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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)*
WELLSFORD REAL PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
950240101
-------------------------------------------------------------------------
(CUSIP Number)
David J. Greenwald, Esq.
Goldman, Sachs & Co.
85 Broad Street, New York, New York 10004
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 28, 1999
-------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box 9.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedules, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 2 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
W/W GROUP HOLDINGS, L.L.C.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 3 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 4 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WH ADVISORS, L.L.C. XI
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 5 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WHWEL REAL ESTATE LIMITED PARTNERSHIP
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 6 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WHATR GEN-PAR, INC.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 7 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 8 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WH ADVISORS, L.P. VII
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 9 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WH ADVISORS, INC. VII
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 10 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP V
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 11 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WH ADVISORS, L.P. V
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 12 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WH ADVISORS, INC. V
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,256,196.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,256,196.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,256,196.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 13 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
GOLDMAN, SACHS & CO.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [x]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,257,446.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,257,446.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,257,446.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN/BD/IA
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------- ---------------------------------
CUSIP NO. 950240101 PAGE 14 OF 39 PAGES
- ------------------- ---------------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
THE GOLDMAN SACHS GROUP, INC.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [_]
(b) [_]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,257,446.9
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,257,446.9
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,257,446.9
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
HC/CO
- -------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 950240101 PAGE 15 OF 39 PAGES
WHWEL Real Estate Limited Partnership, WHATR Gen-Par, Inc., Whitehall
Street Real Estate Limited Partnership VII, WH Advisors, L.P. VII, WH Advisors,
Inc. VII, Whitehall Street Real Estate Limited Partnership V, WH Advisors, L.P.
V, WH Advisors, Inc. V, W/W Group Holdings, L.L.C., Whitehall Street Real Estate
Limited Partnership XI, WH Advisors, L.L.C. XI , Goldman, Sachs & Co. and The
Goldman Sachs Group, Inc. hereby amend the report on Schedule 13D, dated August
28, 1997, as amended by Amendment No. 1 thereto dated August 28, 1997, and as
further amended by Amendment No. 2 thereto dated May 14, 1998 (as so amended,
the "Schedule 13D"), filed in respect of shares of common stock, par value $0.01
per share, of Wellsford Real Properties, Inc., a Maryland corporation.
Capitalized terms used but not defined herein shall have the meaning attributed
to such terms in Schedule 13D.
Item 1. Security and Issuer.
-------------------
Item 1 of the Schedule 13D is hereby amended by replacing the second
sentence therein with the following sentence:
The principal executive offices of the Company is 535 Madison Avenue,
26th Floor, New York, New York 10022.
Item 2. Identity and Background.
-----------------------
Item 2 of the Schedule 13D is hereby amended and restated in its
entirety with the following:
This statement is being filed by WHWEL Real Estate Limited Partnership
("WHWEL"), WHATR Gen-Par, Inc. ("WHATR Gen-Par"), Whitehall Street Real Estate
Limited Partnership VII ("Whitehall VII"), WH Advisors, L.P. VII ("WH Advisors,
L.P. VII"), WH Advisors, Inc. VII ("WH Advisors, Inc. VII"), Whitehall Street
Real Estate Limited Partnership V ("Whitehall V"), WH Advisors, L.P. V ("WH
Advisors, L.P. V"), WH Advisors, Inc. V ("WH Advisors, Inc. V"), W/W Group
Holdings, L.L.C. ("Holdings"), Whitehall Street Real Estate Limited Partnership
XI ("Whitehall XI"), WH Advisors, L.L.C. XI ("WH Advisors, L.L.C. XI"), Goldman,
Sachs & Co. ("GS&Co.") and The Goldman Sachs Group, Inc. ("GS Group"; and
collectively with WHWEL, WHATR Gen-Par, Whitehall VII, WH Advisors, L.P. VII, WH
Advisors, Inc. VII, Whitehall V, WH Advisors, L.P. V, WH Advisors, Inc. V,
Holdings, Whitehall XI, WH Advisors, L.L.C. XI and GS&Co. the "Reporting
Persons").*
- --------
* Neither the present filing nor anything contained herein shall be construed
as an admission that any Reporting Person constitutes a "person" for any
purpose other than Section 13(d) of the
(continued)
<PAGE>
CUSIP NO. 950240101 PAGE 16 OF 39 PAGES
WHWEL is a Delaware limited partnership that engages in the business of
investing in real estate assets indirectly through its membership interest in
Wellsford/Whitehall Group, L.L.C., a Delaware limited liability company
("Wellsford/Whitehall Group") and through its membership interest in Holdings.
WHATR Gen-Par, a Delaware corporation, acts as the sole general partner of
WHWEL. WHATR Gen-Par is a wholly-owned subsidiary of Whitehall VII and does not
engage in any business other than in connection with its role as a general
partner of WHWEL.
Whitehall VII is a Delaware limited partnership that engages in the
business of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.P VII., a Delaware limited partnership, acts as the
sole general partner of Whitehall VII; WH Advisors, Inc. VII, a Delaware
corporation, acts as the sole general partner of WH Advisors, L.P. VII; and
neither WH Advisors, L.P. VII nor WH Advisors, Inc. VII engages in any business
other than in connection with its role as a general partner of Whitehall VII and
WH Advisors, L.P. VII, respectively. WH Advisors, Inc. VII is indirectly
wholly-owned by GS Group.
Whitehall V is a Delaware limited partnership that engages in the
business of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.P. V, a Delaware limited partnership, acts as the
sole general partner of Whitehall V; WH Advisors, Inc. V, a Delaware
corporation, acts as the sole general partner of WH Advisors, L.P. V; and
neither WH Advisors, L.P. V nor WH Advisors, Inc. V engages in any business
other than in connection with its role as a general partner of Whitehall V and
WH Advisors, L.P. V, respectively. WH Advisors, Inc. V is indirectly
wholly-owned by GS Group.
Holdings is a Delaware limited liability company that engages in the
business of investing in real estate assets indirectly through its membership
interest in Wellsford/Whitehall Group. Whitehall XI and WHWEL act as the
managing members of Holdings.
Whitehall XI is a Delaware limited partnership that engages in the
business of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.L.C. XI, a Delaware limited partnership, acts as the
sole general partner of Whitehall XI and WH Advisors, L.L.C. XI does not engage
in any business other than in connection with its role as a general partner of
Whitehall XI. WH Advisors, L.L.C. XI is indirectly wholly-owned by GS Group.
GS&Co., a New York limited partnership, is an investment banking firm
and a member of the New York Stock Exchange, Inc. and other national exchanges.
GS&Co. is an indirect wholly-owned subsidiary of GS Group.
- --------
*(...continued)
Securities Exchange Act of 1934 or that such persons constitute a "group"
for any purpose.
<PAGE>
CUSIP NO. 950240101 PAGE 17 OF 39 PAGES
GS Group is a Delaware corporation and a holding company that (directly
or indirectly through subsidiaries or affiliated companies or both) is a leading
investment banking organization and is a successor in interest to The Goldman
Sachs Group, L.P., which was merged into GS Group on May 7, 1999.
As of May 28, 1999, GS&Co. and GS Group may be deemed to indirectly own
beneficially 4,256,196.9 shares of Common Stock through Holdings. In addition,
as of May 28, 1999, GS&Co., and GS Group indirectly, may be deemed to own
beneficially 1,250 shares of Common Stock held in client accounts with respect
to which GS&Co. or employees of GS&Co. have voting or investment discretion, or
both ("Managed Accounts"). GS&Co. and GS Group each disclaims beneficial
ownership of Common Stock (i) owned by WHWEL, Holdings, Whitehall VII, Whitehall
V and Whitehall XI to the extent of (a) partnership interests in WHWEL, (b)
membership interests in Holdings, (c) partnership interests in Whitehall VII,
(c) partnership interests in Whitehall V and (d) partnership interests in
Whitehall XI, in each case, held by persons other than GS&Co., GS Group or their
affiliates and (ii) held in Managed Accounts.
The names, business addresses, and present principal occupation or
employment of each executive officer and director of WHATR Gen-Par are listed on
Schedule 2A hereto and are incorporated herein by reference. The names, business
addresses, and present principal occupation or employment of each executive
officer and director of WH Advisors, Inc. VII are listed on Schedule 2B hereto
and are incorporated herein by reference. The names, business addresses, and
present principal occupation or employment of each executive officer and
director of WH Advisors, Inc. V are listed on Schedule 2C hereto and are
incorporated herein by reference. The names, business addresses, and present
principal occupation or employment of each executive officer and director of WH
Advisors, L.L.C. XI are listed on Schedule 2D hereto and are incorporated herein
by reference. The names, business addresses, and present principal occupation or
employment of each director of GS Group are set forth in Schedule 2E hereto and
are incorporated herein by reference.
During the last five years, none of the Reporting Persons, or, to the
knowledge of each of the Reporting Persons, any of the persons listed on
Schedules 2A, 2B, 2C, 2D and 2E hereto, (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws, or finding
any violation with respect to such laws.
This Item 2 is qualified in its entirety by reference to Schedule 2A,
Schedule 2B, Schedule 2C, Schedule 2D and Schedule 2E which are attached hereto
and incorporated into this Item by reference.
<PAGE>
CUSIP NO. 950240101 PAGE 18 OF 39 PAGES
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Item 3 of the Schedule 13D is hereby amended by adding the following
paragraphs after the fourth paragraph therein:
In connection with the execution and delivery of the Limited Liability
Company Operating Agreement of Wellsford/Whitehall Group, dated as of May
28, 1999 (the "Wellsford/Whitehall Group LLC Agreement"), the following
transactions took place: (i) WHWEL contributed to Holdings its right, title
and interest in 5,000,000 warrants (the "Old Warrants") issued under the
Warrant Agreement, dated as of August 28, 1997, between the Company and
United States Trust Company of New York (the "Warrant Agent"), as amended
by Amendment No. 1 to Warrant Agreement dated as of July 16, 1998, and as
further amended by Amendment No. 2 to Warrant Agreement dated as of May 28,
1999 (as so amended, the "Warrant Agreement"), and (ii) Holdings acquired
150,000 warrants (the "New Warrants"; and collectively with the Old
Warrants, the "Warrants") issued under the Warrant Agreement, dated as of
May 28, 1999, between the Company and the Warrant Agent (the "New Warrant
Agreement"; and together with the Warrant Agreement, the "Warrant
Agreements").
The exercise price of each Warrant is, at the sole election of the
holder, either (i) a number of membership units of Wellsford/Whitehall
Group equal to the quotient of (x) $10.00 divided by (y) the "Deemed Value
Per Membership Unit" (as defined in the Wellsford/Whitehall Group LLC
Agreement) or (ii) $10.00 in cash; provided that holders of Warrants may
not elect to use membership units of Wellsford/Whitehall Group as the
exercise price prior to August 28, 1999. When multiple Warrants are
exercised, the exercise price may consist of cash, membership units of
Wellsford/Whitehall Group or any combination thereof.
Upon exercise, the holder of a Warrant will receive, at the sole election
of the Company, either (i) 0.826446 shares of Common Stock (as adjusted
pursuant to the terms of the Warrant Agreements, the "Shares Amount") or
(ii) cash in an amount equal to the product of the closing price of the
Common Stock as of the date of exercise multiplied by the Shares Amount
(the "Cash Amount").
None of the persons listed on Schedules 2A, 2B, 2C, 2D and 2E hereto
has contributed any funds or other consideration towards the purchase of
the securities of the Company.
As of May 28,1999 GS&Co. held 1,250 shares of Common Stock for Managed
Accounts. GS&Co. purchased these shares of Common Stock in the ordinary
course of its business. All such transactions that were effected during the
past 60 days are set forth on Schedule 5A hereto and were effected in the
over-the-counter market or through the American Stock Exchange. The
aggregate consideration for the purchases listed on Schedule 5A was
$5,312.50.
<PAGE>
CUSIP NO. 950240101 PAGE 19 OF 39 PAGES
Item 4. Purpose of the Transaction.
--------------------------
Item 4 of the Schedule 13D is hereby amended by adding the following
paragraphs at the end thereof:
Holdings acquired the beneficial right, title and interest to the
Warrants as part of the formation of Wellsford/Whitehall Group. Holdings is
holding the Warrants for investment purposes. As of the date of this
statement, none of the Reporting Persons has any plan or proposal which
relates to or would result in any of the actions set forth in parts (a)
through (j) of Item 4 of Schedule 13D, other than in connection with the
registration rights granted in the Registration Rights Agreement (as
defined in Item 6 below), the Letter Agreements (as defined in Item 6
below) and the rights granted to the members of Wellsford/Whitehall Group
to sell certain assets of Wellsford/Whitehall Group under certain
circumstances as provided in the Wellsford/Whitehall Group LLC Agreement.
The foregoing references to the Registration Rights Agreement, the
Letter Agreements and the Wellsford/Whitehall Group LLC Agreement are
subject to, and qualified in their entirety by reference to, the
Registration Rights Agreement, the Letter Agreements and the
Wellsford/Whitehall Group LLC Agreement, which are filed as exhibits to
this Schedule 13D.
Each Reporting Person expects to evaluate on an ongoing basis the
Company's financial condition, business operations and prospects, the
status of any business combination involving the Company, the market price
of the Common Stock, conditions in the securities markets generally,
general economic and industry conditions and other factors. Accordingly,
each Reporting Person reserves the right to change its plans and intentions
at any time, as it deems appropriate. In particular, each Reporting Person
may at any time and from time to time acquire additional shares of Common
Stock or other securities convertible or exchangeable for Common Stock in
public or private transactions; dispose of shares of Common Stock or other
securities in public or private transactions; and/or enter into privately
negotiated derivative transactions with institutional counterparties to
hedge the market risk of some or all of its positions in the Common Stock
or other securities. Any such transactions may be effected at any time and
from time to time. To the knowledge of each Reporting Person, each of the
persons listed on Schedules 2A, 2B, 2C, 2D and 2E hereto may make the same
evaluation and may reserve the same rights.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Item 5 of the Schedule 13D is hereby amended and restated in its
entirety as follows:
<PAGE>
CUSIP NO. 950240101 PAGE 20 OF 39 PAGES
1. The Warrants are exercisable for 4,256,196.9 shares of Common Stock,
representing approximately 17.3% of the Common Stock reported to be outstanding
as of May 14, 1999 (as reported in the Company's Form 10-Q for the quarter ended
March 31, 1999 (the "Company's 10Q")). As of May 28, 1999, Holdings beneficially
owned such shares of Common Stock.
2. As of May 28, 1999, each of WHWEL and Whitehall XI, as the managing
members of Holdings, may be deemed to beneficially own 4,256,196.9 shares of
Common Stock, which are beneficially owned by Holdings as described above,
representing approximately 17.3% of the shares of Common Stock reported to be
outstanding as of May 14, 1999 (as reported in the Company's 10Q).
3. As of May 28, 1999, WH Advisors, L.L.C. XI, as the general partner
of Whitehall XI, may be deemed to beneficially own 4,256,196.9 shares of Common
Stock, which are beneficially owned by Holdings as described above, representing
approximately 17.3% of the shares of Common Stock reported to be outstanding as
of May 14, 1999 (as reported in the Company's 10Q).
4. As of May 28, 1999, WHATR Gen-Par, as the general partner of WHWEL,
may be deemed to beneficially own 4,256,196.9 shares of Common Stock, which are
beneficially owned by Holdings as described above, representing approximately
17.3% of the shares of Common Stock reported to be outstanding as of May 14,
1999 (as reported in the Company's 10Q).
5. As of May 28, 1999, Whitehall VII, as the direct beneficial owner of
all of the capital stock of WHATR Gen-Par, may be deemed to beneficially own
4,256,196.9 shares of Common Stock, which are beneficially owned by Holdings as
described above, representing approximately 17.3% of the shares of Common Stock
reported to be outstanding as of May 14, 1999 (as reported in the Company's
10Q).
6. As of May 28, 1999, WH Advisors, L.P. VII, as the general partner of
Whitehall VII, may be deemed to beneficially own 4,256,196.9 shares of Common
Stock, which are beneficially owned by Holdings as described above, representing
approximately 17.3% of the shares of Common Stock reported to be outstanding as
of May 14, 1999 (as reported in the Company's 10Q).
7. As of May 28, 1999, WH Advisors, Inc. VII, as the general partner of
WH Advisors, L.P. VII, may be deemed to beneficially own 4,256,196.9 shares of
Common Stock, which are beneficially owned by Holdings as described above,
representing approximately 17.3% of the shares of Common Stock reported to be
outstanding as of May 14, 1999 (as reported in the Company's 10Q).
8. As of May 28, 1999, Whitehall V, as a limited partner of WHWEL, may
be deemed to beneficially own 4,256,196.9 shares of Common Stock, which are
<PAGE>
CUSIP NO. 950240101 PAGE 21 OF 39 PAGES
beneficially owned by Holdings as described above, representing approximately
17.3% of the shares of Common Stock reported to be outstanding as of May 14,
1999 (as reported in the Company's 10Q).
9. As of May 28, 1999, WH Advisors, L.P. V, as the general partner of
Whitehall V, may be deemed to beneficially own 4,256,196.9 shares of Common
Stock, which are beneficially owned by Holdings as described above, representing
approximately 17.3% of the shares of Common Stock reported to be outstanding as
of May 14, 1999 (as reported in the Company's 10Q).
10. As of May 28, 1999, WH Advisors, Inc. V, as the general partner of
WH Advisors, L.P. V, may be deemed to beneficially own 4,256,196.9 shares of
Common Stock, which are beneficially owned by Holdings as described above,
representing approximately 17.3% of the shares of Common Stock reported to be
outstanding as of May 14, 1999 (as reported in the Company's 10Q).
11. As of May 28, 1999, GS&Co., as the investment advisor to Whitehall
VII, Whitehall V and Whitehall XI, may be deemed to beneficially own 4,257,446.9
shares of Common Stock, including (i) the 4,256,196.9 shares of Common Stock
beneficially owned by Holdings as described above, and (ii) 1,250 shares of
Common Stock held in Managed Accounts, representing in the aggregate
approximately 17.3% of the shares of Common Stock reported to be outstanding as
of May 14, 1999 (as reported in the Company's 10Q).
12. As of May 28, 1999, GS Group, (i) as the direct beneficial owner of
(a) all of the capital stock of WH Advisors, Inc. VII, (b) all of the capital
stock of WH Advisors, Inc. V and (c) the membership interests of WH Advisors,
L.L.C. XI and (ii) as a general partner of GS&Co., may be deemed to beneficially
own 4,257,446.9 shares of Common Stock, including (i) the 4,256,196.9 shares of
Common Stock beneficially owned by Holdings as described above, and (ii) 1,250
shares of Common Stock held in Managed Accounts, representing in the aggregate
approximately 17.3% of the shares of Common Stock reported to be outstanding as
of May 14, 1999 (as reported in the Company's 10Q).
13. GS Group and GS&Co. disclaim beneficial ownership of (i) the shares
of Common Stock beneficially owned by Holdings, WHWEL, Whitehall VII, Whitehall
V and Whitehall XI to the extent of (a) membership interests in Holdings, (b)
partnership interests in WHWEL, (c) partnership interests in Whitehall VII, (d)
partnership interests in Whitehall V and (e) partnership interests in Whitehall
XI, in each case, held by persons other than GS Group, GS&Co. or their
affiliates and (ii) the shares of Common Stock held in Managed Accounts.
14. None of the Reporting Persons beneficially owns any of the Common
Stock as of May 28, 1999 other than as set forth herein.
<PAGE>
CUSIP NO. 950240101 PAGE 22 OF 39 PAGES
(b) Each Reporting Person shares the power to vote or direct the vote
and to dispose or direct the disposition of shares of Common Stock
beneficially owned by such Reporting Person as indicated in the second
through fourteenth pages of this filing.
(c) Schedule 5A sets forth transactions in the Common Stock which have
been effected during the period from March 29, 1999 through May 28, 1999,
all of which were effected in the ordinary course of business of CS&Co. The
transactions in the Common Stock described in Schedule 5A, were effectedon
the American Stock Exchange.
Except as set forth on Schedule 5A, no transactions in the Common Stock
were effected by Reporting Persons, or, to the knowledge of any of the
Reporting Persons, any of the persons listed on Schedules 2A, 2B, 2C, 2D
and 2E hereto, during the period from March 29, 1999 through May 28, 1999.
(d) Except for clients of GS&Co. who may have the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the
sale of, any shares of Common Stock held in Managed Accounts, no other
person is known by any Reporting Person to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, any shares of Common Stock beneficially owned by any Reporting
Person.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
----------------------------------------------------------
Item 6 of the Schedule 13D is hereby amended by adding the following
paragraphs after the eighth paragraph therein:
Each Old Warrant is exercisable at any time on or prior to August 28,
2002 for, at the sole election of the Company, either (i) the Shares Amount
or (ii) the Cash Amount. The exercise price of each Old Warrant is, at the
sole election of the holder, either (i) a number of membership units of
Wellsford/Whitehall Group equal to the quotient of (x) $10.00 divided by
(y) the "Deemed Value Per Membership Unit" (as defined in the
Wellsford/Whitehall Group LLC Agreement) or (ii) $10.00 in cash; provided
that holders of the Old Warrants may not elect to use membership units of
Wellsford/Whitehall Group as the exercise price prior to August 28, 1999.
When multiple Old Warrants are exercised, the exercise price may consist of
cash, membership units of Wellsford/Whitehall Group or any combination
thereof.
Each New Warrant is exercisable at any time on or prior to May 28, 2004
for, at the sole election of the Company, either (i) the Shares Amount or
(ii) the Cash Amount. The exercise price of each New Warrant is, at the
sole election of the holder, either (i) a number of membership units of
Wellsford/Whitehall Group equal to the quotient of (x) $10.00 divided by
(y) the "Deemed Value Per Membership Unit" (as defined in the
Wellsford/Whitehall Group LLC Agreement) or (ii) $10.00 in cash; provided
that holders of the New Warrants may not elect to use membership units of
Wellsford/Whitehall Group as the exercise price prior to August 28, 1999.
When multiple New Warrants are exercised, the exercise price may consist of
cash, membership units of Wellsford/Whitehall Group or any combination
thereof.
<PAGE>
CUSIP NO. 950240101 PAGE 23 OF 39 PAGES
The Shares Amount and the Cash Amount are subject to adjustments upon
(i) the payment of dividends payable in shares of Common Stock; (ii) the
payment of a dividend or other distribution or issuance to all holders of
Common Stock of rights or warrants to subscribe for or purchase shares of
Common Stock at less than the current market price, (iii) subdivisions and
combinations of Common Stock, (iv) the dividend or distribution of all
holders of Common Stock of debt or equity securities, cash or assets (other
than as described in (ii) above and other than in the case of certain
excluded dividends and distributions), (v) a tender or exchange offer by
the Company for Common Stock at a price in excess of the current market
price therefor and (vi) the consummation by the Company of any
reclassification, consolidation, merger or sale or exchange of all or
substantially all of the Company's assets or other similar transaction.
The foregoing description of the Warrants and the Warrant Agreements is
subject to, and qualified in its entirety by reference to, the Warrant
Agreements, which are filed as exhibits to this Schedule 13D.
The Registration Rights Agreement, dated as of May 28, 1999, between
the Company and Holdings (the "Registration Rights Agreement"), grants
Holdings demand registration rights to cause the Company to register under
the Securities Act of 1933, as amended, the Warrants and shares of Common
Stock into which the Warrants are exercisable. The holders of Warrants and
the Common Stock into which the Warrants are exercisable will be permitted
to make two demands for registration of such securities and up to four
demands for registration per year for registration of such securities
pursuant to an existing shelf registration statement. The Registration
Rights Agreement provides that the costs and expenses of such registration,
including the fees and expenses of one counsel for the requesting holders
and up to a 5% underwriting discount or commission, will be paid by the
Company. In addition, the Company has granted the holders of the Warrants
and the shares of Common Stock into which the Warrants are exercisable the
right to be included in any registration of securities effected by the
Company, subject to possible proration. In connection with any such
registration, the Registration Rights Agreement provides that the Company
will indemnify and hold harmless, or will contribute to certain losses
incurred by, the requesting holders.
The foregoing description of the Registration Rights Agreement is
subject to, and qualified in its entirety by reference to, the Registration
Rights Agreement, which is filed as an exhibit to this Schedule 13D.
WHWEL and the Company are parties to a letter agreement, dated May 28,
1999, pursuant to which WHWEL will be entitled, under certain
circumstances, to exchange a portion of its membership units of
Wellsford/Whitehall Group for shares of Common Stock. In addition, WHWEL,
Holdings, WXI/WWG Realty, L.L.C. ("WWG Realty"), the Company and Wellsford
Commercial Properties Trust ("WCPT") are parties to a letter agreement,
dated May 28, 1999, pursuant to which the Company and WCPT have a right of
first offer to
<PAGE>
CUSIP NO. 950240101 PAGE 24 OF 39 PAGES
purchase, under certain circumstances, any Common Stock or shares of
beneficial interest of WCPT that WHWEL, Holdings or WWG Realty intends to
sell.
The foregoing description of the letter agreements (the "Letter
Agreements") is subject to, and qualified in its entirety by reference to,
the Letter Agreements, which are filed as exhibits to this Schedule 13D.
Except as described in this Schedule 13D, none of the Reporting Persons
or, to the knowledge of the Reporting Persons, any of the persons listed on
Schedule 2A, Schedule 2B, Schedule 2C, Schedule 2D and Schedule 2E hereto
is a party to any contract, arrangement, understanding or relationship with
respect to any securities of the Company.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Item 7 of the Schedule 13D is hereby amended and restated in its
entirety as follows:
The following exhibits are filed with this statement:
- -------------------------------------------------------------------------------
Exhibit No. Exhibit Page
- -------------------------------------------------------------------------------
EX-1 Warrant Agreement between Wellsford Real Properties,
Inc. and United States Trust Company of New York, as
warrant agent, dated as of August 28, 1997, as
amended by Amendment No. 1 to Warrant Agreement
dated as of July 16, 1998, as further amended by
Amendment No. 2 to Warrant Agreement dated as of
May 28, 1999.
- -------------------------------------------------------------------------------
EX-2 Warrant Agreement between Wellsford Real Properties,
Inc. and United States Trust Company of New York, as
warrant agent, dated as of May 28, 1999.
- -------------------------------------------------------------------------------
EX-3 Registration Rights Agreement between Wellsford Real
Properties, Inc. and W/W Group Holdings, L.L.C.,
dated as of May 28, 1999.
- -------------------------------------------------------------------------------
EX-4 Limited Liability Company Operating Agreement of
Wellsford/Whitehall Group, L.L.C., dated as of
May 28, 1999.
- -------------------------------------------------------------------------------
EX-5 Letter Agreement between WHWEL Real Estate Limited
Partnership and Wellsford Real Properties, Inc.,
dated May 28, 1999.
- -------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 950240101 PAGE 25 OF 39 PAGES
- -------------------------------------------------------------------------------
EX-6 Letter Agreement among WHWEL Real Estate Limited
Partnership, W/W Group Holdings, L.L.C., WXI/WWG
Realty, L.L.C., Wellsford Real Properties, Inc. and
Wellsford Commercial Properties Trust, dated May 28,
1999.
- -------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 950240101 PAGE 26 OF 39 PAGES
SIGNATURE
Each Reporting Person certifies that, after reasonable inquiry and to
the best of such Reporting Person's knowledge and belief, the information set
forth in this Statement is true, complete and correct.
Dated: June 7, 1999 WHWEL REAL ESTATE LIMITED
PARTNERSHIP
By: WHATR Gen-Par, Inc.
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WHATR GEN-PAR, INC.
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII
By: WH Advisors, Inc. VII
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WH ADVISORS, L.P. VII
By: WH Advisors, Inc. VII
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
<PAGE>
CUSIP NO. 950240101 PAGE 27 OF 39 PAGES
Dated: June 7, 1999 WH ADVISORS, INC. VII
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP V
By: WH Advisors, L.P. V
By: WH Advisors, Inc. V
By: /s/ Elizabeth M. Burban
-------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WH ADVISORS, L.P. V
By: WH Advisors, Inc. V
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WH ADVISORS, INC. V
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 W/W GROUP HOLDINGS, L.L.C.
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
<PAGE>
CUSIP NO. 950240101 PAGE 28 OF 39 PAGES
Dated: June 7, 1999 WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP XI
By: WH Advisors, L.L.C. XI
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 WH ADVISORS, L.L.C., XI
By: /s/ Elizabeth M. Burban
--------------------------
Name: Elizabeth M. Burban
Title: Vice President
Dated: June 7, 1999 GOLDMAN, SACHS & CO.
By: /s/ Roger S. Begelman
--------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
Dated: June 7, 1999 THE GOLDMAN SACHS GROUP, INC.
By: /s/ Roger S. Begelman
--------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
<PAGE>
CUSIP NO. 950240101 PAGE 29 OF 39 PAGES
SCHEDULE 2A
The name, position and present principal occupation of each director
and executive officer of WHATR Gen-Par, Inc., which is the sole general partner
of WHWEL Real Estate Limited Partnership, are set forth below.
The business address of all the executive officers and managers listed
below except G. Douglas Gunn, Todd A. Williams, Angie D. Madison, Larry Goodman
and Elizabeth A. O'Brien is 85 Broad Street, New York, New York 10004. The
business address of G. Douglas Gunn, Todd A. Williams, Angie D. Madison and
Larry Goodman is 100 Crescent Court, Suite 1000, Dallas, Texas 75201. The
business address of Elizabeth A. O'Brien is 3 Garden Road, Central, Hong Kong.
Except for Brahm S. Cramer, who is a Canadian citizen, all executive
officers and managers listed below are United States citizens.
<TABLE>
<CAPTION>
Name Title Present Principal Occupation
- ---- ----- ----------------------------
<S> <C> <C>
Rothenberg, Stuart M. Director/Vice President Managing Director of
Goldman, Sachs & Co.
Neidich, Daniel M. President Managing Director of
Goldman, Sachs & Co.
Lahey, Brian J. Vice President/Assistant Vice President of Goldman,
Treasurer Sachs & Co.
Gunn, G. Douglas Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Madison, Angie Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Williams, Todd A. Vice President/Assistant Managing Director of
Secretary/Assistant Treasurer Goldman, Sachs & Co.
Siskind, Edward M. Vice President Managing Director of
Goldman, Sachs & Co.
Klingher, Michael K. Vice President Managing Director of
Goldman, Sachs & Co.
Kava, Alan S. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
O'Brien, Elizabeth A. Vice President/Assistant Vice President of Goldman,
Secretary Sachs (Asia) LLC
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 30 OF 39 PAGES
<TABLE>
<CAPTION>
Name Title Present Principal Occupation
- ---- ----- ----------------------------
<S> <C> <C>
Rosenberg, Ralph F. Vice President/Assistant Managing Director of
Secretary Goldman, Sachs & Co.
Weil, David M. Vice President Managing Director of
Goldman, Sachs & Co.
Naughton, Kevin D. Vice President/Secretary/ Vice President of Goldman,
Treasurer Sachs & Co.
Feldman, Steven M. Vice President Managing Director of
Goldman, Sachs & Co.
Sack, Susan L. Vice President Vice President of Goldman,
Sachs & Co.
Cramer, Brahm S. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Lauer, Kate Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Burban, Elizabeth M. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Goodwin, Larry J. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 31 OF 39 PAGES
SCHEDULE 2B
The name, position and present principal occupation of each director
and executive officer of WH Advisors, Inc. VII, which is the sole general
partner of WH Advisors, L.P. VII, the sole general partner of Whitehall Street
Real Estate Limited Partnership VII, are set forth below.
The business address of all the executive officers and managers listed
below except G. Douglas Gunn, Todd A. Williams, Angie D. Madison, Elizabeth A.
O'Brien, Barry S. Volpert and Jean De Pourtales is 85 Broad Street, New York,
New York 10004. The business address of G. Douglas Gunn, Todd A. Williams and
Angie D. Madison is 100 Crescent Court, Suite 1000, Dallas, Texas 75201. The
business address of Elizabeth A. O'Brien is 3 Garden Road, Central, Hong Kong.
The business adress of Barry S. Volpert and Jean De Pourtales is 133 Fleet
Street, London EC4A 2BB, England.
Except for Brahm S. Cramer, who is a Canadian citizen, and Jean De
Pourtales, who is a citizen of the United Kingdom, all executive officers and
managers listed below are United States citizens.
<TABLE>
<CAPTION>
Name Title Present Principal Occupation
- ---- ----- ----------------------------
<S> <C> <C>
Rothenberg, Stuart M. Director/Vice President Managing Director of Goldman,
Sachs & Co.
Neidich, Daniel M. President Managing Director of Goldman,
Sachs & Co.
Volpert, Barry S. Vice President/Assistant Managing Director
Secretary Goldman Sachs International
Lahey, Brian J. Vice President/Assistant Vice President of Goldman,
Treasurer Sachs & Co.
Kava, Alan S. Vice President Vice President of Goldman,
Sachs & Co.
Feldman, Steven M. Vice President Managing Director of Goldman,
Sachs & Co.
Rosenberg, Ralph F. Vice President/Assistant Managing Director of Goldman,
Secretary Sachs & Co.
Gunn, G. Douglas Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Weil, David M. Vice President Managing Director of Goldman,
Sachs & Co.
Naughton, Kevin D. Vice President/Secretary/ Vice President of Goldman,
Treasurer Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 32 OF 39 PAGES
<TABLE>
<CAPTION>
Name Title Present Principal Occupation
- ---- ----- ----------------------------
<S> <C> <C>
O'Brien, Elizabeth A. Vice President/Assistant Vice President of Goldman,
Secretary Sachs (Asia) LLC
Williams, Todd A. Vice President/Assistant Managing Director of Goldman,
Secretary/Assistant Treasurer Sachs & Co.
Klingher, Michael K. Vice President Managing Director of Goldman,
Sachs & Co.
Siskind, Edward M. Vice President/Assistant Managing Director of Goldman,
Treasurer Sachs & Co.
Madison, Angie Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Mortelliti, Josephine Vice President Vice President of Goldman,
Sachs & Co.
Sack, Susan L. Vice President Vice President of Goldman,
Sachs & Co.
Pourtales, Jean De Vice President Vice President of Goldman
Sachs International
Cramer, Brahm S. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Lauer, Kate Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Burban, Elizabeth M. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 33 OF 39 PAGES
SCHEDULE 2C
The name, position and present principal occupation of each director
and executive officer of WH Advisors, Inc. V, which is the sole general partner
of WH Advisors, L.P. V, the sole general partner of Whitehall Street Real Estate
Limited Partnership V, are set forth below.
The business address of all the executive officers and managers listed
below except G. Douglas Gunn, Todd A. Williams, Angie D. Madison, Elizabeth A.
O'Brien, and Nik Shah is 85 Broad Street, New York, New York 10004. The business
address of G. Douglas Gunn, Simon T. Blaxland, Todd A. Williams and Angie D.
Madison is 100 Crescent Court, Suite 1000, Dallas, Texas 75201. The business
address of Elizabeth A. O'Brien is 3 Garden Road, Central, Hong Kong. The
business address of Nik Shah is 133 Fleet Street, London EC4A 2BB, England. The
business address of Simon T. Blaxland is 2, rue de Thann, 75017 Paris France.
Except for Brahm S. Cramer, who is a Canadian citizen, Simon T.
Blaxland, who is a citizen of the United Kingdom and Nik Shah, who is a citizen
of Tanzania, all executive officers and managers listed below are United States
citizens.
<TABLE>
<CAPTION>
<S> <C> <C>
Rothenberg, Stuart M. Director/Vice President Managing Director of Goldman,
Sachs & Co.
Neidich, Daniel M. President Managing Director of Goldman,
Sachs & Co.
O'Brien, Elizabeth A. Vice President/Assistant Vice President of Goldman,
Secretary Sachs (Asia) LLC
Lahey, Brian J. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Kava, Alan S. Vice President Vice President of Goldman,
Sachs & Co.
Feldman, Steven M. Vice President Managing Director of Goldman,
Sachs & Co.
Madison, Angie Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Weil, David M. Vice President Managing Director of Goldman,
Sachs & Co.
Rosenberg, Ralph F. Vice President/Assistant Managing Director of Goldman,
Secretary Sachs & Co.
Williams, Todd A. Vice President/Assistant Managing Director of Goldman,
Secretary/Assistant Treasurer Sachs & Co.
Naughton, Kevin D. Vice President/Secretary/ Vice President of Goldman,
Treasurer Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 34 OF 39 PAGES
<TABLE>
<CAPTION>
<S> <C> <C>
Siskind, Edward M. Vice President/Assistant Managing Director of Goldman,
Treasurer Sachs & Co.
Klingher, Michael K. Vice President Managing Director of Goldman,
Sachs & Co.
Gunn, G. Douglas Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Mortelliti, Josephine Vice President Vice President of Goldman,
Sachs & Co.
Sack, Susan L. Vice President Vice President of Goldman,
Sachs & Co.
Blaxland, Simon T. Vice President Vice President of Goldman,
Sachs Paris Inc. et Cie.
Cramer, Brahm, S. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Lauer, Kate Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Burban, Elizabeth M. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
Shah, Nik Vice President Vice President of Goldman
Sachs International
Weiss, Mitchell S. Assistant Treasurer Vice President of Goldman,
Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 35 OF 39 PAGES
SCHEDULE 2D
The name, position and present principal occupation of each manager and
executive officer of WH Advisors, L.L.C. XI, which is the sole general partner
of Whitehall Street Real Estate Limited Partnership XI, are set forth below.
The business address of all the executive officers and managers listed
below except G. Douglas Gunn, Todd A. Williams, Angie D. Madison, Paul R.
Milosevich, Elizabeth A. O'Brien and Eli Muraidekh is 85 Broad Street, New York,
New York 10004. The business address of G. Douglas Gunn, Todd A. Williams, Angie
D. Madison and Paul R. Milosevich is 100 Crescent Court, Suite 1000, Dallas, TX
75201. The business address of Eli Muraidekh is 133 Fleet Street, London EC4A
2BB, England. The business address of Elizabeth A. O'Brien is 3 Garden Road,
Central, Hong Kong.
Except for Brahm S. Cramer, who is a Canadian citizen, all executive
officers and managers listed below are United States citizens.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- ---- -------- ----------------------------
<S> <C> <C>
Rothenberg, Stuart M. Manager/Vice President Managing Director of
Goldman, Sachs & Co.
Neidich, Daniel M. Manager/President Managing Director of
Goldman, Sachs & Co.
O'Brien, Elizabeth A. Vice President/Assistant Vice President of
Secretary Goldman Sachs (Asia) L.L.C.
Weil, David M. Vice President Managing Director of
Goldman, Sachs & Co.
Rosenberg, Ralph F. Manager/Vice President/ Managing Director of
Assistant Secretary Goldman, Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 36 OF 39 PAGES
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- ---- -------- ----------------------------
<S> <C> <C>
Williams, Todd A. Vice President/Assistant Managing Director of
Secretary/Assistant Goldman, Sachs & Co.
Treasurer
Naughton, Kevin D. Vice President/Secretary/ Vice President of
Treasurer Goldman, Sachs & Co.
Siskind, Edward M. Vice President/Assistant Managing Director of
Treasurer Goldman, Sachs & Co.
Klingher, Michael K. Vice President Managing Director of
Goldman, Sachs & Co.
Gunn, G. Douglas Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Lahey, Brian J. Vice President/Assistant Vice President of
Treasurer Goldman, Sachs & Co.
Kava, Alan S. Vice President Vice President of
Goldman, Sachs & Co.
Feldman, Steven M. Vice President Managing Director of
Goldman, Sachs & Co.
Madison, Angie D. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Weiss, Mitchell S. Assistant Treasurer Vice President of
Goldman, Sachs & Co.
Cramer, Brahm S. Vice President Vice President of
Goldman, Sachs & Co.
Karr, Jerome S. Vice President Vice President of
Goldman, Sachs & Co.
Lauer, Kate Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 37 OF 39 PAGES
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- ---- -------- ----------------------------
<S> <C> <C>
Milosevich, Paul R. Vice President Vice President of
Goldman, Sachs & Co.
Mortelliti, Josephine Vice President Vice President of
Goldman, Sachs & Co.
Muraidekh, Eli Vice President Vice President of
Goldman Sachs International
Sack, Susan L. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Burban, Elizabeth M. Vice President/Assistant Vice President of Goldman,
Secretary Sachs & Co.
</TABLE>
<PAGE>
CUSIP NO. 950240101 PAGE 38 OF 39 PAGES
SCHEDULE 2E
The name of each director of The Goldman Sachs Group, Inc. is set forth
below.
The business address of each person listed below except John L.
Thornton, Sir John Browne and James A. Johnson is 85 Broad Street, New York, NY
10004. The business address of John L. Thornton is 133 Fleet Street, London EC4A
2BB, England. The business address of Sir John Browne is BP Amoco plc, Brittanic
House, 1 Finsbury Circus, London EC 2M, England. The business address of James
A. Johnson is Fannie Mae, 3900 Wisconsin Avenue NW, Washington, D.C. 20016. Each
person is a citizen of the United States of America. The present principal
occupation or employment of each of the listed persons is set forth below.
Name Present Principal Occupation
- ---- ----------------------------
Henry M. Paulson, Jr. Chairman and Chief Executive Officer of The Goldman
Sachs Group, Inc.
Robert J. Hurst Vice Chairman of the The Goldman Sachs Group, Inc.
John A. Thain President and Co-Chief Operating Officer of The
Goldman Sachs Group, Inc.
John L. Thornton President and Co-Chief Operating Officer of The
Goldman Sachs Group, Inc.
Sir John Browne Group Chief Executive of BP Amoco plc
James A. Johnson Chairman of the Executive Committee of the Board of
Fannie Mae
John L. Weinberg Senior Chairman of The Goldman Sachs Group, Inc.
<PAGE>
CUSIP NO. 950240101 PAGE 39 OF 39 PAGES
SCHEDULE 5A
Wellsford Real Properties, Inc.
===============================================================================
Purchases Sales Price Trade Date Settlement Date
===============================================================================
500 $10.625 4-May-99 7-May-99
===============================================================================
WARRANT AGREEMENT
This WARRANT AGREEMENT is made and entered into as of August 28, 1997
by and between Wellsford Real Properties, Inc., a Maryland corporation (together
with its successors and permitted assigns, the "Company"), and United States
Trust Company of New York (together with its successors and permitted assigns,
the "Warrant Agent").
R E C I T A L S
WHEREAS, WHWEL Real Estate Limited Partnership, a Delaware limited
partnership ("Whitehall"), and Wellsford Commercial Properties Trust, a Maryland
real estate investment trust and a subsidiary of the Company ("WCPT"), have
agreed to form, and contribute certain real property and other assets to,
Wellsford/Whitehall Properties, L.L.C., a Delaware limited liability company
("Wellsford/Whitehall"), subject to the concurrent issuance by the Company to
Whitehall of five million (5,000,000) warrants to purchase shares of the
Company's Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is so willing to act, in connection with the
issuance, transfer or exercise of Warrants and other matters as provided herein;
NOW, THEREFORE, in order to induce Whitehall to enter into
Wellsford/Whitehall and in consideration of the foregoing premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Warrant Agreement, as it may be amended or
modified from time to time.
<PAGE>
"Articles of Incorporation" shall mean the Company's Articles of
Amendment and Restatement, as amended from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banks in New York are authorized or required to close.
"Cash Amount" shall mean, with respect to any Warrant, an amount of
cash equal to the product of (i) the Closing Price of the Common Stock as of the
date of exercise of such Warrant multiplied by (ii) the Shares Amount in effect
on such date.
"Close of Business" shall mean, for any day, 5:00 P.M., New York City
time, on such date.
"Closing Price" shall mean the last reported sale price regular way on
the day in question or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way of the Common
Stock, in each case on the American Stock Exchange ("AMEX"), or, if the Common
Stock is not listed or admitted to trading on the AMEX, on the principal
national securities exchange or quotation system on which the Common Stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any AMEX member
firm selected from time to time by the board of directors of the Company for the
purpose. In the case of a closing price of Common Stock on the AMEX, such price
shall mean the closing price reported in the AMEX composite transactions
reporting system (as reported in the New York City edition of The Wall Street
Journal or, if not so reported, another authoritative source).
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company and any other stock of the Company into which such common stock
may be converted or reclassified (other than stock of the Company into which
unissued Common Stock has been reclassified) or that may be issued in respect
of, in exchange for, or in substitution of, such common stock by reason of any
stock splits, stock dividends, distributions, mergers, consolidations,
recapitalizations or other like events. For purposes of Section 6.1, the term
"Common Stock" shall include the Class A common stock, $.01 par value per share,
of the Company.
"Company" shall have the meaning set forth in the Recitals of this
Agreement.
"Company Shares" shall have the meaning set forth in Section 7.1(g).
"current market price" shall have the meaning set forth in Section
6.1(a)(vii).
"Demand Registration" shall mean a registration of Eligible Securities
pursuant to Section 7.1 hereof.
"Eligible Common Stock" shall mean all shares of Underlying Common
Stock that are Eligible Securities.
-2-
<PAGE>
"Eligible Securities" shall mean (x) all shares of Underlying Common
Stock and unless otherwise provided herein, any related Warrants and (y) any
other securities of the Company or any other entity issued or issuable with
respect to the Underlying Common Stock or Warrants by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise; provided, however,
that particular shares of Underlying Common Stock or particular Warrants shall
cease to be Eligible Securities when (i) such shares or Warrants, as the case
may be, shall have been disposed of in accordance with an effective registration
statement covering the sale of such shares or Warrants; (ii) such shares or
Warrants, as the case may be, have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act; or (iii) in the
case of a Warrant only, such Warrant has been transferred by the Initial Holder
to another Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning set forth in Section 3.1(b).
"Expiration Date" shall mean the fifth anniversary of the date of this
Agreement, provided that if such date is not a Business Day, the next Business
Day thereafter.
"Holders" shall mean, collectively, the holders from time to time of
Warrant Certificates and "Holder" shall mean any such holder. For purposes of
Articles 7 and 8 hereof, the term "Holder" shall mean the holder of any Eligible
Security.
"Initial Holder" shall mean Whitehall.
"Membership Unit" shall have the meaning set forth in the
Wellsford/Whitehall LLC Agreement.
"Partial Spin-Off" shall have the meaning set forth in Section
6.1(a)(iv).
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Piggyback Registration" shall have the meaning set forth in Section
7.2(a).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any of the Eligible Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registration Demand" shall have the meaning set forth in Section
7.1(a).
"Registration Rights" shall mean the rights of Holders set forth in
Sections 7.1 and 7.2 to have Eligible Securities registered under the Securities
Act for sale under one or more effective Registration Statements.
-3-
<PAGE>
"Registration Statement" shall mean any registration statement filed by
the Company under the Securities Act that covers any of the Eligible Securities,
including the Prospectus, any amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such registration statement.
"Representative" shall have the meaning set forth in Section 8.6(a),
and "Representative(s)" shall mean one or more Representatives.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean the annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"selling holder" shall have the meaning set forth in Section 8.1.
"Shares Amount" shall mean, with respect to any Warrant, 0.826446
shares of Common Stock, subject to all adjustments made pursuant to Article 6
hereof on or prior to the date of exercise of such Warrant.
"Shelf Registration" shall have the meaning set forth in Section
7.1(c).
"Shelf Registration Statement" shall have the meaning set forth in
Section 7.1(c).
"Subsequent Warrant Holder" shall mean any Holder other than the
Initial Holder.
"Takedown" shall have the meaning set forth in Section 7.1(c)(ii).
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
any Business Day.
"Transfer Agent" shall have the meaning set forth in Section 11.1.
"Transfer Restriction Termination Date" shall mean the first
anniversary of the date of this Agreement.
"Underlying Common Stock" shall mean all shares of Common Stock either
issuable upon the exercise of the Warrants or previously issued upon the prior
exercise of the Warrants.
"underwriter" shall have the meaning set forth in Section 8.1.
"underwriting or agency agreement" shall have the meaning set forth in
Section 8.1.
-4-
<PAGE>
"Warrants" shall mean the warrants issued by the Company on the date
hereof pursuant to this Agreement, and any additional warrants issued in
accordance with this Agreement.
"Warrant Certificates" shall mean the certificates substantially in the
form of Exhibit A evidencing the Warrants.
"Warrant Agent" shall have the meaning set forth in the Recitals to
this Agreement.
"WCPT" shall have the meaning set forth in the Recitals to this
Agreement.
"Wellsford/Whitehall" shall have the meaning set forth in the Recitals
to this Agreement.
"Wellsford/Whitehall LLC Agreement" shall mean the limited liability
company agreement of Wellsford/Whitehall dated as of August 28, 1997, as the
same may be amended from time to time.
"Whitehall" shall have the meaning set forth in the Recitals to this
Agreement.
Certain terms used principally in Articles 4, 7 and 8 are defined in
those Sections.
ARTICLE 2
ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates. Warrant Certificates shall
be in registered form only, substantially in the form attached hereto as Exhibit
A and dated the date on which countersigned by the Warrant Agent.
Pending the preparation of definitive Warrant Certificates, temporary
Warrant Certificates may be issued, which may be printed, lithographed,
typewritten, mimeographed or otherwise produced, which will be substantially of
the tenor of the definitive Warrant Certificates in lieu of which they are
issued and which are not required to be countersigned by the Warrant Agent.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon the
surrender of the temporary Warrant Certificates to the Warrant Agent, without
charge to the Initial Holder. Until so exchanged the temporary Warrant
Certificates shall in all respects be entitled to the same benefits under this
Agreement as definitive Warrant Certificates.
Section 2.2. Execution and Delivery of Warrant Certificates.
(a) Simultaneously with the execution of this Agreement, Warrant
Certificates evidencing five million (5,000,000) Warrants, shall be executed on
behalf of the Company as provided in paragraph (b) below and delivered to the
Warrant Agent for countersignature and the
-5-
<PAGE>
Warrant Agent shall thereupon countersign and deliver such Warrant Certificates
to Whitehall. In addition, the Warrant Agent is irrevocably authorized to
countersign and deliver Warrant Certificates as required by Sections 3.1(e), 5.1
and 5.2.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman, Chief Executive Officer or President, either manually or by
facsimile signature printed thereon. Warrant Certificates shall be countersigned
by the Warrant Agent, either manually or by facsimile signature printed
thereupon, and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company whose signature shall have been placed upon any
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent
and issued and delivered with the same force and effect as though such person
had not ceased to be such officer of the Company.
ARTICLE 3
EXERCISE OF WARRANTS
Section 3.1. Exercise Procedures.
(a) Each Warrant shall be exercisable as provided in this Section 3
from time to time on any Business Day prior to the Close of Business on the
Expiration Date.
(b) When exercised in accordance with subparagraph (c) below, each
Warrant shall entitle the Holder to purchase, and the Company shall be required
to deliver, a number of shares of Common Stock equal to the Shares Amount in
effect on the day such Warrant is exercised in accordance with Section 3.1(c),
at an exercise price (the "Exercise Price") of, at the sole election of the
Holder, either (x) one Membership Unit or (y) $10.00 in cash; provided, however,
that the Company may, at its sole election, pay to the Holder of each Warrant so
exercised in respect of any one or more of such Warrants cash in an amount equal
to the Cash Amount in lieu of delivering the shares of Common Stock. When
multiple Warrants are exercised, the Exercise Price may consist of cash,
Membership Units or any combination thereof. Notwithstanding the foregoing, the
Holder may not elect to deliver Membership Units as the Exercise Price upon the
exercise of any Warrant before August 28, 1999.
(c) In order to exercise a Warrant, the Holder must surrender the
Warrant Certificate evidencing such Warrant to the Warrant Agent, with the form
of election on the reverse of or attached to the Warrant Certificate duly
executed, together with any required payment or delivery, as the case may be, of
the Exercise Price, to the Warrant Agent at the principal office of the Warrant
Agent in New York, New York. In the event Holder elects to tender Membership
Units as provided in subparagraph (b) above, all such Membership Units (and the
corresponding Interest (as defined in Wellsford/Whitehall LLC Agreement)) shall
be assigned by the Warrant Agent to the Company. In the event a Holder elects to
pay the cash Exercise Price as provided in subparagraph (b) above, such Holder
shall transfer to the Warrant Agent, together with the surrendered Warrant
Certificate, the required payment in full of the Exercise Price for each Warrant
which is exercised. Any such payment of the Exercise Price shall be by certified
or official bank check or wire transfer of same day
-6-
<PAGE>
funds, and such funds shall be deposited by the Warrant Agent for the account of
the Company, unless otherwise instructed in writing by the Company.
(d) Upon surrender of a Warrant Certificate in conformity with the
foregoing, the Warrant Agent shall thereupon promptly notify the Company. In the
event the Company elects to deliver the Shares Amount as provided in
subparagraph (b) above, the Company shall transfer to the Holder of the
exercised Warrant share certificates representing the shares of Common Stock to
which such Holder is entitled and the Holder shall be deemed to own and have all
the rights associated with any shares of Common Stock to which it is entitled
pursuant to this Agreement upon the surrender of any Warrant Certificate in
accordance with this Section 3.1. If the Company elects to deliver the Cash
Amount as provided in subparagraph (b) above, the Company shall deliver to the
Holder of the exercised Warrant payment of the Cash Amount in same day funds to
the account specified on the form of election on the reverse of or attached to
the Warrant Certificate. The Holder acknowledges that the Company does not
currently intend to issue Common Stock equal to 20% or more of its currently
outstanding Common Stock upon the exercise of any Warrants and, in the event of
such an exercise that could result in Common Stock being issued in excess of
such limit, the Company will instead deliver the Cash Amount.
(e) If fewer than all the Warrants represented by a Warrant Certificate
are exercised, such Warrant Certificate shall be surrendered by the Warrant
Agent to the Company with instructions for the issuance of a new Warrant
Certificate and the Company shall promptly execute such new Warrant Certificate
for the Warrants that were not exercised and deliver the same to the Warrant
Agent. The Warrant Agent shall promptly countersign the new Warrant Certificate,
register it and deliver it to the registered Holder thereof.
ARTICLE 4
COMPLIANCE WITH THE SECURITIES ACT
Section 4.1. Transfers. The Initial Holder hereby acknowledges that the
Warrants and the shares of Common Stock which may be received by the Initial
Holder upon exercise of any Warrant are and will be subject to certain
restrictions on transfers under the Securities Act and the regulations
promulgated thereunder.
Section 4.2. Representations. The Initial Holder has been afforded full
and complete access to all information and other materials relating to the
Company and to the offer of the Warrants and has had the opportunity to have
answered any questions it had concerning the Company and the offering of the
Warrants.
The Initial Holder hereby represents that it is acquiring the Warrants
for its own account for investment and not with a view to the resale or
distribution of any interest therein.
-7-
<PAGE>
ARTICLE 5
REGISTRATION OF TRANSFERS AND EXCHANGES
Section 5.1. Generally. The Warrant Certificates shall be issued in
registered form only. The Company shall cause to be kept at the office of the
Warrant Agent a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of the transfers
or exchanges of the Warrant Certificates as herein provided. Notwithstanding
anything to the contrary contained herein, the Initial Holder may not assign,
sell or otherwise transfer Warrants at any time before the Transfer Restriction
Termination Date.
The Warrant Agent shall from time to time register the transfer or
exchange of any outstanding Warrant, in the records to be maintained by it for
that purpose, upon surrender of such Warrant. Upon any such registration of
transfer or exchange, a new Warrant Certificate shall be issued to the
transferee in the case of a transfer or to the Holder making the exchange, and
the surrendered Warrant Certificate shall be canceled by the Warrant Agent.
Canceled Warrant Certificates shall be disposed of by the Warrant Agent in
accordance with its customary procedures and the Warrant Agent shall deliver a
certificate of their destruction to the Company.
All Warrant Certificates issued upon any registration of transfer or
exchange shall be valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrant Certificates surrendered for such registration of transfer or exchange.
Every Warrant Certificate surrendered for registration of transfer or
exchange shall (if so required by the Company or the Warrant Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
contained in Exhibit B hereto or such other form satisfactory to the Company and
the Warrant Agent, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates. The Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
the Warrant Certificates.
Any Warrant Certificate when duly endorsed in blank shall be deemed
negotiable and when any Warrant Certificate shall have been so endorsed, the
Holder thereof may be treated by the Company, the Warrant Agent and all other
persons dealing therewith as the absolute owner thereof for any purpose and as
the Person entitled to either exercise the rights represented thereby or to
transfer the Warrants represented thereby on the register of the Company
maintained by the Warrant Agent, any notice to the contrary withstanding; but
until such transfer on such register, the Company and the Warrant Agent may
treat the registered Holder thereof as the owner for all purposes.
Section 5.2. Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
If any mutilated Warrant Certificate is surrendered to the Warrant Agent or the
Company, or if the Warrant Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Warrant Certificate,
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and there is delivered to the Company and the Warrant Agent such security or
indemnity as may be reasonably required by them to save each of them harmless,
then, in the absence of notice to the Company or the Warrant Agent that such
Warrant Certificate has been acquired by a bona fide purchaser, the Company
shall execute and upon its written request the Warrant Agent shall countersign
and deliver, in exchange for any such mutilated Warrant Certificate, or in lieu
of any such destroyed, lost or stolen Warrant Certificate, a new Warrant
Certificate of like tenor and for a like aggregate number of Warrants. Upon the
issuance of any new Warrant Certificate under this Section 5.2, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and other expenses (including the
reasonable fees and expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this
Section 5.2 in lieu of any destroyed, lost or stolen Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
destroyed, lost or stolen Warrant Certificate shall be at any time enforceable
as provided herein, and shall be entitled to the benefits of this Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. The provisions of this Section 5.2 are
exclusive and shall preclude (to the extent lawful) all other rights or remedies
with respect to the replacement of mutilated, destroyed, lost or stolen Warrant
Certificates.
ARTICLE 6
ADJUSTMENTS
Section 6.1. Adjustment upon Certain Transactions.
(a) The Shares Amount (and, by virtue thereof, the Cash Amount) shall
be subject to adjustment from time to time as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall
pay or make a dividend or other distribution on any other class or
series of stock of the Company which dividend or distribution includes
Common Stock, the Shares Amount in effect at the opening of business on
the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
increased by multiplying such Shares Amount by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding
at the Close of Business on the date fixed for such determination and
the numerator shall be the sum of such number of shares plus the total
number of shares constituting such dividend or other distribution, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this subparagraph (i), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury
of the Company. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
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(ii) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue to all holders of its Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price
per share (determined as provided in subparagraph (vii) of this Section
6.1(a)) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the Shares
Amount in effect at the opening of business on the day following the
date fixed for such determination shall be increased by multiplying the
Shares Amount by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding at the Close of Business
on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the numerator
shall be the number of shares of Common Stock outstanding at the Close
of Business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this subparagraph (ii), the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of
the Company. In case any rights or warrants referred to in this
subparagraph (ii) in respect of which an adjustment shall have been
made shall expire unexercised within 60 days after the same shall have
been distributed or issued by the Company, the Shares Amount shall be
readjusted at the time of such expiration to the Shares Amount that
would have been in effect if no adjustment had been made on account of
the distribution or issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Shares
Amount in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be
proportionately increased, and conversely, in case outstanding shares
of Common Stock shall each be combined into a smaller number of shares
of Common Stock, the Shares Amount in effect at the opening of business
on the day following the day upon which such combination becomes
effective shall be proportionately decreased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective. No reduction in the
Shares Amount may occur except pursuant to this subparagraph (iii).
(iv) Subject to the last two sentences of this subparagraph
(iv), in case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness,
shares of any class or series of stock, cash or assets (including
securities, but excluding any rights or warrants referred to in
subparagraph (ii) of this Section 6.1(a), any dividend or distribution
paid exclusively in cash and any dividend or distribution referred to
in subparagraph (i) of this Section 6.1(a)), the Shares Amount shall be
increased so that the same shall equal the number determined by
multiplying the Shares Amount in effect immediately prior to the
effectiveness of the Shares Amount increase contemplated by this
subparagraph (iv) by a fraction of which the denominator shall be the
current market price per share (determined as provided in subparagraph
(vii) of this
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Section 6.1(a)) of the Common Stock on the date fixed for the payment
of such distribution (the "Reference Date") less the fair market value
(as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion of the
evidences of indebtedness, shares of stock, cash and assets so
distributed applicable to one share of Common Stock and the numerator
shall be such current market price per share of the Common Stock, such
increase to become effective immediately prior to the opening of
business on the day following the Reference Date. If the Board of
Directors determines the fair market value of any distribution for
purposes of this subparagraph (iv) by reference to the actual or when
issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same
period used in computing the current market price per share of Common
Stock pursuant to subparagraph (vii) of this Section 6.1(a). For
purposes of this subparagraph (iv), any dividend or distribution that
includes shares of Common Stock or rights or warrants to subscribe for
or purchase shares of Common Stock shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, cash, assets
or shares of stock other than such shares of Common Stock or such
rights or warrants (making any Shares Amount increase required by this
subparagraph (iv)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants
(making any further Shares Amount increase required by subparagraph (i)
or (ii) of this Section 6.1(a), except (A) the Reference Date of such
dividend or distribution as defined in this subparagraph (iv) shall be
substituted as "the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution, "the date
fixed for the determination of stockholders entitled to receive such
rights or warrants" and "the date fixed for such determination" within
the meaning of subparagraphs (i) and (ii) of this Section 6.1(a) and
(B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the Close of Business
on the date fixed for such determination" within the meaning of
subparagraph (i) of this Section 6.1(a)). Notwithstanding anything to
the contrary contained in this Article 6, the Company may one time in
any twelve-month period pay a dividend or distribution on its Common
Stock exclusively in the form of securities of (or other ownership
interests in) any subsidiary of the Company (a "Partial Spin-Off")
without any adjustment to the Shares Amount on account thereof if the
fair market value (determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution
of the Board of Directors) of the Partial Spin-Off distributed per
share of Common Stock outstanding on the date fixed for such
determination does not exceed 8% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a) of
the Common Stock on the Trading Day next preceding the date of
declaration of such dividend).
(v) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the
case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the greater of (x) the per share amount of
the next preceding quarterly cash dividend on the Common Stock (as
adjusted to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section
6.1(a)), and (y) the per share amount which, when multiplied by four,
and added to the fair market value (as determined in the last sentence
of (iv) above) of any Partial Spin-Off distributed per share of Common
Stock during the preceding twelve-month period,
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is equal to or less than 8% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a))
of the Common Stock on the Trading Day next preceding the date of
declaration of such dividend), the Shares Amount shall be increased so
that the same shall equal the number determined by multiplying the
Shares Amount in effect immediately prior to the effectiveness of the
Shares Amount increase contemplated by this subparagraph (v) by a
fraction of which the denominator shall be the current market price per
share (determined as provided in subparagraph (vii) of this Section
6.1(a)) of the Common Stock on the date fixed for the payment of such
distribution less the amount of cash so distributed and not excluded as
provided above applicable to one share of Common Stock and the
numerator shall be such current market price per share of Common Stock,
such increase to become effective immediately prior to the opening of
business on the day following the date fixed for the payment of such
distribution.
(vi) In case a tender or exchange offer made by the Company or
by any subsidiary of the Company for all or any portion of the
Company's Common Stock shall expire and such tender or exchange offer
shall involve the payment by the Company or such subsidiary of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of
Directors) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) that exceeds the current market price per
share (determined as provided in subparagraph (vii) of this Section
6.1(a)) of the Common Stock on the Trading Day next succeeding the
Expiration Time, the Shares Amount shall be increased so that the same
shall equal the number determined by multiplying the Shares Amount in
effect immediately prior to the effectiveness of the Shares Amount
increase contemplated by this subparagraph (vi) by a fraction of which
the denominator shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the
Expiration Time multiplied by the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a))
of the Common Stock on the Trading Day next succeeding the Expiration
Time and the numerator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as
the "Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) at the Expiration
Time and the current market price per share (determined as provided in
subparagraph (vii) of this Section 6.1(a)) of the Common Stock on the
Trading Day next succeeding the Expiration Time, such increase to
become effective immediately prior to the opening of business on the
day following the Expiration Time.
(vii) For the purpose of any computation under subparagraph
(ii), (iv) and (v) of this Section 6.1(a), the "current market price"
per share of Common Stock on any date in question shall be deemed to be
the average of the daily Closing Prices for the five consecutive
Trading Days prior to and including the date in question; provided,
however, that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Shares Amount pursuant
to
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subparagraph (i), (ii), (iii), (iv), (v) or (vi) above ("Other Event")
occurs after the fifth Trading Day prior to the day in question and
prior to the "ex" date for the issuance or distribution requiring such
computation (the "Current Event"), the Closing Price for each Trading
Day prior to the "ex" date for such Other Event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by
which the Shares Amount is so required to be adjusted as a result of
such Other Event, (2) if the "ex" date for any Other Event occurs after
the "ex" date for the Current Event and on or prior to the date in
question, the Closing Price for each Trading Day on and after the "ex"
date for such Other Event shall be adjusted by multiplying such Closing
Price by the fraction by which the Shares Amount is so required to be
adjusted as a result of such Other Event, (3) if the "ex" date of any
Other Event occurs on the "ex" date for the Current Event, one of those
events shall be deemed for purposes of clauses (1) and (2) of this
proviso to have an "ex" date occurring prior to the "ex" date for the
other event, and (4) if the "ex" date for the Current Event is on or
prior to the date in question, after taking into account any adjustment
required pursuant to clause (2) of this proviso, the Closing Price for
each Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the date in
question (as determined in good faith by the Board of Directors in a
manner consistent with any determination of such value for purposes of
paragraph (iv) or (v) of this Section 6.1(a), whose determination shall
be conclusive and described in a resolution of the Board of Directors)
of the portion of the rights, warrants, evidences of indebtedness,
shares of stock or assets being distributed applicable to one share of
Common Stock. For the purpose of any computation under subparagraph
(vi) of this Section 6.1(a), the current market price per share of
Common Stock on any date in question shall be deemed to be the average
of the daily Closing Prices for such date in question and the next two
succeeding Trading Days; provided, however, that if the "ex" date for
any event (other than the tender or exchange offer requiring such
computation) that requires an adjustment to the Shares Amount pursuant
to subparagraph (i), (ii), (iii), (iv), (v) or (vi) above occurs after
the Expiration Time for the tender or exchange offer requiring such
computation and on or prior to the second Trading Day following the
date in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the fraction by which the Shares Amount is so
required to be adjusted as a result of such other event. For purposes
of this paragraph, the term "ex" date, (1) when used with respect to
any issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to
any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any
tender or exchange offer, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.
(viii) The Company may make such increase in the Shares
Amount, in addition to those required by subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of this Section 6.1(a), as it considers to be
advisable to avoid or diminish an income tax to holders of Common Stock
or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. The
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Company from time to time may increase the Shares Amount by any amount
for any period of time if the period is at least twenty days, the
increase is irrevocable during the period, and the Board of Directors
of the Company shall have made a determination that such increase would
be in the best interest of the Company, which determination shall be
conclusive. Whenever the Shares Amount is increased pursuant to the
preceding sentence, the Company shall mail to Holders a notice of the
increase at least fifteen days prior to the date the increased Shares
Amount takes effect, and such notice shall state the increased Shares
Amount and the period it will be in effect.
(ix) No adjustment in the Shares Amount shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the Shares Amount; provided, however, that any adjustments
which by reason of this subparagraph (ix) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(x) Whenever the Shares Amount is adjusted as herein provided:
(1) the Company shall compute the adjusted Shares
Amount and shall prepare a certificate signed by the Chief
Financial Officer of the Company setting forth the adjusted
Shares Amount and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate
shall forthwith be filed with the Warrant Agent; and
(2) a notice stating the Shares Amount have been
adjusted and setting forth the adjusted Shares Amount shall
forthwith be required, and as soon as practicable after it
is required such notice shall be mailed by the Company to
all Holders.
(b) No Fractional Shares. No fractional shares of Common Stock shall be
issued upon exercise of the Warrants. If more than one Warrant is exercised by
the same Holder at one time, the number of full shares issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrants so
exercised. Instead of any fractional share of Common Stock that would otherwise
be issuable to a holder upon exercise of the Warrants, the Company shall pay a
cash adjustment in respect of such fractional share in an amount equal to the
same fraction of the Closing Price per share of Common Stock as of the date of
such exercise.
(c) Reclassification, Consolidation, Merger or Sale of Assets. In the
event that the Company shall be a party to any transaction (including without
limitation any recapitalization or reclassification of the Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination of the Common
Stock and other than the reclassification of unissued Common Stock into other
stock of the Company), any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another person into the Company
(other than a merger which does not result in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company),
any sale or transfer of all or substantially all of the assets of the Company or
any compulsory share exchange) pursuant to which the Common Stock is converted
into the right to receive other securities, cash or other property, then lawful
provisions shall be made as part of the terms of such transaction whereby the
holder of each Warrant then outstanding shall have the right thereafter to
exercise such Warrant only for (i) in the case of any such transaction other
than a Common Stock Fundamental Change and subject to funds being legally
available for such purpose
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under applicable law at the time of such exercise, the kind and amount of
securities, cash and other property receivable upon such transaction by a holder
of the number of shares of Common Stock of the Company for which such Warrant
could have been exercised immediately prior to such transaction, and (ii) in
the case of a Common Stock Fundamental Change, common stock of the kind received
by holders of Common Stock as a result of such Common Stock Fundamental Change
in an amount determined pursuant to the provisions of Section 6.1(e). The
Company or the Person formed by such consolidation or resulting from such merger
or which acquires such assets or which acquires the Company's shares, as the
case may be, shall execute an agreement in form and substance reasonably
acceptable to the Holders evidencing such right. Such agreement shall provide
for adjustments which, for events subsequent to the effective date of such
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 6. The above provisions shall similarly
apply to each and every successive transaction of the foregoing type.
(d) Prior Notice of Certain Events. In case:
(i) the Company shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash in
an amount not greater than its retained earnings other than any special
or nonrecurring or other extraordinary dividend or (2) declare or
authorize a redemption or repurchase of in excess of 10% of the
then-outstanding shares of Common Stock; or
(ii) the Company shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any share of stock of any class or series or of any other
rights or warrants; or
(iii) of any reclassification of Common Stock (other than
a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value and other than the reclassification of unissued
Common Stock into other stock of the Company), or of any consolidation
or merger to which the Company is a party and for which approval of any
shareholders of the Company shall be required, or of the sale or
transfer of all or substantially all of the assets of the Company or of
any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be mailed to the Holders, at least 10 days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record (if any) is to be taken for the purpose of such dividend, distribution,
redemption, repurchase, rights or warrants or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other
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property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(e) Adjustments in Case of Fundamental Changes. Notwithstanding any
other provision in this Article 6 to the contrary, if any Fundamental Change (as
defined in Section 6.1(f)) occurs, then the Shares Amount in effect will be
adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change (as defined in
Section 6(f)), each Warrant shall be exercisable solely in exchange for common
stock of the kind and amount received by holders of Common Stock as a result of
such Common Stock Fundamental Change as more specifically provided below in this
Section 6.1(e).
For purposes of calculating any adjustment to be made pursuant to this
Section 6.1(e) in the event of a Fundamental Change, immediately after such
Fundamental Change in the case of a Common Stock Fundamental Change, the Shares
Amount in effect immediately prior to such Common Stock Fundamental Change, but
after giving effect to any other prior adjustments effected pursuant to this
Section 6, shall thereupon be adjusted by multiplying such Shares Amount by a
fraction of which the denominator shall be the Purchaser Stock price (as defined
in Section 6.1(f)) and the numerator shall be the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in which (A)
100% by value of the consideration received by a holder of Common Stock is
common stock of the successor, acquiror or other third party (and cash, if any,
is paid with respect to any fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common Stock shall
have been exchanged for, converted into or acquired for common stock (and cash
with respect to fractional interests) of the successor, acquiror or other third
party, the Shares Amount in effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by multiplying such Shares Amount
by the number of shares of common stock of the successor, acquiror, or other
third party received by a shareholder for one share of Common Stock as a result
of such Common Stock Fundamental Change.
(f) Definitions. The following definitions shall apply to terms used in
this Article 6:
(i) "Applicable Price" shall mean (1) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock
receive only cash, the amount of cash received by a shareholder for one
share of Common Stock and (2) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the average
of the daily Closing Prices of the Common Stock for the ten consecutive
Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to receive
securities, cash or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change, or, if there is
no such record date, the date upon which the holders of the Common
Stock shall have the right to receive such securities, cash or other
property, in each case, as adjusted in good faith by the Board of
Directors of the Company to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of
Section 6.1(a).
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(ii) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% by value (as determined in
good faith by the Board of Directors of the Company) of the
consideration received by holders of Common Stock consists of common
stock that for each of the ten consecutive Trading Days referred to
with respect to such Fundamental Change in Section 6.1(f)(i) above has
been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the NASDAQ
National Market System; provided, however, that a Fundamental Change
shall not be a Common Stock Fundamental Change unless either (1) the
Company continues to exist after the occurrence of such Fundamental
Change and the outstanding Warrants continue to exist as outstanding
Warrants, or (2) not later than the occurrence of such Fundamental
Change, the outstanding Warrants are converted into or exchanged for
warrants of a corporation succeeding to the business of the Company,
which warrants have terms identical to those of the Warrants.
(iii) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive
securities, cash or other property (whether by means of an exchange
offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided, however, in
the case of a plan involving more than one such transaction or event,
for purposes of adjustment of the Shares Amount, such Fundamental
Change shall be deemed to have occurred when substantially all of the
Common Stock of the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive cash,
securities, property or other assets, but the adjustment shall be based
upon the highest weighted average of consideration per share which a
holder of Common Stock could have received in such transactions or
events as a result of which more than 50% of the Common Stock of the
Company shall have been exchanged for, converted into, or acquired for
or constitute solely the rights to receive cash, securities, property
or other assets.
(iv) "Non-Stock Fundamental Change" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
(v) "Purchaser Stock Price" shall mean, with respect to any
Common Stock Fundamental Change, the average of the daily Closing
Prices of the common stock received in such Common Stock Fundamental
Change for the ten consecutive Trading Days prior to and including the
record date for the determination of the holders of Common Stock
entitled to receive such common stock, or, if there is no such record
date, the date upon which the holders of the Common Stock shall have
the right to receive such common stock, in each case, as adjusted in
good faith by the Board of Directors of the Company to appropriately
reflect any of the events referred to in subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of Section 6.1(a); provided, however, if no
such Closing Prices of the common stock for such Trading Days exist,
then the Purchaser Stock price shall be set at a price determined in
good faith by the Board of Directors of the Company.
(g) Certain Additional Rights. In case the Company shall, by dividend
or otherwise, declare or make a distribution on its Common Stock referred to in
Section 6(a)(iv) or 6(a)(v) (including, without limitation, dividends or
distributions referred to in the last two sentences
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of Section 6(a)(iv)), the holder of each Warrant, upon the exercise thereof
subsequent to the Close of Business on the date fixed for the determination of
shareholders entitled to receive such distribution and prior to the
effectiveness of the Shares Amount adjustment in respect of such distribution,
shall also be entitled to receive for each share of Common Stock for which such
Warrant is exercised, the portion of the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that, at
the election of the Company (whose election shall be evidenced by a resolution
of the Board of Directors) with respect to all holders so exercising, the
Company may, in lieu of distributing to such holder any portion of such
distribution not consisting of cash or securities of the Company, pay such
holder an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors). If any exercise of a
Warrant described in the immediately preceding sentence occurs prior to the
payment date for a distribution to holders of Common Stock which the holder of
the Warrant so exercised is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of stock, cash or assets to which such holder is so
entitled, provided that such due bill (i) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (ii) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of stock, cash
or assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
(h) Reservation of Shares, Etc. The Company shall at all times reserve
and keep available, free from preemptive rights out of its authorized and
unissued stock, solely for the purpose of allowing the exercise of the Warrants,
such number of shares of its Common Stock as shall from time to time be
sufficient to permit the Company to deliver the Shares Amount in the event all
of the Warrants from time to time outstanding were exercised. The Company shall
from time to time, in accordance with the laws of the State of Maryland,
increase the authorized number of shares of Common Stock if at any time the
number of shares of authorized and unissued Common Stock shall not be sufficient
to permit the Company to deliver the Shares Amount upon the exercise of all of
the then-outstanding Warrants (taking into account the adjustments to the Shares
Amount that are provided for herein).
If any shares of common stock required to be reserved for purposes of
the exercise of the Warrants hereunder require registration with or approval of
any governmental authority under any Federal or State law before such shares may
be issued upon exercise, and an exemption under Section 3(a)(9) of the
Securities Act or similar exemption is not available, the Company will in good
faith and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved as the case may be. If the Common Stock is quoted on the
NASDAQ National Market System or listed on any U.S. national securities
exchange, the Company will, if permitted by the rules of such exchange, list and
keep listed on such exchange, upon official notice of issuance, all shares of
Common Stock issuable upon exercise of the Warrants. The second sentence of this
paragraph shall apply only when the Warrants shall have become freely
transferable pursuant to Rule 144(k) under the Securities Act or if the shares
of Common Stock issuable upon exercise of the Warrants are exempt from the
registration requirements of the Securities Act by operation of an exemption
referred to in the first sentence of this paragraph.
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(i) Dividend or Interest Reinvestment Plans or Other Plans.
Notwithstanding the foregoing provisions, the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under any such plan (a "DRIP"), and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee or director benefit plan or program of the
Company or pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding as of the date hereof shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the Shares Amount
in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article 6. If any action would require adjustment of the Shares Amount pursuant
to more than one of the provisions described above, only one adjustment shall be
made and such adjustment shall be the amount of adjustment which has the highest
absolute value to holders of the Warrants.
ARTICLE 7
REGISTRATION RIGHTS
Section 7.1. Demand Registration.
(a) At any time after June 1, 1998, the Holders shall have the right to
request (each such request, a "Registration Demand") that the Company file a
registration statement under the Securities Act in respect of all or any portion
of such Holder's Eligible Securities; provided that if any Holders shall request
that a portion, but not all, of its Eligible Securities be registered in
accordance with this Section 7.1 (including a requested Takedown pursuant to
subsection (c)(ii) below), such portion shall include not less than two hundred
and fifty thousand (250,000) shares of Eligible Common Stock (or such lesser
number of such shares having a market valuation of at least $5,000,000 as of the
date the Registration Demand is made, based on the Closing Price on such date).
A Registration Demand shall specify the number of shares of Eligible Common
Stock (and, in the case of a Registration Demand by the Initial Holder, the
number of Warrants) that each such Holder proposes to sell in the offering. If
no Shelf Registration Statement shall be effective as of the date of the
Registration Demand, the demanding Holders may elect to register such Eligible
Securities in accordance with either Section 7.1(c)(i) or Section 7.1(d). If a
Shelf Registration Statement shall be effective as of the date of the
Registration Demand, then all demanding Holders shall be deemed to have elected
to register their Eligible Securities pursuant to Section 7.1(c)(ii). The
Holders may make in the aggregate two (2) Registration Demands pursuant to
Sections 7.1(c)(i) and 7.1(d) and four (4) Registration Demands per year
pursuant to an existing Shelf Registration Statement pursuant to Section
7.1(c)(ii) for which the Company will pay and bear all costs and expenses in
accordance with Section 8.3 and thereafter the Holders may make an unlimited
number of Registration Demands for which such requesting Holders shall pay and
bear all costs and expenses.
(b) Upon receipt of a Registration Demand (other than a Takedown), the
Company shall give written notice thereof to all of the other Holders at least
thirty (30) days prior to the initial filing of a Registration Statement
relating to such Registration Demand. Each of the other
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Holders shall have the right, within twenty (20) days after the delivery of such
notice, to request that the Company include all or a portion of such Holder's
Eligible Securities in such Registration Statement. Upon receipt of a
Registration Demand that is a Takedown, a representative of the selling holders
shall give written notice thereof to all of the other Holders at least three (3)
Business Days prior to the initial filing of a prospectus relating to such
Registration Demand. Each of the other Holders shall have the right, within one
(1) Business Day after the delivery of such notice, to request that the Company
include all or a portion of such Holder's Eligible Securities in such
Registration Statement.
(c) (i) As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to register
Eligible Securities pursuant to this paragraph (c), the Company shall file under
the Securities Act a "shelf" registration statement (the "Shelf Registration
Statement") providing for the registration and the sale on a continuous or
delayed basis of all the Eligible Securities, pursuant to Rule 415 under the
Securities Act and/or any similar rule that may be adopted by the SEC (the
"Shelf Registration"). The Company agrees to use its reasonable best efforts to
cause such Shelf Registration Statement to become or be declared effective as
soon as practicable but no later than 75 calendar days after the filing (the "75
Day Effective Date") and to keep such Shelf Registration continuously effective
for a period ending on the occurrence of the earlier of: (x) the third
anniversary of such Registration Demand and (y) notification by all of the
requesting Holders that such Holders have sold all of the Eligible Securities
owned by them. The Company further agrees to supplement or make amendments to
the Shelf Registration Statement and the prospectus included therein (x) as may
be necessary to effect and maintain the effectiveness of such Shelf Registration
Statement for the period set forth in the previous sentence and (y) as may be
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration or by the
Securities Act or rules and regulations thereunder for shelf registration. The
Company agrees to furnish to the Holders of the securities registered thereby
copies of any such supplement or amendment (but excluding any periodic reports
required to be filed with the SEC under the Exchange Act of 1934) so that the
Initial Holder, or if the Initial Holder is no longer a Holder, the Holders,
through the Representative(s), have a reasonable opportunity to comment thereon
prior to its being used and/or filed with the SEC.
(ii) As promptly as practicable after the Company receives a
Registration Demand from a Holder or Holders pursuant to which a Holder is
deemed to have elected to register Eligible Securities pursuant to an existing
Shelf Registration Statement (a "Takedown"), the Company shall, subject to the
Takedown Blackout Period described below, file a Prospectus with the SEC and
otherwise comply with the Securities Act and all rules, regulations and
instructions thereunder applicable to such Takedown. In the event that no
Prospectus or other filing is required nor any other action necessitating the
Company's participation is required to effect a sale of Eligible Securities
pursuant to an effective Shelf Registration Statement filed pursuant to Section
7.1(c)(i), each selling Holder agrees to provide the Company with at least three
(3) Business Days' notice of the proposed sale (which may or may not include the
amount of Eligible Securities to be registered) pursuant to the effective Shelf
Registration Statement; provided, however, that the Company shall, subject to
Section 7.3(g), have the right to postpone any such sale whether before or after
the filing of the applicable Prospectus or Shelf Registration Statement for a
reasonable period of time not to exceed ninety (90) days (a "Takedown Blackout
Period") if: (i) the Company determines in its good faith judgment that it
would, in connection with such sale, be required to disclose in such
Registration Statement (or any prospectus supplement to be used in connection
therewith)
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information not otherwise then required by law to be publicly disclosed and (ii)
either (x) in the good faith judgment of the Board of Directors of the Company,
such disclosure would adversely affect any material corporate development or
business transaction contemplated by the Company or (y) the Company has a bona
fide purpose for preserving as confidential such information; provided further
that the Takedown Blackout Period shall earlier terminate upon the completion or
abandonment of the relevant corporate development or business transaction or
upon public disclosure by the Company or public disclosure by the Company or
public admission by the Company of such information specified in (i) above.
(d) As promptly as practicable and in no event later than sixty (60)
days after the Company receives a Registration Demand electing to register
Eligible Securities pursuant to this Section 7.1(d), the Company shall file with
the SEC a Registration Statement, on any form that shall be available and
appropriate for the sale of the Eligible Securities in accordance with the
intended method of distribution thereof. The Company shall include in such
Registration Statement all of the Eligible Securities of such requesting Holders
that such Holders have requested to be included therein pursuant to Sections
7.1(a) and 7.1(b); provided, however, that, if the requested registration
involves an underwritten offering, the Eligible Securities to be registered may
be reduced if the managing underwriter delivers a notice (a "Cutback Notice")
pursuant to Section 7.1(g). The Company shall use its reasonable best efforts
to cause each such Registration Statement to be declared effective (and to
obtain acceleration of such effectiveness) as soon as practicable but no later
than 75 days after filing such Registration Statement and to keep such
Registration Statement continuously effective and usable for resale of such
Eligible Securities, for a period of one hundred eighty (180) days from the date
on which the SEC declares such Registration Statement effective or such shorter
period as is necessary to complete the distribution of the securities registered
thereunder.
(e) The Initial Holder or, if the Initial Holder is not a selling
holder, the Representative(s) shall determine the method of distribution of
Eligible Securities pursuant to a Registration Demand.
(f) If a Registration Demand involves an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer such offering will be selected by the Initial Holder or, if the
Initial Holder is not a selling holder, the Representative(s); provided that the
Persons so selected shall be reasonably satisfactory to the Company.
(g) In the event that the proposed offering is an underwritten offering
and includes securities to be offered for the account of the Company (the
"Company Shares"), the provisions of this Section 7.1(g) shall be applicable if
the managing underwriter delivers a Cutback Notice stating that, in its opinion,
the aggregate number of shares of Eligible Common Stock, plus the Company Shares
proposed to be sold therein, exceeds the maximum number of shares specified by
the managing underwriter in such Cutback Notice that may be distributed without
adversely affecting the price, timing or distribution of the Common Stock being
distributed. If the managing underwriter delivers such Cutback Notice, the
number of shares of Eligible Common Stock requested to be registered and Company
Shares shall be reduced in the following order until the number of shares to be
offered has been reduced to the maximum number of shares specified by the
managing underwriter in the Cutback Notice: first, the Company Shares and
second, the Eligible Common Stock in proportion to the respective number of
shares of Eligible Common Stock that each Holder has requested to be registered.
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(h) The Company will pay all Registration Expenses (as set forth in
Section 8.3) in connection with a registration under this Section 7.1.
(i) No Registration Demand (other than a Takedown) may be made until
the expiration of six (6) months following the completion of the distribution of
the securities registered under any Registration Statement that has been filed
and has become effective pursuant to a prior Registration Demand.
(j) A Registration Demand will not be deemed satisfied (and will not
count for purposes of the limitations in Section 7.1(a)) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 180 days (or such shorter
period which shall terminate when all Eligible Securities covered by such
registration statement have been sold), (ii) if, after it has become effective,
such registration is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court for any
reason not attributable to the selling holders participating in such
registration and has not thereafter become effective, or (iii) if the conditions
to closing specified in the relevant underwriting or agency agreement entered
into in connection with such offering are not satisfied or waived, other than by
reason of a breach of such agreement by the selling holders participating in
such offering or wilful failure on the part of the selling holders participating
in such offering.
Section 7.2. Piggyback Registration Rights.
(a) If, at any time, the Company proposes to file a Registration
Statement with the SEC respecting an offering, whether primary, secondary or
combined, of any equity securities of the Company, the Company shall give
written notice to all Holders at least thirty (30) days prior to the initial
filing of the Registration Statement relating to each such offering. Such notice
shall specify, at a minimum, the number and the type of equity securities so
proposed to be registered, the proposed date of filing of such registration
statement, any proposed means of distribution of such securities, any proposed
managing underwriter or underwriters of such securities and a good faith
estimate by the Company of the proposed maximum offering price thereof, as such
price is proposed to appear on the facing page of such registration statement.
Each Holder shall have the right, within twenty (20) days after delivery of such
notice, to request in writing that the Company include not less than 50,000
shares of Eligible Common Stock (or such lesser amount as is then owned by such
Holder) in such Registration Statement (a "Piggyback Registration").
(b) In the event that the proposed offering is an underwritten offering
covering Company Shares, the provisions of this paragraph (b) shall be
applicable if the managing underwriter delivers a Cutback Notice stating that,
in its opinion, the aggregate number of shares of Eligible Common Stock and the
Company Shares that the Holders have requested to be registered, exceeds the
maximum number of shares specified by the managing underwriter in such Cutback
Notice that may be distributed without adversely affecting the price, timing or
distribution of the Common Stock being distributed. If the managing underwriter
delivers such Cutback Notice, the number of shares of Eligible Common Stock and
Company Shares requested to be included in such offering shall be reduced in the
following order until the number of shares to be offered has been reduced to the
maximum number of shares specified by the managing underwriter in the Cutback
Notice: first, the
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Eligible Common Stock in proportion to the respective number of shares of
Eligible Common Stock that each Holder has requested to be registered and
second, the Company Shares.
(c) No Piggy-Back Registration effected under this Section 7.2 shall be
deemed to have been effected pursuant to Section 7.1 hereof or shall release the
Company of its obligations to effect any Demand Registration upon request as
provided in Section 7.1.
(d) The Company will pay all Registration Expenses (as set forth in
Section 8.3) in connection with a registration under this Section 7.2.
(e) The provisions of this Section 7.2 shall not be applicable in
connection with a transaction in which a registration statement is filed by the
Company on Form S-4 or S-8 or any successor or similar form or a registration
statement is filed by the Company that registers securities issued pursuant to a
DRIP.
Section 7.3. Company's Ability to Postpone Registration Rights.
(a) The Company shall have the right to postpone the filing of any
Registration Statement relating to a Demand Registration for a reasonable period
of time not to exceed ninety (90) days (the "Blackout Period") if: (i) the
Company determines in its good faith judgment that it would be required to
disclose in such Registration Statement information not otherwise then required
by law to be publicly disclosed and (ii) either (x) in the good faith judgment
of the Board of Directors of the Company, such disclosure would adversely affect
any material corporate development or business transaction contemplated by the
Company or otherwise would be materially harmful to the Company and its
stockholders or (y) the Company has a bona fide purpose for preserving as
confidential such information or; provided, however, that the Blackout Period
shall earlier terminate upon the completion or abandonment of the relevant
corporate development or business transaction or upon public disclosure by the
Company or public admission by the Company of such information specified in (i)
above.
(b) If at any time after the Company notifies the Holders of its
intention to file a Registration Statement that would trigger Piggyback
Registration Rights, the Board of Directors of the Company in good faith shall
determine for any reason not to effect such registration or to postpone such
registration, the Company shall (i) in the case of a determination not to effect
such registration, be relieved of its obligation to register any Eligible
Securities of Holders requesting inclusion in such registration, and (ii) in the
case of a determination to postpone such registration, be permitted to postpone
registering the Eligible Securities of Holders requesting inclusion in such
registration.
(c) After the expiration of any Blackout Period and without further
request from any Holder, the Company shall effect the filing of the relevant
Demand Registration and shall use its reasonable best efforts to cause any such
Demand Registration to be declared effective as promptly as practicable unless
the requesting Holder or Holders shall have, prior to the effective date of such
Demand Registration withdrawn in writing its initial request, in which case,
such withdrawn request shall not constitute a Registration Demand or reduce the
number of Registration Demands available under Section 7.1(a).
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(d) Any request by a Holder for a Demand Registration which is
subsequently withdrawn prior to such Demand Registration becoming effective
shall not constitute a Registration Demand or reduce the number of Registration
Demands available under Section 7.1(a); provided, however, that other than with
respect to a withdrawal which is made as a result of or after the expiration of
any Blackout Period as specified in subsection (c) above, the Holder or Holders,
as appropriate, shall reimburse the Company for all expenses relating to the
preparation of such withdrawn Demand Registration.
(e) The Company shall as promptly as practicable notify the Holders of
any postponement pursuant to this Section 7.3 or Section 7.1(c)(ii), specifying
the reasons therefor.
(f) If the Company exercises its right to postpone the filing of any
Registration Statement pursuant to Section 7.3 or if the Company exercises its
right to postpone any Takedown pursuant to Section 7.1(c)(ii) and the Company
notifies any Holder of such postponement or if the Company gives the notice
described in Section 8.7(a), such Holder agrees to keep confidential the
exercise by the Company of its postponement right and any information related
thereto which is given to such Holder by the Company.
(g) Notwithstanding the provisions of this Section 7.3 or Section
7.1(c)(ii), the aggregate number of days (whether or not consecutive) during
which the Company may delay the effectiveness of the Registration Statement or
prevent offerings, sales or distributions by the Holders pursuant to this
Section 7.3 or Section 7.1(c)(ii) shall in no event exceed 120 days during any
12-month period. In addition, no such delay shall exceed such number of days
that the Company determines in good faith to be reasonably necessary.
Section 7.4. Holder Withdrawal Rights. The Company shall withdraw from
registration any Eligible Securities on request of a Holder. The Company shall
not be obligated to maintain the effectiveness of any Registration Statement if,
after any withdrawal of Eligible Securities by a Holder, the number of Eligible
Securities remaining subject to such Registration Statement represents less than
5% of the shares of Eligible Common Stock deemed outstanding, unless the Company
is also registering securities on such Registration Statement for its own
account.
ARTICLE 8
REGISTRATION PROCEDURES
Section 8.1. Covenants of the Company Applicable to All Registration
Statements. This Section 8.1 applies to all Registration Statements filed by
the Company and referred to in Section 7.1 and 7.2. The securities covered by
each such Registration Statement are referred to as the "Registered Securities".
Each underwriter (including any qualified independent underwriter), agent,
selling broker, dealer manager or similar securities industry professional
participating in any offering of the Registered Securities is referred to as an
"underwriter" or "agent" and any agreement entered into with an underwriter or
agent is referred to as an "underwriting or agency agreement". In connection
with each such registration, the Company covenants with each Holder
participating in such offering (each, a "selling holder") and each underwriter
or agent participating therein as follows:
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(a) The Company will notify the selling holders and the managing
underwriter or agent, immediately, and confirm the notice in writing, (i) when
the Registration Statement or any pre-effective amendment, post-effective
amendment, prospectus or prospectus supplement is filed or when the Registration
Statement, or any post-effective amendment to the Registration Statement, shall
have become effective, (ii) of the receipt of any comments from the SEC, (iii)
of any request by the SEC or any state securities authority for additional
information or to amend the Registration Statement or amend or supplement the
Prospectus or any notification of an intention to proceed for that purpose, (iv)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Registered Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes, (v) if
at any time when a prospectus is required by the Securities Act to be delivered
in connection with sales of the Registered Securities the representations and
warranties of the Company contemplated by Section 8.1(i) cease to be true and
correct and (vi) of the existence of any fact that results or may result in the
Registration Statement, the Prospectus or any document incorporated therein by
reference containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make any statement
therein not misleading in light of the circumstances then existing.
(b) The Company will use its best efforts to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
moment.
(c) The Company will afford the Representative(s) and the managing
underwriters a reasonable opportunity, prior to its being filed with the SEC,
to comment on any Registration Statement, any amendment thereto, or any
amendment of or supplement to the Prospectus.
(d) The Company will furnish to each selling holder and to the managing
underwriter or agent, without charge, as many signed copies of the Registration
Statement (as originally filed) and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith, including documents incorporated by
reference into the Prospectus, and signed copies of all consents and
certificates of experts, as such selling holder or the managing underwriter or
agent may reasonably request, and will furnish to the managing underwriter, for
each other underwriter participating in an underwritten offering, one conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (including documents incorporated by reference into the Prospectus but
without exhibits).
(e) The Company will deliver to each selling holder and each
underwriter or agent participating in such offering, without charge, as many
copies of each preliminary prospectus as such selling holder or such underwriter
or agent may reasonably request, and the Company hereby consents to the use of
such copies for purposes permitted by the Securities Act. The Company will
deliver to each selling holder and each underwriter or agent participating in
such offering, without charge, from time to time during the period when the
Prospectus is required to be delivered under the Securities Act, such number of
copies of the Prospectus (as supplemented or amended) as such selling holder or
such underwriter or agent may reasonably request.
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(f) The Company will comply with the Securities Act and the rules and
regulations of the SEC thereunder, the Exchange Act and the rules and
regulations of the SEC thereunder and any state securities laws or rules so as
to permit the completion of the distribution of the Registered Securities in
accordance with the intended method or methods of distribution contemplated in
the Prospectus. If at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the Registered Securities any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the selling holders, counsel for the underwriters
or agents or counsel for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of any such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the Securities Act or the rules and
regulations of the SEC thereunder, the Company will promptly prepare and file
with the SEC, subject to Section 8.1(c), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements and will
promptly furnish each selling holder and underwriter or agent with a reasonable
number of copies of such amendment or supplement.
(g) The Company will use its best efforts, in cooperation with the
selling holders or the underwriters or agents, as the case may be, to register
or qualify the Registered Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions as the selling holders or
the managing underwriter or agents, as the case may be, may designate and to
keep such registration or qualification in effect for so long as such
Registration Statement remains effective; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Registered Securities have been
qualified as above provided.
(h) The Company will effect the listing of the Registered Securities
covered by a Registration Statement on each national securities exchange on
which similar securities issued by the Company are then listed and make all
other necessary or appropriate filings with each such securities exchange.
(i) The Company shall make such representations and warranties to the
selling holders and the underwriters or agents, if any, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten public
offerings.
(j) On the effective date of the Registration Statement or, in the case
of an underwritten offering, on the date of delivery of the Registered
Securities sold pursuant thereto, the Company shall cause to be delivered to the
selling holders and the underwriters or agents, if any, opinions of counsel for
the Company with respect to, among other things, the due incorporation and good
standing of the Company; the qualification of the Company to transact business
as a foreign corporation; the due authorization, execution and delivery of this
Agreement; the due authorization, execution, authentication and issuance, and
the validity and enforceability, of the Warrants and/or
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the Eligible Common Stock, as the case may be; the absence of material legal or
governmental proceedings involving the Company; the absence of a material breach
by the Company of, or a material default under, agreements binding the Company;
the absence of governmental approvals required to be obtained in connection with
the registration, offering and sale of the Warrants and/or Eligible Common
Stock, as the case may be; the compliance as to form of the Registration
Statement and any documents incorporated by reference therein with the
requirements of the Securities Act; the effectiveness of such Registration
Statement under the Securities Act; and a statement that, as of the date of the
opinion and of the Registration Statement or most recent post-effective
amendment thereto, as the case may be, nothing has come to the attention of such
counsel which causes them to believe that either the Registration Statement or
the Prospectus included therein, as then amended or supplemented, or the
documents incorporated by reference therein (in the case of such documents, in
the light of the circumstances existing at the time that such documents were
filed with the Commission under the Exchange Act), contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein not misleading (it being understood that such counsel need
express no opinion as to the financial statements and other financial data
included therein or omitted therefrom).
In the event that any broker-dealer registered under the Exchange Act
shall be an "affiliate" of, or shall have a "conflict of interest" with, the
Company (each such term as defined in Schedule E to the By-Laws of the National
Association of Securities Dealers ("NASD")), and such broker-dealer shall
underwrite any Eligible Securities or participate as a member of an underwriting
syndicate or selling group or otherwise "assist in the distribution" (within the
meaning of the Rules of Fair Practice and the By-Laws of the NASD) thereof,
whether as a Holder or as an underwriter, a placement or sales agent or a broker
or dealer in respect of such Eligible Securities or otherwise, the Company shall
assist such broker-dealer, in complying with the requirements of such Rules and
By-Laws, including, without limitation, by (1) if such Rules or By-Laws,
including Schedule E thereto, shall so require, engaging a "qualified
independent underwriter" (as defined in such Schedule) to participate in the
preparation of the registration statement relating to such Eligible Securities,
to exercise usual standards of due diligence in respect thereto and, if any
portion of the offering contemplated by the Registration Statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the maximum public offering price of such Eligible Securities, (2)
paying the fees and expenses of any such qualified independent underwriter and
indemnifying the qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 8.4 hereof, and (3)
providing to such broker-dealer such information concerning the Company and its
affiliates, officers, directors, employees and security holders as may be
required in order for such broker-dealer to comply with the requirements of
Schedule E to the NASD By-laws and Section 44 of the Rules of Fair Practice.
(k) Immediately prior to the effectiveness of the Registration
Statement or, in the case of an underwritten offering, at the time of delivery
of any Registered Securities sold pursuant thereto, the Company shall cause to
be delivered to the selling holders and the underwriters or agents, if any,
letters from the Company's independent public accountants stating that such
accountants are independent public accountants with respect to the Company
within the meaning of the Securities Act and the applicable published rules and
regulations of the SEC thereunder, and otherwise in customary form and covering
such financial and accounting matters as are customarily covered by letters of
the independent public accountants delivered in connection with primary
underwritten public offerings.
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(l) If the managing underwriter or agent so requests, the underwriting
or agency agreement shall set forth in full the provisions hereof relating to
covenants, registration expenses, lock-up agreements, indemnification and
contribution contained in this Article 8, with such changes therein as may be
agreed to by the managing underwriter or agent, the Company and the selling
holders.
(m) The Company shall deliver such documents and certificates as may be
requested by any selling holder or the underwriters or agents, if any, to
evidence compliance with Section 8.1(i) and with any customary conditions
contained in the underwriting or agency agreement, if any.
(n) The Company will make available for inspection by representatives
of the selling holders and the underwriters or agents participating in such
offering, any attorney or accountant retained by such selling holders or
underwriters or agents and, with respect to any private placement of Warrants or
Underlying Common Stock, upon notice to the Company, prospective purchasers, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter or
agent, attorney or accountant in connection with the preparation of the
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by each such person (by, among other things, if so requested
by the Company, entering into a confidentiality agreement in form and substance
satisfactory to the Company) unless such records, information or documents
become part of the public domain through no fault of such person or unless
disclosure thereof is required by court or administrative order or the SEC
(including the federal securities law). Without limitation of the foregoing, the
Company will give the selling holders, their underwriters or agents and their
respective counsel, accountants and other representatives and agents the
opportunity to participate in the preparation of any prospectus or offering
circular included therein or filed with the SEC, and, to review all information
reasonably requested by each of them as shall be necessary or appropriate, in
the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
(o) The Company will make generally available to its security holders
as soon as practicable, but not later than forty-five (45) days after the close
of the period covered thereby (or ninety (90) days if such period is a fiscal
year), an earnings statement of the Company (in form complying with the
provisions of Rule 158 under the rules and regulations of the SEC under the
Securities Act), covering a period of twelve (12) months beginning after the
effective date of the Registration Statement but not later than the first day of
the Company's fiscal quarter next following such effective date.
(p) The Company will enter into such customary agreements, including a
customary underwriting or agency agreement with the underwriters or agents, if
any, and take all other reasonable actions in connection with the offering in
order to expedite or facilitate the disposition of the Registered Securities.
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(q) The Company will provide a transfer agent and registrar for all
such Eligible Securities covered by such registration statement not later than
the effective date of such registration statement.
(r) The Company will provide a CUSIP number for all Eligible Securities
being offered, not later than the effective date of the registration statement.
(s) The Company will take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or facilitate the
disposition of such Eligible Securities.
(t) The Company shall cooperate with the selling holders and the
underwriters or agents participating in such offering to facilitate the timely
preparation and delivery of certificates representing such Registered Shares to
be sold, which certificates shall not bear any restrictive legends except as
required by law or the Articles of Incorporation or the Company's By-laws; and,
in the case of an underwritten offering, enable such Registered Shares to be in
such denominations and registered in such names as the managing underwriter or
underwriters may request in writing at least two business days prior to any sale
of the Registered Shares to the underwriters or agents participating in such
offering.
Section 8.2. Covenants of the Selling Holders.
(a) Each selling holder shall use its best efforts to furnish to the
Company such information regarding the distribution of such Registered
Securities as is customarily requested from selling holders in underwritten
public offerings to the extent necessary to permit the Company to comply with
the Securities Act; provided, that the Company will not include in any
Registration Statement, Prospectus or prospectus supplement information
concerning or relating to any Holder or selling holder to which such Holder or
selling holder shall reasonably object (unless the inclusion of such information
is required by applicable law or the regulation of any securities exchange to
which the Company may be subject), and the Company will not file any
Registration Statement, Prospectus or amendment or supplement thereto to which
such Holder or selling holder shall reasonably object; provided that, if such
Holder or selling holder objected to a registration statement to be filed in
connection with a Piggyback Registration, such Holder or selling holder may
withdraw any or all of its Eligible Securities from such registration statement
and the Company may file such registration statement.
(b) Each selling holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
8.1(a)(vi), such selling holder will forthwith discontinue the disposition of
its Registered Securities pursuant to the Registration Statement until such
selling holder's receipt of the copies of a supplemented or amended Prospectus
contemplated by Section 8.1(f), or until it is advised in writing by the Company
that the use of such Prospectus may be resumed. If the Company shall give any
such notice, the Company shall extend the period of time during which the
Company is required to keep the Registration Statement effective and usable by
the number of days during the period from the date of receipt of such notice to
the date when each selling holder of Registered Securities covered by such
Registration Statement either receives the copies of a supplemented or amended
Prospectus contemplated by
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Section 8.1(f) or is advised in writing by the Company that the use of such
Prospectus may be resumed.
(c) No selling holders, as such, shall be required to make any
representation or warranty as to the accuracy or completeness of the
Registration Statement or otherwise relating to the offering (except solely as
to written information furnished to the Company by such selling holder expressly
for use in the Registration Statement).
Section 8.3. Registration Expenses.
(a) The Company will pay and bear all costs and expenses incident to
the performance of its obligations under this Agreement with respect to each
registration pursuant to Section 7.1 or 7.2, including, without limitation:
(i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), as originally
filed and as amended, any preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the selling holders or the underwriters or agents, as
the case may be;
(ii) the preparation, printing and distribution of any
underwriting or agency agreement, agreement among underwriters, selling
agreements, certificates representing the Registered Securities, any
Blue Sky or legal investment survey and other documents relating to the
performance of and compliance with this Agreement;
(iii) the fees and disbursements of the Company's counsel,
accountants and experts and the reasonable fees and disbursements of
one counsel retained by the selling holders pursuant to Section 8.3(b);
(iv) except as provided in Section 8.3(c), the fees and
disbursements of the underwriters or agents customarily paid by issuers
or sellers of securities and the reasonable fees and expenses of any
special experts retained in connection with the Registration Statement,
but excluding underwriting discounts and commissions and transfer
taxes, if any;
(v) the qualification of the Registered Securities under
applicable securities laws in accordance with Section 8.1(g) and any
filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the selling holders and the underwriters
or agents, as the case may be, in connection therewith, in connection
with any Blue Sky or legal investment survey and in connection with any
reserve share program;
(vi) all fees and expenses incurred in connection with the
listing, if any, of any of the Registered Securities on any securities
exchange pursuant to Section 8.1(h); and
(vii) up to a 5% underwriting discount or commission payable
to the underwriters or agents in connection with the sale of the
Registered Securities.
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(b) In connection with the filing of each Registration Statement, the
Company will reimburse the selling holders for the reasonable fees and
disbursements of one firm of legal counsel, which shall be chosen by the Initial
Holder, or if the Initial Holder is not then a selling holder, the
Representative(s) and shall be reasonably satisfactory to the Company.
(c) Each selling holder will pay and bear all costs and expenses
incident to the delivery of the Registered Securities to be sold by it,
including any stock transfer taxes payable upon the sale of such Registered
Securities to the purchaser thereof and, to the extent not paid pursuant to
Section 8.3(a)(vii) above, any underwriting discounts or commissions payable to
underwriters or agents in connection therewith.
Section 8.4. Indemnification and Contribution.
(a) In connection with each registration pursuant to Section 7.1 or
7.2, the Company shall and hereby does indemnify and hold harmless each selling
holder of Eligible Securities, each underwriter or agent participating in such
offering, each person, if any, who controls any selling holder or any such
underwriter or agent within the meaning of Section 15 of the Securities Act, and
each officer, director, employee, agent, stockholder, member, partner or direct
or indirect owner of any of the foregoing (all of the foregoing being referred
to collectively as "Seller Parties" and individually as a "Seller Party"), as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of an untrue statement of a material fact included in any
preliminary or summary prospectus or the Prospectus (or any amendment
or supplement thereto or any document incorporated therein by
reference) or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever arising out of or based upon any such untrue statement
or omission, or any such alleged untrue statement or alleged omission,
if such settlement is effected with the written consent of the Company,
which shall not be unreasonably withheld or delayed; and
(iii) against any and all expense whatsoever, as incurred
(including fees and disbursements of counsel chosen by the Seller
Parties), reasonably incurred in investigating, preparing, defending
against or appealing any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
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provided, however, that, with respect to any Seller Party, this indemnity does
not apply to any loss, liability, claim, damage or expense to the extent arising
out of an untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished to
the Company by such Seller Party, expressly for use in the Registration
Statement (or any amendment thereto), or any preliminary or summary prospectus
or the Prospectus (or any amendment or supplement thereto).
(b) Each selling holder agrees severally, and not jointly or jointly
and severally, to indemnify and hold harmless the Company, its directors, each
of its officers who signed a Registration Statement, each underwriter or agent
participating in such offering and the other selling holders, and each person,
if any, who controls the Company, any such underwriter or agent and any other
selling holder within the meaning of Section 15 of the Securities Act and each
officer, director, employee, agent, stockholder, member, partner or direct or
indirect owner of any of the foregoing, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section
8.4(a), as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or any preliminary or summary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such selling
holder expressly for use in the Registration Statement (or any amendment
thereto), or any preliminary or summary prospectus or the Prospectus (or any
amendment or supplement thereto); provided, however, that the liability of any
selling holder under this Section 8.4(b) shall be limited to the amount of net
proceeds received by such selling holder in the offering giving rise to such
liability.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve the indemnifying party from any liability it may have
under this Agreement, except to the extent that the indemnifying party is
materially prejudiced thereby and shall not relieve the indemnifying party from
any liability it may have had to any indemnified party otherwise than under this
Section 8.4. In case any action or proceeding is brought against the indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, unless in the
reasonable judgment of the indemnified party a conflict may exist between the
indemnifying party and the indemnified party in respect of such claim or
proceeding, to assume the defense thereof, jointly with any other indemnifying
party so notified, with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party that it
so chooses, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that
(i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the claim within twenty (20) days after
receiving notice from the indemnified party that the indemnified party
believes it has failed to do so; or
(ii) if the indemnified party who is a defendant in any action
or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that
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there may be one or more legal defenses available to the indemnified
party which are not available to the indemnifying party; or
(iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional
conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall
have concluded that there may be legal defenses available to such party
or parties which are not available to the other indemnified parties or
to the extent representation of all indemnified parties by the same
counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for
any reasonable expenses therefor. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If for any reason the forgoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any loss, liability, claim, damage or expense in such proportion
as is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from such offering
of securities. If, however, the allocation provided in the immediately preceding
sentence is not permitted by applicable law, or if the indemnified party failed
to give the notice required by subparagraph (c) above and the indemnifying
party is materially prejudiced thereby, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the indemnifying party and the indemnified party as well
as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this subparagraph (d) were to be determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the preceding sentences of this
subparagraph (d). The amount paid or payable in respect of any claim shall be
deemed to include any legal or other expenses incurred by such indemnified party
in connection with investigation or defending any such claim. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act or the equivalent thereof under any applicable law) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything in this subparagraph (d) to the
contrary, no indemnifying party (other than the Company) shall be required
pursuant to this subparagraph (d) to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of securities in the
offering to
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which the losses, claims, damages or liabilities of the indemnified parties
relate, less the amount of any indemnification payment made pursuant to this
subparagraph (d).
(e) Any indemnity and reimbursement agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract. The indemnity and
contribution agreements contained in this Section 8.4 and the representations
and warranties of the Company referred to in Section 8.1(i) shall remain
operative and in full force and effect regardless of (i) any termination of any
underwriting or agency agreement, (ii) any investigation made by or on behalf of
the selling holders, the Company or any underwriter or agent or controlling
person or (iii) the consummation of the sale or successive resales of the
Registered Securities.
(f) The indemnification and contribution required herein shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
Section 8.5. Rule 144. The Company covenants that it will continue to
file on a timely basis the reports required to be filed by it under the
Securities Act and the rules and regulations of the SEC thereunder and the
Exchange Act and the rules and regulations of the SEC thereunder and it will
take such further action as any Holder of Eligible Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Eligible Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act,
as such Rule may be amended from time to time. Upon the request of any Holder of
Eligible Securities, the Company will deliver to such Holder a written statement
as to whether it has complied with such requirements.
Section 8.6. Participation in Underwritten Offerings. No Holder may
participate in any underwritten offering hereunder unless:
(a) Such Holder (other than the Initial Holder) executes a
power of attorney appointing one or more (up to three (3)) attorneys
(each, a "Representative") designated by the selling holders proposing
to sell a majority of the Eligible Securities proposed to be sold by
all selling holders. Each such Representative shall be authorized, on
customary terms, to execute the underwriting agreement on behalf of
each selling holder and to otherwise act for the selling holders in
connection with the offering.
(b) Such Holder (other than the Initial Holder) directly
through its Representative, enters into an underwriting agreement with
the Company, the other selling holders, any selling stockholders and
the underwriters, which underwriting agreement shall comply with the
provisions of this Article 8.
(c) Such Holder executes all questionnaires and other
documents required by the underwriting agreement to be executed by such
Holder.
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Section 8.7. Lock-Up Agreements.
(a) Provided that the Company, within 10 Business Days after receiving
a Registration Demand, has not given notice to the Holder making such
Registration Demand to the effect that it is unable to provide a "lock-up" as
described in this Section 8.7(a) because it intends to issue securities within
the following 90 days, the Company agrees that it will not, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any share of Common Stock or securities convertible into or
exchangeable or exercisable for any share of Common Stock, other than any (i)
such sale or distribution of Common Stock upon exercise of Warrants in the case
of any registration pursuant to Section 7.l and (ii) Excluded Securities (as
defined below), for a period of ninety (90) days (or such shorter period as the
managing underwriter of such registration shall determine) from the effective
date of any Registration Statement pertaining to such Eligible Common
Stock. "Excluded Securities" shall mean (1) options or other securities issued
to employees or directors of the Company, (2) securities issued in exchange for
interests in real property, (3) shares issued in connection with the Company's
DRIP, (4) securities issued upon conversion of convertible securities issued by
the Company and (5) non-convertible preferred stock of the Company and
non-convertible debt securities of the Company.
(b) Each Holder of Eligible Common Stock whose Eligible Common Stock is
covered by a Registration Statement filed pursuant to Sections 7.1 or 7.2 agrees
that it will not, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any shares of Common Stock (other than
the Eligible Common Stock covered by such Registration Statement) or any
Warrants or other securities convertible into or exchangeable or exercisable for
Common Stock, for a period of ninety (90) days (or such shorter period as the
managing underwriter of such registration shall determine) days from the
effective date of the Registration Statement pertaining to such Eligible Common
Stock.
(c) The lock-up agreements set forth in Sections 8.7(a) and 8.7(b)
shall be subject to customary exceptions that may be contained in an
underwriting agreement if any such registration involves an underwritten
offering.
ARTICLE 9
WARRANT AGENT
Section 9.1. Nature of Duties and Responsibilities Assumed.
(a) The Company hereby appoints the Warrant Agent to act as agent of
the Company as set forth in this Agreement. The Warrant Agent hereby accepts
such appointment as agent of the Company and agrees to perform that agency upon
the terms and conditions herein set forth, by all of which the Company and the
Holders, by their acceptance thereof, shall be bound.
(b) The Warrant Agent shall not by countersigning the Warrant
Certificates or by any other act hereunder be deemed to make any representations
as to (i) the validity or authorization of the Warrants or the Warrant
Certificates (except as to its countersignature thereon), or of any securities
or other property delivered upon exercise or tender of any Warrant, (ii) the
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accuracy of the computation of the Exercise Price or the number or kind or
amount of stock or other securities or other property deliverable upon exercise
of any Warrant, or (iii) the correctness of the representations of the Company
made in such certificates that the Warrant Agent receives.
(c) The Warrant Agent shall not have any duty to calculate or determine
any adjustments with respect either to the Exercise Price, the kind and amount
of shares or other securities or any property receivable by Holders upon the
exercise or tender of Warrants, and the Warrant Agent shall have no duty or
responsibility in determining the accuracy or correctness of such calculation.
The Warrant Agent shall not (i) be liable for any recital or statement of fact
contained herein, or in the Warrant Certificates, or for any action taken,
suffered or omitted by it in good faith on the belief that any Warrant
Certificate, or any other documents or any signatures are genuine or properly
authorized, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
(d) The Warrant Agent is hereby authorized to accept instructions with
respect to the performance of its duties hereunder from the Chairman, Chief
Executive Officer or President of the Company and to apply to any such officer
for instructions (which instructions will be promptly given in writing when
requested) and the Warrant Agent shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with the instructions of
any such officer, but in its discretion the Warrant Agent may in lieu thereof
accept other evidence of such or may require such further or additional evidence
as it may deem reasonable.
(e) The Warrant Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, provided reasonable care has been
exercised in the selection and in the continued employment of any such attorney,
agent or employee. The Warrant Agent shall not be under any obligation or duty
to institute, appear in or defend any action, suit or legal proceeding in
respect hereof, unless first indemnified to its reasonable satisfaction, but
this provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without such
indemnity. The Warrant Agent shall promptly notify the Company in writing of any
claim made or action, suit or proceeding instituted against it arising out of or
in connection with this Agreement.
(f) The Company will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Warrant Agent in
order to enable it to carry out or perform its duties under this Agreement.
(g) The Warrant Agent shall act solely as agent of the Company
hereunder. The Warrant Agent shall not be liable except for the failure to
perform such duties as are specifically set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the Warrant
Agent, whose duties and obligations shall be determined solely by the express
provisions hereof.
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Section 9.2. Right to Consult Counsel. The Warrant Agent may at any
time consult with competent legal counsel, and the Warrant Agent shall incur no
liability or responsibility to the Company and to the Holders for any action
taken, suffered or omitted by it in good faith in accordance with the opinion or
advice of such counsel.
Section 9.3. Compensation and Reimbursement. The Company agrees to pay
to the Warrant Agent from time to time compensation for all services rendered by
it hereunder as the Company and the Warrant Agent may agree from time to time,
and to reimburse the Warrant Agent for reasonable expenses and disbursements
incurred in connection with the execution and administration of this Agreement
(including the reasonable compensation and the expenses of its counsel), and
further agrees to indemnify the Warrant Agent for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Section 9.4. Warrant Agent May Hold Company Securities. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the securities of the Company or its Affiliates
or become pecuniarily interested in transactions in which the Company or its
Affiliates may be interested, or contract with or lend money to the Company or
its Affiliates or otherwise act as fully and freely as though it were not the
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
Section 9.5. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Warrant Agent and no appointment
of a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence or willful misconduct) after giving written notice to the Company.
(b) The Company may remove the Warrant Agent upon written notice, and
the Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first-class mail, postage
prepaid) to the Holders at their last address as shown on the register of the
Company maintained by the Warrant Agent a copy of said notice of resignation or
notice of removal, as the case may be.
(c) Upon such resignation or removal, the Company shall appoint in
writing a new warrant agent. If the Company shall fail to make such appointment
within a period of twenty (20) days after it has been notified in writing of
such resignation by the resigning Warrant Agent or after such removal, then the
Holders may apply to any court of competent jurisdiction for the appointment of
a new warrant agent. Any new warrant agent, whether appointed by the Company or
by such a court, shall be a corporation doing business under the laws of the
United States or any state thereof, in good standing and having a combined
capital and surplus of not less than $50,000,000. The combined capital and
surplus of any such new warrant agent shall be deemed to be the combined
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capital and surplus as set forth in the most recent annual report of its
condition published by such warrant agent prior to its appointment, provided
that such reports are published at least annually pursuant to law or to the
requirements of a Federal or state supervising or examining authority.
(d) After acceptance in writing of such appointment by the new warrant
agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
(e) Any corporation into which the Warrant Agent or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Warrant Agent or any new warrant agent shall be a party, shall be a
successor Warrant Agent under this Agreement without any further act, provided
that such corporation would be eligible for appointment as successor to the
Warrant Agent under the provisions of Section 9.5(c). Any such successor Warrant
Agent shall promptly cause notice of its succession as Warrant Agent to be
mailed (by first-class mail, postage prepaid) to the Holders at their last
address as shown on the register of the Company maintained by the Warrant Agent.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1. Representations and Warranties. The Company hereby
represents and warrants that, as of the date of this Agreement:
(a) Authorization. It has the corporate power and authority to enter
into this Agreement and to perform its obligations under, and consummate the
transactions contemplated by, this Agreement and has by proper action duly
authorized the execution and delivery of this Agreement.
(b) No Conflicts or Consents. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated herein,
nor the performance of and compliance with the terms and provisions hereof will:
(i) violate or conflict with any provision of its Articles of Incorporation or
By-laws; (ii) violate any law, regulation (including without limitation
Regulation G, T, U or X), order, writ, judgment, injunction, decree or permit
applicable to it; (iii) violate or materially conflict with any contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it or any of its properties may be bound; or
(iv) result in or require the creation of any lien, security interest or other
charge or encumbrance (other than those contemplated in or in connection with
this Agreement) upon or with respect to its properties.
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<PAGE>
(c) Consents. No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental authority
or other Person is required in connection with the execution, delivery or
performance of this Agreement or the Warrants.
(d) Enforceable Obligations. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(e) Capitalization. As of the date hereof, the Company's authorized
stock consists of (i) 197,650,000 shares of Common Stock of which 16,572,043
have been issued and are outstanding, (ii) 350,000 shares of Class A Common
Stock, $.01 par value per share, of which 339,806 have been issued and are
outstanding, (iii) 2,000,000 shares of Series A 8% Convertible Redeemable
Preferred Stock, .$.01 par value per share, of which no shares have been issued
and are outstanding. As of the date hereof, no shares of Common Stock are held
in treasury, 1,326,235 shares of Common Stock have been reserved for issuance
under the Company's Rollover Stock Option Plan of which options to acquire all
1,326,235 shares of Common Stock have been granted and 1,750,000 shares of
Common Stock have been reserved for issuance under the Company's 1997 Management
Incentive Plan of which options to acquire 547,375 shares of Common Stock have
been granted. The Company also grants shares of Common Stock to directors in
consideration of their service as directors.
ARTICLE 11
COVENANTS
Section 11.1. Reservation of Common Stock for Issuance on Exercise of
Warrants. The Company covenants that it will at all times reserve and keep
available, free from pre-emptive rights, out of its authorized but unissued
shares of Common Stock, solely for the purpose of issue upon exercise of
Warrants, as herein provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of all Warrants issuable hereunder. The
transfer agent for the Common Stock (the "Transfer Agent") will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such Transfer Agent
the stock certificates required to honor outstanding Warrants upon exercise
thereof in accordance with the terms of this Agreement. The Company covenants
that all shares of Common Stock which shall be so issuable shall, upon payment
therefor as set forth in this Agreement and such issue, be duly and validly
issued and fully paid and non-assessable, free of preemptive rights and free
from all taxes, liens, charges and security interests with respect to the issue
thereof.
Section 11.2. Notice of Dividends. At any time when and if the Company
declares any dividend on its Common Stock, it shall give notice to the Holders
of all the then outstanding Warrants of any such declaration not less than ten
(10) days prior to the related record date for payment of the dividend so
declared.
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<PAGE>
Section 11.3. Reports. For so long as any Warrants remain outstanding
and not expired by their terms, the Company shall furnish to the Holders the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. In addition, the Company shall file with the Warrant Agent
within 15 days after it files them with the Commission copies of its SEC
Reports. In the event the Company shall cease to be required to file SEC Reports
pursuant to the Exchange Act, the Company shall nevertheless mail such SEC
Reports to Holders upon their request. The Company shall furnish copies of its
SEC Reports to Holders promptly after the Company files the same with the
Warrant Agent. The Company shall make all such information available to
investors, securities analysts and broker-dealers who request it in writing.
ARTICLE 12
WARRANT HOLDERS
Section 12.1. Warrant Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Warrant Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise or
conversion of the Warrants represented thereby, nor shall anything contained
herein or in any Warrant Certificate be construed to confer upon the holder of
any Warrant Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as specifically provided herein), or to receive
dividends or subscriptions rights, or otherwise, until the Warrant or Warrants
evidenced by such Warrant Certificate shall have been exercised and the Company
shall have elected to deliver Common Stock (and not cash) upon such exercise.
Section 12.2. Right of Action. All rights of action in respect of this
Agreement are vested in the Holders of the Warrants, and any Holder of any
Warrant, without consent of the Warrant Agent or any other Holder, may on such
Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's right to exercise
or exchange such Holder's Warrants in the manner provided in this Agreement.
ARTICLE 13
MISCELLANEOUS
Section 13.1. Money and Other Property Deposited with the Warrant
Agent. Any moneys, securities or other property which at any time shall be
deposited by the Company or by Holders with the Warrant Agent pursuant to this
Agreement shall be and are hereby assigned, transferred and set over to the
Warrant Agent in trust for the purpose for which such moneys, securities or
other property shall have been deposited; but such moneys, securities or other
property need not be segregated from other funds, securities or other property
except to the extent required by law. The
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Warrant Agent shall distribute any money deposited with it for payment and
distribution to the Company or to Holders by a wire transfer in the appropriate
amount to an account designated by each such Person. Any money deposited with
the Warrant Agent for payment and distribution to the Company or the Holders
that remains unclaimed for two years after the date the money was deposited with
the Warrant Agent shall be returned to the Company or the relevant Holder(s)
upon its or their request therefor.
Section 13.2. Payment of Taxes. The Company shall pay all transfer,
stamp and other similar taxes that may be imposed in respect of the issuance or
delivery of Warrants, or in respect of the issuance or delivery by the Company
of any securities upon exercise of Warrants with respect thereto. The Company
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any certificate for shares
of Common Stock or other securities underlying the Warrants or payment of cash
to any Person other than the Holder of a Warrant Certificate surrendered upon
the exercise or purchase of a Warrant, and in case of such transfer or payment,
the Warrant Agent and the Company shall not be required to issue any stock
certificate or pay any cash until such tax or charge has been paid or it has
been established to the Warrant Agent's and the Company's satisfaction that no
such tax or other charge is due.
Section 13.3. Notices. (a) Any notice, demand or delivery authorized by
this Agreement shall be in writing and shall be sufficiently given or made when
delivered or on the third Business Day following the date sent by first-class
mail, postage prepaid, addressed (i) to any Holder at such Holder's address
shown on the register of the Company maintained by the Warrant Agent, (ii) to
the Company or the Warrant Agent as follows:
If to the Company: Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, New York 10020
Attention: President
If to the Warrant Agent: United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
or (iii) such other address as shall have been furnished to the party giving or
making such notice, demand or delivery.
(b) The Company hereby irrevocably authorizes the Warrant Agent, in the
name and at the expense of the Company, to mail to the Holders any such notice
upon receipt thereof from the Company.
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<PAGE>
Section 13.4. APPLICABLE LAW. THIS AGREEMENT, EACH WARRANT CERTIFICATE
AND EACH WARRANT ISSUED HEREUNDER AND ALL RIGHTS ARISING HEREUNDER SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 13.5. Persons Benefitting. This Agreement shall be binding upon
and inure to the benefit of any Holders (each of whom is an intended third party
beneficiary), the Company and the Warrant Agent, and their respective
successors, assigns, beneficiaries, executors and administrators. Nothing in
this Agreement is intended or shall be construed to confer upon any Person,
other than the Company, the Warrant Agent and the Holders (and such successors,
assigns, beneficiaries, executors and administrators), any right, remedy or
claim under or by reason of this Agreement or any part hereof.
Section 13.6. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
Section 13.7. Supplements and Amendments. The Company and the Warrant
Agent may from time to time, without the consent of the Holders, by supplemental
agreement or otherwise, make any changes or corrections in this Agreement in
order to (a) cure any ambiguity or to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, (b) add
to the covenants and agreements of the Company for the benefit of the Holders,
or surrender any rights or power reserved to or conferred upon the Company in
this Agreement, (c) modify the restrictions on, and procedures for, resale and
other transfers of the Warrants to the extent required or permitted by any
change in applicable law or regulation (or the interpretation thereof) of the
United States of America or in practices relating to the resale or transfer of
restricted securities generally or (d) evidence the succession of another Person
to the Company or the Warrant Agent and the assumption by such successor of this
Agreement as provided herein; provided, that, in each case, such changes or
corrections shall in any respect not adversely affect the interests of the
Holders. The Warrant Agent shall send a copy of any such supplemental agreement
or amendment to each of the Holders by first-class mail at the Company's
expense. The Warrant Agent shall join with the Company in the execution and
delivery of any such supplemental agreements and amendments unless it affects
the Warrant Agent's own rights, duties or immunities hereunder, in which case
the Warrant Agent may, but shall not be required to, join in such execution and
delivery. Any amendment or supplement to this Agreement that has an adverse
effect on the rights of Holders as set forth in this Agreement shall require the
written consent of registered Holders of two-thirds (2/3) of the then
outstanding Warrants. Notwithstanding the foregoing, the consent of each Holder
of a Warrant affected shall be required for any amendment pursuant to which the
Shares Amount would be decreased.
Section 13.8. Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience and shall not control or
affect the meaning or construction of any of the provisions hereof.
Section 13.9. Remedies. In the event of a breach by the Company or by a
holder of Eligible Securities, of any of their obligations under this Agreement,
each holder of Eligible Securities or the Company, as the case may be, in
addition to being entitled to exercise all rights
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granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each holder of
Eligible Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
---------------------------------
Name: Edward Lowenthal
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: /s/ Cynthia Chaney
---------------------------------
Name: Cynthia Chaney
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
WARRANTS TO PURCHASE COMMON STOCK
OF WELLSFORD REAL PROPERTIES, INC.
No._______ Certificate for ______ Warrants
This certifies that [HOLDER], or registered assigns, is the registered
holder of the number of Warrants set forth above. Each Warrant entitles the
holder thereof (a "Holder"), subject to the provisions contained herein and in
the Warrant Agreement referred to below, to purchase, from Wellsford Real
Properties, Inc., a Maryland corporation (the "Company"), the number of shares
of the Company's common stock, par value $.01 per share (the "Common Stock"), as
provided in the Warrant Agreement, at an exercise price and subject to all of
the terms and conditions set forth in the Warrant Agreement. At the sole
election of the Company, upon the exercise of any Warrant, the Company may pay
to the Holder a certain amount of cash, as provided in the Warrant Agreement, in
lieu of delivering the shares of Common Stock.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of August 28, 1997 (the "Warrant Agreement"),
between the Company and United States Trust Company of New York, as warrant
agent (the "Warrant Agent", which term includes any successor Warrant Agent
under the Warrant Agreement), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Warrant Agent and the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the Close of
Business on August 28, 2002.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable from time to
time on any Business Day beginning on August 28, 1997, and ending on the
Expiration Date.
The Exercise Price and the number of shares of Common Stock issuable
upon the exercise of each Warrant are subject to adjustment as provided in the
Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
Warrants shall, upon payment therefor as set forth in the Warrant Agreement and
such issue, be duly and validly issued and fully paid and non-assessable.
A-1
<PAGE>
In order to exercise a Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the Warrant
Agent, with the Exercise Subscription Form on the reverse hereof duly executed
by the Holder hereof, with signature guaranteed as therein specified, together
with any required payment in full of the Exercise Price then in effect for the
share(s) of Underlying Common Stock as to which the Warrant(s) represented by
this Warrant Certificate are submitted for exercise, all subject to the terms
and conditions hereof and of the Warrant Agreement. Any such payment of the cash
Exercise Price shall be by certified or official bank check drawn on a New York
City bank payable to the order of the Company.
The Company shall pay all transfer, stamp and other similar taxes that
may be imposed in respect of the issuance or delivery of the Warrants or in
respect of the issuance or delivery by the Company of any securities upon
exercise of the Warrants. The Company shall not be required, however, to pay any
tax or other charge imposed in connection with any transfer involved in the
issuance of any certificate for shares of Common Stock or other securities
underlying the Warrants or payment of cash to any Person other than the Holder
of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant,
and in case of such transfer or payment, the Warrant Agent and the Company shall
not be required to issue any stock certificate or pay any cash until such tax or
other charge has been paid or it has been established to the Company's
satisfaction that no such tax or other charge is due.
Subject to the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered holder hereof, in whole or
in part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified in
the attached Form of Assignment. Upon any partial transfer, the Company will
issue and deliver to such holder a new Warrant Certificate or Certificates with
respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Each taker and holder of this Warrant Certificate, by taking or holding
the same, consents and agrees that this Warrant Certificate when duly endorsed
in blank shall be deemed negotiable and that when this Warrant Certificate shall
have been so endorsed, the holder hereof may be treated by the Company, the
Warrant Agent and all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented hereby, or to the transfer hereof on the register of the
Company maintained by the Warrant Agent, any notice to the contrary
notwithstanding, but until such transfer on such register, the Company and the
Warrant Agent may treat the registered Holder hereof as the owner for all
purposes.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
A-2
<PAGE>
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at the following address:
610 Fifth Avenue, New York, New York 10020.
A-3
<PAGE>
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
Dated: __________
WELLSFORD REAL PROPERTIES, INC.
By:
---------------------------------
Name:
Title:
Countersigned:
UNITED STATES TRUST COMPANY
OF NEW YORK, Warrant Agent
By:
---------------------------------
Name:
Title:
A-4
<PAGE>
FORM OF REVERSE OF WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Wellsford Real Properties, Inc.
The undersigned irrevocably exercises __________ of the Warrants for,
at your election, either (i) the Shares Amount or (ii) the Cash Amount and
herewith makes payments of $_____ and/or delivers ______ membership units of
Wellsford\Whitehall Properties, L.L.C. (such cash payment being by certified or
official bank check drawn on a New York City bank payable to the order of
Wellsford Real Properties, Inc.), all at the Exercise Price and on the terms and
conditions specified in the within Warrant Certificate and the Warrant Agreement
therein referred to, surrenders this Warrant Certificate and all right, title
and interest therein to Wellsford Real Properties, Inc. and directs that any
shares of Common Stock deliverable upon the exercise of such Warrants be
registered in the name and delivered at the address specified below or any Cash
Amount be wired to the account specified below.
Date: ____________________
*
------------------------------------------------
(Signature of Owner)
------------------------------------------------
(Street Address)
------------------------------------------------
(City) (State) (Zip Code)
[Signature Guaranteed by:
------------------------------------------------
Securities and/or check to be issued to:
Please insert social security or identifying number:
___________________
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
A-5
<PAGE>
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Wire transfer instructions:
A-6
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants constituting
a part of the Warrants evidenced by the within Warrant Certificate not being
assigned hereby) all of the rights of the undersigned under the within Warrant
Certificate, with respect to the number of Warrants set forth below:
SOCIAL SECURITY OR
OTHER IDENTIFYING
NAMES OF NUMBER OF
ASSIGNEES ADDRESS ASSIGNEE(S) NUMBER OF WARRANTS
- --------- ------- ------------------ ------------------
A-7
<PAGE>
and does hereby irrevocably constitute and appoint the undersigned's attorney to
make such transfer on the books of maintained for that purpose, with full power
of substitution in the premises.
Date: ______________________
*
------------------------------------------------
(Signature of Owner)
------------------------------------------------
(Street Address)
------------------------------------------------
(City) (State) (Zip Code)
[Signature Guaranteed by:
------------------------------------------------
______________
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
A-8
<PAGE>
AMENDMENT NO. 1 TO WARRANT AGREEMENT
This AMENDMENT NO. 1 to the Warrant Agreement dated as of August 28,
1997 (this "Amendment") is made and entered into as of July 16, 1998 by and
between Wellsford Real Properties, Inc., a Maryland corporation (together with
its successors and permitted assigns, the "Company"), and United States Trust
Company of New York (together with its successors and permitted assigns, the
"Warrant Agent").
R E C I T A L S
---------------
WHEREAS, the Company and the Warrant Agent are parties to that certain
Warrant Agreement, dated as of August 28, 1998 (the "Warrant Agreement"),
pursuant to which the Company had issued to WHWEL Real Estate Limited
Partnership, a Delaware limited partnership ("Whitehall"), five million
(5,000,000) warrants to purchase shares of the Company's common stock;
WHEREAS, the parties hereto entered into the Warrant Agreement in order
to induce Whitehall to enter into a joint venture with Wellsford Commercial
Properties Trust, a Maryland real estate investment trust ("WCPT"), to form
Wellsford/Whitehall Properties, L.L.C., a Delaware limited liability company
("Wellsford/Whitehall"); and
WHEREAS, Whitehall, WCPT and other members of Wellsford/Whitehall have
agreed to enter a series of transactions in which each member of
Wellsford/Whitehall will contribute its membership units in Wellsford/Whitehall
to Wellsford/Whitehall Properties II, L.L.C., a Delaware limited liability
company ("Wellsford/Whitehall II"), in exchange for membership units in
Wellsford/Whitehall II; and
WHEREAS, the parties hereto desire to amend the Warrant Agreement to
reflect the transactions described above and certain other matters.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Warrant Agent
hereby agree as follows:
1. Definitions. All capitalized terms used and not defined herein shall
have the meanings given to such terms in the Warrant Agreement.
2. Amendment to Warrant Agreement.
(a) The terms "Membership Unit" and "Wellsford/Whitehall LLC
Agreement", as defined in Section 1 of the Warrant Agreement, shall be deleted
in their entirety and replaced with the following terms and definitions:
<PAGE>
(i) "'Membership Unit' shall have the meaning set forth in the
Wellsford/Whitehall II LLC Agreement."
(ii) "'Wellsford/Whitehall II' shall mean Wellsford/Whitehall
Properties II, L.L.C., a Delaware limited liability company.
(iii) "'Wellsford/Whitehall II LLC Agreement' shall mean that
certain Limited Liability Company Operating Agreement of Wellsford/
Whitehall II dated as of July 16, 1998, as the same may be amended
from time to time."
All further references in the Warrant Agreement to the term "Membership
Unit", shall be deemed to refer to the term "Membership Unit" as defined in this
Amendment, and all further references in the Warrant Agreement to the term
"Wellsford/Whitehall LLC Agreement" shall be deemed to be references to
"Wellsford/Whitehall II LLC Agreement" (as such term is defined in this
Amendment).
(b) The following defined terms and definitions shall be inserted into
Section 1 of the Warrant Agreement in their appropriate alphabetical order:
(i) "'Favorable Term' shall have the meaning set forth in
Section 7.5."
(ii) "'Original Term' shall have the meaning set forth in
Section 7.5."
(iii) "'Saracen Members' shall have the meaning set forth in the
Wellsford/Whitehall II LLC Agreement."
(iv) "'Saracen Registration Rights Agreement' shall mean that
certain Registration Rights Agreement dated as of July 16, 1998, by
and among the Company and the Saracen Members, as the same may be
amended from time to time."
(v) "'Wellsford/Whitehall II' shall mean Wellsford/Whitehall
Properties II, L.L.C., a Delaware limited liability company."
(c) Article 7 of the Warrant Agreement is hereby amended by inserting
the following language as a new Section 7.5:
"Section 7.5. Other Registration Rights. In the event the
Company shall grant to any of the Saracen Members the right to request
that the Company register any Common Stock pursuant to the terms and
provisions of the Saracen Registration Rights Agreement, and any
registration right granted therein (the "Favorable Term") is more
advantageous to such Saracen Member than the analogous term contained
in this Agreement (the "Original Term"), then any Holder of Eligible
Securities entitled to exercise any or all of the Registration Rights
may elect, upon exercise thereof, that the Favorable Term be applicable
to such exercise in place of the Original Term."
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<PAGE>
(d) The second paragraph of Section 8.1(j) of the Warrant Agreement is
hereby amended to read in its entirety as follows:
"In the event that any broker-dealer registered under the
Exchange Act shall be an "affiliate" (as defined in Rule 2720(b)(1) of
the NASD Rules (or any successor provision thereto)) of the Company or
has a "conflict of interest" (as defined in Rule 2720(b)(7) of the NASD
Rules (or any successor provision thereto)) and such broker-dealer
shall underwrite, participate as a member of an underwriting syndicate
or selling group or assist in the distribution of any Registrable
Securities covered by the Shelf Registration Statement, whether as a
holder of such Registrable Securities or as an underwriter, a placement
or sales agent or a broker or dealer in respect thereof, or otherwise,
the Company shall assist such broker-dealer in complying with the
requirements of the NASD Rules, including, without limitation, by (A)
engaging a "qualified independent underwriter" (as defined in Rule
2720(b)(15) of the NASD Rules (or any successor provision thereto)) to
participate in the preparation of the registration statement relating
to such Registrable Securities, to exercise usual standards of due
diligence in respect thereto and to recommend the public offering price
of such Registrable Securities, (B) indemnifying such qualified
independent underwriter to the extent of the indemnification of
underwriters provided in Section 5 hereof, and (C) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the NASD Rules."
3. Persons Benefitting. This Amendment shall be binding upon and inure
to the benefit of any Holders (each of whom is an intended third party
beneficiary), the Company and the Warrant Agent, and their respective
successors, assigns, beneficiaries, executors and administrators. Nothing in
this Amendment is intended or construed to confer upon any Person, other than
the Company, the Warrant Agent and the Holders (and such successors, assigns,
beneficiaries, executors and administrators), any right, remedy or claim under
or by reason this Amendment or any part hereof.
4. Continued Force and Effect. The Warrant Agreement, as amended by
this Amendment, and each and every provision, covenant, representation,
warranty, condition and right contained therein, as amended by this Amendment,
is hereby ratified and affirmed as of the date hereof, and shall continue in
full force and effect.
5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
6. Headings and Captions. All headings and captions contained
in this Amendment hereto are inserted for convenience only and shall not be
deemed a part of this Amendment.
7. Governing Law. THIS AMENDMENT AND ALL RIGHTS ARISING HEREUNDER SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
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<PAGE>
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
Name: Edward Lowenthal
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: /s/ Cynthia Chancey
---------------------------------
Name: Cynthia Chancey
Title: Assistant Vice President
<PAGE>
AMENDMENT NO. 2 TO WARRANT AGREEMENT
This AMENDMENT NO. 2 (this "Amendment") to the Warrant Agreement, dated
as of August 28, 1997, as amended, is made and entered into as of May 28, 1999
by and between Wellsford Real Properties, Inc., a Maryland corporation (together
with its successors and permitted assigns, the "Company"), and United States
Trust Company of New York (together with its successors and permitted assigns,
the "Warrant Agent").
R E C I T A L S
WHEREAS, the Company and the Warrant Agent are parties to that certain
Warrant Agreement, dated as of August 28, 1997 (the "Original Warrant
Agreement"), pursuant to which the Company had issued to WHWEL Real Estate
Limited Partnership, a Delaware limited partnership ("WHWEL"), five million
(5,000,000) warrants (the "Warrants") to purchase shares of the Company's common
stock;
WHEREAS, the Company and the Warrant Agent entered into that certain
Amendment No. 1 to Warrant Agreement, dated as of July 16, 1998 ("First
Amendment"; the Original Warrant Agreement as amended by the First Amendment,
the "Warrant Agreement"), to reflect the transactions whereby WHWEL, Wellsford
Commercial Properties Trust, a Maryland real estate investment trust ("WCPT")
and other parties formed Wellsford/Whitehall Properties II, L.L.C., a Delaware
limited liability company ("WWP II");
WHEREAS, WHWEL, W/W Group Holdings, L.L.C., a Delaware limited
liability company ("Holding Co."), WXI/WWG Realty, L.L.C., a Delaware limited
liability company, WCPT and other members of WWPII have formed, and contributed
certain assets to, Wellsford/Whitehall Group, L.L.C. (collectively, the "Group
Transactions");
WHEREAS, in connection with the Group Transactions, WHWEL desires to
assign its interest in the Warrants to Holding Co.; and
WHEREAS, the parties hereto desire to amend the Warrant Agreement to
reflect the transactions described above and certain other matters.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Warrant Agent
hereby agree as follows:
1. Definitions. All capitalized terms used and not defined herein shall
have the meanings given to such terms in the Warrant Agreement.
<PAGE>
2. Amendment to Warrant Agreement.
(a) The terms "Initial Holder", "Membership Unit", and
"Wellsford/Whitehall II LLC Agreement", as defined in Section 1 of the Warrant
Agreement, shall be deleted in their entirety and replaced with the following
terms and definitions:
(i) "'Initial Holder'" shall mean Holding Co."
(ii) "'Membership Unit'" shall have the meaning set forth in the
Wellsford/Whitehall Group LLC Agreement."
(iii) "'Wellsford/Whitehall Group LLC Agreement' shall mean that
certain Limited Liability Company Operating Agreement of Wellsford/
Whitehall Group dated as of May ___, 1999, as such agreement may be
amended or modified from time to time."
All further references in the Warrant Agreement to the term "Initial
Holder", "Membership Unit" and "Wellsford/Whitehall II LLC Agreement" shall be
deemed to refer to the terms "Initial Holder", "Membership Unit" and
"Wellsford/Whitehall Group LLC Agreement", respectively, as each is defined in
this Amendment.
(b) The following defined terms and definitions shall be inserted into
Section 1 of the Warrant Agreement in their appropriate alphabetical order:
(i) "'Deemed Value Per Membership Unit' shall have the meaning
set forth in the Wellsford/Whitehall Group LLC Agreement."
(ii) "'Holding Co.' shall mean W/W Group Holdings, L.L.C., a
Delaware limited liability company."
(iii) "'Registration Rights Agreement' shall mean the
Registration Rights Agreement dated as of May ___, 1999, by and
between the Company and the Initial Holder, as such agreement may be
amended or modified from time to time."
(iii) "'Wellsford/Whitehall Group' shall mean Wellsford/Whitehall
Group, L.L.C., a Delaware limited liability company."
(c) The following defined terms and definitions shall be deleted from
Section 1 of the Warrant Agreement: "Company Shares", "Demand Registration",
"Eligible Common Stock", "Eligible Securities", "Favorable Term", "Piggyback
Registration", "Prospectus", "Registration Demand", "Registration Procedures",
"Registration Rights", "Registration Statement", "Representative", "Saracen
Members", "Saracen Registration Rights Agreement", "selling holder", "Shelf
Registration", "Shelf Registration Statement", "Subsequent Warrant Holder",
"Takedown", "underwriter" and "underwriting or agency agreement".
(d) The last sentence of Article 1 is hereby deleted in its entirety
and replaced with the following language:
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<PAGE>
"Certain terms used principally in Article 6 are defined in that
Section."
(e) Section 3.1(b) of the Warrant Agreement is hereby deleted in its
entirety and replaced with the following:
"(b) When exercised in accordance with subparagraph (c) below,
each Warrant shall entitle the Holder to purchase, and the Company
shall be required to deliver, a number of shares of Common Stock equal
to the Shares Amount in effect on the day such Warrant is exercised in
accordance with Section 3.1(c), at an exercise price (the "Exercise
Price") of, at the sole election of the Holder, either (x) a number of
Membership Unit(s) equal to the quotient (rounded to the nearest one
ten-thousandth (0.0001)) of (i) $10.00 divided by (ii) the Deemed Value
Per Membership Unit or (y) $10.00 in cash; provided, however, that the
Company may, at its sole election, pay to the Holder of each Warrant so
exercised in respect of any one or more of such Warrants cash in an
amount equal to the Cash Amount in lieu of delivering the shares of
Common Stock. When multiple Warrants are exercised, the Exercise Price
may consist of cash, Membership Units or any combination thereof. For
the avoidance of doubt, the Holder may procure Membership Units for the
payment of the Exercise Price from its Affiliates or other
third-parties. Notwithstanding the foregoing, the Holder may not elect
to deliver Membership Units as the Exercise Price upon the exercise of
any Warrant before August 28, 1999."
(f) Article 7 of the Warrant Agreement is hereby amended to read in its
entirety as follows:
ARTICLE 7
REGISTRATION RIGHTS AND PROCEDURES
Section 7.1. The Company acknowledges that it is
subject to the terms and conditions of the Registration Rights
Agreement.
(g) Article 8 of the Warrant Agreement is hereby amended to read in its
entirety as follows:
ARTICLE 8
Intentionally Deleted
(h) Section 13.9 of the Warrant Agreement is hereby amended to read in
its entirety as follows:
Section 13.9 Remedies. In the event of a breach by
the Company or by a Holder of any of their obligations under this
Agreement, each Holder or the Company, as the case may be, in addition
to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that
monetary damages would not be
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<PAGE>
adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further agrees
that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be
adequate.
3. Persons Benefitting. This Amendment shall be binding upon and inure
to the benefit of any Holders (each of whom is an intended third party
beneficiary), the Company and the Warrant Agent, and their respective
successors, assigns, beneficiaries, executors and administrators. Nothing in
this Amendment is intended or construed to confer upon any Person, other than
the Company, the Warrant Agent and the Holders (and such successors, assigns,
beneficiaries, executors and administrators), any right, remedy or claim under
or by reason this Amendment or any part hereof.
4. Continued Force and Effect. The Warrant Agreement, as amended by
this Amendment, and each and every provision, covenant, representation,
warranty, condition and right contained therein, as amended by this Amendment,
is hereby ratified and affirmed as of the date hereof, and shall continue in
full force and effect.
5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
6. Headings and Captions. All headings and captions contained in this
Amendment hereto are inserted for convenience only and shall not be deemed a
part of this Amendment.
7. Governing Law. THIS AMENDMENT AND ALL RIGHTS ARISING HEREUNDER SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
---------------------------------
Name: Edward Lowenthal
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: /s/ Cynthia Chaney
---------------------------------
Name: Cynthia Chaney
Title: Assistant Vice President
WARRANT AGREEMENT
This WARRANT AGREEMENT is made and entered into as of May 28, 1999 by
and between Wellsford Real Properties, Inc., a Maryland corporation (together
with its successors and permitted assigns, the "Company"), and United States
Trust Company of New York (together with its successors and permitted assigns,
the "Warrant Agent").
R E C I T A L S
WHEREAS, W/W Group Holdings, L.L.C., a Delaware limited liability
company ("Holding Co."), WHWEL Real Estate Limited Partnership, a Delaware
limited partnership ("WHWEL"), WXI/WWG Realty, L.L.C., a Delaware limited
liability company, Wellsford Commercial Properties Trust, a Maryland real estate
investment trust ("WCPT"), and other parties have agreed to form, and contribute
certain assets to, Wellsford/Whitehall Group, L.L.C., a Delaware limited
liability company ("Wellsford/Whitehall Group"), subject to the concurrent
issuance by the Company to WHWEL of one hundred fifty thousand (150,000)
warrants to purchase shares of the Company's Common Stock;
WHEREAS, WHWEL has directed the Company to issue such 150,000 warrants
to Holding Co.; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is so willing to act, in connection with the
issuance, transfer or exercise of Warrants and other matters as provided herein.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
<PAGE>
"Agreement" shall mean this Warrant Agreement, as it may be amended or
modified from time to time.
"Articles of Incorporation" shall mean the Company's Articles of
Amendment and Restatement, as amended from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banks in New York are authorized or required to close.
"Cash Amount" shall mean, with respect to any Warrant, an amount of
cash equal to the product of (i) the Closing Price of the Common Stock as of the
date of exercise of such Warrant multiplied by (ii) the Shares Amount in effect
on such date.
"Close of Business" shall mean, for any day, 5:00 P.M., New York City
time, on such date.
"Closing Price" shall mean the last reported sale price regular way on
the day in question or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way of the Common
Stock, in each case on the American Stock Exchange ("AMEX"), or, if the Common
Stock is not listed or admitted to trading on the AMEX, on the principal
national securities exchange or quotation system on which the Common Stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any AMEX member
firm selected from time to time by the board of directors of the Company for the
purpose. In the case of a closing price of Common Stock on the AMEX, such price
shall mean the closing price reported in the AMEX composite transactions
reporting system (as reported in the New York City edition of The Wall Street
Journal or, if not so reported, another authoritative source).
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company and any other stock of the Company into which such common stock
may be converted or reclassified (other than stock of the Company into which
unissued Common Stock has been reclassified) or that may be issued in respect
of, in exchange for, or in substitution of, such common stock by reason of any
stock splits, stock dividends, distributions, mergers, consolidations,
recapitalizations or other like events. For purposes of Section 6.1, the term
"Common Stock" shall include the Class A common stock, $.01 par value per share,
of the Company.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"current market price" shall have the meaning set forth in Section
6.1(a)(vii).
"Deemed Value Per Membership Unit" shall have the meaning set forth in
Section 1 of the Wellsford/Whitehall Group LLC Agreement.
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<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning set forth in Section 3.1(b).
"Expiration Date" shall mean the fifth anniversary of the date of this
Agreement, provided that if such date is not a Business Day, the next Business
Day thereafter.
"Holders" shall mean, collectively, the holders from time to time of
Warrant Certificates and "Holder" shall mean any such holder.
"Holding Co." shall have the meaning set forth in the second paragraph
of this Agreement.
"Initial Holder" shall mean Holding Co.
"Membership Unit" shall have the meaning set forth in the
Wellsford/Whitehall Group LLC Agreement.
"Partial Spin-Off" shall have the meaning set forth in Section
6.1(a)(iv).
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of May ___, 1999, between the Company and the Initial
Holder, as such agreement may be amended or modified from time to time .
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean the annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares Amount" shall mean, with respect to any Warrant, 0.826446
shares of Common Stock, subject to all adjustments made pursuant to Article 6
hereof on or prior to the date of exercise of such Warrant.
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
any Business Day.
"Transfer Agent" shall have the meaning set forth in Section 11.1.
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<PAGE>
"Underlying Common Stock" shall mean all shares of Common Stock either
issuable upon the exercise of the Warrants or previously issued upon the prior
exercise of the Warrants.
"Warrants" shall mean the warrants issued by the Company on the date
hereof pursuant to this Agreement, and any additional warrants issued in
accordance with this Agreement.
"Warrant Certificates" shall mean the certificates substantially in the
form of Exhibit A evidencing the Warrants.
"Warrant Agent" shall have the meaning set forth in the first paragraph
of this Agreement.
"WCPT" shall have the meaning set forth in the second paragraph of this
Agreement.
"Wellsford/Whitehall Group" shall mean the meaning set forth in the
second paragraph of this Agreement.
"Wellsford/Whitehall Group LLC Agreement" shall mean the limited
liability company agreement of Wellsford/Whitehall Group dated as of May, ___
1999, as such agreement may be amended or modified from time to time.
Certain terms used principally in Article 6 are defined in that
Section.
ARTICLE 2
ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates. Warrant Certificates shall
be in registered form only, substantially in the form attached hereto as Exhibit
A and dated the date on which countersigned by the Warrant Agent.
Pending the preparation of definitive Warrant Certificates, temporary
Warrant Certificates may be issued, which may be printed, lithographed,
typewritten, mimeographed or otherwise produced, which will be substantially of
the tenor of the definitive Warrant Certificates in lieu of which they are
issued and which are not required to be countersigned by the Warrant Agent.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon the
surrender of the temporary Warrant Certificates to the Warrant Agent, without
charge to the Initial Holder. Until so exchanged the temporary Warrant
Certificates shall in all respects be entitled to the same benefits under this
Agreement as definitive Warrant Certificates.
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<PAGE>
Section 2.2. Execution and Delivery of Warrant Certificates.
(a) Simultaneously with the execution of this Agreement, Warrant
Certificates evidencing one hundred fifty thousand (150,000) Warrants, shall be
executed on behalf of the Company as provided in paragraph (b) below and
delivered to the Warrant Agent for countersignature and the Warrant Agent shall
thereupon countersign and deliver such Warrant Certificates to Whitehall. In
addition, the Warrant Agent is irrevocably authorized to countersign and deliver
Warrant Certificates as required by Sections 3.1(e), 5.1 and 5.2.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman, Chief Executive Officer or President, either manually or by
facsimile signature printed thereon. Warrant Certificates shall be countersigned
by the Warrant Agent, either manually or by facsimile signature printed
thereupon, and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company whose signature shall have been placed upon any
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent
and issued and delivered with the same force and effect as though such person
had not ceased to be such officer of the Company.
ARTICLE 3
EXERCISE OF WARRANTS
Section 3.1. Exercise Procedures.
(a) Each Warrant shall be exercisable as provided in this
Section 3 from time to time on any Business Day prior to the Close of Business
on the Expiration Date.
(b) When exercised in accordance with subparagraph (c) below, each
Warrant shall entitle the Holder to purchase, and the Company shall be required
to deliver, a number of shares of Common Stock equal to the Shares Amount in
effect on the day such Warrant is exercised in accordance with Section 3.1(c),
at an exercise price (the "Exercise Price") of, at the sole election of the
Holder, either (x) a number of Membership Unit(s) equal to the quotient (rounded
to the nearest one ten-thousandth (0.0001)) of (i) $10.00 divided by (ii) the
Deemed Value Per Membership Unit or (y) $10.00 in cash; provided, however, that
the Company may, at its sole election, pay to the Holder of each Warrant so
exercised in respect of any one or more of such Warrants cash in an amount equal
to the Cash Amount in lieu of delivering the shares of Common Stock. When
multiple Warrants are exercised, the Exercise Price may consist of cash,
Membership Units or any combination thereof. For the avoidance of doubt, the
Holder may procure Membership Units for the payment of the Exercise Price from
its Affiliates or other third-parties. Notwithstanding the foregoing, the Holder
may not elect to deliver Membership Units as the Exercise Price upon the
exercise of any Warrant before August 28, 1999.
(c) In order to exercise a Warrant, the Holder must surrender the
Warrant Certificate evidencing such Warrant to the Warrant Agent, with the form
of election on the reverse of or attached to the Warrant Certificate duly
executed, together with any required payment or delivery,
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<PAGE>
as the case may be, of the Exercise Price, to the Warrant Agent at the principal
office of the Warrant Agent in New York, New York. In the event Holder elects to
tender Membership Units as provided in subparagraph (b) above, all such
Membership Units (and the corresponding Interest (as defined in
Wellsford/Whitehall Group LLC Agreement)) shall be assigned by the Warrant Agent
to the Company. In the event a Holder elects to pay the cash Exercise Price as
provided in subparagraph (b) above, such Holder shall transfer to the Warrant
Agent, together with the surrendered Warrant Certificate, the required payment
in full of the Exercise Price for each Warrant which is exercised. Any such
payment of the Exercise Price shall be by certified or official bank check or
wire transfer of same day funds, and such funds shall be deposited by the
Warrant Agent for the account of the Company, unless otherwise instructed in
writing by the Company.
(d) Upon surrender of a Warrant Certificate in conformity with the
foregoing, the Warrant Agent shall thereupon promptly notify the Company. In the
event the Company elects to deliver the Shares Amount as provided in
subparagraph (b) above, the Company shall transfer to the Holder of the
exercised Warrant share certificates representing the shares of Common Stock to
which such Holder is entitled and the Holder shall be deemed to own and have all
the rights associated with any shares of Common Stock to which it is entitled
pursuant to this Agreement upon the surrender of any Warrant Certificate in
accordance with this Section 3.1. If the Company elects to deliver the Cash
Amount as provided in subparagraph (b) above, the Company shall deliver to the
Holder of the exercised Warrant payment of the Cash Amount in same day funds to
the account specified on the form of election on the reverse of or attached to
the Warrant Certificate. The Holder acknowledges that the Company does not
currently intend to issue Common Stock equal to 20% or more of its currently
outstanding Common Stock upon the exercise of any Warrants and, in the event of
such an exercise that could result in Common Stock being issued in excess of
such limit, the Company will instead deliver the Cash Amount.
(e) If fewer than all the Warrants represented by a Warrant Certificate
are exercised, such Warrant Certificate shall be surrendered by the Warrant
Agent to the Company with instructions for the issuance of a new Warrant
Certificate and the Company shall promptly execute such new Warrant Certificate
for the Warrants that were not exercised and deliver the same to the Warrant
Agent. The Warrant Agent shall promptly countersign the new Warrant Certificate,
register it and deliver it to the registered Holder thereof.
ARTICLE 4
COMPLIANCE WITH THE SECURITIES ACT
Section 4.1. Transfers. The Initial Holder hereby acknowledges that the
Warrants and the shares of Common Stock which may be received by the Initial
Holder upon exercise of any Warrant are and will be subject to certain
restrictions on transfers under the Securities Act and the regulations
promulgated thereunder.
Section 4.2. Representations. The Initial Holder has been afforded full
and complete access to all information and other materials relating to the
Company and to the offer of the Warrants and has had the opportunity to have
answered any questions it had concerning the Company and the offering of the
Warrants.
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<PAGE>
The Initial Holder hereby represents that it is acquiring the
Warrants for its own account for investment and not with a view to the resale or
distribution of any interest therein.
ARTICLE 5
REGISTRATION OF TRANSFERS AND EXCHANGES
Section 5.1. Generally. The Warrant Certificates shall be issued in
registered form only. The Company shall cause to be kept at the office of the
Warrant Agent a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of the transfers
or exchanges of the Warrant Certificates as herein provided.
The Warrant Agent shall from time to time register the transfer or
exchange of any outstanding Warrant, in the records to be maintained by it for
that purpose, upon surrender of such Warrant. Upon any such registration of
transfer or exchange, a new Warrant Certificate shall be issued to the
transferee in the case of a transfer or to the Holder making the exchange, and
the surrendered Warrant Certificate shall be canceled by the Warrant Agent.
Canceled Warrant Certificates shall be disposed of by the Warrant Agent in
accordance with its customary procedures and the Warrant Agent shall deliver a
certificate of their destruction to the Company.
All Warrant Certificates issued upon any registration of
transfer or exchange shall be valid obligations of the Company, evidencing the
same obligations, and entitled to the same benefits under this Agreement, as the
Warrant Certificates surrendered for such registration of transfer or exchange.
Every Warrant Certificate surrendered for registration of transfer or
exchange shall (if so required by the Company or the Warrant Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
contained in Exhibit B hereto or such other form satisfactory to the Company and
the Warrant Agent, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange of the Warrant Certificates. The Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of the Warrant Certificates.
Any Warrant Certificate when duly endorsed in blank shall be deemed
negotiable and when any Warrant Certificate shall have been so endorsed, the
Holder thereof may be treated by the Company, the Warrant Agent and all other
persons dealing therewith as the absolute owner thereof for any purpose and as
the Person entitled to either exercise the rights represented thereby or to
transfer the Warrants represented thereby on the register of the Company
maintained by the Warrant Agent, any notice to the contrary withstanding; but
until such transfer on such register, the Company and the Warrant Agent may
treat the registered Holder thereof as the owner for all purposes.
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Section 5.2. Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
If any mutilated Warrant Certificate is surrendered to the Warrant Agent or the
Company, or if the Warrant Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Warrant Certificate, and there is delivered to
the Company and the Warrant Agent such security or indemnity as may be
reasonably required by them to save each of them harmless, then, in the absence
of notice to the Company or the Warrant Agent that such Warrant Certificate has
been acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Warrant Agent shall countersign and deliver, in exchange for
any such mutilated Warrant Certificate, or in lieu of any such destroyed, lost
or stolen Warrant Certificate, a new Warrant Certificate of like tenor and for a
like aggregate number of Warrants. Upon the issuance of any new Warrant
Certificate under this Section 5.2, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and other expenses (including the reasonable fees and expenses
of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this
Section 5.2 in lieu of any destroyed, lost or stolen Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
destroyed, lost or stolen Warrant Certificate shall be at any time enforceable
as provided herein, and shall be entitled to the benefits of this Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. The provisions of this Section 5.2 are
exclusive and shall preclude (to the extent lawful) all other rights or remedies
with respect to the replacement of mutilated, destroyed, lost or stolen Warrant
Certificates.
ARTICLE 6
ADJUSTMENTS
Section 6.1. Adjustment upon Certain Transactions.
(a) The Shares Amount (and, by virtue thereof, the Cash Amount) shall
be subject to adjustment from time to time as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall pay
or make a dividend or other distribution on any other class or series of
stock of the Company which dividend or distribution includes Common Stock,
the Shares Amount in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased by
multiplying such Shares Amount by a fraction of which the denominator shall
be the number of shares of Common Stock outstanding at the Close of
Business on the date fixed for such determination and the numerator shall
be the sum of such number of shares plus the total number of shares
constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this
subparagraph (i), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company.
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The Company shall not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(ii) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue to all holders of its Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a)) of
the Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the Shares Amount in effect at
the opening of business on the day following the date fixed for such
determination shall be increased by multiplying the Shares Amount by a
fraction of which the denominator shall be the number of shares of Common
Stock outstanding at the Close of Business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market
price and the numerator shall be the number of shares of Common Stock
outstanding at the Close of Business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (ii), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company. The Company shall not issue any rights
or warrants in respect of shares of Common Stock held in the treasury of
the Company. In case any rights or warrants referred to in this
subparagraph (ii) in respect of which an adjustment shall have been made
shall expire unexercised within 60 days after the same shall have been
distributed or issued by the Company, the Shares Amount shall be readjusted
at the time of such expiration to the Shares Amount that would have been in
effect if no adjustment had been made on account of the distribution or
issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Shares Amount in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately increased, and
conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Shares Amount
in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately
decreased, such reduction or increase, as the case may be, to become
effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective. No
reduction in the Shares Amount may occur except pursuant to this
subparagraph (iii).
(iv) Subject to the last two sentences of this subparagraph (iv), in
case the Company shall, by dividend or otherwise, distribute to all holders
of its Common Stock evidences of its indebtedness, shares of any class or
series of stock, cash or assets (including securities, but excluding any
rights or warrants referred to in subparagraph (ii) of this Section 6.1(a),
any dividend or distribution paid exclusively in cash and any dividend or
distribution referred to in subparagraph (i) of this Section 6.1(a)), the
Shares Amount shall be increased so that the same shall equal the number
determined by multiplying the Shares
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Amount in effect immediately prior to the effectiveness of the Shares
Amount increase contemplated by this subparagraph (iv) by a fraction of
which the denominator shall be the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a)) of
the Common Stock on the date fixed for the payment of such distribution
(the "Reference Date") less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors), on the Reference
Date, of the portion of the evidences of indebtedness, shares of stock,
cash and assets so distributed applicable to one share of Common Stock and
the numerator shall be such current market price per share of the Common
Stock, such increase to become effective immediately prior to the opening
of business on the day following the Reference Date. If the Board of
Directors determines the fair market value of any distribution for purposes
of this subparagraph (iv) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in doing so
consider the prices in such market over the same period used in computing
the current market price per share of Common Stock pursuant to subparagraph
(vii) of this Section 6.1(a). For purposes of this subparagraph (iv), any
dividend or distribution that includes shares of Common Stock or rights or
warrants to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, cash, assets or shares of stock other than such shares of
Common Stock or such rights or warrants (making any Shares Amount increase
required by this subparagraph (iv)) immediately followed by (2) a dividend
or distribution of such shares of Common Stock or such rights or warrants
(making any further Shares Amount increase required by subparagraph (i) or
(ii) of this Section 6.1(a), except (A) the Reference Date of such dividend
or distribution as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution, "the date fixed for the
determination of stockholders entitled to receive such rights or warrants"
and "the date fixed for such determination" within the meaning of
subparagraphs (i) and (ii) of this Section 6.1(a) and (B) any shares of
Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the Close of Business on the date fixed for such
determination" within the meaning of subparagraph (i) of this Section
6.1(a)). Notwithstanding anything to the contrary contained in this Article
6, the Company may one time in any twelve-month period pay a dividend or
distribution on its Common Stock exclusively in the form of securities of
(or other ownership interests in) any subsidiary of the Company (a "Partial
Spin-Off") without any adjustment to the Shares Amount on account thereof
if the fair market value (determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the Partial Spin-Off distributed
per share of Common Stock outstanding on the date fixed for such
determination does not exceed 8% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a) of the
Common Stock on the Trading Day next preceding the date of declaration of
such dividend).
(v) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the
case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the greater of (x) the per share amount of the
next preceding quarterly cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in subparagraphs (i),
(ii), (iii), (iv), (v) and
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(vi) of this Section 6.1(a)), and (y) the per share amount which, when
multiplied by four, and added to the fair market value (as determined in
the last sentence of (iv) above) of any Partial Spin-Off distributed per
share of Common Stock during the preceding twelve-month period, is equal to
or less than 8% of the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common Stock
on the Trading Day next preceding the date of declaration of such
dividend), the Shares Amount shall be increased so that the same shall
equal the number determined by multiplying the Shares Amount in effect
immediately prior to the effectiveness of the Shares Amount increase
contemplated by this subparagraph (v) by a fraction of which the
denominator shall be the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common Stock
on the date fixed for the payment of such distribution less the amount of
cash so distributed and not excluded as provided above applicable to one
share of Common Stock and the numerator shall be such current market price
per share of Common Stock, such increase to become effective immediately
prior to the opening of business on the day following the date fixed for
the payment of such distribution.
(vi) In case a tender or exchange offer made by the Company or by any
subsidiary of the Company for all or any portion of the Company's Common
Stock shall expire and such tender or exchange offer shall involve the
payment by the Company or such subsidiary of consideration per share of
Common Stock having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender
or exchange offer (as it shall have been amended) that exceeds the current
market price per share (determined as provided in subparagraph (vii) of
this Section 6.1(a)) of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Shares Amount shall be increased so that the same
shall equal the number determined by multiplying the Shares Amount in
effect immediately prior to the effectiveness of the Shares Amount increase
contemplated by this subparagraph (vi) by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
multiplied by the current market price per share (determined as provided in
subparagraph (vii) of this Section 6.1(a)) of the Common Stock on the
Trading Day next succeeding the Expiration Time and the numerator shall be
the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) at
the Expiration Time and the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common Stock
on the Trading Day next succeeding the Expiration Time, such increase to
become effective immediately prior to the opening of business on the day
following the Expiration Time.
(vii) For the purpose of any computation under subparagraph (ii), (iv)
and (v) of this Section 6.1(a), the "current market price" per share of
Common Stock on any date in question shall be deemed to be the average of
the daily Closing Prices for the five
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consecutive Trading Days prior to and including the date in question;
provided, however, that (1) if the "ex" date (as hereinafter defined) for
any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Shares Amount pursuant to
subparagraph (i), (ii), (iii), (iv), (v) or (vi) above ("Other Event")
occurs after the fifth Trading Day prior to the day in question and prior
to the "ex" date for the issuance or distribution requiring such
computation (the "Current Event"), the Closing Price for each Trading Day
prior to the "ex" date for such Other Event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by which
the Shares Amount is so required to be adjusted as a result of such Other
Event, (2) if the "ex" date for any Other Event occurs after the "ex" date
for the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other Event
shall be adjusted by multiplying such Closing Price by the fraction by
which the Shares Amount is so required to be adjusted as a result of such
Other Event, (3) if the "ex" date of any Other Event occurs on the "ex"
date for the Current Event, one of those events shall be deemed for
purposes of clauses (1) and (2) of this proviso to have an "ex" date
occurring prior to the "ex" date for the other event, and (4) if the "ex"
date for the Current Event is on or prior to the date in question, after
taking into account any adjustment required pursuant to clause (2) of this
proviso, the Closing Price for each Trading Day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair
market value on the date in question (as determined in good faith by the
Board of Directors in a manner consistent with any determination of such
value for purposes of paragraph (iv) or (v) of this Section 6.1(a), whose
determination shall be conclusive and described in a resolution of the
Board of Directors) of the portion of the rights, warrants, evidences of
indebtedness, shares of stock or assets being distributed applicable to one
share of Common Stock. For the purpose of any computation under
subparagraph (vi) of this Section 6.1(a), the current market price per
share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for such date in question and the next
two succeeding Trading Days; provided, however, that if the "ex" date for
any event (other than the tender or exchange offer requiring such
computation) that requires an adjustment to the Shares Amount pursuant to
subparagraph (i), (ii), (iii), (iv), (v) or (vi) above occurs after the
Expiration Time for the tender or exchange offer requiring such computation
and on or prior to the second Trading Day following the date in question,
the Closing Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted by multiplying such Closing Price by the
fraction by which the Shares Amount is so required to be adjusted as a
result of such other event. For purposes of this paragraph, the term "ex"
date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution, (2)
when used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades regular
way on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (3) when used with
respect to any tender or exchange offer, means the first date on which the
Common Stock trades regular way on such exchange or in such market after
the Expiration Time of such offer.
(viii) The Company may make such increase in the Shares Amount, in
addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of this Section 6.1(a), as it
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considers to be advisable to avoid or diminish an income tax to holders of
Common Stock or rights to purchase Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. The Company from time to time may
increase the Shares Amount by any amount for any period of time if the
period is at least twenty days, the increase is irrevocable during the
period, and the Board of Directors of the Company shall have made a
determination that such increase would be in the best interest of the
Company, which determination shall be conclusive. Whenever the Shares
Amount is increased pursuant to the preceding sentence, the Company shall
mail to Holders a notice of the increase at least fifteen days prior to the
date the increased Shares Amount takes effect, and such notice shall state
the increased Shares Amount and the period it will be in effect.
(ix) No adjustment in the Shares Amount shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Shares Amount; provided, however, that any adjustments which by reason of
this subparagraph (ix) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
(x) Whenever the Shares Amount is adjusted as herein provided:
(1) the Company shall compute the adjusted Shares Amount and shall
prepare a certificate signed by the Chief Financial Officer of the Company
setting forth the adjusted Shares Amount and showing in reasonable detail
the facts upon which such adjustment is based, and such certificate shall
forthwith be filed with the Warrant Agent; and
(2) a notice stating the Shares Amount have been adjusted and
setting forth the adjusted Shares Amount shall forthwith be required, and
as soon as practicable after it is required such notice shall be mailed by
the Company to all Holders.
(b) No Fractional Shares. No fractional shares of Common Stock shall be
issued upon exercise of the Warrants. If more than one Warrant is exercised by
the same Holder at one time, the number of full shares issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrants so
exercised. Instead of any fractional share of Common Stock that would otherwise
be issuable to a holder upon exercise of the Warrants, the Company shall pay a
cash adjustment in respect of such fractional share in an amount equal to the
same fraction of the Closing Price per share of Common Stock as of the date of
such exercise.
(c) Reclassification, Consolidation, Merger or Sale of Assets. In the
event that the Company shall be a party to any transaction (including without
limitation any recapitalization or reclassification of the Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination of the Common
Stock and other than the reclassification of unissued Common Stock into other
stock of the Company), any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another person into the Company
(other than a merger which does not result in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company),
any sale or transfer of all or substantially all of the assets of the Company or
any compulsory share exchange) pursuant to which the Common Stock is converted
into the right to
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receive other securities, cash or other property, then lawful provisions shall
be made as part of the terms of such transaction whereby the holder of each
Warrant then outstanding shall have the right thereafter to exercise such
Warrant only for (i) in the case of any such transaction other than a Common
Stock Fundamental Change and subject to funds being legally available for such
purpose under applicable law at the time of such exercise, the kind and amount
of securities, cash and other property receivable upon such transaction by a
holder of the number of shares of Common Stock of the Company for which such
Warrant could have been exercised immediately prior to such transaction, and
(ii) in the case of a Common Stock Fundamental Change, common stock of the kind
received by holders of Common Stock as a result of such Common Stock Fundamental
Change in an amount determined pursuant to the provisions of Section 6.1(e). The
Company or the Person formed by such consolidation or resulting from such merger
or which acquires such assets or which acquires the Company's shares, as the
case may be, shall execute an agreement in form and substance reasonably
acceptable to the Holders evidencing such right. Such agreement shall provide
for adjustments which, for events subsequent to the effective date of such
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 6. The above provisions shall similarly
apply to each and every successive transaction of the foregoing type.
(d) Prior Notice of Certain Events. In case:
(i) the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash in an amount not
greater than its retained earnings other than any special or nonrecurring
or other extraordinary dividend or (2) declare or authorize a redemption or
repurchase of in excess of 10% of the then-outstanding shares of Common
Stock; or
(ii) the Company shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any share of stock of any class or series or of any other
rights or warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value and other than the reclassification of unissued Common Stock into
other stock of the Company), or of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of the
Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be mailed to the Holders, at least 10 days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record (if any) is to be taken for the purpose of such dividend, distribution,
redemption, repurchase, rights or warrants or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution,
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redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(e) Adjustments in Case of Fundamental Changes. Notwithstanding any
other provision in this Article 6 to the contrary, if any Fundamental Change (as
defined in Section 6.1(f)) occurs, then the Shares Amount in effect will be
adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change (as defined in
Section 6(f)), each Warrant shall be exercisable solely in exchange for common
stock of the kind and amount received by holders of Common Stock as a result of
such Common Stock Fundamental Change as more specifically provided below in this
Section 6.1(e).
For purposes of calculating any adjustment to be made pursuant to this
Section 6.1(e) in the event of a Fundamental Change, immediately after such
Fundamental Change in the case of a Common Stock Fundamental Change, the Shares
Amount in effect immediately prior to such Common Stock Fundamental Change, but
after giving effect to any other prior adjustments effected pursuant to this
Section 6, shall thereupon be adjusted by multiplying such Shares Amount by a
fraction of which the denominator shall be the Purchaser Stock price (as defined
in Section 6.1(f)) and the numerator shall be the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in which (A)
100% by value of the consideration received by a holder of Common Stock is
common stock of the successor, acquiror or other third party (and cash, if any,
is paid with respect to any fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common Stock shall
have been exchanged for, converted into or acquired for common stock (and cash
with respect to fractional interests) of the successor, acquiror or other third
party, the Shares Amount in effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by multiplying such Shares Amount
by the number of shares of common stock of the successor, acquiror, or other
third party received by a shareholder for one share of Common Stock as a result
of such Common Stock Fundamental Change.
(f) Definitions. The following definitions shall apply to terms used in
this Article 6:
(i) "Applicable Price" shall mean (1) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only
cash, the amount of cash received by a shareholder for one share of Common
Stock and (2) in the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the daily Closing Prices of
the Common Stock for the ten consecutive Trading Days prior to and
including the record date for the determination of the holders of Common
Stock entitled to receive securities, cash or other property in connection
with such Non-Stock Fundamental Change or Common Stock Fundamental Change,
or, if there is no such record date, the date upon which the holders of the
Common Stock shall have the right to receive such securities,
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cash or other property, in each case, as adjusted in good faith by the
Board of Directors of the Company to appropriately reflect any of the
events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of
Section 6.1(a).
(ii) "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% by value (as determined in good faith by the
Board of Directors of the Company) of the consideration received by holders
of Common Stock consists of common stock that for each of the ten
consecutive Trading Days referred to with respect to such Fundamental
Change in Section 6.1(f)(i) above has been admitted for listing or admitted
for listing subject to notice of issuance on a national securities exchange
or quoted on the NASDAQ National Market System; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental Change unless
either (1) the Company continues to exist after the occurrence of such
Fundamental Change and the outstanding Warrants continue to exist as
outstanding Warrants, or (2) not later than the occurrence of such
Fundamental Change, the outstanding Warrants are converted into or
exchanged for warrants of a corporation succeeding to the business of the
Company, which warrants have terms identical to those of the Warrants.
(iii) "Fundamental Change" shall mean the occurrence of any transaction
or event in connection with a plan pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into, acquired
for or constitute solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more than
one such transaction or event, for purposes of adjustment of the Shares
Amount, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Company shall be exchanged
for, converted into, or acquired for or constitute solely the right to
receive cash, securities, property or other assets, but the adjustment
shall be based upon the highest weighted average of consideration per share
which a holder of Common Stock could have received in such transactions or
events as a result of which more than 50% of the Common Stock of the
Company shall have been exchanged for, converted into, or acquired for or
constitute solely the rights to receive cash, securities, property or other
assets.
(iv) "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
(v) "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the ten
consecutive Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to receive such
common stock, or, if there is no such record date, the date upon which the
holders of the Common Stock shall have the right to receive such common
stock, in each case, as adjusted in good faith by the Board of Directors of
the Company to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 6.1(a);
provided, however, if no such Closing Prices of the common stock for such
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Trading Days exist, then the Purchaser Stock price shall be set at a price
determined in good faith by the Board of Directors of the Company.
(g) Certain Additional Rights. In case the Company shall, by dividend
or otherwise, declare or make a distribution on its Common Stock referred to in
Section 6(a)(iv) or 6(a)(v) (including, without limitation, dividends or
distributions referred to in the last two sentences of Section 6(a)(iv)), the
holder of each Warrant, upon the exercise thereof subsequent to the Close of
Business on the date fixed for the determination of shareholders entitled to
receive such distribution and prior to the effectiveness of the Shares Amount
adjustment in respect of such distribution, shall also be entitled to receive
for each share of Common Stock for which such Warrant is exercised, the portion
of the shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Company (whose
election shall be evidenced by a resolution of the Board of Directors) with
respect to all holders so exercising, the Company may, in lieu of distributing
to such holder any portion of such distribution not consisting of cash or
securities of the Company, pay such holder an amount in cash equal to the fair
market value thereof (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors). If any exercise of a Warrant described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of the Warrant so exercised is entitled
to receive in accordance with the immediately preceding sentence, the Company
may elect (such election to be evidenced by a resolution of the Board of
Directors) to distribute to such holder a due bill for the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of stock, cash or
assets to which such holder is so entitled, provided that such due bill (i)
meets any applicable requirements of the principal national securities exchange
or other market on which the Common Stock is then traded and (ii) requires
payment or delivery of such shares of Common Stock, rights, warrants, evidences
of indebtedness, shares of stock, cash or assets no later than the date of
payment or delivery thereof to holders of shares of Common Stock receiving such
distribution.
(h) Reservation of Shares, Etc. The Company shall at all times reserve
and keep available, free from preemptive rights out of its authorized and
unissued stock, solely for the purpose of allowing the exercise of the Warrants,
such number of shares of its Common Stock as shall from time to time be
sufficient to permit the Company to deliver the Shares Amount in the event all
of the Warrants from time to time outstanding were exercised. The Company shall
from time to time, in accordance with the laws of the State of Maryland,
increase the authorized number of shares of Common Stock if at any time the
number of shares of authorized and unissued Common Stock shall not be sufficient
to permit the Company to deliver the Shares Amount upon the exercise of all of
the then-outstanding Warrants (taking into account the adjustments to the Shares
Amount that are provided for herein).
If any shares of common stock required to be reserved for purposes of
the exercise of the Warrants hereunder require registration with or approval of
any governmental authority under any Federal or State law before such shares may
be issued upon exercise, and an exemption under Section 3(a)(9) of the
Securities Act or similar exemption is not available, the Company will in good
faith and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved as the case may be. If the Common Stock is quoted on the
NASDAQ National Market System or listed on any U.S. national securities
exchange, the Company will, if permitted by the rules of such
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exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of Common Stock issuable upon exercise of the Warrants. The
second sentence of this paragraph shall apply only when the Warrants shall have
become freely transferable pursuant to Rule 144(k) under the Securities Act or
if the shares of Common Stock issuable upon exercise of the Warrants are exempt
from the registration requirements of the Securities Act by operation of an
exemption referred to in the first sentence of this paragraph.
(i) Dividend or Interest Reinvestment Plans or Other Plans.
Notwithstanding the foregoing provisions, the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under any such plan (a "DRIP"), and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee or director benefit plan or program of the
Company or pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding as of the date hereof shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the Shares Amount
in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article 6. If any action would require adjustment of the Shares Amount pursuant
to more than one of the provisions described above, only one adjustment shall be
made and such adjustment shall be the amount of adjustment which has the highest
absolute value to holders of the Warrants.
ARTICLE 7
REGISTRATION RIGHTS AND PROCEDURES
Section 7.1. The Company acknowledges that it is subject to the terms
and conditions of the Registration Rights Agreement.
ARTICLE 8
Intentionally Deleted
ARTICLE 9
WARRANT AGENT
Section 9.1. Nature of Duties and Responsibilities Assumed.
(a) The Company hereby appoints the Warrant Agent to act as agent of
the Company as set forth in this Agreement. The Warrant Agent hereby accepts
such appointment as agent of the Company and agrees to perform that agency upon
the terms and conditions herein set forth, by all of which the Company and the
Holders, by their acceptance thereof, shall be bound.
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(b) The Warrant Agent shall not by countersigning the Warrant
Certificates or by any other act hereunder be deemed to make any representations
as to (i) the validity or authorization of the Warrants or the Warrant
Certificates (except as to its countersignature thereon), or of any securities
or other property delivered upon exercise or tender of any Warrant, (ii) the
accuracy of the computation of the Exercise Price or the number or kind or
amount of stock or other securities or other property deliverable upon exercise
of any Warrant, or (iii) the correctness of the representations of the Company
made in such certificates that the Warrant Agent receives.
(c) The Warrant Agent shall not have any duty to calculate or determine
any adjustments with respect either to the Exercise Price, the kind and amount
of shares or other securities or any property receivable by Holders upon the
exercise or tender of Warrants, and the Warrant Agent shall have no duty or
responsibility in determining the accuracy or correctness of such calculation.
The Warrant Agent shall not (i) be liable for any recital or statement of fact
contained herein, or in the Warrant Certificates, or for any action taken,
suffered or omitted by it in good faith on the belief that any Warrant
Certificate, or any other documents or any signatures are genuine or properly
authorized, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
(d) The Warrant Agent is hereby authorized to accept instructions with
respect to the performance of its duties hereunder from the Chairman, Chief
Executive Officer or President of the Company and to apply to any such officer
for instructions (which instructions will be promptly given in writing when
requested) and the Warrant Agent shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with the instructions of
any such officer, but in its discretion the Warrant Agent may in lieu thereof
accept other evidence of such or may require such further or additional evidence
as it may deem reasonable.
(e) The Warrant Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, provided reasonable care has been
exercised in the selection and in the continued employment of any such attorney,
agent or employee. The Warrant Agent shall not be under any obligation or duty
to institute, appear in or defend any action, suit or legal proceeding in
respect hereof, unless first indemnified to its reasonable satisfaction, but
this provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without such
indemnity. The Warrant Agent shall promptly notify the Company in writing of any
claim made or action, suit or proceeding instituted against it arising out of or
in connection with this Agreement.
(f) The Company will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Warrant Agent in
order to enable it to carry out or perform its duties under this Agreement.
(g) The Warrant Agent shall act solely as agent of the Company
hereunder. The Warrant Agent shall not be liable except for the failure to
perform such duties as are specifically set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the
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Warrant Agent, whose duties and obligations shall be determined solely by the
express provisions hereof.
Section 9.2. Right to Consult Counsel. The Warrant Agent may at any
time consult with competent legal counsel, and the Warrant Agent shall incur no
liability or responsibility to the Company and to the Holders for any action
taken, suffered or omitted by it in good faith in accordance with the opinion or
advice of such counsel.
Section 9.3. Compensation and Reimbursement. The Company agrees to pay
to the Warrant Agent from time to time compensation for all services rendered by
it hereunder as the Company and the Warrant Agent may agree from time to time,
and to reimburse the Warrant Agent for reasonable expenses and disbursements
incurred in connection with the execution and administration of this Agreement
(including the reasonable compensation and the expenses of its counsel), and
further agrees to indemnify the Warrant Agent for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Section 9.4. Warrant Agent May Hold Company Securities. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the securities of the Company or its Affiliates
or become pecuniarily interested in transactions in which the Company or its
Affiliates may be interested, or contract with or lend money to the Company or
its Affiliates or otherwise act as fully and freely as though it were not the
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
Section 9.5. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Warrant Agent and no appointment
of a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence or willful misconduct) after giving written notice to the Company.
(b) The Company may remove the Warrant Agent upon written notice, and
the Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first-class mail, postage
prepaid) to the Holders at their last address as shown on the register of the
Company maintained by the Warrant Agent a copy of said notice of resignation or
notice of removal, as the case may be.
(c) Upon such resignation or removal, the Company shall appoint in
writing a new warrant agent. If the Company shall fail to make such appointment
within a period of twenty (20) days after it has been notified in writing of
such resignation by the resigning Warrant Agent or after such removal, then the
Holders may apply to any court of competent jurisdiction for the appointment of
a new warrant agent. Any new warrant agent, whether appointed by the Company or
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by such a court, shall be a corporation doing business under the laws of the
United States or any state thereof, in good standing and having a combined
capital and surplus of not less than $50,000,000. The combined capital and
surplus of any such new warrant agent shall be deemed to be the combined capital
and surplus as set forth in the most recent annual report of its condition
published by such warrant agent prior to its appointment, provided that such
reports are published at least annually pursuant to law or to the requirements
of a Federal or state supervising or examining authority.
(d) After acceptance in writing of such appointment by the new warrant
agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
(e) Any corporation into which the Warrant Agent or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Warrant Agent or any new warrant agent shall be a party, shall be a
successor Warrant Agent under this Agreement without any further act, provided
that such corporation would be eligible for appointment as successor to the
Warrant Agent under the provisions of Section 9.5(c). Any such successor Warrant
Agent shall promptly cause notice of its succession as Warrant Agent to be
mailed (by first-class mail, postage prepaid) to the Holders at their last
address as shown on the register of the Company maintained by the Warrant Agent.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1. Representations and Warranties. The Company hereby
represents and warrants that, as of the date of this Agreement:
(a) Authorization. It has the corporate power and authority to enter
into this Agreement and to perform its obligations under, and consummate the
transactions contemplated by, this Agreement and has by proper action duly
authorized the execution and delivery of this Agreement.
(b) No Conflicts or Consents. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated herein,
nor the performance of and compliance with the terms and provisions hereof will:
(i) violate or conflict with any provision of its Articles of Incorporation or
By-laws; (ii) violate any law, regulation (including without limitation
Regulation G, T, U or X), order, writ, judgment, injunction, decree or permit
applicable to it; (iii) violate or materially conflict with any contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
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which it is a party or by which it or any of its properties may be bound; or
(iv) result in or require the creation of any lien, security interest or other
charge or encumbrance (other than those contemplated in or in connection with
this Agreement) upon or with respect to its properties.
(c) Consents. No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental authority
or other Person is required in connection with the execution, delivery or
performance of this Agreement or the Warrants.
(d) Enforceable Obligations. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(e) Capitalization. As of the date hereof, the Company's authorized
stock consists of (i) 197,650,000 shares of Common Stock of which 20,410,605
have been issued and are outstanding, (ii) 350,000 shares of Class A Common
Stock, $.01 par value per share, of which 339,806 have been issued and are
outstanding, (iii) 2,000,000 shares of Series A 8% Convertible Redeemable
Preferred Stock, .$.01 par value per share, of which no shares have been issued
and are outstanding. As of the date hereof, (i) no shares of Common Stock are
held in treasury, except for shares in deferred compensation plan, which are
accounted for as treasury stock (489,671 shares of Common Stock), (ii) 1,326,235
shares of Common Stock have been reserved for issuance under the Company's
Rollover Stock Option Plan of which options to acquire all 1,326,235 shares of
Common Stock have been granted and (iii) 3,750,000 shares of Common Stock have
been reserved for issuance under the Company's 1997 Management Incentive Plan
and 1998 Management Incentive Plan of which options to acquire 2,232,375 shares
of Common Stock have been granted. The Company also grants shares of Common
Stock to directors in consideration of their service as directors.
ARTICLE 11
COVENANTS
Section 11.1. Reservation of Common Stock for Issuance on Exercise of
Warrants. The Company covenants that it will at all times reserve and keep
available, free from pre-emptive rights, out of its authorized but unissued
shares of Common Stock, solely for the purpose of issue upon exercise of
Warrants, as herein provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of all Warrants issuable hereunder. The
transfer agent for the Common Stock (the "Transfer Agent") will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such Transfer Agent
the stock certificates required to honor outstanding Warrants upon exercise
thereof in accordance with the terms of this Agreement. The Company covenants
that all shares of Common Stock which shall be so issuable shall, upon payment
therefor as set forth in this Agreement and such issue, be duly and validly
issued and fully paid and
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non-assessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issue thereof.
Section 11.2. Notice of Dividends. At any time when and if the Company
declares any dividend on its Common Stock, it shall give notice to the Holders
of all the then outstanding Warrants of any such declaration not less than ten
(10) days prior to the related record date for payment of the dividend so
declared.
Section 11.3. Reports. For so long as any Warrants remain outstanding
and not expired by their terms, the Company shall furnish to the Holders the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. In addition, the Company shall file with the Warrant Agent
within 15 days after it files them with the Commission copies of its SEC
Reports. In the event the Company shall cease to be required to file SEC Reports
pursuant to the Exchange Act, the Company shall nevertheless mail such SEC
Reports to Holders upon their request. The Company shall furnish copies of its
SEC Reports to Holders promptly after the Company files the same with the
Warrant Agent. The Company shall make all such information available to
investors, securities analysts and broker-dealers who request it in writing.
ARTICLE 12
WARRANT HOLDERS
Section 12.1. Warrant Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Warrant Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise or
conversion of the Warrants represented thereby, nor shall anything contained
herein or in any Warrant Certificate be construed to confer upon the holder of
any Warrant Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as specifically provided herein), or to receive
dividends or subscriptions rights, or otherwise, until the Warrant or Warrants
evidenced by such Warrant Certificate shall have been exercised and the Company
shall have elected to deliver Common Stock (and not cash) upon such exercise.
Section 12.2. Right of Action. All rights of action in respect of this
Agreement are vested in the Holders of the Warrants, and any Holder of any
Warrant, without consent of the Warrant Agent or any other Holder, may on such
Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's right to exercise
or exchange such Holder's Warrants in the manner provided in this Agreement.
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ARTICLE 13
MISCELLANEOUS
Section 13.1. Money and Other Property Deposited with the Warrant
Agent. Any moneys, securities or other property which at any time shall be
deposited by the Company or by Holders with the Warrant Agent pursuant to this
Agreement shall be and are hereby assigned, transferred and set over to the
Warrant Agent in trust for the purpose for which such moneys, securities or
other property shall have been deposited; but such moneys, securities or other
property need not be segregated from other funds, securities or other property
except to the extent required by law. The Warrant Agent shall distribute any
money deposited with it for payment and distribution to the Company or to
Holders by a wire transfer in the appropriate amount to an account designated by
each such Person. Any money deposited with the Warrant Agent for payment and
distribution to the Company or the Holders that remains unclaimed for two years
after the date the money was deposited with the Warrant Agent shall be returned
to the Company or the relevant Holder(s) upon its or their request therefor.
Section 13.2. Payment of Taxes. The Company shall pay all transfer,
stamp and other similar taxes that may be imposed in respect of the issuance or
delivery of Warrants, or in respect of the issuance or delivery by the Company
of any securities upon exercise of Warrants with respect thereto. The Company
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any certificate for shares
of Common Stock or other securities underlying the Warrants or payment of cash
to any Person other than the Holder of a Warrant Certificate surrendered upon
the exercise or purchase of a Warrant, and in case of such transfer or payment,
the Warrant Agent and the Company shall not be required to issue any stock
certificate or pay any cash until such tax or charge has been paid or it has
been established to the Warrant Agent's and the Company's satisfaction that no
such tax or other charge is due.
Section 13.3. Notices. (a) Any notice, demand or delivery authorized by
this Agreement shall be in writing and shall be sufficiently given or made when
delivered or on the third Business Day following the date sent by first-class
mail, postage prepaid, addressed (i) to any Holder at such Holder's address
shown on the register of the Company maintained by the Warrant Agent, (ii) to
the Company or the Warrant Agent as follows:
If to the Company: Wellsford Real Properties, Inc.
535 Madison Avenue
26th Floor
New York, New York 10022
Attention: President
If to the Warrant Agent: United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
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or (iii) such other address as shall have been furnished to the party giving or
making such notice, demand or delivery.
(b) The Company hereby irrevocably authorizes the Warrant Agent, in the
name and at the expense of the Company, to mail to the Holders any such notice
upon receipt thereof from the Company.
Section 13.4. APPLICABLE LAW. THIS AGREEMENT, EACH WARRANT CERTIFICATE
AND EACH WARRANT ISSUED HEREUNDER AND ALL RIGHTS ARISING HEREUNDER SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 13.5. Persons Benefitting. This Agreement shall be binding upon
and inure to the benefit of any Holders (each of whom is an intended third party
beneficiary), the Company and the Warrant Agent, and their respective
successors, assigns, beneficiaries, executors and administrators. Nothing in
this Agreement is intended or shall be construed to confer upon any Person,
other than the Company, the Warrant Agent and the Holders (and such successors,
assigns, beneficiaries, executors and administrators), any right, remedy or
claim under or by reason of this Agreement or any part hereof.
Section 13.6. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
Section 13.7. Supplements and Amendments. The Company and the
Warrant Agent may from time to time, without the consent of the Holders, by
supplemental agreement or otherwise, make any changes or corrections in this
Agreement in order to (a) cure any ambiguity or to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein, (b) add to the covenants and agreements of the Company for the benefit
of the Holders, or surrender any rights or power reserved to or conferred upon
the Company in this Agreement, (c) modify the restrictions on, and procedures
for, resale and other transfers of the Warrants to the extent required or
permitted by any change in applicable law or regulation (or the interpretation
thereof) of the United States of America or in practices relating to the resale
or transfer of restricted securities generally or (d) evidence the succession of
another Person to the Company or the Warrant Agent and the assumption by such
successor of this Agreement as provided herein; provided, that, in each case,
such changes or corrections shall in any respect not adversely affect the
interests of the Holders. The Warrant Agent shall send a copy of any such
supplemental agreement or amendment to each of the Holders by first-class mail
at the Company's expense. The Warrant Agent shall join with the Company in the
execution and delivery of any such supplemental agreements and amendments unless
it affects the Warrant Agent's own rights, duties or immunities hereunder, in
which case the Warrant Agent may, but shall not be required to, join in such
execution and delivery. Any amendment or supplement to this Agreement that has
an adverse effect on the rights of Holders as set forth in this Agreement shall
require the written consent of registered Holders of two-thirds (2/3) of the
then outstanding Warrants. Notwithstanding the foregoing, the consent of each
Holder of a Warrant affected shall be required for any amendment pursuant to
which the Shares Amount would be decreased.
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Section 13.8. Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience and shall not control or
affect the meaning or construction of any of the provisions hereof.
Section 13.9. Remedies. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
---------------------------------------
Name: Edward Lowenthal
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: /s/ Cynthia Chaney
---------------------------------------
Name: Cynthia Chaney
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
WARRANTS TO PURCHASE COMMON STOCK
OF WELLSFORD REAL PROPERTIES, INC.
No._______ Certificate for ______ Warrants
This certifies that [HOLDER] , or registered assigns, is the registered
holder of the number of Warrants set forth above. Each Warrant entitles the
holder thereof (a "Holder"), subject to the provisions contained herein and in
the Warrant Agreement referred to below, to purchase, from Wellsford Real
Properties, Inc., a Maryland corporation (the "Company"), the number of shares
of the Company's common stock, par value $.01 per share (the "Common Stock"), as
provided in the Warrant Agreement, at an exercise price and subject to all of
the terms and conditions set forth in the Warrant Agreement. At the sole
election of the Company, upon the exercise of any Warrant, the Company may pay
to the Holder a certain amount of cash, as provided in the Warrant Agreement, in
lieu of delivering the shares of Common Stock.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of May ___, 1999 (the "Warrant Agreement"), between
the Company and United States Trust Company of New York, as warrant agent (the
"Warrant Agent", which term includes any successor Warrant Agent under the
Warrant Agreement), and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of this
Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of
the Company, the Warrant Agent and the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the Close of
Business on May ___, 2004.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable from time to
time on any Business Day beginning on May ___, 2004, and ending on the
Expiration Date.
The Exercise Price and the number of shares of Common Stock issuable
upon the exercise of each Warrant are subject to adjustment as provided in the
Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
Warrants shall, upon payment therefor as set forth in the Warrant Agreement and
such issue, be duly and validly issued and fully paid and non-assessable.
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In order to exercise a Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the Warrant
Agent, with the Exercise Subscription Form on the reverse hereof duly executed
by the Holder hereof, with signature guaranteed as therein specified, together
with any required payment in full of the Exercise Price then in effect for the
share(s) of Underlying Common Stock as to which the Warrant(s) represented by
this Warrant Certificate are submitted for exercise, all subject to the terms
and conditions hereof and of the Warrant Agreement. Any such payment of the cash
Exercise Price shall be by certified or official bank check drawn on a New York
City bank payable to the order of the Company.
The Company shall pay all transfer, stamp and other similar taxes that
may be imposed in respect of the issuance or delivery of the Warrants or in
respect of the issuance or delivery by the Company of any securities upon
exercise of the Warrants. The Company shall not be required, however, to pay any
tax or other charge imposed in connection with any transfer involved in the
issuance of any certificate for shares of Common Stock or other securities
underlying the Warrants or payment of cash to any Person other than the Holder
of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant,
and in case of such transfer or payment, the Warrant Agent and the Company shall
not be required to issue any stock certificate or pay any cash until such tax or
other charge has been paid or it has been established to the Company's
satisfaction that no such tax or other charge is due.
Subject to the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered holder hereof, in whole or
in part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified in
the attached Form of Assignment. Upon any partial transfer, the Company will
issue and deliver to such holder a new Warrant Certificate or Certificates with
respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Each taker and holder of this Warrant Certificate, by taking or holding
the same, consents and agrees that this Warrant Certificate when duly endorsed
in blank shall be deemed negotiable and that when this Warrant Certificate shall
have been so endorsed, the holder hereof may be treated by the Company, the
Warrant Agent and all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented hereby, or to the transfer hereof on the register of the
Company maintained by the Warrant Agent, any notice to the contrary
notwithstanding, but until such transfer on such register, the Company and the
Warrant Agent may treat the registered Holder hereof as the owner for all
purposes.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
A-2
<PAGE>
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at the following address:
535 Fifth Avenue, 26th Floor, New York, New York 10022.
A-3
<PAGE>
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
Dated: __________
WELLSFORD REAL PROPERTIES, INC.
By:________________________________________
Name:
Title:
Countersigned:
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: _____________________________
Name:
Title:
A-4
<PAGE>
FORM OF REVERSE OF WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Wellsford Real Properties, Inc.
The undersigned irrevocably exercises __________of the
Warrants for, at your election, either (i) the Shares Amount or (ii) the Cash
Amount and herewith makes payments of $
and/or delivers membership units of Wellsford\Whitehall
Group, L.L.C. (such cash payment being by certified or official bank check drawn
on a New York City bank payable to the order of Wellsford Real Properties,
Inc.), all at the Exercise Price and on the terms and conditions specified in
the within Warrant Certificate and the Warrant Agreement therein referred to,
surrenders this Warrant Certificate and all right, title and interest therein to
Wellsford Real Properties, Inc. and directs that any shares of Common Stock
deliverable upon the exercise of such Warrants be registered in the name and
delivered at the address specified below or any Cash Amount be wired to the
account specified below.
Date:__________________
______________________________________*
(Signature of Owner)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
______________________________________]
Securities and/or check to be issued to:
Please insert social security or identifying number:
- -----------------
* The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a financial
institution satisfactory to the Warrant Agent.
A-5
<PAGE>
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Wire transfer instructions:
A-6
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants constituting
a part of the Warrants evidenced by the within Warrant Certificate not being
assigned hereby) all of the rights of the undersigned under the within Warrant
Certificate, with respect to the number of Warrants set forth below:
Social Security or
other Identifying
Names of Number of
Assignees Address Assignee(s) Number of Warrants
- --------- ------- ----------- ------------------
A-7
<PAGE>
and does hereby irrevocably constitute and appoint ________________ the
undersigned's attorney to make such transfer on the books of __________________
maintained for that purpose, with full power of substitution in the premises.
Date:__________________
______________________________________*
(Signature of Owner)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
______________________________________]
- -------------
* The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a financial
institution satisfactory to the Warrant Agent.
A-8
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made and entered into as of May
28, 1999 by and between Wellsford Real Properties, Inc., a Maryland corporation
(together with its successors and permitted assigns, the "Company"), and W/W
Group Holdings, L.L.C., a Delaware limited liability company (the "Initial
Holder").
R E C I T A L S
---------------
WHEREAS, the Company and United States Trust Company of New York are
parties to that certain Warrant Agreement dated as of August 28, 1997, as
amended by Amendment No. 1 to Warrant Agreement dated as of July 16, 1998, and
as further amended by Amendment No. 2 to Warrant Agreement dated as of May ___,
1999 (as so amended, the "Warrant Agreement"), pursuant to which the Company has
issued to five million (5,000,000) warrants to purchase shares of the Company's
common stock currently held by the Initial Holder;
WHEREAS, the Company and the Warrant Agent are parties to that certain
Warrant Agreement dated as of May ___, 1999 (the "New Warrant Agreement"),
pursuant to which the Company has issued to the Initial Holder one hundred fifty
thousand (150,000) warrants to purchase shares of the Company's common stock;
WHEREAS, the Company and the Initial Holder desire that the
registration rights and procedures set forth in this Agreement supercede those
granted under the Warrant Agreement and to set forth their respective rights and
obligations regarding the registration of the Company's shares that are issuable
in respect of warrants exercised by the Initial Holder pursuant to the New
Warrant Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
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<PAGE>
voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Registration Rights Agreement, as it may be
amended or modified from time to time.
"Articles of Incorporation" shall mean the Company's Articles of
Amendment and Restatement, as amended from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banks in New York are authorized or required to close.
"Closing Price" shall mean the last reported sale price regular way on
the day in question or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way of the Common
Stock, in each case on the American Stock Exchange ("AMEX"), or, if the Common
Stock is not listed or admitted to trading on the AMEX, on the principal
national securities exchange or quotation system on which the Common Stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any AMEX member
firm selected from time to time by the board of directors of the Company for the
purpose. In the case of a closing price of Common Stock on the AMEX, such price
shall mean the closing price reported in the AMEX composite transactions
reporting system (as reported in the New York City edition of The Wall Street
Journal or, if not so reported, another authoritative source).
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company and any other stock of the Company into which such common stock
may be converted or reclassified (other than stock of the Company into which
unissued Common Stock has been reclassified) or that may be issued in respect
of, in exchange for, or in substitution of, such common stock by reason of any
stock splits, stock dividends, distributions, mergers, consolidations,
recapitalizations or other like events.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Shares" shall have the meaning set forth in Section 2.1(g).
"Demand Registration" shall mean a registration of Eligible Securities
pursuant to Section 2.1 hereof.
"Eligible Common Stock" shall mean all shares of Underlying Common
Stock that are Eligible Securities.
"Eligible Securities" shall mean (x) all shares of Underlying Common
Stock and unless otherwise provided herein, any related Warrants and (y) any
other securities of the Company or any other entity issued or issuable with
respect to the Underlying Common Stock or Warrants by
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<PAGE>
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise; provided, however, that particular shares of Underlying Common Stock
or particular Warrants shall cease to be Eligible Securities when (i) such
shares or Warrants, as the case may be, shall have been disposed of in
accordance with an effective registration statement covering the sale of such
shares or Warrants; (ii) such shares or Warrants, as the case may be, have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act; or (iii) in the case of a Warrant only, such Warrant
has been transferred by the Initial Holder to another Person (other than an
Affiliate of the Initial Holder).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Favorable Term" shall have the meaning set forth in Section 2.5.
"Holder" shall mean the holder of any Eligible Security.
"Initial Holder" shall have the meaning set forth in the first
paragraph of this Agreement.
"New Warrant Agreement" shall have the meaning set forth in the third
paragraph of this Agreement.
"New Warrants" shall mean the warrants issued by the Company pursuant
to the New Warrant Agreement, and any additional warrants issued in accordance
with the New Warrant Agreement.
"Old Warrants" shall mean the warrants issued by the Company pursuant
to the Warrant Agreement, and any additional warrants issued in accordance with
the Warrant Agreement.
"Original Term" shall have the meaning set forth in Section 2.5.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Piggyback Registration" shall have the meaning set forth in Section
2.2(a).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any of the Eligible Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registration Demand" shall have the meaning set forth in Section
2.1(a).
"Registration Rights" shall mean the rights of Holders set forth in
Sections 2.1 and 2.2 to have Eligible Securities registered under the Securities
Act for sale under one or more effective Registration Statements.
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<PAGE>
"Registration Statement" shall mean any registration statement filed by
the Company under the Securities Act that covers any of the Eligible Securities,
including the Prospectus, any amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such registration statement.
"Representative" shall have the meaning set forth in Section 3.6(a),
and "Representative(s)" shall mean one or more Representatives.
"Saracen Members" shall have the meaning set forth in the
Wellsford/Whitehall Group LLC Agreement.
"Saracen Registration Rights Agreement" shall mean that certain
Registration Rights Agreement dated as of July 16, 1998, by and among Wellsford
Commercial Properties Trust, a Maryland real estate investment trust, and the
Saracen Members, as amended by that certain Amendment No. 1 to the Registration
Rights Agreement dated as of May ___, 1999, and as such agreement may be further
amended or modified from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean the annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"selling holder" shall have the meaning set forth in Section 3.1.
"Shelf Registration" shall have the meaning set forth in Section
2.1(c).
"Shelf Registration Statement" shall have the meaning set forth in
Section 2.1(c).
"Takedown" shall have the meaning set forth in Section 2.1(c)(ii).
"Underlying Common Stock" shall mean all shares of Common Stock either
issuable upon the exercise of the Warrants or previously issued upon the prior
exercise of the Warrants.
"underwriter" shall have the meaning set forth in Section 3.1.
"underwriting or agency agreement" shall have the meaning set forth in
Section 3.1.
"Warrant Agreement" shall have the meaning set forth in the second
paragraph of this Agreement.
"Warrants" shall mean any Old Warrants and any New Warrants and the
term "Warrant" shall mean any Old Warrant or any New Warrant.
"WCPT" shall have the meaning set forth in the Recitals to this
Agreement.
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<PAGE>
Certain terms used principally in Articles 2 and 3 are defined in those
Sections.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1. Demand Registration.
(a) At any time, each Holder shall have the right to request (each such
request, a "Registration Demand") that the Company file a registration statement
under the Securities Act in respect of all or any portion of such Holder's
Eligible Securities; provided that if any Holder shall request that a portion,
but not all, of its Eligible Securities be registered in accordance with this
Section 2.1 (including a requested Takedown pursuant to subsection (c)(ii)
below), such portion shall include not less than two hundred and fifty thousand
(250,000) shares of Eligible Common Stock (or such lesser number of such shares
having a market valuation of at least $5,000,000 as of the date the Registration
Demand is made, based on the Closing Price on such date). A Registration Demand
shall specify the number of shares of Eligible Common Stock (and, in the case of
a Registration Demand by the Initial Holder, the number of Warrants) that each
such Holder proposes to sell in the offering. If no Shelf Registration Statement
shall be effective as of the date of the Registration Demand, the demanding
Holders may elect to register such Eligible Securities in accordance with either
Section 2.1(c)(i) or Section 2.1(d). If a Shelf Registration Statement shall be
effective as of the date of the Registration Demand, then all demanding Holders
shall be deemed to have elected to register their Eligible Securities pursuant
to Section 2.1(c)(ii). The Holders may make in the aggregate two (2)
Registration Demands pursuant to Sections 2.1(c)(i) and 2.1(d) and four (4)
Registration Demands per year pursuant to an existing Shelf Registration
Statement pursuant to Section 2.1(c)(ii) for which the Company will pay and bear
all costs and expenses in accordance with Section 3.3 and thereafter the Holders
may make an unlimited number of Registration Demands for which such requesting
Holders shall pay and bear all costs and expenses.
(b) Upon receipt of a Registration Demand (other than a Takedown), the
Company shall give written notice thereof to all of the other Holders at least
thirty (30) days prior to the initial filing of a Registration Statement
relating to such Registration Demand. Each of the other Holders shall have the
right, within twenty (20) days after the delivery of such notice, to request
that the Company include all or a portion of such Holder's Eligible Securities
in such Registration Statement. Upon receipt of a Registration Demand that is a
Takedown, a representative of the selling holders shall give written notice
thereof to all of the other Holders at least three (3) Business Days prior to
the initial filing of a prospectus relating to such Registration Demand. Each of
the other Holders shall have the right, within one (1) Business Day after the
delivery of such notice, to request that the Company include all or a portion of
such Holder's Eligible Securities in such Registration Statement.
(c) (i) As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to register
Eligible Securities pursuant to this paragraph (c), the Company shall file under
the Securities Act a "shelf" registration statement (the "Shelf Registration
Statement") providing for the registration and the sale on a continuous or
delayed basis of all the Eligible Securities, pursuant to Rule 415 under the
Securities Act and/or any similar
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<PAGE>
rule that may be adopted by the SEC (the "Shelf Registration"). The Company
agrees to use its reasonable best efforts to cause such Shelf Registration
Statement to become or be declared effective as soon as practicable but no later
than 75 calendar days after the filing (the "75 Day Effective Date") and to keep
such Shelf Registration continuously effective for a period ending on the
occurrence of the earlier of: (x) the third anniversary of such Registration
Demand and (y) notification by all of the requesting Holders that such Holders
have sold all of the Eligible Securities owned by them. The Company further
agrees to supplement or make amendments to the Shelf Registration Statement and
the prospectus included therein (x) as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the period set forth
in the previous sentence and (y) as may be required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration or by the Securities Act or rules and regulations thereunder
for shelf registration. The Company agrees to furnish to the Holders of the
securities registered thereby copies of any such supplement or amendment (but
excluding any periodic reports required to be filed with the SEC under the
Exchange Act of 1934) so that the Initial Holder, or if the Initial Holder is no
longer a Holder, the Holders, through the Representative(s), have a reasonable
opportunity to comment thereon prior to its being used and/or filed with the
SEC.
(ii) As promptly as practicable after the Company receives a
Registration Demand from a Holder or Holders pursuant to which a Holder is
deemed to have elected to register Eligible Securities pursuant to an existing
Shelf Registration Statement (a "Takedown"), the Company shall, subject to the
Takedown Blackout Period described below, file a Prospectus with the SEC and
otherwise comply with the Securities Act and all rules, regulations and
instructions thereunder applicable to such Takedown. In the event that no
Prospectus or other filing is required nor any other action necessitating the
Company's participation is required to effect a sale of Eligible Securities
pursuant to an effective Shelf Registration Statement filed pursuant to Section
2.1(c)(i), each selling Holder agrees to provide the Company with at least three
(3) Business Days' notice of the proposed sale (which may or may not include the
amount of Eligible Securities to be registered) pursuant to the effective Shelf
Registration Statement; provided, however, that the Company shall, subject to
Section 2.3(g), have the right to postpone any such sale whether before or after
the filing of the applicable Prospectus or Shelf Registration Statement for a
reasonable period of time not to exceed ninety (90) days (a "Takedown Blackout
Period") if: (i) the Company determines in its good faith judgment that it
would, in connection with such sale, be required to disclose in such
Registration Statement (or any prospectus supplement to be used in connection
therewith) information not otherwise then required by law to be publicly
disclosed and (ii) either (x) in the good faith judgment of the Board of
Directors of the Company, such disclosure would adversely affect any material
corporate development or business transaction contemplated by the Company or (y)
the Company has a bona fide purpose for preserving as confidential such
information; provided further that the Takedown Blackout Period shall earlier
terminate upon the completion or abandonment of the relevant corporate
development or business transaction or upon public disclosure by the Company or
public disclosure by the Company or public admission by the Company of such
information specified in (i) above.
(d) As promptly as practicable and in no event later than sixty (60)
days after the Company receives a Registration Demand electing to register
Eligible Securities pursuant to this Section 2.1(d), the Company shall file with
the SEC a Registration Statement, on any form that shall be available and
appropriate for the sale of the Eligible Securities in accordance with the
intended method of distribution thereof. The Company shall include in such
Registration Statement all of the
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<PAGE>
Eligible Securities of such requesting Holders that such Holders have requested
to be included therein pursuant to Sections 2.1(a) and 2.1(b); provided,
however, that, if the requested registration involves an underwritten offering,
the Eligible Securities to be registered may be reduced if the managing
underwriter delivers a notice (a "Cutback Notice") pursuant to Section 2.1(g).
The Company shall use its reasonable best efforts to cause each such
Registration Statement to be declared effective (and to obtain acceleration of
such effectiveness) as soon as practicable but no later than 75 days after
filing such Registration Statement and to keep such Registration Statement
continuously effective and usable for resale of such Eligible Securities, for a
period of one hundred eighty (180) days from the date on which the SEC declares
such Registration Statement effective or such shorter period as is necessary to
complete the distribution of the securities registered thereunder.
(e) The Initial Holder or, if the Initial Holder is not a selling
holder, the Representative(s) shall determine the method of distribution of
Eligible Securities pursuant to a Registration Demand.
(f) If a Registration Demand involves an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer such offering will be selected by the Initial Holder or, if the
Initial Holder is not a selling holder, the Representative(s); provided that the
Persons so selected shall be reasonably satisfactory to the Company.
(g) In the event that the proposed offering is an underwritten offering
and includes securities to be offered for the account of the Company (the
"Company Shares"), the provisions of this Section 2.1(g) shall be applicable if
the managing underwriter delivers a Cutback Notice stating that, in its opinion,
the aggregate number of shares of Eligible Common Stock, plus the Company Shares
proposed to be sold therein, exceeds the maximum number of shares specified by
the managing underwriter in such Cutback Notice that may be distributed without
adversely affecting the price, timing or distribution of the Common Stock being
distributed. If the managing underwriter delivers such Cutback Notice, the
number of shares of Eligible Common Stock requested to be registered and Company
Shares shall be reduced in the following order until the number of shares to be
offered has been reduced to the maximum number of shares specified by the
managing underwriter in the Cutback Notice: first, the Company Shares and
second, the Eligible Common Stock in proportion to the respective number of
shares of Eligible Common Stock that each Holder has requested to be registered.
(h) The Company will pay all Registration Expenses (as set forth in
Section 3.3) in connection with a registration under this Section 2.1.
(i) No Registration Demand (other than a Takedown) may be made until
the expiration of six (6) months following the completion of the distribution of
the securities registered under any Registration Statement that has been filed
and has become effective pursuant to a prior Registration Demand.
(j) A Registration Demand will not be deemed satisfied (and will not
count for purposes of the limitations in Section 2.1(a)) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 180 days (or such shorter
period which shall terminate when all Eligible Securities covered by such
registration
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<PAGE>
statement have been sold), (ii) if, after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason not
attributable to the selling holders participating in such registration and has
not thereafter become effective, or (iii) if the conditions to closing specified
in the relevant underwriting or agency agreement entered into in connection with
such offering are not satisfied or waived, other than by reason of a breach of
such agreement by the selling holders participating in such offering or wilful
failure on the part of the selling holders participating in such offering.
Section 2.2. Piggyback Registration Rights.
(a) If, at any time, the Company proposes to file a Registration
Statement with the SEC respecting an offering, whether primary, secondary or
combined, of any equity securities of the Company, the Company shall give
written notice to all Holders at least thirty (30) days prior to the initial
filing of the Registration Statement relating to each such offering. Such notice
shall specify, at a minimum, the number and the type of equity securities so
proposed to be registered, the proposed date of filing of such registration
statement, any proposed means of distribution of such securities, any proposed
managing underwriter or underwriters of such securities and a good faith
estimate by the Company of the proposed maximum offering price thereof, as such
price is proposed to appear on the facing page of such registration statement.
Each Holder shall have the right, within twenty (20) days after delivery of such
notice, to request in writing that the Company include not less than 50,000
shares of Eligible Common Stock (or such lesser amount as is then owned by such
Holder) in such Registration Statement (a "Piggyback Registration").
(b) In the event that the proposed offering is an underwritten offering
covering Company Shares, the provisions of this paragraph (b) shall be
applicable if the managing underwriter delivers a Cutback Notice stating that,
in its opinion, the aggregate number of shares of Eligible Common Stock and the
Company Shares that the Holders have requested to be registered, exceeds the
maximum number of shares specified by the managing underwriter in such Cutback
Notice that may be distributed without adversely affecting the price, timing or
distribution of the Common Stock being distributed. If the managing underwriter
delivers such Cutback Notice, the number of shares of Eligible Common Stock and
Company Shares requested to be included in such offering shall be reduced in the
following order until the number of shares to be offered has been reduced to the
maximum number of shares specified by the managing underwriter in the Cutback
Notice: first, the Eligible Common Stock in proportion to the respective number
of shares of Eligible Common Stock that each Holder has requested to be
registered and second, the Company Shares.
(c) No Piggy-Back Registration effected under this Section 2.2 shall be
deemed to have been effected pursuant to Section 2.1 hereof or shall release the
Company of its obligations to effect any Demand Registration upon request as
provided in Section 2.1.
(d) The Company will pay all Registration Expenses (as set forth in
Section 3.3) in connection with a registration under this Section 2.2.
(e) The provisions of this Section 2.2 shall not be applicable in
connection with a transaction in which a registration statement is filed by the
Company on Form S-4 or S-8 or any
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<PAGE>
successor or similar form or a registration statement is filed by the Company
that registers securities issued pursuant to a DRIP.
Section 2.3. Company's Ability to Postpone Registration Rights.
(a) The Company shall have the right to postpone the filing of any
Registration Statement relating to a Demand Registration for a reasonable period
of time not to exceed ninety (90) days (the "Blackout Period") if: (i) the
Company determines in its good faith judgment that it would be required to
disclose in such Registration Statement information not otherwise then required
by law to be publicly disclosed and (ii) either (x) in the good faith judgment
of the Board of Directors of the Company, such disclosure would adversely affect
any material corporate development or business transaction contemplated by the
Company or otherwise would be materially harmful to the Company and its
stockholders or (y) the Company has a bona fide purpose for preserving as
confidential such information or; provided, however, that the Blackout Period
shall earlier terminate upon the completion or abandonment of the relevant
corporate development or business transaction or upon public disclosure by the
Company or public admission by the Company of such information specified in (i)
above.
(b) If at any time after the Company notifies the Holders of its
intention to file a Registration Statement that would trigger Piggyback
Registration Rights, the Board of Directors of the Company in good faith shall
determine for any reason not to effect such registration or to postpone such
registration, the Company shall (i) in the case of a determination not to effect
such registration, be relieved of its obligation to register any Eligible
Securities of Holders requesting inclusion in such registration, and (ii) in the
case of a determination to postpone such registration, be permitted to postpone
registering the Eligible Securities of Holders requesting inclusion in such
registration.
(c) After the expiration of any Blackout Period and without further
request from any Holder, the Company shall effect the filing of the relevant
Demand Registration and shall use its reasonable best efforts to cause any such
Demand Registration to be declared effective as promptly as practicable unless
the requesting Holder or Holders shall have, prior to the effective date of such
Demand Registration withdrawn in writing its initial request, in which case,
such withdrawn request shall not constitute a Registration Demand or reduce the
number of Registration Demands available under Section 2.1(a).
(d) Any request by a Holder for a Demand Registration which is
subsequently withdrawn prior to such Demand Registration becoming effective
shall not constitute a Registration Demand or reduce the number of Registration
Demands available under Section 2.1(a); provided, however, that other than with
respect to a withdrawal which is made as a result of or after the expiration of
any Blackout Period as specified in subsection (c) above, the Holder or Holders,
as appropriate, shall reimburse the Company for all expenses relating to the
preparation of such withdrawn Demand Registration.
(e) The Company shall as promptly as practicable notify the Holders of
any postponement pursuant to this Section 2.3 or Section 2.1(c)(ii), specifying
the reasons therefor.
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(f) If the Company exercises its right to postpone the filing of any
Registration Statement pursuant to Section 2.3 or if the Company exercises its
right to postpone any Takedown pursuant to Section 2.1(c)(ii) and the Company
notifies any Holder of such postponement or if the Company gives the notice
described in Section 3.7(a), such Holder agrees to keep confidential the
exercise by the Company of its postponement right and any information related
thereto which is given to such Holder by the Company.
(g) Notwithstanding the provisions of this Section 2.3 or Section
2.1(c)(ii), the aggregate number of days (whether or not consecutive) during
which the Company may delay the effectiveness of the Registration Statement or
prevent offerings, sales or distributions by the Holders pursuant to this
Section 2.3 or Section 2.1(c)(ii) shall in no event exceed 120 days during any
12-month period. In addition, no such delay shall exceed such number of days
that the Company determines in good faith to be reasonably necessary.
Section 2.4. Holder Withdrawal Rights. The Company shall withdraw from
registration any Eligible Securities on request of a Holder. The Company shall
not be obligated to maintain the effectiveness of any Registration Statement if,
after any withdrawal of Eligible Securities by a Holder, the number of Eligible
Securities remaining subject to such Registration Statement represents less than
5% of the shares of Eligible Common Stock deemed outstanding, unless the Company
is also registering securities on such Registration Statement for its own
account.
Section 2.5. Other Registration Rights. In the event WCPT shall grant
to any of the Saracen Members the right to request that WCPT register any common
share of beneficial interest, par value $0.01, of WCPT pursuant to the terms and
provisions of the Saracen Registration Rights Agreement, and any registration
right granted therein (the "Favorable Term") is more advantageous to such
Saracen Member than the analogous term contained in this Agreement (the
"Original Term"), then any Holder of Eligible Securities entitled to exercise
any or all of the Registration Rights may elect, upon exercise thereof, that the
Favorable Term be applicable to such exercise in place of the Original Term.
ARTICLE 3
REGISTRATION PROCEDURES
Section 3.1. Covenants of the Company Applicable to All Registration
Statements. This Section 3.1 applies to all Registration Statements filed by the
Company and referred to in Section 2.1 and 2.2. The securities covered by each
such Registration Statement are referred to as the "Registered Securities". Each
underwriter (including any qualified independent underwriter), agent, selling
broker, dealer manager or similar securities industry professional participating
in any offering of the Registered Securities is referred to as an "underwriter"
or "agent" and any agreement entered into with an underwriter or agent is
referred to as an "underwriting or agency agreement". In connection with each
such registration, the Company covenants with each Holder participating in such
offering (each, a "selling holder") and each underwriter or agent participating
therein as follows:
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(a) The Company will notify the selling holders and the managing
underwriter or agent, immediately, and confirm the notice in writing, (i) when
the Registration Statement or any pre-effective amendment, post-effective
amendment, prospectus or prospectus supplement is filed or when the Registration
Statement, or any post-effective amendment to the Registration Statement, shall
have become effective, (ii) of the receipt of any comments from the SEC, (iii)
of any request by the SEC or any state securities authority for additional
information or to amend the Registration Statement or amend or supplement the
Prospectus or any notification of an intention to proceed for that purpose, (iv)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Registered Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes, (v) if
at any time when a prospectus is required by the Securities Act to be delivered
in connection with sales of the Registered Securities the representations and
warranties of the Company contemplated by Section 3.1(i) cease to be true and
correct and (vi) of the existence of any fact that results or may result in the
Registration Statement, the Prospectus or any document incorporated therein by
reference containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make any statement
therein not misleading in light of the circumstances then existing.
(b) The Company will use its best efforts to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
moment.
(c) The Company will afford the Representative(s) and the managing
underwriters a reasonable opportunity, prior to its being filed with the SEC, to
comment on any Registration Statement, any amendment thereto, or any amendment
of or supplement to the Prospectus.
(d) The Company will furnish to each selling holder and to the managing
underwriter or agent, without charge, as many signed copies of the Registration
Statement (as originally filed) and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith, including documents incorporated by
reference into the Prospectus, and signed copies of all consents and
certificates of experts, as such selling holder or the managing underwriter or
agent may reasonably request, and will furnish to the managing underwriter, for
each other underwriter participating in an underwritten offering, one conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (including documents incorporated by reference into the Prospectus but
without exhibits).
(e) The Company will deliver to each selling holder and each
underwriter or agent participating in such offering, without charge, as many
copies of each preliminary prospectus as such selling holder or such underwriter
or agent may reasonably request, and the Company hereby consents to the use of
such copies for purposes permitted by the Securities Act. The Company will
deliver to each selling holder and each underwriter or agent participating in
such offering, without charge, from time to time during the period when the
Prospectus is required to be delivered under the Securities Act, such number of
copies of the Prospectus (as supplemented or amended) as such selling holder or
such underwriter or agent may reasonably request.
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(f) The Company will comply with the Securities Act and the rules and
regulations of the SEC thereunder, the Exchange Act and the rules and
regulations of the SEC thereunder and any state securities laws or rules so as
to permit the completion of the distribution of the Registered Securities in
accordance with the intended method or methods of distribution contemplated in
the Prospectus. If at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the Registered Securities any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the selling holders, counsel for the underwriters
or agents or counsel for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of any such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the Securities Act or the rules and
regulations of the SEC thereunder, the Company will promptly prepare and file
with the SEC, subject to Section 3.1(c), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements and will
promptly furnish each selling holder and underwriter or agent with a reasonable
number of copies of such amendment or supplement.
(g) The Company will use its best efforts, in cooperation with the
selling holders or the underwriters or agents, as the case may be, to register
or qualify the Registered Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions as the selling holders or
the managing underwriter or agents, as the case may be, may designate and to
keep such registration or qualification in effect for so long as such
Registration Statement remains effective; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Registered Securities have been
qualified as above provided.
(h) The Company will effect the listing of the Registered Securities
covered by a Registration Statement on each national securities exchange on
which similar securities issued by the Company are then listed and make all
other necessary or appropriate filings with each such securities exchange.
(i) The Company shall make such representations and warranties to the
selling holders and the underwriters or agents, if any, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten public
offerings.
(j) On the effective date of the Registration Statement or, in the case
of an underwritten offering, on the date of delivery of the Registered
Securities sold pursuant thereto, the Company shall cause to be delivered to the
selling holders and the underwriters or agents, if any, opinions of counsel for
the Company with respect to, among other things, the due incorporation and good
standing of the Company; the qualification of the Company to transact business
as a foreign corporation; the due authorization, execution and delivery of this
Agreement; the due authorization,
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execution, authentication and issuance, and the validity and enforce ability, of
the Warrants and/or the Eligible Common Stock, as the case may be; the absence
of material legal or governmental proceedings involving the Company; the absence
of a material breach by the Company of, or a material default under, agreements
binding the Company; the absence of governmental approvals required to be
obtained in connection with the registration, offering and sale of the Warrants
and/or Eligible Common Stock, as the case may be; the compliance as to form of
the Registration Statement and any documents incorporated by reference therein
with the requirements of the Securities Act; the effectiveness of such
Registration Statement under the Securities Act; and a statement that, as of the
date of the opinion and of the Registration Statement or most recent
post-effective amendment thereto, as the case may be, nothing has come to the
attention of such counsel which causes them to believe that either the
Registration Statement or the Prospectus included therein, as then amended or
supplemented, or the documents incorporated by reference therein (in the case of
such documents, in the light of the circumstances existing at the time that such
documents were filed with the Commission under the Exchange Act), contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion as to the financial statements and
other financial data included therein or omitted therefrom).
In the event that any broker-dealer registered under the Exchange Act
shall be an "affiliate" (as defined in Rule 2720(b)(1) of the NASD Rules (or any
successor provision thereto)) of the Company or has a "conflict of interest" (as
defined in Rule 2720(b)(7) of the NASD Rules (or any successor provision
thereto)) and such broker-dealer shall underwrite, participate as a member of an
underwriting syndicate or selling group or assist in the distribution of any
Registrable Securities covered by the Shelf Registration Statement, whether as a
holder of such Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise, the Company shall
assist such broker-dealer in complying with the requirements of the NASD Rules,
including, without limitation, by (A) engaging a "qualified independent
underwriter" (as defined in Rule 2720(b)(15) of the NASD Rules (or any successor
provision thereto)) to participate in the preparation of the registration
statement relating to such Registrable Securities, to exercise usual standards
of due diligence in respect thereto and to recommend the public offering price
of such Registrable Securities, (B) indemnifying such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof, and (C) providing such information to such broker-dealer as
may be required in order for such broker-dealer to comply with the requirements
of the NASD Rules.
(k) Immediately prior to the effectiveness of the Registration
Statement or, in the case of an underwritten offering, at the time of delivery
of any Registered Securities sold pursuant thereto, the Company shall cause to
be delivered to the selling holders and the underwriters or agents, if any,
letters from the Company's independent public accountants stating that such
accountants are independent public accountants with respect to the Company
within the meaning of the Securities Act and the applicable published rules and
regulations of the SEC thereunder, and otherwise in customary form and covering
such financial and accounting matters as are customarily covered by letters of
the independent public accountants delivered in connection with primary
underwritten public offerings.
(l) If the managing underwriter or agent so requests, the underwriting
or agency agreement shall set forth in full the provisions hereof relating to
covenants, registration expenses,
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lock-up agreements, indemnification and contribution contained in this Article
8, with such changes therein as may be agreed to by the managing underwriter or
agent, the Company and the selling holders.
(m) The Company shall deliver such documents and certificates as may be
requested by any selling holder or the underwriters or agents, if any, to
evidence compliance with Section 3.1(i) and with any customary conditions
contained in the underwriting or agency agreement, if any.
(n) The Company will make available for inspection by representatives
of the selling holders and the underwriters or agents participating in such
offering, any attorney or accountant retained by such selling holders or
underwriters or agents and, with respect to any private placement of Warrants or
Underlying Common Stock, upon notice to the Company, prospective purchasers, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter or
agent, attorney or accountant in connection with the preparation of the
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by each such person (by, among other things, if so requested
by the Company, entering into a confidentiality agreement in form and substance
satisfactory to the Company) unless such records, information or documents
become part of the public domain through no fault of such person or unless
disclosure thereof is required by court or administrative order or the SEC
(including the federal securities law). Without limitation of the foregoing, the
Company will give the selling holders, their underwriters or agents and their
respective counsel, accountants and other representatives and agents the
opportunity to participate in the preparation of any prospectus or offering
circular included therein or filed with the SEC, and, to review all information
reasonably requested by each of them as shall be necessary or appropriate, in
the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
(o) The Company will make generally available to its security holders
as soon as practicable, but not later than forty-five (45) days after the close
of the period covered thereby (or ninety (90) days if such period is a fiscal
year), an earnings statement of the Company (in form complying with the
provisions of Rule 158 under the rules and regulations of the SEC under the
Securities Act), covering a period of twelve (12) months beginning after the
effective date of the Registration Statement but not later than the first day of
the Company's fiscal quarter next following such effective date.
(p) The Company will enter into such customary agreements, including a
customary underwriting or agency agreement with the underwriters or agents, if
any, and take all other reasonable actions in connection with the offering in
order to expedite or facilitate the disposition of the Registered Securities.
(q) The Company will provide a transfer agent and registrar for all
such Eligible Securities covered by such registration statement not later than
the effective date of such registration statement.
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(r) The Company will provide a CUSIP number for all Eligible Securities
being offered, not later than the effective date of the registration statement.
(s) The Company will take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or facilitate the
disposition of such Eligible Securities.
(t) The Company shall cooperate with the selling holders and the
underwriters or agents participating in such offering to facilitate the timely
preparation and delivery of certificates representing such Registered Shares to
be sold, which certificates shall not bear any restrictive legends except as
required by law or the Articles of Incorporation or the Company's By-laws; and,
in the case of an underwritten offering, enable such Registered Shares to be in
such denominations and registered in such names as the managing underwriter or
underwriters may request in writing at least two business days prior to any sale
of the Registered Shares to the underwriters or agents participating in such
offering.
Section 3.2. Covenants of the Selling Holders.
(a) Each selling holder shall use its best efforts to furnish to the
Company such information regarding the distribution of such Registered
Securities as is customarily requested from selling holders in underwritten
public offerings to the extent necessary to permit the Company to comply with
the Securities Act; provided, that the Company will not include in any
Registration Statement, Prospectus or prospectus supplement information
concerning or relating to any Holder or selling holder to which such Holder or
selling holder shall reasonably object (unless the inclusion of such information
is required by applicable law or the regulation of any securities exchange to
which the Company may be subject), and the Company will not file any
Registration Statement, Prospectus or amendment or supplement thereto to which
such Holder or selling holder shall reasonably object; provided that, if such
Holder or selling holder objected to a registration statement to be filed in
connection with a Piggyback Registration, such Holder or selling holder may
withdraw any or all of its Eligible Securities from such registration statement
and the Company may file such registration statement.
(b) Each selling holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3.1(a)(vi), such selling holder will forthwith discontinue the disposition of
its Registered Securities pursuant to the Registration Statement until such
selling holder's receipt of the copies of a supplemented or amended Prospectus
contemplated by Section 3.1(f), or until it is advised in writing by the Company
that the use of such Prospectus may be resumed. If the Company shall give any
such notice, the Company shall extend the period of time during which the
Company is required to keep the Registration Statement effective and usable by
the number of days during the period from the date of receipt of such notice to
the date when each selling holder of Registered Securities covered by such
Registration Statement either receives the copies of a supplemented or amended
Prospectus contemplated by Section 3.1(f) or is advised in writing by the
Company that the use of such Prospectus may be resumed.
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(c) No selling holders, as such, shall be required to make any
representation or warranty as to the accuracy or completeness of the
Registration Statement or otherwise relating to the offering (except solely as
to written information furnished to the Company by such selling holder expressly
for use in the Registration Statement).
Section 3.3. Registration Expenses.
(a) The Company will pay and bear all costs and expenses incident to
the performance of its obligations under this Agreement with respect to each
registration pursuant to Section 2.1 or 2.2, including, without limitation:
(i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), as originally
filed and as amended, any preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the selling holders or the underwriters or agents, as
the case may be;
(ii) the preparation, printing and distribution of any
underwriting or agency agreement, agreement among underwriters, selling
agreements, certificates representing the Registered Securities, any
Blue Sky or legal investment survey and other documents relating to the
performance of and compliance with this Agreement;
(iii) the fees and disbursements of the Company's counsel,
accountants and experts and the reasonable fees and disbursements of
one counsel retained by the selling holders pursuant to Section 3.3(b);
(iv) except as provided in Section 3.3(c), the fees and
disbursements of the underwriters or agents customarily paid by issuers
or sellers of securities and the reasonable fees and expenses of any
special experts retained in connection with the Registration Statement,
but excluding underwriting discounts and commissions and transfer
taxes, if any;
(v) the qualification of the Registered Securities under
applicable securities laws in accordance with Section 3.1(g) and any
filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the selling holders and the underwriters
or agents, as the case may be, in connection therewith, in connection
with any Blue Sky or legal investment survey and in connection with any
reserve share program;
(vi) all fees and expenses incurred in connection with the
listing, if any, of any of the Registered Securities on any securities
exchange pursuant to Section 3.1(h); and
(vii) up to a 5% underwriting discount or commission payable
to the underwriters or agents in connection with the sale of the
Registered Securities.
(b) In connection with the filing of each Registration Statement, the
Company will reimburse the selling holders for the reasonable fees and
disbursements of one firm of legal
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counsel, which shall be chosen by the Initial Holder, or if the Initial Holder
is not then a selling holder, the Representative(s) and shall be reasonably
satisfactory to the Company.
(c) Each selling holder will pay and bear all costs and expenses
incident to the delivery of the Registered Securities to be sold by it,
including any stock transfer taxes payable upon the sale of such Registered
Securities to the purchaser thereof and, to the extent not paid pursuant to
Section 3.3(a)(vii) above, any underwriting discounts or commissions payable to
underwriters or agents in connection therewith.
Section 3.4. Indemnification and Contribution.
(a) In connection with each registration pursuant to Section 2.1 or
2.2, the Company shall and hereby does indemnify and hold harmless each selling
holder of Eligible Securities, each underwriter or agent participating in such
offering, each person, if any, who controls any selling holder or any such
underwriter or agent within the meaning of Section 15 of the Securities Act, and
each officer, director, employee, agent, stockholder, member, partner or direct
or indirect owner of any of the foregoing (all of the foregoing being referred
to collectively as "Seller Parties" and individually as a "Seller Party"), as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of an untrue statement of a material fact included in any
preliminary or summary prospectus or the Prospectus (or any amendment
or supplement thereto or any document incorporated therein by
reference) or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever arising out of or based upon any such untrue statement
or omission, or any such alleged untrue statement or alleged omission,
if such settlement is effected with the written consent of the Company,
which shall not be unreasonably withheld or delayed; and
(iii) against any and all expense whatsoever, as incurred
(including fees and disbursements of counsel chosen by the Seller
Parties), reasonably incurred in investigating, preparing, defending
against or appealing any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that, with respect to any Seller Party, this indemnity does
not apply to any loss, liability, claim, damage or expense to the extent arising
out of an untrue statement or omission or
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alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Seller Party,
expressly for use in the Registration Statement (or any amendment thereto), or
any preliminary or summary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) Each selling holder agrees severally, and not jointly or jointly
and severally, to indemnify and hold harmless the Company, its directors, each
of its officers who signed a Registration Statement, each underwriter or agent
participating in such offering and the other selling holders, and each person,
if any, who controls the Company, any such underwriter or agent and any other
selling holder within the meaning of Section 15 of the Securities Act and each
officer, director, employee, agent, stockholder, member, partner or direct or
indirect owner of any of the foregoing, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section
3.4(a), as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or any preliminary or summary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such selling
holder expressly for use in the Registration Statement (or any amendment
thereto), or any preliminary or summary prospectus or the Prospectus (or any
amendment or supplement thereto); provided, however, that the liability of any
selling holder under this Section 3.4(b) shall be limited to the amount of net
proceeds received by such selling holder in the offering giving rise to such
liability.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve the indemnifying party from any liability it may have
under this Agreement, except to the extent that the indemnifying party is
materially prejudiced thereby and shall not relieve the indemnifying party from
any liability it may have had to any indemnified party otherwise than under this
Section 3.4. In case any action or proceeding is brought against the indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, unless in the
reasonable judgment of the indemnified party a conflict may exist between the
indemnifying party and the indemnified party in respect of such claim or
proceeding, to assume the defense thereof, jointly with any other indemnifying
party so notified, with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party that it
so chooses, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that
(i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the claim within twenty (20) days after
receiving notice from the indemnified party that the indemnified party
believes it has failed to do so; or
(ii) if the indemnified party who is a defendant in any action
or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal
defenses available to the indemnified party which are not available to
the indemnifying party; or
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(iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional
conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall
have concluded that there may be legal defenses available to such party
or parties which are not available to the other indemnified parties or
to the extent representation of all indemnified parties by the same
counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for
any reasonable expenses therefor. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If for any reason the forgoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any loss, liability, claim, damage or expense in such proportion
as is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from such offering
of securities. If, however, the allocation provided in the immediately preceding
sentence is not permitted by applicable law, or if the indemnified party failed
to give the notice required by subparagraph (c) above and the indemnifying party
is materially prejudiced thereby, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this subparagraph (d) were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this subparagraph (d).
The amount paid or payable in respect of any claim shall be deemed to include
any legal or other expenses incurred by such indemnified party in connection
with investigation or defending any such claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act or
the equivalent thereof under any applicable law) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresen
tation. Notwithstanding anything in this subparagraph (d) to the contrary, no
indemnifying party (other than the Company) shall be required pursuant to this
subparagraph (d) to contribute any amount in excess of the net proceeds received
by such indemnifying party from the sale of securities in the offering to which
the losses, claims, damages or liabilities of the indemnified parties relate,
less the amount of any indemnification payment made pursuant to this
subparagraph (d).
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(e) Any indemnity and reimbursement agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract. The indemnity and
contribution agreements contained in this Section 3.4 and the representations
and warranties of the Company referred to in Section 3.1(i) shall remain
operative and in full force and effect regardless of (i) any termination of any
underwriting or agency agreement, (ii) any investigation made by or on behalf of
the selling holders, the Company or any underwriter or agent or controlling
person or (iii) the consummation of the sale or successive resales of the
Registered Securities.
(f) The indemnification and contribution required herein shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
Section 3.5. Rule 144. The Company covenants that it will continue to
file on a timely basis the reports required to be filed by it under the
Securities Act and the rules and regulations of the SEC thereunder and the
Exchange Act and the rules and regulations of the SEC thereunder and it will
take such further action as any Holder of Eligible Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Eligible Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act,
as such Rule may be amended from time to time. Upon the request of any Holder of
Eligible Securities, the Company will deliver to such Holder a written statement
as to whether it has complied with such requirements.
Section 3.6. Participation in Underwritten Offerings. No Holder may
participate in any underwritten offering hereunder unless:
(a) Such Holder (other than the Initial Holder) executes a
power of attorney appointing one or more (up to three (3)) attorneys
(each, a "Representative") designated by the selling holders proposing
to sell a majority of the Eligible Securities proposed to be sold by
all selling holders. Each such Representative shall be authorized, on
customary terms, to execute the underwriting agreement on behalf of
each selling holder and to otherwise act for the selling holders in
connection with the offering.
(b) Such Holder (other than the Initial Holder) directly
through its Representative, enters into an underwriting agreement with
the Company, the other selling holders, any selling stockholders and
the underwriters, which underwriting agreement shall comply with the
provisions of this Article 8.
(c) Such Holder executes all questionnaires and other
documents required by the underwriting agreement to be executed by such
Holder.
Section 3.7. Lock-Up Agreements.
(a) Provided that the Company, within 10 Business Days after receiving
a Registration Demand, has not given notice to the Holder making such
Registration Demand to the effect that it is unable to provide a "lock-up" as
described in this Section 8.7(a) because it intends to issue securities within
the following 90 days, the Company agrees that it will not, directly or
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indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any share of Common Stock or securities convertible into or
exchangeable or exercisable for any share of Common Stock, other than any (i)
such sale or distribution of Common Stock upon exercise of Warrants in the case
of any registration pursuant to Section 7.l and (ii) Excluded Securities (as
defined below), for a period of ninety (90) days (or such shorter period as the
managing underwriter of such registration shall determine) from the effective
date of any Registration Statement pertaining to such Eligible Common
Stock."Excluded Securities" shall mean (1) options or other securities issued to
employees or directors of the Company, (2) securities issued in exchange for
interests in real property, (3) shares issued in connection with the Company's
DRIP, (4) securities issued upon conversion of convertible securities issued by
the Company and (5) non-convertible preferred stock of the Company and
non-convertible debt securities of the Company.
(b) Each Holder of Eligible Common Stock whose Eligible Common Stock is
covered by a Registration Statement filed pursuant to Sections 2.1 or 2.2 agrees
that it will not, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any shares of Common Stock (other than
the Eligible Common Stock covered by such Registration Statement) or any
Warrants or other securities convertible into or exchangeable or exercisable for
Common Stock, for a period of ninety (90) days (or such shorter period as the
managing underwriter of such registration shall determine) days from the
effective date of the Registration Statement pertaining to such Eligible Common
Stock.
(c) The lock-up agreements set forth in Sections 8.7(a) and 8.7(b)
shall be subject to customary exceptions that may be contained in an
underwriting agreement if any such registration involves an underwritten
offering.
ARTICLE 4
MISCELLANEOUS
Section 4.1. Notices. (a) Any notice, demand or delivery authorized by
this Agreement shall be in writing and shall be sufficiently given or made when
delivered or on the third Business Day following the date sent by first-class
mail, postage prepaid, addressed to the Company or the Initial Holder as
follows:
If to the Company: Wellsford Real Properties, Inc.
535 Madison Avenue
26th Floor
New York, New York 10022
Attention: President
If to the Initial Holder: W/W Group Holdings, L.L.C.
85 Broad Street
New York, New York 10036
Attention: Chief Financial Officer
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or (iii) such other address as shall have been furnished to the party giving or
making such notice, demand or delivery.
Section 4.2. APPLICABLE LAW. THIS AGREEMENT AND ALL RIGHTS ARISING
HEREUNDER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 4.3. Persons Benefitting. This Agreement shall be binding upon
and inure to the benefit of any Holders (each of whom is an intended third party
beneficiary), the Company and their respective successors, assigns,
beneficiaries, executors and administrators. Nothing in this Agreement is
intended or shall be construed to confer upon any Person, other than the Company
and the Holders (and such successors, assigns, beneficiaries, executors and
administrators), any right, remedy or claim under or by reason of this Agreement
or any part hereof.
Section 4.4. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
Section 4.5. Headings. The descriptive headings of the several Sections
of this Agreement are inserted for convenience and shall not control or affect
the meaning or construction of any of the provisions hereof.
Section 4.6. Remedies. In the event of a breach by the Company or by a
holder of Eligible Securities, of any of their obligations under this Agreement,
each holder of Eligible Securities or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and each holder of Eligible Securities agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it shall waive the defense that a remedy at law would
be adequate.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
---------------------------------
Name: Edward Lowenthal
Title: President
W/W GROUP HOLDINGS, L.L.C
By: /s/ Alan S. Kava
---------------------------------
Name: Alan S. Kava
Title: Vice President
A-1
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LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL GROUP, L.L.C.
Dated as of May 28, 1999
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
1.1. Definitions..............................................................2
1.2. Terms Generally.........................................................22
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name............................................................22
2.2. Term....................................................................22
2.3. Filing of Certificate and Amendments....................................23
2.4. Purpose and Business; Powers; Scope of Members' Authority...............23
2.5. Principal Office; Registered Agent......................................23
2.6. Names and Addresses of Members..........................................23
2.7. Representations and Warranties by the Company...........................24
2.8. Representations and Warranties by each Member...........................24
2.9. Indemnification.........................................................25
2.10. Post-Closing Adjustments................................................26
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control..................................................26
3.2. Enumeration of Specific Duties..........................................27
3.3. No Authority to Hire Employees..........................................30
3.4. Decisions Requiring Approval of the Management Committee................30
3.5. Management Committee....................................................35
3.6. Limited Authorization...................................................39
3.7. Members Shall Not Have Power to Bind Company............................39
3.8. Status as "Operating Company"; Participation in Management by Memb......39
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ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property.................................................40
4.2. Exclusivity; Other Activities of the Members............................40
4.3. Indemnification with Respect to the Manager.............................45
4.4. Compensation of Members and Affiliates..................................45
4.5. Investment Representations..............................................46
4.6. Dealing with Members....................................................47
4.7. Designation of Tax Matters Member.......................................47
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Capital Contributions and Capital Accounts of the Members...............48
5.2. Additional Capital Contributions........................................48
5.3. Failure to Fund Capital Contributions...................................49
5.4. Dilution for Failure to Fund Capital Calls..............................50
5.5. Capital of the Company..................................................51
5.6. Liability of Members....................................................51
5.7. Return of Capital Contribution..........................................51
5.8. Calculation of Members' Percentage Interest, Series A Preferred
Percentage Interest...................................................51
5.9. Issuance of Additional Membership Units.................................52
5.10. Arbitration.............................................................53
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts........................................................53
6.2. Profits and Losses......................................................54
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions..........................................61
7.2. Restoration of Excess Distributions.....................................67
7.3. Liquidation.............................................................67
7.4. Repayment of Member Loans...............................................67
7.5. Revisions to Reflect Issuance of Additional Membership Interests........68
7.6. Initial Public Offering; Sale of Units..................................68
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ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members......................69
8.2. Sale of Properties, the Company or its Subsidiaries.....................70
8.2A Indemnification of Saracen..............................................72
8.3. Conversion Right........................................................77
8.4. Certain Transfer Provisions.............................................80
8.5. Assignment Binding on Company...........................................80
8.6. Bankruptcy of a Member..................................................81
8.7. Substituted Members.....................................................81
8.8. Acceptance of Prior Acts................................................81
8.9. Additional Limitations..................................................81
8.10. Tag Along Rights.......................................................81
ARTICLE IX.
MANAGER
9.1. Removal of Manager......................................................82
9.2. Fees....................................................................83
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination............................................83
10.2. Distribution Upon Liquidation..........................................84
10.3. Sale of Company Assets.................................................85
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account.......................................................85
11.2. Availability of Books of Account.......................................85
11.3. Financial Reports and Statements; Annual Budgets.......................85
11.4. Accounting Expenses....................................................87
11.5. Bank Account...........................................................87
11.6. Fidelity Bonds and Insurance...........................................87
11.7. REPSYS Database........................................................87
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ARTICLE XII.
AMENDMENTS
12.1. Amendments.............................................................88
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances.....................................................89
13.2. Notices................................................................89
13.3. Headings and Captions..................................................90
13.4. Variance of Pronouns...................................................90
13.5. Counterparts...........................................................90
13.6. GOVERNING LAW..........................................................90
13.7. Partition..............................................................90
13.8. Invalidity.............................................................90
13.9. Successors and Assigns.................................................90
13.10. Entire Agreement......................................................90
13.11. No Brokers............................................................91
13.12. Maintenance as a Separate Entity......................................91
13.13. Confidentiality.......................................................91
13.14. Power of Attorney.....................................................91
13.15. Time of the Essence...................................................92
13.16. No Third Party Beneficiaries..........................................92
13.17. Exculpation...........................................................92
13.18. Consent of Saracen....................................................93
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EXHIBITS
EXHIBIT A Terms of Series A Preferred Membership Units
EXHIBIT B Form of Registration Rights Agreement
SCHEDULES
SCHEDULE 1 Additional Members
SCHEDULE 2.6 Names and Addresses of Members
SCHEDULE 2.4A List of Properties
SCHEDULE 2.4B List of Subsidiaries
SCHEDULE 2.7A Representations and Warranties by the Company with respect
to the Properties
SCHEDULE 2.7B Representations and Warranties by the Company with respect
to the Subsidiaries
SCHEDULE 3.2(a)(vi) Approved Leases and Lease Documentation
SCHEDULE 5.1 Capital Contributions, Capital Accounts, Membership Units
and Series A Preferred Membership Units
SCHEDULE 7.1 Calculations of the Preferred Distribution Amount
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<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL GROUP, L.L.C.
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT is made and entered
into as of May 28, 1999 by and among WHWEL Real Estate Limited Partnership, a
Delaware limited partnership ("WHWEL"), Wellsford Commercial Properties Trust, a
Maryland real estate investment trust ("WCPT"), WXI/WWG Realty, L.L.C., a
Delaware limited liability company (the "Whitehall XI"), W/W Group Holdings,
L.L.C., a Delaware limited liability company ("Holding Co.") 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, WHWEL and WCPT entered into that certain Limited Liability
Company Operating Agreement of Wellsford/Whitehall Properties, L.L.C., a
Delaware limited liability company ("WWP"), 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 members of WWP by the Amended and Restated Limited
Liability Company Operating Agreement of WWP, dated as of May 15, 1998 (the "WWP
Agreement");
WHEREAS, on July 16, 1998, the following transactions took place: (1)
WCPT, WHWEL and each of the Saracen Members contributed their undivided
Interests in WWP to Wellsford/Whitehall Properties II, L.L.C. ("WWP II") in
exchange for equivalent Interests in WWP II (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;
WHEREAS, contemporaneously with the execution of this Agreement, the
following transactions took place: (1) WCPT, WHWEL and each of the Saracen
Members contributed their undivided Interests in WWP II to the Company (the "WWG
Contribution") as shown in Schedule 5.1 in exchange for Interests in the
Company, and each became a Member of the Company, (2) Whitehall XI was admitted
as a Member of the Company and (3) Holding Co. contributed its 100% membership
interest in WXI/Mt. Bethel Road L.L.C., subject to the Assumed Financing, in
exchange for Interests in the Company as shown in Schedule 5.1 and became a
Member of the Company; and
WHEREAS, after giving effect to the transactions described above, the
Company will be the sole member of WWPII, which will continue to own, directly
or indirectly, all of the Properties set forth in Schedule 2.4A, and the Company
intends to continue the business and purpose of WWP II and acquire, hold,
develop, redevelop and operate real estate assets directly or indirectly through
one or more Subsidiaries.
<PAGE>
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.
ss.18-101 et seq.), as amended from time to time.
"Additional Information Request" shall have the meaning set forth in
Section 4.2(c).
"Administration Fee" shall mean the administration fee, effective as of
January 1, 1999, in the amount of $600,000 per annum payable in four $150,000
installments quarterly in arrears to WRP for so long as WRP (or an Affiliate of
WRP) shall provide the services in connection with the administration of the
Company as described in Section 9.2.
"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).
"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.
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"Arbitration" shall have the meaning set forth in Section 5.10.
"Asserted Deficiency" shall have the meaning set forth in Section
8.2A(a)(xiii).
"Asset Management Agreement" shall mean that certain Asset Management
Agreement dated as of May 15, 1998 between WWP and Saracen Partners, LLC.
"Assumed Financing" shall mean the loan made by (using the proceeds of
a loan in like amount from Goldman Sachs Group to Whitehall Street Real Estate
Limited Partnership XI), Whitehall Street Real Estate Limited Partnership XI to
WXI/Mt. Bethel Road L.L.C. pursuant to the Promissory Note dated as of March 18,
1999 of WXI/Mt. Bethel Road L.L.C. to Whitehall Street Real Estate Limited
Partnership XI.
"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
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<PAGE>
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 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 Managing Members (which shall
be $141,850,000, with respect to the Saracen Contributed Assets and $2,332,143
with respect to the Holding Co. Contributed Asset), and such Book Value shall
thereafter be adjusted in a manner consistent with Treasury Regulations Section
1.704-l(b)(2)(iv)(g) for revaluations pursuant to Section 6.1(b) and for the
Depreciation taken into account with respect to such asset.
"Budget Year" shall mean the period beginning on January 1, 1999 and
ending on December 31, 1999; and beginning January 1, 2000, "Budget Year" shall
mean a period beginning on January 1, 2000 and ending on December 31, 2000 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. 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. The Capital Account of each Member as of the date
hereof is set forth in Schedule 5.1.
"Capital Call" shall mean any written notice to one or more of the
Managing 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 each such Managing Member and each such
Managing Member's pro rata share of such total.
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"Capital Commitment" shall mean, with respect to each Managing Member
and Holding Co., the amount set forth opposite such Managing Member's name below
less the cumulative amounts actually funded, from time to time, by such Managing
Member after the date hereof:
Holding Co. $ 9,372,183
WHWEL: $ 7,860,958
Whitehall XI: $ 78,172,930
WCPT: $ 20,047,458
-------------
Total: $115,453,529
To the extent any Interim Capital Contribution made by a Managing Member is
subsequently returned to such Managing Member pursuant to Section 7.1(b)(i)
within five (5) months of the date such Interim Capital Contribution was made
and in any event prior to December 31, 2000, the amount so returned shall be
added back to such Managing Member's outstanding Capital Commitment on the date
returned as if it had not been funded. It is understood and agreed that, in
connection with the potential acquisition of properties commonly known,
respectively, as 24 Federal Street, Boston, Massachusetts and 79 Milk Street,
Boston, Massachusetts, (i) WHWEL and WCPT have funded $2,700,000 and $300,000,
respectively, (ii) that Holding Co. will fund its entire Capital Commitment in
connection with the capital call for the amount to be paid by the Company in
connection with such acquisition and will, after such funding, have no further
Capital Commitment and that, for the purposes of calculating the Funding
Percentage of each Managing Member, the total Capital Commitment noted above
shall be reduced by $9,372,183, and (iii) that WHWEL, Whitehall XI and WCPT
shall fund the remaining balance disproportionately so that the entire
acquisition cost for such properties is funded in accordance with their
respective Funding Percentage (with all amounts funded by Holding Co. being
added, solely for purpose of this clause (iii), to the amounts actually funded
by Whitehall XI in determining the amount to be funded by Whitehall XI in
accordance with its Funding Percentage).
"Capital Contribution" when used with respect to any Member shall mean
the aggregate amount of capital contributed or deemed contributed by such Member
to the Company in accordance with Article V, including any "Interim Capital
Contribution" contributed (but not yet returned to the applicable Managing
Member pursuant to Section 7.1(b)(i)) by any Managing Member.
"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 Property or Company Asset, (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.
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"Capital Proceeds Distribution Amount" shall have the meaning set forth
in Section 7.1(k).
"Cause" shall mean (a) fraud, criminal felony indictment, gross
negligence or willful misconduct by WCPT, WRP or any of Jeffrey H. Lynford,
Edward Lowenthal, Gregory Hughes or Richard Previdi (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) fraud or willful misconduct by any
Executive Officer of WCPT in connection with the business of the Company or any
Subsidiary that damages the Company or any Subsidiary or the value of any
Property or other asset of the Company or any Subsidiary in an amount of
$5,000,000 or more which has not been cured within forty-five (45) days of the
date WCPT has been given notice of such event, (c) failure of WCPT to fund any
Capital Call in accordance with Section 5.2(b) (but not Section 5.2(a)), (d) 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 May 18, 1999, as the same may
hereafter be amended and/or restated from time to time.
"Closing" shall mean the transactions whereby the WWG Contribution, the
contribution of the Holding Co. Contributed Asset and the admission of WCPT,
WHWEL, Whitehall XI, Holding Co. and each Saracen Member to the Company as
Members is completed.
"Closing Date" shall mean the date hereof.
"Closing Date Proration" shall have the meaning set forth in Section
2.10.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of succeeding law.
"Combined Whitehall/WCPT Percentage Interest" shall mean the sum total
of the Percentage Interest of each Member of the Whitehall Group and of WCPT
collectively.
"Committee Representative" shall mean each individual appointed from
time to time by any Managing Member 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(b)(ii) for and including such calendar quarter.
"Company" shall mean Wellsford/Whitehall Group, L.L.C., a Delaware
limited liability company, as said Company may from time to time be hereafter
constituted.
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"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 Loss" shall have the meaning set forth in Section 2.9.
"Company Nonrecourse Debt" shall have the meaning set forth in Treasury
Regulation Section 1.704-2(i)(2).
"Confidential Information" shall have the meaning set forth in Section
4.2(g).
"Contributing Member" shall have the meaning set forth in Section 5.3.
"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 WWP 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. WHWEL's, Whitehall XI's, Holding Co.'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.
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"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.
"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 $15.85 (fifteen dollars
and eighty-five cents); provided, however, that the Deemed Value Per Membership
Unit may be changed at any time with the prior consent of the Management
Committee, provided that it may only be reduced below $15.85 if prior to giving
effect to such reduction the Company receives a fairness opinion with respect to
the fairness of the revised Deemed Value Per Membership Unit from any of
Valuation Research Corporation, Arthur Andersen LLP, PricewaterhouseCoopers LLP
or other independent, disinterested appraiser reasonably acceptable to the
Saracen Members; provided, further, that if a New Member acquires Membership
Units, the Deemed Value Per Membership Unit shall equal the (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. The parties
intend for the Deemed Value Per Membership Unit to be equal to $15.85 until the
earlier of (i) May 15, 2000 or (ii) the date on which any New Member
unaffiliated with any Members as of the date hereof acquires Membership Units.
"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 or any assets of the Subsidiaries, including any improvements made
thereto and any tangible personal property located therein, or amortization of
the cost of any intangible 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 or asset of the Subsidiaries 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).
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"Disclosure Materials" shall mean all written materials heretofore
delivered by WRP, WCPT, the Company, WWP, WWP II, Holdings, Rand or any of their
respective Affiliates, employees or agents or any other source to WHWEL,
Goldman, Sachs & Co or any of their respective employees, including, but not
limited to, Ronald L. Bernstein, Steven M. Feldman, Alan S. Kava, Angie Madison,
Todd A. Williams and Frederick Yee.
"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.
"Executive Officer" shall mean, with respect to WCPT, any individual
now or hereafter occupying one or more of the following offices: Chairman,
President, Chief Financial Officer, Chief Operating Officer, Chief Executive
Officer or General Counsel, or any other individual employed by WCPT who has an
annual compensation of $100,000 or more.
"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.
"Funded Portion" shall have the meaning set forth in Section 5.3.
"Funding Debt" shall mean any Indebtedness incurred by WCPT in
compliance with the terms and provisions of Section 4.2(e).
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"Funding Percentage" shall mean, with respect to each Managing Member,
such Managing Member's pro rata share of the capital contribution required by a
Mandatory Capital Call or a Capital Call, as the case may be, determined by
dividing (x) the amount remaining for such Managing Member's Capital Commitment
by (y) the sum of the amounts remaining for the Capital Commitments
of all of the Managing Members ($106,081,275). The initial Funding Percentage
for each Managing Member as of the date hereof is as follows:
WHWEL: 7.41031%
Whitehall XI: 73.69150%
WCPT: 18.89819%
---------
Total: 100%
"Goldman Sachs Group" shall mean The Goldman Sachs Group, Inc., a
Delaware corporation, and any successors and assigns to or of all or
substantially all of its business.
"Holding Co." shall have the meaning set forth in the first paragraph
of this Agreement.
"Holding Co. Contributed Asset" shall mean the 100% membership interest
in WXI/Mt. Bethel Road L.L.C.
"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.
"Income" shall have the meaning set forth in Section 2.10.
"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.
"Indemnified Parties" shall have the meaning set forth in Section
4.3(a).
"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
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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.
"Interim Capital Contribution" shall mean the portion of a Capital
Contribution made by any Managing Member that (x) is designated by the Manager
as an "Interim Capital Contribution" in the Capital Call for such Capital
Contribution and (y) is returned to such Managing Member pursuant to Section
7.1(b)(i) not later than the earlier to occur of (i) the date that is five (5)
months of the date such Capital Contribution is made and (ii) December 31, 2000;
provided, however, that (A) a portion of a Capital Contribution may be
designated as an Interim Capital Contribution only if proceeds of such Capital
Contribution are used in connection with the acquisition of one or more
Properties by the Company or one or more Subsidiaries of the Company, (B) no
amount in excess of eighty percent (80%) of any particular Capital Contribution
may be designated as an Interim Capital Contribution and (C) the fraction,
expressed as a percentage, obtained by dividing (1) the sum of (x) the amount of
any Capital Contribution made in connection with the acquisition of a Property
that is designated as an Interim Capital Contribution and the proceeds of which
are used to acquire a specific Property and (y) the amount of mortgage financing
incurred in connection with the acquisition by the Company or a Subsidiary of
such Property and secured by such Property by (2) the gross acquisition costs
paid for such Property may not exceed 80%. For the avoidance of doubt, unless a
Capital Contribution satisfies the foregoing parameters it shall not be
designated as an "Interim Capital Contribution" and shall not be returnable
pursuant to Section 7.1(b)(i) (and shall instead be returnable pursuant to
Section 7.1(b)(iii)), and unless a Capital Contribution that is properly
designated as an Interim Capital Contribution is returned pursuant to Section
7.1(b)(i) prior to the date specified in clause (y) of the first sentence of
this definition, such Capital Contribution shall cease to be designated as an
"Interim Capital Contribution" and shall cease to be returnable pursuant to
Section 7.1(b)(i) and shall instead be returnable pursuant to Section
7.1(b)(iii).
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"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 (including
Interim Capital Contributions) made from time to time by such Member are
returned to such Member together with an annual return equal to such specified
percentage calculated commencing on the date such Capital Contributions
(including Interim Capital Contributions) are or were made (or deemed to be made
as specified in Schedule 5.1) and compounded annually to the extent not paid on
a current basis, taking into account the timing and amounts of all previous
Capital Contributions (including Interim Capital Contributions) by such Member
to the Company and all previous distributions by the Company to such Member
under this Agreement (or deemed to be made pursuant to this Agreement). For
purposes of computing such internal rate of return, (i) any Capital Contribution
(including any Interim 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, (ii) all
capital contributions made by any Managing Member and Saracen Member to either
WWP or WWP II shall be deemed to have been a Capital Contribution by such Member
to the Company in the same amount and as of the same date contributed to either
WWP or WWP II, as applicable, all as shown in Schedule 5.1, (iii) the
contribution by Holding Co. of the Holding Co. Contributed Asset shall be deemed
to have been made as of the Closing Date in an amount equal to the all-in
acquisition cost of such asset (excluding the amount of the Assumed Financing),
as shown in Schedule 5.1 and (iv) all distributions received by any Member from
either WWP or WWPII shall be deemed to have been received by such Member from
the Company in the same amount and as of the same date received from either WWP
or WWP II, as applicable, all as shown in Schedule 5.1. Notwithstanding anything
to the contrary contained herein, the WWP Contribution and WWG Contribution
shall not be deemed to be a Capital Contribution for purposes of computing such
Internal Rate of Return.
"Investment Notice" shall have the meaning set forth in Section 4.2(c).
"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.
"Lender Member" shall have the meaning set forth in Section 7.4.
"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.A.
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"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 WHWEL and Whitehall XI.
"Managing Members" shall mean WCPT, WHWEL and Whitehall XI.
"Mandatory Capital Call" shall mean a Capital Call for any
capital contributions that would be required pursuant to Section 5.2(a).
"Marketing Member" shall have the meaning set forth in Section 8.2(a).
"Marketing Period" shall have the meaning set forth in Section 8.2(d).
"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.
"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 WHWEL, WCPT, Saracen, Whitehall XI and Holding Co.
(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(e).
"Membership Unit" shall mean a fractional, undivided share of the
Interest of all Members issued pursuant to Section 5.1 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 10,698,331 Membership Units outstanding.
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 or any assets of its Subsidiaries, over the adjusted
basis of such Company Assets or assets of its Subsidiaries which
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represents the minimum taxable gain which would be recognized by the Company if
the non-recourse debt were foreclosed upon and the Company Assets or any assets
of its Subsidiaries were transferred to the creditor in satisfaction thereof,
and which is referred to as "minimum gain" in Treasury Regulations Section
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, WHWEL
or Whitehall XI, 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) any obligation to fund the purchase price and other
costs of acquiring any Office Property, the acquisition of which has been
approved by the Management Committee.
"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 Managing
Members, Saracen or Holding Co. Any New Member may be issued a new class of
membership interests with such classifications and designations as the
Management Committee shall determine.
"New Warrant Agreement" shall mean the Warrant Agreement dated as of
the date hereof between WRP and United States Trust Company of New York, as
warrant agent, as such agreement may be amended or restated from time to time.
"New WRP Warrants" shall mean the warrants that were originally to have
been issued to WHWEL by WRP pursuant to the New Warrant Agreement and, at the
direction of WHWEL, have been instead issued to Holding Co. as of the date
hereof.
"Nomura Loan" shall mean that certain loan made by Nomura Asset
Corporation to Wells Senior Holdings LLC in the original principal amount of
$69,000,000.00 as evidenced by the documents and instruments described in
Exhibit C 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-Marketing Member" shall have the meaning set forth in Section
8.2(a).
"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.
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"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.
"Notional Contribution" shall have the meaning set forth in Section
5.4(b).
"Objection Notice" shall have the meaning set forth in Section 11.3(c).
"Offer Notice" shall have the meaning set forth in Section 8.3.
"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.
"150 Mt. Bethel Road" shall mean the parcel of land and the
improvements located on such land, and commonly known as 150 Mt. Bethel Road,
Warren, New Jersey.
"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(a)(xiii).
"Percentage Interest" shall mean, with respect to any Member, the
percentage interest listed for each Member in Schedule 5.1 with respect to its
Membership Units, as the same may be adjusted pursuant to the terms of this
Agreement.
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"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
ss.2510.3-101, as amended.
"Pledgee" shall have the meaning set forth in Section 8.1(b).
"Pledgor" 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) 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 excess of Cumulative
Distribution Amount over all distributions made pursuant to Section
7.1(b)(ii)(A) of this Agreement in the current calendar year, less (B) all
distributions theretofore made pursuant to Section 7.1(b)(ii)(B) of this
Agreement with respect to the then current calendar year. For illustrative
purposes, an example of the manner in which the Preferred Distribution Amount is
calculated under various hypothetical assumptions is set forth in Schedule 7.1.
"Preferred Holders" shall have the meaning set forth in Section
3.5(c)(i).
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"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(c)(iii)(y), 7.1(c)(iv)(y), 7.1(d)(iii)(y),
7.1(d)(iv)(y), 7.1(e)(iii)(y), 7.1(e)(iv)(y), 7.1(f)(iii)(y), 7.1(f)(iv)(y),
7.1(g)(iii)(y), 7.1(g)(iv)(y), 7.1(h)(iii)(y) and 7.1(h)(iv)(y).
"Promote Payments" shall mean an amount, as determined from time to
time, equal to: (i) with respect to WHWEL, the sum of all amounts paid to the
Manager pursuant to Section 7.1(c)(iii)(y) or (iv)(y) and not returned to WHWEL
pursuant to Section 7.2; (ii) with respect to Whitehall XI, the sum of all
amounts paid to the Manager pursuant to Section 7.1(d)(iii)(y) or (iv)(y) and
not returned to Whitehall XI pursuant to Section 7.2; (iii) with respect to
Holding Co., the sum of all amounts paid to the Manager pursuant to Section
7.1(e)(iii)(y) or (iv)(y) and not returned to Holding Co. pursuant to Section
7.2; and (iv) with respect to WCPT, the sum of all amounts paid to the Manager
pursuant to (A) Section 7.1(f)(iii)(y) or (iv)(y) and (B) Section 7.1(g)(iii)(y)
or (iv)(y) and not returned to WCPT pursuant to Section 7.2.
"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.
"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.
"Rand" shall have the meaning set forth in Section 3.5(c)(ii).
"recapture income" shall have the meaning set forth in the Code and the
applicable Treasury Regulations.
"Required Amortization" shall have the meaning set forth in Section
8.2A(a)(ii).
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"Required Committee Approval" shall mean, with respect to any Major
Decision, the affirmative approval of no fewer than one Committee Representative
appointed by each of WHWEL and Whitehall XI and two Committee Representatives
appointed by WCPT, and with respect to any Operational Decision, the affirmative
approval of no fewer than one Committee Representative appointed by either WHWEL
or Whitehall XI and one Committee Representative appointed by WCPT. 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 any Managing Member 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.
"Requisite Promote" shall mean an amount, as determined from time to
time, equal to:
(i) with respect to WHWEL, the sum of (a) 17.5% of the total
distributions distributed to WHWEL pursuant to Section 7.1(b) in excess of
a 17.5% Internal Rate of Return (but only with respect to any such
distributions that, after deducting the amount of the Promote Payments made
by WHWEL, provide WHWEL with an Internal Rate of Return of up to 22.5%),
plus (b) 22.5% of the total distributions distributed to WHWEL pursuant to
Section 7.1(b) that, after deducting the amount of the Promote Payments
made by WHWEL, provide WHWEL with an Internal Rate of Return in excess of
22.5%;
(ii) with respect to Whitehall XI, the sum of (a) 20% of the total
distributions distributed to Whitehall XI pursuant to Section 7.1(b) in
excess of a 15% Internal Rate of Return (but only with respect to any such
distributions that, after deducting the amount of the Promote Payments made
by Whitehall XI, provide Whitehall XI with an Internal Rate of Return of up
to 25%), plus (b) 25% of the total distributions distributed to Whitehall
XI pursuant to Section 7.1(b) that, after deducting the amount of the
Promote Payments made by Whitehall XI, provide Whitehall XI with an
Internal Rate of Return in excess in excess of 25%;
(iii) with respect to Holding Co., the sum of (a) 20% of the total
distributions distributed to Holding Co. pursuant to Section 7.1(b) in
excess of a 15% Internal Rate of Return (but only with respect to any such
distributions that, after deducting the amount of the Promote Payments made
by Holding Co., provide Holding Co. with an Internal Rate of Return of up
to 25%), plus (b) 25% of the total distributions distributed to Holding Co.
pursuant to Section 7.1(b) that, after deducting the amount of the Promote
Payments made by Holding Co., provide Holding Co. with an Internal Rate of
Return in excess in excess of 25%;
(iv) with respect to WCPT on account of the WCPT I Distributions, the
sum of (a) 17.5% of the total distributions distributed to WCPT pursuant to
Section 7.1(b) in excess of a 17.5% Internal Rate of Return with respect to
the WCPT Phase I Capital Contributions (but only with respect to any such
distributions that, after deducting the amount of the Promote Payments made
by WCPT, provide WCPT with an Internal Rate of Return of up to 22.5% with
respect to the WCPT Phase I Capital Contributions), plus (b) 22.5% of the
total distributions distributed to
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WCPT pursuant to Section 7.1(b) that, after deducting the amount of the
Promote Payments made by WCPT, provide WCPT with an Internal Rate of Return
in excess of 22.5% with respect to the WCPT Phase I Capital Contributions;
and
(v) with respect to WCPT on account of its WCPT II Distributions, the
sum of (a) 20% of the total distributions distributed to WCPT pursuant to
Section 7.1(b) in excess of a 15% Internal Rate of Return with respect to
the WCPT Phase II Capital Contributions (but only with respect to any such
distributions that, after deducting the amount of the Promote Payments made
by WCPT, provide WCPT with an Internal Rate of Return of up to 25% with
respect to the WCPT Phase II Capital Contributions), plus (b) 25% of the
total distributions distributed to WCPT pursuant to Section 7.1(b) that,
after deducting the amount of the Promote Payments made by WCPT, provide
WCPT with an Internal Rate of Return in excess in excess of 25%.
"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.
"Rules" shall have the meaning set forth in Section 5.10.
"Sales Notice" shall have the meaning set forth in Section 8.2(a).
"Saracen" or "Saracen Members" shall mean the Members set forth on
Schedule 1 annexed hereto, provided, however that, solely for purposes of
Sections 4.2(f), 8.3, 8.10 and 12.1 hereof, Rand shall not be deemed a Saracen
Member, but shall have the rights set forth in said Sections.
"Saracen Closing" shall mean the transactions whereby WWP acquired
certain assets in exchange for cash, the assumption of certain liabilities,
"Membership Units" of WWP, "Series A Preferred Membership Units" of WWP and
other good and valuable consideration in accordance with the terms WWP Agreement
and the terms of the Contribution Agreement.
"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).
"Section 8.2(c) Termination Date" shall have the meaning set forth in
Section 8.2(d).
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"Series A Capital Accounts" shall have the meaning set forth in Section
6.1(e).
"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 A annexed hereto.
"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.
"Subject Asset" shall have the meaning set forth in Section 8.2(a).
"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.
"Substituted Member" shall mean any Person admitted to the Company as a
Member pursuant to the provisions of Section 8.7.
"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,
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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 Matters Member" shall mean Whitehall XI.
"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).
"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.
"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(b)(ii) of this Agreement with respect to such preceding calendar
year and all prior years, less (C) all distributions theretofore made pursuant
to Section 7.1(b)(ii)(A) of this Agreement with respect to the then current
year. As of the date hereof, but subject to that certain letter agreement, dated
as of the date hereof, executed by the Company in favor of the Saracen Members,
the amount of the Unpaid Preferred Distribution is equal to zero ($0).
"Warrant Agreement" shall mean the Warrant Agreement dated as of August
28, 1997 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 Amount" shall have the meaning set forth in Section 7.1(i).
"WCPT I Distributions" shall mean, as of any date, an amount equal to
the product of (x) the distributions made to WCPT, WHWEL, Whitehall XI and
Holding Co. pursuant to Section 7.1(b)(iii)(B) multiplied by (y) the quotient
(expressed as a percentage rounded up to the nearest one tenthousandth (0.0001))
of the WCPT I Percentage Interest divided by the Combined Whitehall/WCPT
Percentage Interest.
"WCPT II Distributions" shall mean, as of any date, an amount
equal to the product of (x) the distributions made to WCPT, WHWEL, Whitehall XI
and Holding Co. pursuant to Section 7.1(b)(iii)(B) multiplied by (y) the
quotient (expressed as a percentage rounded up to the nearest one ten-
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thousandth (0.0001)) of the WCPT II Percentage Interest divided by the Combined
Whitehall/WCPT Percentage Interest.
"WCPT I Percentage Interest" shall mean the percentage obtained by
dividing (A) the number of Membership Units issued to WCPT as of the date
hereof, plus the number of Membership Units issued to WCPT after the date hereof
in respect of the WCPT Phase I Capital Contribution as of such date by (B) the
total number of Membership Units issued to WCPT as of such date.
"WCPT II Percentage Interest" shall mean the percentage obtained by
dividing (A) the number of Membership Units issued to WCPT after the date hereof
in respect of the WCPT Phase II Capital Contribution as of such date by (B) the
total number of Membership Units issued to WCPT as of such date.
"WCPT IPO" shall have the meaning set forth in Section 8.3(e).
"WCPT Phase I Capital Contributions" shall mean, as of any date, the
sum of $64,652,543, plus the product of (x) WCPT's total Capital Contributions
funded as of such date (excluding Capital Contributions funded prior to the date
hereof) multiplied by (y) 0.51615.
"WCPT Phase II Capital Contributions" shall mean, as of any date, the
sum of $300,000, plus the product of (x) WCPT's total Capital Contributions
funded as of such date multiplied by (y) 0.48385.
"Whitehall XI" shall have the meaning set forth in the first paragraph
of this Agreement.
"Whitehall Group" shall mean, collectively, WHWEL, Whitehall XI and
Holding Co., together with any assignees or transferees to the extent permitted
hereunder.
"Whitehall Registration Statement" shall have the meaning set forth in
Section 8.3(e).
"WHWEL" shall have the meaning set forth in the first paragraph of this
Agreement.
"WRP" shall mean Wellsford Real Properties, Inc., a Maryland
corporation.
"WRP At-Market Shares" shall mean the shares of WRP issued to WHWEL
pursuant to the WRP Letter Agreement in exchange for Membership Units owned by
WHWEL.
"WRP Letter Agreement" shall mean the letter agreement, dated as of the
date hereof, between WHWEL and WRP concerning the conversion of WHWEL's
Membership Units into WRP AtMarket Shares.
"WRP Shares" shall mean shares of common stock, $.01 par value per
share, of WRP.
"WRP Warrants" shall mean the warrants that were originally issued to
WHWEL by WRP pursuant to the Warrant Agreement, which have been assigned to
Holding Co. as of the date hereof.
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"WWG Contribution" shall have the meaning set forth in the fourth
paragraph of this Agreement.
"WWP" shall have the meaning set forth in the second paragraph of this
Agreement.
"WWP II" shall have the meaning set forth in the third 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 Group, 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.
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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"). As of the date of hereof,
the Properties are those listed in Schedule 2.4A and the Subsidiaries are those
listed in Schedule 2.4B. 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 Agreement, 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 535 Madison Avenue, 26th Floor, New York, New York 10022. 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, 535 Madison Avenue, 26th Floor, New York, New York 10022, 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. Representations and Warranties by the Company. To support the
valuation as of the date hereof of each Membership Unit at $15.85, the Company
hereby:
(a) represents and warrants to each of Whitehall XI and Holding Co.
that the representations and warranties in Schedule 2.7A are true and correct,
as of the dates set forth therein,
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with respect to each of the Properties listed in Schedule 2.4A, each as
described in the Disclosure Materials;
(b) represents and warrants to each of Whitehall XI and Holding Co.
that the representations and warranties in Schedule 2.7B are true and correct,
as of the date hereof, with respect to the Company and each of the Subsidiaries
listed in Schedule 2.4B; and
(c) understands and acknowledges that each of Whitehall XI and Holding
Co. is relying on such representations and warranties in making its decision to
become a Member of the Company and contribute capital thereto.
The representations and warranties in this Section 2.7, Schedule 2.7A
and Schedule 2.7B shall survive until May 15, 2000.
2.8. Representations and Warranties by each Member.
(a) Each Member (other than each Saracen Member) hereby represents and
warrants to the other Members, as of the date hereof, that, with respect to
itself only, the following representations and warranties are true and correct:
(i) Such Member has been duly organized and is validly existing and in
good standing in the jurisdiction of its organization and is duly licensed
or qualified to transact business in each jurisdiction in which the nature
of its business activities or assets requires such licensing or
qualification. Such Member has the requisite power and authority to carry
on its business as it is now being, and is proposed to be, conducted.
(ii) This Agreement has been duly authorized, executed and delivered by
such Member and constitutes a legal, valid and binding obligation of such
Member, enforceable against such Member in accordance with its terms,
except as limited by bankruptcy, insolvency, receivership and similar laws
affecting creditors' rights from time to time in effect.
(iii) No order, permission, consent, approval, license, authorization,
registration or filing by or with any government agency having jurisdiction
over such Member or any other Person is required for the execution,
delivery or performance by such Member of this Agreement or any other
document or instrument to be executed and delivered by such Member (in its
individual capacity or as a partner, member or other equity holder of any
other Person) in connection with the Closing, except for such orders,
permissions, consents, approvals, licenses, authorizations, registrations
and filings as have already been obtained, given or made.
(b) Each Saracen Member, with respect to itself only, hereby represents
and warrants to the other Members, as of the date hereof, that this Agreement
has been duly executed and delivered by such Saracen Member and constitutes a
legal, valid and binding obligation of such Saracen Member, enforceable against
such Saracen Member in accordance with its terms, except as limited by
bankruptcy, insolvency, receivership and similar laws affecting creditors'
rights from time to time in effect.
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(c) Holding Co. hereby represents and warrants to the other Members, as
of the date hereof, that the following representations and warranties are true
and correct:
(i) Holding Co. owns 100% of the legal and beneficial interest in the
Holding Co. Contributed Asset, free and clear of all Liens (other than the
Assumed Financing) and, after giving effect to the Closing, the Company
will own 100% of the assets of the Holding Co. Contributed Asset.
(ii) Except for the Assumed Financing and liabilities arising in the
ordinary course of business, Holding Co. has not created any liabilities of
WXI/Mt. Bethel Road, L.L.C. of any nature, whether matured or unmatured,
fixed or contingent, accrued or unaccrued, liquidated or unliquidated,
whether due or to be become due, regardless of whether the disclosure
thereof otherwise would be required by GAAP.
2.9. Indemnification.
(a) The Company shall indemnify each of Whitehall XI and Holding Co.
against, and hold each of Whitehall XI or Holding Co. harmless from, its ratable
share of any loss, liability, expense or damage incurred by the Company
including, without limitation, reasonable counsel fees and disbursements and
court costs (any such amount, a "Company Loss") accruing from or resulting by
reason of any breach or inaccuracy of the representations and warranties made by
the Company in Section 2.7, Schedule 2.7A and Schedule 2.7B; provided, however,
that the Company shall have no liability hereunder for any Company Loss unless
and until all Company Losses, taken together, exceed $500,000 in the aggregate
and then the Company shall have liability hereunder only for the amount by which
all Company Losses, taken together, exceed $500,000. For the purposes hereof,
the ratable share of Whitehall XI's or Holding Co.'s Company Loss shall be an
amount equal to the product of (x) the amount of such Company Loss times (y) the
Percentage Interest of Whitehall XI or Holding Co., respectively, on the date
that the claim is asserted. In lieu of a cash payment on account of such
indemnity, Whitehall XI and Holding Co. shall each be issued additional
Membership Units based on a value per Membership Unit to be determined by the
Management Committee (taking into account the Company Loss) so that, after
giving effect to such issuance of additional Membership Units, the value (taking
into account the Company Loss) of Membership Units owned by each of Whitehall XI
and Holding Co. is equal to the product of (i) the number of Membership Units
owned by Whitehall XI or Holding Co. (as applicable) immediately preceding such
issuance, multiplied by (ii) the Deemed Value Per Membership Unit in effect
immediately preceding such issuance. Whitehall XI or Holding Co. will notify the
Company of any claim hereunder, and the Company will notify Whitehall XI and
Holding Co., promptly after learning of an alleged Company Loss that could
entitle Whitehall XI or Holding Co. to indemnification hereunder. No
indemnification is given as to the fair market value of the "total assets" of
the Company on the date hereof or any time thereafter. For purposes hereof, in
the event any Subsidiary of the Company incurs a loss of the type described in
the definition of Company Loss above, the Company shall be deemed to have
incurred a Company Loss in an amount equal to the product of (i) the amount of
such loss so incurred by such Subsidiary and (ii) the Company's ownership
percentage in such Subsidiary on the date such loss is incurred. Neither
Whitehall XI nor Holding Co. may commence any action or proceeding or otherwise
make a claim for damages based upon a breach or inaccuracy of the
representations and warranties made by the Company after May 15, 2000; provided,
that this sentence shall not restrict Whitehall XI or Holding Co. from
prosecuting or otherwise pursuing a claim
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for indemnification hereunder after such date with respect to any claim made (by
written notice to the Company setting forth, with reasonable specificity, such
claim and the grounds therefor) or proceeding or action commenced on or prior to
May 15, 2000.
2.10. Post-Closing Adjustments. The Company shall be entitled to
receive, and Holding Co shall pay to the Company if received by Holding Co. or
any of its Affiliates, all rents, receivables and other items of income
(collectively, "Income") with respect to 150 Mt. Bethel Road that is received
prior to, on or after the Closing Date that relates to any event or period after
Closing, provided that Holding Co. shall be entitled to receive, and the Company
shall pay to Holding Co., if received by the Company, all Income with respect to
150 Mt. Bethel Road owing by tenants or other Persons at 150 Mt. Bethel Road
which accrued prior to the Closing Date, unless and to the extent any amounts
are then due and payable by the payor of such income to the Company on account
of any period after the Closing and such payment is not specifically designated
to be applied to amounts owing which relate to events or periods prior to the
Closing. No later than thirty (30) days after the Closing, the Company and
Holding Co. shall collectively and jointly determine and calculate, with respect
to 150 Mt. Bethel Road, the apportionment, as of midnight of the Closing Date,
of real estate taxes, utilities and other expense items (but not items of
Income, which are to be allocated as provided in the preceding sentence) that
are customarily apportioned between buyers and sellers of real estate
(collectively, the "Closing Date Proration"). If the Closing Date Proration
shall be a credit to Holding Co., the Company shall remit to Holding Co. an
amount equal to the Closing Date Proration. If the Closing Date Proration shall
be a credit to the Company, Holding Co. shall remit to the Company an amount
equal to the Closing Date Proration.
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.
Prior to hiring or terminating any Executive Officer of WCPT, WCPT must first
obtain written consent of each of
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WHWEL and Whitehall XI (or their respective Committee Representatives), which
consent shall not be unreasonably withheld or delayed; provided, however, that
the consent of WHWEL and Whitehall XI (or their respective Committee
Representatives) shall not be required in connection with terminating an
Executive Officer of WCPT who is also an Executive Officer of WRP.
(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 contractors
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 materialmen'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
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"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; delivering 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;
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(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;
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(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
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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);
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(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 the Managing Members 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 connection 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
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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 each of the Managing Members is 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 (other than those listed in
Schedule 2.4B).
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Notwithstanding anything herein to the contrary, 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.
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
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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.
Notwithstanding anything to the contrary herein, the exercise by a
Marketing Member of its rights under Section 8.2 shall not require any approval
or other action of the Management Committee or any other Member.
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, approve or disapprove 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) Two Committee Representatives shall be appointed by each of
WHWEL and Whitehall XI, and four (4) Committee Representatives shall be
appointed by WCPT (each of WHWEL, Whitehall XI and WCPT in such capacity,
an "Appointing Member") and each Committee Representative shall serve at
the pleasure of the Appointing Member that appointed such Committee
Representative. Each Committee Representative appointed by WCPT shall be an
officer or employee of WCPT or WRP. Each Committee Representative appointed
by WHWEL or Whitehall XI shall be an officer or employee of Goldman, Sachs
& Co., Goldman Sachs Group or one of their respective Affiliates. The
Management Committee shall consist of the Committee Representatives
appointed by the Appointing Members, the Committee
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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.
Each of WHWEL and Whitehall XI shall cease to be an Appointing Member if
all of the Members of the Whitehall Group, taken together, cease to own, in
the aggregate, Membership Units and/or Shares having an aggregate original
cost or fair market value, whichever is greater, of at least $15 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 $15 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 $15 million (unless, at such time, the aggregate cost or fair market
value, whichever is greater, of the Membership Units and Shares of all of
the Members of the Whitehall Group, taken together, is also less than $15
million) then, subject to Section 4.2(j) 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
instead be made or given exclusively by WHWEL and Whitehall XI, acting
jointly, and, to the extent provided in the Series A Terms and this
Agreement, 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. Notwithstanding the foregoing, no notice from Saracen or
any of the Saracen Members purporting to remove William F. Rand, III
("Rand") as a Committee Representative shall be effective unless executed
by Rand. 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, if
applicable, the Preferred Holders 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, if applicable, the Preferred
Holders 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.
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(iii) Except with respect to Rand's appointment as a Committee
Representative by Saracen, 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:
WHWEL: Stuart M. Rothenberg and Steven M. Feldman
Whitehall XI: 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 (in person or by telephone) 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
one of which shall have been appointed by each of WHWEL and Whitehall XI and two
of which shall have been appointed by WCPT) 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
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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, as the
case may be, is present (in person or by telephone) at such meeting or consents
to such action by written consent. Notwithstanding the foregoing, in the event
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, as the case may be, is not present
at a meeting (in person or by telephone), the Management Committee shall be
deemed authorized to take or approve any action taken at such meeting if the
Saracen Members and/or such Committee Representatives ratify(ies) such action at
a subsequent meeting or in a written consent of the Management Committee (it
being understood and agreed that any decision by the Saracen Members and/or such
Committee Representative with respect to any such ratification may be made in
their or his or her sole discretion and that no Saracen Member of Committee
Representative shall be under any obligation to effect any such ratification).
(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 Managing 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
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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 Member of the Whitehall Group, acting alone, 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) the Members of the Whitehall Group shall have the authority to sell or
cause the sale of Properties, Subsidiaries of the Company and/or the Company
itself
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as set forth in Sections 8.2 and 9.1, and (iii) either WHWEL or Whitehall XI
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
Managing 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 participate 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, as long as all of the
Members of the Whitehall Group, taken together, own Membership Units and/or
Shares having an aggregate original cost or fair market value, whichever is
greater, of at least $15 million, WCPT and any of its Affiliates (including WRP)
shall not make any investment in or otherwise acquire or own, directly or
indirectly, any Office Property located in North America, except (A) through its
Interest in the Company, (B) as otherwise permitted in this Sections 4.2, or (C)
pursuant to an acquisition in accordance with Section 8.2 herein. 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). WCPT acknowledges that this covenant is a
material inducement to the Members of the Whitehall Group entering into this
Agreement and that a breach of this covenant shall constitute a material breach
of this Agreement entitling the Members of the Whitehall Group to exercise the
remedies provided elsewhere in this Agreement and at law or in equity (including
specific performance and injunctive relief).
(ii) Notwithstanding anything else to the contrary herein, at any time
after all of the Members of the Whitehall Group, taken together, cease to own
Membership Units and/or Shares having
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an aggregate original cost or fair market value, whichever is greater, of at
least $15 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 any Member of the
Whitehall Group and any Affiliate of such Member) 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) If WCPT or its Affiliate shall have offered the opportunity to
acquire Office Properties in accordance with subparagraph (c) below and the
Committee Representatives appointed by WHWEL and Whitehall XI 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 date hereof and (y) the date twelve months prior to the
date of determination, then at any time thereafter an Affiliate of WCPT (but not
WCPT itself) may acquire Office Properties that have been offered to the Company
pursuant to subparagraph (c) and declined by the Committee Representatives
appointed by WHWEL and Whitehall XI.
(c) 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 WHWEL and Whitehall XI.
WCPT shall promptly provide to the Committee Representatives appointed by WHWEL
and Whitehall XI 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 WHWEL and Whitehall XI, WCPT shall deliver to WHWEL
and Whitehall XI copies of all additional information and documents concerning
such Office Property which are reasonably available to WCPT and are reasonably
necessary for WHWEL and Whitehall XI 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 WHWEL and
Whitehall XI or each of their Committee Representatives pursuant to this Section
4.2(c) 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 Affiliate is permitted to make such
investment or acquisition in accordance with the terms of 4.2(b) 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 WHWEL and Whitehall XI 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
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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 WHWEL and Whitehall XI 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 WHWEL and Whitehall XI in
writing, neither WCPT nor any of its Affiliates may make any investment in or
otherwise acquire any interest in the relevant Office Property.
(d) 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 (c) 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(c)
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).
(e) Except as contemplated by this Agreement, WCPT has not entered into
or conducted and shall not directly or indirectly enter into or conduct any
business or own any assets other than through its Interest in the Company and
has not incurred or issued and shall not incur or issue any Indebtedness or
other liabilities or any debt or equity securities or Rights whatsoever without
the prior written consent of each of WHWEL and Whitehall XI (or their respective
Committee Representatives); provided that, WCPT may (i) issue additional Shares
to WRP if (x) all proceeds received by WCPT are contributed to the Company to
fund a Capital Call issued in accordance with Article V and (y) the price per
Share paid in cash by WRP to WCPT is equal to the price per Membership Unit paid
in cash by WCPT to the Company for such Capital Call and (ii) with the approval
of the Members of the Whitehall Group, issue Funding Debt if (x) the Company
issues Back-to-Back Debt with identical terms to such Funding Debt and (y) all
of the proceeds received by WCPT in connection with the issuance of such Funding
Debt are used to purchase such Back-to-Back Debt. WCPT has not entered into and
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(c).
(f) Subject to this Section 4.2 and any limitations set forth in any
agreement between WCPT (or any of its Affiliates) and any Saracen Member and/or
Rand (only so long as such limitations are applicable under such agreement; it
being specifically agreed that any such limitations contained in the Asset
Management Agreement are no longer applicable or effective), each of WRP (but
not WCPT), WHWEL, Whitehall XI, Holding Co. and 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
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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) no Member of the Whitehall Group nor any Affiliate thereof nor any
Person related to or in any way affiliated with such Member 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 in this Section 4.2,
neither WRP nor any of its Affiliates (other than WCPT) nor any other Person
related to or in any way affiliated with WRP (other than 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 any limitations set forth in
any agreement between WCPT (or any of its Affiliates) and any Saracen Member
and/or Rand (only so long as such limitations are applicable under such
agreement; it being specifically agreed that any such limitations contained in
the Asset Management Agreement are no longer applicable or effective), 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
any investment opportunity is introduced to the Company and one or more of the
Committee Representatives appointed by WCPT declines such opportunity, then any
Member of the Whitehall Group or any affiliate of any such Member, shall be free
to pursue and acquire for its own account such opportunity, provided that the
economic terms are substantially similar to the economic terms previously
offered to the Company.
(g) Each Member of the Whitehall Group 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 WHWEL and
Whitehall XI disapproved pursuant to subparagraph (c) above, (x) no Member of
the Whitehall Group nor any Affiliate of any such Member shall be permitted to
make any investment in or otherwise acquire or own, directly or indirectly, such
Office Property and (y) they shall keep confidential all information concerning
such Office Property that WCPT (or its Affiliate) provided to such Members of
the Whitehall Group (or any Affiliate of such Members) 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 such Members of the Whitehall Group or any
Affiliate of such Members. For purposes of this subparagraph (g), "Confidential
Information" shall include all information furnished to such Members of the
Whitehall Group or any Affiliate of such Members 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 any Member of the Whitehall Group or any Affiliate of such
Member in contravention of this Agreement, (ii) was already in the possession of
such Member of the Whitehall Group or any Affiliate of such Member prior to its
disclosure to such Member of the Whitehall Group or any Affiliate of such Member
by or on behalf of WCPT or its Affiliate, (iii) is or becomes available to such
Member of the Whitehall Group or any Affiliate of such Member from a source
(other than WCPT or its Affiliates) not bound, to the knowledge of such Member
of the Whitehall Group or any Affiliate of such Member, by any legal or other
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obligation prohibiting the disclosure of Confidential Information by such source
to WCPT or its Affiliates or (iv) the Company or its Subsidiary acquires such
Office Property.
(h) Notwithstanding anything to the contrary set forth in this
Agreement, WRP or its Affiliates shall be entitled to acquire and own certain
Office Properties (i) that were acquired in connection with WRP's or its
Affiliates' acquisition of Value Property Trust, a Maryland real estate
investment trust, (ii) in accordance with the letter agreement dated the date
hereof, among the Company, WCPT, WHWEL, Whitehall XI, Saracen and WRP pursuant
to which Affiliates of WCPT may make certain entity-level investments and (iii)
that may be acquired in connection with WRP's or its Affiliate's foreclosure
action or receipt of a deed in lieu of foreclosure or any other exercise of its
remedies under any indebtedness or debt security originated by WRP or its
Affiliate that is permitted in this Section 4.2 (provided that WCPT shall not,
without the prior written consent of each of WHWEL and Whitehall XI (or their
respective Committee Representatives), provide any property or asset management
services for any asset so acquired).
(i) 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 Affiliate) shall not form another entity with any
Member of the Whitehall Group and/or any Affiliate of such Member or jointly
with any Member of the Whitehall Group and/or any Affiliate of such Member,
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(i) shall not independently prevent WCPT (or
any of its Affiliates) or any Member of the Whitehall Group (or any Affiliate of
such Member) 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 any Member of the
Whitehall Group (or any Affiliate of such Member) 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 the prior
written consent of each of WHWEL and Whitehall XI (or their respective Committee
Representatives). Nothing in this Agreement shall preclude or limit the ability
of any Member of the Whitehall Group and any Affiliate of such Member to
purchase Office Properties either alone or in a partnership with another Person
(except WCPT as described above).
(j) Notwithstanding anything else to the contrary herein, if 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, then 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
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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, any Member of the Whitehall Group or any of Affiliate of such
Member, 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.
(k) In the event a Marketing Member has caused the Company or its
Subsidiaries to complete sales pursuant to Section 8.2(a) of Subject Assets
having a total cost basis of $150 million or more, (i) WRP or any of its
Affiliates (including WCPT) shall be free to acquire any Office Property; if,
but only if, such Office Property shall not be located in the same greater
metropolitan region (including central business district and suburban markets)
as any Property then owned by the Company or any Subsidiary unless WRP or any of
its Affiliates (including WCPT) acquires such Office Property pursuant to
Section 8.2, and (ii) WRP shall be permitted to utilize personnel employed by
WCPT on a part-time basis to assist with the management of Office Properties
acquired in accordance with the preceding clause (i); provided that (A) the
costs of such employees, including salary, benefits and overhead, are fairly
allocated between WRP and the Company and (B) each of WHWEL and Whitehall XI (or
their respective Committee Representatives) shall approve the cost allocation
and reimbursement arrangements for such personnel, which approval shall not be
unreasonably withheld.
(l) In the event that 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, have a total cost basis of less
than $150 million, (i) WRP or any of its Affiliates (including WCPT) shall be
free to acquire any Office Property and (ii) WRP and any Member of the Whitehall
Group shall be permitted to hire any individual then employed by WCPT to provide
management services for any Office Property acquired by WRP and any Member of
the Whitehall Group (it being understood that, so long as the Company owns
Properties having an aggregate cost basis of more than $150 million, neither WRP
nor any Member of the Whitehall Group shall be permitted to employ or solicit
the employment or consulting services of, any individuals employed by WCPT,
except (i) as permitted in paragraph (k) above, (ii) after the expiration of six
(6) months following the termination for any reason of such individual's
employment by WCPT, or (iii) after the expiration of three (3) months following
the termination for any reason of such individual's employment by WCPT if at the
time of such termination the "total assets" of the Company (determined as
provided in this clause l) have had, for a period of at least three (3) months,
a total cost basis of less than $250 million and more than $150 million.
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
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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, however, that the
Indemnified Parties shall not be so indemnified for any acts or omissions
determined to be in contravention of this Agreement. The indemnification
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 all of the Members of the Whitehall Group, taken together, cease to
own Membership Units and/or Shares in WCPT having an aggregate original cost or
fair market value, whichever is greater, of at least $15 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
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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, 1997, 1998 and expects to have adjusted
gross income for calendar year 1999, 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
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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 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
and the assets of the Subsidiaries.
4.7. Designation of Tax Matters Member. Whitehall XI, 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.
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ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Capital Contributions and Capital Accounts of the Members.
(a) As of the date hereof, WCPT, WHWEL and each of the Saracen Members
hereby contributes to the Company each of their "Membership Units" in WWP II and
all of their right, title and interest in and to WWP II, to the Company and, in
exchange therefor, each shall receive such number of Membership Units, a
Percentage Interest and Capital Account as set forth in Schedule 5.1.
(b) As of the date hereof, each of the Saracen Members hereby
contributes each of their "Series A 6% Convertible Preferred Membership Units"
in WWP II to the Company and each shall receive therefor an equal number of
Series A Preferred Membership Units, a Series A Preferred Percentage Interest
and a Series A Capital Account, all as set forth in Schedule 5.1. The Company
shall cancel and terminate each of the "Series A 6% Convertible Preferred
Membership Units" of WWP II.
(c) As of the date hereof, Holding Co. hereby contributes the Holding
Co. Contributed Asset, subject to the Assumed Financing, and $122,744 in cash to
the capital of the Company and, in exchange therefor, shall receive such number
of Membership Units, a Percentage Interest and Capital Account as set forth in
Schedule 5.1. The contribution by Holding Co. to the Company (and/or one or more
of its Subsidiaries) of the Holding Co. Contributed Asset on the Closing Date
shall be made subject to the Assumed Financing and on the date of the Closing,
the Company and/or one or more of its Subsidiaries shall assume the Assumed
Financing. The Company shall repay the Assumed Financing no later than May 28,
1999.
5.2. Additional Capital Contributions
(a) If any of the Managing Members 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), such
Managing Member 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
Managing Members shall, within twenty (20) days after receipt of such Mandatory
Capital Call, fund a portion of the capital contribution required by such
Mandatory Capital Call (which portion shall be equal to such Member's Funding
Percentage multiplied by the amount of such Mandatory Capital Call).
Notwithstanding anything to the contrary herein, except for the payment of any
Preferential Distribution Non-Payment (as defined in the Series A Terms), no
Managing Member 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
Member) pursuant to this Section 5.2 or otherwise (i) if such Member has fully
funded its Capital Commitment (whether or not the other Members have fully
funded their Capital Commitments), (ii) in response to a Capital Call made at
any time after December 31, 2000 (irrespective of the amounts previously
contributed) or (iii) at any time after an initial public offering of Shares by
WCPT.
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(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 Managing Members
shall, within (20) days after receipt of such Capital Call, fund a portion of
the capital contribution required by such Capital Call (which portion shall be
equal to such Member's Funding Percentage multiplied by the amount of such
Capital Call).
(c) Following receipt of a Capital Call in compliance with the
requirements of this Section 5.2, each of the Managing Members shall contribute
to the Company the amount applicable to such Member as 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).
(e) Notwithstanding anything contained in this Section 5.2 to the
contrary, Holding Co. will fund its Capital Commitment in the manner and amount
described in the definition of "Capital Commitment" contained herein in
connection with any capital contribution required for the potential acquisition
of properties commonly known, respectively, as 24 Federal Street, Boston,
Massachusetts and 79 Milk Street, Boston, Massachusetts, after which Holding Co.
shall have no further Capital Commitment.
5.3. Failure to Fund Capital Contributions. If any Managing Member who
is required to fund a Capital Call fails to do so in the amount and within the
time required under Section 5.2(a) or (b), as applicable ("Non-Contributing
Member"), the Manager shall give notice of such failure to all other Managing
Members required to make such Capital Contribution, including a statement of the
amount of the Capital Contribution not funded by the Non-Contributing Member
(such amount is hereinafter referred to as the "Failed Contribution"), and the
other such Managing Members may fund all or part of such Failed Contribution
(each such funding Member is hereinafter referred to as a "Contributing
Member"). If more than one Managing Member desires to be a Contributing Member,
each such Member shall have the right to fund the amount the Non-Contributing
Member(s) failed to fund pro rata in proportion to the relative Percentage
Interests of such Contributing Members; provided that, if any such Contributing
Member funds less than its pro rata share, the other Contributing Members shall
have the right to fund an amount equal to the difference between such first
Contributing Member's pro rata share and the amount such first Member actually
contributed pursuant to this sentence, on a pro rata basis in proportion to the
relative Percentage Interests of such Contributing 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:
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(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 NonContributing 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 NonContributing Member's
Percentage Interest diluted as set forth in Section 5.4, with the entire
outstanding principal and interest treated as the amount of the Failed
Contribution 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 agreements,
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.
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)), then 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 funded).
(b) 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). On the date the
adjusted Percentage Interests are determined as provided in this Section 5.4(b),
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 Capital 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
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$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 Member 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), and prior to contributing any amount on account of
the current Capital Call, Member B 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) / $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) / $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 Member 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.
(c) 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) 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 obligations 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.
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5.8. Calculation of Members' Percentage Interest, 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 (after giving effect to any adjustments required by this
Agreement) divided by the aggregate number of Membership Units owned by all of
the Members at such date (after giving effect to any adjustments required by
this Agreement).
(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 the Members the number
of Membership Units and Series A Preferred Membership Units as set forth in
Schedule 5.1.
(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 the Deemed Value Per Membership Unit, provided, further that, if (i)
all or any portion of the Capital Contribution is made by any or all of the
Managing Members, and a third party is not making a Capital Contribution
contemporaneously with any or all of the Managing Members at the same price per
Membership Unit and (ii) the Deemed Value Per Membership Unit is less than the
most recent price per Membership Unit utilized to issue Membership Units to any
Person (other than the Managing Members), 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 any or
all of the Managing Members 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 Closing Date shall have the same rights, powers and
duties as the Membership Units issued on the 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. Notwithstanding anything to the contrary herein, (i) Saracen
shall not be entitled to exercise its preemptive rights set forth herein to
acquire Membership Units at $15.85 per Membership Unit with respect to any
Capital Contributions made by each Managing Member and Holding Co. in an amount
up to such Member's Capital Commitment and (ii) Saracen hereby acknowledges that
it has no rights under this Section 5.9(b) as of the date hereof with respect to
any Capital Contributions made prior to the date hereof and hereby consents to
each of the Managing Members and Holding Co. making Capital Contributions from
time to time after the date hereof in such amounts determined in accordance with
each of their respective Capital Commitments in exchange for Membership Units
issued by the Company at a Deemed Value Per Membership Unit equal to $15.85 per
Membership Unit.
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(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 or the New WRP Warrants in exchange for Membership Units,
(ii) to WCPT in connection with WHWEL's, Whitehall XI's, Holding Co.'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 either WHWEL or Whitehall XI to remove WCPT as the Manager
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.
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(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) 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).
(e) 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)(ii), 6.2(d)(iii) and 6.2(e)(iv) and for distributions made pursuant to
Section 7.1(b)(ii).
(f) 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 or an asset of a Subsidiary 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:
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(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(b)(ii) (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(b)(ii) 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 as
follows:
(I) The relative Percentage Interest of WHWEL to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
balance of the Company's Profits shall be allocated as follows:
(A) First, to WHWEL up to the amounts previously allocated pursuant to
Section 6.2(e)(ii)(I)(D) until the amount allocated pursuant to this
Section 6.2(d)(vi)(I)(A) equals such amounts previously allocated pursuant
to Section 6.2(e)(ii)(I)(D).
(B) Next, to WHWEL until the amount allocated pursuant to this Section
6.2(d)(vi)(I)(B) (and not reversed by Section 6.2(e)(ii)(I)(C)) equals such
amounts previously distributed and distributable pursuant to Section
7.1(c)(ii) assuming that the Company had received all the cash attributable
to the income being allocated;
(C) Next, to WHWEL and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Section 7.1(c)(iii)
(assuming that the Company had received all the cash attributable to the
income being allocated) until the amount allocated
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pursuant to this Section 6.2(d)(vi)(I)(C) (and not reversed by Section
6.2(e)(ii)(I)(B)) equals such amounts previously distributed and
distributable pursuant to Section 7.1 (c)(iii);
(D) Thereafter, to WHWEL and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Section 7.1(c)(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)(I)(D) (and not reversed by Section 6.2(e)(ii)(I)(A)) equals such
amounts previously distributed and distributable pursuant to Section
7.1(c)(iv);
(II) The relative Percentage Interest of Whitehall XI to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
balance of the Company's Profits shall be allocated as follows:
(A) First, to Whitehall XI up to the amounts previously allocated
pursuant to Section 6.2(e)(ii)(II)(D) until the amount allocated pursuant
to this Section 6.2(d)(vi)(II)(A) equals such amounts previously allocated
pursuant to Section 6.2(e)(ii)(II)(D);
(B) Next, to Whitehall XI until the amount allocated pursuant to this
Section 6.2(d)(vi)(II)(B) (and not reversed by Section 6.2(e)(ii)(II)(C))
equals such amounts previously distributed and distributable pursuant to
Section 7.1(d)(ii) assuming the Company had received all the cash
attributable to the income being allocated;
(C) Next, to Whitehall XI and the Manager in proportion to the
aggregate amounts distributed and distributable pursuant to Section
7.1(d)(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)(II)(C) (and not reversed by Section
6.2(e)(ii)(II)(B)) equals such amounts previously distributed and
distributable pursuant to Section 7.1(d)(iii);
(D) Next, to WHWEL and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Section 7.1(d)(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)(II)(D) (and not reversed by Section 6.2(e)(ii)(II)(A)) equals
such amounts previously distributed and distributable pursuant to Section
7.1(d)(iv);
(III) The relative Percentage Interest of Holding Co. to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
balance of the Company's Profits shall be allocated as follows:
(A) First, to Holding Co. up to the amounts previously allocated
pursuant to Section 6.2(e)(ii)(III)(D) until the amount allocated pursuant
to this Section 6.2(d)(vi)(III)(A) equals such amounts previously allocated
pursuant to Section 6.2(e)(ii)(III)(D);
(B) Next, to Holding Co. until the amount allocated pursuant to this
Section 6.2(d)(vi)(III)(B) (and not reversed by Section 6.2(e)(ii)(III)(C))
equals such amounts previously distributed and distributable pursuant to
Section 7.1(e)(ii) assuming that the Company had received all the cash
attributable to the income being allocated;
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(C) Next, to Holding Co. and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Section 7.1(e)(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)(III)(C) (and not reversed by Section 6.2(e)(ii)(III)(B)) equals
such amounts previously distributed and distributable pursuant to Section
7.1(e)(iii);
(D) Next, to Holding Co. and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Section 7.1(e)(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)(III)(D) (and not reversed by Section 6.2(e)(ii)(III)(A)) equals
such amounts previously distributed and distributable pursuant to Section
7.1(e)(iv);
(IV) The relative Percentage Interest of WCPT to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
balance of the Company's Profits shall be allocated as follows:
(A) First, to WCPT up to the amounts previously allocated pursuant to
Section 6.2(e)(ii)(IV)(D) until the amount allocated pursuant to this
Section 6.2(d)(vi)(IV)(A) equals such amounts previously allocated pursuant
to Section 6.2(e)(ii)(IV)(D);
(B) Next, to WCPT until the amount allocated pursuant to this Section
6.2(d)(vi)(IV)(B) (and not reversed by Section 6.2(e)(ii)(IV)(C)) equals
such amounts previously distributed and distributable pursuant to Sections
7.1(f)(ii) and 7.1(g)(ii) assuming that the Company had received all the
cash attributable to the income being allocated;
(C) Next, to WCPT and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Sections 7.1(f)(iii) and
7.1(g)(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)(IV)(C) (and not reversed by Section
6.2(e)(ii)(IV)(B)) equals such amounts previously distributed and
distributable pursuant to Sections 7.1(f)(iii) and 7.1(g)(iii);
(D) Next, to WCPT and the Manager in proportion to the aggregate
amounts distributed and distributable pursuant to Sections 7.1(f)(iv) and
7.1(g)(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)(IV)(D) (and not reversed by Section
6.2(e)(ii)(IV)(A)) equals such amounts previously distributed and
distributable pursuant to Sections 7.1(f)(iv) and 7.1(g)(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)(v) and (vi)
until the amount allocated pursuant to this Section 6.2(e)(i) equals such
amounts previously allocated pursuant to Sections 6.2(d)(v) and (vi); such
amount allocable to the Members, other than the Saracen Members, to be
further allocated among them as set forth in Section 6.2(e)(ii) below.
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(ii) The allocation among the Members described in Section 6.2(e)(i),
other than the Saracen Members, shall be as follows:
(I) The relative Percentage Interest of WHWEL to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
Losses allocable pursuant to Section 6.2(e)(i) to the Members other than
the Saracen Members shall be allocated as follows:
(A) First, to WHWEL and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(I)(D) until the amount
allocated pursuant to this Section 6.2(e)(ii)(I)(A) equals such amounts
previously allocated pursuant to Section 6.2(d)(vi)(I)(D);
(B) Next, to WHWEL and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(I)(C) until the amount
allocated pursuant to this Section 6.2(e)(ii)(I)(B) equals such amounts
previously allocated pursuant to Section 6.2(d)(vi)(I)(C);
(C) Next, to WHWEL until the amount allocated pursuant to this Section
6.2(e)(ii)(I)(C) equals such amounts previously allocated pursuant to
Section 6.2(d)(vi)(I)(B); and
(D) Thereafter, to WHWEL; and
(II) The relative Percentage Interest Whitehall XI to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
Losses allocated pursuant to Section 6.2(e)(i) to the Members other than
the Saracen Members shall be allocated as follows:
(A) First, to Whitehall XI and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(II)(D) until the amount
allocated pursuant to this Section 6.2(e)(ii)(II)(A) equal such amounts
previously allocated pursuant to Section 6.2(d)(vi)(II)(D);
(B) Next, to Whitehall XI and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(II)(C) until the amount
allocated pursuant to this Section 6.2(e)(ii)(II)(B) equal such amounts
previously allocated pursuant to Section 6.2(d)(vi)(II)(C);
(C) Next, to Whitehall XI until the amount allocated pursuant to this
Section 6.2(e)(ii)(II)(C) equals such amounts previously allocated pursuant
to Section 6.2(d)(vi)(II)(B); and
(D) Thereafter, to Whitehall XI.
(III) The relative Percentage Interest of Holding Co. to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
Losses allocated pursuant to Section 6.2(e)(i) to the Members other than
the Saracen Members shall be allocated as follows:
(A) First, to Holding Co. and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(III)(D) until the
amount allocated pursuant to this Section 6.2(e)(ii)(III)(A) equals such
amounts previously allocated pursuant to Section 6.2(d)(vi)(III)(D);
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(B) Next, to Holding Co. and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(III)(C) until the
amount allocated pursuant to this Section 6.2(e)(ii)(III)(B) equals such
amounts previously allocated pursuant to Section 6.2(d)(vi)(III)(C);
(C) Next, to Holding Co. until the amount allocated pursuant to this
Section 6.2(e)(ii)(III)(C) equals such amounts previously allocated
pursuant to Section 6.2(d)(vi)(III)(B); and
(D) Thereafter, to Holding Co.
(IV) The relative Percentage Interest of WCPT to the combined
Percentage Interests of the Whitehall Group and WCPT multiplied by the
Losses allocated pursuant to Section 6.2(e)(i) to the Members other than
the Saracen Members shall be allocated as follows:
(A) First, to WCPT and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(IV)(D) until the amount
allocated pursuant to this Section 6.2(e)(ii)(IV)(A) equals such amounts
previously allocated pursuant to Section 6.2(d)(vi)(IV)(D);
(B) Next, to WCPT and the Manager in proportion to the amounts
previously allocated pursuant to Section 6.2(d)(vi)(IV)(C) until the amount
allocated pursuant to this Section 6.2(e)(ii)(IV)(B) equals such amounts
previously allocated pursuant to Section 6.2(d)(vi)(IV)(C);
(C) Next, to WCPT until the amount allocated pursuant to this Section
6.2(e)(ii)(IV)(C) equals such amounts previously allocated pursuant to
Section 6.2(d)(vi)(IV)(B); and
(D) Thereafter, to WCPT.
(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 and the assets of the Subsidiaries was adjusted
pursuant
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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 obligations), 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.
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(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 and the assets of the Subsidiaries 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.
(ix) To the extent any payments are made pursuant to Sections
7.1(i), 7.1(j), 7.1(k), 7.1(l), 7.1(m), 7.1(n) and 7.2 then, 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 to the allocation of Profits and Losses under Sections 6.2(d) and
(e) among the Members, other than the Saracen Members, so that the
cumulative Profits and Losses allocated to such Members equals, as nearly
as possible, the amount of distributions received by each Member, after
taking into account all payments made pursuant to Section 7.1(i), 7.1(j),
7.1(k), 7.1(l), 7.1(m), 7.1(n) and 7.2.
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions.
(a) Distributions shall be made by the Manager to the Members of all or
a portion of Available Cash as determined by the Management Committee (such
amount, the "Distribution Amount") in accordance with Section 7.1(b) through (g)
within thirty (30) days after the end of each quarter of each
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Fiscal Year. The Members acknowledge and agree, notwithstanding anything in this
Agreement to the contrary, that the Company shall make distributions to all
Members in accordance with this Section 7.1 in an amount at least sufficient (i)
to pay the amounts to Saracen set forth in Section 7.1(b)(ii) below and (ii),
when it has Available Cash to do so, to provide WCPT the amount that WCPT would
be required to distribute to its shareholders, on account of taxable income of
the Company allocable to WCPT, so that WCPT is able to satisfy the distribution
requirements of a real estate investment trust with respect to such taxable
income.
(b) The Distribution Amount and the Capital Proceeds Distribution
Amount, if any, shall be distributed as follows:
(i) First, but only with respect to, and to the extent of, any Capital
Proceeds Distribution Amount derived from a third-party mortgage financing
or refinancing relating to a Property acquired with the proceeds of a
corresponding specified Interim Capital Contribution, to each Managing
Member pro rata (in proportion to the unreturned Interim Capital
Contributions made by such Managing Member) until each such Managing Member
shall have received, taking into account the amount of all prior
distributions under this Section 7.1(b)(i), the full amount of all Interim
Capital Contributions made by such Managing Member through the date of
distribution;
(ii) Second, 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; and
(iii) Third, in an aggregate amount equal to the Common Distribution
Amount, pro rata and on a pari passu basis, (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 XI, WHWEL, Holding Co. and
WCPT an amount equal to their combined Percentage Interests multiplied by
the Common Distribution Amount which amount shall be distributed to
Whitehall XI, WHWEL, Holding Co. and WCPT in accordance with Section 7.1(c)
through (g), respectively.
(c) A portion of the total amount distributed to WHWEL, Whitehall XI,
Holding Co. and WCPT pursuant to Section 7.1(b)(iii)(B) above equal to the
product of such amount multiplied by the quotient (expressed as a percentage
rounded up to the nearest one ten-thousandth (0.0001)) of the Percentage
Interest of WHWEL divided by the Combined Whitehall/WCPT Percentage Interest
shall be further distributed as follows:
(i) First, to WHWEL until WHWEL shall have received, taking into
account the amount of all prior distributions under this Section 7.1(c)(i),
the full amount of all Capital Contributions made by WHWEL through the date
of distribution (it being understood and agreed that as of the date hereof
such Capital Contributions shall be deemed to be the aggregate amount shown
for WHWEL in Schedule 5.1);
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(ii) Second, to WHWEL until WHWEL shall have received, taking into
account the timing and amount of all prior contributions and distributions,
an Internal Rate of Return equal to 17.5% per annum;
(iii) Third, (x) 82.5% to WHWEL and (y) 17.5% to the Manager (subject
to Section 7.1(l)), until WHWEL shall have received, taking into account
the timing and amount of all prior contributions and distributions, an
Internal Rate of Return equal to 22.5% per annum; and
(iv) Thereafter, (x) 77.5% to WHWEL and (y) 22.5% to the Manager
(subject to Section 7.1(l)).
(d) A portion of the total amount distributed to Whitehall XI, WHWEL,
Holding Co. and WCPT pursuant to Section 7.1(b)(iii)(B) above equal to the
product of such amount multiplied by the quotient ((expressed as a percentage
rounded up to the nearest one ten-thousandth (0.0001)) of the Percentage
Interest of Whitehall XI divided by the Combined Whitehall/WCPT Percentage
Interest shall be further distributed as follows:
(i) First, to Whitehall XI until Whitehall XI shall have received,
taking into account the amount of all prior distributions under this
Section 7.1(d)(i), the full amount of all Capital Contributions made by
Whitehall XI through the date of distribution;
(ii) Second, to Whitehall XI until Whitehall XI shall have received,
taking into account the timing and amount of all prior contributions and
distributions, an Internal Rate of Return equal to 15% per annum;
(iii) Third, (x) 80% to Whitehall XI and (y) 20% to the Manager
(subject to Section 7.1(m)), until Whitehall XI shall have received, taking
into account the timing and amount of all prior contributions and
distributions, an Internal Rate of Return equal to 25% per annum; and
(iv) Thereafter, (x) 75% to Whitehall XI and (y) 25% to the Manager
(subject to Section 7.1(m)).
(e) A portion of the total amount distributed to Holding Co., WHWEL,
Whitehall XI and WCPT pursuant to Section 7.1(b)(iii)(B) above equal to the
product of such amount multiplied by such amount by the quotient ((expressed as
a percentage rounded up to the nearest one ten-thousandth (0.0001)) of the
Percentage Interest of Holding Co. divided by the Combined Whitehall/WCPT
Percentage Interest shall be further distributed as follows:
(i) First, to Holding Co. until Holding Co. shall have received, taking
into account the amount of all prior distributions under this Section
7.1(e)(i), the full amount of all Capital Contributions made by Holding Co.
through the date of distribution (it being understood and agreed that as of
the date hereof such Capital Contributions shall be deemed to be the
aggregate amount shown for Holding Co. in Schedule 5.1);
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(ii) Second, to Holding Co. until Holding Co. shall have received,
taking into account the timing and amount of all prior contributions and
distributions, an Internal Rate of Return equal to 15% per annum;
(iii) Third, (x) 80% to Holding Co. and (y) 20% to the Manager (subject
to Section 7.1(n)), until Holding Co. shall have received, taking into
account the timing and amount of all prior contributions and distributions,
an Internal Rate of Return equal to 25% per annum; and
(iv) Thereafter, (x) 75% to Holding Co. and (y) 25% to the Manager
(subject to Section 7.1(n)).
(f) The total amount equal to the WCPT I Distributions shall be further
distributed as follows:
(i) First, to WCPT until WCPT shall have received, taking into account
the amount of all prior distributions under this Section 7.1(f)(i), the
full amount of all Capital Contributions made by WCPT through the date of
distribution (it being understood and agreed that for the purposes of this
Section 7.1(f), as of the date hereof, the total amount of WCPT Phase I
Capital Contributions made by WCPT shall be deemed to be the aggregate
amount shown for WCPT in Schedule 5.1);
(ii) Second, to WCPT until WCPT shall have received, taking into
account the timing and amount of all prior contributions and distributions,
an Internal Rate of Return equal to 17.5% per annum with respect to the
WCPT Phase I Capital Contributions;
(iii) Third, (x) 82.5% to WCPT and (y) 17.5% to the Manager, until WCPT
shall have received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to 22.5%
per annum with respect to the WCPT Phase I Capital Contributions; and
(iv) Thereafter, (x) 77.5% to WCPT and (y) 22.5% to the Manager.
(g) The total amount equal to the WCPT II Distributions shall be
further distributed as follows:
(i) First, to WCPT until WCPT shall have received, taking into account
the amount of all prior distributions under this Section 7.1(g)(i), the
full amount of all WCPT Phase II Capital Contributions made by WCPT through
the date of distribution;
(ii) Second, to WCPT until WCPT shall have received, taking into
account the timing and amount of all prior contributions and distributions,
an Internal Rate of Return equal to 15% per annum with respect to the WCPT
Phase II Capital Contributions;
(iii) Third, (x) 80% to WCPT and (y) 20% to the Manager, until WCPT
shall have received, taking into account the timing and amount of all prior
contributions and distributions,
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an Internal Rate of Return equal to 25% per annum with respect to the WCPT
Phase II Capital Contributions; and
(iv) Thereafter, (x) 75% to WCPT and (y) 25% to the Manager.
(h) 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 further 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.
(i) If WCPT is entitled to receive payments pursuant to Section
7.1(h)(iii) or (iv) or pursuant to Section 7.6 (from any Member other than any
Member of the Whitehall Group, 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, after
subtracting any allocation by WCPT of any portion of the Promote as incentive
compensation to officers and employees of WCPT (the "WCPT Amount"), shall
instead be distributed as follows: (A) to WCPT and WHWEL for distribution in
accordance with Section 7.1(c), an amount equal to the product of the WCPT
Amount multiplied by the quotient (expressed as a percentage rounded up to the
nearest one tenthousandth (0.0001)) of the Percentage Interest of WHWEL divided
by the Combined Whitehall/WCPT Percentage Interest, (B) to WCPT and Whitehall XI
for distribution in accordance with Section 7.1(d), an amount equal to the
product of the WCPT Amount multiplied by the quotient (expressed as a percentage
rounded up to the nearest one ten-thousandth (0.0001)) of the relative
Percentage Interest of Whitehall XI divided by the Combined Whitehall/WCPT
Percentage Interest, (C) to WCPT and Holding Co. for distribution in accordance
with Section 7.1(e), an amount equal to the product of the WCPT Amount
multiplied by the quotient (expressed as a percentage rounded up to the nearest
one ten-thousandth (0.0001)) of the Percentage Interest of Holding Co. divided
by the Combined Whitehall/WCPT Percentage Interest, (D) to WCPT and Manager for
distribution in accordance with Section 7.1(f), an amount equal to the product
of the WCPT Amount multiplied by the quotient (expressed as a percentage rounded
up to the nearest one ten-thousandth (0.0001)) of the WCPT I Percentage Interest
divided by the Combined Whitehall/WCPT Percentage Interest and (E) to WCPT and
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Manager for distribution in accordance with Section 7.1(g), an amount equal to
the product of the WCPT Amount multiplied by the quotient (expressed as a
percentage rounded up to the nearest one ten-thousandth (0.0001)) of the WCPT
II Percentage Interest divided by the Combined Whitehall/WCPT Percentage
Interest. Except as provided in the immediately preceding sentence, Whitehall
XI, WHWEL, Holding Co., 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 none of
WHWEL, Whitehall XI, Holding Co., 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) WHWEL, Whitehall XI,
Holding Co., 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 WHWEL, Whitehall XI, Holding Co., 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(c)(iii)(y), 7.1(c)(iv)(y), 7.1(d)(iii)(y), 7.1(d)(iv)(y),
7.1(e)(iii)(y), 7.1(e)(iv)(y), 7.1(f)(iii)(y), 7.1(f)(iv)(y), 7.1(g)(iii)(y),
7.1(g)(iv)(y), 7.1(h)(iii)(y) and 7.1(h)(iv)(y).
(j) Notwithstanding the terms of Sections 7.1(c), 7.1(d), 7.1(e),
7.1(f), 7.1(g) or 7.1(h), if WCPT shall cease to be the Manager, then, unless
the election described in the proviso of this sentence is made, all
distributions that would otherwise have been made pursuant to (A) Sections
7.1(c)(iii) (y) or 7.1(c)(iv)(y) shall be made to WHWEL instead of the Manager,
(B) Sections 7.1(d)(iii)(y) or 7.1(d)(iv)(y) shall be made to Whitehall XI
instead of the Manager, (C) Sections 7.1(e)(iii)(y) or 7.1(e)(iv)(y) shall be
made to Holding Co. instead of the Manager, (D) Sections 7.1(f)(iii)(y) or
7.1(f)(iv)(y) shall be made to WCPT instead of the Manager, (E) Sections
7.1(g)(iii)(y) or 7.1(g)(iv)(y) shall be made to WCPT instead of the Manager,
and (F) Sections 7.1(h)(iii)(y) or 7.1(h)(iv)(y) shall be made to the New Member
instead of the Manager; provided, however, that if WCPT is removed as Manager
pursuant to Section 9.1, WHWEL and Whitehall XI shall have the right, in their
sole and absolute discretion, to appoint a successor Manager (which may be
Members or Affiliates of Members and who shall provide substantially the same
services as the Manager hereunder) and to have all or a portion (as WHWEL and
Whitehall XI shall determine) of the amounts distributable pursuant to Sections
7.1(c)(iii)(y), 7.1(c)(iv)(y), 7.1(d)(iii)(y), 7.1(d)(iv)(y), 7.1(e)(iii)(y),
7.1(e)(iv)(y), 7.1(f)(iii)(y), 7.1(f)(iv)(y), 7.1(g)(iii)(y), 7.1(g)(iv)(y),
7.1(h)(iii)(y) and 7.1(h)(iv)(y) distributed to such successor.
(k) 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; provided, further, that any
Capital Proceeds Distribution Amount distributable pursuant to Section 7.1(b)(i)
from a third-party mortgage financing or refinancing relating to a particular
Property which has been acquired with the proceeds of a corresponding specified
Interim Capital Contribution with respect to such Property that, at the time of
such distribution, continues to qualify as
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an Interim Capital Contribution, shall not require such thirty (30) days' prior
written notice specified in the preceding clause.
(l) In connection with any Distribution, if the Manager is entitled to
receive payments pursuant to Section 7.1(c)(iii)(y) or 7.1(c)(iv)(y), but
Whitehall XI shall have not received, taking into account the timing and amount
of all prior contributions and distributions, an Internal Rate of Return equal
to 15% per annum with respect to its Capital Contributions pursuant to Section
7.1(d), then an amount, not to exceed 50% of the amount otherwise to be
distributed to the Manager pursuant to Sections 7.1(c)(iii)(y) and
7.1(c)(iv)(y), if any, shall be distributed to Whitehall XI, until Whitehall XI
shall have received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to 15% per
annum with respect to their Capital Contributions.
(m) In connection with any Distribution, if the Manager is entitled to
receive payments pursuant to Sections 7.1(d)(iii)(y), 7.1(d)(iv)(y),
7.1(e)(iii)(y) or 7.1(e)(iv)(y) but WHWEL shall have not received, taking into
account the timing and amount of all prior contributions and distributions, an
Internal Rate of Return equal to 15% per annum with respect to its Capital
Contributions pursuant to Section 7.1(c), then an amount, not to exceed 45% of
the amount otherwise to be distributed to the Manager pursuant to Sections
7.1(d)(iii)(y), 7.1(d)(iv)(y), 7.1(e)(iii)(y) or 7.1(e)(iv)(y), if any, shall be
distributed to WHWEL, until WHWEL shall have received, taking into account the
timing and amount of all prior contributions and distributions, an Internal Rate
of Return equal to 15% per annum with respect to its Capital Contributions.
(n) In connection with any Distribution, if the Manager is entitled to
receive payments made pursuant to Section 7.1(c)(ii)(y) or 7.1(c)(iv)(y), but
Holding Co. shall have not received, taking into account the timing and amount
of all prior contributions and distributions, an Internal Rate of Return equal
to 15% per annum with respect to its Capital Contributions pursuant to Section
7.1(e), then an amount, not to exceed 50% of the amount otherwise to be
distributed to the Manager pursuant to Sections 7.1(c)(iii)(y) or 7.1(c)(iv)(y),
if any, shall be distributed to Holding Co. until Holding Co. shall have
received, taking into account the timing and amount of all prior contributions
and distributions, an Internal Rate of Return equal to 15% per annum with
respect to its Capital Contributions.
(o) Although the terms of this Section 7.1 contemplate distributions
being made under paragraph (b) and then under paragraphs (c), (d), (e), (f),
(g), (h) and (i) of this Section 7.1, the parties intend for the calculations
required by such paragraphs to be made simultaneously and for the funds to be
distributed simultaneously in accordance with such paragraphs in a single
distribution rather than in seriatim.
(p) WCPT acknowledges and agrees that 50% of all amounts received by
the Manager pursuant to Sections 7.1(c)(iii)(y), 7.1(c)(iv)(y), 7.1(f)(iii)(y),
and 7.1(f)(iv)(y), and 55% of all amounts received by the Manager pursuant to
Sections 7.1(d)(iii)(y), 7.1(d)(iv)(y), 7.1(e)(iii)(y), 7.1(e)(iv)(y),
7.1(g)(iii)(y), 7.1(g)(iv)(y), 7.1(h)(iii)(y), and 7.1(h)(iv)(y) shall be paid
to employees, officers and other personnel of WCPT and shall not be distributed
to WRP (it being understood and agreed that any amounts that are, pursuant to
clause (l), clause (m) or clause (n) of this Section 7.1 distributed to WHWEL,
Whitehall XI, or Holding Co., as the case may be, rather than the Manager shall
be deemed to constitute payments that, in compliance with this clause (p) could
be distributed by WCPT
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to WRP rather than paid to employees, officers or other personnel of WCPT). Any
amendments to, or departures from, the foregoing provisions shall be deemed to
be a Major Decision for purposes of this Agreement.
7.2. Restoration of Excess Distributions. Subject to Section 7.3:
If any Promote Payments to the Manager have previously been made and,
subsequently, the Internal Rate of Return for any of WHWEL, Whitehall XI,
Holding Co. and WCPT is reduced as a result of a Capital Contribution being made
pursuant to Section 5.2 or otherwise, then the parties hereto shall make
appropriate adjustments to the amounts previously distributed or paid to them
(and the Manager shall return all or a portion of such Promote Payments to such
Member from whom such Promote Payment was received) to the extent necessary so
that the balance of such Promote Payments retained by the Manager (after giving
effect to such adjustments) does not exceed the Requisite Promote applicable to
such Member, taking into account (x) such reduction in such Member's Internal
Rate of Return, (y) the timing and amount of all Capital Contributions made by,
and all the Common Distribution Amounts received by, such Member and (z) the
Promote Payments previously received by the Manager and not yet returned to such
Member pursuant to this Section 7.2.
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
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Company (including this Agreement) in order that the Manager receives additional
compensation (either in cash, or if the Managing 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 and the assets of the
Subsidiaries 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, WCPT, WHWEL, Whitehall XI and Holding
Co. 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. WHWEL, with respect to any Promote
that would be received by the Manager pursuant to Section 7.1(c), Whitehall XI,
with respect to any Promote that would be received by the Manager pursuant to
Section 7.1(d) and Holding Co., with respect to any Promote that would be
received by Manager pursuant to Section 7.1(e), 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 of the Promote in cash or, if WCPT, WHWEL,
Whitehall XI, Holding Co. and WRP agree otherwise, in the form of Membership
Units or otherwise and based upon the relative Percentage Interests of WCPT,
WHWEL, Whitehall XI and Holding Co. Without in any way limiting the restrictions
contained in Article 8, each Member of the Whitehall Group 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 the Members of the Whitehall Group. Each Member and WRP
will work together in good faith to achieve the optimal tax consequences for
WCPT; provided, that there is no adverse impact on the other Members.
(b) Unless the full Promote has already been, or is due to be, paid to
Manager under subparagraph (a), in the event that any Member of the Whitehall
Group, 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, any Member of the
Whitehall Group, as the case may be, 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
any Member of the Whitehall Group, (or the cash value thereof as of the
Determination Date if such proceeds are not cash) were received by any Member of
the Whitehall Group, pursuant to a distribution of Available Cash among all
Members (other than Saracen) pursuant to Sections 7.1(c), (d), (e), (f) and (g).
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 any Member of the
Whitehall Group, as the case may be, 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 all amounts (whether in cash, Shares, WRP Shares,
Membership Units or other consideration) due 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(c)(iii)(y), 7.1(c)(iv)(y), 7.1(d)(iii)(y),
7.1(d)(iv)(y), 7.1(e)(iii)(y), 7.1(e)(iv)(y), 7.1(f)(iii)(y), 7.1(f)(iv)(y),
7.1(g)(iii)(y), 7.1(g)(iv)(y), 7.1(h(iii)(y) and
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7.1(h)(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
Managing Members (which consent may be withheld in such Managing Member's sole
discretion for any reason or no reason) and in strict compliance 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 August 28, 1997) 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, including 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, WHWEL, Whitehall XI, Holding Co. 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, WHWEL,
Whitehall XI, Holding Co. 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) WHWEL 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, in connection with the exchange of its Membership Units for the WRP
At-Market Shares, or in connection with the exercise of any of the WRP Warrants
and/or the New WRP Warrants, (B) Whitehall XI 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 the exercise of any of
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the WRP Warrants and/or the New WRP Warrants, (C) Holding Co. 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,
(D) 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) and (E) WHWEL, Whitehall XI and Holding Co. shall
have the right at any time to transfer all or any part of its Interest without
prior consent of any Member (including WCPT and the Manager) to any Affiliate of
Goldman Sachs Group.
(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 any other Affiliate of Goldman Sachs
Group meeting the requirements of clause (i) of the definition of "Affiliate"
shall control WHWEL.
(d) At all times prior to an initial public offering by WCPT, any one
or more of Whitehall XI, WHWEL and/or any other Affiliate of Goldman Sachs Group
meeting the requirements of clause (i) of the definition of "Affiliate" shall
control the Holding Co.
8.2. Sale of Properties, the Company or its Subsidiaries.
(a) At any time after the date hereof, any Marketing Member may from
time to time and on one or more separate occasions (1) require the Company or
any Subsidiary to sell any or all of the Properties, (2) require the Company to
sell any or all of the Subsidiaries or (3) sell the Company as a whole, in one
or more bona fide transactions to a Person not Affiliated with the Marketing
Member; provided that, the Marketing Member has first delivered a written notice
(a "Sales Notice") to the Non-Marketing Member in accordance with Section
8.2(b). For the purposes of this Section 8.2, any Property, any Subsidiary or
the Company which is the subject of a Sales Notice is referred to as a "Subject
Asset". The term "Marketing Member" shall mean any Member of the Whitehall Group
or WCPT (provided such Person is still an Appointing Member) who shall deliver a
Sales Notice in accordance with this Section 8.2; provided that if both any
Member of the Whitehall Group and WCPT shall deliver a Sales Notice with respect
to the same Subject Asset, the party who delivered a Sales Notice first shall be
the Marketing Member with respect thereto and the other party shall be the Non-
Marketing Member. If any Member of the Whitehall Group shall have delivered a
Sales Notice in accordance with this Section 8.2, then WCPT shall be the
"Non-Marketing Member", and if WCPT shall have delivered be a Sales Notice in
accordance with this Section 8.2, then the Members of the Whitehall Group shall
be the "Non-Marketing Member".
(b) In the event a proposed sale involves a Subject Asset having a
total cost basis (as set forth on the Company's consolidated balance sheet) of
$50,000,000 or more, the Marketing Member shall deliver a Sale Notice to the
Non-Marketing Member at least forty-five (45) days prior to the
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commencement of the Marketing Period. In the event a proposed sale involves a
Subject Asset having a total cost basis (as set forth on the Company's
consolidated balance sheet) of less than $50,000,000, the Marketing Member shall
deliver a Sale Notice to the Non-Marketing Member at least thirty (30) days
prior to the commencement of the Marketing Period. During such forty-five
(45)-day or thirty (30)-day period, as the case may be, the Marketing Member and
the Non-Marketing Member shall discuss in good faith (on a non-exclusive basis)
the terms by which the Non-Marketing Member would be willing to purchase the
Subject Asset and possibly the terms by which the Non-Marketing Member would
consider the purchase of the Marketing Member's entire Interest in the Company.
(c) In the event the Non-Marketing Member agrees to purchase the
Subject Asset, the Marketing Member shall have the full right, power and
authority (acting alone) to execute, deliver and perform any and all
documentation and to take any and all other action, on behalf of the Company,
any Subsidiary and, in the case of a sale of the Company, of the Members
required or desirable to consummate the sale of the Subject Asset on such terms
and conditions as the Marketing Member shall determine in its discretion, and
each Member hereby consents to the Marketing Member's exercise of such right,
power and authority and 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 consummating such sale of the
Subject Asset.
(d) (i) In the event a binding agreement is not executed between the
Marketing Member and the Non-Marketing Member during the forty-five (45)-day or
thirty (30)-day period (as applicable) specified in Section 8.2(b) or (ii) in
the event a proposed sale of the Subject Asset under Section 8.2(c) fails to
close for any reason other than due to a default by the Marketing Member by the
thirtieth (30th) day after the scheduled closing date for the sale of such
Subject Asset specified in such binding agreement (the "Section 8.2(c)
Termination Date"), the Marketing Member shall be free to market the Subject
Asset upon such terms the Marketing Member deems necessary to consummate a sale
of the Subject Asset during a one hundred eighty (180)-day period (the
"Marketing Period"), commencing on the first day after the expiration of the
forty-five (45)-day or thirty (30)-day period (as applicable) specified in
Section 8.2(b) or upon the earlier of (i) the first day after the date on which
a purchase agreement entered into in accordance with Section 8.2(c) is
terminated or (ii) the Section 8.2(c) Termination Date; provided that the
Marketing Member shall not sell the Subject Asset to a Person that is an
Affiliate of the Marketing Member. The Marketing Member shall have full right,
power and authority (acting alone) to execute, deliver and perform any and all
documentation and to take any and all other action, on behalf of the Company,
any Subsidiary and, in the case of a sale of the Company, of the Members
required or desirable to consummate the sale of the Subject Asset on such terms
and conditions as the Marketing Member shall determine in its discretion, and
each Member hereby consents to the Marketing Member's exercise of such right,
power and authority and 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 consummating such sale of the
Subject Asset.
(e) In the event the Marketing Member markets the Subject Asset
pursuant to paragraph (d) above and the proposed sale fails to close for any
reason during the Marketing Period, each of WCPT and each Member of the
Whitehall Group shall continue to have the right, from time to time, to exercise
any of the rights granted thereto under this Section 8.2; provided, however,
that the Member who was the last Marketing Member shall not have the right to
deliver a Sales Notice to the Non-
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Marketing Member with respect to the Subject Asset that was subject to the last
Sales Notice delivered to such Non-Marketing Member until the thirtieth (30th)
day after the expiration of the Marketing Period.
(f) In the event WCPT is the Non-Marketing Member and acquires a
Subject Asset pursuant to this Section 8.2, (i) such purchase shall not be
deemed a violation of Section 4.2 and (ii) WCPT shall be free to engage third
parties to provide property and asset management services for such Subject
Asset.
(g) Any one or more Members of the Whitehall Group may exercise any of
the rights granted under this Section 8.2 to the Whitehall Group.
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 May 15, 1998 (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 May 15, 1998 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 May 15, 1998 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 May 15, 1998 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 May 15, 1998 ("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
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reduced from time to time under Treasury Regulations Section 1.704-3. 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 May
15, 1998 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 May 15,
1998.
(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 May 15, 1998 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 May 15, 1998 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 May 15, 1998, the aggregate federal,
state and local income taxes (determined
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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 May 15, 1998, 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 May 15, 1998, 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 May 15, 1998, 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
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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 May 15, 1998, but on or before the
expiration of a seven (7) year period after May 15, 1998, 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
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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
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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, WHWEL, Whitehall XI,
Holding Co., Saracen and Rand 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
WHWEL, Whitehall XI, Holding Co., Saracen and Rand 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 WHWEL, Whitehall XI, Holding
Co., Saracen and/or Rand, as applicable. If the Shares Amount is not a whole
number of Shares, WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, 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 WHWEL, Whitehall
XI, Holding Co., Saracen and/or Rand, as applicable. WHWEL, Whitehall XI,
Holding Co., Saracen and/or Rand, 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 WHWEL, Whitehall XI, Holding Co.,
Saracen or Rand may exercise WHWEL's rights, Whitehall XI's rights, Holding
Co.'s rights, Saracen's rights or Rand'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 WHWEL, Whitehall XI, Holding Co., Saracen or
Rand, the Shares Amount shall be paid by WCPT directly to such permitted
successor or permitted assignee and not to WHWEL, Whitehall XI, Holding Co.,
Saracen or Rand. WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, as
applicable, and WCPT acknowledge that WHWEL, Whitehall XI, Holding Co., Saracen
and Rand are not "Excepted Holders" (as defined in Section 7.1 of the
Declaration of Trust) and that, unless either becomes an "Excepted Holder",
WHWEL's, Whitehall XI's, Holding Co.'s, Saracen's
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or Rand's Conversion Right may be limited. Therefore, WHWEL, Whitehall XI,
Holding Co., Saracen and/or Rand, as applicable, and WCPT agree to cooperate in
good faith to cause WHWEL, Whitehall XI, Holding Co., Saracen and Rand to become
"Excepted Holders" before the Conversion Right is exercised or to deliver to
WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, 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
WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, as applicable, is not an
"Excepted Holder". Subject to the foregoing, in the event that WHWEL, Whitehall
XI, Holding Co., Saracen and/or Rand, as applicable, exercises its Conversion
Rights before an initial public offering of WCPT, (i) any Shares received by
WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, as applicable, pursuant
to such exercise may not, prior to an initial public offering of WCPT, be
transferred unless WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, as
applicable, first offers WRP the opportunity to purchase such Shares in
accordance with the following sentence and (ii) WHWEL, Whitehall XI, Holding
Co., Saracen and/or Rand, as applicable, will remain obligated hereunder
(including without limitation with respect to WHWEL and Whitehall XI only, its
obligations in Section 5.2) until an initial public offering of WCPT occurs
(upon which WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, as
applicable, will have no further obligations hereunder except with respect to
any Interest it then owns). If WHWEL, Whitehall XI, Holding Co., Saracen and/or
Rand desire to sell any or all of their respective Shares to any Person that is
not an Affiliate of WHWEL, Whitehall XI, Holding Co., Saracen or Rand, as
applicable, WHWEL, Whitehall XI, Holding Co., Saracen and/or Rand, 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 WHWEL, Whitehall XI, Holding
Co., Saracen and/or Rand, as applicable, intend to sell and the aggregate
purchase price therefor and if WRP either has not notified WHWEL, Whitehall XI,
Holding Co., Saracen or Rand, 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, WHWEL,
Whitehall XI, Holding Co., Saracen or Rand, 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 WHWEL,
Whitehall XI, Holding Co., Saracen or Rand, 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
WHWEL, Whitehall XI, Holding Co., Saracen or Rand, as applicable, the aggregate
purchase price set forth in the Offer Notice not later than ten (10) Business
Days after delivery to WHWEL, Whitehall XI, Holding Co., Saracen or Rand, as
applicable, of its notice of acceptance of the offer set forth in the Offer
Notice and WHWEL, Whitehall XI, Holding Co., Saracen or Rand, 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 any Member of the Whitehall Group 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, such Member
of the Whitehall Group (but not its successors or assigns unless such successor
or assign is an Affiliate of such Member of the Whitehall Group) shall be
entitled to all of the same rights and powers with respect to the management and
governance of WCPT that the Members of the Whitehall Group have been granted
under this Agreement and WCPT shall take such
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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 such Member of the Whitehall Group such
rights and powers, the Committee Representatives appointed by either WHWEL or
Whitehall XI shall no longer serve on the Management Committee and all rights
and obligations of such Member of the Whitehall Group with respect to the
Company shall terminate.
(d) Upon conversion by any Member of the Whitehall Group (or its
permitted successor or permitted assign) of all or any of its Membership Units
pursuant to the terms of this Section 8.3, such Member of the Whitehall Group
(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 such Member of
the Whitehall Group) and shall be no less favorable to the Members of the
Whitehall Group than the registration rights granted with respect to WRP Shares
pursuant to the Warrant Agreement. Promptly upon the request of any Member of
the Whitehall Group, WCPT shall enter into a separate registration rights
agreement with each Member of the Whitehall Group in form and substance no less
favorable to the Members of the Whitehall Group 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 Rand, as applicable, (or their
permitted successors or permitted assigns) of all or any of its Membership Units
pursuant to the terms of this Section 8.3, Saracen or Rand, as applicable, (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 B and which Registration Rights Agreement shall be executed by
Saracen and WCPT on May 15, 1998. In addition, and without in any way limiting
the registration rights to be granted to Saracen and Rand 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 WHWEL, Whitehall XI and/or
Holding Co. may offer its Shares or other capital stock of WCPT to the public
(the "Whitehall Registration Statement"), in either such instance, Saracen and
Rand 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 WHWEL, Whitehall XI and/or Holding Co., provided, that, the number
of Shares or other capital stock of WCPT to be registered on behalf of Saracen
and/or Rand, as applicable, 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 or Rand, as
applicable, multiplied by (ii) a fraction, the numerator of which is the number
of Shares or other capital stock of WCPT owned by WHWEL, Whitehall XI and/or
Holding Co., collectively, 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
WHWEL, Whitehall XI and/or Holding Co, collectively.
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:
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(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 personally liable with
respect to the Subject Property or Subject Subsidiary, at the option of the
Non- Triggering Party either (i) obtain a release of the Company, any
applicable Subsidiary and each Member (and any guarantor affiliated
therewith or which delivered the guaranty on behalf of such Person) from
all liability, direct or contingent, from holders of such debt, obligation
or claim or (ii) cause such indebtedness, obligation or claim to be paid in
full at the closing, or (iii) deliver to the Company, any applicable
Subsidiary and each Member, an agreement in form and substance reasonably
satisfactory to the Company, such Subsidiary and each Member, which
satisfaction may require a creditworthy guarantor, to defend, indemnify and
hold the Company, such Subsidiary and each Member (and any guarantor
affiliated therewith or which delivered the guaranty on behalf of such
Person) harmless from any actions, including attorneys' fees and costs of
litigation, claims or loss arising from such debt, obligation or claim. In
no event shall such indemnity apply to liabilities resulting from the
breach by any Member of its obligations under this Agreement. This
subparagraph (b) shall not apply to any debt, obligation or claim which is
fully insured by public liability insurer(s) reasonably acceptable to the
Company, any applicable Subsidiary and each Member.
8.5. Assignment Binding on Company. No assignment or transfer of all or
any part of the Interest of a Member permitted to be made under this Agreement
shall be binding upon the Company unless and until a duplicate original of such
assignment or instrument of transfer, duly executed and acknowledged by the
assignor or transferor, has been delivered to the Company, and such instrument
evidences (i) the written acceptance by the assignee of all of the terms and
provisions of this Agreement, (ii) the assignee's representation that such
assignment was made in accordance with all applicable laws and regulations and
(iii) the unanimous consent of all of the Managing 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 Interests 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
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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 generality 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 affect 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 the Whitehall Group 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 the Whitehall Group, any part or all of their Membership Units
owned by them, then Managing Members shall provide Saracen and Rand 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 and/or Rand 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 Managing
Members within five (5) Business Days after delivery of such Tag Along Notice. A
Tag Along Election Notice shall specify
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the number of Membership Units which Saracen and/or Rand, as applicable, 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 which Managing Members 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/or Rand, as applicable, and the
denominator of which is the aggregate number of Membership Units owned by WCPT,
the Whitehall Group and Saracen and/or Rand, if applicable. If Saracen and/or
Rand 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 and/or
Rand, as applicable, elects to sell or transfer or, in the sole discretion of
Managing Members, the aggregate number of Membership Units to be sold or
transferred by Managing Members shall be reduced pro rata, so that the aggregate
number of Membership Units to be sold or transferred to such third-party by
Saracen and/or Rand, Managing Members shall remain equal to the aggregate number
of Membership Units which Managing Members originally proposed to sell or
transfer in such transaction. Participation by Saracen and/or Rand 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 Managing Members and on
terms identical to those terms being offered to Managing Members. In connection
with such sale or transfer, WCPT, the Whitehall Group and Saracen and/or Rand
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) Either WHWEL or Whitehall XI 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 either WHWEL or Whitehall XI 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, the Members of the
Whitehall Group 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
Managing Members shall submit the subject matter of WCPT's notice for binding
arbitration as provided in Section 5.10 no later than fifteen (15)
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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 the Members of the Whitehall Group in one or more transactions to
Third Parties, and WHWEL and Whitehall XI 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. (a) 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. The Members acknowledge that the payment of the
Administration Fee to the Manager is in consideration for services to be
performed by WRP relating to the functions typically performed by a President, a
Chief Executive Officer and a Chief Financial Officer and certain back office
functions. The Members further acknowledge that of the Administration Fee
payable to the Manager, the sum of $100,000 is allocated to the functions of
each of the President, Chief Executive Officer and Chief Financial Officer and
that in the event an individual is hired by WCPT to perform such duties,
responsibilities and obligations customarily assigned to each such office on a
full-time basis, the Administration Fee shall be reduced by a corresponding sum
of $100,000 (e.g., if an individual is hired to be a full-time Chief Financial
Officer of WCPT, the Administration Fee shall automatically be reduced by
$100,000).
(b) In exchange for performing certain management services with respect
to 150 Mt. Bethel Road, WCPT shall receive from Whitehall XI an asset management
fee equal to the product of (i) 0.002739% multiplied by (ii) the number of days
from and including the date of acquisition of 150 Mt. Bethel Road to and
excluding the Closing Date multiplied by (iii) $7,881,740.
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;
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(ii) the sale or other disposition of all of the Company Assets
and the assets of the Subsidiaries 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 Managing 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 and the assets of the Subsidiaries 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
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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 and the assets of the Subsidiaries 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 and the assets of the Subsidiaries. If the Manager,
or any such trustee or liquidator, determines that an immediate sale of part or
all of the Company Assets and the assets of the Subsidiaries 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 transaction 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.
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(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 Five" 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 a Managing 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 Managing
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
Managing 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
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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.
(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.
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11.7. REPSYS Database. The Manager understands that the Members of the
Whitehall Group have developed a database for monitoring their investments
called "REPSYS", and hereby agrees to reasonably cooperate with such Members of
the Whitehall Group in providing data relating to the Properties that are
required for such database.
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 Managing
Members, provided, however that each of Saracen or Rand (acting on his own
behalf and not as a Saracen Member), as applicable shall have the right to
consent to any amendment that shall (i) reduce Saracen's or Rand's, as
applicable, Capital Accounts with respect to its Membership Units, Series A
Preferred Membership Units, Percentage Interest or 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, or (D) pursuant to a conversion or redemption of Series
A Preferred Membership Units in accordance with the Series A Terms), (ii)
require Saracen or Rand, as applicable, to make any additional Capital
Contribution, (iii) create any liability for Saracen or Rand, as applicable,
other than the liability they have under this Agreement as of May 15, 1998, (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 or Rand's, as applicable,
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 NonPayment) shall not be deemed to
adversely affect or limit in any way Saracen's or Rand's rights pursuant to
Section 3.5 provided, that such additional Committee Representatives are not
appointed by, or representatives of, either Managing Member or their respective
Affiliates, (vi) modify Saracen's or Rand's, as applicable, rights and/or
obligations as set forth in Sections 4.2, 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, including Rand, 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 or Rand's, as applicable, transfer or
pledge rights pursuant to Section 8.1(b), (x) modify the terms and conditions of
Saracen's or Rand's, as applicable, 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 or Rand, as applicable. 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.
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(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, 535
Madison Avenue, 26th Floor, New York, New York 10022, 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
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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 Managing 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
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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 governmental 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
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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 WHWEL, Whitehall XI 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 each Member of the Whitehall Group have
done so in their respective capacities as officers or trustees of such Members
(or, in the case of each Member of the Whitehall Group, the general partner of
such Member) 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
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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 Kurt W. Saraceno 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 Kurt W. Saraceno, 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 Kurt W. Saraceno 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 Kurt W. Saraceno 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]
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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/ Elizabeth M. Burban
------------------------------------------
Name: Elizabeth M. Burban
Title: Vice President
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Edward Lowenthal
------------------------------------------
Name: Edward Lowenthal
Title: President
WXI/WWG REALTY, L.L.C.
By: /s/ Elizabeth M. Burban
------------------------------------------
Name: Elizabeth M. Burban
Title: Vice President
W/W GROUP HOLDINGS, L.L.C.
By: /s/ Elizabeth M. Burban
------------------------------------------
Name: Elizabeth M. Burban
Title: Vice President
<PAGE>
/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
<PAGE>
The undersigned has executed this Agreement
solely for purposes of Sections 3.3,
4.2, 7.6 and 9.2.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
--------------------------------
Name: Edward Lowenthal
Title: President
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: _______, 1999
Then personally appeared the above-named Dominic J. Saraceno, and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Kurt W. Saraceno , and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named William F. Rand, III, and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Ingeborg E. Saraceno, and
acknowledged the foregoing instrument to be her free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Heidi A. Saraceno-Lawlor, and
acknowledged the foregoing instrument to be her free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Leas A. Saraceno, and
acknowledged the foregoing instrument to be her free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Stephen Davis, and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Edward Werner, and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
Then personally appeared the above-named Carleton G. Tarpinian, and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
THE COMMONWEALTH OF MASSACHUSETTS
_________________ County ss.: ______, 1999
<PAGE>
Then personally appeared the above-named George McLaughlin, III, and
acknowledged the foregoing instrument to be his free act and deed, before me,
----------------------------------------
Notary Public
My Commission Expires:
WHWEL REAL ESTATE LIMITED PARTNERSHIP
85 BROAD STREET
NEW YORK, NEW YORK 10004
May 28, 1999
Wellsford Real Properties, Inc.
535 Madison Avenue
16th Floor
New York, New York 10022
Ladies and Gentlemen:
We refer to the Limited Liability Company Operating Agreement (the "LLC
Agreement") of Wellsford/Whitehall Properties Group, L.L.C. ("Group") dated as
of the date hereof, among Wellsford Commercial Properties Trust ("WCPT"), WHWEL
Real Estate Limited Partnership ("WHWEL") and the other Members. Capitalized
terms used and not defined herein shall have the meanings set forth in the LLC
Agreement.
It is hereby agreed by WRP that, within twenty (20) Business Days after
WHWEL 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 WHWEL
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.
For purposes of this letter agreement, "Excess Membership Units" shall
mean the Membership Units received by WHWEL in exchange for Capital
Contributions made to Group by WHWEL in excess of $50,000,000 up to $75,000,000,
but not with respect to any Membership Unit issued to WHWEL in exchange for
Capital Contributions made to Group by WHWEL in excess of $75,000,000. It is
understood and agreed that, as of the date hereof, WHWEL has funded Capital
Contributions to Group in amount equal to $67,139,043. The number of shares of
WRP Common Stock issued to WHWEL 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.
<PAGE>
For purposes of this letter agreement "WRP Common Stock" shall mean the
common stock, par value $.01 per share, of WRP and any other stock of WRP into
which such common stock may be converted or reclassified (other than stock of
the Company into which unissued Common Stock has been reclassified) or that may
be issued in respect of, in exchange for, or in substitution of, such common
stock by reason of any stock splits, stock dividends, distributions, mergers,
consolidations, recapitalizations or other like events.
For purposes of this letter agreement, "Membership Unit Purchase Price"
shall mean the aggregate purchase price paid for all Excess Membership Units
held by WHWEL on the date of determination divided by the number of Excess
Membership Units held by WHWEL 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.
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<PAGE>
If the foregoing correctly reflects our understanding, please confirm
your acceptance by executing the enclosed counterpart of this letter agreement
and return it to the undersigned, whereupon it will become a binding agreement
between the parties hereto in accordance with its terms.
Very truly yours.
WHWEL REAL ESTATE LIMITED
PARTNERSHIP
By: WHATR Gen-Par, Inc.
By: /s/ 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/ Edward Lowenthal
--------------------------
Name: Edward Lowenthal
Title: President
WHWEL Real Estate Limited Partnership
WXI/WWG Realty, L.L.C.
W/W Group Holdings, L.L.C.
85 Broad Street, 19th Floor
New York, New York 10004
May 28, 1999
Wellsford Commercial Properties Trust
Wellsford Real Properties, Inc.
535 Madison Avenue, 26th Floor
New York, New York 10022
Gentlemen:
Reference is hereby made to the Limited Liability Company Operating
Agreement (the "Agreement") of Wellsford/Whitehall Group, L.L.C. (the
"Company"), dated the date hereof, among WHWEL Real Estate Limited Partnership
("WHWEL"), Wellsford Commercial Properties Trust ("WCPT"), WXI/WWG Realty,
L.L.C. ("Whitehall XI"), W/W Group Holdings, L.L.C. ("Holding Co.") and the
Saracen Members, pursuant to which WHWEL, WCPT, Whitehall XI, Holding Co. and
the Saracen Members set forth the terms and conditions by which the Company
intends to operate. Capitalized terms not otherwise defined herein shall have
the definitions set forth in the Agreement.
Subject to the provisions regarding restrictions on ownership and
transfer, and in addition to any rights set forth in the Agreement, including
without limitation the rights set forth in Section 8.3 thereof, in the event
WHWEL, Whitehall XI, Holding Co. and/or any of their Affiliates, either
individually or together, intend(s) to sell, whether in a registered or private
offering or otherwise, in one or more series of related transactions, any
combination of shares of common stock, par value $.01 per share, of Wellsford
Real Properties, Inc. ("WRP Shares"), or shares of beneficial interest, par
value $.01 per share, of WCPT ("WCPT Shares"), having an aggregate proposed
purchase price of $10 million or more, WHWEL, Whitehall XI and/or Holding Co.,
as the case may be, shall provide WRP and WCPT, respectively, (i) with two
business days prior written notice of its intention to commence such a sale and
(ii) during such two business day period, the opportunity to offer to purchase
from WHWEL, Whitehall XI and/or Holding Co., as the case may be, such WRP Shares
and/or WCPT Shares. Notwithstanding the foregoing, WHWEL, Whitehall XI or
Holding Co. shall have no obligation to accept any such offer from WRP or WCPT.
This letter agreement and all rights arising hereunder shall be
governed by the internal laws of the State of New York.
This letter agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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.
<PAGE>
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc.,
as General Partner
By: /s/ Alan S. Kava
--------------------------------
Name: Alan S. Kava
Title: Vice President
WXI/WWG REALTY, L.L.C.
By: /s/ Alan S. Kava
--------------------------------
Name: Alan S. Kava
Title: Vice President
W/W GROUP HOLDINGS, L.L.C.
By: /s/ Alan S. Kava
--------------------------------
Name: Alan S. Kava
Title: Vice President
Acknowledged and agreed as of the date first above written:
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Edward Lowenthal
---------------------------------
Name: Edward Lowenthal
Title: President
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
---------------------------------
Name: Edward Lowenthal
Title: President
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