REIMBURSEMENT AND INDEMNIFICATION AGREEMENT
THIS REIMBURSEMENT AND INDEMNIFICATION
AGREEMENT (this "Agreement") made as of the 30th day of May, 1997 by and
between WELLSFORD REAL PROPERTIES, INC., a Maryland corporation ("Newco") and
ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership ("ERP").
R E C I T A L S:
A. Reference is hereby made to that
certain Letter of Credit in the face principal amount of $15,773,702.00 issued
by Dresdner Bank, AG, New York Branch (the "Bank") for the purpose of securing
the payment of certain bonds which were issued by the Palomino Park Public
Improvements Corporation, a Colorado nonprofit corporation ("PPPIC") for the
purpose of financing certain public facilities located within Highlands Ranch
Metropolitan District No. 2, ▇▇▇▇▇▇▇ County, Colorado, a quasi-municipal
corporation organized pursuant to the laws of the State of Colorado (the
"▇▇▇▇▇▇▇▇ ▇.▇."). In connection with the ▇▇▇▇▇▇▇▇ ▇.▇., the Bank, PPPIC and
Wellsford Residential Properties Trust, a Maryland real estate investment
trust ("Wellsford Parent") entered into that certain Letter of Credit
Reimbursement Agreement dated as of December 1, 1995 (the "Bank Reimbursement
Agreement").
B. All of Wellsford Parent's rights and
obligations under the Bank Reimbursement Agreement have been assigned to and
assumed by Newco, a wholly-owned subsidiary of Wellsford Parent, pursuant to
that certain Contribution Agreement dated as of May 30, 1997 by and between
Wellsford Parent and Newco (the "Contribution Agreement").
C. ERP and Newco have entered into that
certain Credit Enhancement Agreement dated as of May 30, 1997 (the "Credit
Enhancement Agreement") whereby, among other things, ERP has agreed to
guarantee certain obligations of Newco (as the assignee of Wellsford Parent
pursuant to the Contribution Agreement) under the Bank Reimbursement
Agreement. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Enhancement Agreement. Concurrently
herewith and pursuant to the terms of the Credit Enhancement Agreement, ERP
has agreed to execute and deliver to the Bank the Initial ERP Operating
Partnership Guaranty and, if required pursuant to Article 1.3 of the Credit
Enhancement Agreement, an Alternate ERP Operating Partnership Guaranty.
D. In consideration of ERP's
obligations under the Initial ERP Operating Partnership Guaranty, and if
required, the Alternate ERP Operating Partnership Guaranty, Newco has agreed
to enter into this Agreement under the terms and conditions as set forth
herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the
recitals, and the mutual representations, warranties, covenants and agreements
contained herein, Newco and ERP hereby agree as follows:
1. Reimbursement. Newco hereby
promises, without notice or demand, to pay to ERP in full the amount of any
payment ERP is required to make under the Initial ERP Operating Partnership
Guaranty or any Alternate ERP Operating Partnership Guaranty. All such
amounts shall be due and payable in full by Newco to ERP on the day on which
payment is made by ERP under the Initial ERP Operating Partnership Guaranty or
any Alternate ERP Operating Partnership Guaranty.
Newco shall pay ERP interest at the rate
of the "Prime Rate" (as such term is hereinafter defined) plus three percent
(3%) on all amounts due and owing from Newco to ERP under this Agreement, from
the date said amounts are due until said amounts are actually paid in full by
Newco to ERP. The payment of said interest by Newco shall not, however,
authorize Newco to defer payment when due of any amounts required to be paid
by Newco pursuant to this Agreement. As employed herein, the term "Prime
Rate" shall mean, from time to time, the rate of interest per annum then most
recently announced by The First National Bank of Chicago in Chicago, Illinois
as its corporate base rate. If The First National Bank of Chicago shall not
announce such a rate, then the term "Prime Rate" shall mean the prime rate or
base rate from time to time announced by an American money center bank
designated by ERP.
2. Indemnification of ERP. Newco shall
indemnify, exonerate and hold harmless ERP and any "ERP Indemnified Party" (as
such term is hereinafter defined) against any and all claims, demands,
damages, losses, liabilities and any costs and expenses whatsoever, including
without limitation reasonable attorneys' fees, which ERP or any ERP
Indemnified Party may incur (or which may be claimed against ERP or any ERP
Indemnified Party by any person or entity whatsoever) in connection with the
following:
a. The execution and delivery of,
or the performance of any obligations
under the Credit Enhancement Agreement.
b. The execution and delivery of,
or the performance of any obligations
under the Initial ERP Operating
Partnership Guaranty.
c. The execution and delivery of,
or the performance of any obligations
under any Alternate ERP Operating
Partnership Guaranty.
Notwithstanding the foregoing, Newco shall not indemnify or hold harmless ERP
to the extent that claims, demands, damages, losses, liabilities, costs and
expenses have arisen by reason of ERP's breach of its obligations under the
Credit Enhancement Agreement or the negligence or willful misconduct of ERP or
any ERP Indemnified Party in connection with the Credit Enhancement Agreement,
the Initial ERP Operating Partnership Guaranty or any Alternate ERP Operating
Partnership Guaranty.
As employed herein, the term "ERP
Indemnified Party" shall mean any and all general and limited partners,
officers, directors, trustees and agents of ERP and any and all employees of
the foregoing.
DG Indemnification of Newco. ERP shall
indemnify, exonerate and hold harmless Newco and any "Newco Indemnified Party"
(as such term is hereinafter defined) against any and all claims, demands,
damages, losses, liabilities and any costs and expenses whatsoever, including
without limitation, reasonable attorneys' fees which Newco or any Newco
Indemnified Party may incur (or which may be claimed against Newco or any
Newco Indemnified Party) in connection with ERP's breach of its obligations
under the Credit Enhancement Agreement or by reason of the negligence or
willful misconduct of ERP in connection with the Credit Enhancement Agreement,
the Initial ERP Operating Partnership Guaranty or any Alternate ERP Operating
Partnership Guaranty.
As employed herein, the term "Newco
Indemnified Party" shall mean any and all officers, directors and agents of
Newco and any and all employees of the foregoing.
4. Covenant of Newco. If Newco
receives any notices with respect to a default under the Bank Reimbursement
Agreement or if Newco receives notice that Newco has taken action that with
the passage of time would constitute an event of default under the Bank
Reimbursement Agreement, then Newco shall immediately deliver copies of all
such notices to ERP.
5. Waiver and Estoppel. Newco
knowingly waives and agrees that it will be estopped from asserting any
argument to the contrary: (a) any and all notice of acceptance of this
Agreement or of the creation, renewal or accrual of any of the obligations or
liabilities hereunder indemnified against, either now or in the future;
(b) protest, presentment, demand for payment, notice of default or nonpayment,
notice of protest or default; (c) any and all notices or formalities to which
Newco may otherwise be entitled, including without limitation notice of the
granting of any indulgences or extensions of time of payment of any of the
liabilities and obligations hereunder and hereby indemnified against; (d) any
promptness in making any claim or demand hereunder; (e) the defense of the
statute of limitations in any action hereunder or in any action for the
collection of amounts payable hereunder; (f) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of any other
person or persons or the failure to file or enforce a claim against the estate
(in administration, bankruptcy or any other proceeding) of any other person or
persons; (g) any defense based upon an election of remedies which destroys or
otherwise impairs any or all of the subrogation rights of Newco or the right
of Newco to proceed against any other person for reimbursement, or both;
(h) all duty or obligation of ERP to proceed against any one or more person as
a condition to proceeding against Newco; (i) any principle or provision of
law, statutory or otherwise, which is or might be in conflict with the terms
and provisions of this Agreement. No delay or failure on the part of ERP in
the exercise of any right or remedy against Newco or any other party against
whom ERP may have any rights, shall operate as a waiver of any agreement or
obligation contained herein, and no single or partial exercise by ERP of any
rights or remedies as hereunder shall preclude other or further exercise
thereof or other exercise of any other right or remedy. No waiver of the
rights of ERP or in connection herewith and no release of Newco shall be
effective unless in writing executed by a duly authorized officer of ERP.
6. Restriction on Modification of
Guaranties. ERP agrees that following the execution of the Initial ERP
Operating Partnership Guaranty and the Alternate ERP Operating Partnership
Guaranty, ERP will not consent to a modification of the terms and conditions
of the Initial ERP Operating Partnership Guaranty or the terms and conditions
of the Alternate ERP Operating Partnership Guaranty which would increase
Newco's obligations under this Agreement, without Newco's prior written
consent, unless (in the case of the Alternate ERP Operating Partnership
Guaranty) ERP is required to enter into an Alternate ERP Operating Partnership
Guaranty in such form pursuant to the Credit Enhancement Agreement.
7. Remedies; Attorneys' Fees and
Enforcement Costs. If either party shall fail to perform its obligations
under this Agreement, the other party shall be entitled to pursue any and all
remedies, singly, successively or in combination (including, without
limitation, direct and consequential damages, the remedy of specific
performance and injunctive relief) available to it at law, in equity or
pursuant to statute. In the event of any action or proceeding at law or in
equity between ERP and Newco to enforce any provision of this Agreement or to
protect or establish any right or remedy of either party hereunder, the
unsuccessful party to such litigation (after exhaustion of all appeals) shall
pay to the prevailing party all costs and expenses, including reasonable
attorneys' fees incurred therein by such prevailing party, and if such
prevailing party shall recover judgment in any such action or proceeding, such
costs and expenses (including such attorneys' fees) as are related to said
action or proceeding, or as were incurred by the prevailing party in any lower
court proceedings which have been overturned, shall be included in and as a
part of such judgment.
8. Notices. All notices herein
required shall be in writing and shall be served on the parties at the
addresses or telecopy numbers as set forth herein. The mailing of a notice by
registered or certified mail, return receipt requested, the "faxing" of a
notice by telecopy or notice sent by overnight courier or messenger shall be
deemed sufficient service hereunder. Notices shall be deemed given as of
(i) the second (2nd) business day after the date of mailing if mailed by
registered or certified mail as aforesaid, (ii) the new business day after the
date of sending, if sent by overnight courier, (iii) the time received if
delivered by messenger, or (iv) the date received if given by telecopy as
aforesaid, if received during normal business hours, otherwise, on the next
business day. Notices shall be sent as follows:
If to ERP: ERP Operating Limited Partnership
c/o Equity Residential Properties Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Equity Residential Properties Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Newco: Wellsford Real Properties, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
9. State Law. This Agreement shall be construed and interpreted in
accordance with the substantive laws of the State of Illinois without regard
to principles of conflicts of laws.
10. Jurisdiction; Consent to Service of Process.
a. NEWCO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY ILLINOIS OR NEW
YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
THE CITY OF CHICAGO OR THE CITY OF NEW YORK, AND ANY APPELLATE COURT
THEREFROM, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH ILLINOIS OR NEW YORK STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO 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. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT IN THE COURTS OF ANY JURISDICTION.
b. NEWCO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY ILLINOIS OR
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
11. Headings. The headings used herein are for convenience only and do not
limit or alter the terms of this Agreement or in any way affect the meaning or
interpretation of this Agreement.
12. Successors and Assigns. All rights of ERP and Newco shall inure to the
benefit of their successors and assigns, and all obligations, liabilities, and
duties of Newco hereunder shall bind their successors and assigns, provided
that Newco shall not be permitted to assign its rights and obligations under
this Agreement without the prior written consent of ERP, which may be withheld
in ERP's sole and absolute discretion.
13. Entire Agreement; Amendment and Modification. This Agreement
constitutes the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein, supersedes all prior
agreements and understandings, both written and oral, between the parties in
respect of the subject matter hereof or thereof and no changes, amendments, or
alterations hereto shall be effective unless pursuant to written instrument
executed by Newco and ERP.
14. Waiver of Strict Compliance. No waiver or failure of ERP to exercise
any right, power or remedy or to insist upon strict compliance with any
obligation, covenant, agreement, representation, warranty, or condition shall
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure to comply with such obligation, covenant, agreement, representation,
warranty, or condition.
15. Severability. In the event that any provision of this Agreement, or
the application thereof to any particular party or circumstance, is found by a
court of competent jurisdiction to be invalid or unenforceable (in whole or in
its application to a particular party or circumstance), the remaining
provisions of this Agreement or the application thereof to different parties
or circumstances, as the case may be, shall not be affected thereby and this
Agreement shall remain in full force and effect in all other respects.
16. Time of the Essence. The parties hereby acknowledge and agree that
time is and shall be of the essence hereof.
[Signature page follows]
SIGNATURE PAGE TO
REIMBURSEMENT AND INDEMNIFICATION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WELLSFORD REAL PROPERTIES, INC., a
Maryland corporation
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
ERP OPERATING LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Equity Residential Properties
Trust, a Maryland real estate
investment trust, its general
partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
