EXHIBIT 10.1
FIRST AMENDMENT TO OPERATING AGREEMENT
OF
MONTAUK BATTERY REALTY, LLC
THIS FIRST AMENDMENT TO OPERATING AGREEMENT OF MONTAUK BATTERY REALTY
LLC, dated as of March 14, 2003 (this "Amendment"), among DTHY Realty, Inc.,
Xxxxxxx Xxxxxx, New Valley Real Estate Corporation, New Valley Mortgage
Corporation and The Prudential Real Estate Financial Services of America, Inc.
(collectively, the "Members").
WHEREAS, pursuant to the Operating Agreement of Montauk Battery Realty
LLC dated as of December 17, 2002 (the "Agreement"), the Members have agreed
with respect to the conduct and affairs of Montauk Battery Realty LLC, a New
York limited liability company;
WHEREAS, pursuant to a Purchase and Sale Agreement dated as of March
14, 2003, by and among Insignia Financial Group, Inc., Insignia ESG, Inc.
Insignia Residential Group, Inc., Insignia IP, Inc. and the Company (the
"Purchase Agreement"), the Company has on this date purchased the membership
interests of Insignia Residential Group, LLC and Insignia Xxxxxxx Xxxxxxx LLC
and has acquired certain trademarks from Insignia IP, Inc.;
WHEREAS, simultaneously with the closing of the Purchase Agreement,
DTHY is purchasing a portion of the Membership Interest of Prefsa; and
WHEREAS, in connection with the foregoing, the Members desire to amend
certain provisions of the Agreement as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties hereto do hereby agree as follows:
1. REFERENCES TO AGREEMENT; DEFINED TERMS. Unless the context
requires otherwise, every reference in the Agreement to the term "this
Agreement" shall be deemed to mean the Agreement as amended by this Amendment
thereto. Except as otherwise defined herein, the capitalized terms used herein
shall have the meanings set forth in the Agreement.
2. Section 6.1 is hereby deleted in its entirety and the
following text is hereby inserted in its place:
"The capital percentage interest of each Member (the
"Capital Percentage Interest") shall be as follows:
DTHY 23.76%
Xxxxxx 5.65%
NV 44.35%
New Valley Mortgage 5.65%
Prefsa 20.59%"
3. The first sentence of Section 6.3 is hereby deleted in its
entirety and the following text is hereby inserted in its place:
"The Company shall collect its revenues and pay its
normal operating expenses, including, but not limited to, the
debt service payments, Tax Distributions (as such term is
hereinafter defined) and excess cash flow sweep to the extent
such excess cash flow sweep is required to be paid to Prefsa
under the Loan Agreement (as such term is hereinafter defined)
and to the holders of the Subordinated Notes (as such term is
hereinafter defined)."
4. Section 6.3(e) is hereby deleted in its entirety and the
following text is hereby inserted in its place:
"Notwithstanding the foregoing, payments and
distributions under Section 6.3(b), (c) and (d) may be limited
to the extent required pursuant to the terms of the Loan and
Security Agreement between Prefsa, the Company and certain
other parties dated March 14, 2003, as amended from time to
time (the "Loan Agreement")."
5. The last sentence of Section 8.1 is hereby deleted in its
entirety and the following text is hereby inserted in its place:
"Further, it is hereby expressly acknowledged and
agreed that, except for any transferee of the entire interest
of an original Member of the Company (Xxxxxx, DTHY, NV, New
Valley Mortgage and Prefsa), approved in accordance with the
terms hereof, no new member of the Company shall have the
right to designate a Manager to serve on the Board."
6. The first sentence of Section 12.1 is hereby amended by
inserting at the beginning thereof the following language: "Subject to the
provisions of Section 8.4(b) hereof,".
7. Section 13.1 is hereby amended by inserting the following text
after the first sentence thereof:
"Notwithstanding the foregoing, Prefsa may transfer
to an employee or consultant of the Company or the Company's
Divisions or subsidiaries any of the membership interests
acquired by Prefsa pursuant to the Note and Equity Purchase
Agreement, between Prefsa, the Company and NV dated March 14,
2003, as amended from time to time (the "Subordinated Note
Purchase Agreement")."
8. The penultimate sentence of Section 13.1 is hereby amended by
deleting the clause after "Section 15.6 hereof;" and inserting the following in
its place:
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"provided that, in the event the Company elects to
exercise such option to purchase, the Company shall
concurrently with the closing of such purchase, pay, or cause
to be paid, in full, all indebtedness owing to Prefsa (but not
those certain promissory notes made payable by the Franchisee
(as defined in the Loan Agreement) to PREA in the original
principal amounts of $3,300,000 and $1,250,000, respectively
(the "Franchise Note") pursuant to the Loan Agreement and all
indebtedness due to Prefsa under the Company's 12%
Subordinated Notes due March 14, 2013 issued March 14, 2003
(the "Subordinated Notes")."
9. The first sentence of Section 13.3 is hereby amended by
deleting the words "except with the approval of the Board" at the end thereof
and inserting in its place the words "except with the unanimous approval of the
Board".
10. Section 14.1 is hereby amended by inserting the following text
at the end thereof:
"This Article 14 shall also not apply to any
Disposition by Prefsa to an employee or consultant of the
Company or the Company's Divisions or subsidiaries of any of
the membership interests acquired by Prefsa pursuant to the
Subordinated Note Purchase Agreement."
11. Section 14.5 is hereby amended by inserting the following text
at the end thereof:
"Further, it is hereby expressly acknowledged and
agreed that, except for any transferee of the entire interest
of an original Member of the Company (Xxxxxx, DTHY, NV, New
Valley Mortgage and Prefsa), which transferee received his
interest in accordance with the terms hereof, no new member of
the Company shall have the right to designate a Manager to
serve on the Board."
12. The second sentence of Section 15.2 is hereby amended by
deleting the number "97%" and inserting in its place the number "93%".
13. The second sentence of Section 15.3 is hereby amended by
inserting at the end thereof the following text:
", regardless of whether the beneficiaries of such
insurance are the same as the beneficiaries of the estate of
the Deceased Shareholder."
14. The fifth sentence of Section 15.6 is hereby amended by
inserting at the end thereof after the words "(but not the Franchise Note)" the
words: "and the Subordinated Notes."
15. Section 17.1 and Section 17.2 are each hereby amended by
deleting the number "97%" and inserting in its place the number "93%" and by
deleting the number "40.01%" and inserting in its place the number "28.01%".
Section 17.2 is hereby further amended by deleting the number "38.01%" and
inserting in its place the number "26.01%" and by deleting the number "7.99%"
and inserting in its place the number "19.99%".
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16. Clauses (ii), (iii), and (iv) of Section 18 (other than
provision II of clause (iv) which shall not be amended hereby) are each hereby
amended by deleting the word "Company" in each place it appears, and inserting
in its place the words "Company, or any of its Divisions or subsidiaries".
17. The third sentence of Section 18 is hereby amended by
inserting after the words "after the end of B&H's current franchise agreement
with PREA" the following text:
"or the end of Insignia Xxxxxxx Xxxxxxx'x current
franchise agreement with PREA" (but only with regard to the
area for which the then current franchise agreement has
ended).
18. Section 22.1 and Section 22.4 are each hereby amended by
deleting the number "97%" and inserting in its place the number "93%".
19. Section 22.14 is hereby amended by inserting at the beginning
thereof the following text: "Subject to Section 18 hereof".
20. APPROVAL BY BOARD OF MANAGERS. The Managers of the Company
hereby approve the following matters:
(i) the Purchase Agreement and the consummation of the
transactions contemplated thereby;
(ii) the Loan Agreement and the related borrowings of up
to $57.5 million thereunder from Prefsa;
(iii) the issuance of $19,000,000 of Subordinated Notes
pursuant to the Subordinated Note Purchase Agreement;
(iv) the Franchise Note; and
(v) the issuance of membership interests representing a
30% interest in the Company to the purchasers of the
Subordinated Notes pursuant to the Subordinated Note
Purchase Agreement.
21. GOVERNING LAW. This Amendment shall be construed and
interpreted in accordance with and governed by the internal laws of the State of
New York without regard to conflicts of laws principles.
22. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
23. FULL FORCE AND EFFECT. Except as amended hereby, the Agreement
shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
DTHY REALTY, INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx, President
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
NEW VALLEY REAL ESTATE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Executive Vice President
NEW VALLEY MORTGAGE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx Xxxxxx, President
PRUDENTIAL REAL ESTATE FINANCIAL
SERVICES OF AMERICA, INC.
By: /s/ Xxxxx Ghoroghchi
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As to the Restrictive Covenant and Non-
Solicitation provision and Articles 20, 21 and
22 only
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
AS MANAGERS:
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxx Ghoroghchi
-----------------------------------
Xxxxx Ghoroghchi
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