CONDITIONAL GUARANTEE
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THIS GUARANTEE, dated as of October 22, 1998 is made by WELLSFORD
CAPITAL, a Maryland real estate investment trust, having an address c/o
Wellsford Real Properties, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Guarantor") in favor of XXXXXX BROTHERS HOLDINGS INC. doing business as
Xxxxxx Capital, a division of Xxxxxx Brothers Holdings Inc., a Delaware
corporation having an address at 3 World Financial Center, 00xx Xxxxx, Xxx
Xxxx Xxx Xxxx 00000-0000 ("Lender").
Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in (i) that certain Leasehold Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing for
Commercial Purposes dated of even date herewith, given by Wellsford Capital
Properties, L.L.C., a Delaware limited liability company (the "Borrower"), as
mortgagor, to Fidelity National Title Insurance Company, as trustee, for the
use and benefit of Lender, as beneficiary, covering the Santa Xxxxxx Property
(as defined herein) (as the same may hereafter be amended, modified or
supplemented from time to time, the "Santa Xxxxxx Security Instrument"), and
(ii) that certain Mortgage and Security Agreement dated of even date herewith
between Borrower, as mortgagor, and Lender, as mortgagee, covering the Canton
Property (as defined herein) (as the same may hereafter be amended, modified
or supplemented from time to time, the "Canton Security Instrument"), (iii)
that certain Mortgage and Security Agreement dated of even date herewith
between Borrower, as mortgagor, and Lender, as mortgagee, covering the
Philadelphia Property (as defined herein) (as the same may hereafter be
amended, modified or supplemented from time to time, the "Philadelphia
Security Instrument"), (iv) that certain Mortgage and Security Agreement
dated of even date herewith between Borrower, as mortgagor, and Lender, as
mortgagee, covering the West Xxxxxxx Property (as defined herein) (as the
same may hereafter be amended, modified or supplemented from time to time,
the "West Xxxxxxx Security Instrument"), (v) that certain Mortgage and
Security Agreement dated of even date herewith between Borrower, as
mortgagor, and Lender, as mortgagee, covering the Salem Property (as defined
herein) (as the same may hereafter be amended, modified or supplemented from
time to time, the "Salem Security Instrument"), (vi) that certain Mortgage
and Security Agreement dated of even date herewith between Borrower, as
mortgagor, and Lender, as mortgagee, covering the Piscataway Property (as
defined herein) (as the same may hereafter be amended, modified or
supplemented from time to time, the "Piscataway Security Instrument"), and
(vii) that certain Mortgage and Security Agreement dated of even date
herewith between Borrower, as mortgagor, and Lender, as mortgagee, covering
the Cherry Hill Property (as defined herein) (as the same may hereafter be
amended, modified or supplemented from time to time, the "Cherry Hill
Security Instrument"), (the Santa Xxxxxx Security Instrument, the Canton
Security Instrument, the Philadelphia Security Instrument, the West Xxxxxxx
Security Instrument, the Salem Security Instrument, the Piscataway Security
Instrument and the Cherry Hill Security Instrument are sometimes collectively
referred to herein as the "Security Instruments").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower is the owner of (A) a leasehold interest in and
to those certain premises known as 000 Xxxxxxxx Xxxxxx and 0000 00xx Xxxxxx
located in Santa Monica, California, as more particularly described in the
Santa Xxxxxx Security Instrument (the "Santa Xxxxxx Property"), and (B) fee
simple title to those certain premises known as (i) 000 Xxxxxxxx Xxxxxx
located in Canton, Massachusetts, as more particularly described in the
Canton Security Instrument (the "Canton Property"), (ii) 000 Xxxxxxxx Xxxxxx
located in Philadelphia, Pennsylvania, as more particularly described in the
Philadelphia Security Instrument (the "Philadelphia Property"), (iii)
Bradford Plaza located in West Chester, Pennsylvania, as more particularly
described in the West Xxxxxxx Security Instrument (the "West Xxxxxxx
Property"), (iv) 00-00 Xxxxxxxxx Xxxxx located in Salem, New Hampshire, as
more particularly described in the Salem Security Instrument (the "Salem
Property"), (v) 000 Xxxx Xxxx located in Piscataway, New Jersey, as more
particularly described in the Piscataway Security Instrument (the "Piscataway
Property"), and (vi) 2 Executive Campus located in Cherry Hill, New Jersey,
as more particularly described in the Cherry Hill Security Instrument (the
"Cherry Hill Property") (the Santa Xxxxxx Property, the Canton Property, the
Philadelphia Property, the West Xxxxxxx Property, the Salem Property, the
Piscataway Property and the Cherry Hill Property are sometimes collectively
referred to herein as the "Property");
WHEREAS, Borrower has requested a mortgage loan (the "Loan") from
Lender in the original principal amount of $28,000,000.00 and Lender has
agreed to make such Loan upon the terms and conditions of, among other
documents, a Secured Promissory Note dated the date hereof (the "Note"), the
Security Instruments and this Guarantee (the Note, the Security Instruments
and any other documents executed in connection herewith are sometimes
collectively referred to herein as the "Loan Documents");
WHEREAS, simultaneously herewith, the Loan Documents have been
executed and delivered to Lender;
WHEREAS, Lender has required, as a condition of making the Loan,
the execution of this Guarantee by the Guarantor;
WHEREAS, Guarantor is the owner of 100% of the membership interests
in -Borrower, and accordingly, will derive a substantial benefit from the
Loan;
WHEREAS, capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Security Instruments.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the Guarantor hereby agrees with Lender as follows:
1. Guarantee. The Guarantor hereby unconditionally and
irrevocably guarantees to Lender the full and punctual payment and
performance when due of all of Borrower's obligations under the Loan
Documents, whether at maturity or earlier by reason of acceleration or
otherwise and whether denominated as damages, principal, interest, fees or
otherwise, together with all pre-and post- maturity interest thereon
(including, without limitation, amounts that, but for the initiation of any
proceeding under any insolvency or bankruptcy law, would become due), if any
of the occurrences set forth in subparagraphs (a) through (k) herein occur.
The occurrences set forth in such subparagraphs (a) through (k) are
hereinafter collectively referred to as the "Recourse Events."
Notwithstanding the foregoing, the Guaranteed Obligations (as defined below)
with respect to the Recourse Events set forth in subparagraphs (a) through
(g) herein shall be limited to the amount of all Losses, as defined by the
Security Instruments, incurred by Lender due to such occurrences. In the
event the Guaranteed Obligations are in excess of the Losses incurred by
Lender, such excess shall be applied by Lender to reduce principal and
interest under the Loan, such application to be made in the sole discretion
of Lender. Guarantor's obligations under this Guaranty (the "Guaranteed
Obligations") shall arise in the event one or more of the following events or
conditions occurs:
(a) fraud or material misrepresentation by Borrower or any
other person or entity in connection with the execution and the delivery of
the Loan Documents;
(b) Borrower's gross negligence or willful misconduct with
respect to the management and operation of the Property and/or Borrower's
financial affairs;
(c) Borrower's removal or disposal of any Personal Property
after an Event of Default;
(d) Borrower's failure to pay Taxes, Insurance Premiums,
Other Charges (except to the extent that sums sufficient to pay such amounts
have been deposited with Lender pursuant to the terms of the Security
Instruments and/or the Lockbox Agreement), charges for labor or materials or
other charges that can create liens on the Property;
(e) Borrower or Guarantor or any party acting at the behest
of Borrower or Guarantor challenges the validity or enforceability of this
Guarantee, the Note, the Security Instruments or the other Loan Documents
and/or Borrower or Guarantor or any party acting at the behest of Borrower or
Guarantor asserts defenses (other than (1) the defense of payment in full of
the Obligations, provided that no other Event of Default has occurred and is
continuing, or (2) a defense made in good faith as to the improper exercise
of Lender's remedies under the Note, the Security Instruments or the other
Loan Documents, provided that no Event of Default has occurred and is
continuing at the time of Lender's exercise of such remedies) to the validity
or enforceability of this Guarantee, the Note, the Security Instruments or
the other Loan Documents, in each case solely for the purpose of delaying,
hindering or impairing Lender's rights and remedies under this Guarantee, the
Note, the Security Instruments or the other Loan Documents.
(f) Borrower or any party acting at Borrower's behest
misapplies or misappropriates Rents, tenant security deposits, insurance
proceeds or condemnation awards;
(g) Borrower's failure to comply with the provisions of
Section 3.3, 3.9, 4.2. 4.3. 12.1, 12.2, 13.1, 13.2, 13.3, 13.4 or 13.5 of the
Security Instruments;
(h) Borrower defaults under Section 8.2 or 8.3 of the
Security Instruments;
(i) a voluntary bankruptcy or insolvency proceeding is filed
or instituted by Borrower or Guarantor, or an involuntary bankruptcy or
insolvency proceeding is filed or instituted against Borrower or Guarantor
which is not dismissed within ninety (90) days of the filing thereof (unless
such involuntary proceeding is brought by Lender); or
(j) any financial information concerning Borrower or the
Guarantor provided in this Guarantee, the Note, the Security Instruments or
the other Loan Documents or otherwise in order to induce Lender to make the
loan evidenced by the Note is fraudulent in any respect, contains any
fraudulent information or misrepresents in any material respect the financial
condition of Borrower or any Guarantor or Indemnitor;
The Guarantor also agrees to pay any and all costs and expenses
(including, without limitation, all reasonable fees and disbursements of
counsel) which may be paid or incurred by Lender in connection with the
enforcement of this Guarantee. The foregoing shall not in any manner impair
or release the debt evidenced by the Note or the other Loan Documents or
otherwise impair or derogate from the Lender's ability to enforce its rights
under the Loan Documents.
2. Guarantee Absolute. The Guarantor guarantees that, to the
extent of the Guaranteed Obligations, the Debt will be paid strictly in
accordance with the terms of the Security Instruments regardless of any
requirement of law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Lender with respect
thereto. The liability of the Guarantor hereunder shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Note, the
Security Instruments, the other Loan Documents or any other agreement between
Lender and the Borrower relating thereto;
(b) any change in the time, manner, place of payment of the
indebtedness under, or in any other term of, or any other amendment or waiver
of, or any consent to, departure from, any agreement between the Borrower and
Lender, including, without limitation, the Note, the Security Instruments or
the other Loan Documents;
(c) the insolvency of, or voluntary or involuntary
bankruptcy, assignment for the benefit of creditors, reorganization or other
similar proceedings affecting, the Borrower or any of its assets; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of the Debt
or of the Guarantor in respect of this Guarantee.
No payment made by the Guarantor, any other guarantor or any other
Person, or received or collected by the Lender from the Guarantor, any other
guarantor or any other Person by virtue of any action or proceeding or set
off or application at any time in reduction of or in payment of the Debt
shall be deemed to modify, release or otherwise affect the liability of
Guarantor under this Guarantee. Notwithstanding any such payments received or
collected by the Lender in connection with the Debt, Guarantor shall remain
liable for the balance of the Guaranteed Obligations until the Debt is paid
in full. This Guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of the Debt or any portion
thereof is rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
Lender shall not be required to inquire into the powers of the
Borrower or any of its partners, managers or other agents acting or
purporting to act on its behalf, and monies, advances, renewals or credits
described in Section 1 hereof in fact borrowed or obtained from Lender in
professed exercise of such powers shall be deemed to form part of the debts
and liabilities hereby guaranteed, notwithstanding that such borrowing or
obtaining of monies, advances, renewals, or credits shall be in excess of the
powers of the Borrower, or of its partners, managers or other agents
aforesaid, or be in any way irregular, defective or informal.
3. Dealing with the Borrower and Others.
(a) The Guaranteed Obligations shall not be released,
discharged, limited or in any way affected by anything done, suffered or
permitted by Lender in connection with any monies or credit advanced by
Lender to the Borrower or any security therefor, including any loss of or in
respect of any security received by Lender from the Borrower or others. It is
agreed that Lender, without releasing, discharging, limiting or otherwise
affecting in whole or in part the Guaranteed Obligations and liabilities
hereunder, may, without limiting the generality of the foregoing:
(i) grant time, renewals, extensions, indulgences,
releases and discharges to the Borrower and any other Person guaranteeing
payment of or otherwise liable with respect to the Debt (each such Person, an
"Obligor");
(ii) take or abstain from taking security or collateral
from the Borrower or any Obligor or from perfecting security or collateral of
the Borrower or any Obligor;
(iii) accept compromises from the Borrower or any Obligor;
(iv) apply all monies at any time received from the
Borrower or any Obligor upon such part of the Obligations as Lender may see
fit; or
(v) otherwise deal with the Borrower or any Obligor as
Lender may see fit.
(b) Lender shall not be bound or obliged to exhaust recourse
against the Borrower or any other Obligor or any security, guarantee,
indemnity, mortgage or collateral it may hold or take any other action
(other than make demand pursuant to Section 7 of this Guarantee) before
being entitled to payment from the Guarantor hereunder; and
(c) Any account settled by or between Lender and the Borrower
shall be accepted by the Guarantor as conclusive evidence that the
balance or amount thereby appearing due to Lender is so due.
4. Subrogation. The Guarantor shall not exercise any right of
subrogation with respect to payments made to Lender hereunder until such time
as all indebtedness of the Borrower to Lender shall have been irrevocably
paid in full in cash. In the case of the liquidation, winding-up or
bankruptcy of the Borrower (whether voluntary or involuntary) or in the event
that the Borrower shall make an arrangement or composition with its
creditors, Lender shall have the right to rank first for its full claim and
to receive all payments in respect thereof until its claim has been paid in
full and the Guarantor shall continue to be liable to Lender for any balance
of the Guaranteed Obligations. The Guarantor, to the extent permitted by law,
irrevocably releases and waives any subrogation rights or right of
contribution or indemnity (whether arising by operation of law, contract or
otherwise) Guarantor may have against the Borrower or any Person constituting
the Borrower if and to the extent any such right or rights would give rise to
a claim under the U.S. Bankruptcy Code that payments to Lender with respect
to the Obligations constitute a preference in favor of Guarantor or a claim
under the Bankruptcy Code that any such preference is recoverable from
Lender.
5. Representations and Warranties. The Guarantor hereby
represents and warrants to Lender that:
(a) the Guarantor is not insolvent (as such term is defined
in the debtor/creditor laws of the State of New York), and Guarantor now
has, and covenants and agrees that at all times until the Debt is paid
in full it shall maintain, a net worth of at least $50,000,000.00; and
(b) the execution, delivery and performance of this Guarantee
will not (i) make Guarantor insolvent (as such term is defined in the
debtor/creditor laws of the State of New York), or (ii) violate any
provision of any requirement of law or contractual obligation of
Guarantor and will not result in or require the creation or imposition
of any lien on any of the properties or revenues of Guarantor pursuant
to any requirement of law or contractual obligation of Guarantor.
(c) the Guarantor has all requisite power and authority to
execute, deliver and perform its obligations under this Guarantee.
(d) the execution, delivery of this Guarantee and the
performance by the Guarantor of its obligations hereunder does not and
will not contravene, violate or conflict with any requirement of law,
and does not and will not contravene, violate or conflict with, or
result in a breach of or default under, the operating agreement of
Borrower, or any contractual obligation to which Guarantor or its assets
is or are subject, and does not require or result in the creation or
imposition of any lien in favor of any Person other than Lender.
(e) the execution and delivery hereof and the performance by
the Guarantor of its obligations hereunder does not and will not
contravene, violate or conflict with, or result in a breach of or
default under, any indenture, mortgage, deed of trust, ground lease,
contract, assignment, agreement or other instrument to which the
Borrower or the assets of the Borrower are subject.
(f) no consent of any other party (including, without
limitation, any partner, or any creditor of the Guarantor or Borrower)
is required that has not been obtained by the Guarantor.
(g) this Guarantee has been duly executed and delivered by
Guarantor and is the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, moratorium,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
6. Intentionally Omitted.
7. Demand for Payment: The Guarantor shall make payment of the
Guaranteed Obligations and other amounts payable by the Guarantor hereunder
forthwith after demand therefor is made by Lender to the Guarantor in
writing. Lender shall not be required to seek payment of the Debt from
Borrower or any other Person, prior to demanding payment of the Guaranteed
Obligations from the Guarantor.
8. Waiver of Notice of Acceptance. The Guarantor hereby waives
notice of acceptance of this Guarantee.
9. Additional Guaranties. This Guarantee is in addition and
without prejudice to any guaranties of any kind (including, without
limitation, guaranties whether or not in the same form as this instrument) or
any indemnification agreements now or hereafter held by Lender. Lender shall
not be obligated to proceed under any other guaranty or security with respect
to all or any portion of the Debt before being entitled to payment from
Guarantor under this Guarantee.
10. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS
CHOICE OF LAW IS MADE PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1401.
11. Addresses of Notices. All notices, demands, and other
communications provided for hereunder shall be in writing and shall be
personally delivered, sent by overnight delivery, or mailed (certified mail,
return receipt requested and postage prepaid), to and addressed as follows:
if to the Guarantor, delivered to it at its address set forth above, with a
copy to Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxx X. Xxxxxxx, Esq., and if
to Lender, delivered to it at Three World Financial Center, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxxx X. Xxxxxxxxxx, with a copy to
Xxxxxx Xxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx Xxx Xxxx 00000,
Attention: Xxxxx X. Xxxx, Esq., or as to each party at such other address or
addresses within the continental United States of America as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section 11.
12. No Waiver. Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. Any amendments to, revisions of,
or waivers of any provisions of this Guarantee must be in writing to be
effective.
13. Benefit and Binding Nature. This Guarantee is a continuing
guaranty of payment and shall (a) remain in full force and effect until
irrevocable payment in full of the Guaranteed Obligations and all other
amounts payable hereunder in cash, (b) be binding upon the Guarantor, its
personal representatives, executors, administrators, heirs, distributees and
successors and assigns, and (c) inure to the benefit of and be enforceable by
Lender and its respective successors and assigns.
14. WAIVER OF TRIAL BY JURY. THE GUARANTOR AND LENDER WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, WITH RESPECT TO, IN CONNECTION WITH OR
ARISING OUT OF OR IN ANY WAY RELATED TO THIS GUARANTEE OR THE SECURITY
INSTRUMENTS OR THE NOTE OR ANY OTHER DOCUMENT DELIVERED IN CONNECTION
HEREWITH OR THEREWITH.
15. Jurisdiction. The Guarantor hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the County of
New York in any action or proceeding arising out of or relating to this
Guarantee, the Note, the Security Instruments or any other document delivered
in connection herewith or therewith and the Guarantor hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard
and determined in such New York State court, or to the extent permitted by
law, in such Federal court. The Guarantor hereby irrevocably waives, to the
fullest extent he may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. To the extent permitted by
law, the Guarantor also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies (certified
mail, return receipt requested and postage prepaid) of such process to it at
its address specified in Section 11 hereof. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
IN WITNESS WHEREOF, the Guarantor has executed this Guarantee as of
the date and year set forth above.
GUARANTOR:
WELLSFORD CAPITAL, a Maryland real estate
investment trust
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President and
Assistant Treasurer
COUNTY OF NEW YORK )
:.ss
COUNTY OF NEW YORK )
On the 21 day of October, 1998, before me personally came Xxxxxxx
X. Xxxxxx, to me known, who, being by me duly sworn, did depose and say that
he has an address at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX; he is the Vice President
and Assistant Treasurer of Wellsford Capital, a Maryland real estate
investment trust; and is the person whose name is subscribed to the foregoing
instrument and that he executed the same in such capacity for the purposes
therein contained.
/s/ Xxxxxx Xxxxxxx
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Notary Public
