loans.
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which
such Base Rate Loan is converted to a Eurodollar Rate Loan at a rate per
annum equal to the Base Rate.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at a rate per annum equal to the sum of
the Eurodollar Rate determined for such Interest Period plus one and sixty-
five one-hundredths percent (1.65%).
(c) The Borrower promises to pay interest on each Loan in arrears
on each Interest Payment Date with respect thereto.
(d) Base Rate Loans and Eurodollar Rate Loans may be converted to
Loans of the other Type as provided in Section 4.1.
Section 2.6. Requests for Loans.
(a) Except with respect to the initial Loan funded at the
Closing Date, the Borrower shall give to the Agent written notice in the form
of Exhibit B hereto (or telephonic notice confirmed in writing in the form of
Exhibit B hereto) of each Loan requested hereunder (a "Loan Request") no less
than five (5) Business Days prior to the proposed Drawdown Date. The
Borrower shall not make a Loan Request more frequently than two (2) times
each month. Each such notice shall specify with respect to the requested
Loan the proposed principal amount, Drawdown Date, Interest Period (if
applicable) and Type. Each such notice shall also contain (i) a statement as
to the purpose for which such advance shall be used (which purpose shall be
in accordance with the terms of Section 5.6 or Section 7.11, as applicable),
(ii) in the case of any advance relating to any Capital Improvement Project
for a Mortgaged Property or a Mezzanine Property, a certification from the
Borrower that all materialmen, laborers, subcontractors and any other parties
who might or could claim statutory or common law liens and are furnishing or
have furnished material or labor to the Mortgaged Property or Mezzanine
Property, as applicable, have been paid (or will be paid from the proceeds of
the requested advance) all amounts due for such labor and materials, and if
requested by the Agent, delivery to the Agent of affidavits, lien waivers or
other evidence reasonably satisfactory to the Agent evidencing the same, and
(iii) a certification by the chief financial or chief accounting officer of
the Borrower that the Borrower and the Guarantor are and will be in
compliance with all of their respective covenants under the Loan Documents
after giving effect to the making of such Loan. With respect to any Loan
proposed to be funded after the initial Loan funded at the Closing Date, the
Borrower shall have complied with all requirements set forth in Section 5.4
and the Majority Banks shall have granted their consent to and accepted the
additional Collateral for such Loan in accordance with the terms and
conditions of Section 5.4.
(b) Promptly upon receipt of any such notice, the Agent shall
notify each of the Banks thereof. Except as provided in this Section 2.6,
each such Loan Request shall be irrevocable and binding on the Borrower and
shall obligate the Borrower to accept the Loan requested from the Banks on
the proposed Drawdown Date, provided that, in addition to the Borrower's
other remedies against any Bank which fails to advance its proportionate
share of a requested Loan, such Loan Request may be revoked by the Borrower
by notice received by the Agent no later than the Drawdown Date if any Bank
fails to advance its proportionate share of the requested Loan in accordance
with the terms of this Agreement, provided further that the Borrower shall be
liable in accordance with the terms of this Agreement (including, without
limitation, amounts due pursuant to Section 4.8) to any Bank which is
prepared to advance its proportionate share of the requested Loan for any
costs, expenses or damages incurred by such Bank as a result of the
Borrower's election to revoke such Loan Request. Nothing herein shall
prevent the Borrower or the funding Banks from seeking recourse against any
Bank that fails to advance its proportionate share of a requested Loan (but
not any other Bank) as required by this Agreement for the actual and
consequential damages incurred by the Borrower (including, without
limitation, amounts required to be paid under this Agreement by the Borrower
to any Bank) and such funding Banks proximately caused by such Bank that has
failed to advance its proportionate share, provided that in no event shall
such Bank be liable for punitive or exemplary damages. The Borrower may
without cost or penalty revoke a Loan Request by delivering notice thereof to
each of the Banks no later than three (3) Business Days prior to the Drawdown
Date. Each Loan Request shall be (a) for a Base Rate Loan in a minimum
aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof, or (b) for a Eurodollar Rate Loan in a minimum aggregate amount of
$2,000,000 or an integral multiple of $100,000 in excess thereof; provided,
however, that there shall be no more than five (5) Eurodollar Rate Loans
outstanding at any one time. In the event that the proceeds from such Loan
are to be used for a purpose other than a Capital Improvement Project, then
the Borrower shall provide to the Agent as soon as practicable thereafter
such evidence as the Agent shall reasonably require to evidence that such
funds have been used for such purpose (which evidence may include, without
limitation, a closing statement).
Section 2.7. Funds for Loans.
(a) Not later than 2:00 p.m. (Boston time) on the proposed
Drawdown Date of any Loans, each of the Banks will make available to the
Agent, at the Agent's Head Office, in immediately available funds, the amount
of such Bank's Commitment Percentage of the amount of the requested Loans
which may be disbursed pursuant to Section 2.1. Upon receipt from each Bank
of such amount, and upon receipt of the documents required by Section 10 and
Section 11 and the satisfaction of the other conditions set forth therein, to
the extent applicable, the Agent will make available to the Borrower the
aggregate amount of such Loans made available to the Agent by the Banks by
crediting such amount to the account of the Borrower maintained at the
Agent's Head Office. The failure or refusal of any Bank to make available to
the Agent at the aforesaid time and place on any Drawdown Date the amount of
its Commitment Percentage of the requested Loans shall not relieve any other
Bank from its several obligation hereunder to make available to the Agent the
amount of such other Bank's Commitment Percentage of any requested Loans,
including any additional Loans that may be requested subject to the terms and
conditions hereof to provide funds to replace those not advanced by the Bank
so failing or refusing, provided that the Borrower may by notice received by
the Agent no later than the Drawdown Date refuse to accept any Loan which is
not fully funded in accordance with the Borrower's Loan Request subject to
the terms of Section 2.6. In the event of any such failure or refusal, the
Banks not so failing or refusing shall be entitled to a priority secured
position as against the Bank or Banks so failing or refusing for such Loans
as provided in Section 12.4.
(b) Unless Agent shall have been notified by any Bank prior to the
applicable Drawdown Date that such Bank will not make available to Agent such
Bank's pro rata share of a proposed Loan, Agent may in its discretion assume
that such Bank has made such Loan available to Agent in accordance with the
provisions of this Agreement and Agent may, if it chooses, in reliance upon
such assumption make such Loan available to Borrower, and such Bank shall be
liable to the Agent for the amount of such advance.
Section 2.8. Extension of Maturity Date.
(a) Provided that no Default or Event of Default shall have
occurred and be continuing, the Borrower shall have the option, to be
exercised by giving written notice to the Agent in the form of Exhibit D
hereto at least 90 days prior to the Maturity Date, subject to the terms and
conditions set forth in this Agreement, to extend the Maturity Date by one
(1) year. The request by the Borrower for extension of the Maturity Date
shall constitute a representation and warranty by the Borrower that all of
the conditions set forth in this Section shall have been satisfied on the
date of such request or shall be satisfied prior to the then existing
Maturity Date.
(b) The obligations of the Agent and the Banks to extend the
Maturity Date shall be subject to the satisfaction of the following
conditions precedent on or prior to the Maturity Date (without regard to any
extension):
(i) Payment of Extension Fee. The Borrower shall pay to the
Agent for the pro rata accounts of the Banks in accordance with their
respective Commitment Percentages an extension fee equal to fifteen-
hundredths of one percent (0.15%) of the Total Commitment, which fee
shall, when paid, be fully earned and non-refundable under any
circumstances.
(ii) No Default. On the date the Extension Request is given
and on the Maturity Date (as determined without regard to such
extension) there shall exist no Default or Event of Default.
(iii) Representations and Warranties. The representations
and warranties made by the Borrower, any of its Subsidiaries, the
Guarantor, the Manager, the Member or the Property Owner in the Loan
Documents or otherwise made by or on behalf of such Persons in
connection therewith or after the date thereof shall have been true and
correct in all material respects when made and (other than
representations as to the Guarantor) shall also be true and correct in
all material respects on the Maturity Date (as determined without regard
to such extension) other than for changes in the ordinary course of
business permitted by this Agreement that have not had any materially
adverse affect on the business of any of such Persons.
(iv) Appraisals. The Agent shall have received at Borrower's
expense Appraisals or updates of prior Appraisals to determine the
current Appraised Value and Designated Collateral Value of the Mortgaged
Property and the Mezzanine Property, which Appraisals shall be ordered,
reviewed and approved as provided in Section 5.2(a). The aggregate
outstanding principal amount of the Loans shall be reduced to an amount
such that the aggregate outstanding principal amount of the Loans does
not exceed the Designated Collateral Value (as most recently determined
based upon the Appraisals obtained pursuant to this Section 2.8).
Section 2.9. Termination of Advances. Notwithstanding anything in this
Agreement to the contrary, the Borrower shall have no right to obtain from
the Banks, and the Banks shall have no obligation to lend to Borrower, any
additional sums under this Agreement after the Advance Termination Date.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrower promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, all of the Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
Section 3.2. Mandatory Prepayments.
(a) Except with the prior written approval of the Majority Banks,
which approval may be withheld in the sole and absolute discretion of the
Majority Banks, if at any time the outstanding principal amount of the
Mezzanine Mortgage Loan is prepaid in full, whether voluntarily,
involuntarily or as the result of an acceleration of the maturity date
thereof, all of the outstanding Obligations together with any and all accrued
but unpaid interest thereon and prepayment fees shall become absolutely due
and payable. For the purposes hereof, and without limiting the generality of
the foregoing, the Mezzanine Mortgage Loan shall be deemed to have been
prepaid in the event that (i) a Nomura Mortgage or the Nomura Mortgages are
assigned by the holder thereof to a new holder for the purpose of
facilitating a refinance of the indebtedness secured thereby or (ii) the
Property Owner defeases the Mezzanine Mortgage Loan as permitted by Section
2.3.3 of the Mezzanine Mortgage Loan Agreement.
(b) If at any time there shall occur, whether voluntarily,
involuntarily or by operation of law, a sale, transfer, assignment,
conveyance, option or other disposition of, or any mortgage, hypothecation,
encumbrance, financing or refinancing of (i) any assets or properties of the
Property Owner, except for the Mezzanine Mortgage Loan and releases of the
Mezzanine Property in accordance with the terms of this Agreement, and except
as provided in Section 7.23(a) with respect to the replacement of fixtures,
equipment, machinery and other personal property by the Property Owner in
connection with the operation of the Mezzanine Property in the ordinary
course of business, (ii) any of the Mezzanine Collateral, (iii) any other
assets or properties of the Manager or the Member, (iv) any direct or
indirect interest of either Borrower, the Manager or the Member in the
Property Owner, (v) any direct or indirect interest of the Member in the
Manager, or (vi) any direct or indirect interest of Borrower in the Member,
all of the Obligations outstanding on such date, together with any and all
accrued but unpaid interest thereon and prepayment fees, shall become
absolutely due and payable. A pledge or transfer by WWP of its interest in
the Borrower to the Secured Mezzanine Loan Agreement Lenders shall not cause
a mandatory prepayment under this Section 3.2(b).
Section 3.3. Optional Prepayments. The Borrower shall not have the
right at any time prior to December 15, 1998 to prepay the Loans, as a whole
or in part. At any time after December 15, 1998, the Borrower shall have the
right, at the Borrower's election, to prepay the outstanding amount of the
Loans, as a whole or in part, at any time without penalty or premium;
provided, that the full or partial prepayment of the outstanding amount of
any Eurodollar Rate Loans pursuant to this Section 3.3 may be made only on
the last day of the Interest Period relating thereto except as otherwise
required pursuant to Section 4.7 unless payment is first made of any amounts
payable pursuant to Section 4.8. The Borrower shall give the Agent, no later
than 10:00 a.m., Boston time, at least three (3) Business Days prior written
notice of any prepayment pursuant to this Section 3.3 of any Base Rate Loans
and at least four Eurodollar Business Days notice of any proposed repayment
pursuant to this Section 3.3 of Eurodollar Rate Loans, in each case
specifying the proposed date of payment of Loans and the principal amount to
be paid.
Section 3.4. Partial Prepayments. Each partial prepayment of the Loans
under Section 3.3 shall be in an integral multiple of $100,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to
the date of payment and, after payment of such interest, shall be applied, in
the absence of instruction by the Borrower, first to the principal of Base
Rate Loans and then to the principal of Eurodollar Rate Loans.
Section 3.5. Effect of Prepayments. Amounts of the Loans prepaid under
Section 3.3 prior to the Revolving Credit Termination Date may be reborrowed
as provided in Section 2. Notwithstanding anything herein to the contrary,
amounts of the Loans prepaid after the Revolving Credit Termination Date may
not be reborrowed.
Section 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type and such Loan shall thereafter
bear interest as a Base Rate Loan or a Eurodollar Rate Loan, as applicable;
provided that (i) with respect to any such conversion of a Eurodollar Rate
Loan to a Base Rate Loan, the Borrower shall give the Agent at least three
Business Days' prior written notice of such election, and such conversion
shall only be made on the last day of the Interest Period with respect to
such Eurodollar Rate Loan; (ii) with respect to any such conversion of a Base
Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent at
least four Eurodollar Business Days' prior written notice of such election
and the Interest Period requested for such Loan, the principal amount of the
Loan so converted shall be in a minimum aggregate amount of $2,000,000 or an
integral multiple of $100,000 in excess thereof and, after giving effect to
the making of such Loan, there shall be no more than five (5) Eurodollar Rate
Loans outstanding at any one time; and (iii) no Loan may be converted into a
Eurodollar Rate Loan when any Default or Event of Default has occurred and is
continuing. All or any part of the outstanding Loans of any Type may be
converted as provided herein, provided that no partial conversion shall
result in a Base Rate Loan in an aggregate principal amount of less than
$1,000,000 or a Eurodollar Rate Loan in an aggregate principal amount of less
than $2,000,000 and that the aggregate principal amount of each Loan shall be
in an integral multiple of $100,000. On the date on which such conversion is
being made, each Bank shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office, as the case may be. Each Conversion Request
relating to the conversion of a Base Rate Loan to a Eurodollar Rate Loan
shall be irrevocable by the Borrower.
(b) Any Loan may be continued as such Type upon the expiration of
an Interest Period with respect thereto by compliance by the Borrower with
the terms of Section 4.1; provided that no Eurodollar Rate Loan may be
continued as such when any Default of the type described in subsections (a),
(b), (c) or (d) of Section 12.1 or Event of Default has occurred and is
continuing, but shall be automatically converted to a Base Rate Loan on the
last day of the Interest Period relating thereto ending during the
continuance of any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent of
its election hereunder with respect to any Loan, such Loan shall be
automatically converted to a Base Rate Loan at the end of the applicable
Interest Period.
Section 4.2. Closing Fee. The Borrower has paid to BKB and Goldman a
closing fee as specified in the Agreement Regarding Fees. BKB and Goldman
shall pay on the Closing Date to the other Banks a closing fee in accordance
with their separate agreement.
Section 4.3. Agent's Fee. The Borrower shall pay to the Agent, for the
Agent's own account, an Agent's fee as specified in the Agreement Regarding
Fees.
Section 4.4. Funds for Payments.
(a) All payments of principal, interest, facility fees, Agent's
fees, closing fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Agent, for the respective accounts
of the Banks and the Agent, as the case may be, at the Agent's Head Office,
not later than 12:00 noon (Boston time) on the day when due, in each case in
immediately available funds. The Agent is hereby authorized to charge the
account of the Borrower with BKB, on the dates when the amount thereof shall
become due and payable, with the amounts of the principal of and interest on
the Loans and all fees, charges, expenses and other amounts owing to the
Agent and/or the Banks under the Loan Documents.
(b) All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any of
the other Loan Documents, the Borrower will pay to the Agent, for the account
of the Banks or (as the case may be) the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan Document, such
additional amount in Dollars as shall be necessary to enable the Banks or the
Agent to receive the same net amount which the Banks or the Agent would have
received on such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Agent certificates or
other valid vouchers for all taxes or other charges deducted from or paid
with respect to payments made by the Borrower hereunder or under such other
Loan Document.
Section 4.5. Computations. All computations of interest on the Loans
and of other fees to the extent applicable shall be based on a 360-day year
and paid for the actual number of days elapsed. Except as otherwise provided
in the definition of the term "Interest Period" with respect to Eurodollar
Rate Loans, whenever a payment hereunder or under any of the other Loan
Documents becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The outstanding amount of the
Loans as reflected on the records of the Agent from time to time shall be
considered prima facie evidence of such amount.
Section 4.6. Inability to Determine Eurodollar Rate. In the event
that, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and reasonable
methods do not exist for ascertaining the Eurodollar Rate for such Interest
Period, the Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower and the Banks) to the
Borrower and the Banks. In such event (a) any Loan Request with respect to
Eurodollar Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans and (b) each Eurodollar Rate Loan will
automatically, on the last day of the then current Interest Period thereof,
become a Base Rate Loan, and the obligations of the Banks to make Eurodollar
Rate Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower and the Banks.
Section 4.7. Illegality. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or the
interpretation or application thereof shall make it unlawful, or any central
bank or other governmental authority having jurisdiction over a Bank or its
Eurodollar Lending Office shall assert that it is unlawful, for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice
of such circumstances to the Agent and the Borrower and thereupon (a) the
commitment of the Banks to make Eurodollar Rate Loans or convert Loans of
another type to Eurodollar Rate Loans shall forthwith be suspended and (b)
the Eurodollar Rate Loans then outstanding shall be converted automatically
to Base Rate Loans on the last day of each Interest Period applicable to such
Eurodollar Rate Loans or within such earlier period as may be required by
law.
Section 4.8. Additional Interest. If any Eurodollar Rate Loan or any
portion thereof is repaid or is converted to a Base Rate Loan for any reason
on a date which is prior to the last day of the Interest Period applicable to
such Eurodollar Rate Loan, the Borrower will pay to the Agent upon demand for
the account of the Banks in accordance with their respective Commitment
Percentages, in addition to any amounts of interest otherwise payable
hereunder, any amounts required to compensate the Banks for any losses, costs
or expenses which may reasonably be incurred as a result of such payment or
conversion, including, without limitation, an amount equal to daily interest
for the unexpired portion of such Interest Period on the Eurodollar Rate Loan
or portion thereof so repaid or converted at a per annum rate equal to the
excess, if any, of (a) the interest rate calculated on the basis of the
Eurodollar Rate applicable to such Eurodollar Rate Loan minus (b) the yield
obtainable by the Agent upon the purchase of debt securities customarily
issued by the Treasury of the United States of America which have a maturity
date most closely approximating the last day of such Interest Period (it
being understood that the purchase of such securities shall not be required
in order for such amounts to be payable and that a Bank shall not be
obligated or required to have actually obtained funds at the Eurodollar
Rate).
Section 4.9. Additional Costs, Etc. Notwithstanding anything herein to
the contrary, if any future applicable law or any amendment or modification
of present applicable law which expression, as used herein, includes
statutes, rules and regulations thereunder and legally binding
interpretations thereof by any competent court or by any governmental or
other regulatory body or official with appropriate jurisdiction charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Bank or the Agent by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Bank's Commitment or the Loans
(other than taxes based upon or measured by the income or profits of such
Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank under this
Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by,
or deposits in or for the account of, or loans by, or commitments of an
office of any Bank beyond those in effect as of the date hereof, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, such Bank's Commitment, or any class of loans or commitments of which
any of the Loans or such Bank's Commitment forms a part; and the result of
any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Bank's Commitment, or
(ii) to reduce the amount of principal, interest or other
amount payable to such Bank or the Agent hereunder on account of such
Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is calculated
by reference to the gross amount of any sum receivable or deemed
received by such Bank or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within fifteen (15) days of
demand made by such Bank or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to
such Bank or the Agent such additional amounts as such Bank or the Agent
shall determine in good faith to be sufficient to compensate such Bank or the
Agent for such additional cost, reduction, payment or foregone interest or
other sum. Each Bank and the Agent in determining such amounts may use any
reasonable averaging and attribution methods, generally applied by such Bank
or the Agent.
Section 4.10. Capital Adequacy. If after the date hereof any Bank
determines that (a) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements of general application for banks or
bank holding companies or any change in the interpretation or application
thereof by any governmental authority charged with the administration
thereof, or (b) compliance by such Bank or its parent bank holding company
with any future guideline, request or directive of any such entity regarding
capital adequacy or any amendment or change in interpretation of any existing
guideline, request or directive (whether or not having the force of law), has
the effect of reducing the return on such Bank's or such holding company's
capital as a consequence of such Bank's commitment to make Loans hereunder to
a level below that which such Bank or holding company could have achieved but
for such adoption, change or compliance (taking into consideration such
Bank's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital)
by any amount deemed by such Bank to be material, then such Bank may notify
the Borrower thereof. The Borrower agrees to pay to such Bank the amount of
such reduction in the return on capital as and when such reduction is
determined, upon presentation by such Bank of a statement of the amount
setting for the Bank's calculation thereof. In determining such amount, such
Bank may use any reasonable averaging and attribution methods, generally
applied by such Bank or the Agent.
Section 4.11. Indemnity of Borrower. The Borrower agrees to indemnify
each Bank and to hold each Bank harmless from and against any loss, cost or
expense that such Bank may sustain or incur as a consequence of (a) default
by the Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, or (b)
default by the Borrower in making a borrowing or conversion after the
Borrower has given (or is deemed to have given) a Loan Request or a
Conversion Request; provided, however, that the Borrower shall not be
required to so indemnify any Bank pursuant to clause (b) above which fails or
refuses to fund its proportionate share of a Loan in accordance with the
terms of this Agreement.
Section 4.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) interest on the
Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest payable on demand at a rate per
annum equal to four percent (4.0%) above the Base Rate from the date due
until such amount shall be paid in full (after as well as before judgment).
In addition, the Borrower shall pay a late charge equal to three percent
(3.0%) of any amount of interest and/or principal payable on the Loans or any
other amounts payable hereunder or under the Loan Documents, which is not
paid within ten days of the date when due.
Section 4.13. Intentionally Omitted.
Section 4.14. Certificate. A certificate setting forth any amounts
payable pursuant to Section 4.8, Section 4.9, Section 4.10, Section 4.11 or
Section 4.12 and a brief explanation of such amounts which are due, submitted
by any Bank or the Agent to the Borrower, shall be conclusive in the absence
of manifest error.
Section 4.15. Limitation on Interest. Notwithstanding anything in this
Agreement to the contrary, all agreements between the Borrower and the Banks
and the Agent, whether now existing or hereafter arising and whether written
or oral, are hereby limited so that in no contingency, whether by reason of
acceleration of the maturity of any of the Obligations or otherwise, shall
the interest contracted for, charged or received by the Banks exceed the
maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Banks in excess of the
maximum lawful amount, the interest payable to the Banks shall be reduced to
the maximum amount permitted under applicable law; and if from any
circumstance the Banks shall ever receive anything of value deemed interest
by applicable law in excess of the maximum lawful amount, an amount equal to
any excessive interest shall be applied to the reduction of the principal
balance of the Obligations and to the payment of interest or, if such
excessive interest exceeds the unpaid balance of principal of the
Obligations, such excess shall be refunded to the Borrower. All interest
paid or agreed to be paid to the Banks shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full period until payment in full of the principal of the Obligations
(including the period of any renewal or extension thereof) so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law. This section shall control all agreements
between the Borrower and the Banks and the Agent.
Section 4.16. Certain Provisions Relating to Increased Costs. If any
Bank requests compensation for any losses or costs to be reimbursed pursuant
to any one or more of the provisions of Section 4.9 or Section 4.10, then,
upon request of Borrower, such Bank shall use reasonable efforts in a manner
consistent with such institution's practice in connection with loans like the
Loan to eliminate, mitigate or reduce amounts that would otherwise be payable
by Borrower under the foregoing provisions, provided that such action would
not be otherwise prejudicial to such Bank, including, without limitation, by
designating another of such Bank's offices, branches or affiliates; the
Borrower agreeing to pay all reasonably incurred costs and expenses incurred
by such Bank in connection with any such action. Notwithstanding anything to
the contrary contained herein, if no Default or Event of Default shall have
occurred and be continuing, and if any Bank has requested payment or
compensation for any losses or costs to be reimbursed pursuant to any one or
more of the provisions of Section 4.9 or Section 4.10 (each, an "Affected
Bank"), then, within thirty (30) days after such request for payment or
compensation, Borrower shall have the one-time right as to such Affected
Bank, to be exercised by delivery of written notice delivered to the Agent
and the Affected Bank within thirty (30) days of receipt of such notice, to
elect to cause the Affected Bank to transfer its Commitment. The Agent shall
promptly notify the remaining Banks that each of such Banks shall have the
right, but not the obligation, to acquire a portion of the Commitment, pro
rata based upon their relevant Commitment Percentages, of the Commitment of
the Affected Bank (or if any of such Banks does not elect to purchase its pro
rata share, then to such remaining Banks in such proportion as approved by
the Agent). In the event that the Banks do not elect to acquire all of the
Affected Bank's Commitment, then the Agent shall endeavor to obtain a new
Bank to acquire such remaining Commitment. Upon any such purchase of the
Commitment of the Affected Bank, the Affected Bank's interest in the
Obligations and its rights hereunder and under the Loan Documents shall
terminate at the date of purchase, and the Affected Bank shall promptly
execute all documents reasonably requested to surrender and transfer such
interest. The purchase price for the Affected Bank's Commitment shall equal
any and all amounts outstanding and owed by Borrower to the Affected Bank,
including principal and all accrued and unpaid interest or fees.
Section 5. COLLATERAL SECURITY.
Section 5.1. Collateral. The Obligations shall be secured by (i) a
perfected first priority lien or security title to be held by the Agent for
the benefit of the Banks in the Mortgaged Property pursuant to the terms of
the Security Deeds, (ii) a perfected first priority security interest to be
held by the Agent for the benefit of the Banks in the Leases for the
Mortgaged Property pursuant to the Assignments of Rents and Leases, (iii) the
Indemnity Agreement, (iv) a perfected first priority security interest to be
held by the Agent for the benefit of the Banks in the Equity Interests
pursuant to the terms of the Assignment of Interests, (v) a perfected first
priority lien to be held by the Agent for the benefit of the Banks in cash
and Short-term Investments of the Borrower from time to time pledged to the
Agent pursuant to one or more Pledge Agreements, (vi) a perfected first
priority security interest to be held by the Agent for the benefit of the
Banks in the collateral described in the Cash Collateral Agreement, and (vii)
such additional collateral, if any , as the Agent may from time to time
accept as security for the Obligations with the consent of the Majority
Banks, which consent may be given or withheld in the sole discretion of the
Majority Banks. The Obligations shall also be guaranteed pursuant to the
Guaranty.
Section 5.2. Appraisals.
(a) The Agent on behalf of the Banks shall require Appraisals of
each of the Mortgaged Property and the Mezzanine Property in the event that
the Borrower exercises its extension option pursuant to Section 2.8, which
will be ordered by the Agent and reviewed and approved by the appraisal
departments of the Majority Banks, in order to determine the current
Appraised Value of the Mortgaged Property and the Mezzanine Property, and the
Borrower shall pay to the Agent on demand all reasonable costs of all such
Appraisals; provided, however, that so long as no Default or Event of Default
shall have occurred and be continuing and regulatory requirements of any Bank
generally applicable to real estate loans of the category made under this
Agreement as reasonably interpreted by such Bank shall not require more
frequent Appraisals, and except as required with respect to the addition of
Eligible Real Estate as a Mortgaged Property under Section 5.4, the Borrower
shall not be required to pay for an Appraisal of a particular Mortgaged
Property or Mezzanine Property except in connection with such extension
request.
(b) Notwithstanding the provisions of Section 5.2(a), the Agent
may obtain Appraisals or perform internal studies updating and revising prior
Appraisals with respect to the Mortgaged Property and the Mezzanine Property
or such portion thereof as the Majority Banks shall determine, for the
purpose of determining the current Appraised Value of the Mortgaged Property
and the Mezzanine Property at any time following a partial condemnation of or
uninsured casualty to a Mortgaged Property or a Mezzanine Property (provided
that such Appraisal shall be limited to the affected property). The expense
of such Appraisals and updates performed pursuant to this Section 5.2(b)
shall be borne by the Borrower.
Section 5.3. Release of Collateral.
(a) Provided no Default or Event of Default shall have occurred
hereunder and be continuing (or would exist immediately after giving effect
to the transactions contemplated by this Section 5.3), the Agent shall
release a Mortgaged Property or other Collateral from the lien of the
Security Documents encumbering the same upon the request of the Borrower and
upon the following terms and conditions (provided that a release of a
Mezzanine Property shall be governed by the provisions of Section 5.3(b)):
(i) The Borrower shall deliver to the Agent written notice of
its desire to obtain each such release no later than fifteen (15) days
prior to the date on which each such release is to be effected together
with evidence satisfactory to the Agent that such release is to
facilitate a sale of such Mortgaged Property or other Collateral to an
unrelated third party in a bona-fide arms-length transaction for a cash
sales price; and
(ii) The Borrower shall submit to the Agent with such request
a Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith
estimate of the Borrower to give effect to the proposed release and
demonstrating that no Default or Event of Default with respect to the
covenants referred to therein shall exist after giving effect to such
release; and
(iii) The Borrower shall pay all reasonable costs and
expenses of the Agent in connection with such release, including without
limitation, reasonable attorney's fees and disbursements; and
(iv) The Borrower shall pay to the Agent for the account of
the Banks, which payment shall be applied to reduce the outstanding
principal balance of the Loans, a release price equal to one hundred
twenty percent (120%) of the Designated Collateral Value of such
Collateral. In the event of a release pursuant hereto, the amount
available to be borrowed against the Collateral remaining after such
release shall be reduced by an amount equal to twenty percent (20%) of
the Designated Collateral Value of the Collateral so released without
reducing the Designated Collateral Value of the remaining Mortgaged
Properties or other Collateral for purposes of calculating release
prices. Notwithstanding the foregoing, (A) the vacant land described on
Schedule 5.3(a) hereto
comprising part of the Mortgaged Property commonly known as Point View
and (B) the farm house improvements at the Mortgaged Property commonly
known as 180/188 Mt. Airy Road subject to the purchase option contained
in Paragraph 33 of that certain Agreement between Fidelity Union Bank,
as ancillary trustee for Mellon Bank, N.A., as trustee for Westinghouse
Master Trust Fund, as landlord, and Mt. Airy Associates/ Management, as
tenant, dated November 8, 1982, shall be released upon the payment to
the Agent for the account of the Banks an amount (without premium) equal
to eighty percent (80%) of the gross sales proceeds less reasonable and
customary closing costs from such sale, the Mortgaged Property commonly
known as 74 Turner Street shall be released upon the payment to the
Agent for the account of the Banks an amount (without premium) equal to
twenty-four percent (24%) of the gross sales proceeds less reasonable
and customary closing costs from such sale (the "74 Turner Release
Price"), and the vacant land described on Schedule 5.3(b) hereto
comprising part of the Mortgaged Property commonly known as Greenbrook
Corporate Center shall be released upon the payment to the Agent for the
account of the Banks an amount (without premium) equal to the amount
allocated to such vacant land in the Appraisal of such Mortgaged
Property (as most recently determined pursuant to this Agreement) upon
the sale of such land to an unrelated third party, provided that the
Borrower shall submit to the Agent with the request for the release of
the Point View and Greenbrook Corporate Center land, 74 Turner Street or
such improvements at Mt. Airy (A) a survey satisfactory to Agent showing
such land that Borrower desires to release from the Security Documents
and such other evidence as Agent may reasonably require to show the
availability of unrestricted (whether by private agreement or
governmental provision) direct access to public roads and utilities from
all unreleased portions of such Mortgaged Property, (B) a certification
from Borrower that the conveyance by Borrower of such land which is
requested to be released will not violate the terms of any lease,
agreement, ordinance or restriction by which such Mortgaged Property is
subject (and, with respect to the release of 74 Turner Street, any
lease, agreement, ordinance or restriction by which the Mezzanine
Property commonly known as 128 Technology Center is subject) and, with
respect to the release of 74 Turner Street, a certification from an
appropriate licensed professional that the Mezzanine Property commonly
known as 128 Technology Center satisfies all zoning requirements
applicable thereto, including without limitation, parking requirements
without utilization of 74 Turner Street, and (C) evidence of the proper
subdivision of the property to be released. Such payments shall be
applied to reduce the outstanding principal balance of the Loans;
provided, that the Borrower shall not be required to make a payment
which would reduce the principal balance below zero. Upon the release
of 74 Turner Street, the Designated Collateral Value for the Mezzanine
Property commonly known as 128 Technology Center shall be reduced by the
amount of the 74 Turner Release Price.
(b) Provided no Default or Event of Default shall have occurred
hereunder or the other Loan Documents and be continuing (or would exist
immediately after giving effect to the transactions contemplated by this
Section 5.3), the Property Owner may from time to time release a Mezzanine
Property from the lien of the Nomura Mortgage encumbering the same, and
thereafter (or concurrently) sell, transfer or otherwise convey such
Mezzanine Property to a third party, without thereby requiring the prepayment
of the outstanding Obligations as provided in Section 3.2 upon the request of
the Borrower and upon the following terms and conditions:
(i) The Borrower shall deliver to the Agent written notice of
Property Owner's desire to obtain each such release no later than
fifteen (15) days prior to the date on which each such release is to be
effected together with evidence satisfactory to the Agent that such
release is to facilitate a sale of such Mezzanine Property to an
unrelated third party in a bona-fide arms-length transaction for a cash
sales price or a bona-fide refinance and that such release is in
compliance with the requirements of the Mezzanine Mortgage Loan
Documents (or has otherwise been consented to by the Mezzanine
Mortgagee); and
(ii) The Borrower shall submit to the Agent with such request
a Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith
estimate of the Borrower to give effect to the proposed release and
demonstrating that no Default or Event of Default with respect to the
covenants referred to therein shall exist after giving effect to such
release; and
(iii) The Borrower shall pay all reasonable costs and
expenses of the Agent in connection with such release, including without
limitation, reasonable attorney's fees and disbursements; and
(iv) The Borrower shall pay to the Agent for the account of
the Banks, which payment shall be applied to reduce the outstanding
principal balance of the Loans, a release price for such property as set
forth on Schedule 6.4. In the event of a release pursuant hereto, the
amount available to be borrowed against the collateral remaining for the
Loans after such release shall be reduced by an amount equal to twenty
percent (20%) of the Designated Collateral Value of the Collateral so
released without reducing the Designated Collateral Value of such
remaining collateral for the purposes of calculating release prices or
the release prices set forth on Schedule 6.4; provided that upon a
release of the Mezzanine Property commonly known as 201 University, the
amount available to be borrowed against the balance of the Mezzanine
Collateral remaining for the Loan shall be reduced by the sum of
$48,465.00, provided further that such reduction shall not reduce the
release prices set forth on Schedule 6.4. Such payments shall be
applied to reduce the outstanding principal balance of the Loans;
provided, that the Borrower shall not be required to make a payment
which would reduce the principal balance below zero; and
(b) No release of a Mortgaged Property from the lien of the
Security Documents encumbering the same or the release of any other
Collateral or Mezzanine Property shall be granted by Lender prior to December
15, 1998, unless the release payment applicable thereto pursuant to Section
5.3(a) or Section 5.3(b) hereinabove shall be deposited into an account of
the Agent or other cash collateral vehicle acceptable to Agent in its sole
discretion, which shall be pledged to the Agent, pursuant to documentation
acceptable to Agent in its sole discretion, for the account of the Banks as
security for the Obligations and which shall not be applied against or reduce
the Outstanding Loans, unless the Agent shall otherwise so elect in its sole
discretion.
Section 5.4. Additional Collateral.
(a) The Borrower shall have the right subject to the terms hereof
to add to the Collateral any other Real Estate that is owned by the Borrower
and which is not security for any other Indebtedness. Such addition shall be
completed by the execution and delivery to the Agent of each of the Eligible
Real Estate Qualification Documents. Notwithstanding the foregoing, the
addition of such Collateral shall not increase the Designated Collateral
Value or the amounts available to be borrowed by the Borrower unless each of
the following conditions shall be satisfied:
(i) if such proposed collateral is Real Estate, such Real
Estate shall be Eligible Real Estate;
(ii) no Default or Event of Default shall have occurred or
exist or would occur or exist if such asset were included within the
Collateral and the requested Loan fully funded, including, without
limitation, under Section 9.1;
(iii) the Borrower shall have executed and delivered to
the Agent all Eligible Real Estate Qualification Documents or other
instruments, documents, or agreements, including Uniform Commercial Code
financing statements, as the Agent shall deem necessary or desirable to
perfect a first priority security interest in, or lien on, such
Collateral, all of which instruments, documents or agreements shall be
in form and substance satisfactory to the Agent in its sole discretion;
and
(iv) the Agent, on behalf of the Banks, shall have received
any other appraisals, surveys, rent rolls, environmental reports, title
insurance reports, certificates, opinions or other information or
documentation with respect to the Collateral as the Agent, in its sole
discretion, shall deem necessary or desirable.
The Borrower acknowledges that the decision of the Majority Banks to
grant or withhold their consent to the acceptance of additional Collateral
under this Section 5.4 shall be based entirely on such factors as the
Majority Banks deem relevant in their sole discretion, including, without
limitation, those enumerated in clauses (i) through (iv) hereinabove, and
such consent may be granted or withheld solely at the discretion of the
Majority Banks; provided, however, that if the such Real Estate is a
Stabilized Property, acceptance of such Real Estate shall be subject only to
the satisfaction of the terms of Section 5.4(a)(ii), (iii) and (iv).
(b) In connection with each such addition, the Borrower shall pay
to the Agent the reasonable out-of-pocket costs and expenses (including
reasonable attorney's fees and expenses) of the Agent in connection with the
addition of such Collateral.
(c) In no event shall the acquisition cost of any Mortgaged
Property or the Equity Interests exceed $40,000,000.00.
Section 5.5. Holdback. The Banks have required that Borrower reserve
from the amounts available to be borrowed under this Agreement an amount
necessary to cover (a) eighty percent (80%) of the corporate general and
administrative costs of the Borrower, and (b) eighty percent (80%) of the
operating expenses for each Non-Stabilized Property for which net operating
income from such property is insufficient to cover (such amount pursuant to
clause (b) is hereinafter referred to as the "Negative Carry") as reasonably
determined by the Borrower subject to the approval of the Agent in an amount
to cover all such costs for a period of eighteen (18) months; provided that
in the event that as of any date of determination such amount shall not have
been determined as so provided, then such amount shall be as reasonably
determined by Agent (such amount is hereafter referred to as the "Holdback").
Amounts reserved under the Holdback shall not bear interest until disbursed.
The Borrower may request a disbursement of amounts reserved pursuant to the
Holdback to pay such costs as such costs are incurred, but at no time shall
the amount of the Holdback be less than an amount sufficient to cover such
cost and expenses for a period of six (6) months, and the Borrower shall take
such actions as are necessary (including the prepayment of the Loan to
reinstate the Holdback to such minimum level if it should ever fall below
such level). The Holdback described in Section 5.5(a) shall be allocated pro
rata among all Non-Stabilized Properties that also have a Holdback described
in Section 5.5(b). At such time as a Non-Stabilized Property shall become a
Stabilized Property, the Holdback for such Non-Stabilized Property shall be
eliminated, provided that any Holdback for corporate general and
administrative costs shall be re-allocated among the remaining Non-Stabilized
Properties that also have a Holdback described in Section 5.5(b) pro rata
based upon their respective Designated Collateral Values. As of the date of
this Agreement, the Holdback is $3,957,601.60. The Holdback shall be
determined by the Agent for each additional Mortgaged Property that is
included as Collateral which is a Non-Stabilized Property at the time such
Mortgaged Property is added to the Collateral. At such time as the Borrower
shall deliver to the Agent evidence satisfactory to the Agent that the
"Holdback" under the Secured Mezzanine Loan Agreement is no longer required
pursuant to the terms of the last sentence of Section 5.5 thereof, the
Holdback shall no longer be required under this Agreement.
Section 5.6. Disbursement of Tenant Improvement Reserve. Amounts from
the Tenant Improvement Reserve shall be available to be disbursed hereunder
for Tenant Improvement Projects and Leasing Commissions. With respect to
Loan Requests for Loans to fund Tenant Improvement Projects or Leasing
Commissions, Loans shall be made on the following basis:
(a) prior to any disbursements from the Tenant Improvement
Reserve, the Borrower shall submit to the Agent for approval by the Majority
Banks the proposed Lease to which the Tenant Improvement Project and/or
Leasing Commission relate and a separate budget for such proposed Tenant
Improvement Project and Leasing Commission (a "Building Capital Project
Budget") setting forth the total cost required to construct the Tenant
Improvement Project to be constructed by the Borrower pursuant to such Lease
(such cost is hereinafter referred to as the "Total Cost") and the Leasing
Commissions with respect to such Lease;
(b) upon written approval by the Majority Banks in their sole and
absolute discretion of a Lease and the corresponding Building Capital Project
Budget, the Borrower may thereafter submit Loan Requests for Tenant
Improvement Projects with respect to the applicable Mortgaged Property which
Loan Requests shall separately identify the Mortgaged Property and the Tenant
Improvement Project for which funds are requested and shall identify that
portion of the Total Cost that has been drawn and the amount of the Total
Cost remaining to be drawn (separately identifying amounts drawn under this
Agreement and amounts drawn by WWP under the Secured Mezzanine Loan
Agreement) and a certification that the amount of the Total Cost remaining to
be drawn (including amounts available to be drawn pursuant to the Secured
Mezzanine Loan Agreement with respect thereto) together with equity funds to
be provided by Borrower will be sufficient to cause the Tenant Improvement
Project to be completed in full; provided that prior to the initial
disbursement with respect to a Tenant Improvement Project, the Borrower shall
provide to the Agent evidence satisfactory to the Agent that Borrower has
paid from equity twenty-five percent (25%) of the amounts identified in the
Building Capital Project Budget for such Tenant Improvement Project;
(c) upon compliance with all terms and conditions set forth in
this Agreement with respect to advances of the Loans including, without
limitation, the terms and conditions in Section 2.6 and this Section 5.6,
Loan Requests for Tenant Improvement Projects for work in place will be
funded in accordance with the applicable Building Capital Project Budget;
provided, however, if the Agent in its sole and absolute discretion
determines at any time that the cost of completing a Tenant Improvement
Project is in excess of the amount remaining with respect thereto in the
Building Capital Project Budget and equity funds provided by Borrower, no
additional advances with respect to such Tenant Improvement Project shall be
made unless the Borrower shall provide such funds as the Agent in its sole
and absolute discretion determines are necessary to fully complete such
Tenant Improvement Project in accordance with the terms of this Section 5.6;
(d) amounts disbursed for any approved Tenant Improvement Project
shall be an amount not to exceed, under any circumstances, the costs and
expenses actually incurred by the Borrower with respect thereto
notwithstanding the approval by the Agent of the Total Cost thereof or the
amounts set forth in any Building Capital Project Budget with respect
thereto;
(e) the Borrower shall construct each Tenant Improvement Project
in a good and workmanlike manner and in compliance with all applicable laws
and complete the approved Tenant Improvement Project within the time periods
and as required by, and in accordance with, the Lease with respect thereto;
(f) amounts disbursed for Leasing Commissions shall be an amount
not to exceed, under any circumstances, the commission actually incurred by
Borrower which is reasonable and customary for a licensed real estate broker
in the market area in which the Mortgaged Property is located;
(g) with respect to a Loan Request to pay any portion of the
Leasing Commissions, Borrower shall provide evidence as reasonably requested
by the Agent that such Leasing Commissions are then due and payable or have
been properly paid; provided that prior to the initial disbursement with
respect to a Leasing Commission, the Borrower shall provide to the Agent
evidence satisfactory to the Agent that Borrower has paid from equity twenty-
five percent (25%) of the amounts identified in the Building Capital Project
Budget for such Leasing Commission; and
(h) with respect to each Loan Request for Tenant Improvement
Projects or Leasing Commissions, the Borrower shall provide the Agent with
such additional documents, certificates, lien waivers and affidavits as the
Agent may reasonably request.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Banks as
follows.
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a limited
liability company duly organized pursuant to its organizational documents and
amendments thereto filed with the Secretary of State of Delaware and is
validly existing and in good standing under the laws of the State of
Delaware. WWP is a limited liability company duly organized pursuant to its
organizational documents and amendments thereto filed with the Secretary of
State of Delaware and is validly existing and in good standing under the laws
of the State of Delaware. Wellsford Commercial is a Maryland real estate
investment trust duly organized pursuant to its organizational documents and
amendments thereto filed with the Secretary of State of Maryland and is
validly existing and in good standing under the laws of the State of
Maryland. WHWEL is a limited partnership duly organized pursuant to its
organizational documents and amendments thereto filed with the Secretary of
State of Delaware and is validly existing and in good standing under the laws
of the State of Delaware. The Member is a limited liability company duly
organized pursuant to its organizational documents and amendments thereto
filed with the Secretary of State of Delaware and is validly existing and in
good standing under the laws of the State of Delaware. Manager is a limited
liability company duly organized pursuant to its organizational documents and
amendments thereto filed with the Secretary of State of Delaware and is
validly existing and in good standing under the laws of the State of
Delaware. Property Owner is a limited liability company duly organized
pursuant to its organizational documents and amendments thereto filed with
the Secretary of Commonwealth of Massachusetts and is validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. Each of
the Borrower, the Member, the Property Owner and the Manager (i) has all
requisite power to own its property and conduct its business as now conducted
and as presently contemplated, and (ii) is in good standing as a foreign
entity and is duly authorized to do business in the jurisdictions where the
Mortgaged Property or other Collateral held by it, or, as to Manager, Member
and Property Owner, the Mezzanine Property and other Mezzanine Collateral
held by it, is located and in each other jurisdiction where a failure to be
so qualified in such other jurisdiction could have a materially adverse
effect on the business, assets or financial condition of such Person.
(b) Subsidiaries. Without limiting the foregoing, each of the
Subsidiaries of the Borrower and the Guarantor (i) is a corporation, limited
partnership, limited liability company or trust duly organized under the laws
of its State of organization and is validly existing and in good standing
under the laws thereof, (ii) has all requisite power to own its property and
conduct its business as now conducted and as presently contemplated and (iii)
is in good standing and is duly authorized to do business in each
jurisdiction where Mortgaged Property, Mezzanine Property or other Collateral
held by it is located and in each other jurisdiction where a failure to be so
qualified could have a materially adverse effect on the business, assets or
financial condition of the Borrower or such Subsidiary or any Guarantor.
Neither the Property Owner, Manager nor Member has any Subsidiaries, other
than those which own their respective interests in Property Owner.
(c) Authorization. The execution, delivery and performance of
this Agreement and the other Loan Documents to which any of the Borrower, the
Member, the Manager, the Property Owner or the Guarantor are or are to become
a party and the transactions contemplated hereby and thereby (i) are within
the authority of the such Person, (ii) have been duly authorized by all
necessary proceedings on the part of such Person, (iii) do not and will not
conflict with or result in any breach or contravention of any provision of
law, statute, rule or regulation to which such Person is subject or any
judgment, order, writ, injunction, license or permit applicable to such
Person, (iv) do not and will not conflict with or constitute a default
(whether with the passage of time or the giving of notice, or both) under any
provision of the articles of incorporation , bylaws, or other charter
documents of, or any agreement or other instrument binding upon, such Person,
or any of its properties, and (v) do not and will not result in or require
the imposition of any lien or other encumbrance on any of the properties,
assets or rights of any such Person (other than those in favor of the Agent
pursuant to the terms of the Loan Documents).
(d) Enforceability. The execution and delivery of this Agreement
and the other Loan Documents to which any of the Borrower, the Member, the
Manager, the Property Owner or the Guarantor are or are to become a party are
valid and legally binding obligations of such Person enforceable in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
Section 6.2. Governmental Approvals. The execution, delivery and
performance by the Borrower, the Member, the Manager, the Property Owner and
the Guarantor of this Agreement and the other Loan Documents, as applicable,
and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained and the filing of the Security Documents in
the appropriate records office with respect thereto.
Section 6.3. Title to Properties; Leases. Except as indicated on
Schedule 6.3 hereto, the Borrower owns all of the assets reflected in the
balance sheet of the Borrower as of the Balance Sheet Date or acquired since
that date (except property and assets sold or otherwise disposed of in the
ordinary course of business since that date), subject to no rights of others,
including any mortgages, leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.
The Property Owner owns all of the assets reflected in the balance sheet of
the Property Owner dated as of the Balance Sheet Date, subject to no rights
of others, including any rights of first refusal, right of first offer or
other right to acquire, mortgages, leases, conditional sales agreements,
title retention agreements, liens or other encumbrances, except the Mezzanine
Mortgage Loan, the Permitted Liens, the rights of tenants as tenants only
under the Leases reflected in the Rent Rolls for the Mezzanine Property and
the right of first offer with respect to a sale of 201 University Avenue,
Westwood Massachusetts.
Section 6.4. Financial Statements. The Borrower has furnished to each
of the Banks: (a) an unaudited balance sheet and an unaudited statement of
income and cash flows of Borrower as of the Balance Sheet Date certified by
the Borrower's chief financial or chief accounting officer to have been
prepared in accordance with generally accepted accounting principles and to
fairly present the financial condition of the Borrower as at the close of
business on the dates thereof (subject to year-end adjustments); (b) an
unaudited consolidated statement of operating income for the Mortgaged
Property satisfactory in form to the Agent and certified by the Borrower's
chief financial or accounting officer as fairly presenting the operating
income for such parcels for such periods; and (c) the balance sheet of the
Property Owner dated as of the Balance Sheet Date and an unaudited
consolidated statement of operating income for the Mezzanine Property
satisfactory in form to the Agent and certified by the Borrower's chief
financial or accounting officer as fairly presenting the operating income for
such parcels for such periods. Such balance sheet and statements of income,
stockholder's equity and cash flows have been prepared in accordance with
generally accepted accounting principles and fairly present the financial
condition of the Borrower and the Property Owner as of such dates and the
results of the operations of the Borrower, the Mortgaged Property, the
Property Owner and the Mezzanine Property for such periods. There are no
liabilities, contingent or otherwise, of the Borrower or the Property Owner
involving material amounts not disclosed in said financial statements and the
related notes thereto as of their respective dates. The all-in acquisition
costs of the Mortgaged Properties and the Mezzanine Property, the Designated
Collateral Value as of the date hereof allocable thereto and the
classification of such property as a Stabilized Property or Non-Stabilized
Property are as set forth on Schedule 6.4 hereto.
Section 6.5. No Material Adverse Changes. Since the Balance Sheet
Date, there has occurred no materially adverse change in the financial
condition or business of the Borrower, as shown on or reflected in the
balance sheet of the Borrower, as of the Balance Sheet Date, or its
consolidated statement of income or cash flows for the fiscal year then
ended, other than changes in the ordinary course of business that have not
had any materially adverse effect either individually or in the aggregate on
the business or financial condition of the Borrower. There has occurred no
materially adverse change in the financial condition or business of the
Property Owner as shown on or reflected in the balance sheet of the Property
Owner as of the Balance Sheet Date, or its statement of income or cash flows
for the fiscal year then ended, other than changes in the ordinary course of
business that have not had any materially adverse effect either individually
or in the aggregate on the business or financial condition of the Property
Owner.
Section 6.6. Franchises, Patents, Copyrights, Etc. The Borrower, the
Member, the Property Owner, the Manager and the Guarantor possess all
franchises, patents, copyrights, trademarks, trade names, service marks,
licenses and permits, and rights in respect of the foregoing, adequate for
the conduct of their business substantially as now conducted without known
conflict with any rights of others.
Section 6.7. Litigation. Except as stated on Schedule 6.7 there are no
actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower, the Member, the Property Owner, the Manager,
the Guarantor, the Mortgaged Property, the Mezzanine Collateral or the
Mezzanine Property before any court, tribunal or administrative agency or
board that, if adversely determined, might, either in any case or in the
aggregate, materially adversely affect the properties, assets, financial
condition or business of such Person or materially impair the right of such
Person to carry on business substantially as now conducted by it, or result
in any liability not adequately covered by insurance, or for which adequate
reserves are not maintained on the balance sheet of such Person, or which
question the validity of this Agreement or any of the other Loan Documents or
any of the Mezzanine Mortgage Loan Documents, any action taken or to be taken
pursuant hereto or thereto or any lien or security interest created or
intended to be created pursuant hereto or thereto, or which will adversely
affect the ability of such Person to pay and perform the Obligations in the
manner contemplated by this Agreement and the other Loan Documents. There
are no judgments outstanding against or affecting the Borrower, the Guarantor
or the Mortgaged Property in excess of $250,000.00, or against or affecting
the Member, the Manager, the Property Owner, the Mezzanine Collateral or the
Mezzanine Property.
Section it u No Materially Adverse Contracts, Etc. None of the
Borrower, the Member, the Property Owner, the Manager or the Guarantor is
subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in the
future to have a materially adverse effect on the business, assets or
financial condition of any such Person. None of the Borrower, the Member,
the Property Owner, the Manager or the Guarantor is a party to any contract
or agreement that has or is expected, in the judgment of the officers of such
Person, to have any materially adverse effect on the business of any such
Person.
Section 6.9. Compliance with Other Instruments, Laws, Etc. None of the
Borrower, the Member, the Property Owner, the Manager or the Guarantor is in
violation of any provision of its charter or other organizational documents,
by-laws, or any agreement or instrument to which it may be subject or by
which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases
in a manner that could result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or
business of such Person.
Section 6.10. Tax Status. Each of the Borrower, the Member, the
Property Owner, the Manager and the Guarantor (a) has made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (b) has paid all taxes
and other governmental assessments and charges shown or determined to be due
on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (c) has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers or members of each
of the Borrower, the Member, the Property Owner, the Manager and the
Guarantor know of no basis for any such claim.
Section 6.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
Section 6.12. Holding Company and Investment Company Acts. None of the
Borrower, the Member, the Property Owner, the Manager or the Guarantor is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company",
as such terms are defined in the Investment Company Act of 1940.
Section 6.13. Absence of UCC Financing Statements, Etc. Except with
respect to Permitted Liens, the Mezzanine Mortgage Loan Documents and the
Loan Documents, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover,
affect or give notice of any present or possible future lien on, or security
interest or security title in, any property of the Borrower, the Member, the
Property Owner or the Manager or rights thereunder.
Section 6.14. Setoff, Etc. The Collateral and the rights of the Agent
and the Banks with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrower is the owner of the
Collateral free from any lien, security interest, encumbrance or other claim
or demand, except Permitted Liens.
Section 6.15. Certain Transactions. Except as disclosed in writing to
the Agent, and except with respect to that certain Property Management
Agreement between Property Owner and Northeast Real Estate Services LLC,
dated May 15, 1998, none of the members, officers, trustees, directors, or
employees of the Borrower, the Member, the Property Owner, the Manager or the
Guarantor is a party to any transaction with each other (other than for
services as employees, officers and directors and transactions solely between
Guarantors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, trustee, director or such employee or, to the knowledge of such
Person, any corporation, partnership, trust or other entity in which any
member, officer, trustee, director, or any such employee has a substantial
interest or is a member, officer, director, trustee or partner.
Section 6.16. Employee Benefit Plans. The Borrower, the Member, the
Property Owner, the Manager and each ERISA Affiliate are in compliance in all
material respects with ERISA. There has been no Reportable Event with
respect to any Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan. There has been no institution of proceedings or any other
action by PBGC, the Borrower, the Member, the Property Owner, the Manager or
any ERISA Affiliate to terminate or withdraw or partially withdraw from any
such Plan under any circumstances which could lead to material liabilities to
PBGC or, with respect to a Multiemployer Plan, the "Reorganization" or
"Insolvency" (as each such term is defined in ERISA) of any such Plan. To
the best of the Borrower's knowledge, no "prohibited transaction" (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred
with respect to any such Plan, and neither the consummation of the
transactions provided for in this Agreement and compliance by the Borrower,
the Member, the Property Owner, the Manager and the Guarantor with the
provisions hereof and the other Loan Documents, nor the consummation of the
transactions provided for in the Mezzanine Mortgage Loan Documents and
compliance by the Property Owner with the provisions thereof, will involve
any prohibited transaction.
Section 6.17. ERISA Taxes. None of the Borrower, the Member, the
Property Owner, the Manager nor any ERISA Affiliate thereof is currently and
the Borrower has no reason to believe that any such Person or any ERISA
Affiliate will become subject to any liability (other than routine expenses
or contributions relating to the Plans set forth on Schedule 6.17, if timely
paid), tax or penalty whatsoever to any person whomsoever, which liability,
tax or penalty is directly or indirectly related to any Plans set forth on
Schedule 6.17 including, but not limited to, any penalty or liability arising
under Title I or Title IV of ERISA, any tax or penalty resulting from a loss
of deduction under Sections 404 and 419 of the Code, or any tax or penalty
under Chapter 43 of the Code, except such liabilities, taxes or penalties
(when taken as a whole) as will not have a material adverse effect on such
Person or upon its financial condition, assets, business, operations,
liabilities or prospects.
Section 6.18. Plan Payments. The Borrower, the Member, the Property
Owner, the Manager and each ERISA Affiliate has made full and timely payment
of all amounts (i) required to be contributed under the terms of each Plan
set forth on Schedule 6.17 and applicable law and (ii) required to be paid as
expenses of each Plan set forth on Schedule 6.17. No Plan set forth on
Schedule 6.17 would have an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA) if such Plan were terminated as of
the date on which this representation and warranty is made.
Section 6.19. Regulations U and X. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
Section 6.20. Environmental Compliance. The Borrower or an affiliate
or agent thereof has conducted or caused to be conducted Phase I
environmental site assessments with respect to the past usage and condition
of the Mortgaged Property and the Mezzanine Property and the operations
conducted thereon, and is familiar with the present condition and usage of
the Mortgaged Property and the Mezzanine Property and the operations
conducted thereon and, based upon such reports and knowledge, makes the
following representations and warranties.
(a) With respect to the Mortgaged Property and the Mezzanine
Property, none of the Borrower, the Member, the Property Owner, the Manager
or the Guarantor or any operator of the Mortgaged Property or the Mezzanine
Property, or any operations thereon is in violation, or alleged violation, of
any judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation, ordinance,
order or decree relating to the environment (hereinafter "Environmental
Laws"), which violation involves the Mortgaged Property or the Mezzanine
Property, and would have a material adverse effect on the environment or the
business, assets or financial condition of any such Person.
(b) None of the Borrower, the Member, the Property Owner, the
Manager or the Guarantor has received any notice from any third party
including, without limitation, any federal, state or local governmental
authority, (i) that it has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
Section 9601(5), any hazardous substances as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) or any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which it has generated, transported or disposed of have been
found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that such Person, conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (iii) that it is or shall be a named party to any claim, action,
cause of action, complaint, or legal or administrative proceeding (in each
case, contingent or otherwise) arising out of any third party's incurrence of
costs, expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances.
(c) With respect to the Mortgaged Property and the Mezzanine
Property, except as specifically set forth in the environmental site
assessment reports for the initial Mortgaged Property and the Mezzanine
Property, each of which has been provided to the Agent on or before the date
hereof or, in the case of Mortgaged Property acquired after the date hereof,
the environmental site assessment reports with respect thereto provided to
the Agent under Section 5.4:
(i) no portion of the Mortgaged Property or the Mezzanine Property
has been used for the handling, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws, and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Mortgaged Property or the
Mezzanine Property; (ii) in the course of any activities conducted by the
Borrower, the Member, the Property Owner, the Manager, the Guarantor or the
operators of its properties, no Hazardous Substances have been generated or
are being used on the Mortgaged Property or the Mezzanine Property except in
the ordinary course of business and in accordance with applicable
Environmental Laws; (iii) there has been no past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping (a "Release") or threatened Release
of Hazardous Substances on, upon, into or from the Mortgaged Property or the
Mezzanine Property, or, to the best of the Borrower's knowledge, on, upon,
into or from the other properties of Borrower, the Property Owner, the
Manager or the Guarantor, which Release would have a material adverse effect
on the value of any of the Mortgaged Property or the Mezzanine Property or
adjacent properties or the environment; (iv) to the best of the Borrower's
knowledge, there have been no Releases on, upon, from or into any real
property in the vicinity of any of the Mortgaged Property or the Mezzanine
Property which, through soil or groundwater contamination, may have come to
be located on, and which would have a material adverse effect on the value
of, the Mortgaged Property or the Mezzanine Property; and (v) to the best of
Borrower's knowledge and belief, any Hazardous Substances that have been
generated on any of the Mortgaged Property or the Mezzanine Property have
been transported off-site only by carriers having an identification number
issued by the EPA or approved by a state or local environmental regulatory
authority having jurisdiction regarding the transportation of such substance
and, to the best knowledge of the Borrower without independent investigation,
treated or disposed of only by treatment or disposal facilities maintaining
valid permits as required under all applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the Borrower's
knowledge, operating in compliance with such permits and applicable
Environmental Laws.
(d) None of the Borrower, the Member, the Property Owner, the
Manager, the Guarantor, the Mortgaged Property nor the Mezzanine Property is
required by any applicable Environmental Law to perform Hazardous Substances
site assessments, or remove or remediate Hazardous Substances, or give notice
to any governmental agency or to record or deliver to other Persons an
environmental disclosure document or statement by virtue of the transactions
set forth herein and contemplated hereby, or as a condition to the recording
of the Security Deed or to the effectiveness of any other transactions
contemplated hereby.
Section 6.21. Subsidiaries. Schedule 6.21 sets forth all of the
Subsidiaries of the Borrower. The form and jurisdiction of organization of
each of the Subsidiaries, and the Borrower's ownership interest therein, is
set forth in said Schedule 6.21.
Section 6.22. Leases. The Borrower has delivered to the Agent true
copies of the Leases and any amendments thereto relating to the Mortgaged
Property and the Mezzanine Property.
Section 6.23. Loan Documents. All of the representations and
warranties made by or on behalf of the Borrower, the Member, the Property
Owner, the Manager or the Guarantor in the Loan Documents to which it is a
party or any document or instrument delivered to the Agent or the Banks
pursuant to or in connection with any of such Loan Documents are true and
correct in all material respects, and no such Person has failed to disclose
such information as is necessary to make such representations and warranties
not misleading.
Section 6.24. Mortgaged Property and Mezzanine Property. The Borrower
makes the following representations and warranties concerning each Mortgaged
Property and Mezzanine Property:
(a) Off-Site Utilities. All water, sewer, electric, gas,
telephone and other utilities necessary for the use and operation of the
Mortgaged Property and the Mezzanine Property are installed to the property
lines of the Mortgaged Property and the Mezzanine Property through dedicated
public rights-of-way or through perpetual private easements approved by the
Agent with respect to which, in the case of the Mortgaged Property, the
applicable Security Deed creates a valid and enforceable first lien and,
except in the case of drainage facilities, are connected to the Building
located thereon with valid permits and are adequate to service the Building
in compliance with applicable law.
(b) Access, Etc. The streets abutting the Mortgaged Property and
the Mezzanine Property are dedicated and accepted public roads, to which the
Mortgaged Property and the Mezzanine Property have direct access by trucks
and other motor vehicles and by foot, or are perpetual private ways (with
direct access by trucks and other motor vehicles and by foot to public roads)
to which the Mortgaged Property and the Mezzanine Property have direct access
approved by the Agent and with respect to which, in the case of the Mortgaged
Property, the applicable Security Deed creates a valid and enforceable first
lien. All private ways providing access to the Mortgaged Property and the
Mezzanine Property are zoned in a manner which will permit access to the
Building over such ways by trucks and other commercial and industrial
vehicles.
or Independent Building. Each Building is fully independent in
all respects including, without limitation, in respect of structural
integrity, heating, ventilating and air conditioning, plumbing, mechanical
and other operating and mechanical systems, and electrical, sanitation and
water systems, all of which are connected directly to off-site utilities
located in public streets or ways or through insured perpetual private
easements approved by the Agent. Each Building is located on a lot which is
separately assessed for purposes of real estate tax assessment and payment.
Each Building, all Building Service Equipment and all paved or landscaped
areas related to or used in connection with each Building are, except as
specifically disclosed on a Survey delivered to the Agent prior to the date
hereof and except as disclosed in the Condominium Documents with respect to
the Condominium only, located wholly within the perimeter lines of the lot or
lots on which the Mortgaged Property or Mezzanine Property is located.
Property Owner has not made any additions, alterations or improvements to the
Mezzanine Property, nor have any other changes occurred with respect to the
Mezzanine Property, from the last revision date of the survey of the
Mezzanine Property delivered by Borrower to the Agent that in accordance with
good surveying practices should be disclosed on an as-built survey of the
Mezzanine Property.
(d) Condition; No Asbestos. Except as may otherwise be
specifically disclosed in any written engineering report furnished or caused
to be furnished by the Borrower to the Agent prior to the date hereof, each
Building is structurally sound, in good repair and free of material defects
in materials and workmanship. All major building systems located within each
Building, including without limitation heating, ventilating and air
conditioning, electrical, sprinkler, plumbing or other mechanical systems,
are in good working order and condition. No asbestos is located in or on any
Building, except for nonfriable asbestos or contained friable asbestos which
is being monitored and/or remediated in accordance with the recommendations
of an Environmental Engineer.
(e) Compliance with Law. Except as may otherwise be specifically
disclosed on the face of any certificate of occupancy delivered to the Agent
prior to the date hereof, each Building as presently constructed, used,
occupied and operated does not violate any applicable federal or state law or
governmental regulation, or any local ordinance, order or regulation,
including but not limited to laws, regulations, or ordinances relating to
zoning, building use and occupancy, subdivision control, fire protection,
health, sanitation, safety, handicapped access, historic preservation and
protection, tidelands, wetlands, flood control and Environmental Laws. Each
Building complies with applicable zoning laws and regulations and is not a
so-called non-conforming use. The zoning laws permit use of each Building
for its current use. There is such number of parking spaces on the lot or
lots on which each Building is located as is adequate under the zoning laws
and regulations to permit use of each Building for its current use.
(f) No Required Consents, Permits, Etc. None of the Borrower, the
Member, the Property Owner, the Manager or the Guarantor has received notice
of, or has knowledge of, any approvals, consents, licenses, permits, utility
installations and connections (including, without limitation, drainage
facilities), curb cuts and street openings, required by applicable laws,
rules, ordinances or regulations or any agreement affecting the Mortgaged
Property or the Mezzanine Property for the maintenance, operation, servicing
and use of the Mortgaged Property or the Mezzanine Property or the Building
for its current use which have not been granted, effected, or performed and
completed (as the case may be), or any fees or charges therefor which have
not been fully paid, or which are no longer in full force and effect. No
such approvals, consents, permits or licenses (including, without limitation,
any railway siding agreements) will terminate, or become void or voidable or
terminable on any foreclosure sale of the Mortgaged Property pursuant to the
Security Deed. To the best knowledge of the Borrower, there are no
outstanding notices, suits, orders, decrees or judgments relating to zoning,
building use and occupancy, fire, health, sanitation or other violations
affecting, against, or with respect to, the Mortgaged Property or the
Mezzanine Property or any part thereof.
(g) Insurance. None of the Borrower, the Member, the Property
Owner, the Manager or the Guarantor has received any notice from any insurer
or its agent requiring performance of any work with respect to the Mortgaged
Property or the Mezzanine Property or canceling or threatening to cancel any
policy of insurance, and the Mortgaged Property and the Mezzanine Property
comply with the requirements of all carriers of insurance on the Mortgaged
Property and the Mezzanine Property.
(h) Real Property Taxes; Special Assessments. There are no unpaid
or outstanding real estate or other taxes or assessments on or against the
Mortgaged Property or the Mezzanine Property or any part thereof which are
payable by the Borrower or the Property Owner or any prior owner of the
Mortgaged Property or the Mezzanine Property (except only real estate taxes
or other taxes or assessments, that are not yet due and payable). The
Borrower has delivered or caused to be delivered to the Agent, or has
requested from the appropriate authorities and will deliver to the Agent
promptly upon receipt, true and correct copies of real estate tax bills for
the Mortgaged Property and the Mezzanine Property for the past three fiscal
tax years. No abatement proceedings are pending with reference to any real
estate taxes assessed against the Mortgaged Property or the Mezzanine
Property. There are no betterment assessments or other special assessments
presently pending with respect to any portion of the Mortgaged Property or
the Mezzanine Property, and none of the Borrower, the Member, the Property
Owner, the Manager or the Guarantor has received any notice of any such
special assessment being contemplated.
(i) Historic Status. No Building is a historic structure or
landmark and no Building, Mortgaged Property or Mezzanine Property is located
within any historic district pursuant to any federal, state or local law or
governmental regulation.
(j) Eminent Domain; Casualty. There are no pending eminent domain
proceedings against the Mortgaged Property or Mezzanine Property or any part
thereof, and, to the knowledge of the Borrower, no such proceedings are
presently threatened or contemplated by any taking authority. No Mortgaged
Property, Mezzanine Property or Building nor any part thereof is now damaged
or injured as a result of any fire, explosion, accident, flood or other
casualty.
(k) Leases. An accurate and complete Rent Roll and summary
thereof in a form reasonably satisfactory to the Agent as of the date of
inclusion of each Mortgaged Property or Mezzanine Property (or such other
recent date as may be acceptable to the Agent) with respect to all Leases of
any portion of the Mortgaged Property and the Mezzanine Property has been
provided to the Agent. The Leases reflected on such Rent Roll constitute as
of the date thereof the sole agreements and understandings relating to
leasing or licensing of space at such Mortgaged Property or Mezzanine
Property and in the Building relating thereto. There are no occupancies,
rights, privileges or licenses in or to any Mortgaged Property or Mezzanine
Property or portion thereof other than pursuant to the Leases reflected in
Rent Rolls previously furnished to the Agent for such Mortgaged Property or
Mezzanine Property. Except as set forth in each Rent Roll, the Leases
reflected therein are in full force and effect in accordance with their
respective terms, without any payment default or any other material default
thereunder, nor are there any defenses, counterclaims, offsets, concessions
or rebates available to any tenant thereunder, and none of the Borrower, the
Member, the Property Owner, the Manager or the Guarantor has given or made
any notice of any payment or other material default, or any claim, which
remains uncured or unsatisfied, with respect to any of the Leases. The Rent
Rolls furnished to the Banks accurately and completely set forth all rents
payable by and security, if any, deposited by tenants, no tenant having paid
more than one month's rent in advance. The Borrower has reviewed the
estoppel certificates delivered by the tenants of the Mortgaged Property and
the Mezzanine Property to the Agent and such estoppel certificates as of the
date thereof are true and correct in all material respects. Except as
otherwise set forth in Schedule A-5 to the Contribution Agreement, all tenant
improvements or work to be done, furnished or paid for by the Borrower, the
Member, the Property Owner, the Manager or the Guarantor or credited or
allowed to a tenant, for, or in connection with, the Building pursuant to any
Lease has been completed and paid for or provided for in a manner
satisfactory to the Agent. No material leasing, brokerage or like
commissions, fees or payments are due from the Borrower, the Member, the
Property Owner, the Manager or the Guarantor in respect of the Leases.
(l) Management Agreements. Borrower has delivered to Agent true,
correct and complete copies of the Management Agreements for the Mortgaged
Property and the Mezzanine Property. To the best knowledge of the Borrower,
there are no material claims or any bases for material claims in respect of
the Mortgaged Property or the Mezzanine Property or its operation by any
party to any Management Agreement.
(m) Other Material Real Property Agreements; No Options. There
are no material agreements pertaining to the Mortgaged Property, the
Mezzanine Property or any Building thereon or the operation or maintenance of
any thereof other than as described in this Agreement (including the
Schedules hereto) or otherwise disclosed in writing to the Agent by the
Borrower; and no person or entity has any right or option to acquire the
Mortgaged Property, the Mezzanine Property or any Building thereon or any
portion thereof or interest therein (other than the right of first offer of
Computer Associates set forth in its lease with respect to 201 University
Avenue, the option to purchase the farmhouse improvements at the Mortgaged
Property commonly known as 180/188 Mt. Airy Road as described in Section
5.3(a)(iv), and the option of JVC Americas Corp. to acquire approximately 2.5
acres of the Mortgaged Property commonly known as 1800 Valley). All service
agreements with respect to the Mortgaged Property and the Mezzanine Property
are terminable upon thirty (30) days notice with no penalty or premium or as
otherwise disclosed in writing to the Agent.
Section 6.25. Mezzanine Mortgage Loan Documents. The Borrower hereby
restates and reaffirms each of the representations and warranties made by the
Property Owner set forth in the Mezzanine Mortgage Loan Documents (including
without limitation those set forth in Section 4.1 of the Mezzanine Mortgage
Loan Agreement and Paragraph 2 of the Nomura Mortgages) as if the same were
more fully set forth herein and were made to the Agent and the Banks herein
as of the date hereof; provided, however, that (i) any references in the
Mezzanine Mortgage Loan Documents to "Permitted Encumbrances" shall for the
purposes hereof be a reference to Permitted Liens and (ii) the "Rent Rolls"
referred to in subsection 4.1(aa) of the Mezzanine Mortgage Loan Agreement
shall for the purposes hereof be deemed to mean the latest Rent Rolls for the
Mezzanine Properties heretofore delivered by Borrower to Agent.
Section 6.26. Brokers. None of the Borrower, the Property Owner, the
Manager, the Member or the Guarantor has engaged or otherwise dealt with any
broker, finder or similar entity in connection with this Agreement or the
Loans contemplated hereunder.
Section 6.27. Fair Consideration. The Borrower (and, as applicable,
the Guarantor), by receiving the benefits under this Agreement and the other
Loan Documents is receiving "reasonably equivalent value" within the meaning
of Section 548 of the Bankruptcy Code, Title 11, U.S.C.A. and "fair
consideration" within the meaning of Consolidated Laws of New York Annotated,
Chapter 12, Article 10, Section 272 in exchange for the delivery of the
Security Documents to Agent, and but for the willingness of the Guarantor to
enter into the Guaranty, Borrower would be unable to obtain the financing
contemplated hereunder which financing will enable Borrower (including the
Guarantor) to have available financing to conduct and expand its business.
The transaction evidenced by this Agreement and the other Loan Documents is
in the best interests of the Borrower and the Guarantor and the creditors of
such Persons.
Section 6.28. Solvency. As of the Closing Date and after giving effect
to the transactions contemplated by this Agreement and the other Loan
Documents, including all of the Loans made or to be made hereunder, none of
the Borrower, the Member, the Property Owner, the Manager or the Guarantor
is insolvent on a balance sheet basis, the sum of such Person's assets
exceeds the sum of such Person's liabilities, each such Person is able to pay
its debts as they become due, and each such Person has sufficient capital to
carry on its business.
Section 6.29. No Bankruptcy Filing. None of the Borrower, the Member,
the Property Owner, the Manager or the Guarantor is contemplating either the
filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of its assets or property, and Borrower
has no knowledge of any Person contemplating the filing of any such petition
against it or any of such other Persons.
Section 6.30. No Fraudulent Intent. Neither the execution and delivery
of this Agreement or any of the other Loan Documents nor the performance of
any actions required hereunder or thereunder is being undertaken by the
Borrower, the Member, the Property Owner, the Manager or the Guarantor with
or as a result of any actual intent by any of such Persons to hinder, delay
or defraud any entity to which any of such Persons is now or will hereafter
become indebted.
Section 6.31. Other Debt. None of the Borrower, the Member, the
Property Owner, the Manager, the Guarantor or any of their respective
Subsidiaries is in default in the payment of any other Indebtedness or under
any agreement, mortgage, deed of trust, security agreement, financing
agreement, indenture or lease to which any of them is a party. The Borrower
is not a party to or bound by any agreement, instrument or indenture that may
require the subordination in right or time of payment of any of the
Obligations to any other indebtedness or obligation of the Borrower. Without
limiting the foregoing, no "Default" or "Event of Default" under the
Mezzanine Mortgage Loan Documents has occurred. The Borrower has provided to
the Agent copies of all agreements, mortgages, deeds of trust, financing
agreements or other material agreements binding upon Borrower, the Guarantor,
the Property Owner, the Member or the Manager or their respective properties
and entered into by such Person as of the date of this Agreement with respect
to any Indebtedness of such Person. Attached hereto as Schedule 6.31-1 is a
true, accurate and complete list of all of the Mezzanine Mortgage Loan
Documents. Without limiting the foregoing, Borrower has delivered to the
Agent true, correct and complete copies of the Mezzanine Mortgage Loan
Documents, and none of the Mezzanine Mortgage Loan Documents has been
modified or amended in any respect except as set forth in Schedule 6.31-1
hereto. As of the date hereof, the outstanding principal balance secured by
the Nomura Mortgages is [$68,340,815.57] and interest has been paid through
[May 10, 1998.] The initial allocation of the Mezzanine Mortgage Loan among
the Mezzanine Properties is set forth on Schedule 6.31-2 hereto. As of the
date hereof, the amount on deposit in the "Tax and Insurance Escrow Fund" (as
defined in the Mezzanine Mortgage Loan Documents) is approximately
[$278,184.89,] the amount on deposit in the "Capital Reserve Fund" (as
defined in the Mezzanine Mortgage Loan Documents) is approximately
[$181,243.70,] and the amount on deposit in the "Rollover Reserve Fund" (as
defined in the Mezzanine Mortgage Loan Documents) is approximately
[$608,232.64.]
Section 6.32. Ownership. WWP is the sole member of the Borrower,
subject to the pledge by WWP of its interest in the Borrower to the Secured
Mezzanine Loan Agreement Lenders. Wellsford Commercial and WHWEL own 94.64%
of the membership units in WWP. Wellsford Real Properties owns not less than
99% of the legal, equitable and beneficial interests in Wellsford Commercial.
Whitehall Street Real Estate Limited Partnership V, Whitehall Street Real
Estate Limited Partnership VI, Whitehall Street Real Estate Limited
Partnership VII and Whitehall Street Real Estate Limited Partnership VIII are
partners of WHWEL, a member of WWP. Member and Manager are and shall remain
the sole members of the Property Owner free and clear of all liens,
restrictions, claims, pledges, encumbrances, charges, claims or rights of
third parties and rights of set-off or recoupment whatsoever, and no other
Person owns or shall own any legal, equitable or beneficial interests in the
Property Owner, or have any right to vote or exercise control over the
Property Owner or its management (except for the rights of the "independent
manager" of the Property Owner, as set forth in the Property Owner
Organizational Agreements). Member is and shall remain the sole member of
Manager, free and clear of all liens, restrictions, claims, pledges,
encumbrances, charges, claims or rights of third parties and rights of
set-off or recoupment whatsoever, and no other Person owns or shall own any
legal, equitable or beneficial interests in Manager, or have any right to
vote or exercise control over the Manager or its management (except for the
rights of the "independent manager" of the Manager, as set forth in the
Manager Organizational Agreements). Borrower is and shall remain the sole
member of the Member free and clear of all liens, restrictions, claims,
pledges, encumbrances, charges, claims or rights of third parties and rights
of set-off or recoupment whatsoever, and no other Person owns or shall own
any legal, equitable or beneficial interest in the Member, or have any right
to vote or exercise control over the Member or its management (except for the
rights of the "independent manager" of the Member as set forth in the Member
Organizational Agreements). Property Owner owns no assets other than the
Mezzanine Property, and no other Person owns any legal, equitable or
beneficial interests in the Mezzanine Property, other than the interest as
tenants only of the tenants listed on the Rent Roll delivered to the Agent
pursuant to Section 6.24(k). Manager and the Member own no assets other than
their respective interests in the Property Owner, and as to the Member, its
interests in the Manager.
Section 6.33. Special Purpose Entity. The Borrower is in full and
complete compliance with the Operating Agreement.
Section 6.34. Management Agreements. The Mezzanine Property is managed
by Northeast Real Estate Services LLC pursuant to a Management Agreement
between the Property Owner and Northeast Real Estate Services LLC dated May
15, 1998 (the "Mezzanine Management Agreement"). The Borrower has delivered
to the Agent a true, correct and complete copy of such Mezzanine Management
Agreement. There are no claims or any basis for any claim in respect of the
Mezzanine Property or its operation by any party to the Mezzanine Management
Agreement.
Section 6.35. Obligations as Members.
(a) All duties, obligations and responsibilities required to be
performed by the Manager and the Member as of the date hereof under the
Property Owner Organizational Agreements and by the Member as of the date
hereof under the Manager Organizational Agreements, have been performed, and
no default or condition which with the passage of time or the giving of
notice, or both, would constitute a default exists under the Property Owner
Organizational Agreements or the Manager Organizational Agreements.
(b) Except for the Loan Documents, the Mezzanine Mortgage Loan
Documents and, with respect to clause (iii) only, the Property Owner
Organizational Agreements, the Manager Organizational Agreements and the
Member Organizational Agreements, neither the Property Owner, the Manager nor
the Member is a party to or is bound by any indenture, contract or other
agreement which purports to prohibit, restrict, limit, or control (i) the
transfer or pledge of direct or indirect interests in the Property Owner, the
Manager or the Member, (ii) the exercise of voting rights with respect to
the such Persons or (iii) the management of such Persons.
Section i AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
Section 7.1. Punctual Payment. The Borrower will duly and punctually
pay or cause to be paid the principal and interest on the Loans and all
interest and fees provided for in this Agreement, all in accordance with the
terms of this Agreement and the Notes as well as all other sums owing
pursuant to the Loan Documents.
Section 7.2. Maintenance of Office. The Borrower will maintain its
chief executive office at 610 Fifth Avenue, 7th Floor, New York County, New
York, New York, or at such other place in the United States of America as the
Borrower shall designate upon prior written notice to the Agent and the
Banks, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
Section 7.3. Records and Accounts. The Borrower will keep and will
cause the Property Owner to (a) keep true and accurate records and books of
account in which full, true and correct entries will be made in accordance
with generally accepted accounting principles and (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation
and amortization of its properties, contingencies and other reserves. The
Borrower will not make and will not allow the Property Owner to make, without
the prior written consent of the Majority Banks, (x) any material changes to
the accounting procedures used by such Person in preparing the financial
statements and other information described in Section 6.4 or (y) a change in
its fiscal year.
Section 7.4. Financial Statements, Certificates and Information. The
Borrower will deliver or cause to be delivered to the Agent with sufficient
copies for each of the Banks:
(a) as soon as practicable, but in any event not later than 90
days after the end of each fiscal year of the Borrower, the audited balance
sheet of the Borrower at the end of such year, and the related audited
statements of income, changes in shareholders' equity and cash flows for such
year, each setting forth in comparative form the figures for the previous
fiscal year (other than the fiscal year ending prior to the Closing Date for
which such statements of Borrower were not separately prepared) and all such
statements to be in reasonable detail, prepared in accordance with generally
accepted accounting principles, and accompanied by an auditor's report
prepared without qualification by Ernst & Young LLP or by another "Big Six"
accounting firm, together with the unaudited annual operating statement of
each Mortgaged Property and the Mezzanine Property (which statement shall
also be reconciled to the budget for the Mortgaged Property and the Mezzanine
Property), together with a certification by Borrower's chief financial or
chief accounting officer that the information contained in such statement
fairly presents the operations of the Mortgaged Property and the Mezzanine
Property for such period, and any other information the Banks may reasonably
need to complete a financial analysis of the Borrower;
(b) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth quarter), copies of the unaudited balance sheet of the Borrower as of
the end of such quarter, and the related unaudited consolidated statements of
income, changes in shareholders' equity and cash flows for the portion of the
Borrower's fiscal year then elapsed, and the unaudited operating statement
for the Mortgaged Property and the Mezzanine Property for such quarter and
year-to-date (which statement shall also be reconciled to the budget for the
Mortgaged Property and the Mezzanine Property), all in reasonable detail and
prepared in accordance with generally accepted accounting principles,
together with a certification by the principal financial or accounting
officer of the Borrower that the information contained in such financial
statements fairly presents the financial position of the Borrower and the
operations of the Mortgaged Property and the Mezzanine Property on the date
thereof (subject to year-end adjustments);
(c) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth fiscal quarter in each year), copies of a statement of Net Operating
Income for such fiscal quarter and year-to-date for each of the Mortgaged
Properties and the Mezzanine Properties, prepared in a manner reasonable
satisfactory to the Agent, together with a certification by the Borrower's
chief financial or chief accounting officer that the information contained in
such statement fairly presents the Net Operating Income of the Mortgaged
Property and the Mezzanine Property for such period;
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement (a "Compliance
Certificate") certified by the principal financial or accounting officer of
the Borrower in the form of Exhibit C hereto setting forth in reasonable
detail computations evidencing compliance with the covenants contained in
Section 9, and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;
(e) concurrently with the delivery of the financial statements
described in subsections (b) and (c) above, a certificate signed by the
President or Chief Financial Officer of the Borrower to the effect that,
having read this Agreement, and based upon an examination which they deem
sufficient to enable them to make an informed statement, there does not exist
any Default or Event of Default, or if such Default or Event of Default has
occurred, specifying the facts with respect thereto;
(f) contemporaneously with the filing, mailing or releasing
thereof, copies of all press releases and all material of a financial nature
filed with the SEC, if applicable, or sent to all of the members of the
Borrower;
(g) as soon as practicable but in any event not later than 45 days
after the end of each fiscal quarter of the Borrower (including the fourth
fiscal quarter in each year), updated Rent Rolls with respect to the
Mortgaged Property and the Mezzanine Property and a summary of each Rent Roll
in form reasonably satisfactory to the Agent;
(h) as soon as practicable, but in any event not later than 30
days prior to the beginning of each calendar year, the annual operating
budget for each Mortgaged Property, in form and substance satisfactory to the
Majority Banks;
(i) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and amendments
thereto of the Borrower and the Guarantor;
(j) not later than 45 days after the end of each fiscal quarter of
the Borrower (including the fourth fiscal quarter in each year), the market
comparable study conducted by the Borrower's internal staff or its property
managers, and at other times copies of such market studies relating to the
Mortgaged Property and the Mezzanine Property as are from time to time
prepared by or on behalf of the Borrower;
(k) to the extent not otherwise provided to Agent hereunder, a
copy of each statement, report, Rent Roll, tax return or other matter
required to be delivered to the Mezzanine Mortgagee pursuant to the Mezzanine
Mortgage Loan Documents as and when the same is required to be delivered to
the Mezzanine Mortgagee pursuant to the terms thereof;
(l) not later than 45 days after the end of each fiscal quarter
(including the fourth quarter), a certification by the principal financial or
accounting officer of the Borrower to the effect that to such Person's
knowledge no "Default" or "Event of Default" exists under the Mezzanine
Mortgage Loan Documents, or if such Person shall obtain knowledge of any then
existing "Default" or "Event of Default" under the Mezzanine Mortgage Loan
Documents, they shall disclose in such statement such "Defaults" or "Events
of Default";
(m) not later than 45 days after the end of each fiscal quarter
(including the fourth quarter), a copy of each Lease entered into by or on
behalf of the Borrower or Property Owner, respectively, during such quarter;
(n) promptly upon issuance of the same by any of the Property
Owner, the Borrower, the Member or the Manager, duplicate copies of any and
all notices of any proposed sale or other disposition, or financing or
refinancing, of any interest of or in the Property Owner or of the Mezzanine
Property or of the Mezzanine Collateral, together with all material documents
related thereto and a description of the material terms thereof;
(o) duplicate copies of any and all notices of default by or under
the Property Owner Organizational Agreements, the Member Organizational
Agreements or the Manager Organizational Agreements or of any failure by any
Persons to perform any obligation under such agreements;
(p) duplicate copies of any and all notices sent by the Property
Owner to any Rating Agency, or sent by a Rating Agency to the Property Owner;
(q) not later than 45 days after the end of each calendar year,
evidence that the Property Owner, the Member and the Manager have taken all
actions required by the respective states in which they are organized and
Massachusetts law to remain in good standing;
(r) duplicate copies of any and all appraisals or updates thereof
that are required to be delivered by the Property Owner to the Mezzanine
Mortgagee pursuant to any of the Mezzanine Mortgage Loan Documents as and
when the same are required to be delivered to the Mezzanine Mortgagee; and
(s) from time to time such other financial data and information in
the possession of or reasonably obtainable by the Borrower or the Property
Owner relating to the Borrower, the Property Owner, the Manager, the Member,
the Mortgaged Property, the Mezzanine Property or the Mezzanine Collateral
(including without limitation auditors' management letters, property
inspection and environmental reports and information as to zoning and other
legal and regulatory changes affecting the Borrower) as the Agent may
reasonably request.
Section 7.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this
Agreement or under any note, evidence of indebtedness, indenture or other
obligation (including, without limitation, the Mezzanine Mortgage Loan
Documents) to which or with respect to which any of the Borrower, the Member,
the Property Owner, the Manager or the Guarantor is a party or obligor,
whether as principal or surety, and such default would permit the holder of
such note or obligation or other evidence of indebtedness to accelerate the
maturity thereof, which acceleration would have a material adverse effect on
any such Person, the Borrower shall forthwith give written notice thereof to
the Agent and each of the Banks, describing the notice or action and the
nature of the claimed default.
(b) Environmental Events. The Borrower will promptly give notice
to the Agent (i) upon the Borrower or the Guarantor obtaining knowledge of
any potential or known Release, or threat of Release, of any Hazardous
Substances at or from the Mortgaged Property or the Mezzanine Property; (ii)
of any violation of any Environmental Law that the Borrower, the Guarantor or
the Property Owner reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral report is
made) to any federal, state or local environmental agency and (iii) upon
becoming aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or board, that
in either case involves the Mortgaged Property or the Mezzanine Property or
has the potential to materially affect the assets, liabilities, financial
conditions or operations of such Person or the Agent's liens or security
title on the Collateral pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of any
setoff, claims (including, with respect to the Mortgaged Property and
Mezzanine Property, environmental claims), withholdings or other defenses to
which any of the Collateral or the Mezzanine Property or the rights of the
Borrower, the Member, the Property Owner, the Manager, the Guarantor or the
Agent or the Banks with respect to the Mezzanine Property or the Mortgaged
Property or any of the Collateral or Mezzanine Collateral are subject. In
addition, the Borrower will, immediately upon becoming aware thereof, notify
the Agent in writing of the occurrence of any material default under any
Lease, the intention of any tenant under a Lease to withhold any fixed or
base rent or the actual withholding thereof, or any bankruptcy, insolvency or
cessation of operations by any tenant under a Lease.
(d) Notice of Litigation and Judgments. The Borrower will give
notice to the Agent in writing within 15 days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting any of the Borrower, the Property Owner, the Member,
the Manager or the Guarantor or to which any of such Persons is or is to
become a party involving an uninsured claim against any of such Persons that
could reasonably be expected to have a materially adverse effect on any of
such Persons and stating the nature and status of such litigation or
proceedings. The Borrower will give notice to the Agent, in writing, in form
and detail satisfactory to the Agent and each of the Banks, within ten days
of any judgment not covered by insurance, whether final or otherwise, against
any of the Borrower, the Property Owner, the Manager, the Member or the
Guarantor in an amount in excess of $250,000.
(e) Notification of Banks. Promptly after receiving any notice
under this Section 7.5, the Agent will forward a copy thereof to each of the
Banks, together with copies of any certificates or other written information
that accompanied such notice.
Section 7.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary
to preserve and keep in full force and effect its existence as a Delaware
limited liability company and shall not amend or modify the Operating
Agreement in any manner without the prior written consent of the Agent. The
Borrower will do or cause to be done all things necessary to preserve and
keep in full force all of its rights and franchises. The Borrower will
continue to engage primarily in the business now conducted by it. The
Borrower will cause each of the Property Owner, the Member and the Manager to
do or cause to be done all things necessary to preserve and keep in full
force and effect and in good standing their legal existence as a corporation,
limited partnership, trust or limited liability company, as applicable.
Without limiting the foregoing, the Property Owner, the Member and the
Manager shall take all actions as are necessary to maintain all protection
afforded to limited liability companies in their states of organization and
Massachusetts. The Borrower will do or cause to be done all things necessary
to preserve and keep in full force and affect all of the rights and
franchises of the Property Owner, the Manager and the Member. The Borrower
will cause each of the Property Owner, the Member and the Manager to continue
to engage primarily in the respective businesses now conducted by each of
them and in related businesses.
(b) The Borrower (i) will cause all of its properties used or
useful in the conduct of its business and the Mezzanine Property to be
maintained and kept in good condition, repair and working order (ordinary
wear and tear excepted) and supplied with all necessary equipment, and (ii)
will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof in all cases in which the failure so to
do would have a material adverse effect on the condition of the applicable
Mortgaged Property or other Collateral or Mezzanine Property or on the
financial condition, assets or operations of the Borrower, the Property
Owner, the Member, the Manager or the Guarantor.
Section 7.7. Insurance.
(a) The Borrower will, at its expense, procure and maintain, or
cause to be procured and maintained, for the benefit of the Borrower and the
Agent, insurance policies issued by such insurance companies, in such
amounts, in such form and substance, and with such coverages, endorsements,
deductibles and expiration dates as are acceptable to the Agent, providing
the following types of insurance covering the Mortgaged Property:
(i) "All Risks" property insurance (including broad form
flood, broad form earthquake and comprehensive boiler and machinery
coverages) on each Building and the contents therein of the Borrower in
an amount not less than one hundred percent (100%) of the full
replacement cost of each Building and the contents therein of the
Borrower, with deductibles not to exceed $50,000 for any one occurrence,
with a replacement cost coverage endorsement, and, if requested by the
Agent, a contingent liability from operation of building laws
endorsement in such amounts as the Agent may require. Full replacement
cost as used herein means the cost of replacing the Building (exclusive
of the cost of excavations, foundations and footings below the lowest
basement floor) and the contents therein of the Borrower without
deduction for physical depreciation thereof;
(ii) During the course of construction or repair of any
Building having a cost in excess of $1,000,000, the insurance required
by clause (i) above shall be written on a builders risk, completed
value, non-reporting form, meeting all of the terms required by clause
(i) above, covering the total value of work performed, materials,
equipment, machinery and supplies furnished, existing structures, and
temporary structures being erected on or near the Real Estate, including
coverage against collapse and damage during transit or while being
stored off-site, and containing a soft costs (including loss of rents)
coverage endorsement and a permission to occupy endorsement;
(iii) Flood insurance if at any time any Building is
located in any federally designated "special hazard area" (including any
area having special flood, mudslide and/or flood-related erosion
hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance
Rate Map published by the Federal Emergency Management Agency as Zone A,
AO, Al-30, AE, A99, AH, VO, Vl-30, VE, V, M or E) and the broad form
flood coverage required by clause (i) above is not available, in an
amount equal to the full replacement cost or the maximum amount then
available under the National Flood Insurance Program;
(iv) Rent loss insurance in an amount sufficient to recover at
least the total estimated gross receipts from all sources of income,
including without limitation, rental income, for the Real Estate for a
twelve month period;
(v) Commercial general liability insurance against claims for
personal injury (to include, without limitation, bodily injury and
personal and advertising injury) and property damage liability, all on
an occurrence basis, if commercially available, with such coverages as
the Agent may reasonably request (including, without limitation,
contractual liability coverage, completed operations coverage for a
period of two years following completion of construction of any
improvements on the Real Estate, and coverages equivalent to an ISO
broad form endorsement), with a general aggregate limit of not less than
$1,000,000, a completed operations aggregate limit of not less than
$1,000,000, and a combined single "per occurrence" limit of not less
than $1,000,000 for bodily injury, property damage and medical payments;
(vi) During the course of construction or repair of any
improvements on the Real Estate in excess of $1,000,000, owner's
contingent or protective liability insurance covering claims not covered
by or under the terms or provisions of the insurance required by clause
(v) above;
(vii) Employers liability insurance (with respect to the
Borrower's employees only);
(viii) Umbrella liability insurance with limits of not less
than $50,000,000 to be in excess of the limits of the insurance required
by clauses (v), (vi) and (vii) above, with coverage at least as broad as
the primary coverages of the insurance required by clauses (v), (vi) and
(vii) above, with any excess liability insurance to be at least as broad
as the coverages of the lead umbrella policy. All such policies shall
be endorsed to provide defense coverage obligations;
(ix) Workers' compensation insurance for all employees of the
Borrower engaged on or with respect to the Real Estate; and
(x) Such other insurance in such form and in such amounts as
may from time to time be required by the Majority Banks against other
insurable hazards and casualties which at the time are commonly insured
against in the case of properties of similar character and location to
the Real Estate.
The Borrower shall pay or cause to be paid all premiums on insurance
policies. The insurance policies with respect to all Mortgaged Properties
provided for in clauses (v), (vi) and (viii) above with respect to all
Mortgaged Property shall name the Agent and each Bank as an additional
insured. The insurance policies provided for in clauses (i), (ii), (iii) and
(iv) above shall name the Agent as mortgagee and loss payee, shall be first
payable in case of loss to the Agent, and shall contain mortgage clauses and
lender's loss payable endorsements in form and substance acceptable to the
Agent. The Borrower shall deliver duplicate originals or certified copies of
all such policies to the Agent, and the Borrower shall promptly furnish to
the Agent all renewal notices and evidence that all premiums or portions
thereof then due and payable have been paid. At least 15 days prior to the
expiration date of the policies, the Borrower shall deliver to the Banks
evidence of continued coverage, including a certificate of insurance, as may
be satisfactory to the Agent.
(b) All policies of insurance required by this Agreement shall
contain clauses or endorsements to the effect that (i) no act or omission of
either the Borrower or anyone acting for the Borrower shall affect the
validity or enforceability of such insurance insofar as the Agent is
concerned, (ii) the insurer waives any right of setoff, counterclaim,
subrogation, or any deduction in respect of any liability of the Borrower and
the Agent, (iii) such insurance is primary and without right of contribution
from any other insurance which may be available, (iv) such policies shall not
be modified, canceled or terminated prior to the scheduled expiration date
thereof without the insurer thereunder giving at least 15 days prior written
notice to the Agent by certified or registered mail, and (v) that the Agent
or the Banks shall not be liable for any premiums thereon or subject to any
assessments thereunder, and shall in all events be in amounts sufficient to
avoid any coinsurance liability.
(c) The insurance required by this Agreement may be effected
through a blanket policy or policies covering additional locations and
property of the Borrower and other Persons not included in the Mortgaged
Property, provided that such blanket policy or policies comply with all of
the terms and provisions of this Section 7.7 and contain endorsements or
clauses reasonably satisfactory to the Agent.
(d) All policies of insurance required by this Agreement shall be
issued by companies licensed to do business in the State where the policy is
issued and also in the states where the Real Estate is located and having a
rating in Best's Key Rating Guide of at least "A" and a financial size
category of at least "VIII".
(e) The Borrower shall not carry separate insurance, concurrent in
kind or form or contributing in the event of loss, with any insurance
required under this Agreement unless such insurance complies with the terms
and provisions of this Section 7.7.
(f) In the event of any loss or damage to the Mortgaged Property,
the Borrower shall give immediate written notice to the insurance carrier and
the Agent, and the Agent shall furnish a copy of such notice promptly to each
of the Banks. The Borrower may make proof of loss and adjust and compromise
any claim under insurance policies which is of an amount not more than
$1,000,000.00 so long as no Event of Default has occurred and is continuing
and so long as such claim is pursued diligently and in good faith. The
Borrower hereby irrevocably authorizes and empowers the Agent, at the Agent's
option in the Agent's sole discretion or at the request of the Majority Banks
in their sole discretion, as attorney in fact for the Borrower, to make proof
of any loss except as provided in the preceding sentence, to adjust and
compromise any claim under insurance policies, to appear in and prosecute any
action arising from such insurance policies, to collect and receive insurance
proceeds, and to deduct therefrom the Agent's expenses incurred in the
collection of such proceeds. If the Mortgaged Property is acquired by the
Agent or any nominee through foreclosure, deed in lieu of foreclosure or
otherwise is acquired from the owner thereof, all right, title and interest
of the owner of such Mortgaged Property in and to any insurance policies and
unearned premiums thereon and in and to the proceeds thereof resulting from
loss or damage to the Mortgaged Property prior to such sale or acquisition
shall pass to the Agent or any other successor in interest to the owner or
purchaser or grantee of the Mortgaged Property.
(g) Subject to the terms of the following sentence, the Borrower
authorizes the Agent, at the Agent's option or at the request of the Majority
Banks' in their sole discretion, to (i) apply the balance of such proceeds to
the payment of the Obligations whether or not then due, or (ii) if the Agent
or the Majority Banks shall require the reconstruction or repair of the
Mortgaged Property, to hold the balance of such proceeds to be used to pay
all taxes, charges, sewer use fees, water rates and assessments which may be
imposed upon the Mortgaged Property and the Obligations as they become due
during the course of reconstruction or repair of the Mortgaged Property and
to reimburse the Borrower, in accordance with such terms and conditions as
Agent may prescribe, for the cost of such reconstruction or repair of the
Mortgaged Property, and on completion of such reconstruction or repair to pay
any excess funds to the Borrower so long as no Default or Event of Default
has occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, to apply any of the excess to the payment of the
Obligations. Notwithstanding the foregoing, the Agent shall make such net
proceeds available to the Borrower to reconstruct and repair the Mortgaged
Property, in accordance with such terms and conditions as the Agent may
prescribe for the disbursement of such proceeds to assure completion of such
reconstruction or repair provided that (A) no Default or Event of Default
shall have occurred and be continuing, (B) the Borrower shall have provided
to Agent additional cash security in an amount equal to the amount reasonably
estimated by the Agent to be the amount in excess of such proceeds which will
be required to complete such repair or restoration, and (C) the Agent shall
determine that such repair or reconstruction can be completed prior to the
Maturity Date, (D) the cost of such reconstruction or repair is not estimated
by the Agent to exceed fifty percent (50%) of the Appraised Value of such
Mortgaged Property, (E) the Agent shall have approved the plans and
specifications for such repair or restoration and determined that the
repaired or restored Mortgaged Property will provide the Banks with adequate
security for the Obligations, and (F) the Borrower shall have delivered to
the Agent written agreements binding upon all tenants or other parties having
present or future rights to possession of any portion of the Mortgaged
Property or having any right to require repair, restoration or completion of
the Mortgaged Property or any portion thereof, agreeing upon a date for
delivery of possession of the Mortgaged Property or their respective portions
thereof, or for such required repair, restoration or completion, to permit
time which is sufficient in the judgment of the Agent for such repair or
restoration and approving the plans and specifications for such repair or
restoration, or other evidence satisfactory to the Agent that none of such
tenants or other parties may terminate their Leases as a result of such
casualty or have a right to approve the plans and specifications for such
repair or restoration.
(h) The Borrower, at its expense, will procure and maintain or
cause to be procured and maintained, insurance covering the Borrower and the
Mortgaged Property in such amounts and against such risks and casualties as
are customary for properties of similar character and location, due regard
being given to the type of improvements thereon, their construction,
location, use and occupancy.
(i) The Borrower shall provide or cause to be provided to the
Agent for the benefit of the Banks Title Policies for all of the Mortgaged
Property which shall at all times be in an aggregate amount of not less than
the initial Designated Collateral Value attributable to such Mortgaged
Property (provided that a Title Policy for an individual Mortgaged Property
need not equal the aggregate Designated Collateral Value). Each Title Policy
shall also contain, to the extent available, a tie-in endorsement aggregating
the insurance coverage provided under all of the policies with tie-in
endorsements.
(j) The Borrower will cause the Property Owner, at its expense, to
procure and maintain the insurance policies required by the Mezzanine
Mortgage Loan Documents. Each commercial general liability or umbrella
liability policy with respect to the Mezzanine Property shall name the Agent
and the Banks as an additional insured and shall contain a cross
liability/severability endorsement. The Borrower shall deliver duplicate
originals or certified copies of all such policies to the Agent, and the
Borrower shall promptly furnish to the Agent all renewal notices and evidence
that all premiums or portions thereof then due and payable have been paid.
At least 15 days prior to the expiration date of all such policies, the
Borrower shall deliver to the Agent evidence of continued coverage, including
a certificate of insurance, as may be reasonably satisfactory to the Agent.
Agent acknowledges and agrees that such insurance may be provided by the
Borrower covering the Mezzanine Property as well as other properties directly
or indirectly owned by the Borrower, provided that such insurance satisfies
the requirements of the Mezzanine Mortgage Loan Documents and the Loan
Documents.
(k) In the event of any loss or damage to the Mezzanine Property,
the Borrower shall give prompt written notice to the insurance carrier and
the Agent. The Agent acknowledges that the Property Owner's rights to any
insurance proceeds are subject to the terms of the Mezzanine Mortgage Loan
Documents. The Borrower may not and shall not permit the Property Owner to
settle, adjust or compromise any claim under such insurance policies without
the prior written consent of the Agent; provided, further, that the Property
Owner may make proof of loss and adjust and compromise any claim under
casualty insurance policies which is of an amount less than $1,000,000.00 so
long as no Default or Event of Default has occurred. Any proceeds of such
claim which are not used to reconstruct or repair the Mezzanine Property, or
applied to the balance of the loan evidenced by the Mezzanine Mortgage Loan
Documents, shall be deposited into the accounts established pursuant to the
Mezzanine Mortgage Loan Documents to the extent required thereby, or if such
deposit is not required thereunder, then such proceeds shall be paid to (i)
Borrower (and not to Agent) so long as the Mezzanine Property has been fully
repaired and restored and no Default or Event of Default has occurred and is
continuing, or (ii) if a Default of Event of Default has occurred and is
continuing, or if the Mezzanine Property has not been so fully repaired or
restored, then such excess insurance proceeds shall be paid to Agent and
applied to the payment of the Obligations whether or not then due.
Notwithstanding anything contained in the Loan Documents to the contrary,
Agent hereby agrees that the Property Owner may use all insurance proceeds to
restore and repair the Mezzanine Property, provided that such use is
permitted or required under the terms of the Mezzanine Mortgage Loan
Documents.
(l) In the event that the Property Owner is permitted pursuant to
the terms of the Mezzanine Mortgage Loan Documents to reconstruct, restore or
repair the Mezzanine Property following a casualty to any portion of the
Mezzanine Property, the Borrower shall cause the Property Owner to promptly
and diligently repair and restore the Mezzanine Property in the manner and
within the time periods required by the Mezzanine Mortgage Loan Documents,
the Leases and any other agreements affecting the Mezzanine Property. In the
event that Property Owner is permitted pursuant to the terms of the Mezzanine
Mortgage Loan Documents to elect not to reconstruct, restore or repair the
Mezzanine Property following a casualty to any portion of the Mezzanine
Property, the Borrower shall not permit the Property Owner to elect not to
reconstruct, restore or repair the Mezzanine Property without the prior
written consent of the Agent.
Section 7.8. Taxes.
(a) The Borrower will duly pay and discharge, or cause to be paid
and discharged, before the same shall become overdue, all taxes, assessments
and other governmental and private charges imposed upon the Borrower, the
Member, the Manager, the Property Owner and upon the Mortgaged Property and
any other Collateral, such Person's sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property, and shall in any event cause the prompt,
full and unconditional discharge of all liens imposed on or against the
Collateral or the Mezzanine Collateral or any portion thereof within thirty
(30) days after receiving written notice (whether from the Mezzanine
Mortgagee, the Agent, the lienholder or any other Person) of the filing
thereof; provided that so long as no Event of Default has occurred, any such
tax, assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings which shall suspend the collection thereof with respect to such
property, neither such property nor any portion thereof or interest therein
would be in any danger of sale, forfeiture or loss by reason of such
proceeding and the Borrower or such Person shall have set aside adequate
reserves with respect thereto as the Agent may reasonably require; and
provided, further, that forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor, the Borrower
either (i) will provide a bond issued by a surety reasonably acceptable to
the Majority Banks and sufficient to stay all such proceedings or (ii) if no
such bond is provided, will pay each such tax, assessment, charge, levy or
claim.
(b) The Borrower shall cause the Property Owner to pay all "Taxes"
and "Other Charges" (as defined in the Mezzanine Mortgage Loan Agreement), to
pay all claims for labor, material or supplies that if unpaid or unbonded
might by law become a lien or charge upon any of its property (including the
Mezzanine Property), and to keep the Mezzanine Property free from all Liens
(other than the lien of the Nomura Mortgages and the Permitted Liens), and
shall in any event cause the prompt, full and unconditional discharge of all
Liens imposed upon the Mezzanine Property or any portion thereof within
thirty (30) days after receiving written notice (whether from the Mezzanine
Mortgagee, the Agent, the lienholder or any other Person) of the filing
thereof or such earlier time as may be required by the Mezzanine Mortgage
Loan Documents; subject in each case to the Property Owner's right to contest
the same as permitted in but subject to the conditions set forth in the
Nomura Mortgages so long as no Event of Default has occurred. In the event
that the Property Owner elects to commence any contest or similar proceeding
with respect to any such Taxes, Other Charges, Liens or other claims
described herein, the Borrower shall provide prompt written notice thereof to
the Agent together with such evidence as the Agent may reasonably require
showing the Property Owner's satisfaction of the requirements set forth in
Section 5.1(b) of the Mezzanine Mortgage Loan Agreement. Notwithstanding the
foregoing, the Borrower shall cause the Property Owner promptly to pay any
contested Taxes, Other Charges, Lien or claim and the payment thereof shall
not be deferred, if the Mezzanine Mortgagee or the Property Owner may be
subject to civil or criminal damages as a result thereof. If such action or
proceeding is terminated or discontinued adversely to the Property Owner,
then the Borrower shall deliver to the Agent reasonable evidence of payment
of such contested Taxes, Other Charges or Lien.
Section 7.9. Inspection of Properties and Books. The Borrower shall
permit the Banks, through the Agent or any representative designated by the
Agent, at the Borrower's expense to visit and inspect any of the properties
of the Borrower and the Mezzanine Property, to examine the books of account
of the Borrower and the Property Owner (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and accounts of the
Borrower and the Property Owner with, and to be advised as to the same by,
its officers, all at such reasonable times and intervals as the Agent or any
Bank may reasonably request. The Banks shall use good faith efforts to
coordinate such visits and inspections so as to minimize the interference
with and disruption to the Borrower's and the Property Owner's normal
business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses, and Permits.
The Borrower will comply and will cause the Property Owner, the Member and
the Manager to comply in all respects with (i) all applicable laws and
regulations now or hereafter in effect wherever its business is conducted,
including all Environmental Laws, (ii) the provisions of its or their
certificate of formation, operating agreement, corporate charter, and other
charter documents and bylaws, (iii) all agreements and instruments to which
it is a party or by which it or any of its properties may be bound, (iv) all
applicable decrees, orders, and judgments, and (v) all licenses and permits
required by applicable laws and regulations for the conduct of its business
or the ownership, use or operation of its properties. The Borrower covenants
and agrees to give Agent prompt notice of any non-compliance with such laws,
ordinances, regulations or requirements and of any notice of non-compliance
therewith which the Borrower, the Property Owner, the Member or the Manager
receives or any threatened or pending proceedings in respect thereto or with
respect to the Mezzanine Property (including, without limitation, changes in
zoning) of which the Property Owner, the Borrower, the Member or the Manager
receives notice. If at any time while any Loan or Note is outstanding or the
Banks have any obligation to make Loans hereunder, any authorization,
consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower, the Property Owner, the Member or the Manager may fulfill
any of its obligations hereunder, the Borrower will immediately take or cause
to be taken all steps necessary to obtain such authorization, consent,
approval, permit or license and furnish the Agent and the Banks with evidence
thereof. Notwithstanding the foregoing, the Property Owner shall have the
right to contest the applicability of any legal requirement subject to the
approval of the Mezzanine Mortgagee, so long as Property Owner is in good
faith, and by proper legal proceedings, diligently contesting the application
thereof, provided no Event of Default shall exist and be continuing
hereunder, and the Borrower provides evidence to the Agent that the Property
Owner is otherwise fully complying with each of the conditions set forth in
the Mezzanine Mortgage Loan Documents or prescribed by the Mezzanine
Mortgagee applicable to such contest. The Borrower shall promptly notify the
Agent of the commencement of any contest or similar proceeding hereunder.
Notwithstanding the foregoing, the Borrower shall cause the Property Owner
promptly to comply with any contested legal requirement, and compliance
therewith shall not be deferred, if the Property Owner or the Mezzanine
Mortgagee may be subject to civil or criminal charges or damages as a result
thereof or such noncompliance might place the Mezzanine Property or any part
thereof in danger of being forfeited, lost or closed. If such action or
proceeding is terminated or discontinued adversely to the Property Owner,
then, the Borrower shall, upon written demand, deliver to the Agent
reasonable evidence of compliance by the Property Owner with such contested
legal requirement.
Section 7.11. Use of Proceeds. The Borrower will use the proceeds of
the Loans solely to provide short-term financing (a) for the acquisition of
fee interests by Borrower in Real Estate which is located in the northeastern
corridor of the United States and utilized principally as commercial office
space, (b) for Capital Improvement Projects to Real Estate owned by the
Borrower, (c) for the repayment of Indebtedness incurred or assumed by the
Borrower in connection with the acquisitions and investments described in
Section 7.11(a), (d) for the acquisition of the Equity Interests, (e) for
reasonable transaction costs related to the transactions referred to in the
preceding clause (a) and (d), (f) for Capital Improvement Projects and
Leasing Commissions, (g) up to $10,000,000 for general working capital
purposes, and (h) for such other purposes as the Majority Banks may approve.
Notwithstanding the foregoing, in no event shall the proceeds of the Loan be
used to acquire any asset that as a part of such transaction or in a related
transaction will be or is to become subject to a lien against such asset
other than a lien in favor of the Agent and the Banks under the Loan
Documents.
Section 7.12. Further Assurances. The Borrower will cooperate with,
and will cause the Manager, the Member and the Guarantor to cooperate with,
the Agent and the Banks and execute such further instruments and documents as
the Banks or the Agent shall reasonably request to carry out to their
satisfaction the transactions contemplated by this Agreement and the other
Loan Documents.
Section 7.13. Management Agreements. The Borrower will provide prompt
written notice to the Agent of any termination or material modification or
amendment of any Management Agreement, provided that, without the prior
consent of the Majority Banks, none of the Management Agreements for the
Mortgaged Property shall be modified or amended to increase the fees payable
thereunder and provided further that, without the prior consent of the
Majority Banks, which consent shall not be unreasonably withheld or delayed,
the Borrower shall not permit the Property Owner to terminate, modify or
amend any Management Agreement for the Mezzanine Property. The Borrower will
not enter into and will not permit the Property Owner to enter into any
Management Agreement or otherwise manage any of the Mortgaged Property or the
Mezzanine Property except with property and leasing managers having
sufficient expertise and resources to manage such properties as Class A
office buildings or if such buildings are Non-Stabilized Properties, as Class
B office buildings and with respect to the Mezzanine Property are approved by
the Agent, and on leasing terms and conditions no less favorable to the
Borrower or the Property Owner than are contained in the Management
Agreements delivered to the Agent prior to the date hereof or are otherwise
on then commercially reasonable terms. Any Management Agreement for the
Mezzanine Property shall be in form and substance reasonably satisfactory to
the Agent. The Agent hereby approves the Mezzanine Management Agreement.
Notwithstanding the foregoing, any manager of the Mezzanine Property shall
satisfy any conditions or requirements contained in the Mezzanine Mortgage
Loan Documents applicable to such entity acting as the manager of the
Mezzanine Property, and in no event shall there be a change to the manager of
the Mezzanine Property or any Management Agreement for the Mezzanine Property
if the same would constitute a "Default" or "Event of Default" under the
Mezzanine Mortgage Loan Documents.
Section 7.14. ERISA Compliance. The Borrower will not permit the
present value of all employee benefits vested in all Employee Benefit Plans,
Multiemployer Plans and Guaranteed Pension Plans maintained by the Borrower
and any ERISA Affiliate thereof to exceed the present value of the assets
allocable to such vested benefits by an amount greater than $500,000.00 in
the aggregate. Neither the Borrower nor any ERISA Affiliate thereof will at
any time permit any such Plan maintained by it to engage in any "prohibited
transaction" as such term is defined in Section 4975 of the Code or Section
406 of ERISA, incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived, or terminate any such
Plan in any manner which could result in the imposition of a lien on the
property of the Borrower or the Guarantor pursuant to Section 4068 of ERISA.
Section 7.15. Condemnation. In the event that all or any portion of
the Mezzanine Property shall be damaged or taken through condemnation (which
term shall include any damage or taking by any governmental authority, quasi-
governmental authority, any party having the power of condemnation, or any
transfer by private sale in lieu thereof), or any such condemnation shall be
threatened, the Borrower shall give prompt written notice to the Agent. The
Agent and the Banks acknowledge that the Property Owner's rights to any
condemnation award is subject to the terms of the Mezzanine Mortgage Loan
Documents. The Borrower may not and shall not permit the Property Owner to
settle or compromise any claim, action or proceeding relating to such damage
or condemnation without the prior written consent of the Agent. Any
proceeds, award or damages from such damage or condemnation which are not
used to reconstruct or repair the Mezzanine Property, or applied to the
balance of the loan evidenced by the Mezzanine Mortgage Loan Documents, shall
be paid to the Agent and applied to the payment of the Obligations whether or
not then due. Notwithstanding anything contained in the Loan Documents to
the contrary, Agent hereby agrees that the Property Owner may use all
condemnation proceeds, awards and damages to restore and repair the Mezzanine
Property, provided that such use is permitted or required under the terms of
the Mezzanine Mortgage Loan Documents. In the event that the Property Owner
is permitted pursuant to the terms of the Mezzanine Mortgage Loan Documents
to reconstruct, restore or repair the Mezzanine Property following a
condemnation of any portion of the Mezzanine Property, the Borrower shall
cause the Property Owner to promptly and diligently repair and restore the
Mezzanine Property in the manner and within the time periods required by the
Mezzanine Mortgage Loan Documents, the Leases and any other agreements
affecting the Mezzanine Property. In the event that the Property Owner is
permitted pursuant to the terms of the Mezzanine Mortgage Loan Documents to
elect not to reconstruct, restore or repair the Mezzanine Property following
a condemnation of any portion of the Mezzanine Property, the Borrower shall
not permit the Property Owner to elect not to reconstruct, restore or repair
the Mezzanine Property without the prior written consent of the Agent.
Section 7.16. Intentionally Omitted.
Section 7.17. Compliance. The Borrower shall operate its business in
compliance with the terms and conditions of this Agreement and the other Loan
Documents. Wellsford Commercial shall at all times comply with all
requirements of applicable laws necessary to maintain REIT Status.
Section wful Intentionally Omitted.
Section 7.19. Leasing. The Borrower will take or cause to be taken all
reasonable steps within the power of the Borrower to market and lease the
leasable area of the Mortgaged Property and the Borrower will cause the
Property Owner to take or cause to be taken all reasonable steps within the
power of the Property Owner to market and lease the leasable area of each
Mezzanine Property, all in accordance with sound and customary leasing and
management practices for similar properties. The Borrower will not, and will
not allow the Property Owner to, lease all or any portion of the Mortgaged
Property or the Mezzanine Property or amend, supplement or otherwise modify,
terminate or cancel, or accept the surrender of, or consent to the assignment
or subletting of, or grant any concessions to or waive the performance of any
obligations of any tenant, lessee or licensee under, any now existing or
future Lease without the prior written consent of the Agent; provided,
however, with respect to any Lease which covers less than 25,000 square feet
or provides less than three percent (3%) of the Net Operating Income of the
Mortgaged Property and the Mezzanine Property, whichever is less, the
Borrower or the Property Owner may amend, supplement or otherwise modify,
terminate or cancel, or accept the surrender of, or consent to the assignment
or subletting of, or grant concessions to or waive the performance of any
obligations of any tenant, lessee or licensee under any such Lease in the
ordinary course of business consistent with sound leasing and management
practices for similar properties provided that such action with respect to a
Lease for a Mezzanine Property shall not cause (with the passage of time or
otherwise) a default under the Mezzanine Mortgage Loan Documents. The
Borrower shall furnish or cause the Property Owner to furnish the Agent with
executed copies of all Leases hereafter made, and all Leases now or hereafter
entered into will be in form and substance subject to the approval of the
Agent. Upon the Agent's request, the Borrower shall make a separate and
distinct assignment to the Agent as additional security, of all Leases for
the Mortgaged Property hereafter made. Notwithstanding the foregoing,
following the Agent's approval of the "Leasing Parameters" (as hereinafter
defined) for the Mortgaged Property and the Mezzanine Property, then the
Borrower or the Property Owner, as applicable, may, without the prior
approval of the Agent, enter into any Lease provided that the Lease covers
less than 25,000 square feet or provides less than three percent (3%) of the
Net Operating Income of the Mortgaged Property and the Mezzanine Property, is
a bona fide arm's length lease entered into in the ordinary course of
business with a party unaffiliated with the Borrower, the Property Owner, the
Member, the Manager or the Guarantor, falls within the Leasing Parameters and
is on the standard lease form (without material modification or addition).
In connection with any Lease to be approved by the Agent as provided herein,
the Borrower shall submit to the Agent for its approval the identity of the
tenant and a summary of the major terms of the Lease (which terms shall
include without limitation those matters included within the Leasing
Parameters) (collectively the "Major Terms"), and Agent's approval shall be
limited to the approval of the Major Terms, and provided further that any
such terms submitted to the Agent for approval shall be deemed approved by
the Agent unless the Agent expressly disapproves the same by written notice
delivered to the Borrower (which shall state the reasons for disapproval)
within five (5) Business Days after the date of the delivery of such Lease to
the Agent for approval and all other information reasonably requested by the
Agent in order to make such determination. Following the approval by the
Agent of the Major Terms, the Borrower or the Property Owner shall be
permitted to enter into a lease to such tenant which falls within the Major
Terms. As used herein, "Leasing Parameters" means leasing parameters for the
Mortgaged Property and the Mezzanine Property approved by the Agent. Leasing
Parameters shall include, without limitation, the minimum and maximum term,
the minimum rent, tax and operating stops, tenant standard improvements,
tenant allowances and other tenant inducements and leasing commissions, and
shall be approved by the Agent prior to the commencement of each calendar
year during the term of the Notes. The Borrower will require, and each Lease
will require, each tenant of a Mortgaged Property to enter into a
Nondisturbance, Attornment and Subordination Agreement and to provide an
estoppel certificate satisfactory to the Agent upon the request of the Agent.
The Agent shall have the right, and the Borrower hereby authorizes the Agent,
to communicate directly with any tenant under a Lease to verify any
information delivered to the Agent by the Borrower concerning such tenant or
such tenant's Lease. The Borrower shall not collect and shall not permit the
Property Owner to collect any rents, issues, profits, revenues, income or
other benefits payable under any of the Leases for the Mezzanine Property
more than one (1) month in advance (provided that the foregoing shall not
prohibit the collection of security deposits). The Borrower shall not,
directly or indirectly, cause or permit to exist, or allow the Property Owner
to cause or permit to exist, any condition which would result in the
termination or cancellation of, or which would relieve the performance of any
obligations of any tenant under, any Lease for all or any portion of a
Mezzanine Property.
Section 7.20. Special Purpose Entity. The Borrower shall conduct its
business in full compliance with and shall not violate the terms and
conditions of the Operating Agreement.
Section 7.21. Plan Assets, etc. The Borrower will do, or cause to be
done, all things necessary to ensure that the Borrower, the Property Owner,
the Member and the Manager will not be deemed to hold Plan Assets at any
time. Each owner of an equity interest in Borrower has certified to Borrower
and the Banks, and Borrower shall require each proposed transferee of any
equity interest in Borrower, as a condition precedent to such transfer, to
certify to Borrower and the Banks, that the source of funds used or to be
used by it to acquire its interest in Borrower are not assets of any plan
subject to Title I of ERISA or Section 4975 of the Code and are not deemed to
be assets of any such plan under the U.S. Department of Labor's plan asset
regulations. Borrower has provided the Agent with a copy of each such
certification from each owner of an equity interest in Borrower and will
promptly provide the Agent with a copy of each such certification from each
proposed transferee.
Section 7.22. Budgets. The Borrower shall cause the Property Owner to
provide to Agent a copy of each Budget that is submitted by the Property
Owner to the Mezzanine Mortgagee for approval by the Mezzanine Mortgagee
pursuant to the Mezzanine Mortgage Loan Documents, or any revision or
amendment thereof, as the same are submitted by the Property Owner to the
Mezzanine Mortgagee pursuant to the Mezzanine Mortgage Loan Documents.
Section 7.23. Preservation and Maintenance.
(a) The Borrower (i) shall not permit or commit waste, impairment,
or deterioration of the Mezzanine Property or permit the Property Owner to
abandon the Mezzanine Property, (ii) shall cause the Property Owner to
restore or repair promptly and in a good and workmanlike manner all or any
part of the Mezzanine Property in the event of any damage, injury or loss
thereto, to the equivalent of its condition prior to such damage, injury or
loss, or such other condition as the Agent may approve in writing, (iii)
shall cause the Property Owner to keep the Mezzanine Property, including the
Building and any fixtures, equipment, machinery and personal property, in
good order, repair and tenantable condition (subject to ordinary wear and
tear) and shall replace fixtures, equipment, machinery and personal property
on the Mezzanine Property when necessary to keep such items in good order,
repair, and tenantable condition, and (iv) shall cause Property Owner to keep
all trademarks, tradenames, servicemarks and licenses and permits necessary
for the use and occupancy of the Mezzanine Property in good standing and in
full force and effect. Subject to the provisions of Section 7.23(b) below,
neither the Borrower, the Property Owner nor any tenant or other Person shall
remove, demolish or alter any Building now existing or hereafter erected on
the Mezzanine Property or any other fixtures, equipment, machinery or
personal property in or on the Mezzanine Property except when incident to the
replacement of fixtures, equipment, machinery or other personal property with
items of like kind and value. The Borrower shall cause the Property Owner to
comply with the asbestos operations and maintenance program in effect as of
the date hereof (if any) or adopted hereafter with respect to any new
Mortgaged Property, and shall not permit the Property Owner to discontinue or
materially modify such program without the Agent's prior written consent. In
the event that the Property Owner shall remove any asbestos or asbestos-
containing materials after the date hereof, such removal shall be performed
in accordance with all applicable laws and, upon the request of the Agent,
the Borrower shall provide evidence of such compliance to the Agent.
(b) Provided that no Event of Default shall have occurred and be
continuing hereunder, the Borrower may permit the Property Owner to undertake
any alteration, improvement, demolition or removal of the Mezzanine Property
or any portion thereof (an "Alteration") so long as such Alteration (i) is
performed strictly in compliance with the terms and conditions of the Nomura
Mortgages and the other Mezzanine Mortgage Loan Documents, (ii) is permitted
by the Leases for such Mezzanine Property, (iii) shall not materially
adversely affect the value of the applicable Mezzanine Property or materially
reduce the income from the level available immediately prior to commencement
of such Alteration, and (iv) shall not have a material adverse effect on the
ability of the Property Owner to perform its obligations under the Mezzanine
Mortgage Loan Documents and the Leases for the Mezzanine Property or of the
Borrower to perform its obligations under the Loan Documents. Any other
Alteration shall require the prior written consent of the Agent, such consent
not to be unreasonably withheld or delayed. All work performed in connection
with any Alteration shall be performed in accordance with all applicable
laws. The Borrower shall cause the Property Owner to provide to the Agent
such evidence as the Agent may reasonably require to evidence the Property
Owner's compliance with the terms of the Mezzanine Mortgage Loan Documents
and this Agreement in connection with any Alteration.
Section 7.24. Use of Mezzanine Property. Unless required by applicable
law or unless the Agent has otherwise agreed in writing, the Borrower shall
not allow or permit the Property Owner to allow changes in the nature of the
occupancy or use for which the Mezzanine Property was intended at the time
this Agreement was executed. The Borrower shall not initiate, permit to
occur or acquiesce in or permit the Property Owner to initiate, permit to
occur or acquiesce in a change in the zoning classification of the Mezzanine
Property or subject the Mezzanine Property to restrictive, negative or other
covenants without the Agent's written consent, which consent shall not be
unreasonably withheld or delayed. The Borrower shall cause the Property
Owner to comply with, observe and perform in all material respects all zoning
and other laws affecting the Mezzanine Property, all agreements and other
covenants affecting the Mezzanine Property (including without limitation the
Mezzanine Mortgage Loan Documents), and all licenses and permits affecting
the Mezzanine Property. The Borrower shall cause the Property Owner to take
all actions as are necessary to cause the prompt distribution to Agent of all
Excess Property Income to Agent as provided in the Cash Collateral Agreement.
Section 7.25. Property Owner to Remain a Single-Purpose Entity. The
Borrower shall cause the Property Owner to comply with the provisions of
Section 4.1(dd) of the Mezzanine Mortgage Loan Agreement, shall cause the
Property Owner to do all things necessary to observe limited liability
company formalities and to preserve its existence, and will not permit the
Property Owner to amend, modify or otherwise change its articles of
organization, operating agreement or other organizational documents.
Section 7.26. Condominium.
(a) The Borrower represents, warrants and covenants that the
Condominium Documents and all of the easements and other rights granted
thereby are now valid and subsisting.
(b) The Borrower will cause the Property Owner to fully and
faithfully pay when due and payable the assessments, common charges and other
charges mentioned in and made payable by the Property Owner under the
Condominium Documents, and shall cause the Property Owner to fully and
faithfully perform all obligations on the part of the Property Owner to be
performed under the Condominium Documents in the time and manner therein
prescribed.
(c) The Borrower shall cause the Property Owner to do all things
necessary to preserve and keep unimpaired its rights, powers and privileges
under the Condominium Documents and to prevent the termination or expiration
of the Condominium Documents, or the withdrawal of the Condominium from a
condominium form of ownership, to the end that the Property Owner may enjoy
all of the rights granted to it as a party to the Condominium Documents.
(d) The Borrower will promptly notify Agent of any failure by the
Property Owner to comply with the Condominium Documents.
(e) The Borrower will (i) promptly notify Agent of the receipt by
the Borrower, the Manager, the Member or the Property Owner of any notice
asserting or claiming a default by the Property Owner under, or lack of
compliance by the Property Owner with, the Condominium Documents, (ii)
promptly notify Agent of the receipt by the Borrower, the Manager, the Member
or the Property Owner of any notice or request of a termination or purported
termination of the Condominium Documents or of the Condominium or of or for
the commencement or taking of or intent to commence to take any action to
terminate the Condominium or the Condominium Documents or to withdraw the
Condominium from the condominium ownership pursuant to applicable law or to
seek any action for partition of the Condominium, (iii) promptly notify Agent
of the receipt by the Borrower, the Manager, the Member or the Property Owner
of any notice or request of a modification or change or proposed modification
or change of or to the Condominium Documents, and (iv) promptly cause a copy
of each such notice or request received by the Property Owner, the Manager,
the Member or the Borrower to be delivered to Agent. The Borrower will
promptly notify Agent of the institution of a proceeding to partition the
Condominium or withdraw same from condominium ownership pursuant to
applicable law, and of the institution of any such partition or withdrawal
proceeding. The Borrower will promptly deliver to Agent a copy of each
notice, pleading, brief and preliminary, interim and final determination or
decision and other papers received by it in each such partition or withdrawal
proceeding.
(f) The Borrower will not, without the prior consent of Agent,
allow or suffer the Property Owner to wholly or partially terminate, modify,
subordinate or surrender or suffer or permit in whole or in part any
termination, modification, surrender or expiration of any of the Condominium
Documents, or withdraw or cause to permit the withdrawal of the Condominium
by operation of law or otherwise from condominium ownership pursuant to
applicable law, or allow or suffer the Property Owner to commence or
prosecute any action or proceeding to partition the Condominium or cause or
permit the Condominium to be partitioned pursuant to applicable law or
otherwise.
(g) The Borrower will, within 30 days after receipt of a written
demand from Agent, obtain from the board, association or other Person charged
with administering the Condominium Documents and deliver to Agent a duly
signed and acknowledged certificate certifying that the Condominium Documents
are unmodified and in full force and effect (or, if the same have been
modified in compliance with the Mezzanine Mortgage Loan Documents and this
Agreement, that the Condominium Documents are in full force and effect as so
modified and that there have been no other modifications), stating the dates
to which the assessments, common charges and other charges payable under the
Condominium Documents have been paid and stating whether to the certifying
party's knowledge the Property Owner is in compliance with the Condominium
Documents or, if not, specifying each default or failure of compliance of
which the certifying party has knowledge. The Borrower will, promptly upon
receipt thereof by the Borrower, the Manager, the Member or the Property
Owner, furnish Agent with a copy of all notices and statements, however
characterized, issued by the board, association or other Person charged with
administering the Condominium Documents relating to the Condominium.
(h) The Borrower will not permit or suffer the Property Owner to
exercise any of the Property Owner's rights under the Condominium Documents,
or, to the extent not prohibited by applicable laws, vote at any meeting of
the board, association or other Person charged with administering the
Condominium Documents, in any way that is inconsistent with its duties or
obligations under the Mezzanine Mortgage Loan Documents or this Agreement.
Notwithstanding the foregoing, after the occurrence of an Event of Default
hereunder and for so long as such Event of Default is continuing, the
Borrower will notify Agent of all meetings of the board, association or other
Person charged with administering the Condominium Documents, at least five
(5) Business Days prior thereto, and, to the extent not prohibited by
applicable law, the Borrower will cause the Property Owner to exercise all of
its rights under the Condominium Documents, and vote at all meetings of the
board, association or other Person charged with administering the Condominium
Documents, in accordance with any instructions delivered by Agent to the
Borrower.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any of the Banks has any obligation to make any Loans:
Section 8.1. Restrictions on Indebtedness. The Borrower will not
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks arising under any of the Loan
Documents;
(b) current liabilities of the Borrower incurred in the ordinary
course of business and relating to the Mortgaged Property but not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit except
for credit on an open account basis customarily extended and in fact extended
in connection with normal purchases of goods and services relating to the
Mortgaged Property;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies relating to
the Mortgaged Property to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards relating to the
operation and maintenance of the Mortgaged Property in accordance with this
Agreement that have been in force for less than the applicable period for
taking an appeal so long as execution is not levied thereunder or in respect
of which the Borrower shall at the time in good faith be prosecuting an
appeal or proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review; or
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business relating to the Mortgaged Property.
Notwithstanding anything in this Section 8.1 to the contrary, the
Subsidiaries of the Borrower (other than Member, Manager and Property Owner)
shall be permitted to create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to Indebtedness provided that
Borrower shall not be liable, contingently or otherwise, therefor; provided,
however, that neither Property Owner, Manager or Member shall be permitted to
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than Indebtedness of
Property Owner, Manager and Member expressly permitted pursuant to Section
8.12(e) or Section 8.13(b), as applicable.
Section 8.2. Restrictions on Liens, Etc. Without limiting the terms of
Section 8.1, the Borrower will not (a) create or incur or suffer to be
created or incurred or to exist any lien, encumbrance, mortgage, pledge,
negative pledge, charge, restriction or other security interest of any kind
upon any of its property or assets of any character whether now owned or
hereafter acquired, or upon the income or profits therefrom; (b) transfer any
of its property or assets or the income or profits therefrom for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more
than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; (e) sell, assign, pledge or otherwise transfer any accounts,
contract rights, general intangibles, chattel paper or instruments, with or
without recourse; (f) incur or maintain any obligation to any holder of
Indebtedness of the Borrower which prohibits the creation or maintenance of
any lien securing the Obligations (collectively "Liens"); or (g) permit
either the Member or the Manager to create or incur or suffer to be created
or incurred or to exist any Lien upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or
profits therefrom; provided that the Borrower may create or incur or suffer
to be created or incurred or to exist:
(i) Leases permitted under this Agreement;
(ii) liens on properties to secure taxes, assessments and
other governmental charges or claims for labor, material or supplies
relating to the Mortgaged Property in respect of obligations not
overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, worker's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens in favor of the Agent and the Banks under the Loan
Documents; and
(v) liens and encumbrances on a Mortgaged Property, if any,
expressly permitted under the terms of the Security Deed relating
thereto.
Notwithstanding anything in this Section 8.2 to the contrary, Subsidiaries of
the Borrower (other than Member, Manager and Property Owner) shall be
permitted to create or incur or suffer to be created or incur any Lien other
than Liens with respect to the Mortgaged Property, the Mezzanine Property or
any other Collateral; provided, however, that Property Owner shall be
permitted to create or incur or suffer to be created or incur only those
Liens permitted pursuant to Section 8.13(a).
Section 8.3. Restrictions on Investments. The Borrower will not, and
will not permit Manager, Member or Property Owner to, make or permit to exist
or to remain outstanding any Investment except Investments by Borrower and as
expressly permitted below, Manager, Member, and Property Owner in:
(a) Investments by Borrower in marketable direct or guaranteed
obligations of the United States of America that mature within one (1) year
from the date of purchase by the Borrower or its Subsidiary;
(b) Investments by Borrower in marketable direct obligations of
any of the following: Federal Home Loan Mortgage Corporation, Student Loan
Marketing Association, Federal Home Loan Banks, Federal National Mortgage
Association, Government National Mortgage Association, Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Financing Banks, Export-Import
Bank of the United States, Federal Land Banks, or any other agency or
instrumentality of the United States of America;
(c) Investments by Borrower in demand deposits, certificates of
deposit, bankers acceptances and time deposits of United States banks having
total assets in excess of $100,000,000; provided, however, that the aggregate
amount at any time so invested with any single bank having total assets of
less than $1,000,000,000 will not exceed $200,000;
(d) Investments by Borrower in securities commonly known as
"commercial paper" issued by a corporation organized and existing under the
laws of the United States of America or any State which at the time of
purchase are rated by Moody's Investors Service, Inc. or by Standard & Poor's
Corporation at not less than "P 1" if then rated by Moody's Investors
Service, Inc., and not less than "A 1", if then rated by Standard & Poor's
Corporation;
(e) Investments by Borrower in mortgage-backed securities
guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation
and other mortgage-backed bonds which at the time of purchase are rated by
Moody's Investors Service, Inc. or by Standard & Poor's Corporation at not
less than "Aa" if then rated by Moody's Investors Service, Inc. and not less
than "AA" if then rated by Standard & Poor's Corporation;
(f) Investments by Borrower in repurchase agreements having a term
not greater than 90 days and fully secured by securities described in the
foregoing subsection (a), (b) or (e) with banks described in the foregoing
subsection (c) or with financial institutions or other corporations having
total assets in excess of $500,000,000;
(g) Investments by Borrower in shares of so-called "money market
funds" registered with the SEC under the Investment Company Act of 1940 which
maintain a level per-share value, invest principally in investments described
in the foregoing subsections (a) through (f) and have total assets in excess
of $50,000,000;
(h) Investments by Borrower in Mortgaged Property, including
earnest money deposits relating thereto and transaction costs;
(i) Investments by Borrower in wholly-owned Subsidiaries of
Borrower and Investments by wholly-owned Subsidiaries of Borrower (other than
Member, Manager and Property Owner) in fee and leasehold interests in
properties located in the northeastern United States which are used
principally for commercial office purposes or in land or non-income producing
land assets, and which leasehold interests are under ground leases having not
less than fifty (50) years of the leasehold term remaining at the time of
acquisition thereof;
(j) Investments by Borrower and its Subsidiaries (other than
Member, Manager or Property Owner) in Investment Partnerships which own
Investments of the type described in Section 8.3(i);
(k) Investments by Borrower in Member provided it is wholly-owned
by the Borrower, and by Member in Manager, and by Member and Manager in
Property Owner; and
(l) Investments by Property Owner in the Mezzanine Property.
Section 8.4. Merger, Consolidation. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to any merger,
consolidation or other business combination, or agree to effect any asset
acquisition, stock acquisition or other acquisition without the prior written
consent of the Majority Banks except (i) the merger or consolidation of one
or more of the Subsidiaries of the Borrower with and into the Borrower
provided that no Default or Event of Default exists or will occur as a result
thereof and (ii) the merger or consolidation of two or more Subsidiaries of
the Borrower.
Section 8.5. Sale and Leaseback; Ground Lease. The Borrower will not,
and will not permit the Property Owner to, enter into any arrangement,
directly or indirectly, whereby the Borrower or the Property Owner shall sell
or transfer any Real Estate owned by it or the Mezzanine Property, as
applicable, in order that then or thereafter the Borrower or the Property
Owner or any affiliate thereof shall lease back the Mezzanine Property. The
Borrower will not permit the Property Owner to enter into a ground lease or
similar lease for the Mezzanine Property.
Section 8.6. Compliance with Environmental Laws. The Borrower will not
do and will not permit the Property Owner or any tenant of the Mortgaged
Property or the Mezzanine Property to do any of the following: (a) use any of
the Mortgaged Property or Mezzanine Property or any portion thereof as a
facility for the handling, processing, storage or disposal of Hazardous
Substances, except for small quantities of Hazardous Substances used in the
ordinary course of business and in compliance with all applicable
Environmental Laws and the presence of asbestos or asbestos-containing
materials located in the Building which are to be maintained, contained and
removed in accordance with the terms of the Mezzanine Mortgage Loan Documents
and the Loan Documents, as applicable, (b) cause or permit to be located on
any of the Mortgaged Property or Mezzanine Property any underground tank or
other underground storage receptacle for Hazardous Substances except in full
compliance with Environmental Laws, (c) generate any Hazardous Substances on
any of the Mortgaged Property or Mezzanine Property except in full compliance
with Environmental Laws, (d) conduct any activity at any of the Mortgaged
Property or Mezzanine Property or use any Mortgaged Property or Mezzanine
Property in any manner so as to cause a Release of Hazardous Substances on,
upon or into the Mortgaged Property or Mezzanine Property or any surrounding
properties or any threatened Release of Hazardous Substances which might give
rise to liability under CERCLA or any other Environmental Law, or (e)
directly or indirectly transport or arrange for the transport of any
Hazardous Substances (except in compliance with all Environmental Laws).
The Borrower shall:
(i) in the event of any change in Environmental Laws governing the
assessment, release or removal of Hazardous Substances, which change would
lead a prudent lender to require additional testing to avail itself of any
statutory insurance or limited liability, take all action (including, without
limitation, the conducting of engineering tests at the sole expense of the
Borrower) to confirm that no Hazardous Substances have been Released or
disposed of on the Mortgaged Property or Mezzanine Property in violation of
any Environmental Laws; and
(ii) if any Release or disposal of Hazardous Substances shall occur
or shall have occurred on the Mortgaged Property or Mezzanine Property
(including without limitation any such Release or disposal occurring prior to
the acquisition of such Mortgaged Property or Mezzanine Property by the
Borrower or Property Owner, respectively), cause the prompt containment and
removal of such Hazardous Substances and remediation of the Mortgaged
Property or Mezzanine Property in full compliance with all applicable laws
and regulations and to the satisfaction of the Majority Banks; provided, that
the Borrower shall be deemed to be in compliance with Environmental Laws for
the purpose of this clause (ii) so long as it or a responsible third party
with sufficient financial resources is taking reasonable action to remediate
or manage any event of noncompliance to the satisfaction of the Majority
Banks and no action shall have been commenced by any enforcement agency. The
Majority Banks may engage their own Environmental Engineer to review the
environmental assessments and the Borrower's compliance with the covenants
contained herein.
At any time after an Event of Default shall have occurred hereunder, or,
whether or not an Event of Default shall have occurred, at any time that the
Agent or the Majority Banks shall have reasonable grounds to believe that a
Release or threatened Release of Hazardous Substances may have occurred
relating to any Mortgaged Property or Mezzanine Property, or that any of the
Mortgaged Property or Mezzanine Property is not in compliance with the
Environmental Laws, the Agent may at its election and will at the request of
the Majority Banks obtain such environmental assessments of such Mortgaged
Property or Mezzanine Property prepared by an Environmental Engineer as may
be necessary or advisable for the purpose of evaluating or confirming (i)
whether any Hazardous Substances are present in the soil or water at or
adjacent to such Mortgaged Property or Mezzanine Property and (ii) whether
the use and operation of such Mortgaged Property or Mezzanine Property comply
with all Environmental Laws. Environmental assessments may include detailed
visual inspections of such Mortgaged Property or Mezzanine Property
including, without limitation, any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and the taking of soil samples, as well
as such other investigations or analyses as are necessary or appropriate for
a complete determination of the compliance of such Mortgaged Property or
Mezzanine Property and the use and operation thereof with all applicable
Environmental Laws. All such environmental assessments shall be at the sole
cost and expense of the Borrower.
Section 8.7. Distributions.
(a) The Borrower shall make no Distributions in the event that an
Event of Default consisting of a failure to pay principal, interest or fees
hereunder shall have occurred and be continuing, or any other Event of
Default shall have occurred and be continuing and the maturity of the
Obligations has been accelerated.
(b) In the event that an Event of Default shall have occurred and
be continuing, the Borrower shall not permit the Property Owner, the Member
or the Manager to make any Distributions whatsoever, directly or indirectly,
from amounts attributable to the Mezzanine Property, the Mezzanine Collateral
or its direct or indirect interest in the Property Owner, directly or
indirectly, other than such Distributions that are paid to the Agent pursuant
to the terms of this Agreement or the other Loan Documents.
Section 8.8. Intentionally Omitted.
Section 8.9. Development Activity. Neither the Borrower nor any
Subsidiary of the Borrower shall, without the prior written consent of the
Majority Banks, engage, directly or indirectly, in the "ground-up"
development of properties to be used principally for commercial office
purposes or otherwise, except that the Borrower, subject to the terms of this
Section 8.9, and Subsidiaries of the Borrower (other than Property Owner,
Manager and Member) may engage in the "ground up" development of Real Estate
to be used principally for commercial office purposes provided that the
aggregate costs of acquisition and development of all such properties Under
Development (assuming the full cost of developing such property) at any time
shall not exceed the greater of (i) ten percent (10%) of WWP's Consolidated
Total Assets or (ii) $25,000,000.00. Notwithstanding anything herein to the
contrary, except for the Mortgaged Property commonly known as 140 Kendrick
Street which may be developed by the Borrower, no "ground up" development
shall be performed by the Borrower, Property Owner, Manager or Member. For
purposes of this Section 8.9, the term "development" shall include the new
construction of an office building or office park, but shall not include
Capital Improvement Projects to existing Real Estate which is already used
principally for commercial office purposes. Without limiting the foregoing,
the Borrower acknowledges that for the purposes of this Agreement, (a) any
interest by the Borrower or any Subsidiary in a property which is proposed to
be developed, or any interest therein pursuant to which the borrower or any
Subsidiary has the right to approve site plans or other plans and
specifications or pursuant to which such parties' obligations are conditioned
upon the achievement of certain leasing levels, (b) any agreement by the
Borrower or any Subsidiary which obligates such party to contribute or
otherwise advance funds in connection with or upon completion of the
development of a property, or (c) any acquisition of a property which is
proposed to be developed or which is under development and lease-up at the
time such agreement is entered into, shall be considered a "development" for
the purposes of this Section 8.9. The Borrower acknowledges that the
decision of the Majority Banks to grant or withhold such consent shall be
based on such factors as the Majority Banks deem relevant in their sole
discretion, including without limitation, evidence of sufficient funds both
from borrowings and equity to complete such development and evidence that
such Subsidiary has the resources and expertise necessary to complete such
project. Nothing herein shall prohibit the Borrower or any Subsidiary of the
Borrower from entering into an agreement to acquire Real Estate which has
been developed and initially leased by another Person to the extent not
otherwise prohibited by this Agreement.
Section 8.10. Intentionally Omitted.
Section 8.11. Transfers. The Borrower shall not permit any sale,
transfer, disposition, pledge, mortgage, hypothecation or encumbering of (a)
any direct interest in Borrower other than a sale, transfer, disposition,
pledge, mortgage, hypothecation or encumbrance to or in favor of the Secured
Mezzanine Loan Agreement Lenders or (b) any direct or indirect interest (i)
of Wellsford Commercial in Borrower, (ii) of Wellsford Real Properties in
Wellsford Commercial, (iii) of WHWEL in Borrower, or (iv) of any Person or
Persons directly or indirectly holding the ownership interests in WHWEL,
provided that sales, transfers or other dispositions (but not pledges,
mortgages, hypothecations or encumbrances) of interests in WHWEL shall be
permitted if after giving effect thereto the Goldman Group, directly or
indirectly, owns and controls at least seventy percent (70%) of the ownership
interests in WHWEL. Notwithstanding anything herein to the contrary, (x)
WHWEL shall be permitted at any time and from time to time to convert all or
any of its interest in the Borrower into an interest in Wellsford Commercial
and/or Wellsford Real Properties, and (y) WHWEL and Wellsford Commercial may
transfer or pledge their interests in Borrower to one another as may be
permitted in the operating agreement of the Borrower.
Section 8.12. Additional Covenants with Respect to Indebtedness,
Operations, Fundamental Changes. The Borrower represents, warrants and
covenants as of the date hereof and until such time as the Obligations are
paid in full and the Banks have no further obligations to make any Loans,
that each of the Borrower, the Member and the Manager:
(a) does not own and will not own any encumbered asset other than
the Borrower's ownership of the Collateral;
(b) is not engaged and will not engage in any business other than
the Borrower's acquisition, ownership, operation and sale of the Collateral
and the Member's and the Manager's ownership and operation of its direct or
indirect interest in the Property Owner;
(c) as to the Member and the Manager only, does not and will not
have any Subsidiaries (whether the same would constitute an entity that could
be consolidated on any of such Person's financial statements or a minority
interest) other than, as to the Member and the Manager, the Property Owner
and, as to the Member only, the Manager;
(d) will not enter into any contract or agreement with any
partner, member, shareholder, principal or affiliate of the Borrower, the
Property Owner, the Member, the Manager or the Guarantor, or any affiliate of
any such partner, member, shareholder, principal or affiliate, except upon
terms and conditions that are intrinsically fair and substantially similar to
those that would be available on an arms-length basis with third parties
other than an affiliate;
(e) as to the Member and the Manager only, has not incurred and
will not incur any Indebtedness, other than current liabilities incurred in
the ordinary course of business in connection with normal purchases of goods
and services but not incurred through the borrowing of money; no other debt
or other obligations of any of such Persons may be secured (senior,
subordinate or pari passu) by any right or asset of such Person;
(f) has not made and will not make any loans or advances to any
third party (including the Property Owner, the Borrower, the Member, the
Manager, the Guarantor, any affiliate of such Persons or any member, partner
or shareholder of such Persons);
(g) is and will remain solvent and pay its debts and liabilities
(including, without limitation, employment and overhead expenses) from its
own assets as the same shall become due;
(h) has done or caused to be done and will do all things necessary
to observe limited liability company, corporate and partnership formalities
(as applicable) and to preserve its existence, and will not, nor will any
partner, member or shareholder thereof, amend, modify or otherwise change its
partnership agreement, operating agreement, articles of incorporation, by-
laws or other organizational documents in a manner which adversely affects
such Person's or such partner's, member's or shareholder's existence as a
single purpose entity;
(i) will conduct and operate its business as presently conducted
and operated;
(j) will maintain books and records and bank accounts (if any)
separate from those of its affiliates, including its partners, members and
shareholders;
(k) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity (including any
affiliate thereof, including any partner, member, shareholder or any
affiliate of any partner, member or shareholder of the Borrower, the Member
or the Manager) and shall maintain and use separate stationery, invoices and
checks;
(l) will file its own separate tax returns or if such returns are
filed jointly, such Persons shall be reflected as separate entities thereon;
(m) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light
of its contemplated business operations;
(n) will not, nor shall any partner, member, shareholder or
affiliate, seek the dissolution or winding up, in whole or in part, of the
Borrower, the Property Owner, the Member or the Manager;
(o) will not enter into, and will not permit Property Owner to
enter into, any transaction of merger, consolidation or other business
combination, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock or beneficial ownership of, any
entity;
(p) will not commingle the funds and other assets of the Borrower,
the Property Owner, the Member or the Manager, as applicable, with those of
any partner, member, shareholder, any affiliate or any other Person;
(q) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other Person;
(r) does not and will not hold itself out to be responsible for
the debts or obligations of any other Person;
(s) shall comply with the provisions of its partnership agreement,
operating agreement, articles of incorporation or bylaws or other
organizational documents, as applicable; and
(t) with respect to the Manager and the Member, shall be organized
and conduct its business so that, and otherwise cause, the assumptions of
fact made with respect to the Borrower, the Member, the Manager and the
Property Owner in that certain opinion letter dated May 15, 1998 delivered by
Robinson Silverman Pearce Aronsohn & Berman LLP with respect to non-
consolidation issues to be true and correct, in all material respects at all
times.
Section impos Additional Restrictions Concerning the Mezzanine
Property.
(a) Except as expressly provided in Section 5.3 or Section 7.19,
the Borrower will not, without the prior written consent of the Agent in each
instance, permit the Property Owner, directly or indirectly to: (i) sell,
convey, assign, transfer, contribute, option, mortgage, pledge, encumber,
charge, hypothecate or dispose of the Mezzanine Property, or any part thereof
or interest therein; or any income or profits therefrom, or any other
accounts, contract rights, general intangibles, instruments, chattel paper or
other assets or claims, whether now owned or hereafter acquired; or (ii)
create or suffer to be created or to exist any lien, encumbrance, security
interest, mortgage, pledge, restriction, attachment or other charge of any
kind upon, or any levy, seizure, attachment or foreclosure of, the Mezzanine
Property, or any part thereof or interest therein, or any income or profit
therefrom, or any other accounts, contract rights, general intangibles,
instruments, chattel paper or other assets or claims, whether now owned or
hereafter acquired, except for Permitted Liens. For the purposes of this
paragraph, the sale, conveyance, transfer, disposition, alienation,
hypothecation or encumbering of all or any portion of any interest in the
Property Owner, the Member or the Manager, or the creation or addition of a
new member or other owner of any interest in the Property Owner, the Member
or the Manager shall be deemed to be a transfer of an interest in the
Property Owner, the Member or the Manager. A pledge or transfer by WWP of
its interest in the Borrower pursuant to Section 8.11(a) shall not violate
the provisions of Section 8.13(a).
(b) The Borrower will not permit the Property Owner to create,
incur, assume, guarantee or be or remain liable, contingently or otherwise,
with respect to any Indebtedness other than:
(i) Indebtedness arising under the Mezzanine Mortgage Loan
Documents (it being acknowledged and agreed that any refinancing of such
Indebtedness in connection with an assignment and restatement of the
Mezzanine Mortgage Loan Documents shall not constitute permitted
Indebtedness);
(ii) current liabilities of the Property Owner permitted
pursuant to the Approved Budget incurred in the ordinary course of
business but not incurred through (A) the borrowing of money, or (B) the
obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services; and
(iii) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 7.8.
Section 8.14. Mezzanine Mortgage Loan Documents. The Borrower agrees
to cause the Property Owner to deliver immediately to the Agent copies of any
notices, certificates, requests, demands or other instruments (including
without limitation any notice of default, acceleration or the exercise or
threat of exercise of any remedies under the Mezzanine Mortgage Loan
Documents) furnished or delivered to or by the Property Owner under or in any
way relating to the Mezzanine Mortgage Loan Documents. The Borrower shall
not permit the Property Owner to seek nor to obtain additional advances from
the holder or holders of the Mezzanine Mortgage Loan Documents (provided that
the foregoing shall not be deemed violated in the event that the holder or
holders of the Mezzanine Mortgage Loan Documents shall make a protective
advance or advances for the payment of taxes, insurance premiums or to
protect the Mezzanine Property pursuant to the terms of the Nomura Mortgages,
provided that such advance may otherwise constitute a Default or Event of
Default hereunder to the extent that such protected advance is made by the
Mezzanine Mortgagee as a result of a "Default" or "Event of Default" under
the Mezzanine Mortgage Loan Documents), or to modify, amend, terminate,
extend or seek a consent or waiver under the Mezzanine Mortgage Loan
Documents in any respect without the prior written approval of the Agent.
Section 9. FINANCIAL COVENANTS OF BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans it will comply
with the following:
Section 9.1. Debt Service Coverage Test Amount. The Borrower will not,
at the end of any fiscal quarter permit (a) the difference of (i) the Net
Operating Income of the Mortgaged Properties and the Mezzanine Properties for
any test period of four consecutive fiscal quarters then ended (treated as a
single accounting period) (the "Test Period") minus (ii) the Capital
Improvement Reserve for such Test Period to be less than (b) the multiple of
the Debt Service Coverage Test Amount for the Test Period set forth below:
Fiscal Quarter Ending Multiple of Debt Service
On or Before: Coverage Test Amount
--------------------- --------------------
December 31, 1998 1.35
Thereafter 1.45
In the event that the Borrower shall not have owned any of such Mortgaged
Properties or the Mezzanine Properties for four (4) consecutive fiscal
quarters, then the Net Operating Income of the Borrower for such Mortgaged
Properties and the Mezzanine Properties shall be annualized based upon
historical information with respect to such Mortgaged Properties and the
Mezzanine Properties in a manner reasonably satisfactory to the Agent.
Section 9.2. Designated Collateral Value. The Borrower will not permit
the outstanding principal balance of the Loans as of the date of
determination to be greater than the Designated Collateral Value as of the
date of determination.
Section 9.3. WWP Financial Covenants. If and only in the event that
the loans contemplated by the Secured Mezzanine Loan Agreement shall be paid
in full and the Secured Mezzanine Loan Agreement shall be terminated, then
Borrower shall cause WWP to at all times thereafter observe, perform and
comply with each and every covenant set forth in Sections 9.1 through 9.5 of
the Secured Mezzanine Loan Agreement as set forth in the Secured Mezzanine
Loan Agreement as of the date hereof (or as the same may be amended with the
approval of the Majority Banks), as if such covenants and any defined terms
referred to therein were fully set forth in this Agreement and a part hereof,
subject, however, to any applicable period of grace or notice and cure with
respect to a failure to comply with such covenants as set forth in the
Secured Mezzanine Loan Agreement. Notwithstanding the foregoing, the
provisions of this Section 9.3 shall not apply in the event that the Secured
Mezzanine Loan Agreement Lenders shall acquire title to the interest of WWP
in the Borrower.
Section 10. CLOSING CONDITIONS.
The obligations of the Agent and the Banks to make the initial Loans
shall be subject to the satisfaction of the following conditions precedent on
or prior to July 16, 1998.
Section 10.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall be
in full force and effect and shall be in form and substance satisfactory to
the Majority Banks. The Agent shall have received a fully executed copy of
each such document, except that each Bank shall have received a fully
executed counterpart of its Note. The Agent is authorized by the Banks to
execute on behalf of the Banks and Agent, as applicable, any amendments to
agreements securing or relating to the Original Revolving Credit Agreement
and the Original Loan Agreement as Agent deems appropriate.
Section 10.2. Certified Copies of Organizational Documents. The Agent
shall have received from the Borrower a copy, certified as of a recent date
by the appropriate officer of the State in which the Borrower and the
Guarantor are organized or in which the Mortgaged Property is located, and by
a duly authorized officer of such Person to be true and complete, of the
articles of incorporation or other organizational documents of the Borrower
and the Guarantor (or a certification satisfactory to the Agent that there
have been no changes to the foregoing from those previously provided to the
Agent) or their respective qualification to do business, as applicable, as in
effect on such date of certification.
Section 10.3. Bylaws; Resolutions. All action on the part of the
Borrower and the Guarantor necessary for the valid execution, delivery and
performance by the Borrower and the Guarantor of the Loan Documents to which
it is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Agent shall have been provided to the
Agent. The Agent shall have received from the Borrower and the Guarantor, as
applicable, true copies of its bylaws (or a certification satisfactory to the
Agent that there have been no changes to the foregoing from those previously
provided to the Agent) and the resolutions adopted by its board of directors
or other governing body authorizing the transactions described herein, each
certified by its secretary or other duly authorized officer as of a recent
date to be true and complete.
Section 1it u Incumbency Certificate; Authorized Signers. The Agent
shall have received from the Borrower and Guarantor an incumbency
certificate, dated as of the Closing Date, signed by a duly authorized
officer of the Borrower and Guarantor and giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to sign,
in the name and on behalf of the Borrower and the Guarantor, each of the Loan
Documents to which the Borrower or the Guarantor is or is to become a party;
(b) in the case of the Borrower to make Loan and Conversion Requests; and (c)
to give notices and to take other action on behalf of the Borrower under the
Loan Documents.
Section 10.5. Opinion of Counsel. The Agent shall have received a
favorable opinion addressed to the Banks and the Agent and dated as of the
Closing Date, in form and substance satisfactory to the Banks and the Agent,
from Robinson, Silverman, Pearce, Aronsohn & Berman, and other counsel of the
Borrower and the Guarantor, as to such matters as the Agent shall reasonably
request.
Section 10.6. Payment of Fees. The Borrower shall have paid to the
Agent the commitment fee pursuant to Section 4.2.
Section 10.7. Appraisals. The Agent shall have received Appraisals of
the Mortgaged Property and the Mezzanine Property in form and substance
satisfactory to the Majority Banks prior to the Closing Date demonstrating
that the initial Collateral has a Designated Collateral Value that is in
compliance with the terms of this Agreement.
Section 10.8. Environmental Reports. The Agent shall have received
environmental site assessment reports for the Mortgaged Property and the
Mezzanine Property prepared by an Environmental Engineer, which indicate the
condition of the Mortgaged Property, the Mezzanine Property and such other
properties and any Buildings thereon and which set forth no qualifications
except those that are acceptable to the Majority Banks in their sole
discretion, and disclosing that each piece of Mortgaged Property, Mezzanine
Property and any Building thereon is free of oil, underground storage tanks,
asbestos or asbestos containing material, lead paint and other Hazardous
Substances (except to the extent acceptable to the Majority Banks in their
sole discretion), and which reports are otherwise in form and substance
satisfactory to the Majority Banks).
Section 10.9. Insurance. The Agent shall have received duplicate
originals or certified copies of all policies of insurance required by this
Agreement.
Section 10.10. Performance; No Default. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on the
Closing Date there shall exist no Default or Event of Default.
Section 10.11. Representations and Warranties. The representations and
warranties made by the Borrower and the Guarantor in the Loan Documents or
otherwise made by or on behalf of any Borrower and Guarantor, or any
Subsidiary thereof, in connection therewith or after the date thereof shall
have been true and correct in all material respects when made and shall also
be true and correct in all material respects on the Closing Date.
Section 10.12. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory to the Agent and the Agent's
Special Counsel in form and substance, and the Agent shall have received all
information and such counterpart originals or certified copies of such
documents and such other certificates, opinions or documents as the Agent and
the Agent's Special Counsel may reasonably require.
Section 10.13. Eligible Real Estate Qualification Documents. The
Eligible Real Estate Qualification Documents for each parcel of Mortgaged
Property and the Mezzanine Collateral included in the Collateral as of the
Closing Date shall have been delivered to the Agent.
Section 10.14. Compliance Certificate. A Compliance Certificate dated
as of the date of the Closing Date demonstrating compliance with each of the
covenants calculated therein as of the most recent fiscal quarter end for
which the Borrower has provided financial statements under Section 6.4
adjusted in the best good faith estimate of the Borrower dated as of the date
of the Closing Date shall have been delivered to the Agent.
Section 10.15. Other Documents. To the extent requested by the Agent,
executed copies of all material agreements of any nature whatsoever to which
the Borrower is a party affecting or relating to the use, operation,
development, construction or management of the Mortgaged Property or other
Collateral or the Mezzanine Property.
Section 10.16. No Condemnation/Taking. The Agent shall have received
written confirmation from the Borrower that no condemnation proceedings are
pending or to the Borrower's knowledge threatened against any Mortgaged
Property, Mezzanine Property or other Collateral or, if any such proceedings
are pending or threatened, identifying the same and the Real Estate affected
thereby and the Agent shall have determined that none of such proceedings is
or will be material to the Mortgaged Property, Mezzanine Property or other
Collateral affected thereby.
Section 10.17. Governmental Policy. Each Bank shall have determined
that there have been no material changes in governmental regulations or
policy affecting the Banks, the Borrower or the Guarantor.
Section 10.18. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agent's Special Counsel may reasonably have
requested.
Section 10.19. Satisfaction of Conditions as to Initial Collateral.
The parties hereto acknowledge that the requirements of Sections 10.7, 10.8
and 10.13 for the Mezzanine Properties and the Mortgaged Properties as of the
date hereof have been satisfied.
Section 11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
Section 11.1. Prior Conditions Satisfied. All conditions set forth in
Section 10 shall continue to be satisfied as of the date upon which any Loan
is to be made.
Section 11.2. Representations True; No Default. Each of the
representations and warranties contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which they
were made and shall also be true at and as of the time of the making of such
Loan (except that representations and warranties as to the Guarantor shall
not be deemed to have been repeated), with the same effect as if made at and
as of that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Agreement and the other Loan Documents and
changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing. Agent
shall have received a certificate of the Borrower signed by an authorized
officer of the Borrower to such effect.
Section 11.3. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Bank would make it illegal for such Bank to make
such Loan.
Section 11.4. Governmental Regulation. Each Bank shall have received
such statements in substance and form reasonably satisfactory to such Bank as
such Bank shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.
Section 11.5. Proceedings and Documents. All proceedings in connection
with the Loan shall be satisfactory in substance and in form to the Majority
Banks, and the Majority Banks shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Majority Banks may reasonably request.
Section 11.6. Borrowing Documents. In the case of any request for a
Loan, the Agent shall have received a copy of each of the request for a Loan
required by Section 2.6 in the form of Exhibit B hereto, fully completed.
Section 11.7. Endorsement to Title Policy. At such time as the Agent
shall determine in its discretion, to the extent available under applicable
law, a "date down" endorsement to each Title Policy indicating no change in
the state of title and containing no survey exceptions not approved by the
Agent, which endorsement shall, expressly or by virtue of a proper "revolving
credit" clause or endorsement in the Title Policy, increase the coverage of
the Title Policy to the aggregate amount of all Loans advanced and
outstanding on or before the effective date of such endorsement, other than
the Designated Collateral Value Amount for the Equity Interests, if
applicable (provided that the amount of coverage under an individual Title
Policy for an individual Mortgaged Property need not equal the aggregate
amount of all Loans), or if such endorsement is not available, such other
evidence and assurances as the Agent may reasonably require (which evidence
may include, without limitation, an affidavit from the Borrower stating that
there have been no changes in title from the date of the last effective date
of the Title Policy).
Section 11.8. Future Advances Tax Payment. As a condition precedent to
any Bank's obligations to make any Loans, the Borrower will pay or cause to
be paid to the Agent any mortgage, recording, intangible, documentary stamp
or other similar taxes and charges which the Agent reasonably determines to
be payable as a result of such Loan to any state or any county or
municipality thereof in which any of the Mortgaged Property is located and
deliver to the Agent such affidavits or other information which the Agent
reasonably determines to be necessary in connection with the payment of such
tax, in order to insure that the Security Deeds on Mortgaged Property located
in such state secure the Borrower's obligation with respect to the Loans then
being requested. The provisions of this Section 11.8 shall be without
limitation of the Borrower's obligations under other provisions of the Loan
Documents, including without limitation Section 15 hereof.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the
lapse of time or both is required, then, prior to such notice or lapse of
time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans or
any other sums due hereunder or under any of the other Loan Documents, when
the same shall become due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for payment;
(c) Intentionally Omitted.
(d) Intentionally Omitted.
(e) any of the Borrower, the Member, the Manager, the Guarantor or
any other party shall fail to, or the Borrower shall fail to cause the
Property Owner to, perform any other term, covenant or agreement contained
herein or in any of the other Loan Documents (other than those specified in
this Section 12.1);
(f) any representation or warranty of the Borrower, the Property
Owner, the Member, the Manager or any Guarantor in this Agreement or any
other Loan Document, or in any report, certificate, financial statement,
request for a Loan, or in any other document or instrument delivered pursuant
to or in connection with this Agreement, any advance of a Loan or any of the
other Loan Documents shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(g) without limiting any other terms of the Loan Documents
prohibiting or restricting the ability of such Persons to incur Indebtedness,
any of the Borrower, the Property Owner, the Member, the Manager or any
Guarantor shall fail to pay at maturity, or within any applicable period of
grace, any obligation for borrowed money or credit received or other
Indebtedness (which as to the Property Owner only involves such obligations
or Indebtedness individually or in the aggregate in excess of $1,000,000.00)
or fail to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound (including, without
limitation, the Mezzanine Mortgage Loan Documents), evidencing or securing
any such borrowed money or credit received or other Indebtedness for such
period of time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof (which as to the Property Owner
only involves such obligations or Indebtedness individually or in the
aggregate in excess of $1,000,000.00); provided however that any failure of a
Guarantor to pay such amounts or observe or perform such terms, covenants or
agreements with respect to a "Loan Document" (as defined in the Secured
Mezzanine Loan Agreement) shall not constitute a Default under this Section
12.1(g);
(h) any of the Borrower, the Property Owner, the Member, the
Manager or the Guarantor (A) shall make an assignment for the benefit of
creditors, or admit in writing its general inability to pay or generally fail
to pay its debts as they mature or become due, or shall petition or apply for
the appointment of a trustee or other custodian, liquidator or receiver of
any such Person of any substantial part of the assets of any thereof, (B)
shall commence any case or other proceeding relating to any such Person under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or (C) shall take any action to authorize or in
furtherance of any of the foregoing;
(i) a petition or application shall be filed for the appointment
of a trustee or other custodian, liquidator or receiver of any of the
Borrower, the Property Owner, the Member, the Manager or the Guarantor or any
substantial part of the assets of any thereof, or a case or other proceeding
shall be commenced against any such Person under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect,
and such Person shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition, application, case or proceeding shall
not have been dismissed within 60 days following the filing or commencement
thereof;
(j) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Borrower, the
Property Owner, the Member, the Manager or the Guarantor bankrupt or
insolvent, or approving a petition in any such case or other proceeding, or a
decree or order for relief is entered in respect of any such Person, in each
case of the foregoing in an involuntary case under federal bankruptcy laws as
now or hereafter constituted;
(k) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than 60 days, whether or not consecutive, any uninsured
final judgment against any of the Borrower, the Property Owner, the Member,
the Manager or the Guarantor that, with other outstanding uninsured final
judgments, undischarged, against such Person exceeds in the aggregate
$5,000,000.00 with respect to the Borrower or a Guarantor or $1,000,000.00
with respect to the Property Owner, the Manager or the Member; provided that
in any event such judgment with respect to the Property Owner, the Manager or
the Member shall be sooner removed prior to the commencement of any
proceeding of foreclosure, levy or other sale pursuant thereto; and provided
further that any such judgment against a Guarantor arising from a failure to
perform under a "Loan Document" (as defined in the Secured Mezzanine Loan
Agreement) shall not constitute a Default under this Section 12.1(k);
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent or approval of the Banks,
or any action at law, suit in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of any of the Borrower, the Property Owner, the Member, the Manager or
the Guarantor or any of their respective holders of Voting Interests, or any
court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the terms
thereof in any material respect as determined by the Majority Banks;
(m) any dissolution, termination, partial or complete liquidation,
merger or consolidation of any of the Borrower, the Property Owner, the
Member, the Manager or the Guarantor, or any sale, transfer or other
disposition of the assets of any such Person, other than as permitted under
the terms of this Agreement or the other Loan Documents or otherwise
consented to in writing by the Majority Banks;
(n) any suit or proceeding shall be filed against any of the
Borrower, the Property Owner, the Member, the Manager or the Guarantor or any
of the Mortgaged Property, the Mezzanine Property or any other Collateral
which in the good faith business judgment of the Majority Banks after giving
consideration to the likelihood of success of such suit or proceeding and the
availability of insurance to cover any judgment with respect thereto and
based on the information available to them, if adversely determined, would
have a materially adverse affect on the ability of the Property Owner to
perform each and every one of its obligations under and by virtue of the
Mezzanine Mortgage Loan Documents or the Borrower or any Guarantor to perform
each and every one of their respective obligations under and by virtue of the
Loan Documents; provided that any such suit or proceeding against a Guarantor
relating to a claim under a "Loan Document" (as defined in the Secured
Mezzanine Loan Agreement) shall not constitute a Default under this Section
12.1(n);
(o) the Property Owner, the Member or the Manager shall be
indicted for a federal crime, a punishment for which could include the
forfeiture of any assets of such Person, or the Borrower shall be indicted
for a federal crime, a punishment for which could include the forfeiture of
any assets of such Person included in the Mortgaged Property or other
Collateral;
(p) Jeffrey H. Lynford shall cease to be the Chairman of the Board
of, or Edward Lowenthal shall cease to be the President of, Wellsford
Commercial, and a competent and experienced successor for such Person shall
not be approved by the Majority Banks within six (6) months of such event;
(q) Any violation of the covenant set forth in Section 8.11 shall
occur;
(r) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably could be
expected to result in liability of any of the Borrower, the Property Owner,
the Member, the Manager or the Guarantor to the PBGC or such Guaranteed
Pension Plan in an aggregate amount exceeding $1,000,000 and such event in
the circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan; or the
PBGC shall have instituted proceedings to terminate such Guaranteed Pension
Plan;
(s) any Guarantor denies that it has any liability or obligation
under the Guaranty or the Indemnity Agreement, or shall notify the Agent or
any of the Banks of such Guarantor's intention to attempt to cancel or
terminate the Guaranty or the Indemnity Agreement, or shall fail to observe
or comply with any term, covenant, condition or agreement under the Guaranty
or the Indemnity Agreement;
(t) the Borrower, the Member, the Manager or any other Person
acting on behalf of any of them shall cause, or the Borrower shall permit the
Property Owner to, cause less than all of the Excess Property Income to be
deposited with the Agent as and when provided in the Assignment of Interests
or the Cash Collateral Agreement and the same is not cured within five (5)
days following receipt of written notice of such default;
(u) any warranty or representation of the Property Owner, the
Manager, the Member or the Borrower in any acknowledgment delivered to the
Agent in connection with the Loan shall prove to have been false or
misleading in any material respect upon the date when made or deemed to have
been made or repeated, or the Property Owner, the Manager, the Member or the
Borrower shall fail to perform any term, covenant or agreement contained in
any such acknowledgment; or
(v) The occurrence of an Event of Default under any of the other
Loan Documents;
then, and in any such event, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower; provided that in
the event of any Event of Default specified in Section 12.1(h), Section
12.1(i) or Section 12.1(j), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from any of the
Banks or the Agent. Without limiting the terms of this Agreement, the
occurrence of a "Default" or "Event of Default" under the Secured Mezzanine
Loan Agreement shall not in and of itself constitute a Default or Event of
Default under this Agreement or the other Loan Documents.
Section 12.lA. Limitation of Cure Periods. Notwithstanding anything
contained in Section 12.1 to the contrary, (i) no Event of Default shall
exist hereunder upon the occurrence of any failure described in Section
12.1(b) in the event that the Borrower cures such default within five (5)
days following receipt of written notice of such default, provided, however,
that Borrower shall not be entitled to receive more than two (2) notices in
the aggregate pursuant to this clause (i) in any period of 365 days ending on
the date of any such occurrence of default, and provided further that no such
cure period shall apply to any payments due upon the maturity of the Notes,
and (ii) no Event of Default shall exist hereunder upon the occurrence of any
failure described in Section 12.1(e) in the event that the Borrower cures
such default with thirty (30) days following receipt of written notice of
such default, provided that the provisions of this clause (ii) shall not
pertain to defaults consisting of a failure to provide insurance as required
by Section 7.7, to any default consisting of a failure to comply with Section
7.4(e), Section 8.2(g), Section 8.7(b), Section 8.12 (as to the failure of
the Manager, the Member or the Property Owner to comply therewith), Section
8.13, Section 8.14 (as to the failure to deliver any notice of default,
acceleration or the exercise or threat of exercise of any remedies under the
Mezzanine Mortgage Loan Documents) or to any default excluded from any
provision of cure of defaults contained in any other of the Loan Documents;
provided, however, that the occurrence of such events under Sections 8.2(g),
8.7(b), 8.12, 8.13 and 8.14 shall be subject to the rights of Borrower
pursuant to Paragraph 8(h) of the Assignment of Interests.
Section 12.2. Termination of Commitments. If any one or more Events of
Default specified in Section 12.1(h), Section 12.1(i) or Section 12.1(j)
shall occur, then immediately and without any action on the part of the Agent
or any Bank any unused portion of the credit hereunder shall terminate and
the Banks shall be relieved of all obligations to make Loans to the Borrower.
If any other Event of Default shall have occurred and be continuing, the
Agent, upon the election of the Majority Banks, may by notice to the Borrower
terminate the obligation to make Loans to the Borrower. No termination under
this Section 12.2 shall relieve the Borrower of its obligations to the Banks
arising under this Agreement or the other Loan Documents.
Section 12.3. Remedies. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Loans pursuant to Section 12.1,
the Agent on behalf of the Banks, may, with the consent of the Majority Banks
but not otherwise, proceed to protect and enforce their rights and remedies
under this Agreement, the Notes or any of the other Loan Documents by suit in
equity, action at law or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement
and the other Loan Documents or any instrument pursuant to which the
Obligations are evidenced, including to the full extent permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right. No remedy
herein conferred upon the Agent or the holder of any Note is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision
of law.
Section 12.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Event of Default,
any monies are received in connection with the enforcement of any of the
Security Documents, or otherwise with respect to the realization upon any of
the Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent to protect or preserve the collateral or in connection
with the collection of such monies by the Agent, for the exercise, protection
or enforcement by the Agent of all or any of the rights, remedies, powers and
privileges of the Agent under this Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any provision of
adequate indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Banks shall determine; provided, however, that (i)
distributions in respect of such Obligations shall be made pari passu among
Obligations with respect to the Agent's fee payable pursuant to Section 4.3
and all other Obligations, (ii) in the event that any Bank shall have
wrongfully failed or refused to make an advance under Section 2.7 and such
failure or refusal shall be continuing, advances made by other Banks during
the pendency of such failure or refusal shall be entitled to be repaid as to
principal and accrued interest in priority to the other Obligations described
in this subsection (b), and (iii) Obligations owing to the Banks with respect
to each type of Obligation such as interest, principal, fees and expenses,
shall be made among the Banks pro rata; and provided, further, that the
Majority Banks may in their discretion make proper allowance to take into
account any Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
Section 12.5. Default under Mezzanine Mortgage Loan Documents.
Notwithstanding anything herein to the contrary, the Borrower hereby
expressly agrees that any "Event of Default" (as defined in the Mezzanine
Mortgage Loan Documents) (which shall be deemed to include maturity of the
debt secured by the Mezzanine Mortgage Loan Document or any other occurrence
which would give the holder of the Mezzanine Mortgage Loan Documents the
right to exercise remedies thereunder) shall constitute and be deemed to be
an Event of Default under this Agreement for which no right to cure shall be
available; provided, however, that in the event that (a) a court of competent
jurisdiction finally determines in an adjudication binding upon the Mezzanine
Mortgagee, and sufficient to prohibit or stay any exercise by the Mezzanine
Mortgagee of its remedies under the Mezzanine Mortgage Loan Documents, that
an "Event of Default" under the Mezzanine Mortgage Loan Documents was in fact
not an "Event of Default" thereunder, or (b) the Mezzanine Mortgagee
withdraws such notice of the existence of an "Event of Default" (subject to
the terms of this Section 12.5 below concerning the approval thereof by the
Majority Banks), and in either event the Agent has not foreclosed on the
"Member Interests" (as defined in the Assignment of Interests), such "Event
of Default" shall no longer constitute an Event of Default hereunder.
Without limiting the foregoing, an "Event of Default" under the Mezzanine
Mortgage Loan Documents shall conclusively be deemed to have occurred upon
the declaration, statement or notice from the Mezzanine Mortgagee as to the
existence or occurrence of an "Event of Default" under the Mezzanine Mortgage
Loan Documents. The Borrower shall cause the Property Owner to give the
Agent immediate notice of default and all other notices or communications
received by the Property Owner pursuant to the Mezzanine Mortgage Loan
Documents or in connection with the Mezzanine Mortgage Loan. Upon the
occurrence of any "Default" (as defined in the Mezzanine Mortgage Loan
Documents), the Borrower shall cause the Property Owner to deliver to the
Agent within five (5) days after the first to occur of (x) receipt by the
Property Owner of notice of such "Default" from the Mezzanine Mortgagee or
(y) the date the Property Owner obtains actual knowledge of the occurrence of
such "Default", a detailed description of the actions to be taken by the
Property Owner to cure such "Default" and the dates by which each such action
shall occur. Such schedule shall be subject to the approval of the Majority
Banks. The Borrower shall cause the Property Owner to take all such actions
as are necessary to cure such "Default" under the Mezzanine Mortgage Loan
Documents by the date approved by the Majority Banks, and shall deliver to
the Agent not less frequently than weekly thereafter written updates
concerning the status of the Property Owner's efforts to cure such "Default".
The Agent shall have the right, but not the obligation, to pay any sums or to
take any action which the Agent deems necessary or advisable to cure any
default or alleged default under the Mezzanine Mortgage Loan Documents
(whether or not the Property Owner is undertaking efforts to cure such
default or the same is an "Event of Default" under the Mezzanine Mortgage
Loan Documents or a Default or Event of Default hereunder), and such payment
or such action is hereby authorized by the Borrower, and any sum so paid and
any expense incurred by the Agent in taking any such action shall be
evidenced by this Agreement and secured by the Security Documents and shall
be immediately due and payable by Borrower to the Agent with interest at the
rate for overdue amounts set forth in Section 4.12 until paid. The Agent
shall be authorized to take such actions upon the assertion by the Mezzanine
Mortgagee of the existence of such "Default" or "Event of Default" without
any duty to inquire or determine whether such "Default" or "Event of Default"
exist. The consent or waiver by the Mezzanine Mortgagee of any "Event of
Default" under the Mezzanine Mortgage Loan Documents shall not annul the
occurrence of an Event of Default hereunder unless otherwise approved by the
Majority Banks; provided, however that if the Mezzanine Mortgagee shall
accept the cure of an "Event of Default" under the Mezzanine Mortgage Loan
Documents resulting from a failure to pay any amounts due to the Mezzanine
Mortgagee thereunder within five (5) days of the occurrence of such event,
such acceptance shall not require the consent of the Majority Banks to annul
the occurrence of an Event of Default hereunder. The Borrower shall cause
the Property Owner to permit Agent to enter upon the Mezzanine Property for
the purpose of curing any default or alleged default under the Mezzanine
Mortgage Loan Documents or hereunder. The Borrower hereby transfers and
assigns any excess proceeds arising from any foreclosure or sale under power
pursuant to the Nomura Mortgages or any instrument evidencing the
indebtedness secured thereby, and the Borrower hereby authorizes and directs
the holder or holders of the Nomura Mortgages to pay such excess proceeds
directly to the Agent up to the amount of the Obligations. The provisions of
this Section 12.5 shall be subject to the rights of Borrower pursuant to
Paragraph 8(h) of the Assignment of Interests.
Section 13. SETOFF.
Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific, time
or demand, provisional or final, regardless of currency, maturity, or the
branch of where such deposits are held) or other sums credited by or due from
any of the Banks to the Borrower or any Guarantor and any securities or other
property of the Borrower or any Guarantor in the possession of such Bank may
be applied to or set off against the payment of Obligations and any and all
other liabilities, direct, or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, of the Borrower or any
Guarantor to such Bank. Each of the Banks agrees with each other Bank that
if such Bank shall receive from the Borrower or any Guarantor, whether by
voluntary payment, exercise of the right of setoff, or otherwise, and shall
retain and apply to the payment of the Note or Notes held by such Bank any
amount in excess of its ratable portion of the payments received by all of
the Banks with respect to the Notes held by all of the Banks, such Bank will
make such disposition and arrangements with the other Banks with respect to
such excess, either by way of distribution, pro tanto assignment of claims,
subrogation or otherwise as shall result in each Bank receiving in respect of
the Notes held by it its proportionate payment as contemplated by this
Agreement; provided that if all or any part of such excess payment is
thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but
without interest.
Section 14. THE AGENT.
Section 14.1. Authorization. The Agent is authorized to take such
action on behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent. The
obligations of Agent hereunder are primarily administrative in nature, and
nothing contained in this Agreement or any of the other Loan Documents shall
be construed to constitute the Agent as a trustee for any Bank or to create
any agency or fiduciary relationship. The Borrower and any other Person
shall be entitled to conclusively rely on a statement from the Agent that it
has the authority to act for and bind the Banks pursuant to this Agreement
and the other Loan Documents.
Section 14.2. Employees and Agents. The Agent may exercise its powers
and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Agent may utilize the services of such Persons as the Agent
may reasonably determine, and all reasonable fees and expenses of any such
Persons shall be paid by the Borrower.
Section 14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent, or employee thereof, shall be liable for
any waiver, consent or approval given or any action taken, or omitted to be
taken, in good faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be responsible for the
consequences of any oversight or error of judgment whatsoever, except that
the Agent or such other Person, as the case may be, may be liable for losses
due to its willful misconduct or gross negligence.
Section 14.4. No Representations. The Agent shall not be responsible
for the execution or validity or enforceability of this Agreement, the Notes,
any of the other Loan Documents or any instrument at any time constituting,
or intended to constitute, collateral security for the Notes, or for the
value of any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for
any recitals or statements, warranties or representations made herein or in
any of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower, the Guarantor, the Property
Owner, the Manager or the Member, or be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any other of the Loan Documents. The Agent shall not
be bound to ascertain whether any notice, consent, waiver or request
delivered to it by the Borrower or the Guarantor or any holder of any of the
Notes shall have been duly authorized or is true, accurate and complete. The
Agent has not made nor does it now make any representations or warranties,
express or implied, nor does it assume any liability to the Banks, with
respect to the creditworthiness or financial condition of the Borrower, the
Property Owner, the Manager, the Member or the Guarantor. Each Bank
acknowledges that it has, independently and without reliance upon the Agent
or any other Bank, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any other Bank, based upon such
information and documents as it deems appropriate at the time, continue to
make its own credit analysis and decisions in taking or not taking action
under this Agreement and the other Loan Documents.
Section 14.5. Payments.
(a) A payment by the Borrower or the Guarantor to the Agent
hereunder or under any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The Agent agrees to distribute
to each Bank not later than one Business Day after the Agent's receipt of
good funds, determined in accordance with the Agent's customary practices,
such Bank's pro rata share of payments received by the Agent for the account
of the Banks except as otherwise expressly provided herein or in any of the
other Loan Documents.
(b) If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of
the other Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by the
Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Bank that fails (i) to make
available to the Agent its pro rata share of any Loan or (ii) to comply with
the provisions of Section 13 with respect to making dispositions and
arrangements with the other Banks, where such Bank's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share
of such payments due and payable to all of the Banks, in each case as, when
and to the full extent required by the provisions of this Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank
until such time as such delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it from the Borrower and
the Guarantor, whether on account of outstanding Loans, interest, fees or
otherwise, to the remaining nondelinquent Banks for application to, and
reduction of, their respective pro rata shares of all outstanding Loans. The
Delinquent Bank hereby authorizes the Agent to distribute such payments to
the nondelinquent Banks in proportion to their respective pro rata shares of
all outstanding Loans. A Delinquent Bank shall be deemed to have satisfied
in full a delinquency when and if, as a result of application of the assigned
payments to all outstanding Loans of the nondelinquent Banks or as a result
of other payments by the Delinquent Banks to the nondelinquent Banks, the
Banks' respective pro rata shares of all outstanding Loans have returned to
those in effect immediately prior to such delinquency and without giving
effect to the nonpayment causing such delinquency.
Section 14.6. Holders of Notes. Subject to the terms of Article 18,
the Agent may deem and treat the payee of any Note as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished
in writing with a different name by such payee or by a subsequent holder,
assignee or transferee.
Section 14.7. Indemnity. The Banks ratably agree hereby to indemnify
and hold harmless the Agent from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Agent has not been reimbursed by the
Borrower as required by Section 15), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or any of
the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Agent's actions taken hereunder or thereunder, except to
the extent that any of the same shall be directly caused by the Agent's
willful misconduct or gross negligence.
Section 14.8. Agent as Bank. In its individual capacity, BKB shall
have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of any
of the Notes as it would have were it not also the Agent.
Section 14.9. Resignation. The Agent may resign at any time by giving
60 days' prior written notice thereof to the Banks and the Borrower. Upon
any such resignation, the Majority Banks shall have the right to appoint as a
successor Agent any Bank or any bank whose senior debt obligations are rated
not less than "A3" or its equivalent by Moody's Investors Service, Inc. or
not less than "A" or its equivalent by Standard & Poor's corporation and
which has total assets in excess of $10 billion and, so long as the Loan is
secured by the Mezzanine Collateral, who is approved by the Rating Agencies
pursuant to the Mezzanine Mortgage Loan Agreement. Unless a Default or Event
of Default shall have occurred and be continuing, such successor Agent shall
be reasonably acceptable to the Borrower. If no successor Agent shall have
been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a Bank or any bank whose debt obligations are
rated not less than "A" or its equivalent by Moody's Investors Service, Inc.
or not less than "A" or its equivalent by Standard & Poor's Corporation and
which has total assets in excess of $10 billion and, so long as the Loan is
secured by the Mezzanine Collateral, who is approved by the Rating Agencies
pursuant to the Mezzanine Mortgage Loan Agreement. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder as Agent. After any
retiring Agent's resignation, the provisions of this Agreement and the other
Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
Section 14.10. Duties in the Case of Enforcement. In case one or more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if (a)
so requested by the Majority Banks and (b) the Banks have provided to the
Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions of the Security Documents authorizing the sale or other
disposition of all or any part of the Collateral and exercise all or any such
other legal and equitable and other rights or remedies as it may have in
respect of such Collateral. The Majority Banks may direct the Agent in
writing as to the method and the extent of any such sale or other
disposition, the Banks hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 15. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Banks (other than taxes based upon the Agent's or any Bank's gross or net
income, except that the Agent and the Banks shall be entitled to
indemnification for any and all amounts paid by them in respect of taxes
based on income or other taxes assessed by any State in which Mortgaged
Property or other Collateral is located, such indemnification to be limited
to taxes due solely on account of the granting of Collateral under the
Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such
tax by such indemnified party), including any recording, mortgage,
documentary or intangibles taxes in connection with the Security Deeds and
other Loan Documents, or other taxes payable on or with respect to the
transactions contemplated by this Agreement, including any such taxes payable
by the Agent or any of the Banks after the Closing Date (the Borrower hereby
agreeing to indemnify the Agent and each Bank with respect thereto), (c) all
title insurance premiums, appraisal fees, engineer's fees, reasonable
internal charges of the Agent (determined in good faith and in accordance
with the Agent's internal policies applicable generally to its customers) for
commercial finance exams and engineering and environmental reviews and the
reasonable fees, expenses and disbursements of the counsel to the Agent,
counsel for the Majority Banks and any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein (excluding, however, the
preparation of agreements evidencing participations granted under Section
18.4), the review of any additional or substitute Collateral, the addition of
any guarantor, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the reasonable fees,
expenses and disbursements of the Agent incurred by the Agent in connection
with the preparation, administration or interpretation of the Loan Documents
and other instruments mentioned herein, and the making of each advance
hereunder, (e) all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and costs, which attorneys may be employees of any Bank or
the Agent and the fees and costs of appraisers, engineers, investment bankers
or other experts retained by any Bank or the Agent) incurred by any Bank or
the Agent in connection with (i) the enforcement of or preservation of rights
under any of the Loan Documents against the Borrower or any Guarantor or the
administration thereof after the occurrence of a Default or Event of Default
and (ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Agent's or any of the Bank's
relationship with the Borrower or any Guarantor, (f) all reasonable fees,
expenses and disbursements of any Bank or the Agent incurred in connection
with U.C.C. searches, U.C.C. filings, title rundowns, title searches or
mortgage recordings, and (g) all reasonable fees and expenses (including
reasonable attorney's fees and costs) incurred by BankBoston and Goldman in
connection with the assignment of Commitments and interests in the Loans
pursuant to Section 18.1. The covenants of this Section 15 shall survive
payment or satisfaction of payment of amounts owing with respect to the
Notes.
Section 16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and the
Banks and each director, officer, employee, agent and Person who controls the
Agent or any Bank from and against any and all claims, actions and suits,
whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this Section 16
based upon any agreement, arrangement or action made or taken, or alleged to
have been made or taken, by the Borrower or Guarantor, (b) any condition,
use, operation or occupancy of the Mortgaged Property, the Mezzanine Property
or other Collateral, (c) any actual or proposed use by the Borrower of the
proceeds of any of the Loans, (d) any actual or alleged infringement of any
patent, copyright, trademark, service mark or similar right of the Borrower,
the Property Owner, the Manager, the Member or Guarantor comprised in the
Collateral, (e) the Borrower and the Guarantor entering into or performing
this Agreement or any of the other Loan Documents, (f) any actual or alleged
violation of any law, ordinance, code, order, rule, regulation, approval,
consent, permit or license relating to the Mortgaged Property or the
Mezzanine Property, (g) with respect to the Borrower, the Property Owner, the
Manager, the Member or Guarantor and their respective properties and assets,
the violation of any Environmental Law, the Release or threatened Release of
any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including,
but not limited to claims with respect to wrongful death, personal injury or
damage to property), (h) the Mezzanine Mortgage Loan Documents or the Member
Organizational Agreements, the Property Owner Organizational Agreements and
the Manager Organizational Agreements, (i) matters for which the Mezzanine
Mortgagee is indemnified pursuant to Section 9.2 of the Mezzanine Mortgage
Loan Agreement to the same extent provided therein, (j) in the event that the
Agent or any nominee of the Agent and the Banks shall foreclose or otherwise
obtain title to all or any portion of the Mezzanine Collateral, any
obligations, duties or liabilities of the Property Owner, the Borrower, the
Manager or the Member other than those pursuant to Leases for the Mezzanine
Property entered into in compliance with this Agreement, the Mezzanine
Mortgage Loan Documents (subject to the terms of the Loan Documents) or the
Approved Budget, or (k) the exercise by the Agent of the rights and remedies
set forth in Section 32, in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or
other proceeding; provided, however, that the Borrower shall not be obligated
under this Section 16 to indemnify any Person for liabilities arising from
such Person's own gross negligence or willful misconduct. In order to
provide for just and equitable contribution in circumstances in which the
indemnity agreement provided for in Section 9.2(b) or (c) of the Mezzanine
Mortgage Loan Agreement is for any reason held to be unenforceable by an
indemnified party in respect of any claims, expenses, losses, damages,
obligations or liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 16(i) above the Borrower
shall contribute to the amount paid or payable by the Agent or the Banks as a
result of such claims, expenses, losses, damages, obligations or liabilities
(or action in respect thereof); provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the Agent's, the Banks' and the
Borrower's (or the Borrower's predecessors) relative knowledge and access to
information concerning the matter with respect to which claim was asserted;
(ii) the opportunity to correct and prevent any statement or omission; and
(iii) any other equitable considerations appropriate in the circumstances.
Agent and the Borrower hereby agree that it may not be equitable if the
amount of such contribution were determined by pro rata or per capita
allocation. In litigation, or the preparation therefor, the Banks and the
Agent shall be entitled to select a single law firm as their own counsel and,
in addition to the foregoing indemnity, the Borrower agrees to pay promptly
the reasonable fees and expenses of such counsel. If, and to the extent that
the obligations of the Borrower under this Section 16 are unenforceable for
any reason, the Borrower hereby agrees to make the maximum contribution to
the payment in satisfaction of such obligations which is permissible under
applicable law. The provisions of this Section 16 shall survive the
repayment of the Loans and the termination of the obligations of the Banks
hereunder.
Section 17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower, the Property Owner, the
Manager, the Member or any Guarantor pursuant hereto or thereto shall be
deemed to have been relied upon by the Banks and the Agent, notwithstanding
any investigation heretofore or hereafter made by any of them, and shall
survive the making by the Banks of any of the Loans, as herein contemplated,
and shall continue in full force and effect so long as any amount due under
this Agreement or the Notes or any of the other Loan Documents remains
outstanding or any Bank has any obligation to make any Loans. The
indemnification obligations of the Borrower provided herein and the other
Loan Documents shall survive the full repayment of amounts due and the
termination of the obligations of the Banks hereunder and thereunder to the
extent provided herein and therein. All statements contained in any
certificate or other paper delivered to any Bank or the Agent at any time by
or on behalf of the Borrower, the Property Owner, the Manager, the Member or
any Guarantor pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by such
Person hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. Conditions to Assignment by Banks. Except as provided
herein, each Bank may assign to one or more banks or other entities all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and
the same portion of the Loans at the time owing to it, and the Notes held by
it); provided that (a) the Agent shall have given its prior written consent
to such assignment, which consent shall not be unreasonably withheld
(provided that such consent shall not be required for any assignment to
another Bank, to a bank which is under common control with the assigning Bank
or to a wholly-owned Subsidiary of such Bank provided that such assignee
shall remain a wholly-owned Subsidiary of such Bank), (b) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Agreement, (c) the parties
to such assignment shall execute and deliver to the Agent, for recording in
the Register (as hereinafter defined), a notice of such assignment, together
with any Notes subject to such assignment, (d) in no event shall any voting,
consent or approval rights of a Bank be assigned to any Person controlling,
controlled by or under common control with, or which is not otherwise free
from influence or control by, the Borrower, the Property Owner, the Manager,
the Member or any Guarantor, which rights shall instead be allocated pro rata
among the other remaining Banks, (e) such assignee shall have a net worth as
of the date of such assignment of not less than $500,000,000 and (f) such
assignee shall acquire an interest in the Loans of not less than
$10,000,000.00. No such assignment shall be made without the prior consent
of the Borrower, which consent shall not be unreasonably withheld or delayed;
provided that such consent shall not be required in the event that a Default
or Event of Default shall have occurred. Upon such execution, delivery,
acceptance and recording, of such notice of assignment, (i) the assignee
thereunder shall be a party hereto and all other Loan Documents executed by
the Banks and, to the extent provided in such assignment, have the rights and
obligations of a Bank hereunder, (ii) the assigning Bank shall, to the extent
provided in such assignment and upon payment to the Agent of the registration
fee referred to in Section 18.2, be released from its obligations under this
Agreement, and (iii) the Agent may unilaterally amend Schedule 1.1 to reflect
such assignment. In connection with each assignment, the assignee shall
represent and warrant to the Agent, the assignor and each other Bank as to
whether such assignee is controlling, controlled by, under common control
with or is not otherwise free from influence or control by, the Borrower, the
Property Owner, the Manager, the Member or any Guarantor. Notwithstanding
anything herein to the contrary, in the event that BKB shall at any time hold
a Commitment equal to or less than $20,000,000, then BKB shall promptly
provide written notice thereof to the Banks and the Majority Banks shall have
the right, to be exercised within fifteen (15) days of delivery of such
notice by BKB, to elect to remove BKB as Agent and replace BKB as Agent,
subject to the terms of Section 14.9
Section 18.2. Register. The Agent shall maintain a copy of each
assignment delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the
Commitment Percentages of, and principal amount of the Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time
to time upon reasonable prior notice. Upon each such recordation, the
assigning Bank agrees to pay to the Agent a registration fee in the sum of
$2,000.
Section 18.3. New Notes. Upon its receipt of an assignment executed by
the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the
Banks (other than the assigning Bank). Within five Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for each surrendered Note, a new Note to
the order of such assignee in an amount equal to the amount assumed by such
assignee pursuant to such assignment and, if the assigning Bank has retained
some portion of its obligations hereunder, a new Note to the order of the
assigning Bank in an amount equal to the amount retained by it hereunder, and
shall cause the Guarantor to deliver to Agent an acknowledgment in form and
substance satisfactory to the Agent to the effect that the Guaranty extends
and is applicable to each new Note. Such new Notes shall provide that they
are replacements for the surrendered Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such assignment and shall
otherwise be in substantially the form of the assigned Notes. The
surrendered Notes shall be canceled and returned to the Borrower.
Section 18.4. Participations. Each Bank may sell participations to one
or more banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents with the prior
written consent of the Agent (after giving due regard to the limitations in
Section 18.8); provided that (a) any such sale or participation shall not
affect the rights and duties of the selling Bank hereunder to the Borrower,
(b) such sale and participation shall not entitle such participant any rights
or privileges under this Agreement or the Loan Documents (including, without
limitation, the right to approve waivers, amendments or modifications), (c)
such participant shall have no direct rights against the Borrower or the
Guarantor except the rights granted to the Banks pursuant to Section 13, (d)
such sale is effected in accordance with all applicable laws, and (e) such
participant shall not be a Person controlling, controlled by or under common
control with, or which is not otherwise free from influence or control by,
the Borrower, the Property Owner, the Manager, the Member or any Guarantor.
Section 18.5. Pledge by Bank. Any Bank may at any time pledge all or
any portion of its interest and rights under this Agreement (including all or
any portion of its Note) to any of the twelve Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
Section 18.6. No Assignment by Borrower. The Borrower shall not assign
or transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
Section 18.7. Disclosure. The Borrower agrees that in addition to
disclosures made in accordance with standard institutional lending practices
any Bank may disclose information obtained by such Bank pursuant to this
Agreement to assignees or participants and potential assignees or
participants hereunder.
Section 18.8. Additional Restrictions on Assignments and
Participations. Notwithstanding anything to the contrary set forth in this
Agreement or in any of the other Loan Documents, so long as the Conditional
Guaranty remains in effect, no interest in the Loan may be assigned,
transferred or participated, unless in each case the additional requirements
set forth in clauses (a) through (e) below are satisfied: (a) the entity to
which any interest in the Loan is assigned, transferred or participated is an
Eligible Transferee (as defined below), (b) the minimum denomination
assigned, transferred or participated shall not be less than $10,000,000.00,
(c) assignments, transfers and participations may not be made to more than
thirty (30) Eligible Transferees in the aggregate, (d) assignments, transfers
and participations may not be made without the consent of Whitehall Street
Real Estate Limited Partnership V, Whitehall Street Real Estate Limited
Partnership VI, Whitehall Street Real Estate Limited Partnership VII and
Whitehall Street Real Estate Limited Partnership VIII, which consent shall
not be unreasonably withheld, delayed or conditioned, and (e) assignments,
transfers and participations may not be made unless the prospective assignee,
transferee or participant executes and delivers a fully completed certificate
in the form of Exhibit E hereto confirming that such assignee, transferee or
participant is an Eligible Transferee. "Eligible Transferee" means a
"qualified purchaser" as defined in Section 2(a)(51)(A) of the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
thereunder.
Section 19. NOTICES.
Each notice, demand, election or request provided for or permitted to be
given pursuant to this Agreement (hereinafter in this Section 19 referred to
as "Notice"), but specifically excluding to the maximum extent permitted by
law any notices of the institution or commencement of foreclosure
proceedings, must be in writing and shall be deemed to have been properly
given or served by personal delivery or by sending same by overnight courier
or by depositing same in the United States Mail, postpaid and registered or
certified, return receipt requested, or as expressly permitted herein, by
telegraph, telecopy, telefax or telex, and addressed as follows:
If to the Agent or BKB:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Telecopy No.: 770/390-8434
If to the Borrower:
Wellsford/Whitehall Holdings, L.L.C.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Mr. Gregory F. Hughes
With a copy to:
Alan S. Pearce, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
if to another Bank now a party to this Agreement, to the address set forth on
the signature page hereto, and to each other Bank which may hereafter become
a party to this Agreement at such address as may be designated by such Bank.
Each Notice shall be effective upon being personally delivered or upon being
sent by overnight courier or upon being deposited in the United States Mail
as aforesaid. The time period in which a response to such Notice must be
given or any action taken with respect thereto (if any), however, shall
commence to run from the date of receipt if personally delivered or sent by
overnight courier, or if so deposited in the United States Mail, the earlier
of three (3) Business Days following such deposit or the date of receipt as
disclosed on the return receipt. Rejection or other refusal to accept or the
inability to deliver because of changed address for which no notice was given
shall be deemed to be receipt of the Notice sent. By giving at least fifteen
(15) days prior Notice thereof, the Borrower, a Bank or Agent shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses and each shall have the right to specify as
its address any other address within the United States of America.
Section 20. RELATIONSHIP.
Neither the Agent nor any Bank has any fiduciary relationship with or
fiduciary duty to Borrower arising out of or in connection with this
Agreement or the other Loan Documents, or the transactions contemplated
hereunder or thereunder, and the relationship between each Bank and the
Borrower is solely that of a lender and borrower, and nothing contained
herein or in any of the other Loan Documents shall in any manner be construed
as making the parties hereto partners, joint venturers or any other
relationship other than lender and borrower.
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 22. HEADINGS.
The captions in this Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
Section 23. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
so executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
Section law WAIVER OF JURY TRIAL.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES ITS RIGHT TO
A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY,
AMONG OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS Section
25.
Section 26. DEALINGS WITH THE BORROWER.
The Banks and their affiliates may accept deposits from, extend credit
to and generally engage in any kind of banking, trust or other business with
the Borrower, its Subsidiaries or the Guarantor or any of their affiliates
regardless of the capacity of the Bank hereunder.
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower or
the Guarantor of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Majority
Banks. Notwithstanding the foregoing, none of the following may occur
without the written consent of each Bank: a change in the rate of interest
on and the term of the Notes; a change in the amount of the Commitments of
the Banks; a forgiveness, reduction or waiver of the principal of any unpaid
Loan or any interest thereon or fee payable under the Loan Documents; a
change in the amount of any fee payable to a Bank hereunder; the postponement
of any date fixed for any payment of principal of or interest on the Loan; an
extension of the Maturity Date (except as provided in Section 2.8); a change
in the manner of distribution of any payments to the Banks or the Agent; the
release of the Borrower or the Guarantor or any Collateral except as
otherwise provided herein; an amendment of the definition of Majority Banks
or of any requirement for consent by all of the Banks; any modification to
require a Bank to fund a pro rata share of a request for an advance of the
Loan made by the Borrower other than based on its Commitment Percentage; an
amendment to this Section 27; an amendment of the definition of Majority
Banks; or an amendment of any provision of this Agreement or the Loan
Documents which requires the approval of all of the Banks or the Majority
Banks to require a lesser number of Banks to approve such action. The amount
of the Agent's fee payable for the Agent's account and the provisions of
Section 14 may not be amended without the written consent of the Agent. No
waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrower shall entitle the Borrower to other or further
notice or demand in similar or other circumstances.
Section 28. SEVERABILITY.
The provisions of this Agreement are severable, and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
Section 29. LIMITATION ON LIABILITY.
NO OBLIGATION OR LIABILITY WHATSOEVER OF THE BORROWER WHICH MAY ARISE AT
ANY TIME UNDER THIS AGREEMENT OR ANY OBLIGATION OR LIABILITY WHICH MAY BE
INCURRED BY IT PURSUANT TO ANY OTHER LOAN DOCUMENT SHALL BE PERSONALLY
BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE
PRIVATE PROPERTY OF ANY OF THE BORROWER'S MEMBERS REGARDLESS OF WHETHER SUCH
OBLIGATION OR LIABILITY IS IN THE NATURE OF CONTRACT, TORT OR OTHERWISE;
PROVIDED, HOWEVER, NOTHING HEREIN SHALL DIMINISH OR IMPAIR THE RIGHTS OF
AGENT AND THE BANKS TO PURSUE ANY REMEDY AGAINST ANY ASSETS OF THE BORROWER
OR RELIEVE, REDUCE OR IMPAIR ANY OBLIGATION OF ANY GUARANTOR UNDER ITS
GUARANTY OR INDEMNITY AGREEMENT.
Section 30. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
Section 31. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower under this Agreement and the other
Loan Documents.
Section 32. BANKRUPTCY.
(a) Material Inducement. Each of the Borrower, the undersigned
Guarantor, the Member and the Manager, jointly and severally, acknowledges
and agrees that the representations, warranties, covenants and agreements
contained in this Section 32 constitute a material inducement to the Agent
and the Banks to enter into this Agreement, the other Loan Documents and the
transactions contemplated hereby and thereby and that without the inclusion
of this Section 32 herein the Agent and the Banks would not have entered into
this Agreement and the other Loan Documents.
(b) No Fraudulent Intent. Each of the Borrower, the undersigned
Guarantor, the Member and the Manager, jointly and severally, hereby
acknowledges, warrants, represents and agrees that neither the execution and
delivery of this Agreement and the other Loan Documents nor the performance
of any actions required hereunder or thereunder is being consummated by the
Borrower, the Property Owner, the Guarantor, the Member or the Manager with
or as a result of any actual intent by such Persons, or any of them, to
hinder, delay or defraud any entity to which such Persons, or any of them,
are now or will hereafter become indebted.
(c) No Bankruptcy Intent. Each of the Borrower, the undersigned
Guarantor, the Member and the Manager, jointly and severally, hereby
represents, covenants and agrees that none of the Borrower, the Property
Owner, the Guarantor, the Member or the Manager has any intent (1) to file
any voluntary petition in bankruptcy under any Chapter of the Bankruptcy Code
or in any manner to seek relief, protection, reorganization, liquidation,
dissolution or similar relief for debtors under any local, state, federal or
other insolvency laws or laws providing for relief of debtors, or in equity,
or directly or indirectly to cause any of the other of such Persons to file
any such petition or to seek any such relief, either at the present time, or
at any time hereafter, or (2) directly or indirectly to cause any involuntary
petition under any Chapter of the Bankruptcy Code to be filed against any of
such Persons or directly or indirectly to cause any of such Persons to become
the subject of any dissolution, liquidation or insolvency proceeding or any
other proceeding pursuant to any local, state, federal, or other insolvency
laws or laws providing for relief of debtors, or in equity, either at the
present time, or at any time hereafter, or (3) directly or indirectly to
cause the Mezzanine Property, the Mezzanine Collateral, any other Collateral
or any portion thereof or any interest of such Persons in the Mezzanine
Property, the Mezzanine Collateral or any other Collateral to become the
property of any bankruptcy estate or the subject of any local, state, federal
or other bankruptcy, dissolution, liquidation or insolvency proceedings,
either at the present time or at any time hereafter.
(d) Agreement in Best Interests of Parties; Consideration. Each
of the Borrower, the undersigned Guarantor, the Member and the Manager,
jointly and severally, hereby acknowledges and agrees that (1) the
transactions evidenced by this Agreement and the other Loan Documents are in
the best interests of such Persons and the creditors of such Persons, and (2)
the benefit to inure to such Persons pursuant to this Agreement and the other
Loan Documents constitute substantially more than "reasonable equivalent
value" (as such term is used in Section 548 of the Bankruptcy Code) and "fair
consideration" (as such term is defined and used in the New York Debtor and
Creditor Law Sections 272-279), in exchange for the benefits to be provided
by such Persons to the Agent and the Banks pursuant to this Agreement and the
other Loan Documents.
(e) Subsequent Bankruptcy; Waiver of Automatic Stay.
(1) It is expressly agreed and understood by the parties
hereto that, in the event the Property Owner, the Borrower, the
Guarantor, the Member, the Manager, the Mezzanine Property or other
Mezzanine Collateral, or any portion thereof, shall be or become the
subject of any bankruptcy proceeding or the property of any bankruptcy
estate, the United States Bankruptcy Court for the Southern District of
New York (hereinafter referred to as the "Bankruptcy Court") shall have
the sole and exclusive jurisdiction of such bankruptcy proceeding. The
parties hereto hereby further acknowledge and agree that any voluntary
bankruptcy petition filed by any of the Property Owner, the Borrower,
the Guarantor, the Member or the Manager, or any involuntary bankruptcy
petition caused to be filed by any of the Property Owner, the Borrower,
Guarantor, the Member, the Manager or any affiliate thereof against any
of the Property Owner, the Borrower, the Member, the Guarantor or the
Manager (any such bankruptcy filing being hereinafter referred to as a
"Bad Faith Filing"), or any other action by the Borrower or such
Persons, or any of them, to attempt in any manner to hinder, delay,
impede, stay, void, rescind or nullify any lawful action taken by Agent
to exercise its rights and remedies under this Agreement or any of the
other Loan Documents, or at law or in equity, from and after the date
hereof, or pursuant to any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar proceedings, would be in bad faith
and contrary to the purposes of the bankruptcy laws, would be for the
sole purpose of delaying, inhibiting or interfering with the exercise by
Agent of its rights and remedies under this Agreement and the Loan
Documents and would, in and of itself, constitute "cause" for relief
from the automatic stay pursuant to the provisions of Section 362(d)(1)
of the Bankruptcy Code. Without limitation of the foregoing, the
parties hereto hereby further acknowledge and agree that, in the event
of any Bad Faith Filing by or against any of the Property Owner, the
Borrower, Guarantor, the Member or the Manager, or their respective
successors, successors-in-interest or assigns, Agent shall be entitled
to obtain upon ex parte application therefor, and without further notice
or action of any kind or nature whatsoever, (A) an order from the
Bankruptcy Court prohibiting the use of Agent's "cash collateral" (as
such term is defined in Section 363 of the Bankruptcy Code) in
connection with the Loan, and (B) an order from the Bankruptcy Court
granting immediate relief from the automatic stay pursuant to Section
362 of the Bankruptcy Code so as to permit Agent to exercise all of its
rights and remedies pursuant to the Mezzanine Loan Documents, and at law
and in equity.
(2) The Borrower, the undersigned Guarantor, the Member and
the Manager covenant not to directly or indirectly oppose or otherwise
defend against Agent's effort to obtain relief from the stay pursuant to
Section 32(e)(1), above, and covenant and agree that Agent shall be
entitled to the lifting of the stay pursuant to Section 32(e)(1), above,
without the necessity of an evidentiary hearing and without the
necessity or requirement that Agent establish or prove the value of the
Mezzanine Collateral or any other Collateral, the lack of adequate
protection of Agent's interest in the Mezzanine Collateral or any other
Collateral, the lack of any reasonable prospect of reorganization with
respect either to the Property Owner, the Borrower, the Guarantor, the
Member, the Manager, or the Mezzanine Collateral or any other
Collateral, or the Borrower's, the Guarantor's, the Member's or the
Manager's lack of equity in the Mezzanine Collateral.
(3) The waiver by the Borrower, the undersigned Guarantor,
the Member and the Manager of the Section 362 automatic stay contained
in the Bankruptcy Code pursuant to Section 32(e)(1) and (2), above, and
the waiver of the Section 362 automatic and Section 105 supplemental
stay contained in the Bankruptcy Code pursuant to Section 32(f), below,
shall be unconditional and absolute, and each of the Borrower, the
Member, the Manager and the Guarantor hereby agree never to directly or
indirectly maintain before any court that such waiver of the automatic
stay and supplemental stay should not be strictly enforced.
(f) Waiver of Automatic and Supplemental Stays. Each of the
Borrower, the undersigned Guarantor, the Member and the Manager, on behalf of
itself only, hereby represents, covenants and agrees, in the event of the
filing of any voluntary or involuntary petition in bankruptcy by or against
any of the Property Owner, the Borrower, the Guarantor, the Member or the
Manager, not to assert or request any other party to assert that the
automatic stay provided by Section 362 of the Bankruptcy Code shall operate
or be interpreted to stay, interdict, condition, reduce or inhibit the
ability of Agent to enforce any rights it has by virtue of the Mezzanine Loan
Documents, or any other rights Agent has, whether now or hereafter acquired,
against any of the Property Owner, the Borrower, the Guarantor, the Member,
the Manager or against any Mezzanine Collateral; and further, in the event of
the filing of any voluntary or involuntary petition in bankruptcy by or
against any of the Property Owner, the Borrower, the Guarantor, the Member or
the Manager, not to seek a supplemental stay or any other relief, whether
injunctive or otherwise, pursuant to Section 105 of the Bankruptcy Code or
any other provision of the Bankruptcy Code, to stay, interdict, condition,
reduce or inhibit the ability of Agent to enforce any rights it has by virtue
of the Mezzanine Loan Documents, or at law or in equity, or any other rights
Agent has, whether now or hereafter acquired against the Property Owner, the
Borrower, the Guarantor, the Member, the Manager or against any Mezzanine
Collateral. The parties hereto acknowledge that the waivers in this Section
32(f) with respect to an involuntary petition shall not be effective until
the occurrence of an Event of Default provided that none of the Borrower, the
Guarantor, the Member, the Manager or the Property Owner directly or
indirectly causes such petition to be filed against any of them.
(g) Approval Rights Regarding Bankruptcy Proceeding. Upon the
occurrence and during the continuance of any Event of Default, all rights of
the Borrower, the Guarantor, the Member and the Manager to exercise their
Voting Interests in the Property Owner, the Manager, or the Member, as the
case may be, shall automatically terminate and cease to exist and all such
rights shall thereupon be automatically vested in the Agent who shall
thereupon have the sole and exclusive right to exercise such Voting
Interests. Without limiting the foregoing, in the event of a Bad Faith
Filing or any other voluntary or involuntary bankruptcy filing or any other
insolvency proceeding of any kind under local, state, federal or other
insolvency laws involving the Property Owner, the Borrower, the Guarantor,
the Member or the Manager, or all of them, or any of their properties
(collectively the "Bankruptcy Filings"), the Borrower, the undersigned
Guarantor, the Member and the Manager, each acknowledge and agree to
recognize the rights and powers granted to the Agent in this Section 32(g)
and agree not to oppose or object on any basis whatsoever to the exercise by
the Agent of such rights in connection with the Bankruptcy Filings. Further,
upon the commencement of one or more Bankruptcy Filings, the Borrower, the
undersigned Guarantor, the Member and the Manager, jointly and severally,
covenant and agree: (1) not to propose, approve, vote for, or acquiesce in a
plan of reorganization concerning the Property Owner, the Borrower, the
Guarantor, the Member, the Manager, or all of them, as it directly or
indirectly relates to the Property Owner, the Manager, the Member, the
Mezzanine Property or the Mezzanine Collateral, without the consent of Agent;
(2) not to challenge or object on any basis whatsoever to the standing of
Agent to be recognized as a creditor and/or party-in-interest in the
Bankruptcy Filings; and (3) not to violate or breach any of the covenants or
agreements contained in this Agreement and any of the Loan Documents.
(h) Miscellaneous Representations. Each of the Borrower, the
undersigned Guarantor, the Member and the Manager warrant and represent to
Agent and the Banks that, other than Agent and the Banks, applicable taxing
authorities, and as to the Borrower only, the Indebtedness permitted by this
Agreement, the Borrower, the Guarantor, the Member and the Manager have no
creditors; that none of such Persons has any employees; that each of such
Persons other than the Borrower are single asset entities such that each of
such Persons does not own or hold any beneficial interest in any property of
any kind or nature whatsoever other than their respective direct or indirect
interests in the Property Owner; and that any dispute which may arise between
Agent, the Banks, the Borrower (arising from its interest in the Mezzanine
Collateral), any Guarantor (arising from its interest in the Mezzanine
Collateral), Member or Manager, or any of them, would be, for all intents and
purposes, a dispute, involving only Agent and the Banks and the Borrower,
such Guarantor, the Member or the Manager, or any of them, as applicable.
(i) Covenant of Noninterference and Cooperation.
(1) The Borrower, the undersigned Guarantor, the Member and
the Manager, jointly and severally, covenant and agree that, except for
a "Permitted Defense" (as defined in the Conditional Guaranty), none of
them shall take any action of any kind or nature whatsoever, either
directly or indirectly, to oppose, impede, obstruct, hinder, frustrate,
enjoin or otherwise interfere with the exercise by Agent of any of
Agent's rights and remedies against or with respect to the Mezzanine
Collateral, the Mezzanine Property or the Mezzanine Loan Documents,
including specifically, but without limitation, those rights and
remedies contained in this Section 32, at law or in equity, and shall
not, either directly or indirectly cause any other Person to take any of
the foregoing actions.
(2) The Borrower, the undersigned Guarantor, the Member and
the Manager, jointly and severally, covenant and agree, except with
respect to a Permitted Defense, to cooperate fully and completely with
the exercise by Agent of any of Agent's rights and remedies against or
with respect to the Mezzanine Collateral or the Mezzanine Loan
Documents, including specifically, but without limitation, those rights
and remedies contained in this Section 32.
(3) The Borrower, the undersigned Guarantor, the Member and
the Manager, jointly and severally covenant and agree that any violation
of either Section 32(i)(1) or (2), above, or the occurrence of any
"Triggering Event" (as defined in the Conditional Guaranty), will
constitute an act of bad faith undertaken with intent to hinder, delay
and defraud Agent.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C.,
a Delaware limited liability company, its
managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By:/s/ Gregory F. Hughes
----------------------------
Name Gregory F. Hughes
Title CFO & Treasurer
BANKBOSTON, N.A., a national banking
association, individually and as Agent
By:/s/ Mark E. Basham
---------------------------------
Name: Mark E. Basham
Title: Managing Director
[BANK SEAL]
<PAGE>
GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership, individually and as
Co-Arranger and Co-Syndication Agent
By: Goldman Sachs Real Estate Funding
Corp., general partner
By:/s/ Robert R. Foley
-----------------------------
Name: Robert R. Foley
Title: Authorized Signatory
[CORPORATE SEAL]
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attn: Mr. Roger Boone
<PAGE>
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Sylvia Gross
-------------------------------
Title: Vice President
By: /s/ Nichols Nouvel
-------------------------------
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT
590 Madison Avenue
New York, New York 10022
Attn: Mr. Johnathan Oh
<PAGE>
COMERICA BANK
By: /s/ Charles Weddell
------------------------------
Title: Vice President
Comerica Bank
Comerica Tower, 7th Floor
500 Woodward Avenue
Detroit, Michigan 48226-3256
Attn: Mr. Charles Weddell
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
By: Hartford Investment Services, Inc., its
Agent and Attorney-in-Fact
By: /s/ Dennis F. Kraft
--------------------------------
Dennis F. Kraft
--------------------------------
[Print Name]
Its: Senior Vice President
--------------------------------
[Title]
Hartford Life and Annuity Insurance Company
c/o Hartford Life Insurance Companies
c/o Investment Department - ABS/CMBS Sector
P. O. Box 1744
Hartford, Connecticut 06114-1744
<PAGE>
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Tony Premer
---------------------------------
Title: Assistant Vice President
By: /s/ C.S. Dillon
---------------------------------
Title: Assistant Secretary
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660-6397
Attn: Mr. Tony Premer
<PAGE>
WEBSTER BANK
By: /s/ Bill Chamberland
-----------------------------
Title: Senior Vice President
Webster Bank
City Place II, 185 Asylum Street
Hartford, Connecticut 06103
Attn: Mr. Bill Chamberland
<PAGE>
The undersigned Member, Manager and Guarantor hereby join in this
Agreement for the purpose of being bound to the provisions of Section 32 of
this Agreement.
MEMBER:
WELLS AVENUE HOLDINGS L.L.C., a Delaware
limited liability company
By: Wellsford/Whitehall Holdings, L.L.C., a
Delaware limited liability company, its
sole member
By: Wellsford/Whitehall Properties II,
L.L.C., a Delaware limited liability
company, its managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By:/s/ Gregory F. Hughes
----------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
MANAGER:
WASH MANAGER L.L.C., a Delaware limited
liability company
By: Wells Avenue Holdings L.L.C., a Delaware
limited liability company, its sole member
By: Wellsford/Whitehall Holdings, L.L.C.,
a Delaware limited liability company,
its sole member
By: Wellsford/Whitehall Properties
II, L.L.C., a Delaware limited
liability company, its managing
member
By: Wellsford Commercial
Properties Trust, a
Maryland real estate
investment trust, its
manager
By:/s/ Gregory F. Hughes
-----------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
GUARANTOR:
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
--------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
-------------------------------
Name: Alan S. Kava
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF NOTE
$______________ _______________
FOR VALUE RECEIVED, the undersigned WELLSFORD/WHITEHALL HOLDINGS,
L.L.C., a Delaware limited liability company, hereby promises to pay to
___________________ _____________ or order, in accordance with the terms of
that certain First Amended and Restated Loan Agreement dated as of July __,
1998 (the "Loan Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of _______________ _________________________ DOLLARS
($______________), or such amount as may be advanced by the payee hereof
under the Loan Agreement with daily interest from the date hereof, computed
as provided in the Loan Agreement, on the principal amount hereof from time
to time unpaid, at a rate per annum on each portion of the principal amount
which shall at all times be equal to the rate of interest applicable to such
portion in accordance with the Loan Agreement, and with interest on overdue
principal and, to the extent permitted by applicable law, on overdue
installments of interest and late charges at the rates provided in the Loan
Agreement. Interest shall be payable on the dates specified in the Loan
Agreement, except that all accrued interest shall be paid at the stated or
accelerated maturity hereof or upon the prepayment in full hereof.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Loan Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Loan Agreement.
The principal of this Note may be due and payable in whole or in part prior
to the maturity date stated above and is subject to mandatory prepayment in
the amounts and under the circumstances set forth in the Loan Agreement, and
prepayment is permitted or prohibited in whole or from time to time in part,
all as set forth in the Loan Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of acceleration of the maturity of any of
the Obligations or otherwise, shall the interest contracted for, charged or
received by the Banks exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, interest would otherwise be
payable to the Banks in excess of the maximum lawful amount, the interest
payable to the Banks shall be reduced to the maximum amount permitted under
applicable law; and if from any circumstance the Banks shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to
the reduction of the principal balance of the Obligations and to the payment
of interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the Borrower.
All interest paid or agreed to be paid to the Banks shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal of the
Obligations (including the period of any renewal or extension thereof) so
that the interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all
agreements between the Borrower and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount of
this Note may become or be declared due and payable in the manner and with
the effect provided in said Loan Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of New York (without giving effect to the conflict of laws rules
of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Loan Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized officers,
executed this Note under seal as of the day and year first above written.
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C.,
a Delaware limited liability company, its
managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: ___________________________
Name
Title
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR LOAN
BankBoston, N.A.,as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the First Amended and
Restated Loan Agreement dated July __, 1998, as from time to time in effect
(the "Loan Agreement"), among Wellsford/Whitehall Holdings, L.L.C. (the
"Borrower"), BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and the other Banks from time to time party thereto, the
Borrower hereby requests and certifies as follows:
1. Loan. The Borrower hereby requests a Loan under Section 2.1 of the
Loan Agreement:
Principal Amount: $
Type (Eurodollar, Base Rate):
Drawdown Date: _____________, 19__
Interest Period:
by credit to the general account of the Borrower with the Agent at the
Agent's Head Office.
2. Use of Proceeds. Such Loan shall be used for the following
purposes permitted by Section 7.11 of the Loan Agreement:
[Describe]
3. Capital Improvement Project. In the event that such Loan relates
to any Capital Improvement Project or portion thereof, the Borrower
represents and warrants that such Loan will reimburse the Borrower for or pay
costs incurred for work on the Capital Improvement Project identified above,
which work covered by this request is in place or is for stored materials
which are properly secured. The Borrower further certifies that all
materialmen, laborers, subcontractors and any other parties who might or
could claim statutory or common law liens and are furnishing or have
furnished material or labor to the Mortgaged Property in connection with such
Capital Improvement Project have been paid (or will be paid from the proceeds
of the requested advance) all amounts due for such labor and materials.
4. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect to
the making of the Loan requested hereby. No condemnation proceedings are
pending or to the Borrower's knowledge threatened against any Mortgaged
Property or other Collateral.
5. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower and the Guarantor contained in the Loan
Agreement, in the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with the Loan Agreement was true as of
the date as of which it was made and shall also be true at and as of the
Drawdown Date for the Loan requested hereby (except that representations as
to the Guarantor shall not be deemed to have been repeated), with the same
effect as if made at and as of such Drawdown Date (except to the extent of
changes resulting from transactions contemplated or permitted by the Loan
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially
adverse, and except to the extent that such representations and warranties
relate expressly to an earlier date) and no Default or Event of Default has
occurred and is continuing.
6. Other Conditions. All other conditions to the making of the Loan
requested hereby set forth in Section 11 of the Loan Agreement have been
satisfied. (Reference title insurance "date down", if applicable.)
7. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrower on and as of such Drawdown Date.
8. Definitions. Terms defined in the Loan Agreement are used herein
with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_______________, 199___.
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C.,
a Delaware limited liability company, its
managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: ___________________________
Name_______________________
Title______________________
<PAGE>
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Reference is made to the First Amended and Restated Loan Agreement dated
as of July __, 1998 (the "Loan Agreement") by and among Wellsford/Whitehall
Holdings, L.L.C. (the "Borrower"), BankBoston, N.A., for itself and as Agent,
Goldman Sachs Mortgage Company, and the other Banks from time to time party
thereto. Terms defined in the Loan Agreement and not otherwise defined
herein are used herein as defined in the Loan Agreement.
Pursuant to the Loan Agreement, the Borrower is furnishing to you
herewith (or has most recently furnished to you) the financial statements of
the Borrower for the fiscal period ended _______________ (the "Balance Sheet
Date"). Such financial statements have been prepared in accordance with
generally accepted accounting principles and present fairly the financial
position of the Borrower covered thereby at the date thereof and the results
of their operations for the periods covered thereby, subject in the case of
interim statements only to normal year-end audit adjustments.
This certificate is submitted in compliance with requirements of Section
2.6(iii), Section 5.3(a)(ii), Section 5.3(b)(ii), Section 7.4(d) or Section
10.14 of the Loan Agreement. If this Certificate is provided under a
provision other than Section 7.4(d), the calculations provided below are made
using the financial statements of the Borrower as of the Balance Sheet Date
adjusted in the best good-faith estimate of the Borrower to give effect to
the making of a Loan, extension of the Maturity Date, acquisition or
disposition of property or other event that occasions the preparation of this
certificate; and the nature of such event and the Borrower's estimate of its
effects are set forth in reasonable detail in an attachment hereto. The
undersigned officer of the Borrower is its chief financial or chief
accounting officer.
The undersigned officer has caused the provisions of the Loan Agreement
to be reviewed and has no knowledge of any Default or Event of Default.
(Note: If the signer does have knowledge of any Default or Event of Default,
the form of certificate should be revised to specify the Default or Event of
Default, the nature thereof and the actions taken, being taken or proposed to
be taken by the Borrower with respect thereto.)
The Borrower is providing the following information to demonstrate
compliance as of the date hereof with the following covenants:
I. Section 9.1 Debt Service Coverage Test Amount.
A. Net Operating Income
Net Income for most recent quarter from $____________
Mortgaged Properties and Mezzanine Properties
Plus depreciation and amortization $____________
Plus Capital Expenditures (including tenant $____________
improvements and leasing commissions)
Plus/Minus Rent Adjustments $____________
Minus Rents included in Net Income from ($___________)
tenants delinquent in excess of 60 days
Net Operating Income for three prior quarters:
Quarter ended __________ $____________
Quarter ended __________ $____________
Quarter ended __________ $____________
Total $____________
B. Capital Improvement Reserve for $____________
Mortgaged Properties and Mezzanine Properties
C. Debt Service Coverage Test Amount $____________
[A minus B must equal or exceed 1.35 times C
for the period ending on or before December 31,
1998; A minus B must equal or exceed 1.45 times
C thereafter]
II Section 9.2 Designated Collateral Value. (Attach separate
worksheet for each
Mortgaged Property and
the Mezzanine
Property)
A. Aggregate of all Designated $____________
Collateral Values (per attached
worksheet)
B. Total outstanding principal balance $____________
of Loans (after giving effect to any
Loan Request)
III Section 8.9 Development.
A. Aggregate cost of Real Estate $____________
Under Development
B. WWP Consolidated Total Assets $____________
A may not exceed the greater of $25,000,000.00 or 10% of B.
B may not exceed A
IN WITNESS WHEREOF, I have hereunto set may hand this __ day
____________, _______.
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C.,
a Delaware limited liability company, its
managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: ___________________________
Name_______________________
Title______________________
<PAGE>
EXHIBIT D
FORM OF REQUEST FOR EXTENSION OF LOAN
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.8 of the First Amended and
Restated Loan Agreement dated July __, 1998, as from time to time in effect
(the "Loan Agreement"), among Wellsford/Whitehall Holdings, L.L.C. (the
"Borrower"), BankBoston, for itself and as Agent, Goldman Sachs Mortgage
Company, and the other Banks from time to time party thereto, the Borrower
hereby requests and certifies as follows:
1. Extension Request. The Borrower hereby irrevocably requests that
the Maturity Date be extended as provided in Section 2.8 of the Loan
Agreement.
2. Extension Fee. The Borrower undertakes to pay the extension fee as
required by Section 2.8 (b)(i) of the Loan Agreement as required therein.
3. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect to
the extension requested hereby.
4. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower, the Property Owner, the Manager, the
Member and the Guarantor contained in the Loan Agreement, in the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with the Loan Agreement was true and correct in all material
respect as of the date as of which it was made and (other than
representations as to the Guarantor) shall also be true and correct in all
material respects at and as of the Maturity Date (without regard to such
extension request) with the same effect as if made at and as of the Maturity
Date (without regard to such extension request) (except to the extent of
changes occurring in the ordinary course of business that have not had any
materially adverse affect on the business of such Person).
5. Other Conditions. All other conditions to the extension to the
Loan requested hereby set forth in Section 2.8 of the Loan Agreement have
been satisfied.
6. Date. Except to the extent, if any, specified by notice actually
received by the Agent prior to the Maturity Date (without regard to such
extension request) specified above, the foregoing representations and
warranties shall be deemed to have been made by the Borrower on and as of the
Maturity Date (without regard to such extension request).
7. Definitions. Terms defined in the Loan Agreement are used herein
with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
______________, 199__.
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C.,
a Delaware limited liability company, its
managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: ___________________________
Name _________________________
Title_________________________
<PAGE>
EXHIBIT E
CERTIFICATE
In connection with the purchase being made by the undersigned of a
participation interest in or assignment of the loan (the "Loan") made by the
"Banks" (as defined in the Loan Agreement referred to below) to
Wellsford/Whitehall Holdings, L.L.C. (the "Borrower") pursuant to a First
Amended and Restated Loan Agreement dated July __, 1998 (the "Loan
Agreement"), the undersigned represents, warrants and covenants as follows:
(1) The undersigned either:
(a) is a "qualified institutional buyer" as defined in paragraph (a) of
Rule 144A under the Securities Act of 1933, acting for its own
account, the account of another "qualified institutional buyer", or
the account of a "qualified purchaser" as defined in paragraph
(b)(i)(2) below; provided that if the undersigned is a dealer
described in paragraph (a)(1)(ii) of Rule 144A, the undersigned
owns and invests on a discretionary basis at least $25,000,000 in
securities of issuers that are not affiliated persons of such
dealer, all within the meaning of Rule 2a51-1(g)(1) under the
Investment Company Act of 1940 (the "Act"). (For purposes of
making this determination, a plan referred to in paragraph
(a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred
to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of
such a plan, is not deemed to be acting for its own account if
investment decisions with respect to the plan are made by the
beneficiaries of the plan, except with respect to investment
decisions made solely by the fiduciary, trustee or sponsor of such
plan.)
OR
(b) (i)(1) is acting for its own account or (2) is acting for the
account of individuals or entities each of which is a "qualified
purchaser" as defined in Section 2(a)(51)(A) of the Act and the
rules promulgated thereunder; and (ii) owns and invests on a
discretionary basis at least $25,000,000 in "investments" (as
defined in Section 2(a)(51)(A) of the Act), after deducting the
amount of any outstanding indebtedness incurred to acquire or for
the purpose of acquiring such investments.
OR
(c) is a company (other than a trust formed for the specific purpose of
acquiring an interest in the Loan) all the securities of which are
beneficially owned by "qualified purchasers" as defined in
paragraph (b)(i)(2) above.
(2) The undersigned acknowledges and agrees that the interest in the Loan is
being purchased by the undersigned for its own account and not pursuant to a
public offering and that such interest may only be sold or transferred in a
manner that does not constitute a public offering to another entity that can
deliver to the Borrower a certification to the effect set forth in paragraphs
1(a), (b) or (c) and 2 of this Certificate and otherwise in accordance with
the Loan Agreement.
[name of proposed transferee]
By: ____________________________________
Name:
Title:
<PAGE>
SCHEDULE 1.1
BANKS AND COMMITMENTS
Name and Address Commitment Commitment Percentage
- ---------------- ---------- ---------------------
BankBoston, N.A. $77,500,000.00 25.8333%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Goldman Sachs Mortgage Company $87,500,000.00 29.1667%
85 Broad Street
New York, New York 10004
Attn: Mr. Roger Boone
Eurodollar Lending Office
Same as above
Pacific Life Insurance Company $50,000,000.00 16.6667%
700 Newport Center Drive
Newport Beach, California 92660-6397
Attn: Mr. Tony Premer
Eurodollar Lending Office
Same as above
Hartford Life and Annuity Insurance $35,000,000.00 11.6667%
Company
c/o Hartford Life Insurance Companies
Investment Operations
c/o Portfolio Support, 9th Floor
P. O. Box 1744
Hartford, Connecticut 06114-1744
Eurodollar Lending Office
Same as above
Comerica Bank $20,000,000.00 6.6667%
Comerica Tower, 7th Floor
500 Woodward Avenue
Detroit, Michigan 48226-3256
Attn: Mr. Charles Weddell
Eurodollar Lending Office
Same as above
BHF-Bank Aktiengesellschaft $10,000,000.00 3.3333%
590 Madison Avenue
New York, New York 10022
Attn: Mr. Johnathan Oh
Eurodollar Lending Office
Same as above
Webster Bank $10,000,000.00 3.3333%
City Place II, 185 Asylum Street
Hartford, Connecticut 06103
Attn: Mr. Bill Chamberland
Eurodollar Lending Office
Same as above
First American Bank Texas, SSB $10,000,000.00 3.3333%
14651 Dallas Parkway
Suite 400
Dallas, Texas 75240
Attn: Amy Haws
_______________ ____
Total Commitment $300,000,000.00 100%
Percentages may not equal 100% due to rounding.
<PAGE>
SCHEDULE 5.3
DESCRIPTION OF GREENBROOK CORPORATE
CENTER AND POINT VIEW VACANT LAND
<PAGE>
SCHEDULE 6.3
TITLE TO PROPERTIES
None.
<PAGE>
SCHEDULE 6.4
ALL-IN ACQUISITION COST, DESIGNATED COLLATERAL VALUE,
STABILIZED PROPERTIES
AND RELEASE PRICES
EQUITY INTERESTS
Stabilized
Property/
Designated Non-Stabilized Release
Property Acquisition Cost Collateral Value Property Price
-------- ---------------- ---------------- -------- ---------
Wells Research
(75/85/95) $________ $________ $________
128 Technology $________ $________ $________
Dedham Place $________ $________ $________
7/57 Wells $________ $________ $________
201 University $________ $________ $________
Norfolk Place $________ $________ $________
MORTGAGED PROPERTY
<PAGE>
SCHEDULE 6.7
LITIGATION
None.
<PAGE>
SCHEDULE 6.17
ERISA PLANS
None.
<PAGE>
SCHEDULE 6.21
SUBSIDIARIES
Wells Avenue Holdings L.L.C.
WASH Manager L.L.C.
Wells Avenue Senior Holdings LLC
WEL/WH Convention Managers, L.L.C.
<PAGE>
SCHEDULE 6.24
AGREEMENTS
NONE
<PAGE>
SCHEDULE 6.31-1
MEZZANINE MORTGAGE LOAN DOCUMENTS
<PAGE>
SCHEDULE 6.31-2
ALLOCATION OF MEZZANINE MORTGAGE LOAN
Property Allocated Loan Amount Percentage
------- --------------------- ----------
128 Tech Center $17,666,917 25.60%
Waltham, Massachusetts
7/57 Wells Avenue $ 6,937,010 10.05%
Newton, Massachusetts
75/85/95 Wells Avenue $19,497,301 28.26%
Newton, Massachusetts
201 University Avenue $ 7,656,783 11.10%
Westwood Massachusetts
Dedham Place $14,148,837 20.51%
Dedham, Massachusetts
Norfolk Place (333 Elm Street) $ 3,093,152 4.48%
Dedham, Massachusetts __________ ____
$69,000,000 100.0%
FORM OF NOTE
$50,000,000.00 July 16, 1998
- -------------- -------------
FOR VALUE RECEIVED, the undersigned WELLSFORD/WHITEHALL HOLDINGS,
L.L.C., a Delaware limited liability company, hereby promises to pay to
PACIFIC LIFE INSURANCE COMPANY or order, in accordance with the terms of that
certain First Amended and Restated Loan Agreement dated as of July 16, 1998
(the "Loan Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of FIFTY MILLION and no/100 DOLLARS ($50,000,000.00), or such
amount as may be advanced by the payee hereof under the Loan Agreement with
daily interest from the date hereof, computed as provided in the Loan
Agreement, on the principal amount hereof from time to time unpaid, at a rate
per annum on each portion of the principal amount which shall at all times be
equal to the rate of interest applicable to such portion in accordance with
the Loan Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Loan Agreement. Interest shall be
payable on the dates specified in the Loan Agreement, except that all accrued
interest shall be paid at the stated or accelerated maturity hereof or upon
the prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Loan
Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Loan Agreement.
The principal of this Note may be due and payable in whole or in part prior
to the maturity date stated above and is subject to mandatory prepayment in
the amounts and under the circumstances set forth in the Loan Agreement, and
prepayment is permitted or prohibited in whole or from time to time in part,
all as set forth in the Loan Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of acceleration of the maturity of any of
the Obligations or otherwise, shall the interest contracted for, charged or
received by the Banks exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, interest would otherwise be
payable to the Banks in excess of the maximum lawful amount, the interest
payable to the Banks shall be reduced to the maximum amount permitted under
applicable law; and if from any circumstance the Banks shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to
the reduction of the principal balance of the Obligations and to the payment
of interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the Borrower.
All interest paid or agreed to be paid to the Banks shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal of the
Obligations (including the period of any renewal or extension thereof) so
that the interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all
agreements between the Borrower and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount of
this Note may become or be declared due and payable in the manner and with
the effect provided in said Loan Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of New York (without giving effect to the conflict of laws rules
of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Loan Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized officers,
executed this Note under seal as of the day and year first above written.
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C.,
a Delaware limited liability company, its
managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
<PAGE>
By: /s/ Gregory F. Hughes
-------------------------
Name: Gregory F. Hughes
-------------------
Title: CFO & Treasurer
-----------------
AMENDED AND RESTATED ASSIGNMENT OF MEMBER'S INTEREST
THIS AMENDED AND RESTATED ASSIGNMENT OF MEMBER'S INTEREST (this
"Assignment"), made as of the 16th day of July, 1998, by WELLSFORD/WHITEHALL
HOLDINGS, L.L.C., a Delaware limited liability company ("Assignor"), to
BANKBOSTON, N.A., a national banking association ("BKB"), as Agent for itself
and the other Banks from time to time party to the Credit Agreement (as
hereinafter defined) (BKB, in its capacity as Agent, is hereinafter referred
to as "Agent").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Properties, L.L.C. ("WWP"), BKB, the other
lenders a party thereto and Agent have entered into that certain Revolving
Credit Agreement dated as of December 15, 1997 (the "Original Credit
Agreement"); and
WHEREAS, WWP was the sole member of Wells Avenue Holdings L.L.C., a
limited liability company formed under the laws of the State of Delaware (the
"Member"); and
WHEREAS, the Member is presently governed by that certain Certificate of
Formation filed on April 2, 1998 with the Delaware Secretary of State, and
that certain Operating Agreement for Wells Avenue Holdings L.L.C., a Delaware
limited liability company, dated as of May 15, 1998 (collectively the "Member
Organizational Agreements"); and
WHEREAS, WWP has merged with and into Assignor, with Assignor being the
surviving entity, and as a result thereof, Assignor has succeeded to the
interest of WWP in the Member; and
WHEREAS, Assignor, BKB, the other lenders a party thereto and Agent have
entered into that certain First Amended and Restated Loan Agreement dated of
even date herewith (as the same may be varied, extended, supplemented,
consolidated, amended, replaced, renewed or modified or restated, the "Credit
Agreement"), which in part amends and restates the Original Credit Agreement,
and pursuant to which the Banks a party to the Credit Agreement have agreed
to provide a loan to the Assignor in the amount of up to $300,000,000.00 (the
"Loan"), which Loan is evidenced by those certain Notes made by Assignor to
the order of the Banks in the aggregate principal face amount of
$300,000,000.00 (such notes, together with such other Notes as may be issued
pursuant to the Credit Agreement, as the same may be varied, extended,
supplemented, consolidated, amended, replaced, renewed, modified or restated,
are hereinafter referred to collectively as the "Note"); and
WHEREAS, WWP and Agent have entered into that certain Assignment of
Member's Interest dated as of May 15, 1998 (the "Original Assignment"),
pursuant to which WWP assigned to Agent its interests in the Member; and
WHEREAS, in connection with the merger of WWP into Assignor, and the
amendment and restatement of the Original Credit Agreement, the parties
desire to amend and restate the Original Assignment;
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
amend and restate the Original Assignment and covenant and agree as follows:
33. Definitions. Capitalized terms used herein that are not otherwise
defined herein shall have the meaning set forth in the Credit Agreement.
34. Grant of Security Interest. As security for the payment and
performance by Assignor of each and all of Assignor's duties,
responsibilities and obligations under this Assignment, the Credit Agreement,
the Note and any and all agreements evidencing, securing or otherwise
relating to the obligations evidenced by the Note and the Credit Agreement
(this Assignment, the Credit Agreement, the Note and such other agreements,
together with any and all renewals, modifications, consolidations and
extensions thereof, are hereinafter referred to collectively as the "Loan
Documents"; and said duties, responsibilities and obligations of Assignor are
hereinafter referred to collectively as the "Obligations"), Assignor does
hereby transfer, assign, pledge, convey and grant to Agent, and does hereby
grant a security interest to Agent in, all of Assignor's right, title and
interest in and to the following:
(a) All right, title, interest, claims or rights of Assignor now
or hereafter in, to or against the Member (including, without limitation,
Assignor's membership interest in the Member, the interest of Assignor in and
to the Member Organizational Agreements, the capital of the Member, and the
property and assets of the Member and any rights pertaining thereto) which
interest is evidenced by Certificate No. 2 (the "Certificate"), together with
any and all other securities, cash, certificates or other property, option or
right in respect of, in addition to or substitution or exchange for the
Certificate, or other property at any time and from time to time receivable
or otherwise distributed in respect of or in exchange for all or any thereof;
and
(b) All right, title and interest of Assignor in and to the
Contribution Agreement, and all claims, choses in action or things in action
now or hereafter arising thereunder, to the extent relating to all or any
part of the Mezzanine Property;
(c) Any and all profits, proceeds, accounts, income,
distributions, payments upon dissolution or liquidation of the Member or the
sale, financing or refinancing of any of the property or assets of the
Member, proceeds of a casualty or condemnation, return of capital, repayment
of loans, and payments of any kind or nature whatsoever, now or hereafter
distributable or payable by the Member to Assignor, by reason of Assignor's
interest in the Member or otherwise, or now or hereafter distributable or
payable to Assignor from any other source by reason of Assignor being a
member in the Member, or on account of any interest in or claim or rights
against the Member held by Assignor, or by reason of services performed by
Assignor for or on behalf of the Member or with respect to the assets of the
Member, and any and all proceeds from any transfer, assignment or pledge of
any interest of Assignor in, or claim or right against, the Member
(regardless of whether such transfer, assignment or pledge is permitted under
the terms hereof or the other Loan Documents), and all claims, choses in
action, or things in action or rights as a creditor now or hereafter arising
against the Member; and
(d) All accounts, contract rights and general intangibles now or
hereafter arising from any of the foregoing; and
(e) All notes or other documents or instruments now or hereafter
evidencing or securing any of the foregoing; and
(f) All right of Assignor to collect and enforce payments
distributable or payable by the Member to Assignor pursuant to the terms of
the Member Organizational Agreements; and
(g) All documents, writings, leases, books, files, records,
computer tapes, programs, ledger books and ledger pages arising from or used
in connection with any of the foregoing; and
(h) All renewals, extensions, additions, substitutions or
replacements of any of the foregoing; and
(i) All powers, options, rights, privileges and immunities
pertaining to any of the foregoing; and
(j) All proceeds of any of the foregoing and all cash, security or
other property distributed on account of any of the foregoing.
All of the foregoing described in this paragraph 2 are hereinafter referred
to collectively as the "Collateral". The items described in (a), above, are
sometimes hereinafter referred to as the "Member Interests"; and the items
described in (c) - (j), above, are sometimes hereinafter referred to
collectively as the "Distributions."
35. Obligations Secured. This Assignment secures the payment and
performance by Assignor of the Obligations. The amount that may be borrowed
by Assignor with respect to the direct and indirect interests in the Property
Owner shall not exceed $24,509,000.00; provided that the foregoing shall not
alter, diminish or impair the agreement of Assignor that the Collateral
secures all of the Obligations.
36. Collection of Distributions.
(a) It is acknowledged and agreed by the parties hereto that Agent
shall have sole and exclusive possession of the Distributions and that this
Assignment constitutes a present, absolute and current assignment of all the
Distributions and is effective upon the execution and delivery hereof.
Payments under or with respect to the Distributions shall be made as follows:
(1) Except as otherwise specifically provided in this
Paragraph 4, Assignor shall have no right to receive payments made under
or with respect to the Distributions (including without limitation any
Distributions from or relating to any sale, transfer, assignment,
conveyance, option or other disposition of, or any pledge, mortgage,
encumbrance, financing or refinancing of, or casualty to or condemnation
of, any of the Collateral or the Mezzanine Property regardless of
whether such event is permitted under the terms of the Loan Documents),
and all such payments shall be delivered directly by the Member to Agent
for application by Agent in satisfaction of the Obligations in such
order as Agent in its sole and absolute discretion shall determine.
(2) Except as otherwise specifically provided in this
Paragraph 4, if Assignor shall receive any payments made under or with
respect to the Distributions (including without limitation any
Distributions from or relating to any sale, transfer, assignment,
conveyance, option or other disposition of, or any pledge, mortgage,
encumbrance, financing or refinancing of, or casualty to or condemnation
of, any of the Collateral or the Mezzanine Property regardless of
whether such event is permitted under the terms of the Loan Documents),
Assignor shall hold all such payments in trust for Agent, will not co-
mingle such payments with other funds of Assignor, and will immediately
pay and deliver in kind, all such payments directly to Agent (with such
endorsements and assignments as may be necessary to transfer title to
Agent) for application by Agent in satisfaction of the Obligations in
such order as Agent in its sole and absolute discretion shall determine.
(3) Assignor hereby agrees for the benefit of the Member that
all payments actually received by Agent shall be deemed payments to
Assignor by the Member. Agent shall apply any and all such payments
actually received by Agent in satisfaction of the Obligations in such
order as Agent in its sole and absolute discretion shall determine.
Agent shall return to Assignor that portion of any payments actually
received by Agent from the Member which Agent determines, in the
exercise of its sole and absolute discretion but in good faith is not
needed to repay the Obligations.
(4) In furtherance of the foregoing, Assignor does hereby
notify and direct the Member and its members that all payments under or
with respect to the Distributions shall be made directly to Agent at the
address of Agent set forth in the Credit Agreement.
(b) Assignor shall cause the Property Owner, the Manager and the
Member promptly to distribute all net proceeds of the sale, transfer,
assignment, conveyance, option or other disposition of, or any mortgage,
hypothecation, encumbrance, financing or refinancing of, or casualty to or
condemnation of, any of its assets or properties, and any and all other
Distributions distributable or payable by the Property Owner, the Manager or
the Member or any member thereof under the terms of the Property Owner
Organizational Agreements, the Manager Organizational Agreements or the
Member Organizational Agreements, as applicable.
(c) Assignor hereby irrevocably designates and appoints Agent its
true and lawful attorney-in-fact, which appointment is coupled with an
interest, either in the name of Agent, or in the name of Assignor, at
Assignor's sole cost and expense, and regardless of whether Agent becomes a
member in the Member or not, to take any or all of the following actions:
(1) to ask, demand, sue for, attach, levy, settle,
compromise, collect, compound, recover, receive and give receipt and
acquittances for any and all Collateral and to take any and all actions
as Agent may deem necessary or desirable in order to realize upon the
Collateral, or any portion thereof, including, without limitation,
making any statements and doing and taking any actions on behalf of
Assignor which are otherwise required of Assignor under the terms of any
agreement as conditions precedent to the payment of the Distributions,
and the right and power to receive, endorse, assign and deliver, in the
name of Assignor, any checks, notes, drafts, instruments or other
evidences of payment received in payment of or on account of all or any
portion of the Collateral, and Assignor hereby waives presentment,
demand, protest and notice of demand, protest and non-payment of any
instrument so endorsed; and
(2) to institute one or more actions against the Member or
any member thereof in connection with the collection of the
Distributions, to prosecute to judgment, settle or dismiss any such
actions, and to make any compromise or settlement deemed desirable, in
Agent's sole and absolute discretion, with respect to such
Distributions, to extend the time of payment, arrange for payment in
installments or otherwise modify the terms of the Member Organizational
Agreements with respect to the Distributions or release the Member or
any member thereof from their respective obligations to pay any
Distribution, without incurring responsibility to, or affecting any
liability of, Assignor under the Member Organizational Agreements;
it being specifically understood and agreed, however, that Agent shall not be
obligated in any manner whatsoever to give any notices of default (except as
may be specifically required herein or the other Loan Documents) or to
exercise any such power or authority or be in any way responsible for the
preservation, maintenance, collection of or realizing upon the Collateral, or
any portion thereof, or any of Assignor's rights therein. Notwithstanding
anything contained in this Paragraph 4 to the contrary, provided no Event of
Default has occurred and is continuing, Assignor shall have a license
(revocable upon the occurrence and during the continuance of an Event of
Default) to receive Excess Property Income attributable to (A) rents, issues
and profits paid under Leases for any of the Mezzanine Property not more than
one (1) month in advance, (B) excess proceeds from a sale of a Mezzanine
Property that has been released in accordance with Section 5.3(b) of the
Credit Agreement, (c) proceeds from a casualty permitted to be paid to
Assignor pursuant to Section 7.7(k) of the Credit Agreement, (D) excess
amounts released from the reserves maintained under Sections 7.2, 7.3, 7.4
and 7.5 of the Mezzanine Mortgage Loan Agreement, and (E) rebates or refunds
of property taxes paid with respect to the Mezzanine Property. The foregoing
appointment is irrevocable and continuing and any such rights, powers and
privileges shall be exclusive in Agent, its successors and assigns until this
Assignment terminates as provided in Paragraph 13, below.
37. Warranties and Covenants. Assignor does hereby warrant and
represent to, and covenant and agree with, Agent and the Banks as follows:
(a) Performance. All duties, obligations and responsibilities
required to be performed by Assignor, Member and Manager as of the date
hereof under the Member Organizational Agreements, the Manager Organizational
Agreements and the Property Owner Organizational Agreements, as applicable,
have been performed, and no default or condition which with the passage of
time or the giving of notice, or both, would constitute a default exists
under the Member Organizational Agreements, the Manager Organizational
Agreements and the Property Owner Organizational Agreements, as applicable.
(b) Organizational Agreements. A true, correct and complete copy
of the Member Organizational Agreements, the Manager Organizational
Agreements and the Property Owner Organizational Agreements together with all
amendments thereto, are attached hereto as Exhibit "A-1", "A-2" and "A-3".
The Member Organizational Agreements, the Manager Organizational Agreements
and the Property Owner Organizational Agreements have been duly authorized,
executed and delivered by the parties thereto and are in full force and
effect. Except for the Loan Documents and the Mezzanine Mortgage Loan
Documents, neither the Member nor Assignor is a party to or is bound by any
indenture, contract or other agreement which purports to prohibit, restrict,
limit, or control the transfer or pledge of the Collateral, the exercise of
voting rights with respect to the Member or the management of the Member.
(c) Title. Assignor is and shall remain the sole, lawful,
beneficial and record owner of the Member Interests and the Distributions,
free and clear of all liens, restrictions, claims, pledges, encumbrances,
charges, claims or rights of third parties and rights of set-off or
recoupment whatsoever (other than those in favor of Agent hereunder), and
Assignor has the full and complete right, power and authority to create a
security interest in the Collateral in favor of Agent, in accordance with the
terms and provisions of this Assignment. The Certificate has been duly
authorized and validly issued, and is fully paid and non-assessable.
Assignor is not and will not become a party to or otherwise be bound by any
agreement, other than the Loan Documents and the Mezzanine Mortgage Loan
Documents, which restricts in any manner the rights of any present or future
holder of the Certificate with respect thereto. Except for the right of
first offer with respect to a sale of 201 University Avenue, as set forth in
that certain lease between Dominic J. Saraceno, as landlord, and Cullinane
Database Systems, Inc. (formerly d/b/a Cullinet Software and now known as
Computer Associates), no Person has any option, right of first refusal, right
of first offer or other right to acquire all or any portion of the
Collateral.
(d) Sole Member. Assignor is the sole member of the Member, and
no other Person owns any legal, equitable or beneficial interest in the
Member or, except for the voting rights of the independent manager as set
forth in the Member Organizational Agreements and the Manager Organizational
Agreements, has any right to vote or exercise control over the Member or its
management. The Member Interests are not represented or otherwise evidenced
by any certificate or other document other than the Certificate.
(e) Priority. Upon the delivery of the Certificate to Agent, this
Assignment creates a valid and binding first priority security interest in
the Collateral securing the payment and performance of the Obligations and
the performance by Assignor of the Obligations, and upon the filing of UCC
Financing Statements with the Secretary of State of New York, the Office of
the Register of the City of New York and the Massachusetts Secretary of
State, all filings and other actions necessary to perfect and protect such
security interests shall have been duly made and taken. Neither Assignor nor
the Member has performed or will perform any acts which might prevent Agent
from enforcing any of the terms and conditions of this Agreement or which
would limit Agent in any such enforcement.
(f) Notes. All original notes and other documents or instruments
(if any) evidencing, constituting, guaranteeing or securing any of the
Distributions or any right to receive the Distributions have been endorsed to
and delivered to Agent.
(g) Principal Place of Business. For the purposes of
Article 9-401 of the New York Uniform Commercial Code, the principal place of
business of Assignor is located in New York County, New York. In the event
that Assignor has more than one place of business in the State of New York,
its chief executive office is located in New York County, New York. In order
to perfect the pledge and security interests granted herein against Assignor,
U.C.C. Financing Statements must be filed with the Secretary of State of New
York, the Office of the Register of the City of New York, New York County and
the Massachusetts Secretary of State.
(h) Securities Laws. The transactions contemplated by this
Assignment do not violate and do not require that any filing, registration or
other act be taken with respect to any and all laws pertaining to the
registration or transfer of securities, including without limitation the
Securities Act of 1933, the Securities and Exchange Act of 1934, and any and
all rules and regulations promulgated thereunder or any similar federal,
state or local law, rule, regulation or orders (collectively the "Applicable
Law") hereafter enacted or analogous in effect, as the same are amended and
in effect from time to time (such Act and any similar laws as from time to
time being in effect being referred to as the "Federal Securities Laws").
Assignor shall at all times comply with Applicable Law and the Federal
Securities Laws as the same pertain to all or any portion of the Collateral
or any of the transactions contemplated by this Assignment (provided that the
foregoing shall not apply to assignments by the Banks of interests in the
Loan pursuant to the Credit Agreement).
(i) No Transfer Tax. No transfer tax, deed tax, conveyance tax or
similar tax may be payable as a result of a transfer of the Collateral
(whether by foreclosure, conveyance in lieu of foreclosure or otherwise) by
Assignor to Agent.
(j) Contribution Agreement. Assignor has delivered to the Agent a
true, correct and complete copy of the Contribution Agreement and any
amendments thereto or other agreements relating thereto as of the date
hereof. Assignor is not materially in default thereunder and, to the best of
Assignor's knowledge, there are no defaults on the part of the "contributors"
thereunder.
(k) Destruction of Old Certificate. Certificate No. 1 of the
member interest of WWP in Member (the "Old Certificate") has been replaced by
the Certificate. The Old Certificate shall be destroyed and Assignor shall
cause the books and records of Member to reflect the foregoing.
38. General Covenants. Assignor covenants and agrees that, so long as
this Assignment is continuing:
(a) No Further Encumbrance. Except as expressly permitted by
Section 5.3(b) of the Credit Agreement, Assignor shall not, without the prior
written consent of Agent, which consent may be withheld by Agent in its sole
and absolute discretion, directly, indirectly or by operation of law, sell,
transfer, assign, dispose of, pledge, convey, option, mortgage, hypothecate
or encumber any of the Collateral, nor shall there occur, directly,
indirectly or by operation of law, without the prior written consent of Agent
in each instance, which consent may be withheld by Agent in its sole and
absolute discretion, any sale, assignment, transfer, conveyance, disposition,
option, mortgage, hypothecation, pledge or other encumbrance of (i) any
direct or indirect interests, rights or claims of Member in and to the
Manager or (ii) any direct or indirect interests, rights or claims of the
Member and the Manager in and to the Property Owner. The foregoing shall not
be deemed to restrict the transfer of interests in Assignor itself, which
transfers shall be governed by the terms of the Credit Agreement.
(b) Defense of Collateral. Assignor shall at all times defend the
Collateral against all claims and demands of all persons at any time claiming
any interest in the Collateral adverse to Agent's interest in the Collateral
as granted hereunder.
(c) Modification of Organizational Agreements. So long as this
Assignment remains in effect, Assignor shall not modify, amend, cancel,
release, surrender, terminate or permit the modification, amendment,
cancellation, release, surrender or termination of, the Member Organizational
Agreements, the Property Owner Organizational Agreements or the Manager
Organizational Agreements, or dissolve, liquidate, redeem, cancel, wind-up or
permit the dissolution, liquidation, redemption, cancellation, winding-up or
expiration of the Member, the Manger or the Property Owner or the Member
Organizational Agreements, the Property Owner Organizational Agreements or
the Manager Organizational Agreements, or seek or permit the partition of any
of the assets of the Member, the Manager or the Property Owner, without in
each instance the prior written consent of Agent, which consent may be
withheld by Agent in its sole and absolute discretion; provided, however,
that Agent shall not unreasonably withhold its consent to any modification or
amendment of the Property Owner Organizational Agreements, the Member
Organizational Agreements or the Manager Organizational Agreements which does
not affect or have an impact on the management of the Property Owner, the
Manager or the Member, as applicable, any voting rights, the rights to
receive distributions, any provisions of the Property Owner Organizational
Agreements, the Member Organizational Agreements or the Manager
Organizational Agreements, as applicable, concerning actions that the
Property Owner, the Manager or the Member, as applicable, is either
authorized to do or that are ultra vires, or otherwise materially affect the
Property Owner, the Manager or the Member, as applicable, the Collateral or
the rights and benefits afforded to Agent and the Banks pursuant to this
Assignment and the other Loan Documents (such modifications or amendments
described in the foregoing proviso are hereinafter referred to as the "Minor
Amendments").
(d) Performance of Duties.
(1) Assignor shall perform all of its duties,
responsibilities and obligations under the Member Organizational
Agreements and with respect to the Collateral, and shall diligently and
in good faith protect the value of the Collateral. Assignor shall cause
Member and Manager to perform all of their respective duties,
responsibilities and obligations under the Manager Organizational
Agreements and the Property Owner Organizational Agreements,
respectively.
(2) Assignor shall not, without the prior written consent of
Agent, which consent may be withheld by Agent in its sole and absolute
discretion, take or permit to be taken any action which could result in
the sale, reduction, cancellation, dilution, diminution, conversion or
withdrawal of any interest of Assignor in the Member, of the Member in
the Manager, or of the Member or the Manager in the Property Owner, or
omit to take any action necessary to prevent any such sale, reduction,
cancellation, dilution, diminution, conversion or withdrawal, or
otherwise take any action or omit to take any action that would, in the
exercise of Agent's judgment, jeopardize or diminish the security
interests or rights and benefits afforded to Agent by the Collateral.
Without limiting the foregoing, Assignor shall not consent to or permit
to occur the admission of any new member in the Member, the Manager or
the Property Owner, the creation of any new class of interest in the
Member, the Manager or the Property Owner, or the issuance, directly or
indirectly, of any other equity or beneficial interest in the Member,
the Manager or the Property Owner.
(e) Payment of Taxes. Assignor shall pay all taxes and other
charges against the Collateral, shall not use the Collateral illegally, and
shall not suffer to exist any loss, theft, damage or destruction of the
Collateral and shall suffer to exist no levy, seizure or attachment of the
Collateral.
(f) Enforcement of Organizational Agreements. Assignor, at the
request of Agent, shall take such actions as Agent may reasonably require to
enforce the terms of the Member Organizational Agreements, the Property Owner
Organizational Agreements and the Manager Organizational Agreements,
respectively, or any other contract, agreement or instrument included in,
giving rise to, creating, establishing, evidencing or relating to the
Collateral or to collect or enforce any claim for payment or other right or
privilege assigned to Agent hereunder.
(g) Further Assurances. Assignor authorizes Agent, at the expense
of Assignor, to execute and file any financing statement or statements deemed
necessary by Agent to perfect its security interest in any of the Collateral.
Any such financing statement may be signed by Agent alone. Assignor will
sign and deliver any financing statements and other documents, and perform
such other acts as Agent may deem necessary or desirable from time to time to
establish and maintain in favor of Agent, valid and perfected security
interests in the Collateral, free of all other liens, encumbrances, security
interests and claims other than as permitted by the terms of this Assignment.
Assignor shall do anything else Agent may reasonably require from time to
time to establish a valid security interest in and to further protect and
perfect its security interest in the Collateral.
(h) Location of Collateral. Except for those items of the
Collateral that are delivered to Agent as provided herein, the Collateral,
and all records of Assignor relative to the Collateral, are and will be kept
at the office of Assignor located in New York County, New York. Assignor
shall give Agent not fewer than thirty (30) days prior written notice of any
proposed change in the name of Assignor or the Member and any proposed change
in the location of the Collateral or of such records, and Assignor will not,
without the prior written consent of Agent, move the Collateral or such
records to a location outside of New York County, New York or keep duplicate
records with respect to the Collateral at any address outside such county.
Notwithstanding the foregoing, Agent acknowledges and agrees that the
property records for the Mezzanine Property (including leases, service
contracts and the like) will be kept at the office of the managing agent in
Newton, Massachusetts. Nothing contained in this subparagraph shall be
construed so as to prevent Assignor from keeping material abstracted from the
books and records described herein at any of its offices as necessity or
convenience dictates. Assignor shall permit the Agent or any representative
designated by the Agent, at the Agent's expense and upon reasonable advance
notice (which may be oral), to examine the books and accounts of the Assignor
(and to make copies thereof and extracts therefrom) and to discuss the
affairs, finances and accounts of the Assignor with, and to be advised as to
the same by, its members and officers, all at such reasonable times and
intervals as the Agent may reasonably request. The Agent shall use good
faith efforts to coordinate such visits and inspections so as to minimize the
interference with and disruption to Assignor's normal business operations.
(i) Evidence of Indebtedness. Without limiting any other terms of
the Loan Documents prohibiting or restricting the ability of the Member to
incur Indebtedness, if any amounts are due from the Member to Assignor and
the obligations to repay such amount is to be evidenced by a separate
document or instrument, then as evidence of such obligations, Assignor shall
cause the Member to issue Assignor, as the evidence of any obligations of the
Member to pay Distributions to Assignor in the future, a promissory note
bearing the legend attached hereto as Exhibit "B" and which note shall
provide that all payments due under such promissory note are to be paid
directly to Agent as required by and applied as provided in the Loan
Documents until the Obligations are paid in full or this Assignment is
otherwise terminated as provided herein. No other evidence of such
obligations shall be executed by the Member to Assignor.
(j) Delivery of Notes. Assignor shall promptly deliver to Agent
any note or other document or instrument entered into after the date hereof
which evidences, constitutes, guarantees or secures any of the Distributions
or any right to receive a Distribution, which notes or other documents and
instruments shall be accompanied by such endorsements or assignments as Agent
may require to transfer title to Agent.
(k) Assignor Remains Liable. Anything herein to the contrary
notwithstanding, (1) Assignor shall remain liable under the Member
Organizational Agreements and all other contracts, agreements and instruments
included in, giving rise to, creating, establishing, evidencing or relating
to the Collateral to the extent set forth therein to perform all of its
duties and obligations (including, without limitation, the making of any
contributions to the capital of the Member or the payment of any other sum to
or on behalf of the Member) to the same extent as if this Assignment had not
been executed, (2) the exercise by Agent of any of its rights hereunder shall
not release Assignor from any of its duties or obligations under the Member
Organizational Agreements or any such contracts, agreements and instruments,
and (3) Agent shall not have any obligation or liability under the Member
Organizational Agreements, the Property Owner Organizational Agreements or
the Manager Organizational Agreements or any such contract, agreement or
instrument by reason of this Assignment, nor shall Agent be obligated to
perform any of the obligations or duties of Assignor thereunder or to take
any action to collect or enforce any claim for payment or other right or
privilege assigned to Agent hereunder.
(l) Substitutions or Exchanges. If Assignor shall at any time be
entitled to receive or shall receive any cash, certificate or other property,
option or right, upon, in respect of, as an addition to, or in substitution
or exchange for any of the Collateral, whether for value paid by Assignor or
otherwise, Assignor agrees that the same shall be deemed to be Collateral and
shall be delivered directly to Agent in each case, accompanied by proper
instruments of assignment duly executed by Assignor in such a form as may be
required by Agent, to be held by Agent subject to the terms hereof, as
further security for the Obligations (except as otherwise provided herein
with respect to the application of the foregoing to the Obligations). If
Assignor receives any of the foregoing directly, Assignor agrees to hold such
cash or other property in trust for the benefit of Agent, and to surrender
such cash or other property to Agent immediately.
(m) Additional Interests in Member. In the event that Assignor
purchases or otherwise acquires or obtains any additional interest in the
Member or any rights or options to acquire such interest, all such interest,
rights and options shall automatically be deemed to be a part of the
Collateral. All certificates, if any, representing such member interest
shall be promptly delivered to Agent, together with assignments related
thereto, or other instruments appropriate to transfer a certificate
representing any Member interest, duly executed in blank.
t u Events of Default. An Event of Default shall exist hereunder upon
the occurrence of any of the following:
(a) Any warranty, representation or statement made by or on behalf
of Assignor in this Assignment proves untrue or misleading in any material
respect upon the date when made or deemed to have been made or repeated; or
(b) Assignor shall fail to duly and fully comply with any
covenant, condition or agreement in Paragraphs 6(a), 6(c), 6(d)(2), 6(i),
6(j) or 6(l) of this Assignment; or
(c) Any of the Assignor, Member or the Manager shall fail to, or
the Assignor shall fail to cause the Property Owner to, duly and fully comply
with any other covenant, condition or agreement of this Assignment (other
than those specified in this Paragraph 7 or any default excluded from any
provision of cure of defaults contained in any other of the Loan Documents)
and the same is not cured within thirty (30) days following receipt of
written notice of such default; or
(d) The occurrence of any "Triggering Event" (as defined in the
Conditional Guaranty); or
(e) The occurrence of an Event of Default under any of the other
Loan Documents.
40. Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, Agent may take any action deemed by Agent to be necessary or
appropriate to the enforcement of the rights and remedies of Agent under this
Assignment and the Loan Documents, including, without limitation, the
exercise of its rights and remedies with respect to any or all of the Member
Interests. The remedies of Agent shall include, without limitation, all
rights and remedies specified in the Loan Documents and this Assignment, all
remedies of Agent under applicable general or statutory law, and the remedies
of a secured party under the Uniform Commercial Code as enacted in the State
of New York, regardless of whether the Uniform Commercial Code has been
enacted or enacted in that form in any other jurisdiction in which such right
or remedy is asserted. Any notice required by law, including, but not
limited to, notice of the intended disposition of all or any portion of the
Collateral, shall be reasonably and properly given in the manner prescribed
for the giving of notice herein, and, in the case of any notice of
disposition, if given at least ten (10) calendar days prior to such
disposition. Agent may require Assignor to assemble the Collateral and make
it available to Agent at any place to be designated by Agent which is
reasonably convenient to both parties. It is expressly understood and agreed
that Agent shall be entitled to dispose of the Collateral at any public or
private sale, without recourse to judicial proceedings and without either
demand, appraisement, advertisement or notice of any kind, all of which are
expressly waived, and that Agent shall be entitled to bid and purchase at any
such sale. In the event that Agent is the successful bidder at any public or
private sale of any note or other document or instrument evidencing
Assignor's right to receive a Distribution, Agent shall be entitled to credit
the amount bid by Agent against the obligations evidenced by such note,
document or instrument rather than the obligations evidenced by the Note. To
the extent the Collateral consist of marketable securities, Agent shall not
be obligated to sell such securities for the highest price obtainable, but
shall sell them at the market price available on the date of sale. Agent
shall not be obligated to make any sale of the Collateral if it shall
determine not to do so regardless of the fact that notice of sale of the
Collateral may have been given. Agent may, without notice or publication,
adjourn any public sale from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. Each such purchaser
at any such sale shall hold the Collateral sold absolutely free from claim or
right on the part of Assignor. In the event that any consent, approval or
authorization of any governmental agency or commission will be necessary to
effectuate any such sale or sales, Assignor shall execute all such
applications or other instruments as Agent may deem reasonably necessary to
obtain such consent, approval or authorization. Agent may notify any account
debtor or obligor with respect to the Collateral to make payment directly to
Agent, and may demand, collect, receipt for, settle, compromise, adjust, sue
for, foreclose or realize upon the Collateral as Agent may determine whether
or not the Obligations or the Collateral are due, and for the purpose of
realizing Agent's rights therein, Agent may receive, open and dispose of mail
addressed to Assignor and endorse notes, checks, drafts, money orders,
documents of title or other evidences of payment, shipment or storage of any
form of Collateral on behalf and in the name of Assignor, as its
attorney-in-fact. In addition, Assignor hereby irrevocably designates and
appoints Agent its true and lawful attorney-in-fact either in the name of
Agent or Assignor to (i) sign Assignor's name on any Collateral, drafts
against account debtors, assignments, any proof of claim in any bankruptcy or
other insolvency proceeding involving any account debtor, any notice of lien,
claim of lien or assignment or satisfaction of lien, or on any financing
statement or continuation statement under the Uniform Commercial Code;
(ii) send verifications of accounts receivable to any account debtor; and
(iii) in connection with a transfer of the Collateral as described above,
sign in Assignor's name any documents necessary to transfer title to the
Collateral to Agent or any third party. All acts of said power of attorney
are hereby ratified and approved and Agent shall not be liable for any
mistake of law or fact made in connection therewith. This power of attorney
is coupled with an interest and shall be irrevocable so long as any amounts
remain unpaid on any of the Obligations. All remedies of Agent shall be
cumulative to the full extent provided by law, all without liability except
to account for property actually received, but the Agent shall have no duty
to exercise such rights and shall not be responsible for any failure to do so
or delay in so doing. Pursuit by Agent of certain judicial or other remedies
shall not abate nor bar other remedies with respect to the Obligations or to
other portions of the Collateral. Agent may exercise its rights to the
Collateral without resorting or regard to other collateral or sources of
security or reimbursement for the Obligations. In the event that any
transfer tax, deed tax, conveyance tax or similar tax is payable in
connection with the foreclosure, conveyance in lieu of foreclosure or
otherwise of the Member Interests, the Borrower shall pay such amount to
agent upon demand and if Borrower fails to pay such amount on demand, Agent
may advance such amount on behalf of Borrower and the amount thereof shall
become a part of the Obligations and bear interest at the rate for overdue
amounts under the Credit Agreement until paid.
(b) If Assignor fails to perform any agreement or covenant
contained in this Assignment beyond any applicable period for notice and
cure, Agent may itself perform, or cause to be performed, any agreement or
covenant of Assignor contained in this Assignment which Assignor shall fail
to perform, and the cost of such performance, together with any reasonable
expenses, including reasonable attorneys' fees actually incurred (including
attorneys' fees incurred in any appeal) by Agent in connection therewith,
shall be payable by Assignor upon demand and shall constitute a part of the
Obligations and shall bear interest at the rate for overdue amounts as set
forth in the Credit Agreement.
(c) Whether or not an Event of Default has occurred and whether or
not Agent is the absolute owner of the Collateral, Agent may take such action
as Agent may deem necessary to protect the Collateral or its security
interest therein, Agent being hereby authorized to pay, purchase, contest and
compromise any encumbrance, charge or lien which in the judgment of Agent
appears to be prior or superior to its security interest, and in exercising
any such powers and authority to pay necessary expenses, employ counsel and
pay reasonable attorney's fees. Any such advances made or expenses incurred
by Agent shall be deemed advanced under the Loan Documents, shall increase
the indebtedness evidenced and secured thereby, shall be payable upon demand
and shall bear interest at the rate for overdue payments set forth in the
Credit Agreement.
(d) Any certificates or securities held by Agent as Collateral
hereunder may, at any time, and at the option of Agent, be registered in the
name of Agent or its nominee, endorsed or assigned in blank or in the name of
any nominee and Agent may deliver any or all of the Collateral to the issuer
or issuers thereof for the purpose of making denominational exchanges or
registrations or transfer or for such other purposes in furtherance of this
Agreement as Agent may deem desirable. Until the occurrence of an Event of
Default, Assignor shall retain the right to vote any of the Collateral or
exercise limited liability company membership rights, in a manner not
inconsistent with the terms of this Agreement and the other Loan Documents,
and Agent hereby grants to Assignor its proxy to enable Assignor to so vote
any of the Collateral or exercise such limited liability company member
rights (except that Assignor shall not have any right to exercise any such
power or right if the exercise thereof would violate or result in a violation
of any of the terms of this Agreement or any of the other Loan Documents).
At any time after the occurrence and during the continuance of any Event of
Default, Agent or its nominee shall, without notice or demand, automatically
have the sole and exclusive right to give all consents, waivers and
ratifications in respect of the Collateral and exercise all voting and other
membership, management, approval or other rights at any meeting of the
members of the Member (and the right to call such meetings) or otherwise (and
to give written consents in lieu of voting thereon), and exercise any and all
rights of conversion, exchange, subscription or any of the rights, privileges
or options pertaining to the Collateral and otherwise act with respect
thereto and thereunder as if it were the absolute owner thereof (all of such
rights of the Assignor ceasing to exist and terminating upon the occurrence
of an Event of Default) including, without limitation, the right to exchange,
at its discretion, any and all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or the readjustment of the
issuer thereof, all without liability except to account for property actually
received and in such manner as Agent shall determine in its sole and absolute
discretion, but Agent shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for the failure to
do so or delay in so doing. The exercise by Agent of any of its rights and
remedies under this paragraph shall not be deemed a disposition of collateral
under Article 9 of the UCC nor an acceptance by Agent of any of the
Collateral in satisfaction of the Obligations.
(e) Upon the occurrence and during the continuance of any Event of
Default, the Agent may direct the Assignor in writing to, and the Assignor
shall cause the Property Owner to, replace the existing property manager and
leasing agent for the Mezzanine Property with a property manager and leasing
agent approved by the Agent, subject to any conditions in the Mezzanine
Mortgage Loan Documents to the qualifications and approval of such manager
and leasing agent and the form and terms of any new property management
and/or leasing agreement. The Assignor hereby irrevocably constitutes and
appoints the Agent its true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments and to do
and perform any acts which are referred to in this Paragraph 8(e), in the
name and on behalf of the Assignor. The power vested in such attorney-in-
fact is, and shall be deemed to be, coupled with an interest and irrevocable.
(f) Upon the written demand of the Agent following the occurrence
of and during the continuance of an Event of Default, the Assignor shall
deliver or cause to be delivered to the Agent or the Agent's designee all
books, records, contracts, Leases, files and other correspondence relating to
the Mezzanine Property. In addition, upon the occurrence and during the
continuance of an Event of Default, the Assignor shall upon the written
demand of the Agent cause all tenant security deposits (whether in the form
of cash, letter of credit or otherwise) and other refundable deposits paid to
or held by or on behalf of the Property Owner in connection with the Leases
to be delivered to the Agent, subject to the rights of the Mezzanine
Mortgagee under the Mezzanine Mortgage Loan Documents.
(g) Notwithstanding anything in this Assignment or any other Loan
Document to the contrary, any reference in this Assignment or any other Loan
Document to "the continuance of a default" or "the continuance of an Event of
Default" or any similar phrase shall not create or be deemed to create any
right on the part of Assignor or any other party to cure any default
following the expiration of any applicable grace or notice and cure period.
(h) In the event that there shall occur any Default or Event of
Default under this Assignment which Default or Event of Default arises solely
as a result of the failure of Assignor or any other Person to perform an
obligation with respect to the Mezzanine Collateral or the Mezzanine
Property, then within five (5) Business Days after receipt of notice of such
Default or Event of Default Assignor may elect to cure such Default or Event
of Default by reducing the outstanding Loans in an amount equal to the amount
that would be payable pursuant to Section 5.3(b)(iv) of the Credit Agreement
upon the release by Assignor of all of the remaining Mezzanine Property
pursuant to the terms of Section 5.3(b) of the Credit Agreement. In the
event of such payment, this Assignment shall terminate and the amount
available to be borrowed against the collateral for the Loans remaining after
such release shall be reduced by an amount equal to twenty percent (20%) of
the Designated Collateral Value of the Collateral so released without
reducing the Designated Collateral Value of such remaining collateral for the
purposes of calculating release prices.
41. Duties of Agent. The powers conferred on Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Agent's duty with reference to the
Collateral shall be solely to use slight care in the custody and preservation
of the Collateral, which shall not include any steps necessary to preserve
rights against prior parties. Agent shall have no responsibility or
liability for the collection of any Collateral or by reason of any
invalidity, lack of value or uncollectability of any of the payments received
by it.
42. Indemnification.
wfu It is specifically understood and agreed that this Assignment
shall not operate to place any responsibility or obligation whatsoever upon
Agent, or cause Agent to be, or to be deemed to be, a member in the Member
and that in accepting this Assignment, Agent neither assumes nor agrees to
perform at any time whatsoever any obligation or duty of Assignor relating to
the Collateral or under the Member Organizational Agreements or any other
mortgage, indenture, contract, agreement or instrument to which the Member is
a party or to which it is subject, all of which obligations and duties shall
be and remain with and upon Assignor; provided, however, that Assignor shall
not be liable for the performance of any liabilities or duties under the
Organizational Agreements of Member, Manager or Property Owner which may
result from written amendments thereof made by Agent after the occurrence of
an Event of Default.
(b) Assignor upon receipt of written demand shall pay to Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and disbursements of counsel actually incurred (including
those incurred in any appeal), and of any experts and agents, which Agent may
incur in connection with (i) the administration of this Assignment, (ii) the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Agent hereunder, or
(iv) the failure by Assignor to perform or observe any of the provisions
hereof beyond any applicable period for notice and cure.
43. Security Interest Absolute. All rights of Agent, and the security
interests hereunder, and all of the obligations secured hereby, shall be
absolute and unconditional, irrespective of:
(a) Any lack of validity or enforceability of the Loan Documents
or any other agreement or instrument relating thereto;
(b) Any change in the time (including the extension of the
maturity date of the Note), manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or waiver of or
any consent to any departure from the Loan Documents;
(c) Any exchange, release or nonperfection of any other collateral
for the Obligations, or any release or amendment or waiver of or consent to
departure from any of the Loan Documents with respect to all or any part of
the Obligations; or
(d) Any other circumstance (other than payment of the Obligations
in full) that might otherwise constitute a defense available to, or a
discharge of, Assignor or any third party for the Obligations or any part
thereof.
44. Amendments and Waivers. No amendment or waiver of any provision of
this Assignment nor consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by Agent, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No delay or omission of Agent to
exercise any right, power or remedy accruing upon any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be
a waiver of any such Event of Default, or acquiescence therein; and every
right, power and remedy given by this Assignment to Agent may be exercised
from time to time and as often as may be deemed expedient by Agent. Failure
on the part of Agent to complain of any act or failure to act which
constitutes an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by Agent of Agent's rights hereunder
or impair any rights, powers or remedies consequent on any Event of Default.
Assignor hereby waives to the extent permitted by law all rights which
Assignor has or may have under and by virtue of the Uniform Commercial Code
as enacted in the State of New York, and any federal, state, county or
municipal statute, regulation, ordinance, Constitution or charter, now or
hereafter existing, similar in effect thereto providing any right of Assignor
to notice and to a judicial hearing prior to seizure by Agent of any of the
Collateral. Assignor hereby waives and renounces for itself, its heirs,
successors and assigns, presentment, demand, protest, advertisement or notice
of any kind (except for any notice required by law or the Loan Documents) and
all rights to the benefits of any statute of limitations and any moratorium,
reinstatement, marshaling, forbearance, valuation, stay, extension,
homestead, redemption and appraisement now provided or which may hereafter be
provided by the Constitution and laws of the United States and of any state
thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement of this Assignment and the collection of
any of the Obligations.
45. Continuing Security Interest; Transfer of Note; Release of
Collateral. This Assignment shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Obligations and the termination of the
obligation of the Banks to make Loans to Assignor, (b) be binding upon
Assignor and its permitted successors and assigns, and (c) inure, together
with the rights and remedies of Agent hereunder, to the benefit of Agent and
the Banks and their respective successors, transferees and assigns. Upon the
indefeasible payment in full of the Obligations and the termination of the
obligation of the Banks to make Loans to Assignor, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert
to Assignor. Upon any such termination, Agent will at Assignor's expense
execute and deliver to Assignor such documents as Assignor shall reasonably
request to evidence such termination.
46. Modifications, Etc. Assignor hereby consents and agrees that Agent
and the Banks may at any time and from time to time, without notice to or
further consent from Assignor, either with or without consideration,
surrender any property or other security of any kind or nature whatsoever
held by it or by any person, firm or corporation on its behalf or for its
account, securing the Obligations; substitute for any Mezzanine Collateral so
held by it, other collateral of like kind; agree to modification of the terms
of the Loan Documents; extend or renew the Loan Documents for any period;
grant releases, compromises and indulgences with respect to the Loan
Documents for any period; grant releases, compromises and indulgences with
respect to the Loan Documents to any persons or entities now or hereafter
liable thereunder or hereunder; release any guarantor, endorser or any other
Person liable with respect to the Obligations; or take or fail to take any
action of any type whatsoever; and no such action which Agent shall take or
fail to take in connection with the Loan Documents, or any of them, or any
security for the payment of the Obligations or for the performance of any
obligations or undertakings of Assignor, nor any course of dealing with
Assignor or any other person, shall release Assignor's obligations hereunder,
affect this Assignment in any way or afford Assignor any recourse against
Agent.
47. Securities Act. In view of the position of Assignor in relation to
the Collateral, or because of other current or future circumstances, a
question may arise under Applicable Law or the Federal Securities Laws with
respect to any disposition of the Collateral permitted hereunder. Assignor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of Agent if Agent were to attempt to
dispose of all or any part of the Collateral in accordance with the terms
hereof, and might also limit the extent to which or the manner in which any
subsequent transferee of any Collateral could dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Agent in any attempt to dispose of all or part of the Collateral in
accordance with the terms hereof under applicable Blue Sky or other state
securities laws or similar Applicable Law analogous in purpose or effect.
Assignor recognizes that in light of the foregoing restrictions and
limitations Agent may, with respect to any sale of the Collateral, limit the
purchasers to those who will agree, among other things, to acquire such
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. Assignor acknowledges and agrees that in
light of the foregoing restrictions and limitations, the Agent in its sole
and absolute discretion may, in accordance with Applicable Law, (a) proceed
to make such a sale whether or not a registration statement for the purpose
of registering such Collateral or part thereof shall have been filed under
the Federal Securities Laws and (b) approach and negotiate with a single
potential purchaser to effect such sale. Assignor acknowledges and agrees
that any such sale might result in prices and other terms less favorable to
the seller if such sale were a public sale without such restrictions. In the
event of any such sale, Agent shall incur no responsibility or liability for
selling all or any part of the Collateral in accordance with the terms hereof
at a price that Agent, in its sole and absolute discretion, may in good faith
deem reasonable under the circumstances, notwithstanding the possibility that
a substantially higher price might have been realized if the sale were
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this paragraph will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Agent sells.
48. Governing Law; Terms. THIS ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK.
49. Notices. Each notice, demand, election or request provided for or
permitted to be given pursuant to this Assignment shall be deemed to have
been properly given or served if given in the manner provided in the Credit
Agreement.
50. No Unwritten Agreements. THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
51. Miscellaneous. Time is of the essence of this Assignment. Title
or captions of paragraphs hereof are for convenience only and neither limit
nor amplify the provisions hereof. References to a particular paragraph
refer to that paragraph of this Assignment unless otherwise indicated. If,
for any circumstances whatsoever, fulfillment of any provision of this
Assignment shall involve transcending the limit of validity presently
prescribed by applicable law, the obligation to be fulfilled shall be reduced
to the limit of such validity; and if any clause or provision herein operates
or would prospectively operate to invalidate this Assignment, in whole or in
part, then such clause or provision only shall be held for naught, as though
not herein contained, and the remainder of this Assignment shall remain
operative and in full force and effect.
IN WITNESS WHEREOF, Assignor and Agent have executed this Assignment on
the date first above written.
AGENT:
BANKBOSTON, N.A., as Agent
By: /s/ Mark E. Basham
------------------------------
Mark E. Basham, Managing
Director
<PAGE>
ASSIGNOR:
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford/Whitehall Properties II,
L.L.C., a Delaware limited liability
company
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: /s/ Gregory F. Hughes
------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
EXHIBIT "A"
ORGANIZATIONAL AGREEMENTS
<PAGE>
EXHIBIT "B"
PROMISSORY NOTE LEGEND
"THIS NOTE HAS BEEN PLEDGED BY WELLSFORD/WHITEHALL HOLDINGS, L.L.C.
("ASSIGNOR") TO BANKBOSTON, N.A., AS AGENT ("AGENT") PURSUANT TO AN AMENDED
AND RESTATED ASSIGNMENT OF MEMBER'S INTEREST DATED AS OF JULY __, 1998 (THE
"ASSIGNMENT"). ALL AMOUNTS PAYABLE TO ASSIGNOR PURSUANT TO THIS NOTE SHALL
BE PAID DIRECTLY TO AGENT AS REQUIRED BY THE ASSIGNMENT."
AMENDED AND RESTATED CASH COLLATERAL AGREEMENT
THIS AMENDED AND RESTATED CASH COLLATERAL AGREEMENT (this "Agreement"),
dated as of July 16th, 1998, by and among WELLSFORD/WHITEHALL HOLDINGS,
L.L.C., a Delaware limited liability company ("Borrower"), WASH MANAGER
L.L.C., a Delaware limited liability company ("Manager"), WELLS AVENUE
HOLDINGS L.L.C., a Delaware limited liability company ("Member"; the
Borrower, Manager and Member are sometimes hereinafter referred to as the
"Borrower Parties" ), and BANKBOSTON, N.A., a national banking association
("BKB") as Agent for itself and the other Banks from time to time party to
the Credit Agreement (as hereinafter defined) (BKB, in its capacity as Agent,
is hereinafter referred to as "Agent").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Properties, L.L.C. ("WWP"), BKB, the other
Banks a party thereto and Agent entered into that certain Revolving Credit
Agreement dated December 15, 1997 (the "Original Credit Agreement"); and
WHEREAS, WWP has merged with and into Borrower, with Borrower being the
surviving entity, and pursuant thereto all of the assets and liabilities of
WWP have been transferred to and assumed by Borrower; and
WHEREAS, the Banks and the Agent have consented to such merger and
transfer of assets and liabilities; and
WHEREAS, Wells Avenue Senior Holdings LLC (the "Property Owner") is the
owner of the "Mezzanine Property" (as defined in the Credit Agreement); and
WHEREAS, Manager and Member are the sole members of the Property Owner;
and
WHEREAS, Borrower is the sole member of Member; and
WHEREAS, Borrower, BKB, the other Banks a party thereto and Agent have
entered into that certain First Amended and Restated Loan Agreement dated of
even date herewith (as the same may be varied, extended, supplemented,
consolidated, amended, replaced, renewed, modified or restated, the "Credit
Agreement"), which in part amends and restates the Original Credit Agreement,
and pursuant to which the Banks have agreed to provide a loan to Borrower of
up to $300,000,000.00 (the "Loan"), which Loan is evidenced by those certain
Notes made by Borrower to the order of the Banks in the aggregate principal
face amount of $300,000,000.00 (such Notes, together with such other Notes as
may be issued pursuant to the Credit Agreement, as the same may be varied,
extended, supplemented, consolidated, amended, replaced, renewed, modified or
restated, are hereinafter referred to collectively as the "Note"); and
WHEREAS, WWP, Manager, Member and Agent have entered into that certain
Cash Collateral Agreement dated as of May 15, 1998 (the "Original Cash
Collateral Agreement"); and
WHEREAS, in connection with the execution of the Credit Agreement, the
Borrower and the Agent desire to amend and restate the Original Cash
Collateral Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and
agreements set forth hereinbelow, and for other good and valuable
consideration, the receipt, adequacy, and sufficiency of which are hereby
acknowledged, and as a material inducement to the Banks and Agent to advance
a portion of the Loan to Borrower relating to the Mezzanine Property, the
parties hereto amend and restate the Original Cash Collateral Agreement in
its entirety and covenant and agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement, but which
are not otherwise expressly defined in this Agreement, shall have the
respective meanings given thereto in the Credit Agreement. In addition, the
following terms shall have the following meanings:
Accounts Depository Bank: Such bank or institution as may now or
hereafter hold funds pursuant to the accounts and sub-accounts created under
the Mezzanine Mortgage Loan Agreement or the Deposit Account Agreement.
Clearing Account. See Paragraph 4(e).
Collateral: See Paragraph 2.
Deposit Account: The "Deposit Account" as defined in the Mezzanine
Mortgage Loan Agreement.
Event of Default: See Paragraph 6.
Excess Property Income. All funds or other amounts from time to
time deposited in or credited to the Property Owner's Subaccount or are
otherwise distributed, paid or released to Property Owner pursuant to the
Mezzanine Mortgage Loan Documents.
Instruction Letter: As defined in the Assignment of Interests.
Property Owner's Subaccount: The subaccount of the Deposit Account
referred to as the "Borrower's Subaccount" in the Deposit Account Agreement.
Rents. As defined in the Mezzanine Mortgage Loan Agreement.
2. Security for Obligations. To secure the full and punctual payment
and performance by the Borrower of all duties, responsibilities and
obligations under this Agreement, the Credit Agreement, the Note and the
other Loan Documents (such duties, responsibilities and obligations are
hereinafter referred to as the "Obligations"), Borrower hereby sells,
assigns, conveys, grants, pledges, hypothecates and transfers to Agent a
first-in-lien-priority continuing security interest in and to the following
property of Borrower, in each case whether certificated or uncertificated,
whether now owned or existing or hereafter acquired or arising and regardless
of where located (all of the same, collectively, the "Collateral"):
(a) all right, title and interest of Borrower in and to any
and all Excess Property Income from time to time, now or hereafter available
in the Deposit Account or otherwise and required or permitted, by the terms
of the Mezzanine Mortgage Loan Documents, to be disbursed to or on behalf of
Property Owner or is required, by the terms of the Instruction Letter, this
Agreement or the other Loan Documents, to be paid by the Mezzanine Mortgagee,
the Account Depository Bank or any other Person to Agent, and all rights of
the Borrower to receive such Excess Property Income under the Mezzanine
Mortgage Loan Documents or otherwise;
(b) all right, title and interest of Borrower in and to cash,
checks, drafts, certificates, passbooks, instruments and other amounts, if
any, from time to time (whether by physical possession, book entry or
otherwise) evidencing the Excess Property Income;
(c) all right, title and interest of Borrower in and to all
interest, dividends, cash, instruments and other property from time to time
held (whether by physical possession, book entry or otherwise) in, received,
receivable, or otherwise payable in respect of, or in exchange for, any or
all of the foregoing;
(d) all right, title and interest of Borrower in and to all
accounts, contract rights, general intangibles and other rights and interests
pertaining to any of the foregoing, all replacements, substitutions, renewals
or proceeds of any of the foregoing, and all powers, options, rights,
privileges and immunities pertaining thereto (including the right to make
withdrawals therefrom); and
(e) to the extent not covered by clauses (a), (b), (c) or
(d), above, all proceeds of any or all of the foregoing.
3. Collection of Collateral.
(a) It is acknowledged and agreed by the parties hereto that Agent
shall have sole and exclusive possession of the Collateral and that this
Agreement constitutes a present, absolute and current assignment of all the
Collateral and is effective upon the execution and delivery hereof. Payments
under or with respect to the Collateral shall be made as follows:
(i) Except as otherwise specifically provided in this
Paragraph 3, Borrower shall have no right to receive payments made
under or with respect to the Collateral (including without
limitation any Collateral from or relating to any sale, transfer,
assignment, conveyance, option or other disposition of, or any
pledge, mortgage, encumbrance, financing or refinancing of, or
casualty to or condemnation of, any of the Collateral, the
Mezzanine Collateral or the Mezzanine Property regardless of
whether such event is permitted under the terms of the Loan
Documents), and all such payments shall be delivered directly by
the Property Owner to Agent for application by Agent in
satisfaction of the Obligations in such order as Agent in its sole
and absolute discretion shall determine.
(ii) Except as otherwise specifically provided in this
Paragraph 3, if Borrower shall receive any payments made under or
with respect to the Collateral (including without limitation any
Collateral from or relating to any sale, transfer, assignment,
conveyance, option or other disposition of, or any pledge,
mortgage, encumbrance, financing or refinancing of, or casualty to
or condemnation of, any of the Collateral, the Mezzanine Collateral
or the Mezzanine Property regardless of whether such event is
permitted under the terms of the Loan Documents), Borrower shall
hold all such payments in trust for Agent, will not co-mingle such
payments with other funds of Borrower, and will immediately pay and
deliver in kind, all such payments directly to Agent (with such
endorsements and assignments as may be necessary to transfer title
to Agent) for application by Agent in satisfaction of the
Obligations in such order as Agent in its sole and absolute
discretion shall determine.
(b) Each of Borrower, Manager and Member shall cause the Property
Owner, the Manager and the Member promptly to distribute all net proceeds of
the sale, transfer, assignment, conveyance, option or other disposition of,
or any mortgage, hypothecation, encumbrance, financing or refinancing of, or
casualty to or condemnation of, any of its assets or properties, and any and
all other Distributions distributable or payable by the Property Owner, the
Manager or the Member or any member thereof under the terms of the Property
Owner Organizational Agreements, the Manager Organizational Agreements or the
Member Organizational Agreements, as applicable.
(c) Each of Borrower, Manager and Member hereby irrevocably
designates and appoints Agent its true and lawful attorney-in-fact, which
appointment is coupled with an interest, either in the name of Agent, or in
the name of Borrower, Manager or Member, as applicable, at Borrower's sole
cost and expense, and to take any or all of the following actions:
(i) to ask, demand, sue for, attach, levy, settle,
compromise, collect, compound, recover, receive and give receipt
and acquittances for any and all Collateral and to take any and all
actions as Agent may deem necessary or desirable in order to
realize upon the Collateral, or any portion thereof, including,
without limitation, making any statements and doing and taking any
actions on behalf of such Person which are otherwise required of
such Person under the terms of any agreement as conditions
precedent to the payment of the Collateral, and the right and power
to receive, endorse, assign and deliver, in the name of such Person
any checks, notes, drafts, instruments or other evidences of
payment received in payment of or on account of all or any portion
of the Collateral, and each of Borrower, Manager and Member hereby
waives presentment, demand, protest and notice of demand, protest
and non-payment of any instrument so endorsed; and
(ii) to institute one or more actions against the
Property Owner, any member thereof or any other Person in
connection with the collection of the Collateral to prosecute to
judgment, settle or dismiss any such actions, and to make any
compromise or settlement deemed desirable, in Agent's sole and
absolute discretion, with respect to such Collateral to extend the
time of payment, arrange for payment in installments or otherwise
modify the terms of any agreements with respect to the Collateral
or release the Property Owner, any member thereof or any other
Person from their respective obligations to pay any Collateral,
without incurring responsibility to, or affecting any liability of,
Borrower under any such agreements;
it being specifically understood and agreed, however, that Agent shall not be
obligated in any manner whatsoever to give any notices of default (except as
may be specifically required herein or the other Loan Documents) or to
exercise any such power or authority or be in any way responsible for the
preservation, maintenance, collection of or realizing upon the Collateral, or
any portion thereof, or any of Borrower's rights therein. Notwithstanding
anything in this Paragraph 3 to the contrary, provided no Event of Default
has occurred and is continuing, Borrower shall have a license (revocable upon
the occurrence of an Event of Default) to receive and retain Excess Property
Income attributable to (A) rents, issues and profits paid under Mezzanine
Leases not more than one (1) month in advance, (B) excess proceeds from a
sale of a Mezzanine Property that has been released in accordance with
Section 5.3(b) of the Credit Agreement, (C) proceeds from a casualty
permitted to be paid to Borrower pursuant to Section 7.7(k) of the Credit
Agreement, (D) excess amounts released from the reserves maintained under
Sections 7.2, 7.3, 7.4 and 7.5 of the Mezzanine Mortgage Loan Agreement, and
(E) rebates or refunds of property taxes paid with respect to the Mezzanine
Property. The foregoing appointment is irrevocable and continuing and any
such rights, powers and privileges shall be exclusive in Agent, its
successors and assigns until this Agreement terminates as provided in
Paragraph 12, below.
(d) Notwithstanding anything contained in this Agreement or any of
the other Loan Documents to the contrary, all Excess Property Income released
to Borrower in accordance with the terms of the Loan Documents (including
without limitation the terms of this Paragraph 3) (i) shall be the property
of Borrower, (ii) shall not constitute a part of the Collateral and (iii) may
be further distributed by Borrower to its members or otherwise pursuant to
the terms of its organizational agreements.
4. Warranties and Covenants. Borrower hereby warrants and represents
to, and covenants and agrees with, Agent as follows:
(a) Borrower is and shall remain the sole, lawful, beneficial
and record owner of the Collateral, free and clear of all liens,
restrictions, claims, pledges, encumbrances, charges, claims of third parties
and rights of set-off or recoupment whatsoever (other than those in favor of
Agent hereunder), and Borrower has the full and complete right, power and
authority to create a security interest in the Collateral in favor of Agent,
in accordance with the terms and provisions of this Agreement.
(b) This Agreement creates a valid and binding first-in-lien
priority pledge and assignment of and security interest in the Collateral
securing the payment and performance of the Obligations, and upon the filing
of UCC Financing Statements in the office of the Register of the City of New
York, New York County, the New York Secretary of State, the City of Boston,
the City of Newton and the Massachusetts Secretary of State, all filings and
other actions necessary to perfect and protect such pledge and security
interests shall have been duly made and taken. The Borrower has not
performed and will not perform any acts which might prevent Agent from
enforcing any of the terms and conditions of this Agreement or which would
limit Agent in any such enforcement.
(c) The taxpayer identification number of the Borrower is 13-
3962862.
(d) For the purposes of Article 9-401 of the New York Uniform
Commercial Code, the principal place of business of Borrower is in New York
County, New York. If Borrower has more than one place of business in New
York, its chief executive office is located in New York County, New York.
In order to perfect the pledge and security interests granted herein against
Borrower to the extent the same can be perfected by filing a financing
statement, UCC Financing Statements must be filed with the Secretary of State
of New York, the office of the Register of the City of New York, New York
County, the City of Boston, the City of Newton and the Massachusetts
Secretary of State.
(e) The Property Owner, the Mezzanine Mortgagee and the Account
Depository Bank have executed and delivered the Mezzanine Mortgage Loan
Agreement and the Deposit Account Agreement, as applicable, and the Central
Account and the other sub-accounts described in the Mezzanine Mortgage Loan
Agreement have been created. Other than the bank account described on
Exhibit "A" hereto (the "Clearing Account"), there are no other accounts
maintained by any of the Borrower Parties, the Property Owner or any manager
of the Mezzanine Property for the collection of Rents with respect to the
ownership and operation of the Mezzanine Property and that, so long as any of
the Obligations shall be outstanding or any Bank shall have an obligation to
advance proceeds of the Loan to Borrower, none of the Borrower Parties
shall, nor shall any of the Borrower Parties permit the Property Owner or any
manager of the Mezzanine Property to, open any account for the collection of
Rents with respect to the Mezzanine Property other than those created
pursuant to the Mezzanine Mortgage Loan Agreement and shall deposit all Rents
in the Deposit Account as required therein.
5. General Covenants. The Borrower covenants and agrees that, so long
as any of the Obligations are outstanding or have not been paid or performed
or any Bank shall have an obligation to advance proceeds of the Loan to
Borrower:
(a) Borrower, without the prior written consent of Agent,
which consent may be withheld by Agent in its sole and absolute discretion,
shall not directly, indirectly or by operation of law sell, transfer, assign,
dispose of, pledge, convey, option, mortgage, hypothecate or encumber any of
the Collateral.
(b) Borrower shall at all times defend the Collateral against
all claims and demands of all persons at any time claiming any interest in
the Collateral adverse to Agent's interest in the Collateral as granted
hereunder.
(c) Borrower shall pay all taxes and other charges imposed against
the Collateral, shall not use the Collateral illegally, and shall not suffer
to exist any loss, theft, damage or destruction of the Collateral and shall
suffer to exist no levy, seizure or attachment of the Collateral.
(d) Borrower authorizes Agent, at the expense of Borrower, to
execute and file any financing statement or statements reasonably deemed
necessary by Agent to perfect its security interest in any of the Collateral.
Any such financing statement may be signed by Agent alone. Borrower will
sign and deliver any financing statements and other documents, and perform
such other acts as Agent reasonably may deem necessary or desirable from time
to time to establish and maintain in favor of Agent, valid and perfected
security interests in the Collateral, free of all other liens, encumbrances,
security interests and claims other than as permitted by the terms of this
Agreement. Borrower shall also furnish to Agent such evidence as it
reasonably may require to confirm the value of the Collateral, and shall do
anything else Agent may reasonably require from time to time to establish a
valid security interest in and to further protect and perfect its security
interest in the Collateral.
(e) Except for those items of the Collateral that are delivered to
Agent as provided herein, all records of Borrower relative to the Collateral
are and will be kept either at the office of Borrower located in New York
County, New York or at the offices of Borrower's managing agent in Newton,
Middlesex County, Massachusetts. Borrower shall give Agent not fewer than
thirty (30) days prior written notice of any proposed change in Borrower's
name and any proposed change in the location of such records, and Borrower
will not, without the prior written consent of Agent, move such records to
a location outside of New York County, New York or Newton, Middlesex County,
Massachusetts or keep duplicate records with respect to the Collateral at any
address outside such county or township, as the case may be. Nothing
contained in this subparagraph shall be construed so as to prevent Borrower
from keeping material abstracted from the books and records described herein
at any of its offices as necessity or convenience dictates.
(f) The Borrower shall cause the Property Owner and any
manager of the Mezzanine Property to deposit all amounts into the Deposit
Account that are required to be deposited therein pursuant to the Mezzanine
Mortgage Loan Agreement and the Deposit Account Agreement and to utilize such
funds in accordance with and as and to the extent required by the Mezzanine
Mortgage Loan Agreement and the Deposit Account Agreement. The Borrower
shall promptly notify the Agent of any change in the Account Depository Bank,
and upon the request of the Agent, shall cause such new Account Depository
Bank to execute and deliver to Agent an Instruction Letter in substantially
the form delivered to Agent on the date hereof.
(g) By execution hereof, the Borrower, Manager and Member
hereby irrevocably direct that the Property Owner, the Manager and Member
cause all Excess Property Income to be paid to Agent hereunder, and the
Borrower, Manager and Member hereby agree for the benefit of the Property
Owner, the Manager and Member that all such payments actually received by
Agent pursuant thereto shall be deemed payments to Manager and Member by the
Property Owner, payments to Member by Manager, and payments to Borrower by
Member. By execution hereof, Property Owner, the Manager and Member
acknowledges such direction and the terms of this Agreement. By execution
hereof, Property Owner, Manager and Member acknowledge and agree that neither
Property Owner, Manager, Member nor any other Person has any right, title or
interest in and to any amounts now or hereafter deposited in the Property
Owner's Subaccount or any other Excess Property Income or any interest earned
thereon and that all such amounts are the property of the Borrower, subject
to the security interests in favor of the Agent hereunder.
(h) The Property Owner and Agent, by their execution of the
Instruction Letter and by their delivery thereof to the Mezzanine Mortgagee
and the Account Depository Bank, have irrevocably directed and authorized the
Mezzanine Mortgagee and the Account Depository Bank, and hereby reiterate and
reaffirm such direction and authorization to the Mezzanine Mortgagee and the
Account Depository Bank, when and as required from time to time by the
Mezzanine Mortgage Loan Documents and the Instruction Letter upon notice from
Agent to transfer immediately from the Deposit Account to Agent any and all
Excess Property Income remaining in the Deposit Account which pursuant to the
terms of the Mezzanine Mortgage Loan Documents is required to be disbursed to
Property Owner or the manager of the Property, and any and all other amounts
which are required pursuant to the Mezzanine Mortgage Loan Documents to be
disbursed to Property Owner or the manager of the Mezzanine Property as and
when permitted under the terms of the Mezzanine Mortgage Loan Documents.
Agent shall not deliver a further notice to the Mezzanine Mortgagee and the
Account Depository Bank pursuant to the Instruction Letter demanding that all
Excess Property Income be paid to Agent until the occurrence of an Event of
Default. Subject to the terms of this Agreement and the Assignment of
Interests, Borrower shall further cause the Property Owner or any manager of
the Mezzanine Property to pay to the Agent any and all Excess Property Income
or any other amounts which are required pursuant to the Mezzanine Mortgage
Loan Documents to be disbursed to the Property Owner or the manager of the
Mezzanine Property in the event that such amounts are disbursed to such
Person.
6. Events of Default. An Event of Default shall exist hereunder upon
the occurrence of any of the following:
(a) Any warranty, representation or statement made by or on behalf
of the Borrower in this Agreement proves untrue or misleading in any material
respect upon the date when made or deemed to have been made or repeated; or
(b) Borrower shall fail to duly and fully comply with any
covenant, condition or agreement in Paragraphs 4(e), 5(a), 5(f), 5(g) or 5(h)
of this Agreement (provided that as to a failure to comply with paragraphs
5(f), 5(g) or 5(h) only, the same is not cured within five (5) days following
receipt of notice of such default); or
(c) Borrower shall fail to duly and fully comply with any other
covenant, condition or agreement of this Agreement (other than those
specified above in this Paragraph 6) and the same is not cured within thirty
(30) days following receipt of written notice of such default; or
(d) The occurrence of an Event of Default under any of the Loan
Documents.
7. Remedies.
(a) Upon the occurrence and during the continuance of an Event of
Default, Agent, without limitation, may:
(i) without notice to Borrower, except as required by law,
and at any time or from time to time, charge, set-off, and otherwise apply
all or any part of the Collateral against the Obligations or any part
thereof;
(ii) in its sole discretion, at any time and from time to
time, exercise any and all rights and remedies available to it under this
Agreement, and/or as a secured party under the Uniform Commercial Code; and
(iii) demand, collect, take possession of, receipt for,
settle, compromise, adjust, sue for, foreclose, or otherwise realize upon
the Collateral (or any portion thereof) as Agent may determine in its sole
discretion.
(b) The Borrower hereby expressly waives, to the fullest extent
permitted by law, presentment, demand, protest or any notice of any kind in
connection with this Agreement or the Collateral except as otherwise
specifically provided herein or in any of the Loan Documents. Agent may take
any action deemed by Agent to be necessary or appropriate to the enforcement
of the rights and remedies of Agent under this Agreement, and/or under any of
the other Loan Documents. The remedies of Agent shall include, without
limitation, all rights and remedies specified this Agreement and the other
Loan Documents, all remedies of Agent under applicable general or statutory
law, and the remedies of a secured party under the Uniform Commercial Code as
enacted in the State of New York, regardless of whether the Uniform
Commercial Code has been enacted or enacted in that form in any other
jurisdiction in which such right or remedy is asserted. In addition to such
other remedies as may exist from time to time, whether by way of set-off,
banker's lien, consensual security interest or otherwise, upon the occurrence
and during the continuance of an Event of Default, Agent is authorized at any
time and from time to time, without notice to or demand upon the Borrower
(any such notice or demand being expressly waived by the Borrower) to charge
any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by Agent to
or for the credit of or the account of the Borrower against any and all of
the Obligations, irrespective of whether or not Agent shall have made any
demand for payment and although the Obligations may be unmatured. Any notice
required by law, including, but not limited to, notice of the intended
disposition of all or any portion of the Collateral, shall be reasonable and
properly given in the manner prescribed for the giving of notice herein, and,
in the case of any notice of disposition, if given at least ten (10) days
prior to such disposition. Agent may require the Borrower to assemble the
Collateral and make it available to Agent at any place to be designated by
Agent which is reasonably convenient to the parties hereto. It is expressly
understood and agreed that Agent shall be entitled to dispose of the
Collateral at any public or private sale, without recourse to judicial
proceedings and without either demand, appraisement, advertisement or notice
of any kind, all of which are expressly waived, and that Agent shall be
entitled to bid and purchase at any such sale. In the event that Agent is
the successful bidder at any public or private sale of any note or other
document or instrument evidencing Borrower's right to receive the Collateral,
Agent shall be entitled to credit the amount bid by Agent against the
obligations evidenced by such note, document or instrument rather than the
obligations evidenced by the Note. To the extent the Collateral consists of
marketable securities, Agent shall not be obligated to sell such securities
for the highest price obtainable, but shall sell them at the market price
available on the date of sale. Agent shall not be obligated to make any sale
of the Collateral if it shall determine not to do so regardless of the fact
that notice of sale of the Collateral may have been given. Agent may,
without notice or publication, adjourn any public sale from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Each such purchaser at any such sale shall hold the Collateral
sold absolutely free from claim or right on the part of Borrower. In the
event that any consent, approval or authorization of any governmental agency
or commission will be necessary to effectuate any such sale or sales,
Borrower shall execute all such applications or other instruments as Agent
may deem reasonably necessary to obtain such consent, approval or
authorization. Agent may notify any account debtor or obligor with respect
to the Collateral to make payment directly to Agent, and may demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose or realize upon
the Collateral as Agent may determine whether or not the Obligations or the
Collateral are due, and for the purpose of realizing Agent's rights therein,
Agent may receive, open and dispose of mail addressed to Borrower and endorse
notes, checks, drafts, money orders, documents of title or other evidences of
payment, shipment or storage or any other form of Collateral on behalf and in
the name of Borrower, as its attorney-in-fact. In addition, Borrower hereby
irrevocably designates and appoints Agent its true and lawful attorney-in-
fact either in the name of Agent or Borrower to (i) sign Borrower's name on
any Collateral, drafts against account debtors, assignments, any proof of
claim in any bankruptcy or other insolvency proceeding involving any account
debtor, any notice of lien, claim of lien or assignment or satisfaction of
lien, or on any financing statement or continuation statement under the
Uniform Commercial Code relating to the Collateral; (ii) send verifications
of accounts receivable to any account debtor; and (iii) in connection with a
transfer of the Collateral as described above, sign in Borrower's name any
documents necessary to transfer title to the Collateral to Agent or any third
party. All acts of said power of attorney are hereby ratified and approved
and Agent shall not be liable for any mistake of law or fact made in
connection therewith. This power of attorney is coupled with an interest and
shall be irrevocable so long as any amounts remain unpaid on any of the
Obligations. All remedies of Agent shall be cumulative to the full extent
provided by law, all without liability except to account for property
actually received, but the Agent shall have no duty to exercise such rights
and shall not be responsible for any failure to do so or delay in so doing.
Pursuit by Agent of certain judicial or other remedies shall not abate nor
bar other remedies with respect to the Obligations or to other portions of
the Collateral. Agent may exercise its rights to the Collateral without
resorting or regard to other collateral or sources of security or
reimbursement for the Obligations.
(c) If a Borrower Party fails to perform any agreement or covenant
contained in this Agreement beyond any applicable period for notice and cure,
Agent may itself perform, or cause to be performed, any agreement or covenant
of such Borrower Party contained in this Agreement which such Person shall
fail to perform, and the cost of such performance, together with any
reasonable expenses, including reasonable attorneys' fees actually incurred
(including reasonable attorneys' fees incurred in any appeal) by Agent in
connection therewith, shall be payable by Borrower upon demand and shall
constitute a part of the Obligations and shall bear interest at the rate for
overdue amounts as set forth in the Credit Agreement. Notwithstanding the
Agent's right to perform, at its sole discretion, certain obligations of the
Borrower Parties, Agent's exercise of any of its rights or remedies
hereunder, under any of the other Loan Documents, or otherwise at law or in
equity, Agent shall not be deemed to be a mortgagee-in-possession, nor shall
Agent be subject to any liability with respect to the Mezzanine Property, the
Collateral, or otherwise based upon any claim of lender liability.
(d) Whether or not an Event of Default has occurred and whether or
not Agent is the absolute owner of the Collateral, Agent may take such action
as Agent may deem necessary to protect the Collateral or its security
interest therein, Agent being hereby authorized to pay, purchase, contest and
compromise any encumbrance, charge or lien which in the judgment of Agent
appears to be prior or superior to its security interest, and in exercising
any such powers and authority to pay necessary expenses, employ counsel and
pay reasonable attorney's fees. Any such advances made or expenses incurred
by Agent shall be deemed advanced under the Loan Documents, shall increase
the indebtedness evidenced and secured thereby, shall be payable upon demand
and shall bear interest at the rate for overdue payments set forth in the
Credit Agreement.
8. Duties of Agent. The powers conferred on Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Agent's duty with reference to the
Collateral shall be solely to use slight care in the custody and preservation
of the Collateral, which shall not include any steps necessary to preserve
rights against prior parties. Agent shall have no responsibility or
liability for the collection of any Collateral or by reason of any
invalidity, lack of value or uncollectability of any of the payments received
by it.
9. Indemnification.
(a) It is specifically understood and agreed that this Agreement
shall not operate to place any responsibility or obligation whatsoever upon
Agent, or cause Agent to be, or to be deemed to be, a member in the Property
Owner, the Manager or the Member and that in accepting this Agreement, Agent
neither assumes nor agrees to perform at any time whatsoever any obligation
or duty of Borrower relating to the Collateral or any other mortgage,
indenture, contract, agreement or instrument to which the Property Owner, the
Manager or the Member is a party or to which it is subject, all of which
obligations and duties shall be and remain with and upon Borrower; provided,
however, that Borrower shall not be liable for the performance of any
liabilities or duties under the Organizational Agreements of Member, Manager
or Property Owner which may result from written amendments thereof made by
Agent after the occurrence of an Event of Default.
(b) Borrower agrees to indemnify, defend and hold Agent and the
Banks harmless from and against any and all claims, expenses, losses and
liabilities growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement) or acts taken or omitted
by Agent hereunder or in connection herewith, except claims, expenses, losses
or liabilities resulting from Agent's or such Bank's gross negligence or
wilful misconduct.
(c) Borrower upon receipt of written demand shall pay to Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and disbursements of counsel actually incurred (including
those incurred in any appeal), and of any experts and agents, which Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Agent hereunder, or
(iv) the failure by Borrower to perform or observe any of the provisions
hereof beyond any applicable period for notice and cure.
10. Security Interest Absolute. All rights of Agent, and the security
interests hereunder, and all of the obligations secured hereby, shall be
absolute and unconditional, irrespective of:
(a) Any lack of validity or enforceability of the Loan Documents
or any other agreement or instrument relating thereto;
(b) Any change in the time (including the extension of the
maturity date of the Note), manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or waiver of or
any consent to any departure from the Loan Documents;
(c) Any exchange, release or nonperfection of any other collateral
for the Obligations, or any release or amendment or waiver of or consent to
departure from any of the Loan Documents with respect to all or any part of
the Obligations; or
(d) Any other circumstance (other than payment of the Obligations
in full) that might otherwise constitute a defense available to, or a
discharge of, Borrower or any third party for the Obligations or any part
thereof.
11. Amendments and Waivers. No amendment or waiver of any provision of
this Agreement nor consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by Agent, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No delay or omission of Agent to
exercise any right, power or remedy accruing upon any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be
a waiver of any such Event of Default, or acquiescence therein; and every
right, power and remedy given by this Agreement to Agent may be exercised
from time to time and as often as may be deemed expedient by Agent. Failure
on the part of Agent to complain of any act or failure to act which
constitutes an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by Agent of Agent's rights hereunder
or impair any rights, powers or remedies consequent on any Event of Default.
Borrower hereby waives to the extent permitted by law all rights which
Borrower has or may have under and by virtue of the Uniform Commercial Code
as enacted in the State of New York, and any federal, state, county or
municipal statute, regulation, ordinance, Constitution or charter, now or
hereafter existing, similar in effect thereto providing any right of Borrower
to notice and to a judicial hearing prior to seizure by Agent of any of the
Collateral. Borrower hereby waives and renounces for itself, its heirs,
successors and assigns, presentment, demand, protest, advertisement or notice
of any kind (except for any notice required by law or the Loan Documents) and
all rights to the benefits of any statute of limitations and any moratorium,
reinstatement, marshaling, forbearance, valuation, stay, extension,
homestead, redemption and appraisement now provided or which may hereafter be
provided by the Constitution and laws of the United States and of any state
thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement of this Agreement and the collection of any
of the Obligations.
12. Continuing Security Interest; Transfer of Note; Release of
Collateral. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Obligations and the termination of the
obligation of the Banks to make Loans to Borrower or the earlier termination
of the Assignment of Interests in accordance with its terms, (b) be binding
upon Borrower and its permitted successors and assigns, and (c) inure,
together with the rights and remedies of Agent hereunder, to the benefit of
Agent and the Banks and their respective successors, transferees and assigns.
Upon the indefeasible payment in full of the Obligations and the termination
of the obligation of the Banks to make Loans to Borrower or the earlier
termination of the Assignment of Interests in accordance with its terms, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Borrower; provided, however, that in the event
that a Mezzanine Property is released in accordance with the terms of the
Credit Agreement, this Assignment shall also terminate as to the Mezzanine
Property so released. Upon any such termination, Agent will at Borrower's
expense execute and deliver to Borrower such documents as Borrower shall
reasonably request to evidence such termination and the release of any lien
created by this Agreement.
13. Modifications, Etc. Borrower hereby consents and agrees that Agent
and the Banks may at any time and from time to time, without notice to or
further consent from Borrower, either with or without consideration,
surrender any property or other security of any kind or nature whatsoever
held by it or by any person, firm or corporation on its behalf or for its
account, securing the Obligations; substitute for any Collateral so held by
it, other collateral of like kind; agree to modification of the terms of the
Loan Documents; extend or renew the Loan Documents for any period; grant
releases, compromises and indulgences with respect to the Loan Documents for
any period; grant releases, compromises and indulgences with respect to the
Loan Documents to any persons or entities now or hereafter liable thereunder
or hereunder; release any guarantor, endorser or any other Person liable with
respect to the Obligations; or take or fail to take any action of any type
whatsoever; and no such action which Agent shall take or fail to take in
connection with the Loan Documents, or any of them, or any security for the
payment of the Obligations or for the performance of any obligations or
undertakings of Borrower, nor any course of dealing with Borrower or any
other person, shall release Borrower's obligations hereunder, affect this
Agreement in any way or afford Borrower any recourse against Agent.
14. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK.
15. Notices. Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement shall be deemed to have been
properly given or served if given in the manner provided in the Credit
Agreement.
16. No Unwritten Agreements. THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
17. Cash Collateral. In the event that the Borrower becomes the
subject of a proceeding under the Bankruptcy Code, the parties hereto agree
that the Collateral shall constitute "cash collateral" of Agent under Section
363 of the Bankruptcy Code.
18. Miscellaneous. Time is of the essence of this Agreement. Title or
captions of paragraphs hereof are for convenience only and neither limit nor
amplify the provisions hereof. If, for any circumstances whatsoever,
fulfillment of any provision of this Agreement shall involve transcending the
limit of validity presently prescribed by applicable law, the obligation to
be fulfilled shall be reduced to the limit of such validity; and if any
clause or provision herein operates or would prospectively operate to
invalidate this Agreement, in whole or in part, then such clause or provision
only shall be held for naught, as though not herein contained, and the
remainder of this Agreement shall remain operative and in full force and
effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
AGENT:
BANKBOSTON, N.A., as Agent
By: /s/ Mark E. Basham
-------------------------------
Mark E. Basham, Managing Director
<PAGE>
BORROWER:
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford/Whitehall Properties II,
L.L.C., a Delaware limited liability
company, managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: /s/ Gregory F. Hughes
-------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
MEMBER:
WELLS AVENUE HOLDINGS L.L.C., a Delaware
limited liability company, by its sole member
By: Wellsford/Whitehall Holdings, L.L.C., a
Delaware limited liability company, its
managing member
By: Wellsford/Whitehall Properties II,
L.L.C., a Delaware limited liability
company, managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, manager
By: /s/ Gregory F. Hughes
-----------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
MANAGER:
WASH MANAGER L.L.C., a Delaware limited
liability company, by its sole member
By: Wells Avenue Holdings L.L.C., a Delaware
limited liability company, by its sole
member
By: Wellsford/Whitehall Holdings, L.L.C.,
a Delaware limited liability company,
by its managing member
By: Wellsford/Whitehall Properties II,
L.L.C., a Delaware limited
liability company, by its managing
member
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, manager
By: /s/ Gregory F. Hughes
-----------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
Property Owner joins in the execution of this Agreement for the purposes of
acknowledging the provisions of Paragraphs 4(e), 5(g) and 5(h) above. By
acceptance of this Agreement, Agent acknowledges that a failure by Property
Owner to honor its agreements pursuant to this Agreement shall not give rise
to a monetary claim (whether in damages or otherwise) by Agent against
Property Owner.
WELLS AVENUE SENIOR HOLDINGS LLC, a
Massachusetts limited liability company, by its
managing member
By: WASH Manager L.L.C., a Delaware limited
liability company, by its sole member
By: Wells Avenue Holdings L.L.C., a
Delaware limited liability company,
by its sole member
By: Wellsford/Whitehall Holdings,
L.L.C., a Delaware limited
liability company, by its managing
member
By: Wellsford/Whitehall Properties
II, L.L.C., a Delaware limited
liability company, by its
managing member
By: Wellsford Commercial
Properties Trust, a Maryland
real estate investment
trust, manager
By: /s/ Gregory F. Hughes
---------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
EXHIBIT "A"
CLEARING ACCOUNT
Account Name: Wells Avenue Senior Holdings LLC
c/o Saracen Companies
57 Wells Avenue
Newton, MA 02159
Account Number: 01-96-02642
ABA Number: 2113-70574
INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS
($300,000,000.00 Loan)
THIS INDEMNITY AGREEMENT (this "Agreement"), is made as of this 16th day
of July, 1998, by WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a Delaware limited
liability company ("Borrower"), WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust ("Trust"), and WHWEL REAL ESTATE
LIMITED PARTNERSHIP ("WHWEL") (Trust and WHWEL, collectively "Guarantor"),
for the benefit of BANKBOSTON, N.A., a national banking association
("BankBoston"), as Administrative Agent for itself, Goldman Sachs Mortgage
Company and certain other lenders which may now or hereafter become parties
to the "Loan Agreement" (as hereinafter defined) (BankBoston and such other
lenders are hereinafter referred to collectively as the "Lenders").
W I T N E S S E T H:
WHEREAS, Borrower is the owner of certain real property more
particularly described in Exhibit A attached hereto and incorporated herein
by this reference (the "Borrower Land"; together with all improvements now or
hereafter located in, on or under the Borrower Land, collectively, the
"Borrower Property");
WHEREAS, Wells Avenue Senior Holdings LLC, a Massachusetts limited
liability company (the "Property Owner"), is the owner of certain real
property more particularly described on Exhibit B attached hereto and
incorporated herein by this reference (the "Nomura Land," the Land, together
with all improvements now or hereafter located in, on or under the Nomura
Land, collectively, the "Nomura Property"; the Borrower Property and the
Nomura Property are hereinafter referred to collectively as the "Property");
WHEREAS, Wells Avenue Holdings L.L.C., a Delaware limited liability
company ("Member"), and WASH Manager, L.L.C, a Delaware limited liability
company ("Manager") are the sole members of the Property Owner;
WHEREAS, Borrower is the sole member of Member;
WHEREAS, Lenders have agreed to provide to Borrower a loan in the amount
of up to $300,000,000.00 (the "Loan") pursuant to that certain First Amended
and Restated Loan Agreement, dated of even date herewith, between Lenders,
Borrower, Goldman Sachs Mortgage Company, as Co-Arranger and Co-Syndication
Agent, and BankBoston, as Administrative Agent, Co-Arranger and Co-
Syndication Agent (the "Loan Agreement"), which Loan is evidenced by those
certain Notes dated of even date herewith, made by Borrower to the order of
Lenders in the aggregate principal face amount of $300,000,000.00 as
described in the Loan Agreement (collectively, together with all amendments,
modifications, consolidations, increases, supplements and extensions thereof,
the "Note"), and secured by, among other things, those certain Mortgage and
Security Agreements and Deeds of Trust from Borrower to BankBoston as
Administrative Agent (the "Agent"), as amended by those certain First
Amendments to Mortgage and Security Agreement and other Collateral Documents
and those certain First Amendments to Deed of Trust Assignment of Rents,
Security Agreement and Fixture Filing and other Collateral Documents dated of
even date herewith from Borrower to Agent conveying the Borrower Property and
to be recorded in the appropriate public records of the jurisdictions in
which the Borrower Property is located (collectively, together with all
amendments, modifications, consolidations, increases, supplements and
extensions thereof, the "Security Deed");
WHEREAS, the Loan is further secured by that certain Amended and
Restated Assignment of Member's Interest of even date from Borrower pledging
Borrower's membership interest in Member (collectively, together with all
amendments or modifications thereof, the "Assignment");
WHEREAS, as a condition to making the Loan, Lenders require Borrower and
Guarantor to provide certain indemnities concerning Hazardous Materials (as
hereinafter defined) presently upon, in or under the Property, or hereafter
placed or otherwise located thereon or therein;
WHEREAS, to induce Lenders to make the Loan to Borrower, Borrower and
Guarantor have agreed to provide this Agreement for Lenders' benefit.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
($10.00) Dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lenders, by their acceptance of
delivery hereof, and Borrower and Guarantor hereby agree as follows:
19. Definitions. The definitions set forth below shall apply for
purposes of this Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Credit Agreement:
(a) "Environmental Law" shall mean any federal, state or local
statute, regulation or ordinance or any judicial or administrative decree or
decision, whether now existing or hereinafter enacted, promulgated or issued,
with respect to any Hazardous Materials, drinking water, groundwater,
wetlands, landfills, open dumps, storage tanks, underground storage tanks,
solid waste, waste water, storm water run-off, waste emissions or wells.
Without limiting the generality of the foregoing, the term shall encompass
each of the following statutes, and regulations promulgated thereunder, and
amendments and successors to such statutes and regulations, as may be enacted
and promulgated from time to time: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified in scattered
sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. Section 9601 et
seq.); (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.); (iii) the Toxic Substances Control Act (15 U.S.C. et
seq.); (iv) the Clean Water Act (33 U.S.C. Section 1251 et seq.); (v) the
Clean Air Act (42 U.S.C. Section 7401 et seq.); (vi) the Safe Drinking Water
Act (21 U.S.C. Section 349; 42 U.S.C. Section 201 and Section 300f et seq.);
(vii) the National Environmental Policy Act of 1969 (42 U.S.C. Section 4321);
(viii) the Superfund Amendment and Reauthorization Act of 1986 (codified in
scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (ix)
the Uncontrolled Hazardous Substance Sites Law, 38 M.R.S.A. Section 1361 et
seq., as applicable; (x) the Hazardous Matter Control Law, 38 M.R.S.A.
Section 1317, et seq., as applicable; (xi) the Maine Hazardous Waste, Septage
and Solid Waste Management Act, 38 M.R.S.A. Section 1301 et seq., as
applicable; (xii) the Reduction of Toxics Use, Waste and Release Law, 38
M.R.S.A. Section 2301 et seq., as applicable; and (xiii) the Site Location of
Development Law, 38 M.R.S.A. Section 481 et seq., as applicable.
(b) "Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic
under any Environmental Law. Without limiting the generality of the
foregoing, the term shall mean and include:
(i) "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Superfund Amendment and Reauthorization Act of 1986, or Title III of the
Superfund Amendment and Reauthorization Act, each as amended, and
regulations promulgated thereunder;
(ii) "hazardous waste" as defined in the Resource Conservation
and Recovery Act of 1976, as amended, and regulations promulgated
thereunder;
(iii) "hazardous materials" as defined in the Hazardous
Materials Transportation Act, as amended, and regulations promulgated
thereunder; and
(iv) "chemical substance or mixture" as defined in the Toxic
Substances Control Act, as amended, and regulations promulgated
thereunder.
(c) "Indemnified Parties" shall mean each of the Lenders,
their respective parents, subsidiaries and affiliates, each of their
respective shareholders, directors, officers, employees and agents, and the
successors and assigns of any of them; and "Indemnified Party" shall mean any
one of the Indemnified Parties.
(d) "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, storing, escaping,
leaching, dumping, or discarding, burying, abandoning, or disposing into the
environment.
(e) "Threat of Release" shall mean a substantial likelihood
of a Release which requires action to prevent or mitigate damage to the
environment which may result from such Release.
20. Indemnity Agreement. Borrower and Guarantor, each jointly
and severally, covenant and agree, at their sole cost and expense, to
indemnify, defend (at trial and appellate levels and with attorneys,
consultants and experts acceptable to Lenders) and hold each Indemnified
Party harmless against and from any and all liens, damages, losses,
liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments,
suits, proceedings, costs, disbursements or expenses of any kind or of any
nature whatsoever (including, without limitation, reasonable attorneys',
consultants' and experts' fees and disbursements incurred in investigating,
defending against, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted or
awarded against such Indemnified Party or the Property and, and arising
directly or indirectly from or out of: (A) the Release or Threat of Release
of any Hazardous Materials on, in, under or affecting all or any portion of
the Property or any surrounding areas, regardless of whether or not caused by
or within the control of Borrower, first occurring prior to the payment in
full of the Obligations; (B) the violation of any Environmental Laws relating
to or affecting the Property or the Borrower, whether or not caused by or
within the control of Borrower, first occurring prior to the payment in full
of the Obligations; (C) the failure of Borrower or Guarantor to comply fully
with the terms and conditions of this Agreement; (D) the violation of any
Environmental Laws in connection with other real property of Borrower which
gives or may give rise to any rights whatsoever in any party with respect to
the Property by virtue of any Environmental Laws, first occurring prior to
the payment in full of the Obligations; or (E) the enforcement of this
Agreement, including, without limitation, (i) the costs of assessment,
containment and/or removal of any and all Hazardous Materials from all or any
portion of the Property or any surrounding areas, (ii) the costs of any
actions taken in response to a Release or Threat of Release of any Hazardous
Materials on, in, under or affecting all or any portion of the Property or
any surrounding areas to prevent or minimize such Release or Threat of
Release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and
(iii) costs incurred to comply with the Environmental Laws in connection with
all or any portion of the Property or any surrounding areas. Borrower's and
Guarantor's obligations hereunder are separate and distinct from Borrower's
and Guarantor's obligations under the "Loan Documents" (as hereinafter
defined), and Lenders' and the other Indemnified Parties' rights under this
Agreement shall be in addition to all rights of Agent and Lenders under the
Security Deed, the Assignment, the Note, the Loan Agreement, the Guaranty and
under any other documents or instruments evidencing, securing or relating to
the Loan (the Security Deed, the Assignment, the Note, the Loan Agreement,
the Guaranty and such other documents or instruments, as amended or modified
from time to time, being herein referred to as the "Loan Documents"), and
payments by Borrower or Guarantor under this Agreement shall not reduce
Borrower's or Guarantor's obligations and liabilities under any of the Loan
Documents.
un Survival.
(a) The indemnity set forth above in Paragraph 2 shall
survive the repayment of the Loan and any exercise of any remedies under the
Security Documents, including without limitation, the power of sale, or any
other remedy in the nature of foreclosure, and shall not merge with any deed
or assignment given by Borrower to Agent or Lenders in lieu of foreclosure or
any deed under a power of sale.
(b) It is agreed and intended by Borrower, Guarantor and
Lenders that the indemnity set forth above in Paragraph 2 may be assigned or
otherwise transferred by each Lender to its successors and assigns and to any
subsequent purchaser of all or any portion of the Property or the Collateral
by, through or under Agent or Lenders, without notice to Borrower or
Guarantor and without any further consent of Borrower or Guarantor. To the
extent consent of any such assignment or transfer is required by law, advance
consent to any such assignment or transfer is hereby given by Borrower and
Guarantor in order to maximize the extent and effect of the indemnity given
hereby.
22. No Waiver. The liabilities of Borrower and Guarantor under
this Agreement shall in no way be limited or impaired by, and Borrower and
Guarantor hereby consent to and agree to be bound by, any amendment or
modification of the provisions of the Loan Documents to or with Lenders by
Borrower or Guarantor or any person who succeeds Borrower or Property Owner
as owner of any of the Property or the Collateral. In addition,
notwithstanding any terms of any of the Loan Documents to the contrary, the
liability of Borrower and Guarantor under this Agreement shall in no way be
limited or impaired by: (i) any extensions of time for performance required
by any of the Loan Documents; (ii) any sale, assignment or foreclosure of the
Note or the Security Documents or any sale or transfer of all or part of the
Property or the Collateral; (iii) any exculpatory provision in any of the
Loan Documents limiting Lenders' recourse to property encumbered by the
Security Documents or to any other security, or limiting Lenders' rights to a
deficiency judgment against Borrower; (iv) the accuracy or inaccuracy of the
representations and warranties made by Borrower or Guarantor under any of the
Loan Documents; (v) the release of Borrower or Guarantor or any other person
from performance or observance of any of the agreements, covenants, terms or
conditions contained in the Loan Documents by operation of law, Lenders'
voluntary act, or otherwise; (vi) the release or substitution, in whole or in
part, of any security for the Note; or (vii) Lenders' failure to record the
Security Documents or file any UCC-1 financing statements (or Lenders'
improper recording or filing of any thereof) or to otherwise perfect,
protect, secure or insure any security interest or lien given as security for
the Note; and, in any such case, whether with or without notice to Borrower
or Guarantor and with or without consideration.
23. Waiver by Borrower. BORROWER AND GUARANTOR WAIVE ANY RIGHT
OR CLAIM OF RIGHT TO CAUSE A MARSHALING OF BORROWER'S OR GUARANTOR'S ASSETS
OR TO CAUSE LENDERS TO PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN
BEFORE PROCEEDING UNDER THIS AGREEMENT AGAINST BORROWER AND GUARANTOR OR TO
PROCEED AGAINST BORROWER AND GUARANTOR IN ANY PARTICULAR ORDER. BORROWER AND
GUARANTOR AGREE THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL BECOME
DUE ON DEMAND. BORROWER AND GUARANTOR EXPRESSLY WAIVE AND RELINQUISH ALL
RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION) ACCORDED BY
APPLICABLE LAW TO INDEMNITORS.
24. Delay. No delay on Lenders' part in exercising any right,
power or privilege under any of the Loan Documents shall operate as a waiver
of any privilege, power or right hereunder.
or Releases. Any one or more of Borrower and Guarantor or any
other party liable upon or in respect of this Agreement or the Loan may be
released without affecting the liability of any party not so released.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. Said counterparts
shall constitute but one and the same instrument and shall be binding upon
each of the undersigned individually as fully and completely as if all had
signed but one instrument so that the joint and several liability of each of
the undersigned hereunder shall be unaffected by the failure of any of the
undersigned to execute any or all of the said counterparts.
27. Notices. Each notice, demand, election or request provided
for or permitted to be given pursuant to this Agreement shall be given in the
manner provided in the Loan Agreement.
28. Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated orally, by telephone or by any other means
except by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
29. Binding Effect. Except as herein provided, this Agreement
shall be binding upon Borrower and Guarantor and their respective
successors, successors-in-title and assigns, and shall inure to the benefit
of Lenders, the other Indemnified Parties, and their respective successors
and assigns. Notwithstanding the foregoing, Borrower and Guarantor, without
the prior written consent of Lenders in each instance, may not assign,
transfer or set over to another, in whole or in part, all or any part of its
or their benefits, rights, duties and obligations hereunder, including, but
not limited to, performance of and compliance with conditions hereof.
imp GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE
OF LAW). BORROWER AND GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY (A)
SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B)
WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE
RIGHT, IF ANY, TO TRIAL BY JURY, OR (II) TO OBJECT TO JURISDICTION WITHIN THE
STATE OF NEW YORK OR VENUE IN ANY PARTICULAR FORUM (INCLUDING FEDERAL) WITHIN
THE STATE OF NEW YORK. BORROWER AND GUARANTOR AGREE THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AND GUARANTOR
AT THE ADDRESSES SET FORTH IN THE LOAN AGREEMENT, AND SERVICE SO MADE SHALL
BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL BE SO MAILED. NOTHING
CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDERS FROM BRINGING ANY SUIT,
ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND
AGAINST BORROWER OR GUARANTOR PERSONALLY, AND AGAINST ANY PROPERTY OF
BORROWER, WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING
OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF
THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER, AND GUARANTOR AND LENDERS
HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY BORROWER AND GUARANTOR TO
PERSONAL JURISDICTION WITHIN THE STATE OF NEW YORK.
31. Recourse. Notwithstanding anything to the contrary contained
herein or in any other Loan Document, the obligations of WHWEL Real Estate
Limited Partnership under this Agreement whether arising under this Agreement
or otherwise in connection with any of the Loan Documents, shall be without
recourse to any limited partner of WHWEL Real Estate Limited Partnership and
no such person shall have any liability with respect thereto.
IN WITNESS WHEREOF, Borrower and Guarantor have caused this
Agreement to be executed under seal as of the day and year first written
above.
BORROWER:
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Properties II,
L.L.C., a Delaware limited liability
company, its managing member
By: Wellsford Commercial Properties
Trust, a Maryland real estate investment
trust, its manager
By:/s/ Gregory F. Hughes
-------------------------------------
Name: Gregory F. Hughes
Title: CFO and Treasurer
<PAGE>
GUARANTOR:
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By:/s/ Gregory F. Hughes
---------------------------------------
Name: Gregory F. Hughes
Title: CFO and Treasurer
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By:/s/ Alan S. Kava
----------------------------------
Name: Alan S. Kava
Title: Vice President
CONDITIONAL GUARANTY OF PAYMENT
-------------------------------
($300,000,000 Loan)
FOR AND IN CONSIDERATION OF the sum of Ten and No/100 Dollars
($10.00) and other good and valuable consideration paid or delivered to the
undersigned WELLSFORD COMMERCIAL PROPERTIES TRUST, a Maryland real estate
investment trust ("WCPT"), WHWEL REAL ESTATE LIMITED PARTNERSHIP ("WHWEL"),
WELLSFORD REAL PROPERTIES, INC., a Maryland corporation ("WRPI"), WHITEHALL
STREET REAL ESTATE LIMITED PARTNERSHIP V ("Whitehall V"), WHITEHALL STREET
REAL ESTATE LIMITED PARTNERSHIP VI ("Whitehall VI"), WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VII ("Whitehall VII"), and WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VIII ("Whitehall VIII", and together with
Whitehall V, Whitehall VI and Whitehall VII, collectively, "Whitehall"), each
a Delaware limited partnership (WCPT, WHWEL, WRPI and Whitehall are
hereinafter referred to collectively as "Guarantor"), the receipt and
sufficiency whereof is hereby acknowledged by Guarantor, and for the purpose
of seeking to induce BANKBOSTON, N.A. ("BKB"), and GOLDMAN SACHS MORTGAGE
COMPANY ("Goldman Sachs"; BKB and Goldman Sachs are hereinafter referred to
collectively as "Lender", which term shall also include each other Bank which
may now or hereafter become party to the "Credit Agreement" (as hereinafter
defined) and shall also include any such individual Bank acting as agent for
all of the Banks), to extend credit or otherwise provide financial
accommodations to WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a Delaware limited
liability company (hereinafter referred to as "Borrower"), which extension of
credit and provision of financial accommodations will be to the direct
interest, advantage and benefit of Guarantor, Guarantor does hereby, jointly
and severally, absolutely and irrevocably guarantee to Lender:
(a) subject to the provisions of Paragraphs 24 and 25, below, the
full and prompt payment when due, whether by acceleration or otherwise,
either before or after maturity thereof, of those certain Notes dated July
16, 1998 made by Borrower to the order of the Banks in the aggregate
principal face amount of Three Hundred Million and No/100 Dollars
($300,000,000.00) (hereinafter referred to collectively as the "Bank Notes"),
together with interest as provided in the Bank Notes, together with any
replacements, supplements, renewals, modifications, consolidations,
restatements and extensions thereof; and
(b) subject to the provisions of Paragraphs 24 and 25, below, the
full and prompt payment when due, whether by acceleration or otherwise,
either before or after maturity thereof, of each other note as may be issued
under that certain First Amended and Restated Loan Agreement dated July 16,
1998 among Borrower, BKB, for itself and as agent, Goldman Sachs, and the
other lenders now or hereafter a party thereto (hereinafter referred to as
the "Credit Agreement"), together with interest as provided in each such
note, together with any replacements, supplements, renewals, modifications,
consolidations, restatements and extensions thereof (the Bank Notes and each
of the notes described in this subparagraph (b) is hereinafter referred to
collectively as the "Note"); and
(c) subject to the terms of Paragraphs 24 and 25 below, the full
and prompt payment of all other monetary obligations of Borrower to Lender
under the terms of the Credit Agreement, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(d) subject to the terms of Paragraphs 24 and 25 below, the full
and prompt payment of any and all other monetary obligations of Borrower to
Lender under the Security Documents, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(e) subject to the terms of Paragraphs 24 and 25 below, the full
and prompt payment of any and all other monetary obligations of Borrower to
Lender under any other agreements, documents or instruments now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced by
the Note or the Credit Agreement (the Note, the Security Documents, the
Credit Agreement and said other agreements, documents and instruments, are
hereinafter collectively referred to as the "Loan Documents" and individually
referred to as a "Loan Document").
All terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.
1. Agreement to Pay; Costs of Collection. Guarantor does hereby
agree that, subject to the terms of Paragraphs 24 and 25 below, below, if the
Note is not paid by Borrower in accordance with its terms (including all
applicable grace periods), or if any and all sums which are now or may
hereafter become due from Borrower to Lender under the Loan Documents are not
paid by Borrower in accordance with their terms (including all applicable
grace periods), Guarantor will immediately make such payments. Guarantor
further agrees to pay Lender on demand all reasonable costs and expenses
(including court costs and reasonable attorneys' fees and disbursements) paid
or incurred by Lender in endeavoring to enforce this Guaranty, and until paid
to Lender, such sums shall bear interest at the default rate set forth in the
Credit Agreement unless collection from Guarantor of interest at such rate
would be contrary to applicable law, in which event such sums shall bear
interest at the highest rate which may be collected from Guarantor under
applicable law.
2. Reinstatement of Refunded Payments. If, for any reason, any
payment to Lender of any of the obligations guaranteed hereunder is required
to be refunded by Lender to Borrower, or paid or turned over by Lender to any
other person, including, without limitation, by reason of the operation of
bankruptcy, reorganization, receivership or insolvency laws or similar laws
of general application relating to creditors' rights and remedies now or
hereafter enacted, Guarantor agrees to pay the amount so required to be
refunded, paid or turned over (hereinafter referred to as the "Turnover
Payment"), the obligations of Guarantor shall not be treated as having been
discharged by the original payment to Lender giving rise to the Turnover
Payment, and this Guaranty shall be treated as having remained in full force
and effect for any such Turnover Payment so made by Lender, as well as for
any amounts not theretofore paid to Lender on account of such obligations,
but only to the extent that Guarantor otherwise would have been liable for
the payment of the same hereunder.
3. Rights of Lender to Deal with Collateral, Borrower and Other
Persons. Guarantor hereby consents and agrees that Lender may at any time,
and from time to time, without thereby releasing Guarantor from any liability
hereunder and without notice to or further consent from Guarantor, either
with or without consideration: release or surrender any lien or other
security of any kind or nature whatsoever held by it or by any person, firm
or corporation on its behalf or for its account, securing any indebtedness or
liability hereby guaranteed; substitute for any collateral so held by it,
other collateral of like kind, or of any kind; modify the terms of the Note
or the Loan Documents; extend or renew the Note for any period; grant
releases, compromises and indulgences with respect to the Note or the Loan
Documents and to any persons or entities now or hereafter liable thereunder
or hereunder; release any other Guarantor, surety, endorser or accommodation
party of the Note, the Security Documents or any other Loan Documents; or
take or fail to take any action of any type whatsoever. No such action which
Lender shall take or fail to take in connection with the Note or the Loan
Documents, or any of them, or any security for the payment of the
indebtedness of Borrower to Lender or for the performance of any obligations
or undertakings of Borrower, nor any course of dealing with Borrower or any
other person, shall release Guarantor's obligations hereunder, affect this
Guaranty in any way or afford Guarantor any recourse against Lender. The
provisions of this Guaranty shall extend and be applicable to all
replacements, supplements, renewals, amendments, extensions, consolidations,
restatements and modifications of the Note and the Loan Documents, and any
and all references herein to the Note and the Loan Documents shall be deemed
to include any such replacements, supplements, renewals, extensions,
amendments, consolidations, restatements or modifications thereof.
4. No Contest with Lender; Subordination. So long as any
obligation hereby guaranteed remains unpaid or undischarged, Guarantor will
not, by paying any sum recoverable hereunder (whether or not demanded by
Lender) or by any means or on any other ground, claim any set-off or
counterclaim against Borrower in respect of any liability of Guarantor to
Borrower or, in proceedings under federal bankruptcy law or insolvency
proceedings of any nature, prove in competition with Lender in respect of any
payment hereunder or be entitled to have the benefit of any counterclaim or
proof of claim or dividend or payment by or on behalf of Borrower or the
benefit of any other security for any obligation hereby guaranteed which, now
or hereafter, Lender may hold or in which it may have any share. Guarantor
hereby expressly waives any right of contribution from or indemnity against
Borrower, whether at law or in equity, arising from any payments made by
Guarantor pursuant to the terms of this Guaranty, and Guarantor acknowledges
that Guarantor has no right whatsoever to proceed against Borrower for
reimbursement of any such payments. In connection with the foregoing,
Guarantor expressly waives any and all rights of subrogation to Lender
against Borrower, and Guarantor hereby waives any rights to enforce any
remedy which Lender may have against Borrower and any rights to participate
in any collateral for Borrower's obligations under the Loan Documents.
Guarantor hereby subordinates any and all indebtedness of Borrower now or
hereafter owed to Guarantor to all indebtedness of Borrower to Lender, and
agrees with Lender that (a) Guarantor shall not demand or accept any payment
from Borrower on account of such indebtedness, (b) Guarantor shall not claim
any offset or other reduction of Guarantor's obligations hereunder because of
any such indebtedness, and (c) Guarantor shall not take any action to obtain
any interest in any of the security described in and encumbered by the Loan
Documents because of any such indebtedness; provided, however, that, if
Lender so requests, such indebtedness shall be collected, enforced and
received by Guarantor as trustee for Lender and be paid over to Lender on
account of the indebtedness of Borrower to Lender, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions
of this Guaranty except to the extent the principal amount of such
outstanding indebtedness shall have been reduced by such payment.
5. Waiver of Defenses. Guarantor hereby agrees that its
obligations hereunder shall not be affected or impaired by, and hereby waives
and agrees not to assert or take advantage of any defense based on:
(a) the incapacity or lack of authority of Borrower or any
other person or entity, the death or disability of Borrower or any Guarantor
or any other person or entity, or the failure of Lender to file or enforce a
claim against the estate (either in administration, bankruptcy or in any
other proceeding) of Borrower or any Guarantor or any other person or entity;
(b) the dissolution or termination of existence of Borrower
or any other Person;
(c) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of Borrower or any
other Person;
(d) the voluntary or involuntary receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
assignment, composition, or readjustment of, or any similar proceeding
affecting Borrower, any Guarantor, Property Owner, Manager, Member, or any of
Borrower's, any Guarantor's, Property Owner's, Manager's or Member's
properties or assets;
(e) the damage, destruction, condemnation, foreclosure or
surrender of all or any part of the Mezzanine Property or any Collateral;
(f) the failure of Lender to give notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or
of any action or nonaction on the part of any other person whomsoever in
connection with any obligation hereby guaranteed;
(g) any failure or delay of Lender to commence an action
against Borrower or any other Person, to assert or enforce any remedies
against Borrower under the Note or the Loan Documents, or to realize upon any
security;
(h) any failure of any duty on the part of Lender to
disclose to Guarantor any facts it may now or hereafter know regarding
Borrower, the Property Owner or any other Person, or the Mezzanine Property
or the property encumbered by the Security Documents, whether such facts
materially increase the risk to Guarantor or not;
(i) failure to accept or give notice of acceptance of this
Guaranty by Lender;
(j) failure to make or give notice of presentment and demand
for payment of any of the indebtedness or performance of any of the
obligations hereby guaranteed;
(k) failure to make or give protest and notice of dishonor
or of default to Guarantor or to any other party with respect to the
indebtedness or performance of obligations hereby guaranteed;
(l) any and all other notices whatsoever to which Guarantor
might otherwise be entitled;
(m) any lack of diligence by Lender in collection,
protection or realization upon any collateral securing the payment of the
indebtedness or performance of obligations hereby guaranteed;
(n) the invalidity or unenforceability of the Note or any of
the Loan Documents;
(o) the compromise, settlement, release or termination of
any or all of the obligations of Borrower under the Note or the Loan
Documents;
(p) any transfer by Borrower or any other Person of all or
any part of the security encumbered by the Loan Documents;
(q) the failure of Lender to perfect any security or to
extend or renew the perfection of any security; or
(r) to the fullest extent permitted by law, any other legal,
equitable or surety defenses whatsoever to which Guarantor might otherwise be
entitled, it being the intention that the obligations of Guarantor hereunder
are absolute, unconditional (subject to the terms of Paragraphs 24 and 25,
below) and irrevocable.
6. Guaranty of Payment and Not of Performance or Collection.
This is a Guaranty of payment and not of performance or collection. Subject
to the terms of Paragraphs 24 and 25, below, the liability of Guarantor under
this Guaranty shall be primary, direct and immediate and not conditional or
contingent upon the pursuit of any remedies against Borrower or any other
person, nor against securities or liens available to Lender, its successors,
successors in title, endorsees or assigns. Guarantor hereby waives any right
to require that an action be brought against Borrower or any other person or
to require that resort be had to any security or to any balance of any
deposit account or credit on the books of Lender in favor of Borrower or any
other person.
7. Rights and Remedies of Lender. In the event of an Event of
Default under the Note or the Loan Documents, or any of them, Lender shall
have the right to enforce its rights, powers and remedies thereunder or
hereunder or under any other agreement, document or instrument now or
hereafter evidencing, securing or otherwise relating to the indebtedness
evidenced by the Note or secured by the Loan Documents, in any order, and all
rights, powers and remedies available to Lender in such event shall be
nonexclusive and cumulative of all other rights, powers and remedies provided
thereunder or hereunder or by law or in equity. Accordingly, Guarantor
hereby authorizes and empowers Lender upon the occurrence of any Event of
Default under the Note or the Loan Documents, at its sole discretion, and
without notice to Guarantor, to exercise any right or remedy which Lender may
have, including, but not limited to, judicial foreclosure, exercise of rights
of power of sale, acceptance of an assignment in lieu of foreclosure,
appointment of a receiver, exercise of remedies against personal property, or
enforcement of any assignment of leases, as to any security, whether real,
personal or intangible. At any public or private sale of any security or
collateral for any indebtedness or any part thereof guaranteed hereby,
whether by foreclosure or otherwise, Lender may, in its discretion, purchase
all or any part of such security or collateral so sold or offered for sale
for its own account and may apply against the amount bid therefor all or any
part of the balance due it pursuant to the terms of the Note or Security
Documents or any other Loan Document without prejudice to Lender's remedies
hereunder against Guarantor for deficiencies. If the indebtedness guaranteed
hereby is partially paid by reason of the election of Lender to pursue any of
the remedies available to Lender, or if such indebtedness is otherwise
partially paid, this Guaranty shall nevertheless remain in full force and
effect, and Guarantor shall remain liable for the entire balance of the
indebtedness guaranteed hereby (subject, however, to the provisions of
Paragraphs 24 and 25 below) even though any rights which Guarantor may have
against Borrower may be destroyed or diminished by the exercise of any such
remedy.
8. Application of Payments. Guarantor hereby authorizes Lender,
without notice to Guarantor, to apply all payments and credits received from
Borrower or from Guarantor or realized from any security in such manner and
in such priority as set forth in the Credit Agreement.
9. Business Failure, Bankruptcy or Insolvency. In the event of
the business failure of a Guarantor or if there shall be pending any
bankruptcy or insolvency case or proceeding with respect to a Guarantor under
federal bankruptcy law or any other applicable law or in connection with the
insolvency of a Guarantor, or if a liquidator, receiver, or trustee shall
have been appointed for a Guarantor or a Guarantor's properties or assets,
Lender may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of Lender allowed in any
proceedings relative to such Guarantor, or any of such Guarantor's properties
or assets, and, irrespective of whether the indebtedness or other obligations
of Borrower guaranteed hereby or the obligations of such Guarantor hereunder
shall then be due and payable, by declaration or otherwise, Lender shall be
entitled and empowered to file and prove a claim for the whole amount of any
sum or sums owing by such Guarantor with respect to the indebtedness or other
obligations of Borrower guaranteed hereby, and to collect and receive any
moneys or other property payable or deliverable on any such claim. Guarantor
covenants and agrees that upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Borrower, Guarantor shall not seek a
supplemental stay or otherwise pursuant to Section 105 of the Bankruptcy Code
or any other provision of the Bankruptcy Code, or any other debtor relief law
(whether statutory, common law, case law, or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to
stay, interdict, condition, reduce or inhibit the ability of Lender to
enforce any rights of Lender against Guarantor by virtue of this Guaranty or
otherwise.
10. Financial Statements and Other Information. Each Guarantor
hereby independently represents and warrants to Lender that all financial
statements heretofore delivered by it to Lender are true and correct in all
material respects, have been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly present its financial
condition as of the date thereof; that no material adverse change has
occurred in its assets or financial condition as reflected therein since the
date thereof; and that it has no liabilities or known contingent liabilities
involving material amounts which are not reflected in such financial
statements or referred to in the notes thereto other than its obligations
under this Guaranty. Each Guarantor independently agrees that until all
indebtedness guaranteed hereby has been completely repaid and all obligations
and undertakings of Borrower and Guarantor under, by reason of, or pursuant
to the Note and the Loan Documents have been completely performed and no
Lender has any further obligation to make Loans to Borrower (or until the
Assignment of Interests has been terminated as provided therein, provided
that no "Triggering Event" (as hereinafter defined" has occurred), it will
promptly deliver to Lender upon written (but not more often than quarterly)
demand its then most recent financial statements readily available (provided
that such financial statements shall be prepared and updated not less
frequently than annually) detailing its assets and liabilities certified by
it, in form and substance reasonably acceptable to Lender.
The financial statements and other reports and information
delivered by Guarantor to Lender hereunder will be treated as confidential by
each Lender, and each assignee and participant hereunder and each potential
assignee or participant hereunder, and such parties for themselves agree not
to disclose such information to any Person, provided that such information
may be disclosed to any of the following in connection with their
participation in the transactions contemplated by the Loan Documents:
directors, officers, employees, representatives, legal counsel, accountants
and prospective investors of any of such Persons, it being understood that
such Persons shall be informed of the confidential nature of such information
and shall agree to treat such information confidentially. Notwithstanding
the foregoing, such Persons shall be permitted to disclose such information
(a) to the extent required by law, (b) to the extent such confidential
information becomes publicly available other than as a result of the breach
of this Guaranty, (c) to the extent such information becomes available to any
of such Persons on a non-confidential basis, or (d) to the extent necessary
to enforce the Loan Documents (provided that Lender shall use reasonable
efforts to cause such financial statements, reports and information to remain
confidential).
11. Covenants of Guarantor. Each Guarantor independently hereby
covenants and agrees with Lender that until all indebtedness guaranteed
hereby has been completely repaid and all obligations and undertakings of
Borrower and Guarantor under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed, and the Lenders have no
further obligations to make Loans to Borrower (or until the Assignment of
Interests has been terminated as provided therein, provided that no
"Triggering Event" (as hereinafter defined) has occurred):
(a) it will cause to be done all things necessary to
preserve and keep in full force and effect its legal existence, rights and
franchises, to effect and maintain all required foreign qualifications,
licensing, domestication or authorization, and to comply in all material
respects with all applicable laws and regulations with respect to the
foregoing;
(b) it will keep complete, proper and accurate records and
books of account in which full, true and correct entries will be made in
accordance with generally accepted accounting principles consistent with the
preparation of the financial statements heretofore delivered to Lender and
will maintain adequate accounts and reserves for all taxes (including income
taxes), all depreciation and amortization of its properties, all other
contingencies, and all other proper reserves in the same manner, and to the
same extent, that it has, to the extent applicable, kept and maintained it
records and books and maintained accounts and reserves for the foregoing; and
(c) it will not make or permit to be made, by voluntary or
involuntary means, any transfer or encumbrance of its direct or indirect
interest in Borrower, or any dilution of its direct or indirect interest in
Borrower, which would violate the provisions of Section 8.11 of the Credit
Agreement.
12. [Intentionally Omitted].
13. Changes in Writing; No Revocation. This Guaranty may not be
changed orally, and no obligation of Guarantor can be released or waived by
Lender except by a writing signed by a duly authorized officer of Lender.
This Guaranty shall be irrevocable by Guarantor until all indebtedness
guaranteed hereby has been completely repaid and the Lenders have no further
obligation to advance Loans to Borrower. Notwithstanding anything contained
in this Guaranty or any of the Loan Documents to the contrary, this Guaranty
shall terminate and be of no further force or effect upon the earlier to
occur of (i) payment to Lender by Guarantor of the "Allocable Loan Amount"
(as hereinafter defined) and (ii) any termination of the Assignment of
Interests either pursuant to the terms thereof or by mutual agreement of
Borrower and Lender provided that no "Triggering Event" (as hereinafter
defined) has occurred.
14. Notices. All notices, demands or requests provided for or
permitted to be given pursuant to this Guaranty (hereinafter in this
paragraph referred to as "Notice") must be in writing and shall be deemed to
have been properly given or served by personal delivery or by sending same by
overnight courier or by depositing the same in the United States Mail,
postpaid and registered or certified, return receipt requested, at the
addresses set forth below. Each Notice shall be effective upon being
delivered personally or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. The time period in which a
response to any such Notice must be given or any action taken with respect
thereto, however, shall commence to run from the date of receipt if
personally delivered or sent by overnight courier or, if so deposited in the
United States Mail, the earlier of three (3) business days following such
deposit and the date of receipt as disclosed on the return receipt.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no Notice was given shall be deemed to be receipt of
the Notice sent. By giving at least fifteen (15) days prior Notice thereof,
Guarantor or Lender shall have the right from time to time and at any time
during the term of this Guaranty to change their respective addresses and
each shall have the right to specify as its address any other address within
the United States of America. For the purposes of this Guaranty:
The Address of Lender is:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
with a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jay Johns
and a copy to each other Lender which may now or hereafter become
a party to the Credit Agreement at such address as may be
designated by such Lender.
The Address of Guarantor is:
Wellsford Commercial Properties Trust
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attn: Greg Hughes
and
Wellsford Real Properties, Inc.
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attn: Greg Hughes
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman, LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
and
WHWEL Real Estate Limited Partnership
85 Broad Street, 19th Floor
New York, New York 10004
Attn: Chief Financial Officer
and
Whitehall Street Real Estate Limited Partnership V
Whitehall Street Real Estate Limited Partnership VI
Whitehall Street Real Estate Limited Partnership VII
Whitehall Street Real Estate Limited Partnership VIII
85 Broad Street, 19th Floor
New York, New York 10004
Attn: Chief Financial Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Anthony J. Colletta, Esq.
15. Governing Law. Guarantor acknowledges and agrees that this
Guaranty and the obligations of Guarantor hereunder shall be governed by and
interpreted and determined in accordance with the internal laws of the State
of New York (excluding the laws applicable to conflicts or choice of law).
16. CONSENT TO JURISDICTION; WAIVERS. GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURISDICTION IN THE
STATE OF NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY, AND (B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER
THE LAWS OF ANY STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, AND (II) TO
OBJECT TO JURISDICTION WITHIN THE STATE OF NEW YORK OR VENUE IN ANY
PARTICULAR FORUM WITHIN THE STATE OF NEW YORK. NOTHING CONTAINED HEREIN,
HOWEVER, SHALL PREVENT LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR
EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST GUARANTOR PERSONALLY,
AND AGAINST ANY PROPERTY OF GUARANTOR, WITHIN ANY OTHER STATE. INITIATING
SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY STATE SHALL IN
NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS
OF THE STATE OF NEW YORK SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF GUARANTOR
AND LENDER HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY GUARANTOR TO
PERSONAL JURISDICTION WITHIN THE STATE OF NEW YORK.
17. Successors and Assigns. The provisions of this Guaranty
shall be binding upon Guarantor and its heirs, successors, successors in
title, legal representatives, executors, estate and assigns, and shall inure
to the benefit of Lender, its successors, successors in title, legal
representatives and assigns.
18. Assignment by Lender. Subject to the terms of Section 18.8 of
the Credit Agreement, this Guaranty is assignable by Lender in whole or in
part in conjunction with any assignment of the Note or portions thereof, and
any such assignment hereof or any transfer or assignment of the Note or
portions thereof by Lender shall operate to vest in any such assignee the
rights and powers, in whole or in part, as appropriate, herein conferred upon
and granted to Lender.
19. Severability. If any term or provision of this Guaranty shall
be determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by law.
20. Disclosure. Guarantor agrees that in addition to disclosures
made in accordance with standard banking practices, any Lender may disclose
information obtained by such Lender pursuant to this Guaranty to assignees or
participants and potential assignees or participants hereunder, subject to
the terms of Paragraph 10 above.
21. No Unwritten Agreements. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
22. Time of the Essence. Time is of the essence with respect to
each and every covenant, agreement and obligation of Guarantor under this
Guaranty.
23. [Intentionally Omitted.]
24. Triggering Event.
(a) LENDER ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS GUARANTY, THE PAYMENT BY GUARANTOR
OF ITS OBLIGATIONS UNDER THIS GUARANTY SHALL BE DUE ONLY IN THE EVENT THAT,
AND GUARANTOR SHALL HAVE NO LIABILITY HEREUNDER UNLESS AND UNTIL, ONE OR MORE
"TRIGGERING EVENTS" (AS THAT TERM IS HEREINAFTER DEFINED) SHALL OCCUR AND,
WITH RESPECT TO THE ITEMS DESCRIBED IN CLAUSES (iv) THROUGH (ix) BELOW, ANY
OF THE EVENTS DESCRIBED THEREIN IS NOT CURED WITHIN FIVE (5) DAYS AFTER
RECEIPT BY GUARANTOR OF WRITTEN NOTICE FROM AGENT OF THE OCCURRENCE OF ANY
SUCH EVENT (PROVIDED, HOWEVER, THAT SUCH CURE BY GUARANTOR SHALL NOT BE
DEEMED A CURE OF ANY EVENT OF DEFAULT).
(b) For the purposes of this Guaranty, the term "Triggering
Event" shall mean the occurrence of any one or more of the following events:
(i) Any of the Guarantor, the Borrower, the Manager,
the Member or the Property Owner shall file any voluntary
petition under any Chapter of the Bankruptcy Code, or shall
in any manner seek any relief, protection, reorganization,
liquidation, dissolution or similar relief for debtors under
any local, state, federal or other insolvency laws or other
laws providing for the relief of debtors, or in equity, or
directly or indirectly cause any of the other of such Persons
to file any such petition or to seek any such relief; or
(ii) Any of the Guarantor, the Borrower, the Manager,
the Member or the Property Owner (A) shall file, or, directly
or indirectly, cause to be filed, any involuntary petition
under any Chapter of the Bankruptcy Code against any of such
Persons, whether or not any of such Persons joins in such
petition, or (B) shall, directly or indirectly, cause any of
such Persons to become the subject of any dissolution,
liquidation or insolvency proceeding or any other proceeding
pursuant to any local, state, federal or other insolvency
laws or other laws providing for the relief of debtors, or in
equity;
(iii) Any of the Guarantor, the Borrower, the
Manager, the Member or the Property Owner shall, directly or
indirectly, cause the Mezzanine Property or the Mezzanine
Collateral, or any portion thereof or interest therein, or
any interest of such Persons in the Mezzanine Property or the
Mezzanine Collateral, to become the property of any
bankruptcy, dissolution, liquidation or insolvency
proceeding; or
(iv) Guarantor, Borrower, the Manager, the Member, the
Property Owner, or any of them, shall take any action of any
kind or nature whatsoever, either directly or indirectly, to
oppose, impede, obstruct, hinder, frustrate, enjoin or
otherwise interfere with the exercise by Lender of any of
Lender's rights and remedies under the Mezzanine Loan
Documents, or at law or in equity, other than a "Permitted
Defense" (as hereinafter defined) or shall, either directly
or indirectly, cause any other person to take any action
which, if taken by Guarantor, the Borrower, the Manager, the
Member or the Property Owner, would constitute a Triggering
Event. For the purposes hereof, a "Permitted Defense" shall
mean (A) the defense of payment in full of the obligations
guaranteed hereby, (B) a defense made in good faith that a
Triggering Event has not occurred, or (C) a defense that an
Event of Default has not occurred or as to the improper
exercise of the remedies of the Lenders under the Loan
Documents, provided that (1) the primary purpose of raising
such defense is not to delay, inhibit or interfere with the
exercise by Lender of its rights and remedies under the
Mezzanine Loan Documents, (2) Agent's rights under the
Assignment of Interests to exercise all voting and other
membership, management, approval or other rights with respect
to the Member shall not be opposed, impeded, obstructed,
hindered, frustrated, enjoined or otherwise interfered with,
and (3) all Excess Property Income and "Distributions" (as
defined in the Assignment of Interests) are paid to Agent for
application in accordance with the terms of the Credit
Agreement; or
(v) Except as expressly permitted in Section 5.3 of the
Credit Agreement, there shall occur, whether voluntarily,
involuntary or by operation of law, a sale, transfer,
assignment, conveyance, option or other disposition of, or
any mortgage, hypothecation, encumbrance, financing or
refinancing of (A) any assets or properties of the Property
Owner, except for (1) the Mezzanine Mortgage Loan, (2)
releases of the Mezzanine Property in accordance with the
terms of the Credit Agreement, and except as provided in
Section 7.23(a) with respect to the replacement of fixtures,
equipment, machinery and other personal property by the
Property Owner in connection with the operation of the
Mezzanine Property in the ordinary course of business, (3) a
condemnation of all or any portion of the Mezzanine Property,
or (4) a foreclosure of the Mezzanine Property by the
Mezzanine Mortgagee, (B) any of the Mezzanine Collateral or
any of the Borrower's, the Member's or the Manager's direct
or indirect interests, rights or claims in and to the
Property Owner (including without limitation any rights to
receive distributions from the Property Owner, the Manager or
the Member), (C) any other assets or properties of the
Manager or the Member, (D) any direct or indirect interests,
rights or claims of either Borrower, the Manager or the
Member in the Property Owner, (E) any direct or indirect
interests, rights or claims of Borrower in the Member, or (F)
any direct or indirect interests, rights or claims of the
Member in the Manager; or
(vi) The Property Owner shall seek or obtain additional
advances from the holder or holders of the Mezzanine Mortgage
Loan Documents (provided that the foregoing shall not be
deemed violated in the event that the holder or holders of
the Mezzanine Mortgage Loan Documents shall make a protective
advance or advances for the payment of taxes, insurance
premiums or to protect the Mezzanine Property pursuant to the
terms of the Nomura Mortgages), or the Property Owner shall
modify, amend, terminate, extend or seek a consent or waiver
under the Mezzanine Mortgage Loan Documents in any respect
without the prior written approval of the Lender (other than
an amendment or waiver that would reduce the obligations of
the Property Owner to pay principal, interest, loan fees,
default interest, late charges, prepayment fees or similar
payments thereunder or a waiver of an "Event of Default"
under the Mezzanine Mortgage Loan Documents or other
occasional waiver of compliance with a term of any of the
Mezzanine Mortgage Loan Documents which waiver in each case
is not a waiver of future compliance with such term or
tantamount to an amendment of the Mezzanine Mortgage Loan
Documents, and which waiver does not have a material adverse
effect on any of the Borrower, Lender, Property Owner,
Manager, Member, the Mezzanine Collateral or the Mezzanine
Property); or
(vii) Any of Borrower, Member, Manager or Property
Owner shall modify, amend, cancel, release, surrender,
terminate or permit the modification, amendment,
cancellation, release, surrender or termination of the Member
Organizational Agreements, the Manager Organizational
Agreements or the Property Owner Organizational Agreements
other than "Minor Amendments" (as such term is defined in the
Assignment of Interests), or dissolve, liquidate, redeem,
cancel, wind-up or permit the dissolution, liquidation,
redemption, cancellation, winding-up or expiration of the
Property Owner, the Manager or the Member or the Member
Organizational Agreements, the Manager Organizational
Agreements or the Property Owner Organizational Agreements,
or seek or permit the partition of any of the assets of any
of such Persons; or
(viii) Any of Borrower, the Manager or the Member
shall take any action which results in the sale, reduction,
cancellation, dilution, diminution, conversion or withdrawal
of any direct or indirect interest of such Person in the
Property Owner, the Manager or the Member, as applicable, or
omit to take any action necessary to prevent any such sale,
cancellation, reduction, dilution, diminution, conversion or
withdrawal, or, without limiting the foregoing, consent to or
permit to occur the admission of any new member of the
Property Owner, Manager or Member, the creation of any new
class of interest in the Property Owner, the Manager or the
Member, or the issuance, directly or indirectly, any other
equity or beneficial interest in the Property Owner, the
Manager or the Member; or
(ix) The Borrower shall breach any of its covenants or
agreements contained in Paragraphs 6(i) or 6(j) of the
Assignment of Interests, to the full extent of any losses,
damages and expenses of Lender on account thereof.
(c) No consent or approval which may be given by the Lender
pursuant to Section 32(g) of the Credit Agreement shall be deemed to release,
diminish or otherwise impair the obligations of Guarantor under this Guaranty
or to otherwise affect the determination of whether a Triggering Event has
occurred.
(d) For the purposes of this Guaranty, in order to determine
any loss, damage or expense of Lender, Lender shall not be required to have
sold or otherwise disposed of any of the Mezzanine Collateral or any other
Collateral.
25. Limitation of Recovery. Without modifying or limiting any
provision of this Guaranty or any agreement contained herein, except as
Guarantor's liability is otherwise limited as specifically provided in
Paragraph 24, above, it is hereby agreed that the amount recoverable from
Guarantor under this Guaranty (but not the scope or extent of the liabilities
and obligations guaranteed under this Guaranty) shall be limited to (a) the
principal balance of the Notes not to exceed an amount equal to $5,939,184.00
(such sum of $5,939,184.00 being hereinafter referred to as the "Allocable
Principal Amount"), (b) interest accrued on the principal portion of the
Notes described in Paragraph 25(a), (c) any payments or advances of funds
made by Lender pursuant to any one or more of the Loan Documents relating
directly or indirectly to the Mezzanine Property, the Mezzanine Collateral or
the Mezzanine Mortgage Loan, and (d) all expenses (including, but not limited
to, reasonable attorneys' fees) paid or incurred by Lender in endeavoring to
enforce this Guaranty (such amounts set forth in clauses (a) through (d)
inclusive above are hereinafter referred to collectively as the "Allocable
Loan Amount"). In the event of any foreclosure sale of the Mezzanine
Collateral, the amount recoverable against the Guarantors with respect to any
of the Triggering Events, which pursuant to the terms of any subparagraph of
Paragraph 24(b) the liability of Guarantors is not specifically limited to
the terms thereof, shall be reduced by an amount equal to the amount paid at
such foreclosure sale, for the Mezzanine Collateral or portion thereof so
sold at the time of such foreclosure sale (Guarantor remaining liable at such
foreclosure sale for the deficiency up to the extent of any remaining
liability of Guarantor hereunder).
26. Reduction of the Allocable Principal Amount.
(a) Notwithstanding anything contained in this Guaranty to
the contrary, if and to the extent that one or more of the Mezzanine
Properties are released from the lien of the Nomura Mortgage and such
Mezzanine Property is released in accordance with the terms of Section 5.3 of
the Credit Agreement (including without limitation the payment to Lender of
the requisite release price allocable to such portion of the Mezzanine
Collateral pursuant to the provisions of Section 5.3 of the Credit
Agreement), then the Allocable Principal Amount shall be automatically
reduced by an amount equal to one hundred percent (100%) of the Designated
Collateral Value allocable to such portion of the Mezzanine Collateral.
(b) If and to the extent that any "Rents" (as defined in the
Cash Collateral Agreement), "Distributions" (as defined in the Assignment of
Interests) or other sums generated by any one or more of the Mezzanine
Properties (including, without limitation, any condemnation awards and/or
casualty insurance proceeds) are received by Agent under the Loan Documents
after the occurrence and during the continuance of an Event of Default, and
are applied by Lender in reduction of the outstanding principal balance of
the Notes, then the Allocable Principal Amount shall be automatically reduced
by a like amount.
27. Joint and Several Liability. Notwithstanding anything to the
contrary herein, the representations, warranties, covenants and agreements
made by each of the Persons comprising Guarantor herein, and the liability of
each of the Persons comprising Guarantor hereunder, is joint and several
subject to the terms of this Paragraph 27; provided, however, that the
maximum liability of WRPI and WCPT (collectively, the "Wellsford Entities")
on a joint and several basis shall be fifty percent (50%) of the Allocable
Loan Amount, and the maximum liability of Whitehall and WHWEL on a joint and
several basis shall be fifty percent (50%) of the Allocable Loan Amount; and
provided further that, in the event that a Triggering Event shall occur
solely as a result of any of the events described in Paragraph 24(b)(i), (ii)
or (iii) as to only one or more of the Wellsford Entities, on the one hand,
or only one or more of the Whitehall Entities, on the other hand, then the
Whitehall Entities shall have no liability hereunder as a result of any such
action on the part of any Wellsford Entity, and none of the Wellsford
Entities shall have any liability hereunder as a result of any such action on
the part of any of the Whitehall Entities.
28. Statement of Discharge. Upon the payment in full of the
indebtedness guaranteed hereby and upon the termination of Lender's
obligations to advance Loans to Borrower, the Lender shall, upon the written
request of any of Whitehall, WRPI or the Borrower, deliver a statement to the
Guarantor that the Guarantor's obligations under this Guaranty have been
discharged and satisfied and that this Guaranty is terminated (subject to
reinstatement as provided herein).
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under
seal as of the 16th day of July, 1998.
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
----------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SEAL]
WELLSFORD REAL PROPERTIES, INC., a Maryland
corporation
By: /s/ Gregory F. Hughes
----------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
------------------------------
Name: Alan S. Kava
Title: Vice President
Attest: /s/ Ralph F. Rosenberg
--------------------------
Name: Ralph F. Rosenberg
Title: Assistant Secretary
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP V
By: WH Advisors, L.P. V
By: WH Advisors, Inc. V
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VI
By: WH Advisors, L.P. VI
By: WH Advisors, Inc. VI
By: /s/ Alan S. Kava
-----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII
By: WH Advisors, Inc. VII
By: /s/ Alan S. Kava
------------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VIII
By: WH Advisors, L.P. VIII
By: WH Advisors, Inc. VIII
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
INDEMNITY AND GUARANTY AGREEMENT
($300,000,000.00 Loan)
THIS INDEMNITY AND GUARANTY AGREEMENT (this "Agreement"), made as of the
16th day of July, 1998, by WELLSFORD COMMERCIAL PROPERTIES TRUST, a Maryland
real estate investment trust, and WHWEL REAL ESTATE LIMITED PARTNERSHIP,
jointly and severally (said entities being collectively referred to herein as
"Indemnitor"), whose address is 610 Fifth Avenue, Seventh Floor, New York,
New York 10020, in favor of BANKBOSTON, N.A., a national banking association,
individually and as Agent for itself and the other banks which may become
parties to the "Loan Agreement" (as hereinafter defined), GOLDMAN SACHS
MORTGAGE COMPANY, and each other lender which may now or hereafter become
party to the Loan Agreement (together, "Lender").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Holdings, L.L.C. ("Borrower"), has obtained
loan in the principal amount of up to Three Hundred Million and No/100
Dollars ($300,000,000.00) (the "Loan") from Lender;
WHEREAS, the Loan has been made pursuant to the terms and conditions of
that certain First Amended and Restated Loan Agreement, of even date
herewith, by and between Borrower, Agent and Lender (the "Loan Agreement");
WHEREAS, the Loan is evidenced by one or more promissory notes
(collectively, the "Note"), and executed by Borrower and payable to the order
of Lender and is secured by among other things, the "Security Documents" (as
defined in the Loan Agreement and being referred to herein as the "Security
Documents"), encumbering the "Collateral" (as defined in the Loan Agreement
and being herein referred to as the "Collateral") (the Note, the Security
Documents and all other documents and instruments evidencing or securing the
Loan, as the same may from time to time be amended, consolidated, restated,
extended, renewed or replaced (including without limitation any notes
delivered by Borrower pursuant to Section 18.3 of the Loan Agreement), being
collectively referred to herein as the "Loan Documents"); and
WHEREAS, as a condition to making the Loan to Borrower, Lender has
required that Indemnitor indemnify Lender from and against and guarantee
payment to Lender of certain matters as set forth herein; and
WHEREAS, each of the parties comprising Indemnitor is a direct or
indirect owner of a beneficial interest in Borrower, the extension of the
Loan to Borrower is of substantial benefit to Indemnitor and, therefore,
Indemnitor desires to indemnify Lender from and against and guarantee payment
to Lender of such matters.
NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:
1. Indemnity and Guaranty. Indemnitor hereby assumes liability for,
hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend
and save Lender harmless from and against, and hereby indemnifies Lender from
and against any and all liabilities, obligations, losses, damages, costs and
expenses (including, without limitation, attorneys' fees), causes of action,
suits, claims, demands and judgments of any nature or description whatsoever
(collectively, "Costs") which may at any time be imposed upon, incurred by or
awarded against Lender as a result of:
(a) Proceeds paid under any insurance policies (or paid as a
result of any other claim or cause of action against any person or entity) by
reason of damage, loss or destruction to all or any portion of the Collateral
(including without limitation the Mezzanine Collateral) or the Mezzanine
Property, to the full extent of such proceeds not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been
delivered to Lender;
(b) Proceeds or awards resulting from the condemnation or other
taking in lieu of condemnation of all or any portion of the Collateral
(including without limitation the Mezzanine Collateral) or the Mezzanine
Property, to the full extent of such proceeds or awards not previously
delivered to Lender, but which, under the terms of the Loan Documents, should
have been delivered to Lender;
(c) All tenant security deposits or other refundable deposits paid
to or held by Borrower, Property Owner or any other person or entity in
connection with leases, license agreements, booking agreements and all other
similar agreements entered into for the use and occupancy of all or any
portion of the Collateral or the Mezzanine Property which are not applied in
accordance with the terms of the applicable lease or other agreement;
(d) Rent, accounts, accounts receivables, fees and other payments
received from tenants or any other person or entity under leases, license
agreements, booking agreements and all other similar agreements entered into
for the use and occupancy of all or any portion of the Collateral or the
Mezzanine Property paid more than one month in advance;
(e) Rents, issues, profits, revenues, accounts, accounts
receivable and fees of all or any portion of the Collateral received or
applicable to a period after any notice of Default from Lender under the Loan
Documents in the event of any Default by Borrower thereunder which are not
either applied to the ordinary and necessary expenses of owning and operating
the Collateral or paid to Lender;
(f) Rents, issues, profits, revenues and distributions of all or
any portion of the Mezzanine Collateral received or applicable to a period
after any notice of Default from Lender under the Loan Documents in the event
of any Default by Borrower thereunder which are not paid to Lender as
required by the Loan Documents;
(g) Damage to the Collateral (including without limitation the
Mezzanine Collateral) or the Mezzanine Property as a result of the
intentional misconduct or gross negligence of Borrower, Manager, Member,
Property Owner or any of their respective principals, officers, members or
general partners, or any property manager that controls, is controlled by or
is under common control with any of such persons, or any removal of the
Collateral (including without limitation the Mezzanine Collateral) or the
Mezzanine Property in violation of the terms of the Loan Documents, to the
full extent of the losses or damages incurred by Lender on account of such
damage or removal;
(h) Borrower, Manager, Member or Property Owner retaining funds
directly or indirectly or making distributions to their respective members as
a result of which Borrower, Manager, Member or Property Owner is unable to
pay any valid taxes, assessments, mechanic's liens, materialmen's liens or
other liens which could create liens on any portion of the Mezzanine
Property, the assets of Manager or Member or which could create liens on any
portion of the Collateral (including without limitation the Mezzanine
Collateral) which would be superior to the lien or security title of the
Security Documents or the other Loan Documents thereon; and
(i) Fraud or intentional misrepresentation by Borrower, Manager,
Member, Property Owner or any of their respective principals, members,
officers or general partners, any guarantor, any indemnitor or any agent,
employee or other person authorized or apparently authorized to make
statements or representations on behalf of Borrower, Manager, Member,
Property Owner, any principal, officer, member or partner of Borrower,
Manager, Member, Property Owner, or any guarantor or any indemnitor, to the
full extent of any losses, damages and expenses of Lender on account thereof.
This is a guaranty of payment and performance of the matters within the
scope of this Agreement and not of collection. The liability of Indemnitor
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any remedies against Borrower or any other
person (including, without limitation, other guarantors, if any), nor against
the collateral for the Loan. Indemnitor waives any right to require that an
action be brought against Borrower or any other person or to require that
resort be had to any collateral for the Loan or to any balance of any deposit
account or credit on the books of Lender in favor of Borrower or any other
person. In the event, on account of the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law (whether statutory, common law, case
law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, Borrower shall be relieved of or fail to
incur any debt, obligation or liability as provided in the Loan Documents
which is the subject matter of this Agreement, Indemnitor shall nevertheless
be fully liable therefor to the extent provided in this Agreement. In the
event of a default under the Loan Documents which is not cured within any
applicable grace or cure period, Lender shall have the right to enforce its
rights, powers and remedies (including, without limitation, foreclosure of
all or any portion of the collateral for the Loan) thereunder or hereunder,
in any order, and all rights, powers and remedies available to Lender in such
event shall be non-exclusive and cumulative of all other rights, powers and
remedies provided thereunder or hereunder or by law or in equity. If the
indebtedness and obligations guaranteed hereby are partially paid or
discharged by reason of the exercise of any of the remedies available to
Lender, this Agreement shall nevertheless remain in full force and effect,
and Indemnitor shall remain liable for all remaining indebtedness and
obligations guaranteed hereby to the extent provided in this Agreement, even
though any rights which Indemnitor may have against Borrower may be destroyed
or diminished by the exercise of any such remedy. Terms used in this
Agreement that are not otherwise defined herein shall have the meanings set
forth in the Loan Agreement.
2. Indemnification Procedures.
(a) If any action shall be brought against Lender based upon any
of the matters for which Lender is indemnified hereunder, Lender shall notify
Indemnitor in writing thereof and Indemnitor shall promptly assume the
defense thereof, including, without limitation, the employment of counsel
reasonably acceptable to Lender and the negotiation of any settlement;
provided, however, that any failure of Lender to notify Indemnitor of such
matter shall not impair or reduce the obligations of Indemnitor hereunder.
Lender shall have the right, at the expense of Indemnitor (which expense
shall be included in Costs in the event that Lender shall conclude in good
faith that a conflict of interest exists), to employ separate counsel in any
such action and to participate in the defense thereof. In the event
Indemnitor shall fail to discharge or undertake to defend Lender against any
claim, loss or liability for which Lender is indemnified hereunder, Lender
may, at its sole option and election, defend or settle such claim, loss or
liability. The liability of Indemnitor to Lender hereunder shall be
conclusively established by such settlement, provided such settlement is made
in good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation,
attorneys' fees and disbursements, incurred by Lender in effecting such
settlement. In such event, such settlement consideration, costs and expenses
shall be included in Costs and Indemnitor shall pay the same as hereinafter
provided.
(b) Indemnitor shall not, without the prior written consent of
Lender: (i) settle or compromise any action, suit, proceeding or claim or
consent to the entry of any judgment that does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to
Lender of a full and complete written release of Lender (in form, scope and
substance reasonably satisfactory to Lender in its sole discretion) from all
liability in respect of such action, suit, proceeding or claim and a
dismissal with prejudice of such action, suit, proceeding or claim; or (ii)
settle or compromise any action, suit, proceeding or claim in any manner that
may adversely affect Lender or obligate Lender to pay any sum or perform any
obligation as determined by Lender in its sole discretion.
(c) All Costs shall be immediately reimbursable to Lender when and
as incurred and, in the event of any litigation, claim or other proceeding,
without any requirement of waiting for the ultimate outcome of such
litigation, claim or other proceeding, and Indemnitor shall pay to Lender any
and all Costs within ten (10) Business Days after written notice from Lender
itemizing the amounts thereof incurred to the date of such notice. In
addition to any other remedy available for the failure of Indemnitor to
periodically pay such Costs, such Costs, if not paid within said ten-day
period, shall bear interest at the rate for overdue payments in the Loan
Agreement.
3. Reinstatement of Obligations. If at any time all or any part of
any payment made by Indemnitor or received by Lender from Indemnitor under or
with respect to this Agreement is or must be rescinded or returned for any
reason whatsoever (including, but not limited to, the insolvency, bankruptcy
or reorganization of Indemnitor or Borrower), then the obligations of
Indemnitor hereunder shall, to the extent of the payment rescinded or
returned, be deemed to have continued in existence, notwithstanding such
previous payment made by Indemnitor, or receipt of payment by Lender, and the
obligations of Indemnitor hereunder shall continue to be effective or be
reinstated, as the case may be, as to such payment, all as though such
previous payment by Indemnitor had never been made.
4. Waivers by Indemnitor. To the extent permitted by law and with
respect to matters relating to liabilities arising under this Agreement,
Indemnitor hereby waives and agrees not to assert or take advantage of:
(a) Any right to require Lender to proceed against Borrower or any
other person or to proceed against or exhaust any security held by Lender at
any time or to pursue any other remedy in Lender's power or under any other
agreement before proceeding against Indemnitor hereunder;
(b) Any defense that may arise by reason of the incapacity, lack
of authority, death or disability of any other person or persons or the
failure of Lender to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other person or
persons;
(c) Demand, presentment for payment, notice of nonpayment,
protest, notice of protest and all other notices of any kind, or the lack of
any thereof, including, without limiting the generality of the foregoing,
notice of the existence, creation or incurring of any new or additional
indebtedness or obligation or of any action or non-action on the part of
Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on
the part of any other person whomsoever under this or any other instrument in
connection with any obligation or evidence of indebtedness held by Lender;
(d) Any defense based upon an election of remedies by Lender;
(e) Any right or claim or right to cause a marshaling of the
assets of Indemnitor;
(f) Any principle or provision of law, statutory or otherwise,
which is or might be in conflict with the terms and provisions of this
Agreement;
(g) Any duty on the part of Lender to disclose to Indemnitor any
facts Lender may now or hereafter know about Borrower or the Collateral,
regardless of whether Lender has reason to believe that any such facts
materially increase the risk beyond that which Indemnitor intends to assume
or has reason to believe that such facts are unknown to Indemnitor or has a
reasonable opportunity to communicate such facts to Indemnitor, it being
understood and agreed that Indemnitor is fully responsible for being and
keeping informed of the financial condition of Borrower, of the condition of
the Collateral and of any and all circumstances bearing on the risk that
liability may be incurred by Indemnitor hereunder;
(h) Any lack of notice of disposition or of manner of disposition
of any collateral for the Loan;
(i) Any invalidity, irregularity or unenforceability, in whole or
in part, of any one or more of the Loan Documents;
(j) Any deficiencies in the collateral for the Loan or any
deficiency in the ability of Lender to collect or to obtain performance from
any persons or entities now or hereafter liable for the payment and
performance of any obligation hereby guaranteed;
(k) An assertion or claim that the automatic stay provided by 11
U.S.C. Section 362 (arising upon the voluntary or involuntary bankruptcy
proceeding of Borrower) or any other stay provided under any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Lender to enforce any of its rights, whether
now or hereafter required, which Lender may have against Indemnitor or the
collateral for the Loan;
(l) Any modifications of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any
other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or
otherwise; and
(m) Any action, occurrence, event or matter consented to by
Indemnitor under Section 5(h) hereof, under any other provision hereof, or
otherwise.
5. General Provisions.
(a) Fully Recourse. All of the terms and provisions of this
Agreement are recourse obligations of Indemnitor and not restricted by any
limitation on personal liability. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the obligations of WHWEL Real
Estate Limited Partnership under this Agreement whether arising under this
Agreement or otherwise in connection with any of the Loan Documents, shall be
without recourse to any limited partner of WHWEL Real Estate Limited
Partnership and no such person shall have any liability with respect thereto.
(b) Unsecured Obligations. Indemnitor hereby acknowledges that
Lender's appraisal of the Collateral is such that Lender is not willing to
accept the consequences of the inclusion of Indemnitor's indemnity set forth
herein among the obligations secured by the Security Documents and the other
Loan Documents and that Lender would not make the Loan but for the unsecured
personal liability undertaken by Indemnitor herein.
(c) Survival. This Agreement shall be deemed to be continuing in
nature and shall remain in full force and effect with respect to the matters
covered by this Agreement and shall survive the exercise of any remedy by
Lender under the Security Documents or any of the other Loan Documents,
including, without limitation, any foreclosure or deed in lieu thereof, even
if, as a part of such remedy, the Loan is paid or satisfied in full.
(d) No Subrogation; No Recourse Against Lender. Notwithstanding
the satisfaction by Indemnitor of any liability hereunder, Indemnitor shall
not have any right of subrogation, contribution, reimbursement or indemnity
whatsoever or any right of recourse to or with respect to the assets or
property of Borrower or to any collateral for the Loan. In connection with
the foregoing, Indemnitor expressly waives any and all rights of subrogation
to Lender against Borrower, and Indemnitor hereby waives any rights to
enforce any remedy which Lender may have against Borrower and any right to
participate in any collateral for the Loan. In addition to and without in
any way limiting the foregoing, Indemnitor hereby subordinates any and all
indebtedness of Borrower now or hereafter owed to Indemnitor to all
indebtedness of Borrower to Lender, and agrees with Lender that Indemnitor
(i) from and after the occurrence and during the continuance of an Event of
Default shall not demand or accept any payment of principal or interest from
Borrower, (ii) shall not claim any offset or other reduction of Indemnitor's
obligations hereunder because of any such indebtedness and (iii) shall not
take any action to obtain any of the collateral from the Loan. Further,
Indemnitor shall not have any right of recourse against Lender by reason of
any action Lender may take or omit to take under the provisions of this
Agreement or under the provisions of any of the Loan Documents.
law Reservation of Rights. Nothing contained in this Agreement
shall prevent or in any way diminish or interfere with any rights or
remedies, including, without limitation, the right to contribution, which
Lender may have against Borrower, Indemnitor or any other party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(codified at Title 42 U.S.C. Section 9601 et seq.), as it may be amended from
time to time, or any other applicable federal, state or local laws, all such
rights being hereby expressly reserved.
(f) Financial Statements. Indemnitor hereby agrees, as a material
inducement to Lender to make the Loan to Borrower, to furnish to Lender
promptly upon demand by Lender current and dated financial statements
detailing the assets and liabilities of Indemnitor certified by Indemnitor,
in form and substance acceptable to Lender. Indemnitor hereby warrants and
represents unto Lender that any and all balance sheets, net worth statements
and other financial data which have heretofore been given or may hereafter be
given to Lender with respect to Indemnitor did or will at the time of such
delivery fairly and accurately present the financial condition of Indemnitor
in all material respects.
(g) Rights Cumulative; Payments. Lender's rights under this
Agreement shall be in addition to all rights of Lender under the Note, the
Security Documents and the other Loan Documents. FURTHER, PAYMENTS MADE BY
INDEMNITOR UNDER THIS AGREEMENT SHALL NOT REDUCE IN ANY RESPECT BORROWER'S
OBLIGATIONS AND LIABILITIES UNDER THE NOTE, THE SECURITY DOCUMENTS AND THE
OTHER LOAN DOCUMENTS SHOULD SUCH PAYMENT BE EVER RESCINDED OR RETURNED BY
LENDER FOR ANY REASON WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, THE
INSOLVENCY, BANKRUPTCY OR REORGANIZATION OF INDEMNITOR).
(h) No Limitation on Liability. Indemnitor hereby consents and
agrees that Lender may at any time and from time to time without further
consent from Indemnitor do any of the following events, and the liability of
Indemnitor under this Agreement shall be unconditional and absolute and shall
in no way be impaired or limited by any of the following events, whether
occurring with or without notice to Indemnitor or with or without
consideration: (i) any extensions of time for performance required by any of
the Loan Documents or extension or renewal of the Note; (ii) any sale,
assignment or foreclosure of the Note, the Security Documents or any of the
other Loan Documents or any sale or transfer of the Collateral; (iii) any
change in the composition of Borrower, including, without limitation, the
withdrawal or removal of Indemnitor from any current or future position of
ownership, management or control of Borrower; (iv) the accuracy or inaccuracy
of the representations and warranties made by Indemnitor herein or by
Borrower in any of the Loan Documents; (v) the release of Borrower or of any
other person or entity from performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law, Lender's voluntary act or otherwise; (vi) the
release or substitution in whole or in part of any security for the Loan;
(vii) Lender's failure to record the Security Documents or to file any
financing statement (or Lender's improper recording or filing thereof) or to
otherwise perfect, protect, secure or insure any lien or security interest
given as security for the Loan; (viii) the modification of the terms of any
one or more of the Loan Documents; or (ix) the taking or failure to take any
action of any type whatsoever. No such action which Lender shall take or
fail to take in connection with the Loan Documents or any collateral for the
Loan, nor any course or dealing with Borrower or any other person, shall
limit, impair or release Indemnitor's obligations hereunder, effect this
Agreement in any way or afford Indemnitor any recourse against Lender.
Nothing contained in Section shall be construed to require Lender to take or
refrain from taking any action referred to herein.
(i) Entire Agreement; Amendment; Severability. This Agreement
contains the entire agreement between the parties respecting the matters
herein set forth and supersedes all prior agreements, whether written or
oral, between the parties respecting such matters. Any amendments or
modifications hereto, in order to be effective, shall be in writing and
executed by the parties hereto. A determination that any provision of this
Agreement is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application
of any provision of this Agreement to any person or circumstance is illegal
or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to any other persons or circumstances.
(j) Governing Law; Binding Effect; Waiver of Acceptance. This
Agreement shall be governed by and construed in accordance with the laws of
the State of New York, except to the extent that the applicability of any of
such laws may now or hereafter be preempted by Federal law, in which case
such Federal law shall so govern and be controlling. This Agreement shall
bind Indemnitor and the heirs, personal representatives, successors and
assigns of Indemnitor and shall inure to the benefit of Lender and the
officers, directors, shareholders, agents and employees of Lender and their
respective heirs, successors and assigns. Without limiting the foregoing,
this Agreement is assignable by Lender in whole or in part in conjunction
with any assignment of the Note or portions thereof, and any assignment
hereof or any transfer or assignment of the Note or portions thereof by
Lender shall operate to vest in any such assignee the rights and powers, in
whole or in part, as appropriate, herein conferred upon and granted to
Lender. Notwithstanding the foregoing, Indemnitor shall not assign any of
its rights or obligations under this Agreement without the prior written
consent of Lender, which consent may be withheld by Lender in its sole
discretion. Indemnitor hereby waives any acceptance of this Agreement by
Lender, and this Agreement shall immediately be binding upon Indemnitor.
(k) Notice. All notices, demands, requests or other
communications to be sent by one party to the other hereunder or required by
law shall be in writing and shall be deemed to have been validly given or
served by delivery of the same in person to the intended addressee, or by
depositing the same with Federal Express or another reputable private courier
service for next business day delivery to the intended addressee at its
address set forth on the first page of this Agreement or at such other
address as may be designated by such party as herein provided, or by
depositing the same in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, addressed to the intended addressee
at its address set forth on the first page of this Agreement or at such other
address as may be designated by such party as herein provided. All notices,
demands and requests shall be effective upon such personal delivery, or one
(1) business day after being deposited with the private courier service, or
two (2) business days after being deposited in the United States mail as
required above. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand or request sent.
By giving to the other party hereto at least fifteen (15) days' prior written
notice thereof in accordance with the provisions hereof, the parties hereto
shall have the right from time to time to change their respective addresses
and each shall have the right to specify as its address any other address
within the United States of America.
(l) No Waiver; Time of Essence; Business Day. The failure of
any party hereto to enforce any right or remedy hereunder, or to promptly
enforce any such right or remedy, shall not constitute a waiver thereof nor
give rise to any estoppel against such party nor excuse any of the parties
hereto from their respective obligations hereunder. Any waiver of such right
or remedy must be in writing and signed by the party to be bound. This
Agreement is subject to enforcement at law or in equity, including actions
for damages or specific performance. Time is of the essence hereof.
(m) Captions for Convenience. The captions and headings of the
sections and paragraphs of this Agreement are for convenience of reference
only and shall not be construed in interpreting the provisions hereof.
(n) Attorneys' Fees. In the event it is necessary for Lender to
retain the services of an attorney or any other consultants in order to
enforce this Agreement, or any portion thereof, Indemnitor agrees to pay to
Lender any and all reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by Lender as a result
thereof and such costs, fees and expenses shall be included in Costs.
(o) Successive Actions. A separate right of action hereunder
shall arise each time Lender acquires knowledge of any matter indemnified or
guaranteed by Indemnitor under this Agreement. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at
any time and from time to time. No action hereunder shall preclude any
subsequent action, and Indemnitor hereby waives and covenants not to assert
any defense in the nature of splitting of causes of action or merger of
judgments.
(p) Reliance. Lender would not make the Loan to Borrower without
this Agreement. Accordingly, Indemnitor intentionally and unconditionally
enters into the covenants and agreements as set forth above and understands
that, in reliance upon and in consideration of such covenants and agreements,
the Loan shall be made and, as part and parcel thereof, specific monetary and
other obligations have been, are being and shall be entered into which would
not be made or entered into but for such reliance.
(q) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(1) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW
YORK OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING MAY BE BROUGHT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT OF
COMPETENT JURISDICTION SITTING THEREIN, (C) SUBMITS TO THE JURISDICTION OF
SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT
NEITHER OF THEM WILL BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER PROPER FORUM). INDEMNITOR FURTHER CONSENTS
AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO THE INDEMNITOR AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION
5(k) HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN
EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT
THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED
BY LAW).
(2) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER
OR INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS,
EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER
OR INDEMNITOR, IN EACH OR THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.
(r) Waiver by Indemnitor. Indemnitor covenants and agrees that,
upon the commencement of a voluntary or involuntary bankruptcy proceeding by
or against Borrower, Indemnitor shall not seek or cause Borrower or any other
person or entity to seek a supplemental stay or other relief, whether
injunctive or otherwise, pursuant to 11 U.S.C. Section 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law, (whether statutory, common law, case law or otherwise) of
any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any rights of Lender against Indemnitor by
virtue of this Agreement or otherwise.
(s) Joint and Several Liability. Notwithstanding anything to the
contrary herein, the representations, warranties, covenants and agreements
made by each of the persons comprising Indemnitor herein, and the liability
of each of the persons comprising Indemnitor hereunder, is joint and several.
IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement
under seal as of the day and year first above written.
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
--------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
MEZZANINE LOAN AGREEMENT
DATED AS OF JULY 16, 1998
among
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., as Borrower
and
BANKBOSTON, N.A.,
GOLDMAN SACHS MORTGAGE COMPANY,
THE OTHER BANKS WHICH ARE PARTIES TO THIS AGREEMENT,
and
OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT, as Banks
and
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT AND CO-ARRANGER
AND CO-SYNDICATION AGENT
and
GOLDMAN SACHS MORTGAGE COMPANY
AS CO-ARRANGER AND CO-SYNDICATION AGENT
<PAGE>
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . .-1-
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . .-1-
Section 1.2. Rules of Interpretation . . . . . . . . . . . . . . . -22-
Section 2. THE FACILITY.. . . . . . . . . . . . . . . . . . . . . . . . -23-
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . . . -23-
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . . . . -23-
Section 2.3. Reduction of Commitment . . . . . . . . . . . . . . . -24-
Section 2.4. Notes . . . . . . . . . . . . . . . . . . . . . . . . -24-
Section 2.5. Interest on Loans . . . . . . . . . . . . . . . . . . -25-
Section 2.6. Requests for Loans. . . . . . . . . . . . . . . . . . -25-
Section 2.7. Funds for Loans . . . . . . . . . . . . . . . . . . . -26-
Section 2.8. Extension of Maturity Date. . . . . . . . . . . . . . -27-
Section 2.9. Termination of Advances.. . . . . . . . . . . . . . . -28-
Section 3. REPAYMENT OF THE LOANS.. . . . . . . . . . . . . . . . . . . -28-
Section 3.1. Stated Maturity . . . . . . . . . . . . . . . . . . . -28-
Section 3.2. Mandatory Prepayments . . . . . . . . . . . . . . . . -29-
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . . . -30-
Section 3.4. Partial Prepayments . . . . . . . . . . . . . . . . . -30-
Section 3.5. Effect of Prepayments . . . . . . . . . . . . . . . . -30-
Section 4. CERTAIN GENERAL PROVISIONS.. . . . . . . . . . . . . . . . . -31-
Section 4.1. Conversion Options. . . . . . . . . . . . . . . . . . -31-
Section 4.2. Closing Fee . . . . . . . . . . . . . . . . . . . . . -32-
Section 4.3. Agent's Fee . . . . . . . . . . . . . . . . . . . . . -32-
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . . . -32-
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . . . -32-
Section 4.6. Inability to Determine Eurodollar Rate. . . . . . . . -33-
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . . . -33-
Section 4.8. Additional Interest . . . . . . . . . . . . . . . . . -33-
Section 4.9. Additional Costs, Etc.. . . . . . . . . . . . . . . . -33-
Section 4.10. Capital Adequacy. . . . . . . . . . . . . . . . . . . -35-
Section 4.11. Indemnity of Borrower . . . . . . . . . . . . . . . . -35-
Section 4.12. Interest on Overdue Amounts; Late Charge. . . . . . . -35-
Section 4.13. Intentionally Omitted . . . . . . . . . . . . . . . . -35-
Section 4.14. Certificate . . . . . . . . . . . . . . . . . . . . . -36-
Section 4.15. Limitation on Interest. . . . . . . . . . . . . . . . -36-
Section 4.16. Certain Provisions Relating to Increased Costs. . . . -36-
Section 5. COLLATERAL SECURITY. . . . . . . . . . . . . . . . . . . . . -37-
Section 5.1. Collateral. . . . . . . . . . . . . . . . . . . . . . -37-
Section 5.2. Appraisals. . . . . . . . . . . . . . . . . . . . . . -37-
Section 5.3. Release of Property . . . . . . . . . . . . . . . . . -38-
Section 5.4. Additional Collateral . . . . . . . . . . . . . . . . -40-
Section 5.5. Holdback. . . . . . . . . . . . . . . . . . . . . . . -41-
Section 5.6. Disbursement of Tenant Improvement Reserve. . . . . . -42-
Section 6. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . -43-
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . . . -44-
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . . . -45-
Section 6.3. Title to Properties; Leases . . . . . . . . . . . . . -45-
Section 6.4. Financial Statements. . . . . . . . . . . . . . . . . -45-
Section 6.5. No Material Adverse Changes . . . . . . . . . . . . . -46-
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . . . -46-
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . . . -46-
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . . . -47-
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . . . -47-
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . . . . . . -47-
Section 6.11. No Event of Default . . . . . . . . . . . . . . . . . -47-
Section 6.12. Holding Company and Investment Company Acts . . . . . -47-
Section 6.13. Absence of UCC Financing Statements, Etc. . . . . . . -48-
Section 6.14. Setoff, Etc.. . . . . . . . . . . . . . . . . . . . . -48-
Section 6.15. Certain Transactions. . . . . . . . . . . . . . . . . -48-
Section 6.16. Employee Benefit Plans. . . . . . . . . . . . . . . . -48-
Section 6.17. ERISA Taxes . . . . . . . . . . . . . . . . . . . . . -49-
Section 6.18. Plan Payments . . . . . . . . . . . . . . . . . . . . -49-
Section 6.19. Regulations U and X . . . . . . . . . . . . . . . . . -49-
Section 6.20. Environmental Compliance. . . . . . . . . . . . . . . -49-
Section 6.21. Subsidiaries. . . . . . . . . . . . . . . . . . . . . -51-
Section 6.22. Leases. . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 6.23. Loan Documents. . . . . . . . . . . . . . . . . . . . -51-
Section 6.24. Mortgaged Property and Mezzanine Property . . . . . . -51-
Section 6.25. Brokers . . . . . . . . . . . . . . . . . . . . . . . -55-
Section 6.26. Fair Consideration. . . . . . . . . . . . . . . . . . -55-
Section 6.27. Solvency. . . . . . . . . . . . . . . . . . . . . . . -55-
Section 6.28. No Bankruptcy Filing. . . . . . . . . . . . . . . . . -55-
Section 6.29. No Fraudulent Intent. . . . . . . . . . . . . . . . . -55-
Section 6.30. Other Debt. . . . . . . . . . . . . . . . . . . . . . -56-
Section 6.31. Ownership . . . . . . . . . . . . . . . . . . . . . . -56-
Section 6.32. Special Purpose Entity. . . . . . . . . . . . . . . . -57-
Section 6.33. Obligations as Members. . . . . . . . . . . . . . . . -57-
Section 6.34. Mortgage Loan Documents. . . . . . . . . . . . . . . -57-
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . -58-
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . . . -58-
Section 7.2. Maintenance of Office . . . . . . . . . . . . . . . . -58-
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . . . -58-
Section 7.4. Financial Statements, Certificates and Information. . -58-
Section 7.5. Notices . . . . . . . . . . . . . . . . . . . . . . . -61-
Section 7.6. Existence; Maintenance of Properties. . . . . . . . . -63-
Section 7.7. Insurance . . . . . . . . . . . . . . . . . . . . . . -64-
Section 7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . -65-
Section 7.9. Inspection of Properties and Books. . . . . . . . . . -66-
Section 7.10. Compliance with Laws, Contracts, Licenses,
and Permits . . . . . . . . . . . . . . . . . . . . . -66-
Section 7.11. Use of Proceeds . . . . . . . . . . . . . . . . . . . -67-
Section 7.12. Further Assurances. . . . . . . . . . . . . . . . . . -68-
Section 7.13. Management Agreements . . . . . . . . . . . . . . . . -68-
Section 7.14. ERISA Compliance. . . . . . . . . . . . . . . . . . . -68-
Section 7.15. Condemnation. . . . . . . . . . . . . . . . . . . . . -69-
Section 7.16. Distribution of Income to the Borrower. . . . . . . . -69-
Section 7.17. More Restrictive Agreements . . . . . . . . . . . . . -70-
Section 7.18. Compliance. . . . . . . . . . . . . . . . . . . . . . -70-
Section 7.19. Leasing . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 7.20. Plan Assets, etc. . . . . . . . . . . . . . . . . . . -71-
Section 7.21. Preservation and Maintenance. . . . . . . . . . . . . -72-
Section 7.22. Use of Mortgaged Property and Mezzanine Property. . . -73-
Section 7.23. Property Owner to Remain a Single-Purpose Entity. . . -73-
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.. . . . . . . . . -73-
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . . . -73-
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . . . -75-
Section 8.3. Restrictions on Investments . . . . . . . . . . . . . -77-
Section 8.4. Merger, Consolidation . . . . . . . . . . . . . . . . -78-
Section 8.5. Sale and Leaseback; Ground Lease. . . . . . . . . . . -79-
Section 8.6. Compliance with Environmental Laws. . . . . . . . . . -79-
Section 8.7. Distributions . . . . . . . . . . . . . . . . . . . . -81-
Section 8.8. Asset Sales . . . . . . . . . . . . . . . . . . . . . -81-
Section 8.9. Development Activity. . . . . . . . . . . . . . . . . -81-
Section 8.10. Sources of Capital. . . . . . . . . . . . . . . . . . -82-
Section 8.11. Transfers . . . . . . . . . . . . . . . . . . . . . . -82-
Section 8.12. Additional Restrictions Concerning the Mortgaged
Property and the Mezzanine Property . . . . . . . . . -82-
Section 8.13. Mortgage Loan Documents . . . . . . . . . . . . . . . -84-
Section 9. FINANCIAL COVENANTS OF BORROWER. . . . . . . . . . . . . . . -84-
Section 9.1. Liabilities to Assets Ratio . . . . . . . . . . . . . -84-
Section 9.2. Consolidated Operating Cash Flow Coverage . . . . . . -85-
Section 9.3. Minimum Shareholders Equity . . . . . . . . . . . . . -85-
Section 9.4. Real Estate Assets. . . . . . . . . . . . . . . . . . -86-
Section 9.5. Required Equity . . . . . . . . . . . . . . . . . . . -86-
Section 10. CLOSING CONDITIONS.. . . . . . . . . . . . . . . . . . . . . -86-
Section 10.1. Loan Documents. . . . . . . . . . . . . . . . . . . . -86-
Section 10.2. Certified Copies of Organizational Documents. . . . . -86-
Section 10.3. Bylaws; Resolutions . . . . . . . . . . . . . . . . . -87-
Section 10.4. Incumbency Certificate; Authorized Signers. . . . . . -87-
Section 10.5. Opinion of Counsel. . . . . . . . . . . . . . . . . . -87-
Section 10.6. Payment of Fees . . . . . . . . . . . . . . . . . . . -87-
Section 10.7. Appraisals. . . . . . . . . . . . . . . . . . . . . . -87-
Section 10.8. Environmental Reports . . . . . . . . . . . . . . . . -87-
Section 10.9. Insurance . . . . . . . . . . . . . . . . . . . . . . -88-
Section 10.10. Performance; No Default . . . . . . . . . . . . . . . -88-
Section 10.11. Representations and Warranties. . . . . . . . . . . . -88-
Section 10.12. Proceedings and Documents . . . . . . . . . . . . . . -88-
Section 10.13. Eligible Real Estate Qualification Documents. . . . . -88-
Section 10.14. Compliance Certificate. . . . . . . . . . . . . . . . -88-
Section 10.15. Other Documents . . . . . . . . . . . . . . . . . . . -88-
Section 10.16. No Condemnation/Taking. . . . . . . . . . . . . . . . -88-
Section 10.17. Governmental Policy . . . . . . . . . . . . . . . . . -89-
Section 10.18. Other . . . . . . . . . . . . . . . . . . . . . . . . -89-
Section 10.19. Satisfaction of Conditions as to Initial Collateral. -89-
Section 11. CONDITIONS TO ALL BORROWINGS.. . . . . . . . . . . . . . . . -89-
Section 11.1. Prior Conditions Satisfied. . . . . . . . . . . . . . -89-
Section 11.2. Representations True; No Default. . . . . . . . . . . -89-
Section 11.3. No Legal Impediment . . . . . . . . . . . . . . . . . -89-
Section 11.4. Governmental Regulation . . . . . . . . . . . . . . . -89-
Section 11.5. Proceedings and Documents . . . . . . . . . . . . . . -90-
Section 11.6. Borrowing Documents . . . . . . . . . . . . . . . . . -90-
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.. . . . . . . . . . . . -90-
Section 12.1. Events of Default and Acceleration. . . . . . . . . . -90-
Section 12.1A. Limitation of Cure Periods. . . . . . . . . . . . . . -93-
Section 12.2. Termination of Commitments. . . . . . . . . . . . . . -94-
Section 12.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . -94-
Section 12.4. Distribution of Collateral Proceeds . . . . . . . . . -95-
Section 12.5. Default under Mortgage Loan Documents or Mezzanine
Mortgage Loan Documents . . . . . . . . . . . . . . . -95-
Section 13. SETOFF.. . . . . . . . . . . . . . . . . . . . . . . . . . . -97-
Section 14. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . -97-
Section 14.1. Authorization . . . . . . . . . . . . . . . . . . . . -97-
Section 14.2. Employees and Agents. . . . . . . . . . . . . . . . . -98-
Section 14.3. No Liability. . . . . . . . . . . . . . . . . . . . . -98-
Section 14.4. No Representations. . . . . . . . . . . . . . . . . . -98-
Section 14.5. Payments. . . . . . . . . . . . . . . . . . . . . . . -99-
Section 14.6. Holders of Notes. . . . . . . . . . . . . . . . . . . -99-
Section 14.7. Indemnity . . . . . . . . . . . . . . . . . . . . . .-100-
Section 14.8. Agent as Bank . . . . . . . . . . . . . . . . . . . .-100-
Section 14.9. Resignation; Removal. . . . . . . . . . . . . . . . .-100-
Section 14.10. Duties in the Case of Enforcement . . . . . . . . . .-100-
Section 15. EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . . . .-101-
Section 16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . .-102-
Section 17. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . . . .-103-
Section 18. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . . .-104-
Section 18.1. Conditions to Assignment by Banks . . . . . . . . . .-104-
Section 18.2. Register. . . . . . . . . . . . . . . . . . . . . . .-104-
Section 18.3. New Notes . . . . . . . . . . . . . . . . . . . . . .-105-
Section 18.4. Participations. . . . . . . . . . . . . . . . . . . .-105-
Section 18.5. Pledge by Bank. . . . . . . . . . . . . . . . . . . .-105-
Section 18.6. No Assignment by Borrower . . . . . . . . . . . . . .-105-
Section 18.7. Disclosure. . . . . . . . . . . . . . . . . . . . . .-106-
Section 18.8. Additional Restrictions on Assignments
and Participations. . . . . . . . . . . . . . . . . .-106-
Section 19. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . .-106-
Section 20. RELATIONSHIP.. . . . . . . . . . . . . . . . . . . . . . . .-108-
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.. . . . .-108-
Section 22. HEADINGS.. . . . . . . . . . . . . . . . . . . . . . . . . .-108-
Section 23. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . . .-108-
Section 24. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . .-109-
Section 25. WAIVER OF JURY TRIAL.. . . . . . . . . . . . . . . . . . . .-109-
Section 26. DEALINGS WITH THE BORROWER.. . . . . . . . . . . . . . . . .-109-
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . . .-109-
Section 28. SEVERABILITY.. . . . . . . . . . . . . . . . . . . . . . . .-110-
Section 29. LIMITATION ON LIABILITY. . . . . . . . . . . . . . . . . . .-110-
Section 30. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . . . .-110-
Section 31. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . . . .-111-
Section 32. BANKRUPTCY.. . . . . . . . . . . . . . . . . . . . . . . . .-111-
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF REQUEST FOR LOAN
EXHIBIT C FORM OF COMPLIANCE CERTIFICATE
EXHIBIT D FORM OF REQUEST FOR EXTENSION OF LOAN
EXHIBIT E FORM OF CERTIFICATE
SCHEDULE 1.1 BANKS AND COMMITMENTS
SCHEDULE 5.3 DESCRIPTIONS OF GREENBROOK CORPORATE CENTER AND POINT
VIEW VACANT LAND
SCHEDULE 6.3 TITLE TO PROPERTIES
SCHEDULE 6.4 ALL-IN ACQUISITION COST, DESIGNATED COLLATERAL VALUE,
STABILIZED PROPERTIES AND RELEASE PRICES
SCHEDULE 6.7 LITIGATION
SCHEDULE 6.17 ERISA PLANS
SCHEDULE 6.21 SUBSIDIARIES OF THE BORROWER
SCHEDULE 6.30-1 MEZZANINE MORTGAGE LOAN DOCUMENTS
SCHEDULE 6.30-2 MORTGAGE LOAN DOCUMENTS
SCHEDULE 6.30-3 ALLOCATION OF MEZZANINE MORTGAGE LOAN
<PAGE>
MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT is made as of the 16th day of July, 1998,
by and among WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a Delaware limited
liability company, having its principal place of business at 610 Fifth
Avenue, 7th Floor, New York, New York 10020 ("Borrower"), BANKBOSTON, N.A., a
national banking association, GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership, the other lending institutions which are parties to this
Agreement as "Banks", and the other lending institutions which may become
parties hereto pursuant to Section 18 (collectively, the "Banks"), and
BANKBOSTON, N.A., as Agent for the Banks and Arranger and Syndication Agent
(the "Agent"), and GOLDMAN SACHS MORTGAGE COMPANY, as Co-Arranger and Co-
Syndication Agent.
RECITALS
WHEREAS, Wellsford/Whitehall Properties, L.L.C. ("Revolver Borrower"),
BankBoston, N.A., Goldman Sachs Mortgage Company and Agent have entered into
that certain Revolving Credit Agreement dated as of December 15, 1997 (the
"Original Revolving Credit Agreement"); and
WHEREAS, Revolver Borrower has merged into and with "Property Owner" (as
hereinafter defined), with Property Owner being the surviving entity, and
accordingly, the assets and liabilities of Revolver Borrower have been
assumed by the Property Owner; and
WHEREAS, Agent, Borrower and the Banks desire to continue to provide to
Borrower a portion of the credit facility provided to Revolver Borrower
pursuant to the Original Revolving Credit Agreement;
NOW, THEREFORE, in consideration of the recitals herein and the mutual
covenants contained herein, the parties hereto hereby covenant and agree as
follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions. The following terms shall have the meanings
set forth in this Section l or elsewhere in the provisions of this Agreement
referred to below:
Acknowledgments. The Acknowledgments executed by the Property Owner,
WASH, WASH Manager and Wells Avenue Holdings, respectively, in favor of the
Agent.
Agent. BankBoston, N.A., a national banking association, its successors
and assigns, acting as agent for the Banks.
Advance Termination Date. March 31, 2000.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent
may designate from time to time by notice to the Borrower and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such other
counsel as may be approved by the Agent.
Agreement. This Mezzanine Loan Agreement, including the Schedules and
Exhibits hereto.
Agreement Regarding Fees. The Amended and Restated Agreement Regarding
Fees dated of even date herewith among Borrower, BKB and Goldman.
Appraisal. An MAI appraisal of the value of a parcel of Mortgaged
Property or Mezzanine Property, determined on an "as-is" fair market value
basis, performed by an independent appraiser selected by the Agent who is not
an employee of the Borrower, any Subsidiary of the Borrower, the Agent or a
Bank, the form and substance of such appraisal and the identity of the
appraiser to be in accordance with regulatory laws and policies (both
regulatory and internal) applicable to the Banks, including, without
limitation, FIRREA, and otherwise acceptable to the Majority Banks.
Appraised Value. The fair market value of a parcel of Mortgaged
Property or Mezzanine Property, determined by the most recent Appraisal of
such parcel or update obtained pursuant to Section 5.2 or Section 10.7,
subject, however, to such changes or adjustments to the value determined
thereby as may be required by the appraisal departments of the Majority Banks
in their good faith business judgment.
Assignment of Interests. The Assignment of Member's Interest of even
date herewith from Borrower to the Agent, as the same may be modified or
amended, pursuant to which there shall be assigned to the Agent for the
benefit of the Banks a security interest in the Equity Interests, such
assignment to be in form and substance satisfactory to the Agent.
Balance Sheet Date. May 31, 1998.
Bankruptcy Code. Title 11, U.S.C.A., as amended from time to time or
any successor statute thereto.
Banks. BKB, Goldman, the other lending institutions which are a party
hereto and any other Person who becomes an assignee of any rights of a Bank
pursuant to Section 18 (but not including any Participant, as defined in
Section 18).
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts as its "base
rate", and (b) one-half of one percent (0.5%) above the Federal Funds
Effective Rate (rounded upwards, if necessary, to the next one-eighth of one
percent). Any change in the rate of interest payable hereunder resulting
from a change in the Base Rate shall become effective as of the opening of
business on the day on which such change in the Base Rate becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by reference
to the Base Rate.
BKB. BankBoston, N.A., a national banking association.
Borrower. As defined in the preamble hereto.
Building. All of the buildings, structures and improvements now or
hereafter located on any Mortgaged Property or Mezzanine Property.
Building Service Equipment. All apparatus, fixtures and articles of
personal property owned by the Property Owner or WASH, now or hereafter
attached to or used or procured for use in connection with the operation or
maintenance of any building, structure or other improvement located on or
included in the Mortgaged Property or Mezzanine Property, including, but
without limiting the generality of the foregoing, all engines, furnaces,
boilers, stokers, pumps, heaters, tanks, dynamos, motors, generators,
switchboards, electrical equipment, heating, plumbing, lifting and
ventilating apparatus, air-cooling and air-conditioning apparatus, gas and
electric fixtures, elevators, escalators, fittings, and machinery and all
other equipment of every kind and description, used or procured for use in
the operation of a Building (except apparatus, fixtures or articles of
personal property belonging to lessees or other occupants of such building or
to persons other than the Property Owner or WASH, unless the same be
abandoned by any such lessee or other occupant or person and shall become the
Property Owner's or WASH's property by reason of such abandonment), together
with any and all replacements thereof and additions thereto.
Business Day. Any day on which banking institutions in the city in
which the Agent's Head Office is located are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, which also is a
Eurodollar Business Day.
Capital Improvement Project. With respect to any Real Estate now or
hereafter owned by the Property Owner, which is utilized principally as
commercial office space, capital improvements consisting of rehabilitation,
refurbishment, replacement and improvements (including Tenant Improvement
Projects and Leasing Commissions) to the existing Buildings on such Real
Estate which may be properly capitalized under generally accepted accounting
principles.
Capital Improvement Reserve. For any period an amount equal to seventy-
five cents ($0.75) per annum multiplied by the weighted average of rentable
square footage of the Real Estate owned by Borrower and its Subsidiaries
(including WASH) during such period.
CERCLA. See Section 6.20.
Closing Date. The first date on which all of the conditions set forth
in Section 10 and Section 11 have been satisfied.
Co-Agent. Goldman.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower
which are or are intended to be subject to the security interests and liens
created by the Security Documents, including, without limitation, the Equity
Interests.
Commitment. With respect to each Bank, the amount set forth on Schedule
1.1 hereto as the amount of such Bank's Commitment to make or maintain Loans
to the Borrower, as the same may be reduced from time to time in accordance
with the terms of this Agreement; provided that from and after the Advance
Termination Date, the Commitment of each Bank shall equal its Commitment
Percentage of the aggregate principal amount of the Loans from time to time
outstanding.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1.1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. See Section 7.4(d).
Condominium. As defined in the Mortgage Loan Agreement.
Condominium Documents. As defined in the Mortgage Loan Agreement.
Consolidated or combined. With reference to any term defined herein,
that term as applied to the accounts of the Borrower and its Subsidiaries,
consolidated or combined in accordance with generally accepted accounting
principles.
Consolidated Operating Cash Flow. With respect to any Test Period, an
amount equal to the Operating Cash Flow of the Borrower and its Subsidiaries
for such period consolidated in accordance with generally accepted accounting
principles. The Consolidated Operating Cash Flow of the Borrower and its
Subsidiaries on the consolidated financial statements of the Borrower and its
Subsidiaries shall be adjusted to reflect the Borrower's allocable share of
such Consolidated Operating Cash Flow for the relevant period or as of the
date of determination.
Consolidated Tangible Net Worth. The amount by which Consolidated Total
Assets exceeds Consolidated Total Liabilities.
Consolidated Total Assets. With respect to the Borrower and its
Subsidiaries, the sum of (a) an amount equal to (i) an amount equal to the
difference of (A) the Net Operating Income of the Stabilized Properties of
WWP and its Subsidiaries for the period covered by the four previous
consecutive fiscal quarters (treated as a single accounting period) minus
(B) the Capital Improvement Reserve for such Stabilized Properties for such
period divided by (ii) a nine and one-fourth percent (9.25%) capitalization
rate, (b) the sum of (i) the Appraised Value of the Non-Stabilized Properties
that are Mortgaged Properties and Mezzanine Properties plus (ii) the historic
cost of capital improvements to such Non-Stabilized Properties (including
Tenant Improvement Projects and Leasing Commissions) from the date of the
most recent Appraisal thereof pursuant to this Agreement, (c) the sum of (i)
the all-in acquisition cost (including reasonable closing costs) of the Non-
Stabilized Properties of WWP and its Subsidiaries that are not Mortgaged
Properties or Mezzanine Properties plus (ii) the historic cost of capital
improvements to such Non-Stabilized Properties (if this clause (c) is
applicable thereto) from the date of acquisition thereof (provided that the
Agent shall have the right to obtain at Borrower's expense an Appraisal with
respect to any of such Non-Stabilized Properties, and the Appraised Value
determined from such Appraisal shall be substituted for the amount in clause
(c)(i) for the applicable property for the purposes of such calculation),
(d) the historic cost of investments in Investment Partnerships; and (e) the
aggregate cash and Short-term Investments of such Person; provided that prior
to such time as the Borrower or a Subsidiary has owned and operated any
Stabilized Property for four full fiscal quarters, the Net Operating Income
with respect to such Stabilized Property shall be annualized in such manner
as the Agent shall approve, such approval not to be unreasonably withheld.
Notwithstanding anything herein to the contrary, Leasing Commissions shall
only be included for the purposes of clause (b)(ii) after and only for so
long as the tenant under the applicable Lease takes occupancy and is paying
rent in accordance with the terms of the Lease approved pursuant to Section
5.6. The assets of the Borrower and its Subsidiaries shall be adjusted to
reflect Borrower's allocable share of such assets for the relevant period or
as of the date of determination.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of the Borrower and its
Subsidiaries, whether or not so classified. In the event that the Borrower
or its Subsidiaries has an ownership or other equity interest in any other
Person, which investment is not consolidated in accordance with generally
accepted accounting principles (that is, such interest is a "minority
interest"), then the liabilities of the Borrower and its Subsidiaries shall
include the Borrower's or its Subsidiaries', as applicable, allocable share
of all indebtedness of such Person in which a minority interest is owned
based on the Borrower's or its Subsidiary's respective ownership interest in
such other Person. Such liabilities of the Borrower and its Subsidiaries
shall be adjusted to reflect the Borrower's and its Subsidiaries' allocable
share of such liabilities for the relevant period or as of the date of
determination. For the purposes hereof, such liabilities and Indebtedness
shall include the liabilities and Indebtedness of the Property Owner and
WASH.
Construction Inspector. A firm of professional engineers or architects
selected by the Agent and reasonably acceptable to the Borrower.
Conversion Request. A notice given by the Borrower to the Agent of its
election to convert or continue a Loan in accordance with Section 4.1.
Debt Offering. The issuance and sale by the Borrower or the Guarantor
of any debt securities of the Borrower or the Guarantor.
Debt Service. For any period of four consecutive fiscal quarters, the
sum of actual interest expense (including capitalized interest) and mandatory
or scheduled principal payments due and payable during such period with
respect to all Indebtedness of the Borrower and its Subsidiaries, excluding
any balloon payments due upon maturity of any Indebtedness and any
amortization of loan fees paid on or prior to the Closing Date. For the
initial twelve (12) months following the Closing Date, Debt Service shall be
determined by annualizing the Debt Service from and after such date in a
manner as reasonably determined by the Borrower and reasonably acceptable to
the Agent (provided that in the event that as of the date of any
determination such amounts shall not have been determined as so provided,
then such amount shall be annualized in a manner reasonably acceptable to the
Agent).
Default. See Section 12.1.
Designated Collateral Value. At the relevant time of reference thereto,
the sum of (a) the lesser of (i) fifteen percent (15%) of the sum of (x) the
all-in acquisition cost (including reasonable closing costs) of a Mortgaged
Property accepted as a Mortgaged Property pursuant to this Agreement plus
(y) the historic cost of capital improvements (including any Tenant
Improvement Projects and Leasing Commissions) to such Mortgaged Property
after the date of such acceptance and (ii) fifteen percent (15%) of the sum
of (x) the Appraised Value of a Mortgaged Property accepted as a Mortgaged
Property pursuant to this Agreement as determined in connection with the
acceptance of such Mortgaged Property pursuant to this Agreement or as most
recently determined pursuant to Section 2.8 of this Agreement, subject to the
terms of Section 5.4, plus (y) the historic cost of Tenant Improvement
Projects and Leasing Commissions to such Mortgaged Property after the date of
such acceptance, plus (b) the current value of cash and Short-term
Investments, if any, at the time pledged to the Agent as Collateral pursuant
to a Pledge Agreement, plus (c) an amount equal to the sum of (i) seventy-
five percent (75%) of the Appraised Value of the Mezzanine Property as
determined in connection with the acceptance of the Mezzanine Collateral or
as most recently determined pursuant to Section 2.8 of this Agreement,
subject to the terms of Section 5.4, minus (ii) the principal Indebtedness of
WASH as of the date of the acquisition by Property Owner of the equity
interests in Wells Avenue Holdings (such amount being $68,340,815.57), minus
(iii) the maximum amount available to be borrowed against the Mezzanine
Property pursuant to the Mortgage Loan Agreement as of the date hereof (such
amount being $5,939,184.00), plus (d) the current value determined in a
manner agreed to by the Majority Banks of Collateral accepted by the Majority
Banks under clause (iv) of Section 5.1. Notwithstanding anything herein to
the contrary, Leasing Commissions shall only be included for the purposes of
clauses (a)(i)(y) and (a)(ii)(y) after and only for so long as the tenant
under the applicable Lease takes occupancy and is paying rent in accordance
with the terms of the Lease approved pursuant to Section 5.6. For the
purposes of clause (a) above, the lesser of the amount determined pursuant to
clause (a)(i) and (a)(ii) above shall be the Designated Collateral Value for
each such Mortgaged Property subject thereto, and the aggregate of the
amounts determined for each Mortgaged Property subject thereto shall be the
Designated Collateral Value for all such Mortgaged Properties; provided
however, that with respect to the Mortgaged Properties listed on Schedule 6.4
hereto, the initial Designated Collateral Value for such properties is as set
forth on Schedule 6.4; provided further that in the event that the Maturity
Date is extended pursuant to Section 2.8, the Designated Collateral Value for
each of such Mortgaged Properties listed on Schedule 6.4 shall be the lesser
of the amount determined pursuant to clause (a)(i) and (a)(ii) above. The
initial Designated Collateral Values for the Mortgaged Property and the
Mezzanine Property is set forth in Schedule 6.4 hereto.
Distribution. The declaration or payment of any dividend or
distribution on or in respect of any shares of the Borrower, other than
dividends or distributions payable solely in equity securities of the
Borrower; the purchase, redemption, exchange or other retirement of any
shares of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in respect of any
shares of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1.1 hereto; thereafter, such other office of such Bank,
if any, located within the United States that will be making or maintaining
Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and
the date on which any Loan is converted or combined in accordance with
Section 4.1.
Eligible Real Estate. Real Estate:
(a) which is owned in fee by the Property Owner;
(b) which is located within the northeastern United States,
excluding those States which prescribe a "single-action" or similar rule
limiting the rights of creditors secured by real property, except to the
extent such exclusion is waived in writing by the Majority Banks with
respect to a specific parcel of Real Estate;
(c) which is utilized principally for commercial office purposes;
(d) which is approved by the Majority Banks after the date hereof
in their sole judgment;
(e) as to which all of the representations set forth in Section 6
of this Agreement concerning Mortgaged Property are true and correct;
and
(f) as to which the Agent has received all Eligible Real Estate
Qualification Documents, so long as all of such documents remain in full
force and effect.
Eligible Real Estate Qualification Documents. With respect to any
parcel of Real Estate proposed to be included in the Eligible Real Estate
each of the following:
(a) Survey and Taxes. The Survey of such Real Estate, together
with the Surveyor Certification and evidence of payment of all real
estate taxes, assessments and municipal charges on such Real Estate
which on the date of determination are required to have been paid under
Section 7.8.
(b) Title Insurance; Title Exception Documents. The Title Policy
covering such Real Estate, including all endorsements thereto, and
together with proof of payment of all fees and premiums for such policy,
and true and accurate copies of all documents listed as exceptions under
such policy.
(c) UCC Certification. A certification from the Title Insurance
Company or counsel satisfactory to the Agent that a search of the public
records designated by the Agent disclosed no conditional sales
contracts, security agreements, chattel mortgages, leases of personalty,
financing statements or title retention agreements which affect any
property, rights or interests of the Property Owner that are or are
intended to be subject to the security interest, assignments, and
mortgage liens created by the Mortgage Loan Documents relating to such
Real Estate except to the extent that the same are discharged and
removed prior to or simultaneously with the inclusion of such Real
Estate in the collateral for the Mortgage Loan.
(d) Management Agreement. A true copy of the Management Agreement
relating to such Real Estate.
(e) Leases. True and correct copies of all Leases for such Real
Estate and any lease summaries prepared by Borrower with respect
thereto, together with the forms of Lease to be used by the Property
Owner in connection with future leasing of such Mortgaged Property, such
forms of Lease to be in form and substance satisfactory to the Agent.
(f) Estoppel Certificates. Estoppel certificates from each tenant
of such parcel of Real Estate as required by Agent, such certificates to
be dated not more than sixty (60) days prior to the inclusion of such
Real Estate in the collateral for the Mortgage Loan and to be
satisfactory in form and substance to the Agent.
(g) Certificates of Insurance. Each of (i) a current certificate
of insurance as to the insurance maintained on such Real Estate
(including flood insurance if necessary) from the insurer or an
independent insurance broker dated as of the date of determination,
identifying insurers, types of insurance, insurance limits, and policy
terms; (ii) certified copies of all policies evidencing such insurance
(or certificates therefor signed by the insurer or an agent authorized
to bind the insurer); and (iii) such further information and
certificates from the Borrower, its insurers and insurance brokers as
the Agent may reasonably request, all of which shall be in compliance
with the requirements of this Agreement.
(h) Hazardous Substance Assessments. A hazardous waste site
assessment report concerning Hazardous Substances and asbestos on such
Real Estate dated or updated not more than three months prior to the
inclusion of such Real Estate in the collateral for the Mortgage Loan
unless otherwise approved by the Agent, from an Environmental Engineer,
such report to contain no qualifications except those that are
acceptable to the Majority Banks in their sole discretion and to
otherwise be in form and substance satisfactory to the Majority Banks.
(i) Certificate of Occupancy. A copy of the certificate(s) of
occupancy issued to the Property Owner for such parcel of Real Estate
permitting the use and occupancy of the Building thereon (or evidence
that any previously issued certificate(s) of occupancy is not required
to be reissued to the Property Owner), or a legal opinion reasonably
satisfactory to the Agent that no certificates of occupancy are
necessary to the use and occupancy thereof.
(j) Appraisal. An Appraisal of such Real Estate, in form and
substance satisfactory to the Majority Banks and dated not more than
three months prior to the inclusion of such Real Estate in the
collateral for the Mortgage Loan.
(j) Zoning and Land Use Opinion of Counsel. A favorable opinion
concerning the Real Estate addressed to the Agent and dated the date of
the inclusion of such Real Estate in the collateral for the Mortgage
Loan, in form and substance satisfactory to the Agent, from counsel
approved by the Agent admitted to practice in the State in which such
parcel is located, as to zoning and land use compliance, or such other
evidence regarding zoning and land use compliance as the Agent may
approve in its reasonable discretion.
(k) Construction Inspector Report. A report or written
confirmation from the Construction Inspector satisfactory in form and
content to the Majority Banks, dated or updated not more than three
months prior to the inclusion of such Real Estate in the collateral for
the Mortgage Loan, addressing such matters as the Majority Banks may
reasonably require, including without limitation that the Construction
Inspector has reviewed the plans and specifications or other available
materials for all Buildings on the Real Estate, that the condition of
the Buildings is good, that all Buildings were constructed and completed
in a good and workmanlike manner, that the Buildings satisfy all
applicable building, zoning, handicapped access and Environmental Laws
applicable thereto, and whether or not the Real Estate and the Buildings
thereon are a conforming use under applicable zoning laws.
(l) Permit and Legal Compliance Assurances. Evidence satisfactory
to the Agent that all activities being conducted on such Real Estate
which require federal, state or local licenses or permits have been duly
licensed and that such licenses or permits are in full force and effect,
and that the Real Estate, the Buildings and the use and occupancy
thereof are in compliance in all material respects with all applicable
federal, state or local laws, ordinances or regulations.
(m) Operating Statements. Operating statements for such Real
Estate in the form of such statements delivered to the Banks under
Section 6.4(b) covering each of the four fiscal quarters ending
immediately prior to the addition of such Mortgaged Property to the
collateral for the Mortgage Loan.
(n) Additional Documents. Such other documents, certificates,
reports or assurances as the Agent or the Majority Banks may reasonably
require in their discretion.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
Environmental Engineer. A firm of independent professional engineers or
other scientists generally recognized as expert in the detection, analysis
and remediation of Hazardous Substances and related environmental matters and
reasonably acceptable to the Agent.
Environmental Laws. See Section 6.20(a).
Equity Interests. One hundred percent (100%) of the direct legal,
equitable and beneficial interests of the Borrower in and to the Property
Owner.
Equity Offering. The issuance and sale by the Borrower or the Guarantor
of any of its equity securities.
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D or any
successor or similar regulation), if such liabilities were outstanding. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or
such other Eurodollar interbank market as may be selected by the Agent and
the Banks in their sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1.1 hereto; thereafter, such other office of
such Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the quotient (rounded upwards to the
nearest 1/16 of one percent) of (a) the rate at which the Reference Bank's
Eurodollar Lending Office is offered Dollar deposits two Eurodollar Business
Days prior to the beginning of such Interest Period in whatever interbank
Eurodollar market may be selected by the Reference Bank in its sole
discretion, acting in good faith, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to a Eurodollar Rate.
Event of Default. See Section 12.1.
Federal Funds Effective Rate. For any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
of the quotations for such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the
Agent.
Generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time and (b) consistently applied with past financial statements of the
Borrower adopting the same principles; provided that a certified public
accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles)
as to financial statements in which such principles have been properly
applied.
Goldman. Goldman Sachs Mortgage Company.
Goldman Group. Collectively, the partners of WHWEL as of any date that
are affiliates of The Goldman Sachs Group L.P.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
Guarantor. Collectively, the WWP Members and any other Person which is
now or may hereafter become a party to a Guaranty, and individually any one
of them.
Guaranty. Collectively, the Indemnity and Guaranty Agreement by the WWP
Members in favor of Agent and the Banks, the Mezzanine Conditional Guaranty,
the Nomura Conditional Guaranty, the WWP Member Indemnity Agreement and each
other guaranty which may hereafter be delivered to the Agent and the Banks in
connection with the Loan, each in form and substance satisfactory to Agent in
its sole discretion.
Hazardous Substances. See Section 6.20(b).
Holdback. See Section 5.5.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect (including, without limitation, all obligations evidenced by bonds,
debentures, notes or similar debt instruments and subordinated indebtedness);
(b) all liabilities secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall have been
assumed; and (c) all guarantees, interest rate and currency swap obligations,
endorsements and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including contingent obligations that in
accordance with generally accepted accounting principles are required to be
footnoted on the Borrower's consolidated balance sheets and any obligation to
supply funds to or in any manner to invest directly or indirectly in a
Person, to purchase indebtedness, or to assure the owner of indebtedness
against loss through an agreement to purchase goods, supplies or services for
the purpose of enabling the debtor to make payment of the indebtedness held
by such owner or otherwise, and the obligation to reimburse the issuer in
respect of any letter of credit; (d) any obligation as a lessee or an obligor
under a capitalized lease; and (e) the Borrower's or any of its Subsidiaries'
pro rata share of any of the above-described obligations of its
unconsolidated subsidiaries.
Indemnity Agreement. Collectively, the Indemnity Agreements Regarding
Hazardous Materials made by the Borrower and the WWP Members in favor of the
Agent and the Banks, pursuant to which such parties agree to indemnify the
Agent and the Banks with respect to Hazardous Substances and Environmental
Laws, such Indemnity Agreement to be in form and substance satisfactory to
the Agent.
Interest Payment Date. (a) As to each Loan, the first day of each
January, April, July and October during the term of such Loan, and (b) also
as to each Eurodollar Rate Loan, the last day of the Interest Period relating
thereto.
Interest Period. With respect to each Eurodollar Rate Loan:
(a) initially, the period commencing on the Drawdown Date of such
Loan and ending one, two or three months thereafter; and
(b) thereafter, each period commencing on the day following the
last day of the next preceding Interest Period applicable to such Loan
and ending on the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request;
provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(A) if any Interest Period with respect to a Eurodollar
Rate Loan would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall end and
the next Interest Period shall commence on the next preceding
or succeeding Eurodollar Business Day as determined
conclusively by the Reference Bank in accordance with the then
current bank practice in the applicable Eurodollar interbank
market;
(B) if the Borrower shall fail to give notice as
provided in Section 4.1, the Borrower shall be deemed to have
requested a conversion of the affected Eurodollar Rate Loan to
a Base Rate Loan on the last day of the then current Interest
Period with respect thereto; and
(C) no Interest Period relating to any Eurodollar Rate
Loan shall extend beyond the Maturity Date.
Notwithstanding anything herein to the contrary, each Interest Period
selected by the Borrower hereunder shall be for the same duration selected by
Property Owner for the corresponding advance under the Mortgage Loan
Agreement, or conversion or continuation thereof.
Investment Partnerships. Investments in joint ventures, general
partnerships, limited partnerships, limited liability companies or any other
business association formed for the purpose of acquiring fee interests in
income-producing commercial office properties, provided that Borrower shall
have sufficient Voting Interests or other rights to veto or block any major
actions to be taken by any other Person owning an interest in such Investment
Partnership. Any wholly-owned Subsidiary of the Borrower and the Property
Owner shall not be deemed to be an Investment Partnership.
Investments. With respect to any Person, all shares of capital stock,
evidences of Indebtedness and other securities issued by any other Person,
all loans, advances, or extensions of credit to, or contributions to the
capital of, any other Person, all purchases of the securities or business or
integral part of the business of any other Person and commitments and options
to make such purchases, all interests in real property, and all other
investments; provided, however, that the term "Investment" shall not include
(i) equipment, inventory and other tangible personal property acquired in the
ordinary course of business, or (ii) current trade and customer accounts
receivable for services rendered in the ordinary course of business and
payable in accordance with customary trade terms. In determining the
aggregate amount of Investments outstanding at any particular time:
(a) there shall be included as an Investment all interest accrued with
respect to Indebtedness constituting an Investment unless and until such
interest is paid; (b) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (c) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (a) may be deducted when paid; and (d) there
shall not be deducted from the aggregate amount of Investments any decrease
in the value thereof.
Leases. Leases, licenses and agreements whether written or oral,
relating to the use or occupation of space in or on the Building or on the
Mortgaged Property or the Mezzanine Property.
Leasing Commissions. Reasonable and customary commissions paid to a
licensed real estate broker in connection with a Lease for all or any portion
of the Mortgaged Properties commonly known as Point View, 15 Broad, Mountain
Heights, Morris Technology Center and the Polaroid Buildings, approved
pursuant to Section 5.6, pursuant to commission agreements containing such
terms and provisions as are then prevailing between third party, unaffiliated
owners and brokers for comparable leases of space at properties similar to
such Mortgaged Property in the market area in which such Mortgaged Property
is located.
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Security Documents, the
Guaranty, the Acknowledgments and all other documents, instruments or
agreements executed or delivered by or on behalf of the Borrower, the
Guarantor, Property Owner, WASH, WASH Manager, Wells Avenue Holdings or the
parties to the WWP Member Indemnity Agreement evidencing or securing the
Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans to be made by the Banks hereunder.
Majority Banks. As of any date, the Bank or Banks whose aggregate
Commitment Percentage is equal to or greater than sixty-six and two-thirds
percent (66.67%).
Management Agreements. Agreements, whether written or oral, providing
for the management of the Mortgaged Property, the Mezzanine Property or any
of them.
Maturity Date. December 15, 2000, as the same may be extended as
provided in Section 2.8, or such earlier date on which the Loans shall become
due and payable pursuant to the terms hereof.
Mezzanine Collateral. As defined in the Mortgage Loan Agreement.
Mezzanine Conditional Guaranty. The Mezzanine Conditional Guaranty of
Payment made by Wellsford Commercial, WHWEL, Wellsford Real Properties,
Whitehall Street Real Estate Limited Partnership V, Whitehall Street Real
Estate Limited Partnership VI, Whitehall Street Real Estate Limited
Partnership VII and Whitehall Street Real Estate Limited Partnership VIII, in
favor of the Agent and the Banks, as the same may be modified or amended.
Mezzanine Management Agreement. As defined in the Mortgage Loan
Agreement.
Mezzanine Mortgage Loan. As defined in the Mortgage Loan Agreement.
Mezzanine Mortgage Loan Agreement. As defined in the Mortgage Loan
Agreement.
Mezzanine Mortgage Loan Documents. As defined in the Mortgage Loan
Agreement.
Mezzanine Mortgagee. As defined in the Mortgage Loan Agreement.
Mezzanine Property. Collectively, the real property owned by WASH and
commonly known as 128 Tech Center, 7/57 Wells Avenue, 75/85/95 Wells Avenue,
201 University Avenue, Dedham Place and Norfolk Place (333 Elm Street), for
so long as such properties shall be owned by WASH and the Property Owner's
interests therein shall be collateral for the Mortgage Loan.
Mortgaged Property. The Eligible Real Estate from time to time owned by
the Property Owner which is conveyed to and accepted by the Mortgagee as
security for the indebtedness evidenced by the Mortgage Loan Documents, for
so long as such property remains as security for such indebtedness.
Mortgagee. The Mortgage Loan Banks and any agent acting on behalf of
the Mortgage Loan Banks, as the case may be.
Mortgage Loan. The first mortgage loan to the Property Owner, in the
original principal amount of up to $300,000,000.00.
Mortgage Loan Agreement. The First Amended and Restated Loan Agreement
dated of even date herewith between the Property Owner, the Mortgage Loan
Banks and BKB as Agent, as same may be amended, modified or restated.
Mortgage Loan Banks. The "Banks" from time to time under the Mortgage
Loan Agreement.
Mortgage Loan Documents. Collectively, the Mortgages and other
documents listed on Schedule 6.30-2 attached hereto and made a part hereof.
Mortgages. The Mortgages, Deeds to Secure Debt and Deeds of Trust from
the Property Owner to the Mortgagee (or to trustees named therein acting on
behalf of the Mortgagee) pursuant to which the Property Owner has conveyed a
Mortgaged Property as security for the obligations evidenced by the Mortgage
Loan Documents.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Negative Carry. See Section 5.5.
Net Income (or Deficit). With respect to any Person (or any asset of
any Person) for any fiscal period, the net income (or deficit) of such Person
(or attributable to such asset), after deduction of all expenses, taxes and
other proper charges, determined in accordance with generally accepted
accounting principles.
Net Operating Income. With respect to any Person for any period, an
amount equal to the sum of (a) the Net Income of such Person (attributable to
the Mortgaged Properties and the Mezzanine Properties for such period) plus
(b) depreciation, amortization and interest deducted in calculating such Net
Income plus (c) any extraordinary or non-recurring losses deducted in
calculating such Net Income plus/minus (d) Rent Adjustments with respect to
Leases for the Mortgaged Properties and the Mezzanine Properties minus (e)
any income included in calculating such Net Income from the Mortgaged
Properties or the Mezzanine Properties from tenants which are 60 or more days
delinquent in the payment of any rent minus (f) any extraordinary or non-
recurring gains included in calculating such Net Income. Net Operating
Income shall be determined in a manner consistent with the manner in which it
has previously been calculated and provided to the Banks.
Nomura Conditional Guaranty. The Nomura Conditional Guaranty of Payment
made by Wellsford Commercial, WHWEL, Wellsford Real Properties, Whitehall
Street Real Estate Limited Partnership V, Whitehall Street Real Estate
Limited Partnership VI, Whitehall Street Real Estate Limited Partnership VII
and Whitehall Street Real Estate Limited Partnership VIII, in favor of the
Agent and the Banks, as the same may be modified or amended.
Nomura Mortgages. As defined in the Mortgage Loan Agreement.
Non-Recourse Indebtedness. Indebtedness of the Borrower or a Subsidiary
which is secured by one or more parcels of Real Estate and related personal
property or interests therein and is not a general obligation of the Borrower
or any Subsidiary, the holder of such Indebtedness having recourse solely to
the parcels of Real Estate securing such Indebtedness, the improvements and
leases thereon and the rents and profits thereof securing such Indebtedness,
subject to such exceptions for fraud, misapplication of rents, environmental
issues and other customary matters as Agent may reasonably approve.
Non-Stabilized Property. Any Real Estate owned by the Borrower or its
Subsidiaries which is not a Stabilized Property.
Notes. See Section 2.4.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent, individually or collectively,
under this Agreement or any of the other Loan Documents or in respect of any
of the Loans or the Notes, or other instruments at any time evidencing any of
the foregoing, whether existing on the date of this Agreement or arising or
incurred hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
Operating Cash Flow. With respect to any Person (or any asset of any
Person) for any period, an amount equal to the sum of (a) the Net Income of
such Person (or attributable to such asset) for such period plus (b)
depreciation and amortization, interest expense, and any extraordinary or
non-recurring losses deducted in calculating such Net Income minus (c) any
extraordinary or nonrecurring gains included in calculating such Net Income
plus/minus (d) Rent Adjustments minus (e) any income included in calculating
such Net Income from tenants which are 60 or more days delinquent in the
payment of any rent.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 8.2. When such term is used with respect to a
Mortgaged Property, "Permitted Liens" shall mean only those liens and
encumbrances as are shown in the Title Policy with respect to such Mortgaged
Property. When such term is used with respect to the Mezzanine Property,
"Permitted Liens" shall mean only those liens and encumbrances as are shown
in the Pro Forma Marked Owner's Title Insurance Commitment #9851-00015 issued
by Chicago Title Insurance Company in connection with the acquisition by the
Property Owner of the direct and indirect interests in WASH.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision
thereof.
Plan Assets. Assets of any employee benefit plan subject to Part 4,
Subtitle A, Title I of ERISA.
Pledge Agreement. Each agreement from time to time in effect in form
and substance satisfactory to the Agent pursuant to which the Borrower or the
Guarantor may pledge cash, Short-term Investments or other property referred
to in clause (iv) of Section 5.1 as part of the Collateral securing the
Obligations.
Property Owner. Wellsford/Whitehall Holdings, L.L.C., a Delaware
limited liability company.
Property Owner Organizational Agreements. That certain Amended and
Restated Limited Liability Company Operating Agreement of Wellsford/Whitehall
Holdings, L.L.C., dated as of July 16, 1998.
Rating Agencies. Collectively, the "Rating Agencies" as defined in the
Mezzanine Mortgage Loan Documents.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
REIT Status. With respect to Wellsford Commercial, its status as a real
estate investment trust as defined in Section 856(a) of the Code.
Record. The record, including computer records, maintained by the Agent
with respect to any Loan referred to in the Notes.
Reference Bank. BKB.
Register. See Section 18.2.
Release. See Section 6.20(c)(iii).
Rent Adjustments. For any Person, straight line adjustments to rent
payable under Leases, as determined in accordance with generally accepted
accounting principles.
Rent Roll. A report prepared by the Borrower showing for each tenant
its occupancy status, lease expiration date, market rent, lease rent and
other information in such form as may have been approved by the Agent, such
approval not to be unreasonably withheld.
Reportable Event. Any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
Revolving Credit Termination Date. December 31, 1998.
SEC. The federal Securities and Exchange Commission.
Security Documents. Collectively, the Indemnity Agreement, the
Guaranty, the Assignment of Interests, any further collateral assignments to
the Agent for the benefit of the Banks, and each Pledge Agreement, including,
without limitation, U.C.C.-1 financing statements executed and delivered in
connection therewith.
Shareholders' Equity. At any date, the total consolidated shareholders'
equity of the Borrower and its Subsidiaries determined in accordance with
generally accepted accounting principles.
Short-term Investments. Investments described in subsections (a)
through (g), inclusive, of Section 8.3. For all purposes of this Agreement
and the other Loan Documents, the value of Short-term Investments at any time
shall be the current market value thereof determined in a manner reasonably
satisfactory to the Agent.
Stabilized Property. Each parcel of Eligible Real Estate (a) which is
fully operational; (b) which is eighty percent (80%) leased and occupied
pursuant to bona-fide arm's length leases to third parties unaffiliated with
Borrower, any Guarantor or any of the Subsidiaries of the Borrower; (c) no
more than thirty-five percent (35%) of the Leases (based on the ratio of the
rentable square footage of such Real Estate that is occupied under such
Leases to the total rentable square footage of such Real Estate) for such
Real Estate are scheduled to expire (without regard to any extension options
not exercised) within two (2) years of the acceptance of such Real Estate as
a Mortgaged Property or the inclusion of the equity interests in the
Mezzanine Property as collateral for the Mortgage Loan (whether under the
Mortgage Loan Agreement, the "Original Loan Agreement" (as such term is
defined in the Mortgage Loan Agreement) or the Original Revolving Credit
Agreement; (d) less than all of the Leases for such Real Estate are scheduled
to expire (without regard to any extension options not exercised) within five
(5) years of the date of the acceptance of such Real Estate as a Mortgaged
Property or the inclusion of the equity interests in the Mezzanine Property
as collateral for the Mortgage Loan (whether under this Agreement, the
Original Loan Agreement or the Original Revolving Credit Agreement); and
(e) such Real Estate shall have a projected annual return to Borrower of not
less than 9% on acquisition cost based upon cash flows in place as of the
date of determination. The determination of whether a property is a
Stabilized Property for the purposes of determining the Designated Collateral
Value shall be made at such time as it is accepted as a Mortgaged Property or
the inclusion of the equity interests in the Mezzanine Property as collateral
for the Mortgage Loan as provided above, as applicable; provided that a
property may be later determined to be a Stabilized Property for the purposes
of determining Consolidated Total Assets at such time as a property satisfies
the requirements for a Stabilized Property set forth in this definition.
State. A state of the United States of America.
Subsidiary. Any corporation, association, partnership, limited
liability company, trust, or other business or other legal entity of which
the designated parent shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes or
controlling interests) of the outstanding Voting Interests.
Survey. An instrument survey of a Mortgaged Property or a Mezzanine
Property prepared by a registered land surveyor which shall show the location
of all buildings, structures, easements and utility lines on such property,
shall be sufficient to remove the standard survey exception from the Title
Policy, shall show that all buildings and structures are within the lot lines
of the Mortgaged Property or the Mezzanine Property and shall not show any
encroachments by others (or to the extent any encroachments are shown, such
encroachments shall be acceptable to the Agent in its sole discretion), shall
show rights of way, adjoining sites, establish building lines and street
lines, the distance to, and names of the nearest intersecting streets and
such other details as the Agent may reasonably require; shall show the zoning
district or districts in which the Mortgaged Property or the Mezzanine
Property is located and shall show whether or not the Mortgaged Property or
the Mezzanine Property is located in a flood hazard district as established
by the Federal Emergency Management Agency or any successor agency or is
located in any flood plain, flood hazard or wetland protection district
established under federal, state or local law and shall otherwise be in form
and substance reasonably satisfactory to the Agent.
Surveyor Certification. With respect to each parcel of Mortgaged
Property or Mezzanine Property, a certificate executed by the surveyor who
prepared the Survey with respect thereto, dated as of a recent date and
containing such information relating to such parcel as the Majority Banks or
the Title Insurance Company may reasonably require, such certificate to be
reasonably satisfactory to the Agent in form and substance.
Tenant Improvement Project. With respect to the Mortgaged Properties
commonly known as Point View, 15 Broad, Mountain Heights, Morris Technology
Center and the Polaroid Buildings, base building and/or tenant improvements
to the existing Buildings on such Mortgaged Property to be performed by the
Property Owner in connection with any Lease approved pursuant to Section 5.6.
Tenant Improvement Reserve. The amount of $8,000,000.00, which amount
shall be reserved from the amounts available to be borrowed under this
Agreement and shall be disbursed as provided in Section 5.6.
Test Period. See Section 9.2.
Title Insurance Company. Commonwealth Land Title Insurance Company or
another title insurance company or companies reasonably approved by the
Agent.
Title Policy. With respect to each parcel of Mortgaged Property, an
ALTA standard form title insurance policy (or, if such form is not available,
an equivalent form of or legally promulgated form of owner's title insurance
policy reasonably acceptable to the Agent) issued by a Title Insurance
Company (with such reinsurance or co-insurance as the Agent may require, any
such reinsurance to be with direct access endorsements to the extent
available under applicable law) in such amount as the Agent may require
insuring that the Property Owner holds marketable fee simple title to such
parcel, subject only to the encumbrances approved by Agent and which shall
not contain standard exceptions for mechanics liens, persons in occupancy
(other than tenants as tenants only under Leases) or matters which would be
shown by a survey, shall not insure over any matter except to the extent that
any such affirmative insurance is acceptable to the Agent in its sole
discretion, and shall contain such other endorsements and affirmative
insurance as the Agent reasonably may require and is available in the State
in which the Real Estate is located.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Under Development. Any Real Estate shall be considered under
development until such time as (a) a certificate of occupancy has been
obtained, (b) seventy-five percent (75%) of the net leasable area is leased
and occupied, and (c) the gross revenue from the operation of such Real
Estate shall have been not less than the operating costs (including amounts
properly allocable to such period for expenses which are not payable on a
regular basis during such period, such as taxes and insurance) for three (3)
consecutive months.
Voting Interests. Stock or similar ownership interests, of any class or
classes (however designated), the holders of which are at the time entitled,
as such holders, (a) to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation, association,
partnership, trust or other business entity involved, or (b) to control,
manage, or conduct the business of the corporation, partnership, association,
trust or other business entity involved.
WASH. Wells Avenue Senior Holdings LLC, a Massachusetts limited
liability company.
WASH Manager. WASH Manager L.L.C., a Delaware limited liability
company.
WASH Manager Organizational Agreements. The WASH Manager Organizational
Agreements shall mean the "Manager Organizational Agreements" as defined in
the Mortgage Loan Agreement.
WASH Organizational Agreements. The WASH Organizational Agreements
shall mean the "Property Owner Organizational Agreements" as defined in the
Mortgage Loan Agreement.
Wells Avenue Holdings. Wells Avenue Holdings L.L.C., a Delaware limited
liability company.
Wells Avenue Holdings Organizational Agreements. The Wells Avenue
Holdings Organizational Agreements shall mean the "Member Organizational
Agreements" as defined in the Mortgage Loan Agreement.
Wellsford Commercial. Wellsford Commercial Properties Trust, a Maryland
real estate investment trust.
Wellsford Real Properties. Wellsford Real Properties, Inc., a Maryland
corporation.
WHWEL. WHWEL Real Estate Limited Partnership, a Delaware limited
partnership.
WWP Member Indemnity Agreement. The Indemnity Agreement by Wellsford
Real Properties, Whitehall Street Real Estate Limited Partnership V,
Whitehall Street Real Estate Limited Partnership VI, Whitehall Street Real
Estate Limited Partnership VII and Whitehall Street Real Estate Limited
Partnership VIII in favor of the Agent and the Banks, as the same may be
modified or amended.
WWP Members. Wellsford Commercial and WHWEL.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to such
law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings assigned
to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) The words "approval" and "approved", as the context so determines, means
an approval in writing given to the party seeking approval after full
and fair disclosure to the party giving approval of all material facts
necessary in order to determine whether approval should be granted.
(h) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial
Code as in effect in the State of New York, have the meanings assigned
to them therein.
(i) Reference to a particular "Section", refers to that section of this
Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like import shall
refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
Section 2. THE FACILITY.
Section 2.1. Commitment to Lend. Subject to the terms and conditions
set forth in this Agreement, each of the Banks severally agrees to lend to
the Borrower, and the Borrower may borrow from time to time between the
Closing Date and the Advance Termination Date upon notice by the Borrower to
the Agent given in accordance with Section 2.6, such sums as are requested by
the Borrower for the purposes set forth in Section 7.11 up to the lesser of
(a) a maximum aggregate principal amount outstanding (after giving effect to
all amounts requested) at any one time equal to such Bank's Commitment and
(b) such Bank's Commitment Percentage of the difference of (i) the aggregate
Designated Collateral Value minus (ii) an amount equal to the aggregate
Holdback; provided, that, in all events no Default or Event of Default shall
have occurred and be continuing; and provided, further, that the outstanding
principal amount of the Loans (after giving effect to all amounts requested)
shall not at any time exceed the Total Commitment. The Borrower may repay
and reborrow from time to time between the Closing Date and the Revolving
Credit Termination Date. Notwithstanding anything herein to the contrary, in
no event shall the amount of the Loans advanced for purposes permitted under
this Agreement, other than the purposes contemplated by Section 5.6, exceed
$67,000,000.00, and in no event shall the Borrower be permitted to request
Loans after the Revolving Credit Termination Date except for amounts
requested pursuant to Section 5.6. The Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. The Loan Request shall
constitute a representation and warranty by the Borrower that all of the
conditions set forth in Section 10 and Section 11, in the case of the initial
Loan, and Section 11, in the case of all other Loans, have been satisfied on
the date of such funding.
Section 2.2. Facility Fee. The Borrower agrees to pay to the Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a facility fee calculated at the rate of 0.1875% per annum on the
average daily amount by which the Total Commitment exceeds the outstanding
principal amount of Loans during each calendar quarter or portion thereof
commencing on the date hereof and ending on the Advance Termination Date;
provided, however, that from and after the Revolving Credit Termination Date
and ending on the Advance Termination Date, such fee shall be calculated at
the rate of 0.1875% per annum on the average daily amount by which the Tenant
Improvement Reserve exceeds the outstanding principal amount of Loans
disbursed pursuant to Section 5.6 from the Tenant Improvement Reserve. The
facility fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter or portion
thereof, or on any earlier date on which the Commitments shall be reduced or
shall terminate as provided in Section 2.3, with a final payment on the
Advance Termination Date.
Section 2.3. Reduction of Commitment. The Borrower shall have the
right at any time and from time to time upon five Business Days' prior
written notice to the Agent to reduce by $1,000,000 or an integral multiple
of $1,000,000 in excess thereof or to terminate entirely the unborrowed
portion of the Commitments, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment Percentages
of the amount specified in such notice or, as the case may be, terminated,
any such reduction to be without penalty (unless such reduction requires
repayment of a Eurodollar Rate Loan). Promptly after receiving any notice
of the Borrower delivered pursuant to this Section 2.3, the Agent will notify
the Banks of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the
respective accounts of the Banks the full amount of any facility fee under
Section 2.2 then accrued on the amount of the reduction. No reduction or
termination of the Commitments may be reinstated. Notwithstanding the
foregoing, in no event shall the aggregate Commitments be reduced to less
than $50,000,000.00.
Section 2.4. Notes. The Loans shall be evidenced by a single
promissory note of the Borrower to each Bank in substantially the form of
Exhibit A hereto (collectively, the "Notes"), dated as of the Closing Date
and completed with appropriate insertions. Each such Note shall be payable
to the order of each Bank in the principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Loans made by such
Bank, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes the Agent to make or cause to be made, at or about the
time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal thereof, an appropriate notation on the Agent's Record
reflecting the making of such Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Loans set forth on the Agent's
Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to each Bank, but the failure to record, or any error in so
recording, any such amount on the Agent's Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Note to make
payments of principal of or interest on any Note when due. By delivery of
the Notes, there shall not be deemed to have occurred, and there has not
otherwise occurred, any payment, satisfaction or novation of the Indebtedness
evidenced by the "Notes" described in the Original Revolving Credit
Agreement.
Section 2.5. Interest on Loans.
law Each Base Rate Loan shall bear interest for the period commencing with
the Drawdown Date thereof and ending on the date on which such Base Rate
Loan is converted to a Eurodollar Rate Loan at a rate per annum equal to
the sum of the Base Rate plus one and one-half percent (1.50%).
(b) Each Eurodollar Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at a rate per annum equal to the
sum of the Eurodollar Rate determined for such Interest Period plus
three and two-tenths percent (3.20%).
(c) The Borrower promises to pay interest on each Loan in arrears on each
Interest Payment Date with respect thereto.
(d) Base Rate Loans and Eurodollar Rate Loans may be converted to Loans of
the other Type as provided in Section 4.1.
Section 2.6. Requests for Loans.
(a) Except with respect to the initial Loan funded at the Closing Date, the
Borrower shall give to the Agent written notice in the form of Exhibit B
hereto (or telephonic notice confirmed in writing in the form of Exhibit
B hereto) of each Loan requested hereunder (a "Loan Request") no less
than five (5) Business Days prior to the proposed Drawdown Date. The
Borrower shall not make a Loan Request more frequently than two (2)
times each month. Each such notice shall specify with respect to the
requested Loan the proposed principal amount, Drawdown Date, Interest
Period (if applicable) and Type; provided, that, notwithstanding
anything herein to the contrary, each Type of Loan requested by Borrower
shall be the same Type requested by Property Owner for the corresponding
advance under the Mortgage Loan Agreement. Each such notice shall also
contain (i) a statement as to the purpose for which such advance shall
be used (which purpose shall be in accordance with the terms of Section
5.6 or Section 7.11, as applicable), (ii) in the case of any advance
relating to any Capital Improvement Project for a Mortgaged Property or
a Mezzanine Property, a certification from the Borrower that all
materialmen, laborers, subcontractors and any other parties who might or
could claim statutory or common law liens and are furnishing or have
furnished material or labor to the Mortgaged Property or Mezzanine
Property, as applicable, have been paid (or will be paid from the
proceeds of the requested advance) all amounts due for such labor and
materials, and if requested by the Agent, delivery to the Agent of
affidavits, lien waivers or other evidence reasonably satisfactory to
the Agent evidencing the same, and (iii) a certification by the chief
financial or chief accounting officer of the Borrower that the Borrower
and the Guarantor are and will be in compliance with all of their
respective covenants under the Loan Documents after giving effect to the
making of such Loan. With respect to any Loan proposed to be funded
after the initial Loan funded at the Closing Date, the Borrower shall
have complied with all requirements set forth in Section 5.4 and the
Majority Banks shall have granted their consent to and agreed to advance
against a Mortgaged Property in accordance with the terms and conditions
of Section 5.4.
(b) Promptly upon receipt of any such notice, the Agent shall notify each of
the Banks thereof. Except as provided in this Section 2.6, each such
Loan Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Loan requested from the Banks on the
proposed Drawdown Date, provided that, in addition to the Borrower's
other remedies against any Bank which fails to advance its proportionate
share of a requested Loan, such Loan Request may be revoked by the
Borrower by notice received by the Agent no later than the Drawdown Date
if any Bank fails to advance its proportionate share of the requested
Loan in accordance with the terms of this Agreement, provided further
that the Borrower shall be liable in accordance with the terms of this
Agreement (including, without limitation, amounts due pursuant to
Section 4.8) to any Bank which is prepared to advance its proportionate
share of the requested Loan for any costs, expenses or damages incurred
by such Bank as a result of the Borrower's election to revoke such Loan
Request. Nothing herein shall prevent the Borrower or the funding Banks
from seeking recourse against any Bank that fails to advance its
proportionate share of a requested Loan (but not any other Bank) as
required by this Agreement for the actual and consequential damages
incurred by the Borrower (including, without limitation, amounts
required to be paid under this Agreement by the Borrower to any Bank)
and such funding Banks proximately caused by such Bank that has failed
to advance its proportionate share, provided that in no event shall such
Bank be liable for punitive or exemplary damages. The Borrower may
without cost or penalty revoke a Loan Request by delivering notice
thereof to each of the Banks no later than three (3) Business Days prior
to the Drawdown Date. Each Loan Request shall be (a) for a Base Rate
Loan in a minimum aggregate amount of $1,000,000 or an integral multiple
of $100,000 in excess thereof, or (b) for a Eurodollar Rate Loan in a
minimum aggregate amount of $2,000,000 or an integral multiple of
$100,000 in excess thereof; provided, however, that there shall be no
more than five (5) Eurodollar Rate Loans outstanding at any one time.
In the event that the proceeds from such Loan are to be used for a
purpose other than a Capital Improvement Project, then the Borrower
shall provide to the Agent as soon as practicable thereafter such
evidence as the Agent shall reasonably require to evidence that such
funds have been used for such purpose (which evidence may include,
without limitation, a closing statement).
(c) Notwithstanding the foregoing, the Banks shall not be obligated to
advance a Loan to Borrower unless and until the Mortgage Loan Banks have
contemporaneously therewith advanced a pro rata amount for the same
purpose as Borrower is requesting funds pursuant to Section 7.11. For
the purposes hereof, the Banks' pro rata amount shall be twenty percent
(20%) and the Mortgage Loan Banks' pro rata amount shall be eighty
percent (80%).
Section 2.7. Funds for Loans.
(a) Not later than 2:00 p.m. (Boston time) on the proposed Drawdown Date of
any Loans, each of the Banks will make available to the Agent, at the
Agent's Head Office, in immediately available funds, the amount of such
Bank's Commitment Percentage of the amount of the requested Loans which
may be disbursed pursuant to Section 2.1. Upon receipt from each Bank
of such amount, and upon receipt of the documents required by Section 10
and Section 11 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Loans made available to the Agent
by the Banks by crediting such amount to the account of the Borrower
maintained at the Agent's Head Office. The failure or refusal of any
Bank to make available to the Agent at the aforesaid time and place on
any Drawdown Date the amount of its Commitment Percentage of the
requested Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Loans, including any
additional Loans that may be requested subject to the terms and
conditions hereof to provide funds to replace those not advanced by the
Bank so failing or refusing, provided that the Borrower may by notice
received by the Agent no later than the Drawdown Date refuse to accept
any Loan which is not fully funded in accordance with the Borrower's
Loan Request subject to the terms of Section 2.6. In the event of any
such failure or refusal, the Banks not so failing or refusing shall be
entitled to a priority secured position as against the Bank or Banks so
failing or refusing for such Loans as provided in Section 12.4.
(b) Unless Agent shall have been notified by any Bank prior to the
applicable Drawdown Date that such Bank will not make available to Agent
such Bank's pro rata share of a proposed Loan, Agent may in its
discretion assume that such Bank has made such Loan available to Agent
in accordance with the provisions of this Agreement and Agent may, if it
chooses, in reliance upon such assumption make such Loan available to
Borrower, and such Bank shall be liable to the Agent for the amount of
such advance.
Section 2.8. Extension of Maturity Date.
(a) Provided that no Default or Event of Default shall have occurred and be
continuing, the Borrower shall have the option, to be exercised by
giving written notice to the Agent in the form of Exhibit D hereto at
least 90 days prior to the Maturity Date, subject to the terms and
conditions set forth in this Agreement, to extend the Maturity Date by
one (1) year. The request by the Borrower for extension of the Maturity
Date shall constitute a representation and warranty by the Borrower that
all of the conditions set forth in this Section shall have been
satisfied on the date of such request or shall be satisfied prior to the
then existing Maturity Date.
(b) The obligations of the Agent and the Banks to extend the Maturity Date
shall be subject to the satisfaction of the following conditions
precedent on or prior to the Maturity Date (without regard to any
extension):
(i) Payment of Extension Fee. The Borrower shall pay to the Agent
for the pro rata accounts of the Banks in accordance with their
respective Commitment Percentages an extension fee equal to fifteen-
hundredths of one percent (0.15%) of the Total Commitment, which fee
shall, when paid, be fully earned and non-refundable under any
circumstances.
(ii) No Default. On the date the Extension Request is given and
on the Maturity Date (as determined without regard to such extension)
there shall exist no Default or Event of Default.
(iii) Representations and Warranties. The representations and
warranties made by the Borrower, the Guarantor or the Property Owner or
any of their respective Subsidiaries in the Loan Documents or otherwise
made by or on behalf of such Persons in connection therewith or after
the date thereof shall have been true and correct in all material
respects when made and (other than representations as to the Guarantor)
shall also be true and correct in all material respects on the Maturity
Date (as determined without regard to such extension) other than for
changes in the ordinary course of business permitted by this Agreement
that have not had any materially adverse affect on the business of any
of such Persons.
(iv) Covenant Compliance. On the Maturity Date (as determined
without regard to such extension request), the Borrower would be in
compliance with the covenants set forth in Section 9.1 and Section 9.2
at the levels set forth in such covenants as would be applicable during
the extension period after December 31, 2000.
(v) Appraisals. The Agent shall have received at Borrower's
expense Appraisals or updates of prior Appraisals to determine the
current Appraised Value and Designated Collateral Value of the Mortgaged
Property and the Mezzanine Property, which Appraisals shall be ordered,
reviewed and approved as provided in Section 5.2(a). The aggregate
outstanding principal amount of the Loans shall be reduced to an amount
such that the aggregate outstanding principal amount of the Loans does
not exceed the Designated Collateral Value (as most recently determined
based upon the Appraisals obtained pursuant to this Section 2.8).
(vi) Extension of Mortgage Loan Agreement Maturity Date. The
maturity date for the Mortgage Loan shall have been extended to coincide
with the Maturity Date, as extended.
Section 2.9. Termination of Advances. Notwithstanding anything in this
Agreement to the contrary, the Borrower shall have no right to obtain from
the Banks, and the Banks shall have no obligation to lend to Borrower, any
additional sums under this Agreement after the Advance Termination Date.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrower promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, all of the Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
Section 3.2. Mandatory Prepayments.
(a) If at any time the outstanding principal amount of the Mortgage Loan is
prepaid in full and the obligation of the Mortgagee to advance Mortgage
Loans thereunder shall terminate, whether voluntarily or involuntarily
or as the result of an acceleration of the maturity date thereof, all
proceeds from any repayment or refinance thereof in excess of the
amounts due and payable under the Mortgage Loan Documents shall be paid
to Agent for the account of the Banks as a prepayment of the Loans;
provided that Borrower shall not permit Property Owner to refinance the
Mortgage Loans unless the holder of such new loan shall enter into an
intercreditor agreement with Agent and the Banks in the form of the
intercreditor agreement entered into of even date herewith between Agent
and BKB as agent for the Mortgagee. For the purposes hereof, and
without limiting the generality of the foregoing, the Mortgage Loan
shall be deemed to have been prepaid in the event that a Mortgage or the
Mortgages are assigned by the holder thereof to a new holder for the
purpose of facilitating a refinance of the indebtedness secured thereby.
(b) In the event that the Borrower shall prepay in whole or in part the
outstanding amount of the Mortgage Loans and the obligation of the
Mortgagee to advance Mortgage Loans thereunder shall not have
terminated, then the Borrower shall pay to the Agent for the account of
the Banks as a prepayment of the Loans an amount such that the principal
amount of the Loans shall be reduced in the same proportion as the
Mortgage Loans are reduced as a result of the corresponding prepayment
thereof. By way of example, if ten percent (10%) of the outstanding
principal balance of the Mortgage Loans is prepaid, then the Borrower
shall prepay the Loans in an amount equal to ten percent (10%) of the
outstanding principal balance thereof. The provisions of this Section
3.2(b) shall not apply to a prepayment in full of the Mortgage Loan and
the termination of the Mortgage Loan Documents, which prepayment shall
be governed by Section 3.2(a).
(c) Except with the prior written approval of the Majority Banks, which
approval may be withheld in the sole and absolute discretion of the
Majority Banks, if at any time the outstanding principal amount of the
Mezzanine Mortgage Loan is prepaid in full, whether voluntarily,
involuntarily or as the result of an acceleration of the maturity date
thereof, all of the outstanding Obligations together with any and all
accrued but unpaid interest thereon and prepayment fees shall become
absolutely due and payable. For the purposes hereof, and without
limiting the generality of the foregoing, the Mezzanine Mortgage Loan
shall be deemed to have been prepaid in the event that (i) a Nomura
Mortgage or the Nomura Mortgages are assigned by the holder thereof to a
new holder for the purpose of facilitating a refinance of the
indebtedness secured thereby or (ii) WASH defeases the Mezzanine
Mortgage Loan as permitted by Section 2.3.3 of the Mezzanine Mortgage
Loan Agreement.
(d) If at any time there shall occur, whether voluntarily, involuntarily or
by operation of law, a sale, transfer, assignment, conveyance, option or
other disposition of, or any mortgage, hypothecation, encumbrance,
financing or refinancing of (i) any assets or properties of WASH, except
for the Mezzanine Mortgage Loan and releases of the Mezzanine Property
in accordance with the terms of this Agreement, and except as provided
in Section 7.21(a) with respect to the replacement of fixtures,
equipment, machinery and other personal property by WASH in connection
with the operation of the Mezzanine Property in the ordinary course of
business, (ii) any assets or properties of the Property Owner, except
for the Mortgage Loan and releases of the Mortgaged Property in
accordance with the terms of this Agreement, and except as provided in
Section 7.21(a) with respect to the replacement of fixtures, equipment,
machinery and other personal property by the Property Owner in
connection with the operation of the Mortgaged Property in the ordinary
course of business, (iii) any of the Collateral or the Mezzanine
Collateral except as provided in this Agreement, (iv) any other assets
or properties of WASH Manager or Wells Avenue Holdings, (v) any direct
or indirect interest of Borrower in the Property Owner or either
Property Owner, WASH Manager or Wells Avenue Holdings in WASH, (vi) any
direct or indirect interest of Wells Avenue Holdings in WASH Manager, or
(vii) any direct or indirect interest of Property Owner in Wells Avenue
Holdings, all of the Obligations outstanding on such date, together with
any and all accrued but unpaid interest thereon and prepayment fees,
shall become absolutely due and payable.
Section 3.3. Optional Prepayments. The Borrower shall have the right,
at the Borrower's election, to prepay the outstanding amount of the Loans, as
a whole or in part, at any time without penalty or premium; provided, that
the full or partial prepayment of the outstanding amount of any Eurodollar
Rate Loans pursuant to Section 3.2(b) or this Section 3.3 may be made only on
the last day of the Interest Period relating thereto except as otherwise
required pursuant to Section 4.7 unless payment is first made of any amounts
payable pursuant to Section 4.8. The Borrower shall give the Agent, no later
than 10:00 a.m., Boston time, at least three (3) Business Days prior written
notice of any prepayment pursuant to Section 3.2(b) or this Section 3.3 of
any Base Rate Loans and at least four Eurodollar Business Days notice of any
proposed repayment pursuant to this Section 3.3 of Eurodollar Rate Loans, in
each case specifying the proposed date of payment of Loans and the principal
amount to be paid.
Section 3.4. Partial Prepayments. Each partial prepayment of the Loans
under Section 3.3 shall be in an integral multiple of $100,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to
the date of payment and, after payment of such interest, shall be applied, in
the absence of instruction by the Borrower, first to the principal of Base
Rate Loans and then to the principal of Eurodollar Rate Loans.
Section 3.5. Effect of Prepayments. Amounts of the Loans prepaid under
Section 3.2(b) and Section 3.3 prior to the Revolving Credit Termination Date
may be reborrowed as provided in Section 2. Notwithstanding anything herein
to the contrary, amounts of the Loans prepaid after the Revolving Credit
Termination Date may not be reborrowed.
Section 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Conversion Options.
(a) The Borrower may elect from time to time to convert any outstanding Loan
to a Loan of another Type and such Loan shall thereafter bear interest
as a Base Rate Loan or a Eurodollar Rate Loan, as applicable; provided
that (i) with respect to any such conversion of a Eurodollar Rate Loan
to a Base Rate Loan, the Borrower shall give the Agent at least three
Business Days' prior written notice of such election, and such
conversion shall only be made on the last day of the Interest Period
with respect to such Eurodollar Rate Loan; (ii) with respect to any such
conversion of a Base Rate Loan to a Eurodollar Rate Loan, the Borrower
shall give the Agent at least four Eurodollar Business Days' prior
written notice of such election and the Interest Period requested for
such Loan, the principal amount of the Loan so converted shall be in a
minimum aggregate amount of $2,000,000 or an integral multiple of
$100,000 in excess thereof and, after giving effect to the making of
such Loan, there shall be no more than five (5) Eurodollar Rate Loans
outstanding at any one time; and (iii) no Loan may be converted into a
Eurodollar Rate Loan when any Default or Event of Default has occurred
and is continuing. All or any part of the outstanding Loans of any Type
may be converted as provided herein, provided that no partial conversion
shall result in a Base Rate Loan in an aggregate principal amount of
less than $1,000,000 or a Eurodollar Rate Loan in an aggregate principal
amount of less than $2,000,000 and that the aggregate principal amount
of each Loan shall be in an integral multiple of $100,000. On the date
on which such conversion is being made, each Bank shall take such action
as is necessary to transfer its Commitment Percentage of such Loans to
its Domestic Lending Office or its Eurodollar Lending Office, as the
case may be. Each Conversion Request relating to the conversion of a
Base Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrower.
(b) Any Loan may be continued as such Type upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with
the terms of Section 4.1; provided that no Eurodollar Rate Loan may be
continued as such when any Default of the type described in subsections
(a), (b), (c) or (d) of Section 12.1 or Event of Default has occurred
and is continuing, but shall be automatically converted to a Base Rate
Loan on the last day of the Interest Period relating thereto ending
during the continuance of any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent of its election
hereunder with respect to any Loan, such Loan shall be automatically
converted to a Base Rate Loan at the end of the applicable Interest
Period.
(d) Notwithstanding anything herein to the contrary, each Loan that is
continued or converted pursuant to this Section 4.1 shall be continued
as or converted to the same Type of Loan as the corresponding loan to
Property Owner under the Mortgage Loan Agreement is converted or
continued, and if such Type is a Eurodollar Rate Loan, the Interest
Period selected shall comply with the conditions set forth in the
definition of the term "Interest Period".
Section 4.2. Closing Fee. The Borrower has paid to BKB and Goldman a
closing fee as specified in the Agreement Regarding Fees. BKB and Goldman
shall pay on the Closing Date to the other Banks a closing fee in accordance
with their separate agreement.
Section 4.3. Agent's Fee. The Borrower shall pay to the Agent, for the
Agent's own account, an Agent's fee as specified in the Agreement Regarding
Fees.
Section nlaw Funds for Payments.
(a) All payments of principal, interest, facility fees, Agent's fees,
closing fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Agent, for the respective
accounts of the Banks and the Agent, as the case may be, at the Agent's
Head Office, not later than 12:00 noon (Boston time) on the day when
due, in each case in immediately available funds. The Agent is hereby
authorized to charge the account of the Borrower with BKB, on the dates
when the amount thereof shall become due and payable, with the amounts
of the principal of and interest on the Loans and all fees, charges,
expenses and other amounts owing to the Agent and/or the Banks under the
Loan Documents.
(b) All payments by the Borrower hereunder and under any of the other Loan
Documents shall be made without setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions
or conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any
of the other Loan Documents, the Borrower will pay to the Agent, for the
account of the Banks or (as the case may be) the Agent, on the date on
which such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to
enable the Banks or the Agent to receive the same net amount which the
Banks or the Agent would have received on such due date had no such
obligation been imposed upon the Borrower. The Borrower will deliver
promptly to the Agent certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.
Section 4.5. Computations. All computations of interest on the Loans
and of other fees to the extent applicable shall be based on a 360-day year
and paid for the actual number of days elapsed. Except as otherwise provided
in the definition of the term "Interest Period" with respect to Eurodollar
Rate Loans, whenever a payment hereunder or under any of the other Loan
Documents becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The outstanding amount of the
Loans as reflected on the records of the Agent from time to time shall be
considered prima facie evidence of such amount.
Section 4.6. Inability to Determine Eurodollar Rate. In the event
that, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and reasonable
methods do not exist for ascertaining the Eurodollar Rate for such Interest
Period, the Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower and the Banks) to the
Borrower and the Banks. In such event (a) any Loan Request with respect to
Eurodollar Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans and (b) each Eurodollar Rate Loan will
automatically, on the last day of the then current Interest Period thereof,
become a Base Rate Loan, and the obligations of the Banks to make Eurodollar
Rate Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower and the Banks.
Section 4.7. Illegality. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or the
interpretation or application thereof shall make it unlawful, or any central
bank or other governmental authority having jurisdiction over a Bank or its
Eurodollar Lending Office shall assert that it is unlawful, for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice
of such circumstances to the Agent and the Borrower and thereupon (a) the
commitment of the Banks to make Eurodollar Rate Loans or convert Loans of
another type to Eurodollar Rate Loans shall forthwith be suspended and (b)
the Eurodollar Rate Loans then outstanding shall be converted automatically
to Base Rate Loans on the last day of each Interest Period applicable to such
Eurodollar Rate Loans or within such earlier period as may be required by
law.
Section 4.8. Additional Interest. If any Eurodollar Rate Loan or any
portion thereof is repaid or is converted to a Base Rate Loan for any reason
on a date which is prior to the last day of the Interest Period applicable to
such Eurodollar Rate Loan, the Borrower will pay to the Agent upon demand for
the account of the Banks in accordance with their respective Commitment
Percentages, in addition to any amounts of interest otherwise payable
hereunder, any amounts required to compensate the Banks for any losses, costs
or expenses which may reasonably be incurred as a result of such payment or
conversion, including, without limitation, an amount equal to daily interest
for the unexpired portion of such Interest Period on the Eurodollar Rate Loan
or portion thereof so repaid or converted at a per annum rate equal to the
excess, if any, of (a) the interest rate calculated on the basis of the
Eurodollar Rate applicable to such Eurodollar Rate Loan minus (b) the yield
obtainable by the Agent upon the purchase of debt securities customarily
issued by the Treasury of the United States of America which have a maturity
date most closely approximating the last day of such Interest Period (it
being understood that the purchase of such securities shall not be required
in order for such amounts to be payable and that a Bank shall not be
obligated or required to have actually obtained funds at the Eurodollar
Rate).
Section 4.9. Additional Costs, Etc. Notwithstanding anything herein to
the contrary, if any future applicable law or any amendment or modification
of present applicable law which expression, as used herein, includes
statutes, rules and regulations thereunder and legally binding
interpretations thereof by any competent court or by any governmental or
other regulatory body or official with appropriate jurisdiction charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Bank or the Agent by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Bank's Commitment or the Loans
(other than taxes based upon or measured by the income or profits of
such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in taxes on
income or profits) of payments to any Bank of the principal of or the
interest on any Loans or any other amounts payable to any Bank under
this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or commitments of an
office of any Bank beyond those in effect as of the date hereof, or
(d) impose on any Bank or the Agent any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
such Bank's Commitment, or any class of loans or commitments of which
any of the Loans or such Bank's Commitment forms a part; and the result
of any of the foregoing is
(i) to increase the cost to any Bank of making, funding, issuing,
renewing, extending or maintaining any of the Loans or such Bank's
Commitment, or
(ii) to reduce the amount of principal, interest or other amount
payable to such Bank or the Agent hereunder on account of such Bank's
Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Bank
or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within fifteen (15) days of
demand made by such Bank or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to
such Bank or the Agent such additional amounts as such Bank or the Agent
shall determine in good faith to be sufficient to compensate such Bank or the
Agent for such additional cost, reduction, payment or foregone interest or
other sum. Each Bank and the Agent in determining such amounts may use any
reasonable averaging and attribution methods, generally applied by such Bank
or the Agent.
Section 4.10. Capital Adequacy. If after the date hereof any Bank
determines that (a) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements of general application for banks or
bank holding companies or any change in the interpretation or application
thereof by any governmental authority charged with the administration
thereof, or (b) compliance by such Bank or its parent bank holding company
with any future guideline, request or directive of any such entity regarding
capital adequacy or any amendment or change in interpretation of any existing
guideline, request or directive (whether or not having the force of law), has
the effect of reducing the return on such Bank's or such holding company's
capital as a consequence of such Bank's commitment to make Loans hereunder to
a level below that which such Bank or holding company could have achieved but
for such adoption, change or compliance (taking into consideration such
Bank's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital)
by any amount deemed by such Bank to be material, then such Bank may notify
the Borrower thereof. The Borrower agrees to pay to such Bank the amount of
such reduction in the return on capital as and when such reduction is
determined, upon presentation by such Bank of a statement of the amount
setting for the Bank's calculation thereof. In determining such amount, such
Bank may use any reasonable averaging and attribution methods, generally
applied by such Bank or the Agent.
Section 4.11. Indemnity of Borrower. The Borrower agrees to indemnify
each Bank and to hold each Bank harmless from and against any loss, cost or
expense that such Bank may sustain or incur as a consequence of (a) default
by the Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, or (b)
default by the Borrower in making a borrowing or conversion after the
Borrower has given (or is deemed to have given) a Loan Request or a
Conversion Request; provided, however, that the Borrower shall not be
required to so indemnify any Bank pursuant to clause (b) above which fails or
refuses to fund its proportionate share of a Loan in accordance with the
terms of this Agreement.
Section 4.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) interest on the
Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest payable on demand at a rate per
annum equal to four percent (4.0%) above the Base Rate from the date due
until such amount shall be paid in full (after as well as before judgment).
In addition, the Borrower shall pay a late charge equal to three percent
(3.0%) of any amount of interest and/or principal payable on the Loans or any
other amounts payable hereunder or under the Loan Documents, which is not
paid within ten days of the date when due.
Section 4.13. Intentionally Omitted.
Section 4.14. Certificate. A certificate setting forth any amounts
payable pursuant to Section 4.8, Section 4.9, Section 4.10, Section 4.11 or
Section 4.12 and a brief explanation of such amounts which are due, submitted
by any Bank or the Agent to the Borrower, shall be conclusive in the absence
of manifest error.
Section 4.15. Limitation on Interest. Notwithstanding anything in this
Agreement to the contrary, all agreements between the Borrower and the Banks
and the Agent, whether now existing or hereafter arising and whether written
or oral, are hereby limited so that in no contingency, whether by reason of
acceleration of the maturity of any of the Obligations or otherwise, shall
the interest contracted for, charged or received by the Banks exceed the
maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Banks in excess of the
maximum lawful amount, the interest payable to the Banks shall be reduced to
the maximum amount permitted under applicable law; and if from any
circumstance the Banks shall ever receive anything of value deemed interest
by applicable law in excess of the maximum lawful amount, an amount equal to
any excessive interest shall be applied to the reduction of the principal
balance of the Obligations and to the payment of interest or, if such
excessive interest exceeds the unpaid balance of principal of the
Obligations, such excess shall be refunded to the Borrower. All interest
paid or agreed to be paid to the Banks shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full period until payment in full of the principal of the Obligations
(including the period of any renewal or extension thereof) so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law. This section shall control all agreements
between the Borrower and the Banks and the Agent.
Section 4.16. Certain Provisions Relating to Increased Costs. If any
Bank requests compensation for any losses or costs to be reimbursed pursuant
to any one or more of the provisions of Section 4.9 or Section 4.10, then,
upon request of Borrower, such Bank shall use reasonable efforts in a manner
consistent with such institution's practice in connection with loans like the
Loan to eliminate, mitigate or reduce amounts that would otherwise be payable
by Borrower under the foregoing provisions, provided that such action would
not be otherwise prejudicial to such Bank, including, without limitation, by
designating another of such Bank's offices, branches or affiliates; the
Borrower agreeing to pay all reasonably incurred costs and expenses incurred
by such Bank in connection with any such action. Notwithstanding anything to
the contrary contained herein, if no Default or Event of Default shall have
occurred and be continuing, and if any Bank has requested payment or
compensation for any losses or costs to be reimbursed pursuant to any one or
more of the provisions of Section 4.9 or Section 4.10 (each, an "Affected
Bank"), then, within thirty (30) days after such request for payment or
compensation, Borrower shall have the one-time right as to such Affected
Bank, to be exercised by delivery of written notice delivered to the Agent
and the Affected Bank within thirty (30) days of receipt of such notice, to
elect to cause the Affected Bank to transfer its Commitment. The Agent shall
promptly notify the remaining Banks that each of such Banks shall have the
right, but not the obligation, to acquire a portion of the Commitment, pro
rata based upon their relevant Commitment Percentages, of the Commitment of
the Affected Bank (or if any of such Banks does not elect to purchase its pro
rata share, then to such remaining Banks in such proportion as approved by
the Agent). In the event that the Banks do not elect to acquire all of the
Affected Bank's Commitment, then the Agent shall endeavor to obtain a new
Bank to acquire such remaining Commitment. Upon any such purchase of the
Commitment of the Affected Bank, the Affected Bank's interest in the
Obligations and its rights hereunder and under the Loan Documents shall
terminate at the date of purchase, and the Affected Bank shall promptly
execute all documents reasonably requested to surrender and transfer such
interest. The purchase price for the Affected Bank's Commitment shall equal
any and all amounts outstanding and owed by Borrower to the Affected Bank,
including principal and all accrued and unpaid interest or fees.
Section 5. COLLATERAL SECURITY.
Section 5.1. Collateral. The Obligations shall be secured by (i) the
Indemnity Agreement, (ii) a perfected first priority security interest to be
held by the Agent for the benefit of the Banks in the Equity Interests
pursuant to the terms of the Assignment of Interests, (iii) a perfected first
priority lien to be held by the Agent for the benefit of the Banks in cash
and Short-term Investments of the Borrower from time to time pledged to the
Agent pursuant to one or more Pledge Agreements, and (iv) such additional
collateral, if any, as the Agent may from time to time accept as security for
the Obligations with the consent of the Majority Banks, which consent may be
given or withheld in the sole discretion of the Majority Banks. The
Obligations shall also be guaranteed pursuant to the Guaranty.
Section 5.2. Appraisals.
(a) The Agent on behalf of the Banks shall require Appraisals of each of the
Mortgaged Property and the Mezzanine Property in the event that the
Borrower exercises its extension option pursuant to Section 2.8, which
will be ordered by the Agent and reviewed and approved by the appraisal
departments of the Majority Banks, in order to determine the current
Appraised Value of the Mortgaged Property and the Mezzanine Property,
and the Borrower shall pay to the Agent on demand all reasonable costs
of all such Appraisals; provided, however, that so long as no Default or
Event of Default shall have occurred and be continuing and regulatory
requirements of any Bank generally applicable to real estate loans of
the category made under this Agreement as reasonably interpreted by such
Bank shall not require more frequent Appraisals, and except as required
with respect to the approval of Eligible Real Estate as a Mortgaged
Property under Section 5.4, the Borrower shall not be required to pay
for an Appraisal of a particular Mortgaged Property or Mezzanine
Property except in connection with such extension request.
(b) Notwithstanding the provisions of Section 5.2(a), the Agent may obtain
Appraisals or perform internal studies updating and revising prior
Appraisals with respect to the Mortgaged Property and the Mezzanine
Property or such portion thereof as the Majority Banks shall determine,
for the purpose of determining the current Appraised Value of the
Mortgaged Property and the Mezzanine Property at any time following a
partial condemnation of or uninsured casualty to a Mortgaged Property or
a Mezzanine Property (provided that such Appraisal shall be limited to
the affected property). The expense of such Appraisals and updates
performed pursuant to this Section 5.2(b) shall be borne by the
Borrower.
Section 5.3. Release of Property.
(a) Provided no Default or Event of Default shall have occurred hereunder
and be continuing (or would exist immediately after giving effect to the
transactions contemplated by this Section 5.3), the Property Owner may
release a Mortgaged Property from the lien of the Mortgage encumbering
the same upon the request of the Borrower and upon the following terms
and conditions (provided that a release of a Mezzanine Property shall be
governed by the provisions of Section 5.3(b)):
(i) The Borrower shall deliver to the Agent written notice of
Property Owner's desire to obtain each such release no later than
fifteen (15) days prior to the date on which each such release is to be
effected together with evidence satisfactory to the Agent that such
release is to facilitate a sale of such Mortgaged Property to an
unrelated third party in a bona-fide arms-length transaction for a cash
sales price and that such release is in compliance with the requirements
of the Mortgage Loan Documents (or has otherwise been consented to by
the Mortgagee); and
(ii) The Borrower shall submit to the Agent with such request a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith
estimate of the Borrower to give effect to the proposed release and
demonstrating that no Default or Event of Default with respect to the
covenants referred to therein shall exist after giving effect to such
release; and
(iii) The Borrower shall pay all reasonable costs and expenses of
the Agent in connection with such release, including without limitation,
reasonable attorney's fees and disbursements; and
(iv) The Borrower shall pay to the Agent for the account of the
Banks, which payment shall be applied to reduce the outstanding
principal balance of the Loans, a release price equal to one hundred
twenty percent (120%) of the Designated Collateral Value attributable to
such Mortgaged Property. In the event of a release pursuant hereto, the
amount available to be borrowed against the Collateral remaining after
such release shall be reduced by an amount equal to twenty percent (20%)
of the Designated Collateral Value of the Mortgaged Property so released
without reducing the Designated Collateral Value of the remaining
Mortgaged Properties or other Collateral for purposes of calculating
release prices. Notwithstanding the foregoing, (A) the vacant land
described on Schedule 5.3(a) hereto comprising part of the Mortgaged
Property commonly known as Point View and (B) the farmhouse improvements
at the Mortgaged Property commonly known as 180/188 Mt. Airy Road
subject to the purchase option contained in Paragraph 33 of that certain
Agreement between Fidelity Union Bank, as ancillary trustee for Mellon
Bank, N.A., as trustee for Westinghouse Master Trust Fund, as landlord,
and Mt. Airy Associates/Management, as tenant, dated November 8, 1982,
shall be released upon the payment to the Agent for the account of the
Banks of an amount (without premium) equal to twenty percent (20%) of
the gross sales proceeds less reasonable and customary closing costs
from such sale, the Mortgaged Property commonly known as 74 Turner
Street shall be released upon the payment to the Agent for the account
of the Banks an amount (without premium) equal to seventy-six percent
(76%) of the gross sales proceeds less reasonable and customary closing
costs from such sale (the "74 Turner Release Price"), and the vacant
land described in Schedule 5.3(b) hereto comprising part of the
Mortgaged Property commonly known as Greenbrook Corporate Center shall
be released upon the payment to the Agent for the account of the Banks
an amount (without premium) equal to the amount allocated to such vacant
land in the Appraisal of such Mortgaged Property (as most recently
determined pursuant to this Agreement) upon the sale of such land to an
unrelated third party, provided that the Borrower shall submit to the
Agent with the request for the release of the Point View and Greenbrook
Corporate Center land, 74 Turner Street or such improvements at Mt. Airy
(A) a survey satisfactory to Agent showing such land that Borrower
desires to release from the Mortgage and such other evidence as Agent
may reasonably require to show the availability of unrestricted (whether
by private agreement or governmental provision) direct access to public
roads and utilities from all unreleased portions of such Mortgaged
Property, (B) a certification from Borrower that the conveyance by
Borrower of such land which is requested to be released will not violate
the terms of any lease, agreement, ordinance or restriction by which
such Mortgaged Property is subject (and, with respect to the release of
74 Turner Street, any lease, agreement, ordinance or restriction by
which the Mezzanine Property commonly known as 128 Technology Center is
subject) and, with respect to the release of 74 Turner Street, a
certification from an appropriate licensed professional that the
Mezzanine Property commonly known as 128 Technology Center satisfies all
zoning requirements applicable thereto, including without limitation,
parking requirements without utilization of 74 Turner Street, and
(C) evidence of the proper subdivision of the property to be released.
Such payments shall be applied to reduce the outstanding principal
balance of the Loans; provided, that the Borrower shall not be required
to make a payment which would reduce the principal balance below zero.
Upon the release of 74 Turner Street, the Designated Collateral Value
for the Mezzanine Property commonly known as 128 Technology Center shall
be reduced by the amount of the 74 Turner Release Price.
(b) Provided no Default or Event of Default shall have occurred hereunder or
the other Loan Documents and be continuing (or would exist immediately
after giving effect to the transactions contemplated by this Section
5.3), WASH may from time to time release a Mezzanine Property from the
lien of the Nomura Mortgage encumbering the same (and Property Owner may
obtain a release thereof from the Collateral for the Mortgage Loan), and
thereafter (or concurrently) sell, transfer or otherwise convey such
Mezzanine Property to a third party, without thereby requiring the
prepayment of the outstanding Obligations as provided in Section 3.2(c)
upon the request of the Borrower and upon the following terms and
conditions:
(i) The Borrower shall deliver to the Agent written notice of
WASH's desire to obtain each such release no later than fifteen (15)
days prior to the date on which each such release is to be effected
together with evidence satisfactory to the Agent that such release is to
facilitate a sale of such Mezzanine Property to an unrelated third party
in a bona-fide arms-length transaction for a cash sales price or a bona-
fide refinance and that such release is in compliance with the
requirements of the Mezzanine Mortgage Loan Documents and the Mortgage
Loan Documents (or has otherwise been consented to by the Mortgagee and
the Mezzanine Mortgagee); and
(ii) The Borrower shall submit to the Agent with such request a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith
estimate of the Borrower to give effect to the proposed release and
demonstrating that no Default or Event of Default with respect to the
covenants referred to therein shall exist after giving effect to such
release; and
(iii) The Borrower shall pay all reasonable costs and expenses of
the Agent in connection with such release, including without limitation,
reasonable attorney's fees and disbursements; and
(iv) The Borrower shall pay to the Agent for the account of the
Banks, which payment shall be applied to reduce the outstanding
principal balance of the Loans, a release price for such property as set
forth on Schedule 6.4. In the event of a release pursuant hereto, the
amount available to be borrowed against the Collateral remaining for the
Loans after such release shall be reduced by an amount equal to twenty
percent (20%) of the Designated Collateral Value attributable to the
property so released without reducing the Designated Collateral Value of
such remaining property for the purposes of calculating release prices
or the release prices set forth on Schedule 6.4; provided that upon a
release of the Mezzanine Property commonly known as 201 University, the
amount available to be borrowed against the balance of the Mezzanine
Collateral remaining for the Loan shall be reduced by the sum of
$151,535.00, provided further that such reduction shall not reduce the
release prices set forth on Schedule 6.4. Such payments shall be
applied to reduce the outstanding principal balance of the Loans;
provided, that the Borrower shall not be required to make a payment
which would reduce the principal balance below zero.
Section 5.4. Additional Collateral.
(a) The Borrower shall have the right subject to the terms hereof to permit
Property Owner to add to the collateral for the Mortgage Loan any other
Real Estate that is owned by Property Owner and which is not security
for any other Indebtedness. Such addition shall be completed by the
delivery to the Agent of each of the Eligible Real Estate Qualification
Documents. Notwithstanding the foregoing, the addition of such
collateral for the Mortgage Loan shall not increase the Designated
Collateral Value or the amounts available to be borrowed by the Borrower
unless each of the following conditions shall be satisfied:
(i) if such proposed collateral is Real Estate, such Real Estate
shall be Eligible Real Estate;
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(ii) no Default or Event of Default shall have occurred or exist or
would occur or exist if such asset were included within the Collateral
and the requested Loan fully funded;
(iii) the Borrower shall have delivered to the Agent all
Eligible Real Estate Qualification Documents or other instruments,
documents or agreements as the Agent shall deem necessary or desirable,
all of which instruments, documents or agreements shall be in form and
substance satisfactory to the Agent in its sole discretion;
(iv) the Agent, on behalf of the Banks, shall have received any
other appraisals, surveys, rent rolls, environmental reports, title
insurance reports, certificates, opinions or other information or
documentation with respect to such Real Estate as the Agent, in its sole
discretion, shall deem necessary or desirable; and
(v) the Mortgagee shall have accepted such Real Estate as a
Mortgaged Property.
The Borrower acknowledges that the decision of the Majority Banks to
grant or withhold their consent to the acceptance of an additional Mortgaged
Property under this Section 5.4 shall be based entirely on such factors as
the Majority Banks deem relevant in their sole discretion, including, without
limitation, those enumerated in clauses (i) through (v) hereinabove, and such
consent may be granted or withheld solely at the discretion of the Majority
Banks; provided, however, that if the such Real Estate is a Stabilized
Property, acceptance of such Real Estate shall be subject only to the
satisfaction of the terms of Section 5.4(a)(ii), (iii), (iv) and (v).
(b) In connection with each such addition, the Borrower shall pay to the
Agent the reasonable out-of-pocket costs and expenses (including
reasonable attorney's fees and expenses) of the Agent in connection with
the addition of such property.
(c) In no event shall the acquisition cost of any Mortgaged Property or the
equity interests of Property Owner in the Mezzanine Property exceed
$40,000,000.00.
Section 5.5. Holdback. The Banks have required that Borrower reserve
from the amounts available to be borrowed under this Agreement an amount
necessary to cover (a) twenty percent (20%) of the corporate general and
administrative costs of the Borrower and Property Owner, and (b) twenty
percent (20%) of the operating expenses for each Non-Stabilized Property for
which net operating income from such property is insufficient to cover (such
amount pursuant to clause (b) is hereinafter referred to as the "Negative
Carry") as reasonably determined by the Borrower subject to the approval of
the Agent in an amount to cover all such costs for a period of eighteen (18)
months; provided that in the event that as of any date of determination such
amount shall not have been determined as so provided, then such amount shall
be as reasonably determined by Agent (such amount is hereafter referred to as
the "Holdback"). Amounts reserved under the Holdback shall not bear interest
until disbursed. The Borrower may request a disbursement of amounts reserved
pursuant to the Holdback to pay such costs as such costs are incurred subject
to the other terms of this Agreement, but at no time shall the amount of the
Holdback be less than an amount sufficient to cover such cost and expenses
for a period of six (6) months, and the Borrower shall take such actions as
are necessary (including the prepayment of the Loan to reinstate the Holdback
to such minimum level if it should ever fall below such level). The Holdback
described on Section 5.5(a) shall be allocated pro rata among all Non-
Stabilized Properties that also have a Holdback described in Section 5.5(b).
At such time as a Non-Stabilized Property shall become a Stabilized Property,
the Holdback for such Non-Stabilized Property shall be eliminated, provided
that any Holdback for corporate general and administrative costs shall be re-
allocated among the remaining Non-Stabilized Properties that also have a
Holdback described in Section 5.5(b) pro rata based upon their respective
Designated Collateral Values. As of the date of this Agreement, the Holdback
is $989,400.40. The Holdback shall be determined by the Agent for each
additional Mortgaged Property that is included as collateral for the Mortgage
Loan which is a Non-Stabilized Property at the time it becomes a Mortgaged
Property. At such time as the Borrower is able to comply with the covenants
set forth in Sections 9.1 and 9.2 assuming that 100% of the general and
administrative costs of the Borrower and Property Owner and the uncapitalized
Negative Carry (which for the purposes hereof shall include 100% of the
uncapitalized Negative Carry and shall not be limited to the 20% reserved
against under this Section 5.5) are added back (with respect to the
calculation of Section 9.2) and that the Holdback has been fully disbursed,
the Holdback shall no longer be required.
Section 5.6. Disbursement of Tenant Improvement Reserve. Amounts from
the Tenant Improvement Reserve shall be available to be disbursed hereunder
for Tenant Improvement Projects and Leasing Commissions. With respect to
Loan Requests for Loans to fund Tenant Improvement Projects or Leasing
Commissions, Loans shall be made on the following basis:
(a) prior to any disbursements from the Tenant Improvement Reserve, the
Borrower shall submit to the Agent for approval by the Majority Banks
the proposed Lease to which the Tenant Improvement Project and/or
Leasing Commission relate and a separate budget for such proposed Tenant
Improvement Project and Leasing Commission (a "Building Capital Project
Budget") setting forth the total cost required to construct the Tenant
Improvement Project to be constructed by the Property Owner pursuant to
such Lease (such cost is hereinafter referred to as the "Total Cost")
and the Leasing Commissions with respect to such Lease;
(b) upon written approval by the Majority Banks in their sole and absolute
discretion of a Lease and the corresponding Building Capital Project
Budget (which approval may include, without limitation, evidence that
such matters have been approved pursuant to the Mortgage Loan
Agreement), the Borrower may thereafter submit Loan Requests for Tenant
Improvement Projects with respect to the applicable Mortgaged Property
which Loan Requests shall separately identify the Mortgaged Property and
the Tenant Improvement Project for which funds are requested and shall
identify that portion of the Total Cost that has been drawn and the
amount of the Total Cost remaining to be drawn (separately identifying
amounts drawn under this Agreement and amounts drawn by Property Owner
under the Mortgage Loan Agreement) and a certification that the amount
of the Total Cost remaining to be drawn (including amounts available to
be drawn by Property Owner under the Mortgage Loan Agreement with
respect thereto) together with equity funds to be provided by Borrower
will be sufficient to cause the Tenant Improvement Project to be
completed in full; provided that prior to the initial disbursement with
respect to a Tenant Improvement Project, the Borrower shall provide to
the Agent evidence satisfactory to the Agent that Borrower has paid from
equity twenty-five percent (25%) of the amounts identified in the
Building Capital Project Budget for such Tenant Improvement Project;
(c) upon compliance with all terms and conditions set forth in this
Agreement with respect to advances of the Loans including, without
limitation, the terms and conditions in Section 2.6 and this Section
5.6, Loan Requests for Tenant Improvement Projects for work in place
will be funded in accordance with the applicable Building Capital
Project Budget; provided, however, if the Agent in its sole and absolute
discretion determines at any time that the cost of completing a Tenant
Improvement Project is in excess of the amount remaining with respect
thereto in the Building Capital Project Budget and equity funds provided
by Borrower, no additional advances with respect to such Tenant
Improvement Project shall be made unless the Borrower shall provide such
funds as the Agent in its sole and absolute discretion determines are
necessary to fully complete such Tenant Improvement Project in
accordance with the terms of this Section 5.6;
(d) amounts disbursed for any approved Tenant Improvement Project shall be
an amount not to exceed, under any circumstances, the costs and expenses
actually incurred by the Borrower with respect thereto notwithstanding
the approval by the Agent of the Total Cost thereof or the amounts set
forth in any Building Capital Project Budget with respect thereto;
(e) the Borrower shall construct each Tenant Improvement Project in a good
and workmanlike manner and in compliance with all applicable laws and
complete the approved Tenant Improvement Project within the time periods
and as required by, and in accordance with, the Lease with respect
thereto;
(f) amounts disbursed for Leasing Commissions shall be an amount not to
exceed, under any circumstances, the commission actually incurred by
Borrower which is reasonable and customary for a licensed real estate
broker in the market area in which the Mortgaged Property is located;
(g) with respect to a Loan Request to pay any portion of the Leasing
Commissions, Borrower shall provide evidence as reasonably requested by
the Agent that such Leasing Commissions are then due and payable or have
been properly paid; provided that prior to the initial disbursement with
respect to a Leasing Commission, the Borrower shall provide to the Agent
evidence satisfactory to the Agent that Borrower has paid from equity
twenty-five percent (25%) of the amounts identified in the Building
Capital Project Budget for such Leasing Commission; and
(h) with respect to each Loan Request for Tenant Improvement Projects or
Leasing Commissions, the Borrower shall provide the Agent with such
additional documents, certificates, lien waivers and affidavits as the
Agent may reasonably request.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Banks as
follows.
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a limited liability
company duly organized pursuant to its organizational documents and
amendments thereto filed with the Secretary of State of Delaware and is
validly existing and in good standing under the laws of the State of
Delaware. The Property Owner is a limited liability company duly
organized pursuant to its organizational documents and amendments
thereto filed with the Secretary of State of Delaware and is validly
existing and in good standing under the laws of the State of Delaware.
Wellsford Commercial is a Maryland real estate investment trust duly
organized pursuant to its organizational documents and amendments
thereto filed with the Secretary of State of Maryland and is validly
existing and in good standing under the laws of the State of Maryland.
WHWEL is a limited partnership duly organized pursuant to its
organizational documents and amendments thereto filed with the Secretary
of State of Delaware and is validly existing and in good standing under
the laws of the State of Delaware. Each of the Borrower and the WWP
Members (i) has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated, and (ii) is in
good standing as a foreign entity and is duly authorized to do business
in the jurisdictions where the Mortgaged Property and other Collateral
held by it is located and in each other jurisdiction where a failure to
be so qualified in such other jurisdiction could have a materially
adverse effect on the business, assets or financial condition of such
Person. Wellsford Commercial is a real estate investment trust in full
compliance with and entitled to the benefits of Section 856 of the Code.
Borrower is a qualified subsidiary of a real estate investment trust
within the meaning of the Code.
(b) Subsidiaries. Each of the Subsidiaries of the Borrower and the
Guarantor (i) is a corporation, limited partnership, limited liability
company or trust duly organized under the laws of its State of
organization and is validly existing and in good standing under the laws
thereof, (ii) has all requisite power to own its property and conduct
its business as now conducted and as presently contemplated and (iii) is
in good standing and is duly authorized to do business in each
jurisdiction where Mortgaged Property, Mezzanine Property, Collateral or
collateral for the Mortgage Loan held by it is located and in each other
jurisdiction where a failure to be so qualified could have a materially
adverse effect on the business, assets or financial condition of the
Borrower or such Subsidiary or any Guarantor.
(c) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which any of the Borrower, any
of its Subsidiaries, the Property Owner or the Guarantor are or are to
become a party and the transactions contemplated hereby and thereby (i)
are within the authority of the such Person, (ii) have been duly
authorized by all necessary proceedings on the part of such Person,
(iii) do not and will not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which such Person is subject or any judgment, order, writ, injunction,
license or permit applicable to such Person, (iv) do not and will not
conflict with or constitute a default (whether with the passage of time
or the giving of notice, or both) under any provision of the articles of
incorporation , bylaws, or other charter documents of, or any agreement
or other instrument binding upon, such Person, or any of its properties,
and (v) do not and will not result in or require the imposition of any
lien or other encumbrance on any of the properties, assets or rights of
any such Person (other than those in favor of the Agent pursuant to the
terms of the Loan Documents).
(d) Enforceability. The execution and delivery of this Agreement and the
other Loan Documents to which any of the Borrower, any of its
Subsidiaries, the Property Owner or the Guarantor are or are to become a
party are valid and legally binding obligations of such Person
enforceable in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
Section 6.2. Governmental Approvals. The execution, delivery and
performance by the Borrower, any of its Subsidiaries, the Property Owner and
the Guarantor of this Agreement and the other Loan Documents, as applicable,
and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained and the filing of the Security Documents in
the appropriate records office with respect thereto.
Section 6.3. Title to Properties; Leases. Except as indicated on
Schedule 6.3 hereto, the Borrower and its Subsidiaries own all of the assets
reflected in the pro forma consolidated balance sheet of the Borrower as of
the Balance Sheet Date or acquired since that date (except property and
assets sold or otherwise disposed of in the ordinary course of business since
that date), subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens. The Property Owner owns all of the
assets reflected in the balance sheet of the Property Owner dated as of May
31, 1997, subject to no rights of others, including any rights of first
refusal, right of first offer or other right to acquire, mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances, except the Mortgage Loan, the Mezzanine Mortgage Loan, the
Permitted Liens, the rights of tenants as tenants only under the Leases
reflected in the Rent Rolls for the Mortgaged Property and the Mezzanine
Property and the right of first offer with respect to a sale of 201
University Avenue, Westwood, Massachusetts.
Section 6.4. Financial Statements. The Borrower has furnished to each
of the Banks: (a) a pro forma unaudited consolidated balance sheet and a pro
forma unaudited consolidated statement of income and cash flows of the
Borrower and its Subsidiaries as of the Balance Sheet Date certified by the
Borrower's chief financial or chief accounting officer to have been prepared
in accordance with generally accepted accounting principles and to fairly
present the financial condition of the Borrower and its Subsidiaries as at
the close of business on the dates thereof (subject to year-end adjustments);
and (b) the balance sheet of the Property Owner dated as of May 31, 1998 and
an unaudited consolidated statement of operating income for the Mortgaged
Property satisfactory in form to the Agent and certified by the Borrower's
chief financial or accounting officer as fairly presenting the operating
income for such parcels for such periods. Such balance sheet and statements
of income, stockholder's equity and cash flows have been prepared in
accordance with generally accepted accounting principles and fairly present
the financial condition of the Borrower and its Subsidiaries as of such dates
and the results of the operations of the Borrower and its Subsidiaries, the
Mortgaged Property, the Mezzanine Property and the Property Owner for such
periods. There are no liabilities, contingent or otherwise, of the Borrower
or any of its Subsidiaries or the Property Owner involving material amounts
not disclosed in said financial statements and the related notes thereto as
of their respective dates. The all-in acquisition costs of the Mortgaged
Property, the Mezzanine Property, the Designated Collateral Value as of the
date hereof allocable thereto and the classification of such property as a
Stabilized Property or Non-Stabilized Property are as set forth on Schedule
6.4 hereto.
Section 6.5. No Material Adverse Changes. Since the Balance Sheet
Date, there has occurred no materially adverse change in the financial
condition or business of the Borrower and its Subsidiaries taken as a whole,
as shown on or reflected in the consolidated balance sheet of the Borrower
and its Subsidiaries as of the Balance Sheet Date, or its consolidated
statement of income or cash flows for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of the Borrower and its Subsidiaries taken as a whole.
There has occurred no materially adverse change in the financial condition or
business of the Property Owner as shown on or reflected in the balance sheet
of the Property Owner dated as of May 31, 1998, or its statement of income or
cash flows for the fiscal year then ended, other than changes in the ordinary
course of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of
the Property Owner.
Section 6.6. Franchises, Patents, Copyrights, Etc. The Borrower, its
Subsidiaries, the Property Owner and the Guarantor possess all franchises,
patents, copyrights, trademarks, trade names, service marks, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct of
their business substantially as now conducted without known conflict with any
rights of others.
Section 6.7. Litigation. Except as stated on Schedule 6.7 there are no
actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries, the Property
Owner, the Guarantor, the Mortgaged Property, the Mezzanine Property, the
Collateral or any other collateral for the Mortgage Loan before any court,
tribunal or administrative agency or board that, if adversely determined,
might, either in any case or in the aggregate, materially adversely affect
the properties, assets, financial condition or business of such Person or
materially impair the right of such Person to carry on business substantially
as now conducted by it, or result in any liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the balance
sheet of such Person, or which question the validity of this Agreement or any
of the other Loan Documents or any of the Mortgage Loan Documents, any action
taken or to be taken pursuant hereto or thereto or any lien or security
interest created or intended to be created pursuant hereto or thereto, or
which will adversely affect the ability of such Person to pay and perform the
Obligations in the manner contemplated by this Agreement and the other Loan
Documents. There are no judgments outstanding against or affecting the
Borrower, any of its Subsidiaries (other than the Property Owner, WASH, WASH
Manager or Wells Avenue Holdings) in excess of $250,000.00 or against or
affecting Property Owner, WASH, WASH Manager, Wells Avenue Holdings, the
Guarantor or the Mortgaged Property, the Mezzanine Property, the Collateral,
or any other collateral for the Mortgage Loan.
Section 6.8. No Materially Adverse Contracts, Etc. None of the
Borrower, any of its Subsidiaries, the Property Owner or any Guarantor is
subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in the
future to have a materially adverse effect on the business, assets or
financial condition of any such Person. None of the Borrower, any of its
Subsidiaries, the Property Owner or the Guarantor is a party to any contract
or agreement that has or is expected, in the judgment of the officers of such
Person, to have any materially adverse effect on the business of any such
Person.
Section 6.9. Compliance with Other Instruments, Laws, Etc. None of the
Borrower, any of its Subsidiaries, the Property Owner or the Guarantor is in
violation of any provision of its charter or other organizational documents,
by-laws, or any agreement or instrument to which it may be subject or by
which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases
in a manner that could result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or
business of such Person.
Section 6.10. Tax Status. Each of the Borrower, its Subsidiaries, the
Property Owner and the Guarantor (a) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (b) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (c) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers or members of each of the
Borrower, its Subsidiaries, the Property Owner and the Guarantor know of no
basis for any such claim.
Section 6.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
Section 6.12. Holding Company and Investment Company Acts. None of the
Borrower, any of its Subsidiaries, the Property Owner or the Guarantor is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company",
as such terms are defined in the Investment Company Act of 1940.
Section 6.13. Absence of UCC Financing Statements, Etc. Except with
respect to Permitted Liens, the Mezzanine Mortgage Loan Documents, the
Mortgage Loan Documents and the Loan Documents, there is no financing
statement, security agreement, chattel mortgage, real estate mortgage or
other document filed or recorded with any filing records, registry, or other
public office, that purports to cover, affect or give notice of any present
or possible future lien on, or security interest or security title in, any
property of the Borrower, any of its Subsidiaries or the Property Owner or
rights thereunder.
Section 6.14. Setoff, Etc. The Collateral and the rights of the Agent
and the Banks with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrower is the owner of the
Collateral free from any lien, security interest, encumbrance or other claim
or demand, except Permitted Liens.
Section 6.15. Certain Transactions. Except as disclosed in writing to
the Agent, and except with respect to (i) that certain Asset Management
Agreement dated May 15, 1998 between Wellsford/Whitehall Properties, L.L.C.
and Saracen Partners, LLC, as assigned to Borrower, and (ii) that certain
Property Management Agreement between WASH and Northeast Real Estate
Services, LLC, dated May 15, 1998, none of the members, officers, trustees,
directors, or employees of the Borrower, any of its Subsidiaries, the
Property Owner or the Guarantor is a party to any transaction with each other
(other than for services as employees, officers and directors and
transactions solely between Guarantors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, trustee, director or such employee
or, to the knowledge of such Person, any corporation, partnership, trust or
other entity in which any member, officer, trustee, director, or any such
employee has a substantial interest or is a member, officer, director,
trustee or partner.
Section 6.16. Employee Benefit Plans. The Borrower, its Subsidiaries
and each ERISA Affiliate are in compliance in all material respects with
ERISA. There has been no Reportable Event with respect to any Employee
Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan. There has been
no institution of proceedings or any other action by PBGC, the Borrower, any
of its Subsidiaries, or any ERISA Affiliate to terminate or withdraw or
partially withdraw from any such Plan under any circumstances which could
lead to material liabilities to PBGC or, with respect to a Multiemployer
Plan, the "Reorganization" or "Insolvency" (as each such term is defined in
ERISA) of any such Plan. To the best of the Borrower's knowledge, no
"prohibited transaction" (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) has occurred with respect to any such Plan, and
neither the consummation of the transactions provided for in this Agreement
and compliance by the Borrower, its Subsidiaries, and the Guarantor with the
provisions hereof and the other Loan Documents, nor the consummation of the
transactions provided for in the Mortgage Loan Documents and compliance by
the Property Owner with the provisions thereof, will involve any prohibited
transaction.
Section ful o ERISA Taxes. None of the Borrower, its Subsidiaries nor
any ERISA Affiliate thereof is currently and the Borrower has no reason to
believe that any such Person or any ERISA Affiliate will become subject to
any liability (other than routine expenses or contributions relating to the
Plans set forth on Schedule 6.17, if timely paid), tax or penalty whatsoever
to any person whomsoever, which liability, tax or penalty is directly or
indirectly related to any Plans set forth on Schedule 6.17 including, but not
limited to, any penalty or liability arising under Title I or Title IV of
ERISA, any tax or penalty resulting from a loss of deduction under Sections
404 and 419 of the Code, or any tax or penalty under Chapter 43 of the Code,
except such liabilities, taxes or penalties (when taken as a whole) as will
not have a material adverse effect on such Person or upon its financial
condition, assets, business, operations, liabilities or prospects.
Section 6.18. Plan Payments. The Borrower, its Subsidiaries and each
ERISA Affiliate has made full and timely payment of all amounts (i) required
to be contributed under the terms of each Plan set forth on Schedule 6.17 and
applicable law and (ii) required to be paid as expenses of each Plan set
forth on Schedule 6.17. No Plan set forth on Schedule 6.17 would have an
"amount of unfunded benefit liabilities" (as defined in Section 4001(a)(18)
of ERISA) if such Plan were terminated as of the date on which this
representation and warranty is made.
Section 6.19. Regulations U and X. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
Section 6.20. Environmental Compliance. The Borrower or an affiliate
or agent thereof has conducted or caused to be conducted Phase I
environmental site assessments with respect to the past usage and condition
of the Real Estate, the Mortgaged Property and the Mezzanine Property and the
operations conducted thereon, and is familiar with the present condition and
usage of the Real Estate, the Mortgaged Property, and the Mezzanine Property,
and the operations conducted thereon and, based upon such reports and
knowledge, makes the following representations and warranties.
(a) With respect to the Mortgaged Property and the Mezzanine Property, and
to the best of the Borrower's knowledge with respect to any other Real
Estate, none of the Borrower, its Subsidiaries, the Property Owner or
the Guarantor or any operator of the Real Estate, the Mortgaged Property
or the Mezzanine Property, or any operations thereon is in violation, or
alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, or any
state or local statute, regulation, ordinance, order or decree relating
to the environment (hereinafter "Environmental Laws"), which violation
involves the Real Estate, the Mortgaged Property or the Mezzanine
Property, and would have a material adverse effect on the environment or
the business, assets or financial condition of any such Person.
(b) None of the Borrower, any of its Subsidiaries, the Property Owner nor
any Guarantor has received any notice from any third party including,
without limitation, any federal, state or local governmental authority,
(i) that it has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous waste, as
defined by 42 U.S.C. Section 9601(5), any hazardous substances as
defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. Section 9601(33) or any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has generated,
transported or disposed of have been found at any site at which a
federal, state or local agency or other third party has conducted or has
ordered that such Person, conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; or (iii) that
it is or shall be a named party to any claim, action, cause of action,
complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party's incurrence of
costs, expenses, losses or damages of any kind whatsoever in connection
with the release of Hazardous Substances.
(c) With respect to the Mortgaged Property and the Mezzanine Property, and
to the best of the Borrower's knowledge with respect to any other Real
Estate, except as specifically set forth in the environmental site
assessment reports for the initial Mortgaged Property and the Mezzanine
Property, each of which has been provided to the Agent on or before the
date hereof or, in the case of Real Estate acquired after the date
hereof, the environmental site assessment reports with respect thereto
provided to the Agent under Section 5.4 or Section 7.4(h): (i) no
portion of the Real Estate, the Mortgaged Property or the Mezzanine
Property has been used for the handling, processing, storage or disposal
of Hazardous Substances except in accordance with applicable
Environmental Laws, and no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the
Real Estate, the Mortgaged Property or the Mezzanine Property; (ii) in
the course of any activities conducted by the Borrower, its
Subsidiaries, the Property Owner, the Guarantor or the operators of its
properties, no Hazardous Substances have been generated or are being
used on the Real Estate, the Mortgaged Property or the Mezzanine
Property except in the ordinary course of business and in accordance
with applicable Environmental Laws; (iii) there has been no past or
present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping (a
"Release") or threatened Release of Hazardous Substances on, upon, into
or from the Real Estate, the Mortgaged Property or the Mezzanine
Property, or to the best of the Borrower's knowledge, on, upon, into or
from the other properties of the Borrower, its Subsidiaries or the
Guarantor, which Release would have a material adverse effect on the
value of any of the Real Estate, the Mortgaged Property or the Mezzanine
Property or adjacent properties or the environment; (iv) to the best of
the Borrower's knowledge, there have been no Releases on, upon, from or
into any real property in the vicinity of any of the Real Estate, the
Mortgaged Property or the Mezzanine Property which, through soil or
groundwater contamination, may have come to be located on, and which
would have a material adverse effect on the value of, the Real Estate,
the Mortgaged Property or the Mezzanine Property; and (v) to the best of
Borrower's knowledge and belief, any Hazardous Substances that have been
generated on any of the Real Estate, the Mortgaged Property or the
Mezzanine Property have been transported off-site only by carriers
having an identification number issued by the EPA or approved by a state
or local environmental regulatory authority having jurisdiction
regarding the transportation of such substance and, to the best
knowledge of the Borrower without independent investigation, treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under all applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the
Borrower's knowledge, operating in compliance with such permits and
applicable Environmental Laws.
(d) None of the Borrower, its Subsidiaries, the Property Owner, the
Guarantor nor any of the Mortgaged Property, the Mezzanine Property nor
any other Real Estate is required by any applicable Environmental Law to
perform Hazardous Substances site assessments, or remove or remediate
Hazardous Substances, or give notice to any governmental agency or to
record or deliver to other Persons an environmental disclosure document
or statement by virtue of the transactions set forth herein and
contemplated hereby, or to the effectiveness of any other transactions
contemplated hereby.
Section 6.21. Subsidiaries. Schedule 6.21 sets forth all of the
Subsidiaries of the Borrower. The form and jurisdiction of organization of
each of the Subsidiaries, and the Borrower's ownership interest therein, is
set forth in said Schedule 6.21.
Section 6.22. Leases. The Borrower has delivered to the Agent true
copies of the Leases and any amendments thereto relating to the Mortgaged
Property and the Mezzanine Property.
Section 6.23. Loan Documents. All of the representations and
warranties made by or on behalf of the Borrower, its Subsidiaries, the
Property Owner or the Guarantor in the Loan Documents to which it is a party
or any document or instrument delivered to the Agent or the Banks pursuant to
or in connection with any of such Loan Documents are true and correct in all
material respects, and no such Person has failed to disclose such information
as is necessary to make such representations and warranties not misleading.
Section 6.24. Mortgaged Property and Mezzanine Property. The Borrower
makes the following representations and warranties concerning each Mortgaged
Property and Mezzanine Property:
(a) Off-Site Utilities. All water, sewer, electric, gas, telephone and
other utilities necessary for the use and operation of the Mortgaged
Property and Mezzanine Property are installed to the property lines of
the Mortgaged Property and Mezzanine Property through dedicated public
rights-of-way or through perpetual private easements approved by the
Agent, except in the case of drainage facilities, are connected to the
Building located thereon with valid permits and are adequate to service
the Building in compliance with applicable law.
(b) Access, Etc. The streets abutting the Mortgaged Property and Mezzanine
Property are dedicated and accepted public roads, to which the Mortgaged
Property and Mezzanine Property have direct access by trucks and other
motor vehicles and by foot, or are perpetual private ways (with direct
access by trucks and other motor vehicles and by foot to public roads)
to which the Mortgaged Property and Mezzanine Property have direct
access approved by the Agent. All private ways providing access to the
Mortgaged Property and Mezzanine Property are zoned in a manner which
will permit access to the Building over such ways by trucks and other
commercial and industrial vehicles.
(c) Independent Building. Each Building is fully independent in all
respects including, without limitation, in respect of structural
integrity, heating, ventilating and air conditioning, plumbing,
mechanical and other operating and mechanical systems, and electrical,
sanitation and water systems, all of which are connected directly to
off-site utilities located in public streets or ways or through insured
perpetual private easements approved by the Agent. Each Building is
located on a lot which is separately assessed for purposes of real
estate tax assessment and payment. Each Building, all Building Service
Equipment and all paved or landscaped areas related to or used in
connection with each Building are, except as specifically disclosed on a
Survey delivered to the Agent prior to the date hereof and except as
disclosed in the Condominium Documents with respect to the Condominium
only, located wholly within the perimeter lines of the lot or lots on
which the Mortgaged Property or the Mezzanine Property is located. WASH
has not made any additions, alterations or improvements to the Mezzanine
Property, nor have any other changes occurred with respect to the
Mezzanine Property, from the last revision date of the survey of the
Mezzanine Property delivered by Borrower to the Agent that in accordance
with good surveying practices should be disclosed on an as-built survey
of the Mezzanine Property.
(d) Condition; No Asbestos. Except as may otherwise be specifically
disclosed in any written engineering report furnished or caused to be
furnished by the Borrower to the Agent prior to the date hereof, each
Building is structurally sound, in good repair and free of material
defects in materials and workmanship. All major building systems
located within each Building, including without limitation heating,
ventilating and air conditioning, electrical, sprinkler, plumbing or
other mechanical systems, are in good working order and condition. No
asbestos is located in or on any Building, except for nonfriable
asbestos or contained friable asbestos which is being monitored and/or
remediated in accordance with the recommendations of an Environmental
Engineer.
(e) Compliance with Law. Except as may otherwise be specifically disclosed
on the face of any certificate of occupancy delivered to the Agent prior
to the date hereof, each Building as presently constructed, used,
occupied and operated does not violate any applicable federal or state
law or governmental regulation, or any local ordinance, order or
regulation, including but not limited to laws, regulations, or
ordinances relating to zoning, building use and occupancy, subdivision
control, fire protection, health, sanitation, safety, handicapped
access, historic preservation and protection, tidelands, wetlands, flood
control and Environmental Laws. Each Building complies with applicable
zoning laws and regulations and is not a so-called non-conforming use.
The zoning laws permit use of each Building for its current use. There
is such number of parking spaces on the lot or lots on which each
Building is located as is adequate under the zoning laws and regulations
to permit use of each Building for its current use.
(f) No Required Consents, Permits, Etc. None of the Borrower, any of its
Subsidiaries, the Property Owner or the Guarantor has received notice
of, or has knowledge of, any approvals, consents, licenses, permits,
utility installations and connections (including, without limitation,
drainage facilities), curb cuts and street openings, required by
applicable laws, rules, ordinances or regulations or any agreement
affecting the Mortgaged Property or the Mezzanine Property for the
maintenance, operation, servicing and use of the Mortgaged Property or
the Mezzanine Property or the Building for its current use which have
not been granted, effected, or performed and completed (as the case may
be), or any fees or charges therefor which have not been fully paid, or
which are no longer in full force and effect. To the best knowledge of
the Borrower, there are no outstanding notices, suits, orders, decrees
or judgments relating to zoning, building use and occupancy, fire,
health, sanitation or other violations affecting, against, or with
respect to, the Mortgaged Property or the Mezzanine Property or any part
thereof.
(g) Insurance. None of the Borrower, any of its Subsidiaries, the Property
Owner or the Guarantor has received any notice from any insurer or its
agent requiring performance of any work with respect to the Mortgaged
Property or the Mezzanine Property or canceling or threatening to cancel
any policy of insurance, and the Mortgaged Property and the Mezzanine
Property comply with the requirements of all carriers of insurance on
the Mortgaged Property and the Mezzanine Property.
(h) Real Property Taxes; Special Assessments. There are no unpaid or
outstanding real estate or other taxes or assessments on or against the
Mortgaged Property or the Mezzanine Property or any part thereof which
are payable by the Property Owner, WASH or any prior owner of the
Mortgaged Property or the Mezzanine Property (except only real estate
taxes or other taxes or assessments, that are not yet due and payable).
No abatement proceedings are pending with reference to any real estate
taxes assessed against the Mortgaged Property. There are no betterment
assessments or other special assessments presently pending with respect
to any portion of the Mortgaged Property or the Mezzanine Property, and
none of the Borrower, any of its Subsidiaries, the Property Owner or the
Guarantor has received any notice of any such special assessment being
contemplated.
(i) Historic Status. No Building is a historic structure or landmark and no
Building or Mortgaged Property or Mezzanine Property is located within
any historic district pursuant to any federal, state or local law or
governmental regulation.
(j) Eminent Domain; Casualty. There are no pending eminent domain
proceedings against the Mortgaged Property or the Mezzanine Property or
any part thereof, and, to the knowledge of the Borrower, no such
proceedings are presently threatened or contemplated by any taking
authority. No Mortgaged Property, Mezzanine Property or Building nor
any part thereof is now damaged or injured as a result of any fire,
explosion, accident, flood or other casualty.
(k) Leases. An accurate and complete Rent Roll and summary thereof in a
form reasonably satisfactory to the Agent as of the date of inclusion of
each Mortgaged Property or interests in the Mezzanine Property (or such
other recent date as may be acceptable to the Agent) with respect to all
Leases of any portion of the Mortgaged Property and the Mezzanine
Property has been provided to the Agent. The Leases reflected on such
Rent Roll constitute as of the date thereof the sole agreements and
understandings relating to leasing or licensing of space at such
Mortgaged Property or Mezzanine Property and in the Building relating
thereto. There are no occupancies, rights, privileges or licenses in or
to any Mortgaged Property or Mezzanine Property or portion thereof other
than pursuant to the Leases reflected in Rent Rolls previously furnished
to the Agent for such Mortgaged Property or Mezzanine Property. Except
as set forth in each Rent Roll, the Leases reflected therein are in full
force and effect in accordance with their respective terms, without any
payment default or any other material default thereunder, nor are there
any defenses, counterclaims, offsets, concessions or rebates available
to any tenant thereunder, and none of the Borrower, any of its
Subsidiaries, the Property Owner or the Guarantor has given or made any
notice of any payment or other material default, or any claim, which
remains uncured or unsatisfied, with respect to any of the Leases. The
Rent Rolls furnished to the Banks accurately and completely set forth
all rents payable by and security, if any, deposited by tenants, no
tenant having paid more than one month's rent in advance. The Borrower
has reviewed the estoppel certificates delivered by the tenants of the
Mortgaged Property and the Mezzanine Property to the Agent and such
estoppel certificates as of the date thereof are true and correct in all
material respects. Except as otherwise set forth in Schedule A-5 to the
Contribution Agreement, all tenant improvements or work to be done,
furnished or paid for by the Borrower, any of its Subsidiaries, the
Property Owner, WASH or the Guarantor or credited or allowed to a
tenant, for, or in connection with, the Building pursuant to any Lease
has been completed and paid for or provided for in a manner satisfactory
to the Agent. No material leasing, brokerage or like commissions, fees
or payments are due from the Borrower, any of its Subsidiaries, the
Property Owner or the Guarantor in respect of the Leases.
(l) Management Agreements. Borrower has delivered to Agent true, correct
and complete copies of the Management Agreements for the Mortgaged
Property and the Mezzanine Property. To the best knowledge of the
Borrower, there are no material claims or any bases for material claims
in respect of the Mortgaged Property or the Mezzanine Property or its
operation by any party to any Management Agreement.
(m) Other Material Real Property Agreements; No Options. There are no
material agreements pertaining to the Mortgaged Property or the
Mezzanine Property, any Building thereon or the operation or maintenance
of any thereof other than as described in this Agreement (including the
Schedules hereto) or otherwise disclosed in writing to the Agent by the
Borrower; and no person or entity has any right or option to acquire the
Mortgaged Property, the Mezzanine Property or any Building thereon or
any portion thereof or interest therein (other than the right of first
offer of Computer Associates set forth in its lease with respect to 201
University Avenue, the option to purchase the farmhouse improvements at
the Mortgaged Property commonly known as 180/188 Mt. Airy Road as
described in Section 5.3(a)(iv), and the option of JVC Americas Corp. to
acquire approximately 2.5 acres of the Mortgaged Property commonly known
as 1800 Valley). All service agreements with respect to the Mortgaged
Property and the Mezzanine Property are terminable upon thirty (30) days
notice with no penalty or premium or as otherwise disclosed in writing
to the Agent.
Section 6.25. Brokers. None of the Borrower, any of its Subsidiaries,
the Property Owner or the Guarantor has engaged or otherwise dealt with any
broker, finder or similar entity in connection with this Agreement or the
Loans contemplated hereunder.
Section 6.26. Fair Consideration. The Borrower (and, as applicable,
the Guarantor), by receiving the benefits under this Agreement and the other
Loan Documents is receiving "reasonably equivalent value" within the meaning
of Section 548 of the Bankruptcy Code, Title 11, U.S.C.A. and "fair
consideration" within the meaning of Consolidated Laws of New York Annotated,
Chapter 12, Article 10, Section 272 in exchange for the delivery of the
Security Documents to Agent, and but for the willingness of the Guarantor to
enter into the Guaranty, the Borrower would be unable to obtain the financing
contemplated hereunder which financing will enable the Borrower and its
Subsidiaries (including the Guarantor) to have available financing to conduct
and expand its business. The transaction evidenced by this Agreement and the
other Loan Documents is in the best interests of the Borrower and the
Guarantor and the creditors of such Persons.
Section 6.27. Solvency. As of the Closing Date and after giving effect
to the transactions contemplated by this Agreement and the other Loan
Documents, including all of the Loans made or to be made hereunder, none of
the Borrower, any of its Subsidiaries, the Property Owner or the Guarantor is
insolvent on a balance sheet basis, the sum of such Person's assets exceeds
the sum of such Person's liabilities, each such Person is able to pay its
debts as they become due, and each such Person has sufficient capital to
carry on its business.
Section 6.28. No Bankruptcy Filing. None of the Borrower, any of its
Subsidiaries, the Property Owner or the Guarantor is contemplating either the
filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of its assets or property, and Borrower
has no knowledge of any Person contemplating the filing of any such petition
against it or any of such other Persons.
Section 6.29. No Fraudulent Intent. Neither the execution and delivery
of this Agreement or any of the other Loan Documents nor the performance of
any actions required hereunder or thereunder is being undertaken by the
Borrower, any of its Subsidiaries, the Property Owner or the Guarantor with
or as a result of any actual intent by any of such Persons to hinder, delay
or defraud any entity to which any of such Persons is now or will hereafter
become indebted.
Section 6.30. Other Debt. None of the Borrower, the Property Owner,
the Guarantor or any of their respective Subsidiaries is in default in the
payment of any other Indebtedness or under any agreement, mortgage, deed of
trust, security agreement, financing agreement, indenture or lease to which
any of them is a party. None of the Borrower, the Property Owner, the
Guarantor or any of their respective Subsidiaries is a party to or bound by
any agreement, instrument or indenture that may require the subordination in
right or time of payment of any of the Obligations to any other indebtedness
or obligation of the such Person. Without limiting the foregoing, no
"Default" or "Event of Default" under the Mortgage Loan Documents or the
Mezzanine Mortgage Loan Documents has occurred. The Borrower has provided to
the Agent copies of all agreements, mortgages, deeds of trust, financing
agreements or other material agreements binding upon the Borrower, the
Property Owner, WASH, the Guarantor and their respective Subsidiaries and
properties and entered into by such Person as of the date of this Agreement
with respect to any Indebtedness of such Person. Attached hereto as Schedule
6.30-1 and Schedule 6.30-2 is a true, accurate and complete list of all of
the Mortgage Loan Documents and the Mezzanine Mortgage Loan Documents.
Without limiting the foregoing, Borrower has delivered to the Agent true,
correct and complete copies of the Mortgage Loan Documents and the Mezzanine
Mortgage Loan Documents, and none of such documents has been modified or
amended in any respect except as set forth in Schedule 6.30-1 or Schedule
6.30-2 hereto. As of the date hereof, the outstanding principal balance
secured by the Nomura Mortgages is [$68,340,815.57] and interest has been
paid through [May 10, 1998.] The initial allocation of the Mezzanine
Mortgage Loan among the Mezzanine Properties is set forth on Schedule 6.30-3
hereto. As of the date hereof, the amount on deposit in the "Tax and
Insurance Escrow Fund" (as defined in the Mezzanine Mortgage Loan Documents)
is approximately [$278,184.89,] the amount on deposit in the "Capital Reserve
Fund" (as defined in the Mezzanine Mortgage Loan Documents) is approximately
[$181,243.70,] and the amount on deposit in the "Rollover Reserve Fund" (as
defined in the Mezzanine Mortgage Loan Documents) is approximately
[$608,232.64.]
Section 6.31. Ownership. Wellsford Commercial and WHWEL own 94.64% of
the membership units in the Borrower. Wellsford Real Properties owns not
less than 99% of the legal, equitable and beneficial interests in Wellsford
Commercial. Whitehall Street Real Estate Limited Partnership V, Whitehall
Street Real Estate Limited Partnership VI, Whitehall Street Real Estate
Limited Partnership VII and Whitehall Street Real Estate Limited Partnership
VIII are partners of WHWEL, a member of the Borrower. The Borrower is and
shall remain the sole member of the Property Owner free and clear of all
liens, restrictions, claims, pledges, encumbrances, charges, claims or rights
of third parties and rights of set-off or recoupment whatsoever, and no other
Person owns or shall own any legal, equitable or beneficial interests in the
Property Owner, or have any right to vote or exercise control over the
Property Owner or its management. Wells Avenue Holdings and WASH Manager
are and shall remain the sole members of WASH, free and clear of all liens,
restrictions, claims, pledges, encumbrances, charges, claims or rights of
third parties and rights of set-off or recoupment whatsoever, and no other
Person owns or shall own any legal, equitable or beneficial interests in
WASH, or have any right to vote or exercise control over WASH or its
management (except for the rights of the "independent manager" of WASH, as
set forth in the WASH Organizational Agreements). Wells Avenue Holdings is
and shall remain the sole member of WASH Manager, free and clear of all
liens, restrictions, claims, pledges, encumbrances, charges, claims or rights
of third parties and rights of set-off or recoupment whatsoever, and no other
Person owns or shall own any legal, equitable or beneficial interests in WASH
Manager, or have any right to vote or exercise control over WASH Manager or
its management (except for the rights of the "independent manager" of WASH
Manager, as set forth in the WASH Manager Organizational Agreements).
Property Owner is and shall remain the sole member of Wells Avenue Holdings
free and clear of all liens, restrictions, claims, pledges, encumbrances,
charges, claims or rights of third parties and rights of set-off or
recoupment whatsoever, and no other Person owns or shall own any legal,
equitable or beneficial interest in Wells Avenue Holdings, or have any right
to vote or exercise control over Wells Avenue Holdings or its management
(except for the rights of the "independent manager" of Wells Avenue Holdings
as set forth in the Wells Avenue Holdings Organizational Agreements). WASH
owns no assets other than the Mezzanine Property, and no other Person owns
any legal, equitable or beneficial interests in the Mezzanine Property, other
than the interest as tenants only of the tenants listed on the Rent Roll
delivered to the Agent pursuant to Section 6.24(k). WASH Manager and Wells
Avenue Holdings own no assets other than their respective interests in WASH,
and as to Wells Avenue Holdings, its interests in WASH Manager. Property
Owner owns no assets other than the Mortgaged Property and the member
interest in Wells Avenue Holdings L.L.C. and no other Person owns any legal,
equitable or beneficial interests in the Mortgaged Property or such member
interest, other than the interest as tenants only of the tenants listed on
the Rent Roll delivered to the Agent pursuant to Section 6.24(k).
Section 6.32. Special Purpose Entity. The Property Owner is in full
and complete compliance with the Property Owner Organizational Agreements.
Section 6.33. Obligations as Members.
(a) All duties, obligations and responsibilities required to be performed by
the Borrower as of the date hereof under the Property Owner
Organizational Agreements have been performed, and no default or
condition which with the passage of time or the giving of notice, or
both, would constitute a default exists under the Property Owner
Organizational Agreements.
(b) Except for the Loan Documents, the Mortgage Loan Documents, the
Mezzanine Mortgage Loan Documents and, with respect to clause (iii)
only, the Property Owner Organizational Agreements, neither the Property
Owner nor the Borrower is a party to or is bound by any indenture,
contract or other agreement which purports to prohibit, restrict, limit,
or control (i) the transfer or pledge of direct or indirect interests in
the Property Owner or the Borrower, (ii) the exercise of voting rights
with respect to the such Persons or (iii) the management of such
Persons.
Section 6.34. Mortgage Loan Documents. The Borrower hereby restates
and reaffirms each of the representations and warranties made by the Property
Owner set forth in the Mortgage Loan Documents as if the same were more fully
set forth herein and were made to the Agent and the Banks herein as of the
date hereof.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
Section 7.1. Punctual Payment. The Borrower will duly and punctually
pay or cause to be paid the principal and interest on the Loans and all
interest and fees provided for in this Agreement, all in accordance with the
terms of this Agreement and the Notes as well as all other sums owing
pursuant to the Loan Documents.
Section 7.2. Maintenance of Office. The Borrower will maintain its
chief executive office at 610 Fifth Avenue, 7th Floor, New York County, New
York, New York, or at such other place in the United States of America as the
Borrower shall designate upon prior written notice to the Agent and the
Banks, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
Section 7.3. Records and Accounts. The Borrower will keep and will
cause each of its Subsidiaries and the Property Owner to (a) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with generally accepted accounting principles and
(b) maintain adequate accounts and reserves for all taxes (including income
taxes), depreciation and amortization of its properties, contingencies and
other reserves. The Borrower will not make and will not allow any of its
Subsidiaries or the Property Owner to make, without the prior written consent
of the Majority Banks, (x) any material changes to the accounting procedures
used by such Person in preparing the financial statements and other
information described in Section 6.4 (excluding the conversion of a
Subsidiary's accounting procedures such that they are consistent with the
Borrower's accounting procedures) or (y) a change in its fiscal year.
Section 7.4. Financial Statements, Certificates and Information. The
Borrower will deliver or cause to be delivered to the Agent with sufficient
copies for each of the Banks:
(a) as soon as practicable, but in any event not later than 90 days after
the end of each fiscal year of the Borrower, the audited consolidated
balance sheet of the Borrower at the end of such year, and the related
audited consolidated statements of income, changes in shareholders'
equity and cash flows for such year, each setting forth in comparative
form the figures for the previous fiscal year (other than the fiscal
year ending prior to the Closing Date for which such statements of
Borrower were not separately prepared) and all such statements to be in
reasonable detail, prepared in accordance with generally accepted
accounting principles, and accompanied by an auditor's report prepared
without qualification by Ernst & Young LLP or by another "Big Six"
accounting firm, together with the unaudited annual operating statement
of each Mortgaged Property and the Mezzanine Property (which statement
shall also be reconciled to the budget for the Mortgaged Property and
the Mezzanine Property), together with a certification by Borrower's
chief financial or chief accounting officer that the information
contained in such statement fairly presents the operations of the
Mortgaged Property and the Mezzanine Property for such period, and any
other information the Banks may reasonably need to complete a financial
analysis of the Borrower;
(b) as soon as practicable, but in any event not later than 45 days after
the end of each fiscal quarter of the Borrower (including the fourth
quarter), copies of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries, as of the end of such quarter, and the
related unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for the portion of the Borrower's
fiscal year then elapsed, and the unaudited operating statement for the
Mortgaged Property and the Mezzanine Property for such quarter and year-
to-date (which statement shall also be reconciled to the budget for the
Mortgaged Property and the Mezzanine Property), all in reasonable detail
and prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in
such financial statements fairly presents the financial position of the
Borrower and its Subsidiaries, and the operations of the Mortgaged
Property and the Mezzanine Property on the date thereof (subject to
year-end adjustments);
(c) as soon as practicable, but in any event not later than 45 days after
the end of each fiscal quarter of the Borrower (including the fourth
fiscal quarter in each year), copies of a consolidated statement of
Operating Cash Flow for such fiscal quarter and year-to-date for the
Borrower and its Subsidiaries and a statement of Net Operating Income
for such fiscal quarter and year-to-date for each of the Mortgaged
Properties and the Mezzanine Properties, prepared in a manner reasonable
satisfactory to the Agent, together with a certification by the
Borrower's chief financial or chief accounting officer that the
information contained in such statement fairly presents the Operating
Cash Flow of the Borrower and its Subsidiaries and the Net Operating
Income of the Mortgaged Property and the Mezzanine Property for such
period;
(d) simultaneously with the delivery of the financial statements referred to
in subsections (a) and (b) above, a statement (a "Compliance
Certificate") certified by the principal financial or accounting officer
of the Borrower in the form of Exhibit C hereto setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in Section 9 and the other covenants described therein, and
(if applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date;
(e) concurrently with the delivery of the financial statements described in
subsections (b) and (c) above, a certificate signed by the President or
Chief Financial Officer of the Borrower to the effect that, having read
this Agreement, and based upon an examination which they deem sufficient
to enable them to make an informed statement, there does not exist any
Default or Event of Default, or if such Default or Event of Default has
occurred, specifying the facts with respect thereto;
(f) contemporaneously with the filing, mailing or releasing thereof, copies
of all press releases and all material of a financial nature filed with
the SEC, if applicable, or sent to all of the members of the Borrower;
(g) as soon as practicable but in any event not later than 45 days after the
end of each fiscal quarter of the Borrower (including the fourth fiscal
quarter in each year), updated Rent Rolls with respect to the Mortgaged
Property and the Mezzanine Property and a summary of each Rent Roll in
form reasonably satisfactory to the Agent;
(h) not later than 30 days following each acquisition of an interest in Real
Estate by the Borrower or any of its Subsidiaries (which for the
purposes of this Section 7.4(h) shall include the Investments described
in Section 8.3(k)), each of the following: (i) a description of the
interest acquired, (ii) an environmental site assessment prepared by an
Environmental Engineer stating no material qualification with respect to
such Real Estate or property, and (iii) a Compliance Certificate
prepared using the financial statements of the Borrower most recently
provided or required to be provided to the Banks under Section 6.4 or
this Section 7.4 adjusted in the best good-faith estimate of the
Borrower to give effect to such acquisition and demonstrating that no
Default or Event of Default with respect to the covenants referred to
therein shall exist after giving effect to such acquisition;
(i) as soon as practicable, but in any event not later than 30 days prior to
the beginning of each calendar year, the annual operating budget for
each Mortgaged Property, in form and substance satisfactory to the
Majority Banks, and a copy of each budget that is submitted by WASH to
the Mezzanine Mortgagee for approval by the Mezzanine Mortgagee pursuant
to the Mezzanine Mortgage Loan Documents, or any revision or amendment
thereof, as the same are submitted by WASH to the Mezzanine Mortgagee
pursuant to the Mezzanine Mortgage Loan Documents;
(j) promptly after they are filed with the Internal Revenue Service, copies
of all annual federal income tax returns and amendments thereto of the
Borrower and the Guarantor;
(k) not later than 45 days after the end of each fiscal quarter of the
Borrower (including the fourth fiscal quarter in each year), the market
comparable study conducted by the Borrower's internal staff or its
property managers, and at other times copies of such market studies
relating to the Mortgaged Property and Mezzanine Property as are from
time to time prepared by or on behalf of the Borrower;
(l) to the extent not otherwise provided to Agent hereunder, a copy of each
statement, report, Rent Roll, tax return or other matter required to be
delivered to the Mortgagee or the Mezzanine Mortgagee pursuant to the
Mortgage Loan Documents and the Mezzanine Mortgage Loan Documents,
respectively, as and when the same is required to be delivered to the
Mortgagee or the Mezzanine Mortgagee pursuant to the terms thereof;
(m) not later than 45 days after the end of each fiscal quarter (including
the fourth quarter), a certification by the principal financial or
accounting officer of the Borrower to the effect that to such Person's
knowledge no "Default" or "Event of Default" exists under the Mortgage
Loan Documents or the Mezzanine Mortgage Loan Documents, or if such
Person shall obtain knowledge of any then existing "Default" or "Event
of Default" under the Mortgage Loan Documents or the Mezzanine Mortgage
Loan Documents, they shall disclose in such statement such "Defaults" or
"Events of Default";
(n) not later than 45 days after the end of each fiscal quarter (including
the fourth quarter), a copy of each Lease entered into by or on behalf
of the Property Owner or WASH during such quarter;
(o) promptly upon issuance of the same by any of the Property Owner, the
Borrower or any of its Subsidiaries, duplicate copies of any and all
notices of any proposed sale or other disposition, or financing or
refinancing, of any interest of or in the Property Owner, the Mortgaged
Property, the Collateral or any collateral for the Mortgage Loan,
together with all material documents related thereto and a description
of the material terms thereof;
(p) duplicate copies of any and all notices of default by or under the
Property Owner Organizational Agreements or of any failure by any
Persons to perform any obligation under such agreements;
(q) not later than 45 days after the end of each calendar year, evidence
that the Property Owner has taken all actions required by the state in
which it is organized to remain in good standing;
(r) duplicate copies of any and all appraisals or updates thereof that are
required to be delivered by the Property Owner or WASH to the Mortgagee
or Mezzanine Mortgagee, as applicable, pursuant to any of the Mortgage
Loan Documents or the Mezzanine Mortgage Loan Documents as and when the
same are required to be delivered to the Mortgagee or Mezzanine
Mortgagee, as applicable;
(s) duplicate copies of any and all notices sent by WASH to any Rating
Agency, or sent by a Rating Agency to WASH; and
(t) from time to time such other financial data and information in the
possession of or reasonably obtainable by the Borrower, any of its
Subsidiaries or the Property Owner relating to the Borrower, the
Property Owner, WASH, the Guarantor, the Mortgaged Property, the
Mezzanine Property or the Collateral (including without limitation
auditors' management letters, property inspection and environmental
reports and information as to zoning and other legal and regulatory
changes affecting the Borrower, any of its Subsidiaries, the Property
Owner or WASH) as the Agent may reasonably request.
Section 7.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent in writing of the
occurrence of any Default or Event of Default. If any Person shall give
any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Agreement
or under any note, evidence of indebtedness, indenture or other
obligation (including, without limitation, the Mortgage Loan Documents
or the Mezzanine Mortgage Loan Documents) to which or with respect to
which any of the Borrower, any of its Subsidiaries, the Property Owner
or any Guarantor is a party or obligor, whether as principal or surety,
and such default would permit the holder of such note or obligation or
other evidence of indebtedness to accelerate the maturity thereof, which
acceleration would have a material adverse effect on any such Person,
the Borrower shall forthwith give written notice thereof to the Agent
and each of the Banks, describing the notice or action and the nature of
the claimed default.
(b) Environmental Events. The Borrower will promptly give notice to the
Agent (i) upon the Borrower or the Guarantor obtaining knowledge of any
potential or known Release, or threat of Release, of any Hazardous
Substances at or from the Mortgaged Property or the Mezzanine Property;
(ii) of any violation of any Environmental Law that the Borrower, any of
its Subsidiaries, the Property Owner or the Guarantor reports in writing
or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any federal, state or
local environmental agency and (iii) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice
from any agency of potential environmental liability, of any federal,
state or local environmental agency or board, that in either case
involves the Mortgaged Property or the Mezzanine Property or has the
potential to materially affect the assets, liabilities, financial
conditions or operations of such Person or the Agent's liens or security
title on the Collateral pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of
any setoff, claims (including, with respect to the Mortgaged Property
and Mezzanine Property, environmental claims), withholdings or other
defenses to which any of the Collateral, the Mortgaged Property or the
Mezzanine Property or the rights of the Borrower, its Subsidiaries, the
Property Owner, WASH, the Guarantor or the Agent or the Banks with
respect to the Mortgaged Property, the Mezzanine Property or any of the
Collateral are subject. In addition, the Borrower will, immediately
upon becoming aware thereof, notify the Agent in writing of the
occurrence of any material default under any Lease, the intention of any
tenant under a Lease to withhold any fixed or base rent or the actual
withholding thereof, or any bankruptcy, insolvency or cessation of
operations by any tenant under a Lease.
(d) Notice of Litigation and Judgments. The Borrower will give notice to
the Agent in writing within 15 days of becoming aware of any litigation
or proceedings threatened in writing or any pending litigation and
proceedings affecting any of the Borrower, its Subsidiaries, the
Property Owner or the Guarantor or to which any of such Persons is or is
to become a party involving an uninsured claim against any of such
Persons that could reasonably be expected to have a materially adverse
effect on any of such Persons and stating the nature and status of such
litigation or proceedings. The Borrower will give notice to the Agent,
in writing, in form and detail satisfactory to the Agent and each of the
Banks, within ten days of any judgment not covered by insurance, whether
final or otherwise, against the Borrower, any of its Subsidiaries, the
Property Owner or the Guarantor in an amount in excess of $250,000.
(e) Notice of Proposed Sales, Encumbrances, Refinance or Transfer of
Non-Mortgaged Property. The Borrower will give notice to the Agent of
any proposed or completed sale, encumbrance, refinance or transfer of
any Real Estate or other Investment described in Section 8.3(k) of the
Borrower or its Subsidiaries other than Mortgaged Property within any
fiscal quarter of the Borrower, such notice to be submitted together
with the Compliance Certificate provided or required to be provided to
the Banks under Section 7.4 with respect to such fiscal quarter. The
Compliance Certificate shall with respect to any proposed or completed
sale, encumbrance, refinance or transfer be adjusted in the best
good-faith estimate of the Borrower to give effect to such sale,
encumbrance, refinance or transfer and demonstrate that no Default or
Event of Default with respect to the covenants referred to therein shall
exist after giving effect to such sale, encumbrance, refinance or
transfer. Notwithstanding the foregoing, in the event of any sale,
encumbrance, refinance or transfer of any Real Estate or other
Investment described in Section 8.3(k) of the Borrower or its
Subsidiaries other than the Mortgaged Property involving an amount in
excess of $10,000,000.00, the Borrower shall promptly give notice to the
Agent of such transaction, which notice shall be accompanied by a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Banks
under Section 6.4 or Section 7.4 adjusted as provided in the preceding
sentence.
(f) Notification of Banks. Promptly after receiving any notice under this
Section 7.5, the Agent will forward a copy thereof to each of the Banks,
together with copies of any certificates or other written information
that accompanied such notice.
Section 7.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a Delaware
limited liability company and shall not amend or modify the Operating
Agreement in any manner without the prior written consent of the Agent.
The Borrower will do or cause to be done all things necessary to
preserve and keep in full force all of its rights and franchises. The
Borrower will cause each of its Subsidiaries and the Property Owner to
do or cause to be done all things necessary to preserve and keep in full
force and effect and in good standing their legal existence as a
corporation, limited partnership, trust or limited liability company, as
applicable. Without limiting the foregoing, the Property Owner shall
take all actions as are necessary to maintain all protection afforded to
limited liability companies in its state of organization. The Borrower
will do or cause to be done all things necessary to preserve and keep in
full force and affect all of the rights and franchises of its
Subsidiaries and the Property Owner. The Borrower will continue to
engage primarily in the business now conducted by it. The Borrower will
cause each of its Subsidiaries and the Property Owner to continue to
engage primarily in the respective businesses now conducted by each of
them and in related businesses.
(b) The Borrower (i) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business and the
business of its Subsidiaries to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted)
and supplied with all necessary equipment, and (ii) will cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof in all cases in which the failure so to do would
have a material adverse effect on the condition of the applicable
Mortgaged Property, Mezzanine Property or Collateral or on the financial
condition, assets or operations of any of the Borrower, its
Subsidiaries, the Property Owner or the Guarantor.
Section 7.7. Insurance.
(a) The Borrower will cause the Property Owner, at its expense, to procure
and maintain the insurance policies required by the Mortgage Loan
Documents. Each commercial general liability or umbrella liability
policy with respect to the Mortgaged Property and the Mezzanine Property
shall name the Agent and the Banks as an additional insured and shall
contain a cross liability/severability endorsement. The Borrower shall
deliver duplicate originals or certified copies of all such policies to
the Agent, and the Borrower shall promptly furnish to the Agent all
renewal notices and evidence that all premiums or portions thereof then
due and payable have been paid. At least 15 days prior to the
expiration date of all such policies, the Borrower shall deliver to the
Agent evidence of continued coverage, including a certificate of
insurance, as may be reasonably satisfactory to the Agent. Agent
acknowledges and agrees that such insurance may be provided by the
Borrower covering the Mortgaged Property and the Mezzanine Property as
well as other properties directly or indirectly owned by the Borrower,
provided that such insurance satisfies the requirements of the Mezzanine
Mortgage Loan Documents, the Mortgage Loan Documents and the Loan
Documents.
(b) In the event of any loss or damage to the Mortgaged Property or the
Mezzanine Property, the Borrower shall give prompt written notice to the
insurance carrier and the Agent. The Agent acknowledges that the
Property Owner's and WASH's rights to any insurance proceeds are subject
to the terms of the Mortgage Loan Documents and the Mezzanine Mortgage
Loan Documents, respectively. The Borrower may not and shall not permit
the Property Owner or WASH, respectively, to settle, adjust or
compromise any claim under such insurance policies without the prior
written consent of the Agent; provided, further, that the Property Owner
or WASH, as applicable, may make proof of loss and adjust and compromise
any claim under casualty insurance policies which is of an amount less
than $1,000,000.00 so long as no Default or Event of Default has
occurred. Any proceeds of such claim which are not used to reconstruct
or repair the Mortgaged Property or the Mezzanine Property, as
applicable, or applied to the balance of the loan evidenced by the
Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents, as
applicable, shall be deposited into the accounts established pursuant to
the Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents, as
applicable, to the extent required thereby, or if such deposit is not
required thereunder, then such proceeds shall be, subject to the rights
of the Mortgagee, paid to (i) Borrower (and not to Agent) so long as the
Mortgaged Property or the Mezzanine Property, as applicable, has been
fully repaired and restored and no Default or Event of Default has
occurred and is continuing, or (ii) if a Default of Event of Default has
occurred and is continuing, or if the Mortgaged Property or the
Mezzanine Property, as applicable, has not been so fully repaired or
restored, then such excess insurance proceeds shall, subject to the
rights of the Mortgagee, be paid to Agent and applied to the payment of
the Obligations whether or not then due. Notwithstanding anything
contained in the Loan Documents to the contrary, Agent hereby agrees
that the Property Owner and WASH may use all insurance proceeds to
restore and repair the Mortgaged Property or the Mezzanine Property, as
applicable, provided that such use is permitted or required under the
terms of the Mortgage Loan Documents or the Mezzanine Mortgage Loan
Documents, as applicable.
(c) In the event that the Property Owner or WASH is permitted pursuant to
the terms of the Mortgage Loan Documents or the Mezzanine Mortgage Loan
Documents, as applicable, to reconstruct, restore or repair the
Mortgaged Property or the Mezzanine Property, as applicable, following a
casualty to any portion of the Mortgaged Property or the Mezzanine
Property, the Borrower shall cause the Property Owner or WASH, as
applicable, to promptly and diligently repair and restore the Mortgaged
Property or the Mezzanine Property, as applicable, in the manner and
within the time periods required by the Mortgage Loan Documents or the
Mezzanine Mortgage Loan Documents, as applicable, the Leases and any
other agreements affecting the Mortgaged Property or the Mezzanine
Property. In the event that Property Owner or WASH, as applicable, is
permitted pursuant to the terms of the Mortgage Loan Documents or the
Mezzanine Mortgage Loan Documents, as applicable, to elect not to
reconstruct, restore or repair the Mortgaged Property or the Mezzanine
Property following a casualty to any portion of the Mortgaged Property
or the Mezzanine Property, the Borrower shall not permit the Property
Owner or WASH to elect not to reconstruct, restore or repair the
Mortgaged Property or the Mezzanine Property without the prior written
consent of the Agent.
Section 7.8. Taxes.
(a) The Borrower will duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments
and other governmental and private charges imposed upon the Borrower,
its Subsidiaries and upon the Collateral and the other Real Estate, such
Person's sales and activities, or any part thereof, or upon the income
or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon any of
its property, and shall in any event cause the prompt, full and
unconditional discharge of all liens imposed on or against the
Collateral or any portion thereof within thirty (30) days after
receiving written notice (whether from the Mortgagee, the Agent, the
lienholder or any other Person) of the filing thereof; provided that so
long as no Event of Default has occurred, any such tax, assessment,
charge, levy or claim need not be paid if the validity or amount thereof
shall currently be contested in good faith by appropriate proceedings
which shall suspend the collection thereof with respect to such
property, neither such property nor any portion thereof or interest
therein would be in any danger of sale, forfeiture or loss by reason of
such proceeding and the Borrower or such Person shall have set aside
adequate reserves with respect thereto as the Agent may reasonably
require; and provided, further, that forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security
therefor, the Borrower either (i) will provide a bond issued by a surety
reasonably acceptable to the Majority Banks and sufficient to stay all
such proceedings or (ii) if no such bond is provided, will pay each such
tax, assessment, charge, levy or claim.
(b) Notwithstanding the foregoing, the Borrower shall cause the Property
Owner and WASH to pay all taxes, assessments and other charges, to pay
all claims for labor, material or supplies that if unpaid or unbonded
might by law become a lien or charge upon any of its property (including
the Mortgaged Property and the Mezzanine Property), and to keep the
Mortgaged Property and Mezzanine Property free from all liens (other
than the lien of the Mortgages, the Nomura Mortgages and the Permitted
Liens), and shall in any event cause the prompt, full and unconditional
discharge of all Liens imposed upon the Mortgaged Property and the
Mezzanine Property or any portion thereof within thirty (30) days after
receiving written notice (whether from the Mortgagee, the Mezzanine
Mortgagee, the Agent, the lienholder or any other Person) of the filing
thereof or such earlier time as may be required by the Mortgage Loan
Documents or the Mezzanine Mortgage Loan Documents, as applicable;
subject in each case to the Property Owner's or WASH's, as applicable,
right to contest the same as permitted in but subject to the conditions
set forth in the Mortgages or the Nomura Mortgages, as applicable, so
long as no Event of Default has occurred. In the event that the
Property Owner or WASH elects to commence any contest or similar
proceeding with respect to any such taxes, other charges, liens or other
claims described herein, the Borrower shall provide prompt written
notice thereof to the Agent together with such other evidence as the
Agent may reasonably require showing compliance with the requirements of
the Mortgage Loan Documents and the Mezzanine Mortgage Loan Documents,
as applicable. Notwithstanding the foregoing, the Borrower shall cause
the Property Owner and WASH promptly to pay any contested taxes, other
charges, liens or claims and the payment thereof shall not be deferred,
if the Mortgagee, the Mezzanine Mortgagee, the Property Owner or WASH,
as applicable, may be subject to civil or criminal damages as a result
thereof. If such action or proceeding is terminated or discontinued
adversely to the Property Owner or WASH, then the Borrower shall deliver
to the Agent reasonable evidence of payment of such contested taxes,
other charges or lien.
Section 7.9. Inspection of Properties and Books. The Borrower shall
permit the Banks, through the Agent or any representative designated by the
Agent, at the Borrower's expense to visit and inspect any of the properties
of the Borrower or any of its Subsidiaries and the Mortgaged Property and the
Mezzanine Property, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom) and to
discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with, and to be advised as to the same by, its officers, all at
such reasonable times and intervals as the Agent or any Bank may reasonably
request. The Banks shall use good faith efforts to coordinate such visits
and inspections so as to minimize the interference with and disruption to the
Borrower's and its Subsidiaries' normal business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses, and Permits.
The Borrower will comply and will cause each of its Subsidiaries to comply in
all respects with (i) all applicable laws and regulations now or hereafter in
effect wherever its business is conducted, including all Environmental Laws,
(ii) the provisions of its or their certificate of formation, operating
agreement, corporate charter, and other charter documents and bylaws, (iii)
all agreements and instruments to which it is a party or by which it or any
of its properties may be bound, (iv) all applicable decrees, orders, and
judgments, and (v) all licenses and permits required by applicable laws and
regulations for the conduct of its business or the ownership, use or
operation of its properties. The Borrower covenants and agrees to give Agent
prompt notice of any non-compliance with such laws, ordinances, regulations
or requirements and of any notice of non-compliance therewith which the
Borrower or any of its Subsidiaries receives or any threatened or pending
proceedings in respect thereto or with respect to the Mortgaged Property or
the Mezzanine Property (including, without limitation, changes in zoning), of
which the Property Owner, the Borrower or any of its Subsidiaries receives
notice. If at any time while any Loan or Note is outstanding or the Banks
have any obligation to make Loans hereunder, any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of
any government shall become necessary or required in order that the Borrower
or the Property Owner may fulfill any of its obligations hereunder, the
Borrower will immediately take or cause to be taken all steps necessary to
obtain such authorization, consent, approval, permit or license and furnish
the Agent and the Banks with evidence thereof. Notwithstanding the
foregoing, the Property Owner and WASH shall have the right to contest the
applicability of any legal requirement subject to the approval of the
Mortgagee and the Mezzanine Mortgagee, as applicable, so long as Property
Owner or WASH is in good faith, and by proper legal proceedings, diligently
contesting the application thereof, provided no Event of Default shall exist
and be continuing hereunder, and the Borrower provides evidence to the Agent
that the Property Owner or WASH is otherwise fully complying with each of the
conditions set forth in the Mortgage Loan Documents or the Mezzanine Mortgage
Loan Documents, as applicable, or prescribed by the Mortgagee or the
Mezzanine Mortgagee, as applicable, applicable to such contest. The Borrower
shall promptly notify the Agent of the commencement of any contest or similar
proceeding hereunder. Notwithstanding the foregoing, the Borrower shall
cause the Property Owner or WASH promptly to comply with any contested legal
requirement, and compliance therewith shall not be deferred, if the Property
Owner, WASH, the Mortgagee or the Mezzanine Mortgagee, as applicable, may be
subject to civil or criminal charges or damages as a result thereof or such
noncompliance might place the Mortgaged Property, the Mezzanine Property or
any part thereof in danger of being forfeited, lost or closed. If such
action or proceeding is terminated or discontinued adversely to the Property
Owner or WASH, then, the Borrower shall, upon written demand, deliver to the
Agent reasonable evidence of compliance by the Property Owner or WASH with
such contested legal requirement.
Section 7.11. Use of Proceeds. The Borrower will use the proceeds of
the Loans solely to provide short-term financing (a) for the acquisition of
fee interests by the Property Owner in Real Estate which is located in the
northeastern corridor of the United States and utilized principally as
commercial office space, (b) for Capital Improvement Projects to Real Estate
owned by the Property Owner, (c) for the repayment of Indebtedness incurred
or assumed by the Property Owner or any Subsidiary of the Borrower in
connection with the acquisitions and investments described in Section
7.11(a), (d) for the acquisition by Property Owner of the equity interests in
Wells Avenue Holdings; (e) for reasonable transaction costs related to the
transactions referred to in the preceding clause (a) and (d), (f) for Tenant
Improvement Projects and Leasing Commissions, (g) up to $10,000,000 for
general working capital purposes, and (h) for such other purposes as the
Majority Banks may approve. Notwithstanding the foregoing, in no event shall
the proceeds of the Loan be used (i) to acquire any asset that as a part of
such transaction or in a related transaction will be or is to become subject
to a lien against such asset other than a lien in favor of the Mortgagee
under the Mortgage Loan Documents, or (ii) without the consent of the
Majority Banks, to pay amounts due under the Mortgage Loan Documents.
Section 7.12. Further Assurances. The Borrower will cooperate with,
and will cause each of its Subsidiaries and the Property Owner and the
Guarantor to cooperate with, the Agent and the Banks and execute such further
instruments and documents as the Banks or the Agent shall reasonably request
to carry out to their satisfaction the transactions contemplated by this
Agreement and the other Loan Documents.
Section 7.13. Management Agreements. The Borrower will provide prompt
written notice to the Agent of any termination or material modification or
amendment of any Management Agreement, provided that, without the prior
consent of the Majority Banks, none of the Management Agreements shall be
modified or amended to increase the fees payable thereunder and provided
further, that without the prior consent of the Majority Banks, which consent
shall not be unreasonably withheld or delayed, the Borrower shall not permit
WASH to terminate, modify or amend any Management Agreement for the Mezzanine
Property. The Borrower will not enter into and will not permit the Property
Owner or WASH to enter into any Management Agreement or otherwise manage any
of the Mortgaged Property or Mezzanine Property except with property and
leasing managers having sufficient expertise and resources to manage such
properties as Class A office buildings or if such buildings are Non-
Stabilized Properties, as Class B office buildings and with respect to the
Mezzanine Property are approved by the Agent, and on leasing terms and
conditions no less favorable to the Borrower or the Property Owner or WASH
than are contained in the Management Agreements delivered to the Agent prior
to the date hereof or are otherwise on then commercially reasonable terms.
Any Management Agreement for the Mortgaged Property or the Mezzanine Property
shall be in form and substance reasonably satisfactory to the Agent. The
Agent hereby approves the Mezzanine Management Agreement. Notwithstanding
the foregoing, any manager of the Mezzanine Property shall satisfy any
conditions or requirements contained in the Mezzanine Mortgage Loan Documents
applicable to such entity acting as the manager of the Mezzanine Property,
and in no event shall there be a change to the manager of the Mezzanine
Property or any Management Agreement for the Mezzanine Property if the same
would constitute a "Default" or "Event of Default" under the Mezzanine
Mortgage Loan Documents.
Section 7.14. ERISA Compliance. The Borrower will not permit the
present value of all employee benefits vested in all Employee Benefit Plans,
Multiemployer Plans and Guaranteed Pension Plans maintained by the Borrower
and any ERISA Affiliate thereof to exceed the present value of the assets
allocable to such vested benefits by an amount greater than $500,000.00 in
the aggregate. Neither the Borrower nor any ERISA Affiliate thereof will at
any time permit any such Plan maintained by it to engage in any "prohibited
transaction" as such term is defined in Section 4975 of the Code or Section
406 of ERISA, incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived, or terminate any such
Plan in any manner which could result in the imposition of a lien on the
property of the Borrower or the Guarantor pursuant to Section 4068 of ERISA.
Section 7.15. Condemnation. In the event that all or any portion of the
Mortgaged Property or the Mezzanine Property shall be damaged or taken
through condemnation (which term shall include any damage or taking by any
governmental authority, quasi-governmental authority, any party having the
power of condemnation, or any transfer by private sale in lieu thereof), or
any such condemnation shall be threatened, the Borrower shall give prompt
written notice to the Agent. The Agent and the Banks acknowledge that the
Property Owner's and WASH's rights to any condemnation award is subject to
the terms of the Mortgage Loan Documents and the Mezzanine Mortgage Loan
Documents, respectively. The Borrower may not and shall not permit the
Property Owner or WASH to settle or compromise any claim, action or
proceeding relating to such damage or condemnation without the prior written
consent of the Agent. Any proceeds, award or damages from such damage or
condemnation which are not used to reconstruct or repair the Mortgaged
Property or the Mezzanine Property, as applicable, or applied to the balance
of the loan evidenced by the Mortgage Loan Documents or the Mezzanine
Mortgage Loan documents, as applicable, shall, subject to the rights of the
Mortgagee, be paid to the Agent and applied to the payment of the Obligations
whether or not then due. Notwithstanding anything contained in the Loan
Documents to the contrary, Agent hereby agrees that the Property Owner or
WASH, as applicable, may use all condemnation proceeds, awards and damages to
restore and repair the Mortgaged Property or the Mezzanine Property, as
applicable, provided that such use is permitted or required under the terms
of the Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents, as
applicable. In the event that the Property Owner or WASH, as applicable, is
permitted pursuant to the terms of the Mortgage Loan Documents or the
Mezzanine Mortgage Loan Documents, as applicable, to reconstruct, restore or
repair the Mortgaged Property or the Mezzanine Property, as applicable,
following a condemnation of any portion of the Mortgaged Property or the
Mezzanine Property, the Borrower shall cause the Property Owner or WASH, as
applicable, to promptly and diligently repair and restore the Mortgaged
Property or the Mezzanine Property in the manner and within the time periods
required by the Mortgage Loan Documents or the Mezzanine Mortgage Loan
Documents, as applicable, the Leases and any other agreements affecting the
Mortgaged Property or the Mezzanine Property. In the event that the Property
Owner or WASH, as applicable, is permitted pursuant to the terms of the
Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents, as
applicable, to elect not to reconstruct, restore or repair the Mortgaged
Property or the Mezzanine Property following a condemnation of any portion of
the Mortgaged Property or the Mezzanine Property, the Borrower shall not
permit the Property Owner or WASH to elect not to reconstruct, restore or
repair the Mortgaged Property or the Mezzanine Property without the prior
written consent of the Agent.
Section 7.16. Distribution of Income to the Borrower. The Borrower
shall cause all of its Subsidiaries to promptly distribute to the Borrower
(but not less frequently than monthly), whether in the form of dividends,
distributions or otherwise, all profits, proceeds or other income relating to
or arising from its Subsidiaries' use, operation, financing, refinancing,
sale or other disposition of their respective assets and properties after
(a) the payment by each Subsidiary of its operating expenses and debt service
for such month and (b) the establishment of reasonable reserves for the
payment of operating expenses not paid on at least a monthly basis and
capital improvements to be made to such Subsidiary's assets and properties
approved by such Subsidiary in the ordinary course of business consistent
with its past practices.
Section 7.17. More Restrictive Agreements. Without limiting the terms
of Section 8.1, should the Borrower or any Guarantor enter into or modify
any agreements or documents pertaining to any existing or future
Indebtedness, Debt Offering or Equity Offering, which agreements or documents
include covenants (whether affirmative or negative), warranties,
representations, defaults or events of default (or any other provision which
may have the same practical effect as any of the foregoing) which are
individually or in the aggregate more restrictive against the Borrower, the
Guarantor or their respective Subsidiaries than those set forth herein or in
any of the other Loan Documents, the Borrower shall promptly notify the Agent
and, if requested by the Majority Banks, the Borrower, the Agent, and the
Majority Banks shall (and if applicable, the Borrower shall cause the
Guarantor to) promptly amend this Agreement and the other Loan Documents to
include some or all of such more restrictive provisions as determined by the
Majority Banks in their sole discretion. Notwithstanding the foregoing, this
Section 7.17 shall not apply to covenants contained in any agreements or
documents evidencing or securing Non-Recourse Indebtedness or covenants in
agreements or documents relating to recourse Indebtedness that relate only to
specific Real Estate that is collateral for such Indebtedness.
Section 7.18. Compliance. The Borrower shall operate its business and
shall cause each of its Subsidiaries to operate its business in compliance
with the terms and conditions of this Agreement and the other Loan Documents.
Wellsford Commercial shall at all times comply with all requirements of
applicable laws necessary to maintain REIT Status.
Section 7.19. Leasing. The Borrower will cause the Property Owner and
WASH to take or cause to be taken all reasonable steps within the power of
the Property Owner and WASH to market and lease the leasable area of the
Mortgaged Property and the Mezzanine Property in accordance with sound and
customary leasing and management practices for similar properties. The
Borrower will not allow the Property Owner or WASH to lease all or any
portion of the Mortgaged Property or the Mezzanine Property or amend,
supplement or otherwise modify, terminate or cancel, or accept the surrender
of, or consent to the assignment or subletting of, or grant any concessions
to or waive the performance of any obligations of any tenant, lessee or
licensee under, any now existing or future Lease without the prior written
consent of the Agent; provided, however, with respect to any Lease which
covers less than 25,000 square feet or provides less than three percent (3%)
of the Operating Cash Flow of the Mortgaged Property and the Mezzanine
Property, whichever is less, the Property Owner or WASH, as applicable, may
amend, supplement or otherwise modify, terminate or cancel, or accept the
surrender of, or consent to the assignment or subletting of, or grant
concessions to or waive the performance of any obligations of any tenant,
lessee or licensee under any such Lease in the ordinary course of business
consistent with sound leasing and management practices for similar properties
provided that such action with respect to a lease for a Mortgaged Property or
Mezzanine Property shall not cause (with the passage of time or otherwise) a
default under the Mortgage Loan Documents or the Mezzanine Mortgage Loan
Documents. The Borrower shall furnish or cause the Property Owner and WASH
to furnish the Agent with executed copies of all Leases hereafter made, and
all Leases now or hereafter entered into will be in form and substance
subject to the approval of the Agent. Notwithstanding the foregoing,
following the Agent's approval of the "Leasing Parameters" (as hereinafter
defined) for the Mortgaged Property and the Mezzanine Property, then the
Borrower may permit Property Owner or WASH, without the prior approval of the
Agent, to enter into any Lease provided that the Lease covers less than
25,000 square feet or provides less than three percent (3%) of the Operating
Cash Flow of the Mortgaged Property and the Mezzanine Property, is a bona
fide arm's length lease entered into in the ordinary course of business with
a party unaffiliated with the Borrower, any of its Subsidiaries, the Property
Owner or the Guarantor, falls within the Leasing Parameters and is on the
standard lease form (without material modification or addition). In
connection with any Lease to be approved by the Agent as provided herein, the
Borrower shall submit to the Agent for its approval the identity of the
tenant and a summary of the major terms of the Lease (which terms shall
include without limitation those matters included within the Leasing
Parameters) (collectively the "Major Terms"), and Agent's approval shall be
limited to the approval of the Major Terms, and provided further that any
such terms submitted to the Agent for approval shall be deemed approved by
the Agent unless the Agent expressly disapproves the same by written notice
delivered to the Borrower (which shall state the reasons for disapproval)
within five (5) Business Days after the date of the delivery of such Lease to
the Agent for approval and all other information reasonably requested by the
Agent in order to make such determination. Following the approval by the
Agent of the Major Terms, the Property Owner or WASH, as applicable, shall be
permitted to enter into a lease to such tenant which falls within the Major
Terms. As used herein, "Leasing Parameters" means leasing parameters for the
Mortgaged Property and the Mezzanine Property approved by the Agent. Leasing
Parameters shall include, without limitation, the minimum and maximum term,
the minimum rent, tax and operating stops, tenant standard improvements,
tenant allowances and other tenant inducements and leasing commissions, and
shall be approved by the Agent prior to the commencement of each calendar
year during the term of the Notes. The Agent shall have the right, and the
Borrower hereby authorizes the Agent, to communicate directly with any tenant
under a Lease to verify any information delivered to the Agent by the
Borrower concerning such tenant or such tenant's Lease. The Borrower shall
not collect and shall not permit the Property Owner or WASH to collect any
rents, issues, profits, revenues, income or other benefits payable under any
of the Leases more than one (1) month in advance (provided that the foregoing
shall not prohibit the collection of security deposits). The Borrower shall
not, directly or indirectly, cause or permit to exist, or allow the Property
Owner or WASH to cause or permit to exist, any condition which would result
in the termination or cancellation of, or which would relieve the performance
of any obligations of any tenant under, any Lease.
Section 7.20. Plan Assets, etc. The Borrower will do, or cause to be
done, all things necessary to ensure that the Borrower, its Subsidiaries and
the Property Owner will not be deemed to hold Plan Assets at any time. Each
owner of an equity interest in Borrower has certified to Borrower and the
Banks, and Borrower shall require each proposed transferee of any equity
interest in Borrower, as a condition precedent to such transfer, to certify
to Borrower and the Banks, that the source of funds used or to be used by it
to acquire its interest in Borrower are not assets of any plan subject to
Title I of ERISA or Section 4975 of the Code and are not deemed to be assets
of any such plan under the U.S. Department of Labor's plan asset regulations.
Borrower has provided the Agent with a copy of each such certification from
each owner of an equity interest in Borrower and will promptly provide the
Agent with a copy of each such certification from each proposed transferee.
Section 7.21. Preservation and Maintenance.
(a) The Borrower (i) shall not permit or commit waste, impairment, or
deterioration of the Mortgaged Property or the Mezzanine Property or
permit the Property Owner or WASH to abandon the Mortgaged Property or
the Mezzanine Property, (ii) shall cause the Property Owner or WASH to
restore or repair promptly and in a good and workmanlike manner all or
any part of the Mortgaged Property and the Mezzanine Property in the
event of any damage, injury or loss thereto, to the equivalent of its
condition prior to such damage, injury or loss, or such other condition
as the Agent may approve in writing, (iii) shall cause the Property
Owner and WASH to keep the Mortgaged Property and the Mezzanine
Property, including the Building and any fixtures, equipment, machinery
and personal property, in good order, repair and tenantable condition
(subject to ordinary wear and tear) and shall replace fixtures,
equipment, machinery and personal property on the Mortgaged Property and
the Mezzanine Property when necessary to keep such items in good order,
repair, and tenantable condition, and (iv) shall cause Property Owner
and WASH to keep all trademarks, tradenames, servicemarks and licenses
and permits necessary for the use and occupancy of the Mortgaged
Property and the Mezzanine Property in good standing and in full force
and effect. Subject to the provisions of Section 7.21(b) below, neither
the Borrower, the Property Owner, WASH nor any tenant or other Person
shall remove, demolish or alter any Building now existing or hereafter
erected on the Mortgaged Property or the Mezzanine Property or any other
fixtures, equipment, machinery or personal property in or on the
Mortgaged Property or the Mezzanine Property except when incident to the
replacement of fixtures, equipment, machinery or other personal property
with items of like kind and value. The Borrower shall cause the
Property Owner and WASH to comply with the asbestos operations and
maintenance program in effect as of the date hereof (if any) or adopted
hereafter with respect to any new Mortgaged Property, and shall not
permit the Property Owner or WASH to discontinue or materially modify
such program without the Agent's prior written consent. In the event
that the Property Owner or WASH shall remove any asbestos or asbestos-
containing materials after the date hereof, such removal shall be
performed in accordance with all applicable laws and, upon the request
of the Agent, the Borrower shall provide evidence of such compliance to
the Agent.
(b) Provided that no Event of Default shall have occurred and be continuing
hereunder, the Borrower may permit the Property Owner and WASH to
undertake any alteration, improvement, demolition or removal of the
Mortgaged Property or the Mezzanine Property or any portion thereof (an
"Alteration") so long as such Alteration (i) is performed strictly in
compliance with the terms and conditions of the Mortgages and the other
Mortgage Loan Documents and the Nomura Mortgages and the other Mezzanine
Mortgage Loan Documents, respectively, (ii) is permitted by the Leases,
(iii) shall not materially adversely affect the value of the applicable
Mortgaged Property or Mezzanine Property or materially reduce the income
from the level available immediately prior to commencement of such
Alteration, and (iv) shall not have a material adverse effect on the
ability of the Property Owner or WASH to perform its obligations under
the Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents,
respectively, and the Leases or of the Borrower to perform its
obligations under the Loan Documents. Any other Alteration shall
require the prior written consent of the Agent, such consent not to be
unreasonably withheld or delayed. All work performed in connection with
any Alteration shall be performed in accordance with all applicable
laws. The Borrower shall cause the Property Owner and WASH to provide
to the Agent such evidence as the Agent may reasonably require to
evidence the Property Owner's and WASH's compliance with the terms of
the Mortgage Loan Documents, the Mezzanine Mortgage Loan Documents and
this Agreement in connection with any Alteration.
Section 7.22. Use of Mortgaged Property and Mezzanine Property. Unless
required by applicable law or unless the Agent has otherwise agreed in
writing, the Borrower shall not allow or permit the Property Owner or WASH to
allow changes in the nature of the occupancy or use for which the Mortgaged
Property or the Mezzanine Property was intended at the time this Agreement
was executed. The Borrower shall not initiate, permit to occur or acquiesce
in or permit the Property Owner or WASH to initiate, permit to occur or
acquiesce in a change in the zoning classification of the Mortgaged Property
or the Mezzanine Property or subject the Mortgaged Property or the Mezzanine
Property to restrictive, negative or other covenants without the Agent's
written consent, which consent shall not be unreasonably withheld or delayed.
The Borrower shall cause the Property Owner and WASH to comply with, observe
and perform in all material respects all zoning and other laws affecting the
Mortgaged Property and the Mezzanine Property, all agreements and other
covenants affecting the Mortgaged Property and the Mezzanine Property
(including without limitation the Mortgaged Mortgage Loan Documents and the
Mezzanine Mortgage Loan Documents), and all licenses and permits affecting
the Mortgaged Property and the Mezzanine Property.
Section 7.23. Property Owner to Remain a Single-Purpose Entity. The
Borrower shall cause the Property Owner, WASH Manager and Wells Avenue
Holdings to comply with the provisions of Section 8.12 of the Mortgage Loan
Agreement, shall cause the Property Owner to do all things necessary to
observe limited liability company formalities and to preserve its existence,
and will not permit the Property Owner to amend, modify or otherwise change
its articles of organization, operating agreement or other organizational
documents.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any of the Banks has any obligation to make any Loans:
Section 8.1. Restrictions on Indebtedness. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume, guarantee
or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness of Borrower to the Banks arising under any of the Loan
Documents;
(b) current liabilities of the Borrower or its Subsidiaries incurred in the
ordinary course of business but not incurred through (i) the borrowing
of money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental charges or
levies and claims for labor, materials and supplies to the extent that
payment therefor shall not at the time be required to be made in
accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards that have been in force
for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower
or the relevant Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of
business;
(f) Subject to Section 9, recourse Indebtedness (other than the Obligations)
of the Borrower or any Subsidiary of the Borrower (other than Property
Owner, WASH, WASH Manager or Wells Avenue Holdings) in the aggregate
principal amount not greater than $20,000,000.00, provided that neither
the Borrower nor any of such permitted Subsidiaries shall incur any
Indebtedness pursuant to this Section 8.1(f) unless the Borrower shall
have provided to the Agent a statement that no Default or Event of
Default exists and a Compliance Certificate demonstrating that the
Borrower will be in compliance with its covenants referred to therein
after giving effect to such incurrence; and provided further that
recourse to Borrower pursuant to any such recourse Indebtedness shall be
expressly subordinate in right and time of payment to the Obligations
pursuant to a subordination agreement in form and substance satisfactory
to the Majority Banks;
(g) Non-recourse Indebtedness any Subsidiary of the Borrower (other than
Property Owner, WASH, WASH Manager or Wells Avenue Holdings), provided
that such Indebtedness is incurred in connection with the acquisition of
Real Estate by such permitted Subsidiary and the credit facility
established pursuant to this Agreement and the Mortgage Loan Agreement
is fully funded, or if not fully funded, the Indebtedness to be incurred
in connection with an acquisition or refinance is in excess of the
remaining amounts available to be funded pursuant to this Agreement and
the Mortgage Loan Agreement (assuming such Real Estate was to become a
Mortgaged Property) or either the Banks or the Mortgagee do not approve
the addition of such Real Estate as a Mortgaged Property, provided that
none of such Subsidiaries shall incur any Indebtedness pursuant to this
Section 8.1(g) unless the Borrower shall have provided to the Agent a
statement that no Default or Event of Default exists and a Compliance
Certificate demonstrating that the Borrower will be in compliance with
its covenants referred to therein and the covenants set forth in Section
9 of the Mortgage Loan Agreement after giving effect to such incurrence;
(h) Subject to Section 9, Non-recourse Indebtedness existing prior to an
acquisition of Real Estate by any Subsidiary of the Borrower (other than
Property Owner, WASH, WASH Manager or Wells Avenue Holdings) that is
assumed by such permitted Subsidiary in connection with the acquisition
of Real Estate, provided that none of such permitted Subsidiaries shall
incur any Indebtedness pursuant to this Section 8.1(h) unless the
Borrower shall have provided to the Agent a statement that no Default or
Event of Default exists and a Compliance Certificate demonstrating that
the Borrower will be in compliance with its covenants referred to
therein after giving effect to such incurrence;
(i) Subject to Section 8.12, Section 8.13 and Section 9, Indebtedness of the
Property Owner under the Mortgage Loan Agreement not to exceed
$300,000,000.00 and, subject to the terms of this Agreement, any
refinance thereof in a principal amount not exceeding the then
outstanding balance of the Mortgage Loan; and
(j) Subject to Section 8.12, Section 8.13 and Section 9, Indebtedness of
WASH under the Mezzanine Mortgage Loan Documents not to exceed
[$68,340,815.57].
Notwithstanding anything in this Section 8.1 to the contrary, neither
Property Owner nor WASH shall be permitted to create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to
any Indebtedness other than Indebtedness expressly permitted pursuant to
Section 8.1(i), Section 8.1(j) and Section 8.12, and neither WASH Manager nor
Wells Avenue Holdings shall be permitted to create, incur, assume, guarantee
or be or remain liable, contingently or otherwise, with respect to any
indebtedness other than indebtedness described in Section 8.1(b).
Section 8.2. Restrictions on Liens, Etc. Without limiting the terms of
Section 8.1, the Borrower will not, and will not permit any of its
Subsidiaries to, (a) create or incur or suffer to be created or incurred or
to exist any lien, encumbrance, mortgage, pledge, negative pledge, charge,
restriction or other security interest of any kind upon any of its property
or assets of any character whether now owned or hereafter acquired, or upon
the income or profits therefrom; (b) transfer any of its property or assets
or the income or profits therefrom for the purpose of subjecting the same to
the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have
an option to acquire, any property or assets upon conditional sale or other
title retention or purchase money security agreement, device or arrangement;
(d) suffer to exist for a period of more than 30 days after the same shall
have been incurred any Indebtedness or claim or demand against it that if
unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over its general creditors; (e) sell, assign, pledge
or otherwise transfer any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse; (f) incur or maintain
any obligation to any holder of Indebtedness of the Borrower or any
Subsidiary which prohibits the creation or maintenance of any lien securing
the Obligations (collectively "Liens"); or (g) permit either WASH Manager or
Wells Avenue Holdings to create or incur or suffer to be created or incurred
or to exist any Lien upon any of its property or assets of any character
whether now owned or hereafter acquired, or upon the income or profits
therefrom; provided that the Borrower and its Subsidiaries (other than WASH,
WASH Manager, Wells Avenue Holdings and Property Owner) may create or incur
or suffer to be created or incurred or to exist:
(i) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries
of the Borrower to the Borrower (provided that no such liens shall be
permitted with respect to any of the Mortgaged Property, the Mezzanine
Property, the Collateral or any other collateral for the Mortgage Loan);
(ii) liens on properties to secure taxes, assessments and other
governmental charges or claims for labor, material or supplies in
respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or to secure
payment of, worker's compensation, unemployment insurance, old age
pensions or other social security obligations;
(iv) liens on properties other than Collateral, the Mortgaged
Property, the Mezzanine Property or other collateral for the Mortgage
Loan in respect of judgments, awards or indebtedness, the Indebtedness
with respect to which is permitted by Section 8.1(d), (f), (g) or (h);
(v) encumbrances on Real Estate other than the Mortgaged Property
and the Mezzanine Property consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrower or a Subsidiary of the Borrower
is a party, and other minor non-monetary liens or encumbrances none of
which interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower and its Subsidiaries,
and which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower and its
Subsidiaries on a Consolidated basis;
(vi) liens in favor of the Agent and the Banks under the Loan
Documents;
(vii) Permitted Liens and the Mortgages on the Mortgaged Property
and Permitted Liens and the Nomura Mortgages on the Mezzanine Property;
and
(viii) liens in favor of the Mortgagee on the interest of Property
Owner in Wells Avenue Holdings.
Notwithstanding anything in this Section 8.2 to the contrary, neither
Property Owner, WASH, WASH Manager or Wells Avenue Holdings shall be
permitted to create or incur or suffer to be created or incurred any Lien
other than Liens described in Section 8.2(vii) or (viii) with respect to
Property Owner and WASH.
Section 8.3. Restrictions on Investments. The Borrower will not, and
will not permit any of its Subsidiaries to, make or permit to exist or to
remain outstanding any Investment except Investments by Borrower and its
Subsidiaries (other than WASH, WASH Manager, Wells Avenue Holdings and,
except as expressly permitted below, Property Owner) in:
(a) Investments by Borrower and its permitted Subsidiaries in marketable
direct or guaranteed obligations of the United States of America that
mature within one (1) year from the date of purchase by the Borrower or
its Subsidiary;
(b) Investments by Borrower and its permitted Subsidiaries in marketable
direct obligations of any of the following: Federal Home Loan Mortgage
Corporation, Student Loan Marketing Association, Federal Home Loan
Banks, Federal National Mortgage Association, Government National
Mortgage Association, Bank for Cooperatives, Federal Intermediate Credit
Banks, Federal Financing Banks, Export-Import Bank of the United States,
Federal Land Banks, or any other agency or instrumentality of the United
States of America;
(c) Investments by Borrower and its permitted Subsidiaries in demand
deposits, certificates of deposit, bankers acceptances and time deposits
of United States banks having total assets in excess of $100,000,000;
provided, however, that the aggregate amount at any time so invested
with any single bank having total assets of less than $1,000,000,000
will not exceed $200,000;
(d) Investments by Borrower and its permitted Subsidiaries in securities
commonly known as "commercial paper" issued by a corporation organized
and existing under the laws of the United States of America or any State
which at the time of purchase are rated by Moody's Investors Service,
Inc. or by Standard & Poor's Corporation at not less than "P 1" if then
rated by Moody's Investors Service, Inc., and not less than "A 1", if
then rated by Standard & Poor's Corporation;
(e) Investments by Borrower and its permitted Subsidiaries in
mortgage-backed securities guaranteed by the Government National
Mortgage Association, the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation and other mortgage-backed bonds
which at the time of purchase are rated by Moody's Investors Service,
Inc. or by Standard & Poor's Corporation at not less than "Aa" if then
rated by Moody's Investors Service, Inc. and not less than "AA" if then
rated by Standard & Poor's Corporation;
(f) Investments by Borrower and its permitted Subsidiaries in repurchase
agreements having a term not greater than 90 days and fully secured by
securities described in the foregoing subsection (a), (b) or (e) with
banks described in the foregoing subsection (c) or with financial
institutions or other corporations having total assets in excess of
$500,000,000;
(g) Investments by Borrower and its permitted Subsidiaries in shares of
so-called "money market funds" registered with the SEC under the
Investment Company Act of 1940 which maintain a level per-share value,
invest principally in investments described in the foregoing subsections
(a) through (f) and have total assets in excess of $50,000,000;
(h) Investments by Subsidiaries of the Borrower (other than WASH, WASH
Manager and Wells Avenue Holdings) in fee interests in Real Estate
located in the northeastern United States utilized principally for
commercial office space, including earnest money deposits relating
thereto and transaction costs (provided that as to Property Owner, such
Real Estate shall be Mortgaged Property only);
(i) Investments by Borrower in the Property Owner provided it is wholly-
owned by the Borrower and by Borrower or Property Owner in other wholly-
owned Subsidiaries of the Borrower or Property Owner, as applicable,
which own Investments of the type described in Section 8.3(h) or (j);
(j) Investments by Subsidiaries of the Borrower (other than Property Owner,
WASH, WASH Manager and Wells Avenue Holdings) in leasehold interests in
properties located in the northeastern United States which are used
principally for commercial office purposes under ground leases having
not less than fifty (50) years of the leasehold term remaining at the
time of acquisition thereof;
(k) Investments by Subsidiaries of the Borrower (other than Property Owner,
WASH, WASH Manager and Wells Avenue Holdings) in Investment Partnerships
which own Investments of the type described in Section 8.3(h) or (j);
provided that the aggregate value of such Investments shall not exceed
ten percent (10%) of Borrower's Consolidated Total Assets;
(l) Investments by Property Owner in Wells Avenue Holdings, and by Wells
Avenue Holdings in WASH Manager, and by Wells Avenue Holdings and WASH
Manager in WASH; and
(m) Investments by WASH in the Mezzanine Property.
Section 8.4. Merger, Consolidation. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to any merger,
consolidation or other business combination, or agree to effect any asset
acquisition, stock acquisition or other acquisition without the prior written
consent of the Majority Banks except (i) the merger or consolidation of one
or more of the Subsidiaries of the Borrower with and into the Borrower, (ii)
the merger or consolidation of two or more Subsidiaries of the Borrower, and
(iii) the merger or consolidation of one or more unaffiliated corporations or
other entities with and into the Borrower where (a) the Borrower is the
surviving entity, (b) immediately after the merger or consolidation, the
original shareholders of the Borrower at the time of such consolidation or
merger own at least fifty-one percent (51%) of the Voting Interests in the
Borrower (which for the purposes hereof shall include satisfaction of the
provisions of clauses (a) and (b) of the definition of the term "Voting
Interests"), (c) the purpose of the consolidation or merger is the
acquisition of Real Estate used for commercial office purposes located in the
northeastern United States, (d) the assets of such other entity do not exceed
fifty percent (50%) of the Consolidated Total Assets of the Borrower as
determined prior to such merger, and (e) immediately prior to such merger the
Borrower shall have provided to the Agent a written statement that no Default
or Event of Default exists and a Compliance Certificate demonstrating that
the Borrower will be in compliance with the covenants referred to therein
after giving effect to said merger.
Section 8.5. Sale and Leaseback; Ground Lease. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby the Borrower or any Subsidiary of the
Borrower shall sell or transfer any Real Estate owned by it in order that
then or thereafter the Borrower or any Subsidiary of the Borrower or any
affiliate thereof shall lease back such Real Estate. The Borrower will not
permit WASH to enter into a ground lease or similar lease for the Mezzanine
Property.
Section 8.6. Compliance with Environmental Laws. The Borrower will not
do and will not permit any of its Subsidiaries, the Property Owner or any
tenant of the Real Estate or the Mezzanine Property to do any of the
following: (a) use any of the Real Estate or the Mezzanine Property or any
portion thereof as a facility for the handling, processing, storage or
disposal of Hazardous Substances, except for small quantities of Hazardous
Substances used in the ordinary course of business and in compliance with all
applicable Environmental Laws and the presence of asbestos or asbestos-
containing materials located in the Building which are to be maintained,
contained and removed in accordance with the terms of the Mezzanine Mortgage
Loan Documents, the Mortgage Loan Documents and the Loan Documents, (b) cause
or permit to be located on any of the Real Estate or the Mezzanine Property
any underground tank or other underground storage receptacle for Hazardous
Substances except in full compliance with Environmental Laws, (c) generate
any Hazardous Substances on any of the Real Estate or the Mezzanine Property
except in full compliance with Environmental Laws, (d) conduct any activity
at any of the Real Estate or the Mezzanine Property or use any Real Estate or
Mezzanine Property in any manner so as to cause a Release of Hazardous
Substances on, upon or into the Real Estate or the Mezzanine Property or any
surrounding properties or any threatened Release of Hazardous Substances
which might give rise to liability under CERCLA or any other Environmental
Law, or (e) directly or indirectly transport or arrange for the transport of
any Hazardous Substances (except in compliance with all Environmental Laws).
The Borrower shall:
(i) in the event of any change in Environmental Laws governing the
assessment, release or removal of Hazardous Substances, which change
would lead a prudent lender to require additional testing to avail
itself of any statutory insurance or limited liability, take all action
(including, without limitation, the conducting of engineering tests at
the sole expense of the Borrower) to confirm that no Hazardous
Substances have been Released or disposed of on the Mortgaged Property
or the Mezzanine Property in violation of any Environmental Laws; and
(ii) if any Release or disposal of Hazardous Substances shall
occur or shall have occurred on the Mortgaged Property or Mezzanine
Property (including without limitation any such Release or disposal
occurring prior to the acquisition of such Mortgaged Property or
Mezzanine Property by Property Owner or WASH, respectively), cause the
prompt containment and removal of such Hazardous Substances and
remediation of the Mortgaged Property or the Mezzanine Property in full
compliance with all applicable laws and regulations and to the
satisfaction of the Majority Banks; provided, that the Borrower shall be
deemed to be in compliance with Environmental Laws for the purpose of
this clause (ii) so long as it or a responsible third party with
sufficient financial resources is taking reasonable action to remediate
or manage any event of noncompliance to the satisfaction of the Majority
Banks and no action shall have been commenced by any enforcement agency.
The Majority Banks may engage their own Environmental Engineer to review
the environmental assessments and the Borrower's compliance with the
covenants contained herein.
At any time after an Event of Default shall have occurred hereunder, or,
whether or not an Event of Default shall have occurred, at any time that the
Agent or the Majority Banks shall have reasonable grounds to believe that a
Release or threatened Release of Hazardous Substances may have occurred
relating to any Mortgaged Property or Mezzanine Property, or that any of the
Mortgaged Property or Mezzanine Property is not in compliance with the
Environmental Laws, the Agent may at its election and will at the request of
the Majority Banks obtain such environmental assessments of such Mortgaged
Property or Mezzanine Property prepared by an Environmental Engineer as may
be necessary or advisable for the purpose of evaluating or confirming (i)
whether any Hazardous Substances are present in the soil or water at or
adjacent to such Mortgaged Property or Mezzanine Property and (ii) whether
the use and operation of such Mortgaged Property or Mezzanine Property comply
with all Environmental Laws. Environmental assessments may include detailed
visual inspections of such Mortgaged Property or Mezzanine Property
including, without limitation, any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and the taking of soil samples, as well
as such other investigations or analyses as are necessary or appropriate for
a complete determination of the compliance of such Mortgaged Property or
Mezzanine Property and the use and operation thereof with all applicable
Environmental Laws. All such environmental assessments shall be at the sole
cost and expense of the Borrower.
Section 8.7. Distributions. The Borrower will not make any
Distributions which would cause it to violate any of the following covenants:
(a) The Borrower shall not pay any Distribution to the members of the
Borrower in excess of the amount (assuming that Distributions are made
pro rata to the members of the Borrower in accordance with their
respective ownership interests) which is sufficient to allow Wellsford
Commercial to receive from the Borrower the minimum distributions
required under the Code to maintain the REIT Status of Wellsford
Commercial (assuming for the purposes hereof that such Distributions are
the only income of Wellsford Commercial), as evidenced by a
certification of the principal financial or accounting officer of the
Borrower containing calculations in detail reasonably satisfactory in
form and substance to the Agent; provided that in all events
Distributions of not less than $1,250,000.00 per annum shall be
permitted pursuant to this Section 8.7(a); and
(b) The Borrower shall make no Distributions in the event that an Event of
Default shall have occurred and be continuing or a Default or Event of
Default would be created after giving effect to such Distribution.
Section 8.8. Asset Sales. Neither the Borrower nor any Subsidiary of
the Borrower shall sell, transfer or otherwise dispose of any Real Estate or
other Investment described in Section 8.3(i), Section 8.3(j) or Section
8.3(k)(except as the result of a condemnation or casualty and except for the
granting of Permitted Liens) unless there shall have been delivered to the
Banks a statement that no Default or Event of Default exists and a Compliance
Certificate demonstrating that the Borrower will be in compliance with its
covenants referred to therein after giving effect to such sale, transfer or
other disposition.
Section 8.9. Development Activity. Neither the Borrower nor any
Subsidiary of the Borrower shall, without the prior written consent of the
Majority Banks, engage, directly or indirectly, in the "ground-up"
development of properties to be used principally for commercial office
purposes or otherwise, except that Property Owner and Subsidiaries of
Borrower or Property Owner (other than WASH, WASH Manager and Wells Avenue
Holdings) may engage in the "ground-up" development of Real Estate to be used
principally for commercial office purposes provided that the aggregate costs
of acquisition and development of all such properties Under Development
(assuming the full cost of developing such property) at any time shall not
exceed the greater of (i) ten percent (10%) of the Borrower's Consolidated
Total Assets or (ii) $25,000,000.00. Notwithstanding anything herein to the
contrary, except for the Mortgaged Property commonly known as 140 Kendrick
Street which may be developed by the Property Owner, no "ground up"
development shall be performed by the Borrower, the Property Owner, WASH,
WASH Manager or Wells Avenue Holdings. For purposes of this Section 8.9, the
term "development" shall include the new construction of an office building
or office park, but shall not include Capital Improvement Projects to
existing Real Estate which is already used principally for commercial office
purposes. Without limiting the foregoing, the Borrower acknowledges that for
the purposes of this Agreement, (a) any interest by the Borrower or any
Subsidiary in a property which is proposed to be developed, or any interest
therein pursuant to which the Borrower or any Subsidiary has the right to
approve site plans or other plans and specifications or pursuant to which
such parties' obligations are conditioned upon the achievement of certain
leasing levels, (b) any agreement by the Borrower or any Subsidiary which
obligates such party to contribute or otherwise advance funds in connection
with or upon completion of the development of a property, or (c) any
acquisition of a property which is proposed to be developed or which is under
development and lease-up at the time such agreement is entered into, shall be
considered a "development" for the purposes of this Section 8.9. The
Borrower acknowledges that the decision of the Majority Banks to grant or
withhold such consent shall be based on such factors as the Majority Banks
deem relevant in their sole discretion, including without limitation,
evidence of sufficient funds both from borrowings and equity to complete such
development and evidence that such Subsidiary has the resources and expertise
necessary to complete such project. Nothing herein shall prohibit the
Borrower or any Subsidiary of the Borrower from entering into an agreement to
acquire Real Estate which has been developed and initially leased by another
Person to the extent not otherwise prohibited by this Agreement.
Section 8.10. Sources of Capital. The Borrower shall, at all times
that the Borrower or any of its Subsidiaries permitted by Section 8.9 is
engaging in any development as provided in Section 8.9 or has entered into
any agreement to provide funds with respect to a development, maintain or
have identified available sources of capital equal to the total cost to
acquire and complete such developments and to satisfy such funding
obligations, which sources of capital shall be acceptable to the Agent in its
reasonable discretion. Amounts available to be disbursed for such purposes
pursuant to this Agreement may be considered as a source of capital for the
purposes of this Section 8.10.
Section 8.11. Transfers. The Borrower shall not permit any sale,
transfer, disposition, pledge, mortgage, hypothecation or encumbering of any
direct or indirect interest (a) of Wellsford Commercial in Borrower, (b) of
Wellsford Real Properties in Wellsford Commercial, (c) of WHWEL in Borrower,
or (d) of any Person or Persons directly or indirectly holding the ownership
interests in WHWEL, provided that sales, transfers or other dispositions (but
not pledges, mortgages, hypothecations or encumbrances) of interests in WHWEL
shall be permitted if after giving effect thereto the Goldman Group, directly
or indirectly, owns and controls at least seventy percent (70%) of the
ownership interests in WHWEL. Notwithstanding anything herein to the
contrary, (x) WHWEL shall be permitted at any time and from time to time to
convert all or any of its interest in the Borrower into an interest in
Wellsford Commercial and/or Wellsford Real Properties, and (y) WHWEL and
Wellsford Commercial may transfer or pledge their interests in Borrower to
one another as may be permitted in the operating agreement of the Borrower.
Section 8.12. Additional Restrictions Concerning the Mortgaged Property
and the Mezzanine Property.
(a) Except as expressly provided in Section 5.3 or Section 7.19, the
Borrower will not, without the prior written consent of the Agent in
each instance, permit the Property Owner or WASH, directly or indirectly
to: (i) sell, convey, assign, transfer, contribute, option, mortgage,
pledge, encumber, charge, hypothecate or dispose of the Mortgaged
Property, the Mezzanine Property or any part thereof or interest
therein; or any income or profits therefrom, or any other accounts,
contract rights, general intangibles, instruments, chattel paper or
other assets or claims, whether now owned or hereafter acquired; or (ii)
create or suffer to be created or to exist any lien, encumbrance,
security interest, mortgage, pledge, restriction, attachment or other
charge of any kind upon, or any levy, seizure, attachment or foreclosure
of, the Mortgaged Property, the Mezzanine Property or any part thereof
or interest therein, or any income or profit therefrom, or any other
accounts, contract rights, general intangibles, instruments, chattel
paper or other assets or claims, whether now owned or hereafter
acquired, except for Permitted Liens. For the purposes of this
paragraph, the sale, conveyance, transfer, disposition, alienation,
hypothecation or encumbering of all or any portion of any interest in
the Property Owner, WASH ,WASH Manager or Wells Avenue Holdings or the
creation or addition of a new member or other owner of any interest in
the Property Owner, WASH, WASH Manager or Wells Avenue Holdings shall be
deemed to be a transfer of an interest in the Property Owner or WASH.
(b) The Borrower will not permit the Property Owner to create, incur,
assume, guarantee or be or remain liable, contingently or otherwise,
with respect to any Indebtedness other than:
(i) Indebtedness arising under the Mortgage Loan Documents (it
being acknowledged and agreed that any refinancing of such Indebtedness
in connection with an assignment and restatement of the Mortgage Loan
Documents shall not constitute permitted Indebtedness);
(ii) current liabilities of the Property Owner incurred in the
ordinary course of business but not incurred through (A) the borrowing
of money, or (B) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection
with normal purchases of goods and services; and
(iii) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of Section 7.8.
(c) The Borrower will not permit WASH to create, incur, assume, guarantee or
be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(i) Indebtedness arising under the Mezzanine Mortgage Loan
Documents (it being acknowledged and agreed that any refinancing of such
Indebtedness in connection with an assignment and restatement of the
Mezzanine Mortgage Loan Documents shall not constitute permitted
Indebtedness);
(ii) current liabilities of WASH permitted pursuant to the budget
approved by Mezzanine Mortgagee pursuant to the Mezzanine Mortgage Loan
Documents incurred in the ordinary course of business but not incurred
through (A) the borrowing of money, or (B) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and services;
and
(iii) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of Section 7.8.
Section 8.13. Mortgage Loan Documents. The Borrower agrees to cause
the Property Owner and WASH to deliver immediately to the Agent copies of any
notices, certificates, requests, demands or other instruments (including
without limitation any notice of default, acceleration or the exercise or
threat of exercise of any remedies under the Mortgage Loan Documents or the
Mezzanine Mortgage Loan Documents) furnished or delivered to or by the
Property Owner or WASH under or in any way relating to the Mortgage Loan
Documents or the Mezzanine Mortgage Loan Documents. The Borrower shall not
permit the Property Owner or WASH to seek nor to obtain additional advances
from the holder or holders of the Mortgage Loan Documents or the Mezzanine
Mortgage Loan Documents, respectively (provided that the foregoing shall not
be deemed violated in the event that the holder or holders of the Mortgage
Loan Documents or the Mezzanine Mortgage Loan Documents shall make a
protective advance or advances for the payment of taxes, insurance premiums
or to protect the Mortgaged Property or the Mezzanine Property pursuant to
the terms of the Mortgages or the Nomura Mortgages, as applicable, provided
that such advance may otherwise constitute a Default or Event of Default
hereunder to the extent that such protected advance is made by the Mortgagee
or Mezzanine Mortgagee as a result of a "Default" or "Event of Default" under
the Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents), or to
modify, amend, terminate, extend or seek a consent or waiver under the
Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents in any
respect without the prior written approval of the Agent.
Section 9. FINANCIAL COVENANTS OF BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans it will comply
with the following:
Section 9.1. Liabilities to Assets Ratio. The Borrower will not permit
the ratio of Consolidated Total Liabilities to Consolidated Total Assets of
the Borrower at the end of any fiscal quarter as set forth below to exceed
the ratio set forth below:
<PAGE>
Fiscal Quarter Ending
On or Before: Ratio
--------------------- -----
December 31, 1999 0.75 to 1
December 31, 2000 0.70 to 1
Thereafter 0.65 to 1
Section 9.2. Consolidated Operating Cash Flow Coverage. The Borrower
will not, at the end of any fiscal quarter set forth below permit (a) the sum
of (i) its Consolidated Operating Cash Flow for any period of four
consecutive fiscal quarters then ended (treated as a single accounting
period) (the "Test Period"), plus (ii) the general and administrative costs
of the Borrower and its Subsidiaries for such Test Period plus (iii) the
aggregate Negative Carry for such Test Period minus (iv) the Capital
Improvement Reserve for such Test Period minus (v) any capitalized Negative
Carry for such Test Period to be less than (b) the multiple of Debt Service
for such Test Period as set forth below:
Fiscal Quarter Ending Multiple of
On or Before: Debt Service:
--------------------- ------------
December 31, 1999 1.15
December 31, 2000 1.25
Thereafter 1.35
In the event that the Borrower shall not have any of the foregoing components
for four (4) consecutive fiscal quarters, then such components shall be
annualized in a manner reasonably satisfactory to the Agent. For the
purposes hereof, the aggregate Negative Carry and capitalized Negative Carry
shall include 100% of such Negative Carry and shall not be limited to the 20%
reserved against under Section 5.5. Notwithstanding the foregoing, the
amounts set forth in clauses (a)(ii) and (a)(iii) above shall be added in
such calculation only so long as the Borrower is in compliance with the terms
of Section 5.5, and shall not be added back in such calculation for any
periods during which the Holdback is not required.
Section 9.3. Minimum Shareholders Equity. The Borrower will not, at
the end of any fiscal quarter, permit the Shareholders Equity to be less than
the sum of (a) $68,000,000.00 plus (b) eighty percent (80%) of the net
proceeds from any Equity Offering after the Closing Date plus (c) one hundred
percent (100%) of (i) the sum of (A) all Net Income (or Deficit) from the
Closing Date plus (B) depreciation deducted in calculating such Net Income
(or Deficit) less (ii) the aggregate amount of all Distributions made by
Borrower from the Closing Date pursuant to the terms of Section 8.7(a).
Section 9.4. Real Estate Assets. The Borrower shall not permit its
direct or indirect interest in undeveloped land to exceed, in the aggregate,
five percent (5%) of the Borrower's Consolidated Total Assets; provided,
however, that, except for the Mortgaged Property commonly known as 600 Atrium
which may be owned by the Property Owner, all of the direct interests in
undeveloped land shall be owned by Subsidiaries of the Borrower, other than
Property Owner, WASH, WASH Manager and Wells Avenue Holdings, or by
Investment Partnerships permitted by Section 8.3(k).
Section 9.5. Required Equity. The Borrower shall not permit the ratio
of the (a) aggregate Indebtedness without duplication of the Borrower and its
Subsidiaries pursuant to Section 8.1(a), (f), (g), (h), (i) and (j) to
(b) the sum of (i) the aggregate all-in acquisition cost of the Real Estate
and the Mezzanine Property of the Borrower and its Subsidiaries plus (ii) the
historic cost of capital improvements to the Real Estate and the Mezzanine
Property after the respective acquisitions of such assets on a consolidated
basis, to exceed 0.75 to 1. For the purposes hereof, the all-in acquisition
cost of the Mezzanine Property shall be deemed to be $130,219,292, and the
Indebtedness of the Property Owner and other Subsidiaries of the Borrower or
Property Owner shall be included as Indebtedness of the Borrower.
Section 10. CLOSING CONDITIONS.
The obligations of the Agent and the Banks to make the initial Loans
shall be subject to the satisfaction of the following conditions precedent on
or prior to July 16, 1998:
Section 10.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall be
in full force and effect and shall be in form and substance satisfactory to
the Majority Banks. The Agent shall have received a fully executed copy of
each such document, except that each Bank shall have received a fully
executed counterpart of its Note.
Section 10.2. Certified Copies of Organizational Documents. The Agent
shall have received from the Borrower a copy, certified as of a recent date
by the appropriate officer of the State in which the Borrower and the
Guarantor are organized or in which the Mortgaged Property is located, and by
a duly authorized officer of such Person to be true and complete, of the
articles of incorporation or other organizational documents of the Borrower
and the Guarantor (or a certification satisfactory to the Agent that there
have been no changes to the foregoing from those previously provided to the
Agent) or their respective qualification to do business, as applicable, as in
effect on such date of certification.
Section 10.3. Bylaws; Resolutions. All action on the part of the
Borrower and the Guarantor necessary for the valid execution, delivery and
performance by the Borrower and the Guarantor of the Loan Documents to which
it is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Agent shall have been provided to the
Agent. The Agent shall have received from the Borrower and the Guarantor, as
applicable, true copies of its bylaws (or a certification satisfactory to the
Agent that there have been no changes to the foregoing from those previously
provided to the Agent) and the resolutions adopted by its board of directors
or other governing body authorizing the transactions described herein, each
certified by its secretary or other duly authorized officer as of a recent
date to be true and complete.
Section 10.4. Incumbency Certificate; Authorized Signers. The Agent
shall have received from the Borrower and Guarantor an incumbency
certificate, dated as of the Closing Date, signed by a duly authorized
officer of the Borrower and Guarantor and giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to sign,
in the name and on behalf of the Borrower and the Guarantor, each of the Loan
Documents to which the Borrower or the Guarantor is or is to become a party;
(b) in the case of the Borrower to make Loan and Conversion Requests; and (c)
to give notices and to take other action on behalf of the Borrower under the
Loan Documents.
Section 10.5. Opinion of Counsel. The Agent shall have received a
favorable opinion addressed to the Banks and the Agent and dated as of the
Closing Date, in form and substance satisfactory to the Banks and the Agent,
from Robinson, Silverman, Pearce, Aronsohn & Berman, and other counsel of the
Borrower and the Guarantor, as to such matters as the Agent shall reasonably
request.
Section 10.6. Payment of Fees. The Borrower shall have paid to the
Agent the commitment fee pursuant to Section 4.2.
Section 10.7. Appraisals. The Agent shall have received Appraisals of
the Mortgaged Property and the Mezzanine Property in form and substance
satisfactory to the Majority Banks prior to the Closing Date demonstrating
that the initial Collateral has a Designated Collateral Value that is in
compliance with the terms of this Agreement.
Section 10.8. Environmental Reports. The Agent shall have received
environmental site assessment reports for the Mortgaged Property and the
Mezzanine Property prepared by an Environmental Engineer which indicate the
condition of the Mortgaged Property and the Mezzanine Property and such other
properties and any Buildings thereon and which set forth no qualifications
except those that are acceptable to the Majority Banks in their sole
discretion, and disclosing that each piece of Mortgaged Property, Mezzanine
Property and any Building thereon is free of oil, underground storage tanks,
asbestos or asbestos containing material, lead paint and other Hazardous
Substances (except to the extent acceptable to the Majority Banks in their
sole discretion), and which reports are otherwise in form and substance
satisfactory to the Majority Banks).
Section 10.9. Insurance. The Agent shall have received duplicate
originals or certified copies of all policies of insurance required by this
Agreement.
Section 10.10. Performance; No Default. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on the
Closing Date there shall exist no Default or Event of Default.
Section 10.11. Representations and Warranties. The representations and
warranties made by the Borrower and the Guarantor in the Loan Documents or
otherwise made by or on behalf of any Borrower and Guarantor, or any
Subsidiary thereof, in connection therewith or after the date thereof shall
have been true and correct in all material respects when made and shall also
be true and correct in all material respects on the Closing Date.
Section 10.12. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory to the Agent and the Agent's
Special Counsel in form and substance, and the Agent shall have received all
information and such counterpart originals or certified copies of such
documents and such other certificates, opinions or documents as the Agent and
the Agent's Special Counsel may reasonably require.
Section 10.13. Eligible Real Estate Qualification Documents. The
Eligible Real Estate Qualification Documents for each parcel of Mortgaged
Property and Mezzanine Property as of the Closing Date shall have been
delivered to Agent.
Section 10.14. Compliance Certificate. A Compliance Certificate dated
as of the date of the Closing Date demonstrating compliance with each of the
covenants calculated therein as of the most recent fiscal quarter end for
which the Borrower has provided financial statements under Section 6.4
adjusted in the best good faith estimate of the Borrower dated as of the date
of the Closing Date shall have been delivered to the Agent.
Section 10.15. Other Documents. To the extent requested by the Agent,
executed copies of all material agreements of any nature whatsoever to which
the Borrower or any Subsidiary of the Borrower is a party affecting or
relating to the use, operation, development, construction or management of
the Mortgaged Property, the Mezzanine Property or the Collateral.
Section 10.16. No Condemnation/Taking. The Agent shall have received
written confirmation from the Borrower that no condemnation proceedings are
pending or to the Borrower's knowledge threatened against any Mortgaged
Property, Mezzanine Property or other Collateral or, if any such proceedings
are pending or threatened, identifying the same and the Real Estate affected
thereby and the Agent shall have determined that none of such proceedings is
or will be material to the Mortgaged Property, Mezzanine Property or other
Collateral affected thereby.
Section 10.17. Governmental Policy. Each Bank shall have determined
that there have been no material changes in governmental regulations or
policy affecting the Banks, the Borrower or the Guarantor.
Section 10.18. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agent's Special Counsel may reasonably have
requested.
Section 10.19. Satisfaction of Conditions as to Initial Collateral.
The parties hereto acknowledge that the requirements of Sections 10.7, 10.8
and 10.13 for the Mezzanine Properties and the Mortgaged Properties as of the
date hereof have been satisfied.
Section 11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
Section 11.1. Prior Conditions Satisfied. All conditions set forth in
Section 10 shall continue to be satisfied as of the date upon which any Loan
is to be made.
Section 11.2. Representations True; No Default. Each of the
representations and warranties contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which they
were made and shall also be true at and as of the time of the making of such
Loan (except that representations and warranties as to the Guarantor shall
not be deemed to have been repeated), with the same effect as if made at and
as of that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Agreement and the other Loan Documents and
changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing. Agent
shall have received a certificate of the Borrower signed by an authorized
officer of the Borrower to such effect.
Section 11.3. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Bank would make it illegal for such Bank to make
such Loan.
Section 11.4. Governmental Regulation. Each Bank shall have received
such statements in substance and form reasonably satisfactory to such Bank as
such Bank shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.
Section 11.5. Proceedings and Documents. All proceedings in connection
with the Loan shall be satisfactory in substance and in form to the Majority
Banks, and the Majority Banks shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Majority Banks may reasonably request.
Section 11.6. Borrowing Documents. In the case of any request for a
Loan, the Agent shall have received a copy of each of the request for a Loan
required by Section 2.6 in the form of Exhibit B hereto, fully completed.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the
lapse of time or both is required, then, prior to such notice or lapse of
time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans when the same
shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans or any other
sums due hereunder or under any of the other Loan Documents, when the
same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed
for payment;
(c) Intentionally Omitted.
(d) the Borrower shall fail to comply with the covenant contained in Section
9.1, Section 9.2, Section 9.3, Section 9.4 or Section 9.5 and such
failure shall continue for thirty (30) Business Days after written
notice thereof shall have been given to the Borrower by the Agent;
(e) any of the Borrower, any of its Subsidiaries, the Property Owner, the
Guarantor or any other party shall fail to perform any other term,
covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified in this Section 12.1);
(f) any representation or warranty of the Borrower, any of its Subsidiaries,
the Property Owner or any Guarantor in this Agreement or any other Loan
Document, or in any report, certificate, financial statement, request
for a Loan, or in any other document or instrument delivered pursuant to
or in connection with this Agreement, any advance of a Loan or any of
the other Loan Documents shall prove to have been false in any material
respect upon the date when made or deemed to have been made or repeated;
(g) without limiting any other terms of the Loan Documents prohibiting or
restricting the ability of such Persons to incur Indebtedness, any of
the Borrower, its Subsidiaries, the Property Owner or any Guarantor
shall fail to pay at maturity, or within any applicable period of grace,
any obligation for borrowed money or credit received or other
Indebtedness or fail to observe or perform any material term, covenant
or agreement contained in any agreement by which it is bound (including,
without limitation, the Mortgage Loan Documents or the Mezzanine
Mortgage Loan Documents), evidencing or securing any such borrowed money
or credit received or other Indebtedness for such period of time as
would permit (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof, provided that the events described in
this Section 12.1(g) shall not constitute an Event of Default unless
such failure to perform, together with other failures to perform as
described in this Section 12.1(g), involve singly or in the aggregate
obligations for borrowed money or credit received totaling in excess of
$10,000,000 or with respect to WASH only, in excess of $1,000,000;
(h) any of the Borrower, any of its Subsidiaries, the Property Owner or the
Guarantor (A) shall make an assignment for the benefit of creditors, or
admit in writing its general inability to pay or generally fail to pay
its debts as they mature or become due, or shall petition or apply for
the appointment of a trustee or other custodian, liquidator or receiver
of any such Person of any substantial part of the assets of any thereof,
(B) shall commence any case or other proceeding relating to any such
Person under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or (C) shall take any action
to authorize or in furtherance of any of the foregoing;
(i) a petition or application shall be filed for the appointment of a
trustee or other custodian, liquidator or receiver of any of the
Borrower, any of its Subsidiaries, the Property Owner or the Guarantor
or any substantial part of the assets of any thereof, or a case or other
proceeding shall be commenced against any such Person under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now
or hereafter in effect, and such Person shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition,
application, case or proceeding shall not have been dismissed within 60
days following the filing or commencement thereof;
(j) a decree or order is entered appointing any such trustee, custodian,
liquidator or receiver or adjudicating any of the Borrower, any of its
Subsidiaries, the Property Owner or the Guarantor bankrupt or insolvent,
or approving a petition in any such case or other proceeding, or a
decree or order for relief is entered in respect of any such Person, in
each case of the foregoing in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(k) there shall remain in force, undischarged, unsatisfied and unstayed, for
more than 60 days, whether or not consecutive, any uninsured final
judgment against any of the Borrower, any of its Subsidiaries, the
Property Owner or the Guarantor that, with other outstanding uninsured
final judgments, undischarged, against such Person exceeds in the
aggregate $5,000,000.00 or $1,000,000.00 with respect to WASH, WASH
Manager or Wells Avenue Holdings (provided that in any event such
judgment with respect to Property Owner, WASH, WASH Manager or Wells
Avenue Holdings shall be sooner removed prior to the commencement of any
proceeding of foreclosure, levy or other sale pursuant thereto);
(l) if any of the Loan Documents shall be canceled, terminated, revoked or
rescinded otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of the Banks,
or any action at law, suit in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of any of the Borrower, any of its Subsidiaries, the
Property Owner or the Guarantor or any of their respective holders of
Voting Interests, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that,
any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof in any material
respect as determined by the Majority Banks;
(m) any dissolution, termination, partial or complete liquidation, merger or
consolidation of any of the Borrower, any of its Subsidiaries, the
Property Owner or the Guarantor, or any sale, transfer or other
disposition of the assets of any such Person, other than as permitted
under the terms of this Agreement or the other Loan Documents or
otherwise consented to in writing by the Majority Banks;
l o any suit or proceeding shall be filed against any of the Borrower, any
of its Subsidiaries, the Property Owner or the Guarantor or any of the
Mortgaged Property, the Mezzanine Property, the Collateral or any
collateral for the Mortgage Loan which in the good faith business
judgment of the Majority Banks after giving consideration to the
likelihood of success of such suit or proceeding and the availability of
insurance to cover any judgment with respect thereto and based on the
information available to them, if adversely determined, would have a
materially adverse affect on the ability of such Person to perform each
and every one of their respective obligations under and by virtue of the
Loan Documents, the Mortgage Loan Documents or the Mezzanine Mortgage
Loan Documents, as applicable;
(o) WASH, WASH Manager or Wells Avenue Holding shall be indicted for a
federal crime, a punishment for which could include the forfeiture of
any assets of such Person, or the Borrower or the Property Owner shall
be indicted for a federal crime, a punishment for which could include
the forfeiture of any assets of the Borrower, the Property Owner or the
Guarantor included in the Collateral, the Mortgaged Property or other
collateral for the Mortgage Loan;
(p) Jeffrey H. Lynford shall cease to be the Chairman of the Board of, or
Edward Lowenthal shall cease to be the President of, Wellsford
Commercial, and a competent and experienced successor for such Person
shall not be approved by the Majority Banks within six (6) months of
such event;
(q) Any violation of the covenant set forth in Section 8.11 shall occur;
(r) with respect to any Guaranteed Pension Plan, an ERISA Reportable Event
shall have occurred and the Majority Banks shall have determined in
their reasonable discretion that such event reasonably could be expected
to result in liability of any of the Borrower, WASH, WASH Manager, Wells
Avenue Holdings or the Guarantor to the PBGC or such Guaranteed Pension
Plan in an aggregate amount exceeding $1,000,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee
to administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan;
or the PBGC shall have instituted proceedings to terminate such
Guaranteed Pension Plan;
(s) any Guarantor denies that it has any liability or obligation under the
Guaranty or the Indemnity Agreement, or shall notify the Agent or any of
the Banks of such Guarantor's intention to attempt to cancel or
terminate the Guaranty or the Indemnity Agreement, or shall fail to
observe or comply with any term, covenant, condition or agreement under
the Guaranty or the Indemnity Agreement;
(t) any warranty or representation of the Property Owner, WASH, WASH
Manager, Wells Avenue Holdings or the Borrower in any acknowledgment
delivered to the Agent in connection with the Loan shall prove to have
been false or misleading in any material respect upon the date when made
or deemed to have been made or repeated, or the Property Owner, WASH,
WASH Manager, Wells Avenue Holdings or the Borrower shall fail to
perform any term, covenant or agreement contained in any such
acknowledgment; or
(u) The occurrence of an Event of Default under any of the other Loan
Documents; or
(v) The occurrence of any "Triggering Event" (as defined in each of the
Mezzanine Conditional Guaranty and the Nomura Conditional Guaranty,
respectively);
then, and in any such event, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower; provided that in
the event of any Event of Default specified in Section 12.1(h), Section
12.1(i) or Section 12.1(j), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from any of the
Banks or the Agent.
Section 12.1A. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 12.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the occurrence
of any failure described in Section 12.1(b) in the event that the Borrower
cures such default within five (5) days following receipt of written notice
of such default, provided, however, that Borrower shall not be entitled to
receive more than two (2) notices in the aggregate pursuant to this clause
(i) in any period of 365 days ending on the date of any such occurrence of
default, and provided further that no such cure period shall apply to any
payments due upon the maturity of the Notes, and (ii) no Event of Default
shall exist hereunder upon the occurrence of any failure described in Section
12.1(e) in the event that the Borrower cures such default with thirty (30)
days following receipt of written notice of such default, provided that the
provisions of this clause (ii) shall not pertain to defaults consisting of a
failure to provide insurance as required by Section 7.7, to any default
consisting of a failure to comply with Section 3.2(a), Section 7.4(e),
Section 7.23 (as to the failure of WASH, WASH Manager or Wells Avenue
Holdings to comply therewith) Section 8.2(g), Section 8.7, Section 8.12,
Section 8.13 (as to the failure to deliver any notice of default,
acceleration or the exercise or threat of exercise of any remedies under the
Mortgage Loan Documents or the Mezzanine Mortgage Loan Documents) or to any
default excluded from any provision of cure of defaults contained in any
other of the Loan Documents.
(b) Notwithstanding the provisions of subsections (c) and (d) of
Section 12.1, the cure periods provided therein shall not be allowed and the
occurrence of a Default thereunder immediately shall constitute an Event of
Default for all purposes of this Agreement and the other Loan Documents if,
within the period of twelve months immediately preceding the occurrence of
such Default, there shall have occurred two periods of cure or portions
thereof under any one or more than one of said subsections.
Section 12.2. Termination of Commitments. If any one or more Events of
Default specified in Section 12.1(h), Section 12.1(i) or Section 12.1(j)
shall occur, then immediately and without any action on the part of the Agent
or any Bank any unused portion of the credit hereunder shall terminate and
the Banks shall be relieved of all obligations to make Loans to the Borrower.
If any other Event of Default shall have occurred and be continuing, the
Agent, upon the election of the Majority Banks, may by notice to the Borrower
terminate the obligation to make Loans to the Borrower. No termination under
this Section 12.2 shall relieve the Borrower of its obligations to the Banks
arising under this Agreement or the other Loan Documents.
Section 12.3. Remedies. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Loans pursuant to Section 12.1,
the Agent on behalf of the Banks, may, with the consent of the Majority Banks
but not otherwise, proceed to protect and enforce their rights and remedies
under this Agreement, the Notes or any of the other Loan Documents by suit in
equity, action at law or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement
and the other Loan Documents or any instrument pursuant to which the
Obligations are evidenced, including to the full extent permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right. No remedy
herein conferred upon the Agent or the holder of any Note is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision
of law.
Section 12.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Event of Default,
any monies are received in connection with the enforcement of any of the
Security Documents, or otherwise with respect to the realization upon any of
the Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the reimbursement of,
the Agent for or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred or sustained by
the Agent to protect or preserve the collateral or in connection with
the collection of such monies by the Agent, for the exercise, protection
or enforcement by the Agent of all or any of the rights, remedies,
powers and privileges of the Agent under this Agreement or any of the
other Loan Documents or in respect of the Collateral or in support of
any provision of adequate indemnity to the Agent against any taxes or
liens which by law shall have, or may have, priority over the rights of
the Agent to such monies;
(b) Second, to all other Obligations in such order or preference as the
Majority Banks shall determine; provided, however, that (i)
distributions in respect of such Obligations shall be made pari passu
among Obligations with respect to the Agent's fee payable pursuant to
Section 4.3 and all other Obligations, (ii) in the event that any Bank
shall have wrongfully failed or refused to make an advance under Section
2.7 and such failure or refusal shall be continuing, advances made by
other Banks during the pendency of such failure or refusal shall be
entitled to be repaid as to principal and accrued interest in priority
to the other Obligations described in this subsection (b), and (iii)
Obligations owing to the Banks with respect to each type of Obligation
such as interest, principal, fees and expenses, shall be made among the
Banks pro rata; and provided, further, that the Majority Banks may in
their discretion make proper allowance to take into account any
Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the Borrower or to such
other Persons as are entitled thereto.
Section 12.5. Default under Mortgage Loan Documents or Mezzanine
Mortgage Loan Documents. Notwithstanding anything herein to the contrary,
the Borrower hereby expressly agrees that any "Event of Default" (as defined
in the Mortgage Loan Documents and the Mezzanine Mortgage Loan Documents,
respectively) (which shall be deemed to include maturity of the debt secured
by the Mortgage Loan Document or the Mezzanine Mortgage Loan Documents or any
other occurrence which would give the holder of the Mortgage Loan Documents
or the Mezzanine Mortgage Loan Documents the right to exercise remedies
thereunder) shall constitute and be deemed to be an Event of Default under
this Agreement for which no right to cure shall be available; provided,
however, that in the event that (a) a court of competent jurisdiction finally
determines in an adjudication binding upon the Mortgagee or the Mezzanine
Mortgagee, as applicable, and sufficient to prohibit or stay any exercise by
the Mortgagee or the Mezzanine Mortgagee of its remedies under the Mortgage
Loan Documents or the Mezzanine Mortgage Loan Documents, as applicable, that
an "Event of Default" under the Mortgage Loan Documents or the Mezzanine
Mortgage Loan Documents, as applicable, was in fact not an "Event of Default"
thereunder, or (b) the Mortgagee or the Mezzanine Mortgagee withdraws such
notice of the existence of an "Event of Default" (subject to the terms of
this Section 12.5 below concerning the approval thereof by the Majority
Banks), and in either event the Agent has not foreclosed on the "Member
Interests" (as defined in the Assignment of Interests), such "Event of
Default" shall no longer constitute an Event of Default hereunder. Without
limiting the foregoing, an "Event of Default" under the Mortgage Loan
Documents or the Mezzanine Mortgage Loan Documents, as applicable, shall
conclusively be deemed to have occurred upon the declaration, statement or
notice from the Mortgagee or the Mezzanine Mortgagee, as applicable, as to
the existence or occurrence of an "Event of Default" under the Mortgage Loan
Documents or the Mezzanine Mortgage Loan Documents, as applicable. The
Borrower shall cause the Property Owner or WASH, as applicable, to give the
Agent immediate notice of default and all other notices or communications
received by the Property Owner or WASH pursuant to the Mortgage Loan
Documents or in connection with the Mortgage Loan or pursuant to the
Mezzanine Mortgage Loan Documents or in connection with the Mezzanine
Mortgage Loan, respectively. Upon the occurrence of any "Default" (as
defined in the Mortgage Loan Documents or the Mezzanine Mortgage Loan
Documents, respectively), the Borrower shall cause the Property Owner or
WASH, as applicable, to deliver to the Agent within five (5) days after the
first to occur of (x) receipt by the Property Owner or WASH, as applicable,
of notice of such "Default" from the Mortgagee or the Mezzanine Mortgagee or
(y) the date the Property Owner or WASH, as applicable, obtains actual
knowledge of the occurrence of such "Default", a detailed description of the
actions to be taken by the Property Owner or WASH, as applicable, to cure
such "Default" and the dates by which each such action shall occur. Such
schedule shall be subject to the approval of the Majority Banks. The
Borrower shall cause the Property Owner or WASH, as applicable, to take all
such actions as are necessary to cure such "Default" under the Mortgage Loan
Documents or the Mezzanine Mortgage Loan Documents, as applicable, by the
date approved by the Majority Banks, and shall deliver to the Agent not less
frequently than weekly thereafter written updates concerning the status of
the Property Owner's or WASH's efforts, as applicable, to cure such
"Default". The Agent shall have the right, but not the obligation, to pay
any sums or to take any action which the Agent deems necessary or advisable
to cure any default or alleged default under the Mortgage Loan Documents or
the Mezzanine Mortgage Loan Documents (whether or not the Property Owner or
WASH, as applicable, is undertaking efforts to cure such default or the same
is an "Event of Default" under the Mortgage Loan Documents or the Mezzanine
Mortgage Loan Documents or a Default or Event of Default hereunder), and such
payment or such action is hereby authorized by the Borrower, and any sum so
paid and any expense incurred by the Agent in taking any such action shall be
evidenced by this Agreement and secured by the Security Documents and shall
be immediately due and payable by Borrower to the Agent with interest at the
rate for overdue amounts set forth in Section 4.12 until paid. The Agent
shall be authorized to take such actions upon the assertion by the Mortgagee
or the Mezzanine Mortgagee of the existence of such "Default" or "Event of
Default" without any duty to inquire or determine whether such "Default" or
"Event of Default" exist. The consent or waiver by the Mortgagee or the
Mezzanine Mortgagee of any "Event of Default" under the Mortgage Loan
Documents or the Mezzanine Mortgage Loan Documents shall not annul the
occurrence of an Event of Default hereunder unless otherwise approved by the
Majority Banks; provided, however that if the Mortgagee or the Mezzanine
Mortgagee shall accept the cure of an "Event of Default" under the Mortgage
Loan Documents or the Mezzanine Mortgage Loan Documents, as applicable,
resulting from a failure to pay any amounts due to the Mortgagee or the
Mezzanine Mortgagee thereunder within five (5) days of the occurrence of such
event, such acceptance shall not require the consent of the Majority Banks to
annul the occurrence of an Event of Default hereunder. The Borrower shall
cause the Property Owner and WASH to permit Agent to enter upon the Mortgaged
Property and the Mezzanine Property for the purpose of curing any default or
alleged default under the Mortgage Loan Documents or the Mezzanine Mortgage
Loan Documents or hereunder. The Borrower hereby transfers and assigns any
excess proceeds arising from any foreclosure or sale under power pursuant to
the Mortgages or other security documents for the Mortgage Loan or any
instrument evidencing the indebtedness secured thereby, and the Borrower
hereby authorizes and directs the holder or holders of the Mortgages to pay
such excess proceeds directly to the Agent up to the amount of the
Obligations.
Section 13. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits (general or specific, time or demand,
provisional or final, regardless of currency, maturity, or the branch of
where such deposits are held) or other sums credited by or due from any of
the Banks to the Borrower or any Guarantor and any securities or other
property of the Borrower or any Guarantor in the possession of such Bank may
be applied to or set off against the payment of Obligations and any and all
other liabilities, direct, or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, of the Borrower or any
Guarantor to such Bank. Each of the Banks agrees with each other Bank that
if such Bank shall receive from the Borrower or any Guarantor, whether by
voluntary payment, exercise of the right of setoff, or otherwise, and shall
retain and apply to the payment of the Note or Notes held by such Bank any
amount in excess of its ratable portion of the payments received by all of
the Banks with respect to the Notes held by all of the Banks, such Bank will
make such disposition and arrangements with the other Banks with respect to
such excess, either by way of distribution, pro tanto assignment of claims,
subrogation or otherwise as shall result in each Bank receiving in respect of
the Notes held by it its proportionate payment as contemplated by this
Agreement; provided that if all or any part of such excess payment is
thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but
without interest.
Section 14. THE AGENT.
Section 14.1. Authorization. The Agent is authorized to take such
action on behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent. The
obligations of Agent hereunder are primarily administrative in nature, and
nothing contained in this Agreement or any of the other Loan Documents shall
be construed to constitute the Agent as a trustee for any Bank or to create
any agency or fiduciary relationship. The Borrower and any other Person
shall be entitled to conclusively rely on a statement from the Agent that it
has the authority to act for and bind the Banks pursuant to this Agreement
and the other Loan Documents.
Section 14.2. Employees and Agents. The Agent may exercise its powers
and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Agent may utilize the services of such Persons as the Agent
may reasonably determine, and all reasonable fees and expenses of any such
Persons shall be paid by the Borrower.
Section 14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent, or employee thereof, shall be liable for
any waiver, consent or approval given or any action taken, or omitted to be
taken, in good faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be responsible for the
consequences of any oversight or error of judgment whatsoever, except that
the Agent or such other Person, as the case may be, may be liable for losses
due to its willful misconduct or gross negligence.
Section 14.4. No Representations. The Agent shall not be responsible
for the execution or validity or enforceability of this Agreement, the Notes,
any of the other Loan Documents or any instrument at any time constituting,
or intended to constitute, collateral security for the Notes, or for the
value of any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for
any recitals or statements, warranties or representations made herein or in
any of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower, any of its Subsidiaries or
the Guarantor, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or
in any other of the Loan Documents. The Agent shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by
the Borrower or the Guarantor or any holder of any of the Notes shall have
been duly authorized or is true, accurate and complete. The Agent has not
made nor does it now make any representations or warranties, express or
implied, nor does it assume any liability to the Banks, with respect to the
creditworthiness or financial condition of the Borrower, any of its
Subsidiaries, or the Guarantor. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and
based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank, based upon such information and documents as it
deems appropriate at the time, continue to make its own credit analysis and
decisions in taking or not taking action under this Agreement and the other
Loan Documents.
Section 14.5. Payments.
(a) A payment by the Borrower or the Guarantor to the Agent hereunder or
under any of the other Loan Documents for the account of any Bank shall
constitute a payment to such Bank. The Agent agrees to distribute to
each Bank not later than one Business Day after the Agent's receipt of
good funds, determined in accordance with the Agent's customary
practices, such Bank's pro rata share of payments received by the Agent
for the account of the Banks except as otherwise expressly provided
herein or in any of the other Loan Documents.
(b) If in the opinion of the Agent the distribution of any amount received
by it in such capacity hereunder, under the Notes or under any of the
other Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined
by such court.
(c) Notwithstanding anything to the contrary contained in this Agreement or
any of the other Loan Documents, any Bank that fails (i) to make
available to the Agent its pro rata share of any Loan or (ii) to comply
with the provisions of Section 13 with respect to making dispositions
and arrangements with the other Banks, where such Bank's share of any
payment received, whether by setoff or otherwise, is in excess of its
pro rata share of such payments due and payable to all of the Banks, in
each case as, when and to the full extent required by the provisions of
this Agreement, shall be deemed delinquent (a "Delinquent Bank") and
shall be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed to have assigned any and
all payments due to it from the Borrower and the Guarantor, whether on
account of outstanding Loans, interest, fees or otherwise, to the
remaining nondelinquent Banks for application to, and reduction of,
their respective pro rata shares of all outstanding Loans. The
Delinquent Bank hereby authorizes the Agent to distribute such payments
to the nondelinquent Banks in proportion to their respective pro rata
shares of all outstanding Loans. A Delinquent Bank shall be deemed to
have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans of the
nondelinquent Banks or as a result of other payments by the Delinquent
Banks to the nondelinquent Banks, the Banks' respective pro rata shares
of all outstanding Loans have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
Section 14.6. Holders of Notes. Subject to the terms of Article 18,
the Agent may deem and treat the payee of any Note as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished
in writing with a different name by such payee or by a subsequent holder,
assignee or transferee.
Section 14.7. Indemnity. The Banks ratably agree hereby to indemnify
and hold harmless the Agent from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Agent has not been reimbursed by the
Borrower as required by Section 15), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or any of
the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Agent's actions taken hereunder or thereunder, except to
the extent that any of the same shall be directly caused by the Agent's
willful misconduct or gross negligence.
Section 14.8. Agent as Bank. In its individual capacity, BKB shall
have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of any
of the Notes as it would have were it not also the Agent.
Section 14.9. Resignation; Removal. The Agent may resign at any time
by giving 60 days' prior written notice thereof to the Banks and the
Borrower. In the event that a "Default" or "Event of Default" shall occur
and be continuing under the Mortgage Loan Documents and BKB shall be the
Agent, then the Majority Banks may remove BKB as Agent for cause. Upon any
such resignation or removal, the Majority Banks shall have the right to
appoint as a successor Agent any Bank or any other sophisticated investor
knowledgeable in the lending to and/or operation of real estate similar to
the Mortgaged Property and the Mezzanine Property and, so long as the
interests of Borrower in the Mezzanine Property are included in the
Collateral, who is approved by the Rating Agencies pursuant to the Mezzanine
Mortgage Loan Agreement. Any such removal shall be effective upon
appointment and acceptance of a successor agent selected by the Majority
Banks. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the
Borrower. If no successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which shall be a Bank
or any other sophisticated investor knowledgeable in the lending to and/or
operation of real estate similar to the Mortgaged Property and the Mezzanine
Property and, so long as the interests of Borrower in the Mezzanine Property
are included in the Collateral, who is approved by the Rating Agencies
pursuant to the Mezzanine Mortgage Loan Agreement. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent, and the retiring or
removed Agent shall be discharged from its duties and obligations hereunder
as Agent. After any retiring Agent's resignation or the removal of an Agent,
the provisions of this Agreement and the other Loan Documents shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Agent.
Section 14.10. Duties in the Case of Enforcement. In case one or more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if (a)
so requested by the Majority Banks and (b) the Banks have provided to the
Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions of the Security Documents authorizing the sale or other
disposition of all or any part of the Collateral and exercise all or any such
other legal and equitable and other rights or remedies as it may have in
respect of such Collateral. The Majority Banks may direct the Agent in
writing as to the method and the extent of any such sale or other
disposition, the Banks hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 15. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Agreement, the other Loan Documents and the other agreements
and instruments mentioned herein, (b) any taxes (including any interest and
penalties in respect thereto) payable by the Agent or any of the Banks (other
than taxes based upon the Agent's or any Bank's gross or net income, except
that the Agent and the Banks shall be entitled to indemnification for any and
all amounts paid by them in respect of taxes based on income or other taxes
assessed by any State in which Mortgaged Property or the Collateral is
located, such indemnification to be limited to taxes due solely on account of
the granting of Collateral under the Security Documents and to be net of any
credit allowed to the indemnified party from any other State on account of
the payment or incurrence of such tax by such indemnified party), including
any recording, mortgage, documentary or intangibles taxes in connection with
the Loan Documents, or other taxes payable on or with respect to the
transactions contemplated by this Agreement, including any such taxes payable
by the Agent or any of the Banks after the Closing Date (the Borrower hereby
agreeing to indemnify the Agent and each Bank with respect thereto), (c) all
title insurance premiums, appraisal fees, engineer's fees, reasonable
internal charges of the Agent (determined in good faith and in accordance
with the Agent's internal policies applicable generally to its customers) for
commercial finance exams and engineering and environmental reviews and the
reasonable fees, expenses and disbursements of the counsel to the Agent,
counsel for the Majority Banks and any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein (excluding, however, the
preparation of agreements evidencing participations granted under Section
18.4), the review of any additional or substitute Collateral, the addition of
any guarantor, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the reasonable fees,
expenses and disbursements of the Agent incurred by the Agent in connection
with the preparation, administration or interpretation of the Loan Documents
and other instruments mentioned herein, and the making of each advance
hereunder, (e) all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and costs, which attorneys may be employees of any Bank or
the Agent and the fees and costs of appraisers, engineers, investment bankers
or other experts retained by any Bank or the Agent) incurred by any Bank or
the Agent in connection with (i) the enforcement of or preservation of rights
under any of the Loan Documents against the Borrower or any Guarantor or the
administration thereof after the occurrence of a Default or Event of Default
and (ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Agent's or any of the Bank's
relationship with the Borrower or any Guarantor, (f) all reasonable fees,
expenses and disbursements of any Bank or the Agent incurred in connection
with U.C.C. searches, U.C.C. filings, title rundowns, title searches or
mortgage recordings, and (g) all reasonable fees and expenses (including
reasonable attorney's fees and costs) incurred by BankBoston and Goldman in
connection with the assignment of Commitments and interests in the Loans
pursuant to Section 18.1. The covenants of this Section 15 shall survive
payment or satisfaction of payment of amounts owing with respect to the
Notes.
Section 16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and the
Banks and each director, officer, employee, agent and Person who controls the
Agent or any Bank from and against any and all claims, actions and suits,
whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this Section 16
based upon any agreement, arrangement or action made or taken, or alleged to
have been made or taken, by the Borrower or any of its Subsidiaries or the
Guarantor, (b) any condition, use, operation or occupancy of the Mortgaged
Property, the Mezzanine Property or the Collateral, (c) any actual or
proposed use by the Borrower of the proceeds of any of the Loans, (d) any
actual or alleged infringement of any patent, copyright, trademark, service
mark or similar right of the Borrower or any of its Subsidiaries or the
Guarantor comprised in the Collateral, (e) the Borrower and the Guarantor
entering into or performing this Agreement or any of the other Loan
Documents, (f) any actual or alleged violation of any law, ordinance, code,
order, rule, regulation, approval, consent, permit or license relating to the
Mortgaged Property or the Mezzanine Property, (g) with respect to the
Borrower or any of its Subsidiaries, or the Guarantor and their respective
properties and assets, the violation of any Environmental Law, the Release or
threatened Release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any
Hazardous Substances (including, but not limited to claims with respect to
wrongful death, personal injury or damage to property), (h) the Mortgage Loan
Documents, the Mezzanine Mortgage Loan Documents, the Property Owner
Organizational Agreements, the Wells Avenue Holdings Organizational
Agreements, the WASH Manager Organizational Agreements and the WASH
Organizational Agreements, (i) matters for which the Mezzanine Mortgagee is
indemnified pursuant to Section 9.2 of the Mezzanine Mortgage Loan Agreement
to the same extent provided therein, (j) in the event that the Agent or any
nominee of the Agent and the Banks shall foreclose or otherwise obtain title
to all or any portion of the Collateral, any obligations, duties or
liabilities of the Property Owner, WASH, WASH Manager or Wells Avenue
Holdings other than those pursuant to Leases entered into in compliance with
this Agreement, the Mortgage Loan Documents, the Mezzanine Mortgage Loan
Documents (subject to the terms of the Loan Documents) or the approved
budgets, or (k) the exercise by the Agent of the rights and remedies set
forth in Section 32; in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or
other proceeding; provided, however, that the Borrower shall not be obligated
under this Section 16 to indemnify any Person for liabilities arising from
such Person's own gross negligence or willful misconduct. In order to
provide for just and equitable contribution in circumstances in which the
indemnity agreement provided for in Section 9.2(b) or (c) of the Mezzanine
Mortgage Loan Agreement is for any reason held to be unenforceable by an
indemnified party in respect of any claims, expenses, losses, damages,
obligations or liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 16(i) above the Borrower
shall contribute to the amount paid or payable by the Agent or the Banks as a
result of such claims, expenses, losses, damages, obligations or liabilities
(or action in respect thereof); provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the Agent's, the Banks' and the
Borrower's or its Subsidiaries' (or the Borrower's or its Subsidiaries'
predecessors) relative knowledge and access to information concerning the
matter with respect to which claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Agent and the Borrower
hereby agree that it may not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation. In litigation, or the
preparation therefor, the Banks and the Agent shall be entitled to select a
single law firm as their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of the
Borrower under this Section 16 are unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment in satisfaction
of such obligations which is permissible under applicable law. The
provisions of this Section 16 shall survive the repayment of the Loans and
the termination of the obligations of the Banks hereunder.
Section 17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower, any of its Subsidiaries,
the Property Owner or any Guarantor pursuant hereto or thereto shall be
deemed to have been relied upon by the Banks and the Agent, notwithstanding
any investigation heretofore or hereafter made by any of them, and shall
survive the making by the Banks of any of the Loans, as herein contemplated,
and shall continue in full force and effect so long as any amount due under
this Agreement or the Notes or any of the other Loan Documents remains
outstanding or any Bank has any obligation to make any Loans. The
indemnification obligations of the Borrower provided herein and the other
Loan Documents shall survive the full repayment of amounts due and the
termination of the obligations of the Banks hereunder and thereunder to the
extent provided herein and therein. All statements contained in any
certificate or other paper delivered to any Bank or the Agent at any time by
or on behalf of the Borrower, any of its Subsidiaries, the Property Owner or
any Guarantor pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by such
Person hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. Conditions to Assignment by Banks. Except as provided
herein, each Bank may assign to one or more banks or other entities all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and
the same portion of the Loans at the time owing to it, and the Notes held by
it); provided that (a) the Agent shall have given its prior written consent
to such assignment, which consent shall not be unreasonably withheld
(provided that such consent shall not be required for any assignment to
another Bank, to a bank which is under common control with the assigning Bank
or to a wholly-owned Subsidiary of such Bank provided that such assignee
shall remain a wholly-owned Subsidiary of such Bank), (b) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Agreement, (c) the parties
to such assignment shall execute and deliver to the Agent, for recording in
the Register (as hereinafter defined), a notice of such assignment, together
with any Notes subject to such assignment, (d) in no event shall any voting,
consent or approval rights of a Bank be assigned to any Person controlling,
controlled by or under common control with, or which is not otherwise free
from influence or control by, the Borrower, any of its Subsidiaries, the
Property Owner or any Guarantor, which rights shall instead be allocated pro
rata among the other remaining Banks, (e) such assignee shall have a net
worth as of the date of such assignment of not less than $500,000,000 and (f)
such assignee shall acquire an interest in the Loans of not less than
$10,000,000.00. No such assignment shall be made without the prior consent
of the Borrower, which consent shall not be unreasonably withheld or delayed;
provided that such consent shall not be required in the event that a Default
or Event of Default shall have occurred. Upon such execution, delivery,
acceptance and recording, of such notice of assignment, (i) the assignee
thereunder shall be a party hereto and all other Loan Documents executed by
the Banks and, to the extent provided in such assignment, have the rights and
obligations of a Bank hereunder, (ii) the assigning Bank shall, to the extent
provided in such assignment and upon payment to the Agent of the registration
fee referred to in Section 18.2, be released from its obligations under this
Agreement, and (iii) the Agent may unilaterally amend Schedule 1.1 to reflect
such assignment. In connection with each assignment, the assignee shall
represent and warrant to the Agent, the assignor and each other Bank as to
whether such assignee is controlling, controlled by, under common control
with or is not otherwise free from influence or control by, the Borrower, any
of its Subsidiaries, the Property Owner or any Guarantor. Notwithstanding
anything herein to the contrary, in the event that BKB shall at any time hold
a Commitment equal to or less than $10,000,000, then BKB shall promptly
provide written notice thereof to the Banks and the Majority Banks shall have
the right, to be exercised within fifteen (15) days of delivery of such
notice by BKB, to elect to remove BKB as Agent and replace BKB as Agent,
subject to the terms of Section 14.9.
Section 18.2. Register. The Agent shall maintain a copy of each
assignment delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the
Commitment Percentages of, and principal amount of the Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time
to time upon reasonable prior notice. Upon each such recordation, the
assigning Bank agrees to pay to the Agent a registration fee in the sum of
$2,000.
Section 18.3. New Notes. Upon its receipt of an assignment executed by
the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the
Banks (other than the assigning Bank). Within five Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for each surrendered Note, a new Note to
the order of such assignee in an amount equal to the amount assumed by such
assignee pursuant to such assignment and, if the assigning Bank has retained
some portion of its obligations hereunder, a new Note to the order of the
assigning Bank in an amount equal to the amount retained by it hereunder, and
shall cause the Guarantor to deliver to Agent an acknowledgment in form and
substance satisfactory to the Agent to the effect that the Guaranty extends
and is applicable to each new Note. Such new Notes shall provide that they
are replacements for the surrendered Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such assignment and shall
otherwise be in substantially the form of the assigned Notes. The
surrendered Notes shall be canceled and returned to the Borrower.
Section 18.4. Participations. Each Bank may sell participations to one
or more banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents with the prior
written consent of the Agent (after giving due regard to the limitations in
Section 18.8); provided that (a) any such sale or participation shall not
affect the rights and duties of the selling Bank hereunder to the Borrower,
(b) such sale and participation shall not entitle such participant any rights
or privileges under this Agreement or the Loan Documents (including, without
limitation, the right to approve waivers, amendments or modifications),
(c) such participant shall have no direct rights against the Borrower or the
Guarantor except the rights granted to the Banks pursuant to Section 13, (d)
such sale is effected in accordance with all applicable laws, and (e) such
participant shall not be a Person controlling, controlled by or under common
control with, or which is not otherwise free from influence or control by,
the Borrower, any of its Subsidiaries, the Property Owner or any Guarantor.
Section 18.5. Pledge by Bank. Any Bank may at any time pledge all or
any portion of its interest and rights under this Agreement (including all or
any portion of its Note) to any of the twelve Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
Section 18.6. No Assignment by Borrower. The Borrower shall not assign
or transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
Section 18.7. Disclosure. The Borrower agrees that in addition to
disclosures made in accordance with standard institutional lending practices
any Bank may disclose information obtained by such Bank pursuant to this
Agreement to assignees or participants and potential assignees or
participants hereunder.
Section ul or Additional Restrictions on Assignments and
Participations. Notwithstanding anything to the contrary set forth in this
Agreement or in any of the other Loan Documents, so long as the Mezzanine
Conditional Guaranty or the Nomura Conditional Guaranty remains in effect, no
interest in the Loan may be assigned, transferred or participated, unless in
each case the additional requirements set forth in clauses (a) through (e)
below are satisfied: (a) the entity to which any interest in the Loan is
assigned, transferred or participated is an Eligible Transferee (as defined
below), (b) the minimum denomination assigned, transferred or participated
shall not be less than $10,000,000.00, (c) assignments, transfers and
participations may not be made to more than eight (8) Eligible Transferees in
the aggregate, (d) assignments, transfers and participations may not be made
without the consent of Whitehall Street Real Estate Limited Partnership V,
Whitehall Street Real Estate Limited Partnership VI, Whitehall Street Real
Estate Limited Partnership VII and Whitehall Street Real Estate Limited
Partnership VIII, which consent shall not be unreasonably withheld, delayed
or conditioned, and (e) assignments, transfers and participations may not be
made unless the prospective assignee, transferee or participant executes and
delivers a fully completed certificate in the form of Exhibit E hereto
confirming that such assignee, transferee or participant is an Eligible
Transferee. "Eligible Transferee" means a "qualified purchaser" as defined
in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended, and
the rules and regulations promulgated thereunder.
Section 19. NOTICES.
Each notice, demand, election or request provided for or permitted to be
given pursuant to this Agreement (hereinafter in this Section 19 referred to
as "Notice"), but specifically excluding to the maximum extent permitted by
law any notices of the institution or commencement of foreclosure
proceedings, must be in writing and shall be deemed to have been properly
given or served by personal delivery or by sending same by overnight courier
or by depositing same in the United States Mail, postpaid and registered or
certified, return receipt requested, or as expressly permitted herein, by
telegraph, telecopy, telefax or telex, and addressed as follows:
If to the Agent or BKB:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Telecopy No.: 770/390-8434
<PAGE>
If to the Borrower:
Wellsford/Whitehall Properties II, L.L.C.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Mr. Gregory F. Hughes
With a copy to:
Alan S. Pearce, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
if to another Bank now a party to this Agreement, to the address set forth on
the signature page hereto, and to each other Bank which may hereafter become
a party to this Agreement at such address as may be designated by such Bank.
Each Notice shall be effective upon being personally delivered or upon being
sent by overnight courier or upon being deposited in the United States Mail
as aforesaid. The time period in which a response to such Notice must be
given or any action taken with respect thereto (if any), however, shall
commence to run from the date of receipt if personally delivered or sent by
overnight courier, or if so deposited in the United States Mail, the earlier
of three (3) Business Days following such deposit or the date of receipt as
disclosed on the return receipt. Rejection or other refusal to accept or the
inability to deliver because of changed address for which no notice was given
shall be deemed to be receipt of the Notice sent. By giving at least fifteen
(15) days prior Notice thereof, the Borrower, a Bank or Agent shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses and each shall have the right to specify as
its address any other address within the United States of America.
Section 20. RELATIONSHIP.
Neither the Agent nor any Bank has any fiduciary relationship with or
fiduciary duty to Borrower arising out of or in connection with this
Agreement or the other Loan Documents, or the transactions contemplated
hereunder or thereunder, and the relationship between each Bank and the
Borrower is solely that of a lender and borrower, and nothing contained
herein or in any of the other Loan Documents shall in any manner be construed
as making the parties hereto partners, joint venturers or any other
relationship other than lender and borrower.
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 22. HEADINGS.
The captions in this Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
Section 23. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
so executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
Section 25. WAIVER OF JURY TRIAL.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES ITS RIGHT TO
A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY,
AMONG OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS Section
25.
Section 26. DEALINGS WITH THE BORROWER.
The Banks and their affiliates may accept deposits from, extend credit
to and generally engage in any kind of banking, trust or other business with
the Borrower, it Subsidiaries or the Guarantor or any of their affiliates
regardless of the capacity of the Bank hereunder.
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower or
the Guarantor of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Majority
Banks. Notwithstanding the foregoing, none of the following may occur
without the written consent of each Bank: a change in the rate of interest
on and the term of the Notes; a change in the amount of the Commitments of
the Banks; a forgiveness, reduction or waiver of the principal of any unpaid
Loan or any interest thereon or fee payable under the Loan Documents; a
change in the amount of any fee payable to a Bank hereunder; the postponement
of any date fixed for any payment of principal of or interest on the Loan; an
extension of the Maturity Date (except as provided in Section 2.8); a change
in the manner of distribution of any payments to the Banks or the Agent; the
release of the Borrower or the Guarantor or any Collateral except as
otherwise provided herein; an amendment of the definition of Majority Banks
or of any requirement for consent by all of the Banks; any modification to
require a Bank to fund a pro rata share of a request for an advance of the
Loan made by the Borrower other than based on its Commitment Percentage; an
amendment to this Section 27; an amendment of the definition of Majority
Banks; or an amendment of any provision of this Agreement or the Loan
Documents which requires the approval of all of the Banks or the Majority
Banks to require a lesser number of Banks to approve such action. The amount
of the Agent's fee payable for the Agent's account and the provisions of
Section 14 may not be amended without the written consent of the Agent. No
waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrower shall entitle the Borrower to other or further
notice or demand in similar or other circumstances.
Section 28. SEVERABILITY.
The provisions of this Agreement are severable, and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
Section 29. LIMITATION ON LIABILITY.
NO OBLIGATION OR LIABILITY WHATSOEVER OF THE BORROWER WHICH MAY ARISE AT
ANY TIME UNDER THIS AGREEMENT OR ANY OBLIGATION OR LIABILITY WHICH MAY BE
INCURRED BY IT PURSUANT TO ANY OTHER LOAN DOCUMENT SHALL BE PERSONALLY
BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE
PRIVATE PROPERTY OF ANY OF THE BORROWER'S MEMBERS REGARDLESS OF WHETHER SUCH
OBLIGATION OR LIABILITY IS IN THE NATURE OF CONTRACT, TORT OR OTHERWISE;
PROVIDED, HOWEVER, NOTHING HEREIN SHALL DIMINISH OR IMPAIR THE RIGHTS OF
AGENT AND THE BANKS TO PURSUE ANY REMEDY AGAINST ANY ASSETS OF THE BORROWER
OR RELIEVE, REDUCE OR IMPAIR ANY OBLIGATION OF ANY GUARANTOR UNDER ITS
GUARANTY OR INDEMNITY AGREEMENT.
Section 30. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
Section 31. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower under this Agreement and the other
Loan Documents.
Section 32. BANKRUPTCY.
(a) Material Inducement. Each of the Borrower, WASH Manager, Wells Avenue
Holdings and the undersigned Guarantor, jointly and severally,
acknowledges and agrees that the representations, warranties, covenants
and agreements contained in this Section 32 constitute a material
inducement to the Agent and the Banks to enter into this Agreement, the
other Loan Documents and the transactions contemplated hereby and
thereby and that without the inclusion of this Section 32 herein the
Agent and the Banks would not have entered into this Agreement and the
other Loan Documents.
(b) No Fraudulent Intent. Each of the Borrower, WASH Manager, Wells Avenue
Holdings and the undersigned Guarantor, jointly and severally, hereby
acknowledges, warrants, represents and agrees that neither the execution
and delivery of this Agreement and the other Loan Documents nor the
performance of any actions required hereunder or thereunder is being
consummated by the Borrower, the Property Owner, WASH Manager, Wells
Avenue Holdings or the Guarantor with or as a result of any actual
intent by such Persons, or any of them, to hinder, delay or defraud any
entity to which such Persons, or any of them, are now or will hereafter
become indebted.
(c) No Bankruptcy Intent. Each of the Borrower, WASH Manager, Wells Avenue
Holdings and the undersigned Guarantor, jointly and severally, hereby
represents, covenants and agrees that none of the Borrower, the Property
Owner, WASH, WASH Manager, Wells Avenue Holdings or the Guarantor has
any intent (1) to file any voluntary petition in bankruptcy under any
Chapter of the Bankruptcy Code or in any manner to seek relief,
protection, reorganization, liquidation, dissolution or similar relief
for debtors under any local, state, federal or other insolvency laws or
laws providing for relief of debtors, or in equity, or directly or
indirectly to cause any of the other of such Persons to file any such
petition or to seek any such relief, either at the present time, or at
any time hereafter, or (2) directly or indirectly to cause any
involuntary petition under any Chapter of the Bankruptcy Code to be
filed against any of such Persons or directly or indirectly to cause any
of such Persons to become the subject of any dissolution, liquidation or
insolvency proceeding or any other proceeding pursuant to any local,
state, federal, or other insolvency laws or laws providing for relief of
debtors, or in equity, either at the present time, or at any time
hereafter, or (3) directly or indirectly to cause the Mortgaged
Property, the Mezzanine Property, any other collateral for the Mortgage
Loan, the Collateral or any portion thereof or any interest of such
Persons in the Mortgaged Property, the Mezzanine Property, any other
collateral for the Mortgage Loan or the Collateral to become the
property of any bankruptcy estate or the subject of any local, state,
federal or other bankruptcy, dissolution, liquidation or insolvency
proceedings, either at the present time or at any time hereafter.
(d) Agreement in Best Interests of Parties; Consideration. Each of the
Borrower, WASH Manager, Wells Avenue Holdings and the undersigned
Guarantor, jointly and severally, hereby acknowledges and agrees that
(1) the transactions evidenced by this Agreement and the other Loan
Documents are in the best interests of such Persons and the creditors of
such Persons, and (2) the benefit to inure to such Persons pursuant to
this Agreement and the other Loan Documents constitute substantially
more than "reasonable equivalent value" (as such term is used in Section
548 of the Bankruptcy Code) and "fair consideration" (as such term is
defined and used in the New York Debtor and Creditor Law Sections 272-
279), in exchange for the benefits to be provided by such Persons to the
Agent and the Banks pursuant to this Agreement and the other Loan
Documents.
(e) Subsequent Bankruptcy; Waiver of Automatic Stay.
(1) It is expressly agreed and understood by the parties
hereto that, in the event the Property Owner, WASH, WASH Manager, Wells
Avenue Holdings, the Borrower, the undersigned Guarantor, the
Collateral, the Mortgaged Property, the Mezzanine Property, any other
collateral for the Mortgage Loan, or any portion thereof, shall be or
become the subject of any bankruptcy proceeding or the property of any
bankruptcy estate, the United States Bankruptcy Court for the Southern
District of New York (hereinafter referred to as the "Bankruptcy Court")
shall have the sole and exclusive jurisdiction of such bankruptcy
proceeding. The parties hereto hereby further acknowledge and agree
that any voluntary bankruptcy petition filed by any of the Property
Owner, WASH, WASH Manager, Wells Avenue Holdings, the Borrower, or the
Guarantor, or any involuntary bankruptcy petition caused to be filed by
any of the Property Owner, WASH, WASH Manager, Wells Avenue Holdings,
the Borrower or Guarantor, or any affiliate thereof against any of the
Property Owner, WASH, WASH Manager, Wells Avenue Holdings, the Borrower
or the Guarantor (any such bankruptcy filing being hereinafter referred
to as a "Bad Faith Filing"), or any other action by the Borrower or such
Persons, or any of them, to attempt in any manner to hinder, delay,
impede, stay, void, rescind or nullify any lawful action taken by Agent
to exercise its rights and remedies under this Agreement or any of the
other Loan Documents, or at law or in equity, from and after the date
hereof, or pursuant to any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar proceedings, would be in bad faith
and contrary to the purposes of the bankruptcy laws, would be for the
sole purpose of delaying, inhibiting or interfering with the exercise by
Agent of its rights and remedies under this Agreement and the Loan
Documents and would, in and of itself, constitute "cause" for relief
from the automatic stay pursuant to the provisions of Section 362(d)(1)
of the Bankruptcy Code. Without limitation of the foregoing, the
parties hereto hereby further acknowledge and agree that, in the event
of any Bad Faith Filing by or against any of the Property Owner, WASH,
WASH Manager, Wells Avenue Holdings, the Borrower, or Guarantor, or
their respective successors, successors-in-interest or assigns, Agent
shall be entitled to obtain upon ex parte application therefor, and
without further notice or action of any kind or nature whatsoever, (A)
an order from the Bankruptcy Court prohibiting the use of Agent's "cash
collateral" (as such term is defined in Section 363 of the Bankruptcy
Code) in connection with the Loan, and (B) an order from the Bankruptcy
Court granting immediate relief from the automatic stay pursuant to
Section 362 of the Bankruptcy Code so as to permit Agent to exercise all
of its rights and remedies pursuant to this Agreement, the Loan
Documents, and at law and in equity.
(2) The Borrower, WASH Manager, Wells Avenue Holdings and the
undersigned Guarantor covenant not to directly or indirectly oppose or
otherwise defend against Agent's effort to obtain relief from the stay
pursuant to Section 32(e)(1), above, and covenant and agree that Agent
shall be entitled to the lifting of the stay pursuant to Section
32(e)(1), above, without the necessity of an evidentiary hearing and
without the necessity or requirement that Agent establish or prove the
value of the Mortgaged Property, the Mezzanine Property or the
Collateral, the lack of adequate protection of Agent's interest in the
Collateral, the lack of any reasonable prospect of reorganization with
respect either to the Property Owner, WASH, WASH Manager, Wells Avenue
Holdings, the Borrower, the Guarantor, the Mortgaged Property, the
Mezzanine Property or the Collateral, or the Borrower's or the
Guarantor's lack of equity in the Collateral.
(3) The waiver by the Borrower, WASH Manager, Wells Avenue
Holdings and the undersigned Guarantor of the Section 362 automatic stay
contained in the Bankruptcy Code pursuant to Section 32(e)(1) and (2),
above, and the waiver of the Section 362 automatic and Section 105
supplemental stay contained in the Bankruptcy Code pursuant to Section
32(f), below, shall be unconditional and absolute, and each of the
Borrower, WASH Manager, Wells Avenue Holdings and the undersigned
Guarantor hereby agree never to directly or indirectly maintain before
any court that such waiver of the automatic stay and supplemental stay
should not be strictly enforced.
(f) Waiver of Automatic and Supplemental Stays. Each of the Borrower, WASH
Manager, Wells Avenue Holdings and the undersigned Guarantor, on behalf
of itself only, hereby represents, covenants and agrees, in the event of
the filing of any voluntary or involuntary petition in bankruptcy by or
against any of the Property Owner, WASH, WASH Manager, Wells Avenue
Holdings, the Borrower or the Guarantor, not to assert or request any
other party to assert that the automatic stay provided by Section 362 of
the Bankruptcy Code shall operate or be interpreted to stay, interdict,
condition, reduce or inhibit the ability of Agent to enforce any rights
it has by virtue of this Agreement or the Loan Documents, or any other
rights Agent has, whether now or hereafter acquired, against any of the
Property Owner, WASH, WASH Manager, Wells Avenue Holdings, the Borrower,
the Guarantor, or against any of the Collateral; and further, in the
event of the filing of any voluntary or involuntary petition in
bankruptcy by or against any of the Property Owner, WASH, WASH Manager,
Wells Avenue Holdings, the Borrower or the Guarantor, not to seek a
supplemental stay or any other relief, whether injunctive or otherwise,
pursuant to Section 105 of the Bankruptcy Code or any other provision of
the Bankruptcy Code, to stay, interdict, condition, reduce or inhibit
the ability of Agent to enforce any rights it has by virtue of this
Agreement or the Loan Documents, or at law or in equity, or any other
rights Agent has, whether now or hereafter acquired against the Property
Owner, WASH, WASH Manager, Wells Avenue Holdings, the Borrower or the
Guarantor, or against any of the Collateral. The parties hereto
acknowledge that the waivers in this Section 32(f) with respect to an
involuntary petition shall not be effective until the occurrence of an
Event of Default provided that none of the Borrower, WASH, WASH Manager,
Wells Avenue Holdings, the undersigned Guarantor, or the Property Owner
directly or indirectly causes such petition to be filed against any of
them.
(g) Approval Rights Regarding Bankruptcy Proceeding. Upon the occurrence
and during the continuance of any Event of Default, all rights of the
Borrower and the Guarantor to exercise their Voting Interests in the
Property Owner, as the case may be, shall automatically terminate and
cease to exist and all such rights shall thereupon be automatically
vested in the Agent who shall thereupon have the sole and exclusive
right to exercise such Voting Interests. Without limiting the
foregoing, in the event of a Bad Faith Filing or any other voluntary or
involuntary bankruptcy filing or any other insolvency proceeding of any
kind under local, state, federal or other insolvency laws involving the
Property Owner, WASH, WASH Manager, Wells Avenue Holdings, the Borrower,
the Guarantor, or all of them, or any of their properties (collectively
the "Bankruptcy Filings"), the Borrower, WASH Manager, Wells Avenue
Holdings and the Guarantor each acknowledge and agree to recognize the
rights and powers granted to the Agent in this Section 32(g) and agree
not to oppose or object on any basis whatsoever to the exercise by the
Agent of such rights in connection with the Bankruptcy Filings.
Further, upon the commencement of one or more Bankruptcy Filings, the
Borrower, WASH Manager, Wells Avenue Holdings and the undersigned
Guarantor, jointly and severally, covenant and agree: (1) not to
propose, approve, vote for, or acquiesce in a plan of reorganization
concerning the Property Owner, WASH, WASH Manager, Wells Avenue
Holdings, the Borrower, the Guarantor, or all of them, as it directly or
indirectly relates to the Property Owner, WASH, WASH Manager, Wells
Avenue Holdings, the Collateral, the Mortgaged Property, the Mezzanine
Property or the Mezzanine Collateral without the consent of Agent; (2)
not to challenge or object on any basis whatsoever to the standing of
Agent to be recognized as a creditor and/or party-in-interest in the
Bankruptcy Filings; and (3) not to violate or breach any of the
covenants or agreements contained in this Agreement and any of the Loan
Documents.
(h) Miscellaneous Representations. Each of the Borrower, WASH Manager,
Wells Avenue Holdings and the undersigned Guarantor warrant and
represent to Agent and the Banks that, other than Agent and the Banks,
applicable taxing authorities, and as to the Borrower only, the
Indebtedness permitted by this Agreement, the Borrower, WASH Manager,
Wells Avenue Holdings and the Guarantor have no creditors; that none of
such Persons has any employees; that each of such Persons are single
asset entities such that each of such Persons does not own or hold any
beneficial interest in any property of any kind or nature whatsoever
other than their respective direct or indirect interests in the Property
Owner; and that any dispute which may arise between Agent, the Banks,
the Borrower (arising from its interest in the Collateral), the
Guarantor (arising from its interest in the Collateral), or any of them,
would be, for all intents and purposes, a dispute, involving only Agent
and the Banks and the Borrower, or the Guarantor, or any of them, as
applicable.
(i) Covenant of Noninterference and Cooperation.
(1) The Borrower, WASH Manager, Wells Avenue Holdings and the
undersigned Guarantor jointly and severally, covenant and agree that,
except for a "Permitted Defense" (as defined in each of the Mezzanine
Conditional Guaranty and the Nomura Conditional Guaranty, as
applicable), none of them shall take any action of any kind or nature
whatsoever, either directly or indirectly, to oppose, impede, obstruct,
hinder, frustrate, enjoin or otherwise interfere with the exercise by
Agent of any of Agent's rights and remedies against or with respect to
the Collateral, this Agreement or the other Loan Documents, including
specifically, but without limitation, those rights and remedies
contained in this Section 32, at law or in equity, and shall not, either
directly or indirectly cause any other Person to take any of the
foregoing actions.
(2) The Borrower, WASH Manager, Wells Avenue Holdings and the
undersigned Guarantor jointly and severally, covenant and agree, except
with respect to a Permitted Defense, to cooperate fully and completely
with the exercise by Agent of any of Agent's rights and remedies against
or with respect to the Collateral, this Agreement or the other Loan
Documents, including specifically, but without limitation, those rights
and remedies contained in this Section 32.
(3) The Borrower, WASH Manager, Wells Avenue Holdings and the
undersigned Guarantor jointly and severally covenant and agree that any
violation of either Section 32(i)(1) or (2), above, or the occurrence of
any "Triggering Event" (as defined in each of the Mezzanine Conditional
Guaranty and the Nomura Conditional Guaranty, respectively), will
constitute an act of bad faith undertaken with intent to hinder, delay
and defraud Agent.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.,
a Delaware limited liability company
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By:/s/ Gregory F. Hughes
------------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
BANKBOSTON, N.A., a national banking
association, individually and as Agent
By: /s/ Mark E. Basham
------------------------------------
Name: Mark E Basham
Title: Managing Director
[BANK SEAL]
<PAGE>
GOLDMAN SACHS MORTGAGE COMPANY, a New
York limited partnership,
individually and as Co-Arranger and
Co-Syndication Agent
By: /s/ Robert R. Foley
---------------------------------
Name: Robert R. Foley
Title: Authorized Signatory
[CORPORATE SEAL]
<PAGE>
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Sylvia Gross
-----------------------------
Title: Vice President
By: /s/ Nicholas Nouvel
-----------------------------
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT
590 Madison Avenue
New York, New York 10022
Attn: Mr. Johnathan Oh
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Christopher A. Pucillo
-------------------------------
Title: Vice President
Morgan Stanley Senior Funding, Inc.
1585 Broadway
10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
<PAGE>
The undersigned Wells Avenue Holdings, WASH Manager and Guarantor hereby
join in this Agreement for the purpose of being bound to the provisions of
Section 32 of this Agreement.
WELLS AVENUE HOLDINGS:
---------------------
WELLS AVENUE HOLDINGS, L.L.C., a
Delaware limited liability company
By: Wellsford/Whitehall Holdings,
L.L.C., a Delaware limited
liability company, its sole
member
By: Wells/Whitehall Properties II,
L.L.C., a Delaware limited
liability company, its managing
member
By: Wellsford Commercial
Properties Trust, a
Maryland real estate
investment trust, its
manager
By: /s/ Gregory F. Hughes
----------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
WASH MANAGER:
------------
WASH MANAGER L.L.C., a Delaware limited
liability company
By: Wells Avenue Holdings L.L.C., a Delaware
limited liability company, its sole member
By: Wellsford/Whitehall Holdings, L.L.C.,
a Delaware limited liability company,
its sole member
By: Wellsford/Whitehall Properties
II, L.L.C., a Delaware limited
liability company, its managing
member
By: Wellsford Commercial
Properties Trust, a
Maryland real estate
investment trust, its
manager
By: /s/ Gregory F. Hughes
----------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
GUARANTOR:
---------
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
----------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF NOTE
$______________ _______________
FOR VALUE RECEIVED, the undersigned WELLSFORD/WHITEHALL HOLDINGS II,
L.L.C., a Delaware limited liability company, hereby promises to pay to
______________________________ or order, in accordance with the terms of that
certain Mezzanine Loan Agreement dated as of July ____, 1998 (the "Credit
Agreement"), as from time to time in effect, among the undersigned,
BankBoston, N.A., for itself and as Agent, Goldman Sachs Mortgage Company,
and such other Banks as may be from time to time named therein, to the extent
not sooner paid, on or before the Maturity Date, the principal sum of
_________________________ DOLLARS ($______________), or such amount as may be
advanced by the payee hereof under the Credit Agreement with daily interest
from the date hereof, computed as provided in the Credit Agreement, on the
principal amount hereof from time to time unpaid, at a rate per annum on each
portion of the principal amount which shall at all times be equal to the rate
of interest applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be
payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof
or upon the prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or in
part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in part, all as
set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of acceleration of the maturity of any of
the Obligations or otherwise, shall the interest contracted for, charged or
received by the Banks exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, interest would otherwise be
payable to the Banks in excess of the maximum lawful amount, the interest
payable to the Banks shall be reduced to the maximum amount permitted under
applicable law; and if from any circumstance the Banks shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to
the reduction of the principal balance of the Obligations and to the payment
of interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the Borrower.
All interest paid or agreed to be paid to the Banks shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal of the
Obligations (including the period of any renewal or extension thereof) so
that the interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all
agreements between the Borrower and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount of
this Note may become or be declared due and payable in the manner and with
the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of New York (without giving effect to the conflict of laws rules
of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized officers,
executed this Note under seal as of the day and year first above written.
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust, its
manager
By:___________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR LOAN
BankBoston, N.A.,as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the Mezzanine Loan
Agreement dated July ___, 1998, as from time to time in effect (the "Credit
Agreement"), among Wellsford/Whitehall Properties II, L.L.C. (the
"Borrower"), BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and the other Banks from time to time party thereto, the
Borrower hereby requests and certifies as follows:
1. Loan. The Borrower hereby requests a Loan under Section 2.1 of the
Credit Agreement:
Principal Amount: $
Type (Eurodollar, Base Rate):
Drawdown Date: _____________, 19__
Interest Period:
by credit to the general account of the Borrower with the Agent at the
Agent's Head Office.
2. Use of Proceeds. Such Loan shall be used for the following
purposes permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. Capital Improvement Project. In the event that such Loan relates
to any Capital Improvement Project or portion thereof, the Borrower
represents and warrants that such Loan will reimburse the Borrower for or pay
costs incurred for work on the Capital Improvement Project identified above,
which work covered by this request is in place or is for stored materials
which are properly secured. The Borrower further certifies that all
materialmen, laborers, subcontractors and any other parties who might or
could claim statutory or common law liens and are furnishing or have
furnished material or labor to the Mortgaged Property in connection with such
Capital Improvement Project have been paid (or will be paid from the proceeds
of the requested advance) all amounts due for such labor and materials.
4. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect to
the making of the Loan requested hereby. No condemnation proceedings are
pending or to the Borrower's knowledge threatened against any Mortgaged
Property or the Mezzanine Property or other Collateral for the Loan.
5. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower and its Subsidiaries and the Guarantor
contained in the Credit Agreement, in the other Loan Documents or in any
document or instrument delivered pursuant to or in connection with the Credit
Agreement was true as of the date as of which it was made and shall also be
true at and as of the Drawdown Date for the Loan requested hereby (except
that representations as to the Guarantor shall not be deemed to have been
repeated), with the same effect as if made at and as of such Drawdown Date
(except to the extent of changes resulting from transactions contemplated or
permitted by the Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate
are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default has occurred and is continuing.
6. Other Conditions. All other conditions to the making of the Loan
requested hereby set forth in Section 11 of the Credit Agreement have been
satisfied. (Reference title insurance "date down", if applicable.)
7. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrower on and as of such Drawdown Date.
8. Definitions. Terms defined in the Credit Agreement are used herein
with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_______________, 199___.
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust, its
manager
By:____________________________________
Name:_______________________________
Title:______________________________
<PAGE>
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Reference is made to the Mezzanine Loan Agreement dated as of July __,
1998 (the "Credit Agreement") by and among Wellsford/Whitehall Properties II,
L.L.C. (the "Borrower"), BankBoston, N.A., for itself and as Agent, Goldman
Sachs Mortgage Company, and the other Banks from time to time party thereto.
Terms defined in the Credit Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement.
Pursuant to the Credit Agreement, the Borrower is furnishing to you
herewith (or has most recently furnished to you) the financial statements of
the Borrower and its Subsidiaries for the fiscal period ended _______________
(the "Balance Sheet Date"). Such financial statements have been prepared in
accordance with generally accepted accounting principles and present fairly
the financial position of the Borrower and its Subsidiaries covered thereby
at the date thereof and the results of their operations for the periods
covered thereby, subject in the case of interim statements only to normal
year-end audit adjustments.
This certificate is submitted in compliance with requirements of Section
2.6(iii), Section 5.3(a)(ii), Section 5.3(b)(ii), Section 7.4(d), Section
7.4(h), Section 7.5(e), Section 8.1(f), Section 8.1(g), Section 8.1(h),
Section 8.4, Section 8.8 or Section 10.14 of the Credit Agreement. If this
Certificate is provided under a provision other than Section 7.4(d), the
calculations provided below are made using the financial statements of the
Borrower and its Subsidiaries as of the Balance Sheet Date adjusted in the
best good-faith estimate of the Borrower to give effect to the making of a
Loan, extension of the Maturity Date, acquisition or disposition of property
or other event that occasions the preparation of this certificate; and the
nature of such event and the Borrower's estimate of its effects are set forth
in reasonable detail in an attachment hereto. The undersigned officer of the
Borrower is its chief financial or chief accounting officer.
The undersigned officer has caused the provisions of the Credit
Agreement to be reviewed and has no knowledge of any Default or Event of
Default. (Note: If the signer does have knowledge of any Default or Event of
Default, the form of certificate should be revised to specify the Default or
Event of Default, the nature thereof and the actions taken, being taken or
proposed to be taken by the Borrower with respect thereto.)
The Borrower is providing the following information to demonstrate
compliance as of the date hereof with the following covenants:
I. Section 9.1. Liabilities to Assets Ratio.
A. Consolidated Total Liabilities
per balance sheet $______________
B. Consolidated Total Assets per
definition thereof $______________
(Attach Worksheet)
Ratio of A to B ________
Ratio of A to B may not exceed 0.75 to 1 on or
before December 31, 1999; 0.70 to 1 for the
period thereafter through December 31, 2000;
0.65 to 1 for the period thereafter.
II. Section 9.2. Consolidated Operating Cash
Flow Coverage.
A. Consolidated Operating Cash Flow =
Consolidated Net Income for
most recent quarter $____________
Plus depreciation and amortization $____________
Plus interest expense $____________
Plus extraordinary or non-recurring
losses $____________
Minus extraordinary or non-
recurring gains ($__________)
Plus/Minus Rent Adjustments $___________
Minus Rents included in Net Income from
tenants delinquent in excess of 60 days ($__________)
Subtotal for most recent quarter $___________
Consolidated Operating Cash Flow
for three prior quarters:
Quarter ended __________ $___________
Quarter ended __________ $___________
Quarter ended __________ $___________
Total $___________
Plus General and Administrative Costs
for four prior Quarters $___________
Plus Negative Carry for four prior Quarters $___________
Minus Capital Improvement Reserve for four
prior quarters ($__________)
Minus Capitalized Negative Carry for four
prior quarters ($__________)
Total $___________
B. Debt Service for four prior
quarters $___________
Ratio of A to B _________
A must equal or exceed 115% of B for the period ending on
or before December 31, 1999; A must equal or exceed
125% of B for the period thereafter through
December 31, 2000; A must equal or exceed 135%
of B thereafter.
III. Section 9.3. Minimum Shareholder's Equity
A. Shareholders' Equity $__________
B. $68,000,000.00 $__________
Plus 80% of net proceeds from any Equity Offering
after Closing Date $__________
Plus 100% of Net Income (or Deficit)
after Closing Date $__________
plus Depreciation deducted in calculating Net Income
(or Deficit) after Closing Date $__________
Minus Aggregate Distributions pursuant to Section 8.7(a)
after Closing Date $__________
Total $__________
A must equal or exceed B
IV. Section 9.4. Real Estate Assets
A. Consolidated Total Assets $______________
B. Value of direct or indirect interests
in undeveloped land $______________
Total $______________
Ratio of B to A _______
B may not exceed 5% of A
V. Section 9.5. Required Equity
A. Indebtedness pursuant to this Agreement
(Section 8.1(a)) $______________
Plus Recourse Indebtedness (Section 8.1(f)) $______________
(Amount may not exceed $20,000,000)
Plus Non-Recourse Indebtedness (Section 8.1(g)) $______________
Plus Non-Recourse Indebtedness (Section 8.1(h)) $______________
Plus Indebtedness under Mortgage Loan Agreement
(Section 8.1(i)) $______________
Plus Indebtedness under Mezzanine Mortgage Loan
Agreement (Section 8.1(j)) $______________
Total $______________
B. Aggregate all-in acquisition cost of Real Estate $______________
and the Mezzanine Property of Borrower and its Subsidiaries
and historic cost of capital improvements
Ratio of A to B ________
A may not exceed 0.75 of B
VI. Section 8.3(j). Investment Partnerships
A. Value of investments in Investment Partnerships $______________
B. Consolidated Total Assets $______________
Ratio of A to B _______
A may not exceed 10% of B.
VII. Section 8.7. Distributions
A. Distributions $______________
B. Minimum Distributions required to $______________
maintain REIT status of Wellsford
Commercial
A may not exceed B (provided that B may be at least $1,250,000 per
annum)
VIII. Section 8.9. Development
A. Aggregate cost of Real Estate $______________
Under Development
B. Consolidated Total Assets $______________
A may not exceed the greater of $25,000,000.00 or 10% of B.
IN WITNESS WHEREOF, I have hereunto set may hand this __ day
____________, _______.
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.,
a Delaware limited liability company
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By:_______________________________
Name:__________________________
Title:_________________________
<PAGE>
EXHIBIT D
FORM OF REQUEST FOR EXTENSION OF LOAN
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.8 of the Mezzanine Loan
Agreement dated July ___, 1998, as from time to time in effect (the "Credit
Agreement"), among Wellsford/Whitehall Properties II, L.L.C. (the
"Borrower"), BankBoston, for itself and as Agent, Goldman Sachs Mortgage
Company, and the other Banks from time to time party thereto, the Borrower
hereby requests and certifies as follows:
1. Extension Request. The Borrower hereby irrevocably requests that
the Maturity Date be extended as provided in Section 2.8 of the Credit
Agreement.
2. Extension Fee. The Borrower undertakes to pay the extension fee as
required by Section 2.8 (b)(i) of the Credit Agreement as required therein.
3. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect to
the extension requested hereby.
4. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower, its Subsidiaries, the Property Owner
and the Guarantor contained in the Credit Agreement, in the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with the Credit Agreement was true and correct in all material
respect as of the date as of which it was made and (other than
representations as to the Guarantor) shall also be true and correct in all
material respects at and as of the Maturity Date (without regard to such
extension request) with the same effect as if made at and as of the Maturity
Date (without regard to such extension request) (except to the extent of
changes occurring in the ordinary course of business that have not had any
materially adverse affect on the business of the Borrower, any of its
Subsidiaries, the Property Owner or any Guarantor).
5. Other Conditions. All other conditions to the extension to the
Loan requested hereby set forth in Section 2.8 of the Credit Agreement have
been satisfied.
6. Date. Except to the extent, if any, specified by notice actually
received by the Agent prior to the Maturity Date (without regard to such
extension request) specified above, the foregoing representations and
warranties shall be deemed to have been made by the Borrower on and as of the
Maturity Date (without regard to such extension request).
7. Definitions. Terms defined in the Credit Agreement are used herein
with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
______________, 199__.
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust, its
manager
By:_____________________________________
Name:________________________________
Title:_______________________________
<PAGE>
EXHIBIT E
CERTIFICATE
In connection with the purchase being made by the undersigned of a
participation interest in or assignment of the loan (the "Loan") made by the
"Banks" (as defined in the Credit Agreement referred to below) to
Wellsford/Whitehall Properties II, L.L.C. (the "Borrower") pursuant to a
Mezzanine Loan Agreement dated July ___, 1998, (the "Credit Agreement"), the
undersigned represents, warrants and covenants as follows:
(1) The undersigned either:
(a) is a "qualified institutional buyer" as defined in paragraph (a) of
Rule 144A under the Securities Act of 1933, acting for its own
account, the account of another "qualified institutional buyer", or
the account of a "qualified purchaser" as defined in paragraph
(b)(i)(2) below; provided that if the undersigned is a dealer
described in paragraph (a)(1)(ii) of Rule 144A, the undersigned
owns and invests on a discretionary basis at least $25,000,000 in
securities of issuers that are not affiliated persons of such
dealer, all within the meaning of Rule 2a51-1(g)(1) under the
Investment Company Act of 1940 (the "Act"). (For purposes of
making this determination, a plan referred to in paragraph
(a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred
to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of
such a plan, is not deemed to be acting for its own account if
investment decisions with respect to the plan are made by the
beneficiaries of the plan, except with respect to investment
decisions made solely by the fiduciary, trustee or sponsor of such
plan.)
OR
(b) (i)(1) is acting for its own account or (2) is acting for the
account of individuals or entities each of which is a "qualified
purchaser" as defined in Section 2(a)(51)(A) of the Act and the
rules promulgated thereunder; and (ii) owns and invests on a
discretionary basis at least $25,000,000 in "investments" (as
defined in Section 2(a)(51)(A) of the Act), after deducting the
amount of any outstanding indebtedness incurred to acquire or for
the purpose of acquiring such investments.
OR
(c) is a company (other than a trust formed for the specific purpose of
acquiring an interest in the Loan) all the securities of which are
beneficially owned by "qualified purchasers" as defined in
paragraph (b)(i)(2) above.
(2) The undersigned acknowledges and agrees that the interest in the Loan is
being purchased by the undersigned for its own account and not pursuant to a
public offering and that such interest may only be sold or transferred in a
manner that does not constitute a public offering to another entity that can
deliver to the Borrower a certification to the effect set forth in paragraphs
1(a), (b) or (c) and 2 of this Certificate and otherwise in accordance with
the Credit Agreement.
[name of proposed transferee]
By: ____________________________________
Name:
Title:
<PAGE>
SCHEDULE 1.1
BANKS AND COMMITMENTS
Name and Address Commitment Commitment Percentage
- ---------------- ---------- ---------------------
BankBoston, N.A. $25,000,000.00 33.3333%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Goldman Sachs Mortgage Company $15,000,000.00 20.0000%
85 Broad Street
New York, New York 10004
Attn: Mr. Bob Foley
Eurodollar Lending Office
Same as above
BHF-Bank Aktiengesellschaft $10,000,000.00 13.3333%
590 Madison Avenue
New York, New York 10022
Mr. Johnathan Oh
Eurodollar Lending Office
Same as above
Morgan Stanley Senior
Funding, Inc. $10,000,000.00 13.3333%
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
<PAGE>
Pam Capital Funding LP $15,000,000.00 20.0000%
c/o Highland Capital Management, L.P.
1150 Two Galleria Tower
13455 Noel Road LB#45
Dallas, Texas 75240
Attn: Chris Curtis
Eurodollar Lending Office
Same as above
Total Commitment $75,000,000.00 100%
Percentages may not equal 100% due to rounding.
<PAGE>
SCHEDULE 5.3
DESCRIPTION OF GREENBROOK CORPORATE CENTER
AND POINT VIEW VACANT LAND
<PAGE>
SCHEDULE 6.3
TITLE TO PROPERTIES
None.
<PAGE>
SCHEDULE 6.4
ALL-IN ACQUISITION COST, DESIGNATED COLLATERAL
VALUE, STABILIZED PROPERTIES AND RELEASE PRICES
Acquisition Designated Stabilized Property/ Release
Property Cost Collateral Value Non-Stabilized Property Price
- -------- ----------- ---------------- ----------------------- -------
<PAGE>
SCHEDULE 6.7
LITIGATION
None.
<PAGE>
SCHEDULE 6.17
ERISA PLANS
None.
<PAGE>
SCHEDULE 6.21
SUBSIDIARIES OF THE BORROWER
1. Wellsford/Whitehall Holdings, L.L.C.
2. Wells Avenue Holdings L.L.C.
3. WASH Manager L.L.C.
4. Wells Avenue Senior Holdings LLC
5. WEL/WH Convention Managers, L.L.C.
<PAGE>
SCHEDULE 6.30-1
MEZZANINE MORTGAGE LOAN DOCUMENTS
<PAGE>
SCHEDULE 6.30-2
MORTGAGE LOAN DOCUMENTS
<PAGE>
SCHEDULE 6.30-3
ALLOCATION OF MEZZANINE MORTGAGE LOAN
FORM OF NOTE
$25,000,000 July 16, 1998
FOR VALUE RECEIVED, the undersigned WELLSFORD/WHITEHALL HOLDINGS
II, L.L.C., a Delaware limited liability company, hereby promises to pay to
BANKBOSTON, N.A. or order, in accordance with the terms of that certain
Mezzanine Loan Agreement dated as of July 16, 1998 (the "Credit Agreement"),
as from time to time in effect, among the undersigned, BankBoston, N.A., for
itself and as Agent, Goldman Sachs Mortgage Company, and such other Banks as
may be from time to time named therein, to the extent not sooner paid, on or
before the Maturity Date, the principal sum of TWENTY-FIVE MILLION AND NO/100
DOLLARS ($25,000,000), or such amount as may be advanced by the payee hereof
under the Credit Agreement with daily interest from the date hereof, computed
as provided in the Credit Agreement, on the principal amount hereof from time
to time unpaid, at a rate per annum on each portion of the principal amount
which shall at all times be equal to the rate of interest applicable to such
portion in accordance with the Credit Agreement, and with interest on overdue
principal and, to the extent permitted by applicable law, on overdue
installments of interest and late charges at the rates provided in the Credit
Agreement. Interest shall be payable on the dates specified in the Credit
Agreement, except that all accrued interest shall be paid at the stated or
accelerated maturity hereof or upon the prepayment in full hereof.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for
the payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under
and is entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or in
part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in part, all as
set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all
agreements between the Borrower and the Banks and the Agent, whether now
existing or hereafter arising and whether written or oral, are hereby limited
so that in no contingency, whether by reason of acceleration of the maturity
of any of the Obligations or otherwise, shall the interest contracted for,
charged or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount, the
interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks shall
ever receive anything of value deemed interest by applicable law in excess of
the maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal balance of the Obligations and to
the payment of interest or, if such excessive interest exceeds the unpaid
balance of principal of the Obligations, such excess shall be refunded to the
Borrower. All interest paid or agreed to be paid to the Banks shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full period until payment in full of the principal of
the Obligations (including the period of any renewal or extension thereof) so
that the interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all
agreements between the Borrower and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal
amount of this Note may become or be declared due and payable in the manner
and with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of New York (without giving effect to the conflict of laws
rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby
waive presentment, demand, notice, protest, notice of intention to accelerate
the indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
<PAGE>
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
WELLSFORD/WHITEHALL PROPERTIES
II, L.L.C., a Delaware
limited liability company
By: Wellsford Commercial
Properties Trust, a
Maryland real estate
investment trust, its
manager
By:/s/ Gregory F. Hughes
----------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
ASSIGNMENT OF MEMBER'S INTEREST
-------------------------------
THIS ASSIGNMENT OF MEMBER'S INTEREST (this "Assignment"), made as of the
16th day of July, 1998, by WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company ("Assignor"), to BANKBOSTON, N.A., a
national banking association ("BKB"), as Agent for itself and the other Banks
from time to time party to the Credit Agreement (as hereinafter defined)
(BKB, in its capacity as Agent, is hereinafter referred to as "Agent").
W I T N E S S E T H:
WHEREAS, Assignor is the sole member of Wellsford/Whitehall Holdings,
L.L.C., a limited liability company formed under the laws of the State of
Delaware (the "Property Owner"); and
WHEREAS, the Property Owner is presently governed by that certain
Certificate of Formation filed on August 18, 1997 with the Delaware Secretary
of State, as amended by amendment filed June 19, 1998 with the Delaware
Secretary of State, and that certain Amended and Restated Limited Liability
Company Operating Agreement for Wellsford/Whitehall Holdings, L.L.C., a
Delaware limited liability company, dated as of July 16, 1998 (collectively
the "Property Owner Organizational Agreements"); and
WHEREAS, Assignor, BKB, the other lenders a party thereto and Agent have
entered into that certain Mezzanine Loan Agreement dated of even date
herewith (as the same may be varied, extended, supplemented, consolidated,
amended, replaced, renewed or modified or restated, the "Credit Agreement"),
pursuant to which the Banks a party to the Credit Agreement have agreed to
provide a loan to the Assignor in the amount of up to $75,000,000.00 (the
"Loan"), which Loan is evidenced by those certain Notes made by Assignor to
the order of the Banks in the aggregate principal face amount of
$75,000,000.00 (such notes, together with such other Notes as may be issued
pursuant to the Credit Agreement, as the same may be varied, extended,
supplemented, consolidated, amended, replaced, renewed, modified or restated,
are hereinafter referred to collectively as the "Note"); and
WHEREAS, the Banks and Agent have required, as a condition to the making
of the Loan to Assignor, that Assignor execute this Assignment to secure the
obligations of Assignor under the Note, the Credit Agreement and certain
other agreements;
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
covenant and agree as follows:
1. Definitions. Capitalized terms used herein that are not otherwise
defined herein shall have the meaning set forth in the Credit Agreement.
2. Grant of Security Interest. As security for the payment and
performance by Assignor of each and all of Assignor's duties,
responsibilities and obligations under this Assignment, the Credit Agreement,
the Note and any and all agreements evidencing, securing or otherwise
relating to the obligations evidenced by the Note and the Credit Agreement
(this Assignment, the Credit Agreement, the Note and such other agreements,
together with any and all renewals, modifications, consolidations and
extensions thereof, are hereinafter referred to collectively as the "Loan
Documents"; and said duties, responsibilities and obligations of Assignor are
hereinafter referred to collectively as the "Obligations"), Assignor does
hereby transfer, assign, pledge, convey and grant to Agent, and does hereby
grant a security interest to Agent in, all of Assignor's right, title and
interest in and to the following:
(a) All right, title, interest, claims or rights of Assignor now
or hereafter in, to or against the Property Owner (including, without
limitation, Assignor's membership interest in the Property Owner, the
interest of Assignor in and to the Property Owner Organizational Agreements,
the capital of the Property Owner, and the property and assets of the
Property Owner and any rights pertaining thereto) which interest is evidenced
by Certificate No. 1 (the "Certificate"), together with any and all other
securities, cash, certificates or other property, option or right in respect
of, in addition to or substitution or exchange for the Certificate, or other
property at any time and from time to time receivable or otherwise
distributed in respect of or in exchange for all or any thereof; and
(b) Any and all profits, proceeds, accounts, income,
distributions, payments upon dissolution or liquidation of the Property Owner
or the sale, financing or refinancing of any of the property or assets of the
Property Owner, proceeds of a casualty or condemnation, return of capital,
repayment of loans, and payments of any kind or nature whatsoever, now or
hereafter distributable or payable by the Property Owner to Assignor, by
reason of Assignor's interest in the Property Owner or otherwise, or now or
hereafter distributable or payable to Assignor from any other source by
reason of Assignor being a member in the Property Owner, or on account of any
interest in or claim or rights against the Property Owner held by Assignor,
or by reason of services performed by Assignor for or on behalf of the
Property Owner or with respect to the assets of the Property Owner, and any
and all proceeds from any transfer, assignment or pledge of any interest of
Assignor in, or claim or right against, the Property Owner (regardless of
whether such transfer, assignment or pledge is permitted under the terms
hereof or the other Loan Documents), and all claims, choses in action, or
things in action or rights as a creditor now or hereafter arising against the
Property Owner; and
(c) All accounts, contract rights and general intangibles now or
hereafter arising from any of the foregoing; and
(d) All notes or other documents or instruments now or hereafter
evidencing or securing any of the foregoing; and
(e) All right of Assignor to collect and enforce payments
distributable or payable by the Property Owner to Assignor pursuant to the
terms of the Property Owner Organizational Agreements; and
(f) All documents, writings, leases, books, files, records,
computer tapes, programs, ledger books and ledger pages arising from or used
in connection with any of the foregoing; and
law All renewals, extensions, additions, substitutions or
replacements of any of the foregoing; and
(h) All powers, options, rights, privileges and immunities
pertaining to any of the foregoing; and
(i) All proceeds of any of the foregoing and all cash, security or
other property distributed on account of any of the foregoing.
All of the foregoing described in this paragraph 2 are hereinafter referred
to collectively as the "Collateral". The items described in (a), above, are
sometimes hereinafter referred to as the "Member Interests"; and the items
described in (b) - (i), above, are sometimes hereinafter referred to
collectively as the "Distributions."
3. Obligations Secured. This Assignment secures the payment and
performance by Assignor of the Obligations.
4. Collection of Distributions.
(a) It is acknowledged and agreed by the parties hereto that Agent
shall have sole and exclusive possession of the Distributions and that this
Assignment constitutes a present, absolute and current assignment of all the
Distributions and is effective upon the execution and delivery hereof.
Payments under or with respect to the Distributions shall be made as follows:
(1) Except as otherwise specifically provided in this
Paragraph 4, Assignor shall have no right to receive payments made under
or with respect to the Distributions (including without limitation any
Distributions from or relating to any sale, transfer, assignment,
conveyance, option or other disposition of, or any pledge, mortgage,
encumbrance, financing or refinancing of, or casualty to or condemnation
of, any of the Collateral, the Mortgaged Property or the Mezzanine
Property regardless of whether such event is permitted under the terms
of the Loan Documents), and all such payments shall be delivered
directly by the Property Owner to Agent for application by Agent in
satisfaction of the Obligations in such order as Agent in its sole and
absolute discretion shall determine.
(2) Except as otherwise specifically provided in this
Paragraph 4, if Assignor shall receive any payments made under or with
respect to the Distributions (including without limitation any
Distributions from or relating to any sale, transfer, assignment,
conveyance, option or other disposition of, or any pledge, mortgage,
encumbrance, financing or refinancing of, or casualty to or condemnation
of, any of the Collateral, the Mortgaged Property or the Mezzanine
Property regardless of whether such event is permitted under the terms
of the Loan Documents), Assignor shall hold all such payments in trust
for Agent, will not co-mingle such payments with other funds of
Assignor, and will immediately pay and deliver in kind, all such
payments directly to Agent (with such endorsements and assignments as
may be necessary to transfer title to Agent) for application by Agent in
satisfaction of the Obligations in such order as Agent in its sole and
absolute discretion shall determine.
(3) Assignor hereby agrees for the benefit of the Property
Owner that all payments actually received by Agent shall be deemed
payments to Assignor by the Property Owner. Agent shall apply any and
all such payments actually received by Agent in satisfaction of the
Obligations in such order as Agent in its sole and absolute discretion
shall determine. Agent shall return to Assignor that portion of any
payments actually received by Agent from the Property Owner which Agent
determines, in the exercise of its sole and absolute discretion but in
good faith is not needed to repay the Obligations.
awf In furtherance of the foregoing, Assignor does hereby
notify and direct the Property Owner and its members that all payments
under or with respect to the Distributions shall be made directly to
Agent at the address of Agent set forth in the Credit Agreement.
(b) Assignor shall cause the Property Owner, WASH, WASH Manager
and Wells Avenue Holdings promptly to distribute all net proceeds of the
sale, transfer, assignment, conveyance, option or other disposition of, or
any mortgage, hypothecation, encumbrance, financing or refinancing of, or
casualty to or condemnation of, any of its assets or properties, and any and
all other Distributions distributable or payable by the Property Owner, WASH,
WASH Manager or Wells Avenue Holdings or any member thereof under the terms
of the Property Owner Organizational Agreements, the WASH Organizational
Agreements, the WASH Manager Organizational Agreements or the Wells Avenue
Holdings Organizational Agreements, as applicable.
(c) Assignor hereby irrevocably designates and appoints Agent its
true and lawful attorney-in-fact, which appointment is coupled with an
interest, either in the name of Agent, or in the name of Assignor, at
Assignor's sole cost and expense, and regardless of whether Agent becomes a
member in the Property Owner or not, to take any or all of the following
actions:
(1) to ask, demand, sue for, attach, levy, settle,
compromise, collect, compound, recover, receive and give receipt and
acquittances for any and all Collateral and to take any and all actions
as Agent may deem necessary or desirable in order to realize upon the
Collateral, or any portion thereof, including, without limitation,
making any statements and doing and taking any actions on behalf of
Assignor which are otherwise required of Assignor under the terms of any
agreement as conditions precedent to the payment of the Distributions,
and the right and power to receive, endorse, assign and deliver, in the
name of Assignor, any checks, notes, drafts, instruments or other
evidences of payment received in payment of or on account of all or any
portion of the Collateral, and Assignor hereby waives presentment,
demand, protest and notice of demand, protest and non-payment of any
instrument so endorsed; and
(2) to institute one or more actions against the Property
Owner or any member thereof in connection with the collection of the
Distributions, to prosecute to judgment, settle or dismiss any such
actions, and to make any compromise or settlement deemed desirable, in
Agent's sole and absolute discretion, with respect to such
Distributions, to extend the time of payment, arrange for payment in
installments or otherwise modify the terms of the Property Owner
Organizational Agreements with respect to the Distributions or release
the Property Owner or any member thereof from their respective
obligations to pay any Distribution, without incurring responsibility
to, or affecting any liability of, Assignor under the Property Owner
Organizational Agreements;
it being specifically understood and agreed, however, that Agent shall not be
obligated in any manner whatsoever to give any notices of default (except as
may be specifically required herein or the other Loan Documents) or to
exercise any such power or authority or be in any way responsible for the
preservation, maintenance, collection of or realizing upon the Collateral, or
any portion thereof, or any of Assignor's rights therein. Notwithstanding
anything contained in this Paragraph 4 to the contrary, provided no Event of
Default has occurred and is continuing, Assignor shall have a license
(revocable upon the occurrence and during the continuance of an Event of
Default) to receive amounts attributable to (A) rents, issues and profits
paid under Leases not more than one (1) month in advance, (B) excess proceeds
from a sale of a Mortgaged Property or a Mezzanine Property that has been
released in accordance with Section 5.3 of the Credit Agreement, (c) proceeds
from a casualty permitted to be paid to Assignor pursuant to Section 7.7(b)
of the Credit Agreement, (D) excess amounts released from the reserves
maintained under Sections 7.2, 7.3, 7.4 and 7.5 of the Mezzanine Mortgage
Loan Agreement, and (E) rebates or refunds of property taxes paid with
respect to the Mortgaged Property or the Mezzanine Property. The foregoing
appointment is irrevocable and continuing and any such rights, powers and
privileges shall be exclusive in Agent, its successors and assigns until this
Assignment terminates as provided in Paragraph 13, below.
5. Warranties and Covenants. Assignor does hereby warrant and
represent to, and covenant and agree with, Agent and the Banks as follows:
(a) Performance. All duties, obligations and responsibilities
required to be performed by Assignor, WASH, WASH Manager and Wells Avenue
Holdings as of the date hereof under the Property Owner Organizational
Agreements, the WASH Organizational Agreements, the WASH Manager
Organizational Agreements and the Wells Avenue Holdings Organizational
Agreements, as applicable, have been performed, and no default or condition
which with the passage of time or the giving of notice, or both, would
constitute a default exists under the Property Owner Organizational
Agreements, the WASH Organizational Agreements, the WASH Manager
Organizational Agreements and the Wells Avenue Holdings Organizational
Agreements, as applicable.
(b) Organizational Agreements. A true, correct and complete copy
of the Property Owner Organizational Agreements, the WASH Organizational
Agreements, the WASH Manager Organizational Agreements and the Wells Avenue
Holdings Organizational Agreements together with all amendments thereto, are
attached hereto as Exhibit "A-1", "A-2", "A-3" and "A-4". The Property Owner
Organizational Agreements, the WASH Organizational Agreements, the WASH
Manager Organizational Agreements and the Wells Avenue Holdings
Organizational Agreements have been duly authorized, executed and delivered
by the parties thereto and are in full force and effect. Except for the Loan
Documents, the Mortgage Loan Documents and the Mezzanine Mortgage Loan
Documents, neither the Property Owner nor Assignor is a party to or is bound
by any indenture, contract or other agreement which purports to prohibit,
restrict, limit, or control the transfer or pledge of the Collateral, the
exercise of voting rights with respect to the Property Owner or the
management of the Property Owner.
(c) Title. Assignor is and shall remain the sole, lawful,
beneficial and record owner of the Member Interests and the Distributions,
free and clear of all liens, restrictions, claims, pledges, encumbrances,
charges, claims or rights of third parties and rights of set-off or
recoupment whatsoever (other than those in favor of Agent hereunder), and
Assignor has the full and complete right, power and authority to create a
security interest in the Collateral in favor of Agent, in accordance with the
terms and provisions of this Assignment. The Certificate has been duly
authorized and validly issued, and is fully paid and non-assessable.
Assignor is not and will not become a party to or otherwise be bound by any
agreement, other than the Loan Documents, the Mortgage Loan Documents and the
Mezzanine Mortgage Loan Documents, which restricts in any manner the rights
of any present or future holder of the Certificate with respect thereto.
(d) Members. Assignor is the sole member of the Property Owner,
and no other Person owns any legal, equitable or beneficial interest in the
Property Owner or, except for the voting rights of the independent manager as
set forth in the Property Owner Organizational Agreements, has any right to
vote or exercise control over the Property Owner or its management. The
Member Interests are not represented or otherwise evidenced by any
certificate or other document other than the Certificate.
(e) Priority. Upon the delivery of the Certificate to Agent, this
Assignment creates a valid and binding first priority security interest in
the Collateral securing the payment and performance of the Obligations and
the performance by Assignor of the Obligations, and upon the filing of UCC
Financing Statements with the Secretary of State of New York, the Office of
the Register of the City of New York and the Massachusetts Secretary of
State, all filings and other actions necessary to perfect and protect such
security interests shall have been duly made and taken. Neither Assignor nor
the Property Owner has performed or will perform any acts which might prevent
Agent from enforcing any of the terms and conditions of this Agreement or
which would limit Agent in any such enforcement.
(f) Notes. All original notes and other documents or instruments
(if any) evidencing, constituting, guaranteeing or securing any of the
Distributions or any right to receive the Distributions have been endorsed to
and delivered to Agent.
(g) Principal Place of Business. For the purposes of Article 9-
401 of the New York Uniform Commercial Code, the principal place of business
of Assignor is located in New York County, New York. In the event that
Assignor has more than one place of business in the State of New York, its
chief executive office is located in New York County, New York. In order to
perfect the pledge and security interests granted herein against Assignor,
U.C.C. Financing Statements must be filed with the Secretary of State of New
York, the Office of the Register of the City of New York, New York County and
the Massachusetts Secretary of State.
(h) Securities Laws. The transactions contemplated by this
Assignment do not violate and do not require that any filing, registration or
other act be taken with respect to any and all laws pertaining to the
registration or transfer of securities, including without limitation the
Securities Act of 1933, the Securities and Exchange Act of 1934, and any and
all rules and regulations promulgated thereunder or any similar federal,
state or local law, rule, regulation or orders (collectively the "Applicable
Law") hereafter enacted or analogous in effect, as the same are amended and
in effect from time to time (such Act and any similar laws as from time to
time being in effect being referred to as the "Federal Securities Laws").
Assignor shall at all times comply with Applicable Law and the Federal
Securities Laws as the same pertain to all or any portion of the Collateral
or any of the transactions contemplated by this Assignment (provided that the
foregoing shall not apply to assignments by the Banks of interests in the
Loan pursuant to the Credit Agreement).
(i) No Transfer Tax. No transfer tax, deed tax, conveyance tax or
similar tax may be payable as a result of a transfer of the Collateral
(whether by foreclosure, conveyance in lieu of foreclosure or otherwise) by
Assignor to Agent.
6. General Covenants. Assignor covenants and agrees that, so long as
this Assignment is continuing:
(a) No Further Encumbrance. Except as expressly permitted by
Section 5.3 of the Credit Agreement, Assignor shall not, without the prior
written consent of Agent, which consent may be withheld by Agent in its sole
and absolute discretion, directly, indirectly or by operation of law, sell,
transfer, assign, dispose of, pledge, convey, option, mortgage, hypothecate
or encumber any of the Collateral, nor shall there occur, directly,
indirectly or by operation of law, without the prior written consent of Agent
in each instance, which consent may be withheld by Agent in its sole and
absolute discretion, any sale, assignment, transfer, conveyance, disposition,
option, mortgage, hypothecation, pledge or other encumbrance of (i) any
direct or indirect interests, rights or claims of Property Owner in and to
Wells Avenue Holdings, (ii) any direct or indirect interests, rights or
claims of Wells Avenue Holdings in and to WASH Manager or (iii) any direct or
indirect interests, rights or claims of Wells Avenue Holdings and WASH
Manager in and to WASH. The foregoing shall not be deemed to restrict the
transfer of interests in Assignor itself, which transfers shall be governed
by the terms of the Credit Agreement.
(b) Defense of Collateral. Assignor shall at all times defend the
Collateral against all claims and demands of all persons at any time claiming
any interest in the Collateral adverse to Agent's interest in the Collateral
as granted hereunder.
(c) Modification of Organizational Agreements. So long as this
Assignment remains in effect, Assignor shall not modify, amend, cancel,
release, surrender, terminate or permit the modification, amendment,
cancellation, release, surrender or termination of, the Property Owner
Organizational Agreements, the WASH Organizational Agreements, the WASH
Manager Organizational Agreements or the Wells Avenue Holdings Organizational
Agreements, or dissolve, liquidate, redeem, cancel, wind-up or permit the
dissolution, liquidation, redemption, cancellation, winding-up or expiration
of the Property Owner, WASH, WASH Manager or Wells Avenue Holdings or the
Property Owner Organizational Agreements, the WASH Organizational Agreements,
the WASH Manager Organizational Agreements or the Wells Avenue Holdings
Organizational Agreements, or seek or permit the partition of any of the
assets of the Property Owner, WASH, WASH Manager or Wells Avenue Holdings,
without in each instance the prior written consent of Agent, which consent
may be withheld by Agent in its sole and absolute discretion; provided,
however, that Agent shall not unreasonably withhold its consent to any
modification or amendment of the Property Owner Organizational Agreements,
the WASH Organizational Agreements, the WASH Manager Organizational
Agreements or the Wells Avenue Holdings Organizational Agreements which does
not affect or have an impact on the management of the Property Owner, WASH,
WASH Manager or Wells Avenue Holdings, as applicable, any voting rights, the
rights to receive distributions, any provisions of the Property Owner
Organizational Agreements, the WASH Organizational Agreements, the WASH
Manager Organizational Agreements or the Wells Avenue Holdings Organizational
Agreements, as applicable, concerning actions that the Property Owner, WASH,
WASH Manager or Wells Avenue Holdings, as applicable, is either authorized to
do or that are ultra vires, or otherwise materially affect the Property
Owner, WASH, WASH Manager or Wells Avenue Holdings, as applicable, the
Collateral or the rights and benefits afforded to Agent and the Banks
pursuant to this Assignment and the other Loan Documents (such modifications
or amendments described in the foregoing proviso are hereinafter referred to
as the "Minor Amendments").
(d) Performance of Duties.
(1) Assignor shall perform all of its duties,
responsibilities and obligations under the Property Owner Organizational
Agreements and with respect to the Collateral, and shall diligently and
in good faith protect the value of the Collateral. Assignor shall cause
Property Owner to perform all of its duties, responsibilities and
obligations under the Wells Avenue Holdings Organizational Agreements,
and shall cause Wells Avenue Holdings and WASH Manager to perform all of
their respective duties, responsibilities and obligations under the WASH
Manager Organizational Agreements and the WASH Organizational
Agreements, respectively.
(2) Assignor shall not, without the prior written consent of
Agent, which consent may be withheld by Agent in its sole and absolute
discretion, take or permit to be taken any action which could result in
the sale, reduction, cancellation, dilution, diminution, conversion or
withdrawal of any interest of Assignor in the Property Owner, of the
Property Owner in Wells Avenue Holdings, of Wells Avenue Holdings in
WASH Manager, or of Wells Avenue Holdings or WASH Manager in WASH, or
omit to take any action necessary to prevent any such sale, reduction,
cancellation, dilution, diminution, conversion or withdrawal, or
otherwise take any action or omit to take any action that would, in the
exercise of Agent's judgment, jeopardize or diminish the security
interests or rights and benefits afforded to Agent by the Collateral.
Without limiting the foregoing, Assignor shall not consent to or permit
to occur the admission of any new member in the Property Owner, Wells
Avenue Holdings, WASH Manager or WASH, the creation of any new class of
interest in the Property Owner, Wells Avenue Holdings, WASH Manager or
WASH, or the issuance, directly or indirectly, of any other equity or
beneficial interest in the Property Owner, Wells Avenue Holdings, WASH
Manager or WASH.
(e) Payment of Taxes. Assignor shall pay all taxes and other
charges against the Collateral, shall not use the Collateral illegally, and
shall not suffer to exist any loss, theft, damage or destruction of the
Collateral and shall suffer to exist no levy, seizure or attachment of the
Collateral.
(f) Enforcement of Organizational Agreements. Assignor, at the
request of Agent, shall take such actions as Agent may reasonably require to
enforce the terms of the Property Owner Organizational Agreements, the WASH
Organizational Agreements, the WASH Manager Organizational Agreements and
the Wells Avenue Holdings Organizational Agreements, respectively, or any
other contract, agreement or instrument included in, giving rise to,
creating, establishing, evidencing or relating to the Collateral or to
collect or enforce any claim for payment or other right or privilege assigned
to Agent hereunder.
(g) Further Assurances. Assignor authorizes Agent, at the expense
of Assignor, to execute and file any financing statement or statements deemed
necessary by Agent to perfect its security interest in any of the Collateral.
Any such financing statement may be signed by Agent alone. Assignor will
sign and deliver any financing statements and other documents, and perform
such other acts as Agent may deem necessary or desirable from time to time to
establish and maintain in favor of Agent, valid and perfected security
interests in the Collateral, free of all other liens, encumbrances, security
interests and claims other than as permitted by the terms of this Assignment.
Assignor shall do anything else Agent may reasonably require from time to
time to establish a valid security interest in and to further protect and
perfect its security interest in the Collateral.
(h) Location of Collateral. Except for those items of the
Collateral that are delivered to Agent as provided herein, the Collateral,
and all records of Assignor relative to the Collateral, are and will be kept
at the office of Assignor located in New York County, New York. Assignor
shall give Agent not fewer than thirty (30) days prior written notice of any
proposed change in the name of Assignor or the Member and any proposed change
in the location of the Collateral or of such records, and Assignor will not,
without the prior written consent of Agent, move the Collateral or such
records to a location outside of New York County, New York or keep duplicate
records with respect to the Collateral at any address outside such county.
Notwithstanding the foregoing, Agent acknowledges and agrees that the
property records for the Mezzanine Property (including leases, service
contracts and the like) will be kept at the office of the managing agent in
Newton, Massachusetts. Nothing contained in this subparagraph shall be
construed so as to prevent Assignor from keeping material abstracted from the
books and records described herein at any of its offices as necessity or
convenience dictates. Assignor shall permit the Agent or any representative
designated by the Agent, at the Agent's expense and upon reasonable advance
notice (which may be oral), to examine the books and accounts of the Assignor
(and to make copies thereof and extracts therefrom) and to discuss the
affairs, finances and accounts of the Assignor with, and to be advised as to
the same by, its members and officers, all at such reasonable times and
intervals as the Agent may reasonably request. The Agent shall use good
faith efforts to coordinate such visits and inspections so as to minimize the
interference with and disruption to Assignor's normal business operations.
(i) Evidence of Indebtedness. Without limiting any other terms of
the Loan Documents prohibiting or restricting the ability of the Property
Owner to incur Indebtedness, if any amounts are due from the Property Owner
to Assignor and the obligations to repay such amount is to be evidenced by a
separate document or instrument, then as evidence of such obligations,
Assignor shall cause the Property Owner to issue Assignor, as the evidence of
any obligations of the Property Owner to pay Distributions to Assignor in the
future, a promissory note bearing the legend attached hereto as Exhibit "B"
and which note shall provide that all payments due under such promissory note
are to be paid directly to Agent as required by and applied as provided in
the Loan Documents until the Obligations are paid in full or this Assignment
is otherwise terminated as provided herein. No other evidence of such
obligations shall be executed by the Property Owner to Assignor.
(j) Delivery of Notes. Assignor shall promptly deliver to Agent
any note or other document or instrument entered into after the date hereof
which evidences, constitutes, guarantees or secures any of the Distributions
or any right to receive a Distribution, which notes or other documents and
instruments shall be accompanied by such endorsements or assignments as Agent
may require to transfer title to Agent.
(k) Assignor Remains Liable. Anything herein to the contrary
notwithstanding, (1) Assignor shall remain liable under the Property Owner
Organizational Agreements and all other contracts, agreements and instruments
included in, giving rise to, creating, establishing, evidencing or relating
to the Collateral to the extent set forth therein to perform all of its
duties and obligations (including, without limitation, the making of any
contributions to the capital of the Property Owner or the payment of any
other sum to or on behalf of the Property Owner) to the same extent as if
this Assignment had not been executed, (2) the exercise by Agent of any of
its rights hereunder shall not release Assignor from any of its duties or
obligations under the Property Owner Organizational Agreements or any such
contracts, agreements and instruments, and (3) Agent shall not have any
obligation or liability under the Property Owner Organizational Agreements,
the WASH Organizational Agreements, the WASH Manager Organizational
Agreements or the Wells Avenue Holdings Organizational Agreements or any such
contract, agreement or instrument by reason of this Assignment, nor shall
Agent be obligated to perform any of the obligations or duties of Assignor
thereunder or to take any action to collect or enforce any claim for payment
or other right or privilege assigned to Agent hereunder.
(l) Substitutions or Exchanges. If Assignor shall at any time be
entitled to receive or shall receive any cash, certificate or other property,
option or right, upon, in respect of, as an addition to, or in substitution
or exchange for any of the Collateral, whether for value paid by Assignor or
otherwise, Assignor agrees that the same shall be deemed to be Collateral and
shall be delivered directly to Agent in each case, accompanied by proper
instruments of assignment duly executed by Assignor in such a form as may be
required by Agent, to be held by Agent subject to the terms hereof, as
further security for the Obligations (except as otherwise provided herein
with respect to the application of the foregoing to the Obligations). If
Assignor receives any of the foregoing directly, Assignor agrees to hold such
cash or other property in trust for the benefit of Agent, and to surrender
such cash or other property to Agent immediately.
(m) Additional Interests in Member. In the event that Assignor
purchases or otherwise acquires or obtains any additional interest in the
Property Owner or any rights or options to acquire such interest, all such
interest, rights and options shall automatically be deemed to be a part of
the Collateral. All certificates, if any, representing such member interest
shall be promptly delivered to Agent, together with assignments related
thereto, or other instruments appropriate to transfer a certificate
representing any Property Owner interest, duly executed in blank.
7. Events of Default. An Event of Default shall exist hereunder upon
the occurrence of any of the following:
(a) Any warranty, representation or statement made by or on behalf
of Assignor in this Assignment proves untrue or misleading in any material
respect upon the date when made or deemed to have been made or repeated; or
(b) Assignor shall fail to duly and fully comply with any
covenant, condition or agreement in Paragraphs 6(a), 6(c), 6(d)(2), 6(i),
6(j) or 6(l) of this Assignment; or
(c) any of the Assignor, Property Owner, WASH Manager or Wells
Avenue Holdings shall fail to, or the Assignor shall fail to cause WASH to,
duly and fully comply with any other covenant, condition or agreement of this
Assignment (other than those specified in this Paragraph 7 or any default
excluded from any provision of cure of defaults contained in any other of the
Loan Documents) and the same is not cured within thirty (30) days following
receipt of written notice of such default; or
(d) The occurrence of an Event of Default under any of the other
Loan Documents.
8. Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, Agent may take any action deemed by Agent to be necessary or
appropriate to the enforcement of the rights and remedies of Agent under this
Assignment and the Loan Documents, including, without limitation, the
exercise of its rights and remedies with respect to any or all of the Member
Interests. The remedies of Agent shall include, without limitation, all
rights and remedies specified in the Loan Documents and this Assignment, all
remedies of Agent under applicable general or statutory law, and the remedies
of a secured party under the Uniform Commercial Code as enacted in the State
of New York, regardless of whether the Uniform Commercial Code has been
enacted or enacted in that form in any other jurisdiction in which such right
or remedy is asserted. Any notice required by law, including, but not
limited to, notice of the intended disposition of all or any portion of the
Collateral, shall be reasonably and properly given in the manner prescribed
for the giving of notice herein, and, in the case of any notice of
disposition, if given at least ten (10) calendar days prior to such
disposition. Agent may require Assignor to assemble the Collateral and make
it available to Agent at any place to be designated by Agent which is
reasonably convenient to both parties. It is expressly understood and agreed
that Agent shall be entitled to dispose of the Collateral at any public or
private sale, without recourse to judicial proceedings and without either
demand, appraisement, advertisement or notice of any kind, all of which are
expressly waived, and that Agent shall be entitled to bid and purchase at any
such sale. In the event that Agent is the successful bidder at any public or
private sale of any note or other document or instrument evidencing
Assignor's right to receive a Distribution, Agent shall be entitled to credit
the amount bid by Agent against the obligations evidenced by such note,
document or instrument rather than the obligations evidenced by the Note. To
the extent the Collateral consist of marketable securities, Agent shall not
be obligated to sell such securities for the highest price obtainable, but
shall sell them at the market price available on the date of sale. Agent
shall not be obligated to make any sale of the Collateral if it shall
determine not to do so regardless of the fact that notice of sale of the
Collateral may have been given. Agent may, without notice or publication,
adjourn any public sale from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. Each such purchaser
at any such sale shall hold the Collateral sold absolutely free from claim or
right on the part of Assignor. In the event that any consent, approval or
authorization of any governmental agency or commission will be necessary to
effectuate any such sale or sales, Assignor shall execute all such
applications or other instruments as Agent may deem reasonably necessary to
obtain such consent, approval or authorization. Agent may notify any account
debtor or obligor with respect to the Collateral to make payment directly to
Agent, and may demand, collect, receipt for, settle, compromise, adjust, sue
for, foreclose or realize upon the Collateral as Agent may determine whether
or not the Obligations or the Collateral are due, and for the purpose of
realizing Agent's rights therein, Agent may receive, open and dispose of mail
addressed to Assignor and endorse notes, checks, drafts, money orders,
documents of title or other evidences of payment, shipment or storage of any
form of Collateral on behalf and in the name of Assignor, as its
attorney-in-fact. In addition, Assignor hereby irrevocably designates and
appoints Agent its true and lawful attorney-in-fact either in the name of
Agent or Assignor to (i) sign Assignor's name on any Collateral, drafts
against account debtors, assignments, any proof of claim in any bankruptcy or
other insolvency proceeding involving any account debtor, any notice of lien,
claim of lien or assignment or satisfaction of lien, or on any financing
statement or continuation statement under the Uniform Commercial Code; (ii)
send verifications of accounts receivable to any account debtor; and (iii) in
connection with a transfer of the Collateral as described above, sign in
Assignor's name any documents necessary to transfer title to the Collateral
to Agent or any third party. All acts of said power of attorney are hereby
ratified and approved and Agent shall not be liable for any mistake of law or
fact made in connection therewith. This power of attorney is coupled with an
interest and shall be irrevocable so long as any amounts remain unpaid on any
of the Obligations. All remedies of Agent shall be cumulative to the full
extent provided by law, all without liability except to account for property
actually received, but the Agent shall have no duty to exercise such rights
and shall not be responsible for any failure to do so or delay in so doing.
Pursuit by Agent of certain judicial or other remedies shall not abate nor
bar other remedies with respect to the Obligations or to other portions of
the Collateral. Agent may exercise its rights to the Collateral without
resorting or regard to other collateral or sources of security or
reimbursement for the Obligations. In the event that any transfer tax, deed
tax, conveyance tax or similar tax is payable in connection with the
foreclosure, conveyance in lieu of foreclosure or otherwise of the Member
Interests, the Borrower shall pay such amount to agent upon demand and if
Borrower fails to pay such amount on demand, Agent may advance such amount on
behalf of Borrower and the amount thereof shall become a part of the
Obligations and bear interest at the rate for overdue amounts under the
Credit Agreement until paid.
(b) If Assignor fails to perform any agreement or covenant
contained in this Assignment beyond any applicable period for notice and
cure, Agent may itself perform, or cause to be performed, any agreement or
covenant of Assignor contained in this Assignment which Assignor shall fail
to perform, and the cost of such performance, together with any reasonable
expenses, including reasonable attorneys' fees actually incurred (including
attorneys' fees incurred in any appeal) by Agent in connection therewith,
shall be payable by Assignor upon demand and shall constitute a part of the
Obligations and shall bear interest at the rate for overdue amounts as set
forth in the Credit Agreement.
(c) Whether or not an Event of Default has occurred and whether or
not Agent is the absolute owner of the Collateral, Agent may take such action
as Agent may deem necessary to protect the Collateral or its security
interest therein, Agent being hereby authorized to pay, purchase, contest and
compromise any encumbrance, charge or lien which in the judgment of Agent
appears to be prior or superior to its security interest, and in exercising
any such powers and authority to pay necessary expenses, employ counsel and
pay reasonable attorney's fees. Any such advances made or expenses incurred
by Agent shall be deemed advanced under the Loan Documents, shall increase
the indebtedness evidenced and secured thereby, shall be payable upon demand
and shall bear interest at the rate for overdue payments set forth in the
Credit Agreement.
(d) Any certificates or securities held by Agent as Collateral
hereunder may, at any time, and at the option of Agent, be registered in the
name of Agent or its nominee, endorsed or assigned in blank or in the name of
any nominee and Agent may deliver any or all of the Collateral to the issuer
or issuers thereof for the purpose of making denominational exchanges or
registrations or transfer or for such other purposes in furtherance of this
Agreement as Agent may deem desirable. Until the occurrence of an Event of
Default, Assignor shall retain the right to vote any of the Collateral or
exercise limited liability company membership rights, in a manner not
inconsistent with the terms of this Agreement and the other Loan Documents,
and Agent hereby grants to Assignor its proxy to enable Assignor to so vote
any of the Collateral or exercise such limited liability company member
rights (except that Assignor shall not have any right to exercise any such
power or right if the exercise thereof would violate or result in a violation
of any of the terms of this Agreement or any of the other Loan Documents).
At any time after the occurrence and during the continuance of any Event of
Default, Agent or its nominee shall, without notice or demand, automatically
have the sole and exclusive right to give all consents, waivers and
ratifications in respect of the Collateral and exercise all voting and other
membership, management, approval or other rights at any meeting of the
members of the Property Owner (and the right to call such meetings) or
otherwise (and to give written consents in lieu of voting thereon), and
exercise any and all rights of conversion, exchange, subscription or any of
the rights, privileges or options pertaining to the Collateral and otherwise
act with respect thereto and thereunder as if it were the absolute owner
thereof (all of such rights of the Assignor ceasing to exist and terminating
upon the occurrence of an Event of Default) including, without limitation,
the right to exchange, at its discretion, any and all of the Collateral upon
the merger, consolidation, reorganization, recapitalization or the
readjustment of the issuer thereof, all without liability except to account
for property actually received and in such manner as Agent shall determine in
its sole and absolute discretion, but Agent shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be
responsible for the failure to do so or delay in so doing. The exercise by
Agent of any of its rights and remedies under this paragraph shall not be
deemed a disposition of collateral under Article 9 of the UCC nor an
acceptance by Agent of any of the Collateral in satisfaction of the
Obligations.
(e) Upon the occurrence and during the continuance of any Event of
Default, the Agent may direct the Assignor in writing to, and the Assignor
shall cause WASH to, replace the existing property manager and leasing agent
for the Mezzanine Property with a property manager and leasing agent approved
by the Agent, subject to any conditions in the Mortgage Loan Documents and
the Mezzanine Mortgage Loan Documents to the qualifications and approval of
such manager and leasing agent and the form and terms of any new property
management and/or leasing agreement. The Assignor hereby irrevocably
constitutes and appoints the Agent its true and lawful attorney-in-fact, with
full power of substitution, to execute, acknowledge and deliver any
instruments and to do and perform any acts which are referred to in this
Paragraph 8(e), in the name and on behalf of the Assignor. The power vested
in such attorney-in-fact is, and shall be deemed to be, coupled with an
interest and irrevocable.
(f) Upon the written demand of the Agent following the occurrence
of and during the continuance of an Event of Default, the Assignor shall
deliver or cause to be delivered to the Agent or the Agent's designee all
books, records, contracts, Leases, files and other correspondence relating to
the Mortgaged Property and the Mezzanine Property. In addition, upon the
occurrence and during the continuance of an Event of Default, the Assignor
shall upon the written demand of the Agent cause all tenant security deposits
(whether in the form of cash, letter of credit or otherwise) and other
refundable deposits paid to or held by or on behalf of the Property Owner or
WASH in connection with the Leases to be delivered to the Agent, subject to
the rights of the Mortgagee under the Mortgage Loan Documents and the
Mezzanine Mortgagee under the Mezzanine Mortgage Loan Documents, as
applicable.
(g) Notwithstanding anything in this Assignment or any other Loan
Document to the contrary, any reference in this Assignment or any other Loan
Document to "the continuance of a default" or "the continuance of an Event of
Default" or any similar phrase shall not create or be deemed to create any
right on the part of Assignor or any other party to cure any default
following the expiration of any applicable grace or notice and cure period.
9. Duties of Agent. The powers conferred on Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Agent's duty with reference to the
Collateral shall be solely to use slight care in the custody and preservation
of the Collateral, which shall not include any steps necessary to preserve
rights against prior parties. Agent shall have no responsibility or
liability for the collection of any Collateral or by reason of any
invalidity, lack of value or uncollectability of any of the payments received
by it.
10. Indemnification.
(a) It is specifically understood and agreed that this Assignment
shall not operate to place any responsibility or obligation whatsoever upon
Agent, or cause Agent to be, or to be deemed to be, a member in the Property
Owner and that in accepting this Assignment, Agent neither assumes nor agrees
to perform at any time whatsoever any obligation or duty of Assignor relating
to the Collateral or under the Property Owner Organizational Agreements or
any other mortgage, indenture, contract, agreement or instrument to which the
Property Owner is a party or to which it is subject, all of which obligations
and duties shall be and remain with and upon Assignor; provided, however,
that Assignor shall not be liable for the performance of any liabilities or
duties under the Organizational Agreements of Property Owner, Wells Avenue
Holdings, WASH Manager or WASH which may result from written amendments
thereof made by Agent after the occurrence of an Event of Default.
(b) Assignor upon receipt of written demand shall pay to Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and disbursements of counsel actually incurred (including
those incurred in any appeal), and of any experts and agents, which Agent may
incur in connection with (i) the administration of this Assignment, (ii) the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Agent hereunder, or
(iv) the failure by Assignor to perform or observe any of the provisions
hereof beyond any applicable period for notice and cure.
11. Security Interest Absolute. All rights of Agent, and the security
interests hereunder, and all of the obligations secured hereby, shall be
absolute and unconditional, irrespective of:
(a) Any lack of validity or enforceability of the Loan Documents
or any other agreement or instrument relating thereto;
(b) Any change in the time (including the extension of the
maturity date of the Note), manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or waiver of or
any consent to any departure from the Loan Documents;
(c) Any exchange, release or nonperfection of any other collateral
for the Obligations, or any release or amendment or waiver of or consent to
departure from any of the Loan Documents with respect to all or any part of
the Obligations; or
(d) Any other circumstance (other than payment of the Obligations
in full) that might otherwise constitute a defense available to, or a
discharge of, Assignor or any third party for the Obligations or any part
thereof.
12. Amendments and Waivers. No amendment or waiver of any provision of
this Assignment nor consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by Agent, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No delay or omission of Agent to
exercise any right, power or remedy accruing upon any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be
a waiver of any such Event of Default, or acquiescence therein; and every
right, power and remedy given by this Assignment to Agent may be exercised
from time to time and as often as may be deemed expedient by Agent. Failure
on the part of Agent to complain of any act or failure to act which
constitutes an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by Agent of Agent's rights hereunder
or impair any rights, powers or remedies consequent on any Event of Default.
Assignor hereby waives to the extent permitted by law all rights which
Assignor has or may have under and by virtue of the Uniform Commercial Code
as enacted in the State of New York, and any federal, state, county or
municipal statute, regulation, ordinance, Constitution or charter, now or
hereafter existing, similar in effect thereto providing any right of Assignor
to notice and to a judicial hearing prior to seizure by Agent of any of the
Collateral. Assignor hereby waives and renounces for itself, its heirs,
successors and assigns, presentment, demand, protest, advertisement or notice
of any kind (except for any notice required by law or the Loan Documents) and
all rights to the benefits of any statute of limitations and any moratorium,
reinstatement, marshaling, forbearance, valuation, stay, extension,
homestead, redemption and appraisement now provided or which may hereafter be
provided by the Constitution and laws of the United States and of any state
thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement of this Assignment and the collection of
any of the Obligations.
13. Continuing Security Interest; Transfer of Note; Release of
Collateral. This Assignment shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Obligations and the termination of the
obligation of the Banks to make Loans to Assignor, (b) be binding upon
Assignor and its permitted successors and assigns, and (c) inure, together
with the rights and remedies of Agent hereunder, to the benefit of Agent and
the Banks and their respective successors, transferees and assigns. Upon the
indefeasible payment in full of the Obligations and the termination of the
obligation of the Banks to make Loans to Assignor, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert
to Assignor. Upon any such termination, Agent will at Assignor's expense
execute and deliver to Assignor such documents as Assignor shall reasonably
request to evidence such termination.
14. Modifications, Etc. Assignor hereby consents and agrees that Agent
and the Banks may at any time and from time to time, without notice to or
further consent from Assignor, either with or without consideration,
surrender any property or other security of any kind or nature whatsoever
held by it or by any person, firm or corporation on its behalf or for its
account, securing the Obligations; substitute for any Collateral so held by
it, other collateral of like kind; agree to modification of the terms of the
Loan Documents; extend or renew the Loan Documents for any period; grant
releases, compromises and indulgences with respect to the Loan Documents for
any period; grant releases, compromises and indulgences with respect to the
Loan Documents to any persons or entities now or hereafter liable thereunder
or hereunder; release any guarantor, endorser or any other Person liable with
respect to the Obligations; or take or fail to take any action of any type
whatsoever; and no such action which Agent shall take or fail to take in
connection with the Loan Documents, or any of them, or any security for the
payment of the Obligations or for the performance of any obligations or
undertakings of Assignor, nor any course of dealing with Assignor or any
other person, shall release Assignor's obligations hereunder, affect this
Assignment in any way or afford Assignor any recourse against Agent.
15. Securities Act. In view of the position of Assignor in relation to
the Collateral, or because of other current or future circumstances, a
question may arise under Applicable Law or the Federal Securities Laws with
respect to any disposition of the Collateral permitted hereunder. Assignor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of Agent if Agent were to attempt to
dispose of all or any part of the Collateral in accordance with the terms
hereof, and might also limit the extent to which or the manner in which any
subsequent transferee of any Collateral could dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Agent in any attempt to dispose of all or part of the Collateral in
accordance with the terms hereof under applicable Blue Sky or other state
securities laws or similar Applicable Law analogous in purpose or effect.
Assignor recognizes that in light of the foregoing restrictions and
limitations Agent may, with respect to any sale of the Collateral, limit the
purchasers to those who will agree, among other things, to acquire such
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. Assignor acknowledges and agrees that in
light of the foregoing restrictions and limitations, the Agent in its sole
and absolute discretion may, in accordance with Applicable Law, (a) proceed
to make such a sale whether or not a registration statement for the purpose
of registering such Collateral or part thereof shall have been filed under
the Federal Securities Laws and (b) approach and negotiate with a single
potential purchaser to effect such sale. Assignor acknowledges and agrees
that any such sale might result in prices and other terms less favorable to
the seller if such sale were a public sale without such restrictions. In the
event of any such sale, Agent shall incur no responsibility or liability for
selling all or any part of the Collateral in accordance with the terms hereof
at a price that Agent, in its sole and absolute discretion, may in good faith
deem reasonable under the circumstances, notwithstanding the possibility that
a substantially higher price might have been realized if the sale were
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this paragraph will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Agent sells.
16. Governing Law; Terms. THIS ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK.
17. Notices. Each notice, demand, election or request provided for or
permitted to be given pursuant to this Assignment shall be deemed to have
been properly given or served if given in the manner provided in the Credit
Agreement.
18. No Unwritten Agreements. THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
19. Miscellaneous. Time is of the essence of this Assignment. Title
or captions of paragraphs hereof are for convenience only and neither limit
nor amplify the provisions hereof. References to a particular paragraph
refer to that paragraph of this Assignment unless otherwise indicated. If,
for any circumstances whatsoever, fulfillment of any provision of this
Assignment shall involve transcending the limit of validity presently
prescribed by applicable law, the obligation to be fulfilled shall be reduced
to the limit of such validity; and if any clause or provision herein operates
or would prospectively operate to invalidate this Assignment, in whole or in
part, then such clause or provision only shall be held for naught, as though
not herein contained, and the remainder of this Assignment shall remain
operative and in full force and effect.
IN WITNESS WHEREOF, Assignor and Agent have executed this Assignment on
the date first above written.
AGENT:
BANKBOSTON, N.A., as Agent
By: /s/ Mark E. Basham
---------------------------------
Mark E. Basham, Managing Director
ASSIGNOR:
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust,
its manager
By: /s/ Gregory F. Hughes
--------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
EXHIBIT "A"
ORGANIZATIONAL AGREEMENTS
<PAGE>
EXHIBIT "B"
PROMISSORY NOTE LEGEND
"THIS NOTE HAS BEEN PLEDGED BY WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.
("ASSIGNOR") TO BANKBOSTON, N.A., AS AGENT ("AGENT") PURSUANT TO AN
ASSIGNMENT OF MEMBER'S INTEREST DATED AS OF JULY 16, 1998 (THE "ASSIGNMENT").
ALL AMOUNTS PAYABLE TO ASSIGNOR PURSUANT TO THIS NOTE SHALL BE PAID DIRECTLY
TO AGENT AS REQUIRED BY THE ASSIGNMENT."
INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS
($75,000,000.00 Loan)
THIS INDEMNITY AGREEMENT (this "Agreement"), is made as of this 16th day
of July, 1998, by WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a Delaware
limited liability company ("Borrower"), and WELLSFORD COMMERCIAL PROPERTIES
TRUST, a Maryland real estate investment trust ("Trust"), and WHWEL REAL
ESTATE LIMITED PARTNERSHIP, ("WHWEL"; WHWEL and Trust, collectively
"Guarantor"), for the benefit of BANKBOSTON, N.A., a national banking
association ("BankBoston"), as Administrative Agent for itself, Goldman Sachs
Mortgage Company, and certain other lenders which may now or hereafter become
parties to the "Loan Agreement" (as hereinafter defined) (BankBoston and such
other lenders are hereinafter referred to collectively as the "Lenders").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Holdings, L.L.C. ("Property Owner") is the
owner of certain real property more particularly described in Exhibit A
attached hereto and incorporated herein by this reference (the "Property
Owner Land"; together with all improvements now or hereafter located in, on
or under the Property Owner Land, collectively, the "Property Owner
Property");
WHEREAS, Wells Avenue Senior Holdings LLC, a Massachusetts limited
liability company ("WASH"), is the owner of certain real property more
particularly described on Exhibit B attached hereto and incorporated herein
by this reference (the "WASH Land," the WASH Land, together with all
improvements now or hereafter located in, on or under the WASH Land,
collectively, the "WASH Property"; the Property Owner Property and the WASH
Property are hereinafter referred to collectively as the "Property");
WHEREAS, Wells Avenue Holdings L.L.C., a Delaware limited liability
company ("Wells Avenue Holdings"), and WASH Manager, L.L.C, a Delaware
limited liability company ("WASH Manager") are the sole members of WASH;
WHEREAS, Property Owner is the sole member of Wells Avenue Holdings;
WHEREAS, Borrower is the sole member of Property Owner;
WHEREAS, Borrower has requested that the Lenders provide financing to
Borrower secured by its interests in Property Owner;
WHEREAS, Lenders have agreed to provide to Borrower a loan in the amount
of up to $75,000,000.00 (the "Loan") pursuant to that certain Mezzanine Loan
Agreement, dated July ___, 1998 between Lenders, Borrower, Goldman Sachs
Mortgage Company, as Co-Arranger and Co-Syndication Agent, and BankBoston, as
Administrative Agent, Co-Arranger and Co-Syndication Agent (the "Loan
Agreement"), which Loan is evidenced by certain Notes dated July __, 1998
from Borrower to Lenders as described in the Loan Agreement (collectively,
together with all amendments, modifications, consolidations, increases,
supplements and extensions thereof, the "Note"), and secured by, among other
things, that certain Assignment of Member's Interest of even date from
Borrower to BankBoston as Administrative Agent (the "Agent") pledging
Borrower's membership interest in Property Owner (collectively, together with
all amendments or modifications thereof, the "Assignment");
WHEREAS, as a condition to making the Loan, Lenders require Borrower and
Guarantor to provide certain indemnities concerning Hazardous Materials (as
hereinafter defined) presently upon, in or under the Property, or hereafter
placed or otherwise located thereon or therein;
WHEREAS, to induce Lenders to make the Loan to Borrower, Borrower and
Guarantor have agreed to provide this Agreement for Lenders' benefit.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
($10.00) Dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lenders, by their acceptance of
delivery hereof, and Borrower and Guarantor hereby agree as follows:
1. Definitions. The definitions set forth below shall apply for
purposes of this Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Credit Agreement:
(a) "Environmental Law" shall mean any federal, state or local
statute, regulation or ordinance or any judicial or administrative decree or
decision, whether now existing or hereinafter enacted, promulgated or issued,
with respect to any Hazardous Materials, drinking water, groundwater,
wetlands, landfills, open dumps, storage tanks, underground storage tanks,
solid waste, waste water, storm water run-off, waste emissions or wells.
Without limiting the generality of the foregoing, the term shall encompass
each of the following statutes, and regulations promulgated thereunder, and
amendments and successors to such statutes and regulations, as may be enacted
and promulgated from time to time: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified in scattered
sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. Section 9601 et
seq.); (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.); (iii) the Toxic Substances Control Act (15 U.S.C. et
seq.); (iv) the Clean Water Act (33 U.S.C. Section 1251 et seq.); (v) the
Clean Air Act (42 U.S.C. Section 7401 et seq.); (vi) the Safe Drinking Water
Act (21 U.S.C. Section 349; 42 U.S.C. Section 201 and Section 300f et seq.);
(vii) the National Environmental Policy Act of 1969 (42 U.S.C. Section 4321);
(viii) the Superfund Amendment and Reauthorization Act of 1986 (codified in
scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (ix)
the Uncontrolled Hazardous Substance Sites Law, 38 M.R.S.A. Section 1361 et
seq., as applicable; (x) the Hazardous Matter Control Law, 38 M.R.S.A.
Section 1317, et seq., as applicable; (xi) the Maine Hazardous Waste, Septage
and Solid Waste Management Act, 38 M.R.S.A. Section 1301 et seq., as
applicable; (xii) the Reduction of Toxics Use, Waste and Release Law, 38
M.R.S.A. Section 2301 et seq., as applicable; and (xiii) the Site Location of
Development Law, 38 M.R.S.A. Section 481 et seq., as applicable.
(b) "Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic
under any Environmental Law. Without limiting the generality of the
foregoing, the term shall mean and include:
(i) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, or Title
III of the Superfund Amendment and Reauthorization Act, each as amended,
and regulations promulgated thereunder;
(ii) "hazardous waste" as defined in the Resource
Conservation and Recovery Act of 1976, as amended, and regulations
promulgated thereunder;
(iii) "hazardous materials" as defined in the Hazardous
Materials Transportation Act, as amended, and regulations promulgated
thereunder; and
(iv) "chemical substance or mixture" as defined in the
Toxic Substances Control Act, as amended, and regulations promulgated
thereunder.
(c) "Indemnified Parties" shall mean each of the Lenders, their
respective parents, subsidiaries and affiliates, each of their respective
shareholders, directors, officers, employees and agents, and the successors
and assigns of any of them; and "Indemnified Party" shall mean any one of the
Indemnified Parties.
(d) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, or discarding, burying, abandoning, or disposing into the
environment.
(e) "Threat of Release" shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the
environment which may result from such Release.
2. Indemnity Agreement. Borrower and Guarantor, each jointly and
severally, covenant and agree, at their sole cost and expense, to indemnify,
defend (at trial and appellate levels and with attorneys, consultants and
experts acceptable to Lenders) and hold each Indemnified Party harmless
against and from any and all liens, damages, losses, liabilities,
obligations, settlement payments, penalties, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys',
consultants' and experts' fees and disbursements incurred in investigating,
defending against, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted or
awarded against such Indemnified Party or the Property and, and arising
directly or indirectly from or out of: (A) the Release or Threat of Release
of any Hazardous Materials on, in, under or affecting all or any portion of
the Property or any surrounding areas, regardless of whether or not caused by
or within the control of Borrower, first occurring prior to the payment in
full of the Obligations; (B) the violation of any Environmental Laws relating
to or affecting the Property or the Borrower, whether or not caused by or
within the control of Borrower, first occurring prior to the payment in full
of the Obligations; (C) the failure of Borrower or Guarantor to comply fully
with the terms and conditions of this Agreement; (D) the violation of any
Environmental Laws in connection with other real property of Borrower which
gives or may give rise to any rights whatsoever in any party with respect to
the Property by virtue of any Environmental Laws, first occurring prior to
the payment in full of the Obligations; or (E) the enforcement of this
Agreement, including, without limitation, (i) the costs of assessment,
containment and/or removal of any and all Hazardous Materials from all or any
portion of the Property or any surrounding areas, (ii) the costs of any
actions taken in response to a Release or Threat of Release of any Hazardous
Materials on, in, under or affecting all or any portion of the Property or
any surrounding areas to prevent or minimize such Release or Threat of
Release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and
(iii) costs incurred to comply with the Environmental Laws in connection with
all or any portion of the Property or any surrounding areas. Borrower's and
Guarantor's obligations hereunder are separate and distinct from Borrower's
and Guarantor's obligations under the "Loan Documents" (as hereinafter
defined), and Lenders' and the other Indemnified Parties' rights under this
Agreement shall be in addition to all rights of Agent and Lenders under the
Security Documents, the Note, the Loan Agreement and under any other
documents or instruments evidencing, securing or relating to the Loan (the
Security Documents, the Note, the Loan Agreement and such other documents or
instruments, as amended or modified from time to time, being herein referred
to as the "Loan Documents"), and payments by Borrower or Guarantor under this
Agreement shall not reduce Borrower's or Guarantor's obligations and
liabilities under any of the Loan Documents.
3. Survival.
(a) The indemnity set forth above in Paragraph 2 shall survive the
repayment of the Loan and any exercise of any remedies under the Security
Documents, including without limitation, any remedy in the nature of
foreclosure, and shall not merge with any assignment or conveyance given by
Borrower to Agent or Lenders in lieu of foreclosure.
(b) It is agreed and intended by Borrower, Guarantor and Lenders
that the indemnity set forth above in Paragraph 2 may be assigned or
otherwise transferred by each Lender to its successors and assigns and to any
subsequent purchaser of all or any portion of the Collateral or Property by,
through or under Agent or Lenders, without notice to Borrower or Guarantor
and without any further consent of Borrower or Guarantor. To the extent
consent of any such assignment or transfer is required by law, advance
consent to any such assignment or transfer is hereby given by Borrower and
Guarantor in order to maximize the extent and effect of the indemnity given
hereby.
4. No Waiver. The liabilities of Borrower and Guarantor under this
Agreement shall in no way be limited or impaired by, and Borrower and
Guarantor hereby consent to and agree to be bound by, any amendment or
modification of the provisions of the Loan Documents to or with Lenders by
Borrower or Guarantor or any person who succeeds Borrower as owner of any
portion of the Collateral or Property Owner as owner of the Property. In
addition, notwithstanding any terms of any of the Loan Documents to the
contrary, the liability of Borrower and Guarantor under this Agreement shall
in no way be limited or impaired by: (i) any extensions of time for
performance required by any of the Loan Documents; (ii) any sale, assignment
or foreclosure of the Note or the Security Documents or any sale or transfer
of all or part of the Collateral or the Property; (iii) any exculpatory
provision in any of the Loan Documents limiting Lenders' recourse to property
encumbered by the Security Documents or to any other security, or limiting
Lenders' rights to a deficiency judgment against Borrower; (iv) the accuracy
or inaccuracy of the representations and warranties made by Borrower or
Guarantor under any of the Loan Documents; (v) the release of Borrower or
Guarantor or any other person from performance or observance of any of the
agreements, covenants, terms or conditions contained in the Loan Documents by
operation of law, Lenders' voluntary act, or otherwise; (vi) the release or
substitution, in whole or in part, of any security for the Note; or (vii)
Lenders' failure to record the Security Documents or file any UCC-1 financing
statements (or Lenders' improper recording or filing of any thereof) or to
otherwise perfect, protect, secure or insure any security interest or lien
given as security for the Note; and, in any such case, whether with or
without notice to Borrower or Guarantor and with or without consideration.
5. Waiver by Borrower. BORROWER AND GUARANTOR WAIVE ANY RIGHT OR
CLAIM OF RIGHT TO CAUSE A MARSHALING OF BORROWER'S OR GUARANTOR'S ASSETS OR
TO CAUSE LENDERS TO PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE
PROCEEDING UNDER THIS AGREEMENT AGAINST BORROWER AND GUARANTOR OR TO PROCEED
AGAINST BORROWER AND GUARANTOR IN ANY PARTICULAR ORDER. BORROWER AND
GUARANTOR AGREE THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL BECOME
DUE ON DEMAND. BORROWER AND GUARANTOR EXPRESSLY WAIVE AND RELINQUISH ALL
RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION) ACCORDED BY
APPLICABLE LAW TO INDEMNITORS.
6. Delay. No delay on Lenders' part in exercising any right, power or
privilege under any of the Loan Documents shall operate as a waiver of any
privilege, power or right hereunder.
7. Releases. Any one or more of Borrower and Guarantor or any other
party liable upon or in respect of this Agreement or the Loan may be released
without affecting the liability of any party not so released.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. Said counterparts
shall constitute but one and the same instrument and shall be binding upon
each of the undersigned individually as fully and completely as if all had
signed but one instrument so that the joint and several liability of each of
the undersigned hereunder shall be unaffected by the failure of any of the
undersigned to execute any or all of the said counterparts.
9. Notices. Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement shall be given in the manner
provided in the Loan Agreement.
10. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, by telephone or by any other means except by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
11. Binding Effect. Except as herein provided, this Agreement shall be
binding upon Borrower and Guarantor and their respective successors,
successors-in-title and assigns, and shall inure to the benefit of Lenders,
the other Indemnified Parties, and their respective successors and assigns.
Notwithstanding the foregoing, Borrower and Guarantor, without the prior
written consent of Lenders in each instance, may not assign, transfer or set
over to another, in whole or in part, all or any part of its or their
benefits, rights, duties and obligations hereunder, including, but not
limited to, performance of and compliance with conditions hereof.
12. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE
OF LAW). BORROWER AND GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY (A)
SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B)
WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE
RIGHT, IF ANY, TO TRIAL BY JURY, OR (II) TO OBJECT TO JURISDICTION WITHIN THE
STATE OF NEW YORK OR VENUE IN ANY PARTICULAR FORUM (INCLUDING FEDERAL) WITHIN
THE STATE OF NEW YORK. BORROWER AND GUARANTOR AGREE THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AND GUARANTOR
AT THE ADDRESSES SET FORTH IN THE LOAN AGREEMENT, AND SERVICE SO MADE SHALL
BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL BE SO MAILED. NOTHING
CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDERS FROM BRINGING ANY SUIT,
ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND
AGAINST BORROWER OR GUARANTOR PERSONALLY, AND AGAINST ANY PROPERTY OF
BORROWER, WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING
OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF
THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER, AND GUARANTOR AND LENDERS
HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY BORROWER AND GUARANTOR TO
PERSONAL JURISDICTION WITHIN THE STATE OF NEW YORK.
13. Recourse. Notwithstanding anything to the contrary contained
herein or in any other Loan Document, the obligations of WHWEL Real Estate
Limited Partnership under this Agreement whether arising under this Agreement
or otherwise in connection with any of the Loan Documents, shall be without
recourse to any limited partner of WHWEL Real Estate Limited Partnership and
no such person shall have any liability with respect thereto.
IN WITNESS WHEREOF, Borrower and Guarantor have caused this Agreement to
be executed under seal as of the day and year first written above.
BORROWER:
WELLSFORD WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust,
its manager
By: /s/ Gregory F. Hughes
-------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]<PAGE>
GUARANTOR:
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
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Name: Gregory F. Hughes
Title: CFO & Treasurer
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WHWEL REAL ESTATE LIMITED PARTNERSHIP
By:WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
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Name: Alan S. Kava
Title: Vice President
NOMURA CONDITIONAL GUARANTY OF PAYMENT
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($75,000,000 Loan - Nomura Properties)
FOR AND IN CONSIDERATION OF the sum of Ten and No/100 Dollars ($10.00)
and other good and valuable consideration paid or delivered to the
undersigned WELLSFORD COMMERCIAL PROPERTIES TRUST, a Maryland real estate
investment trust ("WCPT"), WHWEL REAL ESTATE LIMITED PARTNERSHIP ("WHWEL"),
WELLSFORD REAL PROPERTIES, INC., a Maryland corporation ("WRPI"), WHITEHALL
STREET REAL ESTATE LIMITED PARTNERSHIP V ("Whitehall V"), WHITEHALL STREET
REAL ESTATE LIMITED PARTNERSHIP VI ("Whitehall VI"), WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VII ("Whitehall VII"), and WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VIII ("Whitehall VIII", and together with
Whitehall V, Whitehall VI and Whitehall VII, collectively, "Whitehall"), each
a Delaware limited partnership (WCPT, WHWEL, WRPI and Whitehall are
hereinafter referred to collectively as "Guarantor"), the receipt and
sufficiency whereof is hereby acknowledged by Guarantor, and for the purpose
of seeking to induce BANKBOSTON, N.A., a national banking association
("BKB"), and GOLDMAN SACHS MORTGAGE COMPMANY ("Goldman Sachs"; BKB and
Goldman Sachs are hereinafter collectively referred to as "Lender", which
term shall also include each other Bank which may now or hereafter become
party to the "Credit Agreement" (as hereinafter defined) and shall also
include any such individual Bank acting as agent for all of the Banks), to
extend credit or otherwise provide financial accommodations to
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a Delaware limited liability
company (hereinafter referred to as "Borrower"), which extension of credit
and provision of financial accommodations will be to the direct interest,
advantage and benefit of Guarantor, Guarantor does hereby, jointly and
severally, absolutely and irrevocably guarantee to Lender:
(a) subject to the provisions of Paragraphs 24 and 25, below, the full
and prompt payment when due, whether by acceleration or otherwise, either
before or after maturity thereof, of those certain Notes dated July __, 1998
made by Borrower to the order of the Banks in the aggregate principal face
amount of Seventy-Five Million and No/100 Dollars ($75,000,000.00)
(hereinafter referred to collectively as the "Bank Notes"), together with
interest as provided in the Bank Notes, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(b) subject to the provisions of Paragraphs 24 and 25, below, the full
and prompt payment when due, whether by acceleration or otherwise, either
before or after maturity thereof, of each other note as may be issued under
that certain Mezzanine Loan Agreement dated July ___, 1998 among Borrower,
BKB, for itself and as agent, Goldman Sachs, and the other lenders now or
hereafter a party thereto (hereinafter referred to as the "Credit
Agreement"), together with interest as provided in each such note, together
with any replacements, supplements, renewals, modifications, consolidations,
restatements and extensions thereof (the Bank Notes and each of the notes
described in this subparagraph (b) is hereinafter referred to collectively as
the "Note"); and
(c) subject to the terms of Paragraphs 24 and 25 below, the full and
prompt payment of all other monetary obligations of Borrower to Lender under
the terms of the Credit Agreement, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(d) subject to the terms of Paragraphs 24 and 25 below, the full and
prompt payment of any and all other monetary obligations of Borrower to
Lender under the Security Documents, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(e) subject to the terms of Paragraphs 24 and 25 below, the full and
prompt payment of any and all other monetary obligations of Borrower to
Lender under any other agreements, documents or instruments now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced by
the Note or the Credit Agreement (the Note, the Security Documents, the
Credit Agreement and said other agreements, documents and instruments, are
hereinafter collectively referred to as the "Loan Documents" and individually
referred to as a "Loan Document").
All terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.
1. Agreement to Pay; Costs of Collection. Guarantor does hereby agree
that, subject to the terms of Paragraphs 24 and 25 below, below, if the Note
is not paid by Borrower in accordance with its terms (including all
applicable grace periods), or if any and all sums which are now or may
hereafter become due from Borrower to Lender under the Loan Documents are not
paid by Borrower in accordance with their terms (including all applicable
grace periods), Guarantor will immediately make such payments. Guarantor
further agrees to pay Lender on demand all reasonable costs and expenses
(including court costs and reasonable attorneys' fees and disbursements) paid
or incurred by Lender in endeavoring to enforce this Guaranty, and until paid
to Lender, such sums shall bear interest at the default rate set forth in the
Credit Agreement unless collection from Guarantor of interest at such rate
would be contrary to applicable law, in which event such sums shall bear
interest at the highest rate which may be collected from Guarantor under
applicable law.
2. Reinstatement of Refunded Payments. If, for any reason, any
payment to Lender of any of the obligations guaranteed hereunder is required
to be refunded by Lender to Borrower, or paid or turned over by Lender to any
other person, including, without limitation, by reason of the operation of
bankruptcy, reorganization, receivership or insolvency laws or similar laws
of general application relating to creditors' rights and remedies now or
hereafter enacted, Guarantor agrees to pay the amount so required to be
refunded, paid or turned over (hereinafter referred to as the "Turnover
Payment"), the obligations of Guarantor shall not be treated as having been
discharged by the original payment to Lender giving rise to the Turnover
Payment, and this Guaranty shall be treated as having remained in full force
and effect for any such Turnover Payment so made by Lender, as well as for
any amounts not theretofore paid to Lender on account of such obligations,
but only to the extent that Guarantor otherwise would have been liable for
the payment of the same hereunder.
3. Rights of Lender to Deal with Collateral, Borrower and Other
Persons. Guarantor hereby consents and agrees that Lender may at any time,
and from time to time, without thereby releasing Guarantor from any liability
hereunder and without notice to or further consent from Guarantor, either
with or without consideration: release or surrender any lien or other
security of any kind or nature whatsoever held by it or by any person, firm
or corporation on its behalf or for its account, securing any indebtedness or
liability hereby guaranteed; substitute for any collateral so held by it,
other collateral of like kind, or of any kind; modify the terms of the Note
or the Loan Documents; extend or renew the Note for any period; grant
releases, compromises and indulgences with respect to the Note or the Loan
Documents and to any persons or entities now or hereafter liable thereunder
or hereunder; release any other Guarantor, surety, endorser or accommodation
party of the Note, the Security Documents or any other Loan Documents; or
take or fail to take any action of any type whatsoever. No such action which
Lender shall take or fail to take in connection with the Note or the Loan
Documents, or any of them, or any security for the payment of the
indebtedness of Borrower to Lender or for the performance of any obligations
or undertakings of Borrower, nor any course of dealing with Borrower or any
other person, shall release Guarantor's obligations hereunder, affect this
Guaranty in any way or afford Guarantor any recourse against Lender. The
provisions of this Guaranty shall extend and be applicable to all
replacements, supplements, renewals, amendments, extensions, consolidations,
restatements and modifications of the Note and the Loan Documents, and any
and all references herein to the Note and the Loan Documents shall be deemed
to include any such replacements, supplements, renewals, extensions,
amendments, consolidations, restatements or modifications thereof.
4. No Contest with Lender; Subordination. So long as any obligation
hereby guaranteed remains unpaid or undischarged, Guarantor will not, by
paying any sum recoverable hereunder (whether or not demanded by Lender) or
by any means or on any other ground, claim any set-off or counterclaim
against Borrower in respect of any liability of Guarantor to Borrower or, in
proceedings under federal bankruptcy law or insolvency proceedings of any
nature, prove in competition with Lender in respect of any payment hereunder
or be entitled to have the benefit of any counterclaim or proof of claim or
dividend or payment by or on behalf of Borrower or the benefit of any other
security for any obligation hereby guaranteed which, now or hereafter, Lender
may hold or in which it may have any share. Guarantor hereby expressly
waives any right of contribution from or indemnity against Borrower, whether
at law or in equity, arising from any payments made by Guarantor pursuant to
the terms of this Guaranty, and Guarantor acknowledges that Guarantor has no
right whatsoever to proceed against Borrower for reimbursement of any such
payments. In connection with the foregoing, Guarantor expressly waives any
and all rights of subrogation to Lender against Borrower, and Guarantor
hereby waives any rights to enforce any remedy which Lender may have against
Borrower and any rights to participate in any collateral for Borrower's
obligations under the Loan Documents. Guarantor hereby subordinates any and
all indebtedness of Borrower now or hereafter owed to Guarantor to all
indebtedness of Borrower to Lender, and agrees with Lender that (a) Guarantor
shall not demand or accept any payment from Borrower on account of such
indebtedness, (b) Guarantor shall not claim any offset or other reduction of
Guarantor's obligations hereunder because of any such indebtedness, and (c)
Guarantor shall not take any action to obtain any interest in any of the
security described in and encumbered by the Loan Documents because of any
such indebtedness; provided, however, that, if Lender so requests, such
indebtedness shall be collected, enforced and received by Guarantor as
trustee for Lender and be paid over to Lender on account of the indebtedness
of Borrower to Lender, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty except to
the extent the principal amount of such outstanding indebtedness shall have
been reduced by such payment.
5. Waiver of Defenses. Guarantor hereby agrees that its obligations
hereunder shall not be affected or impaired by, and hereby waives and agrees
not to assert or take advantage of any defense based on:
(a) the incapacity or lack of authority of Borrower or any other
person or entity, the death or disability of Borrower or any Guarantor or any
other person or entity, or the failure of Lender to file or enforce a claim
against the estate (either in administration, bankruptcy or in any other
proceeding) of Borrower or any Guarantor or any other person or entity;
(b) the dissolution or termination of existence of Borrower or any
other Person;
(c) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of Borrower or any
other Person;
(d) the voluntary or involuntary receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
assignment, composition, or readjustment of, or any similar proceeding
affecting Borrower, any Guarantor, Property Owner, WASH, WASH Manager, Wells
Avenue Holdings or any of Borrower's, any Guarantor's, Property Owner's,
WASH's, WASH Manager's or Wells Avenue Holdings' properties or assets;
(e) the damage, destruction, condemnation, foreclosure or
surrender of all or any part of the Mezzanine Property or any Collateral;
(f) the failure of Lender to give notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or
of any action or nonaction on the part of any other person whomsoever in
connection with any obligation hereby guaranteed;
(g) any failure or delay of Lender to commence an action against
Borrower or any other Person, to assert or enforce any remedies against
Borrower under the Note or the Loan Documents, or to realize upon any
security;
(h) any failure of any duty on the part of Lender to disclose to
Guarantor any facts it may now or hereafter know regarding Borrower, the
Property Owner, WASH or any other Person, or the Mezzanine Property or the
property encumbered by the Security Documents, whether such facts materially
increase the risk to Guarantor or not;
(i) failure to accept or give notice of acceptance of this
Guaranty by Lender;
(j) failure to make or give notice of presentment and demand for
payment of any of the indebtedness or performance of any of the obligations
hereby guaranteed;
(k) failure to make or give protest and notice of dishonor or of
default to Guarantor or to any other party with respect to the indebtedness
or performance of obligations hereby guaranteed;
(l) any and all other notices whatsoever to which Guarantor might
otherwise be entitled;
(m) any lack of diligence by Lender in collection, protection or
realization upon any collateral securing the payment of the indebtedness or
performance of obligations hereby guaranteed;
(n) the invalidity or unenforceability of the Note or any of the
Loan Documents;
(o) the compromise, settlement, release or termination of any or
all of the obligations of Borrower under the Note or the Loan Documents;
(p) any transfer by Borrower or any other Person of all or any
part of the security encumbered by the Loan Documents;
(q) the failure of Lender to perfect any security or to extend or
renew the perfection of any security; or
(r) to the fullest extent permitted by law, any other legal,
equitable or surety defenses whatsoever to which Guarantor might otherwise be
entitled, it being the intention that the obligations of Guarantor hereunder
are absolute, unconditional (subject to the terms of Paragraphs 24 and 25,
below) and irrevocable.
6. Guaranty of Payment and Not of Performance or Collection. This is
a Guaranty of payment and not of performance or collection. Subject to the
terms of Paragraphs 24 and 25, below, the liability of Guarantor under this
Guaranty shall be primary, direct and immediate and not conditional or
contingent upon the pursuit of any remedies against Borrower or any other
person, nor against securities or liens available to Lender, its successors,
successors in title, endorsees or assigns. Guarantor hereby waives any right
to require that an action be brought against Borrower or any other person or
to require that resort be had to any security or to any balance of any
deposit account or credit on the books of Lender in favor of Borrower or any
other person.
7. Rights and Remedies of Lender. In the event of an Event of Default
under the Note or the Loan Documents, or any of them, Lender shall have the
right to enforce its rights, powers and remedies thereunder or hereunder or
under any other agreement, document or instrument now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced by
the Note or secured by the Loan Documents, in any order, and all rights,
powers and remedies available to Lender in such event shall be nonexclusive
and cumulative of all other rights, powers and remedies provided thereunder
or hereunder or by law or in equity. Accordingly, Guarantor hereby
authorizes and empowers Lender upon the occurrence of any Event of Default
under the Note or the Loan Documents, at its sole discretion, and without
notice to Guarantor, to exercise any right or remedy which Lender may have,
including, but not limited to, judicial foreclosure, exercise of rights of
power of sale, acceptance of an assignment in lieu of foreclosure,
appointment of a receiver, exercise of remedies against personal property, or
enforcement of any assignment of leases, as to any security, whether real,
personal or intangible. At any public or private sale of any security or
collateral for any indebtedness or any part thereof guaranteed hereby,
whether by foreclosure or otherwise, Lender may, in its discretion, purchase
all or any part of such security or collateral so sold or offered for sale
for its own account and may apply against the amount bid therefor all or any
part of the balance due it pursuant to the terms of the Note or Security
Documents or any other Loan Document without prejudice to Lender's remedies
hereunder against Guarantor for deficiencies. If the indebtedness guaranteed
hereby is partially paid by reason of the election of Lender to pursue any of
the remedies available to Lender, or if such indebtedness is otherwise
partially paid, this Guaranty shall nevertheless remain in full force and
effect, and Guarantor shall remain liable for the entire balance of the
indebtedness guaranteed hereby (subject, however, to the provisions of
Paragraphs 24 and 25 below) even though any rights which Guarantor may have
against Borrower may be destroyed or diminished by the exercise of any such
remedy.
8. Application of Payments. Guarantor hereby authorizes Lender,
without notice to Guarantor, to apply all payments and credits received from
Borrower or from Guarantor or realized from any security in such manner and
in such priority as set forth in the Credit Agreement.
9. Business Failure, Bankruptcy or Insolvency. In the event of the
business failure of a Guarantor or if there shall be pending any bankruptcy
or insolvency case or proceeding with respect to a Guarantor under federal
bankruptcy law or any other applicable law or in connection with the
insolvency of a Guarantor, or if a liquidator, receiver, or trustee shall
have been appointed for a Guarantor or a Guarantor's properties or assets,
Lender may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of Lender allowed in any
proceedings relative to such Guarantor, or any of such Guarantor's properties
or assets, and, irrespective of whether the indebtedness or other obligations
of Borrower guaranteed hereby or the obligations of such Guarantor hereunder
shall then be due and payable, by declaration or otherwise, Lender shall be
entitled and empowered to file and prove a claim for the whole amount of any
sum or sums owing by such Guarantor with respect to the indebtedness or other
obligations of Borrower guaranteed hereby, and to collect and receive any
moneys or other property payable or deliverable on any such claim. Guarantor
covenants and agrees that upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Borrower, Guarantor shall not seek a
supplemental stay or otherwise pursuant to Section 105 of the Bankruptcy Code
or any other provision of the Bankruptcy Code, or any other debtor relief law
(whether statutory, common law, case law, or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to
stay, interdict, condition, reduce or inhibit the ability of Lender to
enforce any rights of Lender against Guarantor by virtue of this Guaranty or
otherwise.
10. Financial Statements and Other Information. Each Guarantor hereby
independently represents and warrants to Lender that all financial statements
heretofore delivered by it to Lender are true and correct in all material
respects, have been prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present its financial condition
as of the date thereof; that no material adverse change has occurred in its
assets or financial condition as reflected therein since the date thereof;
and that it has no liabilities or known contingent liabilities involving
material amounts which are not reflected in such financial statements or
referred to in the notes thereto other than its obligations under this
Guaranty. Each Guarantor independently agrees that until all indebtedness
guaranteed hereby has been completely repaid and all obligations and
undertakings of Borrower and Guarantor under, by reason of, or pursuant to
the Note and the Loan Documents have been completely performed and no Lender
has any further obligation to make Loans to Borrower (or until the Assignment
of Interests has been terminated as provided therein, provided that no
"Triggering Event" (as hereinafter defined" has occurred), it will promptly
deliver to Lender upon written (but not more often than quarterly) demand its
then most recent financial statements readily available (provided that such
financial statements shall be prepared and updated not less frequently than
annually) detailing its assets and liabilities certified by it, in form and
substance reasonably acceptable to Lender.
The financial statements and other reports and information delivered by
Guarantor to Lender hereunder will be treated as confidential by each Lender,
and each assignee and participant hereunder and each potential assignee or
participant hereunder, and such parties for themselves agree not to disclose
such information to any Person, provided that such information may be
disclosed to any of the following in connection with their participation in
the transactions contemplated by the Loan Documents: directors, officers,
employees, representatives, legal counsel, accountants and prospective
investors of any of such Persons, it being understood that such Persons shall
be informed of the confidential nature of such information and shall agree to
treat such information confidentially. Notwithstanding the foregoing, such
Persons shall be permitted to disclose such information (a) to the extent
required by law, (b) to the extent such confidential information becomes
publicly available other than as a result of the breach of this Guaranty, (c)
to the extent such information becomes available to any of such Persons on a
non-confidential basis, or (d) to the extent necessary to enforce the Loan
Documents (provided that Lender shall use reasonable efforts to cause such
financial statements, reports and information to remain confidential).
11. Covenants of Guarantor. Each Guarantor independently hereby
covenants and agrees with Lender that until all indebtedness guaranteed
hereby has been completely repaid and all obligations and undertakings of
Borrower and Guarantor under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed, and the Lenders have no
further obligations to make Loans to Borrower (or until the Assignment of
Interests has been terminated as provided therein, provided that no
"Triggering Event" (as hereinafter defined) has occurred):
(a) it will cause to be done all things necessary to preserve and
keep in full force and effect its legal existence, rights and franchises, to
effect and maintain all required foreign qualifications, licensing,
domestication or authorization, and to comply in all material respects with
all applicable laws and regulations with respect to the foregoing;
(b) it will keep complete, proper and accurate records and books
of account in which full, true and correct entries will be made in accordance
with generally accepted accounting principles consistent with the preparation
of the financial statements heretofore delivered to Lender and will maintain
adequate accounts and reserves for all taxes (including income taxes), all
depreciation and amortization of its properties, all other contingencies, and
all other proper reserves in the same manner, and to the same extent, that it
has, to the extent applicable, kept and maintained it records and books and
maintained accounts and reserves for the foregoing; and
(c) it will not make or permit to be made, by voluntary or
involuntary means, any transfer or encumbrance of its direct or indirect
interest in Borrower, or any dilution of its direct or indirect interest in
Borrower, which would violate the provisions of Section 8.11 of the Credit
Agreement.
12. [Intentionally Omitted].
13. Changes in Writing; No Revocation. This Guaranty may not be
changed orally, and no obligation of Guarantor can be released or waived by
Lender except by a writing signed by a duly authorized officer of Lender.
This Guaranty shall be irrevocable by Guarantor until all indebtedness
guaranteed hereby has been completely repaid and the Lenders have no further
obligation to advance Loans to Borrower. Notwithstanding anything contained
in this Guaranty or any of the Loan Documents to the contrary, this Guaranty
shall terminate and be of no further force or effect upon the earlier to
occur of (i) payment to Lender by Guarantor of the "Allocable Loan Amount"
(as hereinafter defined) and (ii) any termination of the Assignment of
Interests either pursuant to the terms thereof or by mutual agreement of
Borrower and Lender provided that no "Triggering Event" (as hereinafter
defined) has occurred.
14. Notices. All notices, demands or requests provided for or
permitted to be given pursuant to this Guaranty (hereinafter in this
paragraph referred to as "Notice") must be in writing and shall be deemed to
have been properly given or served by personal delivery or by sending same by
overnight courier or by depositing the same in the United States Mail,
postpaid and registered or certified, return receipt requested, at the
addresses set forth below. Each Notice shall be effective upon being
delivered personally or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. The time period in which a
response to any such Notice must be given or any action taken with respect
thereto, however, shall commence to run from the date of receipt if
personally delivered or sent by overnight courier or, if so deposited in the
United States Mail, the earlier of three (3) business days following such
deposit and the date of receipt as disclosed on the return receipt.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no Notice was given shall be deemed to be receipt of
the Notice sent. By giving at least fifteen (15) days prior Notice thereof,
Guarantor or Lender shall have the right from time to time and at any time
during the term of this Guaranty to change their respective addresses and
each shall have the right to specify as its address any other address within
the United States of America. For the purposes of this Guaranty:
The Address of Lender is:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
with a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jay Johns
and a copy to each other Lender which may now or hereafter become a
party to the Credit Agreement at such address as may be designated by
such Lender.
The Address of Guarantor is:
Wellsford Commercial Properties Trust
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attn: Greg Hughes
and
Wellsford Real Properties, Inc.
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attn: Greg Hughes
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman, LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
and
WHWEL Real Estate Limited Partnership
85 Broad Street, 19th Floor
New York, New York 10004
Attn: Chief Financial Officer
and
Whitehall Street Real Estate Limited Partnership V
Whitehall Street Real Estate Limited Partnership VI
Whitehall Street Real Estate Limited Partnership VII
Whitehall Street Real Estate Limited Partnership VIII
85 Broad Street, 19th Floor
New York, New York 10004
Attn: Chief Financial Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Anthony J. Colletta, Esq.
15. Governing Law. Guarantor acknowledges and agrees that this
Guaranty and the obligations of Guarantor hereunder shall be governed by and
interpreted and determined in accordance with the internal laws of the State
of New York (excluding the laws applicable to conflicts or choice of law).
16. CONSENT TO JURISDICTION; WAIVERS. GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK
OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY, AND (B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, AND (II) TO OBJECT TO
JURISDICTION WITHIN THE STATE OF NEW YORK OR VENUE IN ANY PARTICULAR FORUM
WITHIN THE STATE OF NEW YORK. NOTHING CONTAINED HEREIN, HOWEVER, SHALL
PREVENT LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY
RIGHTS AGAINST ANY SECURITY AND AGAINST GUARANTOR PERSONALLY, AND AGAINST ANY
PROPERTY OF GUARANTOR, WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION
OR PROCEEDING OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE
A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE OF NEW
YORK SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND LENDER
HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY GUARANTOR TO PERSONAL
JURISDICTION WITHIN THE STATE OF NEW YORK.
17. Successors and Assigns. The provisions of this Guaranty shall be
binding upon Guarantor and its heirs, successors, successors in title, legal
representatives, executors, estate and assigns, and shall inure to the
benefit of Lender, its successors, successors in title, legal representatives
and assigns.
18. Assignment by Lender. Subject to the terms of Section 18.8 of the
Credit Agreement, this Guaranty is assignable by Lender in whole or in part
in conjunction with any assignment of the Note or portions thereof, and any
such assignment hereof or any transfer or assignment of the Note or portions
thereof by Lender shall operate to vest in any such assignee the rights and
powers, in whole or in part, as appropriate, herein conferred upon and
granted to Lender.
19. Severability. If any term or provision of this Guaranty shall be
determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by law.
20. Disclosure. Guarantor agrees that in addition to disclosures made
in accordance with standard banking practices, any Lender may disclose
information obtained by such Lender pursuant to this Guaranty to assignees or
participants and potential assignees or participants hereunder, subject to
the terms of Paragraph 10 above.
21. No Unwritten Agreements. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
22. Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Guarantor under this
Guaranty.
23. [Intentionally Omitted.]
24. Triggering Event.
(a) LENDER ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS GUARANTY, THE PAYMENT BY GUARANTOR OF ITS
OBLIGATIONS UNDER THIS GUARANTY SHALL BE DUE ONLY IN THE EVENT THAT, AND
GUARANTOR SHALL HAVE NO LIABILITY HEREUNDER UNLESS AND UNTIL, ONE OR MORE
"TRIGGERING EVENTS" (AS THAT TERM IS HEREINAFTER DEFINED) SHALL OCCUR AND,
WITH RESPECT TO THE ITEMS DESCRIBED IN CLAUSES (iv) THROUGH (ix) BELOW, ANY
OF THE EVENTS DESCRIBED THEREIN IS NOT CURED WITHIN FIVE (5) DAYS AFTER
RECEIPT BY GUARANTOR OF WRITTEN NOTICE FROM AGENT OF THE OCCURRENCE OF ANY
SUCH EVENT (PROVIDED, HOWEVER, THAT SUCH CURE BY GUARANTOR SHALL NOT BE
DEEMED A CURE OF ANY EVENT OF DEFAULT).
(b) For the purposes of this Guaranty, the term "Triggering Event"
shall mean the occurrence of any one or more of the following events:
(i) Any of the Guarantor, the Borrower, WASH, WASH Manager,
Wells Avenue Holdings or the Property Owner shall file any
voluntary petition under any Chapter of the Bankruptcy Code, or
shall in any manner seek any relief, protection, reorganization,
liquidation, dissolution or similar relief for debtors under any
local, state, federal or other insolvency laws or other laws
providing for the relief of debtors, or in equity, or directly or
indirectly cause any of the other of such Persons to file any such
petition or to seek any such relief; or
(ii) Any of the Guarantor, the Borrower, WASH, WASH Manager,
Wells Avenue Holdings or the Property Owner (A) shall file, or,
directly or indirectly, cause to be filed, any involuntary petition
under any Chapter of the Bankruptcy Code against any of such
Persons, whether or not any of such Persons joins in such petition,
or (B) shall, directly or indirectly, cause any of such Persons to
become the subject of any dissolution, liquidation or insolvency
proceeding or any other proceeding pursuant to any local, state,
federal or other insolvency laws or other laws providing for the
relief of debtors, or in equity;
(iii) Any of the Guarantor, the Borrower, WASH, WASH
Manager, Wells Avenue Holdings or the Property Owner shall,
directly or indirectly, cause the Mezzanine Property or the
Mezzanine Collateral, or any portion thereof or interest therein,
or any interest of such Persons in the Mezzanine Property or the
Mezzanine Collateral, to become the property of any bankruptcy,
dissolution, liquidation or insolvency proceeding; or
(iv) Guarantor, Borrower, WASH, WASH Manager, Wells Avenue
Holdings, the Property Owner, or any of them, shall take any action
of any kind or nature whatsoever, either directly or indirectly, to
oppose, impede, obstruct, hinder, frustrate, enjoin or otherwise
interfere with the exercise by Lender of any of Lender's rights and
remedies under the Loan Documents, or at law or in equity, other
than a "Permitted Defense" (as hereinafter defined) or shall,
either directly or indirectly, cause any other person to take any
action which, if taken by Guarantor, the Borrower, WASH, WASH
Manager, Wells Avenue Holdings or the Property Owner, would
constitute a Triggering Event. For the purposes hereof, a
"Permitted Defense" shall mean (A) the defense of payment in full
of the obligations guaranteed hereby, (B) a defense made in good
faith that a Triggering Event has not occurred, or (C) a defense
that an Event of Default has not occurred or as to the improper
exercise of the remedies of the Lenders under the Loan Documents,
provided that (1) the primary purpose of raising such defense is
not to delay, inhibit or interfere with the exercise by Lender of
its rights and remedies under the Loan Documents, (2) Agent's
rights under the Assignment of Interests to exercise all voting and
other membership, management, approval or other rights with respect
to the Property Owner shall not be opposed, impeded, obstructed,
hindered, frustrated, enjoined or otherwise interfered with, and
(3) all "Distributions" (as defined in the Assignment of Interests)
are paid to Agent for application in accordance with the terms of
the Credit Agreement; or
(v) Except as expressly permitted in Section 5.3 of the
Credit Agreement, there shall occur, whether voluntarily,
involuntary or by operation of law, a sale, transfer, assignment,
conveyance, option or other disposition of, or any mortgage,
hypothecation, encumbrance, financing or refinancing of (A) any
assets or properties of WASH, except for (1) the Mezzanine Mortgage
Loan, (2) releases of the Mezzanine Property in accordance with the
terms of the Credit Agreement, and except as provided in Section
7.21(a) with respect to the replacement of fixtures, equipment,
machinery and other personal property by WASH in connection with
the operation of the Mezzanine Property in the ordinary course of
business, (3) a condemnation of all or any portion of the Mezzanine
Property, or (4) a foreclosure of the Mezzanine Property by the
Mezzanine Mortgagee, (B) any of the Mezzanine Collateral or any of
the Borrower's, the Property Owner's, Wells Avenue Holdings' or
WASH Manager's direct or indirect interests, rights or claims in
and to WASH (including without limitation any rights to receive
distributions from WASH, WASH Manager or Wells Avenue Holdings),
(C) any other assets or properties of WASH Manager or Wells Avenue
Holdings, (D) any direct or indirect interests, rights or claims of
either Borrower, the Property Owner, WASH Manager or Wells Avenue
Holdings in WASH, (E) any direct or indirect interests, rights or
claims of Borrower in Wells Avenue Holdings, or (F) any direct or
indirect interests, rights or claims of Wells Avenue Holdings in
WASH Manager; or
(vi) WASH shall seek or obtain additional advances from the
holder or holders of the Mezzanine Mortgage Loan Documents
(provided that the foregoing shall not be deemed violated in the
event that the holder or holders of the Mezzanine Mortgage Loan
Documents shall make a protective advance or advances for the
payment of taxes, insurance premiums or to protect the Mezzanine
Property pursuant to the terms of the Nomura Mortgages), or WASH
shall modify, amend, terminate, extend or seek a consent or waiver
under the Mezzanine Mortgage Loan Documents in any respect without
the prior written approval of the Lender (other than an amendment
or waiver that would reduce the obligations of WASH to pay
principal, interest, loan fees, default interest, late charges,
prepayment fees or similar payments thereunder or a waiver of an
"Event of Default" under the Mezzanine Mortgage Loan Documents or
other occasional waiver of compliance with a term of any of the
Mezzanine Mortgage Loan Documents which waiver in each case is not
a waiver of future compliance with such term or tantamount to an
amendment of the Mezzanine Mortgage Loan Documents, and which
waiver does not have a material adverse effect on any of the
Borrower, Lender, Property Owner, WASH, WASH Manager, Wells Avenue
Holdings, the Collateral, the Mezzanine Collateral or the Mezzanine
Property); or
(vii) Any of Borrower, Wells Avenue Holdings, WASH, WASH
Manager or Property Owner shall modify, amend, cancel, release,
surrender, terminate or permit the modification, amendment,
cancellation, release, surrender or termination of the Wells Avenue
Holdings Organizational Agreements, the WASH Manager Organizational
Agreements or the WASH Organizational Agreements other than "Minor
Amendments" (as such term is defined in the Assignment of
Interests), or dissolve, liquidate, redeem, cancel, wind-up or
permit the dissolution, liquidation, redemption, cancellation,
winding-up or expiration of WASH, WASH Manager or Wells Avenue
Holdings or the Wells Avenue Holdings Organizational Agreements,
the WASH Manager Organizational Agreements or the WASH
Organizational Agreements, or seek or permit the partition of any
of the assets of any of such Persons; or
(viii) Any of Borrower, the Property Owner, WASH Manager or
Wells Avenue Holdings shall take any action which results in the
sale, reduction, cancellation, dilution, diminution, conversion or
withdrawal of any direct or indirect interest of such Person in
WASH, WASH Manager or Wells Avenue Holdings, as applicable, or omit
to take any action necessary to prevent any such sale,
cancellation, reduction, dilution, diminution, conversion or
withdrawal, or, without limiting the foregoing, consent to or
permit to occur the admission of any new member of WASH, WASH
Manager or Wells Avenue Holdings, the creation of any new class of
interest in WASH, WASH Manager or Wells Avenue Holdings, or the
issuance, directly or indirectly, any other equity or beneficial
interest in WASH, WASH Manager or Wells Avenue Holdings; or
(ix) The Borrower shall breach any of its covenants or
agreements contained in Paragraphs 6(i) or 6(j) of the Assignment
of Interests, to the full extent of any losses, damages and
expenses of Lender on account thereof.
(c) No consent or approval which may be given by the Lender
pursuant to Section 32(g) of the Credit Agreement shall be deemed to release,
diminish or otherwise impair the obligations of Guarantor under this Guaranty
or to otherwise affect the determination of whether a Triggering Event has
occurred.
(d) For the purposes of this Guaranty, in order to determine any
loss, damage or expense of Lender, Lender shall not be required to have sold
or otherwise disposed of any of the Mezzanine Collateral or any other
Collateral.
25. Limitation of Recovery. Without modifying or limiting any
provision of this Guaranty or any agreement contained herein, except as
Guarantor's liability is otherwise limited as specifically provided in
Paragraph 24, above, it is hereby agreed that the amount recoverable from
Guarantor under this Guaranty (but not the scope or extent of the liabilities
and obligations guaranteed under this Guaranty) shall be limited to (a) the
principal balance of the Notes not to exceed an amount equal to
$18,569,816.00 (such sum of $18,569,816.00 being hereinafter referred to as
the "Allocable Principal Amount"), (b) interest accrued on the principal
portion of the Notes described in Paragraph 25(a), (c) any payments or
advances of funds made by Lender pursuant to any one or more of the Loan
Documents relating directly or indirectly to the Mezzanine Property, the
Mezzanine Collateral or the Mezzanine Mortgage Loan, and (d) all expenses
(including, but not limited to, reasonable attorneys' fees) paid or incurred
by Lender in endeavoring to enforce this Guaranty (such amounts set forth in
clauses (a) through (d) inclusive above are hereinafter referred to
collectively as the "Allocable Loan Amount"). In the event of any
foreclosure sale of the Collateral, the amount recoverable against the
Guarantors with respect to any of the Triggering Events, which pursuant to
the terms of any subparagraph of Paragraph 24(b) the liability of Guarantors
is not specifically limited to the terms thereof, shall be reduced by an
amount equal to the amount paid at such foreclosure sale, for the Collateral
or portion thereof so sold at the time of such foreclosure sale (Guarantor
remaining liable at such foreclosure sale for the deficiency up to the extent
of any remaining liability of Guarantor hereunder).
26. Reduction of the Allocable Principal Amount.
(a) Notwithstanding anything contained in this Guaranty to the
contrary, if and to the extent that one or more of the Mezzanine Properties
are released from the lien of the Nomura Mortgage and such Mezzanine Property
is released in accordance with the terms of Section 5.3 of the Credit
Agreement (including without limitation the payment to Lender of the
requisite release price allocable to such portion of the Collateral pursuant
to the provisions of Section 5.3 of the Credit Agreement), then the Allocable
Principal Amount shall be automatically reduced by an amount equal to one
hundred percent (100%) of the Designated Collateral Value allocable to such
portion of the Collateral.
(b) If and to the extent that any "Distributions" (as defined in
the Assignment of Interests) or other sums generated by any one or more of
the Mezzanine Properties (including, without limitation, any condemnation
awards and/or casualty insurance proceeds) are received by Agent under the
Loan Documents after the occurrence and during the continuance of an Event of
Default, and are applied by Lender in reduction of the outstanding principal
balance of the Notes, then the Allocable Principal Amount shall be
automatically reduced by a like amount.
27. Joint and Several Liability. Notwithstanding anything to the
contrary herein, the representations, warranties, covenants and agreements
made by each of the Persons comprising Guarantor herein, and the liability of
each of the Persons comprising Guarantor hereunder, is joint and several
subject to the terms of this Paragraph 27; provided, however, that the
maximum liability of WRPI and WCPT (collectively, the "Wellsford Entities")
on a joint and several basis shall be fifty percent (50%) of the Allocable
Loan Amount, and the maximum liability of Whitehall and WHWEL on a joint and
several basis shall be fifty percent (50%) of the Allocable Loan Amount; and
provided further that, in the event that a Triggering Event shall occur
solely as a result of any of the events described in Paragraph 24(b)(i), (ii)
or (iii) as to only one or more of the Wellsford Entities, on the one hand,
or only one or more of the Whitehall Entities, on the other hand, then the
Whitehall Entities shall have no liability hereunder as a result of any such
action on the part of any Wellsford Entity, and none of the Wellsford
Entities shall have any liability hereunder as a result of any such action on
the part of any of the Whitehall Entities.
28. Statement of Discharge. Upon the payment in full of the
indebtedness guaranteed hereby and upon the termination of Lender's
obligations to advance Loans to Borrower, the Lender shall, upon the written
request of any of Whitehall, WRPI or the Borrower, deliver a statement to the
Guarantor that the Guarantor's obligations under this Guaranty have been
discharged and satisfied and that this Guaranty is terminated (subject to
reinstatement as provided herein).
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as
of the 16th day of July, 1998.
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
---------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SEAL]
WELLSFORD REAL PROPERTIES, INC., a Maryland
corporation
By: /s/ Gregory F. Hughes
-----------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
--------------------------
Name: Alan S. Kava
Title: Vice President
Attest: /s/ Ralph Rosenberg
-----------------------
Name: Ralph Rosenberg
Title: Assistant Secretary
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP V
By: WH Advisors, L.P. V
By: WH Advisors, Inc. V
By: /s/ Alan S. Kava
---------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VI
By: WH Advisors, L.P. VI
By: WH Advisors, Inc. VI
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII
By: WH Advisors, Inc. VII
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VIII
By: WH Advisors, L.P. VIII
By: WH Advisors, Inc. VIII
By: /s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
MEZZANINE CONDITIONAL GUARANTY OF PAYMENT
($75,000,000 Loan)
FOR AND IN CONSIDERATION OF the sum of Ten and No/100 Dollars ($10.00)
and other good and valuable consideration paid or delivered to the
undersigned WELLSFORD COMMERCIAL PROPERTIES TRUST, a Maryland real estate
investment trust ("WCPT"), WHWEL REAL ESTATE LIMITED PARTNERSHIP ("WHWEL"),
WELLSFORD REAL PROPERTIES, INC., a Maryland corporation ("WRPI"), WHITEHALL
STREET REAL ESTATE LIMITED PARTNERSHIP V ("Whitehall V"), WHITEHALL STREET
REAL ESTATE LIMITED PARTNERSHIP VI ("Whitehall VI"), WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VII ("Whitehall VII"), and WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VIII ("Whitehall VIII", and together with
Whitehall V, Whitehall VI and Whitehall VII, collectively, "Whitehall"), each
a Delaware limited partnership (WCPT, WHWEL, WRPI and Whitehall are
hereinafter referred to collectively as "Guarantor"), the receipt and
sufficiency whereof is hereby acknowledged by Guarantor, and for the purpose
of seeking to induce BANKBOSTON, N.A., a national banking association
("BKB"), and GOLDMAN SACHS MORTGAGE COMPANY ("Goldman Sachs"; BKB and Goldman
Sachs are hereinafter referred to collectively as "Lender", which term shall
also include each other Bank which may now or hereafter become party to the
"Credit Agreement" (as hereinafter defined) and shall also include any such
individual Bank acting as agent for all of the Banks), to extend credit or
otherwise provide financial accommodations to WELLSFORD/WHITEHALL PROPERTIES
II, L.L.C., a Delaware limited liability company (hereinafter referred to as
"Borrower"), which extension of credit and provision of financial
accommodations will be to the direct interest, advantage and benefit of
Guarantor, Guarantor does hereby, jointly and severally, absolutely and
irrevocably guarantee to Lender:
(a) subject to the provisions of Paragraphs 24 and 25, below, the full
and prompt payment when due, whether by acceleration or otherwise, either
before or after maturity thereof, of those certain Notes dated July 16, 1998
made by Borrower to the order of the Banks in the aggregate principal face
amount of Seventy-Five Million and No/100 Dollars ($75,000,000.00)
(hereinafter referred to collectively as the "Bank Notes"), together with
interest as provided in the Bank Notes, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(b) subject to the provisions of Paragraphs 24 and 25, below, the full
and prompt payment when due, whether by acceleration or otherwise, either
before or after maturity thereof, of each other note as may be issued under
that certain Mezzanine Loan Agreement dated July ___, 1998 among Borrower,
BKB, for itself and as agent, Goldman Sachs, and the other lenders now or
hereafter a party thereto (hereinafter referred to as the "Credit
Agreement"), together with interest as provided in each such note, together
with any replacements, supplements, renewals, modifications, consolidations,
restatements and extensions thereof (the Bank Notes and each of the notes
described in this subparagraph (b) is hereinafter referred to collectively as
the "Note"); and
(c) subject to the terms of Paragraphs 24 and 25 below, the full and
prompt payment of all other monetary obligations of Borrower to Lender under
the terms of the Credit Agreement, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(d) subject to the terms of Paragraphs 24 and 25 below, the full and
prompt payment of any and all other monetary obligations of Borrower to
Lender under the Security Documents, together with any replacements,
supplements, renewals, modifications, consolidations, restatements and
extensions thereof; and
(e) subject to the terms of Paragraphs 24 and 25 below, the full and
prompt payment of any and all other monetary obligations of Borrower to
Lender under any other agreements, documents or instruments now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced by
the Note or the Credit Agreement (the Note, the Security Documents, the
Credit Agreement and said other agreements, documents and instruments, are
hereinafter collectively referred to as the "Loan Documents" and individually
referred to as a "Loan Document").
All terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.
1. Agreement to Pay; Costs of Collection. Guarantor does hereby agree
that, subject to the terms of Paragraphs 24 and 25 below, below, if the Note
is not paid by Borrower in accordance with its terms (including all
applicable grace periods), or if any and all sums which are now or may
hereafter become due from Borrower to Lender under the Loan Documents are not
paid by Borrower in accordance with their terms (including all applicable
grace periods), Guarantor will immediately make such payments. Guarantor
further agrees to pay Lender on demand all reasonable costs and expenses
(including court costs and reasonable attorneys' fees and disbursements) paid
or incurred by Lender in endeavoring to enforce this Guaranty, and until paid
to Lender, such sums shall bear interest at the default rate set forth in the
Credit Agreement unless collection from Guarantor of interest at such rate
would be contrary to applicable law, in which event such sums shall bear
interest at the highest rate which may be collected from Guarantor under
applicable law.
2. Reinstatement of Refunded Payments. If, for any reason, any
payment to Lender of any of the obligations guaranteed hereunder is required
to be refunded by Lender to Borrower, or paid or turned over by Lender to any
other person, including, without limitation, by reason of the operation of
bankruptcy, reorganization, receivership or insolvency laws or similar laws
of general application relating to creditors' rights and remedies now or
hereafter enacted, Guarantor agrees to pay the amount so required to be
refunded, paid or turned over (hereinafter referred to as the "Turnover
Payment"), the obligations of Guarantor shall not be treated as having been
discharged by the original payment to Lender giving rise to the Turnover
Payment, and this Guaranty shall be treated as having remained in full force
and effect for any such Turnover Payment so made by Lender, as well as for
any amounts not theretofore paid to Lender on account of such obligations,
but only to the extent that Guarantor otherwise would have been liable for
the payment of the same hereunder.
3. Rights of Lender to Deal with Collateral, Borrower and Other
Persons. Guarantor hereby consents and agrees that Lender may at any time,
and from time to time, without thereby releasing Guarantor from any liability
hereunder and without notice to or further consent from Guarantor, either
with or without consideration: release or surrender any lien or other
security of any kind or nature whatsoever held by it or by any person, firm
or corporation on its behalf or for its account, securing any indebtedness or
liability hereby guaranteed; substitute for any collateral so held by it,
other collateral of like kind, or of any kind; modify the terms of the Note
or the Loan Documents; extend or renew the Note for any period; grant
releases, compromises and indulgences with respect to the Note or the Loan
Documents and to any persons or entities now or hereafter liable thereunder
or hereunder; release any other Guarantor, surety, endorser or accommodation
party of the Note, the Security Documents or any other Loan Documents; or
take or fail to take any action of any type whatsoever. No such action which
Lender shall take or fail to take in connection with the Note or the Loan
Documents, or any of them, or any security for the payment of the
indebtedness of Borrower to Lender or for the performance of any obligations
or undertakings of Borrower, nor any course of dealing with Borrower or any
other person, shall release Guarantor's obligations hereunder, affect this
Guaranty in any way or afford Guarantor any recourse against Lender. The
provisions of this Guaranty shall extend and be applicable to all
replacements, supplements, renewals, amendments, extensions, consolidations,
restatements and modifications of the Note and the Loan Documents, and any
and all references herein to the Note and the Loan Documents shall be deemed
to include any such replacements, supplements, renewals, extensions,
amendments, consolidations, restatements or modifications thereof.
4. No Contest with Lender; Subordination. So long as any obligation
hereby guaranteed remains unpaid or undischarged, Guarantor will not, by
paying any sum recoverable hereunder (whether or not demanded by Lender) or
by any means or on any other ground, claim any set-off or counterclaim
against Borrower in respect of any liability of Guarantor to Borrower or, in
proceedings under federal bankruptcy law or insolvency proceedings of any
nature, prove in competition with Lender in respect of any payment hereunder
or be entitled to have the benefit of any counterclaim or proof of claim or
dividend or payment by or on behalf of Borrower or the benefit of any other
security for any obligation hereby guaranteed which, now or hereafter, Lender
may hold or in which it may have any share. Guarantor hereby expressly
waives any right of contribution from or indemnity against Borrower, whether
at law or in equity, arising from any payments made by Guarantor pursuant to
the terms of this Guaranty, and Guarantor acknowledges that Guarantor has no
right whatsoever to proceed against Borrower for reimbursement of any such
payments. In connection with the foregoing, Guarantor expressly waives any
and all rights of subrogation to Lender against Borrower, and Guarantor
hereby waives any rights to enforce any remedy which Lender may have against
Borrower and any rights to participate in any collateral for Borrower's
obligations under the Loan Documents. Guarantor hereby subordinates any and
all indebtedness of Borrower now or hereafter owed to Guarantor to all
indebtedness of Borrower to Lender, and agrees with Lender that (a) Guarantor
shall not demand or accept any payment from Borrower on account of such
indebtedness, (b) Guarantor shall not claim any offset or other reduction of
Guarantor's obligations hereunder because of any such indebtedness, and (c)
Guarantor shall not take any action to obtain any interest in any of the
security described in and encumbered by the Loan Documents because of any
such indebtedness; provided, however, that, if Lender so requests, such
indebtedness shall be collected, enforced and received by Guarantor as
trustee for Lender and be paid over to Lender on account of the indebtedness
of Borrower to Lender, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty except to
the extent the principal amount of such outstanding indebtedness shall have
been reduced by such payment.
5. Waiver of Defenses. Guarantor hereby agrees that its obligations
hereunder shall not be affected or impaired by, and hereby waives and agrees
not to assert or take advantage of any defense based on:
(a) the incapacity or lack of authority of Borrower or any other
person or entity, the death or disability of Borrower or any Guarantor or any
other person or entity, or the failure of Lender to file or enforce a claim
against the estate (either in administration, bankruptcy or in any other
proceeding) of Borrower or any Guarantor or any other person or entity;
(b) the dissolution or termination of existence of Borrower or any
other Person;
(c) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of Borrower or any
other Person;
(d) the voluntary or involuntary receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
assignment, composition, or readjustment of, or any similar proceeding
affecting Borrower, any Guarantor, Property Owner, WASH, WASH Manager, Wells
Avenue Holdings or any of Borrower's, any Guarantor's, Property Owner's,
WASH's, WASH Manager's or Wells Avenue Holdings' properties or assets;
(e) the damage, destruction, condemnation, foreclosure or
surrender of all or any part of the Mortgaged Property, the Mezzanine
Property or any Collateral;
(f) the failure of Lender to give notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or
of any action or nonaction on the part of any other person whomsoever in
connection with any obligation hereby guaranteed;
(g) any failure or delay of Lender to commence an action against
Borrower or any other Person, to assert or enforce any remedies against
Borrower under the Note or the Loan Documents, or to realize upon any
security;
(h) any failure of any duty on the part of Lender to disclose to
Guarantor any facts it may now or hereafter know regarding Borrower, the
Property Owner, WASH or any other Person, or the Mortgaged Property, the
Mezzanine Property or the property encumbered by the Security Documents,
whether such facts materially increase the risk to Guarantor or not;
(i) failure to accept or give notice of acceptance of this
Guaranty by Lender;
(j) failure to make or give notice of presentment and demand for
payment of any of the indebtedness or performance of any of the obligations
hereby guaranteed;
(k) failure to make or give protest and notice of dishonor or of
default to Guarantor or to any other party with respect to the indebtedness
or performance of obligations hereby guaranteed;
(l) any and all other notices whatsoever to which Guarantor might
otherwise be entitled;
(m) any lack of diligence by Lender in collection, protection or
realization upon any collateral securing the payment of the indebtedness or
performance of obligations hereby guaranteed;
(n) the invalidity or unenforceability of the Note or any of the
Loan Documents;
(o) the compromise, settlement, release or termination of any or
all of the obligations of Borrower under the Note or the Loan Documents;
(p) any transfer by Borrower or any other Person of all or any
part of the security encumbered by the Loan Documents;
(q) the failure of Lender to perfect any security or to extend or
renew the perfection of any security; or
(r) to the fullest extent permitted by law, any other legal,
equitable or surety defenses whatsoever to which Guarantor might otherwise be
entitled, it being the intention that the obligations of Guarantor hereunder
are absolute, unconditional (subject to the terms of Paragraphs 24 and 25,
below) and irrevocable.
6. Guaranty of Payment and Not of Performance or Collection. This is
a Guaranty of payment and not of performance or collection. Subject to the
terms of Paragraphs 24 and 25, below, the liability of Guarantor under this
Guaranty shall be primary, direct and immediate and not conditional or
contingent upon the pursuit of any remedies against Borrower or any other
person, nor against securities or liens available to Lender, its successors,
successors in title, endorsees or assigns. Guarantor hereby waives any right
to require that an action be brought against Borrower or any other person or
to require that resort be had to any security or to any balance of any
deposit account or credit on the books of Lender in favor of Borrower or any
other person.
7. Rights and Remedies of Lender. In the event of an Event of Default
under the Note or the Loan Documents, or any of them, Lender shall have the
right to enforce its rights, powers and remedies thereunder or hereunder or
under any other agreement, document or instrument now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced by
the Note or secured by the Loan Documents, in any order, and all rights,
powers and remedies available to Lender in such event shall be nonexclusive
and cumulative of all other rights, powers and remedies provided thereunder
or hereunder or by law or in equity. Accordingly, Guarantor hereby
authorizes and empowers Lender upon the occurrence of any Event of Default
under the Note or the Loan Documents, at its sole discretion, and without
notice to Guarantor, to exercise any right or remedy which Lender may have,
including, but not limited to, judicial foreclosure, exercise of rights of
power of sale, acceptance of an assignment in lieu of foreclosure,
appointment of a receiver, exercise of remedies against personal property, or
enforcement of any assignment of leases, as to any security, whether real,
personal or intangible. At any public or private sale of any security or
collateral for any indebtedness or any part thereof guaranteed hereby,
whether by foreclosure or otherwise, Lender may, in its discretion, purchase
all or any part of such security or collateral so sold or offered for sale
for its own account and may apply against the amount bid therefor all or any
part of the balance due it pursuant to the terms of the Note or Security
Documents or any other Loan Document without prejudice to Lender's remedies
hereunder against Guarantor for deficiencies. If the indebtedness guaranteed
hereby is partially paid by reason of the election of Lender to pursue any of
the remedies available to Lender, or if such indebtedness is otherwise
partially paid, this Guaranty shall nevertheless remain in full force and
effect, and Guarantor shall remain liable for the entire balance of the
indebtedness guaranteed hereby (subject, however, to the provisions of
Paragraphs 24 and 25 below) even though any rights which Guarantor may have
against Borrower may be destroyed or diminished by the exercise of any such
remedy.
8. Application of Payments. Guarantor hereby authorizes Lender,
without notice to Guarantor, to apply all payments and credits received from
Borrower or from Guarantor or realized from any security in such manner and
in such priority as set forth in the Credit Agreement.
9. Business Failure, Bankruptcy or Insolvency. In the event of the
business failure of a Guarantor or if there shall be pending any bankruptcy
or insolvency case or proceeding with respect to a Guarantor under federal
bankruptcy law or any other applicable law or in connection with the
insolvency of a Guarantor, or if a liquidator, receiver, or trustee shall
have been appointed for a Guarantor or a Guarantor's properties or assets,
Lender may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of Lender allowed in any
proceedings relative to such Guarantor, or any of such Guarantor's properties
or assets, and, irrespective of whether the indebtedness or other obligations
of Borrower guaranteed hereby or the obligations of such Guarantor hereunder
shall then be due and payable, by declaration or otherwise, Lender shall be
entitled and empowered to file and prove a claim for the whole amount of any
sum or sums owing by such Guarantor with respect to the indebtedness or other
obligations of Borrower guaranteed hereby, and to collect and receive any
moneys or other property payable or deliverable on any such claim. Guarantor
covenants and agrees that upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Borrower, Guarantor shall not seek a
supplemental stay or otherwise pursuant to Section 105 of the Bankruptcy Code
or any other provision of the Bankruptcy Code, or any other debtor relief law
(whether statutory, common law, case law, or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to
stay, interdict, condition, reduce or inhibit the ability of Lender to
enforce any rights of Lender against Guarantor by virtue of this Guaranty or
otherwise.
10. Financial Statements and Other Information. Each Guarantor hereby
independently represents and warrants to Lender that all financial statements
heretofore delivered by it to Lender are true and correct in all material
respects, have been prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present its financial condition
as of the date thereof; that no material adverse change has occurred in its
assets or financial condition as reflected therein since the date thereof;
and that it has no liabilities or known contingent liabilities involving
material amounts which are not reflected in such financial statements or
referred to in the notes thereto other than its obligations under this
Guaranty. Each Guarantor independently agrees that until all indebtedness
guaranteed hereby has been completely repaid and all obligations and
undertakings of Borrower and Guarantor under, by reason of, or pursuant to
the Note and the Loan Documents have been completely performed and no Lender
has any further obligation to make Loans to Borrower (or until the Assignment
of Interests has been terminated as provided therein, provided that no
"Triggering Event" (as hereinafter defined" has occurred), it will promptly
deliver to Lender upon written (but not more often than quarterly) demand its
then most recent financial statements readily available (provided that such
financial statements shall be prepared and updated not less frequently than
annually) detailing its assets and liabilities certified by it, in form and
substance reasonably acceptable to Lender.
The financial statements and other reports and information delivered by
Guarantor to Lender hereunder will be treated as confidential by each Lender,
and each assignee and participant hereunder and each potential assignee or
participant hereunder, and such parties for themselves agree not to disclose
such information to any Person, provided that such information may be
disclosed to any of the following in connection with their participation in
the transactions contemplated by the Loan Documents: directors, officers,
employees, representatives, legal counsel, accountants and prospective
investors of any of such Persons, it being understood that such Persons shall
be informed of the confidential nature of such information and shall agree to
treat such information confidentially. Notwithstanding the foregoing, such
Persons shall be permitted to disclose such information (a) to the extent
required by law, (b) to the extent such confidential information becomes
publicly available other than as a result of the breach of this Guaranty,
(c) to the extent such information becomes available to any of such Persons
on a non-confidential basis, or (d) to the extent necessary to enforce the
Loan Documents (provided that Lender shall use reasonable efforts to cause
such financial statements, reports and information to remain confidential).
11. Covenants of Guarantor. Each Guarantor independently hereby
covenants and agrees with Lender that until all indebtedness guaranteed
hereby has been completely repaid and all obligations and undertakings of
Borrower and Guarantor under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed, and the Lenders have no
further obligations to make Loans to Borrower (or until the Assignment of
Interests has been terminated as provided therein, provided that no
"Triggering Event" (as hereinafter defined) has occurred):
(a) it will cause to be done all things necessary to preserve and
keep in full force and effect its legal existence, rights and franchises, to
effect and maintain all required foreign qualifications, licensing,
domestication or authorization, and to comply in all material respects with
all applicable laws and regulations with respect to the foregoing;
(b) it will keep complete, proper and accurate records and books
of account in which full, true and correct entries will be made in accordance
with generally accepted accounting principles consistent with the preparation
of the financial statements heretofore delivered to Lender and will maintain
adequate accounts and reserves for all taxes (including income taxes), all
depreciation and amortization of its properties, all other contingencies, and
all other proper reserves in the same manner, and to the same extent, that it
has, to the extent applicable, kept and maintained it records and books and
maintained accounts and reserves for the foregoing; and
(c) it will not make or permit to be made, by voluntary or
involuntary means, any transfer or encumbrance of its direct or indirect
interest in Borrower, or any dilution of its direct or indirect interest in
Borrower, which would violate the provisions of Section 8.11 of the Credit
Agreement.
12. [Intentionally Omitted].
13. Changes in Writing; No Revocation. This Guaranty may not be
changed orally, and no obligation of Guarantor can be released or waived by
Lender except by a writing signed by a duly authorized officer of Lender.
This Guaranty shall be irrevocable by Guarantor until all indebtedness
guaranteed hereby has been completely repaid and the Lenders have no further
obligation to advance Loans to Borrower. Notwithstanding anything contained
in this Guaranty or any of the Loan Documents to the contrary, this Guaranty
shall terminate and be of no further force or effect upon the termination of
the Assignment of Interests either pursuant to the terms thereof or by mutual
agreement of Borrower and Lender provided that no "Triggering Event" (as
hereinafter defined) has occurred.
14. Notices. All notices, demands or requests provided for or
permitted to be given pursuant to this Guaranty (hereinafter in this
paragraph referred to as "Notice") must be in writing and shall be deemed to
have been properly given or served by personal delivery or by sending same by
overnight courier or by depositing the same in the United States Mail,
postpaid and registered or certified, return receipt requested, at the
addresses set forth below. Each Notice shall be effective upon being
delivered personally or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. The time period in which a
response to any such Notice must be given or any action taken with respect
thereto, however, shall commence to run from the date of receipt if
personally delivered or sent by overnight courier or, if so deposited in the
United States Mail, the earlier of three (3) business days following such
deposit and the date of receipt as disclosed on the return receipt.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no Notice was given shall be deemed to be receipt of
the Notice sent. By giving at least fifteen (15) days prior Notice thereof,
Guarantor or Lender shall have the right from time to time and at any time
during the term of this Guaranty to change their respective addresses and
each shall have the right to specify as its address any other address within
the United States of America. For the purposes of this Guaranty:
The Address of Lender is:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
with a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jay Johns
and a copy to each other Lender which may now or hereafter become a
party to the Credit Agreement at such address as may be designated by
such Lender.
The Address of Guarantor is:
Wellsford Commercial Properties Trust
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attn: Greg Hughes
and
Wellsford Real Properties, Inc.
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attn: Greg Hughes
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman, LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
and
WHWEL Real Estate Limited Partnership
85 Broad Street, 19th Floor
New York, New York 10004
Attn: Chief Financial Officer
and
Whitehall Street Real Estate Limited Partnership V
Whitehall Street Real Estate Limited Partnership VI
Whitehall Street Real Estate Limited Partnership VII
Whitehall Street Real Estate Limited Partnership VIII
85 Broad Street, 19th Floor
New York, New York 10004
Attn: Chief Financial Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Anthony J. Colletta, Esq.
15. Governing Law. Guarantor acknowledges and agrees that this
Guaranty and the obligations of Guarantor hereunder shall be governed by and
interpreted and determined in accordance with the internal laws of the State
of New York (excluding the laws applicable to conflicts or choice of law).
16. CONSENT TO JURISDICTION; WAIVERS. GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK
OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY, AND (B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, AND (II) TO OBJECT TO
JURISDICTION WITHIN THE STATE OF NEW YORK OR VENUE IN ANY PARTICULAR FORUM
WITHIN THE STATE OF NEW YORK. NOTHING CONTAINED HEREIN, HOWEVER, SHALL
PREVENT LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY
RIGHTS AGAINST ANY SECURITY AND AGAINST GUARANTOR PERSONALLY, AND AGAINST ANY
PROPERTY OF GUARANTOR, WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION
OR PROCEEDING OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE
A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE OF NEW
YORK SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND LENDER
HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY GUARANTOR TO PERSONAL
JURISDICTION WITHIN THE STATE OF NEW YORK.
17. Successors and Assigns. The provisions of this Guaranty shall be
binding upon Guarantor and its heirs, successors, successors in title, legal
representatives, executors, estate and assigns, and shall inure to the
benefit of Lender, its successors, successors in title, legal representatives
and assigns.
18. Assignment by Lender. Subject to the terms of Section 18.8 of the
Credit Agreement, this Guaranty is assignable by Lender in whole or in part
in conjunction with any assignment of the Note or portions thereof, and any
such assignment hereof or any transfer or assignment of the Note or portions
thereof by Lender shall operate to vest in any such assignee the rights and
powers, in whole or in part, as appropriate, herein conferred upon and
granted to Lender.
19. Severability. If any term or provision of this Guaranty shall be
determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by law.
20. Disclosure. Guarantor agrees that in addition to disclosures made
in accordance with standard banking practices, any Lender may disclose
information obtained by such Lender pursuant to this Guaranty to assignees or
participants and potential assignees or participants hereunder, subject to
the terms of Paragraph 10 above.
21. No Unwritten Agreements. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
22. Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Guarantor under this
Guaranty.
23. [Intentionally Omitted.]
24. Triggering Event.
(a) LENDER ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS GUARANTY, THE PAYMENT BY GUARANTOR OF ITS
OBLIGATIONS UNDER THIS GUARANTY SHALL BE DUE ONLY IN THE EVENT THAT, AND
GUARANTOR SHALL HAVE NO LIABILITY HEREUNDER UNLESS AND UNTIL, ONE OR MORE
"TRIGGERING EVENTS" (AS THAT TERM IS HEREINAFTER DEFINED) SHALL OCCUR AND,
WITH RESPECT TO THE ITEMS DESCRIBED IN CLAUSES (iv) THROUGH (vii) BELOW, ANY
OF THE EVENTS DESCRIBED THEREIN IS NOT CURED WITHIN FIVE (5) DAYS AFTER
RECEIPT BY GUARANTOR OF WRITTEN NOTICE FROM AGENT OF THE OCCURRENCE OF ANY
SUCH EVENT (PROVIDED, HOWEVER, THAT SUCH CURE BY GUARANTOR SHALL NOT BE
DEEMED A CURE OF ANY EVENT OF DEFAULT).
(b) For the purposes of this Guaranty, the term "Triggering Event"
shall mean the occurrence of any one or more of the following events:
(i) Any of the Guarantor, the Borrower or the Property Owner
shall file any voluntary petition under any Chapter of the
Bankruptcy Code, or shall in any manner seek any relief,
protection, reorganization, liquidation, dissolution or similar
relief for debtors under any local, state, federal or other
insolvency laws or other laws providing for the relief of debtors,
or in equity, or directly or indirectly cause any of the other of
such Persons to file any such petition or to seek any such relief;
or
(ii) Any of the Guarantor, the Borrower or the Property Owner
(A) shall file, or, directly or indirectly, cause to be filed, any
involuntary petition under any Chapter of the Bankruptcy Code
against any of such Persons, whether or not any of such Persons
joins in such petition, or (B) shall, directly or indirectly, cause
any of such Persons to become the subject of any dissolution,
liquidation or insolvency proceeding or any other proceeding
pursuant to any local, state, federal or other insolvency laws or
other laws providing for the relief of debtors, or in equity;
(iii) Any of the Guarantor, the Borrower or the Property
Owner shall, directly or indirectly, cause the Mortgaged Property
or the Collateral, or any portion thereof or interest therein, or
any interest of such Persons in the Mortgaged Property or the
Collateral, to become the property of any bankruptcy, dissolution,
liquidation or insolvency proceeding; or
(iv) Except as expressly permitted in Sections 3.2(a), 5.3
and 8.2 of the Credit Agreement, Borrower or Property Owner shall
voluntarily sell, transfer, assign, convey or otherwise dispose of
or mortgage, hypothecate, finance or refinance any assets or
properties of Property Owner except for the Mezzanine Mortgage
Loan, the Mortgage Loan or other Indebtedness permitted pursuant to
Section 8.1 of the Credit Agreement; or
(v) Any of Borrower or Property Owner shall modify, amend,
cancel, release, surrender, terminate or permit the modification,
amendment, cancellation, release, surrender or termination of the
Property Owner Organizational Agreements other than "Minor
Amendments" (as such term is defined in the Assignment of
Interests), or dissolve, liquidate, redeem, cancel, wind-up or
permit the dissolution, liquidation, redemption, cancellation,
winding-up or expiration of Property Owner or Property Owner
Organizational Agreements, or seek or permit the partition of any
of the assets of Property Owner; or
(vi) Borrower shall take any action which results in the
sale, reduction, cancellation, dilution, diminution, conversion or
withdrawal of any direct or indirect interest of Borrower in
Property Owner, or omit to take any action necessary to prevent any
such sale, cancellation, reduction, dilution, diminution,
conversion or withdrawal, or, without limiting the foregoing,
consent to or permit to occur the admission of any new member of
Property Owner, the creation of any new class of interest in
Property Owner or the issuance, directly or indirectly, any other
equity or beneficial interest in Property Owner; or
(vii) The Borrower shall breach any of its covenants or
agreements contained in Paragraphs 6(i) or 6(j) of the Assignment
of Interests, to the full extent of any losses, damages and
expenses of Lender on account thereof.
(c) No consent or approval which may be given by the Lender
pursuant to Section 32(g) of the Credit Agreement shall be deemed to release,
diminish or otherwise impair the obligations of Guarantor under this Guaranty
or to otherwise affect the determination of whether a Triggering Event has
occurred.
(d) For the purposes of this Guaranty, in order to determine any
loss, damage or expense of Lender, Lender shall not be required to have sold
or otherwise disposed of any of the Mezzanine Collateral or any other
Collateral.
25. Limitation of Recovery. Without modifying or limiting any
provision of this Guaranty or any agreement contained herein, except as
Guarantor's liability is otherwise limited as specifically provided in
Paragraph 24, above, it is hereby agreed that the amount recoverable from
Guarantor under this Guaranty (but not the scope or extent of the liabilities
and obligations guaranteed under this Guaranty) shall be limited to (a) the
principal balance of the Notes (hereinafter referred to as the "Allocable
Principal Amount"), (b) interest accrued on the principal portion of the
Notes described in Paragraph 25(a), (c) any payments or advances of funds
made by Lender pursuant to any one or more of the Loan Documents relating
directly or indirectly to the Mortgaged Property, the Mezzanine Property, the
Mezzanine Collateral, the Mortgage Loan or the Mezzanine Mortgage Loan, and
(d) all expenses (including, but not limited to, reasonable attorneys' fees)
paid or incurred by Lender in endeavoring to enforce this Guaranty (such
amounts set forth in clauses (a) through (d) inclusive above are hereinafter
referred to collectively as the "Allocable Loan Amount"). In the event of
any foreclosure sale of the Collateral, the amount recoverable against the
Guarantors with respect to any of the Triggering Events, which pursuant to
the terms of any subparagraph of Paragraph 24(b) the liability of Guarantors
is not specifically limited to the terms thereof, shall be reduced by an
amount equal to the amount paid at such foreclosure sale, for the Collateral
or portion thereof so sold at the time of such foreclosure sale (Guarantor
remaining liable at such foreclosure sale for the deficiency up to the extent
of any remaining liability of Guarantor hereunder). The obligations of the
Guarantor under this Guaranty are separate and independent obligations of
Guarantor and are in addition to the obligations of Guarantor and the rights
of Lender under any other guaranty or indemnity given by Guarantor to Lender,
and payments made under one guaranty or indemnity or limitations on liability
thereunder shall not reduce the liabilities and obligations of Guarantor
hereunder. Without limiting the foregoing, the liability of Guarantor
hereunder shall not be released, diminished or impaired to the extent that
the liability of the Guarantor under the Nomura Conditional Guaranty shall be
or shall be deemed to be limited as a result of the occurrence of any
Triggering Event as defined in this Guaranty.
26. Limitation Reduction of the Allocable Principal Amount.
(a) Notwithstanding anything contained in this Guaranty to the
contrary, if and to the extent that one or more of the Mortgaged Properties
or the Mezzanine Properties are released from the lien of the Mortgage or
Nomura Mortgage, as applicable, and such Mortgaged Property or Mezzanine
Property is released in accordance with the terms of Section 5.3 of the
Credit Agreement (including without limitation the payment to Lender of the
requisite release price allocable to such portion of the Collateral pursuant
to the provisions of Section 5.3 of the Credit Agreement), then the Allocable
Principal Amount shall be automatically reduced by an amount equal to one
hundred percent (100%) of the Designated Collateral Value allocable to such
portion of the Collateral.
(b) If and to the extent that any "Distributions" (as defined in
the Assignment of Interests) or other sums generated by any one or more of
the Mortgaged Properties or the Mezzanine Properties (including, without
limitation, any condemnation awards and/or casualty insurance proceeds) are
received by Agent under the Loan Documents after the occurrence and during
the continuance of an Event of Default, and are applied by Lender in
reduction of the outstanding principal balance of the Notes, then the
Allocable Principal Amount shall be automatically reduced by a like amount.
27. Limitation Joint and Several Liability. Notwithstanding anything
to the contrary herein, the representations, warranties, covenants and
agreements made by each of the Persons comprising Guarantor herein, and the
liability of each of the Persons comprising Guarantor hereunder, is joint and
several subject to the terms of this Paragraph 27; provided, however, that
the maximum liability of WRPI and WCPT (collectively, the "Wellsford
Entities") on a joint and several basis shall be fifty percent (50%) of the
Allocable Loan Amount, and the maximum liability of Whitehall and WHWEL on a
joint and several basis shall be fifty percent (50%) of the Allocable Loan
Amount; and provided further that, in the event that a Triggering Event shall
occur solely as a result of any of the events described in Paragraph
24(b)(i), (ii) or (iii) as to only one or more of the Wellsford Entities, on
the one hand, or only one or more of the Whitehall Entities, on the other
hand, then the Whitehall Entities shall have no liability hereunder as a
result of any such action on the part of any Wellsford Entity, and none of
the Wellsford Entities shall have any liability hereunder as a result of any
such action on the part of any of the Whitehall Entities.
28. Statement of Discharge. Upon the payment in full of the
indebtedness guaranteed hereby and upon the termination of Lender's
obligations to advance Loans to Borrower, the Lender shall, upon the written
request of any of Whitehall, WRPI or the Borrower, deliver a statement to the
Guarantor that the Guarantor's obligations under this Guaranty have been
discharged and satisfied and that this Guaranty is terminated (subject to
reinstatement as provided herein).
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as
of the 16th day of July, 1998.
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By:/s/ Gregory F. Hughes
-------------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SEAL]
WELLSFORD REAL PROPERTIES, INC., a Maryland
corporation
By:/s/ Gregory F. Hughes
-------------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By:/s/ Alan S. Kava
----------------------------------
Name: Alan S. Kava
Title: Vice President
Attest: Ralph F. Rosenberg
-------------------------
Name: Ralph F. Rosenberg
Title: Assistant Secretary
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP V
By: WH Advisors, L.P. V
By: WH Advisors, Inc. V
By:/s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VI
By: WH Advisors, L.P. VI
By: WH Advisors, Inc. VI
By:/s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII
By: WH Advisors, Inc. VII
By:/s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VIII
By: WH Advisors, L.P. VIII
By: WH Advisors, Inc. VIII
By:/s/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
INDEMNITY AND GUARANTY AGREEMENT
--------------------------------
($75,000,000.00 Loan)
THIS INDEMNITY AND GUARANTY AGREEMENT (this "Agreement"), made as of the
16th day of July, 1998, by WELLSFORD COMMERCIAL PROPERTIES TRUST, a Maryland
real estate investment trust, and WHWEL REAL ESTATE LIMITED PARTNERSHIP,
jointly and severally (said entities being collectively referred to herein as
"Indemnitor"), whose address is 610 Fifth Avenue, Seventh Floor, New York,
New York 10020, in favor of BANKBOSTON, N.A., a national banking association,
individually and as Agent for itself and the other banks which may become
parties to the "Loan Agreement" (as hereinafter defined), GOLDMAN SACHS
MORTGAGE COMPANY, and each other lender which may now or hereafter become
party to the Loan Agreement (together, "Lender").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Properties II, L.L.C. ("Borrower"), has
obtained loan in the principal amount of up to Seventy-Five Million and
No/100 Dollars ($75,000,000.00) (the "Loan") from Lender;
WHEREAS, the Loan has been made pursuant to the terms and conditions of
that certain Mezzanine Loan Agreement, of even date herewith, by and between
Borrower, Agent and Lender (the "Loan Agreement");
WHEREAS, the Loan is evidenced by one or more promissory notes
(collectively, the "Note"), and executed by Borrower and payable to the order
of Lender and is secured by among other things, the "Security Documents" (as
defined in the Loan Agreement and being referred to herein as the "Security
Documents"), encumbering the "Collateral" (as defined in the Loan Agreement
and being herein referred to as the "Collateral") (the Note, the Security
Documents and all other documents and instruments evidencing or securing the
Loan, as the same may from time to time be amended, consolidated, restated,
extended, renewed or replaced (including without limitation any notes
delivered by Borrower pursuant to Section 18.3 of the Loan Agreement), being
collectively referred to herein as the "Loan Documents"); and
WHEREAS, as a condition to making the Loan to Borrower, Lender has
required that Indemnitor indemnify Lender from and against and guarantee
payment to Lender of certain matters as set forth herein; and
WHEREAS, each of the parties comprising Indemnitor is a direct or
indirect owner of a beneficial interest in Borrower, the extension of the
Loan to Borrower is of substantial benefit to Indemnitor and, therefore,
Indemnitor desires to indemnify Lender from and against and guarantee payment
to Lender of such matters.
NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:
1. Indemnity and Guaranty. Indemnitor hereby assumes liability for,
hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend
and save Lender harmless from and against, and hereby indemnifies Lender from
and against any and all liabilities, obligations, losses, damages, costs and
expenses (including, without limitation, attorneys' fees), causes of action,
suits, claims, demands and judgments of any nature or description whatsoever
(collectively, "Costs") which may at any time be imposed upon, incurred by or
awarded against Lender as a result of:
(a) Proceeds paid under any insurance policies (or paid as a
result of any other claim or cause of action against any person or entity) by
reason of damage, loss or destruction to all or any portion of the
Collateral, the Mortgaged Property, any other collateral for the Mortgage
Loan (including without limitation the Mezzanine Collateral) or the Mezzanine
Property, to the full extent of such proceeds not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been
delivered to Lender;
(b) Proceeds or awards resulting from the condemnation or other
taking in lieu of condemnation of all or any portion of the Collateral, the
Mortgaged Property, any other collateral for the Mortgage Loan (including
without limitation the Mezzanine Collateral) or the Mezzanine Property, to
the full extent of such proceeds or awards not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been
delivered to Lender;
(c) All tenant security deposits or other refundable deposits paid
to or held by Borrower, Property Owner, WASH or any other person or entity in
connection with leases, license agreements, booking agreements and all other
similar agreements entered into for the use and occupancy of all or any
portion of the Collateral, the Mortgaged Property or the Mezzanine Property
which are not applied in accordance with the terms of the applicable lease or
other agreement;
(d) Rent, accounts, accounts receivables, fees and other payments
received from tenants or any other person or entity under leases, license
agreements, booking agreements and all other similar agreements entered into
for the use and occupancy of all or any portion of the Collateral, the
Mortgaged Property or the Mezzanine Property paid more than one month in
advance;
(e) Distributions, rents, issues, profits, revenues, accounts,
accounts receivable and fees of all or any portion of the Collateral received
or applicable to a period after any notice of Default from Lender under the
Loan Documents in the event of any Default by Borrower thereunder which are
not paid to Lender as required by the Loan Documents;
(f) Damage to the Collateral, the Mortgaged Property, any other
collateral for the Mortgage Loan (including without limitation the Mezzanine
Collateral) or the Mezzanine Property as a result of the intentional
misconduct or gross negligence of Borrower, WASH, WASH Manager, Wells Avenue
Holdings, Property Owner or any of their respective principals, officers,
members or general partners, or any property manager that controls, is
controlled by or is under common control with any of such persons, or any
removal of the Collateral, the Mortgaged Property, any other collateral for
the Mortgage Loan (including without limitation the Mezzanine Collateral) or
the Mezzanine Property in violation of the terms of the Loan Documents, to
the full extent of the losses or damages incurred by Lender on account of
such damage or removal;
(g) Borrower, WASH, WASH Manager, Wells Avenue Holdings or
Property Owner retaining funds directly or indirectly or making distributions
to their respective members as a result of which Borrower, WASH, WASH
Manager, Wells Avenue Holdings or Property Owner is unable to pay any valid
taxes, assessments, mechanic's liens, materialmen's liens or other liens
which could create liens on any portion of the Mortgaged Property, the
Mezzanine Property, the assets of WASH Manager or Wells Avenue Holdings or
which could create liens on any portion of the Collateral which would be
superior to the lien or security title of the Security Documents or the other
Loan Documents thereon; and
(h) Fraud or intentional misrepresentation by Borrower, WASH, WASH
Manager, Wells Avenue Holdings, Property Owner or any of their respective
principals, members, officers or general partners, any guarantor, any
indemnitor or any agent, employee or other person authorized or apparently
authorized to make statements or representations on behalf of Borrower, WASH,
WASH Manager, Wells Avenue Holdings, Property Owner, any principal, officer,
member or partner of Borrower, WASH, WASH Manager, Wells Avenue Holdings,
Property Owner, or any guarantor or any indemnitor, to the full extent of any
losses, damages and expenses of Lender on account thereof.
This is a guaranty of payment and performance of the matters within the
scope of this Agreement and not of collection. The liability of Indemnitor
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any remedies against Borrower or any other
person (including, without limitation, other guarantors, if any), nor against
the collateral for the Loan. Indemnitor waives any right to require that an
action be brought against Borrower or any other person or to require that
resort be had to any collateral for the Loan or to any balance of any deposit
account or credit on the books of Lender in favor of Borrower or any other
person. In the event, on account of the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law (whether statutory, common law, case
law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, Borrower shall be relieved of or fail to
incur any debt, obligation or liability as provided in the Loan Documents
which is the subject matter of this Agreement, Indemnitor shall nevertheless
be fully liable therefor to the extent provided in this Agreement. In the
event of a default under the Loan Documents which is not cured within any
applicable grace or cure period, Lender shall have the right to enforce its
rights, powers and remedies (including, without limitation, foreclosure of
all or any portion of the collateral for the Loan) thereunder or hereunder,
in any order, and all rights, powers and remedies available to Lender in such
event shall be non-exclusive and cumulative of all other rights, powers and
remedies provided thereunder or hereunder or by law or in equity. If the
indebtedness and obligations guaranteed hereby are partially paid or
discharged by reason of the exercise of any of the remedies available to
Lender, this Agreement shall nevertheless remain in full force and effect,
and Indemnitor shall remain liable for all remaining indebtedness and
obligations guaranteed hereby to the extent provided in this Agreement, even
though any rights which Indemnitor may have against Borrower may be destroyed
or diminished by the exercise of any such remedy. Terms used in this
Agreement that are not otherwise defined herein shall have the meanings set
forth in the Loan Agreement.
2. Indemnification Procedures.
(a) If any action shall be brought against Lender based upon any
of the matters for which Lender is indemnified hereunder, Lender shall notify
Indemnitor in writing thereof and Indemnitor shall promptly assume the
defense thereof, including, without limitation, the employment of counsel
reasonably acceptable to Lender and the negotiation of any settlement;
provided, however, that any failure of Lender to notify Indemnitor of such
matter shall not impair or reduce the obligations of Indemnitor hereunder.
Lender shall have the right, at the expense of Indemnitor (which expense
shall be included in Costs in the event that Lender shall conclude in good
faith that a conflict of interest exists), to employ separate counsel in any
such action and to participate in the defense thereof. In the event
Indemnitor shall fail to discharge or undertake to defend Lender against any
claim, loss or liability for which Lender is indemnified hereunder, Lender
may, at its sole option and election, defend or settle such claim, loss or
liability. The liability of Indemnitor to Lender hereunder shall be
conclusively established by such settlement, provided such settlement is made
in good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation,
attorneys' fees and disbursements, incurred by Lender in effecting such
settlement. In such event, such settlement consideration, costs and expenses
shall be included in Costs and Indemnitor shall pay the same as hereinafter
provided.
(b) Indemnitor shall not, without the prior written consent of
Lender: (i) settle or compromise any action, suit, proceeding or claim or
consent to the entry of any judgment that does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to
Lender of a full and complete written release of Lender (in form, scope and
substance reasonably satisfactory to Lender in its sole discretion) from all
liability in respect of such action, suit, proceeding or claim and a
dismissal with prejudice of such action, suit, proceeding or claim; or (ii)
settle or compromise any action, suit, proceeding or claim in any manner that
may adversely affect Lender or obligate Lender to pay any sum or perform any
obligation as determined by Lender in its sole discretion.
(c) All Costs shall be immediately reimbursable to Lender when and
as incurred and, in the event of any litigation, claim or other proceeding,
without any requirement of waiting for the ultimate outcome of such
litigation, claim or other proceeding, and Indemnitor shall pay to Lender any
and all Costs within ten (10) Business Days after written notice from Lender
itemizing the amounts thereof incurred to the date of such notice. In
addition to any other remedy available for the failure of Indemnitor to
periodically pay such Costs, such Costs, if not paid within said ten-day
period, shall bear interest at the rate for overdue payments in the Loan
Agreement.
3. Reinstatement of Obligations. If at any time all or any part of
any payment made by Indemnitor or received by Lender from Indemnitor under or
with respect to this Agreement is or must be rescinded or returned for any
reason whatsoever (including, but not limited to, the insolvency, bankruptcy
or reorganization of Indemnitor or Borrower), then the obligations of
Indemnitor hereunder shall, to the extent of the payment rescinded or
returned, be deemed to have continued in existence, notwithstanding such
previous payment made by Indemnitor, or receipt of payment by Lender, and the
obligations of Indemnitor hereunder shall continue to be effective or be
reinstated, as the case may be, as to such payment, all as though such
previous payment by Indemnitor had never been made.
4. Waivers by Indemnitor. To the extent permitted by law and with
respect to matters relating to liabilities arising under this Agreement,
Indemnitor hereby waives and agrees not to assert or take advantage of:
(a) Any right to require Lender to proceed against Borrower or any
other person or to proceed against or exhaust any security held by Lender at
any time or to pursue any other remedy in Lender's power or under any other
agreement before proceeding against Indemnitor hereunder;
(b) Any defense that may arise by reason of the incapacity, lack
of authority, death or disability of any other person or persons or the
failure of Lender to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other person or
persons;
(c) Demand, presentment for payment, notice of nonpayment,
protest, notice of protest and all other notices of any kind, or the lack of
any thereof, including, without limiting the generality of the foregoing,
notice of the existence, creation or incurring of any new or additional
indebtedness or obligation or of any action or non-action on the part of
Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on
the part of any other person whomsoever under this or any other instrument in
connection with any obligation or evidence of indebtedness held by Lender;
(d) Any defense based upon an election of remedies by Lender;
(e) Any right or claim or right to cause a marshaling of the
assets of Indemnitor;
(f) Any principle or provision of law, statutory or otherwise,
which is or might be in conflict with the terms and provisions of this
Agreement;
(g) Any duty on the part of Lender to disclose to Indemnitor any
facts Lender may now or hereafter know about Borrower or the Collateral,
regardless of whether Lender has reason to believe that any such facts
materially increase the risk beyond that which Indemnitor intends to assume
or has reason to believe that such facts are unknown to Indemnitor or has a
reasonable opportunity to communicate such facts to Indemnitor, it being
understood and agreed that Indemnitor is fully responsible for being and
keeping informed of the financial condition of Borrower, of the condition of
the Collateral and of any and all circumstances bearing on the risk that
liability may be incurred by Indemnitor hereunder;
(h) Any lack of notice of disposition or of manner of disposition
of any collateral for the Loan;
(i) Any invalidity, irregularity or unenforceability, in whole or
in part, of any one or more of the Loan Documents;
(j) Any deficiencies in the collateral for the Loan or any
deficiency in the ability of Lender to collect or to obtain performance from
any persons or entities now or hereafter liable for the payment and
performance of any obligation hereby guaranteed;
(k) An assertion or claim that the automatic stay provided by 11
U.S.C. Section 362 (arising upon the voluntary or involuntary bankruptcy
proceeding of Borrower) or any other stay provided under any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Lender to enforce any of its rights, whether
now or hereafter required, which Lender may have against Indemnitor or the
collateral for the Loan;
(l) Any modifications of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any
other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or
otherwise; and
(m) Any action, occurrence, event or matter consented to by
Indemnitor under Section 5(h) hereof, under any other provision hereof, or
otherwise.
5. General Provisions.
(a) Fully Recourse. All of the terms and provisions of this
Agreement are recourse obligations of Indemnitor and not restricted by any
limitation on personal liability. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the obligations of WHWEL Real
Estate Limited Partnership under this Agreement whether arising under this
Agreement or otherwise in connection with any of the Loan Documents, shall be
without recourse to any limited partner of WHWEL Real Estate Limited
Partnership and no such person shall have any liability with respect thereto.
pos Unsecured Obligations. Indemnitor hereby acknowledges that
Lender's appraisal of the Collateral is such that Lender is not willing to
accept the consequences of the inclusion of Indemnitor's indemnity set forth
herein among the obligations secured by the Security Documents and the other
Loan Documents and that Lender would not make the Loan but for the unsecured
personal liability undertaken by Indemnitor herein.
(c) Survival. This Agreement shall be deemed to be continuing in
nature and shall remain in full force and effect with respect to the matters
covered by this Agreement and shall survive the exercise of any remedy by
Lender under the Security Documents or any of the other Loan Documents,
including, without limitation, any foreclosure or deed in lieu thereof, even
if, as a part of such remedy, the Loan is paid or satisfied in full.
(d) No Subrogation; No Recourse Against Lender. Notwithstanding
the satisfaction by Indemnitor of any liability hereunder, Indemnitor shall
not have any right of subrogation, contribution, reimbursement or indemnity
whatsoever or any right of recourse to or with respect to the assets or
property of Borrower or to any collateral for the Loan. In connection with
the foregoing, Indemnitor expressly waives any and all rights of subrogation
to Lender against Borrower, and Indemnitor hereby waives any rights to
enforce any remedy which Lender may have against Borrower and any right to
participate in any collateral for the Loan. In addition to and without in
any way limiting the foregoing, Indemnitor hereby subordinates any and all
indebtedness of Borrower now or hereafter owed to Indemnitor to all
indebtedness of Borrower to Lender, and agrees with Lender that Indemnitor
(i) from and after the occurrence and during the continuance of an Event of
Default shall not demand or accept any payment of principal or interest from
Borrower, (ii) shall not claim any offset or other reduction of Indemnitor's
obligations hereunder because of any such indebtedness and (iii) shall not
take any action to obtain any of the collateral from the Loan. Further,
Indemnitor shall not have any right of recourse against Lender by reason of
any action Lender may take or omit to take under the provisions of this
Agreement or under the provisions of any of the Loan Documents.
(e) Reservation of Rights. Nothing contained in this Agreement
shall prevent or in any way diminish or interfere with any rights or
remedies, including, without limitation, the right to contribution, which
Lender may have against Borrower, Indemnitor or any other party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(codified at Title 42 U.S.C. Section 9601 et seq.), as it may be amended from
time to time, or any other applicable federal, state or local laws, all such
rights being hereby expressly reserved.
(f) Financial Statements. Indemnitor hereby agrees, as a material
inducement to Lender to make the Loan to Borrower, to furnish to Lender
promptly upon demand by Lender current and dated financial statements
detailing the assets and liabilities of Indemnitor certified by Indemnitor,
in form and substance acceptable to Lender. Indemnitor hereby warrants and
represents unto Lender that any and all balance sheets, net worth statements
and other financial data which have heretofore been given or may hereafter be
given to Lender with respect to Indemnitor did or will at the time of such
delivery fairly and accurately present the financial condition of Indemnitor
in all material respects.
(g) Rights Cumulative; Payments. Lender's rights under this
Agreement shall be in addition to all rights of Lender under the Note, the
Security Documents and the other Loan Documents. FURTHER, PAYMENTS MADE BY
INDEMNITOR UNDER THIS AGREEMENT SHALL NOT REDUCE IN ANY RESPECT BORROWER'S
OBLIGATIONS AND LIABILITIES UNDER THE NOTE, THE SECURITY DOCUMENTS AND THE
OTHER LOAN DOCUMENTS SHOULD SUCH PAYMENT BE EVER RESCINDED OR RETURNED BY
LENDER FOR ANY REASON WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, THE
INSOLVENCY, BANKRUPTCY OR REORGANIZATION OF INDEMNITOR).
(h) No Limitation on Liability. Indemnitor hereby consents and
agrees that Lender may at any time and from time to time without further
consent from Indemnitor do any of the following events, and the liability of
Indemnitor under this Agreement shall be unconditional and absolute and shall
in no way be impaired or limited by any of the following events, whether
occurring with or without notice to Indemnitor or with or without
consideration: (i) any extensions of time for performance required by any of
the Loan Documents or extension or renewal of the Note; (ii) any sale,
assignment or foreclosure of the Note, the Security Documents or any of the
other Loan Documents or any sale or transfer of the Collateral; (iii) any
change in the composition of Borrower, including, without limitation, the
withdrawal or removal of Indemnitor from any current or future position of
ownership, management or control of Borrower; (iv) the accuracy or inaccuracy
of the representations and warranties made by Indemnitor herein or by
Borrower in any of the Loan Documents; (v) the release of Borrower or of any
other person or entity from performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law, Lender's voluntary act or otherwise; (vi) the
release or substitution in whole or in part of any security for the Loan;
(vii) Lender's failure to record the Security Documents or to file any
financing statement (or Lender's improper recording or filing thereof) or to
otherwise perfect, protect, secure or insure any lien or security interest
given as security for the Loan; (viii) the modification of the terms of any
one or more of the Loan Documents; or (ix) the taking or failure to take any
action of any type whatsoever. No such action which Lender shall take or
fail to take in connection with the Loan Documents or any collateral for the
Loan, nor any course or dealing with Borrower or any other person, shall
limit, impair or release Indemnitor's obligations hereunder, effect this
Agreement in any way or afford Indemnitor any recourse against Lender.
Nothing contained in Section shall be construed to require Lender to take or
refrain from taking any action referred to herein.
(i) Entire Agreement; Amendment; Severability. This Agreement
contains the entire agreement between the parties respecting the matters
herein set forth and supersedes all prior agreements, whether written or
oral, between the parties respecting such matters. Any amendments or
modifications hereto, in order to be effective, shall be in writing and
executed by the parties hereto. A determination that any provision of this
Agreement is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application
of any provision of this Agreement to any person or circumstance is illegal
or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to any other persons or circumstances.
(j) Governing Law; Binding Effect; Waiver of Acceptance. This
Agreement shall be governed by and construed in accordance with the laws of
the State of New York, except to the extent that the applicability of any of
such laws may now or hereafter be preempted by Federal law, in which case
such Federal law shall so govern and be controlling. This Agreement shall
bind Indemnitor and the heirs, personal representatives, successors and
assigns of Indemnitor and shall inure to the benefit of Lender and the
officers, directors, shareholders, agents and employees of Lender and their
respective heirs, successors and assigns. Without limiting the foregoing,
this Agreement is assignable by Lender in whole or in part in conjunction
with any assignment of the Note or portions thereof, and any assignment
hereof or any transfer or assignment of the Note or portions thereof by
Lender shall operate to vest in any such assignee the rights and powers, in
whole or in part, as appropriate, herein conferred upon and granted to
Lender. Notwithstanding the foregoing, Indemnitor shall not assign any of
its rights or obligations under this Agreement without the prior written
consent of Lender, which consent may be withheld by Lender in its sole
discretion. Indemnitor hereby waives any acceptance of this Agreement by
Lender, and this Agreement shall immediately be binding upon Indemnitor.
(k) Notice. All notices, demands, requests or other
communications to be sent by one party to the other hereunder or required by
law shall be in writing and shall be deemed to have been validly given or
served by delivery of the same in person to the intended addressee, or by
depositing the same with Federal Express or another reputable private courier
service for next business day delivery to the intended addressee at its
address set forth on the first page of this Agreement or at such other
address as may be designated by such party as herein provided, or by
depositing the same in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, addressed to the intended addressee
at its address set forth on the first page of this Agreement or at such other
address as may be designated by such party as herein provided. All notices,
demands and requests shall be effective upon such personal delivery, or one
(1) business day after being deposited with the private courier service, or
two (2) business days after being deposited in the United States mail as
required above. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand or request sent.
By giving to the other party hereto at least fifteen (15) days' prior written
notice thereof in accordance with the provisions hereof, the parties hereto
shall have the right from time to time to change their respective addresses
and each shall have the right to specify as its address any other address
within the United States of America.
(l) No Waiver; Time of Essence; Business Day. The failure of
any party hereto to enforce any right or remedy hereunder, or to promptly
enforce any such right or remedy, shall not constitute a waiver thereof nor
give rise to any estoppel against such party nor excuse any of the parties
hereto from their respective obligations hereunder. Any waiver of such right
or remedy must be in writing and signed by the party to be bound. This
Agreement is subject to enforcement at law or in equity, including actions
for damages or specific performance. Time is of the essence hereof.
(m) Captions for Convenience. The captions and headings of the
sections and paragraphs of this Agreement are for convenience of reference
only and shall not be construed in interpreting the provisions hereof.
(n) Attorneys' Fees. In the event it is necessary for Lender to
retain the services of an attorney or any other consultants in order to
enforce this Agreement, or any portion thereof, Indemnitor agrees to pay to
Lender any and all reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by Lender as a result
thereof and such costs, fees and expenses shall be included in Costs.
(o) Successive Actions. A separate right of action hereunder
shall arise each time Lender acquires knowledge of any matter indemnified or
guaranteed by Indemnitor under this Agreement. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at
any time and from time to time. No action hereunder shall preclude any
subsequent action, and Indemnitor hereby waives and covenants not to assert
any defense in the nature of splitting of causes of action or merger of
judgments.
(p) Reliance. Lender would not make the Loan to Borrower without
this Agreement. Accordingly, Indemnitor intentionally and unconditionally
enters into the covenants and agreements as set forth above and understands
that, in reliance upon and in consideration of such covenants and agreements,
the Loan shall be made and, as part and parcel thereof, specific monetary and
other obligations have been, are being and shall be entered into which would
not be made or entered into but for such reliance.
(q) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(1) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW
YORK OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING MAY BE BROUGHT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT OF
COMPETENT JURISDICTION SITTING THEREIN, (C) SUBMITS TO THE JURISDICTION OF
SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT
NEITHER OF THEM WILL BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER PROPER FORUM). INDEMNITOR FURTHER CONSENTS
AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO THE INDEMNITOR AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION
5(k) HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN
EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT
THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED
BY LAW).
(2) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER
OR INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS,
EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER
OR INDEMNITOR, IN EACH OR THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.
(r) Waiver by Indemnitor. Indemnitor covenants and agrees that,
upon the commencement of a voluntary or involuntary bankruptcy proceeding by
or against Borrower, Indemnitor shall not seek or cause Borrower or any other
person or entity to seek a supplemental stay or other relief, whether
injunctive or otherwise, pursuant to 11 U.S.C. Section 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law, (whether statutory, common law, case law or otherwise) of
any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any rights of Lender against Indemnitor by
virtue of this Agreement or otherwise.
(s) Joint and Several Liability. Notwithstanding anything to the
contrary herein, the representations, warranties, covenants and agreements
made by each of the persons comprising Indemnitor herein, and the liability
of each of the persons comprising Indemnitor hereunder, is joint and several.
IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement
under seal as of the day and year first above written.
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
--------------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By:/s/ Alan S. Kava
-----------------------------------
Name: Alan S. Kava
Title: Vice President
REVOLVING CREDIT AGREEMENT
DATED AS OF JANUARY 12, 1999
among
WELLSFORD FINANCE, INC., as Borrower
and
BANKBOSTON, N.A.,
and
OTHER LENDERS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT, as Lenders
and
BANKBOSTON, N.A.,
AS AGENT
<PAGE>
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . .-1-
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . .-1-
Section 1.2. Rules of Interpretation.. . . . . . . . . . . . . . . . -16-
Section 2. THE REVOLVING CREDIT FACILITY.. . . . . . . . . . . . . . . -16-
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . . . -16-
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . . . . -17-
Section 2.3. Reduction of Commitment. . . . . . . . . . . . . . . . -17-
Section 2.4. Notes. . . . . . . . . . . . . . . . . . . . . . . . . -18-
Section 2.6. Requests for Loans. . . . . . . . . . . . . . . . . . -18-
Section 2.7. Funds for Loans. . . . . . . . . . . . . . . . . . . . -19-
Section 3. REPAYMENT OF THE LOANS. . . . . . . . . . . . . . . . . . . -20-
Section 3.1. Stated Maturity. . . . . . . . . . . . . . . . . . . . -20-
Section 3.2. Mandatory Prepayments. . . . . . . . . . . . . . . . . -20-
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . . . -20-
Section 3.4. Partial Prepayments. . . . . . . . . . . . . . . . . . -21-
Section 3.5. Effect of Prepayments. . . . . . . . . . . . . . . . . -21-
Section 4. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . . . . . . -21-
Section 4.1. Conversion Options. . . . . . . . . . . . . . . . . . . -21-
Section 4.2. Closing Fee. . . . . . . . . . . . . . . . . . . . . . -22-
Section 4.3. Agents' Fee. . . . . . . . . . . . . . . . . . . . . . -22-
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . . . . -22-
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . . . -22-
Section 4.6. Inability to Determine Eurodollar Rate. . . . . . . . -23-
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . . . -23-
Section 4.8. Additional Interest. . . . . . . . . . . . . . . . . . -23-
Section 4.9. Additional Costs, Etc. . . . . . . . . . . . . . . . . -24-
Section 4.10. Capital Adequacy. . . . . . . . . . . . . . . . . . . -25-
Section 4.11. Indemnity of Borrower. . . . . . . . . . . . . . . . -25-
Section 4.12. Interest on Overdue Amounts; Late Charge. . . . . . . -25-
Section 4.13. Certificate. . . . . . . . . . . . . . . . . . . . . -26-
Section 4.14. Limitation on Interest. . . . . . . . . . . . . . . . -26-
Section 5. COLLATERAL SECURITY.. . . . . . . . . . . . . . . . . . . . -26-
Section 5.1. Collateral. . . . . . . . . . . . . . . . . . . . . . -26-
Section 5.2. Market Value. . . . . . . . . . . . . . . . . . . . . . -26-
Section 5.3. Release of Collateral. . . . . . . . . . . . . . . . . -27-
Section 5.4. Substitute Collateral. . . . . . . . . . . . . . . . . -28-
Section 6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . -29-
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . . . . -29-
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . . . -30-
Section 6.3. Title to Properties: Leases. . . . . . . . . . . . . -30-
Section 6.4. Financial Statements. . . . . . . . . . . . . . . . . -30-
Section 6.5. No Material Changes. . . . . . . . . . . . . . . . . . -30-
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . . . -31-
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . . . -31-
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . . . -31-
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . . . -31-
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . . . . . . -31-
Section 6.11. No Event of Default. . . . . . . . . . . . . . . . . -32-
Section 6.12. Holding Company and Investment Company Acts. . . . . -32-
Section 6.13. Absence of UCC Financing Statements, Etc. . . . . . . -32-
Section 6.14. Setoff, Etc. . . . . . . . . . . . . . . . . . . . . -32-
Section 6.15. Certain Transactions. . . . . . . . . . . . . . . . . -32-
Section 6.16. Employee Benefit Plans. . . . . . . . . . . . . . . . -32-
Section 6.17. ERISA Taxes. . . . . . . . . . . . . . . . . . . . . -33-
Section 6.18. Plan Payments. . . . . . . . . . . . . . . . . . . . -33-
Section 6.19. Regulations T, U and X. . . . . . . . . . . . . . . . -33-
Section 6.20. Subsidiaries. . . . . . . . . . . . . . . . . . . . . -33-
Section 6.21. Loan Documents. . . . . . . . . . . . . . . . . . . . -33-
Section 6.22. Brokers. . . . . . . . . . . . . . . . . . . . . . . -34-
Section 6.23. Fair Consideration. . . . . . . . . . . . . . . . . . -34-
Section 6.24. Solvency. . . . . . . . . . . . . . . . . . . . . . . -34-
Section 6.25. Other Debt. . . . . . . . . . . . . . . . . . . . . . -34-
Section 6.26. Year 2000 Compliant. . . . . . . . . . . . . . . . . -34-
Section 6.27. True Sales. . . . . . . . . . . . . . . . . . . . . . -35-
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER.. . . . . . . . . . . -35-
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . . . -35-
Section 7.2. Maintenance of Office. . . . . . . . . . . . . . . . . -35-
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . . . -35-
Section 7.4. Financial Statements, Certificates and Information. . -35-
Section 7.5. Notices.. . . . . . . . . . . . . . . . . . . . . . . . -37-
Section 7.6. Existence; Maintenance of Properties. . . . . . . . . . -39-
Section 7.7. Insurance. . . . . . . . . . . . . . . . . . . . . . -39-
Section 7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . -39-
Section 7.9. Inspection of Properties and Books. . . . . . . . . . -40-
Section 7.10. Compliance with Laws, Contracts, Licenses,
and Permits. . . . . . . . . . . . . . . . . . . . . . . . -40-
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . . . -40-
Section 7.12. Further Assurances. . . . . . . . . . . . . . . . . . -40-
Section 7.13. Business Operations. . . . . . . . . . . . . . . . . -41-
Section 7.14. ERISA Compliance. . . . . . . . . . . . . . . . . . . -41-
Section 7.15. Distribution of Income to the Borrower. . . . . . . . -41-
Section 7.16. More Restrictive Agreements. . . . . . . . . . . . . -41-
Section 7.17. Plan Assets, etc. . . . . . . . . . . . . . . . . . . -41-
Section 7.18. Determination of Values. . . . . . . . . . . . . . . -42-
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. . . . . . . . . -42-
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . . . -42-
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . . . -43-
Section 8.3. Restrictions on Investments. . . . . . . . . . . . . . -43-
Section 8.4. Merger, Consolidation. . . . . . . . . . . . . . . . . -44-
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . . . . . . -45-
Section 8.6. Distributions. . . . . . . . . . . . . . . . . . . . . -45-
Section 8.7. Asset Sales. . . . . . . . . . . . . . . . . . . . . . -45-
Section 9. FINANCIAL COVENANTS OF BORROWER.. . . . . . . . . . . . . . -45-
Section 9.1. Liabilities to Assets Ratio. . . . . . . . . . . . . . -45-
Section 9.2. Consolidated EBITDA Coverage. . . . . . . . . . . . . -45-
Section 9.3. Borrowing Base. . . . . . . . . . . . . . . . . . . . -46-
Section 9.4. Minimum Shareholders' Equity. . . . . . . . . . . . . -46-
Section 9.5. Required Equity. . . . . . . . . . . . . . . . . . . . -46-
Section 10. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . -46-
Section 10.1. Loan Documents. . . . . . . . . . . . . . . . . . . . -46-
Section 10.2. Certified Copies of Organizational Documents. . . . . -47-
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . . . . . -47-
Section 10.4. Incumbency Certificate; Authorized Signers. . . . . . -47-
Section 10.5. Opinion of Counsel. . . . . . . . . . . . . . . . . . -47-
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . . . . . -47-
Section 10.7. Performance; No Default. . . . . . . . . . . . . . . -47-
Section 10.8. Representations and Warranties. . . . . . . . . . . . -47-
Section 10.9. Proceedings and Documents. . . . . . . . . . . . . . -48-
Section 10.10. Collateral Loan Qualification Documents. . . . . . . -48-
Section 10.11. Compliance Certificate. . . . . . . . . . . . . . . -48-
Section 10.12. Governmental Policy. . . . . . . . . . . . . . . . . -48-
Section 10.13. Other. . . . . . . . . . . . . . . . . . . . . . . . -48-
Section 11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . . . . . . -48-
Section 11.1. Prior Conditions Satisfied. . . . . . . . . . . . . . -48-
Section 11.2. Representations True; No Default. . . . . . . . . . . -48-
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . . . -49-
Section 11.4. Governmental Regulation. . . . . . . . . . . . . . . -49-
Section 11.5. Proceedings and Documents. . . . . . . . . . . . . . -49-
Section 11.6. Borrowing Documents. . . . . . . . . . . . . . . . . -49-
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . -49-
Section 12.1. Events of Default and Acceleration. . . . . . . . . . -49-
Section 12.1A. Limitation of Cure Periods. . . . . . . . . . . . . . -52-
Section 12.1B. Certain Cure Periods. . . . . . . . . . . . . . . . . -53-
Section 12.2. Termination of Commitments. . . . . . . . . . . . . . -53-
Section 12.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . -54-
Section 12.4. Distribution of Collateral Proceeds. . . . . . . . . -54-
Section 13. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
Section 14. THE AGENT.. . . . . . . . . . . . . . . . . . . . . . . . . -55-
Section 14.1. Authorization. . . . . . . . . . . . . . . . . . . . -55-
Section 14.2. Employees and Agents. . . . . . . . . . . . . . . . . -55-
Section 14.3. No Liability. . . . . . . . . . . . . . . . . . . . . -55-
Section 14.4. No Representations. . . . . . . . . . . . . . . . . . -56-
Section 14.5. Payments.. . . . . . . . . . . . . . . . . . . . . . . -56-
Section 14.6. Holders of Notes. . . . . . . . . . . . . . . . . . . -57-
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . . . . . -57-
Section 14.8. Agent as Lender. . . . . . . . . . . . . . . . . . . -57-
Section 14.9. Resignation. . . . . . . . . . . . . . . . . . . . . -57-
Section 14.10. Duties in the Case of Enforcement. . . . . . . . . . -58-
Section 15. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . -58-
Section 16. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . -59-
Section 17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . -60-
Section 18. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . . -60-
Section 18.1. Conditions to Assignment by Lenders. . . . . . . . . -60-
Section 18.2. Register. . . . . . . . . . . . . . . . . . . . . . . -61-
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . . . . . -61-
Section 18.4. Participations. . . . . . . . . . . . . . . . . . . . -62-
Section 18.5. Pledge by Lender. . . . . . . . . . . . . . . . . . . -62-
Section 18.6. No Assignment by Borrower. . . . . . . . . . . . . . -62-
Section 18.7. Disclosure. . . . . . . . . . . . . . . . . . . . . . -62-
Section 19. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . -62-
Section 20. RELATIONSHIP. . . . . . . . . . . . . . . . . . . . . . . -64-
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. . . . . -64-
Section 22. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 23. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 24. ENTIRE AGREEMENT, ETC.. . . . . . . . . . . . . . . . . . . -65-
Section 25. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . -65-
Section 26. DEALINGS WITH THE BORROWER. . . . . . . . . . . . . . . . -65-
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . -65-
Section 28. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . -66-
Section 29. NO UNWRITTEN AGREEMENTS.. . . . . . . . . . . . . . . . . . -66-
Section 30. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . . . -66-
Section 31. REPLACEMENT NOTES.. . . . . . . . . . . . . . . . . . . . . -67-
Section 32. SERVICING.. . . . . . . . . . . . . . . . . . . . . . . . . -67-
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made as of the 12th day of January,
1999, by and among WELLSFORD FINANCE, INC., a Maryland corporation having its
principal place of business at 535 Madison Avenue, 26th Floor, New York, New
York 10022 ("Borrower"), BANKBOSTON, N.A., a national banking association,
and the other lending institutions which may become parties hereto pursuant
to Section 18 (collectively, the "Lenders"), and BANKBOSTON, N.A., as Agent
for the Lenders (the "Agent").
Section 6. DEFINITIONS AND RULES OF INTERPRETATION.
Section 6.1. Definitions. The following terms shall have the
meanings set forth in this Section l or elsewhere in the provisions of this
Agreement referred to below:
Abbey Participation Interest. The Participation Interest of the
Borrower, pursuant to that certain Loan Participation Agreement dated as of
August 28, 1997 between Morgan Guaranty Trust Company of New York and
Wellsford Real Properties, Inc., and subsequently assigned to Wellsford
Capital ("Capital"), as amended by that certain First Amendment to
Participation Agreement dated as of April 17, 1998, as further amended by
that certain Letter Agreement dated June 1, 1998, between Morgan and Capital
and subsequently assigned to Borrower, in the loan from Morgan Guaranty Trust
Company of New York to various borrowers pursuant to a Revolving Credit
Agreement dated as of August 28, 1997.
Agent. BankBoston, N.A., a national banking association, its successors
and assigns, acting as agent for the Lenders.
Agents Head Office. The Agents head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent
may designate from time to time by notice to the Borrower and the Lenders.
Agents Special Counsel. Long Aldridge & Norman LLP or such other
counsel as may be approved by the Agent.
Agreement. This Revolving Credit Agreement, including the Schedules and
Exhibits hereto.
Agreement Regarding Fees. The Agreement Regarding Fees dated of even
date herewith between Borrower and BKB.
Appraisal. An MAI appraisal of the value of a parcel of Collateral
Property, determined on a fair market value basis, performed by an
independent appraiser, the form and substance of such appraisal and the
identity of the appraiser to be in accordance with regulatory laws and
policies (both regulatory and internal) applicable to federally regulated
financial institutions, including, without limitation, FIRREA.
Balance Sheet Date. September 30, 1998.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts as its "base
rate", and (b) one-half of one percent (0.5%) above the Federal Funds
Effective Rate (rounded upwards, if necessary, to the next one-eighth of one
percent). Any change in the rate of interest payable hereunder resulting
from a change in the Base Rate shall become effective as of the opening of
business on the day on which such change in the Base Rate becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by reference
to the Base Rate.
BKB. BankBoston, N.A., a national banking association.
Borrower. As defined in the preamble hereto.
Borrowing Base. At any time, the sum of the Designated Collateral
Values for each Collateral Loan. Notwithstanding anything herein to the
contrary, with respect to any Collateral Loan for which BKB is the Servicer,
in no event shall (a) the LTV with respect to any such Collateral Loan exceed
65%, or (b) the Designated Collateral Value for such Collateral Loans exceed
thirty percent (30%) of the Designated Collateral Value within the Borrowing
Base.
Business Day. Any day on which banking institutions in the city in
which the Agents Head Office is located are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, which also is a
Eurodollar Business Day.
Capitalized Lease. A lease under which a Person is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with generally accepted accounting principles.
Class 1 Collateral Loan. At any time as determined by the Agent, a
Collateral Loan which at the time of determination has a Debt Service
Coverage Ratio greater than 1.50 to 1 and an LTV of less than 75%.
Class 2 Collateral Loan. At any time as determined by the Agent, a
Collateral Loan which at the time of determination has a Debt Service
Coverage Ratio greater than 1.50 to 1 and an LTV of 75% or greater but not
greater than 85%.
Closing Date. The first date on which all of the conditions set forth
in Section 10 and Section 11 have been satisfied.
CMBS. Securities issued pursuant to a securitization of commercial
Mortgage Loans.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower,
which are or are intended to be subject to the security interests, liens and
mortgages created by the Security Documents, including, without limitation,
the Collateral Notes and the other Collateral Loan Documents.
Collateral Assignment. Each of the Collateral Assignment of Documents,
Rights and Claims by the Borrower to the Agent for the benefit of the Lenders
pursuant to which the Collateral Notes and related documents are pledged to
the Agent.
Collateral Loans. Each of the Mortgage Loans, Mezzanine Loans,
Subordinated Loans, Participation Interests and CMBS that are pledged to the
Agent and accepted by the Lenders as Collateral.
Collateral Loan Documents. Each of the documents, instruments or other
agreements evidencing, securing or otherwise relating to the indebtedness of
an applicable Collateral Loan.
Collateral Loan Qualification Documents. See Schedule 1.2 hereto.
Collateral Notes. Collectively, the Qualifying Collateral Notes that
are pledged pursuant to the Collateral Assignments.
Collateral Property. Collectively, the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of a
Collateral Loan (or with respect to a Mezzanine Loan, the equity interests
and other collateral pledged to secure repayment of such loan and the real
property which is directly or indirectly owned by the Person or Persons
pledging the equity interests to secure repayment of a Mezzanine Loan) at any
time and, individually, any one such parcel of real property or other
collateral.
Commitment. With respect to each Lender, the amount set forth on
Schedule 1 hereto as the amount of such Lenders Commitment to make or
maintain Loans to the Borrower, as the same may be reduced from time to time
in accordance with the terms of this Agreement.
Commitment Percentage. With respect to each Lender, the percentage set
forth on Schedule 1 hereto as such Lenders percentage of the aggregate
Commitments of all of the Lenders.
Compliance Certificate. See Section 7.4(e).
Consolidated or combined. With reference to any term defined herein,
that term as applied to the accounts of the Borrower and its Subsidiaries,
consolidated or combined in accordance with generally accepted accounting
principles.
Consolidated EBITDA. With respect to any period, an amount equal to the
EBITDA of the Borrower and its Subsidiaries for such period consolidated in
accordance with generally accepted accounting principles. The Consolidated
EBITDA of the Borrower and its Subsidiaries on the consolidated financial
statements of the Borrower and its Subsidiaries shall be adjusted to reflect
the Borrowers allocable share of such Consolidated EBITDA for the relevant
period or as of the date of determination.
Consolidated Total Assets. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles. All Real Estate shall be valued on an
undepreciated cost basis. The assets of the Borrower and its Subsidiaries on
the consolidated financial statements of the Borrower and its Subsidiaries
shall be adjusted to reflect the Borrowers allocable share of such assets for
the relevant period or as of the date of determination.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of the Borrower and its
Subsidiaries, whether or not so classified. The liabilities of the Borrower
and its Subsidiaries on the consolidated financial statements of the Borrower
and its Subsidiaries shall be adjusted to reflect the Borrowers allocable
share of such liabilities for the relevant period or as of the date of
determination.
Conversion Request. A notice given by the Borrower to the Agent of its
election to convert or continue a Loan in accordance with Section 4.1.
Debt Offering. The issuance and sale by the Borrower of any debt
securities of the Borrower.
Debt Service. For any period, the sum of all interest expense and
mandatory or scheduled principal payments due and payable during such period,
excluding any balloon payments due upon maturity of any Indebtedness.
Debt Service Coverage Ratio. For any Collateral Loan, at any time
determined by the Agent at the end of any calendar quarter, the ratio
(expressed as a percentage) of (a) the net operating income (determined on a
cash basis) from a Collateral Property available for the payment of all Debt
Service secured, in whole or in part, by such Collateral Property or by
direct or indirect beneficial interests therein relating to such Collateral
Property (including all senior loans, Subordinated Loans and Mezzanine Loans)
for such period to (b) the Debt Service payable with respect to all loans
secured, in whole or in part, by such Collateral Property or by direct or
indirect beneficial interests therein relating to such Collateral Property
(including all senior loans, Subordinated Loans and Mezzanine Loans) for such
period. The determination of the Debt Service Coverage Ratio and the
components thereof shall, so long as the same shall be determined in good
faith, be conclusive and binding absent manifest error. With respect to the
Woodlands Notes, the Debt Service Coverage Ratio shall be determined with
respect to and the extent of the EBITDA of the Obligors under the Woodlands
Notes to the extent the same is included in the interest coverage calculation
for such Collateral Loan. With respect to the Abbey Participation Interest, a
capital improvement reserve of $0.25 per square foot per annum of net
rentable area owned by the borrowers now or hereafter a party to the "Abbey
Loan Documents" (as defined in the Collateral Assignment) shall be deducted
in determining the net operating income from the Collateral Properties
subject thereto.
Default. See Section 12.1.
Designated Collateral Value. With respect to each Collateral Loan, the
sum of (a) the lesser of (i) the Market Value of such Collateral Loan at any
time of determination, and (ii) the outstanding principal balance of (or
right to payment of principal pursuant to a Participation Interest evidenced
by) such Collateral Loan, multiplied by (b) the percentage rate set forth
below with respect thereto:
Collateral Loan Advance Rate
--------------- ------------
Class 1 Collateral Loan Not to exceed 65%
Class 2 Collateral Loan Not to exceed 55%
The Advance Rate for a Collateral Loan shall be determined by all of the
Lenders in their sole discretion (but not to exceed 65%). As of the date
hereof, the Woodlands Notes and the Abbey Participation Interest are Class 1
Collateral Loans with an Advance Rate of 65%.
The Designated Collateral Value shall be zero for each Collateral Loan:
(a) with respect to the Collateral Note or related Collateral Loan
Documents (which shall include for the purposes hereof any underlying
loan documents that are the subject of a Participation Interest), there
shall have occurred a failure to pay when due, or within any applicable
period of grace, any obligation thereunder, or a failure to observe or
perform any term, covenant or agreement under such Collateral Note or
related Collateral Loan Documents for such period of time as would
permit (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof; or
(b) with respect to which a Subordination Event has occurred; or
(c) with respect to which the Debt Service Coverage Ratio is not
greater than 1.50 to 1 as of any date of determination and such ratio is
not restored within thirty (30) days of such date of determination; or
(d) with respect to which the LTV exceeds the percentage specified
for the Class of Collateral Loan (that is, Class 1 Collateral Loan or
Class 2 Collateral Loan); provided, however, that in the event that the
LTV exceeds the percentage specified for a Class 1 Collateral Loan, such
Collateral Loan may with the approval of the Agent become a Class 2
Collateral Loan.
Distribution. The declaration or payment of any dividend or
distribution on or in respect of any shares of the Borrower, other than
dividends or distributions payable solely in equity securities of the
Borrower; the purchase, redemption, exchange or other retirement of any
shares of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in respect of any
shares of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Lender
designated as such in Schedule 1 hereto; thereafter, such other office of
such Lender, if any, located within the United States that will be making or
maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and
the date on which any Loan is converted or combined in accordance with
Section 4.1.
Duff & Phelps. Duff & Phelps Credit Rating Co. or any successor
thereto.
EBITDA. With respect to any Person (or any asset of any Person) for any
period, an amount equal to the sum of (a) the Net Income of such Person (or
attributable to such asset) for such period plus (b) depreciation and
amortization, interest expense, and any extraordinary or non-recurring losses
deducted in calculating such Net Income minus (c) any extraordinary or
nonrecurring gains included in calculating such Net Income.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. Any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
as amended, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, or any state or local statute, regulation, ordinance, order or
decree relating to the environment.
Equity Offering. The issuance and sale by the Borrower of any of its
equity securities.
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Estoppel and Agreement. That certain Estoppel and Agreement dated on or
about the date hereof among Borrower, Morgan Guaranty Trust Company of New
York and Agent.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D or any
successor or similar regulation), if such liabilities were outstanding. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Agent and
the Lenders in their sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Lender
designated as such in Schedule 1 hereto; thereafter, such other office of
such Lender, if any, that shall be making or maintaining Eurodollar Rate
Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the quotient (rounded upwards to the
nearest 1/16 of one percent) of (a) the rate at which the Reference Lenders
Eurodollar Lending Office is offered Dollar deposits two Eurodollar Business
Days prior to the beginning of such Interest Period in whatever interbank
eurodollar market may be selected by the Reference Lender in its sole
discretion, acting in good faith, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to a Eurodollar Rate.
Event of Default. See Section 12.1.
Federal Funds Effective Rate. For any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
of the quotations for such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the
Agent.
Fitch. Fitch Investors Service or any successor thereto.
generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time and (b) consistently applied with past financial statements of the
Borrower adopting the same principles; provided that a certified public
accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles)
as to financial statements in which such principles have been properly
applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
Hazardous Substances. Any hazardous waste, as defined by 42 U.S.C.
Section 9601(5), any hazardous substances as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) or any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligors balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect (including, without limitation, all obligations evidenced by bonds,
debentures, notes or similar debt instruments and subordinated indebtedness);
(b) all liabilities secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall have been
assumed; and (c) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including contingent obligations that in accordance with generally accepted
accounting principles are required to be footnoted on the Borrowers
consolidated balance sheets and any obligation to supply funds to or in any
manner to invest directly or indirectly in a Person, to purchase
indebtedness, or to assure the owner of indebtedness against loss through an
agreement to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or
otherwise, and the obligation to reimburse the issuer in respect of any
letter of credit; (d) any obligation as a lessee or an obligor under a
Capitalized Lease; (e) all indebtedness, obligations or other liabilities
under or with respect to interest rate swap, collar, cap or other agreements
providing interest rate protection and currency exchange or swap obligations;
and (f) the Borrowers pro rata share of any of the above-described
obligations of its unconsolidated affiliates.
Interest Payment Date. As to each Loan, the first day of each calendar
month during the term of such Loan.
Interest Period. With respect to each Eurodollar Rate Loan (a)
initially, the period commencing on the Drawdown Date of such Loan and ending
one, two or three months thereafter, and (b) thereafter, each period
commencing on the day following the last day of the next preceding Interest
Period applicable to such Loan and ending on the last day of one of the
periods set forth above, as selected by the Borrower in a Conversion Request;
provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall end and the next Interest Period shall commence on
the next preceding or succeeding Eurodollar Business Day as determined
conclusively by the Reference Lender in accordance with the then current
bank practice in the applicable eurodollar interbank market;
(B) if the Borrower shall fail to give notice as provided in
Section 4.1, the Borrower shall be deemed to have requested a conversion
of the affected Eurodollar Rate Loan to a Base Rate Loan on the last day
of the then current Interest Period with respect thereto; and
(C) no Interest Period relating to any Eurodollar Rate Loan shall
extend beyond the Maturity Date.
Investments. With respect to any Person, all shares of capital stock,
evidences of Indebtedness and other securities issued by any other Person,
all loans, advances, or extensions of credit to, or contributions to the
capital of, any other Person, all purchases of the securities or business or
integral part of the business of any other Person and commitments and options
to make such purchases, all interests in real property, and all other
investments; provided, however, that the term "Investment" shall not include
(i) equipment, inventory and other tangible personal property acquired in the
ordinary course of business, or (ii) current trade and customer accounts
receivable for services rendered in the ordinary course of business and
payable in accordance with customary trade terms. In determining the
aggregate amount of Investments outstanding at any particular time: (a)
there shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is
paid; (b) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (c)
there shall not be deducted in respect of any Investment any amounts received
as earnings on such Investment, whether as dividends, interest or otherwise,
except that accrued interest included as provided in the foregoing clause (a)
may be deducted when paid; and (d) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
Lenders. BKB and any other Person who becomes an assignee of any rights
of a Lender pursuant to Section 18 (but not including any Participant, as
defined in Section 18).
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Security Documents, and
all other documents, instruments or agreements executed or delivered by or on
behalf of the Borrower evidencing or securing the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans to be made by the Lenders hereunder.
LTV. As to any Collateral Loan, at any time determined by the Agent,
the ratio (expressed as a percentage) that (x) the aggregate outstanding
principal balance of all loans secured in whole or in part by Collateral
Property or direct or indirect beneficial interests therein relating to such
Collateral Property bears to (y) the value of the Collateral Property
securing such loans or to which such loans relate (together with all
applicable appurtenant interests and subject to all applicable liens,
encumbrances and tenancies) as determined by the Agent in its good faith
judgment. The determination of the LTV and components thereof shall, so long
as the same shall be determined in good faith, be conclusive and binding
absent manifest error. With respect to the Woodlands Notes, the LTV shall be
determined with respect to and to the extent of the assets that are included
in the "Total Market Value Capitalization" (as defined in the Collateral Loan
Documents for the Woodlands Notes) of the Obligors for such Collateral Loan.
Majority Lenders. As of any date, the Lender or Lenders whose aggregate
Commitment Percentage is equal to or greater than the required percentage, as
determined by the Lenders, required to approve such matter, as disclosed by
the Agent to the Borrower from time to time.
Market Value. With respect to any Collateral Loan, at any time
determined by the Majority Lenders, the all-in acquisition cost (if acquired)
or the outstanding principal balance (if originated) of a Collateral Loan;
provided that in the sole discretion of the Agent, the Market Value of a
Collateral Loan may be increased or decreased to equal the price at which
such Collateral Loan could be sold to a third-party, as determined by the
Majority Lenders in their sole discretion (exercised in good faith), which
Market Value may be determined to be zero. The Majority Lenders
determination of Market Value shall be conclusive upon the parties absent
manifest error.
Maturity Date. January 12, 2002, or such earlier date on which the
Loans shall become due and payable pursuant to the terms hereof.
Mezzanine Loan. A performing loan which is originated or acquired by
the Borrower that is secured by a first priority pledge of the equity
interests in a special purpose, bankruptcy remote person or other entity
approved by the Lenders, which owns, directly or through one or more special
purpose, bankruptcy remote entities or other entity approved by the Lenders,
one or more income producing multifamily or commercial properties or such
other properties as may be approved by the Lenders, which properties are
subject to a loan to the property owner secured by a first lien thereon.
Mezzanine Note. The original executed promissory note or other evidence
of the indebtedness of an Obligor with respect to a Mezzanine Loan.
Moodys. Moodys Investor Service Inc. or any successor thereto.
Mortgage. The mortgage, deed of trust, deed to secure debt or other
similar instrument securing a Mortgage Note, which creates a valid first
priority lien or security title on the fee or leasehold interest in real
property securing the Mortgage Note and the assignment of rents and leases
related thereto.
Mortgage Interest Rate. The annual rate of interest payable on a
Mortgage Note, Mezzanine Note, Subordinated Loan or a CMBS, which shall be
adjusted from time to time with respect to instruments with a variable rate
of interest. Contingent interest, participating interest or other interest
that is not being paid currently on a monthly basis or quarterly basis, if
applicable, shall not be included for the purposes hereof.
Mortgage Loan. A performing first priority mortgage loan on one or more
multifamily or commercial real estate properties or such other properties as
may be approved by the Lenders, which is originated or purchased by Borrower,
and which Mortgage Loan includes, without limitation, (i) the indebtedness
evidenced by a Mortgage Note and secured by a related Mortgage and (ii) a
pledge by Borrower all of its right, title and interest in and to the
Collateral Property covered by such Mortgage.
Mortgage Note. The original executed promissory note or other evidence
of the indebtedness of an Obligor with respect to a Mortgage Loan.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Net Income (or Deficit). With respect to any Person (or any asset of
any Person) for any fiscal period, the net income (or deficit) of such Person
(or attributable to such asset), after deduction of all expenses, taxes and
other proper charges, determined in accordance with generally accepted
accounting principles.
Non-Recourse Indebtedness. Indebtedness of a Subsidiary of Borrower
which is a special purpose bankruptcy remote entity which is secured by one
or more parcels of Real Estate and related personal property or interests
therein and is not a general obligation of the Borrower or any Subsidiary,
the holder of such Indebtedness having recourse solely to the parcels of Real
Estate securing such Indebtedness, the improvements and leases thereon and
the rents and profits thereof securing such Indebtedness, subject to such
exceptions for fraud, misapplication of rents, environmental issues and other
customary matters as Agent may reasonably approve.
Notes. See Section 2.4.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Lenders and the Agent, individually or collectively,
under this Agreement or any of the other Loan Documents or in respect of any
of the Loans or the Notes, or other instruments at any time evidencing any of
the foregoing, whether existing on the date of this Agreement or arising or
incurred hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
Obligor. Collectively, the maker or obligor under a Subordinated Loan
or a Mortgage Loan, any issuer, trustee or servicer of a CMBS and the maker
or obligor under a Mortgage Loan that has been securitized by such CMBS, any
maker or obligor under a Mezzanine Loan and any entity through which such
maker or obligor directly or indirectly owns the underlying Collateral
Property (including the property owner), and any Person issuing a
Participation Certificate and the maker or obligor of the loan which is the
subject of such Participation Interest.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar
responsibilities.
Participation Certificate. The certificates, instruments or other
documents which evidence a Participation Interest.
Participation Interest. The right of a person to receive the payment of
principal and interest from a financial institution, satisfactory to the
Lenders in their sole discretion, by virtue of the purchase by such person of
an undivided fractional interest in a Mortgage Loan, Mezzanine Loan or
Subordinated Loan originated or acquired by such financial institution.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 8.2.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision
thereof.
Plan Assets. Assets of any employee benefit plan subject to Part 4,
Subtitle A, Title I of ERISA.
Pledge Agreement. Each agreement from time to time in effect in form
and substance satisfactory to the Majority Lenders pursuant to which the
Borrower may pledge cash, Short-term Investments or other property referred
to in clause (iii) of Section 5.1 as part of the Collateral securing the
Obligations.
Potential Collateral. Any property of the Borrower which is not at the
time included in the Collateral and which consists of (i) Qualifying
Collateral Notes, (ii) Mortgage Notes, Mezzanine Notes, CMBS, Subordinated
Loans or Participation Interests which may become Qualifying Collateral Notes
through the approval of all of the Lenders and the completion and delivery of
Collateral Loan Qualification Documents, (iii) cash, (iv) Short-term
Investments and (v) other property referred to in clause (iii) of Section
5.1.
Qualifying Collateral Notes. Collectively, the Woodlands Notes, the
Abbey Participation Interest and any other notes, CMBS or Participation
Interests held by the Borrower which meet all of the following conditions:
(i) no event which with the passage of time or the giving of notice, or both,
might constitute a default shall have occurred under the applicable potential
Collateral Note or related Collateral Loan Documents (which shall include for
the purposes hereof any underlying loan documents that are the subject of a
Participation Interest), (ii) the potential Collateral Note and the interest
of the Borrower in the related Collateral Loan Documents shall be free and
clear of all Liens other than the liens in favor of the Agent, (iii) the
underlying Collateral Property shall be an income producing multifamily or
commercial real estate project or other property approved by the Lenders and
qualify as a Class 1 Collateral Loan or a Class 2 Collateral Loan, and shall
not have any material title, survey, environmental or other defects and shall
be acceptable to all of the Lenders, (iv) each such note, CMBS or
Participation Interests shall have a Mortgage Interest Rate in excess of the
interest rate payable hereunder, (v) the Agent shall have received all
relative Collateral Loan Qualification Documents, all of which remain in full
force and effect, and (vi) all of the Lenders shall have approved the
Collateral Loan in the exercise of their sole discretion.
Rating Agencies. Collectively Duff & Phelps, Fitch, Moodys and S&P.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
Record. The record, including computer records, maintained by the Agent
with respect to any Loan referred to in the Notes.
Reference Lender. BKB.
Register. See Section 18.2.
Release. Releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping or
threatened release of Hazardous Substances.
Reportable Event. Any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
S&P. Standard & Poors Corporation or any successor thereto.
SEC. The federal Securities and Exchange Commission.
Security Documents. Collectively, the Collateral Assignments, any
further collateral assignments, pledges, endorsements or powers to the Agent
for the benefit of the Lenders, and each Pledge Agreement, including, without
limitation, U.C.C.-1 financing statements executed and delivered in
connection therewith.
Servicer. A servicer or agent which may service a Collateral Loan or
any portion thereof.
Servicing Agreement. The agreement pursuant to which a Servicer
services a Collateral Loan or any portion thereof.
Shareholders Equity. At any date, the total consolidated shareholders
equity of the Borrower and its Subsidiaries determined in accordance with
generally accepted accounting principles.
Short-term Investments. Investments described in subsections (a)
through (g), inclusive, of Section 8.3. For all purposes of this Agreement
and the other Loan Documents, the value of Short-term Investments at any time
shall be the current market value thereof determined in a manner reasonably
satisfactory to the Majority Lenders.
State. A state of the United States of America.
Subordination Event. The occurrence of any event or circumstance
(including, without limitation, the occurrence of a default or bankruptcy
event) which entitles the holder of any loan to be paid prior to or in
preference to the holder of a Subordinated Loan. Without limiting the
foregoing, with respect to (a) a Mortgage Loan or (b) a Mezzanine Loan or
Participation Interest relating to a Mezzanine Loan or a CMBS, the occurrence
of any event for such period of time as would permit (assuming the giving of
appropriate notice if required) the holder of any mortgage loan or tranche
thereof prior to such Mortgage Loan or any loan secured by the Collateral
Property underlying such Mezzanine Loan or Participation Interest, as
applicable, to accelerate the maturity thereof shall constitute a
Subordination Event.
Subordinated Loan. A Mortgage Loan, Mezzanine Loan, CMBS or
Participation Interest, or portion thereof, with respect to which the right
to be paid or the timing of such payment is or may become subordinated or
otherwise made inferior or subject to the right of another Person to be paid,
whether by contract, priority or otherwise.
Subsidiary. Any corporation, association, partnership, limited
liability company, trust, or other business or other legal entity of which
the designated parent shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes or
controlling interests) of the outstanding Voting Interests.
Total Commitment. The sum of the Commitments of the Lenders, as in
effect from time to time. As of the date of this Agreement, the Total
Commitment is $35,000,000.00 (with BKB having a Commitment of
$35,000,000.00), provided that the Total Commitment shall increase up to a
maximum of $50,000,000.00 as and when one or more Lenders shall acquire from
BKB all or a portion of the additional uncommitted Commitment of
$15,000,000.00.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Voting Interests. Stock or similar ownership interests, of any class or
classes (however designated), the holders of which are at the time entitled,
as such holders, (a) to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation, association,
partnership, trust or other business entity involved, or (b) to control,
manage, or conduct the business of the corporation, partnership, association,
trust or other business entity involved.
Woodlands Notes. Collectively, the Land Company Second Secured Term
Loan Note dated December 28, 1998, in the principal face amount of
$10,813,008.13 and that certain Commercial Company Second Secured Term Loan
Note dated December 28, 1998 in the principal face amount of $4,186,991.87,
each made by The Woodlands Commercial Properties Company, L.P. and The
Woodlands Land Development Company, L.P. to the order of Borrower.
Year 2000 Compliant. All computers, hardware, imbedded microchips,
software and material date-affected technology used in Borrowers business
operations are able to correctly and effectively store, process and otherwise
deal with date data from, into, between and otherwise concerning the
twentieth and twenty-first centuries, and otherwise continue to function
properly and unimpaired with respect to all calendar dates falling on or
after January 1, 2000.
Section 6.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time
in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles applied
on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) The words "approval" and "approved", as the context so
determines, means an approval in writing given to the party seeking approval
after full and fair disclosure to the party giving approval of all material
facts necessary in order to determine whether approval should be granted.
(h) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, have the meanings
assigned to them therein.
(i) Reference to a particular "Section", refers to that section of
this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
Section 7. THE REVOLVING CREDIT FACILITY.
Section 7.1. Commitment to Lend. Subject to the terms and conditions
set forth in this Agreement, each of the Lenders severally agrees to lend to
the Borrower, and the Borrower may borrow (and repay and reborrow) from time
to time between the Closing Date and the Maturity Date upon notice by the
Borrower to the Agent given in accordance with Section 2.6, such sums as are
requested by the Borrower for the purposes set forth in Section 7.11 up to
the lesser of (a) a maximum aggregate principal amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Lenders
Commitment and (b) such Lenders Commitment Percentage of the Borrowing Base;
provided, that, in all events no Default or Event of Default shall have
occurred and be continuing and the Borrowers financial statements as required
pursuant to Section 2.6(iii) shall demonstrate compliance with all covenants
set forth therein; and provided, further, that the outstanding principal
amount of the Loans (after giving effect to all amounts requested) shall not
at any time exceed the Total Commitment. The Loans shall be made pro rata in
accordance with each Lenders Commitment Percentage. The Loan Request shall
constitute a representation and warranty by the Borrower that all of the
conditions set forth in Section 10 and Section 11, in the case of the initial
Loan, and Section 11, in the case of all other Loans, have been satisfied on
the date of such funding. Notwithstanding anything herein to the contrary,
the Lenders shall have no obligation to make Loans to the Borrower in the
maximum aggregate principal amount outstanding of more than $35,000,000.00,
until the Total Commitment shall be increased, up to a maximum of
$50,000,000.00, as and when one or more Lenders shall acquire from BKB all or
a portion of the additional uncommitted Commitment of $15,000,000.00.
Section 7.2. Facility Fee. The Borrower agrees to pay to the Agent
for the accounts of the Lenders in accordance with their respective
Commitment Percentages a facility fee calculated at the rate of one-fourth of
one percent (1/4%) per annum on the average daily amount by which the Total
Commitment exceeds the outstanding principal amount of Loans during each
calendar quarter or portion thereof commencing on the date hereof and ending
on the Maturity Date. The facility fee shall be payable quarterly in arrears
on the first day of each calendar quarter for the immediately preceding
calendar quarter or portion thereof, or on any earlier date on which the
Commitments shall be reduced or shall terminate as provided in Section 2.3,
with a final payment on the Maturity Date.
Section 7.3. Reduction of Commitment. The Borrower shall have the
right at any time and from time to time upon five Business Days prior written
notice to the Agent to reduce by $1,000,000 or an integral multiple of
$1,000,000 in excess thereof or to terminate entirely the unborrowed portion
of the Commitments, whereupon the Commitments of the Lenders shall be reduced
pro rata in accordance with their respective Commitment Percentages of the
amount specified in such notice or, as the case may be, terminated, any such
reduction to be without penalty (unless such reduction requires repayment of
a Eurodollar Rate Loan). Promptly after receiving any notice of the
Borrower delivered pursuant to this Section 2.3, the Agent will notify the
Lenders of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the
respective accounts of the Lenders the full amount of any facility fee under
Section 2.2 then accrued on the amount of the reduction. No reduction or
termination of the Commitments may be reinstated. Notwithstanding the
foregoing, in no event shall the Commitments be reduced to less than
$25,000,000.00.
Section 7.4. Notes. The Loans shall be evidenced by a single
promissory note of the Borrower to each Lender in substantially the form of
Exhibit A hereto (collectively, the "Notes"), dated as of the Closing Date
and completed with appropriate insertions. One Note shall be payable to the
order of each Lender in the principal amount equal to such Lenders Commitment
or, if less, the outstanding amount of all Loans made by such Lender, plus
interest accrued thereon, as set forth below (provided that without
increasing the Commitment of BKB, the initial Note delivered to BKB shall be
in the principal face amount equal to BKBs Commitment and the remaining
uncommitted Commitment of $15,000,000.00). The Borrower irrevocably
authorizes the Agent to make or cause to be made, at or about the time of the
Drawdown Date of any Loan or at the time of receipt of any payment of
principal thereof, an appropriate notation on the Agents Record reflecting
the making of such Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Loans set forth on the Agents Record shall be
prima facie evidence of the principal amount thereof owing and unpaid to each
Lender, but the failure to record, or any error in so recording, any such
amount on the Agents Record shall not limit or otherwise affect the
obligations of the Borrower hereunder or under any Note to make payments of
principal of or interest on any Note when due.
Section 7.5. Interest on Loans.
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which
such Base Rate Loan is converted to a Eurodollar Rate Loan at the rate per
annum equal to the sum of the Base Rate plus one and three-fourths percent
(1.75%).
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the sum
of the Eurodollar Rate determined for such Interest Period plus two and
three-fourths percent (2.75%).
(c) The Borrower promises to pay interest on each Loan in arrears
on each Interest Payment Date with respect thereto.
(d) Base Rate Loans and Eurodollar Rate Loans may be converted to
Loans of the other Type as provided in Section 4.1.
Section 7.6. Requests for Loans. Except with respect to the initial
Loan, the Borrower shall give to the Agent written notice in the form of
Exhibit B hereto (or telephonic notice confirmed in writing in the form of
Exhibit B hereto) of each Loan requested hereunder (a "Loan Request") no less
than five (5) Business Days prior to the proposed Drawdown Date. The
Borrower shall not make a Loan Request more frequently than two times each
month. Each such notice shall specify with respect to the requested Loan the
proposed principal amount, Drawdown Date, Interest Period (if applicable) and
Type. Each such notice shall also contain (i) a statement as to the purpose
for which such advance shall be used (which purpose shall be in accordance
with the terms of Section 7.11), (ii) a certification by the chief financial
or chief accounting officer of the Borrower that the Borrower is and will be
in compliance with all covenants under the Loan Documents after giving effect
to the making of such Loan, and (iii) a Compliance Certificate prepared using
the financial statements of the Borrower most recently provided or required
to be provided to the Agent under Section 6.4 or Section 7.4 adjusted in the
best good faith estimate of the Borrower to give effect to the proposed
advance. Promptly upon receipt of any such notice, the Agent shall notify
each of the Lenders thereof. Except as provided in this Section 2.6, each
such Loan Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Loan requested from the Lenders on the
proposed Drawdown Date, provided that, in addition to the Borrowers other
remedies against any Lender which fails to advance its proportionate share of
a requested Loan, such Loan Request may be revoked by the Borrower by notice
received by the Agent no later than the Drawdown Date if any Lender fails to
advance its proportionate share of the requested Loan in accordance with the
terms of this Agreement, provided further that the Borrower shall be liable
in accordance with the terms of this Agreement (including, without
limitation, amounts due pursuant to Section 4.8) to any Lender which is
prepared to advance its proportionate share of the requested Loan for any
costs, expenses or damages incurred by such Lender as a result of the
Borrowers election to revoke such Loan Request. Nothing herein shall prevent
the Borrower or the funding Lenders from seeking recourse against any Lender
that fails to advance its proportionate share of a requested Loan (but not
any other Lender) as required by this Agreement for the actual and
consequential damages incurred by the Borrower (including, without
limitation, amounts required to be paid under this Agreement by the Borrower
to any Lender) and such funding Lenders proximately caused by such Lender
that has failed to advance its proportionate share, provided that in no event
shall such Lender be liable for punitive or exemplary damages. The Borrower
may without cost or penalty revoke a Loan Request by delivering notice
thereof to each of the Lenders no later than three (3) Business Days prior to
the Drawdown Date. Each Loan Request shall be (a) for a Base Rate Loan in a
minimum aggregate amount of $1,000,000 or an integral multiple of $100,000 in
excess thereof, or (b) for a Eurodollar Rate Loan in a minimum aggregate
amount of $2,000,000 or an integral multiple of $100,000 in excess thereof;
provided, however, that there shall be no more than five (5) Eurodollar Rate
Loans outstanding at any one time.
Section 7.7. Funds for Loans.
(a) Not later than 1:00 p.m. (Boston time) on the proposed
Drawdown Date of any Loans, each of the Lenders will make available to the
Agent, at the Agents Head Office, in immediately available funds, the amount
of such Lenders Commitment Percentage of the amount of the requested Loans
which may be disbursed pursuant to Section 2.1. Upon receipt from each
Lender of such amount, and upon receipt of the documents required by Section
10 and Section 11 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Loans made available to the Agent by
the Lenders by crediting such amount to the account of the Borrower
maintained at the Agents Head Office. The failure or refusal of any Lender
to make available to the Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage of the requested Loans
shall not relieve any other Lender from its several obligation hereunder to
make available to the Agent the amount of such other Lenders Commitment
Percentage of any requested Loans, including any additional Loans that may be
requested subject to the terms and conditions hereof to provide funds to
replace those not advanced by the Lender so failing or refusing, provided
that the Borrower may by notice received by the Agent no later than the
Drawdown Date refuse to accept any Loan which is not fully funded in
accordance with the Borrowers Loan Request subject to the terms of Section
2.6. In the event of any such failure or refusal, the Lenders not so failing
or refusing shall be entitled to a priority secured position as against the
Lender or Lenders so failing or refusing for such Loans as provided in
Section 12.4.
(b) Unless Agent shall have been notified by any Lender prior to
the applicable Drawdown Date that such Lender will not make available to
Agent such Lender's pro rata share of a proposed Loan, Agent may in its
discretion assume that such Lender has made such Loan available to Agent in
accordance with the provisions of this Agreement and Agent may, if it
chooses, in reliance upon such assumption make such Loan available to
Borrower, and such Lender shall be liable to the Agent for the amount of such
advance.
Section 8. REPAYMENT OF THE LOANS.
Section 8.1. Stated Maturity. The Borrower promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, all of the Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
Section 8.2. Mandatory Prepayments. The Borrower promises to pay
principal of the Loans prior to the stated maturity as follows:
(a) If at any time the aggregate outstanding principal amount of
the Loans exceeds the Total Commitment or the Borrowing Base, then the
Borrower shall, subject to Borrowers rights pursuant to Section 12.1B,
immediately pay the amount of such excess to the Agent for the respective
accounts of the Lenders for application to the Loans, together with any
additional interest payable pursuant to Section 4.8.
(b) If at any time the Borrower receives a payment or prepayment
of or in respect to the principal amount of any Collateral Loan (whether as a
result of a voluntary prepayment, the occurrence of a casualty to or
condemnation of the property securing such loan (except to the extent such
proceeds from a casualty or condemnation are required to be released to the
Obligor for repairs or restoration as a result thereof), or otherwise), then
the Borrower shall immediately pay such amount to the Agent for the
respective accounts of the Lenders for application to the Loans, together
with any additional interest payable pursuant to Section 4.8.
Section 8.3. Optional Prepayments. The Borrower shall have the
right, at the Borrowers election, to prepay the outstanding amount of the
Loans, as a whole or in part, at any time without penalty or premium;
provided, that the full or partial prepayment of the outstanding amount of
any Eurodollar Rate Loans pursuant to this Section 3.3 may be made only on
the last day of the Interest Period relating thereto except as otherwise
required pursuant to Section 4.7. The Borrower shall give the Agent, no
later than 10:00 a.m., Boston time, at least three Business Days prior
written notice of any prepayment pursuant to this Section 3.3 of any Base
Rate Loans and at least four Eurodollar Business Days notice of any proposed
repayment pursuant to this Section 3.3 of Eurodollar Rate Loans, in each case
specifying the proposed date of payment of Loans and the principal amount to
be paid.
Section 8.4. Partial Prepayments. Each partial prepayment of the
Loans under Section 3.3 shall be in an integral multiple of $100,000, shall
be accompanied by the payment of accrued interest on the principal prepaid to
the date of payment and, after payment of such interest, shall be applied, in
the absence of instruction by the Borrower, first to the principal of Base
Rate Loans and then to the principal of Eurodollar Rate Loans.
Section 8.5. Effect of Prepayments. Amounts of the Loans prepaid
under Section 3.2 and Section 3.3 prior to the Maturity Date may be
reborrowed as provided in Section 2.
Section 9. CERTAIN GENERAL PROVISIONS.
Section 9.1. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type and such Loan shall thereafter
bear interest as a Base Rate Loan or a Eurodollar Rate Loan, as applicable;
provided that (i) with respect to any such conversion of a Eurodollar Rate
Loan to a Base Rate Loan, the Borrower shall give the Agent at least three
Business Days prior written notice of such election, and such conversion
shall only be made on the last day of the Interest Period with respect to
such Eurodollar Rate Loan; (ii) with respect to any such conversion of a Base
Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent at
least four Eurodollar Business Days prior written notice of such election and
the Interest Period requested for such Loan, the principal amount of the Loan
so converted shall be in a minimum aggregate amount of $2,000,000 or an
integral multiple of $100,000 in excess thereof and, after giving effect to
the making of such Loan, there shall be no more than five (5) Eurodollar Rate
Loans outstanding at any one time; and (iii) no Loan may be converted into a
Eurodollar Rate Loan when any Default or Event of Default has occurred and is
continuing. All or any part of the outstanding Loans of any Type may be
converted as provided herein, provided that no partial conversion shall
result in a Base Rate Loan in an aggregate principal amount of less than
$1,000,000 or a Eurodollar Rate Loan in an aggregate principal amount of less
than $2,000,000 and that the aggregate principal amount of each Loan shall be
in an integral multiple of $100,000. On the date on which such conversion is
being made, each Lender shall take such action as is necessary to transfer
its Commitment Percentage of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office, as the case may be. Each Conversion Request
relating to the conversion of a Base Rate Loan to a Eurodollar Rate Loan
shall be irrevocable by the Borrower.
(b) Any Loan may be continued as such Type upon the expiration of
an Interest Period with respect thereto by compliance by the Borrower with
the terms of Section 4.1; provided that no Eurodollar Rate Loan may be
continued as such when any Default of the type described in subsections (a),
(b), (c) or (d) of Section 12.1 or Event of Default has occurred and is
continuing, but shall be automatically converted to a Base Rate Loan on the
last day of the Interest Period relating thereto ending during the
continuance of any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent of
its election hereunder with respect to any Loan, such Loan shall be
automatically converted to a Base Rate Loan at the end of the applicable
Interest Period.
Section 9.2. Closing Fee. The Borrower agrees to pay, on or before
the Closing Date, to BKB a commitment fee as specified in the Agreement
Regarding Fees.
Section 9.3. Agents Fee. The Borrower shall pay to the Agent, for
the Agents own account, an Agents fee as specified in the Agreement Regarding
Fees.
Section 9.4. Funds for Payments.
(a) All payments of principal, interest, facility fees, Agents
fees, closing fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Agent, for the respective accounts
of the Lenders and the Agent, as the case may be, at the Agents Head Office,
not later than 1:00 p.m. (Boston time) on the day when due, in each case in
immediately available funds. The Agent is hereby authorized to charge the
account of the Borrower with BKB, on the dates when the amount thereof shall
become due and payable, with the amounts of the principal of and interest on
the Loans and all fees, charges, expenses and other amounts owing to the
Agent and/or the Lenders under the Loan Documents.
(b) All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any of
the other Loan Documents, the Borrower will pay to the Agent, for the account
of the Lenders or (as the case may be) the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan Document, such
additional amount in Dollars as shall be necessary to enable the Lenders or
the Agent to receive the same net amount which the Lenders or the Agent would
have received on such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Agent certificates or
other valid vouchers for all taxes or other charges deducted from or paid
with respect to payments made by the Borrower hereunder or under such other
Loan Document.
Section 9.5. Computations. All computations of interest on the Loans
and of other fees to the extent applicable shall be based on a 360-day year
and paid for the actual number of days elapsed. Except as otherwise provided
in the definition of the term "Interest Period" with respect to Eurodollar
Rate Loans, whenever a payment hereunder or under any of the other Loan
Documents becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The outstanding amount of the
Loans as reflected on the records of the Agent from time to time shall be
considered prima facie evidence of such amount.
Section 9.6. Inability to Determine Eurodollar Rate. In the event
that, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and reasonable
methods do not exist for ascertaining the Eurodollar Rate for such Interest
Period, the Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower and the Lenders) to the
Borrower and the Lenders. In such event (a) any Loan Request with respect to
Eurodollar Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans and (b) each Eurodollar Rate Loan will
automatically, on the last day of the then current Interest Period thereof,
become a Base Rate Loan, and the obligations of the Lenders to make
Eurodollar Rate Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower and the Lenders.
Section 9.7. Illegality. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive or the
interpretation or application thereof shall make it unlawful, or any central
bank or other governmental authority having jurisdiction over a Lender or its
Eurodollar Lending Office shall assert that it is unlawful, for any Lender to
make or maintain Eurodollar Rate Loans, such Lender shall forthwith give
notice of such circumstances to the Agent and the Borrower and thereupon (a)
the commitment of the Lenders to make Eurodollar Rate Loans or convert Loans
of another type to Eurodollar Rate Loans shall forthwith be suspended and (b)
the Eurodollar Rate Loans then outstanding shall be converted automatically
to Base Rate Loans on the last day of each Interest Period applicable to such
Eurodollar Rate Loans or within such earlier period as may be required by
law.
Section 9.8. Additional Interest. If any Eurodollar Rate Loan or any
portion thereof is repaid or is converted to a Base Rate Loan for any reason
on a date which is prior to the last day of the Interest Period applicable to
such Eurodollar Rate Loan, the Borrower will pay to the Agent upon demand for
the account of the Lenders in accordance with their respective Commitment
Percentages, in addition to any amounts of interest otherwise payable
hereunder, any amounts required to compensate the Lenders for any losses,
costs or expenses which may reasonably be incurred as a result of such
payment or conversion, including, without limitation, an amount equal to
daily interest for the unexpired portion of such Interest Period on the
Eurodollar Rate Loan or portion thereof so repaid or converted at a per annum
rate equal to the excess, if any, of (a) the interest rate calculated on the
basis of the Eurodollar Rate applicable to such Eurodollar Rate Loan minus
(b) the yield obtainable by the Agent upon the purchase of debt securities
customarily issued by the Treasury of the United States of America which have
a maturity date most closely approximating the last day of such Interest
Period (it being understood that the purchase of such securities shall not be
required in order for such amounts to be payable and that a Lender shall not
be obligated or required to have actually obtained funds at the Eurodollar
Rate or to have actually reinvested such amount as described above).
Section 9.9. Additional Costs, Etc. Notwithstanding anything herein
to the contrary, if any future applicable law or any amendment or
modification of present applicable law which expression, as used herein,
includes statutes, rules and regulations thereunder and legally binding
interpretations thereof by any competent court or by any governmental or
other regulatory body or official with appropriate jurisdiction charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Lender or the Agent by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall:
(a) subject any Lender or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents, such Lenders Commitment or the
Loans (other than taxes based upon or measured by the income or profits of
such Lender or the Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Lender of the principal of or
the interest on any Loans or any other amounts payable to any Lender under
this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by,
or deposits in or for the account of, or loans by, or commitments of an
office of any Lender beyond those in effect as of the date hereof, or
(d) impose on any Lender or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, such Lenders Commitment, or any class of loans or commitments of which
any of the Loans or such Lenders Commitment forms a part; and the result of
any of the foregoing is
(i) to increase the cost to any Lender of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Lenders Commitment, or
(ii) to reduce the amount of principal, interest or other
amount payable to such Lender or the Agent hereunder on account of such
Lenders Commitment or any of the Loans, or
(iii) to require such Lender or the Agent to make any
payment or to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is calculated
by reference to the gross amount of any sum receivable or deemed
received by such Lender or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within fifteen (15) days of
demand made by such Lender or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to
such Lender or the Agent such additional amounts as such Lender or the Agent
shall determine in good faith to be sufficient to compensate such Lender or
the Agent for such additional cost, reduction, payment or foregone interest
or other sum. Each Lender and the Agent in determining such amounts may use
any reasonable averaging and attribution methods, generally applied by such
Lender or the Agent.
Section 9.10. Capital Adequacy. If after the date hereof any Lender
determines that (a) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements of general application for banks or
bank holding companies or any change in the interpretation or application
thereof by any governmental authority charged with the administration
thereof, or (b) compliance by such Lender or its parent bank holding company
with any future guideline, request or directive of any such entity regarding
capital adequacy or any amendment or change in interpretation of any existing
guideline, request or directive (whether or not having the force of law), has
the effect of reducing the return on such Lenders or such holding companys
capital as a consequence of such Lenders commitment to make Loans hereunder
to a level below that which such Lender or holding company could have
achieved but for such adoption, change or compliance (taking into
consideration such Lenders or such holding companys then existing policies
with respect to capital adequacy and assuming the full utilization of such
entitys capital) by any amount deemed by such Lender to be material, then
such Lender may notify the Borrower thereof. The Borrower agrees to pay to
such Lender the amount of such reduction in the return on capital as and when
such reduction is determined, upon presentation by such Lender of a statement
of the amount setting for the Lenders calculation thereof. In determining
such amount, such Lender may use any reasonable averaging and attribution
methods, generally applied by such Lender or the Agent.
Section 9.11. Indemnity of Borrower. The Borrower agrees to
indemnify each Lender and to hold each Lender harmless from and against any
loss, cost or expense that such Lender may sustain or incur as a consequence
of (a) default by the Borrower in payment of the principal amount of or any
interest on any Eurodollar Rate Loans as and when due and payable, including
any such loss or expense arising from interest or fees payable by such Lender
to lenders of funds obtained by it in order to maintain its Eurodollar Rate
Loans, or (b) default by the Borrower in making a borrowing or conversion
after the Borrower has given (or is deemed to have given) a Loan Request or a
Conversion Request; provided, however, that the Borrower shall not be
required to so indemnify any Lender pursuant to clause (b) above which fails
or refuses to fund its proportionate share of a Loan in accordance with the
terms of this Agreement.
Section 9.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) interest on the
Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest payable on demand at a rate per
annum equal to four percent (4.0%) above the Base Rate from the date due
until such amount shall be paid in full (after as well as before judgment).
In addition, the Borrower shall pay a late charge equal to three percent
(3.0%) of any amount of interest and/or principal payable on the Loans or any
other amounts payable hereunder or under the Loan Documents, which is not
paid within ten days of the date when due.
Section 9.13. Certificate. A certificate setting forth any amounts
payable pursuant to Section 4.8, Section 4.9, Section 4.10, Section 4.11 or
Section 4.12 and a brief explanation of such amounts which are due, submitted
by any Lender or the Agent to the Borrower, shall be conclusive in the
absence of manifest error.
Section 9.14. Limitation on Interest. Notwithstanding anything in
this Agreement to the contrary, all agreements between the Borrower and the
Lenders and the Agent, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received by the
Lenders exceed the maximum amount permissible under applicable law. If, from
any circumstance whatsoever, interest would otherwise be payable to the
Lenders in excess of the maximum lawful amount, the interest payable to the
Lenders shall be reduced to the maximum amount permitted under applicable
law; and if from any circumstance the Lenders shall ever receive anything of
value deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal balance of the Obligations and to the payment of
interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the Borrower.
All interest paid or agreed to be paid to the Lenders shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal of the
Obligations (including the period of any renewal or extension thereof) so
that the interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This section shall control all
agreements between the Borrower and the Lenders and the Agent.
Section 10. COLLATERAL SECURITY.
Section 10.1. Collateral. The Obligations shall be secured by (i) a
perfected first priority pledge to the Agent, for the benefit of the Lenders,
of the Collateral Loan Documents; (ii) a perfected first priority lien to be
held by the Agent for the benefit of the Lenders in cash and Short-term
Investments of the Borrower from time to time pledged to the Agent pursuant
to one or more Pledge Agreements and (iii) such additional collateral, if
any, as the Agent for the benefit of the Lenders from time to time may accept
as security for the Obligations with the consent of the Majority Lenders,
whether pursuant to Section 5.4 hereof or otherwise, which consent may be
given or withheld in the sole discretion of the Majority Lenders.
Section 10.2. Market Value.
(a) The Majority Lenders shall redetermine the Market Value of
each of the Collateral Loans not more frequently than once each 12-month
period in order to determine the current Designated Collateral Value of each
Collateral Loan and whether a note, Participation Interest or CMBS may be a
Qualifying Collateral Note, and the Borrower shall pay to the Agent on demand
all reasonable costs of such determination.
(b) Notwithstanding the provisions of Section 5.2(a), the Majority
Lenders may redetermine the Market Value for the purpose of determining the
current Designated Collateral Value of a Collateral Loan or whether a note,
Participation Interest or CMBS is a Qualifying Collateral Note (i) at any
time following a condemnation of or uninsured casualty to the Collateral
Property related to such Collateral Loan, or (ii) in the event that there is
a material adverse change to the Borrower or its assets or any Collateral
Property. The expense of such determination performed pursuant to this
Section 5.2(b) shall be borne by the Borrower.
(c) In the event that the Agent shall advise the Borrower, on the
basis of any determination pursuant to Section 5.2, that the Designated
Collateral Value is insufficient to comply with the requirements of Section
9.3, then until the Designated Collateral Value shall be restored to
compliance with Section 9.3 the Lenders shall not be required to make
advances under Section 2.1.
(d) Notwithstanding the provisions of Section 5.2(a), in the event
that the Borrower shall desire to advance additional amounts pursuant to the
Abbey Participation Interest, Borrower may request that the Agent and the
Majority Lenders redetermine the Market Value of the Abbey Participation
Interest for the purpose of determining the current Designated Collateral
Value thereof. Such redetermination shall be subject to delivery to the
Agent and the Majority Lenders of such evidence as the Agent and the Majority
Lenders may require to verify the increase in the Market Value of the Abbey
Participation Interest, the LTV and Debt Service Coverage Ratio with respect
to the Collateral Properties relating thereto, the continued classification
of such Collateral Note as a Class 1 Collateral Loan or Class 2 Collateral
Loan, as applicable, and the other requirements of this Agreement for a
Collateral Note to be a Qualifying Collateral Note.
Section 10.3. Release of Collateral. Provided no Default or Event of
Default shall have occurred hereunder and be continuing (or would exist
immediately after giving effect to the transactions contemplated by this
Section 5.3 except as provided in this Section 5.3), the Agent shall release
a Collateral Note from the lien of the Security Documents encumbering the
same upon the request of the Borrower and upon the following terms and
conditions:
(a) The Borrower shall deliver to the Agent written notice of its
desire to obtain each such release no later than fifteen (15) days prior to
the date on which each such release is to be effected together with evidence
satisfactory to the Agent that such release is to facilitate a sale of such
Collateral Note to an unrelated third party in a bona-fide arms-length
transaction for a cash sales price or a bona-fide refinance; and
(b) The Borrower shall submit to the Agent with such request a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent under
Section 6.4 or Section 7.4 adjusted in the best good faith estimate of the
Borrower to give effect to the proposed release and demonstrating that no
Default or Event of Default with respect to the covenants referred to therein
shall exist after giving effect to such release; and
(c) The Borrower shall pay all reasonable costs and expenses of
the Agent in connection with such release, including without limitation,
reasonable attorneys fees; and
(d) The Borrower shall pay to the Agent for the account of the
Lenders, which payment shall be applied to reduce the outstanding principal
balance of the Loans, a release price equal to 105% of the Designated
Collateral Value of the Collateral to be released as most recently determined
hereunder. Such payment shall be applied to reduce the outstanding principal
balance of the Loans; provided, that the Borrower shall not be required to
make a payment which would reduce the principal balance below zero.
Notwithstanding the foregoing, in the event that the Borrower shall sell to
BKB a portion of the Abbey Participation Interest pursuant to a separate
transaction, the release price shall be equal to 100% of the Designated
Collateral Value as most recently determined hereunder of the Abbey
Participation Interest to be released.
Section 10.4. Substitute Collateral.
(a) The Borrower from time to time may, by written request to the
Agent who shall promptly notify the Lenders, request that certain Potential
Collateral owned by the Borrower be included as Collateral to secure the
Obligations and for the purpose of increasing the Borrowing Base or replacing
existing Collateral. Notwithstanding the foregoing, no Potential Collateral
shall be included as Collateral unless and until the following conditions
precedent shall have been satisfied:
(i) such proposed collateral shall be a Qualifying Collateral
Note; and
(ii) the Borrower shall have executed and delivered to the
Agent all Collateral Loan Qualification Documents or other instruments,
documents, or agreements, including Uniform Commercial Code financing
statements, as the Agent shall deem necessary or desirable to perfect a
first priority security interest in, or lien on, such Potential
Collateral, all of which instruments, documents or agreements shall be
in form and substance satisfactory to the Agent in its sole discretion.
The Borrower acknowledges that the decision of all of the Lenders to
grant or withhold their consent to the acceptance of additional or substitute
Potential Collateral under this Section 5.4 shall be based entirely on such
factors as the Lenders deem relevant in their sole discretion, including,
without limitation, those enumerated in clauses (i) through (iii)
hereinabove, and such consent may be granted or withheld solely at the
discretion of all of the Lenders. The Agent shall have fifteen (15) days
from the date of the receipt of all of the foregoing to advise the Borrower
whether the Majority Lenders have approved the acceptance of such Potential
Collateral as Collateral.
(b) In connection with each such addition or substitution, the
Borrower, within fifteen (15) days of the Borrower's request to add such
assets to the Collateral, shall pay to the Agent for the account of the
Lenders a review fee of $5,000.00 for each asset to be added to be split
equally by the Lenders, without regard to their respective Commitment
Percentages.
Section 11. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Lenders as
follows.
Section 11.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower (i) is a
corporation duly organized pursuant to its organizational documents and
amendments thereto filed with the Secretary of State of Maryland, and is
validly existing and in good standing under the laws of the State of
Maryland, (ii) has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated, and (iii) is in good
standing as a foreign entity and is duly authorized to do business in each
jurisdiction where a failure to be so qualified in such other jurisdiction
could have a materially adverse effect on the business, assets or financial
condition of the Borrower.
(b) Subsidiaries. Each of the Subsidiaries of the Borrower (i) is
a corporation, limited partnership, limited liability company or trust duly
organized under the laws of its State of organization and is validly existing
and in good standing under the laws thereof, (ii) has all requisite power to
own its property and conduct its business as now conducted and as presently
contemplated and (iii) is in good standing and is duly authorized to do
business in each jurisdiction where a failure to be so qualified could have a
materially adverse effect on the business, assets or financial condition of
the Borrower or such Subsidiary.
(c) Authorization. The execution, delivery and performance of
this Agreement and the other Loan Documents to which the Borrower is or is to
become a party and the transactions contemplated hereby and thereby (i) are
within the authority of the Borrower, (ii) have been duly authorized by all
necessary proceedings on the part of the Borrower, (iii) do not and will not
conflict with or result in any breach or contravention of any provision of
law, statute, rule or regulation to which the Borrower is subject or any
judgment, order, writ, injunction, license or permit applicable to the
Borrower, (iv) do not and will not conflict with or constitute a default
(whether with the passage of time or the giving of notice, or both) under any
provision of the articles of incorporation , bylaws, or other charter
documents of, or any agreement or other instrument binding upon, the
Borrower, or any of its properties, and (v) do not and will not result in or
require the imposition of any lien or other encumbrance on any of the
properties, assets or rights of the Borrower.
(d) Enforceability. The execution and delivery of this Agreement
and the other Loan Documents to which the Borrower is or is to become a party
are valid and legally binding obligations of the Borrower enforceable in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
Section 11.2. Governmental Approvals. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained and the filing of the Security Documents in
the appropriate records office with respect thereto.
Section 11.3. Title to Properties: Leases. Except as indicated on
Schedule 6.3 hereto, the Borrower and its Subsidiaries own all of the assets
reflected in the consolidated balance sheet of the Borrower as at the Balance
Sheet Date or acquired since that date (except property and assets sold or
otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances
except Permitted Liens.
Section 11.4. Financial Statements. The Borrower has furnished to
each of the Lenders: (a) the pro forma consolidated balance sheet of the
Borrower and its Subsidiaries as of the Balance Sheet Date and their related
consolidated statements of income, changes in stockholder equity and cash
flows for the fiscal year then ended, certified by the chief financial or
chief accounting officer of the Borrower to have been prepared in accordance
with generally accepted accounting principles, and (b) an unaudited
consolidated balance sheet and an unaudited consolidated statement of income
and cash flows of the Borrower and its Subsidiaries for the fiscal quarter of
the Borrower ended since the Balance Sheet Date certified by Borrowers chief
financial or chief accounting officer to have been prepared in accordance
with generally accepted accounting principles consistent with those used in
the preparation of the annual audited statements delivered pursuant to
subsection (a) above and to fairly present the financial condition of the
Borrower and its Subsidiaries as at the close of business on the dates
thereof and the results of operations for the fiscal quarter then ended
(subject to year-end adjustments). Such balance sheet and statements of
income, stockholders equity and cash flows have been prepared in accordance
with generally accepted accounting principles and fairly present the
financial condition of the Borrower and its Subsidiaries as of such dates and
the results of the operations of the Borrower and its Subsidiaries for such
periods. There are no liabilities, contingent or otherwise, of the Borrower
or any of its Subsidiaries involving material amounts not disclosed in said
financial statements and the related notes thereto.
Section 11.5. No Material Changes. Since the Balance Sheet Date,
there has occurred no materially adverse change in the financial condition or
business of the Borrower and its Subsidiaries taken as a whole as shown on or
reflected in the consolidated balance sheet of the Borrower as of the Balance
Sheet Date, or its consolidated statement of income or cash flows for the
fiscal year then ended, other than changes in the ordinary course of business
that have not had any materially adverse effect either individually or in the
aggregate on the business or financial condition of the Borrower and its
Subsidiaries taken as a whole.
Section 11.6. Franchises, Patents, Copyrights, Etc. The Borrower and
its Subsidiaries possess all franchises, patents, copyrights, trademarks,
trade names, service marks, licenses and permits, and rights in respect of
the foregoing, adequate for the conduct of their business substantially as
now conducted without known conflict with any rights of others.
Section 11.7. Litigation. Except as stated on Schedule 6.7 there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined,
might, either in any case or in the aggregate, materially adversely affect
the properties, assets, financial condition or business of the Borrower or
materially impair the right of the Borrower to carry on business
substantially as now conducted by it, or result in any liability not
adequately covered by insurance, or for which adequate reserves are not
maintained on the balance sheet of the Borrower, or which question the
validity of this Agreement or any of the other Loan Documents, any action
taken or to be taken pursuant hereto or thereto or any lien or security
interest created or intended to be created pursuant hereto or thereto, or
which will adversely affect the ability of the Borrower to pay and perform
the Obligations in the manner contemplated by this Agreement and the other
Loan Documents.
Section 11.8. No Materially Adverse Contracts, Etc. Neither the
Borrower nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
that has or is expected in the future to have a materially adverse effect on
the business, assets or financial condition of the Borrower. Neither the
Borrower nor any of its Subsidiaries is a party to any contract or agreement
that has or is expected, in the judgment of the officers of such Person, to
have any materially adverse effect on the business of the Borrower.
Section 11.9. Compliance with Other Instruments, Laws, Etc. Neither
the Borrower nor any of its Subsidiaries is in violation of any provision of
its charter or other organizational documents, by-laws, or any agreement or
instrument to which it may be subject or by which it or any of its properties
may be bound or any decree, order, judgment, statute, license, rule or
regulation, in any of the foregoing cases in a manner that could result in
the imposition of substantial penalties or materially and adversely affect
the financial condition, properties or business of the Borrower.
Section 11.10. Tax Status. The Borrower and each of its Subsidiaries
(a) has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(b) has paid all taxes and other governmental assessments and charges shown
or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c)
has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of such Person know of no basis for any such claim.
Section 11.11. No Event of Default. No Default or Event of Default
has occurred and is continuing.
Section 11.12. Holding Company and Investment Company Acts. Neither
the Borrower nor any of its Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935; nor is it an "investment company", or an "affiliated company" or a
"principal underwriter" of an "investment company", as such terms are defined
in the Investment Company Act of 1940.
Section 11.13. Absence of UCC Financing Statements, Etc. Except with
respect to Permitted Liens, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future
lien on, or security interest or security title in, any property of the
Borrower or its Subsidiaries or rights thereunder.
Section 11.14. Setoff, Etc. The Collateral and the rights of the
Agent and the Lenders with respect to the Collateral are not subject to any
setoff, claims, withholdings or other defenses. The Borrower is the owner of
the Collateral free from any lien, security interest, encumbrance or other
claim or demand, except Permitted Liens.
Section 11.15. Certain Transactions. None of the officers, trustees,
directors, or employees of the Borrower or any of its Subsidiaries is a party
to any transaction with the Borrower or any of its Subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, trustee, director or
such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, trustee, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
Section 11.16. Employee Benefit Plans. The Borrower and each ERISA
Affiliate are in compliance in all material respects with ERISA. There has
been no Reportable Event with respect to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan. There has been no
institution of proceedings or any other action by PBGC, the Borrower or any
ERISA Affiliate to terminate or withdraw or partially withdraw from any such
Plan under any circumstances which could lead to material liabilities to PBGC
or, with respect to a Multiemployer Plan, the "Reorganization" or
"Insolvency" (as each such term is defined in ERISA) of any such Plan. To
the best of the Borrowers knowledge, no "prohibited transaction" (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred
with respect to any such Plan, and neither the consummation of the
transactions provided for in this Agreement and compliance by the Borrower
with the provisions hereof and the other Loan Documents will involve any
prohibited transaction.
Section 11.17. ERISA Taxes. Neither the Borrower nor any ERISA
Affiliate thereof is currently and the Borrower has no reason to believe that
the Borrower or any ERISA Affiliate thereof will become subject to any
liability (other than routine expenses or contributions relating to the Plans
set forth on Schedule 6.17, if timely paid), tax or penalty whatsoever to any
person whomsoever, which liability, tax or penalty is directly or indirectly
related to any Plans set forth on Schedule 6.17 including, but not limited
to, any penalty or liability arising under Title I or Title IV of ERISA, any
tax or penalty resulting from a loss of deduction under Sections 404 and 419
of the Code, or any tax or penalty under Chapter 43 of the Code, except such
liabilities, taxes or penalties (when taken as a whole) as will not have a
material adverse effect on the Borrower or upon its financial condition,
assets, business, operations, liabilities or prospects.
Section 11.18. Plan Payments. The Borrower and each ERISA Affiliate
has made full and timely payment of all amounts (i) required to be
contributed under the terms of each Plan set forth on Schedule 6.17 and
applicable law and (ii) required to be paid as expenses of each Plan set
forth on Schedule 6.17. No Plan set forth on Schedule 6.17 would have an
"amount of unfunded benefit liabilities" (as defined in Section 4001(a)(18)
of ERISA) if such Plan were terminated as of the date on which this
representation and warranty is made.
Section 11.19. Regulations T, U and X. No portion of any Loan is to
be used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations T, U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224.
Section 11.20. Subsidiaries. Schedule 6.20 sets forth all of the
Subsidiaries of the Borrower. The form and jurisdiction of organization of
each of the Subsidiaries, and the Borrowers and each other Persons ownership
interest therein, is set forth in said Schedule 6.20.
Section 11.21. Loan Documents. All of the representations and
warranties of the Borrower made in the Loan Documents to which it is a party
or any document or instrument delivered to the Agent or the Lenders pursuant
to or in connection with any of such Loan Documents are true and correct in
all material respects, and no such party has failed to disclose such
information as is necessary to make such representations and warranties not
misleading. The information, reports, financial statements, exhibits and
schedules (excluding projections which have been proposed in good faith)
furnished by the Borrower to the Agent and the Lenders in connection with the
negotiation, preparation or delivery of this Agreement and the other Loan
Documents or included herein or therein or delivered pursuant hereto or
thereto, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein
not misleading; provided that the foregoing representation shall not apply to
the accuracy of any reports prepared by third parties not affiliated with
Borrower (although Borrower has no reason to believe that the Agent and the
Lenders may not rely on the accuracy thereof). All written information
furnished after the date hereof by the Borrower to the Agent or the Lenders
in connection with this Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby will be true, correct and
accurate in every material respect and shall not omit to state any material
fact necessary to make the statements herein or therein not misleading, or
(in the case of projections) based on reasonable estimates, on the date as of
which such information is stated or certified; provided that the foregoing
representation shall not apply to the accuracy of any reports prepared by
third parties not affiliated with Borrower (although Borrower shall disclose
to Agent and the Lenders if it has any reason to believe that the Agent and
the Lenders may not rely on the accuracy thereof).
Section 11.22. Brokers. Neither the Borrower nor any of its
Subsidiaries has engaged or otherwise dealt with any broker, finder or
similar entity in connection with this Agreement or the Loans contemplated
hereunder.
Section 11.23. Fair Consideration. The Borrower, by receiving the
benefits under this Agreement, is receiving "reasonably equivalent value"
within the meaning of Section 548 of the Bankruptcy Code, Title 11, U.S.C.A.
and "fair consideration" within the meaning of Consolidated Laws of New York
Annotated, Chapter 12, Article 10, Section 272 in exchange for the delivery
of the Security Documents to Agent.
Section 11.24. Solvency. As of the Closing Date and after giving
affect to the transactions contemplated by this Agreement and the other Loan
Documents, including all of the Loans made or to be made hereunder, the
Borrower is not insolvent on a balance sheet basis, the sum of the Borrowers
assets exceeds the sum of the Borrowers liabilities, the Borrower is able to
pay its debts as they become due, and the Borrower has sufficient capital to
carry on its business.
Section 11.25. Other Debt. Neither the Borrower nor any of their
respective Subsidiaries is in default in the payment of any other
Indebtedness or under any agreement, mortgage, deed of trust, security
agreement, financing agreement, indenture or lease to which any of them is a
party. The Borrower is not a party to or bound by any agreement, instrument
or indenture that may require the subordination in right or time of payment
of any of the Obligations to any other indebtedness or obligation of the
Borrower. The Borrower has provided to the Agent copies of all agreements,
mortgages, deeds of trust, financing agreements or other material agreements
binding upon Borrower or its properties and entered into by such Person as of
the date of this Agreement with respect to any Indebtedness of such Person.
Section 11.26. Year 2000 Compliant. Borrower has (i) undertaken a
detailed inventory, review and assessment of all areas within its business
and operations that could be adversely affected by the failure to be Year
2000 Compliant on a timely basis, (ii) developed a detailed plan and timeline
for becoming Year 2000 Compliant on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable in all material
aspects. Borrower reasonably anticipates that it will be Year 2000 Compliant
by September 30, 1999 or such earlier date as is necessary to avoid any
material disruption of Borrowers business and has committed and will commit
reasonably adequate resources to be Year 2000 Compliant.
Section 11.27. True Sales. Any Collateral Loan originated by an
originator other than the Borrower has been conveyed to the Borrower pursuant
to a true and legal sale.
Section 12. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loans:
Section 12.1. Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on the Loans
and all interest and fees provided for in this Agreement, all in accordance
with the terms of this Agreement and the Notes as well as all other sums
owing pursuant to the Loan Documents.
Section 12.2. Maintenance of Office. The Borrower will maintain its
chief executive office at 535 Madison Avenue, 26th Floor, New York County,
New York, New York, or at such other place in the United States of America as
the Borrower shall designate upon prior written notice to the Agent and the
Lenders, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
Section 12.3. Records and Accounts. The Borrower will (a) keep, and
cause each of its Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in accordance
with generally accepted accounting principles and (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation
and amortization of its properties and the properties of its Subsidiaries,
contingencies and other reserves. Neither the Borrower nor any of its
Subsidiaries shall, without the prior written consent of the Majority
Lenders, (x) make any material changes to the accounting procedures used by
such Person in preparing the financial statements and other information
described in Section 6.4 (excluding the conversion of a Subsidiary's
accounting procedures such that they are consistent with the Borrower's
accounting procedures) or (y) change its fiscal year.
Section 12.4. Financial Statements, Certificates and Information.
The Borrower will deliver or cause to be delivered to each of the Lenders:
(a) as soon as practicable, but in any event not later than 90
days after the end of each fiscal year of the Borrower, copies of the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries at
the end of such year, and the related unaudited consolidated statements of
income, changes in shareholders equity and cash flows for such year, each
setting forth in comparative form the figures for the previous fiscal year
and all such statements to be in reasonable detail, prepared in accordance
with generally accepted accounting principles, together with a certification
by the principal financial or accounting officer of the Borrower that the
information contained in such financial statements fairly presents the
financial position of the Borrower and its Subsidiaries on the date thereof
(provided that the Agent may require that such balance sheet and statement be
audited by an accounting firm approved by Agent (such approval not to be
unreasonably withheld) at any time that Agent has reasonable grounds to
request the same (including, without limitation, at any time that the
Compliance Certificate indicates that the Borrower is at or near minimum
compliance with the financial covenants in this Agreement) and any other
information the Lenders may need to complete a financial analysis of the
Borrower;
or as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth quarter), copies of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarter, and the related
unaudited consolidated statements of income, changes in shareholders equity
and cash flows for the portion of the Borrowers fiscal year then elapsed, all
in reasonable detail and prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of the Borrower that the information
contained in such financial statements fairly presents the financial position
of the Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) if the Borrower becomes a reporting company, copies of any
documents or reports filed by the Borrower with the SEC simultaneously with
delivery thereof to the SEC;
(d) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth fiscal quarter in each year), copies of a consolidated statement of
EBITDA for such fiscal quarter for the Borrower and its Subsidiaries,
prepared in a manner reasonable satisfactory to the Agent, together with a
certification by the Borrowers chief financial or chief accounting officer
that the information contained in such statement fairly presents the EBITDA
of the Borrower and its Subsidiaries for such period;
(e) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement (a "Compliance
Certificate") certified by the principal financial or accounting officer of
the Borrower in the form of Exhibit C hereto setting forth in reasonable
detail computations evidencing compliance with the covenants contained in
Section 9 and including the Borrowing Base worksheet attached thereto, and
(if applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date;
(f) concurrently with the delivery of the financial statements
described in subsections (b) and (c) above, a certificate signed by the
President or Chief Financial Officer of the Borrower to the effect that,
having read this Agreement, and based upon an examination which they deem
sufficient to enable them to make an informed statement, there does not exist
any Default or Event of Default, or if such Default or Event of Default has
occurred, specifying the facts with respect thereto;
(g) contemporaneously with the filing, mailing or releasing
thereof, copies of all press releases and all material of a financial nature
sent to all of the stockholders of the Borrower;
(h) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and amendments
thereto of the Borrower;
(i) as soon as practicable, but in any event not later than five
(5) Business Days after the Borrower acquires knowledge of the same, the
occurrence of any event or development which would cause any of the
Collateral Notes to no longer be Qualifying Collateral Notes hereunder, which
might cause the Designated Collateral Value with respect thereto to be
reduced or which may adversely affect any of the Collateral;
(j) a copy of any rent roll, operating statements, budget,
financial statement or other report Borrower shall receive from any Obligor
or Servicer with respect to an item of Collateral within fifteen (15) days
after Borrowers receipt thereof;
(k) on or before the 45th day after each fiscal quarter of the
Borrower with respect to the Collateral Loans serviced by Borrower and on or
before the third (3rd) day after Borrowers receipt of such information from
any Servicer with respect to the Collateral Loans serviced by any other
Servicer, a computer readable file containing servicing information,
including without limitation those fields specified by Agent from time to
time (including beginning balance, interest, principal, paid-to-date and
ending balances for each asset constituting Collateral and delinquencies), on
a loan-by-loan basis and in the aggregate, provided, Borrower agrees to use
its best efforts to obtain such information within such 45-day period from
any Servicer; and
(l) from time to time such other financial data and information in
the possession of the Borrower (including without limitation auditors
management letters, property inspection and environmental reports and
information as to zoning and other legal and regulatory changes affecting the
Borrower) as the Agent may reasonably request.
Section 12.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this
Agreement or under any note, evidence of indebtedness, indenture or other
obligation to which or with respect to which the Borrower or any of its
Subsidiaries is a party or obligor, whether as principal or surety, and such
default would permit the holder of such note or obligation or other evidence
of indebtedness to accelerate the maturity thereof, which acceleration would
have a material adverse effect on the Borrower, the Borrower shall forthwith
give written notice thereof to the Agent and each of the Lenders, describing
the notice or action and the nature of the claimed default.
(b) Environmental Events. The Borrower will promptly give notice
to the Agent (i) upon the Borrower obtaining knowledge of any potential or
known Release, or threat of Release, of any Hazardous Substances at or from
any Collateral Property; (ii) of any violation of any Environmental Law that
the Borrower or any of its Subsidiaries or, upon the Borrower obtaining
knowledge thereof, any Obligor, reports in writing or is reportable by such
Person in writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and (iii)
upon becoming aware thereof, of any inquiry, proceeding, investigation, or
other action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or board, that
in either case involves any Collateral Property or has the potential to
materially affect the assets, liabilities, financial conditions or operations
of the Borrower, any Subsidiary of the Borrower or any Obligor or the Agents
liens on the Collateral pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of any
setoff, claims (including, with respect to any Collateral Property,
environmental claims), withholdings or other defenses to which any of the
Collateral, or the rights of the Agent or the Lenders with respect to the
Collateral, are subject.
(d) Notice of Litigation and Judgments. The Borrower will give
notice to the Agent in writing within 15 days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting the Borrower or any of its Subsidiaries or to which the
Borrower or any of its Subsidiaries is or is to become a party involving an
uninsured claim against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a materially adverse effect on the Borrower
and stating the nature and status of such litigation or proceedings. The
Borrower will give notice to the Agent, in writing, in form and detail
satisfactory to the Agent and each of the Lenders, within ten days of any
judgment not covered by insurance, whether final or otherwise, against the
Borrower or any of its Subsidiaries in an amount in excess of $250,000.
(e) Notice of Proposed Sales, Encumbrances, Refinance or Transfer
of Property. The Borrower will give notice to the Agent of any proposed or
completed sale, encumbrance, refinance or transfer of (i) any Real Estate or
other Investment described in Section 8.3(i) of the Borrower or its
Subsidiaries within any fiscal quarter of the Borrower and (ii) any
Collateral Property (to the extent Borrower knows of the same), such notice
to be submitted together with the Compliance Certificate provided or required
to be provided to the Lenders under Section 7.4 with respect to such fiscal
quarter. The Compliance Certificate shall with respect to any proposed or
completed sale, encumbrance, refinance or transfer be adjusted in the best
good-faith estimate of the Borrower to give effect to such sale, encumbrance,
refinance or transfer and demonstrate that no Default or Event of Default
with respect to the covenants referred to therein shall exist after giving
effect to such sale, encumbrance, refinance or transfer. Notwithstanding the
foregoing, in the event of any sale, encumbrance, refinance or transfer of
any Real Estate or other Investment described in Section 8.3(i) of the
Borrower or its Subsidiaries involving an amount in excess of $5,000,000.00,
the Borrower shall promptly give notice to the Agent of such transaction,
which notice shall be accompanied by a Compliance Certificate prepared using
the financial statements of the Borrower most recently provided or required
to be provided to the Lenders under Section 6.4 or Section 7.4 adjusted as
provided in the preceding sentence.
(f) Notice of Casualty or Condemnation. With respect to any
Collateral pledged to Agent hereunder, the Borrower will give notice to the
Agent immediately upon receipt of notice or knowledge that the underlying
Collateral Property securing the applicable Collateral Loan as to which it
relates has been materially damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise damaged
so as to materially affect adversely the value thereof, or that any material
portion of such property has been taken by, or is threatened to be taken by,
eminent domain or other condemnation proceeding.
(g) Notification of Lenders. Promptly after receiving any notice
under this Section 7.5, the Agent will forward a copy thereof to each of the
Lenders, together with copies of any certificates or other written
information that accompanied such notice.
Section 12.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary
to preserve and keep in full force and effect its existence as a Maryland
corporation. The Borrower will cause each of its Subsidiaries to do or cause
to be done all things necessary to preserve and keep in full force and effect
its legal existence. The Borrower will do or cause to be done all things
necessary to preserve and keep in full force all of its rights and franchises
and those of its Subsidiaries. The Borrower will, and will cause each of its
Subsidiaries to, continue to engage primarily in the respective businesses
now conducted by each of them and in related businesses.
(b) The Borrower (i) will cause all of its owned or leased
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted)
and supplied with all necessary equipment, and (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof in all cases in which the failure so to do would have a material
adverse effect on the condition of the applicable owned or leased property or
on the financial condition, assets or operations of the Borrower.
Section 12.7. Insurance. The Borrower, at its expense, will procure
and maintain or cause to be procured and maintained, insurance covering the
Borrower and its Subsidiaries and their respective properties in such amounts
and against such risks and casualties as are customary for businesses similar
to the Borrower.
Section 12.8. Taxes. The Borrower and each Subsidiary will duly
pay and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges imposed
upon it, its Real Estate, its sales and activities, or any part thereof, or
upon the income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid might by law become a lien or charge
upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto; and provided, further, that forthwith upon the
commencement of proceedings to foreclose any lien that may have attached as
security therefor, the Borrower and each Subsidiary of the Borrower either
(i) will provide a bond issued by a surety reasonably acceptable to the
Majority Lenders and sufficient to stay all such proceedings or (ii) if no
such bond is provided, will pay each such tax, assessment, charge, levy or
claim.
Section 12.9. Inspection of Properties and Books. The Borrower shall
permit the Lenders, through the Agent or any representative designated by the
Agent, at the Borrowers expense to visit and inspect any of the properties of
the Borrower or any of its Subsidiaries, to examine the books of account of
the Borrower and its Subsidiaries (and to make copies thereof and extracts
therefrom) and to discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with, and to be advised as to the same by, its officers,
all at such reasonable times and intervals as the Agent or any Lender may
reasonably request. The Lenders shall use good faith efforts to coordinate
such visits and inspections so as to minimize the interference with and
disruption to the Borrowers normal business operations.
Section 12.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply with, and will cause each of its
Subsidiaries to comply in all respects with (i) all applicable laws and
regulations now or hereafter in effect wherever its business is conducted,
including all Environmental Laws, (ii) the provisions of its corporate
charter, and other charter documents and bylaws, (iii) all agreements and
instruments to which it is a party or by which it or any of its properties
may be bound, (iv) all applicable decrees, orders, and judgments, and (v) all
licenses and permits required by applicable laws and regulations for the
conduct of its business or the ownership, use or operation of its properties.
If at any time while any Loan or Note is outstanding or the Lenders have any
obligation to make Loans hereunder, any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that the Borrower may
fulfill any of its obligations hereunder, the Borrower will immediately take
or cause to be taken all steps necessary to obtain such authorization,
consent, approval, permit or license and furnish the Agent and the Lenders
with evidence thereof.
Section 12.11. Use of Proceeds. The Borrower will use the proceeds
of the Loans solely to provide financing (a) for the acquisition or
origination of the Investments described in Section 8.3(i), (b) for
reasonable transaction costs related to the transactions referred to in the
preceding clause (a), and (c) for such other purposes of the Borrower as the
Majority Lenders in their discretion may approve in writing from time to
time.
Section 12.12. Further Assurances. The Borrower will cooperate with,
and will cause each of its Subsidiaries to cooperate with, the Agent and the
Lenders and execute such further instruments and documents as the Lenders or
the Agent shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Loan Documents.
Section 12.13. Business Operations. The Borrower shall operate its
business as described in the business plan provided to the Agent and in
compliance with the terms and conditions of this Agreement and the Loan
Documents.
Section 12.14. ERISA Compliance. The Borrower will not permit the
present value of all employee benefits vested in all Employee Benefit Plans,
Multiemployer Plans and Guaranteed Pension Plans maintained by the Borrower
and any ERISA Affiliate thereof to exceed the present value of the assets
allocable to such vested benefits by an amount greater than $500,000.00 in
the aggregate. Neither the Borrower nor any ERISA Affiliate thereof will at
any time permit any such Plan maintained by it to engage in any "prohibited
transaction" as such term is defined in Section 4975 of the Code or Section
406 of ERISA, incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived, or terminate any such
Plan in any manner which could result in the imposition of a lien on the
property of the Borrower pursuant to Section 4068 of ERISA.
Section 12.15. Distribution of Income to the Borrower. The Borrower
shall cause all of its Subsidiaries to promptly distribute to the Borrower
(but not less frequently than once each fiscal quarter of the Borrower),
whether in the form of dividends, distributions or otherwise, all profits,
proceeds or other income relating to or arising from its Subsidiaries use,
operation, financing, refinancing, sale or other disposition of their
respective assets and properties after (a) the payment by each Subsidiary of
its operating expenses and debt service for such quarter and (b) the
establishment of reasonable reserves for the payment of operating expenses
not paid on at least a quarterly basis and capital improvements to be made to
such Subsidiarys assets and properties approved by such Subsidiary in the
ordinary course of business consistent with its past practices.
Section 12.16. More Restrictive Agreements. Without limiting the
terms of Section 8.1, should the Borrower enter into or modify any
agreements or documents pertaining to any existing or future Indebtedness,
Debt Offering or Equity Offering, which agreements or documents include
covenants (whether affirmative or negative), warranties, representations,
defaults or events of default (or any other provision which may have the same
practical effect as any of the foregoing) which are individually or in the
aggregate more restrictive against the Borrower or its Subsidiaries than
those set forth herein or in any of the other Loan Documents, the Borrower
shall promptly notify the Agent and, if requested by the Majority Lenders,
the Borrower, the Agent, and the Majority Lenders shall promptly amend this
Agreement and the other Loan Documents to include some or all of such more
restrictive provisions as determined by the Majority Lenders in their sole
discretion.
Section 12.17. Plan Assets, etc. The Borrower will do, or cause to be
done, all things necessary to ensure that the Borrower will not be deemed to
hold Plan Assets at any time. Each owner of an equity interest in Borrower
has certified to Borrower and the Lenders, and Borrower shall require each
proposed transferee of any equity interest in Borrower, as a condition
precedent to such transfer, to certify to Borrower and the Lenders, that the
source of funds used or to be used by it to acquire its interest in Borrower
are not assets of any plan subject to Title I of ERISA or Section 4975 of the
code and are not deemed to be assets of any plan under the U.S. Department of
Labors plan asset regulations. Borrower has provided the Agent with a copy
of each such certification from each owner of an equity interest in Borrower
and will promptly provide the Agent with a copy of each such certification
from each proposed transferree.
Section 12.18. Determination of Values. Borrower shall promptly
cooperate with the Agent or the Majority Lenders in their determination of
the Debt Service Coverage Ratio, LTV and Market Value of each Collateral
Loan, including the delivery to the Agent of all information and
documentation in the possession of the Borrower regarding such Collateral
Loan or Collateral Property or otherwise required by the Agent or the
Majority Lenders in their sole discretion.
Section 13. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any of the Lenders has any obligation to make any Loans:
Section 13.1. Restrictions on Indebtedness. The Borrower will not,
and will not permit any of its Subsidiaries to, create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to
any Indebtedness other than:
(a) Indebtedness to the Lenders arising under any of the Loan
Documents;
(b) current liabilities of the Borrower or its Subsidiaries
incurred in the ordinary course of business but not incurred through (i) the
borrowing of money, or (ii) the obtaining of credit except for credit on an
open account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the extent
that payment therefor shall not at the time be required to be made in
accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower or the
relevant Subsidiary shall at the time in good faith be prosecuting an appeal
or proceedings for review and in respect of which a stay of execution shall
have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business; and
(f) Non-recourse Indebtedness of any Subsidiary of the Borrower
that is a special purpose bankruptcy remote entity, provided that none of
such Subsidiaries shall incur any Indebtedness pursuant to this Section
8.1(f) unless the Borrower shall have provided to the Agent a statement that
no Default or Event of Default exists and a Compliance Certificate
demonstrating that the Borrower will be in compliance with its covenants
referred to therein after giving effect to such incurrence.
Section 13.2. Restrictions on Liens, Etc. The Borrower will not, and
will not permit any of its Subsidiaries to, (a) create or incur or suffer to
be created or incurred or to exist any lien, encumbrance, mortgage, pledge,
negative pledge, charge, restriction or other security interest of any kind
upon any of its property or assets of any character whether now owned or
hereafter acquired, or upon the income or profits therefrom; (b) transfer any
of its property or assets or the income or profits therefrom for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more
than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; (e) sell, assign, pledge or otherwise transfer any accounts,
contract rights, general intangibles, chattel paper or instruments, with or
without recourse; or (f) incur or maintain any obligation to any holder of
Indebtedness of the Borrower or such Subsidiary which prohibits the creation
or maintenance of any lien securing the Obligations (collectively "Liens");
provided that the Borrower and any Subsidiary of the Borrower may create or
incur or suffer to be created or incurred or to exist:
(ii liens on properties to secure taxes, assessments and
other governmental charges or claims for labor, material or supplies in
respect of obligations not overdue;
(ii) deposits or pledges made in connection with, or to secure
payment of, workers compensation, unemployment insurance, old age
pensions or other social security obligations;
(iii) liens on properties other than the Collateral in
respect of judgments, awards or indebtedness, the Indebtedness with
respect to which is permitted by Section 8.1(d) or (f); and
(iv) liens in favor of the Agent and the Lenders under the
Loan Documents.
Section 13.3. Restrictions on Investments. The Borrower will not,
and will not permit any of its Subsidiaries to, make or permit to exist or to
remain outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of purchase
by the Borrower or its Subsidiary;
(b) marketable direct obligations of any of the following: Federal
Home Loan Mortgage Corporation, Student Loan Marketing Association, Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Bank for Cooperatives, Federal Intermediate Credit
Banks, Federal Financing Banks, Export-Import Bank of the United States,
Federal Land Banks, or any other agency or instrumentality of the United
States of America;
(c) demand deposits, certificates of deposit, bankers acceptances
and time deposits of United States banks having total assets in excess of
$100,000,000; provided, however, that the aggregate amount at any time so
invested with any single bank having total assets of less than $1,000,000,000
will not exceed $200,000;
(d) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any State which at the time of purchase are rated by Moodys
Investors Service, Inc. or by Standard & Poors Corporation at not less than
"P 1" if then rated by Moodys Investors Service, Inc., and not less than
"A 1", if then rated by Standard & Poors Corporation;
(e) mortgage-backed securities guaranteed by the Government
National Mortgage Association, the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation and other mortgage-backed bonds
which at the time of purchase are rated by Moodys Investors Service, Inc. or
by Standard & Poors Corporation at not less than "Aa" if then rated by Moodys
Investors Service, Inc. and not less than "AA" if then rated by Standard &
Poors Corporation;
(f) repurchase agreements having a term not greater than 90 days
and fully secured by securities described in the foregoing subsection (a),
(b) or (e) with banks described in the foregoing subsection (c) or with
financial institutions or other corporations having total assets in excess of
$500,000,000;
(g) shares of so-called "money market funds" registered with the
SEC under the Investment Company Act of 1940 which maintain a level per-share
value, invest principally in investments described in the foregoing
subsections (a) through (f) and have total assets in excess of $50,000,000;
(h) Investments in Subsidiaries of the Borrower; and
(i) Investments in Mortgage Loans, Mezzanine Loans, Participation
Interests, CMBS and Subordinated Loans.
Section 13.4. Merger, Consolidation. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to any merger,
consolidation or other business combination, or agree to effect any asset
acquisition, stock acquisition or other acquisition without the prior written
consent of the Majority Lenders except (i) the merger or consolidation of one
or more of the Subsidiaries of the Borrower with and into the Borrower and
(ii) the merger or consolidation of two or more Subsidiaries of the Borrower.
Section 13.5. Sale and Leaseback. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby the Borrower or any Subsidiary of the Borrower shall
sell or transfer any Real Estate owned by it in order that then or thereafter
the Borrower or any Subsidiary shall lease back such Real Estate.
Section 13.6. Distributions. The Borrower shall not make any
Distributions which would cause it to violate any of the following covenants:
(a) Borrower shall not pay any Distribution if such Distribution
is in excess of the amount which, when added to the amount of all other
Distributions paid in the same fiscal quarter and the preceding three (3)
fiscal quarters, would exceed fifty percent (50%) of the sum of (i) its Net
Income plus (ii) depreciation deducted in calculating such Net Income for
such period;
(b) The Borrower shall make no Distributions in the event that an
Event of Default shall have occurred and be continuing or a Default or Event
of Default would be created after giving effect to such Distribution.
Section 13.7. Asset Sales. Neither the Borrower nor any Subsidiary of
the Borrower shall sell, transfer or otherwise dispose of any Real Estate or
any Investment described in Section 8.3(i) (except for the granting of
Permitted Liens) unless there shall have been delivered to the Lenders a
statement that no Default or Event of Default exists and a Compliance
Certificate demonstrating that the Borrower will be in compliance with its
covenants referred to therein after giving effect to such sale, transfer or
other disposition.
Section 14. FINANCIAL COVENANTS OF BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loans it will comply
with the following:
Section 14.1. Liabilities to Assets Ratio. The Borrower will not, at
the end of any fiscal quarter, permit the ratio of Consolidated Total
Liabilities to Consolidated Total Assets of the Borrower and its Subsidiaries
to exceed 0.65 to 1.
Section 14.2. Consolidated EBITDA Coverage. The Borrower will not, at
the end of any fiscal quarter, permit its Consolidated EBITDA for (a) each of
the first three fiscal quarters after the date hereof (with the first such
quarter ending March 31, 1999) and (b) each twelve month period ending on the
last day of the fourth fiscal quarter after the date hereof and the last day
of each fiscal quarter thereafter, to be less than 1.5 times the Debt Service
of the Borrower and its Subsidiaries for such period.
Section 14.3. Borrowing Base. The Borrower will not permit the
outstanding principal balance of the Loans as of the date of determination to
be greater than the Borrowing Base as of the date of determination.
Section 14.4. Minimum Shareholders' Equity.
(a) The Borrower will not permit the Shareholders Equity for the
period commencing on the date hereof through and including December 31, 1999
to be less than the sum of (i) $20,000,000.00 plus (ii) eighty-five percent
(85%) of the net proceeds from any Equity Offering after December 31, 1998
plus (iii) fifty percent (50%) of the sum of (A) all Net Income (or Deficit)
from December 31, 1998 plus (B) depreciation deducted in calculating such Net
Income (or Deficit) from December 31, 1998.
(b) The Borrower will not permit the Shareholders Equity for the
period commencing January 1, 2000 through and including December 31, 2000 to
be less than the sum of (i) the greater of (A) $30,000,000.00 and (B) the
Shareholders Equity as of December 31, 1999 plus (ii) eighty-five percent
(85%) of the net proceeds from any Equity Offering after December 31, 1999
plus (iii) fifty percent (50%) of the sum of (A) all Net Income (or Deficit)
from December 31, 1999 plus (B) depreciation deducted in calculating such Net
Income (or Deficit) from December 31, 1999.
(c) The Borrower will not for the period commencing on January 1,
2001 and continuing thereafter permit the Shareholders' Equity to be less
than the sum of (i) the greater of (A) $50,000,000.00 and (B) the
Shareholders' Equity as of December 31, 2000 plus (ii) eighty-five percent
(85%) of the net proceeds from any Equity Offering after December 31, 2000
plus (iii) fifty percent (50%) of the sum of (A) all Net Income (or Deficit)
from December 31, 2000 plus (B) depreciation deducted in calculating such Net
Income (or Deficit) from December 31, 2000.
Section 14.5. Required Equity. The Borrower shall not permit the ratio
of (a) the aggregate Indebtedness without duplication of the Borrower and its
Subsidiaries pursuant to Section 8.1(a) and (f), to (b) the aggregate all-in
acquisition cost (or principal balance of originated loans) of the assets of
the Borrower and its Subsidiaries on a consolidated basis, to exceed 0.65 to
1.
Section 15. CLOSING CONDITIONS.
The obligations of the Agent and the Lenders to make the initial Loans
shall be subject to the satisfaction of the following conditions precedent on
or prior to January 12, 1999:
Section 15.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall be
in full force and effect and shall be in form and substance satisfactory to
the Majority Lenders. The Agent shall have received a fully executed copy of
each such document, except that each Lender shall have received a fully
executed counterpart of its Note. Each of the Collateral Notes shall have
been endorsed to and delivered to the Agent.
Section 15.2. Certified Copies of Organizational Documents. The Agent
shall have received from the Borrower a copy, certified as of a recent date
by the appropriate officer of the State in which the Borrower is organized,
and by a duly authorized officer of the Borrower to be true and complete, of
the articles of incorporation or other organizational documents of the
Borrower or its qualification to do business, as applicable, as in effect on
such date of certification.
Section 15.3. Bylaws; Resolutions. All action on the part of the
Borrower necessary for the valid execution, delivery and performance by the
Borrower of the Loan Documents to which it is or is to become a party shall
have been duly and effectively taken, and evidence thereof satisfactory to
the Agent shall have been provided to the Agent. The Agent shall have
received from the Borrower true copies of its bylaws and the resolutions
adopted by its board of directors or other governing body authorizing the
transactions described herein, each certified by its secretary or other duly
authorized officer as of a recent date to be true and complete.
Section 15.4. Incumbency Certificate; Authorized Signers. The Agent
shall have received from the Borrower an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Borrower and
giving the name and bearing a specimen signature of each individual who shall
be authorized: (a) to sign, in the name and on behalf of the Borrower, each
of the Loan Documents to which the Borrower is or is to become a party; (b)
in the case of the Borrower to make Loan and Conversion Requests; and (c) to
give notices and to take other action on behalf of the Borrower under the
Loan Documents.
Section 15.5. Opinion of Counsel. The Agent shall have received a
favorable opinion addressed to the Lenders and the Agent and dated as of the
Closing Date, in form and substance satisfactory to the Lenders and the
Agent, from Robinson, Silverman, Pearce, Aronsohn & Berman, counsel of the
Borrower, as to such matters as the Agent shall reasonably request.
Section 15.6. Payment of Fees. The Borrower shall have paid to the
Agent the commitment fee pursuant to Section 4.2.
Section 15.7. Performance; No Default. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on the
Closing Date there shall exist no Default or Event of Default.
Section 15.8. Representations and Warranties. The representations and
warranties made by the Borrower in the Loan Documents or otherwise made by or
on behalf of any Borrower or any Subsidiary thereof, in connection therewith
or after the date thereof shall have been true and correct in all material
respects when made and shall also be true and correct in all material
respects on the Closing Date.
Section 15.9. Proceedings and Documents. All proceedings in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory to the Agent and the Agents
Special Counsel in form and substance, and the Agent shall have received all
information and such counterpart originals or certified copies of such
documents and such other certificates, opinions or documents as the Agent and
the Agents Special Counsel may reasonably require.
Section 15.10. Collateral Loan Qualification Documents. The Collateral
Loan Qualification Documents for each Collateral Loan included in the
Collateral as of the Closing Date shall have been delivered to the Agent.
Section 15.11. Compliance Certificate. A Compliance Certificate dated
as of the date of the Closing Date demonstrating compliance with each of the
covenants calculated therein as of the most recent fiscal quarter end for
which the Borrower has provided financial statements under Section 6.4
adjusted in the best good faith estimate of the Borrower dated as of the date
of the Closing Date shall have been delivered to the Agent.
Section 15.12. Governmental Policy. Each Lender shall have determined
that there have been no material changes in governmental regulations or
policy affecting the Lenders or the Borrower.
Section 15.13. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agents Special Counsel may reasonably have
requested.
Section 16. CONDITIONS TO ALL BORROWINGS.
The obligations of the Lenders to make any Loan, whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
Section 16.1. Prior Conditions Satisfied. All conditions set forth in
Section 10 shall continue to be satisfied as of the date upon which any Loan
is to be made.
Section mposs Representations True; No Default. Each of the
representations and warranties contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which they
were made and shall also be true at and as of the time of the making of such
Loan, with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by
this Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing. The Agent shall have received
a certificate of the Borrower signed by an authorized officer of the Borrower
to such effect.
Section 16.3. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Lender would make it illegal for such Lender to
make such Loan.
Section 16.4. Governmental Regulation. Each Lender shall have received
such statements in substance and form reasonably satisfactory to such Lender
as such Lender shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System.
Section 16.5. Proceedings and Documents. All proceedings in connection
with the Loan shall be satisfactory in substance and in form to the Agent,
and the Agent shall have received all information and such counterpart
originals or certified or other copies of such documents as the Agent may
reasonably request.
Section 16.6. Borrowing Documents. In the case of any request for a
Loan, the Agent shall have received a copy of each of the following:
(a) the request for a Loan required by Section 2.6 in the form of
Exhibit B hereto, fully completed; and
(b) the Compliance Certificate required by clause (iii) of Section
2.6 prepared in a manner reasonably acceptable to the Agent.
Section 17. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 17.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the
lapse of time or both is required, then, prior to such notice or lapse of
time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans or
any other sums due hereunder or under any of the other Loan Documents, when
the same shall become due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for payment;
(c) the Borrower shall fail to comply with any covenant contained
in Section 9.3, in which event, subject to the provisions of Section 12.1A,
the Borrower shall have the cure period or periods provided in Section 12.1B;
(d) the Borrower shall fail to comply with any covenant contained
in Section 9.1, Section 9.2, Section 9.4 or Section 9.5 and such failure
shall continue for 30 Business Days after written notice thereof shall have
been given to the Borrower by the Agent;
(e) the Borrower, any of its Subsidiaries or any other party shall
fail to perform any other term, covenant or agreement contained herein or in
any of the other Loan Documents (other than those specified in this Section
12.1);
(f) any representation or warranty of the Borrower or any of its
Subsidiaries in this Agreement or any other Loan Document, or in any report,
certificate, financial statement, request for a Loan, or in any other
document or instrument delivered pursuant to or in connection with this
Agreement, any advance of a Loan or any of the other Loan Documents shall
prove to have been false in any material respect upon the date when made or
deemed to have been made or repeated;
(g) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received, or fail to observe or perform any material
term, covenant or agreement contained in any agreement by which it is bound,
evidencing or securing any such borrowed money or credit received for such
period of time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof; provided that the events
described in this Section 12.1(g) shall not constitute an Event of Default
unless such failure to perform, together with other failures to perform as
described in this Section 12.1(g), involve singly or in the aggregate
obligations for borrowed money or credit received totaling in excess of
$5,000,000.00;
(h) the Borrower or any of its Subsidiaries, (A) shall make an
assignment for the benefit of creditors, or admit in writing its general
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of the Borrower or any of its Subsidiaries
or of any substantial part of the assets of any thereof, (B) shall commence
any case or other proceeding relating to the Borrower or any of its
Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or (C) shall take any action to
authorize or in furtherance of any of the foregoing;
(i) a petition or application shall be filed for the appointment
of a trustee or other custodian, liquidator or receiver of the Borrower or
any of its Subsidiaries or any substantial part of the assets of any thereof,
or a case or other proceeding shall be commenced against the Borrower or any
of its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law
of any jurisdiction, now or hereafter in effect, and the Borrower or any of
its Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition, application, case or proceeding shall
not have been dismissed within 60 days following the filing or commencement
thereof;
(j) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such case
or other proceeding, or a decree or order for relief is entered in respect of
the Borrower or any of its Subsidiaries, in each case of the foregoing in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(k) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than 60 days, whether or not consecutive, any uninsured
final judgment against the Borrower or any of its Subsidiaries that, with
other outstanding uninsured final judgments, undischarged, against the
Borrower or any of its Subsidiaries exceeds in the aggregate $1,000,000.00;
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent or approval of the Lenders,
or any action at law, suit in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower or any of its Subsidiaries or any of their respective
holders of Voting Interests, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof in any material respect as
determined by the Majority Lenders;
(m) any dissolution, termination, partial or complete liquidation,
merger or consolidation of the Borrower or any of its Subsidiaries, or any
sale, transfer or other disposition of the assets of the Borrower or any of
its Subsidiaries, other than as permitted under the terms of this Agreement
or the other Loan Documents;
(n) any suit or proceeding shall be filed against the Borrower,
any of its Subsidiaries, any Collateral or any Collateral Property which in
the good faith business judgment of the Majority Lenders after giving
consideration to the likelihood of success of such suit or proceeding and the
availability of insurance to cover any judgment with respect thereto and
based on the information available to them, if adversely determined, would
have a materially adverse affect on the ability of the Borrower to perform
each and every one of their respective obligations under and by virtue of the
Loan Documents;
(o) the Borrower shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of the
Borrower included in the Collateral;
(p) Jeffrey H. Lynford shall cease to be the Chairman of the Board
of, or Edward Lowenthal shall cease to be the President of, the Borrower, and
a competent and experienced successor for such Person shall not be approved
by the Majority Lenders within six (6) months of such event; or
(q) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Lenders shall have
determined in their reasonable discretion that such event reasonably could be
expected to result in liability of any of the Borrower to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and such
event in the circumstances occurring reasonably could constitute grounds for
the termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan; or the
PBGC shall have instituted proceedings to terminate such Guaranteed Pension
Plan;
then, and in any such event, the Agent may, and upon the request of the
Majority Lenders shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower; provided that in
the event of any Event of Default specified in Section 12.1(h), Section
12.1(i) or Section 12.1(j), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from any of the
Lenders or the Agent.
Section 12.1A. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 12.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the occurrence
of any failure described in Section 12.1(b) in the event that the Borrower
cures such default within five (5) days following receipt of written notice
of such default, provided, however, that Borrower shall not be entitled to
receive more than two (2) notices in the aggregate pursuant to this clause
(i) in any period of 365 days ending on the date of any such occurrence of
default, and provided further that no such cure period shall apply to any
payments due upon the maturity of the Notes, and (ii) no Event of Default
shall exist hereunder upon the occurrence of any failure described in Section
12.1(e) in the event that the Borrower cures such default with thirty (30)
days following receipt of written notice of such default, provided that the
provisions of this clause (ii) shall not pertain to defaults consisting of a
failure to provide insurance as required by Section 7.7, to any default
consisting of a failure to comply with Section 7.4(e), or to any default
excluded from any provision of cure of defaults contained in any other of the
Loan Documents.
(b) Notwithstanding the provisions of subsections (c) and (d) of
Section 12.1 or of Section 12.1B, the cure periods provided therein shall not
be allowed and the occurrence of a Default thereunder immediately shall
constitute an Event of Default for all purposes of this Agreement and the
other Loan Documents if, within the period of twelve months immediately
preceding the occurrence of such Default, there shall have occurred two
periods of cure or portions thereof under any one or more than one of said
subsections.
Section 12.1B. Certain Cure Periods.
(a) In the event that there shall occur any Default under Section
12.1(c), then within five Business Days after receipt of notice of such
Default from the Agent or the Majority Lenders the Borrower may elect to cure
such Default by providing additional Collateral consisting of Potential
Collateral, and/or to reduce the Total Commitment and reduce the outstanding
Loans, in which event such actions shall be completed not later than 15 days
following the date on which the Borrower is notified that the Majority
Lenders have approved the Borrowers proposed actions (provided that upon the
occurrence of any event which may cause a Default to occur under Section
12.1(c) which is also a Default under any of the Loan Documents for which no
notice or right to cure is provided, an Event of Default shall occur for
which no right to cure under this Section 12.1B shall be available). The
Borrowers notice of its election pursuant to the preceding sentence shall be
delivered to the Agent within the period of five Business Days provided
above. Within five Business Days after receipt of such advice, the Majority
Lenders shall advise the Borrower as to whether in their good faith judgment
the actions proposed by the Borrower are sufficient to cure such Default
without the creation of any other Default hereunder. In the event that the
Majority Lenders determine that Borrowers proposal is insufficient to cure
such Default or is otherwise not in accordance with the terms of this
Agreement, the Borrower within an additional three Business Days after such
negative notice may submit to the Agent an alternative plan or evidence
establishing that the Borrowers original election was sufficient. In the
event that within the times provided herein the Borrower shall have failed to
provide evidence satisfactory to the Majority Lenders that Borrowers proposed
actions are sufficient to cure such Default in accordance with the terms
hereof, the cure period shall terminate and such Default immediately shall
constitute an Event of Default.
(b) In the event that the Borrower shall elect in whole or in part
under subsection 12.1B(a) to provide additional Collateral, the promissory
note or Partipation Interest or CMBS to be added to the Collateral shall be a
Qualifying Collateral Note and on or prior to the expiration of the 15-day
period each of the Collateral Loan Qualification Documents shall have been
completed and provided to the Agent for the benefit of the Lenders.
Section 17.2. Termination of Commitments. If any one or more Events of
Default specified in Section 12.1(h), Section 12.1(i) or Section 12.1(j)
shall occur, then immediately and without any action on the part of the Agent
or any Lender any unused portion of the credit hereunder shall terminate and
the Lenders shall be relieved of all obligations to make Loans to the
Borrower. If any other Event of Default shall have occurred and be
continuing, the Agent, upon the election of the Majority Lenders, may by
notice to the Borrower terminate the obligation to make Loans to the
Borrower. No termination under this Section 12.2 shall relieve the Borrower
of its obligations to the Lenders arising under this Agreement or the other
Loan Documents.
Section 17.3. Remedies. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Lenders
shall have accelerated the maturity of the Loans pursuant to Section 12.1,
the Agent on behalf of the Lenders, may, with the consent of the Majority
Lenders but not otherwise, proceed to protect and enforce their rights and
remedies under this Agreement, the Notes or any of the other Loan Documents
by suit in equity, action at law or other appropriate proceeding, whether for
the specific performance of any covenant or agreement contained in this
Agreement and the other Loan Documents or any instrument pursuant to which
the Obligations are evidenced, including to the full extent permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right. No remedy
herein conferred upon the Agent or the holder of any Note is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision
of law.
Section 17.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Event of Default,
any monies are received in connection with the enforcement of any of the
Security Documents, or otherwise with respect to the realization upon any of
the Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent to protect or preserve the collateral or in connection
with the collection of such monies by the Agent, for the exercise, protection
or enforcement by the Agent of all or any of the rights, remedies, powers and
privileges of the Agent under this Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any provision of
adequate indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Lenders shall determine; provided, however, that (i)
distributions in respect of such Obligations shall be made pari passu among
Obligations with respect to the Agents fee payable pursuant to Section 4.3
and all other Obligations, (ii) in the event that any Lender shall have
wrongfully failed or refused to make an advance under Section 2.7 and such
failure or refusal shall be continuing, advances made by other Lenders during
the pendency of such failure or refusal shall be entitled to be repaid as to
principal and accrued interest in priority to the other Obligations described
in this subsection (b), and (iii) Obligations owing to the Lenders with
respect to each type of Obligation such as interest, principal, fees and
expenses, shall be made among the Lenders pro rata; and provided, further
that the Majority Lenders may in their discretion make proper allowance to
take into account any Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
Section 18. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits (general or specific, time or demand,
provisional or final, regardless of currency, maturity, or the branch of
where such deposits are held) or other sums credited by or due from any of
the Lenders to the Borrower and any securities or other property of the
Borrower in the possession of such Lender may be applied to or set off
against the payment of Obligations and any and all other liabilities, direct,
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Lender. Each of the Lenders
agrees with each other Lender that if such Lender shall receive from the
Borrower, whether by voluntary payment, exercise of the right of setoff, or
otherwise, and shall retain and apply to the payment of the Note or Notes
held by such Lender any amount in excess of its ratable portion of the
payments received by all of the Lenders with respect to the Notes held by all
of the Lenders, such Lender will make such disposition and arrangements with
the other Lenders with respect to such excess, either by way of distribution,
pro tanto assignment of claims, subrogation or otherwise as shall result in
each Lender receiving in respect of the Notes held by it its proportionate
payment as contemplated by this Agreement; provided that if all or any part
of such excess payment is thereafter recovered from such Lender, such
disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
Section 19. THE AGENT.
Section 19.1. Authorization. The Agent is authorized to take such
action on behalf of each of the Lenders and to exercise all such powers as
are hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not expressly
assumed herein or therein shall be implied to have been assumed by the Agent.
The obligations of Agent hereunder are primarily administrative in nature,
and nothing contained in this Agreement or any of the other Loan Documents
shall be construed to constitute the Agent as a trustee for any Lender or to
create any agency or fiduciary relationship. The Borrower and any other
Person shall be entitled to conclusively rely on a statement from the Agent
that it has the authority to act for and bind the Lenders pursuant to this
Agreement and the other Loan Documents.
Section 19.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Agent may utilize the services of such Persons as the Agent
may reasonably determine, and all reasonable fees and expenses of any such
Persons shall be paid by the Borrower.
Section 19.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent, or employee thereof, shall be liable for
any waiver, consent or approval given or any action taken, or omitted to be
taken, in good faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be responsible for the
consequences of any oversight or error of judgment whatsoever, except that
the Agent or such other Person, as the case may be, may be liable for losses
due to its willful misconduct or gross negligence.
Section 19.4. No Representations. The Agent shall not be responsible
for the execution or validity or enforceability of this Agreement, the Notes,
any of the other Loan Documents or any instrument at any time constituting,
or intended to constitute, collateral security for the Notes, or for the
value of any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for
any recitals or statements, warranties or representations made herein or in
any of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower or any of its Subsidiaries,
or be bound to ascertain or inquire as to the performance or observance of
any of the terms, conditions, covenants or agreements herein or in any other
of the Loan Documents. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or any
holder of any of the Notes shall have been duly authorized or is true,
accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Lenders, with respect to the creditworthiness or financial
condition of the Borrower or any of its Subsidiaries. Each Lender
acknowledges that it has, independently and without reliance upon the Agent
or any other Lender, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent or any other Lender, based upon such
information and documents as it deems appropriate at the time, continue to
make its own credit analysis and decisions in taking or not taking action
under this Agreement and the other Loan Documents.
Section 19.5. Payments.
(a) A payment by the Borrower to the Agent hereunder or under any
of the other Loan Documents for the account of any Lender shall constitute a
payment to such Lender. The Agent agrees to distribute to each Lender not
later than one Business Day after the Agents receipt of good funds,
determined in accordance with the Agents customary practices, such Lenders
pro rata share of payments received by the Agent for the account of the
Lenders except as otherwise expressly provided herein or in any of the other
Loan Documents.
(b) If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of
the other Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by the
Agent is to be repaid or in the event that any amount received pursuant to
the Estoppel and Agreement and distributed by the Agent is to be repaid
pursuant to the Estoppel and Agreement, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged or required to be repaid or
shall pay over the same in such manner and to such Persons as shall be
determined by such court or as required by the Estoppel and Agreement, as
applicable.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Lender that fails (i) to
make available to the Agent its pro rata share of any Loan or (ii) to comply
with the provisions of Section 13 with respect to making dispositions and
arrangements with the other Lenders, where such Lenders share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share
of such payments due and payable to all of the Lenders, in each case as, when
and to the full extent required by the provisions of this Agreement, shall be
deemed delinquent (a "Delinquent Lender") and shall be deemed a Delinquent
Lender until such time as such delinquency is satisfied. A Delinquent Lender
shall be deemed to have assigned any and all payments due to it from the
Borrower, whether on account of outstanding Loans, interest, fees or
otherwise, to the remaining nondelinquent Lenders for application to, and
reduction of, their respective pro rata shares of all outstanding Loans. The
Delinquent Lender hereby authorizes the Agent to distribute such payments to
the nondelinquent Lenders in proportion to their respective pro rata shares
of all outstanding Loans. A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of
the assigned payments to all outstanding Loans of the nondelinquent Lenders
or as a result of other payments by the Delinquent Lenders to the
nondelinquent Lenders, the Lenders respective pro rata shares of all
outstanding Loans have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency.
Section 19.6. Holders of Notes. Subject to the terms of Article 18,
the Agent may deem and treat the payee of any Note as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished
in writing with a different name by such payee or by a subsequent holder,
assignee or transferee.
Section 19.7. Indemnity. The Lenders ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent has not been reimbursed
by the Borrower as required by Section 15), and liabilities of every nature
and character arising out of or related to this Agreement, the Notes, or any
of the other Loan Documents or the transactions contemplated or evidenced
hereby or thereby, or the Agents actions taken hereunder or thereunder,
except to the extent that any of the same shall be directly caused by the
Agents willful misconduct or gross negligence.
Section 19.8. Agent as Lender. In its individual capacity, BKB shall
have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of any
of the Notes as it would have were it not also the Agent.
Section 19.9. Resignation. The Agent may resign at any time by
giving 60 days prior written notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Majority Lenders shall have the right to
appoint as a successor Agent any Lender or any other sophisticated investor
knowledgeable in the lending on or ownership of property similar to the
Collateral. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the
Borrower. If no successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Agents giving of notice of resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a Lender
or any other sophisticated investor knowledgeable in the lending on or
ownership of property similar to the Collateral. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder as Agent. After any
retiring Agents resignation, the provisions of this Agreement and the other
Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
Section 19.10. Duties in the Case of Enforcement. In case one or
more Events of Default have occurred and shall be continuing, and whether or
not acceleration of the Obligations shall have occurred, the Agent shall, if
(a) so requested by the Majority Lenders and (b) the Lenders have provided to
the Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions of the Security Documents authorizing the sale or other
disposition of all or any part of the Collateral and exercise all or any such
other legal and equitable and other rights or remedies as it may have in
respect of such Collateral. The Majority Lenders may direct the Agent in
writing as to the method and the extent of any such sale or other
disposition, the Lenders hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably
believes the Agents compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 20. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Agreement, the other Loan Documents and the other agreements
and instruments mentioned herein, (b) any taxes (including any interest and
penalties in respect thereto) payable by the Agent or any of the Lenders
(other than taxes based upon the Agents or any Lenders gross or net income,
except that the Agent and the Lenders shall be entitled to indemnification
for any and all amounts paid by them in respect of taxes based on income or
other taxes assessed by any State in which Collateral is located, such
indemnification to be limited to taxes due solely on account of the granting
of Collateral under the Security Documents and to be net of any credit
allowed to the indemnified party from any other State on account of the
payment or incurrence of such tax by such indemnified party), including any
recording, mortgage, documentary or intangibles taxes in connection with the
Security Documents and other Loan Documents, or other taxes payable on or
with respect to the transactions contemplated by this Agreement, including
any such taxes payable by the Agent or any of the Lenders after the Closing
Date (the Borrower hereby agreeing to indemnify the Agent and each Lender
with respect thereto), (c) all reasonable internal charges of the Agent
(determined in good faith and in accordance with the Agents internal policies
applicable generally to its customers) for commercial finance exams and the
reasonable fees, expenses and disbursements of the counsel to the Agent,
counsel for the Majority Lenders and any local counsel to the Agent incurred
in connection with the preparation, administration or interpretation of the
Loan Documents and other instruments mentioned herein (excluding, however,
the preparation of agreements evidencing participations granted under Section
18.4), the review of any additional or substitute Collateral, each closing
hereunder, and amendments, modifications, approvals, consents or waivers
hereto or hereunder, (d) the reasonable fees, expenses and disbursements of
the Agent incurred by the Agent in connection with the preparation,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, and the making of each advance hereunder, (e) all
reasonable out-of-pocket expenses (including reasonable attorneys fees and
costs, which attorneys may be employees of any Lender or the Agent and the
fees and costs of appraisers, engineers, investment bankers or other experts
retained by any Lender or the Agent) incurred by any Lender or the Agent in
connection with (i) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrower or the administration thereof after
the occurrence of a Default or Event of Default and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way
related to the Agents or any of the Lenders relationship with the Borrower,
(f) all reasonable fees, expenses and disbursements of any Lender or the
Agent incurred in connection with U.C.C. searches or U.C.C. filings, and (g)
all reasonable fees and expenses (including reasonable attorneys fees and
costs) incurred by BKB in connection with the assignment of Commitments and
interests in the Loans pursuant to Section 18.1. The covenants of this
Section 15 shall survive payment or satisfaction of payment of amounts owing
with respect to the Notes.
Section 21. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and the
Lenders and each director, officer, employee, agent and Person who controls
the Agent or any Lender from and against any and all claims, actions and
suits, whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this Section 16
based upon any agreement, arrangement or action made or taken, or alleged to
have been made or taken, by the Borrower or any of its Subsidiaries, (b) any
condition of the Collateral Property, (c) any actual or proposed use by the
Borrower of the proceeds of any of the Loans, (d) any actual or alleged
infringement of any patent, copyright, trademark, service mark or similar
right of the Borrower or any of its Subsidiaries comprised in the Collateral,
(e) the Borrower entering into or performing this Agreement or any of the
other Loan Documents, (f) any actual or alleged violation of any law,
ordinance, code, order, rule, regulation, approval, consent, permit or
license (including usury laws, consumer credit loans, truth in lending laws,
and the Real Estate Settlement Procedures Act) relating to the Collateral, or
(g) with respect to the Borrower and its Subsidiaries and their respective
properties and assets, the violation of any Environmental Law, the Release or
threatened Release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any
Hazardous Substances (including, but not limited to claims with respect to
wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of
counsel and allocated costs of internal counsel incurred in connection with
any such investigation, litigation or other proceeding; provided, however,
that the Borrower shall not be obligated under this Section 16 to indemnify
any Person for liabilities arising from such Persons own gross negligence or
willful misconduct. In litigation, or the preparation therefor, the Lenders
and the Agent shall be entitled to select a single law firm as their own
counsel and, in addition to the foregoing indemnity, the Borrower agrees to
pay promptly the reasonable fees and expenses of such counsel. If, and to
the extent that the obligations of the Borrower under this Section 16 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The provisions of this Section 16 shall
survive the repayment of the Loans and the termination of the obligations of
the Lenders hereunder.
Section 22. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto or thereto shall be deemed to have been relied upon by the
Lenders and the Agent, notwithstanding any investigation heretofore or
hereafter made by any of them, and shall survive the making by the Lenders of
any of the Loans, as herein contemplated, and shall continue in full force
and effect so long as any amount due under this Agreement or the Notes or any
of the other Loan Documents remains outstanding or any Lender has any
obligation to make any Loans. The indemnification obligations of the
Borrower provided herein and the other Loan Documents shall survive the full
repayment of amounts due and the termination of the obligations of the
Lenders hereunder and thereunder to the extent provided herein and therein.
All statements contained in any certificate or other paper delivered to any
Lender or the Agent at any time by or on behalf of the Borrower or any of its
Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower or such Subsidiary hereunder.
Section 23. ASSIGNMENT AND PARTICIPATION.
Section 23.1. Conditions to Assignment by Lenders. Except as
provided herein, each Lender may assign to one or more banks or other
entities all or a portion of its interests, rights and obligations under this
Agreement (including all or a portion of its Commitment Percentage and
Commitment and the same portion of the Loans at the time owing to it, and the
Notes held by it); provided that (a) the Agent shall have given its prior
written consent to such assignment, which consent shall not be unreasonably
withheld (provided that such consent shall not be required for any assignment
to another Lender, to a bank which is under common control with the assigning
Lender or to a wholly-owned Subsidiary of such Lender provided that such
assignee shall remain a wholly-owned Subsidiary of such Lender), (b) each
such assignment shall be of a constant, and not a varying, percentage of all
the assigning Lenders rights and obligations under this Agreement, (c) the
parties to such assignment shall execute and deliver to the Agent, for
recording in the Register (as hereinafter defined), a notice of such
assignment, together with any Notes subject to such assignment, (d) in no
event shall any voting, consent or approval rights of a Lender be assigned to
any Person controlling, controlled by or under common control with, or which
is not otherwise free from influence or control by, the Borrower, which
rights shall instead be allocated pro rata among the other remaining Lenders,
(e) such assignee shall have a net worth or unfunded capital commitments as
of the date of such assignment of not less than $500,000,000 unless otherwise
approved by the Agent and Borrower and (f) such assignee shall acquire an
interest in the Loans of not less than $10,000,000.00. No such assignment
shall be made without the prior consent of the Borrower, which consent shall
not be unreasonably withheld or delayed; provided that such consent shall not
be required in the event that a Default or Event of Default shall have
occurred. Upon such execution, delivery, acceptance and recording, of such
notice of assignment, (i) the assignee thereunder shall be a party hereto and
all other Loan Documents executed by the Lenders and, to the extent provided
in such assignment, have the rights and obligations of a Lender hereunder,
(ii) the assigning Lender shall, to the extent provided in such assignment
and upon payment to the Agent of the registration fee referred to in Section
18.2, be released from its obligations under this Agreement, and (iii) the
Agent may unilaterally amend Schedule 1 to reflect such assignment. In
connection with each assignment, the assignee shall represent and warrant to
the Agent, the assignor and each other Lender as to whether such assignee is
controlling, controlled by, under common control with or is not otherwise
free from influence or control by, the Borrower.
Section 23.2. Register. The Agent shall maintain a copy of each
assignment delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitment Percentages of, and principal amount of the Loans owing to the
Lenders from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and the Lenders at any reasonable
time and from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Lender agrees to pay to the Agent a registration
fee in the sum of $2,000.
Section 23.3. New Notes. Upon its receipt of an assignment executed by
the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the
Lenders (other than the assigning Lender). Within five Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for each surrendered Note, a new Note to
the order of such assignee in an amount equal to the amount assumed by such
assignee pursuant to such assignment and, if the assigning Lender has
retained some portion of its obligations hereunder, a new Note to the order
of the assigning Lender in an amount equal to the amount retained by it
hereunder. Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such assignment and shall otherwise be in substantially the
form of the assigned Notes. The surrendered Notes shall be canceled and
returned to the Borrower.
Section 23.4. Participations. Each Lender may sell participations to
one or more banks or other entities in all or a portion of such Lenders
rights and obligations under this Agreement and the other Loan Documents;
provided that (a) any such sale or participation shall not affect the rights
and duties of the selling Lender hereunder to the Borrower, (b) such sale and
participation shall not entitle such participant any rights or privileges
under this Agreement or the Loan Documents (including, without limitation,
the right to approve waivers, amendments or modifications), (c) such
participant shall have no direct rights against the Borrower except the
rights granted to the Lenders pursuant to Section 13, (d) such sale is
effected in accordance with all applicable laws, and (e) such participant
shall not be a Person controlling, controlled by or under common control
with, or which is not otherwise free from influence or control by, the
Borrower or any of its Subsidiaries.
Section 23.5. Pledge by Lender. Any Lender may at any time pledge all
or any portion of its interest and rights under this Agreement (including all
or any portion of its Note) to any of the twelve Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341
or to such other Person as the Agent may approve to secure obligations of
such Lender. No such pledge or the enforcement thereof shall release the
pledgor Lender from its obligations hereunder or under any of the other Loan
Documents.
Section 23.6. No Assignment by Borrower. The Borrower shall not assign
or transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Lenders.
Section 23.7. Disclosure. The Borrower agrees that in addition to
disclosures made in accordance with standard lending practices any Lender may
disclose information obtained by such Lender pursuant to this Agreement to
assignees or participants and potential assignees or participants hereunder.
Section 24. NOTICES.
Each notice, demand, election or request provided for or permitted to be
given pursuant to this Agreement (hereinafter in this Section 19 referred to
as "Notice"), but specifically excluding to the maximum extent permitted by
law any notices of the institution or commencement of foreclosure
proceedings, must be in writing and shall be deemed to have been properly
given or served by personal delivery or by sending same by overnight courier
or by depositing same in the United States Mail, postpaid and registered or
certified, return receipt requested, or as expressly permitted herein, by
telegraph, telecopy, telefax or telex, and addressed as follows:
If to the Agent or BKB:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Telecopy No.: 770/390-8434
If to the Borrower:
Wellsford Finance, Inc.
535 Madison Avenue
26th Floor
New York, New York 10022
Attn: Gregory F. Hughes
With a copy to:
Alan S. Pearce, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
if to another Lender now a party to this Agreement, to the address set forth
on the signature page hereto, and to each other Lender which may hereafter
become a party to this Agreement at such address as may be designated by such
Lender. Each Notice shall be effective upon being personally delivered or
upon being sent by overnight courier or upon being deposited in the United
States Mail as aforesaid. The time period in which a response to such Notice
must be given or any action taken with respect thereto (if any), however,
shall commence to run from the date of receipt if personally delivered or
sent by overnight courier, or if so deposited in the United States Mail, the
earlier of three (3) Business Days following such deposit or the date of
receipt as disclosed on the return receipt. Rejection or other refusal to
accept or the inability to deliver because of changed address for which no
notice was given shall be deemed to be receipt of the Notice sent. By giving
at least fifteen (15) days prior Notice thereof, the Borrower, a Lender or
Agent shall have the right from time to time and at any time during the term
of this Agreement to change their respective addresses and each shall have
the right to specify as its address any other address within the United
States of America.
Section 25. RELATIONSHIP.
Neither the Agent nor any Lender has any fiduciary relationship with or
fiduciary duty to Borrower arising out of or in connection with this
Agreement or the other Loan Documents, or the transactions contemplated
hereunder or thereunder. The relationship between each Lender and the
Borrower is solely that of a lender and borrower, and nothing contained
herein or in any of the other Loan Documents shall in any manner be construed
as making the parties hereto partners, joint venturers or any other
relationship other than lender and borrower.
Section 26. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BRING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 27. HEADINGS.
The captions in this Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
Section 28. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
so executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
Section 29. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
Section 30. WAIVER OF JURY TRIAL.
EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDERS OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY,
AMONG OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS Section
25. BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS
Section 25 WITH ITS LEGAL COUNSEL AND THAT BORROWER AGREES TO THE FOREGOING
AS ITS FREE, KNOWING AND VOLUNTARY ACT.
Section 31. DEALINGS WITH THE BORROWER.
The Lenders and their affiliates may accept deposits from, extend credit
to and generally engage in any kind of banking, trust or other business with
the Borrower, its Subsidiaries or any of their affiliates regardless of the
capacity of the Lender hereunder.
Section 32. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower of
any terms of this Agreement or such other instrument or the continuance of
any Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Majority Lenders. Notwithstanding the
foregoing, none of the following may occur without the written consent of
each Lender: a change in the rate of interest on and the term of the Notes;
a change in the amount of the Commitments of the Lenders (except as provided
in Section 18.1); a forgiveness, reduction or waiver of the principal of any
unpaid Loan or any interest thereon or fee payable under the Loan Documents;
a change in the amount of any fee payable to a Lender hereunder; the
postponement of any date fixed for any payment of principal of or interest on
the Loan; an extension of the Maturity Date; a change in the manner of
distribution of any payments to the Lenders or the Agent; the release of the
Borrower or any Collateral except as otherwise provided herein; an amendment
of the definition of Majority Lenders or of any requirement for consent by
all of the Lenders; any modification to require a Lender to fund a pro rata
share of a request for an advance of the Loan made by the Borrower other than
based on its Commitment Percentage; an amendment to this Section 27; an
amendment of the definition of Majority Lenders; or an amendment of any
provision of this Agreement or the Loan Documents which requires the approval
of all of the Lenders or the Majority Lenders to require a lesser number of
Lenders to approve such action. The amount of the Agents fee payable for the
Agents account and the provisions of Section 14 may not be amended without
the written consent of the Agent. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Agent or any Lender
in exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
Section 33. SEVERABILITY.
The provisions of this Agreement are severable, and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
Section 34. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 35. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower under this Agreement and the other
Loan Documents.
Section 36. REPLACEMENT NOTES.
Upon receipt of evidence reasonably satisfactory to Borrower of the
loss, theft, destruction or mutilation of any Note, and in the case of any
such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory to Borrower or, in the case of any such mutilation,
upon surrender and cancellation of the applicable Note, Borrower will execute
and deliver, in lieu thereof, a replacement Note, identical in form and
substance to the applicable Note and dated as of the date of the applicable
Note and upon such execution and delivery all references in the Loan
Documents to such Note shall be deemed to refer to such replacement Note.
Section 37. SERVICING.
(a) Borrower covenants to maintain or cause the servicing of the
Collateral to be maintained with respect to each type of Collateral pledged
to Agent hereunder in conformity with accepted and prudent servicing
practices in the industry for such same type of Collateral and in a manner at
least equal in quality to the servicing Borrower provides for assets similar
to such Collateral which it owns.
(b) If the Collateral, or any portion thereof, is serviced by
Borrower, (i) Borrower agrees that Agent is the collateral assignee of
all servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of such Collateral (the "Servicing
Records"), and (ii) Borrower grants Agent a security interest in all
servicing fees and rights relating to such Collateral and all Servicing
Records to secure the obligation of Borrower or its designee to service in
conformity with this section and any other obligation of Borrower to Agent
and the Lenders. Borrower covenants to safeguard such Servicing Records and
to deliver them promptly to Agent or its designee upon Agents request.
(c) If the Collateral, or any portion thereof, is serviced by a
third party Servicer, Borrower (i) shall provide a copy of the servicing
agreement to Agent, which shall be in form and substance acceptable to Agent
(the "Servicing Agreement"); and (ii) hereby irrevocably assigns to Agent
and Agents successors and assigns all right, title, interest of Borrower in,
to and under, and the benefits of, any Servicing Agreement with respect to
such Collateral. Any successor to the Servicer shall be approved in
writing by the Agent prior to such successor's assumption of servicing
obligations with respect to such Collateral.
(d) Borrower shall provide to Agent a letter from Borrower (if
Borrower is the Servicer) or the Servicer, as the case may be, to the effect
that upon the occurrence of an Event of Default, Agent may terminate any
Servicing Agreement and transfer servicing to its designee, at no cost or
expense to Agent, it being agreed that Borrower will pay any and all fees
required to terminate the Servicing Agreement and to effectuate the transfer
of servicing to the designee of Agent.
(e) Borrower shall cause the Servicer to provide a copy of each
report notice sent to Borrower to be sent to Agent concurrently therewith.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
WELLSFORD FINANCE INC., a Maryland corporation
By: /s/ Gregory F. Hughes
------------------------------
Title: Vice President
& Treasurer
[CORPORATE SEAL]
<PAGE>
BANKBOSTON, N.A., a national banking
association, individually and as Agent
By: /s/ Jay John
----------------------------------
Title: Vice President
[BANK SEAL]
<PAGE>
EXHIBIT A
---------
FORM OF NOTE
$______________ January __, 1999
FOR VALUE RECEIVED, the undersigned WELLSFORD FINANCE, INC., a Maryland
corporation, hereby promises to pay to ____________________________________
or order, in accordance with the terms of that certain Revolving Credit
Agreement dated as of January 12, 1999 (the "Credit Agreement"), as from time
to time in effect, among the undersigned, BankBoston, N.A., for itself and as
Agent, and such other Lenders as may be from time to time named therein, to
the extent not sooner paid, on or before the Maturity Date, the principal sum
of ____________________________ DOLLARS ($______________), or such amount as
may be advanced by the payee hereof under the Credit Agreement with daily
interest from the date hereof, computed as provided in the Credit Agreement,
on the principal amount hereof from time to time unpaid, at a rate per annum
on each portion of the principal amount which shall at all times be equal to
the rate of interest applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be
payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof
or upon the prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the payee
hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or in
part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in part, all as
set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Lenders and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of acceleration of the maturity of any of
the Obligations or otherwise, shall the interest contracted for, charged or
received by the Lenders exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Lenders in excess of the maximum lawful amount,
the interest payable to the Lenders shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Lenders
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess shall
be refunded to the Borrower. All interest paid or agreed to be paid to the
Lenders shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in
full of the principal of the Obligations (including the period of any renewal
or extension thereof) so that the interest thereon for such full period shall
not exceed the maximum amount permitted by applicable law. This paragraph
shall control all agreements between the Borrower and the Lenders and the
Agent.
In case an Event of Default shall occur, the entire principal amount of this
Note may become or be declared due and payable in the manner and with the
effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the laws of
the State of New York (without giving effect to the conflict of laws rules of
any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized officers,
executed this Note under seal as of the day and year first above written.
WELLSFORD FINANCE, INC.
By: _________________________
Title:
[CORPORATE SEAL]
<PAGE>
EXHIBIT B
---------
FORM OF REQUEST FOR LOAN
BankBoston, N.A.,as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the Revolving Credit Agreement
dated as of January 12, 1999, as from time to time in effect (the "Credit
Agreement"), among Wellsford Finance, Inc. (the "Borrower"), BankBoston,
N.A., for itself and as Agent, and the other Lenders from time to time party
thereto, the Borrower hereby requests and certifies as follows:
1. Loan. The Borrower hereby requests a Loan under Section 2.1 of the
Credit Agreement:
Principal Amount: $
Type (Eurodollar, Base Rate):
Drawdown Date: , 19
Interest Period:
by credit to the general account of the Borrower with the Agent at the Agents
Head Office.
2. Use of Proceeds. Such Loan shall be used for the following purposes
permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect to
the making of the Loan requested hereby. Attached to this Request for Loan
is a Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided under Section 6.4
or Section 7.4 of the Credit Agreement adjusted in the best good-faith
estimate of the Borrower to give effect to the making of the Loan requested
hereby.
4. Representations True. Each of the representations and warranties made
by or on behalf of the Borrower and its Subsidiaries contained in the Credit
Agreement, in the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with the Credit Agreement was true as
of the date as of which it was made and shall also be true at and as of the
Drawdown Date for the Loan requested hereby, with the same effect as if made
at and as of such Drawdown Date (except to the extent of changes resulting
from transactions contemplated or permitted by the Credit Agreement and the
other Loan Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse, and except to the
extent that such representations and warranties relate expressly to an
earlier date) and no Default or Event of Default has occurred and is
continuing.
5. Other Conditions. All other conditions to the making of the Loan
requested hereby set forth in Section 11 of the Credit Agreement have been
satisfied. (Reference title insurance "date down", if applicable.)
6. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrower on and as of such Drawdown Date.
7. Definitions. Terms defined in the Credit Agreement are used herein
with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_______________, 199___.
WELLSFORD FINANCE, INC.
By: __________________________
Chief Financial or
Chief Accounting Officer
<PAGE>
EXHIBIT C
---------
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement dated as of January 12,
1999 (the "Credit Agreement") by and among Wellsford Finance, Inc. (the
"Borrower"), BankBoston, N.A., for itself and as Agent, and the other Lenders
from time to time party thereto. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as defined in the Credit
Agreement.
Pursuant to the Credit Agreement, the Borrower is furnishing to you herewith
(or has most recently furnished to you) the financial statements of the
Borrower and its Subsidiaries for the fiscal period ended _______________
(the "Balance Sheet Date"). Such financial statements have been prepared in
accordance with generally accepted accounting principles and present fairly
the financial position of the Borrower and the Subsidiaries covered thereby
at the date thereof and the results of their operations for the periods
covered thereby, subject in the case of interim statements only to normal
year-end audit adjustments.
This certificate is submitted in compliance with requirements of Section
2.6(iii), Section 5.3(b), Section 7.4(e), Section 7.5(e), Section 10.11 or
Section 11.6(b) of the Credit Agreement. If this certificate is provided
under a provision other than Section 7.4(e), the calculations provided below
are made using the financial statements of the Borrower and its Subsidiaries
as of the Balance Sheet Date adjusted in the best good-faith estimate of the
Borrower to give effect to the making of a Loan, extension of the Maturity
Date, acquisition or disposition of property or other event that occasions
the preparation of this certificate; and the nature of such event and the
Borrowers estimate of its effects are set forth in reasonable detail in an
attachment hereto. The undersigned officer of the Borrower is its chief
financial or chief accounting officer.
The undersigned officer has caused the provisions of the Credit Agreement to
be reviewed and has no knowledge of any Default or Event of Default. (Note:
If the signer does have knowledge of any Default or Event of Default, the
form of certificate should be revised to specify the Default or Event of
Default, the nature thereof and the actions taken, being taken or proposed to
be taken by the Borrower with respect thereto.)
The Borrower is providing the following information to demonstrate
compliance as of the date hereof with the following covenants:
I. Section 9.1. Liabilities to Assets Ratio.
A. Consolidated Total Liabilities
per balance sheet $____________
B. Consolidated Total Assets per
balance sheet $____________
Ratio of A to B may not exceed 0.65 to 1.
II. Section 9.2. Consolidated EBITDA Coverage.
A. Consolidated EBITDA =
Consolidated Net Income for
most recent quarter $____________
Plus depreciation and amortization $____________
Plus interest expense $____________
Plus extraordinary or non-recurring
losses $____________
Minus extraordinary or non-
recurring gains ($__________)
Subtotal for most recent quarter $___________
Consolidated EBITDA for three prior quarters:
Quarter ended __________ $___________
Quarter ended __________ $___________
Quarter ended __________ $___________
Total $___________
B. Debt Service for four prior
quarters $___________
C. Ratio of A to B
A must equal or exceed 1.5 times B $___________
III. Section 9.3. Borrowing Base.
A. Total outstanding principal
balance of Loans (after giving
effect to any Loan Request) $__________
B. Borrowing Base
Sum of Designated Collateral Values $__________
(Attach Borrowing Base worksheet)
Total $ _________
Ratio of A to B may not be more than 1 to 1.
IV. Section 9.4. Minimum Shareholders Equity
A. Shareholders Equity $ _________
FOR THE PERIOD COMMENCING THE DATE OF
THIS AGREEMENT THROUGH AND INCLUDING
DECEMBER 31, 1999.
B. 85% of net proceeds from any Equity Offering
after December 31, 1998 $ _________
C. 50% of Net Income (or Deficit) plus
depreciation deducted in calculating
such Net Income (or deficit) from
December 31, 1998 $_________
Total $ _________
A must equal or exceed the sum of $20,000,000.00
plus B plus C.
FOR THE PERIOD COMMENCING JANUARY 1,
2000 THROUGH AND INCLUDING DECEMBER 31,
2000
D. Greater of Shareholders Equity as of $ _________
December 31, 1999 and $30,000,000.00
E. 85% of net proceeds from any Equity Offering $ _________
after December 31, 1999
F. 50% of Net Income (or Deficit) plus depreciation $ _________
deducted in calculating such Net Income (or deficit)
from December 31, 1999
Total $ _________
A must equal or exceed the sum of D plus E plus F.
FOR THE PERIOD FROM AND AFTER JANUARY 1,
2001
G. Greater of Shareholders Equity as of December 31, $ _________
2000 and $50,000,000.00
H. 85% of net proceeds from any Equity Offering $ _________
after December 31, 2000
I. 50% of Net Income (or Deficit) plus depreciation $ _________
deducted in calculating such Net Income (or
deficit) from December 31, 2000
Total $ _________
A must equal or exceed the sum of H plus I plus J.
V. Section 9.5. Required Equity
A. Indebtedness pursuant to this Agreement
(Section 8.1(a)) $ _________
Plus Non-Recourse Indebtedness (Section 8.1(f)) $ _________
Total $ _________
B. Aggregate all-in acquisition cost (or principal $ _________
balance of originated loans) of assets of
Borrower and its Subsidiaries
Ratio of A to B
A may not exceed 0.65 of B
<PAGE>
SCHEDULE 1
----------
LENDERS AND COMMITMENTS
Name and Address Commitment Commitment Percentage
- ---------------- ---------- ---------------------
BankBoston, N.A. $35,000,000 100%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Total Commitment $35,000,000 100%
- ----------------
<PAGE>
SCHEDULE 1.2
------------
COLLATERAL LOAN QUALIFICATION DOCUMENTS
With respect to each proposed Collateral Loan, each of the following:
(a) Collateral Loan Documents. True and correct originals (or with the
approval of the Agent, copies) of all of the Collateral Loan Documents, duly
executed and delivered by the respective parties thereto and recorded in the
appropriate public records, as applicable.
(b) Security Documents. Such Security Documents relating to the Collateral
Loan Documents as the Agent shall require and all original stock
certificates, limited liability company certificates, CMBS certificates and
such other assignments, certificates, instruments, powers or other documents
as Agent may require to perfect a security interest in the Collateral Loan
and the underlying collateral for such Collateral Loan, in form and substance
satisfactory to the Agent and duly executed and delivered by the respective
parties thereto. Without limiting the foregoing, each Mortgage Note,
Mezzanine Note, CMBS, Participation Certificate or other collateral note or
instrument shall have been endorsed to and delivered to Agent.
(c) Project Description. A narrative description of the proposed
Collateral Loan, the underlying collateral (real property, equity interests)
securing the same and the terms of any subordination agreement relating
thereto. Such description shall also include a discussion of all material
underwriting risks or other material information that has come to the
attention of Borrower, based on reasonable inquiries and diligence under the
circumstances, that would be considered as a materially negative factor or a
defect in the loan documentation or closing deliveries to a reasonable
institutional lender in determining whether to originate or acquire the
Collateral in question.
(d) Investment Committee Report. The investment committee report of the
Borrower with respect to the acquisition or origination of the applicable
Collateral Loan.
(e) Enforceability Opinion. The favorable legal opinion of counsel to the
Borrower reasonably acceptable to the Agent addressed to the Lenders and
Agent and in form and substance satisfactory to the Agent as to the
enforceability of such Security Documents and such other matters as the Agent
shall reasonably request.
(f) Perfection of Liens. Evidence reasonably satisfactory to the Agent
that the Security Documents are effective to create in favor of the Agent a
legal, valid and enforceable first lien and security interest in the
Collateral Loan Documents for such Collateral Loan and that all filings,
recordings, deliveries of instruments and other actions necessary or
desirable to protect and preserve such liens or security interests have been
duly effected.
(g) Survey. If delivered or available to the Borrower, a copy of the
survey of the real estate securing such Collateral Loan.
(h) Title Insurance. If delivered or available to the Borrower, a copy of
the mortgagee title insurance policy covering the real estate securing such
Collateral Loan (or owners title insurance policy with respect to a Mezzanine
Loan), including all endorsements thereto.
(i) UCC Certification. A certification to the Agent from a title insurance
company or other person satisfactory to the Agent that a search of the public
records designated by the Agent disclosed no conditional sales contracts,
security agreements, chattel mortgages, leases of personalty, financing
statements or title retention agreements which affect any property, rights or
interests of the Borrower that are or are intended to be subject to the
security interest, assignments, and liens created by the Security Documents
relating to the Collateral Loan Documents except to the extent that the same
are discharged as of the Closing Date.
(j) Third Party Reports. If delivered or available to the Borrower, copies
of third party studies or reports relating to the underlying real estate
securing such Collateral Loan, including without limitation:
(i) Phase I environmental report and assessment of the presence of
asbestos or asbestos - containing materials, and a Phase II or
other follow-up report if recommended by the Phase I or other
report;
(ii) current Appraisal;
(iii) building inspection report; and
(iv) operations and maintenance plan with respect to asbestos -
containing materials.
(k) Operating Statements; Financial Statements. Operating statements for
the underlying real estate securing such Collateral Loan, current and
proposed operating and capital budgets, and balance sheets and other
financial statements for each Obligor.
(l) Rent Roll. A current rent roll for the underlying real estate securing
such Collateral Loan.
(m) LTV; Debt Service Coverage Ratio. Information concerning the LTV and
Debt Service Coverage Ratio for such Collateral Loan.
(n) Affiliate Transactions. A statement indicating any relationship of
Borrower or any of its affiliates with the potential Obligor or any of its
affiliates.
(o) Servicing Agreement. A copy of any Servicing Agreement relating to such
Collateral Loan.
(p) Participation. With respect to any Participation Interest, a copy of
the underlying loan documents to which such Collateral Loan relates.
(q) Additional Documents. Such other documents, certificates, reports,
opinions or assurances as the Agent may reasonably require in its discretion.
<PAGE>
SCHEDULE 6.3
------------
TITLE TO PROPERTIES; LEASES
None.
<PAGE>
SCHEDULE 6.7
------------
LITIGATION
None.
<PAGE>
SCHEDULE 6.17
-------------
ERISA PLANS
None.
<PAGE>
SCHEDULE 6.20
-------------
SUBSIDIARIES OF THE BORROWER
None.0
NOTE
$ 50,000,000.00 January 12, 1999
FOR VALUE RECEIVED, the undersigned WELLSFORD FINANCE, INC., a Maryland
corporation, hereby promises to pay to BANKBOSTON, N.A. or order, in
accordance with the terms of that certain Revolving Credit Agreement dated as
of January 12, 1999 (the "Credit Agreement"), as from time to time in effect,
among the undersigned, BankBoston, N.A., for itself and as Agent, and such
other Lenders as may be from time to time named therein, to the extent not
sooner paid, on or before the Maturity Date, the principal sum of FIFTY
MILLION AND NO/100 DOLLARS ($50,000,000.00), or such amount as may be
advanced by the payee hereof under the Credit Agreement with daily interest
from the date hereof, computed as provided in the Credit Agreement, on the
principal amount hereof from time to time unpaid, at a rate per annum on each
portion of the principal amount which shall at all times be equal to the rate
of interest applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be
payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof
or upon the prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the payee
hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or in
part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in part, all as
set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Lenders and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of acceleration of the maturity of any of
the Obligations or otherwise, shall the interest contracted for, charged or
received by the Lenders exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Lenders in excess of the maximum lawful amount,
the interest payable to the Lenders shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Lenders
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess shall
be refunded to the Borrower. All interest paid or agreed to be paid to the
Lenders shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in
full of the principal of the Obligations (including the period of any renewal
or extension thereof) so that the interest thereon for such full period shall
not exceed the maximum amount permitted by applicable law. This paragraph
shall control all agreements between the Borrower and the Lenders and the
Agent.
In case an Event of Default shall occur, the entire principal amount of this
Note may become or be declared due and payable in the manner and with the
effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the laws of
the State of New York (without giving effect to the conflict of laws rules of
any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized officers,
executed this Note under seal as of the day and year first above written.
WELLSFORD FINANCE, INC.
By: /s/ Gregory F. Hughes
---------------------------------
Title: Vice President and
Treasurer
[CORPORATE SEAL]
COLLATERAL ASSIGNMENT OF DOCUMENTS, RIGHTS AND CLAIMS
-----------------------------------------------------
THIS COLLATERAL ASSIGNMENT OF DOCUMENTS, RIGHTS AND CLAIMS (hereinafter
referred to as this "Assignment"), made as of the 12th day of January, 1999,
by WELLSFORD FINANCE, INC., a Maryland corporation ("Borrower"), to
BANKBOSTON, N.A., a national banking association, as Agent for itself, and
the other lending institutions (collectively, the "Lenders") which may become
parties to the Credit Agreement (as hereinafter defined) (in such capacity,
"Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Lenders have agreed to provide a revolving credit facility (the
"Loan") to Borrower pursuant to the Credit Agreement, which Loan is evidenced
by the Notes (as hereinafter defined); and
WHEREAS, as additional security for the Loan, Borrower desires to assign to
Agent, for the benefit of the Lenders, and grant to Agent, for the benefit of
the Lenders, a security interest in and to, all of Borrower's right, title,
equity and interest in and to the Collateral (as hereinafter defined);
NOW THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars
($10.00), the mutual covenants and promises herein contained, and other good
and valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Agent do hereby covenant and agree as follows:
ARTICLE ONE
-----------
DEFINITIONS
-----------
1.01 In addition to such other terms as are elsewhere defined herein, the
following terms shall have the following meanings, as used in this Assignment
and in any exhibits attached hereto, unless the context requires otherwise:
"Abbey Loan" shall mean that certain revolving credit loan evidenced by
the Abbey Loan Documents.
"Abbey Loan Documents" shall mean that certain Revolving Credit
Agreement between Morgan and the various entities named therein as
"Borrower" dated August 28, 1997, as amended by that certain Amendment to
Revolving Credit Agreement dated April 6, 1998 between Morgan and the
various entities named therein as "Borrower", and as further amended by that
certain Second Amendment to Revolving Credit Agreement dated December 23,
1998 between Morgan and the various entities named therein as "Borrower" and
such other documents described on Exhibit "B" attached hereto, and each
other document executed after the date hereof evidencing, securing or
otherwise relating to the transactions contemplated thereby, as the same may
be varied, extended, supplemented, consolidated, amended, replaced, renewed,
modified or restated.
"BKB" shall mean BankBoston, N.A., a national banking association.
"Assignment and Acceptance Agreement" shall mean that certain
Assignment and Acceptance Agreement between Borrower and Agent.
"Collateral" shall mean collectively, all of the Borrower's right,
title, equity and interest in and to:
(a) The participation agreements, participation certificates,
notes, deeds of trust, assignments, pledges, financing statements and other
documents and instruments described on Exhibit "A" attached hereto and made
a part hereof, including, without limitation, the Collateral Notes,
Collateral Participation Documents, Collateral Deeds of Trust, the
Collateral Security Documents and all rights and interests thereunder,
together with any and all amendments, modifications, consolidations,
replacements, renewals, restatements or supplements thereto; and
(b) All security for the indebtedness or other obligations
evidenced by the documents and instruments described in Section 1.01(a)
above, including without limitation the Property, and all liens, security
interests and title of Borrower with respect thereto; and
(c) All documents evidencing the documents and instruments
described in Section 1.01(a) above or any security therefor or guaranties
thereof, all title insurance (whether evidenced by policies, commitments or
otherwise) issued with respect to the Property and to any other security for
the documents and instruments described in Section 1.01(a) above, all
accounts, funds, participation interests, lockboxes, leases, books, files,
records, programs, ledger books, computer tapes arising from or created in
connection with such documents and instruments and all other instruments,
documents, agreements and writings now or hereafter executed by, in favor of
or for the benefit of Borrower or any prior holder of such documents and
instruments in connection with any of the foregoing, and all other documents
now or hereafter delivered or to be delivered to or for the benefit of
Borrower or any prior holder of such documents and instruments under the
documents and instruments described in Section 1.01(a) above (all of said
Collateral Notes, Collateral Participation Documents, Collateral Deeds of
Trust, Collateral Security Documents and other documents, policies,
instruments and agreements, and any and all additions, renewals, extensions,
amendments, modifications, consolidations, restatements or supplements
thereto of any of the foregoing, being hereinafter referred to collectively
as the "Collateral Documents"); and
(d) All payments of any kind or nature whatsoever, now or
hereafter due and to become due under the Collateral Documents, all
collections thereon and all other amounts paid thereunder, including without
limitation all prepayments under the Collateral Documents, and all other
cash and non-cash proceeds of the Collateral Documents, or of any other
collateral for the obligations of Obligor under the Collateral Documents and
on account of any claim, rights or choses in action against Obligor or
otherwise pursuant to the Collateral Documents held by Borrower; and
(e) All claims, rights and privileges obtained by Borrower in
connection with the making of the loan to the Woodlands Borrowers or the
purchase of the Junior Participation from Morgan evidenced by the Collateral
Documents, together with the Property and all other property described in
the Collateral Documents, and all the powers, options, privileges,
immunities, claims, actions and causes of action contained in or arising
from any of the foregoing;
(f) All present and future accounts, general intangibles,
contract rights, chattel paper or instruments arising out of or with respect
to any of the foregoing;
(g) Any and all renewals and extensions of any of the foregoing
and any and all replacements or substitutions for any of the foregoing; and
(h) All proceeds and products of the foregoing of every type.
"Collateral Deeds of Trust" shall mean collectively, the deeds of
trust, mortgages and deeds to secure debt described as item 4 and 8 on
Exhibit "A" attached hereto and made a part hereof as the same may now or
hereafter be modified, amended, extended, renewed, consolidated, restated or
supplemented.
"Collateral Notes" shall mean, collectively, the Commercial Company
Second Secured Term Loan Note and the Land Company Second Secured Term Loan
Note as the same may now or hereafter be modified, amended, extended,
renewed, consolidated, restated or supplemented.
"Collateral Participation Documents" shall mean, collectively, the
Participation Agreement, the Participation Certificate and the Abbey Loan
Documents.
"Collateral Security Documents" shall mean, collectively, the pledge
agreements, the stock pledge agreements, collateral assignments, credit
agreement and other instruments and documents described as items 1-16 on
Exhibit "A" attached hereto.
"Commercial Company Second Secured Term Loan Note" shall mean that
certain Commercial Company Second Secured Term Loan Note dated December 28,
1998 in the principal face amount of $4,186,991.87 by the Woodlands
Borrowers to the order of Borrower.
"Credit Agreement" shall mean the Revolving Credit Agreement dated of
even date herewith among Borrower, BKB, the other lending institutions which
may become parties thereto and Agent, as originally executed, or if varied,
extended, supplemented, consolidated, amended or restated from time to time
as so varied, extended, supplemented, consolidated, amended or restated.
"Default" shall mean any event which, with the giving of notice or the
lapse of time, or both, would become an Event of Default.
"Event of Default" shall mean (a) any default in the payment or
performance of the obligations of Borrower hereunder, or (b) any
representation or warranty of Borrower hereunder proving to be untrue in any
material respect upon the date when made or deemed to have been made or
repeated, or (c) any Event of Default under the Credit Agreement, or (d) any
default shall exist or an event which with the passage of time or the giving
of notice, or both, might constitute a default shall have occurred under the
Collateral Documents or the Abbey Loan Documents or any of them (there shall
be no right to cure an Event of Default under (d), above.)
"Junior Participation" shall have the meaning given such term in the
Participation Agreement.
"Land Company Second Secured Term Loan Note" shall mean that certain
Land Company Second Secured Term Loan Note dated December 28, 1998 in the
principal face amount of $10,813,008.13 made by the Woodlands Borrowers to
the order of Borrower.
"Loan Documents" shall have the meaning given to such term in the
Credit Agreement.
"Morgan" shall mean Morgan Guaranty Trust Company of New York, a New
York banking corporation.
"Notes" shall have the meaning given such term in the Credit Agreement.
"Obligations" shall mean:
(a) The debt evidenced by the Notes together with interest as
therein provided;
(b) The full and prompt and payment and performance of all of the
provisions, agreements, covenants and obligations contained in the Credit
Agreement;
(c) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and
contained in any other of the Loan Documents, and the payment of all other
sums therein covenanted to be paid; and
(d) Any and all additional advances made by Agent or any Lender
to protect or preserve the Collateral or the security interest created
hereby.
"Obligor" shall mean, individually and collectively, the Woodlands
Borrowers, Morgan, each respective obligor or payor under the Abbey Loan
Documents, and each respective obligor or payor under the other Collateral
Documents.
"Participation Agreement" shall mean that certain Loan Participation
Agreement dated as of August 28, 1997 between Morgan and Wellsford Real
Properties, Inc., ("WRP") as assigned to Wellsford Capital ("Capital"), as
amended by that certain First Amendment to Participation Agreement, dated
April 17, 1998 between Capital and Morgan, and as subsequently assigned to
Borrower, as the same may be varied, extended, supplemented, consolidated,
amended or restated from time to time.
"Participation Certificate" shall mean that certain Loan Participation
Certificate from Morgan to WRP, as assigned to Capital, as assigned to
Borrower which certifies the amount of the funds outstanding and unpaid
pursuant to the Participation Agreement.
"Property" shall mean the real and personal property encumbered by the
Collateral Documents and the Abbey Loan Documents.
"Woodlands Borrowers" shall mean collectively The Woodlands Commercial
Properties Company, L.P. and The Woodlands Land Development Company, L.P.
"Woodlands Credit Agreement" shall mean that certain First Amended and
Restated Master Credit Agreement dated as of December 30, 1997, effective as
of July 31, 1997 by and among the Woodlands Borrowers, BankBoston, N.A.,
individually and as Agent, Morgan Stanley Senior Funding, Inc. and the other
banks from time to time party thereto as originally executed, or if varied,
extended, supplemented, consolidated, amended or restated from time to time
as so varied, extended, supplemented, consolidated, amended or restated.
ARTICLE TWO
-----------
ASSIGNMENT
----------
2.01 Assignment of, and Grant of Security Interest in, the Collateral. As
security for the full and prompt payment and performance by Borrower of the
Obligations, Borrower hereby transfers, assigns, pledges, conveys to, grants
a security interest in, and deposits with, Agent, for the benefit of Lenders,
the Collateral and all right, title, equity and interest of Borrower in and
to the Collateral. It is the intention of the parties hereto that Agent
shall have a continuing, general lien upon, security title to and security
interest in the Collateral for the benefit of Lenders.
2.02 Terms of Assignment. It is acknowledged and agreed by the parties
hereto that Agent shall have sole and exclusive possession of the Collateral
and that this Assignment constitutes a present and current assignment of all
the Collateral and is effective upon the execution and delivery hereof.
Payments under or with respect to the Collateral shall be made as follows:
(a) Except as hereinafter specifically set forth, Borrower shall have
no right to receive payments made under or with respect to the Collateral,
and all such payments shall be delivered directly by Obligor or any other
party liable thereon to Agent for the benefit of Lenders.
(b) If Borrower shall receive any payments made under or with respect
to the Collateral, Borrower shall hold all such payments in trust for Agent,
will not co-mingle such payments with other funds of Borrower, and will
immediately pay and deliver in kind, all such payments directly to Agent for
application by Agent and Lenders in satisfaction of the Obligations in such
order as Agent and Lenders shall determine in accordance with the applicable
provisions of the Credit Agreement.
(c) Borrower hereby agrees for the benefit of Obligor that all
payments actually received by Agent shall be deemed payments to Borrower by
Obligor. Agent and Lenders shall apply any and all such payments actually
received by Agent in satisfaction of the Obligations in such order as Agent
and Lenders shall determine in accordance with the applicable provisions of
the Credit Agreement. Agent shall return to Borrower that portion of any
payments actually received by Agent from Obligor which Agent determines, in
the exercise of its sole discretion, is not needed to repay the Obligations.
(d) In furtherance of the foregoing, Borrower does hereby notify and
direct Obligor that all payments under or with respect to the Collateral
shall be made directly to Agent at the address of Agent set forth in the
Credit Agreement.
Notwithstanding anything in this Section 2.02 to the contrary, so long as no
Event of Default has occurred, Borrower shall have a license (revocable upon
the occurrence of an Event of Default) to collect, but no more than one (1)
month prior to accrual, all amounts payable and to be applied as current
interest under the Collateral Notes or any other Collateral Document or
payments made by Morgan under the Participation Agreement with respect to
payments of interest under the Abbey Loan Documents; it being understood and
agreed that such license shall not extend to other amounts payable under the
Collateral Notes, the Collateral Participation Documents or other Collateral
Documents, including, without limitation, any voluntary or involuntary
payment of principal or amounts attributable to principal paid under the
Abbey Loan Documents.
ARTICLE THREE
-------------
COVENANTS, REPRESENTATIONS AND WARRANTIES OF BORROWER
-----------------------------------------------------
Borrower hereby warrants and represents to, and covenants and agrees with,
Agent as follows:
3.01 Delivery of Collateral The original of each Collateral Note, endorsed
by Borrower, and the original of each Collateral Participation Document, has
been delivered to Agent. All actions required under any Collateral Note,
Collateral Participation Document or any other Collateral Document and
applicable law have been duly taken in order to constitute Borrower the
holder of the Collateral Notes, Collateral Participation Documents and the
Collateral Documents and to constitute Agent the holder of a first priority
security interest in each Collateral Note, Collateral Participation Document
and Collateral Document. None of the Collateral Notes, Collateral
Participation Documents, Collateral Deeds of Trust, Collateral Security
Documents and other Collateral Documents has been amended, modified,
consolidated, supplemented or replaced except as expressly described on
Exhibit "A" attached hereto.
3.02 Enforceability of This Assignment. This Assignment constitutes the
legal, valid and binding obligation of Borrower enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws generally affecting the rights of
creditors.
3.03 Right to Execute This Assignment. There are no restrictions on the
transfer of the Collateral, and Borrower has full right, power and authority
to enter into, deliver and execute this Assignment. The execution and
delivery of this Assignment, and the consummation of the transactions
contemplated herein, and the fulfillment of, and the compliance with, the
terms and conditions of this Assignment do not and will not (i) violate or
conflict with any of the terms or provisions of the Collateral; (ii) violate
any provision of any judicial or administrative order, award, judgment or
decree applicable to Borrower, the Collateral or the Property; or (iii)
conflict with, result in a breach of or a right to cancel, or constitute a
default under, the articles of incorporation or by-laws of Borrower, or any
agreement or instrument to which Borrower is a party or by which Borrower,
the Collateral or the Property is bound.
3.04 No Amendment of Collateral. Borrower shall not (i) make any additional
loans or advances which would be evidenced or secured by the Collateral Notes
and Collateral Deeds of Trust except for protective advances thereunder; or
(ii) make any additional loans or advances which would be evidenced or
secured by the Collateral Participation Documents except for advances
expressly required pursuant to the terms of the Participation Agreement, and
shall not abandon, alter, amend, cancel, modify, release, relinquish,
supplement, surrender, terminate or waive, and shall not enter into or give
any agreement, approval or consent with respect to, any of the Collateral or
any part thereof or any interest therein or any collateral for the
obligations evidenced by the Collateral Notes, Collateral Participation
Documents or other Collateral Documents, and any attempt to do so without the
prior written consent of Agent shall be void and ineffective.
3.05 Pending Litigation. There are no actions, suits or proceedings
pending, or to the knowledge of Borrower, threatened against or affecting
Borrower, Maker, the Collateral or the Property, or any of them at law or in
equity, or before or by any government authority.
3.06 No Defenses. The assignment of the Collateral pursuant to this
Assignment creates no defense to the payment thereof and is effective to
convey to Agent, for the benefit of Lenders, all rights of Borrower to
collect the Collateral.
3.07 Information About Collateral. The names, amounts owing, due dates and
other facts furnished to Agent with respect to any of the Collateral have
been and will be correctly stated. Borrower shall, immediately upon request
by Agent, execute and deliver to Agent a sworn affidavit setting forth in
detail any and all amounts or payments received by Borrower with respect to
the Collateral or any portion thereof during any period specified by Agent or
such other reports or information in such form and detail as Agent shall
request from time to time. Borrower shall promptly forward to Agent copies
of all financial or property information, loan documents, budgets, leases,
leasing reports, rent rolls, insurance certificates and policies, default
notices, acceleration notices and all other communications or information
received by Borrower or any agent or servicer for Borrower from Maker or from
any other party, or sent by Borrower or any agent or servicer for Borrower or
Morgan, relating to the Collateral and/or Maker and/or the Property. All
records of Borrower relative to the Collateral are and will be kept at the
office of Borrower located in New York County, New York. Borrower shall give
Agent not fewer than thirty (30) days prior written notice of any proposed
change in Borrower's name and any proposed change in the location of the
Collateral or of such records, and Borrower will not, without the prior
written consent of Agent, move the Collateral or such records to a location
outside of New York County, New York or keep duplicate records with respect
to the Collateral at any address outside such county. Nothing contained in
this subparagraph shall be construed so as to prevent Borrower from keeping
material abstracted from the books and records described herein at any of its
offices as necessity or convenience dictates.
3.08 Good Title. Borrower is and shall remain the sole, lawful and
beneficial owner of the Collateral free and clear of all liens, restrictions,
claims, pledges and encumbrances whatsoever and has the full and complete
right, power and authority to create a security interest in the Collateral in
favor of Agent in accordance with the terms and provisions of this
Assignment. The security interest in the Collateral created hereunder
constitutes and will at all times continue to constitute a valid and
enforceable first priority perfected security interest in the Collateral in
favor of Agent, free and clear of all liens, claims, encumbrances and rights
of others. Borrower has made no contract or arrangement of any kind or type
whatsoever (whether oral or written, formal or informal), the performance of
which by the other party thereto could give rise to a lien on the Collateral.
Borrower at all times will defend the Collateral and its proceeds against the
claims and demands of all third persons at any time claiming any interest in
the Collateral adverse to Agent's interest in the Collateral as granted
hereunder.
3.09 Status of the Collateral. The Collateral is valid and enforceable in
accordance with its terms, subject to insolvency, bankruptcy, moratorium and
other laws affecting creditors' rights generally, and is in compliance with
all applicable laws. The Collateral Documents create a valid, enforceable
and perfected first priority lien and security interest in all collateral
covered thereby, and the Borrower shall take such actions as are necessary
(including, without limitation, the filing of continuation statements) to
cause the Collateral Documents to remain a valid, enforceable and perfected
first priority lien and security interest therein.
3.10 No Future Encumbrance or Transfer. Borrower shall not encumber,
pledge, anticipate, borrow against, or create any right of offset against the
Collateral, and shall not transfer, assign, sell, dispose of, pledge, or
convey, option, mortgage, hypothecate or encumber all or any portion of the
Collateral.
3.11 Consents. Any and all consents required to be obtained in connection
with the execution, delivery and performance of this Assignment, including
without limitation any such consents required by the Participation Documents
or the other Collateral Documents, have been obtained. Without limiting the
generality of the foregoing, the execution, delivery and performance of all
obligations under this Assignment do not and will not require any
authorization, consent, approval, order, license or permit from, or filing,
registration, or qualification with, or exemption from any of the foregoing
from, any governmental agency or other person.
3.12 Perfection of Security Interest.
(a) For the purposes of Article 9-401 of the New York Uniform
Commercial Code, the principal place of business of Borrower is located in
New York County, New York. In the event that Borrower has more than one
place of business in the State of New York, its chief executive office is
located in New York County, New York. In order to perfect the pledge and
security interests granted herein against Borrower, U.C.C. Financing
Statements must be filed with Secretary of State of New York and the Office
of the Register of the City of New York, New York County.
(b) Borrower shall, at the request of Agent, execute, acknowledge, and
deliver all such further assignments, security agreements, financing
statements, endorsements, and assurances as Agent from time to time may
require for the better assuring, conveying, assigning and confirming to Agent
the Collateral and the rights hereby conveyed or assigned or intended now or
hereafter to be conveyed or assigned, and for carrying out the intention or
facilitating the performance of the terms of this Assignment, and upon any
failure by Borrower so to do, Agent may make, execute, record, file, rerecord
and/or refile, acknowledge and deliver any and all such further assignments,
security agreements, financing statements, endorsements and assurances for
and in the name of Borrower, and Borrower hereby irrevocably appoints Agent
the agent and attorney-in-fact with full power of substitutions of Borrower
so to do. This power is coupled with an interest. Without limiting the
generality of the foregoing, Borrower will obtain such waivers of lien,
estoppel certificates or subordination agreements as Lender may require to
insure the priority of its security interest in the Collateral. Borrower
also shall furnish to Agent such evidence as Agent reasonably may require
from time to time to confirm the value of the Collateral.
3.13 Collateral Compliance and Defense. Borrower shall remain liable and
comply with all obligations of Borrower under the Collateral and all other
contracts, agreements and instruments related thereto to the extent set forth
therein and to the same extent as if this Assignment had not been executed.
Borrower, at its sole cost and expense, shall defend any claims against the
Collateral or any action that might affect the Collateral or any interest
therein. The exercise by Agent of any of its rights hereunder shall not
release Maker from any of its duties or obligations under the Collateral or
any contracts, agreements and instruments related thereto.
3.14 Protecting Collateral. Borrower will, but only with the prior written
approval of Agent, diligently and in good faith do all things and take all
actions, including, without limitation, bringing appropriate actions against
any Maker which are necessary or desirable to enforce the obligations of such
Maker to make all payments under the Collateral Documents to which it is a
party, and to protect and preserve the interest of Agent under this
Assignment. Borrower shall pay all taxes and other charges against the
Collateral, shall not use the Property or the Collateral illegally, and shall
not suffer to exist any loss, theft, damage or destruction of the Property or
the Collateral or levy, seizure or attachment of the Property or the
Collateral.
3.15 Rights Under Participation Agreement. Borrower shall take all steps
necessary to preserve its rights to service the Abbey Loan pursuant to
paragraph 4 of the Participation Agreement and shall provide Agent with
evidence of same before Borrower's rights expire thereunder. Borrower shall
not propose a servicing plan or asset audit to Morgan with respect to the
Abbey Loan without the prior written approval of Agent. Borrower shall not
exercise any of its rights to service the Abbey Loan without the prior
written approval of Agent.
3.16 Borrower Conduct. Borrower has done no act or omitted to do any act
which might prevent Agent from, or limit Agent in, acting under any of the
provisions herein.
3.17 No Offset. The Collateral Notes and Collateral Participation Documents
evidence bona fide indebtedness or obligations owing to Borrower by Maker,
and no Maker has any rights to setoff, counterclaim or defenses with respect
to the payment or performance of any obligations under the Collateral
Documents.
3.18 No Event of Default Under Loan Documents. No Default or Event of
Default by Borrower or any other party exists under this Assignment, and no
event has occurred and is continuing which with notice or the passage of time
or both would constitute a Default or Event of Default hereunder or under any
of the other Loan Documents.
3.19 Custody of Collateral. Agent's duty with reference to the Collateral
shall be solely to use slight care in the custody and preservation of the
Collateral, which shall not include any steps necessary to preserve rights
against prior parties.
3.20 Related Documents. There are no documents or agreements which conflict
with or vary the terms of the Collateral Documents, and there are no other
documents which have not been delivered to Agent which affect or in any way
relate to the Collateral Documents.
3.21 No Maker Default. Each Maker is the sole obligor and grantor under the
Collateral to which it is a party as reflected on Exhibit "A" attached
hereto, and no event or circumstance has occurred which, with the passage of
time or the giving of notice, or both, might constitute a default under any
of the terms, covenants or conditions of the Collateral. In the event of a
default of any nature under the terms and conditions of the Collateral or the
Collateral Documents, Borrower shall promptly deliver to Agent written notice
of such default, which notice shall specify in reasonable detail the nature
of such default.
3.22 No Event of Default Under the Abbey Loan Documents. To the best of
Borrower's knowledge and belief, no Default or Event of Default exists under
any of the Abbey Loan Documents. In the event Borrower becomes aware of a
default of any nature under the terms and conditions of the Abbey Loan
Documents, Borrower shall promptly deliver to Agent written notice of such
default which notice shall specify in reasonable detail the nature of the
default.
3.23 No Prepayment. No prepayment (or with respect to the Junior
Participation, any payment attributable to the payment of principal under the
Abbey Loan Documents) with respect to the Collateral has been collected or
received by Borrower. No prepayment of the indebtedness or obligations
evidenced by the Collateral Documents will be collected or received by
Borrower without the prior written consent of Agent except for such
prepayment as may be expressly permitted by the terms of the Collateral
Documents.
3.24 Collateral Notes Indebtedness. As of the date hereof, the aggregate
unpaid principal balance of the Commercial Company Second Secured Term Loan
Note is $4,186,991.87, and the aggregate unpaid principal balance of the Land
Company Second Secured Term Loan Note is $10,813,008.13.
3.25 Abbey Loan Indebtedness. As of January 7, 1999, the aggregate
outstanding balance of the Abbey Loan is $92,038,700.00, and interest in the
amount of $135,607.22 has accrued and remains outstanding under the Abbey
Loan Documents.
3.26 Participation Interest. As of January 7, 1999, Borrower's
"Participation Percentage" (as defined in the Participation Agreement) is
fifty percent (50%), and the outstanding principal amount of the Junior
Participation is $46,019,350.00.
3.27 Re-Advance Amount. As of the date hereof, no amounts have been re-
advanced under the Abbey Loan Agreement within the meaning of Section 2.01(a)
thereof.
3.28 Other Participation Interests. No Bank Junior Participation (as
defined in the Participation Agreement) or Senior Default Interest (as
defined in the Participation Agreement) currently exist.
3.29 Modifications. Borrower shall not enter into any modification or
amendment of the Collateral Documents nor shall it consent to any
modification, amendment or waiver of the Abbey Loan Documents without
obtaining the prior written consent of Agent.
3.30 No Abbey Loan Encumbrances. Borrower shall not consent to the
transfer, assignment, sale, disposition of, pledge, conveyance, option,
mortgage, hypothecation or encumbrance of all or any portion of the property
secured by the Abbey Loan Documents without obtaining the prior written
consent of Agent.
3.31 Change in Collateral Value. Borrower shall promptly notify Agent of
any change in the "Collateral Value" (as defined in the Abbey Loan
Agreement).
3.32 Actions by Morgan. Borrower shall promptly notify Agent of any
actions, amendments or waivers contemplated by Morgan under the Abbey Loan
Documents and the Participation Agreement.
3.33 Additions; Substitutions. If Borrower shall at any time be entitled to
receive or shall receive any cash, certificate or other property, option or
right, upon, in respect of, as an addition to, or in substitution or exchange
for any of the Collateral or as a result of the exercise of any rights or
remedies under the Collateral Documents, whether for value paid by Borrower
or otherwise, Borrower agrees that the same shall be deemed to be Collateral
and shall be delivered directly to Agent in each case accompanied by proper
instruments of encumbrance or assignment (including without limitation a deed
of trust, mortgage or security deed) as reasonably required by Agent duly
executed by Borrower in such a form as may be required by Agent to be held by
Agent subject to the terms hereof, as further security for the Obligations
(except as otherwise provided herein with respect to the application of the
foregoing to the Obligations). If Borrower receives any of the foregoing
directly, Borrower agrees to hold such cash or other property in trust for
the benefit of Agent, and to surrender such cash or other property to Agent
immediately.
ARTICLE FOUR
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ACTION BY AGENT
---------------
4.01 Action by Agent. Whether or not an Event of Default has occurred and
whether or not Agent is the absolute owner of the Collateral:
(a) Agent may take such action as Agent may deem necessary to protect
the Collateral or its security interest therein, Agent being hereby
authorized to pay, purchase, contest and compromise any encumbrance, charge
or lien which in the judgment of Agent appears to be prior or superior to
its security interest, and in exercising any such powers and authority to
pay necessary expenses, employ counsel and pay attorney's fees.
(b) Agent shall be under no duty or obligation to (i) preserve,
process, develop, maintain or protect the Collateral or any of Borrower's
rights or interests therein, or (ii) make or give any notices of default
(except as may be specifically required herein), presentments, demands for
performance, notices of non-performance or dishonor, protests, notices of
protests or notices of any other nature whatsoever in connection with the
Collateral on behalf of Borrower or any other person having any interest
therein; and Agent does not assume and shall not be obligated to perform the
obligations of Borrower, if any, with respect to the Collateral. Agent may,
at any time and from time to time, without notice or demand and at the
expense of Borrower, make requests for information concerning the Collateral
from any obligor thereon.
(c) Agent may, at its sole option, make advances to protect the
Collateral and its security therein, or for any reason for which Borrower is
permitted under the terms of the Collateral Documents to make advances, and
any such advances made by Agent shall be deemed advanced under the
Collateral Documents, increasing the indebtedness evidenced and secured
thereby, and also shall be deemed advances under the Loan Documents,
increasing the Obligations.
(d) Agent may at any time compromise, transfer and assign the
Collateral or any portion thereof and this Assignment.
(e) Agent shall have the right to attend any meetings or to be a party
to any conference calls or other communications between Borrower and Morgan
and/or the Obligors under the Abbey Loan Documents with respect to
Borrower's servicing rights under the Participation Agreement or actions to
be taken by Morgan pursuant to the Abbey Loan Documents, and Borrower agrees
that it shall give Agent not less than 48 hours prior notice of such
meetings, conference calls or other communications.
4.02 Default under the Participation Agreement. Notwithstanding anything
herein to the contrary, the Borrower hereby expressly agrees that any failure
to perform any of the covenants or obligations, or failure to exercise any
rights or take such actions necessary to permit Borrower to exercise such
rights, of Borrower under the Participation Agreement (collectively a
"Participation Default") shall constitute and be deemed to be an Event of
Default under this Agreement and the other Loan Documents for which no right
to cure shall be available. Without limiting the foregoing, a Participation
Default shall conclusively be deemed to have occurred upon the declaration,
statement or notice from Morgan as to the existence or occurrence of a
Participation Default. The Agent shall have the right, but not the
obligation, to pay any sums or to take any action which the Agent deems
necessary or advisable to cure any Participation Default (whether or not the
Borrower is undertaking efforts to cure such Participation Default or the
same is a Participation Default or Event of Default hereunder), and such
payment or such action is hereby authorized by the Borrower, and any sum so
paid and any expense incurred by the Agent in taking any such action shall be
evidenced and secured by this Agreement and shall be immediately due and
payable by Borrower to the Agent with interest at the rate for overdue
amounts set forth in Section 4.12 of the Credit Agreement until paid. The
Agent shall be authorized to take such actions upon the assertion by Morgan
of the existence of such Participation Default without any duty to inquire or
determine whether such Participation Default exists.
4.03 Relationship to Assignment and Acceptance Agreement. Borrower and
Agent acknowledge and agree that (i) the Assignment and Acceptance Agreement
is being executed pursuant to and in connection with this Assignment, and
(ii) upon the occurrence of an Event of Default, the Agent may insert the
effective date into the Assignment and Acceptance Agreement and deliver the
same to the "Agent" under the Woodlands Credit Agreement.
4.04 Attorney-In-Fact. Borrower hereby nominates and irrevocably designates
and appoints Agent its true and lawful agent and attorney-in-fact with full
power of substitution, which appointment is coupled with an interest either
in the name of Agent or in the name of Borrower, at Borrower's sole cost and
expense, to take any or all of the following actions:
(a) To do all acts and things and execute all documents which Agent
may deem necessary or advisable to perfect and continue perfected the
security interest created by this Assignment and to preserve, process,
develop, maintain and protect the Collateral and the value thereof and
Agent's interest therein, including, without limitation, preparing, signing,
filing and recording, for Borrower in Borrower's name, or for Borrower on
behalf of any Maker, any financing statement covering or constituting a
part of the Collateral;
(b) To do any and every act which Borrower is obligated to do under
this Assignment;
(c) Whether before or after the occurrence of an Event of Default, to
ask for, demand, sue for, attach, levy, settle, compromise, collect,
compound, recover, receive and give receipt and acquittances for any and all
sums owing or which may become due with respect to the Collateral; to
endorse, in the name of Borrower, all checks, notes, drafts, money orders,
evidences of payment, or other instruments received in payment of, or on
account of, the Collateral or any portion thereof; and to take any and all
actions as Agent may deem necessary or desirable in order to realize upon
the Collateral, or any portion thereof, including, without limitation,
making any statements and doing or taking any acts on behalf of Borrower
which are otherwise required of Borrower under the terms of the Collateral
or any portion thereof as conditions precedent to the payment of the
obligations evidenced by, or to the exercise of, the Collateral or any
portion thereof; and to exercise any rights and remedies available under the
Collateral Documents and to execute any document or instrument which Agent
may deem necessary or desirable in connection therewith, including
pleadings, consent orders, stipulations, and other documents and instruments
which Agent may deem necessary or desirable in connection with judicial or
nonjudicial foreclosure of the Collateral Deeds of Trust or any deed of
trust or other security agreement included within the Collateral Documents
or other legal actions or proceedings with respect to the Collateral. In
addition, Borrower hereby irrevocably designates and appoints Agent its true
and lawful attorney-in-fact with full power of substitution either in the
name of Agent or Borrower which power is coupled with an interest to (i)
sign Borrower's name on any Collateral, drafts against account debtors,
assignments, any proof of claim in any bankruptcy or other insolvency
proceeding involving any account debtor, any notice of lien, claim of lien
or assignment or satisfaction of lien, or on any financing statement or
continuation statement under the Uniform Commercial Code; (ii) send
verifications of accounts receivable to any account debtor; and (iii) in
connection with a transfer of the Collateral as described above sign in
Borrower's name any documents necessary to transfer title to the Collateral
to Agent or any third party.
(d) To endorse and transfer the Collateral upon foreclosure;
provided, however, that Agent shall be under no obligation whatsoever to take
any of the foregoing actions or to exercise any of the foregoing authority or
power, and Agent shall have no liability or responsibility for any act or
omission taken with respect thereto. All of said rights and powers may be
exercised by Agent at any time, whether or not an Event of Default has
occurred and whether or not Agent is the absolute owner of the Collateral.
The foregoing appointment of the Agent as Borrower's attorney-in-fact is
irrevocable, coupled with an interest, with full power of substitution and
cannot be revoked by insolvency, reorganization, merger, consolidation or
otherwise. All acts of said power of attorney are hereby ratified and
approved and Agent shall not be liable for any mistake of law or fact made in
connection therewith.
4.05 Necessity for Agent Action or Consent. So long as this Assignment
shall be held by Agent as security for the Obligations, (a) no approval,
consent, election, waiver or other matter which is given or required or
permitted to be given or which inures to the benefit of Borrower under the
Collateral Documents shall be deemed to have been given unless and until
given by Agent; (b) any matter which is to be established or determined to
the satisfaction of Borrower, or which is accepted or required to be accepted
by Borrower, shall not be deemed to have been so established, determined or
accepted unless and until so established, determined or accepted by Agent;
(c) any matter which is to be received by, delivered to, assigned to or held
by Borrower, including any notice to Borrower under the Collateral Documents,
shall be deemed to have been received, delivered, assigned or held only when
so received, delivered, assigned or held by or to Agent; (d) nothing
contained in any of the Collateral Documents may be modified, amended or
waived in any manner or respect whatsoever without the consent of Agent, and
any such attempted modification, amendment or waiver without such consent
shall be null and void; (e) no Collateral may be released without the
execution of the documentation of release by Agent, and any attempted release
without such execution by Agent shall be null and void; and (f) any exercise
of discretion or rights by Borrower, any requirements imposed or to be
imposed, or permitted to be imposed, by Borrower hereunder, shall be deemed
to have been exercised or imposed only when so exercised or imposed by Agent.
The rights of Agent under this section may be exercised by Agent solely at
the option of Agent or the Agent upon the direction of the Majority Lenders
(as defined in the Credit Agreement) in accordance with the Credit Agreement,
and Agent shall have no obligation to give any consent or take any other
action whatsoever contemplated hereby. Without implying any limitation upon
the scope of Section 7.01 hereof, it is specifically noted that the
provisions of Section 7.01 hereof apply, without limitation, to any action or
failure to act on the part of Lender with respect to the matters contemplated
by this Section 4.03.
ARTICLE FIVE
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ENFORCEMENT OF COLLATERAL DOCUMENTS
-----------------------------------
Borrower acknowledges and agrees that Agent at all times, whether or not an
Event of Default has occurred and whether or not Agent is the absolute owner
of the Collateral, shall have the right, but not the obligation, to exercise
and enforce, in its own name or in Borrower's name, any or all rights and
remedies of Borrower under the Collateral Documents to the exclusion of
Borrower, including but not limited to the right to inspect the Property, to
receive information and documents, to declare due the indebtedness secured by
the Collateral Documents upon the occurrence of a default thereunder, to
grant or withhold approvals, to service the Abbey Loan upon the occurrence of
an event of default thereunder and to exercise discretion with respect to any
matter. Borrower shall not exercise or attempt to exercise any such right or
remedy except at the written request of Agent and only in strict accordance
with the instructions of Agent. Agent may, at its option, enforce or conduct
any action for foreclosure (including nonjudicial foreclosure)under the
Collateral Documents in its own name or in the name of Borrower, and Borrower
specifically consents to any foreclosure (including nonjudicial foreclosure)
under any or all of the Collateral Documents or any other action taken by
Agent even though such action may release any person from personal liability
on any of the Collateral Documents. Upon the exercise by Agent of any such
remedies, any amount bid by Agent or any Lender at any sale of any of the
Property or any other Collateral for the Collateral Note or Collateral
Participation Documents may, at the option of Agent or such Lender, be deemed
to be a credit bid of the indebtedness evidenced by the Collateral Note or
the obligations payable under the Collateral Participation Documents and the
indebtedness evidenced by the Note, or either or both of them; Agent shall be
entitled to set off the amount of any such bid against any such indebtedness,
all at the election of Agent, in its sole discretion; and any or all proceeds
of the Collateral Note or Collateral Participation Documents may be applied
against the indebtedness evidenced by the Note in such order as Agent and the
Majority Banks shall elect in accordance with the Credit Agreement, and Agent
or any Lender shall hold any property obtained by Agent or such Lender at any
such sale free and clear of any interest or claims of Borrower, regardless of
whether Agent shall have exercised any remedy under this Assignment with
respect to any of the Collateral Documents, or shall have sold any of the
Collateral Documents or obtained absolute title thereto pursuant to its
rights and remedies under the Uniform Commercial Code. Borrower hereby
agrees to pay to Agent, immediately upon demand, all costs and expenses,
including without limitation attorney's fees, incurred by Agent in connection
with the enforcement or foreclosure of any Collateral Documents, with
interest from the date of expenditure at the rate for overdue payments
specified in the Credit Agreement, to the extent permitted by applicable
laws.
ARTICLE SIX
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REMEDIES
--------
6.01 Remedies. Upon the occurrence of any Event of Default, without
prejudice to the rights of Agent to enforce claims against Borrower for
damages for failure to fulfill any of its obligations under any of the Loan
Documents, Agent, for the benefit of the Lenders, shall have, in addition to
all other rights and remedies that Agent may have under this Assignment and
by law, all of the rights and remedies hereinafter set forth, and it may
exercise without further notice to Borrower, except as may be specifically
required herein or in the other Loan Documents, any action deemed by Agent to
be necessary or appropriate to the enforcement of the rights and remedies of
Agent under the Assignment and the Loan Documents, including the exercise of
any one, more, or all of the following remedies, in its sole discretion,
without thereby waiving any of the others:
(a) Agent shall have the right immediately to exercise all of its
rights and remedies provided under the Notes, and any of the other Loan
Documents.
(b) Agent shall have the right to collect and to continue to collect
all payments on the Collateral; to renew, extend, modify, amend, accelerate,
accept partial payments on, make allowances and adjustments and issue
credits with respect to, release, settle, compromise, compound, collect or
otherwise liquidate, on terms acceptable to Agent, in whole or in part, the
Collateral and any amounts owing thereon or any guaranty or security
therefor; to enter into any other agreement relating to or affecting the
Collateral; to give all consents, waivers and ratifications in respect of
the Collateral and exercise all other rights, powers and remedies and
otherwise act with respect thereto as if it were the owner thereof; and to
enforce payments and prosecute any action or proceeding with respect to any
and all of the Collateral and take or bring, in Agent's name or in the name
of Borrower, all steps, actions, suits or proceedings deemed by Agent
necessary or desirable to affect collection of or to realize upon the
Collateral.
(c) Agent shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as in effect at that time, including,
without limitation, the right to take possession of any of the Collateral,
and to sell or otherwise dispose of the same.
(d) Agent shall have all of the rights and remedies of a lender under
applicable general or statutory law.
(e) Agent shall have the right to foreclose the liens and security
interests created under this Assignment or under any other agreement
relating to the Collateral by any available judicial procedure or without
judicial process; and to sell, assign, lease or otherwise dispose of the
Collateral or any part thereof, either at public or private sale, in lots or
in bulk, for cash, on credit or for future delivery, or otherwise, with or
without representations or warranties, and upon such terms as shall be
acceptable to Agent in its sole discretion.
6.02 Sale of Collateral. In the event Agent shall determine to sell the
Collateral or any portion thereof, any such sale shall be held at such time
or times and at such place or places as Agent may determine in the exercise
of its sole discretion. Agent or any Lender may bid (which bid may be, in
whole or in part, in the form of cancellation of Obligations) for and
purchase for the account of Agent or such Lender or any nominee of Agent or
such Lender the whole or any part of the Collateral. In the event that Agent
or a Lender is the successful bidder at any public or private sale of the
Collateral or any portion thereof, the amount bid by Agent or such Lender may
be credited against the obligations as provided in Section 6.03. Agent shall
not be obligated to make any sale of the Collateral if it shall determine not
to do so regardless of the fact that notice of sale of the Collateral may
have been given. Agent may, without notice or publication, adjourn any
public sale from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and
place to which the same was so adjourned. Any requirement of sending
reasonable notice to Borrower, including, but not limited to, notice of the
intended disposition of all or any portion of the Collateral, shall be deemed
met if such notice is given to Borrower pursuant to the Credit Agreement at
least ten (10) days before such disposition. Upon consummation of any sale
of the Collateral, Agent shall have the right to assign, transfer and deliver
to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the Collateral sold absolutely free
from claim or right on the part of Borrower, and Borrower hereby waives to
the extent permitted by law all rights of redemption, stay and appraisal
which it now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.
6.03 Application of Net Proceeds. The net cash proceeds resulting from the
collection, liquidation, sale, lease or other disposition of the Collateral
shall be applied to the payment and satisfaction, pro tanto, of the
Obligations as provided in the Credit Agreement.
6.04 No Limitation of Remedies. No remedy conferred upon or reserved to
Agent herein or in any of the Loan Documents or in the Collateral is intended
to be exclusive of any other remedy conferred upon or reserved to Agent under
such instruments or under any applicable laws. Each such remedy shall be
cumulative and concurrent and shall be in addition to each and every other
remedy now or hereafter existing under such instruments or at law or in
equity. No delay or omission by Agent to exercise any right, power or remedy
provided in this Assignment, the Note, or the other Loan Documents or
otherwise accruing upon any Event of Default shall impair in any manner any
such right, power or remedy, or shall be construed to be a waiver of any such
default or acquiescence therein, and each and every right, power and remedy
of Agent may be exercised from time as often as may be deemed expedient by
Agent.
6.05 Rights Independent; Adequacy of Collateral. The security interest
created hereunder is independent of any other security for the Obligations or
the obligations of any other party or any guarantor, and upon the occurrence
of an Event of Default hereunder, Agent may proceed in the enforcement hereof
independently of any other right or remedy that Agent may at any time hold
with respect to the Obligations or any other security or guaranty therefor.
Agent may file a separate action or actions against Borrower hereunder,
whether action is brought and prosecuted with respect to any other security
or against any other party or any guarantor, or whether any other party or
any guarantor is joined in any such action or actions.
6.06 Performance of Borrower's Obligations. If Borrower fails to perform
any agreement or covenant contained in this Assignment beyond any applicable
period for notice and cure, Agent may itself perform, or cause to be
performed, any agreement or covenant of Borrower contained in this Assignment
which Borrower shall fail to perform, and the cost of such performance,
together with any reasonable expenses, including reasonable attorneys' fees
actually incurred (including attorneys' fees incurred in any appeal) by Agent
in connection therewith, shall be payable by Borrower upon demand and shall
constitute a part of the Obligations and shall bear interest at the rate for
overdue amounts as set forth in the Credit Agreement.
ARTICLE SEVEN
--------------
GENERAL CONDITIONS
------------------
7.01 Indemnification. It is specifically understood and agreed that this
Assignment shall not operate to place any responsibility or obligation
whatsoever upon Agent, and that in accepting this Assignment, Agent neither
assumes nor agrees to perform at any time whatsoever any obligation or duty
of Borrower with respect to the Collateral, all of which obligations and
duties shall be and remain with and upon Borrower. In furtherance of this
Assignment, Borrower has delivered the Assignment and Acceptance Agreement to
Agent, and it is specifically understood that in accepting the Assignment and
Acceptance Agreement, Agent neither assumes nor agrees to perform any
obligation or duty of Borrower with respect to the Assignment and Acceptance
Agreement unless and until Agent exercises its rights pursuant to Section
4.03 of this Assignment. Borrower agrees to release, indemnify, defend and
to hold harmless, and does hereby release, indemnify, defend and hold
harmless, Agent and Lenders from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, attorneys fees and expenses) imposed upon or
incurred by Agent or any Lender by reason of this Assignment and any claim
and demand whatsoever which may be asserted against Agent by reason of any
alleged obligation or undertaking to be performed or discharged by Agent
under or by reason of this Assignment. In the event Agent or any Lender
incurs any such liability, obligation, claim, damage, penalty, costs or
expenses under or by reason of this Assignment, or in the defense of any
claims or demands arising out of or in connection with this Assignment, the
amount of such liability, obligation, claim, damage, penalty, cost or expense
shall be added to the Obligations, shall bear interest at the rate for
overdue payments specified in the Credit Agreement from the date incurred
until paid and shall be due and payable immediately upon demand.
7.02 Further Assurances. Borrower agrees to do such further acts and
things, and to execute and deliver such additional conveyances, assignments,
agreements, documents and instruments as Agent may at any time request in
connection with the administration or enforcement of this Assignment or
related to the Collateral or any part thereof or in order to better assure
and confirm unto Agent its rights, powers and remedies hereunder. Without
limiting the generality of the foregoing, at any time and from time to time,
upon request by Agent, Borrower will make, execute and deliver, or cause to
be made, executed and delivered, to Agent and, where appropriate, cause to be
recorded and/or filed and from time to time thereafter to be re-recorded
and/or refiled at such time and in such offices and places as shall be deemed
desirable by Agent, any and all such other and further assignments,
endorsements, deeds to secure debt, mortgages, deeds of trust, security
agreements, financing statements, continuation statements, instruments of
further assurance, certificates and other documents as may, in the opinion of
Agent, be necessary or desirable in order to effectuate, complete, or
perfect, or to continue and preserve (a) the obligations of Borrower under
this Assignment and (b) the security interest created by this Assignment as a
first and prior security interest upon the Collateral. Upon any failure by
Borrower so to do, Agent may make, execute, record, file, re-record and/or
refile any and all such assignments, endorsements, deeds to secure debt,
mortgages, deeds of trust, security agreements, financing statements,
continuation statements, instruments, certificates, and documents for and in
the name of Borrower, and Borrower hereby irrevocably appoints Agent the
agent and attorney-in-fact with full power of substitution of Borrower so to
do. This power is coupled with an interest.
7.03 Expenses and Costs of Agent. Borrower agrees to pay to Agent all
advances, charges, costs and expenses, including all reasonable attorney's
fees, incurred or paid by Agent in exercising any right, power or remedy
conferred by this Assignment, or in the enforcement thereof, whether or not
an action is filed hereon, together with interest from the date of the
expenditure at the rate for overdue payments specified in the Credit
Agreement, to the extent permitted by applicable law, it being specifically
understood and agreed by Borrower that all such advances, charges, costs and
expenses shall constitute Obligations.
7.04 Release of Collateral and Termination. Upon the payment and
satisfaction in full of the Obligations and the termination of the obligation
of the Lenders to make further advances to Borrower under the Credit
Agreement, Agent, upon receipt of written request therefor from Borrower and
at Borrower's expense, shall execute and deliver to Borrower such documents
as may be necessary to release the liens and interests on the Collateral
created by this Assignment.
7.05 Security Interest Absolute. All rights of Agent, and the security
interests hereunder, and all of the obligations secured hereby, shall be
absolute and unconditional, irrespective of:
(a) Any lack of validity or enforceability of the Loan Documents or
any other agreement or instrument relating thereto;
(b) Any change in the time (including the extension of the maturity
date of the Notes), manner or place of payment of, or in any other term of,
all or any of the Obligations or any other amendment or waiver of or any
consent to any departure from the Loan Documents;
(c) Any exchange, release or nonperfection of any other collateral for
the Obligations, or any release or amendment or waiver of or consent to
departure from any of the Loan Documents with respect to all or any part of
the Obligations; or
(d) Any other circumstance (other than payment of the Obligations in
full) that might otherwise constitute a defense available to, or a discharge
of, Borrower or any third party for the Obligations or any part thereof.
7.06 Amendments and Waivers. No amendment or waiver of any provision of
this Assignment nor consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by Agent, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No delay or omission of Agent to
exercise any right, power or remedy accruing upon any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be
a waiver of any such Event of Default, or acquiescence therein; and every
right, power and remedy given by this Assignment to Agent may be exercised
from time to time and as often as may be deemed expedient by Agent. Failure
on the part of Agent to complain of any act or failure to act which
constitutes an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by Agent of Agent's rights hereunder
or impair any rights, powers or remedies consequent on any Event of Default.
Borrower hereby waives to the extent permitted by law all rights which
Borrower has or may have under and by virtue of the Uniform Commercial Code
as enacted in the State of New York, and any federal, state, county or
municipal statute, regulation, ordinance, Constitution or charter, now or
hereafter existing, similar in effect thereto providing any right of Borrower
to notice and to a judicial hearing prior to seizure by Agent of any of the
Collateral. Borrower hereby waives and renounces for itself, its heirs,
successors and assigns, all rights to the benefits of any statute of
limitations and any moratorium, reinstatement, marshaling, forbearance,
valuation, stay, extension, homestead, redemption and appraisement now
provided or which may hereafter be provided by the Constitution and laws of
the United States and of any state thereof, both as to itself and in and to
all of its property, real and personal, against the enforcement of this
Agreement and the collection of any of the Obligations.
7.07 Survival of Certain Agreements. Notwithstanding the repayment of the
Obligations and the cancellation or transfer of the Loan Documents, or any
foreclosure of or other realization upon the Collateral, the agreement of
Borrower contained herein or in any of the other Loan Documents to pay the
costs and expenses of Agent or the Lenders in connection with the Loan and
all agreements of Borrower contained herein or in any of the other Loan
Documents to indemnify and/or hold harmless Agent or the Lenders shall
continue in full force and effect so long as there exists any possibility of
expense or liability on the part of Agent or the Lenders.
7.08 Law Governing. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF NEW YORK.
7.09 Communications. All communications required or permitted under the
terms of this Agreement shall be given in the manner set forth in the Credit
Agreement.
7.10 Incorporation. The following provisions of the Credit Agreement are
hereby incorporated by reference as though fully set forth herein: Sections
22, 27, 28, 29 and 30.
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal, as of
the day and year first above written.
WELLSFORD FINANCE, INC.,
a Maryland corporation
By: /s/ Gregory F. Hughes
--------------------------------
Name: Gregory F. Hughes
Title: Vice President and
Treasurer
[CORPORATE SEAL]
WITNESS:
The undersigned has executed this Collateral Assignment solely for the
purpose of witnessing the grant of power of attorney by Borrower to Agent, as
described in this Collateral Assignment.
Kim B. Ezzy
-------------------------------------
Print Name
<PAGE>
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 11th day of
January, 1999, by GREGORY F. HUGHES, as Treasurer, of Wellsford Finance,
Inc., a Maryland corporation.
WITNESS MY HAND and official seal.
My commission expires:
/s/ Kevin A. Carey
---------------------------------
Notary Public
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 11th day of
January, 1999, by KIM B. EZZY.
WITNESS MY HAND and official seal.
My commission expires:
/s/ Kevin A. Carey
----------------------------------
Notary Public
<PAGE>
EXHIBIT "A"
COLLATERAL DOCUMENTS
--------------------
1. First Amended and Restated Master Credit Agreement dated December 30,
1997, effective as of July 31, 1997, among The Woodlands Commercial
Properties Company, L.P. ("Commercial Company"), The Woodlands Land
Development Company, L.P. ("Land Company"), and BankBoston, N.A.,
individually and as Agent ("Agent"), Morgan Stanley Senior Funding,
Inc., as Documentation Agent, and the other lending institutions which
may now be or hereafter become parties thereto.
2. Commercial Company Second Secured Term Loan Note dated December 28,
1998 made by Commercial Company and Land Company to the order of
Wellsford Finance, Inc. ("Borrower").
3. Land Company Second Secured Term Note dated December 28, 1998 made by
Commercial Company and Land Company to the order of Borrower.
4. Deed of Trust and Security Agreement dated as of July 31, 1997 by
Commercial Company for the benefit of Agent.
5. Assignment of Leases and Rents dated as of July 31, 1997 by Commercial
Company to Agent.
6. Collateral Assignment of Interests dated as of July 31, 1997 by
Commercial Company in favor of Agent.
7. Assignment of Deed of Trust and Security Agreement and other Collateral
Documents dated as of December 30, 1997 by BankBoston, N.A., as Agent
and BankBoston, N.A., as Agent.
8. First Amendment to Deed of Trust and Security Agreement and certain
other Collateral Documents dated December 30, 1997 by and between
Commercial Company, Land Company and Agent.
9. Amended and Restated Cash Collateral Account Agreement dated as of
December 30, 1997, effective as of July 31, 1997 by and among
Commercial Company, Land Company and Agent.
10. Amended and Restated Collateral Assignment of Documents dated
December 30, 1997 by Commercial Company and Land Company to Agent.
11. Collateral Assignment of Documents dated December 30, 1997 by
Commercial Company and Land Company to Agent.
12. Amended and Restated Indemnity Agreement Regarding Hazardous Materials
dated December 30, 1997 by Commercial Company and Land Company for the
benefit of Agent.
13. Amended and Restated Agreement Regarding Negative Pledge dated
December 30, 1997 by Crescent Real Estate Equities Limited Partnership,
The Morgan Stanley Real Estate Fund II, L.P. and Crescent Operating,
Inc. in favor of Agent.
14. Intercreditor Agreement dated December 30, 1997 effective as of
July 31, 1997 by and between BankBoston, N.A., for itself and as Agent,
Morgan Stanley Senior Funding Inc., and the other lenders a party
thereto.
15. UCC-1 Financing Statement naming The Woodlands Land Development
Company, L.P. as Debtor and BankBoston, N.A., as Agent, as secured
party filed with Texas Secretary of State.
16. UCC-1 Financing Statement naming The Woodlands Land Development
Company, L.P. as Debtor and BankBoston, N.A., as Agent, as secured
party filed with Tarrant County, Texas Clerk.
17. Loan Participation Agreement dated as of August 28, 1997 between Morgan
Guaranty Trust Company of New York ("Morgan") and Wellsford Real
Properties, Inc. ("WRP").
18. Assignment and Acceptance Agreement dated March 27, 1998, between WRP
and Wellsford Capital ("Capital").
19. First Amendment to Participation Agreement, dated April 7, 1998,
between Capital and Morgan.
20. Assignment and Acceptance Agreement dated December 28, 1998, between
Capital and Borrower.
21. Loan Participation Certificate dated December 28, 1998 from Morgan to
WRP.
All rights, remedies, collateral instruments or other documents made or
granted in favor of Borrower or its predecessors in interest in connection
with the loans evidenced by the Loan Agreement described in Item 1, above,
and the Participation Agreement described in Item 17, above and secured by
the documents described in Items 2-16 and 18-21 above, (collectively the
"Loans"), including, without limitation: (i) all guaranties, pledges,
security interests, mortgages, deeds of trust, assignments of rents,
assignments of management agreement, assignments of stock or partnership
units, financing statements, or other rights, interests or collateral
securing or guaranteeing payment of such Loans; and (ii) all other rights and
remedies of the Borrower in connection with the Loans, whether provided by
contract or otherwise available under applicable law or in equity, including,
without limitation, all rights and remedies provided under any loan
agreements, security agreements, indemnities, letters of credit, title
insurance policies, fire and casualty insurance policies, flood hazard
insurance policies, life insurance policies, escrow, accounts, certificates
of deposit, proceeds, claims (including proofs of claim), demands, causes of
action and judgments in favor of Borrower or its predecessors in interest
relating to the Loans, or other instruments or documents made, issued or
delivered to or in favor of Borrower or its predecessors in interest in
connection with the Loans, all as the same may have been amended from time to
time.
<PAGE>
EXHIBIT "B"
ABBEY LOAN DOCUMENTS
- --------------------
- ----------------------------------------------------------------------------
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.
Dated as of July 16th, 1998
- ----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
1.1. Definitions 1
1.2. Terms Generally 17
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name 17
2.2. Term 17
2.3. Filing of Certificate and Amendments 17
2.4. Purpose and Business; Powers; Scope of Members' Authority 18
2.5. Principal Office; Registered Agent 18
2.6. Names and Addresses of Members 18
2.7. Pre-Closing Costs 18
2.8. Post-Closing Receipts 18
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control 19
3.2. Enumeration of Specific Duties 20
3.3. No Authority to Hire Employees 23
3.4. Decisions Requiring Approval of the Management Committee 23
3.5. Management Committee 27
3.6. Limited Authorization 30
3.7. Members Shall Not Have Power to Bind Company 30
3.8. Status as "Operating Company"; Participation in Management by
Members 31
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property 31
4.2. Exclusivity; Other Activities of the Members 31
4.3. Indemnification with Respect to the Manager 35
4.4. Compensation of Members and Affiliates 36
4.5. Investment Representations 36
4.6. Dealing with Members 37
4.7. Designation of Tax Matters Member 37
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts
of the Members 38
5.2. Additional Capital Contributions 46
5.3. Failure to Fund Capital Contributions 46
5.4. Dilution for Failure to Fund Capital Calls 47
5.5. Capital of the Company 48
5.6. Liability of Members 48
5.7. Return of Capital Contribution 49
5.8. Calculation of Members' Percentage Interest and Members'
Series A Preferred
Percentage Interest 49
5.9. Issuance of Additional Membership Units 49
5.10. Arbitration 50
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts 50
6.2. Profits and Losses 51
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions 55
7.2. Restoration of Excess Distributions 57
7.3. Liquidation 57
7.4. Repayment of Member Loans 57
7.5. Revisions to Reflect Issuance of Additional
Membership Interests 58
7.6. Initial Public Offering; Sale of Units 58
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members 59
8.2. Sale of Properties, the Company or its Subsidiaries 60
8.2A Indemnification of Saracen 63
8.3. Conversion Right 68
8.4. Certain Transfer Provisions 70
8.5. Assignment Binding on Company 71
8.6. Bankruptcy of a Member 71
8.7. Substituted Members 71
8.8. Acceptance of Prior Acts 71
8.9. Additional Limitations 71
8.10. Tag Along Rights 72
ARTICLE IX.
MANAGER
9.1. Removal of Manager 72
9.2. Fees 73
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination 73
10.2. Distribution Upon Liquidation 74
10.3. Sale of Company Assets 74
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account 74
11.2. Availability of Books of Account 75
11.3. Financial Reports and Statements; Annual Budgets 75
11.4. Accounting Expenses 76
11.5. Bank Account 76
11.6. Fidelity Bonds and Insurance 76
ARTICLE XII.
AMENDMENTS
12.1. Amendments 77
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances 78
13.2. Notices 78
13.3. Headings and Captions 78
13.4. Variance of Pronouns 78
13.5. Counterparts 78
13.6. GOVERNING LAW 79
13.7. Partition 79
13.8. Invalidity 79
13.9. Successors and Assigns 79
13.10. Entire Agreement 79
13.11. No Brokers 79
13.12. Maintenance as a Separate Entity 79
13.13. Confidentiality 80
13.14. Power of Attorney 80
13.15. Time of the Essence 81
13.16. No Third Party Beneficiaries 81
13.17. Exculpation 81
13.18. Consent of Saracen 81
<PAGE>
EXHIBITS
EXHIBIT A Transaction Summary
EXHIBIT B-1 Description of Real Property Contributed by Whitehall
EXHIBIT B-2 Description of Personal, Tangible and Intangible Property
Contributed by Whitehall
EXHIBIT B-3 Description of Excluded Assets
EXHIBIT B-4 Whitehall Properties
EXHIBIT B-5 Whitehall Additional Properties
EXHIBIT C-1 Description of Real Property Contributed by WCPT
EXHIBIT C-2 Description of Personal, Tangible and Intangible Property
Contributed by WCPT
EXHIBIT C-3 Description of Excluded Assets
EXHIBIT C-4 WCPT Properties
EXHIBIT E-1 Representations and Warranties of Whitehall
EXHIBIT E-2 Representations and Warranties of WCPT
EXHIBIT E-3 Representations and Warranties of Whitehall Concerning the
Whitehall Additional Properties
EXHIBIT F Terms of Series A Preferred Membership Units
EXHIBIT G Form of Registration Rights Agreement
SCHEDULES
SCHEDULE 1 Addition Members
SCHEDULE 2.6 Names and Addresses of Members
SCHEDULE 2.9 Certain Post-Closing Expenses
SCHEDULE 3.2(a)(vi) Approved Leases and Lease Documentation
SCHEDULE 5.1(h) Capital Accounts, Membership Units and Series A Preferred
Membership Units
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT is made and
entered into as of July 16th, 1998 by and among WHWEL Real Estate Limited
Partnership, a Delaware limited partnership ("Whitehall"), Wellsford
Commercial Properties Trust, a Maryland real estate investment trust ("WCPT")
and the additional Members set forth on Schedule 1 annexed hereto.
Collectively, the additional Members set forth on Schedule 1 annexed hereto
shall be referred to herein as "Saracen" or the "Saracen Members".
R E C I T A L S
WHEREAS, Whitehall and WCPT entered into that certain Limited
Liability Company Operating Agreement of Wellsford/Whitehall Properties,
L.L.C., a Delaware limited liability company ("WWP") and predecessor in
interest to Wellsford/Whitehall Properties II, L.L.C., dated as of August 28,
1997, as amended by Amendment No. 1 to the Limited Liability Company
Operating Agreement of WWP, dated as of December 31, 1997, and as further
amended to reflect the addition of Saracen as a Member of the Company by the
Amended and Restated Limited Liability Company Operating Agreement of WWP,
dated as of May 15, 1998 (the "WWP Agreement");
WHEREAS, contemporaneously with the execution of this Agreement,
the following transactions took place: (1) WCPT, Whitehall and each of the
Saracen Members contributed their undivided Interests in WWP to
Wellsford/Whitehall Properties II, L.L.C. in exchange for equivalent
Interests in Wellsford/ Whitehall Properties II, L.L.C. (the "WWP
Contribution"), and (2) WWP merged with and into Wellsford/Whitehall
Holdings, L.L.C., a Delaware limited liability company ("Holdings") and
wholly owned subsidiary of WWP, with Holdings being the surviving entity; and
WHEREAS, Wellsford/Whitehall Properties II, L.L.C. intends to
continue the business and purpose of WWP and acquire, hold, develop,
redevelop and operate real estate assets directly or indirectly through one
or more Subsidiaries.
NOW, THEREFORE, in order to carry out their intent as expressed
above and in consideration of the mutual agreements hereinafter contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby covenant and agree as
follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. As used in this Agreement and the Exhibits,
Schedules and Annexes hereto, the following terms shall have the meanings set
forth below:
"Act" shall mean the Delaware Limited Liability Company Act (6 Del.
C. Section 18-101 et seq.), as amended from time to time.
"Additional Closing" shall mean the consummation of the
transactions whereby the Company acquired the Whitehall Additional
Properties.
"Additional Closing Date" shall mean the date upon which the
Additional Closing occurred.
"Administration Fee" shall mean the administration fee in the
amount of $300,000 per annum payable in four $75,000 installments quarterly
in arrears to WRP for so long as WRP (or an Affiliate of WRP) shall provide
services in connection with the administration of the Company. The
Administration Fee shall be prorated for partial years or quarters commencing
on September 30, 1997.
"Affiliate" shall mean with respect to any Person (i) any other
Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with such Person,
(ii) any other Person owning or controlling 10% or more of the outstanding
voting securities of, or other ownership interests in, such Person, (iii) any
officer, director or member of such Person and (iv) if such Person is an
officer, director or member of any company, the company for which such Person
acts in any such capacity. For purposes of this definition and Section
8.1(c), "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"agreed net fair market value" shall have the meaning set forth in
Section 6.1(b).
"Agreement" shall mean this Limited Liability Company Operating
Agreement, as it may hereafter be amended or modified from time to time.
"Annual Capital Budget" shall have the meaning set forth in Section
11.3(c).
"Annual Operating Budget" shall have the meaning set forth in
Section 11.3(c).
"Applicable Closing Date" shall have the meaning set forth in
Section 8.2(c).
"Appointing Member" shall have the meaning set forth in Section
3.5(c).
"Approved Budget" shall mean, with respect to each Property, the
Annual Capital Budget and Annual Operating Budget for such Property for the
Budget Year in question, in each case which has been approved by the
Management Committee.
"Asserted Deficiency" shall have the meaning set forth in Section
8.2A.
"Asset Management Agreement" shall mean the Asset Management
Agreement dated as of the Saracen Closing Date between WWP and the Asset
Manager.
"Asset Manager" shall mean Saracen Partners, LLC, a Massachusetts
limited liability company formed and owned by William F. Rand, III, Dominic
J. Saraceno, Kurt W. Saraceno and Carleton G. Tarpinian, and designated as
the asset manger under the Asset Management Agreement.
"Assumed Financing" shall mean the credit facility made available
to WHATR Real Estate Limited Partnership pursuant to the Loan Agreement dated
as of May 14, 1997 by and among WHATR Real Estate Limited Partnership,
Goldman Sachs Mortgage Company, as syndication agent and lender, and the
other lenders from time to time parties thereto.
"Available Cash" shall mean, for any fiscal period, the excess, if
any, of (A) the sum of (i) the amount of all cash receipts of the Company
during such period from whatever source, other than Capital Proceeds, and
(ii) any cash reserves of the Company existing at the start of such period
(other than reserves funded with Capital Proceeds) over (B) the sum of
(i) all cash amounts paid or payable (without duplication) in such period on
account of expenses and capital expenditures incurred in connection with the
Company's business (including, without limitation, general operating
expenses, taxes and amortization or interest on any debt of the Company) and
(ii) such cash reserves which may be required for the working capital and
future needs of the Company in an amount approved by the Management Committee
or, failing such approval, in an amount equal to the cash reserves of the
Company existing at the start of such period. Notwithstanding the foregoing,
"Available Cash" for any fiscal period shall be increased by the amount of
any cash payment or reserve described in clause (B) above that was made by
the Company during such fiscal period to the extent the Company had obtained
Capital Proceeds for the payment of the related expenditure.
"Back-to-Back Debt" shall mean any Indebtedness incurred by the
Company that (i) is issued exclusively to WCPT, (ii) is issued simultaneously
with the issuance by WCPT of Funding Debt that has identical terms (including
principal amount, interest rate, payment amounts and frequency, maturity
date, covenants and defaults) to the Back-to-Back Debt issued by the Company
and (iii) is funded by WCPT exclusively through the issuance of such Funding
Debt.
"Bankruptcy" shall mean, with respect to the affected party,
(i) the adjudication that such party is bankrupt or insolvent, or the entry
of a final and nonappealable order for relief under Title 11 of the United
States Code or any other applicable federal or state bankruptcy or insolvency
law, (ii) the admission by such party of its inability to pay its debts as
they mature, (iii) the making by it of an assignment for the benefit of
creditors, (iv) the filing by it of a petition in bankruptcy or a petition
for relief under Title 11 of the United States Code or any other applicable
federal or state bankruptcy or insolvency law, (v) the expiration of sixty
(60) days after the filing of an involuntary petition under Title 11 of the
United States Code, an application for the appointment of a receiver for the
assets of such party, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other
federal or state insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such sixty (60)-day period, (vi) the
imposition of a judicial or statutory lien on all or a substantial part of
its assets unless such lien is discharged or vacated or the enforcement
thereof stayed within sixty (60) days after its effective date, (vii) the
filing by such party of an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of the nature described in clause (iv) above, and (viii) the
expiration of sixty (60) days after the commencement of any stay referred to
in clause (v) or (vi) above provided that the subject of such stay shall not
have been vacated or set aside within such sixty (60)-day period.
"Book Value" with respect to any Company Asset shall mean its
adjusted basis for federal income tax purposes, except that the initial Book
Value of any asset contributed by a Member to the Company shall be an amount
equal to the fair market value of such asset, as determined by the Initial
Members (which shall be $141,850,000, with respect to the Saracen Contributed
Assets), and such Book Value shall thereafter be adjusted in a manner
consistent with Treasury Regulations Section 1.704-l(b)(2)(iv)(g) for
revaluations pursuant to Section 6.1(b) and for the Depreciation taken into
account with respect to such asset.
"Breach Notice" shall have the meaning set forth in Section 5.1(l).
"Budget Year" shall mean the period beginning on the Initial
Closing Date and ending on December 31, 1997; and beginning January 1, 1998,
"Budget Year" shall mean a period beginning on January 1, 1998 and ending on
December 31, 1998 and any successive yearly period thereafter.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banks in New York are required or permitted to be
closed.
"Business Plan" shall mean, with respect to any Property, the
master business plan (which shall include the Annual Capital Budget, Annual
Operating Budget, the Leasing Plan and Marketing Plan) for such Property
prepared annually by the Manager and approved by the Management Committee,
setting forth the operating strategy and estimated receipts and expenditures
for the period covered by the Business Plan; provided that, the initial
Business Plan for any Saracen Property for calendar year 1998 shall be the
business plan for such property prepared by or on behalf of the relevant
Saracen Current Owner, a copy of which shall have been provided to and
approved by the Management Committee prior to the Saracen Closing. The
Business Plans may be amended or replaced from time to time with the approval
of the Management Committee.
"Capital Account" when used in respect of any Member shall mean the
Capital Account maintained for such Member in accordance with Section 6.1, as
said Capital Account may be increased or decreased from time to time pursuant
to the terms of Section 6.1.
"Capital Call" shall mean any written notice to the Initial Members
delivered in accordance with Section 5.2 hereof requesting a contribution in
cash to the Company, which notice shall state the total amount of the
required contributions by such Initial Members and each Initial Member's pro
rata share of such total based on such Initial Member's Percentage Interest.
"Capital Contribution" when used with respect to any Member shall
mean the amount of capital contributed by such Member to the Company in
accordance with Article V (other than pursuant to Sections 5.1(c), (e), (i),
(j) and (l)) of this Agreement or, prior to the WWP Contribution, in
accordance with Article V (other than pursuant to Sections 5.1(c), (e), (i),
(j) and (l)) of the WWP Agreement.
"Capital Event" means any of the following: (A) Shares or other
capital stock of WCPT are issued or sold in a public offering and are
thereafter publicly traded or (B) WCPT or the Company engages in (i) a merger
(including a triangular merger), consolidation or other combination with or
into another Person (or such Person's subsidiary) whose equity interests are
publicly traded or (ii) the direct or indirect sale, lease, exchange or other
transfer of all or substantially all of its assets in one transaction or a
series of related transactions with another Person (or such Person's
subsidiary) whose equity interests are publicly traded.
"Capital Proceeds" shall mean the net amount of cash proceeds of
the Company (including the net amount of cash proceeds received from an
Affiliate) from the occurrence of one or more of the following events: (i) a
merger (including a triangular merger), consolidation or other combination
with or into another Person, (ii) the direct or indirect sale, lease,
exchange or other disposition or transfer of any Company Assets, (iii) an
eminent domain taking, insurance recovery or condemnation award, (iv) any
refinancing or borrowing by the Company or its Affiliates, (v) any issuance
of equity securities of the Company or its Affiliates; and (vi) Capital
Contributions.
"Capital Proceeds Distribution Amount" shall have the meaning set
forth in Section 7.1(f).
"Cause" shall mean (a) fraud, criminal felony indictment, gross
negligence or willful misconduct by WCPT, WRP or any of Jeffrey H. Lynford,
Edward Lowenthal or Gregory Hughes (or any successor occupying one or more of
the officer positions currently occupied by any of them in WCPT or WRP) if
such fraud, criminal felony indictment, gross negligence or willful
misconduct relates to any action or omission in connection with the business
of the Company or any of its Subsidiaries, (b) failure of WCPT to fund any
Capital Call in accordance with Section 5.2(b) (but not Section 5.2(a)), (c)
a breach of Section 4.2 by WCPT or its Affiliate or (d) the occurrence of any
Bankruptcy with respect to WCPT or WRP.
"Certificate of Formation" shall mean the Certificate of Formation
of the Company filed with the State of Delaware on August 18, 1997, as the
same may hereafter be amended and/or restated from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any corresponding provision(s) of succeeding law.
"Committee Representative" shall mean each individual appointed
from time to time by Whitehall, WCPT or any other Member pursuant to Section
3.5 or, if applicable, pursuant to the Series A Terms, and "Committee
Representatives" shall mean all of such individuals, collectively.
"Common Distribution Amount" shall mean, for any calendar quarter,
the Distribution Amount plus the Capital Proceeds Distribution Amount, if
any, for and including such calendar quarter less all amounts paid under
Section 7.1(a-2)(i) for and including such calendar quarter.
"Company" shall mean at any time prior to the date hereof, WWP, and
at any time after the date hereof the "Company" shall mean
Wellsford/Whitehall Properties II, L.L.C., a Delaware limited liability
company, as said Company may from time to time be hereafter constituted.
"Company Assets" shall mean all right, title and interest of the
Company in and to all or any portion of the assets of the Company and any
property (real or personal) or estate acquired in exchange therefor or in
connection therewith.
"Company Nonrecourse Debt" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Consolidation Transaction" shall have the meaning set forth in
Section 8.2A.
"Contributee" shall have the meaning set forth in the Contribution
Agreement.
"Contributing Member" shall have the meaning set forth in
Section 5.3.
"Contributor" shall have the meaning set forth in the Contribution
Agreement.
"Contribution Agreement" shall mean the Contribution Agreement
dated as of February 12, 1998, as amended by Amendment No. 1 to the
Contribution Agreement dated as of May 15, 1998, among the Company and the
Saracen Current Owners (including certain Affiliates of the Saracen Current
Owners).
"Conversion Factor" shall mean 1.0; provided that, if WCPT (i)
declares or pays a dividend on its outstanding Shares in Shares or makes a
distribution to all holders of its outstanding Shares in Shares, or
(ii) subdivides its outstanding Shares, or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the record date
for such dividend, distribution, subdivision, combination, or other action
(assuming for such purposes that such dividend, distribution, subdivision,
combination or other action has occurred as of such time) and the denominator
of which shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision, combination or other action. Whitehall's and
Saracen's agreement to the foregoing definition of "Conversion Factor"
contained herein is based upon the agreement of WCPT and WRP not to take any
action which would have a dilutive effect on the value of the Shares as
compared to the value of the Membership Units (so that the value of one Share
would be less than the value of one Membership Unit). In the event that any
such action is nevertheless taken by or on behalf of WCPT or its
shareholders, the Conversion Factor set forth in the first sentence of this
definition shall be adjusted in the manner set forth in the proviso in the
first sentence of this definition or, if otherwise applicable, in the same
manner and in the same instances provided in Article 6 of the Warrant
Agreement (except that no such adjustment shall be made if and to the extent
that WCPT distributes to its shareholders amounts received from the Company
on account of its Interest or the Promote). Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of the
event retroactive to the record date, if any, for the event giving rise
thereto, it being intended that (x) adjustments to the Conversion Factor are
to be made to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Membership Units and (y) if
a specified redemption date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion
Factor applicable to such redemption shall be adjusted to take into account
such event.
"Conversion Right" shall have the meaning set forth in Section 8.3.
"Converted Units" shall mean the number of Series A Preferred
Membership Units outstanding times 1.34.
"Cumulative Distribution Amount" shall mean, for any calendar
quarter, the cumulative quarterly Distribution Amounts theretofore
distributed during the then current calendar year, plus the Distribution
Amount for the quarter for which the Cumulative Distribution Amount is being
determined.
"Damages" shall have the meaning set forth in Section 5.1(c).
"Debtor Member" shall have the meaning set forth in Section 7.4.
"Declaration of Trust" shall mean the amended and restated
declaration of trust of WCPT filed with the State Department of Assessment
and Taxation of the State of Maryland on August 25, 1997, as the same may be
restated and amended from time to time.
"Deemed Value Per Membership Unit" shall mean (i) on the Saracen
Closing Date and prior to the date any New Member acquires Membership Units,
$16.22 (sixteen dollars and twenty-two cents), and (ii) on and after the date
any New Member acquires Membership Units, an amount equal to the quotient
(expressed as a dollar amount) of (x) the sum of the cash plus the agreed net
fair market value of property contributed to the Company by the Person who
most recently became a New Member (including on such date), which amount was
solely attributable to the Membership Units issued and referred to in clause
(y) below, divided by (y) the total number of Membership Units issued to such
New Member in respect of such contributions.
"Default Rate" shall mean an interest rate equal to the lesser of
(i) 15% per annum and (ii) the maximum rate permitted by law.
"Depreciation" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to
Company Assets, including any improvements made thereto and any tangible
personal property located therein, or amortization of the cost of any intan-
gible property or other assets acquired by the Company, which have a useful
life exceeding one year, provided, however, that with respect to any Company
Asset whose tax basis differs from its Book Value at the beginning of such
Fiscal Year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Book Value as the depreciation, amortization or
other cost recovery deduction for such period with respect to such asset for
federal income tax purposes bears to its adjusted tax basis as of the
beginning of such Fiscal Year; provided, however, that if the federal income
tax depreciation, amortization or other cost recovery deduction for such
Fiscal Year is zero, Depreciation shall be determined using any reasonable
method selected by the Management Committee.
"Determination Date" shall have the meaning set forth in Section
7.6(b).
"Dispute Notice" shall have the meaning set forth in Section
5.1(c).
"Distribution Amount" shall have the meaning set forth in Section
7.1(a).
"End Date" shall have the meaning set forth in Section 8.2A(a)(i).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Extraordinary Transaction" shall mean, with respect to any Person,
the occurrence of one or more of the following events: (i) a merger
(including a triangular merger), consolidation or other combination with or
into another Person; (ii) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of its assets in one transaction
or a series of related transactions; (iii) any reclassification,
recapitalization or change of its outstanding equity interests (other than a
change in par value, or from par value to no par value, or as a result of a
split, dividend or similar subdivision); (iv) any issuance of equity
securities of such Person in exchange for assets (other than an issuance of
securities for cash or an issuance of securities pursuant to an employee
benefit plan); (v) any change of control (as defined below) of such Person or
(vi) the adoption of any plan of liquidation or dissolution of such Person.
For purposes of this definition, "change of control" with respect to any
Person means (a) the acquisition by another Person of more than 20% of the
voting stock in such Person or (b) the change in membership of a majority of
such Person's board of directors.
"Failed Contribution" shall have the meaning set forth in
Section 5.3.
"Fiscal Year" shall mean the fiscal year of the Company, which
shall be the calendar year; but upon termination of the Company, "Fiscal
Year" shall mean the period from the end of the last preceding Fiscal Year to
the date of such termination.
"Funding Debt" shall mean any Indebtedness incurred by WCPT in
compliance with the terms and provisions of Section 4.2(g).
"Holdings" shall have the meaning set forth in the third paragraph
of this Agreement.
"Hub Target Market" shall mean the Commonwealth of Massachusetts
and the States of Maine, New Hampshire, Rhode Island and Vermont.
"Indebtedness" shall mean, with respect to any Person, (i) all
indebtedness and obligations of or assumed by such Person in respect of money
borrowed (including any indebtedness which is non-recourse to the credit of
such Person but which is secured by a Lien on any asset of such Person) or
evidenced by a promissory note, bond, debenture, letter of credit
reimbursement agreement or other written obligations to pay money for
borrowed money; (ii) any indebtedness or obligation of others secured by a
Lien on any asset of such Person, whether or not such indebtedness or
obligation is assumed by such Person; (iii) any guaranty, endorsement,
suretyship or other undertaking pursuant to which such Person may be liable
on account of any obligation of any third party other than a Subsidiary;
(iv) indebtedness for the deferred purchase price of property or services;
(v) obligations of such Person incurred in connection with entering into a
Lease which, in accordance with generally accepted accounting principles,
should be capitalized; and (vi) the indebtedness or obligations of a
partnership or joint venture in which such Person is a general partner or
joint venturer.
"Initial Capital Contribution" shall mean those capital
contributions made pursuant to Section 5.1(a) and (d).
"Initial Closing" shall mean the transactions whereby the Company
and/or its Subsidiaries acquired the WCPT Contributed Assets and the
Whitehall Contributed Assets in exchange for Membership Units.
"Initial Closing Date" shall mean August 28, 1997, the date upon
which the Initial Closing occurred.
"Initial Closing Date Prorations" shall have the meaning set forth
in Section 2.9(b).
"Initial Members" shall mean WCPT and Whitehall.
"Initial Member's Percentage Interest" shall mean with respect to
either Initial Member, the ratio, expressed as a percentage, of such Initial
Member's current Percentage Interest to the aggregate current Percentage
Interests of the Initial Members.
"Institutional Lender" shall mean an Affiliate of any Member and/or
any one or more of the following other entities, provided that for any such
other entity to qualify as an Institutional Lender hereunder, such other
entity, together with its Affiliates, must have total assets of at least
$5,000,000,000 and stockholders' equity or net worth of at least $250,000,000
(or, in either case, the equivalent thereof in a foreign currency) as of the
date the loan is made: a savings bank, a savings and loan association, a
commercial bank or trust company, an insurance company subject to regulation
by any governmental authority or body, a real estate investment trust, a
union, governmental or secular employees welfare, benefit, pension or
retirement fund, a pension fund property unit trust (whether authorized or
unauthorized), an investment company or trust, a merchant or investment bank
or any other entity generally viewed as an institutional lender. In each of
the foregoing cases, such Affiliate or other entity shall constitute an
Institutional Lender whether (i) acting for itself or (ii) as trustee, in a
fiduciary, management or advisory capacity or, in the case of a bank, as
agent bank, for any number of lenders, so long as in the case of clause (ii)
the day-to-day management decisions relating to the loan are either exercised
by or recommended by such Institutional Lender and, during the life of the
loan, such Institutional Lender shall only be removed from its clause (ii)
capacity if it is replaced by another Institutional Lender also so acting
under clause (ii).
"Insurance Program" shall have the meaning set forth in
Section 3.4.
"Interest" shall mean the entire interest of a Member in the
Company at any particular time, including the Percentage Interest and Series
A Preferred Percentage Interest of such Member, together with the right of
such Member to any and all benefits to which a Member may be entitled as
provided in this Agreement, together with the obligations of such Member to
comply with all the terms and provisions of this Agreement. The Interest of
any Member may be expressed as a number of Membership Units or Series A
Preferred Membership Units, or a combination thereof.
"Internal Rate of Return" shall mean, with respect to any Member,
that such Member has achieved an internal rate of return of a specified
percentage per annum, which shall occur when the total Capital Contributions
made from time to time by such Member under this Agreement or the WWP
Agreement are returned to such Member together with an annual return equal to
such specified percentage calculated commencing on the date such Capital
Contributions are or were made under this Agreement or the WWP Agreement and
compounded annually to the extent not paid on a current basis, taking into
account the timing and amounts of all previous Capital Contributions by such
Member to the Company and all previous distributions by the Company to such
Member under this Agreement or the WWP Agreement. For purposes of computing
such internal rate of return, any Capital Contribution made by such Member
and any distribution of funds received by such Member at any time during a
month shall be deemed to be made or received on the first day of such month.
Notwithstanding anything to the contrary contained herein, the WWP
Contribution shall not be deemed to be a Capital Contribution for purposes of
computing such Internal Rate of Return. In addition, solely for purposes of
calculating the Internal Rate of Return in Sections 7.1(b)(ii) and
7.1(b)(iii), the amount of each Initial Member's Capital Contributions as of
the Initial Closing Date shall be deemed to be such Member's actual Capital
Contributions as of the Initial Closing Date less such Initial Member's
Percentage Interest (as of the Initial Closing Date) multiplied by
$1 million.
"IRS" shall mean the Internal Revenue Service.
"Leasing Plan" shall mean, with respect to any Property, the
leasing guidelines prepared by the Manager for each type of planned use of
such Property (e.g. commercial, industrial or retail) containing parameters
for minimum rents, tenant allowances, operating expense recaptures, financial
condition of tenants, free rent, lease assignments and assumptions, overages
and tenant improvements to the extent such information is available and
pertinent.
"Lien" shall mean any lien, mortgage, charge, restriction, option,
right of first refusal or offer, contractual restriction on transfer,
security interest, tax lien, pledge, encumbrance, conditional sale or title
retention arrangement, or any other claim of any kind or nature against any
Property securing any Indebtedness, or any agreement to create or confer any
of the foregoing, in each case whether arising by agreement or under any
statute or law or otherwise.
"Losses" shall have the meaning set forth in Section 6.2(a).
"Major Decisions" shall have the meaning set forth in Section 3.4.
"Management Committee" shall have the meaning set forth in Section
3.5 hereof.
"Manager" (i) shall mean WCPT upon the execution and delivery
hereof, (ii) except as set forth in clause (iii) below, if for any reason
WCPT ceases to be the Manager, shall thereafter mean another Person appointed
by the Management Committee or (iii) if WCPT ceases to be the Manager
pursuant to Section 9.1, shall thereafter mean another Person appointed by
Whitehall.
"Mandatory Capital Call" shall mean a Capital Call for any capital
contributions that would be required pursuant to Section 5.2(a).
"Marketing Period" shall have the meaning set forth in Section
8.2(e).
"Marketing Plan" shall mean, with respect to any Property or
appropriate part thereof, the comprehensive plan for marketing and leasing
the space in such Property, which plan shall be submitted by the Manager to,
and approved by, the Management Committee; provided that, the initial
Marketing Plan for any Saracen Property for calendar year 1998 shall be the
marketing plan for such property prepared by or on behalf of the relevant
Saracen Current Owner, a copy of which shall have been provided to and
approved by the Management Committee prior to the Saracen Closing.
"Member-Funded Debt" shall mean any non-recourse debt of the
Company which is loaned or guaranteed by any Member and/or is treated as
Member non-recourse debt with respect to a Member under Treasury Regulations
Section 1.704-2(b)(4).
"Member Loan" shall mean any loan made by a Member to another
Member pursuant to Section 5.3(b).
"Members" shall mean Whitehall and WCPT (for as long as such
Persons are still members of the Company), their successors and permitted
assigns and any other members admitted to the Company in accordance with
Article VIII.
"Membership Capital Accounts" shall have the meaning set forth in
Section 6.1(f).
"Membership Unit" shall mean a fractional, undivided share of the
Interest of all Members issued pursuant to Section 5.1(h) or Section 5.9
hereof, but shall not include the Series A Preferred Membership Units. As of
the date hereof, there shall be considered to be 8,748,844 Membership Units
outstanding, with each Membership Unit representing a .000011430% Percentage
Interest in the Company. The Management Committee may create and authorize
the issuance of new membership interests and may designate one or more new
classes of membership interests and establish the designations, preferences
and relative, participating, optional or other special rights, powers and
duties of each class of membership interests. The number of Membership Units
owned by any Member may be expressed as such Member's Percentage Interest.
The Membership Units are not intended to be characterized as "securities" for
any purpose (including any securities laws).
"Minimum Gain" shall mean an amount equal to the excess of the
principal amount of debt, for which no Member is liable ("non-recourse
debt"), secured by Company Assets, over the adjusted basis of such Company
Assets which represents the minimum taxable gain which would be recognized by
the Company if the non-recourse debt were foreclosed upon and the Company
Assets were transferred to the creditor in satisfaction thereof, and which is
referred to as "minimum gain" in Treasury Regulations Sec-
tion 1.704-1(b)(4)(iv). A Member's share of Minimum Gain shall be determined
pursuant to the above-cited Treasury Regulations.
"Necessary Expenditure" shall mean, (i) to the extent Available
Cash is not sufficient to pay for any expenditure whether or not of a
recurring nature (x) that is necessary, in the reasonable discretion of
either the Manager or Whitehall, to preserve or protect the assets of the
Company, including, without limitation, real estate taxes, insurance
payments, costs of restoring the assets of the Company after a casualty or
condemnation thereof, costs of any capital expenditure necessary to protect
the structural integrity of any asset of the Company or human health or
safety, utility costs, costs of compliance with law, payments on or of
contractual obligations and debts of the Company, tenant improvements and
leasing commissions, or (y) that is required to effectuate or pay for any
cost, expense or transaction provided for in an Approved Budget and (ii) to
the extent Available Cash is not sufficient to repay the WRP Loans in full at
maturity.
"net equity" shall mean, with respect to an entity, the book value
(before depreciation) of such entity's assets less the liabilities of such
entity, and, with respect to any property, the book value (before
depreciation) of such property less the liabilities with respect to such
property.
"New Member" shall mean any Member other than one of the Initial
Members or Saracen. Any New Member may be issued a new class of membership
interests with such classifications and designations as the Management
Committee shall determine.
"Nomura Loan" shall mean that certain loan made by Nomura Asset
Capital Corporation to Wells Senior Holdings LLC in the original principal
amount of $69,000,000.00 as evidenced by the documents and instruments
described on Exhibit C annexed to the Contribution Agreement.
"Nomura Properties" shall mean, collectively, (x) each of the
parcels of land described on Exhibits B-1 through Exhibits B-5 annexed to the
Contribution Agreement and the improvements located on such land, and (y) the
Dedham Place Condominium Unit and all of the Appurtenant Interests (as such
term is defined in the Condominium Documents) relating to the Dedham Place
Condominium Unit; each of the foregoing being commonly known, respectively,
as 333 Elm Street, Norfolk, Massachusetts; 128 Technology Center, Westwood,
Massachusetts; 201 University Avenue, Westwood, Massachusetts; 7/57 Wells
Avenue, Newton Massachusetts; 75/85/95 Wells Avenue, Newton, Massachusetts;
and Dedham Place, Dedham, Massachusetts.
"Non-Contributing Member" shall have the meaning set forth in
Section 5.3.
"Non-Nomura Properties" shall mean, collectively, each of the
parcels of land described on Exhibits B-6 through Exhibits B-13 annexed to
the Contribution Agreement and the improvements located on such land, and
commonly known as 74 Turner Street, Waltham, Massachusetts; 60 Turner Street,
Waltham, Massachusetts; 70 Wells Avenue, Newton, Massachusetts; 100 Wells
Avenue, Newton, Massachusetts; 150 Wells Avenue, Newton, Massachusetts; 160
Wells Avenue, Newton, Massachusetts; and 2331 Congress Street, Portland,
Maine.
"Non-Recourse Liability" shall mean a liability that is a non-
recourse liability within the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2) and a qualified non-recourse financing within the
meaning of Section 465(b)(6) of the Code.
"Non-Triggering Party" shall have the meaning set forth in
Section 8.2(a).
"Non-Triggering Saracen Transfer" shall have the meaning set forth
in Section 8.2A(a)(ii).
"Notice of Conversion" shall mean a Notice of Conversion
substantially in the form of Exhibit D.
"Objection Notice" shall have the meaning set forth in
Section 11.3(c).
"Offer" shall have the meaning set forth in Section 8.2(b).
"Office Property" shall mean any office building property,
including, without limitation, a research and development facility or a
mixed-use complex, not less than 40% of the rentable square footage of which
is used for offices and/or research and development space.
"Operational Decisions" shall have the meaning set forth in
Section 3.4.B.
"Organizational Document" of a Person shall mean (i) with respect
to a corporation, such Person's certificate of incorporation and by-laws, and
any shareholder agreement, voting trust or similar arrangement applicable to
any of such Person's authorized shares of capital stock, (ii) with respect to
a partnership, such Person's certificate of limited partnership, partnership
agreement, voting trusts or similar arrangements applicable to any of its
partnership interests or (iii) with respect to a limited liability company,
such Person's certificate of formation, limited liability company agreement
or other document affecting the rights of holders of limited liability
company interests.
"Payments" shall have the meaning set forth in Section 8.2A.
"Percentage Interest" shall mean the percentage interest listed for
each Member in Schedule 5.1(h) with respect to its Membership Units, as the
same may be adjusted pursuant to the terms of this Agreement.
"Permitted Liens" shall mean (i) Liens for taxes and other similar
charges not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves have been established
(and as to which the property subject to such Lien is not yet subject to
foreclosure, sale or loss on account thereof); (ii) Liens in respect of
property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's and other like Liens; provided that
such Liens secure only amounts not yet due and payable or amounts being
contested in good faith by appropriate proceedings for which adequate
reserves have been established (and as to which the property subject to such
lien is not yet subject to foreclosure, sale or loss on account thereof);
(iii) easements, rights-of-way, restrictions (including zoning restrictions),
defects or irregularities in title and other similar charges or encumbrances
not, in any material respect, interfering with the ordinary conduct of
business at the relevant property; (iv) leases or subleases granted to
others, whether existing now or hereafter entered into, in the ordinary
course of business; (v) any attachment or judgment lien, unless the judgment
it secures shall not, within thirty (30) days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall not have
been discharged within thirty (30) days after the expiration of any such stay
and (vi) any Lien set forth on Schedule B (or any equivalent schedule) as an
exception to the title insurance policies insuring the title of the Company
or any of its Subsidiaries in and to the Properties.
"Person" shall mean any individual, partnership, corporation,
limited liability company, trust or other legal entity.
"Plan Asset Regulation" shall mean the Department of Labor
Regulation Section 2510.3-101, as amended.
"Pledgee" shall have the meaning set forth in Section 8.1(b).
"Profits" shall have the meaning set forth in Section 6.2(a).
"Preferred Distribution" shall mean an amount equal to 6% per annum
of the Preferred Value, calculated on a cumulative basis for each calendar
quarter during a calendar year (i.e., from the first day of the year (or, in
the first year, the Saracen Closing Date) through the end of the calendar
quarter for which the Preferred Distribution is being determined).
"Preferred Distribution Amount" shall mean, for any calendar
quarter, an amount equal to (A) the greater of (i) the Preferred Distribution
and (ii) an amount equal to (x) the Preferred Percentage times (y) the
Cumulative Distribution Amount less all distributions made pursuant to
Section 7.1(a-2)(i)(A) of this Agreement or Section 7.1(a-2)(i)(A) of the WWP
Agreement with respect to the then current calendar year, less (B) all
distributions theretofore made pursuant to Section 7.1(a-2)(i)(B) of this
Agreement or Section 7.1(a-2)(i)(B) of the WWP Agreement with respect to the
then current calendar year.
"Preferred Holders" shall have the meaning set forth in Section
3.5(c)(i).
"Preferred Limitation" shall mean, with respect to any calendar
year, the sum of the Unpaid Preferred Distribution (as of the first day of
such calendar year) and the Preferred Distribution Amount for such calendar
year. The parties agree that, for purposes of calculating the Preferred
Limitation, the Cumulative Distribution Amount shall be calculated based only
on actual cash distributions made pursuant to Section 7.1.
"Preferred Percentage" shall mean a fraction (expressed as a
percentage), the numerator of which is the number of Converted Units and the
denominator of which is the number of Total Units.
"Preferred Value" shall mean an amount equal to the product of $25
and the number of Series A Preferred Membership Units outstanding.
"Promote" shall mean the aggregate distributions that would be made
to the Manager pursuant to Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y),
7.1(c)(iii)(y) and 7.1(c)(iv)(y).
"Property" and "Properties" shall have the meanings set forth in
Section 2.4(a).
"Property Loan" shall mean any bridge, permanent or construction
financing obtained by the Company or any of its Subsidiaries in accordance
with the provisions hereof relating to one or more Properties which may be
secured by a mortgage, or similar security in the nature of a mortgage, on
such Properties, and which is to be entered into for the purpose of financing
or refinancing the acquisition, construction, development, and/or operation
of such Properties. The term "Property Loan" shall also include the Assumed
Financing.
"publicly traded" means listed or admitted to trading on the New
York Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on the NASDAQ National
Market, or any successor to any of the foregoing.
"recapture income" shall have the meaning set forth in the Code and
the applicable Treasury Regulations.
"Replacement Property" shall have the meaning set forth in Section
8.2A.
"Required Amortization" shall have the meaning set forth in Section
8.2A(a)(ii).
"Required Committee Approval" shall mean, with respect to any Major
Decision, the affirmative approval of no fewer than two Committee
Representatives appointed by each Appointing Member, and with respect to any
Operational Decision, the affirmative approval of no fewer than one Committee
Representative appointed by each Appointing Member. During a Preferential
Distribution Non-Payment (as defined in the Series A Terms), "Required
Committee Approval" shall mean, with respect to any Major Decision or
Operational Decision, the affirmative approval of a majority of Committee
Representatives then having voting, consent, approval or determination rights
on the Management Committee, provided, however, that during a Preferential
Distribution Non-Payment (as defined in the Series A Terms), any Major
Decision or Operational Decision which would require the Initial Members to
make additional Capital Contributions (other than pursuant to Section 5.2(a)
below) shall require the applicable Required Committee Approval referred to
in the immediately preceding sentence.
"Rights" shall mean any rights, options, warrants or convertible or
exchangeable securities (or instruments exchangeable or convertible into any
of the foregoing) that in any case entitle the holder to subscribe for or
purchase or otherwise receive one or more Shares or any other securities or
property of WCPT.
"Sales Notice" shall have the meaning set forth in Section 8.2(a).
"Sales Response Notice" shall have the meaning set forth in
Section 8.2(c).
"Saracen" or "Saracen Members" shall mean the Members set forth on
Schedule 1 annexed hereto.
"Saracen Closing" shall mean the transactions whereby the Company
and/or its Subsidiaries acquired the Saracen Contributed Assets in exchange
for cash, the assumption of certain liabilities, Membership Units, Series A
Preferred Membership Units and other good and valuable consideration in
accordance with the terms hereof and the terms of the Contribution Agreement.
"Saracen Closing Date" shall mean May 15, 1998, the date upon which
the Saracen Closing occurred.
"Saracen Contributed Assets" shall have the meaning set forth in
Section 5.1(k).
"Saracen Current Owners" shall mean Wells Avenue Senior Holdings
LLC, 150 Wells Avenue Realty Trust, River Park Realty Trust, Seventy Wells
Avenue LLC, Newton Acquisition LLC I, Saracen Portland L.L.C., KSA Newton
Acquisition Limited Partnership II, KSA Newton Limited Partnership I and
Dominic J. Saraceno.
"Saracen Debt Reduction Event" shall have the meaning set forth in
Section 8.2A(a)(iv).
"Saracen Gain" shall have the meaning set forth in Section
8.2A(a)(iii).
"Saracen Gain Recognition" shall have the meaning set forth in
Section 8.2A(a)(iii).
"Saracen Indemnitee Member" shall have the meaning set forth in
Section 8.2A(a)(iii).
"Saracen Properties" shall mean the Nomura Properties, the 72 River
Park Property and the Non-Nomura Properties.
"Series A Capital Accounts" shall have the meaning set forth in
Section 6.1(f).
"Series A Preferred Membership Units" shall mean the Company's
Series A 6% Convertible Preferred Membership Units with a liquidation
preference per unit equal to $25, which shall have the rights, preferences
and privileges as set forth in the Series A Terms.
"Series A Preferred Percentage Interest" shall mean the percentage
interest listed for each Member in Schedule 5.1(h) with respect to its Series
A Preferred Membership Units, as the same may be adjusted pursuant to the
terms of this Agreement.
"Series A Terms" shall mean the terms of the Company's Series A 6%
Convertible Preferred Membership Units as set forth in Exhibit F annexed
hereto.
"700 Atrium Purchase Contract" shall mean the Purchase Contract
between S/A - 700 Atrium Drive Limited Partnership and WHMAB Real Estate
Limited Partnership, dated as of June 30, 1997.
"72 River Park Property" shall mean the parcel of land and the
improvements located on such land, and commonly known as 72 River Park,
Needham, Massachusetts.
"Share" shall mean a share of beneficial interest (or other
comparable equity interest) of WCPT. If there is more than one class or
series of Shares, the term "Shares" shall, as the context requires, be deemed
to refer to the class or series of Shares that correspond to the class or
series of Membership Interests for which the reference to Shares is made.
"Shares Amount" shall mean a number of Shares equal to the product
of the number of Membership Units offered for conversion times the Conversion
Factor; provided that, if WCPT, at any time, issues any Rights to the holders
of Shares, then the Shares Amount shall also include such Rights that a
holder of that number of Shares would have been entitled to receive.
"Specified Conversion Date" shall mean the tenth Business Day after
receipt by WCPT of a Notice of Conversion.
"Subsidiary" shall mean any Person more than 50% owned, directly or
indirectly, by the Company and over which the Company has management control.
No Subsidiary may be a corporation without the consent of the Management
Committee. As of the date hereof, "Subsidiary" shall mean,
Wellsford/Whitehall Holdings, L.L.C., Wells Avenue Holdings L.L.C., Wells
Avenue Senior Holdings LLC, WASH Manager L.L.C. and WEL/WH Convention
Managers, L.L.C.
"Substituted Member" shall mean any Person admitted to the Company
as a Member pursuant to the provisions of Section 8.7.
"Successor Company" shall have the meaning set forth in Section
8.2A.
"Tag Along Election Notice" shall have the meaning set forth in
Section 8.10.
"Tag Along Notice" shall have the meaning set forth in Section
8.10.
"Tag Along Transaction" shall have the meaning set forth in Section
8.10.
"Target Territory" shall mean the Commonwealths of Massachusetts
and Virginia and the States of Connecticut, Delaware, Maine, Maryland, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, the
greater metropolitan region (including central business district and suburban
markets) of Washington, D.C. and each other greater metropolitan region
(including central business district and suburban markets) in which the
Company and/or its Subsidiaries own one or more Office Properties having a
total purchase price of $15 million in the aggregate.
"Tax Liability Reserve Account" shall have the meaning set forth in
Section 8.2A(c).
"Tax Returns" shall have the meaning set forth in Section
8.2A(a)(xi).
"Third Party" shall have the meaning set forth in Section 8.2(a).
"Third Party Offer" shall have the meaning set forth in
Section 8.2(f).
"Third Party Offer Price" shall have the meaning set forth in
Section 8.2(f).
"Third Party Response Notice" shall have the meaning set forth in
Section 8.2(g).
"Total Price" shall have the meaning set forth in Section 8.2(a).
"Total Units" shall mean the number of Membership Units outstanding
plus the number of Converted Units.
"Transfer" shall have the meaning set forth in Section 8.1(a).
"Treasury Regulations" shall mean the regulations promulgated under
the Code, as such regulations are in effect on the date hereof.
"Triggering Party" shall have the meaning set forth in
Section 8.2(a).
"Unpaid Preferred Distribution" means, for any calendar quarter, an
amount determined as of the close of the preceding calendar year equal to (A)
the sum of the Preferred Distribution Amounts for such preceding calendar
year and all prior years, less (B) the sum of all distributions made pursuant
to Section 7.1(a-2)(i) of this Agreement or Section 7.1(a-2)(i) of the WWP
Agreement with respect to such preceding calendar year and all prior years,
less (C) all distributions theretofore made pursuant to Section 7.1(a-
2)(i)(A) of this Agreement or Section 7.1(a-2)(i)(A) of the WWP Agreement
with respect to the then current year.
"Warrant Agreement" shall mean the Warrant Agreement dated as of
the Initial Closing Date between WRP and United States Trust Company of New
York, as warrant agent, as such agreement may be amended or restated from
time to time.
"WCPT" shall have the meaning set forth in the first paragraph of
this Agreement.
"WCPT Contributed Assets" shall have the meaning set forth in
Section 5.1(d).
"WCPT Current Owners" shall mean North American Medical Research
Corp., Wellsford Wayne Corp., Wellsford Chatham Corp. and Wellsford
Greenbrook Corp.
"WCPT IPO" shall have the meaning set forth in Section 8.3(e).
"WCPT Properties" shall mean each of the real properties listed on
Exhibit C-4.
"Whitehall" shall have the meaning set forth in the first paragraph
of this Agreement.
"Whitehall Additional Contributed Assets" shall have the meaning
set forth in Section 5.1(i).
"Whitehall Additional Properties" shall mean each of the real
properties listed on Exhibit B-5.
"Whitehall Contributed Assets" shall have the meaning set forth in
Section 5.1(a).
"Whitehall Current Owners" shall mean WHATR Real Estate Limited
Partnership, WHPKS Real Estate Limited Partnership and WHMAB Real Estate
Limited Partnership.
"Whitehall Properties" shall mean each of the real properties
listed on Exhibit B-4.
"Whitehall Registration Statement" shall have the meaning set forth
in Section 8.3(e).
"WRP" shall mean Wellsford Real Properties, Inc., a Maryland
corporation.
"WRP At-Market Shares" shall mean the shares of WRP issued to
Whitehall pursuant to the WRP Letter Agreement in exchange for Membership
Units owned by Whitehall.
"WRP Letter Agreement" shall mean the letter agreement, dated as of
the Initial Closing Date, between Whitehall and WRP concerning the conversion
of Whitehall's Membership Units into WRP At-Market Shares.
"WRP Loans" shall have the meaning set forth in Section 3.4.
"WRP Shares" shall mean shares of common stock, $.01 par value per
share, of WRP.
"WRP Warrants" shall mean the warrants issued on the Initial
Closing Date to Whitehall by WRP pursuant to the Warrant Agreement.
"WWP" shall have the meaning set forth in the second paragraph of
this Agreement.
"WWP Agreement" shall have the meaning set forth in the second
paragraph of this Agreement.
"WWP Contribution" shall have the meaning set forth in the third
paragraph of this Agreement.
1.2. Terms Generally. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include both the plural and the singular;
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(c) the words "including" and "include" and other words of similar
import shall be deemed to be followed by the phrase "without limitation."
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name. The business of the Company shall be conducted
under the name of "Wellsford/Whitehall Properties II, L.L.C." in the State of
Delaware and under such name or such assumed names as the Management
Committee deems necessary or appropriate to comply with the requirements of
any other jurisdiction in which the Company may be required to qualify.
2.2. Term. The term of the Company will commence on the date of
this Agreement and shall continue in full force and effect until December 31,
2045, unless sooner terminated or dissolved as hereinafter provided.
2.3. Filing of Certificate and Amendments. The Manager shall (and
shall have the power and authority to) execute and file the Certificate of
Formation and any required amendments thereto and do all other acts requisite
for the constitution of the Company as a limited liability company pursuant
to the laws of the State of Delaware or any other applicable law and for
enabling the Company or its Subsidiaries to conduct business in each
jurisdiction where the Properties are located.
2.4. Purpose and Business; Powers; Scope of Members' Authority.
(a) The Company is organized primarily for the purpose of directly or
indirectly acquiring, owning, financing, managing, maintaining, operating,
improving, developing and selling real property (each real property owned by
the Company or one of its Subsidiaries, together with all improvements
thereon and personal property owned by the Company or its Subsidiary related
thereto, a "Property", and all properties collectively, the "Properties").
After giving effect to the Initial Closing, the Properties were the real
properties set forth on Exhibit B-4 and Exhibit C-4, after giving effect to
the Additional Closing, the Properties were the real properties set forth on
Exhibit B-4, Exhibit C-4 and Exhibit B-5, and after giving effect to the
Saracen Closing, the Properties were the real properties set forth on Exhibit
B-4, Exhibit C-4 and Exhibit B-5 hereto and Exhibit B to the Contribution
Agreement. Subject to the other terms and conditions of this Agreement, the
Company is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Company and its Subsidiaries,
including, without limitation, full power and authority, directly or through
its Subsidiaries, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve
and develop any Property, and lease, sell, transfer and dispose of any
Property. The Company will at all times operate in a manner so as to be
exempt from the provisions of the Investment Company Act of 1940, as amended.
(b) Except as otherwise expressly and specifically provided in
this Agreement, no Member shall have any authority to bind or act for, or
assume any obligations or responsibility on behalf of, any other Member.
Neither the Company nor any Member shall, by virtue of executing this Agree-
ment, be responsible or liable for any indebtedness or obligation of the
other Members or otherwise relating to any Property incurred or arising
either before or after the execution of this Agreement, except as to those
joint responsibilities, liabilities, indebtedness, or obligations expressly
assumed by the Company as of the date of this Agreement or incurred
thereafter pursuant to and as limited by the terms of this Agreement.
2.5. Principal Office; Registered Agent. The principal office of
the Company shall be 610 Fifth Avenue, New York, New York 10020. The Company
may change its place of business to such location or locations as may at any
time or from time to time be determined by the Management Committee. The
mailing address of the Company shall be c/o Wellsford Commercial Properties
Trust, 610 Fifth Avenue, New York, New York 10020, or such other address as
may be selected from time to time by the Management Committee. The Company
shall maintain a registered office at The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801. The name and address of the Company's registered agent is
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
2.6. Names and Addresses of Members. The names and addresses of
the Members are as set forth on Schedule 2.6 hereto.
2.7. Pre-Closing Costs. Except as otherwise provided herein to
the contrary, each of the Members will bear all costs and expenses incurred
by such Member prior to the date hereof, including, without limitation, all
costs and expenses (including transfer and recordation taxes with respect to
properties transferred by such Member) relating to the contribution of assets
to the Company in connection with the Initial Closing.
2.8. Post-Closing Receipts. (a) The Subsidiaries of the Company
shall be entitled to receive, and WCPT shall pay to the Company if received
by WCPT or any of its Affiliates, all income with respect to the WCPT
Properties that is received on or after the Initial Closing Date which
relates to any event or period after the Initial Closing, provided that WCPT
shall be entitled to receive, and the Company and its Subsidiaries shall pay
to WCPT if received by any of them, all rents and other receivables with
respect to the WCPT Properties owing by tenants or other Persons at the WCPT
Properties which accrued prior to the Initial Closing unless and to the
extent any amounts are then due and payable by the payor of such income to
the Company or one of its Subsidiaries on account of any period after the
Initial Closing and such payment is not specifically designated to be applied
to amounts owing which relate to events or periods prior to the Initial
Closing.
(b) The Subsidiaries of the Company shall be entitled to receive,
and Whitehall shall pay to the Company if received by Whitehall or any of its
Affiliates, all income with respect to the Whitehall Properties that is
received on or after the Initial Closing Date which relates to any event or
period after the Initial Closing, provided that Whitehall shall be entitled
to receive, and the Company and its Subsidiaries shall pay to Whitehall if
received by any of them, all rents and other receivables with respect to the
Whitehall Properties owing by tenants or other Persons at the Whitehall
Properties which accrued prior to the Initial Closing unless and to the
extent any amounts are then due and payable by the payor of such income to
the Company or one of its Subsidiaries on account of any period after the
Initial Closing and such payment is not specifically designated to be applied
to amounts owing which relate to events or periods prior to the Initial
Closing.
(c) The Subsidiaries of the Company shall be entitled to receive,
and Whitehall shall pay to the Company if received by Whitehall or any of its
Affiliates, all income with respect to the Whitehall Additional Properties
that is received on or after the Additional Closing Date which relates to any
event or period after the Additional Closing, provided that Whitehall shall
be entitled to receive, and the Company and its Subsidiaries shall pay to
Whitehall if received by any of them, all rents and other receivables with
respect to the Whitehall Properties owing by tenants or other Persons at the
Whitehall Additional Properties which accrued prior to the Additional Closing
unless and to the extent any amounts are then due and payable by the payor of
such income to the Company or one of its Subsidiaries on account of any
period after the Additional Closing and such payment is not specifically
designated to be applied to amounts owing which relate to events or periods
prior to the Additional Closing.
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control.
(a) Except as otherwise specifically set forth in this Agreement,
including, without limitation, Sections 3.1(c), 3.2, 3.3, 3.4, 3.5 and 3.6,
the Manager shall have the right, power and authority to conduct the business
and affairs of the Company (whether for the Company itself or where the
Company is acting in its capacity as a direct or indirect member, partner or
owner of any Subsidiary) and to do all things necessary to carry on the
business of the Company, and is hereby authorized to take any action of any
kind and to do anything and everything the Manager deems necessary or
appropriate in accordance with the provisions of this Agreement and
applicable law. The Manager shall have the authority to carry out the
Business Plan approved by the Management Committee for each Property subject
to the limitations therein and in the Approved Budget.
(b) As long as WCPT shall be the Manager, WCPT agrees to cause
experienced and qualified personnel of WRP (or an Affiliate of WRP) to
supervise the business of the Company and to devote such time to the business
of the Company and its Subsidiaries as may be necessary to carry out the
business and purpose of the Company and its Subsidiaries in a prudent and
efficient manner.
(c) The Manager shall not, without the prior approval of the
Management Committee, take any action on behalf of or in the name of the
Company (whether for the Company itself or where the Company is acting in its
capacity as a direct or indirect member, partner or owner of any Subsidiary),
or enter into any commitment or obligation binding upon the Company, except
for (i) actions authorized under this Agreement and (ii) actions authorized
by the Members or the Management Committee in the manner set forth herein.
The Manager shall indemnify and hold harmless the Company, its Subsidiaries
and the Members and their Affiliates from and against any and all claims,
demands, losses, damages, liabilities, lawsuits and other proceedings,
judgments and awards, and costs and expenses (including but not limited to
reasonable attorneys' fees) arising, directly or indirectly, in whole or in
part, out of any breach of the provisions of this Section 3.1(c) by the
Manager or its Affiliates.
(d) The Management Committee shall have the full and exclusive
right, power and authority to act on behalf of the Company (whether the
Company is acting in its own behalf or in its capacity as a direct or
indirect member, partner or owner of any Subsidiary) to the extent provided
herein, including, without limitation, Sections 3.4, 3.5 and 3.7.
3.2. Enumeration of Specific Duties. (a) Subject to the other
provisions of this Article III, the Manager shall have the right, power,
authority and (to the extent there are available funds from the Company or
the appropriate Subsidiary) duty, all at the Company's expense, to manage the
day-to-day business of the Company and the Subsidiaries and to implement the
decisions made and the actions authorized for and on behalf of the Company by
the Management Committee, including, without limitation, all of the
following:
(i) applying for and using diligent efforts to obtain any and
all necessary consents, approvals and permits required for the occupancy
and operation of each Property;
(ii) supervising and managing the performance of all contrac-
tors performing work (including construction) including direct
observation, inspection and supervision during the progress thereof;
making final inspection of the completed work and approving bills for
payment; obtaining the necessary receipts, releases, waivers, discharges
and assurances to keep each Property free from mechanics' and material-
men's liens and other claims;
(iii) paying, before delinquency and prior to the addition of
interest or penalties, all taxes, assessments and other impositions
applicable to each Property and other assets owned by the Company and
its Subsidiaries, and undertaking any action or proceeding seeking to
reduce such taxes, assessments or other impositions;
(iv) procuring all necessary insurance to the extent
available at commercially reasonable rates for the Company and its
Subsidiaries in accordance with the Insurance Program adopted by the
Company from time to time pursuant to clause (b) of the definition of
"Operational Decision" set forth in Section 3.4.B. below (provided that
the Manager shall increase any insurance coverage carried by the Company
and its Subsidiaries or procure any additional insurance coverage
(whether or not provided for in the Insurance Program) if required under
the terms of any Property Loan or if requested to do so by the
Management Committee to the extent it is commercially reasonable to do
so); causing the Members to be named as additional insureds on all
liability policies maintained by the Company and its Subsidiaries; deli-
vering to the members of the Management Committee copies of all
insurance policies maintained by the Company and its Subsidiaries from
time to time, including renewals or replacements of any expiring
policies prior to the expiration thereof;
(v) verifying that appropriate insurance (including any
required by the terms of any Property Loan) is maintained by each
contractor performing work on a Property;
(vi) executing and delivering leases and other legal
documents necessary to carry out the business of the Company and its
Subsidiaries (which legal documents shall have first been approved by
the Management Committee if its approval is required pursuant to this
Agreement, including, without limitation, Section 3.4 below) provided
that, the Management Committee shall be deemed to have approved the
legal documents and tenants in respect of the leases described on
Schedule 3.2(a)(vi);
(vii) demanding, receiving, acknowledging and instituting
legal action for recovery of any and all revenues, receipts and
considerations due and payable to the Company or its Subsidiaries, in
accordance with prudent business practices;
(viii) keeping all books of account and other records of the
Company and its Subsidiaries and delivering all reports in the manner
provided in Article XI below and maintaining (or causing to be
maintained) books of account and other records of the Subsidiaries
separate and distinct from the books and records of the Company;
(ix) maintaining all funds of the Company in a Company bank
account in the manner provided in Article XI below, which funds shall
not be commingled with the funds of the Subsidiaries or any other
Person, conducting any and all banking transactions on behalf of the
Company and adjusting and settling checking, savings, and other accounts
with such institutions as the Management Committee shall deem
appropriate;
(x) delivering to the Management Committee members copies of
any notices received from lenders, or other persons with whom the
Company or its Subsidiaries have material contractual obligations,
alleging any material deficiencies or defaults by the Company or its
Subsidiaries under the said contractual arrangements;
(xi) protecting and preserving the title and interests of the
Company (and its Subsidiaries) in the Properties and all other assets of
the Company, including keeping each Property and all other assets of the
Company and its Subsidiaries free from mechanics' and materialmen's
liens;
(xii) coordinating the defense of any claims, demands, suits
or legal proceedings made or instituted against the Company (or its
Subsidiaries) or the Members (as members of the Company) by other
parties, through legal counsel for the Company engaged in accordance
with the terms of this Agreement; giving the members of the Management
Committee prompt notice of the receipt of any material claim or demand
or the commencement of any suit or legal proceeding and, upon request,
promptly providing the members of the Management Committee all
information relevant or necessary thereto;
(xiii) monitoring and complying with (A) the terms and
provisions of any restrictive covenants or easement agreements affecting
any Property or any portion thereof, and any and all contracts entered
into or assumed by the Company (or its Subsidiaries), including, without
limitation, the exceptions noted in any title policy and (B) the terms
and provisions of any note, mortgage and other loan documents assumed or
executed by the Company or any Subsidiary, including any Property Loan
documents;
(xiv) coordinating the marketing and leasing of each
Property;
(xv) paying (or causing to be paid), prior to delinquency,
all insurance premiums, debts and other obligations of the Company and
its Subsidiaries, including amounts due under any loans to the Company
or its Subsidiaries and costs of construction, operation and maintenance
of each Property;
(xvi) at Company expense (except as otherwise provided
herein) and subject to the provisions of this Agreement, operating,
maintaining and otherwise managing each Property in an efficient manner
and at all times maintaining an organization sufficient to enable it to
carry out all of its duties, obligations and functions as Manager under
this Agreement, and rendering advice concerning sales and rental values
in the manner set forth in this Agreement;
(xvii) during the term of this Agreement, complying with all
present and future laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments, courts,
departments, commissions, boards and officers, the requirements of any
insurance policy (or any insurer thereunder) covering any Property, any
national or local Board of Fire Underwriters, or any other body
exercising functions similar to those of any of the foregoing, which may
be applicable to any Property and the operation and management thereof,
and, when appropriate and prudent to do so, contesting the validity or
application of any such law, ordinance, order, rule, regulation or
requirement;
(xviii) performing all other services reasonably necessary or
required for the ownership, development, maintenance, marketing and
operation by the Company or its Subsidiaries of each Property or
otherwise required to be performed by the Manager pursuant to this
Agreement and not otherwise prohibited hereunder;
(xix) requesting the Management Committee's consent to any
matter which the Company (or any Subsidiary) has the right to consent
to, waive or approve under or with respect to the partnership agreement
or other governing instrument of any Subsidiary to the extent such
matter would require the approval or consent of the Management Committee
hereunder;
(xx) delivering to each member of the Management Committee
promptly upon its receipt, copies of all (1) material summonses and
complaints served on the Company or any Subsidiary, (2) notices of
default on any loan or other indebtedness of the Company or any of its
Subsidiaries or any material contract to which the Company or any
Subsidiary is a party and (3) notices of the incurrence of or discovery
by the Manager of any Lien against any Property (other than a Permitted
Lien);
(xxi) executing on behalf of the Company and filing the
certificate of formation, certificate of limited partnership or
certificate of incorporation for any Subsidiary of the Company (the
formation of which has been approved by the Management Committee) and
any required amendments thereto and executing the operating company
agreement or limited partnership agreement or adopting by-laws of any
such Subsidiary and any required amendments thereto to the extent the
operative provisions of such agreement or by-laws or amendment has been
approved by the Management Committee; and doing all other acts requisite
for the constitution of such Subsidiary pursuant to the laws of the
State of Delaware or any other applicable law and for enabling such
Subsidiary to conduct its business in each jurisdiction where the
Properties are located; and
(xxii) taking any action directed by the Management Committee
(as evidenced by a written consent thereof).
(b) The Manager shall devote such time to the Company, its
Subsidiaries and their respective businesses as shall be reasonably necessary
to conduct the business of the Company and its Subsidiaries in an efficient
manner and to carry out the Manager's responsibilities set forth in this
Agreement. The Manager shall act and carry out its duties hereunder with
reasonable diligence and in a prompt and businesslike manner, exercising such
care and skill as a prudent property manager with sophistication and
experience in managing and developing real estate assets like the Properties
would exercise in dealing with its own property. Provided that the Manager
satisfies the standard of care, skill and performance set forth in this
paragraph (b), the Manager shall not be deemed to be in default of its duties
under this Section 3.2 with respect to its acts or omissions in carrying out
such duties.
3.3. No Authority to Hire Employees. The Company and its
Subsidiaries shall have no employees and the Manager shall have no authority
to hire any employees of the Company or its Subsidiaries. The Manager and/or
WRP shall at its own expense (subject to reimbursement as otherwise
specifically provided in this Agreement) maintain an organization sufficient
to enable the Manager and/or WRP to carry out all its duties, obligations and
functions hereunder. Without limiting the generality of the foregoing, the
Manager and/or WRP shall maintain, at the Company's (or the applicable
Subsidiary's) expense, workers' compensation insurance, employer's liability
insurance, fidelity bonds for employees with authority to sign checks or make
withdrawals from Company and/or Subsidiary bank accounts, and other
appropriate insurance insuring the Company (and each Subsidiary) against any
loss due to embezzlement or other dishonest acts or errors or omissions of
any employees of the Company, the Manager and/or WRP or any of its
Affiliates.
3.4. Decisions Requiring Approval of the Management Committee.
Notwithstanding anything to the contrary in this Agreement, no act shall be
taken, sum expended, decision made or obligation incurred by the Company (in
its own behalf or in its capacity as a member, partner or other equity holder
of any Subsidiary) or the Manager with respect to a matter within the scope
of any of the Major Decisions or Operational Decisions, unless and until the
Required Committee Approval shall have been obtained pursuant to and in
accordance with this Section 3.4 and Section 3.5. The provisions of this
Agreement relating to the management and control of the business and affairs
of the Company shall also be construed to be fully applicable to the
management and control of each Subsidiary and any and all matters listed in
part A below in this Section 3.4 shall constitute Major Decisions for
purposes hereof whether such matter relates to the Company or any Subsidiary
of the Company and any and all matters listed in part B below in this Section
3.4 shall constitute Operational Decisions for purposes hereof whether such
matter relates to the Company or any Subsidiary of the Company. In the event
of any need for consent of the Management Committee to any Major Decision or
Operational Decision, the Manager shall make such request of the Management
Committee in writing and shall provide each member of the Management
Committee with any information reasonably necessary for the Management
Committee to make an informed decision. The Manager shall use its reasonable
efforts to keep the Management Committee informed of the status of any matter
regarding which the Manager intends to request the Management Committee's
consent under this Section 3.4.
A. The "Major Decisions" are:
(a) altering the nature of the business of the Company or its
Subsidiaries from the businesses permitted by Section 2.4(a);
(b) taking any action in contravention of, amending, modifying or
waiving, the provisions of this Agreement or the Certificate of
Formation, or taking any action in contravention of, amending, modifying
or waiving the provisions of any Organizational Documents for any
Subsidiary;
(c) making a Capital Call except as permitted by Section 5.2;
(d) instituting proceedings to adjudicate the Company or any
Subsidiary a bankrupt, or consent to the filing of a bankruptcy
proceeding against the Company or any Subsidiary, or file a petition or
answer or consent seeking reorganization of the Company or any
Subsidiary under the Federal Bankruptcy Act or any other similar
applicable federal or state law, or consent to the filing of any such
petition against the Company or any Subsidiary, or consent to the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or any Subsidiary or of its
property, or make an assignment for the benefit of creditors of the
Company or any Subsidiary, or admit the Company's or any Subsidiary's
inability to pay its debts generally as they become due;
(e) extending the term of the Company or any of its Subsidiaries
beyond December 31, 2045;
(f) approving any Annual Capital Budget, Annual Operating Budget
or Business Plan or modifying (or deviating from) any of the foregoing
except to the extent the Manager is so permitted by this Section 3.4);
(g) establishing any reserve for the Company in excess of $1
million (less any reserves held by the Company's Subsidiaries other than
Property-level reserves) or establishing any Property-level reserves in
excess of 0.5% of the book value of the applicable Property (before
depreciation);
(h) selecting or varying depreciation and accounting methods which
would have a material effect on the income, loss, gain or deduction of
the Company or any of its Subsidiaries and making any other decisions or
elections with respect to federal, state, local or foreign tax matters
or other financial purposes;
(i) except as WCPT and Whitehall are each permitted by Section 8.2
hereof, directly or indirectly selling, transferring, assigning,
hypothecating, pledging or otherwise disposing of all or any portion of
any Property or any Subsidiary or any interest in any of the foregoing;
(j) extending credit, making loans or becoming or acting as a
surety, guarantor, endorser or accommodation endorser (or materially
modifying any obligations relating to the foregoing), except in connec-
tion with negotiating checks or other instruments received by the
Company (or any Subsidiary) and except for immaterial amounts in the
ordinary course of business;
(k) selecting the Company's or any Subsidiary's accountants and
independent auditors (unless such accountants or auditors are Ernst &
Young); and approving financial statements prepared by the Company's or
any Subsidiary's auditors;
(l) making or agreeing to any material changes to the zoning of
any Property; and approving the material terms and provisions of any
material restrictive covenants or easement agreements (other than
utility easements or other non-material easements necessary for the
operation or development of a Property) or any material documents
establishing a cooperative, condominium or similar association or
related entity affecting any Property or any portion thereof;
(m) obtaining financing or refinancing for, or otherwise incurring
any Indebtedness or issuing any debt or equity securities (including
Back-to-Back Debt) of, the Company (or any Subsidiary) or any assets of
the Company (or any Subsidiary) including, without limitation, any
Property Loan and any financing of the operations of the Company (or any
Subsidiary), except for unsecured loans for working capital specifically
set forth in an Approved Budget; placing or suffering of any other Lien
or encumbrance (other than leases permitted under paragraph (a) of the
definition of "Operational Decision" in this Section 3.4) on or
affecting any Property or any portion thereof or any other material
property or asset owned by the Company (or any Subsidiary) or selling
any debt securities of the Company or any Subsidiary in a public or
private offering or otherwise (or taking any action which has
substantially the same effect or commits the Company or any Subsidiary
to any of the foregoing); approving any document (including any
amendment, supplement or other modification) containing or evidencing
any material modification of any term of any such financing, refinancing
or encumbrance which was previously approved by the Management
Committee; and approving the terms of a workout of any such financing or
refinancing with the lender thereof;
(n) approving the admission to the Company of a successor or a New
Member or removing any Member, designating or approving the
classification of any new class of Membership Units issued to a New
Member (and establishing the designations, preferences and relative,
participating, optional or other special rights, powers and duties of
each class of Membership Units) or approving the admission to any
Subsidiary of a successor or an additional partner or member or other
equity owner;
(o) terminating and dissolving the Company (or causing or
consenting to any such action relating to a Subsidiary) except in
accordance with Article X below;
(p) acquiring any land or other real property or any interest
therein;
(q) making or approving any material change or modification to the
Marketing Plan applicable to any Property, it being agreed that it shall
not be deemed to be material if the proposed change (i) was necessitated
by the occurrence of an event which was not in the control of the
Manager, (ii) relates to a non-discretionary expenditure (e. g., taxes,
utilities or insurance) or (iii) would not cause either (1) more than a
5% increase in expenditures or decrease in revenues from the line item
in question set forth in the Approved Budget (taking into account all
other changes affecting such line item during the same Budget Year not
previously approved by the Management Committee); provided that, the
amount of such increase or decrease (together with all prior increases
in expenditures and decreases in revenues in such Approved Budget) shall
not exceed 2% of the total expenditures or revenues, as the case may be,
in the Approved Budget or (2) any Property Loan to be in default;
(r) modifying the material terms of (i) any loan documentation or
(ii) any other material agreement after the same has been approved by
the Members or the Management Committee (but only in the case of clause
(ii) if the consent of the Management Committee shall have been required
as a condition to the Manager's executing such other material
agreement);
(s) except as WCPT and Whitehall are each permitted by Section
8.2, approving or entering into an Extraordinary Transaction with
respect to the Company or any Subsidiary or causing the Company (or any
Subsidiary) to sell ownership interests or other securities in a public
or private offering or otherwise (or taking any action which has
substantially the same effect or commits the Company or any Subsidiary
to do any of the foregoing);
(t) taking any action or giving or withholding any consent, waiver
or approval or exercising any right that is specifically delegated to or
requires the approval of the Management Committee pursuant to the terms
of this Agreement; or
(u) forming any subsidiary of the Company.
Notwithstanding anything herein to the contrary, (i) the loans
being made and to be made by WRP to the Company (the "WRP Loans") pursuant to
the loan documents being entered into simultaneously herewith and said loan
documents shall be deemed to have been approved by the Management Committee
and (ii) the assumption of the Assumed Financing by the Company and the
execution and delivery by the Company of the documentation related thereto
shall be deemed to have been approved by the Management Committee. In
addition, without the consent of the Management Committee, either of the
Initial Members may elect to extend the WRP Loans in accordance with the
terms for their Extension Period (as defined in the loan documents evidencing
the WRP Loans) and in such instance, WCPT shall have the sole and exclusive
right (and is hereby directed) to execute, deliver and perform such mortgages
and other documents and take such other actions as may be required pursuant
to the loan documents evidencing the WRP Loans.
B. The "Operational Decisions" are:
(a) executing, modifying, accepting the surrender of or
terminating any lease or other arrangement involving the rental, use or
occupancy of any Property or any part thereof, except in accordance with
the applicable Leasing Plan; provided, however, that the Manager may
modify a lease of all or any portion of any Property if such lease would
still satisfy the applicable Leasing Plan as modified; and provided
further, however, that the Manager may terminate any lease (and bring
eviction and legal proceedings against the tenant thereunder) where the
tenant has defaulted in its rent payments or is otherwise in material
default;
(b) approving an insurance program for the Company (and its
Subsidiaries) and each Property (the "Insurance Program");
(c) retaining legal counsel for the Company (or its Subsidiaries)
in connection with any major financing or other capital event (including
a merger, combination or public offering of the Company);
(d) taking any action in respect of any Property relating to
environmental matters other than to obtain environmental studies and
reports and conduct (or arrange for) evaluations and analyses thereof
and other than to remediate any environmental contamination or other
similar matters as required by law if the cost of such remediation would
not exceed $250,000;
(e) settling an insurance claim or condemnation action involving a
claim in excess of Five Hundred Thousand Dollars ($500,000) or which,
when added to all other insurance or condemnation claims during a single
calendar year, exceeds One Million Dollars ($1,000,000);
(f) unless required pursuant to the terms of any ground lease or
mortgage encumbering any Property, deciding whether to repair or rebuild
in case of material damage to any of the improvements on such Property,
or any part thereof, arising out of a casualty or condemnation (except
such emergency repairs as may be necessary to protect such Property);
(g) making any expenditure or incurring any cost or obligation
which, when added to any other expenditure, cost or obligation of the
Company (or its Subsidiaries, as the case may be), either exceeds the
applicable Approved Budget applicable to the Budget Year when such
expenditure was made or cost or obligation was incurred or exceeds any
line items specified in such Approved Budget; provided, however, that
the Manager may, without the approval of the Management Committee, make
expenditures or incur obligations in excess of an Approved Budget if
(i) the making of such expenditure or incurrence of such obligation
either (1) was necessitated by the occurrence of an event which was not
in the control of the Manager or (2) relates to a non-discretionary
expenditure (e.g., taxes, utilities and insurance), (ii) such
expenditure or obligation is within a 5% variance from the line item in
question set forth in such Approved Budget (taking into account all
other expenditures in excess of such line item during the same Budget
Year not previously approved by the Management Committee) and the amount
of all variances for such Budget Year (including the pending variance)
would not exceed 5% of the total expenditures in the Approved Budget and
(iii) such expenditure or obligation would not cause the applicable
Property Loan, if any, to be in default;
(h) giving or withholding any consent, waiver or approval or
exercising any right that the Company (or any Subsidiary) has the right
to give, withhold or exercise under or with respect to the
Organizational Document of any Subsidiary to the extent that the
Management Committee would have the right to approve, consent or
exercise rights hereunder regarding such matter;
(i) entering into any property management, leasing, development or
similar agreement.
3.5. Management Committee.
(a) A committee consisting of the Committee Representatives (the
"Management Committee") is hereby established and is granted the sole and
exclusive right, power and authority to make all Major Decisions and
Operational Decisions on behalf of the Company and its Subsidiaries, and is
hereby authorized to designate an authorized signatory to execute and deliver
on behalf of the Company (or to cause the Manager to so execute and deliver)
any and all such contracts, certificates, agreements, instruments and other
documents, and to take any such action, as the Management Committee deems
necessary or appropriate relating to Major Decisions and Operational
Decisions.
(b) The Manager shall cause such reports as the Management
Committee shall reasonably request to be prepared and delivered on a timely
basis to the members of the Management Committee. Unless and until a new
Approved Budget shall be established, the Company shall operate under the
most recent Approved Budget. The Manager may from time to time submit
amendments to any Business Plan for the approval of the Management Committee.
The Management Committee will meet promptly after the submission of a
Business Plan or proposed amendment thereto with the object of reaching some
conclusion thereon within not later than thirty (30) days after the
submission of the same.
(c) (i) Four (4) Committee Representatives shall be appointed by
each of Whitehall and WCPT (each in such capacity, an "Appointing
Member") and each Committee Representative shall serve at the pleasure
of the Appointing Member that appointed such Committee Representative.
The Management Committee shall consist of the Committee Representatives
appointed by the Appointing Members, the Committee Representatives, if
any, appointed by the Saracen Members pursuant to Section 3.5(e)(vi),
and the Committee Representatives, if any, appointed by the holders of
Series A Preferred Membership Units together with the holders of
membership interests ranking on a parity with the Series A Preferred
Membership Units with respect to distribution rights (collectively, the
"Preferred Holders"), pursuant to the Series A Terms. Whitehall shall
cease to be an Appointing Member if it no longer owns Membership Units
and/or Shares having an aggregate original cost or fair market value,
whichever is greater, of at least $10 million (unless, at such time, the
aggregate cost or fair market value, whichever is greater, of WRP's
Shares and/or Membership Units (excluding Membership Units owned through
WCPT) is also less than $10 million); in which case, all decisions,
consents and approvals to be made or given by the Management Committee
or the Manager hereunder shall be made exclusively by WCPT and the
Preferred Holders, if applicable. If WRP no longer owns Shares and/or
Membership Units (excluding Membership Units owned through WCPT) having
an aggregate original cost or fair market value, whichever is greater,
of at least $10 million (unless, at such time, the aggregate cost or
fair market value, whichever is greater, of Whitehall's Membership Units
and Shares is also less than $10 million) then, subject to Section
4.2(l) herein, all decisions, consents and approvals to be made or given
by the Management Committee or the Manager hereunder described in
Section 3.4A(i), (m), (p), (r) and (s) shall be made exclusively by
Whitehall and the Preferred Holders, if applicable.
(ii) Each Appointing Member, the Saracen Members and the
Preferred Holders shall have the power to remove any Committee
Representative appointed by it or them and simultaneously to appoint a
replacement Committee Representative by delivering notice to the Company
and to the other Members five (5) Business Days in advance of such
removal and appointment. Vacancies on the Management Committee shall be
filled by the Appointing Member, the Saracen Members or the Preferred
Holders, as applicable, that appointed the Committee Representative
previously holding the position which is then vacant. Each Appointing
Member and the Preferred Holders, if applicable, agrees that their
respective appointed Committee Representatives shall have the authority
to act on behalf of such Appointing Member or the Preferred Holders, if
applicable, to effectuate the purposes of this Agreement and to execute
documents on their respective behalf (unless such Appointing Member or
the Preferred Holders, if applicable, provides to the Appointing Members
and to the Preferred Holders, if applicable, written notice to the
contrary), except that the Committee Representatives shall not have the
authority to appoint successor Committee Representatives. Each
Appointing Member's Committee Representatives (and such Committee
Representatives appointed by the Preferred Holders, if applicable) shall
have the right to rely on the authority of the Appointing Members'
Committee Representatives (and such Committee Representatives appointed
by the Preferred Holders, if applicable) to act for its designating
Appointing Member, or Preferred Holders, as applicable, until such time
as it or they receive written notice from such Appointing Members, or
Preferred Holders, as applicable, that a Committee Representative has
been removed or its authority limited.
(iii) The individuals appointed as Committee
Representatives must always be Affiliates or employees of their
respective Appointing Member or their respective Affiliates. Such
individuals shall cease to be Committee Representatives and shall be
immediately removed by their respective Appointing Member (or the other
Appointing Member if such Appointing Member fails to do so) in the event
such individuals cease to be so affiliated with their respective
Appointing Member.
(iv) The Committee Representatives effective as of the date
hereof shall be as follows:
Whitehall: Stuart M. Rothenberg, Steven M. Feldman, Ronald L.
Bernstein and Todd A. Williams.
WCPT: Jeffrey H. Lynford, Edward Lowenthal, Gregory Hughes
and Richard Previdi.
Saracen: William F. Rand, III and Kurt W. Saraceno, which
Committee Representatives shall have been appointed pursuant
to Section 3.5(e)(vi) below.
(d) The Management Committee shall act with respect to all matters
(whether to approve any Major Decision and any Operational Decision or to
exercise any other right (or to grant any consent or approval) accorded to
the Management Committee hereunder) by Required Committee Approval. Each
Committee Representative shall have one (1) vote on all matters that arise
before the Management Committee. For avoidance of doubt and notwithstanding
anything to the contrary herein, no matter may be approved and no action
taken by the Management Committee without Required Committee Approval.
(e) (i) The Management Committee shall meet regularly not less
often than quarterly. Special meetings of the Management Committee may be
called by any Committee Representative having a right to vote at such meeting
on at least four (4) Business Days' prior written notice of time and place of
such meeting; provided, however, that such notice requirement shall be deemed
waived by any Committee Representative who is present at the commencement of
any such special meeting. Regular and special meetings may be held at any
place designated from time to time by the Manager, including meetings by
telephone conference. Six (6) Committee Representatives (at least two of
which shall have been appointed by each Appointing Member) shall constitute a
quorum for Management Committee action with respect to any Major Decision and
three (3) Committee Representatives (at least one of which shall have been
appointed by each Appointing Member) shall constitute a quorum for Management
Committee action with respect to any Operational Decision, provided, however,
that (x) unless at least four (4) Business Days' prior written notice of the
time and place of any regular or special meeting is provided to the Committee
Representatives appointed by the Saracen Members pursuant to Section
3.5(e)(vi) and, (y) during a Preferential Distribution Non-Payment (as
defined in the Series A Terms), unless (A) at least ten (10) Business Days'
prior written notice of the time and place of any regular meeting is provided
to the Committee Representatives appointed pursuant to Section 4 of the
Series A Terms, or (B) at least five (5) Business Days' prior written notice
of the time and place of any special meeting is provided to the Committee
Representatives appointed pursuant to Section 4 of the Series A Terms, and at
least two (2) Business Days prior to any special meeting such Committee
Representatives are provided with reasonably sufficient information and
documentation to enable them to adequately address the issues presented at
the special meeting, even if there are the required number of Committee
Representatives present to constitute a quorum for Management Committee
action, a quorum will not be deemed to be present at such meeting of the
Management Committee and the Management Committee shall not be authorized to
take or approve any action, unless one of the Committee Representatives
appointed by the Saracen Members pursuant to Section 3.5(e)(vi) and/or one of
the Committee Representatives appointed pursuant to Section 4 of the Series A
Terms is present at such meeting, as the case may be.
(ii) Actions taken or approved by the Management Committee
will be evidenced by a written resolution prepared within ten (10) business
days of a meeting of the Management Committee by the Manager and approved in
writing by the Committee Representatives who were present at such meeting and
who adopted such resolutions.
(iii) Any action required or permitted to be taken at a
meeting of the Management Committee may be taken without a meeting if a
written consent setting forth the action so taken is signed by the Committee
Representatives whose approval is required to constitute the Required
Committee Approval, provided, however that the Appointing Members shall send
by telecopy or by Federal Express or other nationally recognized overnight
courier service, a copy of the proposed written consent to the Committee
Representatives appointed by the Saracen Members pursuant to Section
3.5(e)(vi) herein at least two (2) Business Days prior to the earlier of (i)
the effective date of such consent or (ii) the execution by any Committee
Representative of such written consent. In the event of any action which is
taken, or is to be taken pursuant to a written consent and not pursuant to a
vote at a duly called and authorized meeting of the Management Committee, the
Manager shall endeavor, in good faith, to solicit input from all Committee
Representatives prior to the execution by any Committee Representative of
such written consent. Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of such
Committee Representatives. An action so taken shall be deemed to have been
taken at a meeting held on the effective date so certified. Copies of all
such written consents shall be sent to each Initial Member and to Saracen.
(iv) Each Committee Representative may authorize any other
Committee Representative to act for him or her by proxy on all matters in
which a Committee Representative is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Committee Representative. No proxy shall
be valid after the expiration of eleven (11) months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Committee Representative executing it, such revocation to
be effective upon the Company's receipt of written notice thereof.
(v) All out-of-pocket expenses (including travel expenses)
incurred by each of the Committee Representatives in connection with their
service on the Management Committee shall be borne by the Company.
(vi) The Saracen Members have the right to appoint two (2)
Committee Representatives to attend and observe any and all quarterly and
special meetings of the Management Committee, which initial Committee
Representatives are set forth in Section 3.5(c)(iv). All Committee
Representatives appointed by the Saracen Members pursuant to this Section
3.5(e)(vi) shall be subject to the prior written approval of the Management
Committee, which approval shall not be unreasonably withheld or delayed,
provided, however that the Management Committee hereby approves the
appointment of Kurt W. Saraceno and William F. Rand, III as the initial
Committee Representatives appointed by the Saracen Members. The Saracen
Members' right to appoint Committee Representatives pursuant to this Section
3.5(e)(vi) shall cease and the appointment of all Committee Representatives
previously appointed by Saracen shall be terminated (A) if Saracen no longer
owns Membership Units, Series A Preferred Membership Units and/or Shares
having an aggregate original cost or fair market value, whichever is greater,
of at least $5 million, or (B) upon the occurrence of a Capital Event.
Except as and to the extent set forth in this Agreement, such Committee
Representatives appointed by the Saracen Members shall have no voting,
consent, approval or determination rights on the Management Committee.
3.6. Limited Authorization. Any provision hereof to the contrary
notwithstanding, except for expenditures made and obligations incurred which
were (i) previously approved by the Management Committee, (ii) included in an
Approved Budget, or (iii) otherwise not required to be approved by the
Management Committee in accordance herewith, the Manager shall have no
authority to make any expenditure or incur any obligation or liability on
behalf of the Company or any Subsidiary. The Manager shall not expend more
than the amount which the Manager in good faith believes to be the fair and
reasonable market value at the time and place of contracting for any goods
purchased or services engaged on behalf of the Company or any Subsidiary.
The Manager shall not enter into any agreement or other arrangement for the
furnishing to or by the Company or any Subsidiary of goods or services with
itself or any Person that is an Affiliate of the Manager unless such
agreement or arrangement has been approved by the Management Committee.
Notwithstanding anything to the contrary contained herein, the Manager is
hereby authorized to make expenditures for emergencies (not to exceed
$100,000 per Property per Fiscal Year) to the extent necessary to protect a
Property or the occupants thereof from damage or harm; provided that, the
Manager notifies the Management Committee in writing of any such expenditure
promptly after the incurrence thereof.
3.7. Members Shall Not Have Power to Bind Company. No Member
shall transact business for the Company nor shall any Member have the power
or authority to sign, act for or bind the Company, all of such powers being
vested solely and exclusively in the Manager and the Management Committee,
provided that (i) each of Whitehall and WCPT, acting alone, shall have the
authority to sell or cause the sale of Properties, Subsidiaries of the
Company and/or the Company itself as set forth in Section 8.2, (ii)
Whitehall, acting alone, shall have the authority to sell or cause the sale
of Properties, Subsidiaries of the Company and/or the Company itself as set
forth in Sections 8.2 and 9.1, and (iii) Whitehall shall have the right to
appoint a new Manager as provided in Section 9.1.
3.8. Status as "Operating Company"; Participation in Management by
Members. The Company intends to operate its business in a manner so as to
qualify as an "operating company" for purposes of ERISA and the Plan Asset
Regulation. For purposes of ERISA and the Plan Asset Regulation, the
Management Committee is intended to be the functional equivalent of a board
of directors of a corporation incorporated under the laws of the State of
Delaware. Each Initial Member that has the right to appoint a Committee
Representative to the Management Committee shall have the right, directly or
through its Committee Representative on the Management Committee, to partici-
pate substantially in the management and conduct of the Company (both in the
Company's own behalf and in the Company's capacity as the controlling member
or partner in the Subsidiaries). The Manager shall from time to time meet
with the members of the Management Committee to discuss the business and
affairs of the Company or to discuss any particular matter requested by a
member of the Management Committee.
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property. No Member shall make use of the
funds or property of the Company or any Subsidiary, or assign its rights to
specific Company property except as otherwise specifically permitted by this
Agreement. The Manager and the Management Committee can make use of the
funds or property of the Company or any Subsidiary but only for the business
or benefit of the Company.
4.2. Exclusivity; Other Activities of the Members.
(a) (i) Notwithstanding anything else to the contrary herein, until such
time as Whitehall no longer owns Membership Units and/or Shares having an
aggregate original cost or fair market value, whichever is greater, of at
least $10 million neither WCPT nor any of its Affiliates (including WRP) may
make any investment in or otherwise acquire or own, directly or indirectly,
any Office Property located in North America, except through its Interest in
the Company, as specifically set forth in Section 4.2(b), (c), (d) and (k) or
pursuant to an acquisition in accordance with Section 8.2 herein. Once the
book value (before depreciation) of the Company's assets reaches
$750,000,000, neither WCPT nor any of its Affiliates shall be entitled to
make any investment pursuant to Section 4.2(b). For purposes of the first
sentence of this Section 4.2(a)(i), the direct or indirect ownership by WCPT
or any of its Affiliates (including WRP) of any indebtedness or debt security
which (1) is secured by one or more Office Properties, and (2) when added to
any senior and pari passu debt secured by such Office Property, had a loan-
to-value ratio in excess of ninety percent (90%) at the time of origination
shall constitute ownership of an Office Property by WCPT and a breach of this
Section 4.2(a)(i). WCPT acknowledges that this covenant is a material
inducement to Whitehall entering into this Agreement and that a breach of
this covenant shall constitute a material breach of this Agreement entitling
Whitehall to exercise the remedies provided elsewhere in this Agreement and
at law.
(ii) Notwithstanding anything else to the contrary herein, at any
time after Whitehall no longer owns Membership Units and/or Shares having an
aggregate original cost or fair market value, whichever is greater, of at
least $10 million, and until such time as (A) Saracen no longer owns
Membership Units, Series A Preferred Membership Units and/or Shares having an
aggregate original cost or fair market value, whichever is greater, of at
least $5 million, or (B) a Capital Event shall occur, neither WCPT nor any of
its Affiliates (including WRP, but in any event excluding Whitehall and its
Affiliates) may make any investment in or otherwise acquire or own, directly
or indirectly, any Office Property located in the Target Territory, except
through its Interest in the Company or pursuant to an acquisition in
accordance with Section 8.2 herein. For purposes of the first sentence of
this Section 4.2(a)(ii), the direct or indirect ownership by WCPT or any of
its Affiliates (including WRP) of any indebtedness or debt security which (1)
is secured by one or more Office Properties, and (2) when added to any senior
and pari passu debt secured by such Office Property, had a loan-to-value
ratio in excess of ninety percent (90%) at the time of origination shall
constitute ownership of an Office Property by WCPT and a breach of this
Section 4.2(a)(ii).
(b) At any time after the first anniversary of the Initial Closing
Date, an Affiliate of WCPT (including WRP) may acquire and own an Office
Property if, and only if each of the following conditions are satisfied: (i)
such Office Property is not located within the Target Territory, (ii) a
property manager is hired by WRP or its Affiliate (other than WCPT) to manage
the day-to-day operations at such Office Property, (iii) the net equity value
of such Office Property plus the aggregate net equity value of all other
Office Properties acquired by all such Affiliates pursuant to this
Section 4.2(b) (determined at the time of acquisition) does not exceed the
lesser of 25% of the net equity value of WCPT and 25% of the net equity value
of WRP, (iv) WCPT or its Affiliate, as the case may be, shall have first
offered the opportunity to acquire such Office Property to the Company in
accordance with subparagraph (e) below and the Company shall have declined
such opportunity in accordance therewith, (v) an Affiliate of WRP other than
WCPT with its own corporate staff and acquisition personnel (distinct from
the Company's) is established to acquire and own such Office Property, and
(vi) the Company has not previously achieved a book value (before
depreciation) of $750,000,000 or more.
(c) If the Company has first been offered the opportunity,
pursuant to subparagraph (e) below, to purchase an interest in the Office
Property known as "First Canadian Place" located in Toronto and has declined
such opportunity, an Affiliate of WCPT may purchase such Office Property as
long as the conditions set forth in clauses (ii) and (v) of subparagraph (b)
above are satisfied.
(d) If WCPT or its Affiliate shall have offered the opportunity to
acquire Office Properties in accordance with subparagraph (e) below and the
Committee Representatives appointed by Whitehall shall have declined not less
than five of such opportunities each having a purchase price of at least
$15 million individually at any time since the later of (x) the first
anniversary of the Initial Closing Date and (y) the date twelve months prior
to the date of determination, then at any time thereafter (i) an Affiliate of
WCPT (but not WCPT itself) may acquire Office Properties that have been
offered to the Company pursuant to subparagraph (e) and declined by the
Committee Representatives appointed by Whitehall and (ii) either party may
trigger the provisions of Section 8.2(l).
(e) If an Affiliate of WCPT (including WRP) wishes to make any
investment in or otherwise acquire or own, directly or indirectly, any Office
Property prior to the end of the term of this Agreement, then in such
instance, WCPT shall provide written notice of such investment opportunity
(an "Investment Notice") to each Committee Representative appointed by
Whitehall. WCPT shall promptly provide to the Committee Representatives
appointed by Whitehall all such information and copies of documents in WCPT's
(or its Affiliate's) possession or reasonably available to WCPT (or its
Affiliate) concerning any such Office Property. At the request of any
Committee Representative appointed by Whitehall, WCPT shall deliver to
Whitehall copies of all additional information and documents concerning such
Office Property which are reasonably available to WCPT and are reasonably
necessary for Whitehall to evaluate whether such Office Property is a
suitable and desirable investment for the Company or one of its Subsidiaries,
including all third-party reports and internal analyses or investment
memoranda. The additional information and documents required to be provided
to Whitehall or its Committee Representatives pursuant to this Section 4.2(e)
shall be provided at the Company's expense. An Affiliate of WCPT (including
WRP) may proceed with the investment in or acquisition of such Office
Property if, and only if, (i) such investment or acquisition is not
prohibited by Section 4.2(a) and (ii) within 15 Business Days after WCPT's
delivery of an Investment Notice, or within 10 Business Days after the
delivery of an Additional Information Request (as defined below), WCPT shall
not have received notice from any Committee Representative appointed by
Whitehall that either (x) the investment in or other acquisition of the
specified Office Property would be a desirable investment for the Company or
one of its Subsidiaries or (y) it reasonably requires additional information
to make the determination whether the investment in or other acquisition of
the specified Office Property would be a desirable investment for the
Company or one of its Subsidiaries (an "Additional Information Request"). No
more than two (2) Additional Information Requests may be made with respect to
any investment opportunity. The fact that any information or document
contained in an Additional Information Request shall be subject to a
confidentiality agreement pursuant to which such information or document may
not be disclosed to Whitehall shall not render an Additional Information
Request unreasonable for purposes of clause (y) of the immediately preceding
sentence. If, within 30 days after delivery of an Additional Information
Request which contains a request for one or more documents subject to a
confidentiality agreement to which WCPT or one of its Affiliates is bound,
either (i) an appropriate modification or waiver of the relevant
confidentiality agreement is not obtained or (ii) the relevant part of the
Additional Information Request is not rescinded by Whitehall in writing,
neither WCPT nor any of its Affiliates may make any investment in or
otherwise acquire any interest in the relevant Office Property.
(f) If the Company or one of its Subsidiaries does not elect to
invest in or otherwise acquire an interest in any Office Property in
accordance with Section 4.2 (e) and the financial terms of the transaction
relating to such Office Property are later materially changed and, in the
case of a change in financial terms, are expected to materially enhance the
economic return of the Office Property, then the right of first refusal set
forth in Section 4.2(e) shall again apply to such Office Property (it being
understood that the economic return will be deemed to be "materially
enhanced" in the event that either (i) the projected internal rate of return
increases by at least one percent (1%) or (ii) the projected gross profits
increase by at least $500,000.00 over the expected life of the investment).
(g) Except as contemplated by this Agreement, WCPT shall not
directly or indirectly enter into or conduct any business or own any assets
other than through its Interest in the Company and shall not incur any
Indebtedness or other liabilities or issue any debt or equity securities or
Rights whatsoever without the prior written consent of Whitehall; provided
that, WCPT may (i) issue additional Shares to WRP if (x) all proceeds
received by WCPT are contributed to the Company to fund a Capital Call issued
in accordance with Article V and (y) the price per Share paid in cash by WRP
to WCPT is equal to the price per Membership Unit paid in cash by WCPT to the
Company for such Capital Call, (ii) with the approval of Whitehall, issue
Funding Debt if (x) the Company issues Back-to-Back Debt with identical terms
to such Funding Debt and (y) all of the proceeds received by WCPT in
connection with the issuance of such Funding Debt are used to purchase such
Back-to-Back Debt and (iii) engage in activities contemplated by the Closing
Steps Summary attached to the Contribution Agreement as Exhibit A. WCPT will
not enter into a debt or equity financing unless, prior to entering into such
financing, WCPT has first given the Company an opportunity to enter into such
financing for the Company's account (rather than WCPT entering into such
financing) substantially in the manner specified in Section 4.2(e).
(h) Subject to this Section 4.2, and the limitations set forth in
the Asset Management Agreement (only so long as such limitations are
applicable under the Asset Management Agreement), each of WRP (but not WCPT),
Whitehall, Saracen and their respective Affiliates may engage or invest in
any other activity or venture or possess any interest therein independently
or with others. None of the Company, the Members, the creditors of the
Company or any other person having any interest in the Company shall have
(i) any claim, right or cause of action against any of the Members or any
other Person employed by, related to or in any way affiliated with, any of
the Members by reason of any direct or indirect investment or other
participation, whether active or passive in any such activity or venture or
interest therein, or (ii) any right to any such activity or venture or
interest therein or the income or profits derived therefrom. Notwithstanding
anything to the contrary herein, (A) neither Whitehall nor any of its
Affiliates nor any Person related to or in any way affiliated with Whitehall
shall have any duty or obligation to disclose or offer to the Company or the
Members, or obtain for the benefit of the Company or the Members, any
activity or venture or interest therein, (B) except as otherwise specifically
set forth herein (including, without limitation, in Section 4.2), neither
WCPT nor any of its Affiliates nor any other Person related to or in any way
affiliated with WCPT shall have any duty or obligation to disclose or offer
to the Company or the Members, or obtain for the benefit of the Company or
the Members, any activity or venture or interest therein, and (C) except as
otherwise specifically set forth herein (including, without limitation, in
Section 4.2) and in the Asset Management Agreement (only so long as such
limitations are applicable under the Asset Management Agreement), neither
Saracen nor any of its Affiliates nor any other Person related to or in any
way affiliated with Saracen shall have any duty or obligation to disclose or
offer to the Company or the Members, or obtain for the benefit of the Company
or the Members, any activity or venture or interest therein. In addition, in
the event that Whitehall introduces any investment opportunity to the Company
and the Management Committee declines such opportunity, Whitehall shall not
in any way be restricted with respect to such opportunity.
(i) Whitehall hereby agrees that, with respect to any Office
Property that has previously been offered to the Company by WCPT (or its
Affiliate) and that the Committee Representatives appointed by Whitehall
disapproved pursuant to subparagraph (e) above, (x) neither Whitehall nor any
of its Affiliates shall be permitted to make any investment in or otherwise
acquire or own, directly or indirectly, such Office Property and (y) it shall
keep confidential all information concerning such Office Property that WCPT
(or its Affiliate) provided to Whitehall (or any of its Affiliates) to the
extent that such information constitutes Confidential Information (as defined
below). The covenant set forth in clause (y) in the immediately preceding
sentence shall cease to be applicable to any information either to the extent
it no longer constitutes Confidential Information or more than two years has
elapsed since the date of delivery thereof to Whitehall or its Affiliates.
For purposes of this subparagraph (i), "Confidential Information" shall
include all information furnished to Whitehall and its Affiliates by or on
behalf of WCPT and/or its Affiliates concerning an Office Property.
Notwithstanding the foregoing, any such information shall not constitute
"Confidential Information" to the extent it (i) is or becomes generally
available to the public other than as a result of a disclosure by Whitehall
or its Affiliate in contravention of this Agreement, (ii) was already in the
possession of Whitehall or its Affiliate prior to its disclosure to Whitehall
or its Affiliate by or on behalf of WCPT or its Affiliate, (iii) is or
becomes available to Whitehall or its Affiliate from a source (other than
WCPT or its Affiliates) not bound, to the knowledge of Whitehall or its
Affiliate, by any legal or other obligation prohibiting the disclosure of
Confidential Information by such source to WCPT or its Affiliate or (iv) the
Company or its Subsidiary acquires such Office Property.
(j) Notwithstanding anything to the contrary set forth in this
Agreement, WCPT or its Affiliates shall be entitled to acquire and own
certain Office Properties (i) that may be acquired in connection with WRP's
or its Affiliates' acquisition of Value Property Trust, a Maryland real
estate investment trust and (ii) in accordance with the letter agreement
dated the date hereof, among the Company, WCPT, Whitehall, Saracen and WRP
pursuant to which Affiliates of WCPT may make certain entity-level
investments.
(k) Except for activities conducted through the Company or any of
its Subsidiaries or as otherwise permitted pursuant to the other sections of
this Agreement, WCPT (or any of its Affiliates) shall not form another entity
with Whitehall and/or its Affiliates or jointly with Whitehall and/or its
Affiliates, engage in, or make any investment in, or otherwise acquire or
own, directly or indirectly, any Office Property located in the Target
Territory, as partners or joint venturers (or in other similar
relationships), without the prior written consent of Saracen. This Section
4.2(k) shall not independently prevent WCPT (or any of its Affiliates) or
Whitehall (or any of its Affiliates) from individually, engaging in, or
making an investment in, or otherwise acquiring or owning, directly or
indirectly, Office Property located in the Target Territory, except as the
same may be restricted pursuant to the other provisions of this Agreement.
Nothing contained herein shall limit WCPT (or any of its Affiliates) from
individually, or together with Whitehall (or any of its Affiliates) as
partners or joint venturers (or in other similar relationships), from
engaging in, or making an investment in, or otherwise acquiring or owning,
directly or indirectly, any Office Property located outside the Target
Territory, provided that, if otherwise restricted pursuant to the terms of
this Agreement, WCPT obtains Whitehall's prior written consent. Nothing in
this Agreement shall preclude or limit the ability of Whitehall and its
Affiliates to purchase Office Properties either alone or in a partnership
with another Person (except WCPT as described above).
(l) Notwithstanding anything else to the contrary herein, at any
time that the Committee Representatives on the Management Committee appointed
by WCPT do not have the power to vote to prevent the Company from making an
investment in or otherwise acquiring or owning, directly or indirectly, any
Office Property (unless only in the event such voting rights have been
terminated solely because WCPT has been terminated as Manager for Cause) and
the Company desires to make an investment in or otherwise acquire or own,
directly or indirectly, any Office Property located in the Hub Target Market,
until such time as (A) Saracen no longer owns Membership Units, Series A
Preferred Membership Units and/or Shares having an aggregate original cost or
fair market value, whichever is greater, of at least $5 million, or (B) a
Capital Event shall occur, the Company shall provide an Investment Notice to
Saracen. The Company may proceed with the investment in or other acquisition
of such Office Property in the Hub Target Market only if within one (1)
Business Day after the Company's delivery of an Investment Notice to Saracen,
the Company shall not have received written notice from Saracen objecting to
the investment in or other acquisition of the specified Office Property
located in the Hub Target Market. If, in accordance with the immediately
preceding sentence, the Company may not make an investment in or otherwise
acquire any Office Property in the Hub Target Market, Whitehall, either alone
or in partnership or joint venture with any other Person, including, without
limitation, WCPT and/or its Affiliates, may make such investment in or
otherwise acquire such Office Property.
4.3. Indemnification with Respect to the Manager. (a) None of
the Manager, its Affiliates or their respective officers, directors,
trustees, employees, representatives or agents (collectively, the
"Indemnified Parties") shall be liable, responsible or accountable in damages
or otherwise to the Company, any third party or to any Member for (i) any act
performed or omission within the scope of the authority conferred on the
Indemnified Party by this Agreement except for the gross negligence, fraud,
breach of fiduciary duty or willful misconduct of any Indemnified Party in
carrying out its obligations hereunder, (ii) the Indemnified Party's
performance of, or failure to perform, any act on the reasonable reliance on
advice of legal counsel to the Company or (iii) the negligence, dishonesty or
bad faith of any agent, consultant or broker of the Company selected, engaged
or retained in good faith and with reasonable prudence. In any threatened,
pending or completed action, suit or proceeding, each Indemnified Party shall
be fully protected and indemnified and held harmless by the Company against
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, proceedings, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, reasonable attorneys' fees, costs
of investigation, fines, judgments and amounts paid in settlement, actually
incurred by such Indemnified Party in connection with such action, suit or
proceeding) by virtue of its status as an Indemnified Party or with respect
to any action or omission taken or suffered in good faith, other than
liabilities and losses resulting from the gross negligence, fraud, breach of
fiduciary duty or willful misconduct of any Indemnified Party; provided, how-
ever, that the Indemnified Parties shall not be so indemnified for any acts
or omissions determined to be in contravention of this Agreement. The indem-
nification provided by this Section 4.3(a) shall be recoverable only out of
the assets of the Company, and no Member shall have any personal liability on
account thereof.
(b) The Manager shall indemnify and hold the Company and the
Members harmless against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses, and
disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by the Company in
connection with any action, suit or proceeding) resulting from the gross
negligence, fraud, breach of fiduciary duty or willful misconduct of the
Manager.
4.4. Compensation of Members and Affiliates. Until the earlier of
(i) such time as Whitehall no longer owns Membership Units and/or Shares in
WCPT having an aggregate original cost or fair market value, whichever is
greater, of at least $10 million and (ii) such time as WCPT makes an initial
public offering (and in connection with an initial public offering by WCPT),
the Company agrees that, to the extent the Company seeks to retain an
investment bank for any financial or related services with respect to actions
of the Company (including an initial public offering by WCPT), the Company
will retain Goldman, Sachs & Co. or one or more of its Affiliates to provide
such services; provided, that the foregoing requirement shall not apply to
the sale or financing of a single Property or to the sale or financing of
Properties having an aggregate book value of less than $50 million. If
Goldman, Sachs & Co. or such Affiliate agrees to accept any such engagement,
Goldman, Sachs & Co. and/or such Affiliate shall be entitled to receive its
customary indemnification, and fees and commissions at rates that are
consistent with the then prevailing rates for such services charged by
similar quality providers of such services, for acting in such capacity.
4.5. Investment Representations. (a) The Members each represent
that they are acquiring their interests as Members for their own account for
investment purposes only and not with a view to the distribution or resale
thereof, in whole or in part, and each agrees that it will not transfer, sell
or dispose of all or any portion of, or offer to transfer, sell, or dispose
of all or any portion of its interest as a Member, or solicit offers to buy
from or otherwise approach or negotiate in respect thereof with any person or
persons whomsoever, all or any portion of its Interest in any manner which
would violate or cause the Company or any Member to violate applicable
federal or state securities laws.
(b) Each Saracen Member (either alone or with his, her or its
advisors) have had a reasonable opportunity to ask questions of and receive
information and answers from a person or persons acting on behalf of the
Company and its Affiliates concerning the Company (and its Subsidiaries), the
Company's (and any of its Subsidiary's) Properties, the Company's (and any of
its Subsidiary's) financial and business condition and the acquisition of
Membership Units and Series A Preferred Membership Units, and, as each
Saracen Member may deem necessary, to verify any information provided to any
Saracen Member by the Company and its Affiliates and all such questions have
been answered and all such information has been provided to the full
satisfaction of each Saracen Member. Nothing contained in this Section
4.5(b) shall limit in any way the representations and warranties of the
Company set forth in the Contribution Agreement.
(c) Each Saracen Member (either alone or with his, her or its
advisors) has sufficient knowledge and experience in financial, tax and
business matters to enable him, her or it to evaluate the merits and risks of
an investment in the Membership Units and Series A Preferred Membership
Units. Each Saracen Member has the ability to bear the economic risk of
acquiring the Membership Units and the Series A Preferred Membership Units.
Each Saracen Member acknowledges that (1) the transactions contemplated by
this Agreement and the Contribution Agreement involve complex tax
consequences for each Saracen Member and each Saracen Member is relying
solely on the advice of his, her or its own tax advisors in evaluating such
consequences, and (2) neither the Company (including any of its Affiliates),
nor the Manager, nor the Management Committee has made (or shall be deemed to
have been made) any representations or warranties as to the tax consequences
of such transactions to any Saracen Member. Notwithstanding the foregoing,
the Company acknowledges its obligations pursuant to Section 6.1(e) and
Section 8.2A herein.
(d) All information that each Member has provided to the Company
concerning himself or herself or itself and his, her or its financial
position, including any financial information requested by the Company, is
correct and complete in all material respects as of the date hereof.
(e) Each Saracen Member is not acquiring Membership Units or
Series A Preferred Membership Units as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio,
or presented at any meeting or seminar.
(f) Each Saracen Member is over 21 years of age, has adequate
means of providing for his or her current needs and personal contingencies
and has no need for liquidity of any investment in the Membership Units and
the Series A Preferred Membership Units.
(g) Each Saracen Member has (i) a net worth, when combined with
the net worth of that person's spouse, in excess of $1,000,000, or (ii) has
had adjusted gross income for calendar years 1996 and 1997 and expects to
have adjusted gross income for calendar 1998, of at least $200,000 for each
such year.
(h) No Saracen Member (or any ultimate beneficial interest holder
in a Saracen Member that is a flow-through entity for tax purposes) is a
"qualified organization" within the meaning of Section 514(c)(9)(C) of the
Code.
4.6. Dealing with Members. The fact that a Member, an Affiliate
of a Member or any officer, director, employee, partner, consultant or agent
of a Member or an Affiliate of a Member, is directly or indirectly interested
in or connected with any person, firm or corporation employed by the Company
to render or perform a service, or from or to whom the Company may buy or
sell any property or have other business dealings, shall not prohibit the
Company from employing such person, firm or corporation or from dealing with
him or it on customary terms and at competitive rates of compensation, and
neither the Company nor any of the Members shall have any rights in or to any
income or profits derived therefrom, provided, however that in the event any
Member provides a loan to the Company, such loan shall (i) be on commercially
reasonable terms, (ii) have a term of six (6) months or less and (iii)
together with all other loans (other than loans made to assume or refinance
the Lazard Mezzanine Loan (as defined in the Contribution Agreement) as
described below) from Members to the Company then outstanding, be in an
aggregate amount of less than 10% of the Book Value of all of the Company
Assets, including any asset of any Subsidiary, provided further, however that
Members and their Affiliates may assume or refinance the Lazard Mezzanine
Loan (as defined in the Contribution Agreement) upon commercially reasonable
terms, as determined by the Management Committee.
4.7. Designation of Tax Matters Member. The Manager, as long as
it is a Member, shall act as the Tax Matters Member of the Company, as
provided in the regulations pursuant to Section 6231 of the Code. Each
Member hereby approves of such designation and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be deemed necessary or appropriate to evidence
such approval. To the extent and in the manner provided by applicable Code
sections and regulations thereunder, the Tax Matters Member (a) shall furnish
the name, address, profits interest and taxpayer identification number of
each Member to the IRS and (b) shall inform each Member of administrative or
judicial proceedings for the adjustment of Company items required to be taken
into account by a Member for income tax purposes. The Tax Matters Member
shall not enter into an agreement with the IRS or any other taxing authority
to extend the limitation period for assessment of any federal, state or local
income, franchise or unincorporated business tax of any Member or owner
thereof nor settle with the IRS or any other taxing authority to disallow
deductions or increase income from this Company with respect to any Member,
unless all of the Members shall have agreed thereto.
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts of the
Members.
(a) On the Initial Closing Date, Whitehall contributed, or caused
the contribution of, the following property to the Company (or one of its
Subsidiaries) in exchange for the Membership Units specified in Section
5.1(h), all in accordance with Exhibit A:
(i) the real property known as 1275 K Street which is more
particularly described on Exhibit B-1, together with any and all
improvements located thereon and the rights of the Whitehall Current
Owners to any and all personal, tangible and intangible property located
on or otherwise related to any Whitehall Property, including, without
limitation, the property described on Exhibit B-2 but specifically
excluding any such property described on Exhibit B-3;
(ii) 100% of the legal and beneficial ownership of WHATR Real
Estate Limited Partnership; and
(iii) all right, title and interest of WHMAB Real Estate Limited
Partnership in and under the 700 Atrium Purchase Contract (including,
without limitation, the deposits made by purchaser thereunder prior to
the Initial Closing).
Effective as of the Initial Closing, all liabilities and duties
under the 700 Atrium Purchase Contract (other than as explicitly
provided in the assignment agreement in respect thereof), including,
without limitation, payment of the purchase price thereunder, will be
borne solely by the Company and neither Whitehall nor WHMAB Real Estate
Limited Partnership shall have any further liability or obligation with
respect thereto.
All of the foregoing property described in subclauses (i), (ii),
and (iii) above are herein referred to as the "Whitehall Contributed Assets".
(b) The contribution by Whitehall to the Company (and/or one or
more of its Subsidiaries) of the Whitehall Contributed Assets on the Initial
Closing Date was made subject to the Assumed Financing and on the date of the
Initial Closing, the Company and/or one or more of its Subsidiaries assumed
the Assumed Financing. Unless Whitehall and its Affiliates are
unconditionally released from any obligations under the Assumed Financing,
the Company shall indemnify and hold Whitehall and its Affiliates (as
transferors and not as Members) harmless from and against any liability
related to the Assumed Financing.
(c) The Whitehall Contributed Assets had an agreed upon value, net
of any distributions made to Whitehall contemporaneously with the Initial
Closing and net of the outstanding principal and accrued and unpaid interest
of the Assumed Financing (calculated as of the Initial Closing Date) equal to
Whitehall's Capital Account on the Initial Closing Date. To support this
valuation, Whitehall made the representations and warranties set forth in
Exhibit E-1 as of the Initial Closing Date. Each Member agrees, however,
that the Whitehall Contributed Assets net of the amounts set forth in the
first sentence of this subparagraph (c) may be worth more or less than an
amount equal to Whitehall's Capital Account on the Initial Closing Date. The
representations and warranties of Whitehall set forth in Exhibit E-1 were
made as of and shall survive the Initial Closing for a period of two years
from the Initial Closing Date and neither the Company, any Subsidiary nor any
Member or other Person may make a claim for indemnity for a breach of a
representation or warranty made by Whitehall hereunder or under the WWP
Agreement either (i) at any time after the expiration of such two-year period
or (ii) which breach is based upon or arises from information or facts
contained in any Lease (as defined in Exhibit E-1), brokerage contract,
environmental report, structural report, title commitment (including any
copies of recorded documents), documents included in closing binders, legal
memorandum concerning zoning or legal compliance of the Properties, rent
rolls, title policies, surveys and service contracts, in each case which was
delivered to WCPT or its Affiliate prior to the Initial Closing. Subject to
the time limitations in the immediately preceding sentence, Whitehall agrees
to indemnify, defend, and hold the Company, its Subsidiaries and their
respective officers, directors, members, controlling persons, affiliates and
agents harmless against all claims, demands, actions, causes of action and
losses (collectively "Damages") suffered or incurred by, or asserted against,
any of them relating to or arising from any inaccuracy in or breach of any
representation or warranty of Whitehall made pursuant to this Agreement or
the WWP Agreement. In the event that any representation or warranty made by
Whitehall in Exhibit E-1 is inaccurate or breached, WCPT shall notify
Whitehall in writing of such inaccuracy or breach and the amount of Damages
suffered or incurred by the Company (or any of its Subsidiaries) as a result
of such breach or inaccuracy. Within thirty (30) days after receipt of the
foregoing notice, Whitehall shall either (i) make a capital contribution to
the Company of cash in an amount equal to the Damages claimed in such notice
to have been suffered or incurred by the Company as a result of the foregoing
breach or inaccuracy or (ii) notify the Company in writing that it disputes
the circumstances giving rise to or the amount of such claim for
indemnification (such notice, a "Dispute Notice"). If (x) within the thirty
(30) day period specified in the immediately preceding sentence Whitehall
shall neither have made a capital contribution to the Company in the amount
of the Damages claimed in the notice nor have delivered a Dispute Notice to
the Company or (y) within thirty (30) days after Whitehall has received
notice from the arbitrator selected in accordance with Section 5.10 Whitehall
shall not have made a capital contribution to the Company in an amount equal
to the amount of Damages which such arbitrator shall have determined to have
been suffered or incurred by the Company as a result of the foregoing breach
or inaccuracy, then WCPT may (i) elect on behalf of the Company to reduce
Whitehall's Capital Account by the amount of the Damages suffered or incurred
(or the amount determined by the arbitrator pursuant to Section 5.10 to have
been suffered or incurred) by the Company in respect of such breach or
inaccuracy and (ii) elect to reduce the number of Membership Units
attributable to Whitehall (and the aggregate number of Membership Units of
the Company outstanding) by an amount equal to the above-referenced amount of
Damages divided by the Deemed Value Per Membership Unit (and thereby reduce
Whitehall's Percentage Interest by a proportionate amount). If the Company
fails to submit the subject matter of any Dispute Notice for binding
arbitration as provided in Section 5.10 within thirty (30) days after receipt
of such Dispute Notice, Whitehall shall be relieved of any responsibility or
obligation in respect of the Damages which are the subject of such Dispute
Notice.
(d) On the Initial Closing Date, WCPT contributed the following
property to the Company (and/or one or more of its Subsidiaries) in exchange
for the Membership Units specified in Section 5.1(h), all in accordance with
Exhibit A:
(i) the real property known as 1700 Valley Road which is more
particularly described on Exhibit C-1, together with any and all
improvements located thereon and the rights of the WCPT Current Owners
to any and all personal, tangible and intangible property located on or
otherwise related to any WCPT Property, including, without limitation,
the property described on Exhibit C-2 but specifically excluding any
such Property described on Exhibit C-3; and
(ii) 100% of the legal and beneficial ownership of the WCPT
Current Owners other than North American Medical Research Corp., a New
Jersey corporation.
All of the foregoing property described in subclauses (i) and (ii)
above are herein referred to as the "WCPT Contributed Assets".
(e) The WCPT Contributed Assets had an agreed upon value net of
any distributions made to WCPT contemporaneously with the Initial Closing
equal to WCPT's Capital Account on the Initial Closing Date. To support this
valuation, WCPT made the representations and warranties set forth in Exhibit
E-2 as of the Initial Closing Date. Each Member agrees, however, that the
WCPT Contributed Assets net of the amounts set forth in the first sentence of
this subparagraph (e) may be worth more or less than an amount equal to
WCPT's Capital Account on the Initial Closing Date. The representations and
warranties of WCPT set forth in Exhibit E-2 were made as of and shall survive
the Initial Closing for a period of two years from the Initial Closing Date
and neither Whitehall, the Company nor any Subsidiary or other Person may
make a claim for indemnity for a breach of a representation made by WCPT
hereunder or under the WWP Agreement either (i) at any time after the
expiration of such two-year period or (ii) which breach is based upon or
arises from information or facts contained in any Lease (as defined in
Exhibit E-2), brokerage contract, environmental report, structural report,
title commitment (including any copies of recorded documents), documents
included in closing binders, legal memorandum concerning zoning or legal
compliance of the Properties, rent rolls, title policies, surveys and service
contracts, in each case which was delivered to Whitehall or its Affiliate
prior to the Initial Closing. Subject to the time limitations in the
immediately preceding sentence, WCPT agrees to indemnify, defend and hold the
Company, its Subsidiaries and their respective officers, directors, members,
controlling persons, affiliates and agents harmless against all Damages
suffered or incurred by, or asserted against, any of them relating to or
arising from any inaccuracy or breach of any representation or warranty of
WCPT made pursuant to this Agreement or the WWP Agreement. In the event that
any representation or warranty made by WCPT in Exhibit E-2 is inaccurate or
breached, Whitehall shall notify WCPT in writing of such inaccuracy or breach
and the amount of Damages suffered or incurred by the Company (or any of its
Subsidiaries) as a result of such breach or inaccuracy. Within thirty (30)
days after receipt of the foregoing notice, WCPT shall either (i) make a
capital contribution to the Company of cash in an amount equal to the Damages
claimed in such notice to have been suffered or incurred by the Company as a
result of the foregoing breach or inaccuracy or (ii) deliver a Dispute Notice
to the Company. If (x) within the thirty (30) day period specified in the
immediately preceding sentence WCPT shall neither have made a capital
contribution to the Company in the amount of the Damages claimed in the
notice nor have delivered a Dispute Notice to the Company or (y) within
thirty (30) days after WCPT has received notice from the arbitrator selected
in accordance with Section 5.10 WCPT shall not have made a capital
contribution to the Company in an amount equal to the amount of Damages which
such arbitrator shall have determined to have been suffered or incurred by
the Company as a result of the foregoing breach or inaccuracy, then Whitehall
may elect on behalf of the Company (i) to reduce WCPT's Capital Account by
the amount of the Damages suffered or incurred (or the amount determined by
the arbitrator pursuant to Section 5.10 to have been suffered or incurred) by
the Company in respect of such breach or inaccuracy and (ii) to reduce the
number of Membership Units attributable to WCPT (and the aggregate number of
Membership Units of the Company outstanding) by an amount equal to the above-
referenced amount of Damages divided by the Deemed Value Per Membership Unit
(and thereby reduce WCPT's Percentage Interest by a proportionate amount).
If the Company fails to submit the subject matter of any Dispute Notice for
binding arbitration as provided in Section 5.10 within thirty (30) days after
receipt of such Dispute Notice, WCPT shall be relieved of any responsibility
or obligation in respect of the Damages which are the subject of such Dispute
Notice.
(f) The Company shall not consummate the transactions contemplated
by the 700 Atrium Purchase Contract if the Management Committee determines in
good faith that it would not be in the best interests of the Company. Any
and all costs associated with the termination of the 700 Atrium Purchase
Contract pursuant to this Section 5.1(f) shall be for the account of the
Company.
(g) Contemporaneously with the contribution to the Company and its
Subsidiaries of the Whitehall Contributed Assets and the WCPT Contributed
Assets in the manner set forth in 5.1(a) and (d) above, the Company entered
into the WRP Loans. The proceeds of the Term Loan A (as defined in the loan
documentation evidencing the WRP Loans) (apart from $1,500,000 which was
retained by the Company as working capital) was used as follows:
(i) $7,551,124 was distributed to Whitehall (for further distribution to its
partners), (ii) $22,972,172 was used to repay the existing financing secured
by 1275 K Street and (iii) $29,676,144 was distributed to WCPT. The effect
of such distribution was to reduce the Capital Account of Whitehall to
$24,950,000 and the Capital Account of WCPT to $25,050,000, each as of the
Initial Closing Date. In the event that the closing under the 700 Atrium
Purchase Contract is not consummated, Whitehall agrees to remit $1 million in
cash to the Company as liquidated damages to be used for working capital of
the Company; provided that, no increase or decrease in any Member's Capital
Account, Percentage Interest or Membership Units shall be made on account of
such remittance.
(h) As of the date hereof, the Percentage Interest, the Series A
Preferred Percentage Interest and the Capital Accounts of each of the Members
and the number of Membership Units and Series A Preferred Membership Units
outstanding immediately after the Saracen Closing shall be as set forth on
Schedule 5.1(h) annexed hereto. Such Capital Accounts have been adjusted to
reflect a revaluation of the Company's assets pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(f).
(i) Subject to subparagraph (j) below and to Whitehall and/or its
Affiliates obtaining the Necessary Whitehall Consents (as defined below),
Whitehall shall, within ten (10) Business Days of obtaining such Necessary
Whitehall Consents, contribute, or cause the contribution of, the following
property to the Company (or one of its Subsidiaries) in accordance with
Exhibit A:
(1) the real property known as 600 Atrium located in Somerset
County, New Jersey, together with any and all improvements located
thereon and the rights of the Whitehall Additional Owners to any and all
personal, tangible and intangible property located on or otherwise
related to any Whitehall Additional Property, specifically excluding any
such property identified to WCPT in writing prior to determining the
value of such property as provided in subparagraph (j) below; and
(2) the real property known as 15 Broad Street located in Boston,
Massachusetts, together with any and all improvements located thereon
and the rights of the Whitehall Additional Owners to any and all
personal, tangible and intangible property located on, or otherwise
related to, any Whitehall Additional Property, specifically excluding
any such property identified to WCPT in writing prior to determining the
value of such property as provided in subparagraph (j) below.
All of the foregoing property described in subclauses (i) and (ii) above
are herein referred to as the "Whitehall Additional Contributed Assets."
As used in this subparagraph (i), the term "Necessary Whitehall
Consents" means each and every consent of (i) the limited partners of
Whitehall Street Real Estate Limited Partnership VII and Whitehall Street
Real Estate Limited Partnership V, each a Delaware limited partnership, and
(ii) the lenders under the financings secured by the Whitehall Additional
Contributed Assets that are necessary in order to consummate the Additional
Closing. Whitehall hereby agrees to use good faith efforts to obtain all
Necessary Whitehall Consents as soon as practicable, provided that if
Whitehall is not able to obtain one or more Necessary Whitehall Consents on
or prior to December 15, 1997, Whitehall's obligations under this paragraph
(i) shall terminate and be of no further force and effect. If the Whitehall
Additional Contributed Assets are contributed to the Company, then Whitehall
will receive cash in an amount equal to the agreed upon value of the
Whitehall Additional Contributed Assets.
(j) At the time of their contribution to the Company, the
Whitehall Additional Contributed Assets had a value as agreed upon by the
Initial Members on or prior to the Additional Closing Date. To support such
valuation, Whitehall made the representations and warranties set forth in
Exhibit E-3 as of the Additional Closing Date. Not later than five (5)
Business Days prior to the Additional Closing Date, Whitehall furnished to
WCPT copies of all disclosure schedules described in Exhibit E-3. The
representations and warranties of Whitehall set forth in Exhibit E-3 were
made as of and shall survive the Additional Closing for a period of two years
from the Additional Closing Date and neither the Company, any Subsidiary, any
Member nor any other Person may make a claim for indemnity for a breach of a
representation or warranty made by Whitehall hereunder or under the WWP
Agreement as of the Additional Closing Date either (i) at any time after the
expiration of such two-year period or (ii) which breach is based upon or
arises from information or facts contained in any Lease (as defined in
Exhibit E-3), brokerage contract, environmental report, structural report,
title commitment (including copies of recorded documents), documents included
in closing binders, legal memorandum concerning zoning or legal compliance of
the Properties, rent rolls, title policies, surveys and service contracts, in
each case which was delivered to WCPT prior to the Additional Closing.
Subject to the time limitations in the immediately preceding sentence,
Whitehall agrees to indemnify, defend, and hold the Company, its Subsidiaries
and their respective officers, directors, members, controlling persons,
affiliates and agents harmless against all Damages, suffered or incurred by,
or asserted against, any of them relating to or arising from any inaccuracy
in or breach of any representation or warranty of Whitehall in Exhibit E-3.
In the event that any representation or warranty made by Whitehall in Exhibit
E-3 is inaccurate or breached, WCPT shall notify Whitehall in writing of such
inaccuracy or breach and the amount of Damages suffered or incurred by the
Company (or any of its Subsidiaries) as a result of such breach or
inaccuracy. Within thirty (30) days after receipt of the foregoing notice,
Whitehall shall either (i) make a capital contribution to the Company of cash
in an amount equal to the Damages claimed in such notice to have been
suffered or incurred by the Company as a result of the foregoing breach or
inaccuracy or (ii) deliver a Dispute Notice to the Company. If (x) within
the thirty (30) day period specified in the immediately preceding sentence
Whitehall shall neither have made a capital contribution to the Company in
the amount of the Damages claimed in the notice nor have delivered a Dispute
Notice to the Company or (y) within thirty (30) days after Whitehall has
received notice from the arbitrator selected in accordance with Section 5.10
Whitehall shall not have made a capital contribution to the Company in an
amount equal to the amount of Damages which such arbitrator shall have
determined to have been suffered or incurred by the Company as a result of
the foregoing breach or inaccuracy, then WCPT may (i) elect on behalf of the
Company to reduce Whitehall's Capital Account by the amount of the Damages
suffered or incurred (or the amount determined by the arbitrator pursuant to
Section 5.10 to have been suffered or incurred) by the Company in respect of
such breach or inaccuracy and (ii) elect to reduce the number of Membership
Units attributable to Whitehall (and the aggregate number of Membership Units
of the Company outstanding) by an amount equal to the above-referenced amount
of Damages divided by the Deemed Value Per Membership Unit (and thereby
reduce Whitehall's Percentage Interest by a proportionate amount). If the
Company fails to submit the subject matter of any Dispute Notice for binding
arbitration as provided in Section 5.10 within thirty (30) days after receipt
of such Dispute Notice, Whitehall shall be relieved of any responsibility or
obligation in respect of the Damages which are the subject of such Dispute
Notice.
(k) On the Saracen Closing Date, Saracen contributed, or caused
the contribution of, directly or indirectly, the following properties to the
Company (and/or one or more of its Subsidiaries) in exchange for cash, the
assumption of certain liabilities, Membership Units, Series A Preferred
Membership Units and other good and valuable consideration, all in accordance
with the Contribution Agreement:
(i) the Nomura Properties, the 72 River Park Property and the
Non-Nomura Properties, together with any and all improvements
located thereon and the rights of the Saracen Current Owners to any
and all personal, tangible and intangible property located on or
otherwise related to any Saracen Property, including, without
limitation, the properties described in Section 2.1 of the
Contribution Agreement, all as more particularly described in the
Contribution Agreement; and
(ii) all of the legal and beneficial ownership interests of
Saraceno Holding Trust General Partnership, a Massachusetts general
partnership, in and to Wells Avenue Holdings LLC, a Massachusetts
limited liability company.
All of the foregoing property described in subclauses (i) and (ii) above
are herein referred to as the "Saracen Contributed Assets".
(l) The Saracen Contributed Assets had an agreed upon value net of
any distributions made to Saracen contemporaneously with the Saracen Closing
equal to the aggregate amount of the Saracen Members' Capital Accounts on the
Saracen Closing Date. To support this valuation, the Saracen Members
(excluding Edward Werner and Stephen Davis) guaranteed the truth, accuracy
and performance of the representations, warranties and covenants of the
Contributor set forth in the Contribution Agreement as and to the extent set
forth therein, and subject also to the terms and conditions, including
without limitation, the limitations on survival and liability, set forth
therein. The representations, warranties and covenants of the Contributor
were made as of and shall survive the Saracen Closing Date only if and for
the periods set forth in the Contribution Agreement, and neither the Company
nor any Subsidiary may make a claim for indemnity for a breach of a
representation, warranty or covenant made by the Contributor under the
Contribution Agreement, or the guaranty of the same made herein, at any time
after the expiration of such periods, as set forth in the Contribution
Agreement, or make a claim for damages based upon an inaccurate
representation, warranty or covenant of the Contributor where the inaccuracy
could have been readily discovered by the Company prior to the Saracen
Closing Date from information or facts contained in any lease, brokerage
agreement, management agreement, environmental report, structural report,
title commitment (including copies of recorded title documents), documents
included in closing binders, rent rolls, title policies or surveys, in each
case which was delivered or made readily available by the Contributor to the
Company or its attorneys and representatives prior to the Saracen Closing.
Subject to the limitations in the immediately preceding sentence, the Saracen
Members (excluding Edward Werner and Stephen Davis) agree to indemnify,
defend and hold the Company, its Subsidiaries and their respective officers,
directors, members, controlling persons, affiliates and agents harmless
against all Damages in excess of $500,000.00 (but subject to the aggregate
limitations on liability set forth in the Contribution Agreement) suffered or
incurred by any of them relating to or arising from any inaccuracy or breach
of any representation, warranty or covenant of the Contributor made pursuant
to the Contribution Agreement. In the event that any representation,
warranty or covenant made by the Contributor in the Contribution Agreement
for which the Saracen Members (excluding Edward Werner and Stephen Davis)
have liability hereunder or under the WWP Agreement is inaccurate or
breached, the Company or the Manager shall notify Saracen in writing of such
inaccuracy or breach (the "Breach Notice") and the amount of Damages in
excess of $500,000.00 (but subject to the aggregate limitations on liability
set forth in the Contribution Agreement) suffered or incurred as a result of
such breach or inaccuracy. Within thirty (30) days after receipt of the
Breach Notice, Saracen shall either (i) make a capital contribution to the
Company of cash in an amount equal to the Damages in excess of $500,000.00
(but subject to the aggregate limitation on liability set forth in the
Contribution Agreement) claimed in such Breach Notice to have been suffered
or incurred as a result of the foregoing breach or inaccuracy or (ii) deliver
a Dispute Notice to the Company. If (x) within the thirty (30) day period
after receipt by Saracen of the Breach Notice, Saracen shall neither have
made a capital contribution to the Company in the amount of the Damages in
excess of $500,000.00 (but subject to the aggregate limitation on liability
set forth in the Contribution Agreement) nor have delivered a Dispute Notice
to the Company or (y) within thirty (30) days after Saracen has received
notice from the arbitrator selected in accordance with Section 5.10 Saracen
shall not have made a capital contribution to the Company in an amount equal
to the amount of the Damages in excess of $500,000.00 (but subject to the
aggregate limitation on liability set forth in the Contribution Agreement)
which such arbitrator shall have determined to have been suffered or incurred
by the Company as a result of the foregoing breach or inaccuracy, then the
Management Committee may elect:
(i) (A) to reduce Dominic J. Saraceno's Capital Account with
respect to his Membership Units by the amount of the first $5,000,000.00 of
Damages in excess of $500,000.00 (but subject to the applicable limitations
on liability) suffered or incurred (or the first $5,000,000.00 of the amount
of Damages determined by the arbitrator pursuant to Section 5.10 to have been
suffered or incurred in excess of $500,000.00 (but subject to the applicable
limitations on liability)) by the Company in respect of such breach or
inaccuracy and (B) to the extent that such reduction in Dominic J. Saraceno's
Capital Account with respect to his Membership Units is not sufficient to
satisfy the first $5,000,000.00 of Damages in excess of $500,000.00 (but
subject to the applicable limitations on liability), to reduce Dominic J.
Saraceno's Capital Account with respect to his Series A Preferred Membership
Units by the amount of the first $5,000,000.00 of Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), less
the amount already reduced pursuant to subparagraph (i)(A) above. Subject to
the applicable limitations on liability set forth in the Contribution
Agreement, only to the extent of such Damages which are in excess of the
reduction in Dominic J. Saraceno's Capital Account with respect to his
Membership Units and Series A Preferred Membership Units pursuant to the
preceding sentence, unless Saracen shall have made a capital contribution in
such amount, then the Management Committee may elect to reduce, pro rata with
respect to their respective Percentage Interests, the Saracen Members'
Capital Accounts (excluding Edward Werner and Stephen Davis) with respect to
their respective Membership Units by the amount of the Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), less
the amount already reduced pursuant to the preceding sentence and (B) to the
extent that such reduction in the Saracen Members' Capital Accounts
(excluding Edward Werner and Stephen Davis) with respect to their Membership
Units and such reduction in Dominic J. Saraceno's Capital Account with
respect to his Membership Units and Series A Preferred Membership Units
together with any capital contribution made pursuant to the preceding
sentence is not sufficient to satisfy the Damages in excess of $500,000.00
(but subject to the applicable limitations on liability), to reduce, pro rata
with respect to their respective Series A Preferred Percentage Interests, the
Saracen Members' Capital Accounts (excluding Edward Werner and Stephen Davis)
with respect to their respective Series A Preferred Membership Units by the
amount of the Damages in excess of $500,000.00, less the amount already
reduced pursuant to this subparagraph (i); and
(ii) (A) to reduce the number of Membership Units attributable
to Dominic J. Saraceno (and the aggregate number of Membership Units of the
Company outstanding) by an amount equal to the amount of the first
$5,000,000.00 of Damages in excess of $500,000.00 (but subject to the
applicable limitations on liability) suffered or incurred (or the first
$5,000,000.00 of the amount of Damages determined by the arbitrator pursuant
to Section 5.10 to have been suffered or incurred in excess of $500,000.00
(but subject to the applicable limitations on liability)) divided by the
Deemed Value Per Membership Unit (and thereby reduce Dominic J. Saraceno's
Percentage Interest by a proportionate amount) and (B) to the extent that
such reduction of the number of Membership Units (based upon the aggregate
Deemed Value Per Membership Unit) attributable to Dominic J. Saraceno is not
sufficient to satisfy the first $5,000,000.00 of Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), to
reduce the number of Series A Preferred Membership Units attributable to
Dominic J. Saraceno (and the aggregate number of Series A Preferred
Membership Units of the Company outstanding) by an amount equal to the amount
of the first $5,000,000.00 of Damages in excess of $500,000.00 (but subject
to the applicable limitations on liability), less the amount of Damages in
excess of $500,000.00 satisfied pursuant to subparagraph (ii) (A) above,
divided by $25.00 (and thereby reduce Dominic J. Saraceno's Series A
Preferred Percentage Interest by a proportionate amount). In the event of
Damages in excess of $500,000.00 (but subject to the applicable limitations
on liability set forth in the Contribution Agreement, only to the extent of
such Damages which are in excess of the amount of the reduction of the number
of Membership Units and Series A Preferred Membership Units (based upon the
aggregate Deemed Value Per Membership Unit and liquidation preference of the
Series A Preferred Membership Units) attributable to Dominic J. Saraceno
pursuant to the preceding sentence, unless Saracen shall have made a capital
contribution in such amount, the Management Committee may elect to reduce,
pro rata with respect to their respective Percentage Interests, the number of
Membership Units attributable to the Saracen Members (excluding Edward Werner
and Stephen Davis) (and the aggregate number of Membership Units of the
Company outstanding) by an amount equal to the amount of Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), less
the amount satisfied pursuant to the preceding sentence, divided by the
Deemed Value Per Membership Unit (and thereby reduce the Saracen Members'
Percentage Interests (excluding Edward Werner and Stephen Davis) by a
proportionate amount), and (B) to the extent that such reduction of the
number of Membership Units and Series A Preferred Membership Units (based
upon the aggregate Deemed Value Per Membership Unit and the liquidation
preference of the Series A Preferred Membership Units) attributable to
Dominic J. Saraceno and the reduction of the number of Membership Units
(based upon the aggregate Deemed Value Per Membership Unit) attributable to
the Saracen Members (excluding Edward Werner and Stephen Davis) together with
any capital contribution made pursuant to the preceding sentence is not
sufficient to satisfy the Damages in excess of $500,000.00 (but subject to
the applicable limitations on liability), to reduce, pro rata with respect to
their respective Series A Preferred Percentage Interests, the number of
Series A Preferred Membership Units attributable to the Saracen Members
(excluding Edward Werner and Stephen Davis) (and the aggregate number of
Series A Preferred Membership Units of the Company outstanding) by an amount
equal to the amount of Damages in excess of $500,000.00 (but subject to the
applicable limitations on liability) suffered or incurred (or the amount
determined by the arbitrator pursuant to Section 5.10 to have been suffered
or incurred in excess of $500,000.00 (but subject to the applicable
limitations on liability)), less the amount of Damages in excess of
$500,000.00 satisfied pursuant to this subparagraph (ii) divided by $25.00
(and thereby reduce the Saracen Members' Series A Preferred Percentage
Interests (excluding Edward Werner and Stephen Davis) by a proportionate
amount). If the Company fails to submit the subject matter of any Dispute
Notice for binding arbitration as provided in Section 5.10 within thirty (30)
days after receipt of such Dispute Notice, the Saracen Members shall be
relieved of any responsibility or obligation in respect of the Damages which
are the subject of such Dispute Notice.
(m) The representations, warranties and covenants of the
Contributee are made as of and shall survive the Saracen Closing Date only if
and for the periods set forth in the Contribution Agreement, and neither
Saracen nor the Contributor may make a claim for indemnity for a breach of a
representation, warranty or covenant made by the Contributee under the
Contribution Agreement, at any time after the expiration of such periods, as
set forth in the Contribution Agreement, or make a claim for damages based
upon an inaccurate representation, warranty or covenant of the Contributee
where the inaccuracy could have been readily discovered by Saracen or the
Contributor prior to the Saracen Closing Date from information or facts
contained in any lease, brokerage agreement, management agreement,
environmental report, structural report, title commitment (including copies
of recorded title documents), documents included in closing binders, rent
rolls, title policies or surveys, in each case which was delivered or made
readily available by the Contributee to Saracen or the Contributor or their
attorneys and representatives prior to the Saracen Closing. Subject to the
limitations in the immediately preceding sentence, the Company agrees to
indemnify, defend and hold the Contributor and Saracen and their respective
officers, directors, members, controlling persons, affiliates and agents
harmless against all Damages in excess of $500,000.00 (but subject to the
aggregate limitations on liability set forth in the Contribution Agreement)
suffered or incurred by any of them relating to or arising from any
inaccuracy or breach of any representation, warranty or covenant of the
Contributee made pursuant to the Contribution Agreement. In the event that
any representation, warranty or covenant made by the Contributee in the
Contribution Agreement is inaccurate or breached, Saracen shall deliver a
Breach Notice to the Company describing such inaccuracy or breach and the
amount of Damages in excess of $500,000.00 (but subject to the aggregate
limitations on liability set forth in the Contribution Agreement) suffered or
incurred by any of them as a result of such breach or inaccuracy, which
amount of Damages shall be reduced by any capital contributions made by the
Initial Members pursuant to Sections 5.1(c), (e), and (j), but only to the
extent such capital contributions were made with respect to the
representations, warranties and covenants that were the basis of the Damage
claim made pursuant to this Section 5.1(m). Within thirty (30) days after
receipt of the Breach Notice, the Company shall either (i) make a payment in
cash to the Saracen Members in accordance with their respective Percentage
Interests in an amount equal to the Damages in excess of $500,000.00 (but
subject to such limitations on liability) claimed in such Breach Notice to
have been suffered or incurred as a result of the foregoing breach or
inaccuracy or (ii) deliver a Dispute Notice to Saracen. If Saracen fails to
submit the subject matter of any Dispute Notice for binding arbitration as
provided in Section 5.10 within thirty (30) days after receipt of such
Dispute Notice, the Company shall be relieved of any responsibility or
obligation in respect of the Damages which are the subject of such Dispute
Notice.
5.2. Additional Capital Contributions
(a) If either the Manager or Whitehall shall reasonably determine
that funds are required for a Necessary Expenditure, or in the event of a
Preferential Distribution Non-Payment (as defined in the Series A Terms),
either the Manager or Whitehall shall have the right to make a Mandatory
Capital Call describing the amount and nature of the Necessary Expenditure or
the aggregate amount of any payment default pursuant to the Series A Terms,
in which event each of the Initial Members shall, within twenty (20) days
after receipt of such Mandatory Capital Call, fund a portion of such amount
equal to such Initial Member's Percentage Interest. Notwithstanding anything
to the contrary herein, except for the payment of any Preferential
Distribution Non-Payment (as defined in the Series A Terms), neither WCPT nor
Whitehall shall be required to contribute or lend any funds to the Company
(and no Mandatory Capital Call for a Necessary Expenditure may be issued to
such Initial Member) pursuant to this Section 5.2 or otherwise (i) to the
extent such Initial Member has previously made Capital Contributions (other
than the Initial Capital Contributions) to the Company and its Subsidiaries
in an amount equal to or in excess of $50,100,000 with respect to WCPT, or
equal to or in excess of $49,900,000 with respect to Whitehall, (ii) in
response to a Capital Call made at any time after the second anniversary of
the Initial Closing (irrespective of the amounts previously contributed) or
(iii) at any time after an initial public offering of Shares by WCPT.
(b) If the Management Committee shall have authorized a Capital
Call, the Manager shall make such Capital Call describing in brief detail the
use of proceeds of such Capital Call, in which event each of the Initial
Members shall, within (20) days after receipt of such Capital Call, fund a
portion of such amount equal to such Initial Member's Percentage Interest.
(c) Following receipt of a Capital Call in compliance with the
requirements of this Section 5.2, each Initial Member shall contribute to the
Company the amount applicable to such Member, in accordance with such Initial
Member's Percentage Interest, set forth in the Capital Call delivered
pursuant to this Section 5.2 on the due date specified in such notice.
(d) Upon any conversion by a Saracen Member of any Series A
Preferred Membership Units into Membership Units, such Saracen Member shall
have the right to contribute up to $7,500.00 to the Company as an additional
capital contribution, provided, however, that such capital contribution shall
be in addition to and shall not reduce the conversion price payable in
connection with such conversion. In exchange for such capital contribution,
Membership Units shall be issued based upon the Deemed Value Per Membership
Unit on the date of such capital contribution. Notwithstanding the
foregoing, in no event shall (i) the aggregate amount of capital
contributions made by all Saracen Members pursuant to this Section 5.2(d)
exceed $50,000.00, and (ii) Membership Units be issued for more than
$50,000.00 of capital contributions pursuant to this Section 5.2(d).
5.3. Failure to Fund Capital Contributions. If any Initial Member
shall fail to make a capital contribution required to be made pursuant to
Section 5.2 in the amount and within the time period specified in the Capital
Call (such Initial Member is hereinafter referred to as a "Non-Contributing
Member"), the Manager shall give notice of such failure to all other Initial
Members and the amount of the capital contribution not funded by the Non-
Contributing Member (such amount is hereinafter referred to as the "Failed
Contribution"), and any Initial Member or Initial Members may fund all or
part of such Failed Contribution (each such funding Initial Member is
hereinafter referred to as a "Contributing Member"). If more than one
Initial Member desires to be a Contributing Member, each such Initial Member
shall have the right to fund the amount the Non-Contributing Member(s) failed
to fund pro rata in proportion to the relative Percentage Interests of such
Contributing Members; provided that, if any such Initial Member funds less
than its pro rata share, the other Initial Members shall have the right to
fund an amount equal to the difference between such first Initial Member's
pro rata share and the amount such first Initial Member actually contributed
pursuant to this sentence, on a pro rata basis in proportion to the relative
Percentage Interests of such other Initial Members. Upon funding all or any
part of a Failed Contribution, any Contributing Member may elect the
following treatment for the portion (the "Funded Portion") of the Failed
Contribution funded by such Contributing Member:
(a) The Contributing Member may at any time (even after first
electing to proceed under paragraph (b) below) elect to treat the Funded
Portion as a capital contribution by such Contributing Member with the
dilution provided for in Section 5.4 below.
(b) The Contributing Member may elect to treat the Funded Portion
as a loan (a "Member Loan") by the Contributing Member to the Non-
Contributing Member, which Member Loan shall be treated as (i) a demand
loan made by the Contributing Member to the Non-Contributing Member
(bearing interest at the Default Rate), and (ii) as a Capital
Contribution by the Non-Contributing Member. Any such Loan (to the
extent of unpaid principal and interest) shall be recourse only to the
Non-Contributing Member's Interest and shall also be payable by the Non-
Contributing Member on demand of the Contributing Member and shall be
repaid (i) directly by the Company on behalf of the Non-Contributing
Member to the Contributing Member from funds otherwise distributable to
the Non-Contributing Member pursuant to Section 7.4 or (ii) upon the
closing of the transactions contemplated by Section 8.2 hereof. A
Contributing Member may, by delivering a notice to the Non-Contributing
Member at any time prior to full repayment of such Member Loan, elect to
terminate such loan and have the Non-Contributing Member's Percentage
Interest diluted as set forth in Section 5.4, with the entire outstand-
ing principal and interest treated as the amount of the Failed Contribu-
tion and the Capital Accounts of the Contributing and Non-Contributing
Members adjusted accordingly to reflect the outstanding amount of a
Member Loan as a Capital Contribution by the Contributing Member, not
the Non-Contributing Member. Repayment of any Member Loan shall be
secured by the Non-Contributing Member's Interest, and the Non-
Contributing Member hereby grants a security interest in such Interest
to the Contributing Member who has advanced such Member Loan and hereby
irrevocably appoints such Contributing Member, and any of its agents,
officers or employees, as its attorneys-in-fact with full power and
authority to prepare and execute any documents, instruments and agree-
ments, including, but not limited to, any note evidencing the Member
Loan, and such Uniform Commercial Code financing statements,
continuation statements, and other security instruments as may be
appropriate to perfect and continue such security interest in favor of
such Contributing Member.
(c) [INTENTIONALLY OMITTED]
5.4. Dilution for Failure to Fund Capital Calls. (a) If one or
more Contributing Members elect to treat the Funded Portion as a capital
contribution (including after electing to terminate a Member Loan pursuant to
Section 5.3(b)), the Percentage Interest of each such Contributing Member
shall be increased by a percentage equal to the quotient (rounded up to the
nearest one hundredth of one percent) obtained when (x) two times the
remaining Funded Portion funded by such Contributing Member is divided by
(y) the sum of all Members' Capital Contributions as of such date (including
the remaining Funded Portions).
(b) Notwithstanding the terms of paragraph (a) above, if (i)
Saracen or any New Member has purchased Membership Units from the Company and
continues to own any of such Membership Units, and (ii) one or more
Contributing Members elect to treat the Funded Portion as a capital
contribution (including after electing to terminate a Member Loan pursuant to
Section 5.3(b)), the Percentage Interest of each such Contributing Member
shall be increased by a percentage equal to the quotient (rounded up to the
nearest one hundredth of one percent) obtained when (x) the remaining Funded
Portion funded by such Contributing Member is divided by (y) the Deemed Value
Per Membership Unit times the aggregate number of Membership Units then
issued by the Company plus the amount of the remaining Funded Portion.
(c) In the case of either (a) or (b) above, the Percentage
Interest of the Non-Contributing Member shall be decreased by the aggregate
amount of the increase in the Percentage Interests of all Contributing
Members made pursuant to paragraph (a) or (b), as the case may be. On the
date the adjusted Percentage Interests are determined as provided in this
Section 5.4(c), each Member shall be considered as of such date, solely for
purposes of further calculations and adjustments of each member's Percentage
Interest to have made Capital contributions equal to such Member's Percentage
Interest multiplied by the total Contributions made by all Members as of such
date (such product being referred to as the "Notional Contribution" of such
Member), for example, if (1) a Non-Contributing Member X has a Percentage
Interest of 50% and has a Failed Contribution of $10 in respect of a $20
Capital Call, (2) Contributing Member A has a Percentage Interest of 40% and
contributes $8 in respect of such Capital Call plus its pro rata share of the
Non-Contributing Member's Failed Contribution (i.e., 40% divided by 50%
multiplied by the $10 Failed Contribution or $8) and, prior to contributing
any amount on account of the current Capital Call Member A has made Common
Equity Capital Contributions of $392 ($40% of $980), (3) Contributing Member
B has a Percentage Interest of 10% and contributes $2 in respect of such
Capital Call plus its pro rata share of the Non-Contributing Member's Failed
Contribution (i.e., 10% divided by 50% multiplied by the $10 Failed
Contribution or $2), prior to contributing any amount on account of the
current Capital Call has made Common Equity Capital Contributions of $98 (10%
of $980), and (4) the sum of all Members' Common Equity Capital Contributions
as of such date (including the current Capital Call of $20) is $1,000, then
(i) the Percentage Interest of Contributing Member A will be increased to
41.6% (($392 + $8 + $16) divided by $1,000), FOR A NET INCREASE OF 1.6%, (ii)
the Percentage Interest of Contributing Member B will be increased to 10.4%
(($98 + $2 + $4) divided by $1,000), for a net increase of 0.4%, (iii) the
Percentage Interest of Non-Contributing Member X will be decreased by 2.0%
(the sum of the 1.6% increase in A's Percentage Interest and the 0.4%
increase in B's Percentage interest), (iv) the Capital Account of each Member
shall be adjusted to reflect the actual cash contributions made by such
Member and (v) the Notional Contribution as of the date of adjustment of
Member A, Member B and Member X, respectively, will be $416, $104 and $480.
(d) In order to give effect to the dilution of the Non-
Contributing Member's Percentage Interest as set forth above in this Section
5.4, a number of the Non-Contributing Member's Membership Units corresponding
to the Percentage Interest forfeited under Section 5.4(a) or (b) shall be
deemed to be assigned to the Contributing Members pro rata to the relative
amounts of their remaining Funded Portions such that the percentage of all
Membership Units then owned by each such Contributing Member shall equal each
such Contributing Member's Percentage Interest (taking into account the
additional Membership Units issued to the Contributing Members pursuant to
Section 5.9), and the Manager is hereby authorized and directed to reflect
such assignment on the books of the Company.
5.5. Capital of the Company. The capital of the Company shall be
the sum of the Members' Capital Contributions. Except as otherwise provided
herein, no Member shall be entitled to withdraw or receive any interest or
other return on its Capital Contribution.
5.6. Liability of Members. The Members shall not be bound by, nor
be personally liable for, the expenses, liabilities, indebtedness or obli-
gations of the Company or of any other Member. The liability of each Member
shall be limited solely to the amount of its Capital Contributions;
provided, however, that after a Member has received a distribution from the
Company, such Member may be liable to the Company for the amount of the
distribution but only to the extent provided by the Act. The Members shall
not be required to contribute any amounts in excess of the amounts set forth
in Sections 5.1, and 5.2 hereof, provided, however, that any Member's failure
to fund a Capital Call made pursuant to Section 5.2 shall be subject to the
provisions of this Article V.
5.7. Return of Capital Contribution. Except as otherwise provided
in this Agreement, no Member shall have the right to withdraw as a Member or
demand the return of all or any part of its Capital Contribution until the
Company has been dissolved and terminated, or to demand or receive property
other than cash in return for its Capital Contribution. No Member shall be
liable for the return of the Capital Contribution of any other Member.
5.8. Calculation of Members' Percentage Interest and Members'
Series A Preferred Percentage Interest. (a) At any time, a Member's
Percentage Interest shall be equal to the number of Membership Units owned by
such Member at the date of determination divided by the aggregate number of
Membership Units owned by all of the Members at such date.
(b) At any time, a Member's Series A Preferred Percentage Interest
shall be equal to the number of Series A Preferred Membership Units owned by
such Member at the date of determination divided by the aggregate number of
Series A Preferred Membership Units owned by all of the Members at such date.
5.9. Issuance of Additional Membership Units. (a) The Manager is
hereby authorized and directed to cause the Company to issue to (i) the
Initial Members the number of Membership Units set forth in Schedule 5.1(h)
and (ii) the Saracen Members on the Saracen Closing Date the number of
Membership Units and Series A Preferred Membership Units set forth in
Schedule 5.1(h).
(b) The Manager is hereby authorized and directed to cause the
Company to issue to any Member (including a New Member) that makes a Capital
Contribution to the Company (including a capital contribution made by a
Contributing Member in accordance with Section 5.3), the number of Membership
Units equal to the amount of such contributing Member's Capital Contribution
divided by a price per Membership Unit determined by the Management
Committee; provided that, if the Management Committee is unable to determine
such price, the price per Membership Unit shall be equal to the Deemed Value
Per Membership Unit, provided, further that, if (i) all or any portion of the
Capital Contribution is made by WCPT or Whitehall, or both, and a third party
is not making a Capital Contribution contemporaneously with WCPT and/or
Whitehall at the same price per Membership Unit and (ii) the price per
Membership Unit determined by the Management Committee in connection with
such Capital Contribution is less than the most recent price per Membership
Unit utilized to issue Membership Units to any Person (other than Whitehall
or WCPT), Saracen shall have the right for its own account, and not for the
account of any other party, to make a Capital Contribution in an amount equal
to the product of (x) the aggregate amount of the Capital Contributions
described in this Section 5.9(b) to be made by WCPT and/or Whitehall and (y)
its Percentage Interest immediately prior to such Capital Contributions. In
such instance, Saracen shall be given at least thirty (30) days' prior
written notice to make such Capital Contribution and if no Capital
Contribution is made by Saracen within such thirty (30) day period, the right
to make such Capital Contribution shall be deemed waived. Unless
specifically resolved otherwise by the Management Committee, any Membership
Units issued after the Initial Closing Date shall have the same rights,
powers and duties as the Membership Units issued on the Initial Closing Date
and the Saracen Closing Date; provided that, in any event, the Management
Committee may authorize the classification of multiple classes of membership
interests and may establish the designations, preferences and relative,
participating, optional or other special rights, powers or duties of each
class of membership interests, subject to the restrictions set forth in the
Series A Terms.
(c) The Manager is hereby authorized and directed to cause the
Company to issue Membership Units (i) to WRP as required in connection with
the exercise of the WRP Warrants in exchange for Membership Units, (ii) to
WCPT in connection with Whitehall's and Saracen's exercise of their rights
set forth in Section 8.3, (iii) to WRP in connection with the exchange of
Membership Units for WRP At-Market Shares and (iv) to Saracen in connection
with the conversion of the Series A Preferred Membership Units.
5.10. Arbitration. Any matter arising pursuant to any provision
hereunder which specifies that such matter shall be resolved by arbitration
and any other dispute involving an alleged breach or violation of this
Agreement (including, without limitation, an alleged breach or violation by
WCPT that would entitle Whitehall to remove WCPT pursuant to Section 9.1)
shall be submitted to arbitration ("Arbitration") in accordance with the
provisions of this Section 5.10. The party having the right to submit a
matter to Arbitration and exercising its rights to do so shall have the right
to request an arbitration which shall be conducted in accordance with the
Rules of Arbitration of the American Arbitration Association for a single
arbitrator arbitration (the "Rules") in New York, New York, or at such other
location as may be agreed between the parties. The Arbitration shall be
conducted by a single arbitrator chosen in accordance with the Rules,
provided that, such arbitrator shall be a person having at least ten (10)
years experience in the matter in dispute including valuing real estate. The
determination of the arbitrator shall be made within thirty (30) days
following the appointment of such arbitrator and shall be conclusive and
binding upon the parties and judgment upon the same may be entered in any
court having jurisdiction thereof. Each party shall pay the fees and
expenses of the arbitrator as determined by the arbitrator. The arbitrator
shall not have the right to amend any provision of this Agreement.
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts.
(a) The Company shall maintain a Capital Account for each Member
in accordance with federal income tax accounting principles.
(b) The Capital Account of each Member shall be increased by (i)
the amount of any cash and the agreed net fair market value (as used herein,
"agreed net fair market value" of property shall mean the gross fair market
value of the property reduced by all liabilities encumbering the property) as
of the date of contribution of any property subsequently contributed as a
Capital Contribution to the capital of the Company by such Member and (ii)
the amount of any Profits allocated to such Member. The Capital Account of
each Member shall be decreased by (i) the amount of any Losses allocated to
such Member and (ii) the amount of distributions to such Member. In all
respects, the Member's Capital Accounts shall be determined in accordance
with the detailed capital accounting rules set forth in Treasury Regulation
Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of
certain events as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(f). The Members hereby agree that as of the date hereof,
the Capital Account of each Member shall be as set forth on Schedule 5.1(h).
(c) A transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account)
attributable to the transferred Interest.
(d) Notwithstanding anything to the contrary contained herein, no
increase in any Member's Capital Account, Percentage Interest or number of
Membership Units shall be made on account of a contribution made by an
Initial Member pursuant to Section 5.1(c), (e), (i) or (j).
(e) It is the intention of the parties that a conversion pursuant
to its terms of a Series A Preferred Membership Unit into a Membership Unit
be treated for federal income tax purposes as a contribution of the Series A
Preferred Membership Unit to the Company in exchange for a Membership Unit
and that any such conversion be treated as an event requiring an adjustment
to the Members' Capital Accounts pursuant to Section 6.1(b) hereof and
Treasury Regulation Section 1.704-1(b)(2)(iv)(f).
(f) The Capital Account balances of the Members holding Series A
Preferred Membership Units (the "Series A Capital Accounts") shall be
maintained separately from the Capital Accounts of the Members holding
Membership Units (the "Membership Capital Accounts"). For purposes of
maintaining Capital Account balances as provided in subsection (b) above, the
Series A Capital Accounts shall be adjusted for allocations of Profits and
Losses pursuant to Sections 6.2(d)(i), 6.2(d)(ii) and 6.2(e)(iv) and for
distributions made pursuant to Section 7.1(a-2)(i).
(g) Notwithstanding anything in this Agreement to the contrary,
including without limitation Articles VII and X hereof, no Member shall be
required to pay to the Company or to any other Member any deficit or negative
balance which may exist from time to time in such Member's Capital Account.
6.2. Profits and Losses.
(a) The profits and losses of the Company ("Profits" and "Losses")
shall be the net income or net loss (including capital gains and losses,
income and gain exempt from tax, and items of loss, deduction of expense not
deductible from Company income or capitalizable into the basis of Company
property), respectively, of the Company determined for each Fiscal Year in
accordance with the accounting method followed for federal income tax
purposes except that (i) in computing Profits and Losses, all depreciation
and cost recovery deductions shall be deemed equal to Depreciation and (ii)
gain or loss on the sale or other disposition of a Company Asset shall be
determined by reference to Book Value.
(b) Whenever a proportionate part of the Profits or Losses is
allocated to a Member, every item of income, gain, loss, deduction or credit
entering into the computation of such Profits or Losses or arising from the
transactions with respect to which such Profits or Losses were realized shall
be credited or charged, as the case may be, to such Member in the same
proportion; provided, however, that "recapture income", if any, shall be
allocated to the Members who were allocated the corresponding depreciation
deductions.
(c) If any Member transfers all or any part of its Interest during
any Fiscal Year or its Interest is increased or decreased, Profits and Losses
attributable to such Interest for such Fiscal Year shall be apportioned
between the transferor and transferee ratably on a daily basis, provided in
all events that any apportionment described above shall be permissible under
the Code and applicable regulations thereunder.
(d) Profits shall be allocated each year among the Members as
follows:
(i) First, among all the Members holding Membership Units, in
proportion to the amounts previously allocated pursuant to Section
6.2(e)(v) until the amounts allocated pursuant to this Section 6.2(d)(i)
in the current and all prior years equals such amounts previously
allocated pursuant to Section 6.2(e)(v) in the current and all prior
years.
(ii) Second, to the Saracen Members holding Series A
Preferred Units, in proportion to the amounts previously allocated
pursuant to Section 6.2(e)(iv) until the amount allocated pursuant
to this Section 6.2(d)(ii) in the current and all prior years
equals such amounts previously allocated pursuant to Section
6.2(e)(iv) in the current and all prior years;
(iii) Third, to each Saracen Member holding Series A
Preferred Units, an amount equal to the aggregate amounts
distributed and distributable pursuant to Section 7.1(a-2)(i)
(assuming that the Company had received all the cash attributable
to the income being allocated) until the amounts allocated pursuant
to this Section 6.2(d)(iii) in the current and all prior years
equals such amounts previously distributed and distributable
pursuant to Sections 7.1(a-2)(i) in the current and all prior
years; provided, however, that in no event shall amounts be
allocated under this Section 6.2(d)(iii) in excess of the Preferred
Limitation;
(iv) Fourth, among all the Members holding Membership Units,
in proportion to the amounts previously allocated pursuant to
Section 6.2(e)(iii) until the amount allocated pursuant to this
Section 6.2(d)(iv) in the current and all prior years equals such
amounts previously allocated pursuant to Section 6.2(e)(iii) in the
current and all prior years.
(v) Fifth, to the Saracen Members holding Membership Units,
in proportion to their respective Percentage Interests, an amount
equal to the product of (x) their aggregate Percentage Interests,
and (y) the remaining Profits of the Company after taking into
account Sections 6.1(d)(i) through (d)(iv) above; and
(vi) The balance of the Company's Profits shall be allocated
between the Initial Members as follows:
A. First, to the Initial Members in proportion to the amounts
previously allocated pursuant to Section 6(e)(ii)(D) until the
amount allocated pursuant to this Section 6.2(d)(vi)(A) equals such
amounts previously allocated pursuant to Section 6(e)(ii)(D).
B. Next, to the Initial Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections
7.1(b)(ii) (assuming that the Company had received all the cash
attributable to the income being allocated) until the amount
allocated pursuant to this Section 6.2(d)(vi)(B)(and not reversed
by Section 6.2(e)(ii)(C) equals such amounts previously distributed
and distributable pursuant to Sections 7.1(b)(ii);
C. Next, to the Initial Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections
7.1(b)(iii) (assuming that the Company had received all the cash
attributable to the income being allocated) until the amount
allocated pursuant to this Section 6.2(d)(vi)(C) (and not reversed
by Section 6.2(e)(ii)(B)) equals such amounts previously
distributed and distributable pursuant to Sections 7.1(b)(iii); and
D. Thereafter, to the Initial Members in proportion to the
aggregate amounts distributed and distributable pursuant to
Sections 7.1(b)(iv) (assuming that the Company had received all the
cash attributable to the income being allocated) until the amount
allocated pursuant to this Section 6.2(d)(vi)(D) (and not reversed
by Section 6.2(e)(ii)(A)) equals such amounts previously
distributed and distributable pursuant to Sections 7.1(b)(iv).
(e) Losses shall be allocated each year among the Members as
follows:
(i) First, among the Members holding Membership Units, in
proportion to the amounts previously allocated pursuant to Sections
6.2(d)(iv) and (v) until the amount allocated pursuant to this
Section 6.2(e)(i) equals such amounts previously allocated pursuant
to Sections 6.2(d)(iv) and (v); such amount to be allocated to the
Initial Members to be further allocated between them as set forth
in Section 6.2(e)(ii) below.
(ii) The allocation between the Initial Members described in
Section 6.2(e)(i) shall be as follows:
(A) First, to the Initial Members in proportion to the
amounts previously allocated pursuant to Section 6.2(d)(vi)(D)
until the amount allocated pursuant to this Section 6.2(e)(ii)(A)
equals such amounts previously allocated pursuant to Section
6.2(d)(vi)(D);
(B) Second, to the Initial Members in proportion to the
amounts previously allocated pursuant to Section 6.2(d)(vi)(C)
until the amount allocated pursuant to this Section 6.2(e)(ii)(B)
equals such amounts previously allocated pursuant to Section
6.2(d)(vi)(C);
(C) Third, to the Initial Members in proportion to the
amounts previously allocated pursuant to Section 6.2(d)(vi)(B)
until the amount allocated pursuant to this Section 6.2(e)(ii)(C)
equals such amounts previously allocated pursuant to Section
6.2(d)(vi)(B); and
(D) Thereafter, to the Initial Members pro rata in
proportion to their relative Percentage Interests.
(iii) Next, to the Members holding Membership Units, an
amount required to reduce their positive Membership Capital Account
balances to zero, in proportion to the respective required amounts.
(iv) Next, to the Saracen Members holding Series A Preferred
Membership Units, an amount required to reduce their positive
Series A Capital Account balances to zero, in proportion to the
respective required amounts.
(v) Any remaining Losses shall be allocated among all Members
holding Membership Units in proportion to their respective
Percentage Interests.
(f) Notwithstanding Sections 6.2(d) and (e) hereof,
(i) For federal income tax purposes but not for purposes of
crediting or charging Capital Accounts, depreciation or gain or loss
realized by the Company with respect to any property that was
contributed to the Company or that was held by the Company at a time
when the Book Value of the Company assets was adjusted pursuant to the
third sentence of Section 6.1(b) shall, in accordance with the
"traditional method" under Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(d) and (f), be allocated among the
Members in a manner which takes into account the differences between the
adjusted basis for federal income tax purposes to the Company of its
interest in such property and the fair market value of such interest at
the time of its contribution or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the Company
during a taxable year (including any Minimum Gain attributable to
Member-Funded Debt), each Member at the end of such year shall be
allocated, prior to any other allocations required under this Article
VI, items of gross income for such year (and, if necessary, for
subsequent years) in the amount and proportions described in Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) Notwithstanding the allocations provided for in Sections
6.2(d) and (e), no allocation of an item of loss or deduction shall be
made to a Member to the extent such allocation would cause or increase a
deficit balance in such Member's Capital Account as of the end of the
taxable year to which such allocation relates. If any Member receives
an adjustment, allocation or distribution that causes or increases such
a deficit balance, taking into account the rules of Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), such Member shall be
allocated (after taking into account any allocations made pursuant to
Section 6.2(f)(ii)) items of income and gain in an amount and manner to
eliminate the Member's Capital Account deficit attributable to such
adjustment, allocation or distribution as quickly as possible. For
purposes of this Section 6.2(f)(iii), there shall be excluded from a
Member's deficit Capital Account balance at the end of a taxable year of
the Company (a) such Member's share, determined in accordance with
Section 704(b) of the Code and Treasury Regulation Section 1.704-2(g) of
Minimum Gain (provided that, in the case of Minimum Gain attributable to
Member-Funded Debt, such Minimum Gain shall be allocated to the Member
or Members to whom such debt is attributable pursuant to Treasury
Regulation Section 1.704-2(i)), and (b) the amount that such Member is
obligated to restore to the Company under Treasury Regulation Section
1.704-1(b)(2)(ii)(c).
(iv) Notwithstanding the allocations provided for in subsection
(ii) of this Section 6.2(f) and Sections 6.2(d) and (e), if there is a
net increase in Minimum Gain of the Company during a taxable year of the
Company that is attributable to Member-Funded Debt, then first
Depreciation, to the extent the increase in such Minimum Gain is
allocable to depreciable property, and then a proportionate part of
other deductions and expenditures described in Section 705(a)(2)(B) of
the Code, shall be allocated to the lending or guaranteeing Member (and
to joint lenders or guarantors in proportion to their relative obli-
gations), provided that the total amount of deductions so allocated for
any year shall not exceed the increase in Minimum Gain attributable to
such Member-Funded Debt in such year.
(v) Any special allocation under Sections 6.2(f)(ii) through (iv)
shall be taken into account in computing subsequent allocations of
Profits and Losses of any item thereof pursuant to this Article VI so
that the net amount of any items so allocated and the Profits, Losses
and all items thereof allocated to each Member pursuant to this
Article VI shall, to the extent permissible under Section 704(b) of the
Code and the Treasury Regulations promulgated thereunder, be equal to
the net amount that would have been allocated to each Member pursuant to
this Article VI if such special allocation had not occurred.
(vi) It is intended that prior to a distribution of the proceeds
from a liquidation of the Company pursuant to Section 10.2(vi) hereof,
the positive Capital Account balance of each Member shall be equal to
the amount that such Member would receive if liquidation proceeds were
distributed in accordance with Section 7.1. Accordingly,
notwithstanding anything to the contrary in this Section 6.2, to the
extent permissible under Sections 704(b) and 514(c)(9) of the Code and
the Treasury Regulations promulgated thereunder, Profits and Losses and,
if necessary, items of gross income and gross deductions, of the Company
for the year of liquidation of the Company (or, if the liquidation spans
more than one year, each such year) shall be allocated among the Members
so as to bring the positive Capital Account balance of each Member as
close as possible to the amount that such Member would receive if
liquidation proceeds were distributed in accordance with Section 7.1.
(vii) Appropriate adjustments shall be made to the provisions
of this Section 6.2 if a New Member is admitted to the Company.
(viii) The Members agree that in the absence of any special
allocations or adjustments to the Capital Accounts made by the Internal
Revenue Service, their respective Capital Account balances (other than
with respect to the Series A Preferred Membership Units) should be in
the ratio of their respective number of Membership Units, and,
accordingly, notwithstanding anything to the contrary in Section 6.2(d),
to the extent permissible under Sections 704(b) and 514(c)(9) of the
Code and the Treasury Regulations promulgated thereunder, for purposes
of maintaining Capital Account balances, book income, gain and loss from
the sale of Company Assets shall be allocated, in a manner that brings
the Member's Capital Account balances into the ratio of their respective
number of Membership Units as quickly as possible.
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions.
(a-1) Distributions shall be made by the Manager to the Members of
all or a portion of Available Cash as determined by the Management Committee
(such amount, the "Distribution Amount") in accordance with Section 7.1(a-2),
(b) and (c) within thirty (30) days after the end of each quarter of each
Fiscal Year. The Members acknowledge and agree, notwithstanding anything in
this Agreement to the contrary, that the Company shall make distributions to
the Members in an amount at least sufficient to pay the amounts to Saracen
set forth in Section 7.1(a-2)(i) below and to provide WCPT the amount that
WCPT would be required to distribute to its shareholders, on account of
taxable income of the Company allocable to WCPT, so that WCPT is able to
satisfy the distribution requirements of a real estate investment trust with
respect to such taxable income.
(a-2) The Distribution Amount and the Capital Proceeds
Distribution Amount, if any, shall be distributed as follows:
(i) First, in an aggregate amount equal to the sum of (A) the
Unpaid Preferred Distribution, if any, plus (B) the Preferred
Distribution Amount, pro rata to each Saracen Member, in proportion
to its relative Series A Preferred Percentage Interests;
(ii) Second, in an aggregate amount equal to the Common
Distribution Amount, pro rata, (A) to each Saracen Member, an
amount equal to each Saracen Member's Percentage Interest
multiplied by the Common Distribution Amount and (B) to Whitehall
and WCPT an amount equal to their combined Percentage Interests
multiplied by the Common Distribution Amount, which amount shall be
distributed to Whitehall and WCPT in accordance with Section
7.1(b).
(b) The total amount distributed to Whitehall and WCPT pursuant to
Section 7.1(a-2)(ii)(B) above shall be further distributed between them as
follows:
(i) First, to WCPT and Whitehall pro rata (in proportion to the
unreturned Capital Contributions of such Members) until each of WCPT and
Whitehall shall have received the full amount of all Capital
Contributions made by such Member through the date of distribution;
(ii) Second, to WCPT and Whitehall pro rata (in proportion to their
relative Percentage Interests) until each of WCPT and Whitehall shall
have received, taking into account the timing and amount of all prior
contributions and distributions (other than any amounts paid pursuant to
Sections 2.8 and 2.9 hereof and the Promote), an Internal Rate of Return
equal to 17.5% per annum;
(iii) Third, (x) 82.5% to WCPT and Whitehall pro rata (in
proportion to their relative Percentage Interests) and (y) 17.5% to the
Manager until WCPT and Whitehall shall have received, taking into
account the timing and amount of all prior contributions and distribu-
tions (other than any amounts paid pursuant to Sections 2.8 and 2.9
hereof and the Promote), an Internal Rate of Return equal to 22.5% per
annum; and
(iv) Thereafter, (x) 77.5% to WCPT and Whitehall pro rata (in
proportion to their relative Percentage Interests) and (y) 22.5% to the
Manager.
(c) If and to the extent applicable, an amount equal to the
Percentage Interest of each New Member multiplied by the Common Distribution
Amount shall be distributed as follows:
(i) First, to such New Member until such New Member shall have
received the full amount of all Capital Contributions made by such New
Member through the date of distribution;
(ii) Second, to such New Member until such New Member shall have
received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to a
percentage to be approved by the Management Committee;
(iii) Third, (x) a percentage to be approved by the Management
Committee to such New Member and (y) a percentage to be approved by the
Management Committee to the Manager, until such New Member shall have
received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to a
percentage to be approved by the Management Committee; and
(iv) Thereafter, (x) a percentage to be approved by the Management
Committee to such New Member and (y) a percentage to be approved by the
Management Committee to the Manager.
(d) If WCPT is entitled to receive payments pursuant to
Section 7.1(c)(iii) or (iv) or pursuant to Section 7.6 (from any Member other
than Whitehall, it being acknowledged that WCPT (or any other Manager) shall
not be entitled to any such Promote from Saracen) on account of any Promote,
then all such amounts entitled to be received by WCPT shall instead be
distributed among WCPT and Whitehall in accordance with Section 7.1(b).
Except as provided in the immediately preceding sentence, Whitehall, Saracen
and any other New Member acknowledge and agree that, notwithstanding their
existing or future direct or indirect ownership of Shares, (i) they shall not
have any direct or indirect interest in the Promote payable to WCPT pursuant
to this Agreement, (ii) WCPT shall structure the receipt of the Promote or
enter into one or more transactions, so that neither Whitehall, Saracen nor
any other New Member will have any direct or indirect interest therein,
including, without limitation, by distributing or causing the distribution of
the proceeds of or assigning its right to receive all or any portion of the
Promote to an Affiliate of or Person(s) employed by WCPT and not to WCPT
itself, (iii) Whitehall, Saracen, any other New Member and the Company will
cooperate with WCPT, its Affiliates and their respective shareholders, in
good faith, but without additional costs to Whitehall, Saracen, any other New
Member or the Company, to accomplish the foregoing, and (iv) WCPT (or any
other Manager) shall only be entitled to receive the Promote under and
pursuant to Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) and
7.1(c)(iv)(y).
(e) Notwithstanding the terms of Section 7.1(b) or 7.1(c), if WCPT
shall cease to be the Manager, then, at the election of Whitehall, the amount
of Available Cash that would otherwise be distributed pursuant to Sections
7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) or 7.1(c)(iv)(y) to the Manager
shall not be distributed to WCPT, but shall be distributed to Whitehall and
WCPT in proportion to their relative Percentage Interests, and appropriate
adjustments shall be made in the allocations to be made pursuant to Article
6; provided, however, that if WCPT is removed as Manager pursuant to Section
9.1 Whitehall shall have the right, in its sole and absolute discretion, to
provide for the payment to one or more successor managers (which may be
Members or Affiliates of Members) of all or a portion of the amounts that
would otherwise be distributed to the Manager pursuant to Sections
7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) or 7.1(c)(iv)(y) but are not to
be so distributed by reason of this Section 7.1(e).
(f) Distributions shall be made by the Manager to the Members of
all or any portion of Capital Proceeds as determined by the Management
Committee (such amount, the "Capital Proceeds Distribution Amount") in
accordance with Section 7.1(a) in such amounts and at such time(s) as
determined by the Management Committee in its sole discretion, provided,
however, that such Capital Proceeds Distribution Amount shall not be made
unless at least thirty (30) days' prior written notice of the approximate
amount of such Capital Proceeds Distribution Amount has been delivered to the
Preferred Holders.
7.2. Restoration of Excess Distributions. Subject to Section 7.3:
(a) In the event that distributions have been made to WCPT and
Whitehall under Section 7.1(b)(iii) of this Agreement or Section 7.1(b)(iii)
of the WWP Agreement and subsequently, Whitehall or WCPT makes a Capital
Contribution, then, to the extent required to cause Whitehall and WCPT to
receive on a cumulative basis, taking into account the timing and amount of
all prior contributions and distributions (other than the Promote), an
Internal Rate of Return equal to 17.5% per annum, amounts previously
distributed to a Manager under Section 7.1(b)(iii)(y) of this Agreement or
Section 7.1(b)(iii)(y) of the WWP Agreement shall be returned by such Manager
to the Company for immediate distribution to Whitehall and WCPT pro rata in
accordance with their relative Percentage Interests, and, to the extent
permissible under Sections 704(b) and 514(c)(9) of the Code and the Treasury
Regulations promulgated thereunder, appropriate adjustments shall be made in
the allocations pursuant to Article VI hereof.
(b) In the event that distributions have been made to the WCPT and
Whitehall under Section 7.1(b)(iv) of this Agreement or Section 7.1(b)(iv) of
the WWP Agreement and subsequently, Whitehall or WCPT makes a Capital
Contribution, then, to the extent required to cause Whitehall and WCPT to
receive on a cumulative basis, taking into account the timing and amount of
all prior contributions and distributions (other than the Promote), an
Internal Rate of Return equal to 22.5% per annum, amounts previously
distributed to the Manager under Section 7.1(b)(iv)(y) of this Agreement or
Section 7.1(b)(iv)(y) of the WWP Agreement shall be returned by such Manager
to the Company for immediate distribution to Whitehall and WCPT pro rata in
accordance with their relative Percentage Interests, and, to the extent
permissible under Sections 704(b) and 514(c)(9) of the Code and the Treasury
Regulations promulgated thereunder, appropriate adjustments shall be made in
the allocations pursuant to Article VI hereof.
7.3. Liquidation. In the event of the sale or other disposition
of all Properties owned by the Company and its Subsidiaries, the Company
shall be dissolved and the proceeds of such sale or other disposition shall
be distributed to the Members in liquidation as provided in Article X.
7.4. Repayment of Member Loans. If any Member shall be a borrower
under one or more Member Loans (a "Debtor Member"), then any distributions
that would otherwise be payable to such Debtor Member pursuant to Section
7.1, 7.2 or 10.2 shall instead be paid to the Member or Members which made
such Member Loans (each, a "Lender Member"), first to pay any accrued
interest (at the Default Rate) and then to pay the principal amount thereof,
until such Member Loans (including any accrued and unpaid interest) shall be
repaid in full. In the event there are two or more Lender Members with
respect to any Debtor Member, distributions under this Section 7.4 shall be
made pro rata to each Lender Member in proportion to the relative principal
amount of Member Loans (including accrued and unpaid interest) that such
Lender Member has outstanding as a percentage of total outstanding Member
Loans made to such Debtor Member by all Lender Members. Any amounts
distributed pursuant to this Section 7.4 shall for all other purposes of this
Agreement be treated as if distributed to the Debtor Member.
7.5. Revisions to Reflect Issuance of Additional Membership
Interests. Subject to Section 12.1 herein, in the event that the Company
issues additional membership interests pursuant to Section 5.9 hereof with
rights, preferences or privileges different from those issued on the date
hereof, the Manager shall make such revisions to this Article VII as it deems
necessary to reflect the issuance of such additional membership interests and
any special rights, duties or powers with respect thereto.
7.6. Initial Public Offering; Sale of Units. (a) In the event
of a public offering of Shares by WCPT and provided that WCPT shall be acting
as the Manager at the time of such offering, each Member and WRP agree to
take all actions necessary or appropriate at no cost or expense to the
Saracen Members, and without any impact on the rights or amounts to be
received by the Saracen Members, including, without limitation, amending any
Organizational Document of WCPT and the Company (including this Agreement) in
order that the Manager receives additional compensation (either in cash, or
if the Initial Members agree, in the form of Membership Units or otherwise)
equal in value to the Promote that the Manager would have received if all of
the Company Assets were sold for a price equal to the total valuation of the
Company (implied by reference to the public offering price of the shares sold
by WCPT) and the proceeds of such sale were distributed pursuant to Section
10.2. If, in connection with a public offering of WCPT, the Initial Members
are restricted from selling their Membership Units or Shares until a
specified lock-up period has lapsed after such offering, then the Promote
payable to WCPT under this subparagraph (a) shall be calculated and paid to
WCPT promptly after such lock-up period expires. The Initial Members (other
than WCPT) agree to pay to the Manager or its designee contemporaneously with
the closing of the public offering (or on the day after expiration of any
lock-up as described in the immediately preceding sentence) such amount in
cash or, if the Initial Members and WRP agree otherwise, in the form of
Membership Units or otherwise (based upon the relative Percentage Interests
of such Initial Members). Without in any way limiting the restrictions
contained in Article 8, Whitehall agrees not to distribute its Membership
Units or Shares to any of its constituent partners prior to payment of the
Promote payable under this subparagraph (a). Any Membership Units to be
received by the Manager pursuant to this subparagraph (a) shall not be newly
issued Membership Units but shall be Membership Units beneficially owned by
Whitehall. Each Member and WRP will work together in good faith to achieve
the optimal tax consequences for WCPT; provided, that there is no adverse
impact on the other Members.
(b) Unless the full Promote has already been, or is due to be,
paid to Manager under subparagraph (a), in the event that any Initial Member
other than WCPT, to the extent permitted under this Agreement, either sells
(or otherwise disposes of) all or any of its Membership Units to a third-
party or converts all or any of its Membership Units into Shares or WRP
Shares, such Initial Member shall pay to the Manager on the Determination
Date (as defined below) an amount equal to the amount of the Promote that
would have been payable to the Manager if the proceeds received by such
Initial Member (or the cash value thereof as of the Determination Date if
such proceeds are not cash) were first distributed to such Initial Member
pursuant to Section 7.1 (ignoring for this purpose only any Interest of any
other Initial Member) to the extent required for the Manager to receive the
Promote. For purposes of this subparagraph (b), the "Determination Date"
shall be the date of the relevant sale, disposition or conversion of the
Membership Units; provided that, if the Shares or WRP Shares received by such
Initial Member upon conversion of any Membership Units are subject to any
"lock-up" agreement prohibiting the sale of such Shares or WRP Shares for a
specified period, the "Determination Date" shall mean the date upon which
such lock-up period expires.
(c) Upon payment of any amounts (whether in cash, Shares, WRP
Shares, Membership Units or other consideration) to the Manager pursuant to
this Section 7.6 in respect of the sale, disposition or conversion of any
Membership Units, no further amounts shall be payable to the Manager pursuant
to this Section 7.6 or Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y)
or 7.1(c)(iv)(y) or any successor provision to any of the foregoing in
respect of any such sold, disposed of or converted Membership Units or in
respect of any subsequent sale, transfer or other disposition of the proceeds
from or consideration received on account of any such sale, disposition or
conversion of Membership Units.
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members.
(a) Except as provided in Section 8.1(b) and Section 8.2, no
Member shall Transfer (as hereinafter defined) all or any portion of its
Interest or permit such a Transfer or contract to do so, without the consent
of each of the Initial Members (which consent may be withheld in such Initial
Member's sole discretion for any reason or no reason) and in strict compli-
ance with the provisions of this Article VIII. As used herein "Transfer" of
an Interest means, with respect to any Member, any transfer, sale, pledge,
hypothecation, encumbrance, assignment or other disposition of any portion of
the Interest of such Member or the proceeds thereof (whether voluntarily,
involuntarily, by operation of law or otherwise). Notwithstanding the
foregoing, a transfer, sale, pledge, hypothecation, encumbrance, assignment
or other disposition of ownership interests in WCPT (including by virtue of
an Extraordinary Transaction but excluding any transfer of up to 6,000 shares
of WCPT issued to holders other than WRP on or about the Initial Closing
Date) shall constitute a "transfer" of WCPT's Interest and shall be subject
to the provisions of this Article VIII. Any purported Transfer in violation
of this Article VIII shall be void ab initio, and shall not bind the Company,
and the Members making such purported transfer, sale or assignment shall
indemnify and hold the Company and the other Members harmless from and
against any federal, state or local income taxes, or transfer taxes, includ-
ing without limitation, transfer gains taxes, arising as a result of, or
caused directly or indirectly by, such purported Transfer. The giving of any
consent to a Transfer in any one or more instances shall not limit or waive
the need for such consent in any other or subsequent instances.
(b) Subject to compliance with the remaining provisions of this
Article VIII and with Section 4.2 and notwithstanding anything to the
contrary set forth in Section 8.1(a) above, each of WCPT, Whitehall and
Saracen may, from time to time and without any consent or approval, pledge or
otherwise grant a security interest in all or part of such Member's Interest
to an Institutional Lender to secure a loan made to such Member (a "Pledgor")
by such Institutional Lender (a "Pledgee"); provided that, (i) such pledged
Interest may not be transferred to the Pledgee by foreclosure, assignment in
lieu thereof or other enforcement of such pledge, and (ii) WCPT, Whitehall
and Saracen may pledge only their respective economic interests in the
Company and no other rights hereunder. In addition, notwithstanding anything
to the contrary set forth herein, (A) Whitehall shall have the right at any
time to transfer all or any part of its Interest without the prior consent of
any Member (including WCPT and the Manager) pursuant to Section 8.3 or in
connection with (i) its exercise of the WRP Warrants in exchange for its
Membership Units or (ii) the exchange of its Membership Units for the WRP At-
Market Shares and (B) any Saracen Member shall have the right at any time to
transfer all or any part of his or her Interest without the prior consent of
any Member (i) pursuant to Section 8.3, (ii) to another Saracen Member,
provided that such transfer shall not result in Dominic J. Saraceno having a
Percentage Interest (assuming for purposes of determining Dominic J.
Saraceno's Percentage Interest pursuant to this Section 8.1(b) only, all of
his outstanding Series A Preferred Membership Units were converted into
Membership Units at the conversion price set forth in the Series A Terms)
equal to or greater than 10% or (iii) pursuant to a transfer for a tax or
estate planning purpose only, by inter vivos gift or sale to an entity or
trust or pursuant to any applicable laws of descent; provided that at all
times the voting control of such entity or trust is held by and the decisions
of such entity or trust are made solely by such Member (or, if applicable, by
any executor).
(c) At all times prior to an initial public offering by WCPT, any
one or more of Whitehall Street Real Estate Limited Partnership V, Whitehall
Street Real Estate Limited Partnership VII and/or Whitehall Street Real
Estate Limited Partnership IX, each a Delaware limited partnership, shall
control Whitehall.
8.2. Sale of Properties, the Company or its Subsidiaries. (a)
Notwithstanding any other provisions herein, at any time prior to an initial
public offering by WCPT and after the fourth anniversary of the Initial
Closing, either Whitehall or WCPT may (as long as it is still an Appointing
Member), by delivering written notice (a "Sales Notice") to the other (the
person delivering such Sales Notice being referred to as the "Triggering
Party" and the recipient of such Sales Notice being referred to as the "Non-
Triggering Party"), require the Company to sell any and all of the Properties
(or sell the Subsidiary(ies) owning any Property(ies)) in one or more bona
fide transactions to a Person not Affiliated with the Triggering Party (a
"Third Party"), subject to the terms and conditions of this Section 8.2. Each
Property (or Subsidiary) which is the subject of a Sales Notice is referred
to herein as a "Subject Property" (or "Subject Subsidiary"). The Sales Notice
shall state the price (the "Total Price") at which the Triggering Party
desires to sell the Subject Property(ies) and/or Subject Subsidiary(ies).
(b) Concurrently with the delivery of the Sales Notice referred to
in Section 8.2(a), the Triggering Party shall submit to the Non-Triggering
Party an offer (the "Offer"), to sell (or cause the Company or the applicable
Subsidiaries to sell) to the Non-Triggering Party (or its designees) for cash
in exchange for the Non-Triggering Party (or its designees) paying to the
Company or the Subsidiary(ies) owning the Subject Property(ies) the Total
Price, failing which the Triggering Party shall be entitled to market the
Subject Property(ies) and/or Subject Subsidiary(ies), as more particularly
set forth below in this Section 8.2. The Offer shall also set forth any
other material economic terms of the purchase; provided that, any Offer (x)
shall be an all cash offer and shall contain an exculpation of the Members
and their direct and indirect owners and Affiliates from any liabilities
relating to the Subject Property(ies) and/or Subject Subsidiary(ies) and (y)
notwithstanding such exculpation, may include a holdback for breaches of
representations or warranties (which may survive for claims made within no
more than one year from the transfer of the Subject Property(ies) and/or
Subject Subsidiary(ies)) by the Company (which in each case shall be as
outlined by the Triggering Party in the Offer) not to exceed 3% of the
purchase price, which holdback amount may be available for no more than the
survival period of the representations and warranties.
(c) Within thirty (30) days after receiving the Offer, the Non-
Triggering Party shall deliver a notice (a "Sales Response Notice") to the
Triggering Party, stating the election by the Non-Triggering Party of one of
the two following options:
(1) to purchase (or have its designee purchase) for the Total
Price the Subject Property(ies) and /or Subject Subsidiary(ies) on or
before the date (the "Applicable Closing Date") specified in such Sales
Response Notice (which date shall be no later than sixty (60) days after
the Sales Response Notice is delivered) and in accordance with the terms
set forth in the Offer; concurrently with the delivery of a Sales
Response Notice, and as a condition to its effectiveness under this
Section 8.2(c), the Non-Triggering Party shall also deliver to the Com-
pany a down payment equal to 5% of the Total Price, which shall not be
refundable except if the Company or its Subsidiary defaults as a seller
of the Subject Property(ies) and/or Subject Subsidiary(ies); or
(2) to agree to the sale of the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of the Offer,
subject to such changes therein as are contemplated by the terms of this
Section 8.2 provided below, in which event, the Non-Triggering Party
shall have no further rights to purchase any Subject Property or Subject
Subsidiary, except as may be expressly provided for below in this
Section 8.2.
If the Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that the Non-Triggering Party elected option (2) above
(and the Non-Triggering Party hereby consents to such sale in such case).
(d) Promptly after an election by the Non-Triggering Party
pursuant to Section 8.2(c)(1), the Company (and/or the applicable Subsidiary
or Subsidiaries) and the Non-Triggering Party (or its designee(s)) shall
proceed with such purchase and sale, the closing for which shall be held on
or before the Applicable Closing Date, during normal business hours at the
offices of counsel to the Non-Triggering Party. The Non-Triggering Party
shall have one five (5) Business Day adjournment, whereupon time shall be of
the essence with respect to the Non-Triggering Party's obligation to close on
the purchase of the Subject Property(ies) and/or Subject Subsidiary(ies) in
accordance with the terms of this Section 8.2(d) on or before the Applicable
Closing Date, and if the Non-Triggering Party does not close in accordance
with this paragraph, the Triggering Party shall be entitled, as the sole and
exclusive remedies of the Triggering Party, to market and sell the Subject
Property(ies) and/or Subject Subsidiary(ies) on behalf of the Company (or the
applicable Subsidiary(ies)) in accordance with this Section 8.2 as if the
Non-Triggering Party made the election described in Section 8.2(c)(2) and to
keep (for the Company's account) the downpayment described in Section
8.2(c)(1) above (unless the failure to close is due to the default of the
Company or its Subsidiary, in which case the Triggering Party shall not be
entitled to the foregoing remedies).
(e) Upon an election (or deemed election) by the Non-Triggering
Party pursuant to Section 8.2(c)(2), the Triggering Party shall have the
right to cause the Company or the applicable Subsidiary(ies) to market the
Subject Property(ies) and/or Subject Subsidiary(ies) for a period (the
"Marketing Period") of one hundred and eighty (180) days commencing with the
earlier to occur of (i) the thirtieth (30th) day after the delivery of the
Offer to the Non-Triggering Party or (ii) the notice by the Non-Triggering
Party to the Triggering Party of the Non-Triggering Party's election to
proceed under Section 8.2(c)(2). The Members shall cooperate fully with the
efforts of the Triggering Party to market the Subject Property(ies) and/or
Subject Subsidiary(ies) and shall use their good faith efforts to cause the
sale of the Subject Property(ies) and/or Subject Subsidiary(ies) on the terms
set forth in the Offer.
(f) If (i) during the Marketing Period, the Company receives a
third-party offer to purchase the Subject Property(ies) and/or Subject
Subsidiary(ies) for all cash (a "Third Party Offer") that the Triggering
Party desires to accept, (ii) the sale price provided for therein (the "Third
Party Offer Price") is equal to 100% or more of the Total Price and (iii) the
terms are otherwise no less favorable to the Company than those set forth in
the Offer and shall not provide for any additional or separate consideration
to the Triggering Party (or its Affiliates), then the Company or the
applicable Subsidiary(ies) shall sell the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of such Third Party
Offer (the Triggering Party being fully authorized and empowered to execute
and deliver all necessary documents, agreements and instruments on their
behalf and to make the representations and warranties on their behalf that
were outlined in the Offer) and no Non-Triggering Party shall have any right
to purchase any Subject Property or Subject Subsidiary or to object to or
otherwise interfere with such sale, provided that the closing of such sale
shall occur not later than the ninetieth (90th) day after the expiration of
the Marketing Period. In the event that the closing shall not occur within
such ninety (90)-day period, or the Company does not receive a Third Party
Offer that satisfies the conditions of this Section 8.2(f) during the
Marketing Period, then the Triggering Party shall have the right at any time
thereafter to further attempt to sell the Subject Property(ies) and/or
Subject Subsidiary(ies), subject to the rights of the Non-Triggering Party
under Section 8.2(a), which shall be reinstated with respect to any such
further decision on the part of Triggering Party to sell the Subject
Property(ies) and /or Subject Subsidiary(ies).
(g) If during the Marketing Period, the Company receives a Third
Party Offer that satisfies the conditions of Section 8.2(f), except that the
Third Party Offer Price is less than 100% of the Total Price, then the
Triggering Party, if it wishes to accept such Third Party Offer, shall so
notify the Non-Triggering Party. Within thirty (30) days after receiving
such notice, the Non-Triggering Party shall deliver to the Triggering Party a
notice (a "Third Party Response Notice"), stating its election of one of the
two following options:
(1) to purchase (or have its designee purchase) for the Third
Party Offer Price the Subject Property(ies) and/or Subject
Subsidiary(ies) on or before the date which is no later than thirty (30)
days after delivery of such Third Party Response Notice and otherwise in
accordance with the terms set forth in the Third Party Offer;
concurrently with the delivery of a Third Party Response Notice, and as
a condition to its effectiveness under this Section 8.2(g), the Non-
Triggering Party shall also deliver to the Company a down payment equal
to 5% of the Third Party Offer Price, which shall not be refundable
except if the Company or its Subsidiary defaults as a seller of the
Subject Property(ies) and/or Subject Subsidiary(ies); or
(2) to agree to the sale of the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of the Third Party
Offer, in which event, the Non-Triggering Party shall have no further
rights to purchase any Subject Property or Subject Subsidiary, except as
may be expressly provided for below in this Section 8.2.
If the Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that the Non-Triggering Party elected option (2) above
(and the Non-Triggering Party hereby consents to such sale in such case).
(h) Promptly after an election by the Non-Triggering Party
pursuant to Section 8.2(g)(1), the Company and/or the applicable Subsidiary
or Subsidiaries and the Non-Triggering Party (or its designee(s)) shall
proceed with such purchase and sale, the closing for which shall be held on
or before the closing date specified in the Third Party Response Notice
pursuant to Section 8.2(g)(1) above, during normal business hours at the
offices of counsel to the Non-Triggering Party. The Non-Triggering Party
shall have one five (5) Business Day adjournment, whereupon time shall be of
the essence with respect to the Non-Triggering Party's obligation to close on
the purchase of the Subject Property(ies) and/or Subject Subsidiary(ies) in
accordance with the terms of this Section 8.2(h) on or before the thirtieth
(30th) day after such election is made, and if the Non-Triggering Party does
not close in accordance with this paragraph, the Triggering Party shall be
entitled, as the sole and exclusive remedies of the Triggering Party, to
market and sell the Subject Property(ies) and/or the Subject Subsidiary(ies)
on behalf of the Company (or the applicable Subsidiary) in accordance with
this Section 8.2 as if the Non-Triggering Party made the election described
in Section 8.2(g)(2) and to keep (for the Company's account) the down payment
described in Section 8.2(g)(1) above (unless the failure to close is due to
the default of the Company or its Subsidiary, in which case the Triggering
Party shall not be entitled to the foregoing remedies).
(i) If the Non-Triggering Party, having elected to proceed under
either Section 8.2(c)(1) or Section 8.2(g)(1), defaults on its obligation to
purchase the Subject Property(ies) and/or Subject Subsidiary(ies) as required
thereunder, then the Triggering Party shall be entitled to retain (for the
Company's account), as liquidated damages, the down payment received in
contemplation of such sale, it being agreed that the amount represents a fair
and equitable estimate of the damages to be suffered by the Triggering Party,
the Company or its Subsidiaries if the Non-Triggering Party were to so
default and that actual damages would be highly impracticable to determine.
(j) Notwithstanding anything to the contrary, the Triggering Party
shall, subject to and in accordance with this Section 8.1, have full right,
power and authority (acting alone) to execute, deliver and perform, for and
in the name of the Company, of the applicable Subsidiary(ies) and, in the
case of a sale of the Company, of the Members, and each Member hereby agrees
to execute, deliver and perform, any and all documents, agreements and
instruments, and to take any other actions as may be required or desirable
for the purpose of transferring the Subject Property(ies) and/or Subject
Subsidiary(ies), to the maker of the Third Party Offer or the Non-Triggering
Party, as the case may be.
(k) No Property may be a Subject Property if the sale of such
Property would cause WCPT to lose its REIT status or to incur a 100% tax on
the profits allocable to WCPT.
(l) Notwithstanding any other provisions herein, at any time
after the occurrence of a Triggering Event (as defined below) and prior to an
initial public offering by WCPT, the Marketing Member (as defined below) may
require the Company or its Subsidiary(ies) to sell any or all of the
Properties (or sell the Subsidiary(ies) owning such Property(ies)) , and may
sell the Company as a whole, in one or more bona fide transactions to a
Person not Affiliated with the Marketing Member, subject to the terms and
conditions of this Section 8.2(l). Prior to commencing any sale of a
Property or Subsidiary (or the Company) pursuant to this Section 8.2(l), the
Marketing Member shall notify the other Members of its intention to sell the
subject Property(ies) and/or Subsidiary(ies) (or the Company) in writing and
shall keep the other Members reasonably informed of the status and terms of
the marketing efforts with respect to such assets of the Company. The
Marketing Member shall have full right, power and authority (acting alone) to
execute, deliver and perform, for and in the name of the Company, of the
applicable Subsidiary(ies) and, in the case of a sale of the Company, of the
Members, and each Member hereby agrees to execute, deliver and perform, any
and all documents, agreements and instruments, and to take any other actions
as may be required or desirable for the purpose of transferring the subject
Property(ies) and/or Subsidiary(ies) or the Company to the purchaser thereof.
For purposes of this Section 8.2(l), the term "Triggering Event" shall mean
(i) with respect to either Whitehall or WCPT, the fifth anniversary of the
Initial Closing Date, (ii) with respect to Whitehall only, the occurrence of
any event constituting Cause and (iii) with respect to either Whitehall or
WCPT, at any time since the later of (x) the first anniversary of the Initial
Closing Date and (y) the date twelve months prior to the date of
determination, the Committee Representatives appointed by Whitehall declined
not less than five opportunities to purchase one or more Office Properties
each having a purchase price of at least $15 million individually after WCPT
or one of its Affiliates shall have offered the Company the opportunity to
purchase such Office Properties in accordance with Section 4.2(e). For
purposes of this Section 8.2(l), the term "Marketing Member" shall mean, with
respect to any Property or Subsidiary (or of the Company), the first of
Whitehall or WCPT (provided such Person is still an Appointing Member) to
receive a binding offer from a Person who is not Affiliated with such Member
to purchase such Property or Subsidiary (or the Company) and if Whitehall and
WCPT shall each contemporaneously receive such an offer, the Member receiving
the offer with the higher purchase price for such Property or Subsidiary (or
the Company); provided that, at any time after the occurrence of a Triggering
Event specified in clause (ii) only Whitehall may be a Marketing Member.
8.2A Indemnification of Saracen. (a) The Company shall indemnify
Saracen as and when required in this Section 8.2A. The Company acknowledges
and agrees that this Section 8.2A is a material inducement to the Saracen
Members entering into this Agreement, without which the Saracen Members would
be unwilling to enter into this Agreement.
(i) Except only as and to the extent set forth in this Section
8.2A(a) below, in the event the Company shall cause or permit to occur or
exist (a) any Saracen Gain Recognition (as hereinafter defined) (x) on or
before the expiration of a nine (9) year period following the Saracen Closing
Date (the last day of such period, hereafter, the "End Date") with respect to
all or any of the Nomura Properties or the 72 River Park Property and (y) on
or before the expiration of a five (5) year period following the Saracen
Closing Date with respect to all or any of the Non-Nomura Properties or (b)
any Saracen Debt Reduction Event (as hereinafter defined) on or before the
End Date, then the provisions in Sections 8.2A(v), (vi), (vii), (viii), (ix)
and (x) shall apply.
(ii) Notwithstanding anything in this Section 8.2A to the contrary,
Section 8.2A(a)(i) above and Sections 8.2A(a)(v) through (x) below shall not
apply to (x) any Saracen Gain Recognition caused by any affirmative action
taken by any Saracen Member before, on or after the Saracen Closing Date with
respect to any Interest of any Saracen Member (any such transfer, a "Non-
Triggering Saracen Transfer") which triggers any Saracen Gain Recognition,
but only if and to the extent of the Saracen Gain Recognition which is caused
by such Non-Triggering Saracen Transfer, (y) any Saracen Gain Recognition or
Saracen Debt Reduction Event which results (i) from the partial, periodic
amortization of the Nomura Loan during the period from the Saracen Closing
Date through the End Date, but only as and to the extent such amortization is
required in connection with any applicable regularly scheduled payment of
principal and interest pursuant to the documents evidencing the Nomura Loan
as of the Saracen Closing Date ("Required Amortization"), such amortization
not to include any voluntary or involuntary payments of principal (other than
Required Amortization) on or before the End Date, whether in connection with
any default, casualty, condemnation or otherwise, or (ii) from any payment of
principal on or after the End Date, or (z) any recognition of income or gain
by any Saracen Member as a result of or in connection with the Saracen
Closing.
(iii) For purposes of this Section 8.2A, the term "Saracen
Gain" shall mean any "built-in gain" (within the meaning of Treasury
Regulation Section 1.704-3(a)(3)(ii)) that exists immediately following the
Saracen Closing with respect to any of the Nomura Properties, the 72 River
Park Property or the Non-Nomura Properties (after taking into account any
step-up in basis with respect to such properties arising in connection with
the Saracen Closing), as such "built-in gain" may be reduced from time to
time (a) under Treasury Regulations Section 1.704-3, and (b) to reflect any
Damages (in excess of $500,000) determined pursuant to Section 5.1(l) hereof.
For purposes of Section 8.2A, the term "Saracen Gain Recognition" means (x)
any recognition of Saracen Gain by any Saracen Member, including a permitted
transferee pursuant to Section 8.1(b)(B) (individually or collectively, as
the case may be, hereafter a "Saracen Indemnitee Member"), with respect to
the Nomura Properties or the 72 River Park Property at any time commencing on
the Saracen Closing Date and ending on or before the End Date, and (y) any
recognition of Saracen Gain by a Saracen Indemnitee Member with respect to
the Non-Nomura Properties at any time during the five (5) year period
commencing on the Saracen Closing Date.
(iv) For purposes of this Section 8.2A, the term "Saracen Debt
Reduction Event" shall mean the recognition of taxable income by any Saracen
Indemnitee Member as a result of the failure, for any reason whatsoever, of
the Company to have outstanding an amount of Non-Recourse Liabilities such
that each Saracen Indemnitee Member is allocated (pursuant to Section 752 of
the Code and the Treasury Regulations issued thereunder) an amount of such
liabilities at least equal to the amount by which such Saracen Indemnitee
Member's (outside) tax basis in his Interest would be negative but for
allocations of Non-Recourse Liabilities to such Member (pursuant to Section
752 of the Code and the Treasury Regulations thereunder), in order to prevent
such Member from recognizing taxable income as a result of a reduction in the
amount of debt allocable to such Member; provided, however, that the amount
of liabilities required to be allocated to all Saracen Indemnitee Members in
the aggregate shall not exceed $50,000,000, reduced over time with respect to
each applicable Saracen Indemnitee Member (w) by the aggregate amount of
additions to such Saracen Indemnitee Member's (outside) tax basis in his
Interests attributable to all prior Saracen Gain Recognition events and
Saracen Debt Reduction Events, (x) by the aggregate amount of Required
Amortization as allocated entirely among the Saracen Indemnitee Members, (y)
by all payments of principal on the Nomura Loan made after the End Date as
allocated entirely among the Saracen Indemnitee Members, (z) the aggregate
amount of additions to such Saracen Indemnitee Member's (outside) tax basis
in its Interests attributable to all taxable income recognized by reason of a
Non-Triggering Saracen Transfer taken by such Saracen Indemnitee Member, (aa)
by any reductions in the amount of Non-Recourse Liabilities allocable to such
Saracen Indemnitee Member by reason of any adjustments to Capital Accounts or
the number of Membership Units or Series A Preferred Membership Units
pursuant to Section 5.1(l) hereof, and (bb) after the expiration of a five
(5) year period after the Saracen Closing Date but only if there shall have
been a Capital Event, by an amount equal to the amount by which such Saracen
Indemnitee Member's (outside) tax basis in his Interest would be negative but
for allocations of Non-Recourse Liabilities to such Member (pursuant to
Section 752 of the Code and the Treasury Regulations thereunder), as of the
day before the Saracen Closing Date determined solely with respect to the
Non-Nomura Properties (without duplication for any amounts taken into account
under clauses (w), (x), (y), (z) and (aa) above).
(v) In the event of any Saracen Gain Recognition or Saracen Debt
Reduction Event which is otherwise prohibited or restricted pursuant to this
Section 8.2A(a), concurrently with the consummation of the transaction or
other event or circumstance which results in such Saracen Gain Recognition or
Saracen Debt Reduction Event, as the case may be, the Company shall pay to
the applicable Saracen Indemnitee Members, in addition to any amounts
otherwise distributable under Article VII (or, if applicable, Article X)
hereof, an amount equal to the amounts described in Sections 8.2A(a)(vi)
through (x) below.
(vi) (A) In the case of any Saracen Gain Recognition at or before
the expiration of a five (5) year period after the Saracen Closing Date, the
aggregate federal, state and local income taxes (determined in accordance
with Section 8.2A(x)) payable by each Saracen Indemnitee Member on the pro
rata amount of Saracen Gain recognized by such Saracen Indemnitee Member as a
result of the Saracen Gain Recognition, as such Saracen Gain is reduced,
without duplication, by items (w), (x), (y) and (z) described in Section
8.2A(viii).
(B) In the case of any Saracen Debt Reduction Event at or
before the expiration of a five (5) year period after the Saracen Closing
Date, the aggregate federal, state and local income taxes (determined in
accordance with Section 8.2A(x)) payable by each Saracen Indemnitee Member on
the pro rata amount of taxable income recognized by such Saracen Indemnitee
Member as a result of the Saracen Debt Reduction Event, as such taxable
income is reduced, without duplication, by items (w), (x), (y), (z), (aa) and
(bb) described in Section 8.2A(iv).
(vii) (A) In the case of any Saracen Gain Recognition after the
expiration of a five (5) year period after the Saracen Closing Date, but
prior to the End Date, and subject to Section 8.2A(a)(ix), an amount
representing the present value of the aggregate federal, state and local
income taxes (determined in accordance with Section 8.2A(x)) payable by each
Saracen Indemnitee Member, on the pro rata amount of Saracen Gain recognized
by such Saracen Indemnitee Member as a result of the Saracen Gain
Recognition, as such Saracen Gain is reduced, without duplication, by items
(w), (x), (y) and (z) described in Section 8.2A(viii), determined as if such
taxes were payable on the End Date and calculated using a 10% discount rate.
(B) In the case of any Saracen Debt Reduction Event after the
expiration of a five (5) year period after the Saracen Closing Date, but
prior to the End Date, and subject to Section 8.2A(a)(ix), an amount
representing the present value of the aggregate federal, state and local
income taxes (determined in accordance with Section 8.2A(x)) payable by each
Saracen Indemnitee Member, on the pro rata amount of taxable income
recognized by such Saracen Indemnitee Member as a result of the Saracen Debt
Reduction Event, as such taxable income is reduced, without duplication, by
items (w), (x), (y), (z), (aa) and (bb) described in Section 8.2A(iv),
determined as if such taxes were payable on the End Date and calculated using
a 10% discount rate.
(viii) For purposes of Section 8.2A(a)(vi) and (vii) above and
notwithstanding anything therein to the contrary, the amount required to be
paid a result of any Saracen Gain Recognition with respect to any particular
Property, other than amounts to be paid on account of the "gross-up" pursuant
to Section 8.2A(x), shall equal the amount of aggregate federal, state and
local income taxes (determined in accordance with Section 8.2A(x)) then
payable with respect to the amount of Saracen Gain with respect to such
Property at the time of the Saracen Gain Recognition, reduced over time with
respect to each applicable Saracen Indemnitee Member, (w) by an amount equal
to $4,000,000 times a fraction, the numerator of which is the Book Value of
such Property and the denominator of which is the aggregate Book Values of
all Saracen Contributed Properties, in each case as Book Value is determined
immediately after the Saracen Closing, (x) by the pro rata amount of Saracen
Gain previously taken into account by such Saracen Indemnitee Member (or any
predecessor in interest) under Sections 8.2A(a)(vi) and (vii) as a result of
any Saracen Gain Recognition, (y) by the amount of any Saracen Gain
reportable as taxable income by such Saracen Indemnitee Member (or any
predecessor in interest) as a result of any Non-Triggering Saracen Transfer,
and (z) any increase in basis of such Property under Code Section 754, which
is attributable to a sale, exchange or other disposition of an Interest by
such Saracen Indemnitee Member (or any predecessor or successor hereof); the
death of such Saracen Indemnitee Member (or any predecessor or successor
thereof); or a distribution of property to such Saracen Indemnitee Member (or
any predecessor or successor thereof).
(ix) In addition, and notwithstanding the foregoing in the case of
any Saracen Gain Recognition or Saracen Debt Reduction Event that occurs
after the expiration of a five (5) year period after the Saracen Closing
Date, but on or before the expiration of a seven (7) year period after the
Saracen Closing Date, the Company shall, concurrently with the consummation
of the transaction or other event or circumstance which results in such
Saracen Gain Recognition or Saracen Debt Reduction Event, make a loan to each
Saracen Indemnitee Member providing for (A) a principal amount equal to the
amount by which the aggregate federal, state and local income taxes payable
by such Member as a result of such Saracen Gain Recognition or Saracen Debt
Reduction Event, as the case may be, exceeds the amount reimbursed by the
Company pursuant to Section 8.2A(a)(vi) and (vii) above; (B) an interest rate
equal to 10% per annum or, in the case of a Saracen Gain Recognition or
Saracen Debt Reduction Event that arises in connection with an event which is
not within the reasonable control of the Company, an interest rate equal to
12% per annum, which interest shall accrue until maturity, with all such
amounts compounding annually; (C) maturity on the End Date; and (D)
prepayment at any time without premium or penalty.
(x) Any reimbursement by the Company under this Section 8.2A shall
be increased by an amount (the "gross-up") to take into account any tax
liability that would be incurred by the Saracen Indemnitee Member arising
from the receipt or accrual of such reimbursement payment without regard to
the gross-up. That is, the gross-up amount does not take into account any
tax liability that would be incurred by the Saracen Indemnitee Member arising
from the receipt or accrual of the gross-up payment itself. In computing the
amount of any tax reimbursement payment or gross-up, such Member shall be
deemed to be subject to federal, state and local income tax at the highest
effective tax rate imposed on income of residents of Boston, Massachusetts
then in effect but taking into account all applicable capital gains tax rates
and giving effect to all federal income tax savings attributable to
deductions for all state and local taxes payable hereunder in connection with
a Saracen Gain Recognition and a Saracen Debt Reduction Event, and such
payments shall be made without regard to or reduction for any items of loss,
deduction or credit to which such Member may be entitled under applicable
law, other than such deductions for all state and local taxes payable
hereunder.
(xi) The Saracen Members agree to furnish to the Company copies of
all 1996, 1997 and 1998 federal and state income tax returns of the Saracen
Current Owners relating to the Saracen Properties ("Tax Returns") as soon as
practicable following the filing thereof with the tax authorities. However,
any failure by any Saracen Member to comply with the requirements of this
Section 8.2A(a)(xi) shall not constitute a default and will not affect or
otherwise limit the Company's liability or obligations under this Section
8.2A(a).
(xii) After the expiration of the End Date and only if no
Capital Event shall have occurred before, on or after the End Date, the
Company shall reasonably cooperate with the holders of the Saracen Membership
Units and the Series A Preferred Membership Units to reduce or eliminate the
amount of income that would otherwise be recognized by them by reason of a
Saracen Debt Reduction Event, including by permitting such holders to
guarantee certain obligations of the Company or to agree to a limited
obligation to restore deficits in their capital accounts, provided and to the
extent that doing so would not then impose (x) any adverse income tax
consequences on any other Member or the Company, or (y) any economic cost on
any other Member or the Company. Notwithstanding the foregoing, in no event
shall the Company or the Management Committee have any duty to incur new or
additional financing or to refrain from refinancing or satisfying any
existing indebtedness of the Company as a result of this
Section 8.2(A)(a)(xii), and neither the Company nor the Management Committee
shall incur any liability in the event that the Company does not comply with
the terms of this Section 8.2(A)(a)(xii) at any time.
(xiii) Amounts required to be paid or loaned by the Company to
one or more Saracen Indemnitee Members pursuant to this Section 8.2A
(collectively, "Payments") shall be paid or loaned concurrently with the
consummation of the transaction or other event or circumstance which causes
such amounts to become payable. Within thirty (30) days following the
receipt by a Saracen Indemnitee Member of a Payment, such Saracen Indemnitee
Member can send a written notice to the Company containing a computation of
what such Saracen Indemnitee Member considers to be correct amount of
Payments and specifying the resulting deficiency (the "Asserted Deficiency").
Upon receipt by the Company of such a notice within said thirty (30) day
period, there shall be no distributions of cash to any Member pursuant to
Section 7.1(a-2) unless and until the Company shall, at its option, either
(i) pay the Asserted Deficiency to such Saracen Indemnitee Member, (ii)
establish a reserve account in an amount equal to the Asserted Deficiency, or
(iii) resolve the dispute in a manner agreed to, in writing, by such Saracen
Indemnitee Member.
(xiv) If there is any change in the provisions of the Code or
Treasury Regulations which would cause any Payments to become payable
hereunder, each of the Saracen Indemnitee Members shall reasonably cooperate
with the Company to reduce or eliminate any such Payments to the maximum
extent possible, provided and to the extent that doing so would not then
impose (x) any adverse income tax consequences to any Saracen Indemnitee
Member, or (y) any economic cost on any Saracen Indemnitee Member and
provided, further, that any failure of the Saracen Indemnitee Members to
comply with the requirements of this Section 8.2A(xiv) shall not constitute a
default and will not affect or otherwise limit the Company's liability or
obligations under this Section 8.2A(a).
(xv) This Section 8.2A(a) shall be binding upon all successors
and assigns of the Company, including, without limitation, any successor as a
result of a merger (including a triangular merger), consolidation or other
combination with or into another Person (or such Person's Subsidiary), or
otherwise.
(b) Nothing contained in this Section 8.2A shall prohibit the
Company from (A) paying down the principal of any Company indebtedness, (B)
refinancing any such indebtedness with one or more mortgage loans, (C)
selling or otherwise transferring all or any portion of or interest in all or
any of its Properties, or (D) taking any other action with respect to the
Company, its business or its Properties, provided, however, that the Company
shall, in any such event, comply with the provisions set forth in Section
8.2A.
(c) If the "total assets" of the Company as set forth on the
Company's Consolidated Balance Sheets in accordance with generally accepted
accounting principles, consistently applied, is less than $200 million, and
the Company's net equity is less than 200% of the applicable Tax Liability
for such year as set forth on Schedule 8.2A(c) annexed hereto, the Company
shall establish a reserve account (the "Tax Liability Reserve Account") in an
amount equal to the difference between (i) 200% of the applicable Tax
Liability for such year as set forth on Schedule 8.2A(c) annexed hereto and
(ii) the then current net equity of the Company. The determination of the
"total assets" of the Company, (as set forth on the Company's Consolidated
Balance Sheets in accordance with generally accepted accounting principles,
consistently applied), and the Company's net equity and the applicable
deposit, if any, in the Tax Liability Reserve Account, shall be made within
forty-five (45) days after the end of each fiscal quarter of the Company,
provided, however, if at any time the Company reasonably and in good faith
determines that based upon the immediately preceding sentence an additional
deposit or a decrease in the Tax Liability Reserve Account is required, such
adjustment shall be made immediately. If any event occurs which decreases
the Tax Liability for any specified year, as set forth on Schedule 8.2A(c)
annexed hereto, the Management Committee shall amend such Schedule 8.2A(c)
immediately to reflect the then current Tax Liability for such year. The
Company's obligations under this Section 8.2A(c) shall cease if Shares or
other capital stock of WCPT are issued or sold in a public offering or WCPT
or the Company engages in (i) a merger (including a triangular merger),
consolidation or other combination with or into another Person (or such
Person's subsidiary) whose equity interests are publicly traded or (ii) the
direct or indirect sale, lease, exchange or other transfer of all or
substantially all of its assets in one transaction or a series of related
transactions with another Person (or such Person's subsidiary) whose equity
interests are publicly traded. Schedule 8.2(A)(c) is intended to be utilized
solely for purposes of this Section 8.2(A)(c) and no inference is intended
for, and Schedule 8.2(A)(c) shall have no affect on, the computations of any
Payments pursuant to Section 8.2(A)(a) hereof.
8.3. Conversion Right. (a) At any time and from time to time
after WCPT shall have Shares or other capital stock issued to the public in a
public offering or shall engage in an Extraordinary Transaction, Whitehall
and Saracen shall each have the right (the "Conversion Right") to require
WCPT to convert part or all of its Membership Units into Shares, with such
conversion to occur on the Specified Conversion Date and at a conversion
price equal to and in the form of the Shares Amount. Any such Conversion
Right shall be exercised pursuant to a Notice of Conversion delivered to
WCPT. Each of Whitehall and Saracen may exercise the Conversion Right from
time to time after WCPT shall have Shares or other capital stock issued to
the public in a public offering or shall engage in an Extraordinary
Transaction, without limitation as to frequency, with respect to part or all
of the Membership Units that it owns, as selected by Whitehall and/or
Saracen, as applicable. If the Shares Amount is not a whole number of
Shares, Whitehall and/or Saracen, as applicable, shall be paid (i) that
number of Shares which equals the nearest whole number less than such amount
plus (ii) an amount of cash which WCPT determines, in its reasonable
discretion, to represent the fair value of the remaining fractional Share
which would otherwise be payable to Whitehall and/or Saracen, as applicable.
Whitehall and/or Saracen, as applicable, shall have no right with respect to
any Membership Units so converted to receive any distributions paid after the
Specified Conversion Date with respect to such Membership Units. Any
permitted successor or permitted assignee of Whitehall or Saracen may
exercise Whitehall's rights or Saracen's rights, respectively, pursuant to
this Section 8.3. In connection with any exercise of such rights by such
permitted successor or permitted assignee of Whitehall or Saracen, the Shares
Amount shall be paid by WCPT directly to such permitted successor or
permitted assignee and not to Whitehall or Saracen. Whitehall and/or
Saracen, as applicable, and WCPT acknowledge that Whitehall and Saracen are
not "Excepted Holders" (as defined in Section 7.1 of the Declaration of
Trust) and that, unless either becomes an "Excepted Holder", Whitehall's or
Saracen's Conversion Right may be limited. Therefore, Whitehall and/or
Saracen, as applicable, and WCPT agree to cooperate in good faith to cause
Whitehall and Saracen to become "Excepted Holders" before the Conversion
Right is exercised or to deliver to Whitehall and/or Saracen, as applicable,
cash instead of Shares upon such exercise equal in amount to the fair market
value of the Shares that would otherwise have been delivered, but for the
fact that Whitehall and/or Saracen, as applicable, is not an "Excepted
Holder". Subject to the foregoing, in the event that Whitehall and/or
Saracen, as applicable, exercises its Conversion Rights before an initial
public offering of WCPT, (i) any Shares received by Whitehall and/or Saracen,
as applicable, pursuant to such exercise may not, prior to an initial public
offering of WCPT, be transferred unless Whitehall and/or Saracen, as
applicable, first offers WRP the opportunity to purchase such Shares in
accordance with the following sentence and (ii) Whitehall and/or Saracen, as
applicable, will remain obligated hereunder (including without limitation
with respect to Whitehall only, its obligations in Section 5.2) until an
initial public offering of WCPT occurs (upon which Whitehall and/or Saracen,
as applicable, will have no further obligations hereunder except with respect
to any Interest it then owns). If Whitehall and/or Saracen desire to sell
any or all of their respective Shares to any Person that is not an Affiliate
of Whitehall or Saracen, as applicable, Whitehall and/or Saracen, as
applicable, shall, not less than ten (10) Business Days prior to any such
sale, notify WRP in writing (the "Offer Notice") of such intended sale
setting forth in such Offer Notice the number of Shares which Whitehall
and/or Saracen, as applicable, intend to sell and the aggregate purchase
price therefor and if WRP either has not notified Whitehall or Saracen, as
applicable, in writing within ten (10) Business Days of receipt of the Offer
Notice that it wishes to purchase such Shares on terms and conditions
identical to those set forth in the Offer Notice, Whitehall or Saracen, as
applicable, may sell to a non-Affiliate the number of Shares set forth in the
Offer Notice for a price not less than the aggregate purchase price set forth
therein. If WRP notifies Whitehall or Saracen, as applicable, in writing
within ten (10) Business Days of receipt of the Offer Notice that it accepts
the offer in the Offer Notice for all of the Shares described therein, WRP
shall pay to Whitehall or Saracen, as applicable, the aggregate purchase
price set forth in the Offer Notice not later than ten (10) Business Days
after delivery to Whitehall or Saracen, as applicable, of its notice of
acceptance of the offer set forth in the Offer Notice and Whitehall or
Saracen, as applicable, shall deliver to WRP the requisite Shares free and
clear of all Liens.
(b) All Membership Units delivered for conversion shall be
delivered to WCPT free and clear of all Liens, and, notwithstanding anything
contained herein to the contrary, WCPT shall not be under any obligation to
acquire Membership Units which are or may be subject to any Lien.
(c) If Whitehall converts all of its Membership Units pursuant to
the terms of this Section 8.3 at any time prior to an initial public offering
by WCPT, until an initial public offering by WCPT, Whitehall (but not its
successors or assigns unless such successor or assign is an Affiliate of
Whitehall) shall be entitled to all of the same rights and powers with
respect to the management and governance of WCPT that Whitehall has been
granted under this Agreement and WCPT shall take such further actions as may
be necessary (including by classifying its board of directors and amending
its Declaration of Trust and other organizational documents) to give effect
to this provision. Upon full implementation of such documentation as is
necessary to grant Whitehall such rights and powers, the Committee
Representatives appointed by Whitehall shall no longer serve on the
Management Committee and all rights and obligations of Whitehall with respect
to the Company shall terminate.
(d) Upon conversion by Whitehall (or its permitted successor or
permitted assign) of all or any of its Membership Units pursuant to the terms
of this Section 8.3, Whitehall (or such permitted successor or assign) shall
receive demand and piggyback registration rights with respect to the Shares
received in such conversion, which registration rights shall be exercisable
after any Shares of WCPT become publicly traded (subject to any lock-up
agreement entered into by Whitehall) and shall be no less favorable to
Whitehall than the registration rights granted with respect to WRP Shares
pursuant to the Warrant Agreement. Promptly upon Whitehall's request, WCPT
shall enter into a separate registration rights agreement with Whitehall in
form and substance no less favorable to Whitehall than the Warrant Agreement
(or, if more favorable, than those granted to WRP at the time of the initial
public offering of WCPT).
(e) Upon conversion by Saracen (or its permitted successors or
permitted assigns) of all or any of its Membership Units pursuant to the
terms of this Section 8.3, Saracen (or such permitted successors or assigns)
shall receive registration rights with respect to the Shares or other capital
stock of WCPT received in such conversion, as set forth in the form of
Registration Rights Agreement annexed hereto as Exhibit G and which
Registration Rights Agreement shall be executed by Saracen and WCPT on the
Saracen Closing Date. In addition, and without in any way limiting the
registration rights to be granted to Saracen under such Registration Rights
Agreement, if WCPT offers Shares or other capital stock in an initial public
offering (a "WCPT IPO") or within one year after the WCPT IPO, WCPT files a
registration statement pursuant to which Whitehall may offer its Shares or
other capital stock of WCPT to the public (the "Whitehall Registration
Statement"), in either such instance, Saracen shall be given 30 days' advance
notice of such event and shall have the right to participate in such offering
on the same terms and conditions made available to Whitehall, provided, that,
the number of Shares or other capital stock of WCPT to be registered on
behalf of Saracen in the WCPT IPO or in the Whitehall Registration Statement,
as the case may be, shall be less than or equal to (i) the aggregate number
of Shares or other capital stock of WCPT owned by Saracen, multiplied by (ii)
a fraction, the numerator of which is the number of Shares or other capital
stock of WCPT owned by Whitehall which are to be registered in the WCPT IPO
or the Whitehall Registration Statement, as the case may be, and the
denominator of which is the aggregate number of Shares or other capital stock
of WCPT owned by Whitehall.
8.4. Certain Transfer Provisions. The following provisions shall
apply to a purchase by a Non-Triggering Party of any Subject Property or
Subject Subsidiary:
(a) The purchase price shall be paid in cash, by wire transfer of
the funds to the accounts of the Company or the applicable Subsidiary.
All transfer costs (including transfer taxes and attorneys' fees) shall
be borne by the Company (unless the Offer provided otherwise) and there
shall be an adjustment of the purchase price at closing to reflect a
proration of any accrued income and expenses, excluding non-cash items.
Within forty-five (45) days after the closing, the Non-Triggering Party
shall direct the independent accountants for the Company to complete an
audit of such Members' proration and such independent accountants shall
deliver their audit report to the Members. If such audit report shall
adjust such proration, the party in whose favor such adjustment is made
shall promptly be paid by the other party the amount of such adjustment.
(b) On payment of the purchase price, the Non-Triggering Party
shall, with respect to each Company and/or Subsidiary debt, obligation
and claim against the Company and/or a Subsidiary for which the Company,
a Subsidiary or any Member (or any guarantor affiliated therewith or
which delivered the guaranty on behalf of such Person) is or may be per-
sonally liable with respect to the Subject Property or Subject
Subsidiary, at the option of the Non-Triggering Party either (i) obtain
a release of the Company, any applicable Subsidiary and each Member (and
any guarantor affiliated therewith or which delivered the guaranty on
behalf of such Person) from all liability, direct or contingent, from
holders of such debt, obligation or claim or (ii) cause such
indebtedness, obligation or claim to be paid in full at the closing, or
(iii) deliver to the Company, any applicable Subsidiary and each Member,
an agreement in form and substance reasonably satisfactory to the
Company, such Subsidiary and each Member, which satisfaction may require
a creditworthy guarantor, to defend, indemnify and hold the Company,
such Subsidiary and each Member (and any guarantor affiliated therewith
or which delivered the guaranty on behalf of such Person) harmless from
any actions, including attorneys' fees and costs of litigation, claims
or loss arising from such debt, obligation or claim. In no event shall
such indemnity apply to liabilities resulting from the breach by any
Member of its obligations under this Agreement. This subparagraph (b)
shall not apply to any debt, obligation or claim which is fully insured
by public liability insurer(s) reasonably acceptable to the Company, any
applicable Subsidiary and each Member.
8.5 Assignment Binding on Company. No assignment or transfer of
all or any part of the Interest of a Member permitted to be made under this
Agreement shall be binding upon the Company unless and until a duplicate
original of such assignment or instrument of transfer, duly executed and
acknowledged by the assignor or transferor, has been delivered to the
Company, and such instrument evidences (i) the written acceptance by the
assignee of all of the terms and provisions of this Agreement, (ii) the
assignees representation that such assignment was made in accordance with all
applicable laws and regulations and (iii) the unanimous consent of all of the
Initial Members to the transfer of the Interest unless such Transfer is
pursuant to the last sentence of Section 8.1(b).
8.6. Bankruptcy of a Member. In the event a Member becomes
subject to a Bankruptcy, the trustee or receiver of the estate shall have all
the rights of a Member for the purpose of settling or managing the estate and
such power as such Member possessed to assign all or any part of the Inter-
ests and to join with the assignee thereof in satisfying conditions precedent
to such assignee becoming a Substituted Member; provided, however, in such
event, such Member shall cease to be an Appointing Member for purposes of
Article III. The Company shall not be dissolved or terminated by reason of
the Bankruptcy, removal, dissolution or admission of any Member.
8.7. Substituted Members. (a) Members who assign all their
Interests pursuant to an assignment or assignments permitted under this
Agreement shall cease to be Members of the Company except that unless and
until a Substituted Member is admitted in his stead, the assigning Member
shall not cease to be a Member of the Company under the Act and shall retain
the rights and powers of a member under the Act and hereunder, provided that
such assigning Member may, prior to the admission of a Substituted Member,
assign its economic interest in the Interest, to the extent otherwise
permitted under this Article VIII, including, without limitation, Section
8.5. Any Person who is an assignee of any of the Interests of a Member and
who has satisfied the requirements of Sections 8.1 and 8.5 shall become a
Substituted Member only when (i) the Manager has entered such assignee as a
Member on the books and records of the Company, which the Manager is hereby
directed to do upon satisfaction of such requirements, and (ii) such assignee
shall have paid all reasonable legal fees and filing costs in connection with
the substitution as Member.
(b) Any Person who is an assignee of all or any portion of the
Interest of a Member but who does not become a Substituted Member and desires
to make a further assignment of any such Interest, shall be subject to all
the provisions of this Article VIII to the same extent and in the same manner
as any Member desiring to make an assignment of the Interest.
8.8. Acceptance of Prior Acts. Any person who becomes a Member,
by becoming a Member, accepts, ratifies and agrees to be bound by all actions
duly taken pursuant to the terms and provisions of this Agreement by the
Company prior to the date it became a Member and, without limiting the gener-
ality of the foregoing, specifically ratifies and approves all agreements and
other instruments as may have been executed and delivered on behalf of the
Company prior to said date and which are in force and effect on said date,
provided, however, that nothing contained in this Section 8.8 shall limit or
effect any of the representations, warranties, covenants and other agreements
and obligations of the Company under the Contribution Agreement.
8.9. Additional Limitations. Notwithstanding anything contained
in this Agreement, no Transfer shall be made and any Member shall have the
right to prohibit and may refuse to accept any Transfer unless (i)
registration is not required under the Securities Act of 1933, as amended, in
respect of such transaction; and (ii) such assignment or transfer does not
violate any applicable federal or state securities, real estate syndication,
or comparable laws. Any Member may elect prior to any Transfer to require an
opinion of counsel with respect to any of the foregoing matters.
8.10. Tag Along Rights. If WCPT and Whitehall together shall
desire to sell or transfer, in one transaction or one or more series of
related transactions, to a bona fide prospective third-party purchaser,
unaffiliated with WCPT and/or Whitehall, any part or all of their Membership
Units owned by them, then WCPT and Whitehall shall provide Saracen with 30
days' advance written notice of the pending sale (a "Tag Along Notice"),
which Tag Along Notice shall contain the terms and conditions of the proposed
sale or transfer. Saracen may elect to participate in such transaction (a
"Tag Along Transaction") as an additional selling or transferring party by
delivering a written notice thereof (a "Tag Along Election Notice") to WCPT
and Whitehall within five (5) Business Days after delivery of such Tag Along
Notice. A Tag Along Election Notice shall specify the number of Membership
Units which Saracen wishes to sell or transfer in such transaction, which
number may include a number of Membership Units previously received as a
result of a conversion of Series A Preferred Membership Units into Membership
Units pursuant to the Series A Terms, and shall in the aggregate, be less
than or equal to (i) the aggregate number of Membership Units of which WCPT
and Whitehall proposed to sell or transfer in such transaction, multiplied by
(ii) a fraction, the numerator of which is the number of Membership Units
owned by Saracen, and the denominator of which is the aggregate number of
Membership Units owned by WCPT, Whitehall and Saracen. If Saracen shall
elect to sell or transfer Membership Units in such transaction, the aggregate
number of Membership Units to be sold or transferred in such transaction
shall be increased by the number of Membership Units Saracen elects to sell
or transfer or, in the sole discretion of WCPT and Whitehall, the aggregate
number of Membership Units to be sold or transferred by WCPT and Whitehall
shall be reduced pro rata, so that the aggregate number of Membership Units
to be sold or transferred to such third-party by Saracen, WCPT and Whitehall
shall remain equal to the aggregate number of Membership Units which WCPT and
Whitehall originally proposed to sell or transfer in such transaction.
Participation by Saracen in the offering of Membership Units pursuant to this
Section 8.10 shall be at a price per Membership Unit equal to the price being
offered to WCPT and Whitehall and on terms identical to those terms being
offered to WCPT and Whitehall. In connection with such sale or transfer,
WCPT, Whitehall and Saracen shall execute and deliver, in a timely manner,
any and all documents, agreements and instruments reasonably necessary to
sell or transfer their respective Membership Units.
ARTICLE IX.
MANAGER
9.1. Removal of Manager. (a) Whitehall may in its sole discretion
elect, by ten (10) days' prior written notice, to remove WCPT as the Manager
for Cause. Thereupon, WCPT shall cease to be an Appointing Member and
Whitehall may appoint a new Manager. Nothing herein shall be deemed to limit
the indemnification obligations under Section 4.3 if WCPT is removed as
Manager of the Company, and this Section 9.1 shall not constitute a waiver of
exculpation from claims by, or indemnification from, the Company with respect
to any matter arising prior to the removal of WCPT.
(b) Notwithstanding anything to the contrary herein, Whitehall may
deliver a Sales Notice to WCPT at any time upon the removal of WCPT as
Manager pursuant to Section 9.1(a) and require the Company to sell any and
all of the Properties (or sell the Subsidiary(ies) owning such
Property(ies)), and may sell the Company as a whole, in one or more
transactions to a Third Party in the manner provided in Sections 8.2 and 8.4,
without having to first offer the Property(ies), the Subsidiary(ies) or the
Company to WCPT. If WCPT shall notify the Company in writing that it
disputes any of the grounds for its removal as Manager (setting forth in such
notice WCPT's grounds for such dispute) no later than fifteen (15) days after
receipt of any Sales Notice delivered to WCPT in accordance with the
immediately preceding sentence, the Initial Members shall submit the subject
matter of WCPT's notice for binding arbitration as provided in Section 5.10
no later than fifteen (15) days after receipt of the foregoing notice from
WCPT. If the arbitrator shall rule that WCPT may be removed as Manager
pursuant to this Agreement, the Company shall sell any and all of the
Properties (or the Company's Subsidiary(ies)) as selected by Whitehall in one
or more transactions to Third Parties and Whitehall shall also have the full
and exclusive right, power and authority on behalf of all Members to sell the
Company itself to such a Third Party.
9.2. Fees. Except as provided in this Section 9.2 and elsewhere
in this Agreement (including the provisions of Articles VI and VII regarding
distribution, payments and allocations to which it may be entitled), the
Manager shall not be compensated for its services as manager of the Company.
Notwithstanding the foregoing, the Manager (for so long as the Manager is
WCPT) shall be paid the Administration Fee on a quarterly basis in arrears
and shall be reimbursed, on a monthly basis, for all expenses that it incurs
relating to the ownership and operation of or for the benefit of, the
Company (including without limitation, (i) expenses relating to the ownership
of interests in and the management and operation of the Company and its
Subsidiaries and (ii) compensation of WCPT officers and employees to the
extent they devoted substantially all of their working time to the business
of the Company and its Subsidiary(ies). The Members acknowledge that all
such expenses of the Manager are deemed to be for the benefit of the Company.
Such reimbursement shall be in addition to any reimbursement made as a result
of indemnification pursuant to Section 4.3(a) hereof.
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination.
(a) The Company shall be dissolved and liquidated only upon the
occurrence of any of the following:
(i) December 31, 2045;
(ii) the sale or other disposition of all of the Company
Assets and receipt of the final payment of any installment obligation
received as a result of any such sale or disposition;
(iii) the written consent of all Initial Members;
(iv) any event which makes it unlawful for the Company's
business to be continued; or
(v) the issuance of a decree by any court of competent
jurisdiction that the Company be dissolved and liquidated.
Upon dissolution, the Company shall promptly wind up its affairs and shall
promptly be liquidated and a certificate of cancellation of the Company's
Certificate of Formation, as required by law, shall be filed.
(b) In the event of the dissolution and liquidation of the
Company, its business activities shall promptly be wound up, any amounts due
from the Members shall be collected, its debts and liabilities shall be paid
and its remaining assets, if any, shall be distributed as set forth in
Section 10.2 below. Dissolution shall be effective on the date of the
occurrence of an event set forth in Section 10.1(a) but the Company shall not
terminate until all of the Company assets have been liquidated and the
proceeds distributed in accordance with the provisions of this Article X.
Notwithstanding the dissolution of the Company, prior to the termination of
the Company as aforesaid, the business of the Company and the affairs of the
Members as such, shall continue to be governed by this Agreement.
10.2. Distribution Upon Liquidation. Upon dissolution of the
Company, the Manager or other Members, as provided in this Agreement, or if
there shall be none, a duly appointed trustee or liquidator as provided in
this Agreement, shall promptly proceed with the liquidation of the Company,
its Subsidiaries and the Company Assets and the proceeds of such liquidation
shall be applied and distributed in the following order of priority:
(i) to the payment of expenses of the liquidation;
(ii) to the payment of debts and liabilities of the Company,
in order of priority as provided by law, other than debts or liabilities
owed to Members;
(iii) to the setting up of any reserves that the Manager
or such trustee or liquidator, as the case may be, shall determine are
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company or the Members (in their respective capacity
as Members);
(iv) to the payment of other debts and liabilities of the
Company owed to Members (including amounts payable to Saracen under
Section 8.2A); and
(v) except to the extent otherwise provided in Section 7.4,
to the Members in accordance with their respective Capital Account
balances after allocation of Profits and Losses for the period ending
immediately prior to such distribution.
10.3. Sale of Company Assets.
(a) As expeditiously as possible, the Manager, or any such trustee
or liquidator, shall pay all Company liabilities, establish the reserves and
make the distributions provided for in Section 10.2. Except as agreed by the
Management Committee, no Member shall have the right to demand or receive
property other than cash upon liquidation, and the Management Committee, or
any such trustee or liquidator, shall, in any event, have the power to sell
Company assets for cash as necessary to provide for the payment of all
Company liabilities and the establishment of reserves.
(b) In connection with the sale by the Company and reduction to
cash of its assets, although the Company has no obligation to offer to sell
any property to the Members, any Member or any Affiliate of any Member may
bid on and purchase any Company Assets. If the Manager, or any such trustee
or liquidator, determines that an immediate sale of part or all of the
Company assets would cause undue loss to the Members, the Manager, or any
such trustee or liquidator, may, with the written consent of the Management
Committee, defer liquidation of and withhold from distribution for a
reasonable time any assets of the Company (except those necessary to satisfy
the Company's current obligations).
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account. At all times during the continuance of
the Company, the Manager shall keep or cause to be kept true and complete
books of account in which shall be entered fully and accurately each trans-
action of the Company. Such books shall be kept on the basis of the Fiscal
Year in accordance with the accrual method of accounting, and shall reflect
all Company transactions in accordance with generally accepted accounting
principles. In addition, the Manager shall cause each Subsidiary to keep all
books of account and other records of such Subsidiary separate and distinct
from the books and records of the Company and with the standards set forth in
this Section 11.1.
11.2. Availability of Books of Account. All of the books of
account referred to in Section 11.1, together with an executed copy of this
Agreement and the Certificate of Formation, and any amendments thereto and
any other books and financial records of the Company, shall at all times be
maintained at the principal office of the Company or such other place in the
State of New York as the Manager may designate in writing to the Members, and
upon reasonable notice to the Manager, shall be open to the inspection and
examination of the Members or their representatives during reasonable
business hours.
11.3. Financial Reports and Statements; Annual Budgets.
(a) The Manager shall prepare or cause the Company's independent
accountants to prepare (under the oversight of the Manager), on an accrual
basis, all federal, state and local tax returns required to be filed. The
Manager (or, if pursuant to the preceding sentence the tax returns are
prepared by the independent accountants, such preparer) shall submit the
returns and completed IRS Schedules K-1 to each member of the Management
Committee for review and approval and the Manager shall deliver such approved
K-1 to each Member no later than ten (10) days prior to the due date of the
returns, but in no event later than March 1st of each year. Each Member
shall notify the other Members upon receipt of any notice of tax examination
of the Company by federal, state or local authorities.
(b) For each Fiscal Year, the Manager shall send to each Person
who was a Member at any time during such Fiscal Year, within sixty (60) days
after the end of such Fiscal Year, an annual report of the Company including
an annual balance sheet, profit and loss statement, a statement of cash flow
and a statement of changes in Member's capital, all as prepared in accordance
with generally accepted accounting principles consistently applied and
audited by the Company's independent public accountants, which shall be Ernst
& Young, unless another "Big Six" independent public accountants of
recognized standing is selected by the Management Committee, and a statement
showing allocations to the Members of taxable income, gains, losses,
deductions and credits, as prepared by such accountants. For each quarter,
the Manager shall send to each Person who was an Initial Member at any time
during such quarter, within forty-five (45) days after the end of such
quarter, quarterly financial statements of the Company including a quarterly
balance sheet, profit and loss statement, a statement of cash flow and a
statement of changes in Member's capital, all as prepared in accordance with
generally accepted accounting principles consistently applied. In addition,
the Manager shall send (i) to each Initial Member within fifteen (15) days
after the end of each month of each Fiscal Year a monthly report setting
forth such financial and operating information as such Initial Member shall
reasonably request, and (ii) to each Member, such other information
concerning the Company and reasonably requested by such Member as is
necessary for the preparation of such Member's federal, state and local
income or other tax returns.
(c) (i) On or before the November 1st immediately preceding the
commencement of each Budget Year of the Company, the Manager shall submit to
the Management Committee for its approval (1) an annual capital budget for
each Property (an "Annual Capital Budget"), in such form as the Management
Committee shall have approved, for such Budget Year setting forth the
Manager's estimates reasonably itemized of all receipts and expenditures in
respect of capital transactions relating to such Property for such year
(including expenditures for alterations incident to space leases to be
recovered as rent from tenants) and (2) an annual operating budget for such
Property (an "Annual Operating Budget"), in such form as the Management
Committee shall have approved, for such year setting forth the Manager's
estimates reasonably itemized of all income and expenses relating to such
Property for such year and establishing reserves and working capital for such
Property. The Annual Operating Budget shall also contain (x) a schedule of
space that is vacant and space leases expiring during such year (including
the square footage thereof) and (y) the Leasing Plan for such year, maximum
tenant improvement allowances, maximum obligations on lease takeovers and any
other criteria for leases that may be executed without the specific approval
of the Management Committee. Not later than twenty (20) days after receipt
of a proposed Annual Capital Budget or Annual Operating Budget, the
Management Committee shall either approve the Annual Capital Budget and
Annual Operating Budget or shall deliver a notice (an "Objection Notice") to
the Manager stating that the Management Committee objects to any information
contained in or omitted from such proposed Annual Capital Budget or Annual
Operating Budget and setting forth the objections with reasonable
specificity. With respect to such proposed Annual Capital Budget or Annual
Operating Budget as to which no Objection Notice is delivered prior to such
twentieth (20th) day, the proposed Annual Capital Budget or Annual Operating
Budget will be deemed to have been accepted and consented to by the
Management Committee and shall be deemed an "Approved Budget." If the
Objection Notice is timely delivered, the Manager and the Management
Committee shall endeavor in good faith to reach an agreement as to the Annual
Capital Budget or Annual Operating Budget. Notwithstanding the foregoing, as
of the Initial Closing, the Annual Capital Budget and Annual Operating Budget
for each Property shall be the capital budget and operating budget for such
Property as prepared by the WCPT Current Owner or Whitehall Current Owner, as
the case may be, copies of which shall have been delivered to Whitehall or
WCPT, as appropriate, prior to the Initial Closing.
(ii) If the Management Committee shall consider for adoption a
proposed Annual Capital Budget for any Budget Year and shall fail to adopt it
in its entirety because of disagreement as to one or more line items although
the Management Committee shall agree on other line items, then such proposed
Annual Capital Budget, exclusive of the items as to which there is
disagreement, shall be deemed adopted as the Annual Capital Budget for such
Budget Year (and to such extent shall be deemed to be the Approved Budget for
such Budget Year); provided that, if any item or project is approved as part
of the Approved Capital Budget for one Budget Year but is not completed
within such Budget Year, the unexpended portion of such Approved Capital
Budget relating to such item or project shall be carried over to the
following Budget Year and deemed approved. If the Management Committee shall
consider for adoption a proposed Annual Operating Budget for any Budget Year
and shall fail to adopt it in its entirety, then the Annual Operating Budget
for the immediately preceding year shall be deemed adopted as the Annual
Operating Budget for such year except that any specific line items agreed to
in the proposed Annual Operating Budget shall control (and to such extent
shall be deemed to be the Approved Budget for such Budget Year).
11.4. Accounting Expenses. All out-of-pocket expenses payable to
Persons who are not Affiliated with any Member in connection with the keeping
of the books and records of the Company and the preparation of audited or
unaudited financial statements and federal and local tax and information
returns required to implement the provisions of this Agreement or required by
any governmental authority with jurisdiction over the Company shall be borne
by the Company as an ordinary expense of its business.
11.5. Bank Account. The Company shall within 10 days after the
date hereof arrange to maintain (and shall cause each Subsidiary which owns a
Property to maintain) its bank deposits in segregated accounts held for the
Company's (or such Subsidiary's) business, which accounts shall, to the
extent reasonably practicable, be interest-bearing. All funds of the Company
and each applicable Subsidiary shall be promptly deposited in the appropriate
segregated account. The Manager from time to time shall authorize
signatories for such accounts and withdrawals or checks in excess of $100,000
shall require the signature of Jeffrey H. Lynford, Edward Lowenthal or
Gregory Hughes.
11.6. Fidelity Bonds and Insurance. The Company will obtain
fidelity bonds with reputable surety companies, covering all persons having
access to the Company's (or any Subsidiary's) funds, indemnifying the Company
(or such Subsidiary) against loss resulting from fraud, theft and dishonest
and other wrongful acts of such persons. The Company shall carry or cause to
be carried on its behalf and on its Subsidiaries' behalf all property,
liability and workers' compensation insurance as shall be required under
applicable mortgages, leases, agreements, and other instruments and statutes,
but in any event in the amounts and with the insurers required by the
Insurance Program.
ARTICLE XII.
AMENDMENTS
12.1. Amendments (a) Amendments may be made to this Agreement
from time to time by the Manager with only the written consent of each of the
Initial Members, provided, however that Saracen shall have the right to
consent to any amendment that shall (i) reduce Saracen's Capital Accounts
with respect to its Membership Units or its Series A Preferred Membership
Units, Saracen's Percentage Interest or Saracen's Series A Preferred
Percentage Interest (except (A) in the case of the inclusion of additional
Members in accordance with this Agreement, (B) due to a Capital
Contribution(s) made by Members or New Members in accordance with this
Agreement, (C) pursuant to the Contribution Agreement, (D) pursuant to
Section 5.1(l) hereof or (E) pursuant to a conversion or redemption of Series
A Preferred Membership Units in accordance with the Series A Terms, (ii)
require Saracen to make any additional Capital Contribution, (iii) create any
liability for Saracen other than the liability they have under this Agreement
as of the Saracen Closing Date, (iv) modify the rights, priority, preferences
and privileges of the Series A Preferred Membership Units except as permitted
pursuant to the Series A Terms, (v) adversely affect or limit in any way
Saracen's rights pursuant to Section 3.5, provided, however, that (A) the
appointment or election of additional Committee Representatives having the
right to attend and observe meetings of the Management Committee, (B) the
appointment or election of additional Committee Representatives having
voting, consent, approval or determination rights on the Management Committee
or (C) amendments to the definition of Required Committee Approval (other
than Required Committee Approval during a Preferential Distribution Non-
Payment) shall not be deemed to adversely affect or limit in any way
Saracen's rights pursuant to Section 3.5 provided, that such additional
Committee Representatives are not appointed by, or representatives of, either
Initial Member or their respective Affiliates, (vi) modify Saracen's rights
and/or obligations as set forth in Sections 4.2, 5.1(l), 5.1(m), 5.2(d),
8.2A, 13.17 and this Section 12.1, (vii) modify the definitions of Target
Territory and/or Hub Target Market only by reducing the size of the Target
Territory and/or Hub Target Market, as applicable, (viii) adversely affect
Saracen's rights under Articles VI and VII with respect to any Saracen
Member, except as a result of other amendments or modifications permitted
pursuant to this Section 12.1(a) or the Series A Terms, (ix) modify Saracen's
transfer or pledge rights pursuant to Section 8.1(b), (x) modify the terms
and conditions of Saracen's conversion right pursuant to Section 8.3 and (xi)
modify the terms and conditions of Section 13.9 or 13.18 as they relate to
Saracen. In making any amendments, there shall be prepared and filed for
recordation by the Manager such documents and certificates as shall be
required to be prepared and filed. Promptly after the execution of any
amendments or restatements, the Manager shall provide copies thereof to all
Members.
(b) Each Saracen Member by execution and delivery of this
Agreement, irrevocably constitutes and appoints the Manager and the Chairman,
President, Secretary, Treasurer, Chief Financial Officer and Chief Operating
Officer of the Manager as his or her true and lawful attorney-in-fact with
full power and authority, in such Saracen Member's name, place, and stead
only to execute, acknowledge and deliver such certificates, instruments,
documents and agreements as are necessary to make any and all amendments of
this Agreement which amendments do not require the consent of Saracen as set
forth in Section 12.1(a), provided, however, that such power shall only be
exercised by the Manager and/or the Chairman, President, Secretary, Treasurer
and Chief Operating Officer of the Manager, if and only if, the Manager
delivers written notice of the documents which are to be executed under this
power of attorney to Saracen five (5) Business Days in advance of the date
such documents are to be executed. The appointment by each Saracen Member of
the Manager and the aforesaid officers of the Manager as attorney-in-fact
shall be deemed to be a power coupled with an interest, and shall survive,
and not be affected by the subsequent bankruptcy, death, incapacity,
disability, adjudication of incompetence or insanity, or dissolution of any
Saracen Member hereby giving such power. As a condition to the transfer by a
Saracen Member of any or all of such Saracen Member's Interest, the foregoing
power of attorney shall be granted by the transferee of such Saracen Member's
Interest.
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and
things, as may be required by law or as, in the reasonable judgment of the
Management Committee, may be necessary or advisable to carry out the intent
and purpose of this Agreement.
13.2. Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party
to this Agreement may desire or be required to give hereunder shall be in
writing and shall be given by hand, by depositing the same in the United
States mail, first class postage prepaid, certified mail, return receipt
requested, by facsimile transmission with delivery of an original thereafter
by any other method provided by this Section 13.2, or by a recognized
overnight courier service providing confirmation of delivery, addressed as
follows:
(a) To the Company, c/o Wellsford Commercial Properties Trust,
610 Fifth Avenue, New York, New York 10020, or at such other address as
may be designated by the Manager upon written notice to all of the
Members; and
(b) To the Members at their respective addresses set forth in
Section 2.6 herein. Each Member shall have the right to designate
another address or change in address by written notice to the Company in
the manner prescribed herein.
All notices given pursuant to this Section 13.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date
delivery was refused by the addressee, (ii) if delivered by United States
mail or by overnight courier, on the date of delivery as established by the
return receipt or courier service confirmation (or the date on which the
return receipt or courier service confirms that acceptance of delivery was
refused by the addressee) or (iii) if delivered by facsimile, on the date of
delivery thereof.
13.3. Headings and Captions. All headings and captions contained
in this Agreement and the table of contents hereto are inserted for
convenience only and shall not be deemed a part of this Agreement.
13.4. Variance of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or entity may require.
13.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one Agreement.
13.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
13.7. Partition. The Members hereby agree that no Member nor any
successor-in-
interest to any Member shall have the right, while this Agreement remains in
effect, to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the
property of the Company partitioned, and each Member, on behalf of himself,
his successors, representatives, heirs and assigns, hereby waives any such
right.
13.8. Invalidity. Every provision of this Agreement is intended
to be severable. The invalidity and unenforceability of any particular
provision of this Agreement in any jurisdiction shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as
if such invalid or unenforceable provision were omitted.
13.9. Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and permitted legal assigns and
shall inure to the benefit of the parties hereto and, except as otherwise
provided herein, their respective successors, executors, administrators,
legal representatives, heirs and permitted legal assigns. No Person other
than the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and permitted legal assigns,
shall have any rights or claims under this Agreement.
13.10. Entire Agreement. This Agreement, together with all
Exhibits, Schedules, and Annexes hereto and all letter agreements executed by
the Company, the Initial Members and/or their respective Affiliates on the
Initial Closing Date and the date hereof (which are incorporated herein by
this reference), supersedes all prior agreements among the parties with
respect to the subject matter hereof and contains the entire agreement among
the parties with respect to such subject matter. This instrument may not be
amended, supplemented or discharged, and no provisions hereof may be modified
or waived, except expressly by an instrument in writing signed by the Manager
and each Member and, in the case of an amendment, modification or supplement,
in compliance with Section 12.1. No waiver of any provision hereof by any
party hereto shall be deemed a waiver by any other party nor shall any such
waiver by any party be deemed a continuing waiver of any matter by such
party. No amendment, modification, supplement, discharge or waiver hereof or
hereunder shall require the consent of any person not a party to this
Agreement.
13.11. No Brokers. Each of the parties hereto warrants to each
other that there are no brokerage commissions or finders' fees (or any basis
therefor) resulting from any action taken by such party or any Person acting
or purporting to act on its behalf in connection with entering into this
Agreement. Each Member agrees to indemnify and hold harmless each other
Member for all costs, damages or other expenses arising out of any
misrepresentation made in this Section 13.11.
13.12. Maintenance as a Separate Entity. The Company shall
maintain books and records and bank accounts separate from those of its
Affiliates; shall at all times hold itself out to the public as a legal
entity separate and distinct from any of its Affiliates (including in its
leasing activities, in entering into any contract, in preparing its financial
statements, and in its stationery and on any signs it posts), and shall cause
its Affiliates to do the same and to conduct business with it on an arm's-
length basis; shall not commingle its assets with assets of any of its
Affiliates; shall not guarantee any obligation of any of its Affiliates;
shall cause its business to be carried on by the Manager and shall keep
minutes of all meetings of the Members and the Management Committee.
13.13. Confidentiality. Each Member agrees not to disclose or
permit the disclosure of any of the terms of this Agreement or of any
information relating to the Company's assets or business, provided that such
disclosure may be made (a) to any person who is a Member, officer, director
or employee of such Member or counsel to, accountants of, investment bankers
for or consultants to, such Member or the Company solely for their use and on
a need-to-know basis, (b) with the prior consent of the other Members,
(c) pursuant to a subpoena or order issued by a court, arbitrator or govern-
mental body, agency or official or in order to comply with any law, rule or
regulation (including the rules and regulations of the Securities and
Exchange Commission, the American Stock Exchange and any other applicable
national securities exchange), (d) in connection with and to the extent
necessary to sell or market any Property in accordance with this Agreement,
or (e) to any lender or investor providing financing to the Company.
In the event that a Member shall receive a request to disclose any
of the terms of this Agreement under a subpoena or order, such Member shall
(i) promptly notify the other Members thereof, (ii) consult with the other
Members on the advisability of taking steps to resist or narrow such request
and (iii) if disclosure is required or deemed advisable, cooperate with any
of the other Members in any attempt it may make to obtain an order or other
assurance that confidential treatment will be accorded those terms of this
Agreement that are disclosed.
13.14. Power of Attorney.
(a) Each Member does irrevocably constitute and appoint the
Manager, with full power of substitution, as its true and lawful attorney, in
its name, place and stead, to execute, acknowledge, swear to, deliver, record
and file, as appropriate and in accordance with this Agreement (i) the
original Certificate of Formation and all amendments thereto required or
permitted by law or the provisions of this Agreement, (ii) all certificates
and other instruments requiring execution by the Members or any of them and
deemed necessary or advisable by the Manager to qualify or continue the
Company as a limited liability company in the jurisdictions where the Company
may be conducting its operations, (iii) all instruments, agreements or
documents that the Management Committee so directs pursuant to Section 3.5(e)
and (iv) all conveyances and other instruments deemed necessary or advisable
by the Manager to effect the dissolution and termination of the Company in
accordance with this Agreement. Nothing contained in this Section 13.14
shall empower the Manager to take any action requiring the consent of the
Management Committee or any Member(s) hereunder unless such consent is first
obtained.
(b) The powers of attorney granted pursuant to this Section 13.14
are coupled with an interest and shall be irrevocable and survive and not be
affected by the subsequent death, incapacity, disability, Bankruptcy or
dissolution of the grantor; may be exercised by the Manager either by signing
separately as attorney-in-fact for each Member or by the Manager acting as
attorneys-in-fact for all of them; and shall survive the delivery of an
assignment by a Member of the whole or any fraction of its Interest, except
that, where the whole of such Member's Interest has been assigned or diluted
in accordance with this Agreement, the power of attorney of the assignor
shall survive the delivery of such assignment for the sole purpose of
enabling the Manager to execute, acknowledge, swear to, deliver, record and
file any instrument necessary or appropriate to effect such substitution. In
the event of any conflict between this Agreement and any document,
instrument, conveyance or certificate executed or filed by the Manager
pursuant to such power of attorney, this Agreement shall control.
(c) In addition to the foregoing, each of Whitehall and WCPT are
hereby irrevocably constituted and appointed, with full power of
substitution, as the true and lawful attorney of the Manager and each Member
of the Company to execute, acknowledge, swear to, deliver, record and file
any and all instruments, agreements and other documents (in the name, place
and stead of the Manager and each such Member and the Company) and to take
any and all such other actions as may be necessary or desirable to carry out
the provisions of Sections 8.2 and 8.3.
13.15. Time of the Essence. Time is of the essence in the
performance of each and every term of this Agreement.
13.16. No Third Party Beneficiaries. The right or obligation of
the Manager or Management Committee to call for any capital contribution or
of any Member to make a capital contribution or otherwise to do, perform,
satisfy or discharge any liability or obligation of any Member hereunder, or
to pursue any other right or remedy hereunder or at law or in equity
provided, shall not confer any right or claim upon or otherwise inure to the
benefit of any creditor or other third party having dealings with the
Company, it being understood and agreed that the provisions of this Agreement
shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and assigns except as may be
otherwise agreed to by the Company in writing with the prior written approval
of the Management Committee.
13.17. Exculpation. The parties agree that the individuals
executing this Agreement on behalf of WCPT and Whitehall have done so in
their respective capacities as officers or trustees of such Members (or, in
the case of Whitehall, its general partner) and not individually, and none of
the direct or indirect partners, trustees, officers or shareholders of either
such Member shall be bound or have any personal liability hereunder. Each
Member shall look solely to the Interest of the other Members for
satisfaction of any liability of such other Member in respect of this
Agreement and will not seek recourse or commence any action against any of
the direct or indirect partners, trustees, officers or shareholders of such
other Member or any of their personal assets for the performance or payment
of any obligation hereunder. The foregoing shall also apply to any future
documents, agreements, understandings, arrangements and transactions between
the parties hereto.
13.18. Consent of Saracen. Whenever the consent, approval,
determination or decision of Saracen is required pursuant to any of the terms
of this Agreement, including to amend or waive any provisions of this
Agreement, such consent, approval, determination or decision shall be deemed
given by, and binding on, each of the respective Saracen Members if the
Company obtains the written consent, approval or decision of William F. Rand,
III or any other Person designated in writing by a majority of Saracen's
Percentage Interest (assuming for purposes of determining Saracen's
Percentage Interest pursuant to this Section 13.18, all of the outstanding
Series A Convertible Preferred Membership Units were converted into
Membership Units at the conversion price set forth in the Series A Terms),
which Person must be approved by the Management Committee which approval
shall not be unreasonably withheld or delayed, and each of the Saracen
Members hereby irrevocably agrees that William F. Rand, III, or such other
Person designated by the Saracen Members, shall have the power and authority
to grant any such written consent or approval, or make any such determination
or decision, on behalf of, and as the duly authorized agent and
representative of, such respective Persons. Each Saracen Member by execution
and delivery of this Agreement, irrevocably constitutes and appoints William
F. Rand, III or any other Person designated in writing by a majority of
Saracen's Percentage Interest (assuming for purposes of determining Saracen's
Percentage Interest pursuant to this Section 13.18, all of the outstanding
Series A Convertible Preferred Membership Units were converted into
Membership Units at the conversion price set forth in the Series A Terms),
which Person must be approved by the Management Committee which approval
shall not be unreasonably withheld or delayed, as his or her true and lawful
attorney-in-fact with full power and authority in such Saracen Member's name,
place, and stead only to execute, acknowledge and deliver such certificates,
instruments, documents and agreements as are necessary or appropriate to make
any and all amendments or restatements of this Agreement which amendments or
restatements do explicitly require the consent of Saracen as set forth in
Section 12.1(a). The appointment by each Saracen Member of William F. Rand,
III or such other Person as designated above as attorney-in-fact shall be
deemed to be a power coupled with an interest, and shall survive, and not be
affected by the subsequent bankruptcy, death, incapacity, disability,
adjudication of incompetence or insanity, or dissolution of any Saracen
Member hereby giving such power. As a condition to the transfer by a Saracen
Member of any or all of such Saracen Member's Interest, the foregoing power
of attorney shall be granted by the transferee of such Saracen Member's
Interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
-------------------------------
Name: Alan S. Kava
Title: Vice President
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Gregory F. Hughes
--------------------------------
Name: Gregory F. Hughes
Title: Vice President
/s/ Dominic J. Saraceno
--------------------------------
DOMINIC J. SARACENO
/s/ Kurt W. Saraceno
--------------------------------
KURT W. SARACENO
/s/ William F. Rand, III
--------------------------------
WILLIAM F. RAND, III
/s/ Ingeborg E. Saraceno
--------------------------------
INGEBORG E. SARACENO
/s/ Heidi A. Saraceno-Lawlor
-------------------------------
HEIDI A. SARACENO-LAWLOR
/s/ Leas A. Saraceno
--------------------------------
LEAS A. SARACENO
/s/ Stephen Davis
--------------------------------
STEPHEN DAVIS
/s/ Edward Werner
------------------------------------
EDWARD WERNER
/s/ Carleton G. Tarpinian
------------------------------------
CARLETON G. TARPINIAN
/s/ George McLaughlin, III
-------------------------------------
GEORGE MCLAUGHLIN, III
The undersigned has executed this
Agreement solely for purposes of Section 4.2. and 7.6.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Gregory F. Hughes
- ----------------------------------
Name: Gregory F. Hughes
Title: CFO
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 15, 1998
Then personally appeared the above-named Dominic J. Saraceno , and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Christine M. Collins
-------------------------------
Notary Public Christine M. Collins
My Commission Expires: October 19, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 15, 1998
Then personally appeared the above-named Kurt W. Saraceno , and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Christine M. Collins
-------------------------------
Notary Public Christine M. Collins
My Commission Expires: October 19, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 15, 1998
Then personally appeared the above-named William F. Rand, III, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Christine M. Collins
-------------------------------
Notary Public Christine M. Collins
My Commission Expires: October 19, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 20 ,1998
Then personally appeared the above-named Ingeborg E. Saraceno, and
acknowledged the foregoing instrument to be her free act and deed, before me,
/s/ Christine M. Collins
-------------------------------
Notary Public Christine M. Collins
My Commission Expires: October 19, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 20 ,1998
Then personally appeared the above-named Heidi A. Saraceno-Lawlor,
and acknowledged the foregoing instrument to be her free act and deed, before
me,
/s/ Christine M. Collins
-------------------------------
Notary Public Christine M. Collins
My Commission Expires: October 19, 2001
THE STATE OF FLORIDA
Palm Beach County ss.: July 20,1998
Then personally appeared the above-named Leas A. Saraceno, and
acknowledged the foregoing instrument to be her free act and deed, before me,
/s/ Nicole R. Charbonneau
-------------------------------
Notary Public Nicole R. Charbonneau
My Commission Expires: April 9, 2002
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk County ss.: July __,1998
Then personally appeared the above-named Stephen Davis, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Karen M. Manan
-------------------------------
Notary Public Karen M. Manan
My Commission Expires: Sept. 7, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Essex County ss.: July 25,1998
Then personally appeared the above-named Edward Werner, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Grace A. Hall
-------------------------------
Notary Public Grace A. Hall
My Commission Expires: Sept. 3, 2004
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 15 ,1998
Then personally appeared the above-named Carleton G. Tarpinian, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Christine M. Collins
-------------------------------
Notary Public Christine M. Collins
My Commission Expires: October 19, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk County ss.: July 17, 1998
Then personally appeared the above-named George McLaughlin, III,
and acknowledged the foregoing instrument to be his free act and deed, before
me,
/s/ Sheri F. Perkins
-------------------------------
Notary Public Sheri F. Perkins
My Commission Expires: July 23, 2004
<PAGE>
EXHIBIT A
Transaction Summary
<PAGE>
EXHIBIT B-1
Description of Real Property Contributed by Whitehall
<PAGE>
EXHIBIT B-2
Description of Personal, Tangible and Intangible Property Contributed by
Whitehall
NONE
<PAGE>
EXHIBIT B-3
Description of Excluded Assets
1. Any interest rate protection agreement to which WHPKS Real Estate Limited
Partnership is a party or a beneficiary
<PAGE>
EXHIBIT B-4
Whitehall Properties
300, 400, 500 Atrium (Somerset County, New Jersey)
1275 K Street (Washington, D.C.)
Description of
Contributed Assets<PAGE>
Percentage and Legal
Nature of Ownership
Interest Contributed<PAGE>
<PAGE>
1275 K Street<PAGE>
Fee simple interest<PAGE>
<PAGE>
300, 400 and 500
Atrium<PAGE>
100% partnership
interest in WHATR
Real Estate Limited
Partnership<PAGE>
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT B-5
Whitehall Additional Properties
600 Atrium (Somerset County, New Jersey)
15 Broad Street (Boston, Massachusetts)
Description of
Contributed Assets<PAGE>
Percentage and Legal
Nature of Ownership
Interest Contributed<PAGE>
<PAGE>
600 Atrium<PAGE>
Fee simple interest<PAGE>
<PAGE>
15 Broad Street<PAGE>
Fee simple interest<PAGE>
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT C-1
Description of Real Property Contributed by WCPT
<PAGE>
EXHIBIT C-2
Description of Personal, Tangible and Intangible Property Contributed by WCPT
<PAGE>
EXHIBIT C-3
Description of Excluded Assets
<PAGE>
EXHIBIT C-4
WCPT Properties
Point View and adjacent land (residential and commercial) (Wayne, New Jersey)
Chatham Building (Chatham, New Jersey)
Greenbrook Corporate Center (Fairfield, New Jersey)
1700 Valley Road (Wayne, New Jersey)
1800 Valley Road (Wayne, New Jersey)
Description of
Contributed Assets
Percentage and Legal Nature of Ownership Interest Contributed
Point View
100% stock of Wellsford Wayne Corp.
Chatham Building
100% stock of Wellsford Chatham Corp.
Greenbrook Corporate Center
100% stock of Wellsford Greenbrook Corp.
1700 Valley Road
Fee simple interest
1800 Valley Road
100% stock of Wellsford Wayne Corp.
<PAGE>
EXHIBIT E-1
Representations and Warranties of Whitehall
<PAGE>
EXHIBIT E-2
Representations and Warranties of WCPT
<PAGE>
EXHIBIT E-3
Representations and Warranties of Whitehall Concerning the Whitehall
Additional Properties
<PAGE>
EXHIBIT F
Terms of the Series A Preferred Membership Units
<PAGE>
EXHIBIT G
Form of Registration Rights Agreement
<PAGE>
SCHEDULE 1
ADDITIONAL MEMBERS
1. Dominic J. Saraceno
2. Kurt W. Saraceno
3. William F. Rand, III
4. Ingeborg B. Saraceno
5. Heidi A. Saraceno-Lawlor
6. Leas A. Saraceno
7. Stephen Davis
8. Edward Werner
9. Carleton G. Tarpinian
10. George McLaughlin, III<PAGE>
SCHEDULE 2.6
WHWEL Real Estate Limited Partnership
c/o Whitehall Street Real Estate
Limited Partnership VII
85 Broad Street, 19th Floor
New York, New York 10004
Attention: Chief Financial Officer
Wellsford Commercial Properties Trust
610 Fifth Avenue
New York, New York 10020
Attention: President
Saracen
c/o Saracen Companies, Inc.
57 Wells Avenue
Newton Centre, MA. 02159
Attn: Mr. William F. Rand, III<PAGE>
SCHEDULE 3.2(a)(vi)
Approved Leases and Lease Documentation
<PAGE>
[Schedule 5.1(h) Continued]
Series A Preferred Membership Units
Member Series A Series A Series A
Preferred Preferred Preferred
Capital Membership Percentage
Account Units Interest
- --------- ----------- ---------- -----------
Dominic J. Saraceno $ 7,685,475 307,419 40.45%
Kurt W. Saraceno 3,274,250 130,970 17.23%
William F. Rand, III 927,450 37,098 4.88%
Ingeborg E. Saraceno 3,545,250 141,810 18.66%
Heidi A. Saraceno-Lawlor 1,736,525 69,461 9.14%
Leas A. Saraceno 919,925 36,797 4.84%
Stephen Davis 155,000 6,200 0.82%
Edward Werner 606,125 24,245 3.19%
Carleton G. Tarpinian 150,000 6,000 0.79%
TOTAL $19,000,000 760,000 100.00%
WHWEL REAL ESTATE LIMITED PARTNERSHIP
85 Broad Street
New York, New York 10004
July 16, 1998
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
"LLC Agreement") of Wellsford/Whitehall Properties II, L.L.C.
("Wellsford/Whitehall II") dated as of the date hereof, among Wellsford
Commercial Properties Trust ("WCPT"), WHWEL Real Estate Limited Partnership
("Whitehall") and the Saracen Members. Capitalized terms used and not
defined herein shall have the meanings set forth in the LLC Agreement.
This letter agreement will confirm the agreement of Wellsford Real
Properties, Inc. ("WRP") and Whitehall regarding warrants 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 made to Wellsford/Whitehall II by
Whitehall in excess of $50,000,000 up to $75,000,000. The number of shares
of WRP Common Stock issued to Whitehall in exchange for each Excess
Membership Unit shall be equal to the quotient of (i) the Membership Unit
Purchase Price (as defined below) divided by (ii) the Closing Price (as
defined in the Warrant Agreement) as of the Trading Day (as defined in the
Warrant Agreement) immediately prior to the date the written request
described above is delivered to WRP. For purposes of this letter agreement
"WRP Common Stock" shall mean the common stock, par value $.01 per share, of
WRP and any other stock of WRP into which such common stock may be converted
or reclassified (other than stock of the Company into which unissued Common
Stock has been reclassified) or that may be issued in resect 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.
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/ Alan S. Kava
----------------------------
Name: Alan S. Kava
Title: Vice President
Acknowledged and agreed
as of the date first above written:
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Gregory F. Hughes
-----------------------
Name: Gregory F. Hughes
Title: CFO
FIXED RATE LOAN AGREEMENT
Dated as of August 11, 1998
BY and AMONG
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS,
as Borrower
BANKERS TRUST COMPANY,
as Agent
AND
THE LENDERS LISTED ON THE SIGNATURE PAGES HERETO,
as Lenders
$45,000,000
(Bank Group)
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION. . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Principles of Construction. . . . . . . . . . . . . . . . . . . 13
II. GENERAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Commitments; Advances; Notes; the Register. . . . . . . . . . . 14
2.1.1 Commitments.. . . . . . . . . . . . . . . . . . . . 14
2.1.2 Borrowing Mechanics. . . . . . . . . . . . . . . . 14
2.1.3 Disbursement of Funds . . . . . . . . . . . . . . . 15
2.1.4 Notes . . . . . . . . . . . . . . . . . . . . . . . 15
2.1.5 The Register. . . . . . . . . . . . . . . . . . . . 16
2.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Loan Repayments and Prepayments . . . . . . . . . . . . . . . . 16
2.3.1 Repayments. . . . . . . . . . . . . . . . . . . . . 16
2.3.2 Mandatory Prepayments of the Loans. . . . . . . . . 16
2.3.3 Voluntary Prepayments of the Loans. . . . . . . . . 17
2.3.4 Not A Revolver. . . . . . . . . . . . . . . . . . . 17
2.4 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4.1 Generally . . . . . . . . . . . . . . . . . . . . . 17
2.4.2 Interest Payments . . . . . . . . . . . . . . . . . 17
2.4.3 Default Rate; Post-Maturity Interest. . . . . . . . 18
2.5 Payments; Computations. . . . . . . . . . . . . . . . . . . . . 18
2.5.1 Making of Payments. . . . . . . . . . . . . . . . . 18
2.5.2 Computation of Interest . . . . . . . . . . . . . . 18
2.5.3 Capital Adequacy Adjustment. . . . . . . . . . . . 18
2.6 Extension of Loan Term. . . . . . . . . . . . . . . . . . . . . 19
2.6.1 Extension Option. . . . . . . . . . . . . . . . . . 19
2.6.2 Conditions to Extend. . . . . . . . . . . . . . . . 19
2.7 Commitment and Other Fees . . . . . . . . . . . . . . . . . . . 20
2.8 Agent Reliance; Defaulting Lenders. . . . . . . . . . . . . . . 20
2.8.1 Agent Reliance. . . . . . . . . . . . . . . . . . . 20
2.8.2 Defaulting Lenders. . . . . . . . . . . . . . . . . 20
2.8.3 Subordination of Defaulting Lenders.. . . . . . . . 21
2.9 Lending Installations . . . . . . . . . . . . . . . . . . . . . 21
2.10 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.11 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . 22
2.12 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . 23
III. SPECIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.1 Loss Proceeds Account . . . . . . . . . . . . . . . . . . . . . 23
3.2 Casualty and Condemnation . . . . . . . . . . . . . . . . . . . 23
3.2.1 Casualty, Condemnation and Application of Proceeds. 23
3.2.2 Conflicts With Mortgage Financing . . . . . . . . . 27
IV. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Intentionally Omitted.. . . . . . . . . . . . . . . . . . . . . 27
4.2 Conditions Precedent to All Advances. . . . . . . . . . . . . . 27
4.2.1 Notice of Borrowing; Other
Documentation. . . . . . . . . . . . . . . . . . . . . . . 27
4.2.2 Other Conditions. . . . . . . . . . . . . . . . . . 28
V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 28
5.1 Borrower Representations. . . . . . . . . . . . . . . . . . . . 28
5.1.1 Organization; Existence . . . . . . . . . . . . . . 28
5.1.2 Proceedings . . . . . . . . . . . . . . . . . . . . 29
5.1.3 No Conflicts. . . . . . . . . . . . . . . . . . . . 29
5.1.4 Litigation. . . . . . . . . . . . . . . . . . . . . 29
5.1.5 Agreements. . . . . . . . . . . . . . . . . . . . . 30
5.1.6 No Bankruptcy Filing. . . . . . . . . . . . . . . . 30
5.1.7 Full and Accurate Disclosure. . . . . . . . . . . . 30
5.1.8 Tax and REIT Status . . . . . . . . . . . . . . . . 30
5.1.9 Use of Proceeds . . . . . . . . . . . . . . . . . . 30
5.1.10 Financial Information . . . . . . . . . . . . . . . 30
5.1.11 No Default. . . . . . . . . . . . . . . . . . . . . 31
5.1.12 Federal Reserve Regulations . . . . . . . . . . . . 31
5.1.13 Enforceability. . . . . . . . . . . . . . . . . . . 31
5.1.14 Incorporation of Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . 32
VI. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 Borrower Covenants. . . . . . . . . . . . . . . . . . . . . . . 32
6.1.1 SEC Filings and Press Releases. . . . . . . . . . . 32
6.1.2 Business and Operations . . . . . . . . . . . . . . 32
6.1.3 Costs of Enforcement. . . . . . . . . . . . . . . . 32
6.1.4 Estoppel Statement. . . . . . . . . . . . . . . . . 32
6.1.5 Loan Proceeds . . . . . . . . . . . . . . . . . . . 33
6.1.6 Name; Principal Place of Business . . . . . . . . . 33
6.1.7 Board of Trustees . . . . . . . . . . . . . . . . . 33
6.1.8 Offering. . . . . . . . . . . . . . . . . . . . . . 33
6.1.9 Incorporation of Affirmative
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 33
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Borrower Negative Covenants . . . . . . . . . . . . . . . . . . 33
7.1.1 Debt. . . . . . . . . . . . . . . . . . . . . . . . 34
7.1.2 Corporate Structure . . . . . . . . . . . . . . . . 34
7.1.3 Incorporation of Negative Covenants . . . . . . . . 34
VIII. DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 34
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Gotham's Cure Rights. . . . . . . . . . . . . . . . . . . . . . 38
IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.2 Lenders' or Agent's Discretion. . . . . . . . . . . . . . . . . 39
9.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Modification, Waiver in Writing . . . . . . . . . . . . . . . . 40
9.5 Delay Not a Waiver. . . . . . . . . . . . . . . . . . . . . . . 41
9.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.7 Trial By Jury . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.10 Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.11 Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . . 43
9.12 Remedies of Borrower. . . . . . . . . . . . . . . . . . . . . . 43
9.13 Non-Exculpation . . . . . . . . . . . . . . . . . . . . . . . . 43
9.14 Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . 43
9.15 Exhibits, Schedules Incorporated. . . . . . . . . . . . . . . . 45
9.16 Offsets, Counterclaims and Defenses . . . . . . . . . . . . . . 45
9.17 No Joint Venture or Partnership . . . . . . . . . . . . . . . . 46
9.18 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.19 Waiver of Counterclaim. . . . . . . . . . . . . . . . . . . . . 46
9.20 Conflict; Construction of Documents . . . . . . . . . . . . . . 46
9.21 Brokers and Financial Advisors. . . . . . . . . . . . . . . . . 46
9.22 Prior Agreements. . . . . . . . . . . . . . . . . . . . . . . . 47
9.23 Maximum Rate of Interest. . . . . . . . . . . . . . . . . . . . 47
9.24 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . 47
9.25 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.26 Application of Payments . . . . . . . . . . . . . . . . . . . . 48
9.27 Assignments and Participations. . . . . . . . . . . . . . . . . 48
9.28 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.29 Liability of Borrower's Trustees, etc.. . . . . . . . . . . . . 51
9.30 Employee Termination Expenses . . . . . . . . . . . . . . . . . 51
9.31 Conflicts with Intercreditor Agreement. . . . . . . . . . . . . 51
X. AGENT; SUCCESSOR AGENT . . . . . . . . . . . . . . . . . . . . . . . 52
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.2 Powers and Duties; General Immunity . . . . . . . . . . . . . . 52
10.2.1 Powers; Duties. . . . . . . . . . . . . . . . . . . 52
10.2.2 Agent Entitled to Act as Lender . . . . . . . . . . 52
10.3 Representations and Warranties; No Responsibility for Appraisal
of Creditworthiness. . . . . . . . . . . . . . . . . . . . . . . . . 53
10.4 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 53
XI. OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.1 Rights Offering . . . . . . . . . . . . . . . . . . . . . . . . 54
11.2 Consummation. . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.3 Proceeds of Offering. . . . . . . . . . . . . . . . . . . . . . 54
11.4 Pricing of Rights Offering. . . . . . . . . . . . . . . . . . . 54
11.5 Waiver of Ownership Limitations . . . . . . . . . . . . . . . . 54
11.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 55
EXHIBITS
Exhibit A Form of Guaranty
Exhibit B Form of Notes
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1 List of Prior Debt Documents
Schedule 2.1.1 Commitments; Lenders' Pro Rata Shares
Schedule 5.1.4 Pending and Threatened Litigation
Schedule 5.1.14 Annexes to Line of Credit Facility
<PAGE>
FIXED RATE LOAN AGREEMENT
THIS FIXED RATE LOAN AGREEMENT, dated as of August 11, 1998 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "Agreement"), by and among BANKERS TRUST COMPANY, a New York
banking corporation ("Bankers"), having an address at 130 Liberty Street, New
York, New York 10006, BANKBOSTON N.A., a national banking association, having
an address at 115 Perimeter Center Place, NE, Suite 500, Atlanta, Georgia
30346, and WELLSFORD CAPITAL, a Maryland real estate investment trust, having
an address at 610 Fifth Avenue, New York, New York 10020 (together with their
successors and assigns hereunder, each a "Lender" and collectively, the
"Lenders"), BANKERS TRUST COMPANY, a New York banking corporation, as agent
(in such capacity, together with its successors and assigns hereunder,
"Agent"), having an address at 130 Liberty Street, New York, New York 10006,
Attention: Jeffrey Baevsky, and FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, an Ohio real estate investment trust ("Borrower"), having an
address at Suite 1900, 55 Public Square, Cleveland, Ohio 44113-1937.
All capitalized terms used herein shall have the respective
meanings set forth in Section 1.1 hereof.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower desires to obtain the Loans from Lenders; and
WHEREAS, Lenders are willing to make the Loans to Borrower, sub-
ject to and in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the making of the Loans by
Lenders and the covenants, agreements, representations and warranties set
forth in this Agreement, the parties hereto hereby covenant, agree, represent
and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided herein or unless the context clearly indicates a contrary intent:
"Advance" means an advance of a Loan made on or after the Closing
Date pursuant to and in accordance with Section 2.1.1 to be used exclusively
for the purposes described in Section 2.2.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person or is a director, officer or trustee of such
Person or of an Affiliate of such Person. For purposes of this definition,
"control" of a person means the power, directly or indirectly, (i) to vote
ten percent (10%) or more of the securities having ordinary voting power for
the election of directors or trustees of such Person, or (ii) to direct or
cause the direction of the management and policies of such Person, whether by
contract or otherwise; provided that no Lender shall be deemed an Affiliate
of Borrower for purposes of this Agreement or any other Loan Document; and
that each of the entities included in the definition of Gotham are deemed to
be Affiliates of each other.
"Agent" has the meaning specified in the first Paragraph hereof.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit D and delivered pursuant to Section 9.27.
"Bankruptcy" means, with respect to any Person: (i) the
commencement by such Person of a proceeding seeking relief under any
provision or chapter of the Bankruptcy Code or any other federal or state law
relating to insolvency, bankruptcy or reorganization; (ii) an adjudication
that such Person is insolvent or bankrupt; (iii) the entry of an order for
relief under the Bankruptcy Code with respect to such Person; (iv) the filing
of any such petition or the commencement of any such case or proceeding
against such Person, unless such petition and the case or proceeding
initiated thereby are dismissed within sixty (60) days from the date of such
filing; (v) the filing of an answer by such Person admitting the material
allegations of any such petition; (vi) the appointment of a trustee, receiver
or custodian for all or substantially all of the assets of such Person unless
such appointment is vacated or dismissed by the earlier of sixty (60) days
from the date of such appointment and five (5) days before the proposed sale
of any assets of such Person; (vii) the execution by such Person of a general
assignment for the benefit of creditors; (viii) the convening by such Person
of a meeting of its creditors, or any class thereof, for purposes of
effecting a moratorium upon or composition of its debts or an extension of
its debts; (ix) the levy, attachment, execution or other seizure of
substantially all of the assets of such Person where such seizure is not
discharged within ten (10) days thereafter; or (x) the admission by such Per-
son in writing of its inability to pay its debts as they mature or that it is
generally not paying its debts as they become due.
"Bankruptcy Action" means, with respect to any Person: (i) commen-
cing any case, proceeding or other action seeking protection for such Person
as a debtor under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors; (ii) consenting
to the entry of an order for relief in or institution of any case, proceeding
or other action brought by any third party against such Person as a debtor
under any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors; (iii) filing an answer in
any involuntary case or proceeding described in clause (ii) above admitting
the material allegations of the petition therein or otherwise failing to
contest any such involuntary case or proceeding; (iv) seeking or consenting
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for such Person or for a
substantial portion of its properties; (v) making any assignment for the
benefit of the creditors of such Person; or (vi) admitting in writing the
inability of such Person to generally pay its debts as they mature or that
such Person is generally not paying its debts as they become due.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"Borrower" has the meaning specified in the first Paragraph
hereof.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New York, or
which is a day on which banking institutions located in any such jurisdiction
are authorized or required by law or other governmental action to close.
"Capital Event" means: (i) any sale, transfer, disposition,
conveyance or refinancing of all or any portion of any Property; (ii)
Casualty or Condemnation of all or any portion of any Property; (iii) the
acquisition, by purchase or otherwise, of any Property or other assets; (iv)
the issuance of any debt (other than the Indebtedness and other than under
the Imperial Credit Facility and/or the Line of Credit Facility, as each is
in effect on the date hereof) or equity securities by Borrower (including the
Offering); (v) the incurrence of any indebtedness (other than the Indebted-
ness and other than under the Imperial Credit Facility and/or the Line of
Credit Facility, as each is in effect on the date hereof) for borrowed money
by Borrower (other than purchase-money indebtedness); (vi) any transaction or
arrangement with any Person whereby Borrower shall sell or transfer any
Property and then or thereafter rent or lease back the same Property which it
intends to use for substantially the same purposes as the Property sold or
transferred; or (vii) any other event or occurrence which creates Capital
Event Proceeds.
"Capital Event Proceeds" means the net proceeds (i.e., the amounts
received as a result of a Capital Event exceeds the costs and expenses
incurred in such Capital Event) to Borrower from any Capital Event, including
but not limited to: (i) net proceeds from the sale, transfer, disposition,
conveyance or refinancing of all or any portion of any Property; (ii) Loss
Proceeds in respect of a Casualty or Condemnation of all or any portion of
the Properties, if such proceeds are not used to rebuild or restore such
Properties, or are not governed by another document in accordance with
Section 3.2.2; (iii) net proceeds from the issuance of any debt or equity
securities by Borrower; (iv) net proceeds from the incurrence of any
indebtedness for borrowed money by Borrower; or (v) any net proceeds from a
transaction or arrangement with any Person whereby Borrower shall sell or
transfer any Property and then or thereafter rent or lease back the same Pro-
perty which it intends to use for substantially the same purposes as the Pro-
perty sold or transferred; provided that all such proceeds shall be net of
reasonable out-of-pocket transaction costs and income or other taxes payable
by Borrower as a result of such Capital Event and, in the case of the sale or
other disposition of any Property, net of payment of any debt secured by such
Property or Properties.
"Casualty" means any damage to, or loss or destruction of, all or
any part of the Properties, whether or not such damage, loss or destruction
is insured or insurable.
"Casualty Insurance Proceeds" means insurance or other proceeds or
amounts paid or payable to or on behalf of Borrower in respect of a Casualty.
"Change in Control" means, with respect to Borrower, any of the
following events: (i) the acquisition, directly or indirectly, by any one
"person" (as such term is used in Section 13(d), and 14(d) of the Securities
and Exchange Act of 1934, as amended) of more than 10% of the common stock of
or other equity interests in Borrower; or (ii) during any period subsequent
to the date hereof, individuals who at the beginning of such period
constituted the Board of Trustees or Board of Directors of Borrower (together
with any new directors or trustees whose election or nomination for election
was approved by a vote of a majority of the directors or trustees then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of such Board of Directors or Board of
Trustees then in office; provided that neither the execution of the Standby
Purchase Agreements nor the purchase by the Standby Purchasers of any stock
pursuant to the Offering or the Standby Purchase Agreements shall be deemed
to cause a Change in Control and that any increase in the ownership by any
Standby Purchaser of any common stock or other equity interests in Borrower
shall not constitute a Change in Control.
"Closing Date" means the date of this Agreement.
"Commitments" means the commitments of Lenders to make Advances to
Borrower pursuant to Section 2.1.1.
"Commitment Fees" has the meaning specified in Section 2.7.
"Condemnation" means any actual or threatened taking, condemna-
tion, eminent domain or other similar proceeding relating to all or any
portion of any Property.
"Condemnation Proceeds" means any and all award proceeds and other
compensation payable in respect of a Condemnation.
"Control" of a Person means the power, whether or not exercised,
to direct the management of such Person, whether by possession of the power
to elect a majority of the Board of Directors or Board of Trustees or other-
wise.
"CPA" means a certified public accounting firm of recognized
national standing.
"Debt" means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness
of such Person for the deferred purchase price of property or services (other
than indebtedness for property and services purchased in the ordinary course
of business that is payable and paid within sixty (60) days after delivery),
(iii) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments (other than performance, surety and appeal bonds
arising in the ordinary course of business), (iv) all indebtedness of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (v) all
obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (vi) all reimbursement,
payment or similar obligations of such Person, contingent or otherwise, under
acceptance, letter of credit or similar facilities (other than letters of
credit in support of trade obligations or in connection with workers' com-
pensation, unemployment insurance, old-age pensions and other social security
benefits in the ordinary course of business), (vii) all Debt (as defined in
clauses (i) through (vi) above) of another Person guaranteed directly or in-
directly by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (A) to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt, (B) to pur-
chase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss in respect of
such Debt, (C) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or
(D) otherwise to assure a creditor against loss in respect of such Debt, and
(viii) all Debt (as defined in clauses (i) through (vi) above) of another
Person secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any lien, security interest
or other charge or encumbrance upon or in property (including accounts and
contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt; excluding, however,
the endorsement of negotiable instruments or documents in the ordinary course
of business.
"Default" means the existence of a condition or the occurrence of
an event which, but for the giving of notice or passage of time, or both,
would be an Event of Default.
"Default Rate" means a rate per annum equal to the greater of the
Interest Rate plus four percent (4.0%) per annum and the Prime Lending Rate
plus four percent (4.0%) per annum.
"Defaulting Lender" shall have the meaning assigned to such term
in Section 2.8.3.
"Elliott" is a reference to Elliott Associates, L.P., a Delaware
limited partnership.
"Event of Default" has the meaning specified in Section 8.1.
"Extension Fee" has the meaning specified in Section 2.6.2.
"Final Commitment Date" means the date that is six (6) months from
the date on which the Closing Date occurs; provided that if the Final
Commitment Date occurs on a day which is not a Business Day, the Final
Commitment Date will fall on the next succeeding Business Day.
"Final Extension Maturity Date" has the meaning specified in
Section 2.6.1(b).
"Final Extension Notice" has the meaning specified in Section
2.6.1(b).
"Final Extension Option" has the meaning specified in Section
2.6.1(b).
"Fiscal Year" means each twelve month period commencing on Janu-
ary 1 and ending on December 31.
"FFO" means, for any Person, net income (computed in accordance
with GAAP), excluding gains (or losses) from restructuring and sales of pro-
perty, plus depreciation of real property, and after adjustments for
unconsolidated entities in which such Person holds an interest.
"Funding Date" means the date of the funding of an Advance.
"GAAP" means generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"Gotham" is a reference to Gotham Partners, L.P., a New York
limited partnership, and Gotham Partners III, L.P., a New York limited
partnership, and each reference herein to Gotham, including to Gotham as a
Standby Purchaser, shall be deemed to be a reference to all of such entities
or to both of such entities, as the context requires.
"Governmental Authority" means any legislative body, court, board,
agency, commission, office or authority of any nature whatsoever of or for
any governmental unit (federal, state, county, district, municipal, city or
otherwise) whether now or hereafter in existence.
"Guarantors" means any Person which hereafter becomes a Guarantor
pursuant to Section 7.20 of the Line of Credit Facility (as incorporated
herein).
"Guaranty" means each guaranty, substantially in the form attached
hereto as Exhibit A, hereafter executed by a Guarantor in favor of Lenders,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Imperial Credit Facility" means the credit facility governed by
(i) that certain Amended and Restated Credit Agreement dated as of April 17,
1997 among Imperial Parking Limited, 504463 N.B. Inc., the lenders named
therein, and BT Bank of Canada, and (ii) that certain Ancillary Agreement
dated April 17, 1997 among BT Bank of Canada, Hongkong Bank of Canada and
Borrower; both as amended, restated, replaced, supplemented or otherwise
modified, and as more specifically described on Schedule 1.1 hereto.
"Indebtedness" means the indebtedness evidenced by the Notes,
together with all other obligations and liabilities of Borrower due or to
become due to Lenders pursuant hereto in respect of the Loans, under the
Notes or in accordance with any of the other Loan Documents, all amounts,
sums and expenses paid by or payable or reimbursable to Lenders hereunder in
respect of the Loans or pursuant to the Notes or any of the other Loan Docu-
ments, and all other covenants, obligations and liabilities of Borrower here-
under in respect of the Loans or pursuant to the Notes or any of the other
Loan Documents, together with all interest thereon (including, if and when
applicable, interest at the Default Rate as provided in this Agreement and in
the Notes).
"Indemnified Liabilities" has the meaning specified in
Section 9.14.
"Indemnitees" means, collectively, Agent, Lenders and their
successors and assigns, and its and their respective officers, directors,
agents (including any servicer of the Loans), employees, parents, Affiliates
and Subsidiaries.
"Independent" means a Person who (i) is in fact independent,
(ii) does not have any direct financial interest or any material indirect
financial interest in Borrower or in any Affiliate of Borrower or any
constituent partner of Borrower, and (iii) is not connected with Borrower or
any Affiliate of Borrower or any constituent partner of Borrower as an
officer, employee, promoter, underwriter, trustee, partner, director or per-
son performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be provided, such opinion
or certificate shall state that the Person executing the same has read this
definition and is Independent within the meaning hereof.
"Initial Extension Maturity Date" has the meaning specified in
Section 2.6.1(a).
"Initial Extension Notice" has the meaning specified in Section
2.6.1(a).
"Initial Extension Option" has the meaning specified in Section
2.6.1(a).
"Initial Maturity Date" means the day that is six (6) months from
the date on which the Closing Date occurs; provided that if the Initial
Maturity Date occurs on a day which is not a Business Day, the Initial
Maturity Date will fall on the next succeeding Business Day.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement of even date herewith by and among the parties to this Agreement
and the parties to the Other Loan Agreement, as the same may be amended or
otherwise modified from time to time.
"Interest Payment Date" means, for any Interest Period, the date
that is the last day of such Interest Period; provided, however, that if such
day is not a Business Day, the Interest Payment Date for such Interest Period
shall occur on the next succeeding Business Day.
"Interest Period" means each calendar month during the term of the
Loans; provided that:
(a) the initial Interest Period shall commence on (and include)
the Closing Date and shall end on (and include) the last day of the
calendar month in which the Closing Date occurs; and
(b) the final Interest Period shall end on (and include) the
last day of the calendar month in which the Initial Maturity Date
occurs (or, if applicable, the Initial Extension Maturity Date or Final
Extension Maturity Date).
"Interest Rate" means a rate of interest equal to nine and seven-
eighths percent (9.875%) per annum.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations
issued pursuant thereto in temporary or final form.
"Legal Requirements" means all federal, state, county, municipal
and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of any Governmental Authority
(including Environmental Laws) affecting Borrower or any Property or any part
thereof, whether now or hereafter enacted and in force.
"Lenders" has the meaning specified in the first Paragraph hereof,
and shall, as the context may require, include any servicer appointed by
Lenders for the purpose of servicing the Loans.
"Lender Approval" means the written approval of the Required Len-
ders. Lender Approval or approval by the Required Lenders, except as other-
wise herein provided, may be granted or withheld in the sole and absolute
discretion of such required percentage of Lenders hereunder.
"Lending Installation" means any office or branch of any Lender.
"Lien" means any mortgage, deed of trust, lien, pledge, hypothe-
cation, assignment, security interest, security title, or any other encum-
brance, charge or collateral transfer of, on or affecting the Properties of
Borrower or any portion thereof or any interest therein, including any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, and mechanic's, materialmen's and other
similar liens and encumbrances.
"Line of Credit Facility" means the $125,000,000.00 credit
facility governed by that certain Amended and Restated Credit Agreement dated
as of November 1, 1997 among Borrower, Manager, the lenders named therein,
Keybank National Association, Bankers Trust Company, and National City Bank,
as amended, restated, replaced, supplemented or otherwise modified, and as
more specifically described on Schedule 1.1 hereto.
"Loan Documents" means collectively, this Agreement, the Notes,
the Guaranty, the Standby Purchase Agreements and any other document or
instrument executed and delivered by Borrower or any other Person to Agent or
any Lender evidencing, governing, securing or otherwise relating to the
Loans, in each case, as amended, restated, replaced, supplemented or other-
wise modified from time to time.
"Loans" means the fixed rate unsecured loans evidenced by the
Notes and governed by the Loan Documents, to be made in Advances by Lenders
to Borrower pursuant hereto.
"Loss Proceeds" means Casualty Insurance Proceeds and/or Condemna-
tion Proceeds, as the context may require.
"Loss Proceeds Account" has the meaning specified in Section 3.1.
"Manager" means First Union Management, Inc., a Delaware
corporation.
"Material Adverse Effect" means any circumstance, act, condition
or event of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, or circumstance or circumstances, whether or not
related, that does, or could reasonably be expected to, (i) result in a
materially adverse change in or have a materially adverse effect upon the
business, operations or condition (financial or otherwise) of Borrower or any
Standby Purchaser, as the case may be, or (ii) result in the material
impairment of the ability of Borrower or any Standby Purchaser to perform, or
of Lenders to enforce, the obligations of Borrower or such Standby Purchaser
under the Loan Documents to which it is a party, or any of them.
"Maximum Rate" has the meaning specified in Section 9.23.
"Notes" means those certain Notes of even date herewith, in each
case made by Borrower in favor of a Lender, substantially in the form of
Exhibit B, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Notice of Borrowing" means a notice substantially in the form
attached hereto as Exhibit C, delivered by Borrower to Agent pursuant to
Section 2.1.2 with respect to a proposed borrowing hereunder.
"Offering" has the meaning specified in Section 11.1.
"Officer's Certificate" means a certificate delivered to Agent by
Borrower which is signed by an authorized officer of Borrower.
"Organizational Documents" means, with respect to any Person, (a)
if such Person is a limited partnership, the limited partnership agreement of
such Person and the certificate of limited partnership of such person, in
each case, as amended, restated, supplemented or otherwise modified from time
to time, (b) if such Person is a corporation, the certificate or articles of
incorporation of such Person and the by-laws of such Person, in each case, as
amended, restated, supplemented or otherwise modified from time to time, (c)
if such Person is a limited liability company, the certificate of formation
(or equivalent document) and the operating agreement of such Person, as
amended, restated, supplemented or otherwise modified from time to time, (d)
if such person is a trust, the trust agreement of such Person, as amended,
restated, supplemented or otherwise modified from time to time, and (e) if
such Person is a general partnership, the partnership agreement of such Per-
son, as amended, restated, supplemented or otherwise modified from time to
time. If a Person is an individual, there are no Organizational Documents
for such Person.
"Other Loan Agreement" shall mean that certain Fixed Rate Loan
Agreement of even date herewith by and among Borrower, as borrower, Gotham,
Blackacre Bridge Capital, L.L.C. and Elliott, as lenders, and Bankers Trust
Company, as Agent.
"Other Loans" means the "Loans," as defined in the Other Loan
Agreement.
"Paired Trust" means an Ohio trust created for the benefit of the
shareholders of Borrower, which trust holds all of the shares of Manager.
"Participant" means any participant in any obligations of Borrower
hereunder.
"Performing Lenders" shall have the meaning assigned to such term
in Section 2.8.2.
"Person" means any individual, corporation, general partnership,
limited partnership, limited liability company, limited liability partner-
ship, joint venture, estate, trust, unincorporated association, or other
organization, whether or not a legal entity, any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"Policies" has the meaning specified in Section 6.1.22(c).
"Pre-Closing Documentation" has the meaning specified in Sec-
tion 10.3.
"Prime Lending Rate" shall mean the "Prime Rate" reported by The
Wall Street Journal (Eastern Edition) from time to time; provided, however,
if at any time more than one Prime Rate is reported by The Wall Street
Journal, the Prime Lending Rate shall mean the rate which Agent announces
from time to time as its prime lending rate, in effect from time to time.
The Prime Lending Rate shall change as of the date of each change in the
Prime Rate. If, during any period that any portion of the Loans are out-
standing, The Wall Street Journal no longer publishes a "Prime Rate", the
Prime Lending Rate shall mean the rate which Agent announces from time to
time as its prime lending rate, in effect from time to time. The Prime
Lending Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Lenders may make
commercial or other loans at rates of interest at, above or below the Prime
Lending Rate.
"Prior Debt Documents" means the documents evidencing, governing,
securing or otherwise relating to any outstanding Debt of Borrower as of the
Closing Date other than the Indebtedness, including Debt pursuant to the
Senior Notes, the Line of Credit Facility and the Imperial Credit Facility.
The Prior Debt Documents shall include (but shall not be limited to) the
instruments listed on Schedule 1.1 hereto.
"Properties" means, collectively, the parcels of real property
from time to time owned or leased by Borrower and all improvements thereon,
together with all rights pertaining to such property and improvements.
"Pro Rata Share" means with respect to each Lender, the percentage
obtained by dividing (i) as of any date of determination prior to the
termination of the Commitments (a) that Lender's Commitment by (b) the sum of
the aggregate Commitments of all Lenders and (ii) as of any date of
determination after the termination of the Commitments, (A) the aggregate
principal amount of such Lender's outstanding Advances by (B) the sum of the
aggregate principal amount of all outstanding Advances.
"Register" has the meaning specified in Section 2.1.5(a).
"REIT" means a real estate investment trust as defined in Section
856 of the Internal Revenue Code.
"Required Lenders" shall mean Lenders holding a 66 2/3% or greater
share of the outstanding Loans or, if no Loans are outstanding, Lenders
holding a 66 2/3% or greater share of the Commitments.
"Securities and Exchange Commission" means the United States
Securities and Exchange Commission or any successor thereto.
"Senior Notes" means those certain 8 and 7/8% Senior Notes due
2003 issued by Borrower pursuant to that certain Indenture dated as of
October 1, 1993 from Borrower to Society National Bank , as amended,
restated, replaced, supplemented or otherwise modified, and as more
specifically described on Schedule 1.1 hereto.
"Standby Purchase Agreements" shall mean each of the Standby Stock
Purchase Agreements of even date herewith made by and between a Standby Pur-
chaser and Borrower and acknowledged and agreed to by Agent, as the same may
be amended or otherwise modified from time to time.
"Standby Purchaser" means each of Elliott and Gotham.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, trust or other entity of which at
least a majority of the securities or other ownership interests having by
their terms ordinary voting power to elect a majority of the Board of
Directors or Board of Trustees or other individuals performing similar
functions of such corporation, partnership, limited liability company, trust
or other entity (irrespective of whether or not at the time securities or
other ownership interests of any other class or classes of such corporation,
partnership, limited liability company, trust or other entity shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person and/or one
or more Subsidiaries of such Person, and any partnership or limited liability
company in which such Person or any such Subsidiary is a general partner or
managing member.
"Tax" means any present or future tax, levy, impost, duty, charge,
fee, assessment, imposition, deduction or withholding of any nature and
whatever called, by any Governmental Authority, on whomsoever and wherever
imposed, levied, collected, withheld or assessed.
"Work" has the meaning specified in Section 3.2.1(d)(i).
1.2 Principles of Construction.
All references to sections, schedules and exhibits are to sec-
tions, schedules and exhibits in or to this Agreement unless otherwise
specified. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. The words and phrases "including," "shall include,"
"inclusive of" and words and phrases of similar import shall be deemed to be
followed by "without limitation" or "but not limited to". Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP, as modified herein.
II. GENERAL TERMS
2.1 Commitments; Advances; Notes; the Register.
2.1.1 Commitments. Subject to and upon the terms and
conditions set forth herein, each Lender hereby severally agrees to lend to
Borrower from time to time during the period from the Closing Date to and
including the Final Commitment Date an aggregate amount not exceeding such
Lender's Pro Rata Share of the aggregate amount of the Commitments; provided,
however, that notwithstanding anything herein to the contrary, any amount
borrowed and repaid hereunder cannot be reborrowed. Borrower agrees that for
so long as Advances are available hereunder Borrower will not borrow under
the Other Loan Agreement. The original amount of each Lender's Commitment
and such Lender's original Pro Rata Share is set forth opposite its name on
Schedule 2.1.1 annexed hereto and the aggregate original amount of the
Commitments is Forty-five Million Dollars ($45,000,000.00). Borrower shall
use the proceeds of all Loans for the purposes identified in Section 2.2.
Each Lender's Commitment shall expire on the Final Commitment Date
and all Advances and all other amounts owed hereunder with respect to the
Loans and the Commitments shall be paid in full no later than the Initial
Maturity Date (or, if the term of the Loans is extended pursuant to Section
2.6, the Initial Extension Maturity Date or the Final Extension Maturity
Date, as the case may be).
2.1.2 Borrowing Mechanics. Advances made on any Funding Date
shall be in an aggregate minimum amount of Five Million Dollars
($5,000,000.00). Whenever Borrower desires that Lenders make Advances, it
shall deliver to Agent a Notice of Borrowing no later than 10:00 A.M. (New
York time) at least three Business Days in advance of the proposed Funding
Date.
Each Notice of Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day), (ii) the amount of the Advances
requested, (iii) the account to which the Advances shall be wired, and (iv)
that no other Funding Date shall have occurred within the 30 days immediately
preceding the proposed Funding Date.
Borrower may give Agent telephonic notice by the required time of
any proposed Advances under this Section 2.1.2; provided, however, that such
notice shall be promptly confirmed in writing by delivery of a Notice of
Borrowing to Agent on or before the applicable Funding Date. Neither Agent
nor any Lender shall incur any liability to Borrower in acting upon any
telephonic notice referred to above that Agent believes in good faith to have
been given by a duly authorized officer or other Person authorized to borrow
on behalf of Borrower or for otherwise acting in good faith under this Sec-
tion 2.1.2, and upon funding of Advances by Lenders in accordance with this
Agreement pursuant to any such telephonic notice Borrower shall have effected
Advances hereunder.
Borrower shall notify Agent (who shall notify Lenders) prior to
the funding of any Advances in the event that any of the matters to which
Borrower is required to certify in the applicable Notice of Borrowing is no
longer true and correct as of the applicable Funding Date, and the acceptance
by Borrower of the proceeds of any Advances shall constitute a re-
certification by Borrower, as of the applicable Funding Date, as to the
matters to which Borrower is required to certify in the applicable Notice of
Borrowing.
2.1.3 Disbursement of Funds. All Advances under this Agree-
ment shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make Advances requested hereunder nor shall the Commitment of
any Lender be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make Advances requested hereun-
der. Promptly after receipt by Agent of a Notice of Borrowing pursuant to
Section 2.1.2 (or telephonic notice in lieu thereof), Agent shall notify each
Lender of the proposed Advances. Provided that Lenders have received at
least one (1) Business Day notice of the requested Advance, each Lender shall
make its Pro Rata Share of the aggregate amount of the Advances requested in
such Notice of Borrowing or telephonic notice, as the case may be, available
to Agent, in same day funds, at the office of Agent located at 130 Liberty
Street, New York, New York, not later than 12:00 Noon (New York time) on the
applicable Funding Date. Upon satisfaction of the conditions precedent
specified in Section 4.1 and 4.2 (in the case of Advances made on the
Closing Date) and Section 4.2 (in the case of all Advances), Agent shall make
the proceeds of such Advances available to Borrower on the applicable Funding
Date by causing an amount of same day funds equal to the proceeds of all such
Advances received by Agent from Lenders to be transferred to the account
designated in the Notice of Borrowing or telephonic notice, as the case may
be.
2.1.4 Notes. The Commitments and Loans shall be evidenced by
the Notes of Borrower, each in the original principal amount of the
respective Loan and having an initial maturity date of Initial Maturity Date.
The Notes shall bear interest as provided in Section 2.4 and shall be subject
to repayment and prepayment as provided in Section 2.3. The Notes shall be
entitled to the benefits of this Agreement.
2.1.5 The Register.
(a) Agent shall maintain, at its address referred to in
this Agreement, a register for the recordation of the names and
addresses of Lenders and the Commitment and Advances of each Lender
from time to time (the "Register"). For all purposes of this
Agreement, Borrower, Agent and Lenders may treat as a Lender hereunder
each Person whose name is recorded in the Register as a Lender hereun-
der. The Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(b) Agent shall record in the Register the Commitment and
the Advances from time to time of each Lender, and each repayment or
prepayment in respect of the principal amount of the Advances of each
Lender. Any such recordation shall be prima facie evidence of such
matters as against Borrower and each Lender, absent manifest error;
provided, however, that failure to make any such recordation, or any
error in such recordation, shall not affect Borrower's obligations in
respect of the applicable Loans.
(c) Each Lender shall record on its internal records
(including the Notes described in Section 2.1.4) the amount of each
Advance made by it and each payment in respect thereof. Any such
recordation shall be prima facie evidence of such matters as against
Borrower absent manifest error; provided, however, that failure to make
any such recordation, or any error in such recordation, shall not
affect Borrower's obligations in respect of the applicable Loans.
2.2 Use of Proceeds.
Borrower shall use the proceeds of the Loans only for the purposes
of repurchasing outstanding Senior Notes and the payment of actual out-of-
pocket costs incurred by Borrower in connection therewith, and for no other
purpose.
2.3 Loan Repayments and Prepayments.
2.3.1 Repayments. Subject to Section 2.6 hereof, Borrower
shall repay the then outstanding principal amount of the Loans in full on the
Initial Maturity Date, together with interest thereon through (and including)
the last day of the final Interest Period.
2.3.2 Mandatory Prepayments of the Loans. Subject to the
terms and provisions of the Intercreditor Agreement, the Loans and the Other
Loans are subject to mandatory partial or full prepayment (together with
interest on the amount prepaid), on a pro-rata basis, with one hundred
percent (100%) of all Capital Event Proceeds within two (2) Business Days
after the date Borrower receives such Capital Event Proceeds; provided that
Loss Proceeds shall be applied to such mandatory prepayment only to the
extent such Loss Proceeds are not applied to rebuild or restore Properties
that were the subject of the Casualty or Condemnation with respect to which
such Loss Proceeds were received. However, to the extent such Loss Proceeds
become available for prepayment during the Lock-Out Period (defined below),
such prepayment shall be made immediately following the Lock-Out Period.
2.3.3 Voluntary Prepayments of the Loans. Subject to the
terms and provisions of the Intercreditor Agreement, Borrower may, at any
time, upon not less than two (2) days' prior written notice to Agent, prepay
the Loans, in whole or in part, together with interest on the outstanding
principal amount of the Loans being prepaid to (and including) the day in
which the prepayment occurs, such amount of interest and principal to be
applied to the Loans pro rata in accordance with the respective outstanding
principal balances of the Loans; provided, however, that any Loan which is
prepaid (including with the proceeds of the Offering) within ninety (90) days
(the "Lock-Out Period") of being advanced shall be accompanied by a prepay-
ment premium of (i) if the prepayment occurs on or before thirty (30) days
after being advanced, three percent (3%) of the amount prepaid; (ii) if the
prepayment occurs on or after thirty-one (31) days to and including sixty
(60) days of being advanced, two percent (2%) of the amount prepaid; and
(iii) if the prepayment occurs on or after sixty-one (61) days to and
including ninety (90) days of being advanced, one percent (1%) of the amount
prepaid. Each notice of prepayment of the Loans shall be irrevocable and
shall specify (i) the prepayment date and (ii) the amount of prepayment.
2.3.4 Not A Revolver. This Agreement does not provide for
revolving loans. Accordingly, amounts repaid or prepaid may not be
reborrowed.
2.4 Interest.
2.4.1 Generally. The outstanding principal amount of the
Loans shall bear interest at a rate per annum equal to the Interest Rate.
2.4.2 Interest Payments. Subject to the provisions of Sec-
tion 2.4.3, interest on the outstanding principal balance of the Loans shall
be payable (a) for any Interest Period other than the final Interest Period,
on the Interest Payment Date for such Interest Period, (b) upon any prepay-
ment of the Loans (to the extent accrued on the amount being prepaid), in
accordance with Section 2.3, and (c) for the final Interest Period, on the
Initial Maturity Date (or, if the term of the Loans is extended pursuant to
Section 2.6, the Initial Extension Maturity Date or Final Extension Maturity
Date, as applicable).
2.4.3 Default Rate; Post-Maturity Interest. If Borrower
shall default in the payment of principal of or interest on the Loans, or any
fees or other amounts owed by Borrower under this Agreement or any other Loan
Documents shall not be paid when due, then the outstanding principal amount
of the Loans and, to the extent permitted by applicable law, any interest
payments thereon not paid when due and any fees and other amounts then due
and payable under this Agreement or any other Loan Document shall thereafter
bear interest (including post-petition interest in any proceeding under the
Bankruptcy Code or any other now existing or future applicable bankruptcy,
insolvency or other similar laws) payable upon demand at the Default Rate.
Payment or acceptance of the increased rates provided for in this subsection
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Default or Event of Default or an amendment to this Agreement
or any other Loan Document and shall not otherwise prejudice or limit any
rights or remedies of Lenders.
2.5 Payments; Computations.
2.5.1 Making of Payments. Each payment by Borrower hereunder
or under the Notes shall be made to Agent by deposit to such account as Agent
may have last designated by written notice to Borrower. Payments received
after 2:00 p.m., New York City time, shall be deemed to have been received on
the next Business Day. Whenever any payment hereunder or under the Notes
shall be stated to be due on a day that is not a Business Day and an
alternative payment date is not otherwise provided for, such payment shall be
made on the next Business Day, with interest thereon to the date of payment.
Immediately after receipt of payment, Agent will distribute to each Lender
its Pro Rata Share of each such payment received by Agent for the account of
Lenders.
2.5.2 Computation of Interest. Interest on the Loans shall
be computed on the basis of a 360-day year, based on the actual number of
days expired in any given Interest Period. In computing interest on the
Loans, the first day of an Interest Period and the last day of such Interest
Period shall be included.
2.5.3 Capital Adequacy Adjustment. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability of any
law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance with
any guideline, request or directive regarding capital adequacy (whether or
not having the force of law) of any such Governmental Authority, central bank
or comparable agency, in any case occurring or arising after the date hereof,
has or would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence of,
or with reference to, the Loans or other obligations hereunder to a level
below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability,
change or compliance (taking into consideration the policies of such Lender
or such controlling corporation with regard to capital adequacy), then from
time to time, within five (5) Business Days after receipt by Borrower from
Agent on behalf of such Lender of the statement referred to in the next
sentence, Borrower shall pay to Agent on behalf of such Lender such addition-
al amount or amounts as will compensate such Lender or such controlling cor-
poration on an after-tax basis for such reduction. Agent on behalf of such
Lender shall deliver to Borrower a written statement, setting forth in
reasonable detail the basis of the calculation of such additional amounts,
which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
2.6 Extension of Loan Term.
2.6.1 Extension Option. Subject to the satisfaction of each
of the conditions set forth in Section 2.6.2:
(a) Borrower shall have the option (the "Initial Extension
Option"), exercisable by notice (the "Initial Extension Notice") to
Agent given at least ten (10) Business Days prior to the Initial
Maturity Date, time being of the essence, to extend the maturity of the
Loans until the date three (3) months following the Initial Maturity
Date (the "Initial Extension Maturity Date").
(b) If Borrower shall have exercised the Initial Extension
Option, then Borrower shall have the option (the "Final Extension
Option"), exercisable by notice (the "Final Extension Notice") to Agent
given at least ten (10) Business Days prior to the Initial Extension
Maturity Date, time being of the essence, to extend the maturity of the
Loans until the date three (3) months following the Initial Extension
Maturity Date (the "Final Extension Maturity Date").
2.6.2 Conditions to Extend. Borrower's right to extend the
term of the Loan shall be conditioned upon the satisfaction of the following
conditions precedent as of the date on which the Initial Extension Notice or
Final Extension Notice, as applicable, is provided to Agent, and as of the
Initial Maturity Date or the Initial Extension Maturity Date, as applicable:
(a) no monetary Default, material non-monetary Default or
Event of Default shall have occurred and be continuing (and any
extension shall not be deemed a waiver of a Default of any type); and
(b) Borrower shall pay to Agent (to be distributed pro rata
among Lenders in accordance with the outstanding principal balances of
the Loans) on each of the dates on which the Initial Extension Notice
and Final Extension Notice, as applicable, is provided to Agent a non-
refundable extension fee of $225,000 (each, an "Extension Fee").
2.7 Commitment and Other Fees.
Borrower agrees to pay to each Lender on the Closing Date a non-
refundable commitment fee (each a "Commitment Fee" and collectively the "Com-
mitment Fees") in an amount equal to one and one-half percent (1.5%) of the
principal amount of the Commitment made by such Lender to Borrower pursuant
to this Agreement. Pursuant to a separate agreement with Borrower, upon the
Closing Date Borrower is paying Agent a non-refundable Agent's fee.
2.8 Agent Reliance; Defaulting Lenders.
2.8.1 Agent Reliance. Unless Agent shall have been notified
in writing by any Lender prior to the date of an Advance that such Lender
does not intend to make available to Agent such Lender's pro rata share of
the Advance to be made on such date, Agent may assume that such Lender has
made such amount available to Agent on such date, and Agent may make
available to Borrower a corresponding amount. If such corresponding amount
is not in fact made available to Agent by such Lender on the date of such
Advance, Agent shall have no obligation to make such corresponding amount
available to the Borrower. If Agent has made such funds available to
Borrower and such Lender does not pay such corresponding amount upon Agent's
demand therefor, Agent may at any time thereafter so notify Borrower and Bor-
rower shall immediately upon Agent's demand therefor pay to Agent such
corresponding amount together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent, at the Interest
Rate.
2.8.2 Defaulting Lenders. To the extent that a Lender fails
to make any Advance when required hereunder and one or more of the other
Lenders ("Performing Lenders") makes such Advance in such amounts as they may
agree upon (although none of Lenders or Agent shall have any obligation to
make any such Advance), then, without otherwise limiting any rights and
remedies in such situation, Defaulting Lender shall pay to Lenders which per-
formed Defaulting Lender's obligations (x) interest on such amount at a rate
equal to such Performing Lender's cost of funds for the related Loan which
Performing Lenders made to Borrower as a result of such Defaulting Lender's
failure to effect the related Advance and (y) a pro-rata portion of the fees
paid to Defaulting Lender by Borrower as set forth in Section 2.7, with such
pro-rata portion to be calculated by amortizing such fees on a straight-line
basis (over the then scheduled term of the Loan) and allocating to Performing
Lenders, with respect to the period they performed on behalf of the
Defaulting Lender, the fees allocable to the amount so advanced by Performing
Lenders on behalf of Defaulting Lender. Such interest shall accrue and be
payable from the date the Performing Lender(s) made a loan to Borrower on
behalf of the Defaulting Lender(s) until such payment is made by the
Defaulting Lender(s) to the Performing Lender(s). If Defaulting Lender makes
the payment which it theretofore failed to make and pays Performing Lender
the interest and fees described in this Section, then Defaulting Lender shall
be deemed to have made the Advance when the same was originally due.
2.8.3 Subordination of Defaulting Lenders. If a Lender
fails, when required hereunder, to make any Advance or fails to pay any sum
payable to Agent hereunder and such default continues for five (5) days after
written notice by Agent to such Lender, then such Lender's (the "Defaulting
Lender") share in the Loans and the Loan Documents and proceeds thereof shall
be immediately subordinated to the other Lenders' and Agent's share therein
and proceeds thereof, and such Defaulting Lender's Commitment and Loans shall
be voted by Agent, all without necessity for executing any further documents.
Upon such failure, in addition to Agent's other legal and equitable rights
and remedies, Agent shall withhold and apply any and all amounts payable to
such Defaulting Lender under the Loan Documents in such order of priority as
Agent shall determine in its sole discretion to: (i) purchase for the
Defaulting Lender its share of any Loan or pay any sum payable hereunder that
Defaulting Lender was obligated but failed to pay pursuant to this Agreement;
and/or (ii) reimburse Performing Lenders and/or Agent for any other sums,
costs, expenses or disbursements payable by Defaulting Lender hereunder.
Upon actual payment by Defaulting Lender of its late Commitment percentage of
the Loans and any other sums then payable by Defaulting Lender under the Loan
Documents, its share in the Loans and in the Loan Documents and proceeds
thereof and its Commitment and Loan thereupon shall immediately be restored
to equal priority with that of the other Lenders, but these provisions shall
not effect a rescission of any exercise by Agent of any vote of Defaulting
Lender's Commitment and Loans.
2.9 Lending Installations.
Each Lender may book Loans at one or more Lending Installations
selected by it from time to time, and may change its Lending Installations
from time to time, but no such selection or change shall affect the liability
of the Lender making any such selection or change. All terms of this
Agreement and of the other Loan Documents shall apply to any such Lending
Installation as if it were a Lender hereunder, and, if a Lender so selects
Lending Installation(s), this Agreement shall be deemed held by such Lender
for the benefit of its selected Lending Installation(s).
2.10 Withholding.
All payments by Borrower shall be paid in full without setoff or
counterclaim and without reduction for and free from any and all Taxes;
provided, however, that in the event Borrower shall be required by law to
deduct or withhold Taxes from interest, fees or other amounts payable hereun-
der or under any of the other Loan Documents, Borrower shall be entitled to
do so without being in Default hereunder provided that Borrower, together
with such payment, shall provide a statement to Agent and Lenders setting
forth the amount of Taxes deducted or withheld, the applicable rate, an
official receipt or other evidence of payment satisfactory to the applicable
Lender and any other information or documentation which may reasonably be
requested for the purpose of assisting the Person(s) from whom Taxes were
deducted or withheld to obtain any allowable credits or deductions for the
Taxes so deducted or withheld in each jurisdiction in which said Person(s)
are subject to tax. Notwithstanding the foregoing, however, Borrower shall
not deduct or withhold Taxes from amounts payable to or for the benefit of a
Person entitled to payments hereunder whose percentage interest in the oblig-
ations of Borrower has been disclosed to Borrower (either in writing or by a
document to which such Person, any Lender or Borrower is a signatory) (or, in
the event that any Taxes are required by law to be deducted or withheld from
payments hereunder to any such Person, Borrower shall pay to such Person such
additional amount as is necessary to ensure that the net amount actually
received by such Person will equal the full amount such Person would have
received had no such deduction or withholding been required), (i) if such
Person is created or organized under the laws of the United States or any
state thereof or (ii) to the extent that Borrower would be permitted to make
such payments to such Person free of such deductions or withholdings as of
the Closing Date or the date such Person otherwise acquires an interest in
the obligations of Borrower hereunder; provided that if at the date a Person
becomes a party hereto the applicable transferor or assignor was entitled to
additional amounts under this Section 2.10, then to such extent the assignee
or transferee shall also be entitled to additional amounts hereunder. A
Lender organized in a jurisdiction other than the United States or a
political subdivision thereof shall not be entitled to receive additional
amounts under this Section 2.10 to the extent that a withholding tax is
imposed due to a failure to comply with the provisions of Section 9.27(f)
hereof. The percentage interest in the obligations of Borrower hereunder of
each such Person shall equal the percentage participation in such obligations
of such Person as so disclosed to Borrower from time to time. Borrower shall
also pay any present or future stamp or documentary taxes or any other Taxes
imposed on Agent or any Lender that arise from any payment hereunder or from
the execution, delivery or registration of or otherwise with respect to this
Agreement.
2.11 Sharing of Payments, Etc.
If any Lender shall obtain any payment or reduction (including,
without limitation, any amounts received as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code) of any obligation of
Borrower hereunder in respect of the Loans or in respect of any other obliga-
tions of Borrower under any of the Loan Documents (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Pro Rata Share of payments or reductions on account of the
Loans or such other obligations obtained by all Lenders, such Lender shall
forthwith (i) notify each of the other Lenders and Agent of such receipt, and
(ii) purchase from the other Lenders, without recourse, such participations
in the affected obligations owned by the selling Lenders as shall be
necessary to cause such purchasing Lenders to share the excess payment or
reduction, net of costs incurred in connection therewith, ratably with each
of them, provided that if all or any portion of such excess payment or
reduction is thereafter recovered from such purchasing Lenders, or additional
costs are incurred, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery or such additional costs, but without
interest. Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.11 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were
the direct creditor of Borrower in the amount of such participation.
2.12 Pro Rata Treatment.
Subject to the provisions of Sections 2.8.2 and 2.8.3, each
borrowing by Borrower from Lenders and each payment (including each prepay-
ment) by Borrower on account of principal and/or interest in respect of the
Loans shall be made concurrently and pro rata as among all Lenders all in
accordance with their Pro Rata Shares appropriately adjusted in the case of
any Lender who shall have failed to fund its Pro Rata Share of the Loans.
III. SPECIAL PROVISIONS
3.1 Loss Proceeds Account. Borrower shall cause all Casualty Insurance
Proceeds or Condemnation Proceeds to be paid directly to an account
designated by Agent for such purpose and under the sole dominion and control
of Agent for the purposes of receiving and disbursing Loss Proceeds (the
"Loss Proceeds Account"), on behalf of Lenders. If any Loss Proceeds are
received by Borrower, the same shall be received in trust for Lenders, shall
be segregated from other funds of Borrower, and shall be paid directly to the
Loss Proceeds Account to be applied or disbursed in accordance with this
Agreement. Borrower hereby authorizes and directs any affected insurance
company to make payment of Loss Proceeds directly to the Loss Proceeds
Account and Borrower agrees to execute such additional instruments as any
such affected insurance company may request as a condition to making such
payment of Loss Proceeds.
3.2 Casualty and Condemnation.
3.2.1 Casualty, Condemnation and Application of Proceeds.
(a) Borrower shall give prompt written notice to Agent of
any Casualty at or Condemnation of the Properties or any part thereof
and shall deliver to Agent copies of any and all papers served in
connection with such proceedings. All Casualty Insurance Proceeds and
all Condemnation Proceeds shall be applied and disbursed in accordance
with the provisions of this Section and Section 2.3.2, as the case may
be.
(b) Upon the occurrence of any Casualty at or Condemnation
of the Properties or any part thereof, all Loss Proceeds shall only be
applied to the Indebtedness or toward the restoration of such Property,
as shall be determined by Borrower in its sole and absolute discretion;
provided, however, that (i) if an Event of Default shall be continuing
at the time of any Casualty or Condemnation, all Loss Proceeds shall
only be applied to the Indebtedness, in accordance with Section 2.3.2;
but (ii) if such Casualty or Condemnation occurs at a Property which is
encumbered by a Lien, the Loss Proceeds shall be applied in accordance
with such Lien documents.
(c) Upon the occurrence of any Casualty at or Condemnation
of the Properties or any part thereof during the existence of an Event
of Default, Agent alone shall have the right, in its sole and absolute
discretion, to settle, adjust or compromise any claim (i) under any
policy of insurance or (ii) in connection with a Condemnation. In all
other cases, Borrower may settle, adjust or compromise any such claim
which is less than $500,000.00, and with respect to any such claim in
excess of $500,000.00, Agent and the Borrower shall consult and
cooperate with each other and each shall be entitled to participate in
all meetings and negotiations with respect to the settlement of such
claim. Any adjustment or settlement by the Borrower of any claim which
is in excess of $500,000.00 shall be subject to prior Lender Approval,
which approval shall not be unreasonably withheld or delayed; provided
that if such Casualty/Condemnation occurs at a Property which is
encumbered by a Lien, the any settlement, adjustment or compromise
shall be decided in accordance with such Lien documents.
(d) In the event that Loss Proceeds from any Casualty at or
Condemnation of a Property or any part thereof are to be made available
to Borrower for restoration and the reasonably anticipated cost of the
restoration is $2,000,000 or more, the following provisions shall
apply:
(i) Borrower shall, no later than upon receipt of the
Loss Proceeds, commence diligently to restore the applicable
Property substantially to its value, character and utility
immediately prior to such Casualty or Condemnation (it being
understood that Borrower's commencement of such restoration prior
to receipt of Insurance Proceeds shall not in any way affect
Lender's right, if any, to apply Insurance Proceeds to the Loans
pursuant to and in accordance with the terms of this Agreement),
in which event Borrower shall comply with the following conditions
in connection with the performance of all of such restoration
(hereinafter "Work"):
(A) no Work shall be undertaken until Borrower
shall have provided Agent with evidence reasonably satisfac-
tory to Agent that the amounts deposited in the Loss
Proceeds Account will be sufficient to cover the entire cost
of such Work;
(B) no Work shall be undertaken until Borrower
shall have procured and paid for, so far as the same may be
required from time to time, all permits and consents of all
Governmental Authorities having jurisdiction;
(C) any Work that is structural in nature, that
involves mechanical, electrical, fire safety, HVAC or other
building systems or the performance of which in the
reasonable judgment of Agent otherwise requires the services
of a licensed architect, engineer and/or other professional
in accordance with safe and sound construction practices,
shall be performed in accordance with plans, specifications,
reports and/or drawings prepared by Borrower's architect,
engineer and/or other professional and approved by Agent
(such approval not to be unreasonably withheld or delayed)
and promptly following its receipt of same, Borrower shall
deliver to Agent copies of all plans, specifications,
reports and/or drawings relating to any such Work for its
review and approval (such approval not to be unreasonably
withheld or delayed);
(D) all Work shall be performed in accordance
with cost estimates approved by Agent as provided below and
promptly following its receipt of same, Borrower shall deli-
ver to Agent copies of all cost estimates relating to any
such Work for Agent's review and approval (such approval not
to be unreasonably withheld or delayed);
(E) any Work that is structural in nature or
that involves mechanical, electrical, fire safety, HVAC or
other building systems or the performance of which in the
reasonable judgment of Agent otherwise requires the services
of a licensed architect, engineer and/or other professional
in accordance with safe and sound construction practices,
shall be performed under the supervision of a licensed
architect, engineer and/or other professional reasonably
approved by Agent;
(F) all Work shall be prosecuted diligently to
completion in a good and workmanlike manner and in compli-
ance with all applicable permits and authorizations and with
all other applicable Legal Requirements;
(G) all Work shall be completed free and clear
of all liens, encumbrances, chattel mortgages, conditional
bills of sale and other charges, and substantially in
accordance with the plans and specifications therefor;
(H) during the performance of any Work, Borrower
shall procure and maintain, or cause to be procured and
maintained, (x) "All-Risk" builder's risk property
insurance, with vandalism and malicious mischief endorse-
ments, completed value form, covering all physical loss
(including any loss of or damage to supplies, machinery and
equipment) in connection with the performance of such Work
and (y) statutory workers' compensation and employers'
liability coverage, if applicable to Borrower; and
(I) Borrower shall reimburse Agent and Lenders
for all reasonable fees and expenses incurred by Agent or
Lenders in connection with their review of any Work.
(ii) All Loss Proceeds (in excess of $2,000,000 with
respect to any Casualty or Condemnation) shall be deposited in the
Loss Proceeds Account in accordance with the terms of this Agree-
ment. Agent shall disburse such proceeds (together with any
additional sums deposited) to or for the account of the Borrower
from time to time to pay the costs and expenses associated with
the restoration of the Properties, as set forth below:
(A) Each request for payment shall be made on
ten (10) Business Days' prior notice to Agent and, if an
architect, engineer or other professional was retained to
supervise the restoration, shall be accompanied by a certi-
ficate to be made by such supervising architect, engineer
and/or other professional stating that the sum requested is
required to reimburse Borrower for payments by Borrower to,
or is due to, the contractor, subcontractors, materialmen,
laborers, engineers, architects or other persons rendering
services or materials for the Work (giving a brief
description of such services and materials);
(B) Each request shall be accompanied by waivers
of liens satisfactory to Agent covering that part of the
Work for which reimbursement is being requested or for which
payment was previously requested; and
(C) Each request shall be accompanied by evi-
dence reasonably satisfactory to Lender that the amounts
deposited in the Loss Proceeds Account will be sufficient to
cover the remaining cost of such Work.
(e) Notwithstanding anything to the contrary contained in
this Agreement, during the continuance of an Event of Default, Lenders
shall have the absolute right to apply at any time all or any part of
the Loss Proceeds then held by or on behalf of Lenders to the prepay-
ment of the Indebtedness.
3.2.2 Conflicts With Mortgage Financing. If any term or
provision of Section 3.2.1 shall conflict with the terms of any mortgage
financing applicable to a Property as to which a Casualty or Condemnation has
occurred, then the terms and provisions of such Prior Debt Documents shall
take precedence over Sections 2.3.2 and 3.2.1 hereof.
IV. CONDITIONS PRECEDENT
4.1 Intentionally Omitted.
4.2 Conditions Precedent to All Advances.
The obligations of Lenders to make Advances on each Funding Date
are subject to the satisfaction by Borrower of the following conditions
precedent no later than such Funding Date:
4.2.1 Notice of Borrowing; Other Documentation. Agent shall
have received before such Funding Date, in accordance with the provisions of
Section 2.1.2, an (i) original executed Notice of Borrowing, in each case
signed by an authorized officer of Borrower, and (ii) such other documents,
agreements, certificates or instruments as Agent deems appropriate or
necessary.
4.2.2 Other Conditions. As of such Funding Date:
(a) the representations and warranties contained herein and
in the other Loan Documents shall be true and correct in all material
respects on and as of such Funding Date to the same extent as though
made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date (including
references to "the Closing Date" or "the date hereof"), in which case
such representations and warranties shall have been true and correct in
all material respects on and as of such earlier date;
(b) Borrower and each Standby Purchaser shall have per-
formed in all material respects all agreements and satisfied all condi-
tions which this Agreement or any other Loan Document provides shall be
performed or satisfied by it on or before such Funding Date;
(c) no Material Adverse Effect (in the sole opinion of
Agent) shall have occurred;
(d) no order, judgment or decree of any arbitrator or
Governmental Authority shall purport to enjoin or restrain any Lender
from making the Advances to be made by it on that Funding Date; and
(e) no event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute a Default or Event of
Default.
V. REPRESENTATIONS AND WARRANTIES
5.1 Borrower Representations.
Borrower represents and warrants (which representations and
warranties shall survive Borrower's delivery of the Notes and the making and
repayment of the Loans) that the following statements are true, correct and
complete as of the Closing Date and on each Funding Date:
5.1.1 Organization; Existence. Borrower has been duly
organized and is validly existing and in good standing as a business trust
under the laws of the State of Ohio, with requisite trust power and authority
to own or hold under lease its Properties and to transact the businesses in
which it now engaged, and to execute and deliver the Loan Documents to which
it is a party, and is qualified and self-administered as a REIT under Sec-
tions 856 through 860 of the Internal Revenue Code. Borrower is duly quali-
fied to do business in each jurisdiction where it is required to be so quali-
fied in connection with its Properties, businesses and operations where the
failure so to qualify would have a material adverse effect on Borrower. Bor-
rower possesses all rights, licenses, permits and authorizations, governmen-
tal or otherwise, necessary to entitle it to own its Properties and to
transact the businesses in which it is now engaged. Borrower's
Organizational Documents have been duly executed, delivered and, to the
extent required by applicable law, filed, and are in full force and effect in
accordance with their respective terms and have not been modified or amended.
5.1.2 Proceedings. Borrower has taken all necessary cor-
porate, trust, partnership or limited liability company action to authorize
the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, and the performance of all transactions
contemplated thereby, including the Offering. This Agreement and such other
Loan Documents to which Borrower is a party have been duly executed and
delivered by or on behalf of Borrower.
5.1.3 No Conflicts. The execution, delivery and performance
by Borrower of the Loan Documents to which it is a party, and the performance
of all transactions contemplated thereby, including the Offering, will not
conflict with or violate any provisions of its Organizational Documents or
conflict with or result in a breach of any of the terms or provisions of, or
constitute a Default under, or result in the creation or imposition of any
Lien, charge or encumbrance (other than pursuant to the Loan Documents) upon
any of the Properties pursuant to the terms of any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which the Properties are subject, nor
will such action result in any material violation of the provisions of any
statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over Borrower (or any of its Affiliates), or over
any of Borrower's Properties (including without limitation Regulations G, T,
U or X of the Board of Governors of the Federal Reserve System), and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental agency
or body or any other Person required for the execution, delivery and per-
formance by Borrower of the Loan Documents to which it is a party has been
obtained and is in full force and effect and no term of condition thereof has
been amended or modified.
5.1.4 Litigation. Except as set forth on Schedule 5.1.4,
there are no actions, suits or proceedings at law or in equity by or before
any Governmental Authority or other agency now pending or, to Borrower's
knowledge, threatened against or affecting Borrower where such actions, suits
or proceedings, if determined against Borrower, could, individually or
collectively, reasonably be expected to have a Material Adverse Effect.
There are no proceedings pending or, to Borrower's knowledge, threatened
against Borrower which call into question the validity or enforceability of
any of the Loan Documents.
5.1.5 Agreements. Borrower is not a party to any agreement
or instrument or subject to any restriction which does or could reasonably be
expected to result in a Material Adverse Effect.
5.1.6 No Bankruptcy Filing. Borrower has not filed and Bor-
rower is not contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of its assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it.
5.1.7 Full and Accurate Disclosure. No statement of fact
made by Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
materially misleading.
5.1.8 Tax and REIT Status. Borrower has timely filed all
tax returns that are required to be filed with any Government Entity and has
timely paid all Taxes due pursuant to the tax returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested
in good faith by appropriate proceedings and for which adequate reserves or
other provisions are maintained in accordance with GAAP. Borrower has (i)
elected to be taxed as a REIT effective for each of the taxable years ending
on or after December 31, 1961, (ii) has not revoked such election, (iii)
qualified for taxation as a REIT for each such taxable year and is in a
position to so qualify for its current taxable year, (iv) operates in a
manner so as to qualify as a REIT, and (v) has not sold or otherwise disposed
of any assets which could give rise to a material amount of Tax pursuant to
any election made by Borrower under Notice 88-19, 1988-1 CB 486 and does not
expect to effect any such sale or other disposition.
5.1.9 Use of Proceeds. Borrower's use of the proceeds of the
Loans is solely for the purposes described in Section 2.2.
5.1.10 Financial Information. Borrower has furnished Lenders
with true, correct and complete copies of (a) the combined annual financial
statements for Borrower and Manager for the most recent fiscal year of
Borrower, including the combined balance sheet of Borrower and Manager and as
of the end of such fiscal year and combined statements of income and changes
in cash for Borrower and Manager and a statement of shareholder's equity,
prepared on a consistent basis in accordance with GAAP (except as
specifically disclosed therein) and in the form included with Borrower's Form
10-K as filed with the Securities and Exchange Commission for such fiscal
year, certified without qualification by Borrower's CPAs; (b) the combined
quarterly financial statements for Borrower and Manager for each fiscal
quarter elapsed since the expiration of Borrower's most recent fiscal year,
including a combined balance sheet and combined statements of income and
change in cash of Borrower and the Manager prepared on a consistent basis
with the prior fiscal year's financial statements in accordance with GAAP
(except as specifically disclosed therein), and in the form included with
Borrower's Form 10-Q, as filed with the Securities and Exchange Commission
for any such fiscal quarter; and (c) a certificate of the chief financial
officer, principal accounting officer or chief executive officer of Borrower,
stating that to his best knowledge after due inquiry the foregoing statements
present fairly in all material respects the combined financial position of
Borrower and Manager and the results of their combined operations, subject,
solely with respect to the materials described in clause (b), to routine
year-end audit adjustments. No changes have occurred in the assets,
liabilities or financial condition of Borrower or Manager from those
reflected in the most recent balance sheets referred to above in this Section
which, individually or in the aggregate, have been materially adverse. Since
the date of such most recent balance sheet, there has been no material and
adverse development in the business or in the operations or prospects of
Borrower or Manager.
5.1.11 No Default.
(a) No event has occurred and is continuing, and no condition
exists, which constitutes a Default or Event of Default.
(b) No Default by Borrower or any Standby Purchaser and no
accrued right of rescission, cancellation or termination on the part of
Borrower or any Standby Purchaser exists under this Agreement or any of
the other Loan Documents.
5.1.12 Federal Reserve Regulations. No part of the proceeds
of the Loans will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or by the
terms and conditions of this Agreement or the other Loan Documents.
5.1.13 Enforceability. The Loan Documents constitute legal,
valid and binding obligations of Borrower and Standby Purchasers party
thereto, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law
or in equity) and are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower or any Standby Purchaser, including the
defense of usury, and neither Borrower nor any Standby Purchaser has asserted
any right of rescission, set-off, counterclaim or defense with respect
thereto.
5.1.14 Incorporation of Representations and Warranties. In
addition to the foregoing representations and warranties, each of the
representations and warranties set forth in Section 6 of the Line of Credit
Facility and any related definitions, as in effect on the date hereof, are
hereby incorporated herein by reference and shall apply, mutatis mutandis, to
this Agreement.
VI. AFFIRMATIVE COVENANTS
6.1 Borrower Covenants.
From the date hereof and until the indefeasible payment and perfo-
rmance in full of all Indebtedness of Borrower, Borrower hereby covenants and
agrees with Lenders that:
6.1.1 SEC Filings and Press Releases. Borrower shall provide
to Agent copies promptly after their filing or, if not filed, after they
become available, of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by Borrower to its security
holders, (b) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by the Borrower with the New York Stock
Exchange, Inc., any other securities exchange or with the Securities and Ex-
change Commission or any Governmental Authority or private regulatory
authority, and (c) all press releases and other statements made available
generally by Borrower or any of its Affiliates to the public or to the
securityholders of the Borrower;
6.1.2 Business and Operations. Borrower will continue to
engage in the businesses presently conducted by it (i.e., acquisition,
disposition and ownership of real property); provided that Borrower may cease
conducting any business presently conducted by it, with prior written Lender
Approval (such Lender Approval not to be unreasonably withheld). Borrower
will qualify to do business and will remain in good standing under the laws
of each jurisdiction necessary for the conduct of its business.
6.1.3 Costs of Enforcement. In the event of the Bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Borrower
or an assignment by Borrower for the benefit of its creditors, Borrower, its
successors or assigns, shall be chargeable with and agrees to pay all costs
of collection and defense, including reasonable attorneys' fees in connection
therewith and in connection with any appellate proceeding or post-judgment
action involved therein, which shall be due and payable together with all
required service or use Taxes.
6.1.4 Estoppel Statement. Borrower, within ten (10) days
after request from Agent, shall furnish to Agent a statement, duly acknowl-
edged and certified to Lenders and to any other Person designated by Agent,
setting forth (a) the amount then owing by Borrower in respect of the
Indebtedness, (b) the date through which interest on the Loans has been paid,
(c) the nonexistence of any offsets, counterclaims, credits or defenses to
the payment of Borrower's obligations under the Loan Documents, and
(d) whether any written notice of default from Lenders or Agent to Borrower
is then outstanding, and acknowledging that this Agreement and the other Loan
Documents have not been modified or, if modified, giving the particulars of
such modification.
6.1.5 Loan Proceeds. Borrower shall use the proceeds of the
Loans only for the purposes set forth in Section 2.2.
6.1.6 Name; Principal Place of Business. Borrower shall
provide to Agent (a) notification of any change in Borrower's name, identity
or corporate, partnership, limited liability company or trust structure
within 30 days of such change and (b) 30 days' prior written notice of any
change in Borrower's executive office or principal place of business.
6.1.7 Board of Trustees. Borrower shall provide to Agent,
with reasonable promptness, written notice of any change in the Board of
Trustees of Borrower.
6.1.8 Offering. Borrower shall obtain Lender Approval of the
registration statement for the Offering, file the approved registration
statement for the Offering and use its best efforts to consummate the
Offering, all in accordance with Article XI.
6.1.9 Incorporation of Affirmative Covenants. In addition to
the foregoing affirmative covenants, each of the affirmative covenants set
forth in Section 7 of the Line of Credit Facility and any related
definitions, as in effect on the date hereof, are hereby incorporated herein
by reference as if set forth herein in full and shall apply, mutatis
mutandis, to this Agreement; provided, however, that the following
affirmative covenants of the Line of Credit Facility are not so incorporated:
7.3, 7.4, 7.16(f) and 7.16(g), 7.17, 7.18 and 7.19.
VII. NEGATIVE COVENANTS
7.1 Borrower Negative Covenants.
From the date hereof until payment and performance in full of all
Indebtedness of Borrower, Borrower covenants and agrees with Lenders that it
will not do, directly or indirectly, any of the following:
7.1.1 Debt. Without prior Lender Approval and except for
Debt existing on the date hereof and reflected in the financial information
furnished to Lenders, Borrower shall not create, incur or assume any Debt
exceeding in the aggregate Five Million Dollars ($5,000,000.00) other than
(a) the Indebtedness; (b) draws under the existing Line of Credit Facility or
the Imperial Credit Facility; and (c) non-recourse mortgage Debt for the pur-
pose of financing an acquisition of a Property or refinancing any Property
(provided that in the event of a refinancing such Debt may only encumber the
Property being refinanced and in the event of an acquisition such Debt may
only encumber the asset being acquired); provided that the net proceeds of
any such financing or refinancing shall be used to prepay the Indebtedness
pursuant to Section 2.3.2 above.
7.1.2 Corporate Structure. Without prior written Lender
Approval (such Lender Approval not to be unreasonably withheld), Borrower
shall not, and shall not permit any of its Subsidiaries or Affiliates to: (i)
except as provided in Article XI, alter the corporate, capital or legal
structure of Borrower or any of its Subsidiaries or Affiliates (including by
the issuance or distribution of a new or special class of securities), (ii)
incorporate or otherwise organize any Subsidiaries, (iii) make or permit any
transfer, or acquire by purchase or otherwise, directly or indirectly, all or
substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, or (iv) engage in any
transaction or take any action that would cause Borrower or Paired Trust to
cease to qualify as a "stapled entity" entitled to an exemption from the
requirements of Section 269B of the Internal Revenue Code.
7.1.3 Incorporation of Negative Covenants. In addition to
the foregoing negative covenants, each of the negative covenants set forth in
Section 8 of the Line of Credit Facility and any related definitions, as in
effect on the date hereof, are hereby incorporated herein by reference as if
set forth herein in full and shall apply, mutatis mutandis, to this Agree-
ment.
VIII. DEFAULTS
8.1 Event of Default.
(a) In case of the occurrence of any of the following
events (each of which is herein sometimes called an "Event of
Default"):
(i) if Borrower fails to make any payment of princi-
pal of, or interest on, the Loans on the date on which such pay-
ment was due hereunder;
(ii) if Borrower fails to pay the Indebtedness in full
on the Initial Maturity Date (or, if the term of the Loan is
extended pursuant to Section 2.6, the Initial Extension Maturity
Date or the Final Extension Maturity Date, as the case may be);
(iii) if Borrower or Standby Purchaser fails to
pay any other amount payable by Borrower or Standby Purchaser pur-
suant to this Agreement or any other Loan Document when due and
such failure continues for five (5) Business Days after Lender
delivers written notice thereof to Borrower;
(iv) if any representation or warranty made by Bor-
rower or any Standby Purchaser herein or in any other Loan Docu-
ment, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by Borrower or any
Standby Purchaser in connection with this Agreement or any other
Loan Document, shall be inaccurate or misleading in any material
respect as of the date such representation or warranty was made or
deemed made;
(v) if Borrower or any Standby Purchaser shall make
an assignment for the benefit of creditors;
(vi) if a receiver, liquidator or trustee shall be
appointed for Borrower or any Standby Purchaser or if Borrower or
any Standby Purchaser shall be adjudicated a "Debtor" under the
federal bankruptcy law or insolvent, or if any petition for Bank-
ruptcy, reorganization or arrangement pursuant to federal Bank-
ruptcy law, or any similar federal or state law, shall be filed by
or against, consented to, or acquiesced in by Borrower or any
Standby Purchaser, or if any proceeding for the dissolution or
liquidation of Borrower or any Standby Purchaser shall be
instituted; provided, however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by
Borrower or any Standby Purchaser, the same shall become an Event
of Default upon the same not being discharged, stayed or dismissed
within sixty (60) days, or if Borrower or any Standby Purchaser
shall generally not be paying its debts as they become due;
(vii) if Borrower assigns its rights under this
Agreement or any of the other Loan Documents or any interest
herein or therein; or if any Standby Purchaser assigns its rights
under a Standby Purchase Agreement or any interest therein, other
than in accordance with the terms of such Standby Purchase
Agreement;
(viii) if an Event of Default as defined or de-
scribed in any other Loan Document occurs, or if any other event
shall occur or condition shall exist, if the effect of such event
or condition is to accelerate the maturity of all or any portion
of the Indebtedness or to permit Lenders to accelerate the
maturity of all or any portion of the Indebtedness;
(ix) except as otherwise provided in this Section 8.1,
if Borrower or Standby Purchaser shall continue to be in default
under any of the other terms, covenants or conditions of this
Agreement or any other Loan Document, for ten (10) days after
notice to Borrower or Standby Purchaser from Agent, in the case of
any default which can be cured by the payment of a sum of money,
or for thirty (30) days after notice from Agent in the case of any
other default; provided, however, that if such non-monetary
default is susceptible of cure but cannot reasonably be cured
within such 30-day period and provided further that Borrower or
Standby Purchaser shall have commenced to cure such default within
such 30-day period and thereafter diligently and expeditiously
proceeds to cure the same, such 30-day period shall be extended
for such time as is reasonably necessary for Borrower or Standby
Purchaser in the exercise of due diligence to cure such default,
such additional period not to exceed thirty (30) days;
(x) if Borrower fails to make any payment due to any
Indemnitee or such Indemnitee's respective officers, directors,
agents, parents or affiliates pursuant to Section 9.14 hereof for
a period of fifteen (15) days after receipt by Borrower of written
demand therefor; provided that Borrower shall not be deemed to be
in Default in respect of any such payment (or portion thereof)
which Borrower is contesting in good faith pursuant to appropriate
proceedings, provided, further, that (A) Borrower shall post cash
or other security reasonably satisfactory to the relevant
Indemnitee with an escrowee satisfactory to such Indemnitee in an
amount equal to the disputed amount during the pendency of any
appeal by Borrower of an adverse determination, and (B) if such
contest is finally determined in favor of the Indemnitee (or if
Borrower does not appeal an adverse determination), Borrower shall
be required to make such payment (or portion thereof) to such
Indemnitee within ten (10) days after such determination;
(xi) if any money judgment, writ or warrant of attach-
ment or similar process requiring the payment of in excess of
$500,000 not adequately covered by insurance as to which a solvent
and unaffiliated insurance company has acknowledged coverage shall
be entered or filed against Borrower or any of its assets and
shall remain undischarged, unvacated, unbonded or unstayed for a
period of sixty (60) days (or in any event later than five days
prior to the date of any proposed sale thereunder);
(xii) if there shall be a default by Borrower
under any of the Prior Debt Documents (as in effect on the date
hereof) or if there shall be a default by Borrower under any of
the Prior Debt Documents (as from time to time in effect);
(xiii) if Borrower shall cease for any reason to
maintain its status as a REIT under the Internal Revenue Code;
(xiv) a Change in Control shall occur; or
(xv) an Event of Default (as defined in the Other Loan
Agreement) shall occur under the Other Loan Agreement;
then and in every such Event of Default and at any time thereafter during the
continuance thereof, Agent may, in addition to any other rights or remedies
available to Agent and/or Lender pursuant to this Agreement and the other
Loan Documents or at law or in equity, take such action, without notice or
demand, that Required Lenders deem advisable to protect and enforce their
rights against Borrower and/or any Standby Purchaser, including declaring the
Indebtedness or any portion thereof to be immediately due and payable, and
may enforce or avail itself of any or all rights or remedies provided in the
Loan Documents, including all rights or remedies available at law or in
equity.
8.2 Remedies. Upon the occurrence and during the continuance of an
Event of Default, all or any one or more of the rights, powers, privileges
and other remedies available to Lenders under this Agreement or any of the
other Loan Documents or at law or in equity may be exercised, at the direc-
tion of the Required Lenders by Agent on behalf of Lenders at any time and
from time to time, whether or not all or any of the Indebtedness shall be
declared due and payable, and whether or not Agent on behalf of Lenders shall
have commenced any action for the enforcement of Lender's rights and remedies
under any of the Loan Documents.
8.3 Remedies Cumulative. The rights, powers and remedies of Agent and
Lenders under this Agreement shall be cumulative and not exclusive of any
other right, power or remedy which Agent and Lenders may have against Bor-
rower pursuant to this Agreement or the other Loan Documents, or existing at
law or in equity or otherwise. Agent's and Lenders' rights, powers and
remedies shall be concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as
Required Lenders may determine, to the fullest extent permitted by law, with-
out impairing or otherwise affecting the other rights and remedies of Agent
and Lenders permitted by law, equity or contract or as set forth herein or in
the other Loan Documents. No delay or omission to exercise any remedy, right
or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may
be deemed expedient. A waiver of one Default or Event of Default shall not
be construed to be a waiver of any subsequent Default or Event of Default or
to impair any remedy, right or power consequent thereon.
8.4 Gotham's Cure Rights. Notwithstanding anything contained herein
or in any other Loan Document, if there shall be a Default or Event of
Default by any Standby Purchaser (other than Gotham) under this Agreement or
any other Loan Document, or a Default or Event of Default by Borrower which
is due to any breach by any Standby Purchaser (other than Gotham) of any
representations, warranties, covenants or any other provision contained in
this Agreement or any other Loan Document (each such event, a "Standby
Purchaser Default"), then such Default or Event of Default may be cured in
accordance with the following procedures:
(a) Agent, promptly following its receipt of notice of such
Standby Purchaser Default, shall notify Gotham of the occurrence of
such Standby Purchaser Default (the "Standby Purchaser Notice");
(b) Gotham shall, within fifteen (15) days of receipt of
the Standby Purchaser Notice, elect, in a writing delivered to Agent,
to either: (i) assume all rights and obligations of the defaulting
Standby Purchaser under its respective Standby Purchase Agreement (the
"Alternate Standby Rights"), or (ii) decline to so assume the Alternate
Standby Rights. Failure by Gotham to respond within 15 days shall be
deemed to be a decision to decline to assume the Alternate Standby
Rights.
(c) If Gotham chooses to assume the Alternate Standby
Rights, each Gotham Standby Purchase Agreement shall be deemed to have
been amended to reflect Gotham's assumption of the Alternate Standby
Rights (with such assumption to be on a pro-rata basis among the
entities comprising Gotham, unless Gotham's notice sets forth a
different allocation for the assumption of the Alternate Standby
Rights), the rights of the defaulting Standby Purchaser so to purchase
shall be subject to Gotham's rights so to purchase and the Standby
Purchaser Default shall be deemed cured. If Gotham chooses to decline
to assume the Alternate Standby Rights, then such Standby Purchaser
Default shall constitute a Default or Event of Default as described in
Section 8.1 of this Agreement.
IX. MISCELLANEOUS
9.1 Survival. This Agreement and all covenants, agreements, repre-
sentations and warranties made herein and in the certificates delivered pur-
suant hereto shall survive the Closing Date, the making by Lenders of any
Loans hereunder and the execution and delivery to Agent of the Notes, and
shall continue in full force and effect so long as all or any of the Indebt-
edness is outstanding and unpaid. All covenants, promises and agreements in
this Agreement contained shall inure to the benefit of and be binding upon
the respective legal representatives, successors and assigns of the parties
hereto, provided that Borrower may not assign or transfer any of its rights
or obligations hereunder.
9.2 Lenders' or Agent's Discretion. Whenever pursuant to this Agree-
ment or any other Loan Document, Lenders or Agent exercise any right given to
any of them to approve, disapprove, make a determination, exercise discretion
or consent, or any arrangement or term is to be satisfactory to Lenders or
Agent, the decision of Lenders or Agent to approve, disapprove, make a
determination, exercise discretion or consent, or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as
otherwise specifically herein or in any other Loan Document provided) be in
the sole discretion of Lenders or Agent and shall be final and conclusive.
9.3 Governing Law.
(a) This Agreement was negotiated in the State of New York,
and made by Lenders and Agent and accepted by the Borrower in the State
of New York, and the proceeds of the Notes delivered pursuant hereto
were disbursed from the State of New York, which State the parties
agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby, and in all respects, including
matters of construction, validity and performance, this Agreement and
the obligations arising hereunder shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State and any applicable law of
the United States of America. To the fullest extent permitted by law,
Borrower hereby unconditionally and irrevocably waives any claim to
assert that the law of any other jurisdiction governs this Agreement
and the Notes. Lenders, Agent and Borrower hereby agree, in accordance
with Section 5-1401 of the New York General Obligations Law, that this
Agreement and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
(b) To the fullest extent permitted by applicable law, any
legal suit, action or proceeding against Lenders, Agent or Borrower
arising out of or relating to this Agreement shall be instituted in any
federal or state court in New York, New York (the "New York Courts"),
pursuant to Section 5-1402 of the New York General Obligations Law, and
Borrower waives any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding in the New York
Courts, and Borrower hereby irrevocably submits to the jurisdiction of
any such New York Court in any suit, action or proceeding. Borrower
does hereby designate and appoint Gotham Partners Management Co., LLC,
having an address at 110 East 42nd Street, New York, New York 10017,
Attention: William A. Ackman or at such other office in New York, New
York as it may direct, as its authorized agent to accept and
acknowledge on its behalf service of any and all process which may be
served in any such suit, action or proceeding in any federal or state
court in New York, New York, and agrees that service of process upon
said agent at said address and written notice of said service of Bor-
rower mailed or delivered to Borrower in the manner provided herein
shall be deemed in every respect effective service of process upon Bor-
rower, in any such suit, action or proceeding in the State of New York.
Borrower (i) shall give prompt notice to Agent of any changed address
of its authorized agent hereunder, (ii) may, at any time and from time
to time designate a substitute authorized agent with an office in New
York, New York (which office shall be designated as the address for
service of process), and (iii) shall promptly designate such a substi-
tute if its authorized agent ceases to have an office in New York, New
York or is dissolved without leaving a successor.
9.4 Modification, Waiver in Writing. Except as otherwise required by
this Section or where Agent is, pursuant to any of the Loan Documents,
authorized to act without the consent of the Lenders, no modification,
termination or waiver of any provisions of this Agreement or of any of the
other Loan Documents, nor consent to any departure therefrom, shall in any
event be effective, irrespective of any course of dealing between the
parties, unless the same shall be in a writing executed by Required Lenders;
provided, however, that, notwithstanding anything to the contrary in any of
the Loan Documents, Agent may amend any of the Loan Documents or waive any
condition or provision thereof if such amendment or waiver is of a technical
nature. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or
demand on Borrower, any Guarantor or any Standby Purchaser in any case shall
entitle Borrower, any Guarantor or any Standby Purchaser to any other or
further notice or demand in the same, similar or other circumstances. In the
case and to the extent of any waiver, the parties shall be restored to their
former positions and rights hereunder and under the other Loan Documents; but
no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon. No disbursement of an
Advance or of a portion thereof shall constitute a waiver of any Default,
Event of Default or condition to disbursement, nor shall such disbursement
preclude Agent on behalf of Required Lenders from declaring an Event of
Default and pursuing its and their remedies hereunder in the event such Event
of Default is not cured. Any Advance made by Lenders hereunder made prior to
or without the fulfillment by Borrower of all of the conditions precedent
thereto, whether or not known to Agent and/or Lenders, shall not constitute a
waiver by Agent and/or Lenders of the requirement that all conditions,
including the non-performed conditions, shall be satisfied with respect to
all future advances. This Agreement, together with the other Loan Documents,
sets forth the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating hereto, whether oral or written. Except as may be expressly
required by the Loan Documents, Required Lenders shall not, without the prior
written consent of all Lenders, (i) increase the principal amount of the
Loans, (ii) postpone any date fixed for payment of principal or interest on
the Loans, (iii) reduce the amount of any principal or interest payable with
respect to the Loans, (iv) release Borrower, any Guarantor or Standby Pur-
chaser or forgive or discharge all or any part of the Loans, in each event
whether or not with consideration, (v) change the definition of Required
Lenders, (vi) change the Commitment of any Lender, (vii) change this sentence
or the first sentence of Section 9.4, (viii) reduce the fees payable by
Borrower, (ix) permit Borrower to assign any of its rights or obligations
under the Loan Documents, (x) consent to any amendment or modification to the
Loan Documents which is material and is favorable to Borrower, (xi) waive
any Event of Default, or (x) modify Section 11.1.
9.5 Delay Not a Waiver. Neither any failure nor any delay on the part
of Agent or any Lender, in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Notes or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or
constitute a waiver thereof, nor shall a single or partial exercise thereof
preclude any other future exercise, or the exercise of any other right,
power, remedy or privilege. In particular, and not by way of limitation, by
accepting payment after the due date of any amount payable under this Agree-
ment, the Notes or any other Loan Document, Lenders and Agent shall not be
deemed to have waived any right either to require prompt payment when due of
all other amounts due under this Agreement, the Note or the other Loan Docu-
ments, or to declare a default for failure to effect prompt payment of any
such other amount.
9.6 Notices. All notices, consents, approvals and requests required
or permitted hereunder or under any other Loan Document shall be given in
writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, or (c) telecopier (with answer
back acknowledged and hard copy sent by hand or one of the methods described
in clause (a) or (b) above), addressed if to Lenders at their addresses set
forth above, if to Agent at its address set forth on the first page hereof,
and if to Borrower at the address of Borrower set forth above (with a copy to
Gotham Partners Management Co., LLC, 110 East 42nd Street, New York, New York
10017, Attention: William Ackman), or at such other address as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section. A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or certified
mail, when delivered or the first attempted delivery on a Business Day; in
the case of expedited prepaid delivery and telecopy, upon the first attempted
delivery on a Business Day; or if telecopied, upon receipt.
9.7 Trial By Jury. BORROWER, AGENT AND EACH LENDER EACH HEREBY AGREES
TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
AND THE LENDER/BORROWER RELATIONSHIP BETWEEN THEM. The scope of this waiver
is intended to encompass any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common laws and
statutory claims. Borrower, Agent and each Lender each acknowledges that
this waiver is a material inducement to enter into this Agreement, and that
each will continue to rely on the waiver in their related future dealing.
Borrower warrants and represents that it has reviewed this waiver with its
legal counsel, and that it knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DOCUMENTS OR AGREE-
MENTS RELATING TO THE LOANS. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.
9.8 Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
9.9 Severability. If any provision of this Agreement or any of the
other Loan Documents or the application thereof to any Person or circumstance
shall, for any reason and to any extent, be invalid or unenforceable, then
neither the remainder of this Agreement or the other Loan Documents nor the
application of such provision to other Persons or circumstances nor the other
instruments referred to hereinabove shall be affected thereby, but rather
shall be enforced to the greatest extent permitted by applicable Legal
Requirements.
9.10 Preferences. To the extent any Person makes a payment or payments
to Agent for Borrower's benefit, which payment or proceeds or any part there-
of are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds received, the obliga-
tions hereunder or under any other Loan Document or part thereof intended to
be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Agent.
9.11 Waiver of Notice. Borrower shall not be entitled to any notices
of any nature whatsoever from Agent or Lenders except with respect to matters
for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Agent or Lenders to Borrower
and except with respect to matters for which Borrower is not, pursuant to
applicable Legal Requirements, permitted to waive the giving of notice. Bor-
rower hereby expressly waives the right to receive any notice from Agent or
Lenders with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice
by Agent or Lenders to Borrower.
9.12 Remedies of Borrower. In the event that a claim or adjudication
is made that Agent or Lenders or their agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement
or the other Loan Documents, Agent, Lenders or such agent, as the case may
be, have an obligation to act reasonably or promptly, Borrower agrees that
neither Agent, Lenders nor their agents shall be liable for any monetary
damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Agent or any Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment. In any such action, the prevailing party shall be entitled to
recover its reasonable attorneys' fees and disbursements incurred in connec-
tion with such action from the other party.
9.13 Non-Exculpation. Notwithstanding anything to the contrary in this
Agreement or the other Loan Documents, Borrower's obligations to pay the
principal of and interest on the Loans, the Notes and any and all other
amounts payable by Borrower hereunder and under the other Loan Documents, the
performance by Borrower of its respective obligations hereunder and under the
other Loan Documents, and Borrower's liability for its representations,
warranties and covenants hereunder and under the other Loan Documents, shall
be full recourse obligations of Borrower.
9.14 Expenses; Indemnity.
(a) Borrower covenants and agrees to reimburse Indemnitees
and each of them upon receipt of written notice from any Indemnitee for
all loss, cost, damage, expense or liability of any kind or nature
whatsoever (including reasonable attorneys' fees and disbursements) in-
curred by such Indemnitee in connection with (i) the preparation,
negotiation, execution, delivery and administration of this Agreement,
the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby (ii) the negotiation, preparation,
execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement, the other Loan Docu-
ments, and any other documents or matters if requested by Borrower or
required by Agent or Lenders; (iii) reasonable fees and expenses of
counsel for providing to Agent and Lenders all required legal opinions;
(iv) enforcing or preserving any rights in response to third party
claims or prosecuting or defending any action or proceeding or other
litigation, in each case against, under, affecting or relating to Bor-
rower, any Guarantor, this Agreement or the other Loan Documents; and
(v) enforcing any obligations of, or paying or performing any defaulted
obligations of, or collecting any payments due from, Borrower or any
Guarantor or Standby Purchaser under this Agreement, the other Loan
Documents or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement or any of the other
Loan Documents in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings in respect of Borrower or any Guarantor or
Standby Purchaser or any of its successors; provided, however, that
Borrower shall not be liable for the payment of any costs and expenses
described in clauses (i) through (v) above to the extent the same arise
by reason of the gross negligence, illegal acts, fraud or willful
misconduct of the Indemnitees, their agents, contractors or employees.
(b) In addition to but without duplication of the payment
of expenses pursuant to subsection (a) above, whether or not the trans-
actions contemplated hereby shall be consummated, Borrower agrees to
indemnify, pay and hold harmless the Indemnitees, and each of them,
from and against any and all other losses, costs, damages, expenses or
liabilities of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for such Indemnitee in connection
with any investigative, administrative or judicial proceeding commenced
or threatened, whether or not such Indemnitee shall be designated a
party thereto), that may be imposed on, incurred by, or asserted
against such Indemnitee in any manner relating to or arising out of
(i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in this Agreement or any Loan
Document, or (ii) the use or intended use of the proceeds of the Loans
(collectively, the "Indemnified Liabilities"); provided, however, that
Borrower shall not have any obligation to an Indemnitee hereunder to
the extent that such Indemnified Liabilities arise from gross negli-
gence, illegal acts, fraud or willful misconduct of such Indemnitee,
its agents, contractors or employees. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees
or any of them. Borrower shall not, without the prior written consent
of the applicable Indemnitee, settle or compromise any claim, or permit
a default or consent to the entry of judgment in respect thereof,
unless such settlement, compromise or consent includes, as an
unconditional term thereof, the giving by the claimant to the
Indemnitee of an unconditional release from all liability in respect of
such Claim.
(c) Nothing herein shall limit the indemnity made by
Borrower to and in favor of Agent and Lenders in the Standby Purchase
Agreements.
(d) Borrower hereby acknowledges and agrees that each
Indemnitee (other than each Lender) is an intended third-party bene-
ficiary of this Section 9.14.
Promptly after receipt by an Indemnitee of notice of any claim or
the commencement of any action for which indemnity may be sought against Bor-
rower under this Agreement or any other Loan Document, such Indemnitee shall
notify Borrower in writing of the receipt of such claim. Borrower shall be
entitled to assume the defense of any claim with counsel reasonably
satisfactory to such Indemnitee, and after notice from Borrower to such
Indemnitee of its election so to assume and actual assumption of the defense
thereof with counsel reasonably satisfactory to such Indemnitee, Borrower
shall not be liable to such Indemnitee under any indemnity agreement set
forth herein or in any other Loan Document for any legal or other expense
subsequently incurred by such Indemnitee in connection with the defense
thereof other than reasonable fees and expenses of separate counsel retained
by such Indemnitee unless (a) Borrower and such Indemnitee shall have agreed
to the retention of such subsequent counsel or (b) such Indemnitee shall have
reasonably concluded that representation of Borrower and such Indemnitee by
the same counsel would be inappropriate due to actual or potential
conflicting interests between them. Borrower shall have no liability for any
settlement of any action or claim effected without its consent, but if
settled with such consent or if there be a final judgment for the plaintiff
not stayed by appeal, Borrower agrees to indemnify the Indemnitee from and
against any loss or liability required to be paid by the Indemnitee by reason
of such settlement or judgment if and to the extent required by, and subject
to the limitations of, the terms of this Agreement. Borrower agrees to
consult in advance with Agent with respect to the terms of any proposed
waiver, release or settlement of any claim, liability, proceeding or other
action against Borrower to which any Indemnitee may also be subject, and to
use reasonable efforts to afford Agent and any such Indemnitee the opportu-
nity to join in such waiver, release or settlement.
9.15 Exhibits, Schedules Incorporated. The Exhibits and Schedules
annexed hereto are hereby incorporated herein as a part of this Agreement
with the same effect as if set forth in the body hereof.
9.16 Offsets, Counterclaims and Defenses. Any assignee of any Lender's
interest in and to this Agreement, the Notes or the other Loan Documents
shall take the same free and clear of all offsets, counterclaims or defenses
which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or pro-
ceeding brought by any such assignee upon such documents and any such right
to interpose or assert any such unrelated offset, counterclaim or defense in
any such action or proceeding is hereby expressly waived by Borrower.
9.17 No Joint Venture or Partnership. Borrower and Lenders intend that
the relationships created hereunder and under the other Loan Documents and be
solely that of borrower and lender. Nothing contained herein or therein (i)
shall constitute any Lender or any of their Affiliates as members of any
partnership, joint venture, association or other separate entity with Bor-
rower, its Affiliates or any other entities, (ii) shall be construed to
impose any liability as such on any Lender or any of their Affiliates, or
(iii) shall constitute a general or limited agency or be deemed to confer on
either party hereto any express, implied or apparent authority to incur any
obligation or liability on behalf of the other.
9.18 Publicity. On and after the Closing Date, Lenders and their
Affiliates shall be entitled, but not required, to advertise the transactions
contemplated hereby from time to time in media selected by Lenders or their
Affiliates at their expense. On and after the Closing Date, Borrower shall
be entitled, but not required, to advertise the same from time to time in
media selected by Borrower at its expense, provided that Borrower's adver-
tisements shall include a disclosure, in each case approved in writing by
Agent (not to be unreasonably withheld or delayed), that Lenders originated
the Loans.
9.19 Waiver of Counterclaim. Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Agent, any Lender or their agents, but Bor-
rower does not waive its right to assert any such claim in a separate action.
9.20 Conflict; Construction of Documents. In the event of any conflict
between the provisions of this Agreement and any of the other Loan Documents,
the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by counsel in connection with the
negotiation and drafting of the Loan Documents and other documents and
instruments executed and delivered in connection therewith and that such Loan
Documents and other documents and instruments shall not be subject to the
principle of construing their meaning against the party which drafted the
same.
9.21 Brokers and Financial Advisors. Borrower hereby represents that
it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the transactions contemplated by
this Agreement. Borrower hereby agrees to indemnify and hold harmless
Lenders and their Affiliates and their respective agents, representatives and
employees from and against any and all claims, liabilities, costs and
expenses of any kind in any way relating to or arising from a claim by any
Person that such Person acted on behalf of Borrower or its Affiliates in
connection with the transactions contemplated herein. The provisions of this
Section 9.21 shall survive the expiration and termination of this Agreement
and the repayment of the Indebtedness.
9.22 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior agreements
among or between such parties, whether oral or written, are superseded by the
terms of this Agreement and the other Loan Documents.
9.23 Maximum Rate of Interest. This Agreement, the Notes and the other
Loan Documents are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the Loans at a rate that
could subject Lenders to either civil or criminal liability as a result of
such rate being in excess of the highest lawful rate permitted under
applicable usury law to be charged to Borrower (the "Maximum Rate"). If, by
the terms of this Agreement, the Notes or any of the other Loan Documents,
Borrower is at any time required or obligated to pay interest on the Loans at
a rate in excess of such Maximum Rate, the rate of interest applicable to the
Loans shall be deemed to be immediately reduced to such Maximum Rate and the
interest payable shall be computed at such Maximum Rate and all prior
interest payments in excess of such Maximum Rate shall be deemed to have been
the result of a mistake on the part of both Borrower and Lenders, and Lenders
shall promptly credit such excess (to the extent only of such interest pay-
ments in excess of the Maximum Rate) against the unpaid principal amount of
the Loans to which such excess may lawfully be credited, and any portion of
such excess payments not capable of being so credited shall be refunded to
Borrower or otherwise disposed of as directed by the order of a court of
competent jurisdiction.
9.24 Attorneys' Fees. In the event of any litigation, arbitration or
other dispute resolution proceedings between the parties hereto arising out
of or relating to this Agreement or the transactions contemplated hereby, the
party prevailing in such litigation, arbitration or proceeding shall be
entitled to recover from the other party the reasonable attorney's fees and
disbursements incurred by such prevailing party in connection with such
litigation, arbitration or proceeding.
9.25 Counterparts. This Agreement and any amendments, waivers,
consents or supplements hereto or in connection herewith may be executed in
any number of counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.
9.26 Application of Payments. Except as otherwise provided in this
Agreement and the other Loan Documents, each and every payment made by Bor-
rower to Agent in accordance with the terms of this Agreement and the other
Loan Documents and all other proceeds received by Agent with respect to the
Indebtedness shall be applied in the following order of priority: (i) to pay
the costs and expenses of Agent and Lenders for which Agent and Lenders are
entitled to reimbursement from Borrower under this Agreement or the other
Loan Documents, and that have not previously been reimbursed by Borrower,
together with accrued interest thereon (if any); then (ii) to ratably pay
accrued interest on the Loans, including interest accrued at the Default Rate
(if any); and then (iii) to ratably reduce the outstanding principal amount
of the Loans.
9.27 Assignments and Participations.
(a) Each Lender may assign, to one or more banks or other
financial institutions regularly engaged in making or acquiring loans,
all or a portion of its interests, rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it); provided, however, that (i) Agent (in its
sole discretion) must give its prior written consent to such
assignment, (ii) if no Event of Default and/or monetary Default shall
then exist and be continuing, Borrower must give its prior written
consent to such assignment, which consent shall not be unreasonably
withheld or delayed and if an Event of Default or a monetary Default
shall be so continuing, then Borrower's consent shall not be required,
(iii) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Lender's rights and obligations under
this Agreement as a Lender and the other Loan Documents, (iv) the
aggregate amount of the Loans and Commitment of the assigning Lender
subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered
to Agent) shall not be less than $10,000,000 unless such Lender's then
outstanding Loans and Commitment is less than $10,000,000 in which
event such Lender may assign the aggregate amount of the Loans made by
such Lender and its entire Commitment to make Loans, (v) the parties to
each such assignment shall execute and deliver to Agent an Assignment
and Acceptance, and a processing fee of $5,000 and (vi) if no Default
and/or Event of Default shall then be continuing, Bankers agrees to
retain at least a 22.2222% interest in the Loans. Upon the later of
acceptance pursuant to this Section, and the effective date specified
in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations
under this Agreement and the other Loan Documents, and (B) the assign-
ing Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement and the other
Loan Documents (and, in the case of an Assignment and Acceptance cover-
ing all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement and the other Loan Documents, such
assigning Lender shall cease to be a party hereto, but it shall
continue to receive the benefit of the indemnifications referred to or
provided for in, Section 9.14). Borrower shall execute replacement
Notes (in the form of Exhibit B) in connection with any such
assignment.
(b) By executing and delivering an Assignment and Accep-
tance, the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other and the other
parties hereto as follows: (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest
being assigned thereby free and clear of any adverse claim, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or represen-
tations made in or in connection with this Agreement or any of the
other Loan Documents, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents, or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of Borrower or any other Person or the per-
formance or observance by Borrower any other Person of any of its obli-
gations under this Agreement or any of the other Loan Documents, or any
other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the
other Loan Documents and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will
independently and without reliance upon Agent, such assigning Lender or
any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such
assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of
this Agreement and the other Loan Documents are required to be per-
formed by it as a Lender.
(c) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and assignee together with
the processing fee referred to in Section 9.27(a) above and the written
consent of Agent (and of Borrower, if required) to such assignment
Agent shall (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt
notice thereof to Borrower and Lenders.
(d) Each Lender may without the consent of Borrower, but
upon the prior written consent of Agent, sell participations to one or
more banks or other financial institutions regularly engaged in making
or acquiring loans in all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and
the Loans owing to it); provided, however, that (i) such Lender's obli-
gations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
entities shall be entitled to the benefit of the provisions contained
in Sections 2.5, 2.9, 2.10 and 9.14 as if such Participant were a
Lender, and (iv) Borrower, Agent and other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender
shall retain the sole right to enforce the obligations of Borrower,
Guarantors and Standby Purchasers relating to the Loans and to approve
any amendment, modification or waiver of any provision of this
Agreement or any of the other Loan Documents (but with respect to the
matters referred to in the last sentence of Section 9.4 a Lender may
allow its participant to have approval rights with respect thereto).
(e) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant any information relating to Borrower any Guarantor or
any Standby Purchaser, their respective Affiliates furnished to each
such Lender by or on behalf of Borrower, Guarantors and/or Standby Pur-
chasers.
(f) Any Lender which is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof shall, and if pursuant to Section
9.27(a), any interest in this Agreement is assigned to any other bank
or financial institution, the assigning Lender shall cause the
assignee, concurrently with the effectiveness of such assignment to
(i) furnish to Borrower either U.S. Internal Revenue Service Form 4224
or U.S. Internal Revenue Form 1001 (or such other forms or certificates
wherein such assignee claims entitlement to complete exemption from or
reduction of U.S. federal withholding tax on all interest payments
hereunder) and (ii) agree (for the benefit of Borrower) to provide Bor-
rower a new form upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable
U.S. laws and regulations and amendments duly executed and completed by
such assignee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
Notwithstanding anything to the contrary herein, nothing in this
Section 9.27(f) shall require a Lender to provide a form which it is
not legally permitted to provide.
9.28 Setoff. Upon the occurrence of an Event of Default, Agent and
each Lender is hereby authorized, at any time or from time to time, without
prior notice to Borrower or any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness or property at any
time held or owing by Agent or any Lender to or for the credit or the account
of Borrower, whether or not related to this Agreement or any transaction or
occurrence hereunder, against and on account of the indebtedness and other
liabilities of Borrower to Agent or any Lender hereunder, under the Notes
and/or under any of the other Loan Documents, whether or not Agent or any
Lender shall have made any demand hereunder and although such liabilities, or
any of them, shall be contingent or unmatured. The rights and remedies
granted to Agent and each Lender under this Section shall be in addition to,
and not in substitution for, any rights or remedies, including, without
limitation, any right of set-off or banker's lien, to which Agent or any
Lender may otherwise be entitled.
9.29 Liability of Borrower's Trustees, etc. Notwithstanding any
provision of this Agreement to the contrary, this Agreement has been executed
and delivered by a duly authorized officer of Borrower, for and on behalf of
Borrower's trustees. The Agent and each Lender each acknowledges that
neither the trustees of Borrower, nor any additional or successor trustees of
Borrower, nor any beneficiary, officer, employee or agent of Borrower, shall
have any personal, individual liability hereunder or under any of the Loan
Documents.
9.30 Employee Termination Expenses. Notwithstanding anything herein to
the contrary, for the purposes of this Agreement and of the Line of Credit
Facility (as incorporated herein), including, without limitation, for the
purposes of Section 7.20 of the Line of Credit Facility, employee termination
expenses of up to $8,500,000 incurred from and after the date hereof shall be
disregarded.
9.31 Conflicts with Intercreditor Agreement. If any term or provision
of this Agreement relating to the application of monies conflicts with the
provisions of the Intercreditor Agreement, the terms and provisions of the
Intercreditor Agreement shall take precedence over such conflicting
provisions of this Agreement.
X. AGENT; SUCCESSOR AGENT
10.1 Appointment. Bankers Trust Company is hereby appointed Agent
hereunder and under the other Loan Documents and each Lender hereby
authorizes Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. Agent agrees to act upon the
express conditions contained in this Agreement and the other Loan Documents,
as applicable. The provisions of this Article X are solely for the benefit
of Agent and Lenders and Borrower shall not have any right as third-party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Borrower or any
Affiliate of Borrower.
10.2 Powers and Duties; General Immunity.
10.2.1 Powers; Duties. Each Lender irrevocably authorizes
Agent to deal and communicate with Borrower on such Lender's behalf in all
respects under and in connection with the Loan Documents. Borrower shall
have no obligation to recognize or deal directly with Lenders nor to comply
with any demand or requirement made by any Lender (other than through Agent),
and no Lender shall deal directly with Borrower with respect to the rights,
benefits and obligations of Borrower under the Loan Documents or any one or
more documents or instruments in respect thereof. Borrower shall be entitled
to rely conclusively on the actions of Agent as agent to bind Lenders,
notwithstanding that the particular action in question may, pursuant to the
terms of such agreements as may exist from time to time among the Agent and
Lenders, be subject, as among the Agent and Lenders, to the approval or
direction of Lenders or any specified percentage of Lenders. Agent may exer-
cise its powers, rights and remedies and perform its duties hereunder by or
through its agents or employees. Agent shall not have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as
to impose upon Agent any obligations in respect of this Agreement or any of
the other Loan Documents except as expressly set forth herein or therein.
10.2.2 Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Agent in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans, Agent
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include Agent in
its individual capacity. Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust, financial
advisory or other business with Borrower or any Standby Purchaser or any of
their respective Affiliates as if it were not performing the duties specified
herein, and may accept fees and other consideration from Borrower or any
Standby Purchaser for services in connection with this Agreement and other-
wise without having to account for the same to Lenders.
10.3 Representations and Warranties; No Responsibility for Appraisal of
Creditworthiness. Each Lender hereby acknowledges that such Lender has been
furnished with copies of such Loan Documents, financial statements, certifi-
cates, instruments, documents, affidavits, resolutions, reports, and agree-
ments (collectively, the "Pre-Closing Documentation") as such Lender has
deemed necessary to make its own credit analysis and decision with respect to
the Loans. Each Lender acknowledges that it has, independently and without
reliance upon Agent and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and to extend credit to the Borrower on the terms set forth in
this Agreement and the other Loan Documents. Each Lender also acknowledges
to Agent that such Lender will, independently and without reliance upon Agent
and based on the Pre-Closing Documentation and such other documents and
information as it shall deem appropriate at the time, make and continue to
make its own decision in taking or not taking action with respect to the
Loans. Lenders hereby acknowledge that Agent (i) shall not be responsible to
Lenders for any statements, warranties, or representations (written or other-
wise) by any party other than Agent made in or in connection with the Pre-
Closing Documentation, the Loans, or the Loan Documents, or the financial
condition of Borrower or the Standby Purchasers, any indemnitor or any other
person; and (ii) shall not be responsible to Lenders for the due execution,
legality, validity, enforceability, genuineness, sufficiency or
collectability of any of the Loan Documents or any other instrument or docu-
ment furnished pursuant thereto or in connection with the Loans.
10.4 Successor Agent. Agent may resign at any time by giving thirty
(30) days' prior written notice thereof to Lenders and Borrower, and Agent
may be removed for cause by Lenders by written Lender Approval, if such
written instrument is delivered to Borrower. Upon any such notice of
resignation or any such removal, Lenders shall have the right, by Lender
Approval, upon five (5) Business Days' notice to Borrower, to appoint a suc-
cessor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent and the retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Agent, the provisions of this
Article X shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
XI. OFFERING
11.1 Rights Offering. Borrower shall use its best efforts to file with
the Securities and Exchange Commission within forty-five (45) days from the
Closing Date either (i) a registration statement or (ii) to the extent that
Borrower in good faith concludes that the Offering (as defined below) may be
conducted pursuant to a prospectus supplement to Borrower's existing shelf
registration statement (file no. 333-31695), a prospectus supplement (in
which case the number of days referred to above shall be sixty (60) days) or
(iii) a post-effective amendment to such shelf registration statement, in
each case in such form such that when the same is declared effective by the
Securities and Exchange Commission or, in the case of clause (ii) above,
filed with the Securities and Exchange Commission, Borrower will be able to
consummate an offering entitling holders of equity securities of Borrower to
purchase additional equity interests in Borrower on a pro rata basis (the
"Offering") which, if fully subscribed, would result in aggregate proceeds to
Borrower of an amount at least sufficient to enable Borrower to prepay, upon
the consummation of the Offering, the Loans and the Other Loans (and all
interest and other fees or other amounts due in connection with the Loans and
the Other Loans), and Borrower shall use its best efforts to cause any such
registration statement or post-effective amendment referred to in clause (i)
or (iii) above to be declared effective within ninety (90) days from the
Closing Date. Borrower shall use its best efforts to take, or cause to be
taken, any and all further action or actions necessary or advisable to be
taken in order to enable the Offering to be consummated as contemplated by
this Section 11.1, including but not limited to the distribution of a
prospectus or prospectus supplement pursuant to any of the applicable
registration statements referred to above. It shall be an Event of Default
if the registration statement or post-effective amendment is not declared
effective or if the prospectus supplement is not filed with the Securities
and Exchange Commission, as the case may be, on or prior to the Initial
Maturity Date.
11.2 Consummation. After the filing of the registration statement,
post-effective amendment or prospectus supplement referred to in Section 11.1
above, for the Offering pursuant to Section 11.1, Borrower shall thereafter
diligently and continuously use its best efforts to consummate the Offering.
11.3 Proceeds of Offering. Upon Borrower's receipt of any proceeds of
the Offering, Borrower shall cease to have any right to borrow under this
Agreement.
11.4 Pricing of Rights Offering. The pricing of the securities to be
offered pursuant to the Offering shall be consistent with the pricing
parameters set forth in Section 7(d) of the Standby Purchase Agreements.
11.5 Waiver of Ownership Limitations. Borrower hereby covenants and
agrees to use its best efforts to cause to be issued to Gotham a waiver of
the ownership limitations set forth in Article VI, Section 6 of the By-Laws
of Borrower, in form and substance reasonably satisfactory to Gotham, to the
extent necessary (in light of all other securities of Borrower directly,
indirectly, beneficially or constructively owned or controlled by or subject
to the power to vote of (in each case, within the meaning of Borrower's
Organizational Documents, the Securities Exchange Act of 1934, as amended and
the rules and regulations thereunder, and the Internal Revenue Code and the
rules and regulations thereunder) Gotham to permit Gotham to acquire the
securities it may become obligated to purchase pursuant to the Standby
Purchase Agreement to which Gotham is a party; provided, however, that
notwithstanding the foregoing or any other provision of this Agreement,
(i) Borrower shall not be obligated to take any action hereunder which would
prevent Borrower from qualifying or continuing to qualify for taxation under
the Internal Revenue Code as a REIT, and (ii) Borrower shall not be prevented
or restricted hereunder with respect to taking any action which the Board of
Trustees of Borrower shall deem advisable to prevent disqualification of
Borrower for taxation under the Internal Revenue Code as a REIT.
11.6 Indemnification.
(a) Borrower agrees to indemnify and hold harmless Agent and
each Lender against any and all losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements
(and any and all actions, suits, proceedings and investigations in respect
thereof and any and all legal and other costs, expenses and disbursements in
giving testimony or furnishing documents in response to a subpoena or
otherwise), including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating, preparing or defending
any such action, suit, proceeding or investigation (whether or not in
connection with litigation in which any Agent or any Lender is a party),
directly or indirectly, caused by, relating to, based upon, arising out of,
or in connection with, including, without limitation, any act or omission by
Agent or such Lender in connection with the Offering or any registration
statement or any prospectus relating to the Offering.
(b) These indemnification provisions shall be in addition to any
liability which Borrower may otherwise have to Agent or Lenders or the
persons indemnified below in this sentence and shall extend to the following:
Agent, Lenders, their respective affiliated entities, partners, employees,
legal counsel, agents and controlling persons (within the meaning of the
federal securities laws), and the officers, directors, employees, legal
counsel, partners, agents and controlling persons of any of them. All
references to Agent and/or Lender in these indemnification provisions shall
be understood to include any and all of the foregoing indemnitees.
(c) If any action, suit, proceeding or investigation is
commenced, as to which Agent or any Lender proposes to demand
indemnification, it shall notify Borrower with reasonable promptness;
provided, however, that any failure by Agent or any Lender to notify Borrower
shall not relieve Borrower from its obligations hereunder. Agent or any such
Lender, as the case may be, shall have the right to retain counsel of its own
choice to represent it, and Borrower shall pay the reasonable fees, expenses
and disbursements of such counsel; and such counsel shall, to the extent
consistent with its professional responsibilities, cooperate with Borrower
and any counsel designated by Borrower. Borrower shall not be liable for any
settlement of any claim against Agent or any Lender made without Borrower's
prior written consent, which consent shall not be unreasonably withheld.
Borrower shall not, without the prior written consent of Agent or any such
Lender, as the case may be, settle or compromise any claim, or permit a
default or consent to the entry of any judgment in respect thereof, unless
such settlement, compromise or consent includes, as an unconditional term
thereof, the giving by the claimant to Agent or any such Lender, as the case
may be, of an unconditional release from all liability in respect of such
claim.
(d) In order to provide for just and equitable contribution, if
a claim for indemnification pursuant to these indemnification provisions is
made but it is found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) that such indemnification may not be enforced
in such case, even though the express provisions hereof provide for
indemnification in such case, then Borrower, on the one hand, and Agent or
any such Lender, as the case may be, on the other hand, shall contribute to
the losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses, and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by
Borrower, on the one hand, and Agent or any such Lender, as the case may be,
on the other hand, and also the relative fault of Borrower, on the one hand,
and Agent or any such Lender, as the case may be, on the other hand, in
connection with the statements, acts or omissions which resulted in such
losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses or disbursements and the relevant equitable
considerations shall also be considered. No person found liable for a
fraudulent misrepresentation shall be entitled to contribution from any
person who is not also found liable for such fraudulent misrepresentation.
Notwithstanding the foregoing, neither Agent nor any Lender shall be
obligated to contribute any amount hereunder that exceeds the amount of fees
previously received by Agent or such Lender, as the case may be, pursuant to
this Agreement.
(e) These indemnification provisions and the provisions of
Section 9.14 shall survive any termination of this Agreement and thereafter
shall remain operative and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized representatives, all as of the
day and year first above written.
LENDER and AGENT:
BANKERS TRUST COMPANY
By: /s/ Alexander Johnson
------------------------------
Name: Alexander Johnson
Title: Managing Director
LENDERS:
BANKBOSTON, N.A.
By:/s/ Paul F. DiVito
---------------------------------
Name: Paul F. DiVito
Title: Managing Director
WELLSFORD CAPITAL
By:/s/ Gregory F. Hughes
-------------------------------
Name: Gregory F. Hughes
Title:Chief Financial Officer
BORROWER:
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
By: /s/ Thomas Kmiecik
------------------------------
Name: Thomas Kmiecik
Title: Senior Vice President
Treasurer
PROMISSORY NOTE
$15,000,000
Dated as of August 11, 1998
THIS PROMISSORY NOTE (as amended, restated, supplemented or
otherwise modified from time to time, this "Note") is made by FIRST UNION
REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, an Ohio business trust
("Borrower"), having an address at Suite 1900, 55 Public Square, Cleveland,
Ohio 44113-1937, Attention: William Ackman, in favor of WELLSFORD CAPITAL, a
Maryland real estate investment trust (together with its successors and
assigns hereunder, "Lender"), whose address is 610 Fifth Avenue, New York,
New York 10020.
Section 1. Promise to Pay.
FOR VALUE RECEIVED, Borrower hereby promises to pay to the order
of Lender, on or before the Initial Maturity Date (as defined in the Loan
Agreement, defined below), or if the Loan is extended pursuant to Section 2.6
of the Loan Agreement, on or before the Initial Extension Maturity Date or
the Final Extension Maturity Date (both as defined in the Loan Agreement), as
applicable (such final maturity date, the "Maturity Date"), the principal sum
of Fifteen Million Dollars in U.S. dollars (U.S.$15,000,000), or, if less,
the then unpaid principal amount of the Loan made to Borrower by Lender
pursuant to that certain Fixed Rate Loan Agreement dated as of even date
herewith, by and among Borrower, Lender, Bankers Trust Company, as agent, and
the other lenders named therein (as amended, restated, replaced, supplemented
or otherwise modified from time to time, the "Loan Agreement"; capitalized
terms used herein without definition shall have the meanings ascribed to
those terms in the Loan Agreement). Borrower also promises to pay interest
on the unpaid principal amount hereof as provided herein.
Section 2. Interest.
a. Accrual. Subject to the other provisions of this Note and
Loan Documents, interest shall accrue on the unpaid principal amount hereof
from the Closing Date through the Maturity Date at the Interest Rate.
b. Interest Payments. On each Interest Payment Date, Borrower
shall pay to Lender all accrued and unpaid interest at the Interest Rate for
the Interest Period then ended.
c. Default Rate. Upon the occurrence and during the
continuation of any default in the payment of principal or interest in
respect of the Loan, or any fees or other amounts owed by Borrower under this
Note, the Loan Agreement or any of the other Loan Documents, the principal
amount hereof and, to the extent permitted by applicable law, any interest
payments thereon not paid when due and any fees and other amounts then due
and payable under this Note, the Loan Agreement or any of the other Loan
Documents, shall thereafter bear interest (including post-petition interest
in any proceeding under the Bankruptcy Code or other applicable bankruptcy
laws) payable upon demand at a rate (the "Default Rate") equal to the greater
of four percent (4%) per annum in excess of the Interest Rate and four
percent (4%) per annum in excess of the Prime Rate. Payment or acceptance of
interest at the Default Rate is not a permitted alternative to timely payment
and shall not constitute a waiver of any Default or Event of Default or an
amendment to this Note or any other Loan Document and shall not otherwise
prejudice or limit any rights or remedies of Lender.
d. Manner of Payment. Each payment hereunder shall be made in
the manner specified in Section 2.5 of the Loan Agreement.
e. Computation of Interest. Interest payable hereunder shall
be computed on the basis of a 360-day year and the actual number of days
expired in the related Interest Period. In computing interest on the Loan,
the first day of an Interest Period and the last day of such Interest Period
shall be included (it being understood that no day shall be included in more
than one Interest Period).
f. Usury Laws. It is the intention of Borrower and Lender that
no provision of this Note or any other Loan Document shall require the
payment of interest on the Loan at a rate that exceeds the highest rate
permitted under any applicable usury law (the "Maximum Rate").
Notwithstanding anything to the contrary contained herein or in any other
Loan Document, Borrower shall not be obligated to make any payment hereunder
or under any other Loan Document to the extent (but only to the extent) that
such payment would result in the payment of interest at a rate in excess of
the Maximum Rate. If, by the terms of this Note or any other Loan Document,
Borrower is at any time required or obligated to pay interest on the Loan at
a rate in excess of such Maximum Rate, the rate of interest applicable to the
Loan shall be deemed to be immediately reduced to such Maximum Rate, and the
interest payable shall be computed at such Maximum Rate, and all prior
interest payments in excess of such Maximum Rate shall be deemed to have been
the result of a mistake on the part of both Borrower and Lender. Any monies
collected by Lender that constitute interest in excess of the Maximum Rate
shall be applied to the unpaid principal amount of the Loan to which such
excess may lawfully be credited, and any portion of such excess payment not
capable of being so credited shall be refunded to Borrower or otherwise
disposed of as directed by the order of a court of competent jurisdiction.
Section 3. Unscheduled Prepayments.
This Note is subject to voluntary and mandatory prepayment in
whole or in part prior to the Maturity Date only as provided in Section 2.3
of the Loan Agreement. Borrower shall pay a prepayment premium in connection
with any prepayment, if applicable, as and to the extent provided in the Loan
Agreement.
Section 4. Loan Agreement.
This Note is one of the "Notes" referred to in, is issued pursuant
to, and is entitled to the benefits of, the Loan Agreement, to which
reference is made for a more complete statement of the terms and conditions
under which the Loan evidenced hereby was made and is to be repaid. This
Note is entitled to the benefits of the Guaranties, if any, and the other
Loan Documents.
Section 5. Event of Default.
Upon the occurrence of an Event of Default, the principal of and
accrued interest on this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in
the Loan Agreement.
Section 6. Miscellaneous.
Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
The proceeds of this Note were or are to be disbursed from the
State of New York, which State the parties agree has a substantial
relationship to the parties and to the underlying transaction embodied
hereby, and in all respects, including matters of construction, validity and
performance, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES. To the fullest extent
permitted by law, Borrower hereby unconditionally and irrevocably waives any
claim to assert that the law of any other jurisdiction governs this Note, and
Lender and Borrower hereby agree, in accordance with Section 5-1401 of the
New York General Obligations Law, that this Note shall be governed by and
construed in accordance with the laws of the State of New York.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement, and no provision of
this Note or the Loan Agreement, shall alter or impair the obligations of
Borrower, which are absolute and unconditional, to pay the principal of,
interest on, and any applicable prepayment premium with respect to, this Note
at the place, at the respective times and in the manner prescribed herein and
in the Loan Agreement. The provisions of this Note are subject to Section
9.13 of the Loan Agreement, which is incorporated herein by this reference as
if set forth in full.
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed
by its duly authorized representative as of the day and year first written
above.
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS, an Ohio
business trust
By: /s/ Thomas T. Kmiecik
------------------------------
Name: Thomas T. Kmiecik
Title: Senior Vice President -
Treasurer
FIRST AMENDMENT OF FIXED RATE LOAN AGREEMENT
FIRST AMENDMENT OF FIXED RATE LOAN AGREEMENT (as the same may be
amended or otherwise modified from time to time, the "Amendment"), dated as
of the 8th day of January, 1999, among First Union Real Estate Equity and
Mortgage Investments, as Borrower; BankBoston, N.A., Wellsford Capital and
Bankers Trust Company, as Lenders; and Bankers Trust Company, as Agent.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Fixed Rate Loan Agreement as of
August 11, 1998 among the parties hereto (as the same may be amended or
otherwise modified from time to time, the "Loan Agreement"), Lenders made
loans to Borrower in the original aggregate principal amount of Forty-Five
Million and 00/100 ($45,000,000.00) Dollars; and
WHEREAS, Borrower and Lenders desire to modify and amend the terms and
provisions of the Loan Agreement as hereinafter provided.
NOW, THEREFORE, in consideration of the covenants set forth herein and
for other good and valuable consideration, the receipt and legal sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used herein without definition and
which are defined in the Loan Agreement are used herein with the
meanings assigned to such terms in the Loan Agreement.
2. Amendments to Loan Agreement. The Loan Agreement is hereby modified as
follows:
a. The definition of the Imperial Credit Facility is hereby amended
to include, as part of the Amended and Restated Credit Agreement
referred to in such definition, that certain Second Amendment to
the Amended and Restated Credit Agreement dated as of December
30, 1998, a copy of which is annexed to this Amendment as EXHIBIT
A. Accordingly, the reference in SECTION 8.1(a)(xii) of the Loan
Agreement to the Prior Debt Documents "as in effect on the date
hereof" (to the extent such reference to the Prior Debt Documents
is a reference to the Imperial Credit Facility) shall mean the
Imperial Credit Facility as in effect after giving effect to such
Second Amendment to the Amended and Restated Credit Agreement.
b. The definition of Line of Credit Facility is hereby amended to
include, as part of the Amended and Restated Credit Agreement
referred to in such definition, that certain Amendment No. 2 dated
as of November 24, 1998 to the Amended and Restated Credit
Agreement dated as of November 1, 1997, a copy of which Amendment
No. 2 is annexed to this Amendment as EXHIBIT B. Accordingly, the
references in SECTIONS 6.1.9 and 7.1.3 of the Loan Agreement to
the Line of Credit Facility "as in effect on the date hereof" and
in SECTION 8.1(a)(xii) of the Loan Agreement to the Prior Debt
Documents "as in effect on the date hereof" (to the extent such
reference to the Prior Debt Documents is a reference to the Line
of Credit Facility) shall mean the Line of Credit Facility as in
effect after giving effect to Amendment No. 2.
c. Clause (b) of the definition of "Interest Period" is hereby
amended to read, in its entirety, as follows:
"(b) the final Interest Period shall end on (and include) August
11, 1999."
d. The definition of Interest Rate is hereby amended to read, in its
entirety, as follows:
"Interest Rate" means (i) from the date hereof to and including
November 11, 1998, a rate of interest equal to nine and seven-
eighths percent (9.875%) per annum and (ii) on and after November
12, 1998, a rate of interest equal to twelve percent (12%) per
annum.
e. The first sentence of SECTION 2.1.4 of the Loan Agreement is
hereby amended to read, in its entirety, as follows:
"The Commitments and the Loans shall be evidenced by the Notes of
Borrower, each in the original principal amount of the respective
Loans and having a scheduled maturity date of August 11, 1999."
f. SECTION 2.3.1 of the Loan Agreement is hereby amended to read, in
its entirety, as follows:
"Borrower shall repay the then outstanding principal amount of the
Loans in full on August 11, 1999, together with interest thereon
through (and including) the last day of the final Interest
Period."
g. SECTION 2.6 of the Loan Agreement and all related definitions are
hereby deleted.
h. All references in the Loan Agreement to the Initial Maturity Date,
the Initial Extension Maturity Date and the Final Extension
Maturity Date shall mean August 11, 1999.
ul SECTION 2.7 of the Loan Agreement is hereby amended to designate
the existing provisions thereof as paragraph (a) and to add the
following as a new SECTION 2.7(b):
"On January 15, 1999, Borrower shall pay to Agent (for the ratable
benefit of Lenders) a non-refundable facility fee of $450,000.
If, on March 31, 1999, the outstanding principal balance of the
Loans is $30,000,000 or more, then on March 31, 1999 Borrower
shall pay to Agent (for the ratable benefit of Lenders) a non-
refundable facility fee of one-half of one percent (.50%) of the
then outstanding principal balance of the Loans. If, on May 31,
1999, the outstanding principal balance of the Loans exceeds
$15,000,000, then on May 31, 1999 Borrower shall pay to Agent (for
the ratable benefit of Lenders) a non-refundable facility fee of
one percent (1.0%) of the then outstanding principal balance of
the Loans. However, if on May 31, 1999 the outstanding principal
balance of the Loans is less than or equal to $15,000,000, then on
May 31, 1999 Borrower shall pay to Agent (for the ratable benefit
of Lenders) a non-refundable facility fee of one-half of one
percent (.50%) of the then outstanding principal balance of the
Loans. Each of the fees payable pursuant to this SECTION 2.7(b)
shall be payable only if on the date such fee is due Loans are
outstanding. Any repayment of the Loans shall not entitle
Borrower to any refund of any fees or other amounts paid to
Lenders. Borrower's failure to pay, when due, any fee payable
pursuant to this SECTION 2.7(b) shall be an Event of Default."
j. SECTION 8.1(a)(ii) of the Loan Agreement is hereby amended to
read, in its entirety, as follows:
"(ii) if Borrower fails to pay the Indebtedness in full on August
11, 1999;"
k. SECTION 8.1(a) (xiv) of the Loan Agreement is hereby amended to
delete the "or" at the end thereof; SECTION 8.1(a)(xv) of the Loan
Agreement is hereby amended to add "or" at the end thereof; and
the following are hereby added to the Loan Agreement as new
SECTIONS 8.1(a)(xvi) and (xvii):
"(xvi) if on March 31, 1999 the outstanding principal amount
of the Loans is $35,000,000 or more; or
(xvii) if on May 31, 1999 the outstanding principal balance
of the Loans is $25,000,000 or more."
1. SECTIONS 11.2 and 11.3 of the Loan Agreement are hereby deleted
and SECTION 11.1 is hereby amended to read, in its entirety, as
follows:
"Borrower shall use its best efforts to consummate, on or
before each of March 31, 1999 and May 31, 1999 (each, a "Required
Payment Date"), an offering, or offerings, as the case may be
(collectively, the "Offering"), pursuant to the Registration
Statement filed by Borrower on September 17, 1998 (Registration
No. 333-63541), as amended from time to time, and such other
registration statements as Borrower shall deem necessary or
appropriate, which entitle(s) holders of equity securities of
Borrower to purchase additional equity securities of Borrower, on
a pro rata basis and which Offering, if fully subscribed, would
provide Borrower with net proceeds, together with any other
Capital Event Proceeds received by Borrower prior to each Required
Payment Date, sufficient to enable Borrower to make principal
payments on account of the Loans and Other Loans such that no
Event of Default will occur under SECTIONS 8.1(a)(xvi) or (xvii)
of the Loan Agreement or SECTIONS 8.1(a)(xvi) or (xvii) of the
Other Loan Agreement. Borrower shall use its best efforts to
take, or cause to be taken, any and all further action or actions
necessary or advisable to be taken in order to consummate the
Offering when and as required by this SECTION 11.1, including but
not limited to the distribution of a prospectus or preparation,
filing and distribution of any necessary prospectus supplement
with respect to any of the applicable registration statements
referred to above. Without limiting the foregoing, Borrower shall
use its best efforts to commence, on a timely basis, but in any
event no later than sixteen (16) days prior to each applicable
Required Payment Date, an Offering which, if fully subscribed,
would provide the Borrower with net proceeds, together with any
other Capital Event Proceeds received by Borrower prior to the
applicable Required Payment Date, sufficient to enable Borrower to
satisfy such principal amortization requirements (as previously
reduced by other prepayments) under the Loans and Other Loans due
on the applicable Required Payment Date, and, following the
commencement of such Offering, diligently proceed to consummate
such Offering. It shall be an Event of Default if the
Registration Statement filed by Borrower on September 17, 1998
(Registration No. 333-6351) is not declared effective on or prior
to February 11, 1999."
3. Amendments to Notes. The first eight (8) lines of SECTION 1 of each
Note are hereby deleted and are replaced with the following:
"FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of
Lender, on or before August 11, 1999 (the "Maturity Date"), the
principal sum of "
4. Outstanding Loans. Borrower represents and warrants to Lenders that
the outstanding principal amount of the Loans is $45,000,000, that
there are no offsets, defenses or counterclaims to its obligations
under the Loan Documents and, that to the extent that any such offsets,
defenses or counterclaims exist without its knowledge, the same are
hereby waived to the fullest extent permitted by law. Except as
modified by this Amendment, the terms and provisions of the Loan
Documents are hereby ratified and confirmed in all respects and
continue in full force and effect.
5. Consent of Lenders. Concurrently herewith the parties to the Other
Loan Agreement are entering into a First Amendment to Fixed Rate Loan
Agreement (the "Other Amendment"), which Other Amendment is, except for
the parties thereto, substantially identical to this Amendment. The
Lenders hereby consent to the execution and delivery of the Other
Amendment.
6. Modifications. No provision of this Amendment may be waived, amended
or supplemented except by a written instrument executed in accordance
with SECTION 9.4 of the Loan Agreement.
7. Successors and Assigns. This Amendment, which sets forth the entire
understanding of the parties hereto with respect to the subject matter
hereof, inures to the benefit of, and shall be binding upon, the
parties hereto and their respective successors and permitted assigns.
8. Severability. In the event that any one or more of the provisions
contained in this Amendment shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Amendment, but this Amendment shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
9. Captions; Counterparts; Governing Law. Captions used in this Amendment
are for convenience of reference only and shall not be deemed a part of
this Amendment nor used in the construction of its meaning. This
Amendment may be signed in any number of counterparts, each of which,
when taken together, shall constitute one and the same Amendment. This
Amendment shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to contracts made and
to wholly be performed within such state.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date and year first written above.
LENDER AND AGENT:
BANKERS TRUST COMPANY
By: /s/ Steven P. Lapham
------------------------------
- --
Name: Steven P. Lapham
Title: Vice President
LENDERS:
BANKBOSTON, N.A.
By: /s/ Paul F. DiVito
------------------------------
- --
Name: Paul F. DiVito
Title: Managing Director
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
------------------------------
- -
Name: Gregory F. Hughes
Title: Chief Financial Officer
BORROWER:
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
By: /s/ Steven M. Edelman
------------------------------
- ----
Name: Steven M. Edelman
Title: Executive Vice President
<PAGE>
CONSENT OF STANDBY PURCHASERS
(BANK GROUP)
Each of the Standby Purchasers hereby consents to the execution and delivery
by Borrower of the foregoing Amendment and represents and warrants to Lenders
that there are no offsets, defenses or counterclaims to its obligations under
the Standby Purchase Agreement to which it is a party and, that to the extent
that any such offsets, defenses or counterclaims exist without its knowledge,
the same are hereby waived to the fullest extent permitted by law. Each
Standby Purchaser confirms that its obligations under the Standby Purchase
Agreement to which it is a party shall be applicable to each Offering
contemplated by SECTION 11.1 of the Loan Agreement and that this confirmation
shall not in any manner limit any obligations of any Standby Purchaser under
the Standby Purchase Agreement to which it is a party. The terms and
provisions of the Standby Purchase Agreements are hereby ratified and
confirmed in all respects and continue in full force and effect.
GOTHAM PARTNERS, L.P.
By: Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
-----------------------------
Name: William A. Ackman
Title: President
ELLIOTT ASSOCIATES, L.P.
By:/s/ Paul Singer
-----------------------------
Name: Paul Singer
Title:General Partner
GOTHAM PARTNERS III, L.P.
By:Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
---------------------------
Name: William A. Ackman
Title: President
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
55 Public Square
Suite 1900
Cleveland, Ohio 44113-1937
January 8, 1999
Bankers Trust Company
BankBoston, N.A
Wellsford Capital
c/o Bankers Trust Company
130 Liberty Street
New York, New York 10006
Gentlemen:
Reference is hereby made to that certain Fixed Rate Loan Agreement
dated as of August 11, 1998 (as amended by that certain First Amendment of
Fixed Rate Loan Agreement dated as of January 8, 1999 and as the same may
further be amended or otherwise modified from time to time, the "Loan
Agreement"). All capitalized terms used herein without definition and which
are defined in the Loan Agreement are used herein with the meanings assigned
to such terms in the Loan Agreement.
1. Borrower and Lenders hereby agree that the Loan Agreement
shall be and hereby is modified as follows:
(a) The first sentence of Section 2.7(b) is hereby deleted
and the following is substituted in lieu thereof:
"On January 8, 1999, Borrower shall pay to Agent (for the
ratable benefit of Lenders) a non-refundable facility fee of
$150,000 and, on February 11, 1999, Borrower shall pay to
Agent (for the ratable benefit of Lenders) a non-refundable
facility fee of 1% of the then outstanding principal balance
of the Loans."
(b) Section 11.1 of the Loan Agreement is hereby amended to
read, in its entirety, as follows:
"Borrower shall use its best efforts to consummate, on or
before each of March 31, 1999, May 31, 1999 and August 11,
1999 (each, a "Required Payment Date"), an offering, or
offerings, as the case may be (collectively, the
"Offering"), pursuant to the Registration Statement filed by
Borrower on September 17, 1998 (Registration No. 333-63541),
as amended from time to time, and such other registration
statements as Borrower shall deem necessary or appropriate,
which entitle(s) holders of equity securities of Borrower to
purchase additional equity securities of Borrower, on a pro
rata basis and which Offering, if fully subscribed, would
provide Borrower with net proceeds, together with any other
Capital Event Proceeds received by Borrower prior to each
Required Payment Date, sufficient to enable Borrower to make
principal payments on account of the Loans and Other Loans
such that no Event of Default will occur under SECTIONS
8.1(a) (i),(xvi) or (xvii) of the Loan Agreement or SECTIONS
8.1(a)(i), (xvi) or (xvii) of the Other Loan Agreement.
Borrower shall use its best efforts to take, or cause to be
taken, any and all further action or actions necessary or
advisable to be taken in order to consummate the Offering
when and as required by this SECTION 11.1, including but not
limited to the distribution of a prospectus or preparation,
filing and distribution of any necessary prospectus
supplement with respect to any of the applicable
registration statements referred to above. It shall be an
Event of Default if Borrower shall not commence, by that
date which is sixteen (16) days prior to each applicable
Required Payment Date, an Offering which, if fully
subscribed, would provide the Borrower with net proceeds,
together with any other Capital Event Proceeds received by
Borrower prior to the applicable Required Payment Date,
sufficient to enable Borrower to satisfy such principal
payment or amortization requirements (as previously reduced
by other prepayments) under the Loans and Other Loans due on
the applicable Required Payment Date. Following the
commencement of such Offering, Borrower shall diligently
proceed to consummate such Offering. Borrower shall use its
best efforts to cause the Registration Statement filed by
Borrower on September 17, 1998 (Registration No. 333-6351)
to be declared effective on or prior to February 11, 1999."
2. As modified hereby, the Loan Agreement is hereby ratified
and confirmed.
3. Concurrently herewith, the parties to the Other Loan
Agreement are entering into a letter agreement (the "Other Letter
Agreement"), which is, except for the parties thereto, identical to this
letter agreement. The Lenders hereby consent to the execution and delivery
of the Other Letter Agreement.
4. This letter agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of such counterparts together shall constitute one and the
same instrument.
<PAGE>
If the foregoing is acceptable to you, please so indicate by
signing below.
Very truly yours,
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ Steven M. Edelman
--------------------------------
Name: Steven M. Edelman
Title: Executive Vice President
LENDER AND AGENT:
BANKERS TRUST COMPANY
By: /s/ Steven P. Lapham
-----------------------------
- --
Name: Steven P. Lapham
Title: Vice President
LENDERS:
BANKBOSTON, N.A.
By: /s/ Paul F. DiVito
----------------------------
- --
Name: Paul F. DiVito
Title: Managing Director
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
------------------------------
Name: Gregory F. Hughes
Title: Chief Financial
Officer
<PAGE>
CONSENTED TO:
GOTHAM PARTNERS, L.P.
By: Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
-------------------------------
Name: William A. Ackman
Title: President
ELLIOTT ASSOCIATES, L.P.
By: /s/ Paul Singer
----------------------------
Name: Paul Singer
Title: General Partner
GOTHAM PARTNERS III, L.P.
By:Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
----------------------------
Name: William A. Ackman
Title: President
AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
THIS AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment") is made
and executed as of the 6th day of April, 1998 by each of the entities
identified on Schedule A annexed hereto (collectively, the "Borrower"), and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation
(the "Lender").
RECITALS
R-1. AP-Anaheim LLC, a California limited liability company, AP-
Arlington LLC, a California limited liability company, AP-Atlantic LLC, a
California limited liability company, AP-Cityview LLC, a California limited
liability company, AP-Redlands LLC, a California limited liability company,
AP-Palmdale LLC, a California limited liability company, AP-Farrell Ramon
LLC, a California limited liability company, AP-Sierra LLC formerly known as
Abbey Sierra LLC, a California limited liability company, AP-Victoria LLC, a
California limited liability company, and AP-Victorville LLC, a Delaware
limited liability company (collectively, the "Original Borrowers") executed
and delivered a certain Revolving Credit Agreement dated August 28, 1997 (the
"Original Agreement"), whereby the Original Borrowers borrowed from Lender,
on a secured revolving credit basis, up to the maximum principal amount of
SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00).
R-2. AP-Edinger LLC, a California limited liability company, AP-
Glendora LLC, a California limited liability company and AP - Diamond Bar
LLC, a California limited liability company (collectively, the "Additional
Borrowers"), have, pursuant to certain Revolving Credit Assumption Agreements
dated December 10, 1997, December 24, 1997 and January 16, 1998,
respectively, assumed all obligations under the Original Agreement on a joint
and several basis with the Original Borrowers and each other Additional
Borrower (the Original Agreement, as assumed and/or modified, as the case may
be, by said three Revolving Credit Assumption Agreements, collectively, the
"Loan Agreement"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement.
R-3. The Borrower requests, and the Lender has agreed, to increase the
maximum outstanding principal amount available pursuant to the Loan Agreement
from SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00) to ONE HUNDRED
TWENTY MILLION AND NO/100 DOLLARS ($120,000,000.00) subject to and in
accordance with the terms and conditions set forth below.
AGREEMENT
NOW THEREFORE, as an inducement for Lender to increase the aggregate
principal amount available to Borrower pursuant to the Loan Agreement, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties do hereby agree as follows:
1. The Recitals set forth hereinabove are hereby incorporated by this
reference with the same force and effect as if fully set forth herein.
2. Lender's obligation to increase the maximum principal amount of
the Loan as contemplated hereunder is subject to the satisfaction of each of
the following conditions as determined by Lender. All documents,
instruments, certificates and opinions referred to below shall be
satisfactory in form and substance to Lender in its sole discretion:
(a) Guaranty Amendment. Guarantor shall have executed and
delivered to Lender an Amendment to and Reaffirmation of Guaranty with
respect to the guaranty previously executed and delivered by Guarantor in
connection with the Loan.
(b) Promissory Note Amendment. Borrower shall have executed and
delivered to Lender an Amendment to Promissory Note (the "Note Amendment")
pursuant to which, among other things, the principal amount of the Note shall
be increased to $120,000,000.
(c) First Amendment to Deed of Trust. Each Borrower shall have
executed and delivered to Lender a First Amendment to Deed of Trust, Security
Agreement, Assignment of Rents and Fixture Filing and First Amendment to
Assignment of Leases and Rents and Security Deposits (the "Security
Amendment") in recordable form with respect to the Mortgage and the
Assignment of Leases and Rents and Security Deposits encumbering the Subject
Property owned or leased by such Borrower pursuant to which, among other
things, the amounts secured by such documents shall be increased to
$120,000,000.
(d) Certificate as to Organizational Documents of Each Borrower.
Lender shall have received copies of amendments to the operating agreements
of each of the Borrowers reflecting the increase in the Loan contemplated
hereby as well as a certificate from the Managing Member of each Borrower
certifying that there have been no other changes to the organizational
documents of such Managing Member or the Borrower as previously delivered to
Lender as well as updated good standing certificates for each Borrower and
the Managing Member thereof.
(e) Resolutions of Each Borrower Approving the Transaction.
Lender shall have received resolutions duly adopted by the Members of each
Borrower approving the transactions contemplated hereby.
(f) Consents. Lender shall have received copies of any required
consents which are necessary in connection with the consummation of the
transactions contemplated hereby including, without limitation, the consent
and estoppel of any ground lessor in substantially the same form as delivered
at the original closing of the Loan.
(g) Fees and Expenses. Borrower shall have paid the legal fees
and expenses of Lender's Counsel and any local counsel retained by Lender in
connection with the negotiation, preparation, execution and delivery of this
Amendment and the other documents contemplated hereby as well as all other
costs and expenses in connection with the transactions contemplated
hereunder.
(h) Title Policies. Lender shall have received an endorsement
to each of the policies of title insurance previously delivered to Lender,
which endorsements shall without further exception unless approved by Lender
(i) update the date of each such policy to the date hereof and (ii) increase
the insured amount to $120,000,000.
(i) Opinion of Counsel. Lender shall have received an opinion
of counsel with respect to the transactions contemplated hereby and which
shall also serve to update the opinion delivered to Lender at the time of the
execution and delivery of the Original Agreement.
(j) No Default. No Event of Default or Default shall have
occurred and be continuing and no Default or Event of Default will occur as a
result of the consummation of any of the transactions contemplated hereby.
(k) Representations and Warranties. All representations and
warranties made by the Borrower and the Guarantor in any Loan Document shall
remain true, correct and complete in all material respects as of the date
hereof as if made on the date hereof.
(l) Participation. Lender shall have entered into an amendment
of the Loan Participation Agreement with Wellsford Real Properties, Inc. (the
"Participant") dated August 28, 1997 pursuant to which the Participant shall
have consented to the increase in the Loan contemplated hereunder and agreed
to participate in the Loan, as increased, on the same terms and conditions as
currently in effect.
(m) Other Documents. Lender shall have received such other
documents, instruments, certificates and assurances relating to the
transactions contemplated hereby as Lender may reasonably request.
3. References in the Loan Agreement to "$70,000,000" ,
"$70,000,000.00" or to "SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00)"
set forth on the cover page thereof, in the first recital thereof, in the
definition of "Commitment" set forth in Section 1.01 thereof, in Section 5.02
thereof and in Section 8.25 thereof are hereby deleted and are hereby
replaced by, respectively, "$120,000,000", $120,000,000.00" or "ONE HUNDRED
TWENTY MILLION AND NO/100 DOLLARS ($120,000,000.00)".
4. The definition of the term "Note" set forth in Section 1.01 is
hereby deleted in its entirety and the following definition is hereby
substituted therefor:
"Note" means that certain Promissory Note dated August 28, 1997
executed by the Original Borrowers in the original maximum
principal amount of $70,000,000 as assumed and/or modified by
Promissory Note Assumption Agreements dated December 10, 1997,
December 24, 1997 and January 16, 1998, executed by AP-Edinger
LLC, a California limited liability company, AP-Glendora LLC, a
California limited liability company and AP - Diamond Bar LLC, a
California limited liability company, respectively, as further
modified and increased to $120,000,000 pursuant to an Amendment to
Promissory Note between Borrower and Lender dated as of April _,
1998, as the same may be further modified, assumed or supplemented
from time to time.
5. Section 2.01(a) of the Loan Agreement is hereby modified by
deleting the figure "$80,000,000" as it appears therein and replacing it with
the figure "$130,000,000".
6. The last line of Section 3.01(b) of the Loan Agreement is hereby
modified by deleting the phrase "Three Hundred Fifty Thousand Dollars
($350,000.00)" and replacing it with the phrase "Six Hundred Thousand Dollars
($600,000.00)".
7. Each Borrower hereby reaffirms all of its covenants and
obligations under the Loan Agreement as modified hereby. Each of the
Borrowers represents and warrants to Lender that all of the representations
and warranties contained in the Loan Agreement made by such Borrower remain
true and correct in all material respects as of the date hereof as if made on
the date hereof and are true and correct with respect to this Amendment, the
Note Amendment and the Security Amendment. Each Borrower acknowledges and
agrees that it has no offsets, counterclaims or defenses to any of its
obligations under the Loan Agreement as modified hereby.
8. Except as modified hereby, the Loan Agreement remains unmodified
and in full force and effect.
9. This Amendment may be executed in any number of counterparts, all
of which, when taken together, shall constitute but one and the same
instrument.
[Signatures Appear on Following Page]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Amendment as of the day and year first hereinabove written.
BORROWER:
AP - DIAMOND BAR LLC, a California limited
liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
______________________________
Name:Donald G. Abbey
Title:President
AP - EDINGER LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - GLENDORA LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
[Signatures Continue on Following Page]
AP - ANAHEIM LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - ARLINGTON LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - ATLANTIC LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - CITYVIEW LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
[Signatures Continue on Following Page]
<PAGE>
AP - REDLANDS LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - PALMDALE LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - FARRELL RAMON LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - SIERRA LLC (formerly known as Abbey
Sierra LLC), a California limited liability
company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
[Signatures Continue on Following Page]
<PAGE>
AP - VICTORIA LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
AP - VICTORVILLE LLC,
a Delaware limited liability company
By: DA Investments Properties, Inc.,
a Delaware corporation, its
Manager
By:/s/ Donald G. Abbey
_____________________________
Name:Donald G. Abbey
Title:President
LENDER:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ Bernard J. Costello
___________________________________
Name: Bernard J. Costello
Title: Vice President
By:/s/ E. Thornton
___________________________________
Name: E. Thornton
Title: Vice President
<PAGE>
SCHEDULE A
Borrower Entities
1. AP - DIAMOND BAR LLC, a California limited liability company
2. AP - EDINGER LLC, a California limited liability company
3. AP - GLENDORA LLC, a California limited liability company
4. AP - ANAHEIM LLC, a California limited liability company
5. AP - ARLINGTON LLC, a California limited liability company
6. AP - ATLANTIC LLC, a California limited liability company
7. AP - CITYVIEW LLC, a California limited liability company
8. AP - REDLANDS LLC, a California limited liability company
9. AP - PALMDALE LLC, a California limited liability company
10. AP - FARRELL RAMON LLC, a California limited liability company
11. AP - SIERRA LLC (formerly known as Abbey Sierra LLC), a California
limited liability company
12. AP - VICTORIA LLC, a California limited liability company
13. AP - VICTORVILLE LLC, a Delaware limited liability company
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
This FIRST AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment") is
made and entered into as of this 7th day of April, 1998 between MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation having an
address at 60 Wall Street, New York, New York 10260 (the "Bank") and
WELLSFORD CAPITAL, a Maryland real estate investment trust having an address
at 610 Fifth Avenue, New York, New York 10020 (the "Participant").
RECITALS
WHEREAS, the Bank and Wellsford Real Properties, Inc. (the "Original
Participant") entered into that certain Loan Participation Agreement dated as
of August 28, 1997 (the "Agreement"; capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Agreement) pursuant to which the Bank and the Original Participant agreed,
among other things, to participate in the funding of the Loan in the maximum
outstanding amount of $70,000,000; and
WHEREAS, pursuant to that certain Assignment and Acceptance Agreement
dated March_, 1998, the Original Participant assigned all of its rights under
the Agreement to the Participant and the Participant assumed all of the
Original Participant's obligations thereunder; and
WHEREAS, the Participant is now the holder of the Junior Participation;
and
WHEREAS, the Borrower has requested that the maximum principal amount
of the Loan be increased from $70,000,000 to $120,000,000; and
WHEREAS, the Bank and the Participant desire to amend the Agreement as
hereinafter set forth to reflect the increase in the Loan and the agreement
between the Bank and the Participant to fund the Loan as increased on the
same basis as the Loan is currently being funded.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Bank and the Participant hereby agree as
follows:
1. The Recitals set forth above are deemed a part of this Amendment
as if they were fully set forth herein.
2. The Bank and the Participant agree that each shall fund all future
Advances and receive payments thereon under the Agreement as modified hereby
in the same manner and in the same proportion as currently set forth in the
Agreement, all as if the original amount of the Loan had been $120,000,000.
3. The first sentence of the first paragraph of the Agreement on page
1 is hereby deleted in its entirety and the following sentence is hereby
substituted therefor:
Reference is made to the Revolving Credit Agreement dated as of August
28, 1997 as modified by (a) three Revolving Credit Assumption
Agreements dated December 10, 1997, December 24, 1997 and January 16,
1998, respectively and (b) an Amendment to Revolving Credit Agreement
dated as of April 6, 1998, between the Bank and the entities named
therein as "Borrowers" (said entities, together with any other entity
who becomes liable under the terms of the Credit Agreement (as
hereinafter defined), are hereinafter collectively referred to as the
"Borrower"), copies of which have been furnished to the Participant
(said Revolving Credit Agreement, as heretofore assumed and modified as
set forth above, together with any further modification made in
accordance with Section 4(f) below, is hereinafter referred to
collectively as the "Credit Agreement").
4. The last sentence of the first paragraph of the Agreement on page
1 is hereby modified by deleting the figures "$70,000,000" and "$80,000,000"
where they appear therein and substituting the figures "$120,000,000" and
"$130,000,000" therefor, respectively.
5. The second sentence of the second paragraph of the Agreement on
page 1 is hereby modified by deleting the figure "$35,000,000" where it
appears therein and substituting the figure "$60,000,000" therefor.
6. The last sentence of the second paragraph of the Agreement on page
1 is hereby deleted in its entirety and the following sentence is hereby
substituted therefor:
For purposes of this Agreement, the term "Note" shall mean the
promissory note in the original principal amount of $70,000,000 dated
August 28, 1997 as modified by (a) three Promissory Note Assumption
Agreements dated December 10, 1997, December 24, 1997 and January 16,
1998, respectively and (b) increased to $120,000,000 pursuant to an
Amendment to Promissory Note dated as of April 6, 1998, executed by
Borrower in favor of the Bank together with any modification thereof
made in accordance with Section 4(f) below.
7. The fourth sentence of Section 1(d) of the Agreement on page 3 is
hereby modified by deleting the phrase "In the event that the Participant
fails to reimburse the Bank as provided in this paragraph within three (3)
Business Days" at the beginning of said sentence and substituting the phrase
"For so long as the Participant fails to reimburse the Bank as provided in
this paragraph" therefor.
8. The third sentence of Section 4(e) of the Agreement on page 7 is
hereby modified by inserting the word "sole" following the phrase "the
Participant shall have the" and immediately prior to the phrase "right to
accelerate the Loan".
9. The second sentence of Section 8 of the Agreement on page 10 is
hereby deleted in its entirety and the following sentence is hereby
substituted therefor:
The Bank may sell other participations in the Loan including sub-
participations in the Senior Participation provided that the Bank shall
not reduce its participation interest in the Loan to below 10% without
the prior written consent of the Participant.
10. The Participant, by its execution of this Amendment, hereby
consents in accordance with Section 4(f) of the Agreement to the increase in
the Commitment from $70,000,000 to $120,000,000 including, without
limitation, all documents executed between the Borrower and the Bank to
effectuate the increase in the Commitment as well as the increase in the
Junior Participation from $35,000,000 to $60,000,000 as contemplated hereby.
11. The Participant, by its execution of this Amendment, hereby
acknowledges that the Bank may be entering into a participation agreement (as
opposed to an assignment of the Bank's rights under the Agreement) pursuant
to which the Bank may sell a participation interest in the Senior
Participation. In connection therewith the Participant hereby acknowledges
and agrees that, in certain circumstances, the Bank's new participant may, as
between the Bank and such new participant, control certain decisions and
determinations to be made by the holder of the Senior Participation under the
Agreement, provided, however, that as between the Bank and the Participant,
the Participant will continue to deal directly with the Bank as currently set
forth in the Agreement.
12. Except as modified hereby, the Agreement remains unmodified and in
full force and effect.
13. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York.
[Signatures contained on following page]<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Bernard J. Costello
----------------------------------
- --
Name: Bernard J. Costello
--------------------------------
- --
Title: Vice President
--------------------------------
- --
By: /s/ L. Blume
----------------------------------
- --
Name: L. Blume
--------------------------------
- --
Title: Vice President
--------------------------------
- --
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
----------------------------------
- --
Name: Gregory F. Hughes
--------------------------------
- --
Title: Vice President
--------------------------------
- --
AMENDMENT
TO
PROMISSORY NOTE
THIS AMENDMENT TO PROMISSORY NOTE (this "Amendment") is made and
executed as of the 6th day of April, 1998 by each of the entities identified
on Schedule A annexed hereto (collectively, the "Makers"), and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation (the
"Payee").
RECITALS
R-1. AP-Anaheim LLC, a California limited liability company, AP-
Arlington LLC, a California limited liability company, AP-Atlantic LLC, a
California limited liability company, AP-Cityview LLC, a California limited
liability company, AP-Redlands LLC, a California limited liability company,
AP-Palmdale LLC, a California limited liability company, AP-Farrell Ramon
LLC, a California limited liability company, AP-Sierra LLC formerly known as
Abbey Sierra LLC, a California limited liability company, AP-Victoria LLC, a
California limited liability company, and AP-Victorville LLC, a Delaware
limited liability company (collectively, the "Original Borrowers") executed
and delivered on a joint and several basis a certain Promissory Note to Payee
dated August 28, 1997 (the "Original Note"), in the original maximum
principal amount of SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00).
R-2. AP-Edinger LLC, a California limited liability company, AP-
Glendora LLC, a California limited liability company and AP - Diamond Bar
LLC, a California limited liability company (collectively, the "Additional
Borrowers"), have, pursuant to certain Promissory Note Assumption Agreements
dated December 10, 1997, December 24, 1997 and January 16, 1998,
respectively, assumed all obligations under the Original Note on a joint and
several basis with the Original Borrowers and each other Additional Borrower
(the Original Note, as heretofore modified by said Promissory Note Assumption
Agreements, is hereinafter collectively referred to as the "Note").
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Note.
R-3. The Makers have requested and the Payee has agreed to increase the
maximum outstanding principal amount available pursuant to the Loan Agreement
from SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00) to ONE HUNDRED
TWENTY MILLION AND NO/100 DOLLARS ($120,000,000.00) subject to and in
accordance with that certain Amendment to Revolving Credit Agreement of even
date herewith between the Makers and Payee.
R-4. The parties hereto desire to amend the Note to increase the
principal amount thereof from SEVENTY MILLION AND NO/100 DOLLARS
($70,000,000.00) to ONE HUNDRED TWENTY MILLION AND NO/100 DOLLARS
($120,000,000.00) in accordance with the terms set forth herein.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Makers hereby jointly and
severally agree as follows with Payee.
1. The Recitals set forth hereinabove are hereby incorporated by this
reference with the same force and effect as if fully set forth herein.
2. The definition of the term "Mortgages" set forth in the Note is
hereby deleted in its entirety and the following is hereby substituted
therefor:
"Mortgages" shall mean collectively (i) those thirteen (13) Deeds of
Trust, Security Agreements, Assignments of Rents and Fixture Filings
previously executed by each Maker for the benefit of Payee, each in the
original principal amount of $70,000,000, as each of such deeds of
trust was increased to $120,000,000 and modified pursuant to certain
First Amendments to Deed of Trust, Security Agreement, Assignment of
Rents and Fixture Filing and First Amendment to Assignment of Leases
and Rents and Security Deposits executed by each of the Makers and
dated as of April _, 1998 and (ii) any other deeds of trust hereafter
delivered to Payee pursuant to the terms of the Loan Agreement.
3. The definition of "Note Amount" is hereby modified by deleting
the amount "$70,000,000" and substituting the amount "$120,000,000" therefor.
The first paragraph of the Note is hereby modified by deleting the phrase
"SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00)" where it appears
therein and substituting the phrase "ONE HUNDRED TWENTY MILLION AND NO/100
DOLLARS ($120,000,000.00)" therefor.
4. The outstanding principal balance due under the Note as modified
hereby is $59,420,800 as of the date hereof. Each of the Makers hereby
reaffirms all of its covenants and obligations under the Note as modified
hereby, including, without limitation, the obligation to pay the principal
amount of the Note as modified hereby together with interest thereon as
provided in the Note. Each of the Makers acknowledges and agrees that it has
no offsets, counterclaims or defenses to any of its obligations under the
Note as modified hereby.
5. Except as modified hereby, the Note remains unmodified and in full
force and effect.
6. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York in the same manner and to the same
extent as the Original Note.
7. This Amendment may be executed in any number of counterparts, all
of which, when taken together, shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the day and year first hereinabove written.
AP - DIAMOND BAR LLC, a California limited
liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - EDINGER LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - GLENDORA LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
[Signatures Continue on Following Page]
<PAGE>
AP - ANAHEIM LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - ARLINGTON LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - ATLANTIC LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - CITYVIEW LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
[Signatures Continue on Following Page]
<PAGE>
AP - REDLANDS LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - PALMDALE LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - FARRELL RAMON LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - SIERRA LLC (formerly known as Abbey
Sierra LLC), a California limited liability
company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
[Signatures Continue on Following Page]
<PAGE>
AP - VICTORIA LLC,
a California limited liability company
By: Abbey Investments, Inc., a
California corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
AP - VICTORVILLE LLC,
a Delaware limited liability company
By: DA Investments Properties, Inc.,
a Delaware corporation, its
Manager
By:/s/ Donald G. Abbey
-------------------------------
Name:Donald G. Abbey
Title:President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ Bernard J. Costello
--------------------------------------
Name: Bernard J. Costello
Title: Vice President
By:/s/ E. Thornton
--------------------------------------
Name: E. Thornton
Title: Vice President
<PAGE>
SCHEDULE A
Borrower Entities
1. AP - DIAMOND BAR LLC, a California limited liability company
2. AP - EDINGER LLC, a California limited liability company
3. AP - GLENDORA LLC, a California limited liability company
4. AP - ANAHEIM LLC, a California limited liability company
5. AP - ARLINGTON LLC, a California limited liability company
6. AP - ATLANTIC LLC, a California limited liability company
7. AP - CITYVIEW LLC, a California limited liability company
8. AP - REDLANDS LLC, a California limited liability company
9. AP - PALMDALE LLC, a California limited liability company
10. AP - FARRELL RAMON LLC, a California limited liability company
11. AP - SIERRA LLC (formerly known as Abbey Sierra LLC), a California
limited liability company
12. AP - VICTORIA LLC, a California limited liability company
13. AP - VICTORVILLE LLC, a Delaware limited liability company
======================================================================
SAFEGUARD CAPITAL FUND, L.P., a Delaware limited partnership
as Borrower
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Lender
----------------
$90,000,000
REVOLVING CREDIT AGREEMENT
Dated as of March 28, 1998
======================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; CONSTRUCTION. . . . . . . . . . . . . . . . . . . .1
Section 1.01 Definitions.. . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II. AMOUNT AND TERMS OF THE LOAN. . . . . . . . . . . . . . . . . .3
Section 2.01 The Loan. . . . . . . . . . . . . . . . . . . . . . . .3
Section 3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IV. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . .5
Section 4.01 Conditions Precedent to Closing. . . . . . . . . . . .5
Section 4.02 Conditions Precedent to Advances. . . . . . . . . . . .7
ARTICLE V COLLATERAL VALUE AND RELEASES OF COLLATERAL. . . . . . . . . . . 11
Section 5.01 Determinations of Collateral Value by Lender. . . . . 11
Section 5.02 Recalculations of Collateral Value at Borrower's
Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.03 Release of Collateral . . . . . . . . . . . . . . . . 12
Section 5.04 Calculations of Collateral Value and LTV Ratio. . . . 13
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . 13
Section 6.01 Representations and Warranties. . . . . . . . . . . . 13
Section 6.02 Financial Reports . . . . . . . . . . . . . . . . . . 18
Section 6.03 Litigation. . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . 20
Section 7.01 Events of Default . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.01 Notices . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.02 Performance by Lender . . . . . . . . . . . . . . . . 20
Section 8.03 No Oral Change. . . . . . . . . . . . . . . . . . . . 20
Section 8.04 No Waiver: Remedies Cumulative. . . . . . . . . . . . 21
Section 8.05 Fees and Expenses . . . . . . . . . . . . . . . . . . 21
Section 8.06 Indemnification . . . . . . . . . . . . . . . . . . . 22
Section 8.07 Benefits of Agreement . . . . . . . . . . . . . . . . 22
Section 8.08 Participations. . . . . . . . . . . . . . . . . . . . 22
Section 8.09 Assignments . . . . . . . . . . . . . . . . . . . . . 23
Section 8.10 Governing Law . . . . . . . . . . . . . . . . . . . . 23
Section 8.11 Counterparts. . . . . . . . . . . . . . . . . . . . . 24
Section 8.12 Waiver of Counterclaim, Etc . . . . . . . . . . . . . 24
Section 8.13 Severable Provisions. . . . . . . . . . . . . . . . . 24
Section 8.14 Right of Setoff . . . . . . . . . . . . . . . . . . . 24<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 8.18 Waiver of Notice. . . . . . . . . . . . . . . . . . . 25
Section 8.19 Remedies of Borrower. . . . . . . . . . . . . . . . . 25
Section 8.20 Reserved. . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.21 Application of Default Rate Not a Waiver. . . . . . . 25
Section 8.22 No Joint Venture or Partnership . . . . . . . . . . . 25
Section 8.23 Time of the Essence . . . . . . . . . . . . . . . . . 25
Section 8.24 Publicity . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.25 Securitization. . . . . . . . . . . . . . . . . . . . 26
Section 8.26 Offsets, Counterclaims and Defenses . . . . . . . . . 26
Section 8.27 Headings; Construction of Documents: etc. . . . . . . 26
Section 8.28 Joint and Several . . . . . . . . . . . . . . . . . . 26
<PAGE>
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as of March __,
1998 between SAFEGUARD CAPITAL FUND, L.P., a Delaware limited partnership,
having an address at 111 Veterans Boulevard, Suite 1020, Metairie, Louisiana
70005 (the "Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New
York banking corporation, having an address at 60 Wall Street, New York, New
York 10260 ("Lender").
W I T N E S S E T H:
WHEREAS, in order to refinance certain self-storage facilities currently
owned by Borrower and to finance future acquisitions by Borrower of
additional self-storage facilities, Borrower desires to borrow from Lender,
on a secured revolving credit basis, loans in an aggregate principal sum
outstanding from time to time not exceeding Ninety Million Dollars
($90,000.000.00); and
WHEREAS, Lender is willing to make advances (individually, an "Advance",
and collectively, the "Loan") to Borrower on such basis for such purposes,
subject to the terms and conditions hereof.
NOW THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions.
(a) Defined terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in the Mortgages.
(b) As used herein and in the Note, the following terms shall have
the meanings herein specified (to be equally applicable to both the singular
and plural forms of the terms defined).
"Agreement" means this Revolving Credit Agreement, as amended,
supplemented or modified from time to time in accordance with its terms.
"Borrowing" means a borrowing under this Agreement consisting of an
Advance made to Borrower by Lender pursuant to Section 2.01 of this
Agreement.
"Borrowing Date" with respect to a particular Borrowing shall mean
the Business Day, identified by the Borrower in the related Borrowing
Request, as the date on which the Borrower requests that Lender make an
Advance.
"Borrowing Request" means a Borrowing Request in the form of
Exhibit A-1.
"Closing Date" means the date hereof.
"Collateral" shall mean collectively, the real property and
improvements thereon secured by the Mortgages together with any additional
collateral pledged to Lender in accordance with Section 5.01 hereof.
"Collateral Value" means the aggregate value assigned by Lender to
the Collateral as of any date of determination, which value shall be
calculated in accordance with Lender's standard underwriting practices
consistently applied.
"Commitment" means the obligation of Lender to make Advances to
Borrower pursuant to Section 2.01 in an aggregate amount not to exceed
$90,000,000 at any one time outstanding.
"Commitment Period" means the period commencing with the Closing
Date and ending on the Expiration Date, unless otherwise extended by Lender
in writing or unless otherwise terminated pursuant to the terms hereof.
"Expiration Date" means April 1, 2001.
"First Facility Fee" shall have the meaning set forth in Section
3.01(c) hereof.
"Guarantor" means collectively Jack Chaney and Bruce C. Roch, Jr.
"Initial Advance" shall mean the Advance to be made on the Closing
Date in the aggregate original principal amount of $2,075,000.
"Lender" shall have the meaning set forth in the preamble hereof,
which term shall include, as applicable, any other office of Lender
designated by it from time to time for the purpose of making or maintaining
any Advances hereunder.
"Lien" means any interest in property, real or personal, tangible
or intangible, securing an obligation owed to, or a claim by, a Person other
than the owner of such property, whether such interest is based on the common
law, statute or contract, and including, but not limited to, the security
interest, security title or lien arising from a security agreement, mortgage,
deed of trust, deed to secure debt, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting such property.
"Loan" is defined in the preamble to this Agreement.
"Loan Fee" shall have the meaning set forth in Section 3.01(b)
hereof.
"LTV Ratio" shall have the meaning set forth in Section 5.01
hereof.
"Maturity Date" means, with respect to each Advance, the Expiration
Date.
"Mortgage(s)" shall mean each mortgage, deed of trust or deed to
secure debt encumbering a Subject Property, each substantially in the form of
Exhibit B and incorporating such modifications as may be necessary,
appropriate or customary in Lender's determination under the law of the State
where the Subject Property is located, and as otherwise originally executed
or as the same may hereafter from time to time be supplemented, amended,
modified or extended by one or more indentures supplemental thereto granted
by Borrower to Lender as security for the Note.
"Note" means the Secured Promissory Note of even date herewith
executed by Borrower and payable to Lender in the maximum principal amount of
$90,000,000, together with any amendments thereto or supplements thereof.
"Participant" shall have the meaning set forth in Section 8.08.
"Preliminary Borrowing Request" means a request by Borrower in the
form of Exhibit A-2.
"Second Facility Fee" shall have the meaning set forth in Section
3.01(d) hereof.
"Subject Property" means the property, real or personal, tangible
or intangible, which is, or which is proposed to be, financed pursuant to the
terms of this Agreement and subject to the Lien of a Mortgage. In all cases
the Subject Property shall be improved with a self storage facility.
ARTICLE II. AMOUNT AND TERMS OF THE LOAN
Section 2.01 The Loan.
(a) Lender agrees, upon the terms and subject to the conditions
and in reliance upon the representations, warranties and covenants
hereinafter set forth, to make the Loan in one or more Advances on a
revolving credit basis, to Borrower, up to the amount of the Commitment,
provided, however, that notwithstanding anything to the contrary contained
herein or in any other Loan Document, in no event will Lender be obligated to
re-advance more than $10,000,000 of Loan proceeds such that the aggregate
principal amount of all Advances made hereunder (including such re-advances)
shall in no event exceed $100,000,000 over the term of this Agreement.
Borrower and Lender acknowledge and agree that on the Closing Date the
Initial Advance in the aggregate principal amount of $2,075,000 will be made
to Borrower subject to the satisfaction of all applicable terms and
conditions hereinafter set forth.
(b) Each Advance shall be in an aggregate amount of not less than
One Million Dollars ($1,000,000.00), and in integral multiples of Fifty
Thousand Dollars ($50,000.00); provided, however, that the aggregate amount
of Advances at any time outstanding (after giving effect to such Advance)
shall not exceed the lesser of (x) the amount of the Commitment or (y) 75% of
the Collateral Value.
(c) In connection with each Advance to be made hereunder:
(i) Borrower shall deliver a Preliminary Borrowing Request to
Lender, accompanied by each of the instruments, documents and agreements set
forth on Schedule I, together with such other information as Lender may
reasonably request, and with respect to items 9 through 13 of said Schedule
I, performed by Persons previously approved by Lender, as set forth on
Schedule II hereof, and engaged by Lender at the sole cost and expense of
Borrower, except to the extent that any such instrument, document or
agreement has been previously delivered to Lender;
(ii) Lender shall approve, which approval may be granted or
denied in Lender's sole and absolute discretion, or disapprove any such
Preliminary Borrowing Request received by Lender from Borrower within ten
(10) Business Days of the receipt thereof; and
(iii) in the event that Lender approves the Advance for
which the Preliminary Borrowing Request relates, such Advance shall be made
subject to the terms and conditions hereof, including, without limitation,
Borrower delivering a Borrowing Request not less than three (3) Business Days
prior to the proposed Borrowing Date, which Borrowing Request shall be
irrevocable and must be received by Lender not later than 1:00 p.m. (New York
City time), unless otherwise agreed to in writing by Lender. Subject to the
terms and conditions hereof, Lender shall make the amount of funds evidencing
the approved Advance available by wire transfer in accordance with the
instructions set forth in the applicable Borrowing Request.
(d) The Loan and each of the Advances shall be evidenced by the
Note, duly executed by Borrower, dated the Closing Date and payable to the
order of Lender. All Advances to Borrower pursuant to this Agreement and all
payments of the principal of such Advances to Lender shall be recorded by
Lender on the schedule attached to the Note and by specific reference made a
part thereof. The amounts of principal indicated by said schedule as
outstanding or accrued and unpaid, as the case may be, shall constitute
rebuttable presumptive evidence of the principal outstanding and the accrued
and unpaid interest on the Loan; provided, that any failure or error on the
part of Lender in recording any Advance on such schedule shall not limit the
obligation of Borrower to pay all principal of and interest accruing on the
Loan.
Section 3.01 Fees.
(a) Borrower has previously paid to Lender a non-refundable
arrangement fee in the amount of $50,000.00, which fee shall be credited
towards the initial payment due under Section 3.01(b). below.
(b) On each Borrowing Date, Borrower shall pay to Lender a loan
fee (the "Loan Fee") equal to (i) the aggregate principal amount of such
Advance to be made on such Borrowing Date, multiplied by (ii) 0.75%.
(c) In the event that on the first anniversary of the date of this
Agreement the aggregate principal amount of Advances hereunder shall be less
than $30,000,000, then, in such event, Borrower shall have the option to
either (i) terminate the Commitment whereupon (x) Lender shall have no
further obligation to make any Advances hereunder and (y) all outstanding
amounts under the Loan shall be due and payable within thirty (30 ) days
following such election or (ii) throughout the balance of the Commitment
Period, pay to Lender an additional fee (the "First Facility Fee") on a
monthly basis, in the same manner and times as interest is payable under the
Note, commencing with the first interest payment following the first
anniversary of this Agreement, in an amount equal to the product of (x) .25%
per annum multiplied by (y) the excess of $90,000,000 over the aggregate
outstanding principal balance of the Loan as of the date of determination,
provided, however, that in the event that the aggregate principal amount of
Advances hereunder exceeds $45,000,000 as of the eighteen month anniversary
of the date of this Agreement, Borrower shall no longer be obligated to pay
the First Facility Fee commencing with the next monthly payment.
(d) In the event that on the first anniversary of the date of this
Agreement the aggregate principal amount of Advances hereunder was equal to
or in excess of $30,000,000 but on the eighteen month anniversary of the date
of this Agreement the aggregate principal amount of Advances hereunder shall
be less than $45,000,000, then, in such event, Borrower shall have the option
to either (i) terminate the Commitment whereupon (x) Lender shall have no
further obligation to make any Advances hereunder and (y) all outstanding
amounts under the Loan shall be due and payable within thirty (30) days of
such election or (ii) throughout the balance of the Commitment Period, pay
to Lender an additional fee (the "Second Facility Fee") on a monthly basis,
in the same manner and times as interest is payable under the Note,
commencing with the first interest payment following the eighteen month
anniversary of this Agreement, in an amount equal to the product of (x) .25%
per annum multiplied by (y) the excess of $90,000,000 over the aggregate
outstanding principal balance of the Loan as of the date of determination.
(e) In the event that Borrower is obligated to elect an option
under either paragraph (c) or (d) above, Borrower shall notify Lender of its
election within ten (10) Business Days following receipt of notice from
Lender that an election is required. In the event that Lender does not
receive Borrower's election in a timely manner, Borrower shall be deemed to
have elected to pay the First Facility Fee or the Second Facility Fee, as the
case may be.
(f) All fees paid under this Section 3.01 shall be non-refundable.
Each payment thereof and any other charges or amounts payable under this
Agreement shall be paid by Borrower in accordance with Section 2.2 of the
Note.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Closing. On the Closing Date, in
addition to the other documents and instruments required by this Agreement,
Borrower shall deliver the following documents to Lender, all of which shall
be satisfactory in form and substance to Lender in its sole and absolute
discretion:
(a) Corporate Action. Certified copies of (i) the certificate and
agreement of partnership of Borrower and the certificate of formation and
operating agreement of General Partner, and (ii) all partnership, corporate
and company action, as applicable, taken by Borrower and General Partner
approving the Loan and the Loan Documents (including, without limitation, a
certificate setting forth the resolutions of the members of General Partner,
both in its individual capacity and as general partner of Borrower, adopted
in respect of the transactions contemplated thereby).
(b) Incumbency. A certificate of General Partner's officers or
members stating (i) the Persons authorized to sign the Loan Documents on
behalf of Borrower and General Partner, and (ii) who will, until replaced by
another officer or officers or manager duly authorized for that purpose, act
on behalf of Borrower and General Partner for the purposes of signing
documents and giving notices and other communications in connection with the
Loan Documents and the transactions contemplated thereby (and Lender may
conclusively rely on such certificate until it receives notice in writing
from Borrower and General Partner, signed by any of such officers or members,
to the contrary).
(c) Officer's Certificate. The conditions set forth in paragraphs
(a), (d) and (e) of Section 4.02 hereof shall be satisfied on and as of the
Closing Date and Lender shall have received a certificate of Borrower
certifying that such conditions have been satisfied.
(d) Opinion of Counsel. An opinion of counsel to Borrower and
General Partner in form and substance satisfactory to Lender, including,
without limitation a substantive non-consolidation opinion in a form approved
by Lender to be delivered in connection with the initial Borrowing.
(e) Loan Documents. This Agreement, the Note and each of the other
Loan Documents shall have been duly executed and delivered by the parties
thereto.
(f) Perfection of Security Interests. Evidence that all actions
necessary or, in the opinion of Lender, desirable to perfect and protect the
Liens and security interests created by the Loan Documents have been taken.
(g) Fees and Expenses. Evidence (including, without limitation,
payment instructions given by Borrower) that all fees and expenses payable to
Lender, including without limitation, the fees and expenses referred to in
each of Section 3.01 and Section 8.05, to the extent then due and payable,
have been paid in full.
(h) Other Documents. Such other documents relating to the
transactions contemplated hereby as Lender may reasonably request.
Section 4.02 Conditions Precedent to Advances. The obligation of
Lender to make any Advance to Borrower upon the occasion of any proposed
Borrowing hereunder is subject, in addition to the continued satisfaction of
the conditions in Section 4.01 hereof, to the fulfillment of the following
conditions, which, unless otherwise expressly stated below, shall be
satisfied both immediately prior and after giving effect to such Borrowing
and the application of the proceeds therefrom:
(a) Borrowing Request. A Borrowing Request and Preliminary
Borrowing Request, each executed and delivered on behalf of Borrower by a
duly authorized officer thereof, shall have each been delivered to Lender and
Lender shall have, in its sole and absolute discretion, approved the Advance
requested in the Preliminary Borrowing Request and Borrowing Request.
(b) Due Diligence and Loan Documents. Lender shall have completed
its due diligence and underwriting of the proposed Advance and Subject
Property, all of which shall be satisfactory in form and substance to Lender
in its sole and absolute discretion. Lender shall have received, not less
than fifteen (15) Business Days prior to the date of the proposed Borrowing
(or, if a later delivery date is expressly set forth below, on or prior to
such later date), each of the following documents, instruments and
agreements, each of which shall be satisfactory in form and substance to
Lender in its reasonable discretion:
(i) Title Insurance. On the date of the applicable
Borrowing, policies of title insurance on forms of, and issued by, one or
more title insurance companies satisfactory to Lender in its sole and
absolute discretion (the "Title Companies"), showing fee simple title vested
in the Borrower with respect to, or, if applicable, showing the Borrower's
interest as a tenant under a ground lease of, the applicable Subject Property
and insuring the first priority of the Liens created under the Mortgage
thereon in an amount satisfactory to Lender in its sole and absolute
discretion, subject only to such Liens as are acceptable to Lender, together
with, as may be required by Lender, such reinsurance schedules, endorsements
and agreements in respect of all then existing title insurance policies for
such properties and the other Subject Properties in amounts and otherwise in
form and substance satisfactory to Lender and executed by the Title
Companies. Such policies shall also contain such endorsements and affirmative
insurance provisions as Lender may reasonably require, subject to
availability in the particular jurisdiction. In addition, Borrower shall have
paid to the Title Companies (and shall have delivered to Lender evidence of
such payment) all expenses of the Title Companies in connection with the
issuance of such policies, reinsurance schedules, endorsements and agreements
and an amount equal to the recording and stamp taxes (including, without
limitation, mortgage recording taxes) payable in connection with recording
the Mortgages in the appropriate county land offices.
(ii) Searches. Not less than three (3) Business Days
prior to the proposed Borrowing, copies of the UCC filing searches, tax lien
searches, judgment searches and real estate tax searches and, where
available, municipal department searches setting forth any and all building
violations (if available) in each county where the applicable Subject
Property is located (and in the case of UCC filing searches, in the office of
the Secretary of State or other applicable State office of the State where
such Subject Property is located), demonstrating as of a recent date the
existence of no other financing statements (other than those to be released
concurrently with the subject Advance), tax liens, judgments, building
violations or delinquent real estate taxes, together with evidence that all
fees payable in connection with any such searches have been paid.
(iii) Survey. A survey of the applicable Subject
Property, prepared by a land surveyor licensed or registered in the State in
which such Subject Property is located and otherwise satisfactory to Lender,
in compliance with the minimum standard detail requirements for land title
surveys adopted by the American Land Title Association and American Congress
on Surveying and Mapping, and certified to Lender, Borrower, the Title
Companies and any other parties requested by Lender, as of a date not more
than two months prior to the date of the Borrowing.
(iv) Ground Leases. Certified copies of all ground
leases affecting the applicable Subject Property, including all amendments
and modifications thereto, and a ground lessor estoppel and consent
satisfactory, in form and substance, to Lender.
(v) Material Contractual Obligations. Not less than five (5)
Business Days prior to the proposed Borrowing, certified copies of all
documents, instruments or agreements constituting material Contractual
Obligations relating to the applicable Subject Property, together with a
certificate signed by Borrower stating that such documents, instruments and
agreements reflect, to the best of its knowledge, the only material
Contractual Obligations relating to such property.
(vi) Counsel Opinions. Such legal opinions (including an
opinion of local counsel in the State in which such Subject Property is
located) with respect to such matters as Lender shall request and otherwise
in form and substance satisfactory to the Lender.
(vii) Rent Roll. Not less than five (5) Business Days
prior to the proposed Borrowing, a rent roll for the applicable Subject
Property, together with a certificate signed by Borrower stating that to the
best of its knowledge such rent roll is true, complete and correct and
contains the aforesaid information required by such Mortgage.
(viii) Leases. At Lender's option, copies of all leases
for the applicable Subject Property, together with a certificate signed by
Borrower to the effect that to the best of its knowledge each such copy is
true, complete and correct.
(ix) Management Agreement. A management agreement for
the applicable Subject Property in form and substance acceptable to Lender in
its sole and absolute discretion.
(x) Zoning Compliance, Etc. Not less than five (5) Business
Days prior to the proposed Borrowing, evidence satisfactory to Lender of the
type customarily delivered in the jurisdiction in which the Subject Property
is located for commercial loan facilities that all improvements have been
constructed and are being used and operated in compliance with (A) all
applicable zoning, subdivision, environmental and other laws, orders, rules,
regulations and requirements relating to the use and occupancy of the
Subject Properties and (B) all building permits issued in respect of the
Subject Properties and (if available) a copy of all certificates of occupancy
for each such property to the extent available to the Borrower.
(xi) Contract of Sale. Copies of the contracts of sale
executed in connection with the purchase of the applicable Subject Property.
(xii) Title Updates. Borrower shall have provided Lender
with a Revolving Credit Endorsement, if available, with respect to each Title
Policy. In any jurisdiction in which a Revolving Credit Endorsement is
unavailable or the Revolving Credit Endorsement takes exception to mechanics'
liens or other liens or encumbrances not approved by Lender, Borrower will
provide a title update or title report for the applicable Subject Properties
before the date of each Borrowing reflecting that there are no mechanics'
liens or other liens or encumbrances upon the applicable Subject Properties
which have not been approved by Lender. In the event such title update or
title report discloses mechanics' liens or other liens or encumbrances not
approved by Lender, and, without waiving any of Lender's rights hereunder or
under any other Loan Documents on account of the existence of such liens or
other encumbrances, the obligation of Lender to make any Advance to Borrower
is subject to the condition that such mechanics' liens or other liens or
encumbrances be cured, deleted of record or remedied to Lender's reasonable
satisfaction.
(xiii) Perfection of Security Interests. Evidence that all
actions necessary or, in the opinion of Lender, desirable to perfect and
protect the Liens created by the Loan Documents have been taken, including,
without limitation, evidence that the Mortgage on the applicable Subject
Property has been duly filed and recorded in the appropriate governmental
offices and that the related UCC financing statements have been duly filed in
the appropriate governmental offices.
(xiv) Fees and Expenses. Evidence (including, without
limitation, payment instructions given by Borrower) that all fees and
expenses payable to Lender, including, without limitation, the fees and
expenses referred to in Section 3.01 and Section 8.05 hereof, to the extent
then due and payable, have been paid in full.
(xv) Other Documents. Such other documents relating to
the transactions contemplated hereby as Lender may reasonably request,
including, without limitation, an assignment of leases and rents in
substantially the form of Exhibit C attached hereto and a reaffirmation of
guaranty executed by the Guarantor in substantially the form of Exhibit D
attached hereto.
(c) Loan Documents. On or before the date of each Borrowing, the
Mortgages shall constitute valid first mortgage liens on the fee simple title
to, or, if applicable, on the relevant Borrower's interest as a tenant under
a ground lease of, the Subject Properties and which shall secure all of the
Debt, subject only to such defects, Liens, encumbrances, assessments,
security interests, restrictions, easements and other title exceptions as
shall be acceptable to Lender or permitted by the express terms of the
relevant Mortgage; and UCC-1 financing statements covering fixtures owned by
the relevant Borrower and affixed to, or used in connection with each such
property, in each case appropriately completed and duly executed and
delivered to Lender for filing in the appropriate county and State offices
shall have been filed to perfect Lender's Lien in the collateral described
therein. Each of the Mortgages shall be cross-collateralized and cross-
defaulted with the other Mortgages. In the event that the State in which the
Subject Property is located does not impose a mortgage recording tax, then
the Mortgage encumbering such Subject Property will be in the face amount of
$90,000,000. In the event, however, that any such State imposes a mortgage
recording tax, the face amount of the applicable Mortgage shall be limited to
100% of the appraised value of the Subject Property as determined by Lender.
(d) Default. No Event of Default or Default shall have occurred
and be continuing and no Default will occur as the result of the consummation
of any of the transactions contemplated by the Loan Documents.
(e) Representations. The representations and warranties of
Borrower and Guarantor included and incorporated by reference in this
Agreement and each of the other Loan Documents shall be true, correct and
complete on and as of the date of such Borrowing (or, for purposes of Section
4.01(c), on and as of the Closing Date) with the same force and effect as if
made on and as of such date. On the date of funding of each subsequent
Advance, the Borrower shall execute a certification to Lender stating that
all representations and warranties made by the Borrower in this Agreement
remain true and correct as they relate to the Borrower and the Subject
Properties which were the subject of prior Advances and are true and correct
with respect to the applicable new Subject Property.
(f) Material Adverse Effect. Since the date of the most recent
financial statements of Borrower or Guarantor delivered to Lender, nothing
shall have occurred which would or could have a Material Adverse Effect on
Borrower or Guarantor.
(g) Recording Taxes. Borrower shall have paid all mortgage
recording taxes payable (if any) in each jurisdiction in which the applicable
Subject Property is located and shall have delivered to Lender any and all
supplemental or additional mortgages, in form and substance satisfactory to
Lender, as may be required by Lender. Without limiting the generality of the
foregoing, and notwithstanding anything to the contrary contained in any Loan
Document, Borrower acknowledges and agree that to the extent there is a
payment of principal of the Loan which results in the aggregate outstanding
principal amount of the Loan being less than the aggregate maximum principal
amount of the Loan secured by any Jurisdictional Capped Mortgage(s) (whether
or not such aggregate outstanding principal amount of the Loan was originally
less than the aggregate maximum principal amount of the Loan secured by such
Jurisdictional Capped Mortgage(s) prior to such payment), then (A) Borrower
may thereafter be required to pay additional mortgage recording taxes in
connection with any future Borrowing pursuant to this Agreement so that the
Jurisdictional Capped Mortgages in existence at or prior to such Borrowing
will secure, in accordance with applicable law, the amount of such Borrowing
up to the aggregate maximum original principal amount secured by such
Jurisdictional Capped Mortgage(s), and (B) if and to the extent that Lender
determines in good faith that any such additional mortgage recording taxes
are so due and payable in connection with any such future Borrowing and
unless Borrower shall have presented to Lender evidence, satisfactory to
Lender, that any such additional mortgage recording taxes are not so due and
payable, Borrower shall pay such additional mortgage recording taxes to the
appropriate governmental taxing authorities, and shall duly execute and
deliver to Lender any and all supplemental or additional mortgages and
consolidation agreements, as may be required by Lender in connection
therewith. As used herein, "Jurisdictional Capped Mortgages" shall
collectively mean, for each State, all of the Mortgage(s) now or hereafter
covering Subject Properties located in such State which secure a maximum
original principal amount of indebtedness which is less than the Commitment,
whether for the purpose of limiting the debt secured by such Mortgages and
any mortgage recording taxes payable in connection therewith or otherwise
with approval of Lender; and the "aggregate maximum principal amount of the
Loan secured by any such Jurisdictional Capped Mortgage(s)" shall mean, at
any time, the aggregate maximum original principal amount of indebtedness
secured by all of the Mortgages covering Subject Properties in such State at
such time, as specified in such Mortgages.
(h) Loan Amount. The aggregate amount of all Advances then
outstanding, prior to and after giving effect to the making of the Advance on
the Borrowing Date, does not exceed the lesser of (i) the amount of the
Commitment or (ii) 75% of the Collateral Value.
Each Borrowing Request hereunder shall be deemed to constitute a
certification by Borrower to the effect set forth in the above clauses of
this Section 4.02 (as of the date of such notice and, unless Borrower
otherwise notifies Lender prior to the date of such Borrowing, as of the date
of such Borrowing, both immediately prior to and after giving effect to such
Borrowing and the application of proceeds therefrom).
ARTICLE V COLLATERAL VALUE AND RELEASES OF COLLATERAL
Section 5.01 Determinations of Collateral Value by Lender. Lender
shall have the right at any time to recalculate the Collateral Value. In the
event that Lender determines at any time, whether pursuant to this Section
5.01 or 5.02 below, that the ratio of the aggregate outstanding principal
balances of the Loan to the then current Collateral Value (the "LTV Ratio")
exceeds seventy-five percent (75%), Borrower shall, within thirty (30) days
following Lender's demand therefor, either (a) pay down the principal balance
of the Loan in an amount necessary to reduce the LTV Ratio to seventy-five
percent (75%) or (b) deliver to Lender such additional collateral in form,
type and amount satisfactory to Lender in its sole and absolute discretion,
which additional collateral shall be subject to a first lien security
interest in favor of Lender, such that the LTV Ratio, after giving effect to
Lender's determination of the value of such collateral, is reduced to
seventy-five percent (75%). In the event that Borrower elects to deliver
additional collateral, Borrower shall also deliver such additional materials
and assurances with respect thereto as Lender may request based upon the
nature of the collateral. Upon Lender's receipt of a first lien security
interest in such additional approved collateral, such additional collateral
shall, so long as Lender continues to hold a first lien security interest
therein, be included in all future calculations of Collateral Value.
Section 5.02 Recalculations of Collateral Value at Borrower's
Request. (a) Borrower shall have the right to request that Lender
recalculate the Collateral Value once in each calendar quarter during the
term of this Agreement. In the event the recalculated Collateral Value
results in an LTV Ratio in excess of seventy-five percent (75%), Borrower
shall prepay the Loan or deliver additional collateral to Lender in
accordance with the requirements set forth in Section 5.01 above. In the
event that the recalculated Collateral Value results in an LTV Ratio of less
than seventy-five percent (75%), Borrower shall have the right, subject to
the satisfaction of all applicable conditions set forth herein, to receive
additional Advances hereunder until the LTV Ratio reaches seventy-five
percent (75%), but in no event shall the aggregate outstanding balance at any
time exceed $90,000,000.
(b) Notwithstanding anything to the contrary contained in this Article
or Article IV above, subject to the satisfaction of all applicable conditions
thereto set forth in Article IV above as modified below, in the event
Borrower elects and is entitled to receive an Advance following the
recalculation of the Collateral Value without delivering additional
Collateral to Lender:
(i) In lieu of new Loan Documents as contemplated by Section
4.02(c) above, Lender shall have received, with respect to those Subject
Properties for which the Mortgage amount is limited to 100% of the appraised
value thereof, amendments to or supplements of such Mortgages (and the
related Assignments), satisfactory in form and substance to Lender, which the
Lender reasonably determines to be necessary to maintain the same level of
security on a cross- collateralized basis with respect to the applicable
Subject Properties as existed immediately prior to such Advance; and
(ii) In lieu of a new Title Policy, Lender shall have received such
endorsements to the Title Policies for all Subject Properties, satisfactory
in form and substance to Lender, increasing the amount of insurance for each
Subject Property by (x) the applicable amount of the increase to or
supplement of the applicable original Mortgage as contemplated in clause (i)
above with respect to Subject Properties with respect to which the amount of
the Mortgage was originally 100% of the appraised value and (y) with respect
to all other Subject Properties, an amount reasonably allocated thereto by
Lender, and showing said Advance as having the same priority as the original
Advance made with respect to the applicable Subject Properties without
further exception.
Section 5.03 Release of Collateral. Provided there exists no Default
or Event of Default hereunder (other than a Default or Event of Default
which is non-monetary in nature and relates only to the property encumbered
by the Mortgage to be released), Lender shall fully release any Mortgage upon
the request of the Borrower (but Lender shall not partially release any
Mortgage) provided that after giving effect to such reconveyance, (a) the LTV
Ratio does not exceed seventy-five percent (75%) and (b) there shall exist no
Default or Event of Default. As a condition to any such release, Borrower
shall remit to Lender the release price calculated by Lender as necessary to
achieve a seventy-five percent (75%) LTV Ratio after giving effect to the
release of the Mortgage. As additional conditions to any such release,
Borrower shall pay all fees, costs and expenses, including reasonable
attorneys' fees and expenses, incurred by Lender in connection with such
release. In connection with a release of a particular Mortgage, Lender shall
also, at Borrower's expense, release the related Assignment of Rents and UCC
financing statements relating to that particular Mortgage.
Section 5.04 Calculations of Collateral Value and LTV Ratio. All
calculations of Collateral Value and LTV Ratio shall be made by Lender in
accordance with its customary underwriting standards consistently applied and
shall be deemed binding and conclusive upon Borrower.
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01 Representations and Warranties. In order to induce
Lender to enter into this Agreement and to make the Advances of the Loan
hereunder, Borrower hereby represents and warrants to Lender as of the date
hereof or such other date as is set forth below:
(a) Organization and Authority. Borrower (i) is a limited
liability company, general partnership, limited partnership or corporation,
as the case may be, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation, (ii) has all requisite
power and authority and all necessary licenses and permits to carry on its
business as now conducted and as presently proposed to be conducted and (iii)
is duly qualified, authorized to do business and in good standing in each
other jurisdiction where the conduct of its business or the nature of its
activities makes such qualification necessary. If Borrower is a limited
liability company, limited partnership or general partnership, each general
partner or managing member, as applicable, of Borrower which is a corporation
is duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation.
(b) Power. Borrower and, if applicable, each General Partner has
full power and authority to execute, deliver and perform, as applicable, the
Loan Documents to which it is a party.
(c) Authorization of Borrowing. The execution, delivery and
performance of the Loan Documents to which Borrower is a party, are within
the powers of Borrower and have been duly authorized by Borrower and, if
applicable, the General Partners, by all requisite action (and Borrower
hereby represents that no approval or action of any limited partner or
shareholder, as applicable, of Borrower is required to authorize any of the
Loan Documents to which Borrower is a party) and will constitute the legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their terms, except as enforcement may be stayed or limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in proceedings at law or in equity) and will not (i) violate any
provision of its partnership agreement or partnership certificate or
certificate of incorporation or bylaws, or operating agreement, or articles
of organization, as applicable, or, to its knowledge, any law, judgment,
order, rule or regulation of any court, arbitration panel or other
Governmental Authority, domestic or foreign, or other Person affecting or
binding upon Borrower or the Subject Property, or (ii) violate any provision
of any indenture, agreement. mortgage, contract or other instrument to which
Borrower or, if applicable, any General Partner is a party or by which any of
their respective properties, assets or revenues are bound, or be in conflict
with, result in an acceleration of any obligation or a breach of or
constitute (with notice or lapse of time or both) a default or require any
payment or prepayment under, any such indenture, agreement, mortgage,
contract or other instrument, or (iii) result in the creation or imposition
of any lien, except those in favor of Lender as provided in the Loan
Documents to which it is a party.
(d) Consent Neither Borrower nor, if applicable, any General
Partner, is required to obtain any consent, approval or authorization from,
or to file any declaration or statement with, any Governmental Authority or
other agency in connection with or as a condition to the execution, delivery
or performance of this Agreement, the Note or the other Loan Documents which
has not been so obtained or filed.
(e) Reserved
(f) Other Agreements. Borrower is not a party to nor is otherwise
bound by any agreements or instruments which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect. Neither
Borrower nor, if applicable, any General Partner, is in violation of its
organizational documents or other restriction or any agreement or instrument
by which it is bound, or any judgment, decree, writ, injunction, order or
award of any arbitrator, court or Governmental Authority, or any Legal
Requirement, in each case, applicable to Borrower or the Subject Property,
except for such violations that would not, individually or in the aggregate,
have a Material Adverse Effect.
(g) Maintenance of Existence. Borrower and, if applicable, each
General Partner at all times since their formation have been duly formed and
existing and shall preserve and keep in full force and effect their existence
as a Single Purpose Entity in accordance with the requirements of the
Mortgages.
(h) No Defaults. No Default or Event of Default has occurred and
is continuing or would occur as a result of the consummation of the
transactions contemplated by the Loan Documents. Borrower is not in default
in the payment or performance of any of its Contractual Obligations in any
respect.
(i) Governmental Consents and Approvals. Borrower and, if
applicable, each General Partner, have obtained or made all necessary (i)
consents, approvals and authorizations, and registrations and filings of or
with all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
nongovernmental Persons, in each case, which are required to be obtained or
made by Borrower or, if applicable, the General Partner, in connection with
the execution and delivery of, and the performance by Borrower of its
obligations under, the Loan Documents.
(j) Investment Company Act Status. Borrower is not an "investment
company," or a company "controlled" by an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended.
(k) Compliance with Law. Borrower is and shall remain in
compliance in all material respects with all Legal Requirements to which it
is subject, including, without limitation, all Environmental Statutes, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities
Act and ERISA.
(l) Financial Information. The financial statements of Borrower
and the General Partner that have been delivered by or on behalf of Borrower
or the General Partner to Lender (i) are true, complete and correct in all
material respects, (ii) fairly present the financial condition of the
Borrower or the General Partner, as the case may be, as of the end of the
period indicated and the results of operations for the periods indicated and
(iii) have been prepared on a cash basis in accordance with sound accounting
principles consistently applied (or such other accounting basis as is
acceptable to Lender) throughout the periods covered. As of the date hereof,
neither Borrower nor, if applicable, any General Partner, has any contingent
liability, liability for taxes or other unusual or forward commitment not
reflected in such financial statements delivered to Lender; since the date of
the last financial statements delivered by Borrower to Lender except as
otherwise disclosed in such financial statements or notes thereto, there has
been no change in the assets, liabilities or financial position of Borrower
nor, if applicable, any General Partner, or in the results of operations of
Borrower which would have a Material Adverse Effect. Neither Borrower nor, if
applicable, any General Partner, has incurred any obligation or liability,
contingent or otherwise not reflected in such financial statements which
would have a Material Adverse Effect.
(m) Transaction Brokerage Fees. Borrower has not dealt with any
financial advisors, brokers, underwriters, placement agents, agents or
finders in connection with the transactions contemplated by this Agreement
except for Lender and its Affiliates. All brokerage fees, commissions and
other expenses payable in connection with the transactions contemplated by
the Loan Documents have been paid in full contemporaneously with the
execution of the Loan Documents and the funding of the Initial Advance.
Borrower hereby agrees to indemnify and hold Lender harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from (i) a claim by any Person that such Person acted
on behalf of Borrower in connection with the transactions contemplated herein
or (ii) any breach of the foregoing representation. The provisions of this
subsection shall survive the repayment of the Debt.
(n) Federal Reserve Regulations. No part of the proceeds of any
Advance will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System or for any other purpose which would
be inconsistent with such Regulations G, T, U or X or any other Regulations
of such Board of Governors, or for any purposes prohibited by Legal
Requirements or by the terms and conditions of the Loan Documents.
(o) Pending Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of Borrower, threatened against or
affecting Borrower in any court or before any Governmental Authority which if
adversely determined either individually or collectively has or is reasonably
likely to have a Material Adverse Effect.
(p) Solvency; No Bankruptcy. Each of Borrower and, if applicable,
the General Partner, (i) is and has at all times been Solvent and will remain
Solvent immediately upon the consummation of the transactions contemplated by
the Loan Documents and (ii) is free from bankruptcy, reorganization or
arrangement proceedings or a general assignment for the benefit of creditors
and is not contemplating the filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
such Person's assets or property and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or, if applicable,
the General Partner. None of the transactions contemplated hereby will be or
have been made with an intent to hinder, delay or defraud any present or
future creditors of Borrower and Borrower has received reasonably equivalent
value in exchange for its obligations under the Loan Documents. Borrower's
assets do not, and immediately upon consummation of the transaction
contemplated in the Loan Documents will not, constitute unreasonably small
capital to carry out its business as presently conducted or as proposed to be
conducted. Borrower does not intend to, nor believe that it will, incur debts
and liabilities beyond its ability to pay such debts as they may mature.
(q) Use of Proceeds. The proceeds of the Loan shall be applied by
Borrower to (i) satisfy certain mortgage loans presently encumbering all or a
part of the applicable Subject Property or to be purchased with such
proceeds, (ii) fund any reserve required by Lender in connection with a
particular Advance, (iii) purchase the Subject Property, (iv) pay certain
transaction costs incurred by Borrower in connection with the Loan and (v)
for any other business purposes approved by Lender. No portion of the
proceeds of the Loan will be used for family, personal, agricultural or
household use.
(r) Tax Filings. Borrower and, if applicable, each General
Partner, have filed all federal, state and local tax returns required to be
filed and have paid or made adequate provision for the payment of all
federal, state and local taxes, charges and assessments payable by Borrower
and, if applicable, the General Partners. Borrower and, if applicable, the
General Partners, believe that their respective tax returns properly reflect
the income and taxes of Borrower and said General Partner, if any, for the
periods covered thereby, subject only to reasonable adjustments required by
the Internal Revenue Service or other applicable tax authority upon audit.
(s) Not Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.
(t) ERISA.
(i) The assets of Borrower and Guarantor are not and will not
become treated as "plan assets", whether by operation of law or under
regulations promulgated under ERISA. Each Plan and Welfare Plan, and, to the
knowledge of Borrower, each Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material respects in
compliance with, its terms and the applicable provisions of ERISA, the Code
and any other applicable Legal Requirement, and no event or condition has
occurred and is continuing as to which Borrower would be under an obligation
to furnish a report to Lender under clause (ii)(A) of this subsection. Other
than an application for a favorable determination letter with respect to a
Plan, there are no pending issues or claims before the Internal Revenue
Service, the United States Department of Labor or any court of competent
jurisdiction related to any Plan or Welfare Plan under which Borrower,
Guarantor or any ERISA Affiliate, directly or indirectly (through an
indemnification agreement or otherwise), could be subject to any material
risk of liability under Section 409 or 502(i) of ERISA or Section 4975 of the
Code. No Welfare Plan provides or will provide benefits, including, without
limitation, death or medical benefits (whether or not insured) with respect
to any current or former employee of Borrower, Guarantor or any ERISA
Affiliate beyond his or her retirement or other termination of service other
than (A) coverage mandated by applicable law, (B) death or disability
benefits that have been fully provided for by fully paid up insurance or (C)
severance benefits.
(ii) Borrower will furnish to Lender as soon as possible,
and in any event within ten (10) days after Borrower knows or has reason to
believe that any of the events or conditions specified below with respect to
any Plan, Welfare Plan or Multiemployer Plan has occurred or exists, an
Officer's Certificate setting forth details respecting such event or
condition and the action, if any, that Borrower or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC (or any other relevant
Governmental Authority) by Borrower or an ERISA Affiliate with respect to
such event or condition, if such report or notice is required to be filed
with the PBGC or any other relevant Governmental Authority:
(A) any reportable event, as defined in Section 4043(b)
of ERISA and the regulations issued thereunder, with respect
to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified
within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding standard
of Section 412 of the Code of Section 302 of ERISA, including,
without limitation, the failure to make on or before its due
date a required installment under Section 412(m) of the Code
of Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code), and any request for a waiver
under Section 412(d) of the Code for any Plan;
(B) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by
Borrower or an ERISA Affiliate to terminate any Plan;
(C) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by Borrower or
any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by PBGC with respect to such
Multiemployer Plan;
(D) the complete or partial withdrawal from a
Multiemployer Plan by Borrower or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by Borrower or
any ERISA Affiliate of notice from a Multiemployer Plan that
it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(E) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against Borrower or any ERISA Affiliate
to enforce Section 515 of ERISA, which proceeding is not
dismissed within thirty (30) days;
(F) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the
trust of which such Plan is a part if Borrower or an ERISA
Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections; or
(G) the imposition of a lien or a security interest in
connection with a Plan.
(iii) Borrower shall not knowingly engage in or permit any
transaction in connection with which Borrower, Guarantor or any ERISA
Affiliate could be subject to either a civil penalty or tax assessed pursuant
to Section 502(i) or 502(1) of ERISA or Section 4975 of the Code, permit any
Welfare Plan to provide benefits, including without limitation, medical
benefits (whether or not insured), with respect to any current or former
employee of Borrower, Guarantor or any ERISA Affiliate beyond his or her
retirement or other termination of service other than (A) coverage mandated
by applicable law, (B) death or disability benefits that have been fully
provided for by paid up insurance or otherwise or (C) severance benefits,
permit the assets of Borrower or Guarantor to become "plan assets", whether
by operation of law or under regulations promulgated under ERISA or adopt,
amend (except as may be required by applicable law) or increase the amount of
any benefit or amount payable under, or permit any ERISA Affiliate to adopt,
amend (except as may be required by applicable law) or increase the amount of
any benefit or amount payable under, any employee benefit plan (including,
without limitation, any employee welfare benefit plan) or other plan, policy
or arrangement, except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result
in a material increase in benefits expense to Borrower, Guarantor or any
ERISA Affiliate.
(u) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
Section 6.02 Financial Reports.
(a) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, on a cash basis in accordance with sound
accounting principles consistently applied (or such other accounting basis
acceptable to Lender), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower. Lender shall have the
right from time to time at all times during normal business hours upon
reasonable notice to examine such books, records and accounts at the office
of Borrower or other Person maintaining such books, records and accounts and
to make such copies or extracts thereof as Lender shall desire. After the
occurrence of an Event of Default, Borrower shall pay any costs and expenses
incurred by Lender to examine Borrower's accounting books and records, as
Lender shall determine to be necessary or appropriate in the protection of
Lender's interest.
(b) Borrower will furnish Lender annually, within one hundred
twenty (120) days following the end of each Fiscal Year of Borrower, with a
complete copy of Borrower's financial statement audited by a certified public
accountant acceptable to Lender and prepared on a cash basis in accordance
with sound accounting principles consistently applied (or such other
accounting basis acceptable to Lender) covering all of the financial affairs
of Borrower and containing a statement of revenues and expenses, a statement
of assets and liabilities and a statement of Borrower's equity. Together with
Borrower's annual financial statements, Borrower shall supplement the
combined financial statement with information on a property by-property basis
that was used in the preparation of the combined statement and shall furnish
to Lender an Officer's Certificate certifying as of the date thereof (i) that
the annual financial statements accurately represent the results of operation
and financial condition of Borrower (or, in the case of a combined financial
statement, the results of operation and financial condition of Borrower) all
in accordance with sound accounting principles consistently applied, and (ii)
whether to the best knowledge of the officer executing such certificate,
there exists an event or circumstance which constitutes, or which upon notice
or lapse of time or both would constitute, a Default under the Note or any
other Loan Document executed and delivered by Borrower, and if such event or
circumstance exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy such event or circumstance.
(c) Borrower shall furnish to Lender, within twenty-five (25) days
following the end of each calendar quarter, income and expense statements and
an updated rent roll with respect to each of the Subject Properties, in each
case certified by Borrower to be true and correct.
(d) Borrower shall furnish Lender, within thirty (30) days after
Lender's request therefor, with such further detailed information with
respect to the financial affairs of Borrower as may be reasonably requested
by Lender.
Section 6.03 Litigation. Borrower will give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
(in writing) against Borrower which might have a Material Adverse Effect.
ARTICLE VII. EVENTS OF DEFAULT
Section 7.01 Events of Default. If any Event of Default shall occur
and be continuing then, and in any such event, and in addition to any other
rights or remedies Lender may have hereunder, under any other Loan Documents,
including, without limitation, pursuant to Section 13.02 of the Mortgages, or
at law or equity, (A) if such event is an Event of Default specified in
Section 13.01(i) of any of the Mortgages, the Commitment hereunder shall
immediately terminate and the outstanding principal amount of the Note
together with accrued and unpaid interest thereon and all other amounts owing
under this Agreement and the Note shall immediately become due and payable,
and (B) if such event is any other Event of Default, Lender may, by written
notice of default to Borrower, terminate the Commitment hereunder and/or
declare the outstanding principal amount of the Note, together with accrued
and unpaid interest thereon and all other amounts owing under this Agreement
and the Note to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above herein
or in any of the other Loan Documents, presentment, demand, protest and all
other notices of any kind are hereby expressly waived by Borrower.
ARTICLE VIII. MISCELLANEOUS
Section 8.01 Notices. All notices, requests and other communications
to any party hereunder or under the Note shall be given in the manner and to
the address of each party as set forth in Article XI of the Mortgages.
Section 8.02 Performance by Lender. Should Borrower fail to perform
any covenant, duty or agreement in accordance with the terms and conditions
of any of the Loan Documents to which it is party and, except in the case of
an emergency or any other event which could or would materially adversely
affect the collateral for the Loan (in which cases no notice shall be
required), such failure continues uncured for a period ten (10) days
following written notice to Borrower specifying such default, Lender may (but
shall be under no obligation to), at its option, perform, or attempt to
perform, such covenant, duty or agreement on behalf of Borrower. In such
event, the appropriate entity shall, at the request of Lender, promptly pay
any amount expended by Lender in such performance or attempted performance to
Lender at the office of Lender designated for receipt of payments of
principal and interest on the Loan, together with interest thereon at the
Default Rate from the date of such expenditure by Lender until paid.
Notwithstanding the foregoing, it is expressly understood that Lender does
not assume and shall never have, except by express written consent, any
liability or responsibility for the performance of any duties of Borrower
hereunder, or under or in connection with any of the other Loan Documents.
Section 8.03 No Oral Change. The terms of this Agreement, together
with the terms of the Note and the other Loan Documents constitute the entire
understanding and agreement of the parties hereto and supersede all prior
agreements, understandings and negotiations between Borrower and Lender with
respect to the Loan. This Agreement, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally
or by any act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
Section 8.04 No Waiver: Remedies Cumulative. No failure or delay on
the part of Lender in exercising any right, remedy, power or privilege
hereunder or under the other Loan Documents and no course of dealing between
Borrower and Lender shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder or
under the other Loan Documents preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege hereunder or
thereunder. The rights and remedies provided herein and in the other Loan
Documents are cumulative and not exclusive of any rights or remedies provided
by law. The giving of notice to or demand on Borrower, which notice or demand
is not required hereunder or under the other Loan Documents, shall not
entitle Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights, remedies, powers or
privileges of Lender in any circumstances not requiring notice or demand.
Section 8.05 Fees and Expenses. In addition to any other amounts
payable by the Borrower under the terms of any of the Loan Documents,
Borrower agrees to promptly pay or reimburse Lender for:
(a) all reasonable expenses (including, without limitation, the
fees, which shall not exceed $50,000, and the reasonable disbursements of
Swidler & Berlin, Chartered and any local counsel retained by Lender)
incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement:
(b) all reasonable expenses (including, without limitation, the
fees, which shall not exceed $10,000 per Advance per property, and the
reasonable disbursements of Swidler & Berlin, Chartered and any local counsel
retained by Lender) incurred in connection with the closing of each
subsequent Advance;
(c) all costs and expenses (including, without limitation,
reasonable fees and disbursements of counsel) incurred in connection with any
Default or Event of Default and any enforcement or collection proceedings
resulting therefrom including, without limitation, in connection with any
bankruptcy, insolvency, liquidation, reorganization, moratorium or other
similar proceedings involving Borrower or a "workout" of the Loan, as
applicable, or in connection with any seizure or sale of any Subject Property
or any related or similar proceedings;
(d) all Taxes, and all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement, any other Loan Documents or any other
document referred to herein or therein, and all costs, expenses, Taxes and
other charges incurred in connection with any filing, registration, recording
or perfection of any security interest or Lien contemplated by this
Agreement, any other Loan Documents or any document referred to therein; and
(e) all recording fees, registration taxes, title insurance
premiums, appraisal fees, costs of surveys, fees of third-party consultants
and all other fees and expenses reasonably incurred by Lender in connection
with any Subject Property, all of which sums shall be paid on demand, with
interest thereon at the Default Rate if not paid within five (5) days
following demand therefor.
Section 8.06 Indemnification. Borrower agrees to indemnify Lender
(and any Participant of Lender) and their respective directors, officers,
attorneys, employees and agents from, and to hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses (in
contract, tort or otherwise) incurred by any of them, as incurred, arising
out of or by reason of any claim of any Person relating to or arising out of
this Agreement or any other Loan Document or any transaction contemplated
hereby or thereby or resulting from the ownership or financing of any Subject
Property or any investigation or litigation or other proceedings (including
any threatened investigation or litigation or other proceedings) relating to
this Agreement or any other Loan Document or any actual or proposed use by
Borrower of any of the proceeds of any of the Advances (including, without
limitation, the reasonable fees and disbursements of counsel), but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason
of the gross negligence or willful misconduct of any Person to be indemnified
hereunder. Notwithstanding any other provision of this Agreement, the
obligation of Borrower under this Section 8.06 shall survive the repayment of
the Loan.
Section 8.07 Benefits of Agreement. This Agreement shall be binding
upon and inure to the benefit of Borrower, Lender and their respective
successors and assigns, except that Borrower may not assign or transfer any
of its rights or obligations under this Agreement or the Note without the
prior written consent of Lender.
Section 8.08 Participations. Lender may at any time grant to one or
more banks or other institutions (each a "Participant") participating
interests in its Commitment or any portion or all of the Loan. In the event
of any such grant by Lender of a participating interest to a Participant,
whether or not upon notice to Borrower, Lender shall remain responsible for
the performance of its obligations hereunder, and Borrower shall continue to
deal solely and directly with Lender in connection with Lender's rights and
obligations under this Agreement. Any agreement pursuant to which Lender may
grant such a participating interest shall provide that Lender shall retain
the sole right and responsibility to enforce the obligations of Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that (i) Lender will not agree to any
modification, amendment or waiver of this Agreement (a) which increases or
decreases the Commitment, (b) reduces the principal of or rate of interest on
the Loan or fees hereunder, (c) postpones the date fixed for any payment of
principal of or interest on the Loan or any fees hereunder, (d) modifies the
75% LTV Ratio requirement or (e) otherwise materially affects the rights of
the Participant without the consent of the Participant and (ii) the
Participant may commence servicing the Loan upon the occurrence of an Event
of Default. Lender shall have the right to deliver from time to time to any
Participant or prospective Participant copies of all financial and other
information in the possession of Lender with respect to any Loan, the
Borrower, any guarantor or any other related person or entity, all of which
information may be retained by such Participant and/or prospective
Participant.
Section 8.09 Assignments. Lender may at any time assign to one or
more banks or other institutions (each an "Assignee") all, or a proportionate
part of all, of its rights and obligations under this Agreement and the Note,
and such Assignee shall assume such rights and obligations, pursuant to an
assignment and assumption agreement executed by such Assignee and Lender,
with (and subject to) the subscribed consent of Borrower, which shall not be
unreasonably withheld; provided that if an Assignee is an Affiliate of
Lender, no such consent shall be required. Upon execution and delivery of
such instrument and payment by such Assignee to Lender of an amount equal to
the purchase price agreed between Lender and such Assignee, such Assignee
shall be a party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this Section
8.09, Lender and Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. In addition to the foregoing,
Lender may assign or transfer any of its rights or obligations hereunder and
under the Note to an Affiliate or other branch of Lender.
Section 8.10 Governing Law.
(a) This Agreement was negotiated and executed in New York, and
the proceeds of the Note delivered pursuant hereto will be disbursed from New
York, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in all
respects, including, without limiting the generality of the foregoing,
matters of construction, validity and performance. This Agreement and the
obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
made and performed in such State and any applicable law of the United States
of America, except that at all times the provisions for the creation,
perfection, and enforcement of the liens and security interests created
pursuant to the Mortgages and pursuant to the other Loan Documents shall be
governed by and construed according to the law of the State in which the
Subject Property is located, it being understood that, to the fullest extent
permitted by law of such State, the law of the State of New York shall govern
the validity and the enforceability of all Loan Documents, and the Debt or
obligations arising hereunder or thereunder. To the fullest extent permitted
by law, Borrower hereby unconditionally and irrevocably waives any claim to
assert that the law of any other jurisdiction governs this Agreement and this
Agreement shall be governed by and construed in accordance with the laws of
the State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) Any legal suit, action or proceeding against Borrower or
Lender arising out of or relating to this Agreement shall be instituted in
any federal or state court in New York, New York, pursuant to Section 5-1402
of the New York General Obligations Law, and Borrower waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding, and Borrower hereby irrevocably submits to the juris-
diction of any such court in any suit, action or proceeding. Borrower does
hereby designate and appoint CT Corporation System, 1633 Broadway, New York,
New York 10019 as its authorized agent to accept and acknowledge on its
behalf service of any and all process which may be served in any such suit,
action or proceeding in any federal or state court in New York, New York, and
agrees that service of process upon said agent at said address and written
notice of said service of Borrower mailed or delivered to Borrower in the
manner provided in Section 8.01 hereof, shall be deemed in every respect
effective service of process upon Borrower, in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give prompt notice to
the Lender of any changed address of its authorized agent hereunder, (ii) may
at any time and from time to time designate a substitute authorized agent
with an office in New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly designate such a
substitute if its authorized agent ceases to have an office in New York, New
York or is dissolved without leaving a successor.
Section 8. 11 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which shall together constitute one and the same
agreement.
Section 8.12 Waiver of Counterclaim, Etc. BORROWER HEREBY WAIVES THE
RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY
ACTION OR PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS AGENTS, AND WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO
AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED TO ASSERT
HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST BORROWER,
OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT OR THE DEBT.
Section 8.13 Severable Provisions. If any term, covenant or condition
of the Loan Documents including, without limitation, the Note or this
Agreement, is held to be invalid, illegal or unenforceable in any respect,
such Loan Document shall be construed without such provision.
Section 8.14 Right of Setoff. In addition to any other rights now or
hereafter granted under applicable law or otherwise and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
Borrower hereby authorizes Lender and each Affiliate of Lender at any time or
from time to time, without presentment, demand, protest or other notice of
other kind to Borrower or any other Person, each of which is hereby expressly
waived by Borrower, to the extent permitted by applicable law, to set-off and
appropriate and apply any and all deposits (general or special) in any
currency and any amount owing from Lender to Borrower, to any amount owing by
Borrower hereunder and under the other Loan Documents to which it is a party
to Lender.
Section 8.15 Confidentiality. Except as provided herein to the
contrary, all correspondence from Lender to Borrower and all of the Loan
Documents are confidential and may not be shown by Borrower to or discussed
by Borrower with any third party (other than on a confidential basis with
Borrower's legal counsel and independent public accountants and Borrower's
investors) without Lender's prior written consent.
Section 8.16 Exhibits Incorporated. The information set forth on the
cover hereof, and the Exhibits annexed hereto, are hereby incorporated herein
as a part of this Agreement with the same effect as if set forth in the body
hereof.
Section 8.17 Sole Discretion of Lender. Whenever Lender exercises any
right given to it to approve or disapprove, or any arrangement or term is to
be satisfactory to Lender, the decision of Lender to approve or disapprove or
to decide that arrangements or terms are satisfactory or not satisfactory
shall be in the sole discretion of Lender and shall be final and conclusive,
except as may be otherwise specifically provided herein.
Section 8.18 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement specifically and expressly provides for the giving
of notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice.
Section 8.19 Remedies of Borrower. In the event that a claim or
adjudication is made that Lender has acted unreasonably or unreasonably
delayed acting in any case where by law or under the Note, this Agreement or
the other Loan Documents, it has an obligation to act reasonably or promptly,
Lender shall not be liable for any monetary damages, and Borrower's remedies
shall be limited to injunctive relief or declaratory judgment.
Section 8.20 Reserved.
Section 8.21 Application of Default Rate Not a Waiver. Application of
the Default Rate shall not be deemed to constitute a waiver of any Default or
Event of Default or any rights or remedies of Lender under this Agreement,
any other Loan Document or applicable Legal Requirements, or a consent to any
extension of time for the payment or performance of any obligation with
respect to which the Default Rate may be invoked.
Section 8.22 No Joint Venture or Partnership. Borrower and Lender
intend that the relationship created hereunder be solely that of a borrower
and a lender. Nothing herein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender.
Section 8.23 Time of the Essence. Time shall be of the essence in the
performance of all obligations of Borrower hereunder.
Section 8.24 Publicity. All promotional news releases, publicity or
advertising by Borrower or its Affiliates through any media intended to reach
the general public shall not refer to the Loan Documents or the financing
evidenced by the Loan Documents, or to Lender or any of its Affiliates
without the prior written approval of Lender or its Affiliates, as
applicable, in each instance, such approval not to be unreasonably withheld
or delayed. Lender shall be authorized to provide information relating to the
Loan and matters relating thereto to rating agencies, underwriters, potential
securities investors, auditors, regulatory authorities and to any Persons
which may be entitled to such information by operation of law.
Section 8.25 Securitization. In the event the Loan or any portion
thereof are to be included as an asset of a Securitization, Borrower,
without cost to Borrower (except any costs incurred by Borrower in connection
with its representation by legal counsel), shall, at the request of Lender,
promptly, but in any event within ten (10) Business Days of Lender's request
(a) amend the Loan Documents with respect to the Loan (or the portions
thereof) which are to be included in the Securitization to extend the
maturity date thereof for a period to be determined by Lender in its sole
discretion which shall in no event be more than two (2) additional years, (b)
split the Note into two or more notes with principal balances aggregating not
more than $90,000,000, (c) amend any cross-default provisions and/or cross-
collateralization provisions in the Loan Documents so that the portions of
the Loan which are not to be included as an asset in the Securitization
shall not be cross-defaulted or cross-collateralized with the portions
thereof which are to be included within such Securitization and (d) amend the
Loan Documents and enter into additional Loan Documents as may be reasonably
requested by Lender, provided, that no such amendments or additional
documentation shall materially and adversely affect Borrower.
Section 8.26 Offsets, Counterclaims and Defenses. Any assignee of
this Agreement, any Mortgage, the Assignment or the Note shall take the same
free and clear of all offsets, counterclaims or defenses which are unrelated
to this Agreement, the Mortgages, the Assignment or the Note which Borrower
may otherwise have against any assignor of this Agreement, the Mortgages, the
Assignment and the Note and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by
any such assignee upon this Agreement, the Mortgages, the Assignment or the
Note and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.
Section 8.27 Headings; Construction of Documents: etc. The table of
contents, headings and captions of various paragraphs of this Agreement are
for convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof. Borrower
acknowledges that it was represented by competent counsel in connection with
the negotiation and drafting of this Agreement and the other Loan Documents
and that neither this Agreement nor the other Loan Documents shall be subject
to the principle of construing the meaning against the Person who drafted
same.
Section 8.28. Joint and Several.
If Borrower consists of more than one Person or party, the obligations
and liabilities of each such Person or party hereunder shall be joint and
several.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, as of
the date first above written.
SAFEGUARD CAPITAL FUND, L.P., a
Delaware limited partnership
By: Safeguard Equity Group, L.L.C., a
limited liability company,
Its General Partner
By: Safeguard Holdings, L.L.C., a
limited liability company,
Its Manager
By: /s/ Bruce C. Roch, Jr.
--------------------------
Name: Bruce C. Roch, Jr.
------------------------
Title: Manager
------------------------
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Bernard J. Costello
------------------------------------
Name: Bernard J. Costello
Title: Vice President
By: /s/ R. Gray
------------------------------------
Name: R. Gray
Title: Vice President
<PAGE>
EXHIBIT A
BORROWING REQUEST
From: _____________________________
To: Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Securities Inc.,
its agent
60 Wall Street, l8th Floor
New York, New York 10260
1. ______________________ ("Borrower") requests a Borrowing from
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("Lender") pursuant to the
Revolving Credit Agreement, dated March ___, 1998 between Borrower and Lender
(as the same may be amended from time to time, the "Agreement"). Capitalized
terms used herein and defined in the Agreement shall be used herein as so
defined.
2. Borrowing requested:
(a) Borrower hereby requests a Borrowing in the principal amount
of $_________________________; and
(b) Requested Borrowing Date:_________________ 199____.
3. The undersigned officer of Borrower represents and warrants to
Lender:
(a) no Default or Event of Default has occurred and is continuing;
and
(b) no change or event which has a Material Adverse Effect has
occurred.
4. The representations and warranties of Borrower contained in the
Agreement and those contained in each other Loan Document to which Borrower
is a party remain true and correct in all material respects on and as of the
date hereof with respect to the Borrower and all Subject Properties which
were the subject of prior Advances and are true and correct in all material
respects as of the date hereof with respect to the new Subject Property.
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this request to be duly executed
by its officer thereunto duly authorized, as of
.
____________________________________
By: _________________________________
By:
Name:
Title:
<PAGE>
EXHIBIT A-2
PRELIMINARY BORROWING REQUEST
From: ________________________
To: Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Securities Inc.,
its agent
60 Wall Street, l8th Floor
New York, New York 10260
1. , a
("Borrower") hereby submits for your approval a preliminary request for a
Borrowing from MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Lender")
pursuant to the Revolving Credit Agreement, dated as of March ___, 1998
between Borrower and Lender (as the same may be amended from time to time,
the "Agreement"). Capitalized terms used herein and defined in the Agreement
shall be used herein as so defined.
2. Borrowing requested:
(a) Borrower hereby requests a Borrowing in the principal
amount of
$ ; and
(b) Requested Borrowing Date: on or about , 199_.
3. The undersigned officer of Borrower represents and warrants to
Lender:
(a) each of the documents, instruments and agreements
required to be delivered pursuant to Section 2.01(c) of the Agreement has
been previously delivered to you or accompanies this request, and each such
document, instrument and agreement is either the original or a true and
accurate copy thereof and has not been amended, modified or terminated since
the date submitted to you;
(b) no Default or Event of Default has occurred and is
continuing under the Agreement; and
(c) no change or event which constitutes a Material Adverse
Effect has occurred.
4. The representations and warranties of Borrower contained in the
Agreement and those contained in each other Loan Document to which Borrower
is a party remain true and correct in all material respects on and as of the
date hereof with respect to the Borrower and all Subject Properties which
were the subject of prior Advances and are true and correct in all material
respects as of the date hereof with respect to the new Subject Property.
IN WITNESS WHEREOF, Borrower has caused this request to be duly executed
by its officer thereunto duly authorized, as of .
BORROWER
By:________________________________
Name:
Title:
<PAGE>
Schedule I
Document No. Item
1. Checklist of Credit File Contents
2. Loan Summary Memorandum
3. Exhibit 1 - Site Plan or Building Layout/Floor Plan
4. Exhibit 2 - Color Photographs
5. Exhibit 3 - Property Operating Statements (2 prior years), current
year-to date and budget or trailing 12 - Months
6. Exhibit 4 - Rent Roll (or other evidence of leasing status) and
Lender rent roll form, if applicable
7. Exhibit 5 - Capital Expenditures Schedule and Budget
8. Signed Tenant Estoppel Certificates for Major Space Leases only
9. Appraisals (2 originals and 1 copy) to be ordered by Lender
10. Environmental Site Assessment (2 originals and 1 copy) to be
ordered by Lender
11. Physical Assessment Report (2 originals and 1 copy) to be ordered
by Lender
12. Seismic (2 originals) to be ordered by Lender
13. Site inspection - to be ordered by Lender
14. Real Estate Tax Bills (2 years)
15. Monthly Occupancy History (2 years)
16. Tenant Delinquency Report (1 year)
17. Standard Lease Form - all properties except Hotel and Nursing Home
18. Executed Ground Lease - if applicable
19. Tenant Leases (if required by Lender) - Retail, Industrial, Office
only
20. Updated Rent Roll - Multifamily and Self-Storage only
21. Termite Inspection Report - Multifamily only
22. Executed Property Management Agreement
23. All known current property code violations for the Mortgaged
Property
24. All known current litigation for the Mortgaged Property
25. Property Insurance Policies and Paid Receipts
26. Certificates of Occupancy
27. Licenses and Permits
28. Evidence of Zoning
29. Major Vendor/Service Contracts and Equipment Leases - Hotel,
Congregate Care and Nursing Home only
30. Letter of Rebuildability, if legal non-conforming use
<PAGE>
Schedule II
APPROVED PROFESSIONAL CONSULTANTS
FIRM NAME CONTACT NAME CONTACT NUMBER
- --------- ------------ --------------
APPRAISERS
CB Commercial Ron Neyhart (770) 851-7874
Cushman & Wakefield Bruce Kellogg (404) 853-5227
ENGINEERS AND ENVIRONMENTAL CONSULTANTS
Aaron & Wright Richard Dagnall (312) 573-0327
Certified Environments Inc. Gregory F. Paulay (301) 622-7100
Eckland Consultants Bob Splain (214) 490-4010
EMG Fritzi Beale (410) 785-6200
Law Engineering Steve Taylor (214) 934-0800
Property Solutions, Inc. Tim Downes (609) 764-6000
SEISMIC CONSULTANTS
Dames & Moore Craig Tillman (714) 433-2000
Eckland Consultants Sterling Ault (520) 577-0108
Project Resources Inc. Noreen L. Clindinning (619) 505-1000
PROMISSORY NOTE
Date of Note: March 28, 1998
Note Amount: $90,000,000.00
FOR VALUE RECEIVED, the undersigned, as maker (the "Maker"), hereby
promises to pay to the order of MORGAN GUARANTY TRUST COMPANY OF NEW YORK
("Payee"), on or before April 1, 2001, at its office located at 60 Wall
Street, l8th Floor, New York, New York 10260 or to such other location or
account as Payee shall specify to Maker from time to time, in federal or
other immediately available funds in lawful money of the United States, the
principal amount of NINETY MILLION AND NO/100 DOLLARS ($90,000,000.00) or, if
less, the aggregate unpaid principal amount of all Advances made by Payee to
the Maker pursuant to the Revolving Credit Agreement dated as of even date
herewith (such agreement as it may from time to time be amended, modified or
supplemented being the "Loan Agreement") between Maker and Payee, and as
recorded by Payee on the schedule attached to this Note and by specific
reference made a part thereof (the "Schedule"). The amounts of principal
indicated by said Schedule as outstanding or accrued and unpaid, as the case
may be, shall constitute rebuttable presumptive evidence of the principal
outstanding and the accrued and unpaid interest on the Advances; provided,
that any failure or error on the part of Payee in recording any Advance on
such Schedule shall not limit the obligation of Maker to pay all principal of
and interest and other amounts accruing on the Loan. Up to $10,000,000 of
the principal amount evidenced hereby may be repaid and subsequently
readvanced in accordance with the terms of the Loan Agreement.
SECTION 1 DEFINITIONS
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Note
shall include in the singular number the plural and in the plural number the
singular. All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Mortgages or the Loan Agreement.
"Adjusted LIBOR" means, at any date of determination, the quotient of
(i) the LIBO Rate then in effect divided by (ii) the difference between (A)
1.0, minus (B) the reserve percentage (expressed as a decimal) applicable
during such Interest Accrual Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those days
in such Interest Accrual Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board for
determining the maximum reserve requirement (including, any emergency,
supplemental or other marginal reserve requirement) of Payee with respect to
liabilities or assets consisting of or including "Eurocurrency liabilities"
(as such term is defined in Regulation D of the Board) having a term equal to
such Interest Accrual Period.
"Base Rate" means, for any day the Federal Funds Rate for such day plus
2.50%.
"Board" means the Board of Governors of the Federal Reserve System, and
any successor thereof.
"Business Day" means any a Business Day as defined in the Mortgages, and
when used in the context of an Advance bearing interest at the LIBO Rate, is
also a day of trading by and between banks in the London interbank market.
"Capital Adequacy Rule" means any law, rule or regulation regarding
capital adequacy, or any interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency.
"Dollar" and the sign "$" means lawful money of the United States of
America.
"Federal Funds Rate" means, for any date, the rate set forth in the
weekly statistical release designated as H.15(519) or any successor
publication, published by the Board for such day opposite the caption
"Federal Funds Effective". If on the relevant day such rate is not yet so
published, the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York for such date under the caption "Federal Funds
Effective Rate". If on any relevant date the appropriate rate for such date
is not yet published in either of the foregoing publications, the rate for
such day will be the arithmetic mean (rounded upwards if necessary, to the
nearest 1/l00th of one percent) of the rates for the last transaction in
overnight Federal Funds arranged prior to 9:00 a.m. (New York City time) on
that day by three leading brokers or dealers of Federal Funds transactions in
New York City, selected by Payee.
"Interest Accrual Period" means each one-month period commencing on the
first day of each calendar month and ending on the last day of such calendar
month; provided that, if any Borrowing is made on a day other than the first
day of a calendar month, then the first Interest Accrual Period with respect
to such Borrowing shall be deemed to have begun on the date of such Borrowing
and shall end on the last day of the calendar month in which such Borrowing
was made. Notwithstanding the foregoing, with respect to any Advance (a) if
any Interest Accrual Period would otherwise commence before and end after the
applicable Maturity Date, such Interest Accrual Period shall end on such
Maturity Date; and (b) each Interest Accrual Period which would otherwise end
on a day which is not a Business Day shall end on the next succeeding day
which is a Business Day (or if such next succeeding Business Day falls in the
next succeeding calendar month, such Interest Accrual Period shall end on the
next preceding Business Day) and the first day of the next succeeding
Interest Accrual Period shall be adjusted to fall on the last day of such
preceding Interest Accrual Period.
"LIBOR Lending Office" means the office of Payee located at Nassau,
Bahamas or such other branch (or Affiliate) of Payee as Payee may designate
as its LIBOR Lending Office.
"LIBO Rate" means the rate per annum at which deposits in Dollars appear
with respect to the applicable Interest Accrual Period on the Telerate Page
3750 (or any successor page), in each case as of 11:00 a.m. (London time) two
Business Days prior to the beginning of such Interest Accrual Period, or if
such rate is not available, then the average (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of the rates quoted to Payee in the London
Interbank market at or about 11:00 a.m. (London time) two Business Days prior
to the first day of the applicable Interest Accrual Period for the offering
to Payee of Dollar deposits for such Interest Accrual Period in an amount
approximately equal to the aggregate amount of all Advances to be outstanding
on the first day of such Interest Accrual Period and with a maturity equal to
such Interest Accrual Period.
"Maturity Date" shall mean April 1, 2001.
"Mortgages" shall mean collectively any mortgages, deeds to secure debt,
deeds of trust or other similar security instruments now or hereafter
delivered to Payee pursuant to the terms of the Loan Agreement as security
for this Note and the Loan Agreement.
"Parent" means, with respect to Payee, any Person controlling Payee.
SECTION 2 INTEREST, PAYMENTS, ETC.
Section 2.1 Interest.
2.1.1 Maker shall pay interest (computed on the basis of the
actual number of days elapsed in a year of 360 days) on the outstanding
principal amount of each Advance from the date of the making of such Advance
until the principal amount thereof shall be paid in full, at a rate per annum
equal to Adjusted LIBOR, plus two and 50/100 percent (2.50%).
2.1.2 Except as otherwise provided in Section 2.1.3., interest
on all Advances shall be payable monthly in arrears on (i) the first day of
the next succeeding Interest Accrual Period for such Loan, (ii) upon
repayment of any Advance or any portion thereof (whether scheduled or
otherwise), and (iii) on the Maturity Date.
2.1.3 If Maker shall default in the payment of the principal of
or interest on the Loan or any fee, charge or other amount due and payable
hereunder or under any of the other Loan Documents beyond any applicable
notice or grace period, Maker shall on demand pay interest on such overdue
principal amount and, to the extent permitted by applicable law, on such
overdue interest and any other overdue amount, at the Default Rate, accruing
from the date such payment was due until such amount is paid in full (after
as well as before judgment).
2.1.4 Payee shall determine the LIBO Rate, Base Rate, and
Federal Funds Rate as in effect from time to time, and each such
determination of the LIBO Rate, Base Rate and Federal Funds Rate shall be
conclusive and binding absent manifest error.
Section 2.2 Payments.
2.2.1 Maker shall repay the unpaid principal amount of the Loan
on the Maturity Date.
2.2.2 Any prepayment of any Advance shall be governed by
Section 15.01 of the Mortgages and Article V of the Loan Agreement. In
addition thereto, any such prepayment of any Advance permitted by Payee
hereunder shall be accompanied by the payment of any costs, loss or expenses
incurred by Payee in connection with such prepayment as provided in Section
2.4. Any amounts so prepaid may (a), to the extent of $10,000,000, be
reborrowed by Maker on or prior to the Expiration Date in accordance with
the terms and conditions of the Loan Agreement and (b) be applied in such
order of priority as Payee shall determine in its sole discretion.
Section 2.3 Funds; Manner of Payment; Taxes.
2.3.1 Each payment of principal of and interest on the Loan,
and each payment on account of any other fees, charges or other amounts
payable under this Note or under any of the other Loan Documents shall be
paid by Maker, without set-off or counterclaim, by wire transfer to Payee at
its office set forth in the preamble hereof or to such other location or
account as Payee may specify to Maker from time to time, in Federal or other
immediately available funds in lawful money of the United States of America,
not later than 12:00 Noon, New York City time, on the date on which any such
payment is payable. If any payment hereunder or under any of the other Loan
Documents becomes due and payable on a day (the "Due Date") other than a
Business Day, such payment shall not be payable until the next succeeding
Business Day, provided, however, if such next succeeding Business Day falls
within the next calendar month, such payment shall be due and payable on the
immediately preceding Business Day. If the date for any payments of principal
is extended on account of the foregoing or on account of operation of law or
otherwise, interest thereon shall be payable at the then applicable rate
during such extension.
2.3.2 All payments made by Maker under this Note and any of the
Loan Documents shall be made free and clear of, and without reduction for or
on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding income and franchise taxes of the United States of
America or any political subdivision or taxing authority thereof or therein
(such non-excluded taxes being called "Additional Taxes"). If any Additional
Taxes are required to be withheld from any amounts payable to Payee hereunder
or under any of the other Loan Documents, the amounts so payable to Payee
shall be increased to the extent necessary to yield to Payee (after payment
of all Additional Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Note.
Section 2.4 Indemnity. Maker agrees to indemnify Payee and to hold
it harmless from any cost, loss or expense which Payee may sustain or incur
as a consequence of (a) Maker making a payment or prepayment of principal on
any Loan on a day which is not the first day of an Interest Accrual Period
with respect thereto, (b) any failure by Maker to borrow an Advance hereunder
after a Borrowing Request has been given pursuant to this Note, (c) default
by Maker in making any prepayment after Maker has given a notice of
prepayment, and (d) any acceleration of the maturity of the Loan by Payee in
accordance with the terms of this Note, including, but not limited to, any
such reasonable cost, loss or expense arising in liquidating the Loan and
from interest or fees payable by Payee to lenders of funds obtained by it in
order to maintain the Loan hereunder.
Section 2.5 Increased Cost and Reduced Return.
2.5.1 If, on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by Payee (or its
LIBOR Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board
(but excluding with respect to any such requirement reflected in the then
effective LIBO Rate)), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Payee (or its LIBOR Lending Office) or shall impose on Payee (or
its LIBOR Lending Office) or on the London interbank market any other
condition affecting any Advance bearing interest at the LIBO Rate, and the
result of any of the foregoing is to increase the cost to Payee (or its LIBOR
Lending Office) of making or maintaining any Advance at the LIBO Rate, or to
reduce the amount of any sum received or receivable by Payee (or its LIBOR
Lending Office) under this Note, by an amount deemed by Payee to be material,
then, within sixty (60) days after demand by Payee, Maker shall pay to Payee
such additional amount or amounts as will compensate Payee for such increased
cost or reduction.
2.5.2 If Payee shall have determined that, after the date
hereof, the adoption of any Capital Adequacy Rule has or would have the
effect of reducing the rate of return on capital of Payee (or its Parent) as
a consequence of Payee's obligations hereunder to a level below that which
Payee (or its Parent) could have achieved but for such adoption (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by Payee to be material, then from time to time, within fifteen (15)
days after demand by Payee, Maker shall pay to Payee such additional amount
or amounts as will compensate Payee (or its Parent) for such reduction.
2.5.3 Payee will promptly notify Maker of any event of which it
has knowledge, occurring after the date hereof, which will entitle Payee to
compensation pursuant to this Section 2.5 and will designate a different
LIBOR Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the reasonable judgment of
Payee, be otherwise disadvantageous to Payee. A certificate of Payee
claiming compensation under either Section 2.5.1 or 2.5.2 and setting forth
the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error; provided that any certificate
delivered by Payee pursuant to this Section 2.5.3 shall (i) in the case of a
certificate in respect of amounts payable pursuant to Section 2.5.1, set
forth in reasonable detail the basis for and the calculation of such amounts,
and (ii) in the case of a certificate in respect of amounts payable pursuant
to Section 2.5.2, (A) set forth at least the same amount of detail in respect
of the calculation of such amount as Payee provides in similar circumstances
to other similarly situated borrowers from Payee, and (B) include a statement
by Payee that it has allocated to the Commitment or outstanding Loan a
proportionately equal amount of any reduction of the rate of return on
Payee's capital due to a Capital Adequacy Rule as it has allocated to each of
its other commitments to lend or to each of its other outstanding loans that
are affected similarly by such Capital Adequacy Rule.
Section 2.6 Deposits Unavailable. In the event, and on each
occasion, that (i) Payee shall have reasonably determined that dollar
deposits in the principal amounts of the Loan are not generally available to
Payee in the London interbank market, for such periods and amounts then
outstanding hereunder or that reasonable means do not exist for ascertaining
the LIBO Rate, or (ii) Payee reasonably determines that the rate at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to Payee of making or maintaining the Loan at the LIBO Rate during
such month, Payee shall, as soon as practicable thereafter, give written
notice of such determination to Maker. In the event of any such
determination, until the circumstances giving rise to such notice no longer
exist, the Loan shall bear interest at the Base Rate. After an Event of
Default, interest shall accrue on the outstanding principal balance of this
Note at a rate per annum equal to the Default Rate.
Section 2.7 Illegality. If, on or after the date of this Note, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by Payee (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for
Payee (or its LIBOR Lending Office) to make, maintain or fund the Loan or any
portion thereof at the LIBO Rate, Payee shall forthwith give notice thereof
to Maker, whereupon until Payee notifies Maker that the circumstances giving
rise to such suspension no longer exist, the obligation of Payee to make
Advances at the LIBO Rate shall be suspended. Before giving any notice to
Maker pursuant to this Section 2.7, Payee shall designate a different LIBOR
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of Payee, be otherwise disadvantageous to
Payee. If Payee shall reasonably determine that it may not lawfully continue
to maintain and fund any outstanding Advance at the LIBO Rate to maturity and
shall so specify in such notice, Maker shall immediately prepay in full the
then outstanding principal amount of each such Advance, together with accrued
interest thereon. Concurrently with prepaying each such Advance, Maker shall
borrow an Advance which shall accrue interest at the Base Rate in an equal
principal amount from Payee for an Interest Accrual Period coincident with
the remaining term of the Interest Accrual Period applicable to such Advance
repaid, and Payee shall make such an Advance accruing interest at the Base
Rate.
SECTION 3 DEFAULTS
Section 3.1. Events of Default.
This Note is secured by, among other things, the Mortgages which specify
various Events of Default, upon the happening of which all or portions of the
sums owing under this Note may be declared immediately due and payable as
more specifically provided therein. Any Event of Default under any Mortgage
or any one or more of the other Loan Documents shall be an Event of Default
hereunder. To the extent that Maker makes a payment or Payee receives any
payment or proceeds for Maker's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid
to a trustee, debtor in possession, receiver, custodian or any other party
under any bankruptcy law, common law or equitable cause, then, to such
extent, the obligations of Maker hereunder intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Payee.
Section 3.2. Remedies.
If an Event of Default shall occur hereunder or under any other Loan
Document, in addition to all other remedies available to Payee under the
Mortgages, the other Loan Documents at law or in equity, interest on the
Principal Amount and, to the extent permitted by applicable law, all accrued
but unpaid interest on the Principal Amount shall, commencing on the date of
the occurrence of such Event of Default, at the option of Payee, immediately
and without notice to Maker, accrue interest at the Default Rate until such
Event of Default is cured. The foregoing provision shall not be construed as
a waiver by Payee of its right to pursue any other remedies available to it
under the Mortgages, or any other instrument evidencing or securing the Loan,
nor shall it be construed to limit in any way the application of the Default
Rate. If there is more than one Maker of this Note, the undersigned parties
shall each be jointly and severally liable to pay the entire Loan Amount and
all other sums becoming due hereunder or under the other Loan Documents.
SECTION 4 MISCELLANEOUS
Section 4.1. Further Assurances.
Maker shall execute and acknowledge (or cause to be executed and
acknowledged) and deliver to Payee all documents, and take all actions,
reasonably required by Payee from time to time to confirm the rights created
or now or hereafter intended to be created under this Note and the other Loan
Documents, to protect and further the validity, priority and enforceability
of this Note and the other Loan Documents, to subject to the Loan Documents
any property of Maker intended by the terms of any one or more of the Loan
Documents to be encumbered by the Loan Documents, or otherwise carry out the
purposes of the Loan Documents and the transactions contemplated thereunder;
provided, however, that no such further actions, assurances and confirmations
shall increase Maker's obligations under this Note.
Section 4.2. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or waiver
(a "Modification") of any provision of this Note, the Mortgages or any one or
more of the other Loan Documents, nor consent to any departure by Maker
therefrom, shall in any event be effective unless the same shall be in a
writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly provided herein,
no notice to, or demand on, Maker shall entitle Maker to any other or future
notice or demand in the same, similar or other circumstances. Payee does not
hereby agree to, nor does Payee hereby commit itself to, enter into any
Modification. However, in the event Payee does ever agree to a Modification,
such Modification shall only be upon the terms and conditions set forth in
the Mortgages.
Section 4.3. Costs of Collection.
Maker agrees to pay all costs and expenses of collection incurred by
Payee, in addition to principal, interest and late or delinquency charges
(including, without limitation, reasonable attorneys' fees and disbursements)
and including all costs and expenses incurred in connection with the pursuit
by Payee of any of its rights or remedies referred to in Section 3 hereof or
its rights or remedies referred to in any of the Loan Documents or the
protection of or realization of collateral or in connection with any of
Payee's collection efforts, whether or not suit on this Note, on any of the
other Loan Documents or any foreclosure proceeding is filed, and all such
costs and expenses shall be payable on demand, together with interest at the
Default Rate thereon, and also shall be secured by the Mortgages and all
other collateral at any time held by Payee as security for Maker's
obligations to Payee.
Section 4.4. Maximum Amount.
4.4.1 It is the intention of Maker and Payee to conform
strictly to the usury and similar laws relating to interest from time to time
in force, and all agreements between Maker and Payee, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever, whether by acceleration of
maturity hereof or otherwise, shall the amount paid or agreed to be paid in
the aggregate to Payee as interest hereunder or under the other Loan
Documents or in any other security agreement given to secure the Debt, or in
any other document evidencing, securing or pertaining to the Debt, exceed the
maximum amount permissible under applicable usury or such other laws (the
"Maximum Amount"). If under any circumstances whatsoever fulfillment of any
provision hereof, or any of the other Loan Documents, at the time performance
of such provision shall be due, shall involve transcending the Maximum
Amount, then ipso facto, the obligation to be fulfilled shall be reduced to
the Maximum Amount. For the purposes of calculating the actual amount of
interest paid and/or payable hereunder, in respect of laws pertaining to
usury or such other laws, all sums paid or agreed to be paid to the holder
hereof for the use, forbearance or detention of the Debt, outstanding from
time to time shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread from the date of disbursement of the proceeds
of this Note until payment in full of all of the Debt, so that the actual
rate of interest on account of the Debt is uniform through the term hereof.
The terms and provisions of this Section 4.4 shall control and supersede
every other provision of all agreements between Maker or any endorser and
Payee.
4.4.2 If under any circumstances Payee shall ever receive an
amount which would exceed the Maximum Amount, such amount shall be deemed a
payment in reduction of the Loan Amount owing hereunder and any other
obligation of Maker in favor of Payee, and shall be so applied in accordance
with Section 2.2 hereof, or if such excessive interest exceeds the unpaid
balance of the Loan Amount and any other obligation of Maker in favor of
Payee, the excess shall be deemed to have been a payment made by mistake and
shall be refunded to Maker.
Section 4.5. Waivers.
Maker hereby expressly and unconditionally waives presentment, demand,
protest, notice of protest or notice of any kind, including, without
limitation, any notice of intention to accelerate and notice of acceleration,
except as expressly provided herein, and in connection with any suit, action
or proceeding brought by Payee on this Note, any and every right it may have
to (a) a trial by jury, (b) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Payee on this Note and cannot be maintained in a separate action)
and (c) have the same consolidated with any other or separate suit, action or
proceeding.
Section 4.6. Governing Law.
(a) This Note was negotiated in New York, and made by Maker and
accepted by Payee in the State of New York, and the proceeds of the Note
delivered pursuant hereto were disbursed from New York, which State the
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby, and in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity and performance. This Note and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State
of New York applicable to contracts made and performed in such State and any
applicable law of the United States of America, except that at all times the
provisions for the creation, perfection, and enforcement of the liens and
security interests created pursuant to any Mortgage and pursuant to the other
Loan Documents shall be governed by and construed according to the law of the
State in which the applicable Mortgaged Property is located, it being
understood that, to the fullest extent permitted by law of such State, the
law of the State of New York shall govern the validity and the enforceability
of all Loan Documents, and the Debt or obligations arising hereunder or
thereunder. To the fullest extent permitted by law, Maker hereby
unconditionally and irrevocably waives any claim to assert that the law of
any other jurisdiction governs this Note and this Note shall be governed by
and construed in accordance with the laws of the State of New York pursuant
to Section 5-1401 of the New York General Obligations Law.
(b) Any legal suit, action or proceeding against Maker or Payee
arising out of or relating to this Note shall be instituted in any federal or
state court in New York, New York, pursuant to Section 5-1402 of the New York
General Obligations Law, and Maker waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and Maker hereby irrevocably submits to the jurisdiction of any such court in
any suit, action or proceeding. Maker does hereby designate and appoint CT
Corporation System, 1633 Broadway, New York, New York 10019 as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon
said agent at said address and written notice of said service of Maker mailed
or delivered to Maker in the manner provided in the Mortgages, shall be
deemed in every respect effective service of process upon Maker, in any such
suit, action or proceeding in the State of New York. Maker (i) shall give
prompt notice to the Payee of any changed address of its authorized agent
hereunder, (ii) may at any time and from time to time designate a substitute
authorized agent with an office in New York, New York (which office shall be
designated as the address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to have an office
in New York, New York or is dissolved without leaving a successor.
Section 4.7. Headings.
The Section headings in this Note are included herein for convenience of
reference only and shall not constitute a part of this Note for any other
purpose.
Section 4.8. Assignment; Participations.
(a) Subject to Section 8.09 of the Loan Agreement, Payee shall have the
right to transfer, sell and assign this Note, the Mortgages and/or any of the
other Loan Documents, and the obligations hereunder, to any Person. All
references to "Payee" hereunder shall be deemed to include the assigns of the
Payee.
(b) Payee may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in the Loans. In
the event of any such grant by the Payee of a participating interest to a
Participant, whether or not upon notice to the Maker, the Payee shall remain
responsible for the performance of its obligations hereunder and under the
other Loan Documents, and the Maker shall continue to deal solely and
directly with the Payee in connection with the Payee's rights and obligations
under this Note and the other Loan Documents. Any agreement pursuant to
which the Payee may grant such a participating interest shall provide that
the Payee shall retain the sole right and responsibility to enforce the
obligations of the Maker hereunder and under the other Loan Documents
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Note or the other Loan
Documents; provided that such participation agreement may provide that (i)
the Payee will not agree to any modification, amendment or waiver of this
Note or any other Loan Document (a) which increases or decreases the Loan
Amount, (b) reduces the principal of or rate of interest on the Loan or fees
hereunder or under any Loan Document, (c) postpones the date fixed for any
payment of principal of or interest on the Loan or any fees hereunder or
under any Loan Document, (d) modifies the 75% LTV Ratio requirement or (e)
otherwise materially affects the rights of the Participant without the
consent of the Participant and (ii) the Participant may commence servicing
the Loan upon the occurrence of an Event of Default. Maker agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Section 2.4, 2.5 and 2.6 hereof as well any
indemnification or similar provision contained in this Note or any other Loan
Document with respect to its participating interest. Payee shall have the
right to deliver from time to time to any Participant or prospective
Participant copies of all financial and other information in the possession
of Payee with respect to the Loan, the Maker, any guarantor or any other
related person or entity, all of which information may be retained by such
Participant and/or prospective Participant.
Section 4.9. Severability.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.
Section 4.10. Joint and Several.
In the event there is more than one Maker, the obligations and
liabilities of each Maker hereunder shall be joint and several.
Section 4.11. Limitation on Liability
(a) Notwithstanding anything herein or in any other Loan Documents to
the contrary, but subject to the qualifications below, Payee and Maker agree
that:
(i) Maker shall be liable upon the Debt and for the other
obligations arising under the Loan Documents to the full extent (but only to
the extent) of the collateral now or hereafter securing the Debt and such
other obligations; provided, however, that in the event of (A) Maker's breach
or default under Sections 2.02(g) or 9.02 of any of the Mortgages, or (B) any
of the Mortgaged Properties or any part thereof become an asset in a
voluntary bankruptcy or insolvency proceeding, the limitation on recourse set
forth in this Section 4.11 will be null and void and completely inapplicable,
and this Note shall be with full recourse to Maker;
(ii) If a default occurs in the timely and proper payment of all or
any part of the Debt, Payee shall not enforce the liability and obligation of
Maker to perform and observe the obligations contained in this Note or any of
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Maker, except that Payee may bring a foreclosure
action, action for specific performance or other appropriate action or
proceeding to enable Payee to enforce and realize upon the Mortgages, the
other Loan Documents and the interest in the Mortgaged Properties, the Rents
and any other collateral given to Payee; provided, however, that any judgment
in any action or proceeding shall be enforceable against Maker only to the
extent of Maker's interest in the Mortgaged Properties, in the Rents and in
such other collateral given to Payee. Payee, by accepting this Note and the
Mortgages, agrees that it shall not, except as otherwise herein provided, sue
for, seek or demand any deficiency judgment against Maker in any action or
proceeding, under or by reason of or under or in connection with this Note,
the other Loan Documents or the Mortgages.
(iii) The provisions of this Section 4.11 shall not (A)
constitute a waiver, release or impairment of any obligation evidenced or
secured by this Note, the other Loan Documents or the Mortgages; (B) impair
the right of Payee to name Maker as a party defendant in any action or suit
for judicial foreclosure and sale under the Mortgages; (C) affect the
validity or enforceability of any indemnity, guaranty, master lease or
similar instrument made in connection with this Note, the Mortgages, or the
other Loan Documents; (D) impair the right of Payee to obtain the appointment
of a receiver; (E) impair the enforcement of the Assignments executed in
connection herewith; (F) impair the right of Payee to enforce the provisions
of Article XII or Section 16.02 of the Mortgages; or (G) impair the right of
Payee to obtain a deficiency judgment or judgment on this Note against Maker
if necessary to obtain any insurance proceeds or condemnation awards to which
Payee would otherwise be entitled under the Mortgages; provided, however,
Payee shall only enforce such judgment against the insurance proceeds and/or
condemnation awards.
(iv) Notwithstanding the provisions of this Section to the
contrary, Maker shall be personally liable to Payee for any losses it incurs
due to: (A) the misapplication or misappropriation of Rents contrary to the
provisions of any of the Loan Documents; (B) the misapplication or
misappropriation of insurance proceeds or condemnation awards contrary to the
provisions of the Mortgages; (C) Maker's failure to return or to reimburse
Payee for all Personal Property taken from any of the Mortgaged Properties by
or on behalf of Maker and not replaced with Personal Property of the same
utility and of the same or greater value; (D) any act of actual waste or
arson by Maker, any principal, affiliate, general partner or member thereof
or by any Guarantor; (E) any fees or commissions paid by Maker to any
principal, affiliate, general partner or member of Maker, or any Guarantor in
violation of the terms of this Note, the Mortgages or the other Loan
Documents; (F) Maker's failure to comply with the provisions of Article XII
and Article XVI of the Mortgages; (G) the exercise of any right or remedy
under any federal, state or local forfeiture laws resulting in the loss of
the lien of the Mortgages, or the priority thereof, against the Mortgaged
Properties; (H) fraud, willful misconduct or material misrepresentation by
Maker, the General Partner, or any of their respective officers, directors,
managers, members or shareholders; (I) Maker's breach or default under
Section 9.01 of any of the Mortgages or (J) any claims, actions, or
proceedings initiated by Maker, any principal, affiliate, general partner or
member thereof or by any Guarantor alleging that the relationship of Maker
and Payee is that of joint venturers, partners, tenants in common, joint
tenants or any relationship other than that of debtor and creditor.
(b) Nothing herein shall be deemed to be a waiver of any right which
Payee may have under Sections 506(a), 506(b), 1111(b) or any other provisions
of the Bankruptcy Code to file a claim for the full amount of the Debt or to
require that all collateral shall continue to secure all of the Debt, owing
to Payee in accordance with this Note, the Mortgages and the other Loan
Documents.
<PAGE>
IN WITNESS WHEREOF, this Note has been duly executed by the Maker the
day and year first written above.
SAFEGUARD CAPITAL FUND, L.P., a
Delaware limited partnership
By: Safeguard Equity Group, L.L.C., a
limited liability company,
Its General Partner
By: Safeguard Holdings, L.L.C., a
limited liability company,
Its Manager
By: /s/ Bruce C. Roch, Jr.
--------------------------
Name: Bruce C. Roch, Jr.
------------------------
Title: Manager
------------------------
<PAGE>
SCHEDULE
Principal
Date Amount of Loan Principal Repaid
- ---- -------------- ----------------
LOAN PARTICIPATION AGREEMENT
LOAN PARTICIPATION AGREEMENT (this "Agreement") dated as of December 1,
1998 between MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank") and
WELLSFORD CAPITAL (the "Participant").
Reference is made to the Revolving Credit Agreement dated as of March
"8, 1998 (the "Credit Agreement") between Safeguard Capital Fund, L.P., a
Delaware limited partnership (the "Borrower") and the Bank, a copy of which
has been furnished to the Participant. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the Credit
Agreement. Pursuant to the terms of the Credit Agreement, the Bank is
committed, subject to the terms and conditions thereof, to make a loan
(collectively, the "Loan") in advances (each an "Advance") to the Borrower
from time to time in an aggregate principal amount not to exceed $90,000,000
at any one time outstanding and with the aggregate principal amount of all
Advances made under the Credit Agreement not to exceed $100,000,000 (the
"Commitment").
On the following terms and conditions, the Bank hereby agrees to sell
and the Participant hereby agrees to purchase an undivided junior interest
(the "Junior Participation") in the Loan and each of the Advances, including,
without limitation, the initial Advances in the amount of $11,8"5,000.00
heretofore made by the Bank to the Borrower. The maximum aggregate
outstanding principal amount of the Junior Participation is $45,000,000, and
the relationship which the aggregate outstanding principal amount of (a) as
to the Participant, the Junior Participation, and (b) as to the Bank, the sum
of (i) the Senior Participation (as hereinafter defined) plus (ii) any
Default Senior Interest (as hereinafter defined) plus (iii) any Bank Junior
Participation (as hereinafter defined), as the case may be, bears to the
aggregate outstanding principal amount of the Loan made or to be made by the
Bank (determined at any given time after giving effect to any assignment by
the Bank of any of its right, title and interest under the Credit Agreement
but without giving effect to the sale of this or any other participation
therein) is hereinafter called the "Participation Percentage". The Junior
Participation will be payable in accordance with Section " below and shall
bear interest at an annual rate equal to 1.50% in excess of the interest rate
payable under the Note as in effect from time to time (the "Junior
Participation Rate"). The Bank will retain a senior interest in the Loan (the
"Senior Participation") payable in accordance with Section " below, which
Senior Participation shall bear interest at an annual rate equal to the
interest rate payable under the Note as in effect from time to time less
1.50% (the "Senior Participation Rate"). For purposes of this Agreement, the
term "Note" shall mean the promissory note executed by Borrower in favor of
the Bank in the maximum principal amount of $90,000,000 together with any
modification thereof made in accordance with Section 4(f) below.
1. ADVANCES; SERVICING ADVANCES
(a) Upon the Bank's receipt of a Preliminary Borrowing Request from the
Borrower and all documentation required by the Bank under the Credit
Agreement in support thereof, the Bank shall, provided it has approved such
Preliminary Borrowing Request, promptly furnish to the Participant a copy
thereof as well as all such documents and information furnished by or on
behalf of the Borrower in connection therewith. The Participant shall have
five (5) Business Days to review the Preliminary Borrowing Request. In the
event that upon receiving a Preliminary Borrowing Request the Participant
delivers a certification to the Bank (a "Dispute Notice"), which Dispute
Notice must be received by the Bank within five (5) Business Days following
Participant's receipt of the Preliminary Borrowing Request, certifying that
the Participant has determined in good faith that the Collateral Value
calculated by the Bank after giving effect to the new Advance is too high,
the Participant shall not be obligated to fund the Participant's Share (as
hereinafter defined) of the new Advance. In the event the Participant does
not deliver to the Bank a written revocation of the Dispute Notice within one
Business Day after delivering the Dispute Notice, the Participant shall be
deemed to have elected not to fund the Participant's Share of such new
Advance and shall also be deemed to have automatically waived its right to
fund any future Advance made pursuant to the Credit Agreement. In the event
that the Participant fails to deliver a Dispute Notice by the end of such
fifth (5th) Business Day, the Participant shall be deemed to have waived its
rights under this paragraph (a) and shall be obligated to fund the
Participant's Share of the new Advance in accordance with paragraph (c) of
this Section 1. Any Dispute Notice shall include reasonable back-up for such
determination.
(b) In the event the Participant timely delivers a Dispute Notice, the
Bank shall fund one hundred percent (100%) of the Advance and shall be deemed
to be the owner of a fifty percent (50%) Senior Participation in such Advance
and a new junior participation (a "Bank Junior Participation") evidencing the
remaining fifty percent (50%) interest in such Advance, which Bank Junior
Participation shall be pari passu with the Junior Participation held by the
Participant and shall bear interest at the Junior Participation Rate in
accordance with Section " below, provided, however, that all payments
received by the Bank on account of such Advance shall nonetheless be
aggregated with payments received by the Bank on account of the balance of
the Loan for purposes of distributions under Section ".
(c) Provided that the Preliminary Borrowing Request has been approved
by the Bank, and unless a Dispute Notice has been timely delivered in
accordance with paragraph (a) above and not revoked, upon the Bank's receipt
of a Borrowing Request, a copy of which the Bank shall promptly furnish to
the Participant, the Participant will by no later than 10:00 a.m. (New York
City time) on the date of the requested borrowing set forth in the Borrowing
Request, make available to the Bank at its office at 60 Wall Street, New
York, New York 10"60, funds immediately available in the amount of fifty
percent (50%) (the "Participant's Share") of the new Advance.
(d) The Note evidencing, and all other documents relating to, the Loan
(the "Loan File") will be retained by the Bank or a custodian on behalf of
the Bank, but copies thereof will be furnished to the Participant. The Loan
File shall contain, at a minimum, the documents listed on SCHEDULE A attached
hereto.
(e) Record title to the Loan shall initially be retained by the Bank in
its capacity as initial servicer (the Bank in such capacity as well as any
successor servicer appointed pursuant hereto and/or the Participant to the
extent it is performing servicing responsibilities with respect to the Loan
are each sometimes hereinafter referred to as the "Servicer"), in trust for
the Bank, the Participant and any other party who hereafter acquires a
participation or sub-participation interest in the Loan (collectively, the
"Participants") as the owners thereof, and possession of the Loan Files
shall be retained by the Bank or its document custodian or, in certain cases
by the Participant, in trust for the Participants as the owners thereof, for
the sole purpose of servicing the Loan. The beneficial ownership of the Loan,
including, without limitation, the Loan Files and all rights, benefits,
proceeds and obligations arising therefrom or in connection therewith, is
vested in the Participants.
(f) To evidence the Junior Participation the Bank has provided the
Participant with a loan participation certificate (the "Junior Certificate")
in the form annexed hereto and hereby authorizes the Participant to endorse
on the Junior Certificate the dates and the amount of each Advance in respect
of the Junior Participation and the amount of each payment of principal which
the Bank advises the Participant in writing has been credited to its account.
(g) In the event that the Participant fails to advance the
Participant's Share of any Advance when required, the Bank shall, to the
extent required to comply with its obligations under the Credit Agreement,
fund 100% of such Advance or obtain an alternative source of funding for such
portion of the Advance. If the Bank funds 100% of such Advance, the
Participant covenants and agrees that it shall, subject to the terms of the
penultimate sentence of this paragraph (g), reimburse the Bank in the amount
of the Participant's Share of such Advance together with interest on such
amount calculated at the interest rate of two percent in excess of the Junior
Participation Rate payable from the day such Advance was made by the Bank
through and including the day the Participant reimburses the Bank for funding
the Participant's Share of such Advance, which repayment obligation as to
both principal and interest shall be subject to a credit in the amount of any
principal or interest, respectively, received from time to time by the Bank
or the provider of any alternative financing as the holder of the applicable
Default Senior Interest (as defined below). Such reimbursement shall be made
by wire transfer to the account indicated by the Bank. Commencing with the
date the Bank or such alternative source of financing funds all or any
portion of the Participant's Share of an Advance and continuing for so long
as the Participant fails to reimburse the Bank or the alternative source of
financing, as the case may be, as provided in this paragraph to the account
designated by the Bank, the Bank or such alternative source of financing, as
the case may be, shall be deemed the owner of a new senior participation
interest (a "Default Senior Interest") evidencing a senior participation as
to the Participant's Share (or such portion thereof) of such Advance, payable
at the same senior priority as the Senior Participation in the balance of the
Loan in accordance with Section " below, provided, further, that any Default
Senior Interest shall bear interest at the Junior Participation Rate for so
long as it remains outstanding. At any time following the issuance of a
Default Senior Interest, the Participant, prior to reimbursing the holder of
the Default Senior Interest, shall provide ten (10) days prior written notice
of its intention to effect such reimbursement. The holder of the Default
Senior Interest shall notify the Participant within five (5) Business Days of
its receipt of such notice of its election to either (i) accept reimbursement
from the Participant in which case upon receipt of such full reimbursement of
principal and interest the Default Senior Interest shall be assigned to the
Participant and automatically immediately converted to a Junior Participation
or (ii) reject the reimbursement and retain the Default Senior Interest in
which case the reimbursement obligation of the Participant under this
paragraph (g) shall automatically terminate with respect to the subject
Advance. Nothing herein shall be deemed a waiver of any other rights or
remedies of the Bank provided hereunder, at law or in equity in connection
with any refusal by the Participant to fund the Participant's Share of any
Advance.
(h) The Bank reserves the right, but is not obligated, to make advances
of all amounts necessary for the payment of hazard insurance premiums, water
rates, real estate taxes, assessments or other public charges, or other items
necessary for the protection of the security of any mortgage or deed of trust
securing the Loan or the preservation of any mortgaged property, including,
without limitation, any property which has been foreclosed or acquired by a
deed-in-lieu of foreclosure by the Bank or any designee of the Bank (each, a
"Mortgaged Property") to the extent funds held in mortgage escrows are
insufficient to pay for such items. In the event that the Bank determines in
accordance with the terms of this Agreement that such an advance (a
"Servicing Advance") is necessary or appropriate in connection with the Loan
or any Mortgaged Property which has been converted to real estate owned
status following the exercise of any remedies, the Bank shall, in the absence
of an emergency, use reasonable efforts to consult with the Participant prior
to making a Servicing Advance. While the Bank shall use reasonable efforts
to consult with the Participant, other than in the case of an emergency, the
determination of the Bank shall be conclusive in the event that the parties
disagree. In the event, however, that the Participant is servicing the Loan
in accordance with Section 4(d) and 4(e) below, the Participant shall have
the right, after consulting with the Bank, to make a Servicing Advance with
respect to the Loan in the event that the Participant reasonably determines
that such an advance is necessary to protect the security of the collateral
or preserve the then existing condition of the Mortgaged Property. Servicing
Advances shall bear interest from the date advanced until repaid at the same
rate of interest payable by the Borrower under the Loan Documents (the
"Servicing Advance Rate") with respect to such advances and will be
reimbursed to the Bank and/or the Participant, as the case may be, together
with interest thereon, in accordance with Section " below.
(i) In the event that the Participant fails to fund the amount
requested in connection with the funding of any Advance required to be funded
by the Participant hereunder within the applicable time period, the
Participant shall reimburse the Bank for all reasonable and necessary out-of-
pocket costs and expenses actually incurred by the Bank, directly or
indirectly, as a result of the Participant's failure to fund within the
applicable time period, which reimbursement shall be made within 10 days
after receipt by the Participant of copies of invoices and/or statements from
the Bank itemizing such costs and expenses.
2. DISTRIBUTIONS
(a) With respect to payments of interest actually received by the Bank
in respect of the Loan, such payments will be promptly applied:
(i) First, to the Bank and the Participant on a pari passu basis
and pro rata, to repay any accrued and unpaid interest on any
Servicing Advances by such party at the Servicing Advance Rate;
(ii) Second, to the Bank to repay all accrued and unpaid interest
on the Senior Participation at the Senior Participation Rate and
any Default Senior Interest at the Junior Participation Rate; and
(iii) Third, to the Bank and the Participant on a pari passu
basis and pro rata, to repay all accrued and unpaid interest on any
Bank Junior Participation held by the Bank and the Junior
Participation held by the Participant, at the Junior Participation
Rate.
(b) With respect to prepayments of principal actually received by the
Bank in respect of the Loan, such prepayments shall be promptly applied:
(i) First, to the Bank and the Participant, on a pari passu basis
and pro rata based upon the respective amounts of unreimbursed
Servicing Advances and Asset Audit Expenses owing to the Bank and
the Participant, to reimburse the Bank and the Participant for any
unreimbursed Servicing Advances together with interest thereon at
the Servicing Advance Rate and to reimburse the Bank and the
Participant for any unreimbursed Asset Audit Expenses; and
(ii) Second, to the Bank and the Participant, on a pari passu
basis, to pay principal based upon their respective Participation
Percentages.
(c) With respect to all other payments of principal actually received
by the Bank in respect of the Loan (including, without limitation, insurance
proceeds, condemnation proceeds, liquidation proceeds and proceeds from the
operation of any Mortgaged Property), such payments shall be promptly
applied:
(i) First, to the Bank and the Participant on a pari passu basis
and pro rata based upon the respective amounts of unreimbursed
Servicing Advances and Asset Audit Expenses owing to the Bank and
the Participant, to reimburse the Bank and the Participant for any
unreimbursed Servicing Advances together with interest thereon at
the Servicing Advance Rate and to reimburse the Bank and the
Participant for any unreimbursed Asset Audit Expenses;
(ii) Second, to the Bank to repay all accrued and unpaid interest
on the Senior Participation at the Senior Participation Rate and
any Default Senior Interest at the Junior Participation Rate;
(iii) Third, to the Bank to repay all principal amounts due and
owing to the Bank as the holder of the Senior Participation and any
Default Senior Interest in the Loan;
(iv) Fourth, to the Bank and the Participant on a pari passu basis
and pro rata, to repay all accrued and unpaid interest on any Bank
Junior Participation held by the Bank and the Junior Participation
held by the Participant, at the Junior Participation Rate;
(v) Fifth, only to the extent of any remaining funds representing
such principal payments, to the Bank and the Participant on a pari
passu basis and pro rata, to the extent of the Junior Participation
held by the Participant and any Bank Junior Participation held by
the Bank, to repay all principal amounts due and owing; and
(vi) Sixth, to the Participant and the Bank on a pari passu basis,
based
upon their respective Participation Percentages.
(d) Notwithstanding anything herein to the contrary, the fees payable
under Section 3.01 of the Credit Agreement shall be solely for the account of
the Bank and shall be retained by the Bank for its own account. In addition,
any late fees and, notwithstanding anything to the contrary set forth in
Section "(a) above, any incremental increases in the interest rate under the
Loan paid by the Borrower on account of a default rate of interest being in
effect (but only to the extent of the incremental increase in the interest
rate as opposed to the base rate of interest which shall remain payable in
accordance with Section "(a) above) shall be divided between the Bank and the
Participant in accordance with their respective Participation Percentage at
the time of payment.
(e) In addition to the payments of debt service on the Loan to be
distributed as set forth above, payments received by the Bank under any
guaranty, reimbursement or indemnification provision under any Loan Document
shall (i) be distributed in accordance with paragraphs (a) through (c) above
of this Section " to the extent such payments relate to principal or interest
on the Loan and (ii) in the event such payment relates to obligations of the
Borrower other than payment of the Loan, including, without limitation,
indemnification obligations or reimbursement obligations for sums advanced on
account of the Borrower, such payment shall be distributed to the Bank and
the Participant based upon the actual losses or expenditures suffered or
incurred by each such party in connection with the event or obligation giving
rise to such payment.
3. RETURN OF FUNDS
If the Bank should for any reason make any payment to the Participant in
anticipation of the receipt of funds from the Borrower or any guarantor and
such funds are not received by the Bank from the Borrower or any guarantor on
the date payment is due, then the Participant shall, on demand of the Bank,
forthwith return to the Bank any such amounts transferred to the Participant
by the Bank in respect of the Junior Participation plus interest thereon from
the day such amounts were transferred by the Bank to the Participant to, but
not including, the day such amounts are returned by the Participant at a rate
per annum equal to the effective Federal Funds Rate. If the Bank is required
at any time to return to the Borrower or any guarantor or to a trustee,
receiver, liquidator, custodian or other similar official any portion of the
payments made by the Borrower or any guarantor to the Bank, then the
Participant shall, on demand of the Bank, forthwith return to the Bank any
such payments transferred to the Participant by the Bank in respect of the
Junior Participation, but without interest on such payments (unless the Bank
is required to pay interest on such amounts to the person recovering such
payments).
4. SERVICING
(a) The Loan will be serviced by the Bank pursuant to the terms of this
Agreement provided that in certain cases following a default under the Loan
the Participant will have certain responsibilities with respect to the
servicing of the Loan subject to and in accordance with the terms of this
Agreement. In addition, the Bank shall have the right at any time to
delegate any of its servicing responsibilities hereunder without obtaining
the consent of the Participant, provided, however, the Bank shall be and
remain primarily liable for such delegated activities subject to the
limitations on liability set forth in this Agreement. The Bank or the
Participant, as the case may be, shall diligently service and administer the
Loan in the best interests of and for the benefit of the Participants as a
whole (as determined by the Bank or the Participant, as the case may be, in
its good faith and reasonable judgment, without regard to any unique
circumstances surrounding any particular Participant) in accordance with
applicable law, the terms of this Agreement and the Loan and, to the extent
consistent with the foregoing, in the same manner as would prudent mortgage
lenders, loan servicers and asset managers servicing mortgage loans
comparable to the Loan in the jurisdiction where each Mortgaged Property is
located, but in no event shall the Loan be serviced by the Bank or the
Participant, as the case may be, with any lesser degree of care than the Bank
or the Participant, as the case may be, ordinarily exercises with respect to
comparable commercial loans in which no participation is granted, and with a
view to the timely collection of all scheduled payments of principal and
interest under the Note or, if the Loan comes into and continues in default
and no satisfactory arrangements can be made for the collection of the
delinquent payments, to the maximization of the recovery on the Loan to
Participants on a present value basis (the relevant discounting of
anticipated collections that will be distributable to Participants to be done
at the related Loan interest rate), but without regard to: (i) any
relationship that the Servicer or any affiliate thereof may have with the
Borrower; (ii) the ownership of any Participation Certificate by the Servicer
or any affiliate thereof; (iii) the Servicer's obligation to make Servicing
Advances or Advances; and (iv) the Servicer's right to receive compensation
for its services hereunder or with respect to any particular transaction.
All moneys received by the Bank under the Loan shall be held by the
Bank as trustee for the Participant to be disbursed in accordance with
Section " above. Disbursements pursuant to Section " above shall be made to
the Participant not later than the next Business Day following receipt
thereof, in any case by wire transfer of immediately available funds pursuant
to the wiring instructions set forth in Section 10 below. Except as
expressly provided herein, the Bank does not assume any other duties or
responsibilities.
(b) The Bank may make or cause to be made such inspections of the
Mortgaged Properties from time to time in accordance with its customary
practices. The Bank shall notify the Participant at least three Business
Days prior to any such inspection such that representatives of the
Participant may, at their own expense, accompany the Bank or its
representative on any such inspection. Any written report prepared by or on
behalf of the Bank in connection with an inspection shall be promptly
furnished to the Participant. In no event shall the Bank be obligated to take
any action to effect repairs and correct any deficient structural,
environmental or physical conditions on any of the Mortgaged Properties.
(c) The Bank shall promptly furnish to the Participant copies of all
quarterly and annual financial statements received from the Borrower. At any
time that the Bank recalculates the Collateral Value, the Bank shall promptly
furnish to the Participant the results of its determination. In the event
that the Participant requests that the Bank recalculate the Collateral Value,
the Bank shall perform such recalculation, provided, however, that the Bank
shall not be obligated to recalculate the Collateral Value more than once
every two months except in the case of Advances occurring more frequently.
In addition, upon the request of the Participant, the Bank shall also furnish
to the Participant such other information within the Bank's possession
relating to the Loan, any Advance or a Mortgaged Property as the Participant
may from time to time reasonably request.
(d) In the event there occurs an Event of Default under any Mortgage or
the Note, the Participant shall assume the servicing of the Loan and shall
complete an asset audit containing a discussion of the economics of the Loan
and the related Mortgaged Property(ies) and a recommended course of action
for the Loan within ten (10) days of receiving notice from the Bank that such
an Event of Default has occurred unless such Event of Default is cured prior
thereto. The results of any asset audit shall be put into a concise
memorandum format by the Participant and forwarded, together with a copy of
all documents prepared by or on behalf of the Participant in connection with
such asset audit, to the Bank. The cost of such asset audit (the "Asset Audit
Expense") will be borne by Participant, subject to reimbursement in
accordance with Section " above. To the extent that Participant is not fully
reimbursed for an Asset Audit Expense within thirty (30) days following the
incurrence of such expense pursuant to distributions under Section ", then
the Bank shall promptly reimburse the Participant for fifty percent (50%) of
the applicable Asset Audit Expense, subject to reimbursement in accordance
with Section ".
(e) In the event that the Bank agrees with the recommendations of the
Participant set forth in the asset audit, or in the event that the Bank does
not object to such recommendations within ten (10) days following receipt of
the asset audit, the Participant shall, in the name of the Bank, implement
the course of action set forth in the approved (or deemed approved) asset
audit. Prior to commencing the pursuit of such remedies, however, the
Participant shall instruct outside counsel acceptable to the Bank to review
the documents evidencing and securing the Loan for enforceability, the effect
of any laws affecting remedies (including, without limitation, election of
remedies doctrines, anti-deficiency rules and single action rules) and any
technical defaults, and, subject to outside counsel's recommendations and
findings regarding state laws affecting remedies, commence enforcing such
agreed upon remedies. In the event the Bank disagrees with the
recommendations of the Participant set forth in the asset audit and if the
Bank and the Participant are unable to reach an agreement as to the course of
action to be taken within thirty (30) days following delivery of the original
asset audit, the Participant shall have the right to accelerate the Loan and
commence foreclosure proceedings under any Mortgage or Mortgages, provided,
however, that no foreclosure or similar proceeding shall be completed and no
deed-in-lieu of foreclosure shall be accepted unless the Participant has
previously obtained an updated phase I environmental study (and phase II if
necessary) with respect to the Mortgaged Property or Mortgaged Properties
subject to such foreclosure action which is reasonably acceptable to the
Bank. In no event shall any other remedies be pursued without the written
consent of the Bank, which consent shall not be unreasonably withheld or
delayed. In connection with any foreclosure proceeding or any other action
taken by the Participant pursuant to the first sentence of this paragraph
(e), the Bank shall cooperate with the Participant so as to enable the
Participant to accelerate the Loan and legally commence foreclosure
proceedings or take such other agreed upon actions, whether through the
execution and delivery of a limited power of attorney or otherwise.
Notwithstanding anything herein to the contrary, in the event that the
Participant has defaulted in any of its obligations under this Agreement
beyond any applicable grace period, including, without limitation, failing to
deliver an asset audit in accordance with this Section, all decisions as to
the election and pursuit of remedies shall belong to the Bank.
(f) Except as otherwise provided in this Agreement, the Bank reserves
the sole right and responsibility to enforce the obligations of the Borrower
and any other entity obligated in respect of the Loan, and may, in its sole
discretion, and shall have the sole and exclusive right to (i) agree to any
modification of any of the terms of the Loan or the Note or any other
agreement or instrument evidencing, securing or otherwise relating to the
Loan, (ii) waive any of such terms or give or withhold consents or approvals
to any action or failure to act by the Borrower or any such other agreement
or instrument and (iii) exercise or refrain from exercising, or waive, any
rights or powers the Bank may have in respect thereof, provided that (x)
prior to agreeing to any such amendment or waiver or giving any consent or
approval (except as otherwise set forth in clause (y) below), the Bank shall
consult with the Participant, provided that in the event that the Bank and
the Participant disagree, the decision of the Bank shall be final and
conclusive and (y) no modification, amendment or waiver shall increase the
Junior Participation or subject the Participant to any additional obligation,
reduce the principal of the Junior Participation or the rate of interest on
the Note, increase the amount of the Commitment, modify the seventy-five
percent (75%) loan to value requirement set forth in the Credit Agreement,
postpone the date fixed for payment of principal of or interest on the Junior
Participation or the Note or otherwise modify or grant a waiver or give any
consent or approval with respect to the Loan or any document relating thereto
in a manner which would materially adversely affect the Participant's rights
thereunder or hereunder without in each case the prior written consent of the
Participant.
(g) In the event that the Participant is servicing the Loan as
contemplated by paragraphs (d) and (e) above of this Section 4, the
Participant will comply with the servicing standard set forth in Section 4(a)
above. All moneys received by the Participant under or in respect of the
Loan shall be held by the Participant as trustee for the Bank and shall be
remitted to the Bank no later than the next Business Day following receipt
thereof by the Participant, to be disbursed by the Bank in accordance with
Section " above. Except as expressly provided herein, the Participant does
not assume any other duties or responsibilities.
(h) The Bank shall maintain customary books and records in respect of
the Loan in accordance with the servicing standard set forth in Section 4(a)
above. Such books and records shall be made available for copying and
inspection by the Participant at the Participant's cost and expenses during
normal business hours upon not less than three Business Days' prior written
notice. The Bank and the Participant shall notify each other as to any
material default under the Loan which comes to such party's attention or any
other matter which in the Bank's or the Participant's respective judgment
might adversely affect the parties' respective interests hereunder or any
documents relating thereto.
5. LIMITATIONS ON LIABILITY
The Bank shall not, in the absence of gross negligence or willful
misconduct, be under any liability to the Participant with respect to
anything which it may do or refrain from doing which may seem to the Bank to
be necessary or desirable in connection with its obligations hereunder.
Without in any way limiting the foregoing, the Bank may rely upon the advice
of counsel concerning legal matters and upon any written communication or
telephone conversation which it believes to be genuine and correct or to have
been signed, sent or made by the proper person and shall not be required to
make an inquiry concerning the performance by the Borrower of its obligations
under the Credit Agreement or in respect of the Loan. Except for the Bank's
obligation to cooperate with the Participant under Section 4(e) above in
order to enable the Participant to accelerate the Loan and commence
foreclosure proceedings, the Bank shall have no obligation to make any claim
on, or assert any lien upon, or assert any setoff against, any property held
by it, and if it elects to do so with respect to any property other than
collateral for the Loan, the Bank may in its discretion apply the same
against indebtedness of the Borrower other than its indebtedness in respect
of the Loan. The Bank may accept deposits from, make loans or otherwise
extend credit to, and generally engage in any kind of Bank or trust business
with, the Borrower, any Affiliate of the Borrower or any other entity
obligated in respect of the Loan.
6. INDEMNIFICATION OF THE BANK
The Participant agrees to indemnify the Bank for its Participation
Percentage of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature against it in any way relating to or arising out of the Loan,
the Note or the transactions contemplated thereby or the enforcement of any
of the terms thereof, provided that the Participant shall not be liable for
any of the foregoing to the extent they arise from the Bank's gross
negligence or willful misconduct. This indemnity shall survive termination
of this Agreement.
7. DISCLAIMERS BY THE BANK
The Bank makes no representation or warranty in connection with, and
shall have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrower or any other party to the Loan
Documents, or the validity and enforceability of the obligations of the
Borrower or any other party in respect of the Loan, or otherwise in respect
of the Loan or any of the Mortgaged Properties. The Participant acknowledges
that it has, independently and without reliance on the Bank, and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to purchase the Junior Participation and will
continue to be responsible for making its own independent appraisal of the
Loan and the business, affairs and financial condition of the Borrower.
8. ASSIGNMENT AND TRANSFERS
This Agreement may not be assigned by one party without the prior
written consent of the other party, nor may the Participant transfer the
Junior Participation in whole or in part to any other person without the
prior written consent of the Bank, which consent in the case of a transfer by
the Participant of all or any portion of the Junior Participation shall not
be unreasonably withheld or delayed. The Bank may sell other participations
in the Loan including sub-participations in the Senior Participation provided
that the Bank shall not reduce its participation interest in the Loan to
below 10% without the prior written consent of the Participant. In the event
the Bank sells any sub-participation in the Senior Participation, the
Participant acknowledges and agrees that the holder of such sub-participation
may be granted, subject to the terms, covenants and limitations set forth in
the sub-participation agreement entered into between the Bank and such sub-
participant, certain rights otherwise exercisable by the Bank hereunder,
provided, however, that except as otherwise expressly agreed in writing by
the Participant, (i) as between the Bank and the Participant, the Bank shall
be remain primarily liable for such delegated rights subject to the
limitations on liability set forth in this Agreement and (ii) any sub-
participation agreement entered into between the Bank and any sub-participant
shall not be deemed to expand the rights otherwise exercisable by the Bank
hereunder. In addition, the Bank shall have the right at any time to
delegate any of its servicing responsibilities hereunder without obtaining
the consent of the Participant, provided, however, that as between the Bank
and the Participant, the Bank shall be remain primarily liable for such
delegated activities subject to the limitations set forth in this Agreement.
9. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
10. NOTICES
Any communications provided for or permitted hereunder shall be in
writing and, unless otherwise expressly provided herein, shall be sent as
follows to:
(i) in the case of the Bank:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10"60
Attention: Larry Blume
Fax No.: ("1") 648-5138
with a copy to:
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W.
Washington, D.C. "0007
Attention: Jeffrey S. Scharff, Esq
Fax No. "0"-4"4-7643
(ii) in the case of the Participant:
Wellsford Capital
610 Fifth Avenue
New York, New York 100"0
Attention: Gregory F. Hughes
Fax: ("1") 333-"3"3
<PAGE>
Wiring Instructions:
Chase Manhattan Bank, N.A.
ABA No.: 0"10000"1
For the Account of: United States Trust Company of New York
Account No.: 9"0-1-073195
In favor of: Wellsford Capital RBA Account 69-811"-7
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1"90 Avenue of the Americas
New York, New York 10014
Attn: Alan S. Pearce, Esq.
Fax: ("1") 541-1411
or as to each such person such other address as may hereafter be furnished by
such person to the parties hereto in writing. Any communication required or
permitted to be delivered to any of the foregoing shall be deemed to have
been duly given when sent by electronic means to the facsimile number listed
above, with a copy mailed first class, postage prepaid, to the address of the
party.
11. SEVERAL NATURE
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement.
12. SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall be binding upon and, subject to
the limitations set forth in Section 8 above, inure to the benefit of the
respective successors and assigns of the parties hereto. No other person,
including, without limitation, the Borrower, shall be entitled to any benefit
or equitable right, remedy or claim under this Agreement.
13. HEADINGS; CONSTRUCTION OF AGREEMENT
The headings of various sections of this Agreement are for convenience
of reference only and are not to be construed as defining or limiting, in any
way, the scope or intent of the provisions hereof. The Participant
acknowledges that it was represented by competent counsel in connection with
the negotiation and drafting of this Agreement and that this Agreement shall
not be subject to the principle of construing the meaning against the Person
who drafted this Agreement.
14. NO PARTNERSHIP
Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between the Bank and the
Participant.
15. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, and all of which shall
together constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Bernard J. Costello
----------------------------------
Name: Bernard J. Costello
----------------------------------
Title: Vice President
----------------------------------
By: /s/ L. Blume
----------------------------------
Name: L. Blume
----------------------------------
Title: Vice President
----------------------------------
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
----------------------------------
Name: Gregory F. Hughes
----------------------------------
Title: CFO
----------------------------------
<PAGE>
LOAN PARTICIPATION CERTIFICATE
Morgan Guaranty Trust Company of New York (the "Bank") hereby certifies
that pursuant to the Loan Participation Agreement dated as of December 1,
1998 (the "Participation Agreement") between the Bank and Wellsford Capital
(the "Participant"), it has sold to the Participant a participation interest
in the Loan (the "Junior Participation") and has received from the
Participant funds in the aggregate amount endorsed on the grid attached
hereto shown at any time as outstanding and unpaid in respect of the Junior
Participation. The Junior Participation shall bear interest at an annual
rate equal to 1.50% in excess of the interest rate payable under the Note as
in effect from time to time.
This Loan Participation Certificate is issued pursuant to, and the
Junior Participation evidenced hereby is subject to, the terms of the
Participation Agreement and the Credit Agreement. Capitalized terms used
herein without definition shall have the respective meanings ascribed thereto
in the Participation Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Bernard J. Costello
----------------------------------
Name: Bernard J. Costello
----------------------------------
Title: Vice President
----------------------------------
By: /s/ L. Blume
----------------------------------
Name: L. Blume
----------------------------------
Title: Vice President
----------------------------------
<PAGE>
SCHEDULE A
(i) the original Note payable to the order of the Bank;
(ii) each original or a copy of the Mortgage in favor of the Bank, in
each case with evidence of recording indicated thereon;
(iii) each original or a copy of the Assignment of Leases in favor
of the Bank, in each case with evidence of recording thereon;
(iv) originals or copies of all assumption, modification, written
assurance and substitution agreements, with evidence of recording
thereon where appropriate, in those instances where the terms or
provisions of the Mortgage, Note or any related security document
have been modified or the Loan has been assumed;
(v) the original or a copy of each lender's title insurance policy
issued in connection with the Loan, together with all endorsements
or riders that were issued with or subsequent to the issuance of
such policy, insuring the priority of each Mortgage as a first lien
on the related Mortgaged Property;
(vi) the original of any guaranty of the obligations of the Borrower
under the Loan;
(vii) file copies of any UCC Financing Statements and continuation
statements which were filed in order to perfect (and maintain
the perfection of) any security interest held by the Bank in
and to the personalty of the Borrower at the Mortgaged
Property (in each case with evidence of filing thereon); and
(viii) any additional documents required to be added to the Loan File
pursuant to this Agreement.
SECURED PROMISSORY NOTE
$28,000,000.00 New York New York
As of October 22, 1998
FOR VALUE RECEIVED, WELLSFORD CAPITAL PROPERTIES, L.L.C., a
Delaware limited liability company having an address c/o Wellsford Real
Properties, Inc., 610 Fifth Avenue, New York, NY 10020 ("Borrower"), promises
to pay to the order of LEHMAN BROTHERS HOLDINGS INC., doing business as
Lehman Capital, a division of Lehman Brothers Holdings Inc., a Delaware
corporation having an address at 3 World Financial Center, 12th Floor, New
York, New York 10285-1200 ("Lender") the principal sum of TWENTYEIGHT MILLION
AND 00/100 DOLLARS ($28,000,000.00) or so much thereof as may be advanced or
outstanding from time to time, in lawful money of the United States of
America with interest thereon to be computed from the date of this Note at
the Interest Rate (hereinafter defined) to be paid as hereinafter provided
(the "Loan"). Whenever used, the singular number shall include the plural,
the plural the singular, and the words "Lender" and "Borrower" shall include
their respective successors, assigns, heirs, executors and administrators.
A non-refundable origination fee in an amount equal to 1% of the
face amount hereof has been paid by Borrower to Lender on the date hereof.
A. Payment Terms
Borrower shall pay to Lender at the address set forth above, or at
such other place as the Lender may from time to time designate in writing:
(i) a payment of interest only calculated at the Interest Rate
from the date hereof through October 31, 1998 shall be due
and payable on the date hereof;
(ii) interest only in arrears shall be due and payable on the
first day of December, 1998 and on the first day of each
calendar month thereafter to and including the Maturity Date
(as hereinafter defined); and
(iii) the balance of the principal sum then outstanding and all
interest thereon, and all other sums due and payable under
this Note or the Other Loan Documents (hereinafter defined)
shall be due and payable on the Maturity Date.
As used herein, the term "Maturity Date" shall mean the earlier to
occur of (i) November 1, 2001 (the "Scheduled Maturity Date"), subject to
extension for the Extended Term (hereinafter defined) as hereinafter
provided, and (ii) the date on which the entire Obligations (hereinafter
defined) have become due and payable upon the occurrence of an Event of
Default (as that term is defined in the Security Documents (hereinafter
defined)). Any payment hereunder which is stated to be due on a day which is
not a Business Day shall be made on the next succeeding Business Day (and
interest shall accrue for such extension of time) unless the result of such
extension would be to extend such payment into another calendar month in
which event such payment shall be made on the immediately preceding Business
Day. "Business Day" shall mean any day other than a Saturday or Sunday or a
day on which banks in New York, New York are authorized or required by law to
be closed.
B. Interest
Prior to the Maturity Date, provided there exists no Event of
Default (hereinafter defined), the unpaid principal balance shall bear
interest at a rate per annum (the "Interest Rate") equal to LIBOR plus 275
basis points. "LIBOR" shall mean for each calendar month, the London
Interbank Offer Rate as listed in The Wall Street Journal in the "Money
Rates" column or at Telerate (page 3750) which is published or announced on
the date which is two Business Days prior to the beginning of such calendar
month for such calendar month. If for any reason the LIBOR Rate for any
calendar month cannot be determined in accordance with the preceding
sentence, then Lender will notify Borrower and instead determine the LIBOR
Rate by using the rates offered to prime banks in the interbank eurocurrency
market by Citibank or any successor or assign (but in all other respects in
accordance with the preceding sentence). Each determination of the Interest
Rate by Lender pursuant to this Note shall be conclusive and binding on the
Borrower in the absence of manifest error. Interest on the principal sum of
this Note shall be calculated in arrears on the basis of the actual number of
days elapsed over a three hundred sixty (360) day year.
C. Events of Default
If an Event of Default occurs, or any other cause for acceleration
of the indebtedness evidenced by this Note shall occur, then, the whole of
the principal sum of this Note, together with all interest accrued and unpaid
thereon and all other sums due under the Security Documents (hereinafter
defined) and this Note (all such sums hereinafter collectively referred to as
the "Obligations") shall without notice become immediately due and payable at
the option of Lender. All of the terms, covenants and conditions contained
in the Security Documents and the Other Loan Documents (hereinafter defined)
are hereby made part of this Note to the same extent and with the same force
as if they were fully set forth herein. In the event that it should become
necessary to employ counsel to collect the Obligations or to protect or
foreclose the security hereof, Borrower also agrees to pay reasonable
attorney's fees for the services of such counsel whether or not suit is
brought.
D. Prepayment
Except as specifically provided herein or in the Security
Documents, no prepayment of the principal indebtedness of this Note shall be
allowed at anytime during the first eighteen (18) full calendar months of the
term of this Note (the "Closed Period"). After the Closed Period, Borrower,
whether or not a debtor in a proceeding under Title 11, United States Code,
may prepay the principal balance of this Note in whole, but not in part,
without penalty or premium, on the first day of any calendar month but only
upon (i) not less than thirty (30) days' but not more than sixty (60) days'
irrevocable prior written notice to Lender specifying the date on which
prepayment is to be made, (ii) the payment of all accrued and unpaid interest
on the outstanding principal balance of this Note to and including the date
of such prepayment, and (iii) the payment of all other sums then due under
this Note, the Security Documents and the Other Loan Documents.
Lender shall not be obligated to accept any prepayment of the
principal balance of this Note unless it is accompanied by all sums due in
connection therewith. If a Default Prepayment (hereinafter defined) occurs,
Borrower shall pay to Lender the entire Obligations including, without
limitation, the Prepayment Fee (hereinafter defined), provided, however, that
Borrower shall have no obligation to pay the Prepayment Fee unless the
obligation to make the Default Prepayment occurs during the Closed Period.
For purposes hereof, the term "Default Prepayment" shall mean a prepayment of
the principal amount of the Note made after the occurrence of any Event of
Default or an acceleration of the Maturity Date under any circumstances,
including, without limitation, a prepayment occurring in connection with the
reinstatement of the Security Documents provided by statute under foreclosure
proceedings or exercise of a power of sale, any statutory right of redemption
exercised by Borrower or any other party having a statutory right to redeem
or prevent foreclosure, any sale in foreclosure or under exercise of a power
of sale or otherwise. For purposes hereof, the term "Prepayment Fee" shall
mean one percent (1%) of the outstanding principal indebtedness of this Note.
The aforementioned Prepayment Fee does not constitute a penalty,
but rather represents the reasonable estimate, agreed to between Borrower and
Lender, of a fair compensation for the loss that may be sustained by Lender
due to prepayment of the principal indebtedness. Any prepayment fee required
pursuant to the preceding paragraphs shall be paid without prejudice to the
right of Lender to collect any of the amounts owing under this Note or the
Security Documents or otherwise, to enforce any of its rights or remedies
arising out of an Event of Default hereunder.
Notwithstanding anything contained herein to the contrary, provided
no Event of Default shall have occurred and be continuing, no prepayment fee
shall be payable upon any prepayment of the Principal Indebtedness resulting
solely from the application by Lender of any casualty insurance proceeds or
condemnation awards.
E. Default Interest and Late Charges
Upon the occurrence of any Event of Default, or upon maturity
hereof (by acceleration or otherwise), the outstanding principal balance of
the indebtedness evidenced by this Note shall, at the option of Lender, bear
interest from the date of occurrence of such Event of Default or such
maturity until collection (including any period of time occurring after
judgment), at the "Default Rate", being the lower of (a) the highest rate
allowed by applicable law, or (b) a rate per annum equal to five percent (5%)
above the Interest Rate in effect on the Maturity Date.
If any monthly installment of principal and interest is not paid
prior to the tenth (10th) day after the due date of such payment, then
Borrower shall pay to Lender, upon demand, a late charge equal to the lesser
of five percent (5%) of such unpaid sum or the maximum amount permitted by
applicable law to defray the expenses incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment.
All default interest and late charges (i) shall be in addition to,
and not in lieu of, any other remedy Lender may have and shall be in addition
to, and not in lieu of, Borrower's obligation to pay any reasonable fees and
charges of any agents or attorneys employed in the event of any default
hereunder; (ii) shall be added to the Obligations, and shall be deemed
secured by the Security Documents and Other Loan Documents; and (iii) shall
not be construed as an agreement or privilege to extend the date of the
payment of the Obligations, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default.
F. Security
This Note is secured by the Security Documents and the Other Loan
Documents. The term "Security Documents" as used in this Note shall mean,
collectively, the Mortgage and Security Agreement given by Borrower to Lender
covering the Canton Property (as defined herein) (the "Canton Security
Instrument"), the Assignment of Leases and Rents given by Borrower to Lender
covering the Canton Property (the "Canton Assignment"), the Mortgage and
Security Agreement given by Borrower to Lender covering the Philadelphia
Property (as defined herein) (the "Philadelphia Security Instrument"), the
Assignment of Leases and Rents given by Borrower to Lender covering the
Philadelphia Property (the "Philadelphia Assignment"), the Mortgage and
Security Agreement given by Borrower to Lender covering the West Chester
Property (as defined herein) (the "West Chester Security Instrument"), the
Assignment of Leases and Rents given by Borrower to Lender covering the West
Chester Property (the "West Chester Assignment") the Mortgage and Security
Agreement given by Borrower to Lender covering the Salem Property (as defined
herein) (the "Salem Security Instrument"), the Assignment of Leases and Rents
given by Borrower to Lender covering the Salem Property (the "Salem
Assignment"), the Mortgage and Security Agreement given by Borrower to Lender
covering the Piscataway Property (as defined herein) (the "Piscataway
Security Instrument"), the Assignment of Leases and Rents given by Borrower
to Lender covering the Piscataway Property (the "Piscataway Assignment") the
Mortgage and Security Agreement given by Borrower to Lender covering the
Cherry Hill Property (as defined herein) (the "Cherry Hill Security
Instrument"), the Assignment of Leases and Rents given by Borrower to Lender
covering the Cherry Hill Property (the "Cherry Hill Assignment"), the
Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing For Commercial Purposes given by Borrower Fidelity National Title
Insurance Company, as trustee, for the use and benefit of Lender, covering
the Santa Monica Property (as defined herein) (the "Santa Monica Security
Instrument") (the Canton Security Instrument, the Philadelphia Security
Instrument, the West Chester Security Instrument, the Salem Security
Instrument, the Piscataway Security Instrument, the Cherry Hill Security
Instrument and the Santa Monica Security Instrument are sometimes
collectively referred to herein as the "Security Instruments"), the
Assignment of Leases and Rents given by Borrower to Lender covering the Santa
Monica Property (the "Santa Monica Assignment") (the Canton Assignment, the
Philadelphia Assignment, the West Chester Assignment, the Salem Assignment,
the Piscataway Assignment, the Cherry Hill Assignment and the Santa Monica
Assignment are sometimes collectively referred to herein as the
"Assignments"), the respective security documents, and certain pledge and
security agreements dated the date hereof given by Borrower to Lender
covering, respectively, (A) the fee simple estate in certain real property
located in (i) Canton, Massachusetts (the "Canton Property"), (ii)
Philadelphia, Pennsylvania (the "Philadelphia Property"), (iii) West Chester,
Pennsylvania (the "West Chester Property"), (iv) Salem, New Hampshire (the
"Salem Property"), (v) Piscataway, New Jersey (the "Piscataway Property"),
and (vi) Cherry Hill, New Jersey (the "Cherry Hill Property"), and (B) the
leasehold estate in certain real property located in Santa Monica, California
(the "Santa Monica Property"), and the Borrower's interest in certain
accounts established pursuant to the Other Loan Documents (such interest
together with the Canton Property, the Philadelphia Property, the West
Chester Property, the Salem Property, the Piscataway Property, the Cherry
Hill Property and the Santa Monica Property are sometimes collectively
referred to herein as the "Property") and other property, as more
particularly described therein which (i) Canton Security Instrument and
Canton Assignment are intended to be duly recorded in the land records where
the Canton Property is located, (ii) Philadelphia Security Instrument and
Philadelphia Assignment are intended to be duly recorded in the land records
where the Philadelphia Property is located,(iii) West Chester Security
Instrument and West Chester Assignment are intended to be duly recorded in
the land records where the West Chester Property is located, (iv) Salem
Security Instrument and Salem Assignment are intended to be duly recorded in
the land records where the Salem Property is located, (v) Piscataway Security
Instrument and Piscataway Assignment are intended to be duly recorded in the
land records where the Piscataway Property is located, (vi) Cherry Hill
Security Instrument and Cherry Hill Assignment are intended to be duly
recorded in the land records where the Cherry Hill Property is located, and
(vii) Santa Monica Security Instrument and Santa Monica Assignment are
intended to be duly recorded in the land records where the Santa Monica
Property is located. Lender may resort for the payment of the Obligations to
any such security held by Lender in such order and manner as Lender, in its
discretion, may elect. Lender may take any action to recover the Obligations
or any portion thereof, or to enforce any covenant hereof or of the Security
Documents or Other Loan Documents without prejudice to the right of Lender
thereafter to foreclose under any of the Security Documents. The rights of
Lender under this Note and the Security Documents and the Other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Lender shall be construed
as an election to proceed under any one provision herein or of any of the
Security Documents and the Other Loan Documents to the exclusion of any other
provision. Lender shall not be limited exclusively to the rights and
remedies herein or therein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity. The term "Other Loan
Documents" as used in this Note shall mean all and any of the documents other
than this Note or the Security Documents now, hereinbefore or hereafter
executed by Borrower and/or others and by or in favor of Lender, which wholly
or partially secure, guarantee or relate to payment of this Note. With
reference to the Security Documents, and solely for the purposes expressly
contained therein, the amount of the Loan allocated to each Property is set
forth on Exhibit A attached hereto and by this reference made a Part hereof.
G. Savings Clause
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance
due hereunder at a rate which could subject Lender to either civil or
criminal liability as a result of being in excess of the maximum interest
rate which Borrower is permitted by applicable law to contract or agree to
pay. If by the terms of this Note, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder. at a rate
in excess of such maximum rate the Interest Rate shall be deemed to be
immediately reduced to such maximum rate and all previous payments in excess
of the maximum rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder.
H. Miscellaneous
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part
of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
If Borrower consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
Borrower and all others who may become liable for the payment of
all or any part of the Obligations do hereby severally waive presentment and
demand for payment, notice of dishonor, protest and notice of protest and
non-payment. No release of any security for the Obligations or extension of
time for payment of this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the Security Documents or
the Other Loan Documents made by agreement between Lender and any other
person or party shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower, and any other who
may become liable for the payment of all or any part of the Obligations,
under this Note, the Security Documents or the Other Loan Documents.
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security Documents and the Other Loan Documents,
to perform its obligations hereunder and thereunder, and that this Note, the
Security Documents and the Other Loan Documents constitute valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms.
THIS NOTE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
Pursuant to New York General Obligations Law Section 5-1402,
Borrower hereby irrevocably submits to the jurisdiction of any court of the
State of New York or federal court sitting in the State of New York in any
action or proceeding arising out of or relating to this Note, the Security
Documents or the Other Loan Documents. Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such court of the State of New York or, to the extent permitted
by law, in such federal court. Borrower hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. To the extent permitted by
law, Borrower also irrevocably consents to the service of any and all process
in any such action or proceeding arising out of or in connection with this
Note, the Security Documents or Other Loan Documents by the mailing (postage
prepaid) of copies of such process to the undersigned at the address set
forth above. Borrower agrees that a final and non-appealable judgment (or a
judgment whose time to appeal has expired) in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
BORROWER AND LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM WHETHER IN CONTRACT OR TORT, AT LAW OR IN
EQUITY, WITH RESPECT TO, IN CONNECTION WITH OR ARISING OUT OF OR IN ANY WAY
RELATED TO THIS NOTE OR THE SECURITY DOCUMENTS OR THE OTHER LOAN DOCUMENTS OR
THE VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION, COLLECTION OR
ENFORCEMENT HEREOF OR THEREOF, OR ANY CLAIM OR DISPUTE HEREUNDER OR
THEREUNDER.
Wherever pursuant to this Note (i) Lender exercises any right given
to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all
decisions that arrangements or terms are satisfactory or not satisfactory and
all other decisions and determinations made by Lender, shall be in the sole
and absolute discretion of Lender and shall be final and conclusive, except
as may be otherwise expressly and specifically provided herein.
Wherever pursuant to this Note it is provided that Borrower pay any
costs and expenses, such costs and expenses shall include, without
limitation, the reasonable legal fees and disbursements of Lender.
I. Limited Recourse
(1) Subject to the provisions of Paragraph (2) below, Lender shall
not enforce the liability and obligation of Borrower to perform and observe
the obligations contained in this Note, the Security Documents or the Other
Loan Documents by any action or proceeding wherein a money judgment (or
equitable remedy having the effect of a money judgment) shall be sought
against Borrower, except that Lender may bring a foreclosure action, action
for specific performance or other appropriate action or proceeding to enable
Lender to enforce and realize upon this Note, the Security Documents, the
Other Loan Documents, and the interest in the Property, the Rents (as defined
in the Security Instruments) and any other collateral given to Lender created
by this Note, the Security Documents and the Other Loan Documents; provided,
however, that any judgment in any such action or proceeding shall be
enforceable against the Borrower only to the extent of Borrower's interest in
the Property, the Rents and any other collateral given to Lender. Lender, by
accepting this Note and the Security Documents, agrees that, except as
provided in Article 15 of the Security Instruments, it shall not sue for,
seek or demand any deficiency judgment against the Borrower in any such
action or proceeding, under or by reason of or under or in connection with
the Security Documents, the Other Loan Documents or this Note. The
provisions of this paragraph shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by the Security
Documents, the Other Loan Documents or this Note; (ii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under the Security Documents; (iii) affect the
validity or enforceability of any guaranty, indemnity or similar instrument
made in connection with the Security Documents, this Note, or the Other Loan
Documents; (iv) impair the right of Lender to obtain the appointment of a
receiver; (v) impair the enforcement of the Assignments executed in
connection herewith; (vi) impair the right of Lender to obtain a deficiency
judgment or judgment on the Note against Borrower if necessary to obtain any
insurance proceeds or condemnation awards to which Lender would otherwise be
entitled under the Security Instruments provided, however Lender shall only
enforce such judgment against the insurance proceeds and/or condemnation
awards; or (vii) impair the right of Lender to enforce the provisions of the
Security Instruments.
(2) Notwithstanding anything to the contrary contained in Paragraph
(1) above Borrower shall be fully and personally liable to Lender upon the
occurrence of certain events as described in Article 15 of the Security
Instruments and Wellsford Capital a Maryland real estate investment trust
("Wellsford Capital" or "Guarantor"), shall be fully and personally liable to
the extent set forth in and upon the occurrence of certain events as
described in that certain Conditional Guarantee of even date herewith given
by Guarantor in favor of Lender (the "Guarantee") and Borrower and Wellsford
Capital (the "Indemnitors") shall be fully and personally liable to the
extent set forth in and upon the occurrence of certain events as described in
that certain Environmental Indemnity Agreement of even date herewith given by
Indemnitors in favor of Lender and other Indemnified Parties (as defined
therein).
I. Extended Term
Provided no Event of Default shall have occurred and be continuing
either on the date notice to extend is given to Lender or on the commencement
date of the Extended Term, Borrower shall have the option to extend the
Scheduled Maturity Date of this Note to November 1, 2002 (the "Extended
Term"). Borrower shall exercise such option by providing written notice to
Lender not later than September 15, 2001. Lender shall so extend the
Scheduled Maturity Date provided Borrower provides the following (and agrees
to pay all costs and expenses in connection therewith): (i) proof
satisfactory to Lender in all respects that (A) the Debt Service Coverage
Ratio (as defined in the Security Instruments) for the Property is at least
1.30 to 1.0 and (B) the outstanding principal balance of this Note is less
than seventy-five (75%) of the then current aggregate appraised value of the
Property determined by appraisals conducted by an independent appraiser or
appraisers selected or approved by Lender, (ii) payment of Lender's
attorneys' fees and expenses, (iii) title reports satisfactory to Lender and
its counsel showing no exceptions to title other than those contained in the
mortgagee title insurance policies originally insuring the Security
Documents, (iv) an affidavit from Borrower that no alterations have been made
with respect to the Property which would render inaccurate those certain
surveys delivered to Lender with respect to the Property in connection with
the initial closing of the Loan (except for such alterations made in
compliance with the applicable terms and provisions of the Security Documents
and for which survey recertifications have been delivered to the Lender) and
(v) at the time that the written option notice is sent to Lender, Borrower
shall pay a non-refundable extension fee equal to one-half of one percent
(1/2%) of the outstanding principal balance of this Note, and further
provided that Borrower submits and executes such additional documents as
Lender may reasonably require. Notwithstanding anything to the contrary
contained herein, the foregoing extension option shall not be deemed
effective until all requirements of this paragraph are fully complied with to
the complete satisfaction of Lender.
<PAGE>
IN WITNESS WHEREOF, Borrower has duly executed this Note under seal
the day and year first above written.
WELLSFORD CAPITAL PROPERTIES, L.L.C.,
a Delaware limited liability company
By: Wellsford Capital, a Maryland real estate
investment trust, its Managing Member
By: /s/ Gregory F. Hughes
--------------------------------
Name: Gregory F. Hughes
Title: Vice President and
Assistant Treasurer<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 21st day of October, 1998, before me personally came Gregory
F. Hughes, to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is
the Vice President and Assistant Treasurer of Wellsford Capital, a Maryland
real estate investment trust, which trust is the managing member of Wellsford
Capital Properties, L.L.C., a Delaware limited liability company; and that he
had authority to sign the same; and that he acknowledged to me that he
executed the same in such capacity as the act the deed of said limited
liability company for the uses and purposes therein mentioned.
/s/ Frantz Michaud
-------------------------
Notary Public
<PAGE>
EXHIBIT A
(Allocated Loan Amounts)
1. Canton Property: $1,940,000
2. Philadelphia Property: $2,000,000
3. West Chester Property: $8,400,000
4. Salem Property: $2,420,000
5. Piscataway Property: $1,340,000
6. Cherry Hill Property: $2,300,000
7. Santa Monica Property: $9,600,000
CONDITIONAL GUARANTEE
---------------------
THIS GUARANTEE, dated as of October 22, 1998 is made by WELLSFORD
CAPITAL, a Maryland real estate investment trust, having an address c/o
Wellsford Real Properties, Inc., 610 Fifth Avenue, New York, New York 10020
(the "Guarantor") in favor of LEHMAN BROTHERS HOLDINGS INC. doing business as
Lehman Capital, a division of Lehman Brothers Holdings Inc., a Delaware
corporation having an address at 3 World Financial Center, 12th Floor, New
York New York 10285-1200 ("Lender").
Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in (i) that certain Leasehold Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing for
Commercial Purposes dated of even date herewith, given by Wellsford Capital
Properties, L.L.C., a Delaware limited liability company (the "Borrower"), as
mortgagor, to Fidelity National Title Insurance Company, as trustee, for the
use and benefit of Lender, as beneficiary, covering the Santa Monica Property
(as defined herein) (as the same may hereafter be amended, modified or
supplemented from time to time, the "Santa Monica Security Instrument"), and
(ii) that certain Mortgage and Security Agreement dated of even date herewith
between Borrower, as mortgagor, and Lender, as mortgagee, covering the Canton
Property (as defined herein) (as the same may hereafter be amended, modified
or supplemented from time to time, the "Canton Security Instrument"), (iii)
that certain Mortgage and Security Agreement dated of even date herewith
between Borrower, as mortgagor, and Lender, as mortgagee, covering the
Philadelphia Property (as defined herein) (as the same may hereafter be
amended, modified or supplemented from time to time, the "Philadelphia
Security Instrument"), (iv) that certain Mortgage and Security Agreement
dated of even date herewith between Borrower, as mortgagor, and Lender, as
mortgagee, covering the West Chester Property (as defined herein) (as the
same may hereafter be amended, modified or supplemented from time to time,
the "West Chester Security Instrument"), (v) that certain Mortgage and
Security Agreement dated of even date herewith between Borrower, as
mortgagor, and Lender, as mortgagee, covering the Salem Property (as defined
herein) (as the same may hereafter be amended, modified or supplemented from
time to time, the "Salem Security Instrument"), (vi) that certain Mortgage
and Security Agreement dated of even date herewith between Borrower, as
mortgagor, and Lender, as mortgagee, covering the Piscataway Property (as
defined herein) (as the same may hereafter be amended, modified or
supplemented from time to time, the "Piscataway Security Instrument"), and
(vii) that certain Mortgage and Security Agreement dated of even date
herewith between Borrower, as mortgagor, and Lender, as mortgagee, covering
the Cherry Hill Property (as defined herein) (as the same may hereafter be
amended, modified or supplemented from time to time, the "Cherry Hill
Security Instrument"), (the Santa Monica Security Instrument, the Canton
Security Instrument, the Philadelphia Security Instrument, the West Chester
Security Instrument, the Salem Security Instrument, the Piscataway Security
Instrument and the Cherry Hill Security Instrument are sometimes collectively
referred to herein as the "Security Instruments").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower is the owner of (A) a leasehold interest in and
to those certain premises known as 900 Colorado Avenue and 1651 16th Street
located in Santa Monica, California, as more particularly described in the
Santa Monica Security Instrument (the "Santa Monica Property"), and (B) fee
simple title to those certain premises known as (i) 250 Turnpike Street
located in Canton, Massachusetts, as more particularly described in the
Canton Security Instrument (the "Canton Property"), (ii) 421 Chestnut Street
located in Philadelphia, Pennsylvania, as more particularly described in the
Philadelphia Security Instrument (the "Philadelphia Property"), (iii)
Bradford Plaza located in West Chester, Pennsylvania, as more particularly
described in the West Chester Security Instrument (the "West Chester
Property"), (iv) 19-21 Keewaydin Drive located in Salem, New Hampshire, as
more particularly described in the Salem Security Instrument (the "Salem
Property"), (v) 501 Hoes Lane located in Piscataway, New Jersey, as more
particularly described in the Piscataway Security Instrument (the "Piscataway
Property"), and (vi) 2 Executive Campus located in Cherry Hill, New Jersey,
as more particularly described in the Cherry Hill Security Instrument (the
"Cherry Hill Property") (the Santa Monica Property, the Canton Property, the
Philadelphia Property, the West Chester Property, the Salem Property, the
Piscataway Property and the Cherry Hill Property are sometimes collectively
referred to herein as the "Property");
WHEREAS, Borrower has requested a mortgage loan (the "Loan") from
Lender in the original principal amount of $28,000,000.00 and Lender has
agreed to make such Loan upon the terms and conditions of, among other
documents, a Secured Promissory Note dated the date hereof (the "Note"), the
Security Instruments and this Guarantee (the Note, the Security Instruments
and any other documents executed in connection herewith are sometimes
collectively referred to herein as the "Loan Documents");
WHEREAS, simultaneously herewith, the Loan Documents have been
executed and delivered to Lender;
WHEREAS, Lender has required, as a condition of making the Loan,
the execution of this Guarantee by the Guarantor;
WHEREAS, Guarantor is the owner of 100% of the membership interests
in -Borrower, and accordingly, will derive a substantial benefit from the
Loan;
WHEREAS, capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Security Instruments.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the Guarantor hereby agrees with Lender as follows:
1. Guarantee. The Guarantor hereby unconditionally and
irrevocably guarantees to Lender the full and punctual payment and
performance when due of all of Borrower's obligations under the Loan
Documents, whether at maturity or earlier by reason of acceleration or
otherwise and whether denominated as damages, principal, interest, fees or
otherwise, together with all pre-and post- maturity interest thereon
(including, without limitation, amounts that, but for the initiation of any
proceeding under any insolvency or bankruptcy law, would become due), if any
of the occurrences set forth in subparagraphs (a) through (k) herein occur.
The occurrences set forth in such subparagraphs (a) through (k) are
hereinafter collectively referred to as the "Recourse Events."
Notwithstanding the foregoing, the Guaranteed Obligations (as defined below)
with respect to the Recourse Events set forth in subparagraphs (a) through
(g) herein shall be limited to the amount of all Losses, as defined by the
Security Instruments, incurred by Lender due to such occurrences. In the
event the Guaranteed Obligations are in excess of the Losses incurred by
Lender, such excess shall be applied by Lender to reduce principal and
interest under the Loan, such application to be made in the sole discretion
of Lender. Guarantor's obligations under this Guaranty (the "Guaranteed
Obligations") shall arise in the event one or more of the following events or
conditions occurs:
(a) fraud or material misrepresentation by Borrower or any
other person or entity in connection with the execution and the delivery of
the Loan Documents;
(b) Borrower's gross negligence or willful misconduct with
respect to the management and operation of the Property and/or Borrower's
financial affairs;
(c) Borrower's removal or disposal of any Personal Property
after an Event of Default;
(d) Borrower's failure to pay Taxes, Insurance Premiums,
Other Charges (except to the extent that sums sufficient to pay such amounts
have been deposited with Lender pursuant to the terms of the Security
Instruments and/or the Lockbox Agreement), charges for labor or materials or
other charges that can create liens on the Property;
(e) Borrower or Guarantor or any party acting at the behest
of Borrower or Guarantor challenges the validity or enforceability of this
Guarantee, the Note, the Security Instruments or the other Loan Documents
and/or Borrower or Guarantor or any party acting at the behest of Borrower or
Guarantor asserts defenses (other than (1) the defense of payment in full of
the Obligations, provided that no other Event of Default has occurred and is
continuing, or (2) a defense made in good faith as to the improper exercise
of Lender's remedies under the Note, the Security Instruments or the other
Loan Documents, provided that no Event of Default has occurred and is
continuing at the time of Lender's exercise of such remedies) to the validity
or enforceability of this Guarantee, the Note, the Security Instruments or
the other Loan Documents, in each case solely for the purpose of delaying,
hindering or impairing Lender's rights and remedies under this Guarantee, the
Note, the Security Instruments or the other Loan Documents.
(f) Borrower or any party acting at Borrower's behest
misapplies or misappropriates Rents, tenant security deposits, insurance
proceeds or condemnation awards;
(g) Borrower's failure to comply with the provisions of
Section 3.3, 3.9, 4.2. 4.3. 12.1, 12.2, 13.1, 13.2, 13.3, 13.4 or 13.5 of the
Security Instruments;
(h) Borrower defaults under Section 8.2 or 8.3 of the
Security Instruments;
(i) a voluntary bankruptcy or insolvency proceeding is filed
or instituted by Borrower or Guarantor, or an involuntary bankruptcy or
insolvency proceeding is filed or instituted against Borrower or Guarantor
which is not dismissed within ninety (90) days of the filing thereof (unless
such involuntary proceeding is brought by Lender); or
(j) any financial information concerning Borrower or the
Guarantor provided in this Guarantee, the Note, the Security Instruments or
the other Loan Documents or otherwise in order to induce Lender to make the
loan evidenced by the Note is fraudulent in any respect, contains any
fraudulent information or misrepresents in any material respect the financial
condition of Borrower or any Guarantor or Indemnitor;
The Guarantor also agrees to pay any and all costs and expenses
(including, without limitation, all reasonable fees and disbursements of
counsel) which may be paid or incurred by Lender in connection with the
enforcement of this Guarantee. The foregoing shall not in any manner impair
or release the debt evidenced by the Note or the other Loan Documents or
otherwise impair or derogate from the Lender's ability to enforce its rights
under the Loan Documents.
2. Guarantee Absolute. The Guarantor guarantees that, to the
extent of the Guaranteed Obligations, the Debt will be paid strictly in
accordance with the terms of the Security Instruments regardless of any
requirement of law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Lender with respect
thereto. The liability of the Guarantor hereunder shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Note, the
Security Instruments, the other Loan Documents or any other agreement between
Lender and the Borrower relating thereto;
(b) any change in the time, manner, place of payment of the
indebtedness under, or in any other term of, or any other amendment or waiver
of, or any consent to, departure from, any agreement between the Borrower and
Lender, including, without limitation, the Note, the Security Instruments or
the other Loan Documents;
(c) the insolvency of, or voluntary or involuntary
bankruptcy, assignment for the benefit of creditors, reorganization or other
similar proceedings affecting, the Borrower or any of its assets; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of the Debt
or of the Guarantor in respect of this Guarantee.
No payment made by the Guarantor, any other guarantor or any other
Person, or received or collected by the Lender from the Guarantor, any other
guarantor or any other Person by virtue of any action or proceeding or set
off or application at any time in reduction of or in payment of the Debt
shall be deemed to modify, release or otherwise affect the liability of
Guarantor under this Guarantee. Notwithstanding any such payments received or
collected by the Lender in connection with the Debt, Guarantor shall remain
liable for the balance of the Guaranteed Obligations until the Debt is paid
in full. This Guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of the Debt or any portion
thereof is rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
Lender shall not be required to inquire into the powers of the
Borrower or any of its partners, managers or other agents acting or
purporting to act on its behalf, and monies, advances, renewals or credits
described in Section 1 hereof in fact borrowed or obtained from Lender in
professed exercise of such powers shall be deemed to form part of the debts
and liabilities hereby guaranteed, notwithstanding that such borrowing or
obtaining of monies, advances, renewals, or credits shall be in excess of the
powers of the Borrower, or of its partners, managers or other agents
aforesaid, or be in any way irregular, defective or informal.
3. Dealing with the Borrower and Others.
(a) The Guaranteed Obligations shall not be released,
discharged, limited or in any way affected by anything done, suffered or
permitted by Lender in connection with any monies or credit advanced by
Lender to the Borrower or any security therefor, including any loss of or in
respect of any security received by Lender from the Borrower or others. It is
agreed that Lender, without releasing, discharging, limiting or otherwise
affecting in whole or in part the Guaranteed Obligations and liabilities
hereunder, may, without limiting the generality of the foregoing:
(i) grant time, renewals, extensions, indulgences,
releases and discharges to the Borrower and any other Person guaranteeing
payment of or otherwise liable with respect to the Debt (each such Person, an
"Obligor");
(ii) take or abstain from taking security or collateral
from the Borrower or any Obligor or from perfecting security or collateral of
the Borrower or any Obligor;
(iii) accept compromises from the Borrower or any Obligor;
(iv) apply all monies at any time received from the
Borrower or any Obligor upon such part of the Obligations as Lender may see
fit; or
(v) otherwise deal with the Borrower or any Obligor as
Lender may see fit.
(b) Lender shall not be bound or obliged to exhaust recourse
against the Borrower or any other Obligor or any security, guarantee,
indemnity, mortgage or collateral it may hold or take any other action
(other than make demand pursuant to Section 7 of this Guarantee) before
being entitled to payment from the Guarantor hereunder; and
(c) Any account settled by or between Lender and the Borrower
shall be accepted by the Guarantor as conclusive evidence that the
balance or amount thereby appearing due to Lender is so due.
4. Subrogation. The Guarantor shall not exercise any right of
subrogation with respect to payments made to Lender hereunder until such time
as all indebtedness of the Borrower to Lender shall have been irrevocably
paid in full in cash. In the case of the liquidation, winding-up or
bankruptcy of the Borrower (whether voluntary or involuntary) or in the event
that the Borrower shall make an arrangement or composition with its
creditors, Lender shall have the right to rank first for its full claim and
to receive all payments in respect thereof until its claim has been paid in
full and the Guarantor shall continue to be liable to Lender for any balance
of the Guaranteed Obligations. The Guarantor, to the extent permitted by law,
irrevocably releases and waives any subrogation rights or right of
contribution or indemnity (whether arising by operation of law, contract or
otherwise) Guarantor may have against the Borrower or any Person constituting
the Borrower if and to the extent any such right or rights would give rise to
a claim under the U.S. Bankruptcy Code that payments to Lender with respect
to the Obligations constitute a preference in favor of Guarantor or a claim
under the Bankruptcy Code that any such preference is recoverable from
Lender.
5. Representations and Warranties. The Guarantor hereby
represents and warrants to Lender that:
(a) the Guarantor is not insolvent (as such term is defined
in the debtor/creditor laws of the State of New York), and Guarantor now
has, and covenants and agrees that at all times until the Debt is paid
in full it shall maintain, a net worth of at least $50,000,000.00; and
(b) the execution, delivery and performance of this Guarantee
will not (i) make Guarantor insolvent (as such term is defined in the
debtor/creditor laws of the State of New York), or (ii) violate any
provision of any requirement of law or contractual obligation of
Guarantor and will not result in or require the creation or imposition
of any lien on any of the properties or revenues of Guarantor pursuant
to any requirement of law or contractual obligation of Guarantor.
(c) the Guarantor has all requisite power and authority to
execute, deliver and perform its obligations under this Guarantee.
(d) the execution, delivery of this Guarantee and the
performance by the Guarantor of its obligations hereunder does not and
will not contravene, violate or conflict with any requirement of law,
and does not and will not contravene, violate or conflict with, or
result in a breach of or default under, the operating agreement of
Borrower, or any contractual obligation to which Guarantor or its assets
is or are subject, and does not require or result in the creation or
imposition of any lien in favor of any Person other than Lender.
(e) the execution and delivery hereof and the performance by
the Guarantor of its obligations hereunder does not and will not
contravene, violate or conflict with, or result in a breach of or
default under, any indenture, mortgage, deed of trust, ground lease,
contract, assignment, agreement or other instrument to which the
Borrower or the assets of the Borrower are subject.
(f) no consent of any other party (including, without
limitation, any partner, or any creditor of the Guarantor or Borrower)
is required that has not been obtained by the Guarantor.
(g) this Guarantee has been duly executed and delivered by
Guarantor and is the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, moratorium,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
6. Intentionally Omitted.
7. Demand for Payment: The Guarantor shall make payment of the
Guaranteed Obligations and other amounts payable by the Guarantor hereunder
forthwith after demand therefor is made by Lender to the Guarantor in
writing. Lender shall not be required to seek payment of the Debt from
Borrower or any other Person, prior to demanding payment of the Guaranteed
Obligations from the Guarantor.
8. Waiver of Notice of Acceptance. The Guarantor hereby waives
notice of acceptance of this Guarantee.
9. Additional Guaranties. This Guarantee is in addition and
without prejudice to any guaranties of any kind (including, without
limitation, guaranties whether or not in the same form as this instrument) or
any indemnification agreements now or hereafter held by Lender. Lender shall
not be obligated to proceed under any other guaranty or security with respect
to all or any portion of the Debt before being entitled to payment from
Guarantor under this Guarantee.
10. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS
CHOICE OF LAW IS MADE PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1401.
11. Addresses of Notices. All notices, demands, and other
communications provided for hereunder shall be in writing and shall be
personally delivered, sent by overnight delivery, or mailed (certified mail,
return receipt requested and postage prepaid), to and addressed as follows:
if to the Guarantor, delivered to it at its address set forth above, with a
copy to Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the
Americas, New York, New York 10104 Attention: Dennis M. Sughrue, Esq., and if
to Lender, delivered to it at Three World Financial Center, 12th Floor, New
York, New York 10285-1200, Attention: Charles W. Schoenherr, with a copy to
Kelley Drye & Warren LLP, 101 Park Avenue, New York New York 10178,
Attention: James J. Kirk, Esq., or as to each party at such other address or
addresses within the continental United States of America as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section 11.
12. No Waiver. Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. Any amendments to, revisions of,
or waivers of any provisions of this Guarantee must be in writing to be
effective.
13. Benefit and Binding Nature. This Guarantee is a continuing
guaranty of payment and shall (a) remain in full force and effect until
irrevocable payment in full of the Guaranteed Obligations and all other
amounts payable hereunder in cash, (b) be binding upon the Guarantor, its
personal representatives, executors, administrators, heirs, distributees and
successors and assigns, and (c) inure to the benefit of and be enforceable by
Lender and its respective successors and assigns.
14. WAIVER OF TRIAL BY JURY. THE GUARANTOR AND LENDER WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, WITH RESPECT TO, IN CONNECTION WITH OR
ARISING OUT OF OR IN ANY WAY RELATED TO THIS GUARANTEE OR THE SECURITY
INSTRUMENTS OR THE NOTE OR ANY OTHER DOCUMENT DELIVERED IN CONNECTION
HEREWITH OR THEREWITH.
15. Jurisdiction. The Guarantor hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the County of
New York in any action or proceeding arising out of or relating to this
Guarantee, the Note, the Security Instruments or any other document delivered
in connection herewith or therewith and the Guarantor hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard
and determined in such New York State court, or to the extent permitted by
law, in such Federal court. The Guarantor hereby irrevocably waives, to the
fullest extent he may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. To the extent permitted by
law, the Guarantor also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies (certified
mail, return receipt requested and postage prepaid) of such process to it at
its address specified in Section 11 hereof. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
IN WITNESS WHEREOF, the Guarantor has executed this Guarantee as of
the date and year set forth above.
GUARANTOR:
WELLSFORD CAPITAL, a Maryland real estate
investment trust
By: /s/ Gregory F. Hughes
----------------------
Name: Gregory F. Hughes
Title: Vice President and
Assistant Treasurer
COUNTY OF NEW YORK )
:.ss
COUNTY OF NEW YORK )
On the 21 day of October, 1998, before me personally came Gregory
F. Hughes, to me known, who, being by me duly sworn, did depose and say that
he has an address at 610 Fifth Avenue, New York, NY; he is the Vice President
and Assistant Treasurer of Wellsford Capital, a Maryland real estate
investment trust; and is the person whose name is subscribed to the foregoing
instrument and that he executed the same in such capacity for the purposes
therein contained.
/s/ Frantz Michaud
- --------------------
Notary Public
WELLSFORD CAPITAL PROPERTIES, L.L.C., as mortgagor
(Borrower)
to
LEHMAN BROTHERS HOLDINGS INC., as mortgagee
(Lender)
-----------------------------------------------------------
MORTGAGE AND SECURITY AGREEMENT
-----------------------------------------------------------
Dated: October 22, 1998
Location: 19-23 Keewaydin Drive
Salem, New Hampshire
PREPARED BY AND UPON RECORDATION RETURN TO:
Kelley Drye & Warren LLP
101 Park Avenue
New York NY 10178
Attention: Thomas E. Tether, Esq.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 GRANTS OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 Property Mortgaged . . . . . . . . . . . . . . . . . . .1
Section 1.2 Assignment of Rents. . . . . . . . . . . . . . . . . . .3
Section 1.3 Security Agreement . . . . . . . . . . . . . . . . . . .4
Section 1.4 Pledge of Monies Held. . . . . . . . . . . . . . . . . .4
ARTICLE 2 DEBT AND OBLIGATIONS SECURED . . . . . . . . . . . . . . . . . . .4
Section 2.1 Debt . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2.2 Other Obligations. . . . . . . . . . . . . . . . . . . .5
Section 2.3 Debt and Other Obligations . . . . . . . . . . . . . . .5
Section 2.4 Payments . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE 3 BORROWER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .6
Section 3.1 Payment of Debt. . . . . . . . . . . . . . . . . . . . .6
Section 3.2 Incorporation by Reference . . . . . . . . . . . . . . .6
Section 3.3 Insurance. . . . . . . . . . . . . . . . . . . . . . . .6
Section 3.4 Payment of Taxes, etc. . . . . . . . . . . . . . . . . 10
Section 3.5 Escrow Fund. . . . . . . . . . . . . . . . . . . . . . 11
Section 3.6 Condemnation . . . . . . . . . . . . . . . . . . . . . 11
Section 3.7 Leases and Rents . . . . . . . . . . . . . . . . . . . 12
Section 3.8 Maintenance of Property. . . . . . . . . . . . . . . . 13
Section 3.9 Waste. . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.10 Compliance With Laws . . . . . . . . . . . . . . . . . 14
Section 3.11 Books and Records. . . . . . . . . . . . . . . . . . . 14
Section 3.12 Payment for Labor and Materials. . . . . . . . . . . . 16
Section 3.13 Management Agreements. . . . . . . . . . . . . . . . . 16
Section 3.14 Performance of Other Agreements. . . . . . . . . . . . 17
Section 3.15 Change of Name, Identity or Structure. . . . . . . . . 18
Section 3.16 Existence. . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4 SPECIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.1 Property Use . . . . . . . . . . . . . . . . . . . . . 18
Section 4.2 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 4.3 Single Purpose Entity. . . . . . . . . . . . . . . . . 19
Section 4.4 Restoration. . . . . . . . . . . . . . . . . . . . . . 20
Section 4.5 Lockbox Account. . . . . . . . . . . . . . . . . . . . 26
Section 4.6 Other Debt . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 26
Section 5.1 Warranty of Title. . . . . . . . . . . . . . . . . . . 26
Section 5.2 Authority. . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.3 Legal Status and Authority . . . . . . . . . . . . . . 27
Section 5.4 Validity of Documents. . . . . . . . . . . . . . . . . 27
Section 5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6 Status of Property . . . . . . . . . . . . . . . . . . 27
Section 5.7 No Foreign Person. . . . . . . . . . . . . . . . . . . 29
Section 5.8 Separate Tax Lot . . . . . . . . . . . . . . . . . . . 29
Section 5.9 ERISA Compliance . . . . . . . . . . . . . . . . . . . 29
Section 5.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.11 Financial Condition. . . . . . . . . . . . . . . . . . 29
Section 5.12 Business Purposes. . . . . . . . . . . . . . . . . . . 30
Section 5.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.14 Mailing Address. . . . . . . . . . . . . . . . . . . . 30
Section 5.15 No Change in Facts or Circumstances. . . . . . . . . . 30
Section 5.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.17 Third Party Representations. . . . . . . . . . . . . . 30
Section 5.18 Illegal Activity . . . . . . . . . . . . . . . . . . . 30
ARTICLE 6 OBLIGATIONS AND RELIANCES. . . . . . . . . . . . . . . . . . . . 30
Section 6.1 Relationship of Borrower and Lender. . . . . . . . . . 30
Section 6.2 No Reliance on Lender. . . . . . . . . . . . . . . . . 30
Section 6.3 No Lender Obligations. . . . . . . . . . . . . . . . . 31
Section 6.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.1 Recording of Security Instrument, etc. . . . . . . . . 31
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 7.2 Further Acts, etc. . . . . . . . . . . . . . . . . . . 32
Section 7.3 Changes in Tax, Debt, Credit and Documentary Stamp Laws32
Section 7.4 Estoppel Certificates. . . . . . . . . . . . . . . . . 32
Section 7.5 Splitting of Security Instrument . . . . . . . . . . . 33
Section 7.6 Replacement Documents. . . . . . . . . . . . . . . . . 34
ARTICLE 8 DUE ON SALE/ENCUMBRANCE. . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 Lender Reliance. . . . . . . . . . . . . . . . . . . . 34
Section 8.2 No Sale/Encumbrance. . . . . . . . . . . . . . . . . . 34
Section 8.3 Sale/Encumbrance Defined . . . . . . . . . . . . . . . 34
Section 8.4 Lender's Rights. . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.1 Prepayment Before Event of Default . . . . . . . . . . 35
Section 9.2 Prepayment After Event of Default. . . . . . . . . . . 36
ARTICLE 10 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.1 Events of Default. . . . . . . . . . . . . . . . . . . 36
Section 10.2 Late Payment Charge. . . . . . . . . . . . . . . . . . 39
Section 10.3 Default Interest . . . . . . . . . . . . . . . . . . . 39
ARTICLE 11 RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . 39
Section 11.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.2 Application of Proceeds. . . . . . . . . . . . . . . . 41
Section 11.3 Right to Cure Defaults . . . . . . . . . . . . . . . . 42
Section 11.4 Actions and Proceedings. . . . . . . . . . . . . . . . 42
Section 11.5 Recovery of Sums Required To Be Paid . . . . . . . . . 42
Section 11.6 Examination of Books and Records . . . . . . . . . . . 42
Section 11.7 Other Rights, etc. . . . . . . . . . . . . . . . . . . 43
Section 11.8 Right to Release Any Portion of the Property . . . . . 43
Section 11.9 Violation of Laws. . . . . . . . . . . . . . . . . . . 43
Section 11.10 Recourse and Choice of Remedies. . . . . . . . . . . . 43
Section 11.11 Right of Entry . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 12 ENVIRONMENTAL HAZARDS . . . . . . . . . . . . . . . . . . . 44
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 12.1 Environmental Representations and Warranties . . . . . 44
Section 12.2 Environmental Covenants. . . . . . . . . . . . . . . . 46
Section 12.3 Lender's Rights. . . . . . . . . . . . . . . . . . . . 47
ARTICLE 13 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 47
Section 13.1 General Indemnification. . . . . . . . . . . . . . . . 47
Section 13.2 Mortgage and/or Intangible Tax . . . . . . . . . . . . 48
Section 13.3 ERISA Indemnification. . . . . . . . . . . . . . . . . 48
Section 13.4 Environmental Indemnification. . . . . . . . . . . . . 48
Section 13.5 Duty to Defend; Attorneys' Fees and Other Fees and
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 14 WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 14.1 Waiver of Counterclaim . . . . . . . . . . . . . . . . 50
Section 14.2 Marshalling and Other Matters. . . . . . . . . . . . . 50
Section 14.3 Waiver of Notice . . . . . . . . . . . . . . . . . . . 50
Section 14.4 Waiver of Statute of Limitations . . . . . . . . . . . 51
Section 14.5 Sole Discretion of Lender. . . . . . . . . . . . . . . 51
Section 14.6 Survival . . . . . . . . . . . . . . . . . . . . . . . 51
Section 14.7 WAIVER OF TRIAL BY JURY. . . . . . . . . . . . . . . . 51
ARTICLE 15 EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 15.1 Exculpation. . . . . . . . . . . . . . . . . . . . . . 52
Section 15.2 Reservation of Certain Rights. . . . . . . . . . . . . 52
Section 15.3 Exceptions to Exculpation. . . . . . . . . . . . . . . 52
Section 15.4 Recourse . . . . . . . . . . . . . . . . . . . . . . . 53
Section 15.5 Bankruptcy Claims. . . . . . . . . . . . . . . . . . . 53
ARTICLE 16 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 16.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 17 SERVICE OF PROCESS. . . . . . . . . . . . . . . . . . . . . 54
Section 17.1 Submission to Jurisdiction . . . . . . . . . . . . . . 54
Section 17.2 Jurisdiction Not Exclusive . . . . . . . . . . . . . . 55
ARTICLE 18 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . 55
Section 18.1 Choice of Law. . . . . . . . . . . . . . . . . . . . . 55
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 18.2 Usury Laws . . . . . . . . . . . . . . . . . . . . . . 55
Section 18.3 Provisions Subject to Applicable Law . . . . . . . . . 55
ARTICLE 19 SECONDARY MARKET. . . . . . . . . . . . . . . . . . . . . . 55
Section 19.1 Transfer of Loan . . . . . . . . . . . . . . . . . . . 55
ARTICLE 20 COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 20.1 Performance at Borrower's Expense. . . . . . . . . . . 56
Section 20.2 Attorney's Fees for Enforcement. . . . . . . . . . . . 56
ARTICLE 21 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 21.1 General Definitions. . . . . . . . . . . . . . . . . . 57
ARTICLE 22 MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . 57
Section 22.1 No Oral Change . . . . . . . . . . . . . . . . . . . . 57
Section 22.2 Liability. . . . . . . . . . . . . . . . . . . . . . . 57
Section 22.3 Inapplicable Provisions. . . . . . . . . . . . . . . . 57
Section 22.4 Headings, etc. . . . . . . . . . . . . . . . . . . . . 58
Section 22.5 Duplicate Originals; Counterparts. . . . . . . . . . . 58
Section 22.6 Number and Gender. . . . . . . . . . . . . . . . . . . 58
Section 22.7 Entire Agreement . . . . . . . . . . . . . . . . . . . 58
ARTICLE 23 CROSS-COLLATERALIZATION . . . . . . . . . . . . . . . . . . 58
<PAGE>
THIS MORTGAGE AND SECURITY AGREEMENT (this "Security Instrument")
is made as of the 22nd day of October, 1998, by WELLSFORD CAPITAL PROPERTIES,
L.L.C., a Delaware limited liability company having its principal place of
business c/o Wellsford Real Properties, Inc., 610 Fifth Avenue, New York, New
York 10020, as mortgagor ("Borrower") to LEHMAN BROTHERS HOLDINGS INC., doing
business as Lehman Capital, a division of Lehman Brothers Holdings Inc., a
Delaware corporation, having an address at 3 World Financial Center, 12th
Floor, New York, New York 10285-1200, as mortgagee ("Lender").
R E C I T A L S:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of Twenty-Eight Million and
00/100 Dollars ($28,000,000.00) in lawful money of the United States of
America (the note together with all extensions, renewals, modifications,
substitutions and amendments thereof shall collectively be referred to as the
"Note"), with interest from the date thereof at the rates set forth in the
Note, principal and interest to be payable in accordance with the terms and
conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and
the Other Obligations (as defined in Article 2).
ARTICLE 1
GRANTS OF SECURITY
Section 1.1 Property Mortgaged. Borrower, for consideration paid, does
hereby irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey to Lender with MORTGAGE COVENANTS, and grant a security
interest to Lender in, the following property, rights, interests and estates
now owned, or hereafter acquired by Borrower (collectively, the "Property"):
(a) Land. The real property described in Exhibit A attached
hereto and made a part hereof (the "Land");
(b) Additional Land. All additional lands, estates and
development rights hereafter acquired by Borrower for use in connection with
the Land and the development of the Land and all additional lands and estates
therein which may, from time to time, by supplemental mortgage or otherwise
be expressly made subject to the lien of this Security Instrument:
(c) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (the
"Improvements");
(d) Easements. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, air rights and development
rights, and all estates, rights, titles, interests, privileges, liberties,
servitudes, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way now or hereafter belonging, relating or pertaining to
the Land and the Improvements and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Land, to the center line
thereof and all the estates, rights, titles, interests, dower and rights of
dower, curtesy and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Land and
the Improvements and every part and parcel thereof, with the appurtenances
thereto, and all minerals, oils, gas and other hydrocarbon substances thereon
or therein;
(e) Fixtures and Personal Property. All machinery, equipment,
fixtures (including, but not limited to, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other property
of every kind and nature whatsoever owned by Borrower, or in which Borrower
has or shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the
present or future operation and occupancy of the Land and the Improvements
and all building equipment, materials and supplies of any nature whatsoever
owned by Borrower, or in which Borrower has or shall have an interest, now or
hereafter located upon the Land and the Improvements, or appurtenant thereto,
or usable in connection with the present or future operation and occupancy of
the Land and the Improvements (collectively, the "Personal Property"), and
the right, title and interest of Borrower in and to any of the Personal
Property which may be subject to any security interests, as defined in the
Uniform Commercial Code, as adopted and enacted by the state or states where
any of the Property is located (the "Uniform Commercial Code"), superior in
lien to the lien of this Security Instrument and all proceeds and products of
the above;
(f) Leases and Rents. All leases and other agreements affecting
the use, enjoyment or occupancy of all or any part of the Land and the
Improvements heretofore or hereafter entered into, whether before or after
the filing by or against Borrower of any petition for relief under 11 U.S.C.
Section 101 et seq., as the same may be amended from time to time (the
"Bankruptcy Code") together with all extensions, renewals, guaranties and/or
modifications of, and substitutions for, the same (the "Leases") and all
right, title and interest of Borrower, its successors and assigns therein and
thereunder, including, without limitation, cash or securities deposited
thereunder to secure the performance by the lessees of their obligations
thereunder and all rents, revenues, issues and profits, royalties, income and
other benefits, including those now due, past due and to become due, under or
by virtue of the Leases, including without limitation, base rents, minimum
rents, additional rents, percentage rents, security deposits, charges for
parking, maintenance, taxes and insurance, deficiency rents and damages
following default, the premium payable by any tenant upon the exercise of a
cancellation privilege provided in any Lease, all proceeds payable under any
policy of insurance covering loss of rent resulting from any destruction or
damage to all or any part of the Property, and all other rights and claims of
any kind which Borrower may have against any tenant or any other occupant of
all or any part of the Property (including all oil and gas or other mineral
royalties and bonuses) from the Land and the Improvements whether paid or
accruing before or after the filing by or against Borrower of any petition
for relief under the Bankruptcy Code (the "Rents") and all proceeds from the
sale or other disposition of the Leases and the right to receive and apply
the Rents to the payment of the Debt;
(g) Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with respect to
the Property, whether from the exercise of the right of eminent domain
(including but not limited to any transfer made in lieu of or in anticipation
of the exercise of the right), or for a change of grade, or for any other
injury to or decrease in the value of the Property;
(h) Insurance Proceeds. All proceeds of and any unearned premiums
on any insurance policies covering the Property, including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Property;
(i) Tax Certiorari. All refunds, rebates or credits in connection
with a reduction in real estate taxes and assessments charged against the
Property as a result of tax certiorari or any applications or proceedings for
reduction;
(j) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds
of insurance and condemnation awards, into cash or liquidation claims;
(k) Rights. The right, in the name and on behalf of Borrower, to
appear in and defend any action or proceeding brought with respect to the
Property and to commence any action or proceeding to protect the interest of
Lender in the Property;
(1) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including,
without limitation, the right, upon the happening of any default hereunder,
to receive and collect any sums payable to Borrower thereunder;
(m) Trademarks. All tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property; and
(n) Other Rights. Any and all other rights of Borrower in and to
the items set forth in Subsections (a) through (m) above.
Section 1.2 Assignment of Rents. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in and
to all current and future Leases and Rents; it being intended by Borrower
that this assignment constitutes a present, absolute assignment and not an
assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.7, Lender grants to Borrower a revocable
license to collect and receive the Rents. Borrower shall hold the Rents, or
a portion thereof sufficient to discharge all current sums due on the Debt,
for use in the payment of such sums.
Section 1.3 Security Agreement. This Security Instrument is both a
real property mortgage and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal
property and all other rights and interests, whether tangible or intangible
in nature, of Borrower in the Property. By executing and delivering this
Security Instrument, Borrower hereby grants to Lender, as security for the
Obligations (defined in Section 2.3), a security interest in the Personal
Property to the full extent that the Personal Property may be subject to the
Uniform Commercial Code.
Section 1.4 Pledge of Monies Held. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section
3.5), Net Proceeds (as defined in Section 4.4), the Lockbox Account (as
defined in Section 4.5) and condemnation awards or payments described in
Section 4.4, as additional security for the Obligations until expended or
applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto
and to the use and benefit of Lender, and the successors and assigns of
Lender, forever;
PROVIDED, HOWEVER, these presents are upon the express condition
that, if Borrower shall well and truly pay to Lender the Debt at the time and
in the manner provided in the Note and this Security Instrument, shall well
and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, these presents and
the estate hereby granted shall cease, terminate and be void.
ARTICLE 2
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the
following, in such order of priority as Lender may determine in its sole
discretion (the "Debt"):
(a) the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
(b) the payment of interest, default interest, late charges and
other sums, as provided in the Note, this Security Instrument or the Other
Security Documents (defined below);
(c) the payment of the Prepayment Fee (as defined in the Note);
(d) the payment of all other moneys agreed or provided to be paid
by Borrower in the Note, this Security Instrument or the Other Security
Documents (as defined herein);
(e) the payment of all sums advanced pursuant to this Security
Instrument to protect and preserve the Property and the lien and the security
interest created hereby; and
(f) the payment of all sums advanced and reasonable costs and
expenses incurred by Lender in connection with the Debt or any part thereof,
any renewal, extension, or change of or substitution for the Debt or any part
thereof, or the acquisition or perfection of the security therefor, whether
made or incurred at the request of Borrower or Lender.
Section 2.2 Other Obligations. This Security Instrument and the
grants, assignments and transfers made in Article 1 are also given for the
purpose of securing the following (the "Other Obligations"):
(a) the performance of all other obligations of Borrower contained
herein;
(b) the performance of each obligation of Borrower contained in
any other agreement given by Borrower to Lender which is for the purpose of
further securing the obligations secured hereby, and any amendments,
modifications and changes thereto; and
(c) the performance of each obligation of Borrower contained in
any renewal, extension, amendment, modification, consolidation, change of, or
substitution or replacement for, all or any part of the Note, this Security
Instrument or the Other Security Documents.
Section 2.3 Debt and Other Obligations. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively below as the "Obligations."
Section 2.4 Payments. Unless payments are made in the required amount
in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless
of any receipt or credit issued therefor, constitute payment until the
required amount is actually received by Lender in funds immediately available
at the place where the Note is payable (or any other place as Lender, in
Lender's sole discretion, may have established by delivery of written notice
thereof to Borrower) and shall be made and accepted subject to the condition
that any check or draft may be handled for collection in accordance with the
practice of the collecting bank or banks. Acceptance by Lender of any
payment in an amount less than the amount then due shall be deemed an
acceptance on account only, and the failure to pay the entire amount then due
shall be and continue to be an Event of Default (defined below).
ARTICLE 3
BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 Payment of Debt. Borrower will pay the Debt at the time
and in the manner provided in the Note and in this Security Instrument.
Section 3.2 Incorporation by Reference. All the covenants, conditions
and agreements contained in (a) the Note and (b) all and any of the documents
other than the Note or this Security Instrument now or hereafter executed by
Borrower and/or others and by or in favor of Lender, which wholly or
partially secure or guaranty payment of the Note (the "Other Security
Documents"), are hereby made a part of this Security Instrument to the same
extent and with the same force as if fully set forth herein.
Section 3.3 Insurance.
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Property providing at least the following
coverages:
(i) comprehensive all risk insurance on the Improvements and
the Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to 100% of the "Full
Replacement Cost," which for purposes of this Security Instrument shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation, but the
amount shall in no event be less than the allocated loan amount for the
Property as set forth in Exhibit A to the Note; (B) containing an agreed
amount endorsement with respect to the Improvements and Personal Property
waiving all co-insurance provisions; (C) providing for no deductible in
excess of the lesser of $10,000.00 and one percent (1%) of the face value of
such policy; and (D) containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or
uses. The Full Replacement Cost shall be redetermined from time to time (but
not more frequently than once in any twenty-four (24) calendar months) at the
request of Lender by an appraiser or contractor designated and paid by
Borrower and approved by Lender, or by an engineer or appraiser in the
regular employ of the insurer. After the first appraisal, additional
appraisals may be based on construction cost indices customarily employed in
the trade. No omission on the part of Lender to request any such
ascertainment shall relieve Borrower of any of its obligations under this
Subsection. In addition, Borrower shall obtain (y) flood hazard insurance if
any portion of the Improvements is currently or at any time in the future
located in a federally designated "special flood hazard area", such flood
hazard insurance to be in an amount equal to the lesser of (a) the allocated
loan amount for the Property as set forth on Exhibit A to the Note or (b) the
maximum amount of such insurance available under the National Flood Insurance
Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended; and (z) earthquake
insurance in amounts and in form and substance satisfactory to Lender in the
event the Property is located in an area with a high degree of seismic
activity, provided that the insurance pursuant to clauses (y) and (z) hereof
shall be on terms consistent with the comprehensive all risk insurance policy
required under this Subsection 3.3(a)(i) except that the deductible on such
insurance shall not be in excess of five percent (5%) of the allocated loan
amount for the Property as set forth on Exhibit A to the Note;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in
or about the Property, such insurance (A) to be on the so-called "occurrence"
form with a combined single limit of not less than $1,000,000.00; (B) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate as determined by Lender in the exercise of its
reasonable discretion; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations on an "if any"
basis; (3) independent contractors; (4) blanket contractual liability for all
written and oral contracts; and (5) contractual liability covering the
indemnities contained in Article 13 hereof to the extent the same is
available;
(iii) business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance
provided for in Subsection 3.3(a)(i); (C) containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of twenty-four (24) months from
the date of the loss, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in an amount equal
to 100% of the projected gross income from the Property for a period of
twelve (12) months. The amount of such business income insurance shall be
determined prior to the date hereof and at least once each year thereafter
based on Borrower's reasonable estimate of the gross income from the Property
for the succeeding twenty-four (24) month period. All insurance proceeds
payable to Lender pursuant to this Subsection 3.3(a)(iii) shall be held by
Lender and shall be applied to the obligations secured hereunder from time to
time due and payable hereunder and under the Note; provided, however, that
nothing herein contained shall be deemed to relieve Borrower of its
obligations to pay the obligations secured hereunder on the respective dates
of payment provided for in the Note except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements (A)
owner's contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above mentioned commercial
general liability insurance policy; and (B) the insurance provided for in
Subsection 3.3(a)(i) shall be written in a so-called builder's risk completed
value form (1) on a non-reporting basis, (2) against all risks insured
against pursuant to Subsection 3.3(a)(i), (3) including permission to occupy
the Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(v) workers' compensation, subject to the statutory limits of
the state in which the Property is located, and employer's liability
insurance with a limit of at least $1,000,000.00 per accident and per disease
per employee, and $1,000,000.00 for disease aggregate in respect of any work
or operations on or about the Property, or in connection with the Property or
its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on terms
consistent with the comprehensive all risk insurance policy required under
Subsection 3.3(a)(i);
(vii) umbrella liability insurance in an amount not less
than $50,000,000.00 per occurrence on terms consistent with the commercial
general liability insurance policy required under Subsection 3.3(a)(ii);
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence of $1,000,000.00; and
(ix) such other insurance and in such amounts as Lender from
time to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to the
Property located in or around the region in which the Property is located.
(b) All insurance provided for in Subsection 3.3(a) hereof shall
be obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be subject to the reasonable approval of
Lender as to insurance companies, amounts, forms, deductibles, loss payees
and insureds. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the state in
which the Property is located and approved by Lender in the exercise of its
reasonable discretion. The insurance companies must have a rating of "Aa1"
or better for claims paying ability assigned by Moody's Investors Service,
Inc. and a rating from A.M. Best's of at least A:XV, and in the event such
insurance companies are rated by Fitch Investors Service, Inc. and Duff &
Phelps Credit Rating Company, and if there are any Securities (defined in
Section 19.1 below) issued which have been assigned a rating by a credit
rating agency approved by Lender (a "Rating Agency"), the insurance company
shall have a claims paying ability rating by such Rating Agency equal to or
greater than the rating of the highest class of the Securities (each such
insurer shall be referred to below as a "Qualified Insurer"). The Policies
described in Subsections 3.3(a)(i), (iii), (iv)(B) and (vi) shall designate
Lender as loss payee. Not less than thirty (30) days prior to the expiration
dates of the Policies theretofore furnished to Lender pursuant to Subsection
3.3(a), certified copies of the Policies marked "premium paid" or accompanied
by evidence satisfactory to Lender of payment of the premiums due thereunder
(the "Insurance Premiums") shall be delivered by Borrower to Lender;
provided, however, that in the case of renewal Policies, Borrower may furnish
Lender with binders therefor to be followed by the original Policies when
issued.
(c) Borrower shall not obtain (i) any umbrella or blanket
liability or casualty Policy unless, in each case, such Policy is approved in
advance in writing by Lender and Lender's interest is included therein as
provided in this Security Instrument and such Policy is issued by a Qualified
Insurer, or (ii) separate insurance concurrent in form or contributing in the
event of loss with that required in Subsection 3.3(a) to be furnished by, or
which may be reasonably required to be furnished by, Borrower. In the event
Borrower obtains separate insurance or an umbrella or a blanket Policy,
Borrower shall notify Lender of the same and shall cause certified copies of
each Policy to be delivered as required in Subsection 3.3(a). Any blanket
insurance Policy shall specifically allocate to the Property the amount of
coverage from time to time required hereunder and shall otherwise provide the
same protection as would a separate Policy insuring only the Property in
compliance with the provisions of Subsection 3.3(a).
(d) All Policies of insurance provided for or contemplated by
Subsection 3.3(a), except for the Policy referenced in Subsection (a)(v),
shall name Lender and Borrower as the insured or additional insured, as their
respective interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-called New
York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Subsection 3.3(a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any tenant under any Lease or other occupant, or failure to
comply with the provisions of any Policy which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect the
validity or enforceability of the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or cancelled without at least 30
days' written notice to Lender and any other party named therein as an
insured; and
(iii) each Policy shall provide that the issuers thereof
shall give written notice to Lender if the Policy has not been renewed thirty
(30) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender, on or before thirty (30)
days after the close of each of Borrower's fiscal years, a statement
certified by Borrower or a duly authorized officer of Borrower of the amounts
of insurance maintained in compliance herewith, of the risks covered by such
insurance and of the insurance company or companies which carry such
insurance and, if requested by Lender, verification of the adequacy of such
insurance by an independent insurance broker or appraiser acceptable to
Lender.
(g) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender
shall have the right, without notice to Borrower, to take such action as
Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in its
sole discretion deems appropriate, and all expenses incurred by Lender in
connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Lender upon demand and until paid shall
be secured by this Security Instrument and shall bear interest in accordance
with Section 10.3 hereof.
(h) If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Borrower shall give prompt notice of such
damage to Lender and shall promptly commence and diligently prosecute the
completion of the repair and restoration of the Property as nearly as
possible to the condition the Property was in immediately prior to such fire
or other casualty, with such alterations as may be approved by Lender (the
"Restoration") and otherwise in accordance with Section 4.4 of this Security
Instrument. Borrower shall pay all costs of such Restoration whether or not
such costs are covered by insurance. Lender may, but shall not be obligated
to make proof of loss if not made promptly by Borrower.
(i) In the event of foreclosure of this Security Instrument, or
other transfer of title to the Property in extinguishment in whole or in part
of the Debt, all right, title and interest of Borrower in and to such
policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or
Lender or other transferee in the event of such other transfer of title.
Section 3.4 Payment of Taxes, etc. Borrower shall promptly pay all
taxes, assessments, water rates, sewer rents, governmental impositions, and
other charges, including without limitation vault charges and license fees
for the use of vaults, chutes and similar areas adjoining the Land, now or
hereafter levied or assessed or imposed against the Property or any part
thereof (the "Taxes"), all ground rents, maintenance charges and similar
charges, now or hereafter levied or assessed or imposed against the Property
or any part thereof (the "Other Charges"), and all charges for utility
services provided to the Property as same become due and payable. Borrower
will deliver to Lender, promptly upon Lender's request, evidence satisfactory
to Lender that the Taxes, Other Charges and utility service charges have been
so paid or are not then delinquent. Borrower shall not suffer and shall
promptly cause to be paid and discharged any lien or charge whatsoever which
may be or become a lien or charge against the Property. Except to the extent
sums sufficient to pay all Taxes and Other Charges have been deposited with
Lender in accordance with the terms of this Security Instrument and/or the
Lockbox Agreement, Borrower shall furnish to Lender paid receipts for the
payment of the Taxes and Other Charges prior to the date the same shall
become delinquent. If any Taxes or Other Charges are not paid as herein
provided or pursuant to the Lockbox Agreement, Lender shall have the right to
pay the same, together with any penalty and interest thereon, and the amount
or amounts so paid or advanced shall forthwith be payable by Borrower to
Lender and shall be secured by the lien of this Security Instrument;
provided, however, that Borrower may in good faith contest, at Borrower's own
cost and expenses, by proper legal proceedings, the validity or amount of any
Taxes or Other Charges, on the condition that Borrower first shall, unless
the contested amount is paid in full when due despite such contest, deposit
with Lender, as security for the payment of such contested item, an amount
equal to the contested item plus all penalties and interest which would be
payable if Borrower is ultimately required to pay such contested item, and on
the further condition that no amount so contested may remain unpaid for such
length of time as shall permit the Property, or the lien thereon created by
the item being contested, to be sold for the nonpayment thereof, or as shall
permit an action, either of foreclosure or otherwise, to be commenced by the
holder of any such lien, or as shall permit the Property to be otherwise in
danger of sale, forfeiture or loss by reason of such proceedings. Borrower
will not claim any credit on, or make any deduction from the Debt by reason
of the payment of any Taxes or Other Charges.
Section 3.5 Escrow Fund. In addition to the initial deposits with
respect to Taxes, Premiums and Other Charges made by Borrower to Lender on
the date hereof in accordance with the Lockbox Agreement, Borrower shall pay
to Lender on the first day of each calendar month (a) one-twelfth of an
amount which would be sufficient to pay the Taxes payable, or estimated by
Lender to be payable, during the next ensuing twelve (12) months, (b) one-
twelfth of an amount which would be sufficient to pay the Insurance Premiums
due for the renewal of the coverage afforded by the Policies upon the
expiration thereof and (c) one-twelfth of an amount which would be sufficient
to pay the Other Charges payable, or estimating by Lender to be payable,
during the next ensuing twelve (12) months (the amounts in (a), (b) and (c)
above shall be called the "Escrow Fund"). Borrower agrees to notify Lender
immediately of any changes to the amounts, schedules and instructions for
payment of any Taxes, Insurance Premiums and Other Charges of which it has
obtained knowledge and authorizes Lender or its agent to obtain the bills for
Taxes and Other Charges directly from the appropriate taxing authority or
other appropriate party. The Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply
the Escrow Fund to payments of Taxes, Insurance Premiums and Other Charges
required to be made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If
the amount of the Escrow Fund shall exceed the amounts due for Taxes,
Insurance Premiums and Other Charges pursuant to Sections 3.3 and 3.4 hereof,
Lender shall, in its discretion, return any excess to Borrower or credit such
excess against future payments to be made to the Escrow Fund. In allocating
such excess, Lender may deal with the person shown on the records of Lender
to be the owner of the Property. If the Escrow Fund is not sufficient to pay
the items set forth in clauses (a), (b) and (c) of this Section 3.5 above,
Borrower shall promptly pay to Lender, upon demand, an amount which Lender
shall estimate as sufficient to make up the deficiency. The Escrow Fund
shall not constitute a trust fund and may be commingled with other monies
held by Lender. No earnings on interest on the Escrow Fund shall be payable
to Borrower. The Escrow Fund shall be established pursuant to the terms and
provisions of the Lockbox Agreement. In the event of any inconsistency
between the terms and provisions of this Section 3.5 and the terms and
provisions of the Lockbox Agreement, the terms and provisions of the Lockbox
Agreement shall control.
Section 3.6 Condemnation. Borrower shall promptly give Lender notice
of the actual or threatened commencement of any condemnation or eminent
domain proceeding and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any
such proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at
its expense, diligently prosecute any such proceedings, and shall consult
with Lender, its attorneys and experts, and cooperate with them in the
carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise
(including but not limited to any transfer made in lieu of or in anticipation
of the exercise of such taking), Borrower shall continue to pay the Debt at
the time and in the manner provided for its payment in the Note and in this
Security Instrument and the Debt shall not be reduced until any award or
payment therefor shall have been actually received and applied by Lender,
after the deduction of reasonable expenses of collection, to the reduction or
discharge of the Debt. Lender shall not be limited to the interest paid on
the award by the condemning authority but shall be entitled to receive out of
the award interest at the rate or rates provided herein or in the Note. If
the Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of
the Property and otherwise comply with the provisions of Section 4.4 of this
Security Instrument. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the award or payment, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the award or payment, or a
portion thereof sufficient to pay the Debt.
Section 3.7 Leases and Rents.
(a) Except as otherwise consented to by Lender, all Leases shall
be written on the standard form of lease which shall have been approved by
Lender (the "Standard Lease Form"). Upon request, Borrower shall furnish
Lender with executed copies of all Leases. No material changes may be made
to the Standard Lease Form without the prior written consent of Lender. In
addition, all renewals of Leases and all proposed leases shall provide for
rental rates and terms comparable to existing local market rates and terms
and shall be arms-length transactions with bona fide, independent third party
tenants. All proposed leases and renewals of existing Leases shall be
subject to the prior approval of Lender and its counsel, at Borrower's
expense. All Leases shall provide that they are subordinate to this Security
Instrument and that the lessee agrees to attorn to Lender, provided that,
upon request of any proposed tenant in connection with any proposed Lease in
excess of 5,000 rentable square feet, Lender will agree not to disturb the
tenant's possession of the premises demised thereunder for so long as the
tenant is not in default under the Lease beyond the expiration of any
applicable notice or grace period pursuant, and subject, to the terms and
provisions of a subordination, non-disturbance and attornment agreement in
Lender's customary form (or in the form provided in the Lease or by Tenant,
if reasonably acceptable to Lender) (an "SNDA") in respect of such Lease.
Borrower (i) shall observe and perform all the obligations imposed upon the
lessor under the Leases and shall not do or permit to be done anything to
impair the value of the Leases as security for the Debt; (ii) shall promptly
send copies to Lender of all notices of default which Borrower shall send or
receive thereunder; (iii) shall enforce all of the terms, covenants and
conditions contained in the Leases upon the part of the lessee thereunder to
be observed or performed, short of termination thereof; Borrower may
terminate, however, Minor Leases as the result of a default by lessee
thereunder; (iv) shall not collect any of the Rents more than one (1) month
in advance; (v) shall not execute any other assignment of the lessor's
interest in the Leases or the Rents; (vi) except as expressly permitted
herein, shall not alter, modify or change the terms of the Leases without the
prior written consent of Lender, or cancel or terminate the Leases or accept
a surrender thereof or convey or transfer or suffer or permit a conveyance or
transfer of the Land or of any interest therein so as to effect a merger of
the estates and rights of, or a termination or diminution of the obligations
of, lessees thereunder; (vii) shall not alter, modify or change the terms of
any guaranty, letter of credit or other credit support with respect to the
Leases (the "Lease Guaranty") or cancel or terminate such Lease Guaranty
without the prior written consent of Lender; and (viii) shall not consent to
any assignment of or subletting under the Leases not in accordance with their
terms, without the prior written consent of Lender.
(b) Notwithstanding the provisions of Subsection (a) above,
renewals of existing commercial Leases and proposed leases for commercial
space shall not be subject to the prior approval of Lender provided all of
the following conditions are satisfied: (i) the renewal Lease or series of
leases or proposed lease or series of leases covers less than 5,000 rentable
square feet, in the aggregate (any such lease or series of leases demising
less than 5,000 rentable square feet of the Property being hereinafter
referred to as a "Minor Lease"), (ii) the renewal Lease or series of leases
or proposed lease or series of leases shall be written on the standard form
of Lease which shall have been approved by Lender, (iii) no rent credits,
free rents or concessions have been granted under the renewal Lease or
proposed lease which are inconsistent with customary leasing practices in the
local market in which the Property is located, (iv) the renewal Lease or
proposed lease shall provide for rental rates and terms comparable to
existing local market rates and terms, (v) the renewal Lease or proposed
lease shall be an arms-length transaction with a bona fide, independent third
party tenant, and (vi) the renewal Lease or proposed lease shall satisfy such
additional criteria as shall be reasonably required by Lender in its sole
discretion and of which Borrower has been notified by Lender. Borrower shall
deliver to Lender copies of all Leases which are entered into pursuant to the
preceding sentence together with Borrower's certification that it has
satisfied all of the conditions of the preceding sentence within thirty (30)
days after the execution of the Lease.
(c) To the extent permitted by law, Borrower shall promptly
deposit with Lender any and all monies representing security deposits under
the Leases, whether or not Borrower actually received such monies (the
"Security Deposits"). Lender shall hold the Security Deposits in accordance
with the terms of the respective Lease, and shall only release the Security
Deposits in order to return a tenant's Security Deposit to such tenant if
such tenant is entitled to the return of the Security Deposit under the terms
of the Lease and is not otherwise in default under the Lease. To the extent
required by Applicable Laws (defined below), Lender shall hold the Security
Deposits in an interest-bearing account selected by Lender in its sole
discretion (it being understood that (i) Lender or Servicer shall have no
obligation to maximize the return or yield on any sums so invested, and (ii)
any such interest shall constitute additional security for the Obligations).
In the event Lender is not permitted by law to hold the Security Deposits,
Borrower shall deposit the Security Deposits into an account with a federally
insured institution as approved by Lender.
Section 3.8 Maintenance of Property. Borrower shall cause the Property
to be maintained in a good and safe condition and repair, reasonable wear and
tear excepted. The Improvements and the Personal Property shall not be
removed, demolished or materially altered (except for normal replacement of
the Personal Property) without the consent of Lender. Borrower shall
promptly repair, replace or rebuild any part of the Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which
may be affected by any proceeding of the character referred to in Section 3.6
hereof and shall complete and pay for any structure at any time in the
process of construction or repair on the Land. Borrower shall not initiate,
join in, acquiesce in, or consent to any change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Property or any part thereof. If
under applicable zoning provisions the use of all or any portion of the
Property is or shall become a nonconforming use, Borrower will not cause or
permit the nonconforming use to be discontinued or abandoned without the
express written consent of Lender.
Section 3.9 Waste. Borrower shall not commit or suffer any waste of
the Property or make any change in the use of the Property which will in any
way materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security
of this Security Instrument. Borrower will not, without the prior written
consent of Lender, permit any drilling or exploration for or extraction,
removal, or production of any minerals from the surface or the subsurface of
the Land, regardless of the depth thereof or the method of mining or
extraction thereof.
Section 3.10 Compliance With Laws.
(a) Borrower shall promptly comply with all existing and future
federal, state and local laws, orders, ordinances, governmental rules and
regulations or court orders affecting the Property, or the use thereof
including, but not limited to, the Americans with Disabilities Act ("ADA")
(collectively, the "Applicable Laws").
(b) Borrower shall from time to time, upon Lender's request,
provide Lender with evidence satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with
Applicable Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property, Borrower
shall not alter the Property in any manner which would increase Borrower's
responsibilities for compliance with Applicable Laws without the prior
written approval of Lender. Lender's approval of the plans, specifications,
or working drawings for alterations of the Property shall create no
responsibility or liability on behalf of Lender for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Borrower or by any of its
tenants. Lender may condition any such approval upon receipt of a
certificate of compliance with Applicable Laws from an independent architect,
engineer, or other person acceptable to Lender.
(d) Borrower shall give prompt notice to Lender of the receipt by
Borrower of any notice related to a violation of any Applicable Laws and of
the commencement of any proceedings or investigations which relate to
compliance with Applicable Laws.
(e) Borrower will take appropriate measures to prevent and will
not engage in or knowingly permit any illegal activities at the Property.
Section 3.11 Books and Records.
(a) Borrower and any Guarantors (as defined in Subsection 10.1 (e)
and Indemnitors (as defined in Subsection 10.1 (k)), if any, shall keep
adequate books and records of account in accordance with generally accepted
accounting principles, consistently applied ("GAAP"), or in accordance with
other methods acceptable to Lender in its sole discretion, consistently
applied and furnish to Lender:
(i) monthly operating statements of the Property together
with a property balance sheet for such month, prepared and certified by
Borrower in the form required by Lender, detailing the revenues received, the
expenses incurred and the net operating income before and after debt service
(principal and interest) and major capital improvements for that month and
containing appropriate year to date information, and containing a comparison
for such quarter with the annual budget delivered pursuant to Subsection
3.11(a)(v), within thirty (30) days after the end of such month;
(ii) monthly certified rent rolls signed and dated by
Borrower, detailing the names of all tenants of the Improvements, the portion
of Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the expiration
date, and any other information as is reasonably required by Lender, within
thirty (30) days after the end of such month;
(iii) an annual operating statement of the Property
detailing the total revenues received, total expenses incurred, total cost of
all capital improvements, total debt service and total cash flow, and
containing a comparison for such period with the annual budget delivered
pursuant to Subsection 3.11(a)(v), to be prepared and certified by Borrower
in the form required by Lender, or if required by Lender, an audited annual
operating statement prepared and certified by an independent certified public
accountant acceptable to Lender, within ninety (90) days after the close of
each fiscal year of Borrower;
(iv) an annual balance sheet and profit and loss statement of
Borrower, any Guarantors and any Indemnitors in the form required by Lender,
prepared and certified by the respective Borrower, Guarantors and/or
Indemnitors, or if required by Lender, audited financial statements prepared
by an independent certified public accountant acceptable to Lender, within
ninety (90) days after the close of each fiscal year of Borrower, Guarantors
and Indemnitors, as the case may be;
(v) an annual operating budget presented on a monthly basis
consistent with the quarterly and annual operating statements described above
for the Property, including cash flow projections for the upcoming year, and
all proposed capital replacements and improvements at least fifteen (15) days
prior to the start of each calendar year; and
(vi) copies of Borrower's federal income tax returns within
fifteen (15) days of the date such returns are filed.
(b) Upon reasonable request from Lender (but, provided no Event of
Default shall have occurred and be continuing, not more than two (2) times in
any twelve (12) month period) Borrower, its affiliates, any Guarantor and any
Indemnitor shall furnish to Lender:
(i) a property management report for the Property, showing
the number of inquiries made and/or rental applications received from tenants
or prospective tenants and deposits received from tenants and any other
information reasonably requested by Lender, in reasonable detail and
certified by Borrower (or an officer, general partner or principal of
Borrower if Borrower is not an individual) to be true and complete; and
(ii) an accounting of all security deposits held in connection
with any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are
held, the name and address of the financial institutions in which such
security deposits are held and the name of the person to contact at such
financial institution, along with any authority or release necessary for
Lender to obtain information regarding such accounts directly from such
financial institutions.
(c) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish Lender with such other additional financial or management
information as may, from time to time, be reasonably required by Lender in
form and substance satisfactory to Lender.
(d) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish to Lender and its agents convenient facilities for the
examination and audit of any such books and records. Within a reasonable
time after request by Lender, Borrower, its affiliates, any Guarantor and any
Indemnitor shall provide any other information with respect to the Property
and the financial condition of Borrower, its affiliates, any Guarantor and
any Indemnitor as Lender may from time to time request.
Section 3.12 Payment for Labor and Materials. Borrower will promptly
pay when due all bills and costs for labor, materials, and specifically
fabricated materials incurred in connection with the Property and never
permit to exist beyond the due date thereof in respect of the Property or any
part thereof any lien or security interest, even though inferior to the liens
and the security interests hereof, and in any event never permit to be
created or exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security
interests hereof, except for the Permitted Exceptions (defined below).
Section 3.13 Management Agreements.
(a) If the Improvements are operated under the terms and
conditions of that certain management agreement dated April 1, 1998 between
Wellsford Capital (predecessor-in-interest to Borrower), as owner, and
Trammel Crow Operations, Inc. (the "Manager"), the owner's interest in which
was assigned to Borrower by that certain instrument of assignment dated as of
the date hereof (hereinafter, together with any renewals or replacements
thereof, being referred to as the "Management Agreement"), which Management
Agreement has been approved by Lender, Borrower shall (i) diligently perform
and observe all of the terms, covenants and conditions of the Management
Agreement on the part of Borrower to be performed and observed to the end
that all things shall be done which are necessary to keep unimpaired the
rights of Borrower under the Management Agreement and (ii) promptly notify
Lender of the giving of any notice to Borrower of any default by Borrower in
the performance or observance of any of the terms, covenants or conditions of
the Management Agreement on the part of Borrower to be performed and observed
and deliver to Lender a true copy of each such notice. Borrower shall not
surrender the Management Agreement, consent to the assignment by the Manager
of its interest under the Management Agreement (to the extent such consent is
required by the Management Agreement), or terminate or cancel the Management
Agreement or modify, change, supplement, alter or amend the Management
Agreement, in any respect, either orally or in writing, and Borrower hereby
assigns to Lender as further security for the payment of the Debt and for the
performance and observance of the terms, covenants and conditions of this
Security Instrument, all the rights, privileges and prerogatives of Borrower
to surrender the Management Agreement or to terminate, cancel, modify,
change, supplement, alter or amend the Management Agreement in any respect,
and any such surrender of the Management Agreement or termination,
cancellation, modification, change, supplement, alteration or amendment of
the Management Agreement without the prior consent of Lender shall be void
and of no force and effect. If Borrower shall default in the performance or
observance of any material term, covenant or condition of the Management
Agreement on the part of Borrower to be performed or observed, then, without
limiting the generality of the other provisions of this Security Instrument,
and without waiving or releasing Borrower from any of its obligations
hereunder, Lender shall have the right, but shall be under no obligation, to
pay any sums and to perform any act or take any action as may be appropriate
to cause all the terms, covenants and conditions of the Management Agreement
on the part of Borrower to be performed or observed to be promptly performed
or observed on behalf of Borrower, to the end that the rights of Borrower in,
to and under the Management Agreement shall be kept unimpaired and free from
default. Lender and any person designated by Lender shall have, and are
hereby granted, the right to enter upon the Property at any time and from
time to time for the purpose of taking any such action. If the Manager under
the Management Agreement shall deliver to Lender a copy of any notice sent to
Borrower of default under the Management Agreement, such notice shall
constitute full protection to Lender for any action taken or omitted to be
taken by Lender in good faith, in reliance thereon. Borrower shall, from
time to time, use its best efforts to obtain from the Manager under the
Management Agreement such certificates of estoppel with respect to compliance
by Borrower with the terms of the Management Agreement as may be requested by
Lender. Borrower shall exercise each individual option, if any, to extend or
renew the term of the Management Agreement upon demand by Lender made at any
time within one (1) year of the last day upon which any such option may be
exercised, and Borrower hereby expressly authorizes and appoints Lender its
attorney-in-fact to exercise any such option in the name of and upon behalf
of Borrower, which power of attorney shall be irrevocable and shall be deemed
to be coupled with an interest. Any sums expended by Lender pursuant to this
Section 3.13 shall bear interest at the Default Rate (hereinafter defined)
from the date such cost is incurred to the date of payment to Lender, shall
be deemed to constitute a portion of the Debt, shall be secured by the lien
of this Security Instrument and the Other Security Documents and shall be
immediately due and payable upon demand by Lender therefor.
(b) Without limitation of the foregoing, if (i) the Manager shall
become insolvent, or (ii) an Event of Default shall occur and be continuing,
then Lender, at its option, may require Borrower to engage a bona fide,
independent third party management agent approved by Lender in its sole
discretion (the "New Manager") to manage the Property. The New Manager shall
be engaged by Borrower pursuant to a written management agreement that
complies with the terms hereof and is otherwise satisfactory to Lender in all
respects.
Section 3.14 Performance of Other Agreements. Borrower shall observe
and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property, or given by Borrower to Lender for the purpose of
further securing an obligation secured hereby and any amendments,
modifications or changes thereto.
Section 3.15 Change of Name, Identity or Structure. Borrower will not
change Borrower's name, identity (including its trade name or names) or, if
not an individual, Borrower's corporate, partnership or other structure
without notifying Lender of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in
Borrower's structure, without first obtaining the prior written consent of
Lender. Borrower will execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Lender to establish or
maintain the validity, perfection and priority of the security interest
granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under
which Borrower intends to operate the Property, and representing and
warranting that Borrower does business under no other trade name with respect
to the Property.
Section 3.16 Existence. Borrower will continuously maintain its
existence and its rights to do business in the state where the Property is
located together with its franchises and trade names.
ARTICLE 4
SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 Property Use. The Property shall be used only for
commercial office space, and for no other use without the prior written
consent of Lender, which consent may be withheld in Lender's sole and
absolute discretion.
Section 4.2 ERISA.
(a) It shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Security Instrument and the
Other Security Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term
of the Security Instrument, as requested by Lender in its sole discretion,
that (i) Borrower is not an "employee benefit plan" as defined in Section
3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental plan"
within the meaning of Section 3(32) of ERISA; (ii) Borrower is not subject to
state statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (iii) one or more of the following circumstances
is true:
(I) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(II) Less than 25 percent of each outstanding class of equity
interests in Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(III) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) or (e) or an investment company registered under The
Investment Company Act of 1940.
Section 4.3 Single Purpose Entity. Borrower has not and shall not:
(a) engage in any business or activity other than the ownership,
operation and maintenance of the Property (and the Additional Property
(hereinafter defined)), and activities incidental thereto;
(b) acquire or own any material assets other than (i) the Property
and Additional Property, and (ii) such incidental Personal Property as may be
necessary for the operation of the Property and the Additional Property;
(c) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal
structure, without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its organization or formation, or without the prior written
consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or Certificate of
Incorporation or similar organizational documents, as the case may be, as
same may be further amended or supplemented, if such amendment, modification,
termination or failure to comply would adversely affect the ability of
Borrower to perform its obligations hereunder, under the Note or under the
Other Security Documents;
(e) own any subsidiary or make any investment in, any person or
entity without the consent of Lender;
(f) commingle its assets with the assets of any of its general
partners, affiliates, principals or of any other person or entity;
(g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt, except in the
ordinary course of its business of owning and operating the Property and the
Additional Property, provided that such debt is paid when due:
(h) become insolvent and fail to pay its debts and liabilities
from its assets as the same shall become due:
(i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the general partners, principals
and affiliates of Borrower, the affiliates of a general partner of Borrower,
and any other person or entity;
(j) enter into any contract or agreement with any general partner,
principal or affiliate of Borrower, Guarantor or Indemnitor, or any general
partner, principal or affiliate thereof, except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any general
partner, principal or affiliate of Borrower, Guarantor or Indemnitor, or any
general partner, principal or affiliate thereof;
(k) seek the dissolution or winding-up in whole, or in part, of
Borrower;
(1) maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from
those of any member, general partner, principal or affiliate of Borrower, or
any member, general partner, principal or affiliate thereof or any other
person;
(m) hold itself out to be responsible for the debts of another
person;
(n) make any loans or advances to any third party, including any
member, general partner, principal or affiliate of Borrower, or any general
partner, principal or affiliate thereof;
(o) fail to file its own tax returns;
(p) agree to, enter into or consummate any transaction which would
render Borrower unable to furnish the certification or other evidence
referred to in Section 4.2(b) hereof;
(q) fail either to hold itself out to the public as a legal entity
separate and distinct from any other entity or person or to conduct its
business solely in its own name in order not (i) to mislead others as to the
identity with which such other party is transacting business, or (ii) to
suggest that Borrower is responsible for the debts of any third party
(including any general partner, principal or affiliate of Borrower, or any
general partner, principal or affiliate thereof);
(r) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light
of its contemplated business operations; or
(s) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for
the benefit of creditors.
The foregoing covenants shall apply to the members, general
partners or principal shareholders of Borrower when appropriate as determined
by Lender.
Section 4.4 Restoration. The following provisions shall apply in
connection with the Restoration of the Property:
(a) If the Net Proceeds shall be less than $200,000.00 and the
costs of completing the Restoration shall be less than $200,000.00, the Net
Proceeds will be disbursed by Lender to Borrower upon receipt, provided that
all of the conditions set forth in Subsection 4.4(b)(i) are met and Borrower
delivers to Lender a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Security Instrument.
(b) If the Net Proceeds are equal to or greater than $200,000.00
or the costs of completing the Restoration are equal to or greater than
$200,000.00, Lender shall make the Net Proceeds available for the Restoration
in accordance with the provisions of this Subsection (b). The term "Net
Proceeds" for purposes of this Section 4.4 shall mean: (i) the net amount of
all insurance proceeds received by Lender pursuant to Subsections 3.3(b)(i),
(iv), (vi) and (vii) of this Security Instrument as a result of such damage
or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in
collecting same ("Insurance Proceeds"), or (ii) the net amount of all awards
and payments received by Lender with respect to a taking referenced in
Section 3.6 of this Security Instrument, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees),
if any, in collecting same ("Condemnation Proceeds"), whichever the case may
be.
(i) The Net Proceeds shall be made available to Borrower for
the Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing under the Note, this Security Instrument or any of the
Other Security Documents;
(B) in the event the Net Proceeds are (1) Insurance
Proceeds, less than fifty percent (50%) of the total floor area of
the Improvements has been damaged, destroyed, or rendered unusable
as a result of such fire or other casualty or (2) Condemnation
Proceeds, less than ten (10%) of the land constituting the Property
is taken, and such land is located along the perimeter or periphery
of the Property, and no portion of the Improvements is located in
such land;
(C) Leases demising in the aggregate a percentage amount
equal to or greater than the Rentable Space Percentage (hereinafter
defined) of the total rentable space in the Property which has been
demised under executed and delivered Leases in effect as of the
date of the occurrence of such fire or other casualty or taking,
whichever the case may be, shall remain in full force and effect
during and after the completion of the Restoration. The term
"Rentable Space Percentage" shall mean (1) in the event the Net
Proceeds are Insurance Proceeds, a percentage amount equal to fifty
percent (50%) and (2) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to ninety percent
(90%);
(D) Borrower shall commence the Restoration as soon as
reasonably Practicable (but in no event later than sixty (60) days
after such damage or destruction or taking, whichever the case may
be, occurs) and shall diligently pursue the same to satisfactory
completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note and the Applicable Interest Rate (as
defined in the Note), which will be incurred with respect to the
Property as a result of the occurrence of any such fire or other
casualty or taking, whichever the case may be, will be covered out
of (1) the Net Proceeds, (2) the insurance coverage referred to in
Subsection 3.3(a)(iii), if applicable, or (3) by other funds of
Borrower;
(F) Lender shall be satisfied that, upon the completion
of the Restoration, the Debt Service Coverage Ratio (as defined
herein) shall be at least 1.30 to 1.0, as determined by Lender in
its sole and absolute discretion:
(G) Lender shall be satisfied that the Restoration will
be completed on or before the earliest to occur of (1) six (6)
months prior to the Maturity Date (as defined in the Note), (2)
twelve (12) months after the occurrence of such fire or other
casualty or taking, whichever the case may be, (3) the earliest
date required for such completion under the terms of any Leases
which are required in accordance with the provisions of this
Subsection 4.4(b) to remain in effect subsequent to the occurrence
of such fire or other casualty or taking, whichever the case may
be, and the completion of the Restoration or (4) such time as may
be required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other
casualty or to as nearly as possible the condition it was in
immediately prior to such taking, as applicable;
(H) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
applicable zoning laws, ordinances, rules and regulations (or, to
the extent the Property Constituted a permitted non-conforming use,
will continue to constitute a permitted con-conforming use);
(I) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in compliance
with all applicable governmental laws, rules and regulations
(including, without limitation, all applicable Environmental Laws)
defined below; and
(J) such fire or other casualty or taking, as applicable,
does not result in the loss of access to the Property or the
Improvements.
The term "Debt Service Coverage Ratio" as used herein
shall mean the ratio of (a) the NOI (hereinafter defined) produced
by the operation of the Property and the Additional Property during
the twelve (12) calendar month period immediately preceding the
calculation to (b) the aggregate required debt service payments
that would be due and payable with respect to the Property and the
Additional Property for the twelve (12) calendar month period
immediately following the calculation.
The term "NOI" as used herein shall mean the gross income
derived from the operation of the Property and the Additional
Property, less Expenses (hereinafter defined). NOI shall include
only Rents and such other income, including any rent loss or
business income insurance proceeds, laundry, parking, vending or
concession income and any expenditure relating to the maintenance
or operation of the Property and the Additional Property paid by
Borrower which is reimbursed by tenants under written leases (a
"Tenant Pass-Through") (such as, by way of example, reimbursements
for proportionate share of property taxes and operating expenses),
which are actually received by Borrower or its agents or
representatives and Expenses actually paid or payable on an accrual
basis during the twelve (12) month period ending one month prior to
the date on which the NOI is being calculated, as set forth on
operating statements satisfactory to Lender. NOI shall be
calculated on a cash basis in accordance with customary accounting
principles applicable to real estate.
Notwithstanding the foregoing, NOI shall not include (a)
condemnation or insurance proceeds (excluding rent or business
income insurance proceeds); (b) any proceeds from the sale,
exchange, transfer, financing or refinancing of all or any portion
of the Property or any Additional Property; (c) amounts received
from tenants as a security deposit; or (d) any other type of income
otherwise includable in NOI but paid directly by any tenant to a
person or entity other than Borrower or its agents or
representatives.
The term "Expenses" as used herein shall mean the
aggregate of the following items: (a) real estate taxes, general
and special assessments or similar charges; (b) sales, use and
personal property taxes; (c) management fees of not less than 3% of
gross income derived from the operation of the Property and the
Additional Property and disbursements for management services,
whether such services are performed at the Property or the
Additional Property or off-site; (d) wages, salaries, pension costs
and all fringe and other employee-related benefits and expenses, up
to and including (but not above) the level of the on-site manager,
engaged in the repair, operation and maintenance of the Property
and the Additional Property and service to tenants and on-site
personnel engaged in audit and accounting functions performed by
Borrower; (e) insurance premiums including, but not limited to,
casualty, liability, rent and fidelity insurance premiums; (f) cost
of all electricity, oil, gas, water, steam, HVAC and any other
energy, utility or similar item and overtime services, the cost of
building and cleaning supplies, and all other administrative,
management, ownership, operating, advertising, marketing and
maintenance expenses incurred in connection with the operation of
the Property and the Additional Property; (g) cost of necessary
cleaning, repair, replacement, maintenance, decoration or painting
of existing improvements on the Property and the Additional
Property (including, without limitation, parking lots and
roadways), of like kind and quantity or such kind or quality which
is necessary to maintain the Property and the Additional Property
to the same standards as competitive properties of similar size and
location of the Property and the Additional Property, as
applicable, together with adequate reserves for the repair and
replacement of capital improvements on the Property and the
Additional Property acceptable to Lender; (h) the cost of such
other maintenance materials, HVAC repairs, parts and supplies, and
all equipment to be used in the ordinary course of business, which
is not capitalized in accordance with GAAP; (i) legal, accounting
and other professional expenses incurred in connection with the
Property and the Additional Property; (j) casualty losses to the
extent not reimbursed by a third party; (k) all amounts that should
be reserved, as reasonably determined by Borrower with approval by
the Lender in its reasonable discretion, for repair or maintenance
of the Property and the Additional Property and to maintain the
value of the Property and the Additional Property, including
replacement reserves; and (1) cost of leasing commissions and
tenant concessions payable to tenants pursuant to Leases in effect
at the Property. The Expenses shall be based on the above-
described items actually incurred or payable on an accrual basis in
accordance with GAAP by Borrower during the twelve (12) month
period ending one month prior to the date on which the NOI is to be
calculated (except the capital expenses and reserves set forth in
Subsection (g) above), with customary adjustments for items such as
taxes and insurance which accrue but are paid periodically, as
adjusted by Lender to reflect projected adjustments for the
subsequent twelve (12) month period beginning on the date on which
the NOI is to be calculated.
Notwithstanding the foregoing, the term "Expenses" shall
not include (i) depreciation or amortization or any other non-cash
item of expense unless approved by Lender; (ii) interest,
principal, fees, costs and expense reimbursements of Lender in
administrating the loan evidenced by the Note or exercising
remedies under this Security Instrument or the Other Security
Documents; or (iii) any expenditure (other than leasing commissions
and tenant concessions) properly treated as a capital item under
GAAP and such expenditure is treated by Borrower as a capital item
in Borrower's financial statements.
(ii) The Net Proceeds shall be held by Lender and, until
disbursed in accordance with the provisions of this Subsection 4.4(b), shall
constitute additional security for the Obligations. The Net Proceeds shall
be disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration. Upon receipt of evidence satisfactory
to Lender that (A) all materials installed and work and labor performed
(except to the extent that they are to be paid for out of the requested
disbursement) in connection with the Restoration have been paid for in full,
and (B) there exist no notices of pendency, stop orders, mechanic's or
materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the Property arising out of the
Restoration which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company insuring the lien of this
Security Instrument.
(iii) All plans and specifications required in connection
with the Restoration shall be subject to prior review and reasonable
acceptance in all respects by Lender and by an independent consulting
engineer selected by Lender (the "Casualty Consultant"). Lender shall have
the use of the plans and specifications and all permits, licenses and
approvals required or obtained in connection with the Restoration. The
identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been engaged,
shall be subject to prior review and reasonable acceptance by Lender and the
Casualty Consultant. All costs and expenses incurred by Lender in connection
with making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the costs
actually incurred from time to time for work in place as part of the
Restoration, as certified by the Casualty Consultant, minus the Casualty
Retainage. The term "Casualty Retainage" as used in this Subsection (b)
shall mean an amount equal to 10% of the costs actually incurred for work in
place as part of the Restoration, as certified by the Casualty Consultant,
until the Restoration has been completed. The Casualty Retainage shall in no
event, and notwithstanding anything to the contrary set forth above in this
Subsection (b), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant
certifies to Lender that the Restoration has been completed in accordance
with the provisions of this Subsection (b) and that all approvals necessary
for the re-occupancy and use of the Property have been obtained from all
appropriate governmental and quasi-governmental authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration
have been paid in full or will be paid in full out of the Casualty Retainage,
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, and the contractor, subcontractor
or materialman delivers the lien waivers (conditioned only upon payment) or
evidence of payment in full of all sums due to the contractor, subcontractor
or materialman as may be reasonably requested by Lender or by the title
company insuring the lien of this Security Instrument. If required by
Lender, the release of any such portion of the Casualty Retainage shall be
approved by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or
materialman.
(v) Lender shall not be obligated to make disbursements of
the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the opinion of Lender, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty Consultant
to be incurred in connection with the completion of the Restoration, Borrower
shall deposit the deficiency (the "Net Proceeds Deficiency") with Lender
before any further disbursement of the Net Proceeds shall be made. The Net
Proceeds Deficiency deposited with Lender shall be held by Lender and shall
be disbursed for costs actually incurred in connection with the Restoration
on the same conditions applicable to the disbursement of the Net Proceeds,
and until so disbursed pursuant to this Subsection 4.4(b) shall constitute
additional security for the Obligations.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited with
Lender after the Casualty Consultant certifies to Lender that the Restoration
has been completed in accordance with the provisions of this Subsection
4.4(b), and the receipt by Lender of evidence satisfactory to Lender that all
costs incurred in connection with the Restoration have been paid in full,
shall be remitted by Lender to Borrower, provided no Event of Default shall
have occurred and shall be continuing under the Note, this Security
Instrument or any of the Other Security Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Subsection 4.4(b)(vii) may be retained and applied by Lender
toward the payment of the Debt whether or not then due and payable in such
order, priority and proportions as Lender in its discretion shall deem proper
or, at the discretion of Lender, the same may be paid, either in whole or in
part, to Borrower for such purposes as Lender shall designate, in its
discretion. If Lender shall receive and retain Net Proceeds, the lien of
this Security Instrument shall be reduced only by the amount thereof received
and retained by Lender and actually applied by Lender in reduction of the
Debt
Section 4.5 Lockbox Account. Borrower shall cause all rents to be
deposited as provided in the Lockbox Agreement (as hereinafter defined).
Section 4.6 Other Debt. Borrower will not incur or permit to exist any
indebtedness for borrowed money or guarantee the obligations of another
person or entity other than the Debt.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 Warranty of Title. Borrower has good title to the Property
and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey the same and that Borrower possesses an unencumbered fee
simple absolute estate in the Land and the Improvements and that it owns the
Property free and clear of all liens, encumbrances and charges whatsoever
except for those exceptions shown in the title insurance policy insuring the
lien of this Security Instrument (the "Permitted Exceptions"). Borrower
shall forever warrant, defend and preserve the title and the validity and
priority of the lien of this Security Instrument and shall forever warrant
and defend the same to Lender against the claims of all persons whomsoever.
Section 5.2 Authority. Borrower (and the undersigned representative of
Borrower, if any) has full power, authority and legal right to execute this
Security Instrument, and to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the Property pursuant to the terms hereof and to
keep and observe all of the terms of this Security Instrument on Borrower's
part to be performed.
Section 5.3 Legal Status and Authority. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state
of organization or incorporation; (b) is duly qualified to transact business
and is in good standing in the state where the Property is located; and (c)
has all necessary approvals, governmental and otherwise, and full power and
authority to own the Property and carry on its business as now conducted and
proposed to be conducted. Borrower now has and shall continue to have the
full right, power and authority to operate and lease the Property, to
encumber the Property as provided herein and to perform all of the other
obligations to be performed by Borrower under the Note, this Security
Instrument and the Other Security Documents.
Section 5.4 Validity of Documents. (a) The execution, delivery and
performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the
corporate/partnership/limited liability power of Borrower; (ii) have been
authorized by all requisite corporate/partnership/limited liability company
action; (iii) have received all necessary approvals and consents, corporate,
governmental, judicial or otherwise; (iv) will not violate, conflict with,
result in a breach of or constitute (with notice or lapse of time, or both) a
default under any provision of law, any order or judgment of any court or
governmental authority, the articles of incorporation, by-laws, partnership,
operating or trust agreement, or other governing instrument of Borrower, or
any indenture, agreement or other instrument to which Borrower is a party or
by which it or any of its assets or the Property is or may be bound or
affected; (v) will not result in the creation or imposition of any lien,
charge or encumbrance whatsoever upon any of its assets, except the lien and
security interest created hereby; and (vi) will not require any authorization
or license from, or any filing with, any governmental, judicial or other body
(except for the recordation of this instrument in appropriate land records in
the state where the Property is located and except for Uniform Commercial
Code filings relating to the security interest created hereby); and (b) the
Note, this Security Instrument and the Other Security Documents constitute
the legal, valid and binding obligations of Borrower.
Section 5.5 Litigation. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower's knowledge, threatened or
contemplated against, or affecting, Borrower, a Guarantor, if any, an
Indemnitor, if any, or the Property that has not been disclosed to Lender or
is not adequately covered by insurance, as determined by Lender in its sole
and absolute discretion.
Section 5.6 Status of Property.
(a) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to the National
Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as
amended, or any successor law, or, if located within any such area, Borrower
has obtained and will maintain the insurance prescribed in Section
3.3(a)(i)(y) hereof.
(b) To Borrower's best knowledge, Borrower has obtained all
necessary certificates, licenses and other approvals, governmental, judicial
and otherwise, necessary for the operation of the Property and the conduct of
its business and all required zoning, building code, land use, environmental
and other similar permits or approvals, all of which are in full force and
effect as of the date hereof and not subject to revocation, suspension,
forfeiture or modification.
(c) To Borrower's best knowledge, and except as disclosed in the
engineering report obtained by Lender in connection with this Security
Instrument, the Property and the present and contemplated use and occupancy
thereof are in full compliance with all Applicable Laws, including, without
limitation, zoning ordinances, building codes, land use and environmental
laws, laws relating to the disabled (including, but not limited to, the ADA)
and other similar laws.
(d) To Borrower's best knowledge, and except as disclosed in the
engineering report obtained by Lender in connection with this Security
Instrument, the Property is served by all utilities required for the current
or contemplated use thereof. All utility service is provided by public
utilities and the Property has accepted or is equipped to accept such utility
service.
(e) All public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally
open for use by the public.
(f) The Property is served by public water and sewer systems.
(g) The Property is free from damage caused by fire or other
casualty.
(h) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have been
paid in full.
(i) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and all
security interests, liens or encumbrances, except the lien and security
interest created hereby.
(j) To Borrower's best knowledge, all liquid and solid waste
disposal, septic and sewer systems located on the Property are in a good and
safe condition and repair and in compliance with all Applicable Laws.
(k) Except as disclosed in the surveys delivered to Lender by
Borrower in connection with this Security Instrument, all Improvements lie
within the boundary of the Land.
Section 5.7 No Foreign Person. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended, and the related Treasury Department regulations, including
temporary regulations.
Section 5.8 Separate Tax Lot. The Property is assessed for real estate
tax purposes as one or more wholly independent tax lot or lots, separate from
any adjoining land or improvements not constituting a part of such lot or
lots, and no other land or improvement is assessed and taxed together with
the Property or any portion thereof.
Section 5.9 ERISA Compliance.
(a) As of the date hereof and throughout the term of this Security
Instrument, (i) Borrower is not and will not be an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, and
(ii) the assets of Borrower do not and will not constitute "plan assets" of
one or more such plans for purposes of Title I of ERISA; and
(b) As of the date hereof and throughout the term of this Security
Instrument (i) Borrower is not and will not be a "governmental plan" within
the meaning of Section 3(32) of ERISA and (ii) transactions by or with
Borrower are not and will not be subject to state statutes applicable to
Borrower regulating investments of and fiduciary obligations with respect to
governmental plans.
Section 5.10 Leases. (a) Borrower is the sole owner of the entire
lessor's interest in the Leases; (b) the Leases are valid and enforceable;
(c) the terms of all alterations, modifications and amendments to the Leases
are reflected in the certified occupancy statement delivered to and approved
by Lender; (d) none of the Rents reserved in the Leases have been assigned or
otherwise pledged or hypothecated; (e) none of the Rents have been collected
for more than one (1) month in advance; (f) the premises demised under the
Leases have been completed and the tenants under the Leases have accepted the
same and have taken possession of the same on a rent-paying basis; (g) except
as disclosed in the estoppel certificates delivered to Lender by tenants
under Leases at the Property in connection with the execution and delivery of
this Security Instrument, there exist no offsets or defenses to the payment
of any portion of the Rents; (h) no Lease contains an option to purchase,
right of first refusal to purchase, or any other similar provision; (i) no
person or entity has any possessory interest in, or right to occupy, the
Property except under and pursuant to a Lease; and (j) except as previously
disclosed to Lender in writing, each Lease is subordinate to this Security
Instrument, either pursuant to its terms or a recorded subordination
agreement.
Section 5.11 Financial Condition. (a) Borrower is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state
or federal law with respect to Borrower has been initiated, and (b) it has
received reasonably equivalent value for the granting of this Security
Instrument.
Section 5.12 Business Purposes. The loan evidenced by the Note is
solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.
Section 5.13 Taxes. Borrower, any Guarantor and any Indemnitor have
filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and
related liabilities which have become due pursuant to such returns or
pursuant to any assessments received by them. Neither Borrower, any
Guarantor nor any Indemnitor knows of any basis for any additional assessment
in respect of any such taxes and related liabilities for prior years.
Section 5.14 Mailing Address. Borrower's mailing address, as set forth
in the opening paragraph hereof or as changed in accordance with the
provisions hereof, is true and correct.
Section 5.15 No Change in Facts or Circumstances. All information in
the application for the loan submitted to Lender (the "Loan Application") and
in all financing statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan Application or in
satisfaction of the terms thereof, are accurate, complete and correct in all
respects. There has been no adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise materially misleading.
Section 5.16 Disclosure. Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.
Section 5.17 Third Party Representations. Each of the representations
and the warranties made herein or in any Other Security Document(s) by (i)
Guarantor and (ii) Indemnitor, is true and correct in all material respects.
Section 5.18 Illegal Activity. No portion of the Property has been or
will be purchased with proceeds of any illegal activity.
ARTICLE 6
OBLIGATIONS AND RELIANCES
Section 6.1 Relationship of Borrower and Lender. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender
has no fiduciary or other special relationship with Borrower, and no term or
condition of any of the Note, this Security Instrument and the Other Security
Documents shall be construed so as to deem the relationship between Borrower
and Lender to be other than that of debtor and creditor.
Section 6.2 No Reliance on Lender. The general partners, principals
and (if Borrower is a trust) beneficial owners of Borrower are experienced in
the ownership and operation of properties similar to the Property, and
Borrower and Lender are relying solely upon such expertise and business plan
in connection with the ownership and operation of the Property. Borrower is
not relying on Lender's expertise, business acumen or advice in connection
with the Property.
Section 6.3 No Lender Obligations.
(a) Notwithstanding the provisions of Subsections 1.1(f) and
1.1(1) or Section 3.7, Lender is not undertaking the performance of (i) any
obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Security
Instrument, the Note or the Other Security Documents, including without
limitation, any officer's certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
Lender shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, the legality or effectiveness of same, and such acceptance or
approval thereof shall not constitute any warranty or affirmation with
respect thereto by Lender.
Section 6.4 Reliance. Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Security
Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article 5 without
any obligation to investigate the Property and notwithstanding any
investigation of the Property by Lender; that such reliance existed on the
part of Lender prior to the date hereof; that the warranties and
representations are a material inducement to Lender in accepting the Note,
this Security Instrument and the Other Security Documents; and that Lender
would not be willing to make the loan evidenced by the Note, this Security
Instrument and the Other Security Documents and accept this Security
Instrument in the absence of the warranties and representations as set forth
in Article 5.
ARTICLE 7
FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, etc. Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter,
from time to time, will cause this Security Instrument and any of the Other
Security Documents creating a lien or security interest or evidencing the
lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully
to protect and perfect the lien or security interest hereof upon, and the
interest of Lender in, the Property. Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this Security
Instrument, the Other Security Documents, any note or mortgage supplemental
hereto, any security instrument with respect to the Property and any
instrument of further assurance, and any modification or amendment of the
foregoing documents, and all federal, state, county and municipal taxes,
duties, imposts, assessments and charges arising out of or in connection with
the execution and delivery of this Security Instrument, any mortgage
supplemental hereto, any security instrument with respect to the Property or
any instrument of further assurance, and any modification or amendment of the
foregoing documents, except where prohibited by law so to do.
Section 7.2 Further Acts, etc. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignments, transfers and assurances as Lender shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby mortgaged, granted,
bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be
or may hereafter become bound to convey or assign to Lender, or for carrying
out the intention or facilitating the performance of the terms of this
Security Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Applicable Laws. Borrower, on demand,
will execute and deliver and hereby authorizes Lender to execute in the name
of Borrower upon Borrower's failure to comply with Lender's demand for a
period in excess of fifteen (15) days, or without the signature of Borrower
to the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or other instruments, to evidence more effectively the
security interest of Lender in the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender
at law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 7.2.
Section 7.3 Changes in Tax, Debt, Credit and Documentary Stamp Laws.
(a) If any law is enacted or adopted or amended after the date of
this Security Instrument which deducts the Debt from the value of the
Property for the purpose of taxation or which imposes a tax, either directly
or indirectly, on the Debt or Lender's interest in the Property, Borrower
will pay the tax, with interest and penalties thereon, if any. If Lender is
advised by counsel chosen by it that the payment of tax by Borrower would be
unlawful or taxable to Lender or unenforceable or provide the basis for a
defense of usury, then Lender shall have the option by written notice of not
less than ninety (90) days to declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any credit
or credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required
by law, Lender shall have the option, by written notice of not less than
ninety (90) days, to declare the Debt immediately due and payable.
(c) If at any time the United States of America, any state thereof
or any subdivision of any such state shall require revenue or other stamps to
be affixed to the Note, this Security Instrument, or any of the Other
Security Documents or impose any other tax or charge on the same, Borrower
will pay for the same, with interest and penalties thereon, if any.
Section 7.4 Estoppel Certificates.
(a) After request by Lender, Borrower, within ten (10) days, shall
furnish Lender or any proposed assignee with a statement, duly acknowledged
and certified, setting forth (i) the amount of the original principal amount
of the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of
interest of the Note, (iv) the terms of payment and maturity date of the
Note, (v) the date installments of interest and/or principal were last paid,
(v) that, except as provided in such statement, there are no defaults or
events which with the passage of time or the giving of notice or both, would
constitute an event of default under the Note or the Security Instrument,
(vi) that the Note and this Security Instrument are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification, (vii) whether any offsets or defenses exist against the
obligations secured hereby and, if any are alleged to exist, a detailed
description thereof, (viii) that all Leases are in full force and effect and
(provided the Property is not a residential multifamily property) have not
been modified (or if modified, setting forth all modifications), (ix) the
date to which the Rents thereunder have been paid pursuant to the Leases, (x)
whether or not, to the best knowledge of Borrower, any of the lessees under
the Leases are in default under the Leases, and, if any of the lessees are in
default, setting forth the specific nature of all such defaults, (xi) the
amount of security deposits held by Borrower under each Lease and that such
amounts are consistent with the amounts required under each Lease, and (xii)
as to any other matters reasonably requested by Lender and reasonably related
to the Leases, the obligations secured hereby, the Property or this Security
Instrument.
(b) To the extent required of lessees under any Leases, Borrower
shall deliver to Lender, and, otherwise, Borrower shall use commercially
reasonable efforts to deliver to Lender, promptly upon request, duly executed
estoppel certificates from any one or more lessees as required by Lender
attesting to such facts regarding the Lease as Lender may require, including
but not limited to attestations that the Lease is in full force and effect
with no defaults thereunder on the part of any party, that none of the Rents
have been paid more than one month in advance, and that the lessee claims no
defense or offset against the full and timely performance of its obligations
under the Lease, provided, however, that Borrower shall be deemed to have
satisfied its obligations pursuant to the terms of this subparagraph (b) if
it obtains from the lessee under the Lease an estoppel certificate in the
form required by the Lease. To the extent any lessee shall refuse or fail to
so deliver an estoppel certificate as aforesaid, Borrower shall deliver to
Lender the required estoppel certificate which shall further provide an
explanation as to why the lessee failed or refused to deliver the estoppel
certificate.
(c) Upon any transfer or proposed transfer contemplated by Section
19.1 hereof, at Lender's request, Borrower, any Guarantors and any
Indemnitors shall provide an estoppel certificate to the Investor (defined in
Section 19.1) or any prospective Investor in such form, substance and detail
as Lender, such Investor or prospective Investor may reasonably require.
Section 7.5 Splitting of Security Instrument. This Security Instrument
and the Note shall, at any time until the same shall be fully paid and
satisfied, at the sole election of Lender, and at Lender's cost and expense,
be split or divided into two or more notes and two or more security
instruments, each of which shall cover all or a portion of the Property to be
more particularly described therein. To that end, Borrower, upon written
request of Lender, shall execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered by the then owner of the Property, to
Lender and/or its designee or designees substitute notes and security
instruments in such principal amounts, aggregating not more than the then
unpaid principal amount of this Security Instrument, and containing terms,
provisions and clauses similar to those contained herein and in the Note, and
such other documents and instruments as may be reasonably required by Lender,
provided that none of the foregoing instruments shall alter the monetary
terms contained in the Note, this Security Instrument or the Other Security
Documents or increase the obligations or decrease the rights of Borrower,
Guarantor or any Indemnitor in respect of the loan secured hereby. In such
event, in any instance where the consent of Lender is required under this
Security Instrument, Borrower shall be required to obtain only the consent of
the holder of the security instrument having the highest lien priority;
provided, however, that the foregoing shall not limit Borrower's obligation
to obtain the written agreement of the holder of each and every such security
instrument to the extent any waiver of rights of any of the holder(s) thereof
is requested by Borrower, or in the case of any modification or amendment to
any such security instrument.
Section 7.6 Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the
Note or any Other Security Document which is not of public record, and, in
the case of any such mutilation, upon surrender and cancellation of such Note
or Other Security Document, Borrower will issue, in lieu thereof, a
replacement Note or Other Security Document, dated the date of such lost,
stolen, destroyed or mutilated Note or Other Security Document in the same
principal amount thereof and otherwise of like tenor.
ARTICLE 8
DUE ON SALE/ENCUMBRANCE
Section 8.1 Lender Reliance. Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its general partners,
members, principals and (if Borrower is a trust) beneficial owners in owning
and operating properties such as the Property in agreeing to make the loan
secured hereby, and will continue to rely on Borrower's ownership of the
Property as a means of maintaining the value of the Property as security for
repayment of the Debt and the performance of the Other Obligations. Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Property so as to ensure that, should Borrower default in the repayment of
the Debt or the performance of the Other Obligations, Lender can recover the
Debt by a sale of the Property.
Section 8.2 No Sale/Encumbrance. Borrower agrees that Borrower shall
not, without the prior written consent of Lender, sell, convey, mortgage,
grant, bargain, encumber, pledge, assign, or otherwise transfer the Property
or any part thereof or permit the Property or any part thereof to be sold,
conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred.
Section 8.3 Sale/Encumbrance Defined. A sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer within the
meaning of this Article 8 shall be deemed to include, but not be limited to,
(a) an installment sales agreement wherein Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments; (b) an
agreement by Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any Rents; (c)
if Borrower, any Guarantor, any Indemnitor, or any general partner, member or
principal shareholder of Borrower, Guarantor or Indemnitor is a corporation,
the voluntary or involuntary sale, conveyance, transfer or pledge of such
corporation's stock (or the stock of any corporation directly or indirectly
controlling such corporation by operation of law or otherwise) or the
creation or issuance of new stock by which an aggregate of more than 10% of
such corporation's stock shall be vested in a party or parties who are not
now stockholders; and (d) if Borrower, any Guarantor or Indemnitor or any
partner or member of Borrower, any Guarantor or Indemnitor is a limited or
general partnership, limited liability company or joint venture, the change,
removal or resignation of a general partner or managing partner or managing
member, or the transfer or pledge of the partnership or membership interest
of any partner or member or any profits or proceeds relating to such
partnership or membership interest. Notwithstanding the foregoing, (i) with
the prior written consent of Lender, any member in Borrower shall be
permitted to transfer its membership interest to any other member in Borrower
as of the date of this Security Instrument, (ii) transfers of stock in
Wellsford Real Properties, Inc. ("WRP") shall not require Lender's consent,
nor shall Lender's consent be required to any merger, consolidation or other
combination of WRP or the direct or indirect sale, lease, exchange, or
transfer of all or substantially all of the assets of WRP in one transaction
or in a series of related transactions, and (iii) transfers of ownership
interests in Wellsford Capital shall not require Lender's consent so long as
Wellsford Real Properties, Inc. continues to own a majority interest and
maintain management control over Wellsford Capital.
Section 8.4 Lender's Rights. Lender reserves the right to condition
the consent required hereunder upon a modification of the terms hereof and on
assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer
fee of not less than one percent (1%) of the principal balance of the Note
and all of Lender's expenses incurred in connection with such transfer, the
approval by a Rating Agency of the proposed transferee, the proposed
transferee's continued compliance with the covenants set forth in Sections
4.2 and 4.3 hereof, or such other conditions as Lender shall determine in its
sole discretion to be in the interest of Lender. Lender shall not be
required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Debt immediately
due and payable upon Borrower's sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property without Lender's
consent in such cases where such consent is required. This provision shall
apply to every sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of the Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
or transfer of the Property.
ARTICLE 9
PREPAYMENT
Section 9.1 Prepayment Before Event of Default. The Debt may be
prepaid only in strict accordance with the express terms and conditions of
the Note including the payment of any prepayment consideration.
Section 9.2 Prepayment After Event of Default. If a Default Prepayment
(defined below) occurs, Borrower shall pay to Lender the entire Debt,
including without limitation, the Prepayment Fee; provided, however, that
Borrower shall have no obligation to pay the Prepayment Fee unless the
obligation to make the Default Prepayment occurs during the Closed Period (as
defined in the Note). For purposes of this Section 9.2, the term "Default
Prepayment" shall mean a prepayment of the principal amount of the Note made
after the occurrence of any Event of Default or an acceleration of the
Maturity Date (as defined in the Note) under any circumstances, including,
without limitation, a prepayment occurring in connection with reinstatement
of this Security Instrument provided by statute under foreclosure proceedings
or exercise of a power of sale, any statutory right of redemption exercised
by Borrower or any other party having a statutory right to redeem or prevent
foreclosure, any sale in foreclosure or under exercise of a power of sale or
otherwise.
ARTICLE 10
DEFAULT
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid on or before the fifth
(5th) day after the same is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) if any of the Taxes or Other Charges is not paid when the same
is due and payable except to the extent sums sufficient to pay such Taxes and
Other Charges have been deposited with Lender in accordance with the terms of
this Security Instrument and/or the Lockbox Agreement;
(c) if the Policies are not kept in full force and effect (for any
reason other than the failure to pay the premiums therefor to the extent sums
sufficient to pay the same have been deposited with Lender pursuant to this
Security Instrument and/or the Lockbox Agreement and have not been so paid or
applied by Lender), or if the Policies are not delivered to Lender upon
request or Borrower has not delivered evidence of the renewal of the Policies
thirty (30) days prior to their expiration as provided in Section 3.3(b);
(d) if Borrower violates or does not comply with any of the
provisions of Sections 3.7 or 4.3 or Articles 8, 12 or 13;
(e) if any representation or warranty of Borrower, Indemnitor or
any person guaranteeing payment of the Debt or any portion thereof or
performance by Borrower of any of the terms of this Security Instrument (a
"Guarantor"), or any general partner, member, principal or beneficial owner
of any of the foregoing, made herein or in the Environmental Indemnity
(defined below) or any guaranty, or in any certificate, report, financial
statement or other instrument or document furnished to Lender shall have been
false or misleading in any material respect when made;
(f) if (i) Borrower or any general partner or member of Borrower,
or any Guarantor or Indemnitor shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship
or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or Borrower or any general partner or member of Borrower, or any
Guarantor or Indemnitor shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Borrower or any
general partner or member of Borrower, or any Guarantor or Indemnitor any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of ninety (90) days; or (iii) there shall be commenced
against Borrower or any general partner or member of Borrower, or any
Guarantor or Indemnitor any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of any
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within ninety (90) days from the entry
thereof; or (iv) Borrower or any general partner or member of Borrower, or
any Guarantor or Indemnitor shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) Borrower or any general
partner or member of Borrower, or any Guarantor or Indemnitor shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due;
(g) if Borrower shall be in default under any other mortgage, deed
of trust, deed to secure debt or other security agreement covering any part
of the Property whether it be superior or junior in lien to this Security
Instrument;
(h) if the Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate taxes and
assessments not then due and payable and the lien shall remain undischarged
of record (by payment, bonding or otherwise) for a period of thirty (30) days
following Borrower's receipt of notice of the filing thereof;
(i) if any federal tax lien is filed against the Property and same
is not discharged of record within thirty (30) days following Borrower's
receipt of notice of the filing thereof;
(j) if (i) Borrower fails to timely provide Lender with the
written certification and evidence referred to in Section 4.2(b) hereof, or
(ii) Borrower consummates a transaction which would cause this Security
Instrument or Lender's exercise of its rights under this Security Instrument,
the Note or the Other Security Documents to constitute a nonexempt prohibited
transaction under ERISA or result in a violation of a state statute
regulating governmental plans, subjecting Lender to liability for a violation
of ERISA or a state statute;
(k) if any default occurs under any guaranty or indemnity executed
in connection herewith including, without limitation, (1) that certain
Conditional Guarantee dated the date hereof given by Wellsford Capital, a
Maryland real estate investment trust ("Wellsford Capital" or "Guarantor") to
Lender, and (2) that certain Environmental Indemnity Agreement dated the date
hereof given by Borrower and Wellsford Capital (collectively, "Indemnitors")
to Lender, and such default continues beyond the expiration of any applicable
notice and grace periods, if any;
(1) if any default occurs under that certain Lockbox Pledge and
Security Agreement dated the date hereof by and between Lender, Hatfield
Philips Inc. (the "Servicer") and Borrower (the "Lockbox Agreement") and such
default continues after the expiration of applicable notice and grace period,
if any;
(m) if any default occurs under (i) that certain Mortgage and
Security Agreement dated as of the date hereof given by Borrower to Lender
(the "Canton Security Instrument") encumbering certain real property located
in Canton, Massachusetts and more particularly described therein (the "Canton
Property"), (ii) that certain Mortgage and Security Agreement dated as of the
date hereof given by Borrower to Lender (the "Philadelphia Security
Instrument") encumbering certain real property located in Philadelphia,
Pennsylvania as more particularly described therein (the "Philadelphia
Property"), (iii) that certain Mortgage and Security Agreement dated as of
the date hereof given by Borrower to Lender (the "West Chester Security
Instrument") encumbering certain real property located in West Chester,
Pennsylvania as more particularly described therein (the "West Chester
Property"), (iv) that certain Mortgage and Security Agreement dated the date
hereof given by Borrower to Lender (the "Piscataway Security Instrument")
encumbering certain real property located in Piscataway, New Jersey (the
"Piscataway Property"), (v) that certain Mortgage and Security Agreement
dated as of the date hereof given by Borrower to Lender (the "Cherry Hill
Security Instrument") encumbering certain real property located in Cherry
Hill, New Jersey (the "Cherry Hill Property"), and (vi) that certain
Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing for Commercial Purposes dated the date hereof given by Borrower to
Fidelity National Title Insurance Company, as trustee, for the use and
benefit of Lender, as beneficiary (the "Santa Monica Security Instrument")
encumbering Borrower's leasehold estate in certain real property located in
Santa Monica, California and more particularly described therein (the "Santa
Monica Property") (the Canton Security Instrument, the Philadelphia Security
Instrument, the West Chester Security Instrument, the Piscataway Security
Instrument, the Cherry Hill Security Instrument and the Santa Monica Security
Instrument are sometimes herein referred to collectively as the "Additional
Security Instruments"; the Canton Property, the Philadelphia Property, the
West Chester Property, the Piscataway Property, the Cherry Hill Property and
the Santa Monica Property are sometimes herein referred to collectively as
the "Additional Property"); or
(n) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term, covenant or
condition of the Note, this Security Instrument or the Other Security
Documents in the case of any default which can be cured by the payment of a
sum of money or for thirty (30) days after notice from Lender in the case of
any other default, provided that if such default cannot reasonably be cured
within such thirty (30) day period and Borrower shall have commenced to cure
such default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall
be for a period in excess of one hundred twenty (120) days.
Section 10.2 Late Payment Charge. If any monthly installment of
principal and interest is not paid on or before the tenth (10th) day after
the date on which it is due, Borrower shall pay to Lender upon demand an
amount equal to the lesser of five percent (5%) of such unpaid portion of the
outstanding monthly installment of principal and interest then due or the
maximum amount permitted by applicable law, to defray the expense incurred by
Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment, and such amount
shall be secured by this Security Instrument and the Other Security
Documents.
Section 10.3 Default Interest. Borrower does hereby agree that upon
the occurrence of an Event of Default, Lender shall be entitled to receive
and Borrower shall pay interest on the entire principal amount of the Note at
a rate (the "Default Rate") equal to the lesser of (i) the Interest Rate (as
defined in the Note) plus five percent (5%) or (ii) the maximum interest rate
permitted by applicable law. The Default Rate shall be computed from the
occurrence of the Event of Default until the earlier of the date upon which
the Event of Default is cured or the date upon which the Debt is paid in
full. Interest calculated at the Default Rate shall be added to the Debt,
and shall be deemed secured by this Security Instrument. This clause,
however, shall not be construed as an agreement or privilege to extend the
date of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default.
ARTICLE 11
RIGHTS AND REMEDIES
Section 11.1 Remedies. Upon the occurrence of any Event of Default,
Borrower agrees that Lender may take such action, without notice or demand,
as it deems advisable to protect and enforce its rights against Borrower and
in and to the Property, including, but not limited to, the following actions,
each of which may be pursued concurrently or otherwise, at such time and in
such order as Lender may determine, in its sole discretion, without impairing
or otherwise affecting the other rights and remedies of Lender:
(a) declare the entire unpaid Debt to be immediately due and
payable;
(b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision of law
in which case the Property or any interest therein may be sold for cash or
upon credit in one or more parcels or in several interests or portions and in
any order or manner;
(c) with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the
partial foreclosure of this Security Instrument for the portion of the Debt
then due and payable, subject to the continuing lien and security interest of
this Security Instrument for the balance of the Debt not then due, unimpaired
and without loss of priority;
(d) sell for cash or upon credit the Property or any part thereof
and all estate, claim, demand, right, title and interest of Borrower therein
and rights of redemption thereof, pursuant to power of sale or otherwise, at
one or more sales, as an entity or in parcels, at such time and place, upon
such terms and after such notice thereof as may be required or permitted by
law;
(e) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein, in the Note or in the Other Security Documents;
(f) recover judgment on the Note either before, during or after
any proceedings for the enforcement of this Security Instrument or the Other
Security Documents;
(g) as a matter of right, have a receiver, trustee, liquidator or
conservator of the Property appointed, without notice and without regard for
the adequacy of the security for the Debt and without regard for the solvency
of Borrower, any Guarantor, Indemnitor or of any person, firm or other entity
liable for the payment of the Debt;
(h) subject to any applicable law, the license granted to Borrower
under Section 1.2 shall automatically be revoked and Lender may enter into or
upon the Property, either personally or by its agents, nominees or attorneys
and dispossess Borrower and its agents and servants therefrom, without
liability for trespass, damages or otherwise and exclude Borrower and its
agents or servants wholly therefrom, and take possession of all books,
records and accounts relating thereto and Borrower agrees to surrender
possession of the Property and of such books, records and accounts to Lender
upon demand, and thereupon Lender may (i) use, operate, manage, control,
insure, maintain, repair, restore and otherwise deal with all and every part
of the Property and conduct the business thereat; (ii) complete any
construction on the Property in such manner and form as Lender deems
advisable; (iii) make alterations, additions, renewals, replacements and
improvements to or on the Property; (iv) exercise all rights and powers of
Borrower with respect to the Property, whether in the name of Borrower or
otherwise, including, without limitation, the right to make, cancel, enforce
or modify Leases, obtain and evict tenants, and demand, sue for, collect and
receive all Rents of the Property and every part thereof; (v) require
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be occupied by Borrower; (vi)
require Borrower to vacate and surrender possession of the Property to Lender
or to such receiver and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise; and (vii) apply the receipts from the
Property to the payment of the Debt, in such order, priority and proportions
as Lender shall deem appropriate in its sole discretion after deducting
therefrom all expenses (including reasonable attorneys' fees) incurred in
connection with the aforesaid operations and all amounts necessary to pay the
Taxes, Other Charges, insurance and other expenses in connection with the
Property, as well as just and reasonable compensation for the services of
Lender, its counsel, agents and employees;
(i) exercise any and all rights and remedies granted to a secured
party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing: (i) the right to take possession of
the Personal Property or any part thereof, and to take such other measures as
Lender may deem necessary for the care, protection and preservation of the
Personal Property, and (ii) request Borrower at its expense to assemble the
Personal Property and make it available to Lender at a convenient place
acceptable to Lender. Any notice of sale, disposition or other intended
action by Lender with respect to the Personal Property sent to Borrower in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any other
sums held in escrow or otherwise by Lender in accordance with the terms of
this Security Instrument, the Lockbox Agreement or any Other Security
Document to the payment of the following items in any order in its
uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note;
(v) All other sums payable pursuant to the Note, this
Security Instrument and the Other Security Documents, including without
limitation advances made by Lender pursuant to the terms of this Security
Instrument;
(k) surrender the Policies maintained pursuant to Article 3
hereof, collect the unearned Insurance Premiums and apply such sums as a
credit on the Debt in such priority and proportion as Lender in its
discretion shall deem proper, and in connection therewith, Borrower hereby
appoints Lender as agent and attorney-in-fact (which is coupled with an
interest and is therefore irrevocable) for Borrower to collect such Insurance
Premiums;
(l) pursue such other remedies as Lender may have under applicable
law, including, without limitation, the STATUTORY POWER OF SALE;
(m) apply the undisbursed balance of any Net Proceeds Deficiency
deposit, together with interest thereon, to the payment of the Debt in such
order, priority and proportions as Lender shall deem to be appropriate in its
discretion; or
(n) notwithstanding any other provisions set forth herein and
without limitation thereof, this Security Instrument is upon the STATUTORY
CONDITIONS, for any breach of which the Lender shall have the STATUTORY POWER
OF SALE.
In the event of a sale, by foreclosure, power of sale, or otherwise, of less
than all of the Property, this Security Instrument shall continue as a lien
and security interest on the remaining portion of the Property unimpaired and
without loss of priority. Notwithstanding the provisions of this Section
11.1 to the contrary, if any Event of Default as described in clauses (i) or
(ii) of Subsection 10.1(f) shall occur, the entire unpaid Debt shall be
automatically due and payable, without any further notice, demand or other
action by Lender.
Section 11.2 Application of Proceeds. The purchase money, proceeds and
avails of any disposition of the Property, or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or
the Other Security Documents, may be applied by Lender to the payment of the
Debt in such priority and proportions as Lender in its discretion shall deem
proper.
Section 11.3 Right to Cure Defaults. Upon the occurrence of any Event
of Default or if Borrower fails to make any payment or to do any act as
herein provided, Lender may, but without any obligation to do so and without
notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent
as Lender may deem necessary to protect the security hereof. Lender is
authorized to enter upon the Property for such purposes, or appear in,
defend, or bring any action or proceeding to protect its interest in the
Property or to foreclose this Security Instrument or collect the Debt, and
the cost and expense thereof (including reasonable attorneys' fees to the
extent permitted by law), with interest as provided in this Section 11.3,
shall constitute a portion of the Debt and shall be due and payable to Lender
upon demand. All such costs and expenses incurred by Lender in remedying
such Event of Default or such failed payment or act or in appearing in,
defending, or bringing any such action or proceeding shall bear interest at
the Default Rate, for the period after notice from Lender that such cost or
expense was incurred to the date of payment to Lender. All such costs and
expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be
secured by this Security Instrument and the Other Security Documents and
shall be immediately due and payable upon demand by Lender therefor.
Section 11.4 Actions and Proceedings. Lender has the right to appear
in and defend any action or proceeding brought with respect to the Property
and to bring any action or proceeding, in the name and on behalf of Borrower,
which Lender, in its discretion, decides should be brought to protect its
interest in the Property.
Section 11.5 Recovery of Sums Required To Be Paid. Lender shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to
whether or not the balance of the Debt shall be due, and without prejudice to
the right of Lender thereafter to bring an action of foreclosure, or any
other action, for a default or defaults by Borrower existing at the time such
earlier action was commenced.
Section 11.6 Examination of Books and Records. Lender, its agents,
accountants and attorneys shall have the right, upon reasonable advance
notice and at reasonable times, to examine the records, books, management and
other papers of Borrower and its affiliates or of any Guarantor or Indemnitor
which reflect upon their financial condition, at the Property or at any
office regularly maintained by Borrower, its affiliates or any Guarantor or
Indemnitor where the books and records are located. Lender and its agents
shall have the right to make copies and extracts from the foregoing records
and other papers. In addition, Lender, its agents, accountants and attorneys
shall have the right upon reasonable advance notice and at reasonable times
to examine and audit the books and records of Borrower and its affiliates or
of any Guarantor or Indemnitor pertaining to the income, expenses and
operation of the Property during reasonable business hours at any office of
Borrower, its affiliates or any Guarantor or Indemnitor where the books and
records are located. This Section 11.6 shall apply throughout the term of
the Note and without regard to whether an Event of Default has occurred or is
continuing.
Section 11.7 Other Rights, etc.
(a) The failure of Lender to insist upon strict performance of any
term hereof shall not be deemed to be a waiver of any term of this Security
Instrument. Borrower shall not be relieved of Borrower's obligations
hereunder by reason of (i) the failure of Lender to comply with any request
of Borrower, any Guarantor or any Indemnitor to take any action to foreclose
this Security Instrument or otherwise enforce any of the provisions hereof or
of the Note or the Other Security Documents, (ii) the release, regardless of
consideration, of the whole or any part of the Property, or of any person
liable for the Debt or any portion thereof, or (iii) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Security Instrument or the Other
Security Documents.
(b) It is agreed that the risk of loss or damage to the Property
is on Borrower, and Lender shall have no liability whatsoever for decline in
value of the Property, for failure to maintain the Policies, or for failure
to determine whether insurance in force is adequate as to the amount of risks
insured. Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender's possession.
(c) Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its
discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclose this Security Instrument. The rights
of Lender under this Security Instrument shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No
act of Lender shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Lender shall not
be limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity.
Section 11.8 Right to Release Any Portion of the Property. Lender may
release any portion of the Property for such consideration as Lender may
require without, as to the remainder of the Property, in any way impairing or
affecting the lien or priority of this Security Instrument, or improving the
position of any subordinate lienholder with respect thereto, except to the
extent that the obligations hereunder shall have been reduced by the actual
monetary consideration, if any, received by Lender for such release, and may
accept by assignment, pledge or otherwise any other property in place thereof
as Lender may require without being accountable for so doing to any other
lienholder. This Security Instrument shall continue as a lien and security
interest in the remaining portion of the Property.
Section 11.9 Violation of Laws. If the Property is not in compliance
with Applicable Laws, Lender may impose additional requirements upon Borrower
in connection herewith including, without limitation, monetary reserves or
financial equivalents.
Section 11.10 Recourse and Choice of Remedies. Notwithstanding any
other provision of this Security Instrument, including but not limited to
Article 15 hereof, Lender and other Indemnified Parties (defined in Section
13.1 below) are entitled to enforce the obligations of Borrower, Guarantor
and Indemnitor contained in Sections 13.2 and 13.3 and 13.4 without first
resorting to or exhausting any security or collateral and without first
having recourse to the Note or any of the Property, through foreclosure or
acceptance of a deed in lieu of foreclosure or otherwise, and in the event
Lender commences a foreclosure action against the Property, Lender is
entitled to pursue a deficiency judgment with respect to such obligations
against Borrower, Guarantor and Indemnitor. The provisions of Sections 13.2
and 13.3, 13.4 and 15.3 are exceptions to any non-recourse or exculpation
provisions in the Note, this Security Instrument or the Other Security
Documents, and Borrower, Guarantor and Indemnitor are fully and personally
liable for the obligations pursuant to Sections 13.2 and 13.3, 13.4 and 15.3.
The liability of Borrower, Guarantor and Indemnitor are not limited to the
original principal amount of the Note. Notwithstanding the foregoing,
nothing herein shall inhibit or prevent Lender from foreclosing pursuant to
this Security Instrument or exercising any other rights and remedies pursuant
to the Note, this Security Instrument and the Other Security Documents,
whether simultaneously with foreclosure proceedings or in any other sequence.
A separate action or actions may be brought and prosecuted against Borrower,
whether or not action is brought against any other person or entity or
whether or not any other person or entity is joined in the action or actions.
In addition, Lender shall have the right but not the obligation to join and
participate in, as a party if it so elects, any administrative or judicial
proceedings or actions initiated in connection with any matter addressed in
Article 12 or Section 13.4.
Section 11.11 Right of Entry. Lender and its agents shall have the
right to enter and inspect the Property at all reasonable times.
ARTICLE 12
ENVIRONMENTAL HAZARDS
Section 12.1 Environmental Representations and Warranties. To the best
of Borrower's knowledge, after due inquiry: (a) there are no Hazardous
Substances (defined below) or underground storage tanks in, on, or under the
Property, except those that are both (i) in compliance with Environmental
Laws (defined below) and with permits issued pursuant thereto and (ii) fully
disclosed to Lender in writing pursuant to the written reports resulting from
the environmental assessments of the Property delivered to Lender (the
"Environmental Report"); (b) there are no past, present or threatened
Releases (defined below) of Hazardous Substances in, on, under or from the
Property except as described in the Environmental Report; (c) there is no
threat of any Release of Hazardous Substances migrating to the Property
except as described in the Environmental Report; (d) there is no past or
present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Property except as described in the
Environmental Report; (e) Borrower does not know of, and has not received,
any written or oral notice or other communication from any person or entity
(including but not limited to a governmental entity) relating to Hazardous
Substances or Remediation (defined below) thereof, of possible liability of
any person or entity pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or potential
administrative or judicial proceedings in connection with any of the
foregoing; and (f) Borrower has truthfully and fully provided to Lender, in
writing, any and all information relating to conditions in, on, under or from
the Property that is known to Borrower and that is contained in Borrower's
files and records, including but not limited to any reports relating to
Hazardous Substances in, on, under or from the Property and/or to the
environmental condition of the Property.
"Environmental Law" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to protection of human health or the environment,
relating to Hazardous Substances, relating to liability for or costs of
Remediation or prevention of Releases of Hazardous Substances or relating to
liability for or costs of other actual or threatened danger to human health
or the environment. "Environmental Law" includes, but is not limited to, the
following statutes, as amended, any successor/hereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency
Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Safe Drinking Water Act; the Occupational Safety
and Health Act, the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation
Act. "Environmental Law" also includes, but is not limited to, any present
and future federal, state and local laws, statutes, ordinances, rules,
regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the property; requiring
notification or disclosure of Releases of Hazardous Substances or other
environmental condition of the Property to any governmental authority or
other person or entity, whether or not in connection with transfer of title
to or interest in property; imposing conditions or requirements in connection
with permits or other authorization for lawful activity; relating to
nuisance, trespass or other causes of action related to the Property; and
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of the Property.
"Hazardous Substances" include but are not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or
regulatory effect under any present or future Environmental Laws or that may
have a negative impact on human health or the environment, including but not
limited to petroleum and petroleum products, asbestos and asbestos-containing
materials, polychlorinated biphenyls, lead, radon, radioactive materials,
flammables and explosives.
"Release" of any Hazardous Substance includes but is not limited to any
release, deposit, discharge, emission, leaking, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Substances.
"Remediation" includes but is not limited to any response, remedial,
removal, or corrective action, any activity to clean up, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance, any
actions to prevent, cure or mitigate any Release of any Hazardous Substance,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other analysis, or
evaluation relating to any Hazardous Substances or to anything referred to in
Article 12.
Section 12.2 Environmental Covenants. Borrower covenants and agrees
that: (a) all uses and operations on or of the Property, whether by Borrower
or any other person or entity, shall be in compliance with all Environmental
Laws and permits issued pursuant thereto; (b) there shall be no Releases of
Hazardous Substances in, on, under or from the Property that shall not be
remediated in accordance with all applicable Environmental Laws within sixty
(60) days of the occurrence thereof; (c) there shall be no Hazardous
Substances in, on, or under the Property, except those that are both (1) in
compliance with all Environmental Laws and with permits issued pursuant
thereto and (2) fully disclosed to Lender in writing; (d) Borrower shall keep
the Property free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other person or entity (the "Environmental Liens"); (e)
Borrower shall, at its sole cost and expense, fully and expeditiously
cooperate in all activities pursuant to Section 12.3 below, including but not
limited to providing all relevant information and making knowledgeable
persons available for interviews; (f) Borrower shall, at its sole cost and
expense, perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
written request of Lender following a Release of a Hazardous Substance upon
the Property or Lender's receipt of notice from Borrower pursuant to clause
(i) below (including but not limited to sampling, testing and analysis of
soil, water, air, building materials and other materials and substances
whether solid, liquid or gas), and share with Lender the reports and other
results thereof, and Lender and other Indemnified Parties shall be entitled
to rely on such reports and other results thereof; (g) Borrower shall, at its
sole cost and expense, comply with all reasonable written requests of Lender
to (1) reasonably effectuate Remediation of any condition (including but not
limited to a Release of a Hazardous Substance) in, on, under or from the
Property; (2) comply with any Environmental Law; (3) comply with any
directive from any governmental authority; and (4) take any other reasonable
action necessary or appropriate for protection of human health or the
environment; (h) Borrower shall not do or allow any tenant or other user of
the Property to do any act that materially increases the dangers to human
health or the environment, poses an unreasonable risk of harm to any person
or entity (whether on or off the Property), impairs or may impair the value
of the Property, is contrary to any requirement of any insurer, constitutes a
public or private nuisance, constitutes waste, or violates any covenant,
condition, agreement or easement applicable to the Property; and (i) Borrower
shall immediately notify Lender in writing of (A) any presence or Releases or
threatened Releases of Hazardous Substances in, on, under, from or migrating
towards the Property; (B) any non-compliance with any Environmental Laws
related in any way to the Property; (C) any actual or potential Environmental
Lien; (D) any required or proposed Remediation of environmental conditions
relating to the Property; and (E) any written or oral notice or other
communication of which Borrower becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any way to
Hazardous Substances or Remediation thereof, possible liability of any person
or entity pursuant to any Environmental Law, other environmental conditions
in connection with the Property, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this Article
12. Any failure of Borrower to perform its obligations pursuant to this
Section 12.2 shall constitute bad faith waste with respect to the Property.
Section 12.3 Lender's Rights. Lender and any other person or entity
designated by Lender, including but not limited to any receiver, any
representative of a governmental entity, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Property at
all reasonable times to assess any and all aspects of the environmental
condition of the Property and its use, including but not limited to
conducting any environmental assessment or audit (the scope of which shall be
determined in Lender's sole and absolute discretion) and taking samples of
soil, groundwater or other water, air, or building materials, and conducting
other invasive testing, provided that Lender or its designee shall repair any
physical damage to the Property caused by such invasive testing. Borrower
shall cooperate with and provide access to Lender and any such person or
entity designated by Lender.
ARTICLE 13
INDEMNIFICATION
Section 13.1 General Indemnification. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to attorneys'
fees and other costs of defense) (the "Losses") imposed upon or incurred by
or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any one or more of the following
(except to the extent any such Losses result from the willful misconduct or
gross negligence of Lender or such Indemnified Parties): (a) ownership of
this Security Instrument, the Property or any interest therein or receipt of
any Rents; (b) any amendment to, or restructuring of, the Debt, and the Note,
this Security Instrument, or any Other Security Documents; (c) any and all
lawful action that may be taken by Lender in connection with the enforcement
of the provisions of this Security Instrument or the Note or any of the Other
Security Documents, whether or not suit is filed in connection with same, or
in connection with Borrower, any Guarantor or Indemnitor and/or any partner,
joint venturer or shareholder thereof becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding;
(d) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (e) any use, nonuse or condition in, on or about the
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (f) any failure on the
part of Borrower to perform or be in compliance with any of the terms of this
Security Instrument; (g) performance of any labor or services or the
furnishing of any materials or other property in respect of the Property or
any part thereof; (h) the failure of any person to file timely with the
Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of
Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may
be required in connection with the Security Instrument, or to supply a copy
thereof in a timely fashion to the recipient of the proceeds of the
transaction in connection with which this Security Instrument is made; (i)
any failure of the Property to be in compliance with any Applicable Laws; (j)
the enforcement by any Indemnified Party of the provisions of this Article
13; (k) any and all claims and demands whatsoever which may be asserted
against Lender by reason of any alleged obligations or undertakings on its
part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; (1) the payment of any commission, charge or
brokerage fee to anyone which may be payable in connection with the funding
of the loan evidenced by the Note and secured by this Security Instrument
(Lender, by its acceptance hereof, represents that no mortgage broker has
been retained by Lender in connection with the making of the loan evidenced
by the Note); or (m) any misrepresentation made by Borrower in this Security
Instrument or any Other Security Document. Any amounts payable to Lender by
reason of the application of this Section 13.1 shall become immediately due
and payable and shall bear interest at the Default Rate from the date loss or
damage is sustained by Lender until paid. For purposes of this Article 13,
the term "Indemnified Parties" means Lender and any person or entity who is
or will have been involved in the origination of the loan secured hereby, any
person or entity who is or will have been involved in the servicing of the
loan secured hereby, any person or entity in whose name the encumbrance
created by this Security Instrument is or will have been recorded, persons
and entities who may hold or acquire or will have held a full or partial
interest in the loan secured hereby (including, but not limited to, Investors
or prospective Investors in the Securities, as well as custodians, trustees
and other fiduciaries who hold or have held a full or partial interest in the
loan secured hereby for the benefit of third parties) as well as the
respective directors, officers, shareholders, partners, employees, agents,
servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other person or entity who holds
or acquires or will have held a participation or other full or partial
interest in the loan secured hereby or the Property, whether during the term
of the loan secured hereby or as a part of or following a foreclosure of the
loan secured hereby and including, but not limited to, any successors by
merger, consolidation or acquisition of all or a substantial portion of
Lender's assets and business).
Section 13.2 Mortgage and/or Intangible Tax. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making
and/or recording of this Security Instrument, the Note or any of the Other
Security Documents.
Section 13.3 ERISA Indemnification. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, attorneys' fees and costs incurred in the investigation, defense,
and settlement of Losses incurred in correcting any prohibited transaction or
in the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender's sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 4.2 or 5.9 or Subsection 4.3(p).
Section 13.4 Environmental Indemnification. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses and costs of
Remediation (whether or not performed voluntarily), engineers' fees,
environmental consultants' fees, and costs of investigation (including but
not limited to sampling, testing, and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas)
imposed upon or incurred by or asserted against any Indemnified Parties, and
directly or indirectly arising out of or in any way relating to any one or
more of the following: (a) any presence of any Hazardous Substances in, on,
above, or under the Property; (b) any past, present or threatened Release of
Hazardous Substances in, on, above, under or from the Property; (c) any
activity by Borrower, any person or entity affiliated with Borrower or any
tenant or other user of the Property in connection with any actual, proposed
or threatened use, treatment, storage, holding, existence, disposition or
other Release, generation, production, manufacturing, processing, refining,
control, management, abatement, removal, handling, transfer or transportation
to or from the Property of any Hazardous Substances at any time located in,
under, on or above the Property; (d) any activity by Borrower, any person or
entity affiliated with Borrower or any tenant or other user of the Property
in connection with any actual or proposed Remediation of any Hazardous
Substances at any time located in, under, on or above the Property, whether
or not such Remediation is voluntary or pursuant to court or administrative
order, including but not limited to any removal, remedial or corrective
action; (e) any past or present non-compliance or violations of any
Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including but not limited
to any failure by Borrower, any person or entity affiliated with Borrower or
any tenant or other user of the Property to comply with any order of any
governmental authority in connection with any Environmental Laws; (f) the
imposition, recording or filing of any Environmental Lien encumbering the
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 12 and
this Section 13.4; (h) any past, present or threatened injury to, destruction
of or loss of natural resources in any way connected with the Property,
including but not limited to costs to investigate and assess such injury,
destruction or loss; (i) any acts of Borrower or other users of the Property
in arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Substances owned or
possessed by such Borrower or other users, at any facility or incineration
vessel owned or operated by another person or entity and containing such or
any similar Hazardous Substance; (j) any acts of Borrower or other users of
the Property, in accepting any Hazardous Substances for transport to disposal
or treatment facilities, incineration vessels or sites selected by Borrower
or such other users, from which there is a Release, or a threatened Release
of any Hazardous Substance which causes the incurrence of costs for
Remediation; (k) any personal injury, wrongful death, or property damage
arising under any statutory or common law or tort law theory, including but
not limited to damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
the Property; and (1) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to Article 12.
The foregoing indemnity shall survive the payment of the Note, the
exercise of a power of sale in respect of the Property, the foreclosure of
this Security Instrument or the acceptance of a deed in lieu of the
foreclosure of this Security Instrument for a period of two (2) years (the
"Environmental Survival Period"), and, except as hereinafter provided, any
claim not brought within the Environmental Survival Period shall be deemed
waived. Notwithstanding the foregoing, upon the payment in full of the Note
and the performance by Borrower of all other Obligations and the release or
discharge of record by Lender of this Security Instrument, the foregoing
indemnity shall be of no further force or effect upon Borrower's delivery to
Lender of an environmental report, prepared by an environmental consultant
satisfactory to Lender, showing that no Releases have occurred upon the
Property which have not been remediated in accordance with all applicable
Environmental Laws and that the Property is otherwise in compliance in all
material respects with all Environmental Laws; provided, however, that,
notwithstanding anything contained herein to the contrary, in the event such
environmental report, or any other environmental report obtained by Lender,
shall disclose that a Release occurred upon the Property which has not been
remediated in compliance in all material respects with all applicable
Environmental Laws or that the Property is not in compliance in all material
respects with all Environmental Laws, the foregoing indemnity shall fully
survive indefinitely. Nothing herein shall be deemed to impose any liability
upon Borrower for any Release of Hazardous Substances, or any violation of
Environmental Laws, occurring solely subsequent to (A) a transfer of the
Property in accordance with the terms of Article 8 hereof, provided that the
transferee shall execute and deliver to the Lender an indemnification
substantially in the form of this Section 13.4, (B) the payment in full of
the Note and the performance by Borrower of all other Obligations and the
release or discharge of record by Lender of this Security Instrument, (C) the
exercise of any power of sale in respect of the Property, or (D) the
foreclosure of this Security Instrument or the acceptance of a deed in lieu
of foreclosure of this Security Instrument.
Section 13.5 Duty to Defend; Attorneys' Fees and Other Fees and
Expenses. Upon written request by any Indemnified Party, Borrower shall
defend such Indemnified Party (if requested by any Indemnified Party, in the
name of the Indemnified Party) by attorneys and other professionals approved
by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified
Parties may, in their sole and absolute discretion, engage their own
attorneys and other professionals to defend or assist them, and, at the
option of Indemnified Parties, their attorneys shall control the resolution
of claim or proceeding. Upon demand, Borrower shall pay or, in the sole and
absolute discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.
ARTICLE 14
WAIVERS
Section 14.1 Waiver of Counterclaim. Borrower hereby waives the right
to assert a counterclaim, other than a mandatory or compulsory counterclaim,
in any action or proceeding brought against it by Lender arising out of or in
any way connected with this Security Instrument, the Note, any of the Other
Security Documents, or the Obligations.
Section 14.2 Marshalling and Other Matters. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation,
stay, extension, reinstatement and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Borrower
hereby expressly waives any and all rights of redemption from sale under any
order or decree of foreclosure of this Security Instrument on behalf of
Borrower, and on behalf of each and every person acquiring any interest in or
title to the Property subsequent to the date of this Security Instrument and
on behalf of all persons to the extent permitted by applicable law.
Section 14.3 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters
for which this Security Instrument specifically and expressly provides for
the giving of notice by Lender to Borrower and except with respect to matters
for which Lender is required by applicable law to give notice, and Borrower
hereby expressly waives the right to receive any notice from Lender with
respect to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 14.4 Waiver of Statute of Limitations. Borrower hereby
expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to Payment of the Debt or
performance of its Other Obligations.
Section 14.5 Sole Discretion of Lender. Wherever pursuant to this
Security Instrument (a) Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to Lender, or
(c) any other decision or determination is to be made by Lender, the decision
of Lender to approve or disapprove, all decisions that arrangements or terms
are satisfactory or not satisfactory and all other decisions and
determinations made by Lender, shall be in the sole and absolute discretion
of Lender and shall be final and conclusive, except as may be otherwise
expressly and specifically provided herein.
Section 14.6 Survival. The indemnifications made pursuant to Sections
13.2, 13.3 and 13.4 and the representations and warranties, covenants, and
other obligations arising under Article 12, shall continue indefinitely in
full force and effect and shall survive and shall in no way be impaired by:
any satisfaction or other termination of this Security Instrument, any
assignment or other transfer of all or any portion of this Security
Instrument or Lender's interest in the Property (but, in such case, shall
benefit both Indemnified Parties and any assignee or transferee), any
exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the Other
Security Documents, any transfer of all or any portion of the Property
(whether by Borrower or by Lender following foreclosure or acceptance of a
deed in lieu of foreclosure or at any other time), any amendment to this
Security Instrument, the Note or the Other Security Documents, and any act or
omission that might otherwise be construed as a release or discharge of
Borrower from the obligations pursuant hereto.
Section 14.7 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR
THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY INSTRUMENT OR THE
OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS,
EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
ARTICLE 15
EXCULPATION
Section 15.1 Exculpation. Except as otherwise provided, Lender shall
not enforce the liability and obligation of Borrower to perform and observe
the obligations contained in the Note or this Security Instrument by any
action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, action for
specific performance or other appropriate action or proceeding to enable
Lender to enforce and realize upon this Security Instrument, the Other
Security Documents, and the interest in the Property, the Rents and any other
collateral given to Lender created by this Security Instrument and the Other
Security Documents; provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents and in any other collateral
given to Lender. Lender, by accepting the Note and this Security Instrument,
agrees that it shall not, except as otherwise provided in Sections 15.2 and
15.3, sue for, seek or demand any deficiency judgment against Borrower in any
action or proceeding, under or by reason of or under or in connection with
the Note, the Other Security Documents or this Security Instrument.
Section 15.2 Reservation of Certain Rights. The provisions of Section
15.1 shall not (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Note, the Other Security Documents or
this Security Instrument; (b) impair the right of Lender to obtain a
deficiency judgment in any action or proceeding in order to preserve its
rights and remedies, including, without limitation, foreclosure, nonjudicial
foreclosure, or the exercise of a power of sale, under the Additional
Security Instruments; however, Lender agrees that it shall not enforce such
deficiency judgment against any assets of Borrower other than the Additional
Property or in the exercise of its rights and remedies under the Additional
Security Instruments; (c) impair the right of Lender to name Borrower as a
party defendant in any action or suit for judicial foreclosure and sale under
this Security Instrument; (d) affect the validity or enforceability of any
indemnity, guaranty, master lease or similar instrument made in connection
with the Note, this Security Instrument, or the Other Security Documents; (e)
impair the right of Lender to obtain the appointment of a receiver; (f)
impair the enforcement of the Assignment of Leases and Rents executed in
connection herewith; (g) impair the right of Lender to obtain a deficiency
judgment or judgment on the Note against Borrower if necessary to obtain any
insurance proceeds or condemnation awards to which Lender would be otherwise
entitled under this Security Instrument, provided, however, Lender shall only
enforce such judgment against the insurance proceeds and/or condemnation
awards; or (h) impair the right of Lender to enforce the provisions of
Sections 11.10, 13.1, 13.2, 13.3 and 13.4 of this Security Instrument.
Section 15.3 Exceptions to Exculpation. Notwithstanding the provisions
of this Article 15 to the contrary, Borrower shall be personally liable to
Lender for the Losses it incurs due to: (i) fraud or material
misrepresentation by Borrower or any other person or entity in connection
with the execution and the delivery of the Note, this Security Instrument or
the Other Security Documents; (ii) Borrower's gross negligence or willful
misconduct with respect to the management and operation of the Property
and/or Borrower's financial affairs; (iii) Borrower's removal or disposal of
any Personal Property after an Event of Default; (iv) Borrower's failure to
pay Taxes, Insurance Premiums, Other Charges (except to the extent that sums
sufficient to pay such amounts have been deposited with Lender pursuant to
the terms of this Security Instrument and/or the Lockbox Agreement), charges
for labor or materials or other charges that can create liens on the
Property; (v) Borrower or Guarantor or any party acting at the behest of
Borrower or Guarantor challenges the validity or enforceability of the Note,
this Security Instrument or Other Security Documents and/or Borrower or
Guarantor or any party acting at the behest of Borrower or Guarantor asserts
defenses (other than (A) the defense of payment in full of the Obligations,
provided that no other Event of Default has occurred and is continuing, or
(B) a defense made in good faith as to the improper exercise of Lender's
remedies under the Note, this Security Instrument or the Other Security
Documents, provided that no Event of Default has occurred and is continuing
at the time of Lender's exercise of such remedies) to the validity or
enforceability of the Note, this Security Instrument or Other Security
Documents, in each case solely for the purpose of delaying, hindering or
impairing Lender's rights and remedies under the Note, this Security
Instrument or Other Security Documents; (vi) Borrower or any party acting at
Borrower's behest misapplies or misappropriates Rents, tenant security
deposits, insurance proceeds or condemnation awards; or (vii) Borrower's
failure to comply with the provisions of Sections 3.3, 3.9, 4.2, 4.3, 12.1,
12.2, 13.1, 13.2, 13.3, 13.4 or 13.5 of this Security Instrument.
Section 15.4 Recourse. Notwithstanding the foregoing, the agreement of
Lender not to pursue recourse liability as set forth in Section 15.1 above
SHALL BECOME NULL AND VOID and shall be of no further force and effect in the
event (1) Borrower defaults under Sections 8.2 or 8.3 of this Security
Instrument, (2) a voluntary bankruptcy or insolvency proceeding is filed or
instituted by Borrower or Guarantor, or an involuntary bankruptcy or
insolvency proceeding is filed or instituted against Borrower or Guarantor
which is not dismissed within ninety (90) days of the filing thereof (except
if such involuntary proceeding is brought by Lender), or (3) any financial
information concerning Borrower or Guarantor provided in the Note, this
Security Instrument or the Other Security Documents or otherwise in order to
induce Lender to make the loan evidenced by the Note is fraudulent in any
respect, contains any fraudulent information or misrepresents in any material
respect the financial condition of Borrower or any Guarantor or Indemnitor.
Section 15.5 Bankruptcy Claims. Nothing herein shall be deemed to be a
waiver of any right which Lender may have under Sections 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for
the full amount of the Debt secured by this Security Instrument or to require
that all collateral shall continue to secure all of the Debt owing to Lender
in accordance with the Note, this Security Instrument and the Other Security
Documents.
ARTICLE 16
NOTICES
Section 16.1 Notices. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof, (ii) one (1) Business Day (defined below) after having
been deposited for overnight delivery with any reputable overnight courier
service, or (iii) three (3) Business Days after having been deposited in any
post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: Wellsford Capital Properties, L.L.C.
c/o Wellsford Real Properties, Inc.
610 Fifth Avenue, New York, New York 10020
Attention: Gregory F. Hughes
Facsimile No.: 212-333-2323
Confirmation No.: 212-333-2300
With a copy to: Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Attention: Dennis M. Sughrue, Esq.
Facsimile No.: (212) 541-1490
Confirmation No.: (212) 541-2009
If to Lender: Lehman Brothers Holdings Inc.
3 World Financial Center - 12th Floor
New York, New York 10295-1200
Attention: Charles W. Schoenherr
Facsimile No.: (212) 528-6680
Confirmation No.: (212) 526-5069
With a copy to: Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: James J. Kirk, Esq.
Facsimile No.: (2112) 808-7897
Confirmation No.: (212) 808-7623
or addressed as such party may from time to time designate by written notice
to the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
For purposes of this Subsection 16.1, "Business Day" shall mean a day on
which commercial banks are not authorized or required by law to close in New
York, New York.
ARTICLE 17
SERVICE OF PROCESS
Section 17.1 Submission to Jurisdiction. With respect to any claim or
action arising hereunder or under the Note or the Other Security Documents,
Borrower (a) irrevocably submits to the nonexclusive jurisdiction of the
courts of the State of New York and the state where the Property is located
and the United States District Court located in the Borough of Manhattan in
New York, New York and the county in which the Property is located, and
appellate courts from any thereof, and (b) irrevocably waives any objection
which it may have at any time to the laying on venue of any suit, action or
proceeding arising out of or relating to this Security Instrument brought in
any such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum.
Section 17.2 Jurisdiction Not Exclusive. Nothing in this Security
Instrument will be deemed to preclude Lender from bringing an action or
proceeding with respect hereto in any other jurisdiction.
ARTICLE 18
APPLICABLE LAW
Section 18.1 Choice of Law. This Security Instrument shall be
governed, construed, applied and enforced in accordance with the laws of the
state in which the Property is located and the applicable laws of the United
States of America.
Section 18.2 Usury Laws. This Security Instrument and the Note are
subject to the express condition that at no time shall Borrower be obligated
or required to pay interest on the Debt at a rate which could subject the
holder of the Note to either civil or criminal liability as a result of being
in excess of the maximum interest rate which Borrower is permitted by
applicable law to contract or agree to pay. If by the terms of this Security
Instrument or the Note, Borrower is at any time required or obligated to pay
interest on the Debt at a rate in excess of such maximum rate, the rate of
interest under the Security Instrument and the Note shall be deemed to be
immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of
such maximum rate shall be applied and shall be deemed to have been payments
in reduction of the principal balance of the Note. All sums paid or agreed
to be paid to Lender for the use, forbearance, or detention of the Debt
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Note until
payment in full so that the rate or amount of interest on account of the Debt
does not exceed the maximum lawful rate of interest from time to time in
effect and applicable to the Debt for so long as the Debt is outstanding.
Section 18.3 Provisions Subject to Applicable Law. All rights, powers
and remedies provided in this Security Instrument may be exercised only to
the extent that the exercise thereof does not violate any applicable
provisions of law and are intended to be limited to the extent necessary so
that they will not render this Security Instrument invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
applicable law. If any term of this Security Instrument or any application
thereof shall be invalid or unenforceable, the remainder of this Security
Instrument and any other application of the term shall not be affected
thereby.
ARTICLE 19
SECONDARY MARKET
Section 19.1 Transfer of Loan. Lender may, at any time, and without
the consent of Borrower, but at Lender's sole cost and expense, sell,
transfer or assign the Note, this Security Instrument and the Other Security
Documents, and any or all servicing rights with respect thereto, or grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to each
purchaser, transferee, assignee, servicer, participant, investor in such
Securities or any Rating Agency rating such Securities (all of the foregoing
entities collectively referred to as the "Investor") and each prospective
Investor, all documents and information which Lender now has or may hereafter
acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor
and the Property, whether furnished by Borrower, any Guarantor, any
Indemnitor or otherwise, as Lender determines necessary or desirable.
Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in
connection with any transfer made or any Securities created pursuant to this
Section 19.1, including, without limitation, the delivery of an estoppel
certificate required in accordance with Subsection 7.4(c) hereof and such
other documents as may be reasonably requested by Lender; provided that such
cooperation shall not alter the monetary terms of the Note, this Security
Instrument or the Other Security Documents, or increase the obligations, or
decrease the rights, of Borrower, any Guarantor or any Indemnitor hereunder
or thereunder. Borrower shall also furnish and Borrower, any Guarantor and
any Indemnitor consent to Lender furnishing to such Investors or such
prospective Investors or Rating Agency any and all information concerning the
Property, the Leases, the financial condition of Borrower, any Guarantor and
any Indemnitor as may be requested by Lender, any Investor or any prospective
Investor or Rating Agency in connection with any sale, transfer or
participation interest.
ARTICLE 20
COSTS
Section 20.1 Performance at Borrower's Expense. Borrower acknowledges
and confirms that Lender shall impose certain administrative processing
and/or commitment fees in connection with (a) the extension, renewal,
modification, amendment and termination of its loans, (b) the release or
substitution of collateral therefor, (c) obtaining certain consents, waivers
and approvals with respect to the Property, or (d) the review of any Lease or
proposed lease or the preparation or review of any subordination, non-
disturbance agreement (the occurrence of any of the above shall be called an
"Event"). Borrower further acknowledges and confirms that it shall be
responsible for the payment of all costs of reappraisal of the Property or
any part thereof, whether required by law, regulation, Lender or any
governmental or quasi-governmental authority. Borrower hereby acknowledges
and agrees to pay, immediately, with or without demand, all such fees (as the
same may be increased or decreased from time to time), and any additional
fees of a similar type or nature which may be imposed by Lender from time to
time, upon the occurrence of any Event or otherwise, provided that such fees
shall be customary and reasonable for the work undertaken. Wherever it is
provided for herein that Borrower pay any costs and expenses, such costs and
expenses shall include, but not be limited to, all reasonable legal fees and
disbursements of Lender, whether of retained firms, the reimbursement for the
expenses of in-house staff or otherwise.
Section 20.2 Attorney's Fees for Enforcement. (a) Borrower shall pay
all reasonable legal fees incurred by Lender in connection with (i) the
preparation of the Note, this Security Instrument and the Other Security
Documents and (ii) the items set forth in Section 20.1 above, and (b)
Borrower shall pay to Lender on demand any and all expenses, including legal
expenses and attorneys' fees, incurred or paid by Lender in protecting its
interest in the Property or Personal Property or in collecting any amount
payable hereunder or in enforcing its rights hereunder with respect to the
Property or Personal Property, whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any default or Event of
Default shall have occurred and is continuing, together with interest thereon
at the Default Rate from the date paid or incurred by Lender until such
expenses are paid by Borrower.
ARTICLE 21
DEFINITIONS
Section 21.1 General Definitions. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words
used in this Security Instrument may be used interchangeably in singular or
plural form and the word "Borrower" shall mean "each Borrower and any
subsequent owner or owners of the Property or any part thereof or any
interest therein," the word "Lender" shall mean "Lender and any subsequent
holder of the Note," the word "Note" shall mean "the Note and any other
evidence of indebtedness secured by this Security Instrument," the word
"person" shall include an individual, corporation, partnership, trust,
limited liability company, unincorporated association, government,
governmental authority, and any other entity, the word "Property" shall
include any portion of the Property and any interest therein, and the phrases
"attorneys' fees", "legal fees" and "counsel fees" shall include any and all
attorneys', paralegal and law clerk fees and disbursements, including, but
not limited to, fees and disbursements at the pre-trial, trial and appellate
levels incurred or paid by Lender in protecting its interest in the Property,
the Leases and the Rents and enforcing its rights hereunder.
ARTICLE 22
MISCELLANEOUS PROVISIONS
Section 22.1 No Oral Change. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part
of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 22.2 Liability. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint
and several. This Security Instrument shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns
forever.
Section 22.3 Inapplicable Provisions. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Note and this Security
Instrument shall be construed without such provision.
Section 22.4 Headings, etc. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only
and are not to be construed as defining or limiting, in any way, the scope or
intent of the provisions hereof.
Section 22.5 Duplicate Originals; Counterparts. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security
Instrument may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together
shall constitute a single Security Instrument. The failure of any party
hereto to execute this Security Instrument, or any counterpart hereof, shall
not relieve the other signatories from their obligations hereunder.
Section 22.6 Number and Gender. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 22.7 Entire Agreement. The Note, this Security Instrument and
the Other Security Documents constitute the entire understanding and
agreement between Borrower and Lender with respect to the transactions
arising in connection with the Debt and supersede all prior written or oral
understandings and agreements between Borrower and Lender with respect
thereto. Borrower hereby acknowledges that, except as incorporated in
writing in the Note, this Security Instrument and the Other Security
Documents, there are not, and were not, and no persons are or were authorized
by Lender to make, any representations, understandings, stipulations,
agreements or promises, oral or written, with respect to the transaction
which is the subject of the Note, this Security Instrument and the Other
Security Documents.
ARTICLE 23
CROSS-COLLATERALIZATION
Section 23.1 Cross Collateralization. Borrower acknowledges that the
Debt is secured by this Security Instrument together with the Additional
Security Instruments encumbering the Additional Property, all as more
specifically set forth in the Note. Upon the occurrence of an Event of
Default, Lender shall have the right to institute a proceeding or proceedings
for the total or partial foreclosure of this Security Instrument and the
Additional Security Instruments whether by court action, power of sale or
otherwise, under any applicable provision of law, including, without
limitation, the STATUTORY POWER OF SALE, for all of the Debt or the portion
of the Debt allocated to the Property as set forth in Exhibit A to the Note,
and the liens and the security interests created by the Additional Security
Instruments shall continue in full force and effect without loss of priority
as liens and security interests securing the payment of that portion of the
Debt then due and payable but still outstanding. Borrower acknowledges and
agrees that the Property and the Additional Property are located in one or
more states and counties, and therefore Lender shall be permitted to enforce
payment of the Debt and the performance of any term, covenant or condition of
the Note, this Security Instrument, the other Security Documents or the
Additional Security Instruments and exercise any and all rights and remedies
under the Note, this Security Instrument, the Other Security Documents or the
Additional Security Instruments, or as provided by law or at equity, by one
or more proceedings, whether contemporaneous, consecutive or both, to be
determined by Lender, in its sole discretion, in any one or more of the
states or counties in which the Property or the Additional Property is
located. Neither the acceptance of this Security Instrument, the Other
Security Documents or the Additional Security Instruments nor the enforcement
thereof in any one state or county, whether by court action, foreclosure,
power of sale or otherwise, shall prejudice or in any way limit or preclude
enforcement by court action, foreclosure, power of sale or otherwise, of the
Note, this Security Instrument, the Other Security Documents, or any
Additional Security Instrument through one or more additional proceedings in
that state or county or in any other atate or county. Any and all sums
received by Lender under the Note, this Security Instrument, and the Other
Security Documents shall be applied to the Debt in such order and priority as
Lender shall determine, in its sole discretion, without regard to the
allocated loan amounts set forth on Exhibit A to the Note or the appraised
value of the Property or the Additional Property.
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower as of the day and year first above written.
WELLSFORD CAPITAL PROPERTIES, L.L.C., a Delaware
limited liability company
By: Wellsford Capital, a Maryland real estate
investment trust, its Managing Member
By: /s/ Gregory F. Hughes
------------------------------------
Name: Gregory F. Hughes
Title: Vice President and Assistant
Treasurer
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 21st day of October, 1998, before me personally came Gregory
F. Hughes, to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is
the Vice President and Assistant Treasurer of Wellsford Capital, a Maryland
real estate investment trust, which trust is the managing member of Wellsford
Capital Properties, L.L.C., a Delaware limited liability company; and that he
had authority to sign the same; and that he acknowledged to me that he
executed the same in such capacity as the act and deed of said limited
liability company for the uses and purposes therein mentioned.
/s/ Frantz Michaud
---------------------
Frantz Michaud
Notary Public
<PAGE>
Exhibits
Exhibit A Description of Land
<PAGE>
PARCEL 1:
Beginning at a point on the easterly sideline of Keewaydin Drive in the City
of Salem, New Hampshire at the southwesterly corner of the granted premises
at land now or formerly of Robert B. Ross; thence
Northeasterly a distance of Six Hundred Five and Twenty-Nine
Hundredths (605.29) feet to a point; thence
S 24 degree - 57 - 30"W a distance of Three Hundred Twenty-Five (325.00) feet
to a point; thence
S 65 degree - 02' - 30"W a distance of Six Hundred Eighty-Nine and Fifty-
Seven Hundredths (689.57) feet to a point; and
thence
N 10 degree - 25' - 10"W a distance of Three Hundred Thirty-Five and Seventy-
Five Hundredths (335.75) feet to a point of
beginning, or as otherwise bounded and described.
The above described parcel of land contains an area of 210,414 square feet or
4.83 acres, more or less, in said Salem and is shown as lot 29-B on a plan
entitled "Plan of Land in Salem, New Hampshire, prepared for TA Associates
Realty One Limited Partnership," dated June, 1984, prepared by Allen &
Demurjian, Inc., and recorded with the Rockingham County (New Hampshire)
Registry of Deeds as Plan No. D12590, which plan was revised April 25, 1985,
and, as revised, recorded with the Rockingham County Registry of Deeds as
Plan No. 13605.
PARCEL 2:
Beginning at a point on the easterly sideline of Keewaydin Drive in the City
of Salem, New Hampshire at the northwesterly corner of the premises described
below, at land formerly of TA Associates Realty One Limited Partnership, such
other land being Parcel 1 described above; thence
Northeasterly a distance of Six Hundred Eighty-Nine and Fifty-Seven
Hundredths (689.57) feet to a point; thence
S 24 degree - 57' - 30"E a distance of Six Hundred Ninety-Seven and Eighty-
Five Hundredths (697.85) feet to a point; thence
S 77 degree - 55' - 20"W a distance of Five Hundred Four and Sixty-Three
Hundredths (504.63) feet; thence
Northwesterly a distance of Forty-Four and Fifty Hundredths (44.50)
feet to a point; thence
Southwesterly a distance of Three Hundred and Thirty-Seven Hundredths
(300.37) feet to a point of curvature; thence
Northwesterly and curving to the left along the arc of a curve having a
radius of Seventy-Five (75.00) feet, a length of Twenty-
Nine and Thirty-Two Hundredths (29.32) feet to a point;
thence
Northwesterly and curing to the right along the arc of a curve having a
radius of Fifty (50.00) feet, a length of Forty-Three and
Eighty-One Hundredths (43.81) feet to a point; and thence
N 10 degree - 25' - 10"W a distance of Four Hundred Ten and Fifty-Eight
Hundredths (410.58) feet to the point of beginning,
or as otherwise bounded and described.
The above described parcel of land in Salem in shown as Lot 29-A on the Plan,
and as shown on the revised plan recorded as Plan No. 13605 in the Rockingham
County Registry of Deeds, contains an area of 444,880 square feet or 10.2
acres, more or less.
PARCEL 3:
Beginning at a point of curvature on the easterly sideline of Keewaydin Drive
in the City of Salem, New Hampshire at the northwesterly corner of the
granted premises at land formerly of TA Associates Realty One Limited
Partnership, such other land being Parcel 2 described above; thence
N 79 degree - 45' - 23"E a distance of Three Hundred and Thirty-Seven
Hundredths (300.37) feet to a point; thence
S 12 degree - 24' - 29"E a distance of Five Hundred Eighty-One and Ninety-
Nine Hundredths (581.99) feet to a point; thence
N 67 degree - 40' - 50"W a distance of One Hundred Twelve and Fifty-Seven
Hundredths (112.57) feet to a point; thence
S 82 degree - 01' - 50"W a distance of Two Hundred Ninety-Two and Forty-Seven
Hundredths (292.47) feet to a point; thence
N 10 degree - 25' - 10"W a distance of Three Hundred Ninety-Nine and Twenty
Hundredths (399.20) feet to a point of curvature;
and thence
Northeasterly and curving to the left along the arc of a curve
having a radius of Seventy-Five (75.00) feet, a
length of One Hundred Fifty-Four and Twenty-One
Hundredths (154.21) feet to the point of beginning,
or as otherwise bounded and described.
The above described parcel of land contains an area of 189,953 square feet or
4.4 acres, more or less in said Salem and is shown as lot 29-1 on a plan
entitled "Plan of Land in Salem, New Hampshire, prepared for TA Associates
Realty One Limited Partnership," dated June, 1984, prepared by Allen &
Demurjian, Inc., recorded with the Rockingham County (New Hampshire) Registry
of Deeds as Plan No. D12590, and on that same plan, as revised April 25,
1985, and recorded as plan No. 13605 in the Rockingham County Registry of
Deeds.
WELLSFORD REAL PROPERTIES, INC.
1998 MANAGEMENT INCENTIVE PLAN
WELLSFORD REAL PROPERTIES, INC., a Maryland corporation (the
"Company"), hereby establishes and adopts the following 1998 Management
Incentive Plan (the "Plan").
RECITALS
WHEREAS, the Company desires to encourage high levels of
performance by those individuals who are key to the success of the Company,
to attract new individuals who are highly motivated and who will contribute
to the success of the Company and to encourage such individuals to remain as
directors and/or employees of the Company and its subsidiaries by increasing
their proprietary interest in the Company's growth and success.
WHEREAS, to attain these ends, the Company has formulated the Plan
embodied herein to authorize the granting of incentive awards through grants
of stock options ("Options"), grants of stock appreciation rights, grants of
Stock Purchase Awards (hereafter defined), and grants of Restricted Stock
Awards (hereafter defined) to those individuals whose judgment, initiative
and efforts are responsible for the success of the Company.
NOW, THEREFORE, the Company hereby constitutes, establishes and
adopts the following Plan and agrees to the following provisions:
ARTICLE 10.
PURPOSE OF THE PLAN
10.1. Purpose. The purpose of the Plan is to assist the Company
in attracting and retaining selected individuals to serve as directors,
officers and employees of the Company who will contribute to the Company's
success and to achieve long-term objectives which will inure to the benefit
of all shareholders of the Company through the additional incentive inherent
in the ownership of the Company's Common Stock (the "Shares"). Options
granted under the Plan will be either "incentive stock options," intended to
qualify as such under the provisions of section 422 of the Internal Revenue
Code of 1986, as from time to time amended (the "Code"), or "nonqualified
stock options." For purposes of the Plan, the term "subsidiary" shall mean
"subsidiary corporation," as such term is defined in section 424(f) of the
Code, and "affiliate" shall have the meaning set forth in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). For
purposes of the Plan, the term "Award" shall include a grant of an Option,
stock appreciation rights, a Stock Purchase Award, a Restricted Stock Award,
or any other award made under the terms of the Plan.
ARTICLE 11.
SHARES SUBJECT TO AWARDS
11.1. Number of Shares. Subject to the adjustment provisions of
Section 9.9 hereof, the aggregate number of Shares which may be issued under
Awards under the Plan, whether pursuant to Options, Stock Purchase Awards or
Restricted Stock Awards shall not exceed 2,000,000. No Options to purchase
fractional Shares shall be granted or issued under the Plan. For purposes of
this Section 2.1, the Shares that shall be counted toward such limitation
shall include all Shares:
(1) issued or issuable pursuant to Options that have been or may
be exercised;
(2) issued or issuable pursuant to Stock Purchase Awards; and
(3) issued as, or subject to issuance as a Restricted Stock Award.
11.2. Shares Subject to Terminated Awards. The Shares covered by
any unexercised portions of terminated Options granted under Articles 4 and
6, Shares forfeited as provided in Section 8.2(a) and Shares subject to any
Awards which are otherwise surrendered by the Participant without receiving
any payment or other benefit with respect thereto may again be subject to new
Awards under the Plan. In the event the purchase price of an Option is paid
in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the Option shall not again be
available for the grant of Awards under the Plan. Shares subject to Options,
or portions thereof, which have been surrendered in connection with the
exercise of share appreciation rights shall not again be available for the
grant of Awards under the Plan.
11.3. Character of Shares. Shares delivered under the Plan may be
authorized and unissued Shares or Shares acquired by the Company, or both.
11.4. Limitations on Grants to Individual Participant. Subject to
adjustments pursuant to the provisions of Section 9.9 hereof, the maximum
number of Shares with respect to which Options or stock appreciation rights
may be granted hereunder to any employee during any fiscal year shall be
500,000 Shares (the "Limitation"). If an Option is canceled, the canceled
Option shall continue to be counted toward the Limitation for the year
granted. An Option (or a stock appreciation right) that is repriced during
any fiscal year is treated as the cancellation of the Option (or stock
appreciation right) and a grant of a new Option (or stock appreciation right)
for purposes of the Limitation for that fiscal year.
ARTICLE 12.
ELIGIBILITY AND ADMINISTRATION
12.1. Awards to Employees and Directors. (a) Participants who
receive Options under Articles 4 and 6 hereof (including stock appreciation
rights under Article 5) ("Optionees"), Stock Purchase Awards under Article 7
or Restricted Stock Awards under Article 8 (in either case, a "Participant")
shall consist of such key employees and Directors (hereinafter defined) of
the Company or any of its subsidiaries or affiliates as the Committee shall
select from time to time. The Committee's designation of an Optionee or
Participant in any year shall not require the Committee to designate such
person to receive Awards or grants in any other year. The designation of an
Optionee or Participant to receive Awards or grants under one portion of the
Plan shall not require the Committee to include such Optionee or Participant
under other portions of the Plan.
(b) No Option which is intended to qualify as an "incentive
stock option" may be granted to any employee or Director who, at the time of
such grant, owns, directly or indirectly (within the meaning of sections
422(b)(6) and 424(d) of the Code), shares possessing more than ten percent
(10%) of the total combined voting power of all classes of shares of the Com-
pany or any of its subsidiaries or affiliates, unless at the time of such
grant, (i) the option price is fixed at not less than 110% of the Fair Market
Value (as defined below) of the Shares subject to such Option, determined on
the date of the grant, and (ii) the exercise of such Option is prohibited by
its terms after the expiration of five (5) years from the date such Option is
granted.
12.2. Administration. (a) The Plan shall be administered by a
committee (the "Committee") consisting of not fewer than two Directors of the
Company (the directors of the Company being hereinafter referred to as the
"Directors"), as designated by the Directors. The Directors may remove from,
add members to, or fill vacancies in the Committee. Unless otherwise
determined by the Directors, each member of the Committee will be a "Non-
Employee Director" within the meaning of Rule 16b-3 (or any successor rule)
of the Exchange Act and an "outside director" within the meaning of Section
162(m)(4)(C)(i) of the Code and the regulations thereunder.
Any Award to a member of the Committee shall be on terms
consistent with Awards made to other Directors who are not members of the
Committee, except where the Award is approved or ratified by the Compensation
Committee (excluding persons who are also members of the Committee) of the
Board of Directors of the Company.
(b) The Committee is authorized, subject to the provisions of
the Plan, to establish such rules and regulations as it may deem appropriate
for the conduct of meetings and proper administration of the Plan. All
actions of the Committee shall be taken by majority vote of its members. The
Committee is also authorized, subject to the provisions of the Plan, to make
provisions in various Awards pertaining to a "change of control" of the
Company and to amend or modify existing Awards.
(c) Subject to the provisions of the Plan, the Committee
shall have authority, in its sole discretion, to interpret the provisions of
the Plan and, subject to the requirements of applicable law, including Rule
16b-3 of the Exchange Act, to prescribe, amend, and rescind rules and regula-
tions relating to it as it may deem necessary or advisable. All decisions
made by the Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding on all persons, including the Company, its
shareholders, Directors and employees, and Plan participants.
ARTICLE 13.
OPTIONS
13.1. Grant of Options. The Committee shall determine, within the
limitations of the Plan, the Directors and employees of the Company and its
subsidiaries and affiliates to whom Options are to be granted under the Plan,
the number of Shares that may be purchased under each such Option and the
option price, and shall designate such Options at the time of the grant as
either "incentive stock options" or "nonqualified stock options;" provided,
however, that Options granted to employees of an affiliate (that is not also
a subsidiary) or to non-employees of the Company may only be "nonqualified
stock options."
All Options granted pursuant to this Article 4 and Article 6 herein
shall be authorized by the Committee and shall be evidenced in writing by
stock option agreements ("Stock Option Agreements") in such form and
containing such terms and conditions as the Committee shall determine which
are not inconsistent with the provisions of the Plan, and, with respect to
any Stock Option Agreement granting Options which are intended to qualify as
"incentive stock options," are not inconsistent with Section 422 of the Code.
Granting of an Option pursuant to the Plan shall impose no obligation on the
recipient to exercise such option. Any individual who is granted an Option
pursuant to this Article 4 and Article 6 herein may hold more than one Option
granted pursuant to such Articles at the same time and may hold both
"incentive stock options" and "nonqualified stock options" at the same time.
To the extent that any Option does not qualify as an "incentive stock option"
(whether because of its provisions, the time or manner of its exercise or
otherwise) such Option or the portion thereof which does not so qualify shall
constitute a separate "nonqualified stock option."
13.2. Option Price.
(a) Subject to Section 3.1(b), the option price per each
Share purchasable under any "incentive stock option" granted pursuant to this
Article 4 and any "nonqualified stock option" granted pursuant to Article 6
herein shall not be less than 100% of the Fair Market Value (as hereinafter
defined) of such Share on the date of the grant of such Option.
(b) The option price per share of each Share purchasable
under any "nonqualified stock option" granted pursuant to this Article 4
shall be such amount as the Committee shall determine at the time of the
grant of such Option.
13.3. Other Provisions. Options granted pursuant to this
Article 4 shall be made in accordance with the terms and provision of Article
9 hereof and any other applicable terms and provisions of the Plan.
ARTICLE 14.
STOCK APPRECIATION RIGHTS
14.1. Grant and Exercise. Stock appreciation rights may be
granted in conjunction with all or part of any Option granted under the Plan
provided such rights are granted at the time of the grant of such Option. A
"stock appreciation right" is a right to receive cash or Shares, as provided
in this Article 5, in lieu of the purchase of a Share under a related Option.
A share appreciation right or applicable portion thereof shall terminate and
no longer be exercisable upon the termination or exercise of the related
Option, and a stock appreciation right granted with respect to less than the
full number of Shares covered by a related Option shall not be reduced until,
and then only to the extent that, the exercise or termination of the related
Option exceeds the number of Shares not covered by the share appreciation
right. A stock appreciation right may be exercised by the holder thereof
(the "Holder"), in accordance with Section 5.2 of this Article 5, by giving
written notice thereof to the Company and surrendering the applicable portion
of the related Option. Upon giving such notice and surrender, the Holder
shall be entitled to receive an amount determined in the manner prescribed in
Section 5.2 of this Article 5. Options which have been so surrendered, in
whole or in part, shall no longer be exercisable to the extent the related
share appreciation rights have been exercised.
14.2. Terms and Conditions. Stock appreciation rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee,
including the following:
(a) Stock appreciation rights shall be exercisable only at
such time or times and to the extent that the Options to which they
relate shall be exercisable in accordance with the provisions of the
Plan.
(b) Upon the exercise of a stock appreciation right, a Holder
shall be entitled to receive up to, but no more than, an amount in cash
or whole Shares equal to the excess of the then Fair Market Value of one
Share over the option price per Share specified in the related Option
multiplied by the number of Shares in respect of which the share appre-
ciation right shall have been exercised. The Holder shall specify in
his written notice of exercise, whether payment shall be made in cash or
in whole Shares. Each share appreciation right may be exercised only at
the time and so long as a related Option, if any, would be exercisable
or as otherwise permitted by applicable law.
(c) Upon the exercise of a stock appreciation right, the
Option or part thereof to which such share appreciation right is related
shall be deemed to have been exercised for the purpose of the limitation
of the number of Shares to be issued under the Plan, as set forth in
Section 2.1 of the Plan.
(d) With respect to stock appreciation rights granted in
connection with an Option that is intended to be an "incentive stock
option," the following shall apply:
(i) No stock appreciation right shall be transferable by
a Holder otherwise than by will or by the laws of descent and
distribution, and stock appreciation rights shall be exercisable,
during the Holder's lifetime, only by the Holder.
(ii) Stock appreciation rights granted in connection
with an Option may be exercised only when the Fair Market Value of
the Shares subject to the Option exceeds the option price at which
Shares can be acquired pursuant to the Option.
ARTICLE 15.
RELOAD OPTIONS
15.1. Authorization of Reload Options. Concurrently with the
award of any Option (such Option hereinafter referred to as the "Underlying
Option") to any participant in the Plan, the Committee may grant one or more
reload options (each, a "Reload Option") to such participant to purchase for
cash or Shares a number of Shares as specified below. A Reload Option shall
be exercisable for an amount of Shares equal to (i) the number of Shares
delivered by the Optionee to the Company to exercise the Underlying Option,
and (ii) to the extent authorized by the Committee, the number of Shares used
to satisfy any tax withholding requirement incident to the exercise of the
Underlying Option, subject to the availability of Shares under the Plan at
the time of such exercise. Any Reload Option may provide for the grant, when
exercised, of subsequent Reload Options to the extent and upon such terms and
conditions consistent with this Article 6, as the Committee in its sole
discretion shall specify at or after the time of grant of such Reload Option.
The grant of a Reload Option will become effective upon the exercise of an
Underlying Option or Reload Option by delivering to the Company Shares in
payment of the exercise price and/or tax withholding obligations.
Notwithstanding the fact that the Underlying Option may be an "incentive
stock option," a Reload Option is not intended to qualify as an "incentive
stock option" under Section 422 of the Code.
15.2. Reload Option Amendment. Each Share Option Agreement shall
state whether the Committee has authorized Reload Options with respect to the
Underlying Option. Upon the exercise of an Underlying Option or other Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Share Option Agreement.
15.3. Reload Option Price. The option price per Share deliverable
upon the exercise of a Reload Option shall be the Fair Market Value of a
Share on the date the grant of the Reload Option becomes effective.
15.4. Term and Exercise. Each Reload Option is fully exercisable
immediately upon its grant. The term of each Reload Option shall be equal to
the remaining option term of the Underlying Option.
15.5. Termination of Employment. No additional Reload Options
shall be granted to Optionees when Options and/or Reload Options are
exercised pursuant to the terms of this Plan following termination of the
Optionee's employment unless the Committee, in its sole discretion, shall
determine otherwise.
awful Applicability of Other Sections. Except as otherwise
provided in this Article 6, the provisions of Article 9 applicable to Options
shall apply equally to Reload Options.
ARTICLE 16.
STOCK PURCHASE AWARDS
16.1. Grant of Stock Purchase Award. The term "Stock Purchase
Award" means the right to purchase Shares of the Company and to pay for such
Shares through a loan made by the Company to the Participant (a "Purchase
Loan") as set forth in this Article 7.
16.2. Terms of Purchase Loans.
(a) Purchase Loan. Each Purchase Loan shall be evidenced by
a promissory note. The term of the Purchase Loan shall be for a period of
years, as determined by the Committee, and the proceeds of the Purchase Loan
shall be used exclusively by the Participant for purchase of Shares from the
Company at a purchase price equal to the Fair Market Value on the date of the
Stock Purchase Award.
(b) Interest on Purchase Loan. A Purchase Loan shall be non-
interest bearing or shall bear interest at whatever rate the Committee shall
determine (but not in excess of the maximum rate permissible under applicable
law), payable in a manner and at such times as the Committee shall determine.
Those terms and provisions as the Committee shall determine shall be
incorporated into the promissory note evidencing the Purchase Loan.
(c) Forgiveness of Purchase Loan. Subject to Section 7.4
hereof, the Company may forgive the repayment of up to 100% of the principal
amount of the Purchase Loan, subject to such terms and conditions as the
Committee shall determine and set forth in the promissory note evidencing the
Purchase Loan. A Participant's Purchase Loan can be prepaid at any time, and
from time to time, without penalty.
16.3. Security for Loans.
(a) Stock Power and Pledge. Purchase Loans granted to
Participants shall be secured by a pledge of the Shares acquired pursuant to
the Stock Purchase Award. Such pledge shall be evidenced by a pledge
agreement (the "Pledge Agreement") containing such terms and conditions as
the Committee shall determine. The share certificates for the Shares
purchased by a Participant pursuant to a Stock Purchase Award shall be issued
in the Participant's name, but shall be held by the Company as security for
repayment of the Participant's Purchase Loan together with a stock power
executed in blank by the Participant (the execution and delivery of which by
the Participant shall be a condition to the issuance of the Stock Purchase
Award). The Participant shall be entitled to exercise all rights applicable
to such Shares, including, but not limited to, the right to vote such Shares
and the right to receive dividends and other distributions made with respect
to such Shares. When the Purchase Loan and any accrued but unpaid interest
thereon has been repaid or otherwise satisfied in full, the Company shall
deliver to the Participant the share certificates for the Shares purchased by
a Participant under the Stock Purchase Award. Purchase Loans shall be
recourse or non-recourse with respect to a Participant, as determined by the
Committee.
(b) Release and Delivery of Stock Certificates During the
Term of the Purchase Loan. The Company shall release and deliver to each
Participant certificates for Shares purchased by a Participant pursuant to a
Stock Purchase Award, in such amounts and on such terms and conditions as the
Committee shall determine, which shall be set forth in the Pledge Agreement.
(c) Release and Delivery of Stock Certificates Upon Repayment
of the Purchase Loan. The Company shall release and deliver to each
Participant certificates for the Shares purchased by the Participant under
the Stock Purchase Award and then held by the Company, provided the
Participant has paid or otherwise satisfied in full the balance of the
Purchase Loan and any accrued but unpaid interest thereon. In the event the
balance of the Purchase Loan is not repaid, forgiven or otherwise satisfied
within ninety (90) days after (i) the date repayment of the Purchase Loan is
due (whether in accordance with its term, by reason of acceleration or
otherwise), or (ii) such longer time as the Committee, in its discretion,
shall provide for repayment or satisfaction, the Company shall retain those
Shares then held by the Company in accordance with the Pledge Agreement.
(d) Recourse Purchase Loans. Notwithstanding Sections
7.3(a), (b) and (c) above, in the case of a recourse Purchase Loan, the
Committee may make a Purchase Loan on such terms as it determines, including
without limitation, not requiring a pledge of the acquired Shares.
16.4. Termination of Employment.
(a) Termination of Employment by Death, Disability or by the
Company Without Cause; Change of Control. In the event of a Participant's
termination of employment by reason of death, "disability" or by the Company
without "cause", or in the event of a "change of control", the Committee
shall have the right (but shall not be required) to forgive the remaining
unpaid amount (principal and interest) of the Purchase Loan in whole or in
part as of the date of such occurrence. "Change of Control", "disability"
and "cause" shall have the respective meanings as set forth in the promissory
note evidencing the Purchase Loan.
(b) Termination of Employment. Subject to Section 7.4(a)
above, in the event of a Participant's termination of employment for any
reason, the Participant shall repay to the Company the entire balance of the
Purchase Loan and any accrued but unpaid interest thereon, which amounts
shall become immediately due and payable, provided, however, that if the
Participant voluntarily resigns as an employee in good standing, such amounts
will become due and payable on the ninetieth (90th ) day after the effective
date of such resignation.
16.5. Restrictions on Transfer. No Stock Purchase Award or Shares
purchased through such an Award and pledged to the Company as collateral
security for the Participant's Purchase Loan (and accrued by unpaid interest
thereon) may be otherwise pledged, sold, assigned or transferred (other than
by will or by the laws of descent and distribution).
ARTICLE 17.
RESTRICTED STOCK AWARDS
17.1. Restricted Stock Awards. (a) A grant of Shares made
pursuant to this Article 8 is referred to as a "Restricted Stock Award." The
Committee may grant to any Participant an amount of Shares in such manner,
and subject to such terms and conditions relating to vesting, forfeitability
and restrictions on delivery and transfer (whether based on performance
standards, periods of service or otherwise) as the Committee shall establish
(such Shares, "Restricted Shares"). The terms of any Restricted Stock Award
granted under this Plan shall be set forth in a written agreement (a
"Restricted Stock Agreement") which shall contain provisions determined by
the Committee and not inconsistent with this Plan. The provisions of
Restricted Stock Awards need not be the same for each Participant receiving
such Awards.
(b) Issuance of Restricted Shares. As soon as practicable
after the date of grant of a Restricted Stock Award by the Committee, the
Company shall cause to be transferred on the books of the Company, Shares
registered in the name of the Company, as nominee for the Participant,
evidencing the Restricted Shares covered by the Award, but subject to
forfeiture to the Company retroactive to the date of grant, if a Restricted
Stock Agreement delivered to the Participant by the Company with respect to
the Restricted Shares covered by the Award is not duly executed by the
Participant and timely returned to the Company. All Restricted Shares
covered by Awards under this Article 8 shall be subject to the restrictions,
terms and conditions contained in the Plan and the Restricted Stock Agreement
entered into by and between the Company and the Participant. Until the lapse
or release of all restrictions applicable to an Award of Restricted Shares,
the share certificates representing such Restricted Shares shall be held in
custody by the Company or its designee.
(c) Shareholder Rights. Beginning on the date of grant of
the Restricted Stock Award and subject to execution of the Restricted Stock
Agreement as provided in Sections 8.1(a) and (b), the Participant shall
become a shareholder of the Company with respect to all Shares subject to the
Restricted Stock Agreement and shall have all of the rights of a shareholder,
including, but not limited to, the right to vote such Shares and the right to
receive distributions made with respect to such Shares; provided, however,
that any Shares distributed as a dividend or otherwise with respect to any
Restricted Shares as to which the restrictions have not yet lapsed shall be
subject to the same restrictions as such Restricted Shares and shall be
represented by book entry and held as prescribed in Section 8.1(b).
(d) Restriction on Transferability. None of the Restricted
Shares may be assigned or transferred (other than by will or the laws of
descent and distribution), pledged or sold prior to lapse or release of the
restrictions applicable thereto.
(e) Delivery of Shares Upon Release of Restrictions. Upon
expiration or earlier termination of the forfeiture period without a
forfeiture and the satisfaction of or release from any other conditions
prescribed by the Committee, the restrictions applicable to the Restricted
Shares shall lapse. As promptly as administratively feasible thereafter,
subject to the requirements of Section 10.1, the Company shall deliver to the
Participant or, in case of the Participant's death, to the Participant's
beneficiary, one or more stock certificates for the appropriate number of
Shares, free of all such restrictions, except for any restrictions that may
be imposed by law.
17.2. Terms of Restricted Shares.
(a) Forfeiture of Restricted Shares. Subject to Section
8.2(b), all Restricted Shares shall be forfeited and returned to the Company
and all rights of the Participant with respect to such Restricted Shares
shall terminate unless the Participant continues in the service of the
Company as an employee until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth in the
Restricted Stock Agreement. The Committee in its sole discretion, shall
determine the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with respect to
any Restricted Stock Award.
(b) Waiver of Forfeiture Period. Notwithstanding anything
contained in this Article 8 to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth in
any Restricted Stock Agreement under appropriate circumstances (including the
death, disability or retirement of the Participant or a material change in
circumstances arising after the date of an Award) and subject to such terms
and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.
ARTICLE 18.
GENERALLY APPLICABLE PROVISIONS
18.1. Option Period. Subject to Section 3.1(b), the period for
which an Option is exercisable shall not exceed ten (10) years from the date
such Option is granted, provided, however, in the case of an Option that is
not intended to be an "incentive stock option", the Committee may prescribe a
period in excess of ten years. After the Option is granted, the option
period may not be reduced.
18.2. Fair Market Value. If the Shares are listed or admitted to
trading on a securities exchange registered under the Exchange Act, the "Fair
Market Value" of a Share as of a specified date shall mean the average of the
high and low price of the shares for the day immediately preceding the date
as of which Fair Market Value is being determined (or if there was no re-
ported sale on such date, on the last preceding date on which any reported
sale occurred) reported on the principal securities exchange on which the
Shares are listed or admitted to trading. If the Shares are not listed or
admitted to trading on any such exchange but are listed as a national market
security on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), traded in the over-the-counter market or listed
or traded on any similar system then in use, the Fair Market Value of a Share
shall be the average of the high and low sales price for the day immediately
preceding the date as of which the Fair Market Value is being determined (or
if there was no reported sale on such date, on the last preceding date on
which any reported sale occurred) reported on such system. If the Shares are
not listed or admitted to trading on any such exchange, are not listed as a
national market security on NASDAQ and are not traded in the over-the-counter
market or listed or traded on any similar system then in use, but are quoted
on NASDAQ or any similar system then in use, the Fair Market Value of a Share
shall be the average of the closing high bid and low asked quotations on such
system for the Shares on the date in question. If the Shares are not
publicly traded, Fair Market Value shall be determined by the Committee in
its sole discretion using appropriate criteria. An Option shall be con-
sidered granted on the date the Committee acts to grant the Option or such
later date as the Committee shall specify.
18.3. Exercise of Options. Options granted under the Plan shall
be exercised by the Optionee thereof (or by his or her executors,
administrators, guardian or legal representative, or by a Permitted Assignee,
as provided in Sections 9.6 and 9.7 hereof) as to all or part of the Shares
covered thereby, by the giving of written notice of exercise to the Company,
specifying the number of Shares to be purchased, accompanied by payment of
the full purchase price for the Shares being purchased. Full payment of such
purchase price shall be made within five (5) business days following the date
of exercise and shall be made (i) in cash or by certified check or bank
check, (ii) with the consent of the Committee, by delivery of a promissory
note in favor of the Company upon such terms and conditions as determined by
the Committee, (iii) with the consent of Committee, by tendering previously
acquired Shares (valued at its Fair Market Value, as determined by the
Committee as of the date of tender), or (iv) with the consent of the
Committee, any combination of (i), (ii) and (iii). In connection with a
tender of previously acquired Shares pursuant to clause (iii) above, the
Committee, in its sole discretion, may permit the Optionee to constructively
exchange Shares already owned by the Optionee in lieu of actually tendering
such Shares to the Company, provided that adequate documentation concerning
the ownership of the Shares to be constructively tendered is furnished in
form satisfactory to the Committee. The notice of exercise, accompanied by
such payment, shall be delivered to the Company at its principal business
office or such other office as the Committee may from time to time direct,
and shall be in such form, containing such further provisions consistent with
the provisions of the Plan, as the Committee may from time to time prescribe.
In no event may any Option granted hereunder be exercised for a fraction of a
Share. The Company shall effect the transfer of Shares purchased pursuant to
an Option as soon as practicable, and, within a reasonable time thereafter,
such transfer shall be evidenced on the books of the Company. No person
exercising an Option shall have any of the rights of a holder of Shares
subject to an Option until certificates for such Shares shall have been
issued following the exercise of such Option. No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date of such issuance.
18.4. Transferability. No Option that is intended to qualify as
an "incentive stock option" under Section 422 of the Code shall be assignable
or transferable by the Optionee, other than by will or the laws of descent
and distribution, and such Option may be exercised during the life of the
Optionee only by the Optionee or his guardian or legal representative.
"Nonqualified stock options" and any stock appreciation rights granted in
tandem therewith are transferrable (together and not separately) by the
Optionee or Holder, as the case may be, to any one or more of the following
persons (each, a "Permitted Assignee"): (i) the spouse, parent, issue,
spouse of issue, or issue of spouse ("issue" shall include all descendants
whether natural or adopted) of such Optionee or Holder, as the case may be;
(ii) a trust for the benefit of one or more of those persons described in
clause (i) above or for the benefit of such Optionee or Holder, as the case
may be, or for the benefit of any such persons and such Optionee or Holder,
as the case may be; or (iii) an entity in which the Optionee or Holder or any
Permitted Assignee thereof is a beneficial owner; provided, however, that
such Permitted Assignee shall be bound by all of the terms and conditions of
this Plan and shall execute an agreement satisfactory to the Company
evidencing such obligation; provided further, however that any transfer by an
Optionee or Holder who is not then a Director of the Company to any Permitted
Assignee shall be subject to the prior consent of the Committee; and provided
further, however, that such Optionee or Holder shall remain bound by the
terms and conditions of this Plan. The Company shall cooperate with an
Optionee's Permitted Assignee and the Company's transfer agent in
effectuating any transfer permitted pursuant to this Section 9.4.
18.5. Termination of Employment. In the event of the termination
of employment of an Optionee or the separation from service of a Director
(who is an Optionee) for any reason (other than death or disability as
provided below), any Option(s) held by such Optionee (or its Permitted
Assignee) under this Plan and not previously exercised or expired shall be
deemed canceled and terminated on the day of such termination or separation,
unless the Committee decides, in its sole discretion, to extend the term of
the Option for a period not to exceed three months after the date of such
termination or separation, provided, however, that in no instance may the
term of the Option, as so extended, exceed the maximum term set forth in
Section 3.1(b)(ii) or 9.1 above. Notwithstanding the foregoing, in the event
of the separation from service of a non-employee Director (who is an
Optionee) by reason of death, disability or under conditions satisfactory to
both the Director and the Company, any nonqualified stock options held by
such Director (or its Permitted Assignee) under the Plan and not previously
exercised or expired shall be exercisable for a period not to exceed five (5)
years after the date of such separation, provided, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
set forth in Sections 3.1(b)(ii) or 9.1 above.
18.6. Death. In the event an Optionee (other than a non-employee
Director) dies while employed by the Company or any of its subsidiaries or
affiliates any Option(s) held by such Optionee (or its Permitted Assignee)
and not previously expired or exercised shall, to the extent exercisable on
the date of death, be exercisable by the estate of such Optionee or by any
person who acquired such Option by bequest or inheritance, or by the
Permitted Assignee at any time within one year after the death of the
Optionee, unless earlier terminated pursuant to its terms, provided, however,
that if the term of such Option would expire by its terms within six months
after the Optionee's death, the term of such Option shall be extended until
six months after the Optionee's death, provided further, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
set forth in Section 3.1(b)(ii) or 9.1 above.
18.7. Disability. In the event of the termination of employment
of an Optionee (other than a non-employee Director) due to total disability,
the Optionee, or his guardian or legal representative, or a Permitted
Assignee shall have the unqualified right to exercise any Option(s) which
have not been previously exercised or expired and which the Optionee was eli-
gible to exercise as of the first date of total disability (as determined by
the Committee), at any time within one (1) year after such termination,
unless earlier terminated pursuant to its terms, provided, however, that if
the term of such Option would expire by its terms within six months after
such termination, the term of such Option shall be extended until six months
after such termination, provided further, however, that in no instance may
the term of the Option, as so extended, exceed the maximum term set forth in
Section 3.1(b)(ii) or 9.1 above. The term "total disability" shall, for
purposes of this Plan, be defined in the same manner as such term is defined
in Section 22(e)(3) of the Code.
18.8. Amendment and Modification of the Plan. The Compensation
Committee of the Board of Directors of the Company may, from time to time,
alter, amend, suspend or terminate the Plan as it shall deem advisable,
subject to any requirement for shareholder approval imposed by applicable law
or any rule of any stock exchange or quotation system on which Shares are
listed or quoted; provided that such Compensation Committee may not amend the
Plan, without the approval of the Company's shareholders, to increase the
number of Shares that may be the subject of Options under the Plan (except
for adjustments pursuant to Section 9.9 hereof). In addition, no amendments
to, or termination of, the Plan shall in any way impair the rights of an
Optionee or a Participant (or a Permitted Assignee thereof) under any Award
previously granted without such Optionee's or Participant's consent.
18.9. Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, com-
bination, repurchase, or exchange of Shares or other securities, the issuance
of warrants or other rights to purchase Shares or other securities, or other
similar corporate transaction or event affects the Shares with respect to
which Options have been or may be issued under the Plan, such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in
such manner as the Committee may deem equitable, adjust any or all of (i) the
number and type of Shares that thereafter may be made the subject of Options,
(ii) the number and type of Shares subject to outstanding Options and share
appreciation rights, and (iii) the grant or exercise price with respect to
any Option, or, if deemed appropriate, make provision for a cash payment to
the holder of any outstanding Option; provided, in each case, that with
respect to "incentive stock options," no such adjustment shall be authorized
to the extent that such adjustment would cause such options to violate
Section 422(b) of the Code or any successor provision; and provided further,
that the number of Shares subject to any Option denominated in Shares shall
always be a whole number. In the event of any reorganization, merger,
consolidation, split-up, spin-off, or other business combination involving
the Company (collectively, a "Reorganization"), the Compensation Committee of
the Board of Directors or the Board of Directors may cause any Award
outstanding as of the effective date of the Reorganization to be canceled in
consideration of a cash payment or alternate Award made to the holder of such
canceled Award equal in value to the fair market value of such canceled
Award. The determination of fair market value shall be made by the
Compensation Committee of the Board of Directors or the Board of Directors,
as the case may be, in their sole discretion.
ARTICLE 19.
MISCELLANEOUS
19.1. Tax Withholding. All payments or distributions made
pursuant to the Plan to an Optionee or Participant (or a Permitted Assignee
thereof) shall be net of any applicable federal, state and local withholding
taxes arising as a result of the grant of any Award, exercise of an Option or
stock appreciation rights or any other event occurring pursuant to this Plan.
The Company shall have the right to withhold from such Optionee or
Participant (or a Permitted Assignee thereof) such withholding taxes as may
be required by law, or to otherwise require the Optionee or Participant (or a
Permitted Assignee thereof) to pay such withholding taxes. If the Optionee
or Participant (or a Permitted Assignee thereof) shall fail to make such tax
payments as are required, the Company or its subsidiaries or affiliates
shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to such Optionee or
Participant or to take such other action as may be necessary to satisfy such
withholding obligations. In satisfaction of the requirement to pay
withholding taxes, the Optionee or Participant(or Permitted Assignee) make a
written election (the "Tax Election"), which may be accepted or rejected in
the discretion of the Committee, to have withheld a portion of the Shares
then issuable to the Optionee (or Permitted Assignee) pursuant to the Plan,
having an aggregate Fair Market Value equal to the withholding taxes.
19.2. Right of Discharge Reserved. Nothing in the Plan nor the
grant of an Award hereunder shall confer upon any employee, Director or other
individual the right to continue in the employment or service of the Company
or any subsidiary or affiliate of the Company or affect any right that the
Company or any subsidiary or affiliate of the Company may have to terminate
the employment or service of (or to demote or to exclude from future Options
under the Plan) any such employee, Director or other individual at any time
for any reason. Except as specifically provided by the Committee, the
Company shall not be liable for the loss of existing or potential profit from
an Award granted in the event of termination of an employment or other
relationship even if the termination is in violation of an obligation of the
Company or any subsidiary or affiliate of the Company to the employee or
Director.
19.3. Nature of Payments. All Awards made pursuant to the Plan are
in consideration of services performed for the Company or any subsidiary or
affiliate of the Company. Any income or gain realized pursuant to Awards
under the Plan and any share appreciation rights constitutes a special
incentive payment to the Optionee, Participant or Holder and shall not be
taken into account, to the extent permissible under applicable law, as
compensation for purposes of any of the employee benefit plans of the Company
or any subsidiary or affiliate of the Company except as may be determined by
the Committee or by the Directors or directors of the applicable subsidiary
or affiliate of the Company.
19.4. Severability. If any provision of the Plan shall be held
unlawful or otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of the Plan or part thereof, each of which remain in full force and
effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or unen-
forceable, such unlawfulness, invalidity or unenforceability shall not
prevent any other payment or benefit from being made or provided under the
Plan, and if the making of any payment in full or the provision of any other
benefit required under the Plan in full would be unlawful or otherwise
invalid or unenforceable, then such unlawfulness, invalidity or unenforce-
ability shall not prevent such payment or benefit from being made or provided
in part, to the extent that it would not be unlawful, invalid or
unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.
19.5. Gender and Number. In order to shorten and to improve the
understandability of the Plan document by eliminating the repeated usage of
such phrases as "his or her" and any masculine terminology herein shall also
include the feminine, and the definition of any term herein in the singular
shall also include the plural except when otherwise indicated by the context.
19.6. Governing Law. The Plan and all determinations made and
actions taken thereunder, to the extent not otherwise governed by the Code or
the laws of the United States, shall be governed by the laws of the State of
New York and construed accordingly.
19.7. Termination of Plan. The Plan shall be effective on the date
of the approval of the Plan by the holders of a majority of the shares
entitled to vote thereon, provided such approval is obtained within 12 months
after the date of adoption of the Plan by the Board of Directors. Awards may
be granted under the Plan at any time and from time to time on or prior to
March 10,2008, on which date the Plan will expire except as to Awards and
related share appreciation rights then outstanding under the Plan. Such
outstanding Awards and stock appreciation rights shall remain in effect until
they have been exercised or terminated, or have expired.
19.8. Captions. The captions in this Plan are for convenience of
reference only, and are not intended to narrow, limit or affect the substance
or interpretation of the provisions contained herein.
Exhibit 21.1
Subsidiaries of the Registrant
The following is a list of subsidiaries of the registrant as of December 31,
1998:
o Wellsford Capital (100% direct)
o Wellsford Capital Properties, L.L.C. (100% indirect)
o VPT Real Estate Corp. I (100% indirect)
o Wellsford Finance Inc. (100% indirect)
o Wellsford Broomfield, L..L.C. (100% indirect)
o WRL Holdings, L.L.C. ( 51.1% indirect)
o WRL Management, L.L.C. (33.4% indirect)
o WRL Finance, L.L.C. (50.9% indirect)
o Wellsford CRC Holding Corp. (100% direct)
o Creamer Realty Consultants (49% indirect)
o Creamer Vitale Wellsford, L.L.C. (49% indirect)
o Wellsford Sonterra L.L.C. (100% direct)
o Wellsford Park Highlands Corp. (80% direct)
o Park at Highlands L.L.C (80% indirect)
o Red Canyon at Palomino Park L.L.C (80% indirect)
o Silver Mesa at Palomino Park, L.L.C. (79.2% indirect)
o Palomino Park Telecom L.L.C. (100% direct)
o Wellsford Commercial Properties Trust (99.9% direct)
o Wellsford/Whitehall Properties II, L.L.C. (47.7% indirect)
o Wellsford/Whitehall Holdings, L.L.C. (47.7% indirect)
o 1275 K Street Holding, L.L.C. (47.7% indirect)
o WEL/WH Convention Managers, L.L.C. (47.7% indirect)
o Wells Avenue Holdings, L.L.C. (47.7% indirect)
o WASH Manager, L.L.C. (47.7% indirect)
o Wells Avenue Senior Holdings, L.L.C. (47.7% indirect)
o Wellsford Ventures, Inc. (100% direct)
o North American Medical Research Corp. (100% direct)
o VPT Real Estate Corp. II (100% indirect)
o VPT Real Estate Corp. III (100% indirect)
o VPT Real Estate Corp. IV (100% indirect)
o VPT Real Estate Corp. V (100% indirect)
o MRT Santa Monica, Inc. (100% indirect)
o Bay City Holdings, L.P. (100% indirect)
o MRT Creekside, Inc. (100% indirect)
o MRT West, Inc. (100% indirect)
o MRT Newark, Inc. (100% indirect)
o Newark C&C Associates, L.P. (90% indirect)
o 150 Rittenhouse Circle, Inc. (100% indirect)
o Keystone Venture I (70% indirect)
o TPIP II (75% indirect)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This Schedule contains summary financial information extracted from
the consolidated balance sheets and consolidated statements of operation and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 18,129,887
<SECURITIES> 0
<RECEIVABLES> 124,706,499
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,165,376
<PP&E> 153,029,835
<DEPRECIATION> (2,707,390)
<TOTAL-ASSETS> 384,970,658
<CURRENT-LIABILITIES> 12,788,324
<BONDS> 137,176,790
<COMMON> 207,504
0
0
<OTHER-SE> 231,417,319
<TOTAL-LIABILITY-AND-EQUITY> 384,970,658
<SALES> 0
<TOTAL-REVENUES> 29,677,423
<CGS> 0
<TOTAL-COSTS> 7,643,615
<OTHER-EXPENSES> 5,062,895
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,599,309
<INCOME-PRETAX> 12,294,054
<INCOME-TAX> 2,850,298
<INCOME-CONTINUING> 9,443,756
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,443,756
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.46
</TABLE>
