MEMORANDUM OF UNDERSTANDING
This Memorandum of
Understanding (“MOU”) is entered into among Wellsford Real
Properties, Inc. (“WRP”), Wellsford Commercial Properties Trust
(“WCPT”), WHWEL Real Estate Limited Partnership
(“WHWEL”), WXI/WWG Realty, L.L.C. (“Whitehall
XI”) and W/W Group Holdings, L.L.C. (“Holding Co.”)
this 25th day of October 2000 for the purpose of setting forth the understanding
of the parties hereto with respect to (i) certain modifications to be made
to the Limited Liability Company Operating Agreement (the “Operating
Agreement”) of Wellsford/Whitehall Group, L.L.C. (the
“Company”) and (ii) certain additional agreements to be entered
into among the parties relating to the Company, its assets and its business and
to WCPT and its personnel. All capitalized terms used but not defined herein
have the meanings set forth in the Operating Agreement.
| 1. |
Modification of Governance Provisions. |
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(a) |
WCPT Management LLC (“New Manager”) will replace WCPT as the
managing member of the Company, and New Manager will assume all of the
day-to-day management rights and duties of WCPT. At the closing of the
transactions contemplated in this MOU, New Manager will be owned by Whitehall
XI, Holding Co., WHWEL, Whitehall Street Real Estate Limited Partnership XIII,
Whitehall Parallel Real Estate Limited Partnership XIII (and/or another
Whitehall Fund) or their affiliates and Xxxxxxx Xxxxxxx (and possibly other
employees) in amounts to be determined by them. |
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(b) |
From and after the effective date of the definitive agreements executed to
implement this MOU (the “Effective Date”), the decisions that
will require Management Committee’s approval are: |
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(i) |
The Major Decisions and Operational Decisions originally set forth in the
Operating Agreement, but as such terms are modified as provided on Annex
A hereto. (The parties may eliminate the term “Operational
Decisions” and include the items on Annex A defined as such within
the term “Major Decisions”); |
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(ii) |
Material changes to the development plans and construction budget (which plans
and budget will be subject to WCPT’s approval) for the property known as
“Pointview”, located in the Township of Wayne, New Jersey
(“Pointview”), if such changes cause the construction budget to
increase by more than 10%; |
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(iii) |
The incurrence of debt for borrowed money not in compliance with the Financing
Parameters (as defined in Section 2 below); |
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(iv) |
The sale of any Property not in compliance with the Sale Parameters (as defined
in Section 3 below) other than the following assets: Channel Lumber, Channel
Lumber Land (to the extent it is owned by the Company), 000 Xxx Xxxxxx and XX
Xxxxxxxx (the “Recently Acquired Assets”), which will be
transferred pursuant to Section 4; and |
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(v) |
The purchase of any new real estate assets except for assets acquired in one or
more §1031 exchange transactions for any of the Non-Nomura Saracen Assets
or the Nomura Saracen Assets (each as described below). |
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For purposes of clause (v), New Manager may cause the Company (A) to acquire any
one or more assets in a §1031 transaction in exchange for the Non-Nomura
Saracen Assets as determined by New Manager in its sole discretion, provided
that no individual asset acquired in such a §1031 transaction may, unless
WCPT consents thereto, have disclosed environmental issues that would cost more
than $250,000 to remediate per asset (as determined by the Company’s
environmental consultant) and (B) to acquire Credit Lease Assets as part of a
§1031 exchange transaction for any of the Nomura Saracen Assets (as defined
below in Section 5(iii)). The term “Credit Lease Assets” means
any property or properties to be owned or, if a part of an acquisition of a
pool of assets that also includes fee owned properties, ground leased by the Company (or a
Subsidiary) that are (I) leased to a tenant or tenants having a credit rating of
at least “Baa” by Xxxxx’x or “BBB+” by S&P and (II)
leveraged by the Company (or such Subsidiary) with financing in an amount equal
to at least $140 million in the aggregate (i.e. among all of such properties
taken together) or, if greater, 85% of the total purchase price of such
properties. The ownership interest of the Company in the Credit Lease Assets
may, at the election of New Manager, be distributed to the Company’s
Members so that each Member owns an undivided tenancy-in-common interest in the
Credit Lease Assets and held pursuant by such Members pursuant to a
tenancy-in-common agreement in substantially the same form as the Operating
Agreement with such changes as may be reasonably acceptable to WCPT and the Whitehall
Group. |
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Except
for the foregoing decisions and except for such other matters that expressly
require the consent of WCPT as set forth in the definitive agreements implementing
this MOU, New Manager will have the authority to act on
behalf of the Company without the Management Committee’s or WCPT’s
consent or approval. |
| 2. |
Financing Parameters. From and after the Effective Date, New
Manager may from time to time cause the Company and its Subsidiaries to enter
into financings and refinancings with the approval of the Whitehall Group
provided that the Financing Parameters are satisfied. The “Financing
Parameters” will be as follows:
|
| (a) |
such financings are non-recourse to the Company’s Members or the parent
companies of the Company’s Members (except for environmental obligations
and such Member’s actions on account of matters covered by non-recourse
carveouts similar to those in the Fleet Bank financing or similar matters
consistent with market practice, provided that unless one or more
Whitehall funds actually provides such a guaranty, WRP shall not be required to
do so, provided further that any such environmental indemnity shall only be
recourse to the Company, WCPT and the Whitehall Group but not to the parent
companies of the Company’s Members); |
| (b) |
the weighted average interest rate of all financings of the Company and its
subsidiaries taken together does not exceed LIBOR plus 400 basis points
per annum (calculated quarterly based on the outstanding debt balances of the
Company and its Subsidiaries as of the end of each calendar quarter); and |
| (c) |
the total aggregate Indebtedness of the Company and its Subsidiaries will not
exceed 70% of the “Borrowing Base” (calculated quarterly based
on the outstanding debt balances of the Company and its Subsidiaries as of the
end of each calendar quarter). The term “Indebtedness” includes
any secured or unsecured financings, any senior or mezzanine financings and any
preferred equity issued by the Company after the date hereof. |
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The Borrowing Base will initially be equal to $700 million, as such amount is
allocated among all of the Company’s assets as agreed by WCPT and the
Whitehall Group in the definitive documentation (the allocated value for each
asset is referred to as an “Allocated Value”). The Borrowing
Base will (x) increase or decrease in connection with a re-financing of any
asset by an amount equal to the difference between (1) a lender’s
appraised value or implied valuation (i.e. based on the gross loan amount
divided by the loan-to-value ratio, regardless of whether a third party
appraisal is procured) of such asset and (2) the Allocated Value of such
asset in effect immediately prior to such refinancing (and the Allocated Value
of such refinanced asset will be increased or decreased, as applicable, by a
like amount) and (y) be reduced by the Allocated Value of any asset that is sold
(as such Allocated Value may be adjusted as provided in the foregoing clause
(x)) and by a pro rata portion of the Allocated Value of any asset that is
subject to a casualty or condemnation and (z) exclude Credit Lease Assets
that are financed as described below. |
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For the avoidance of doubt, (i) any particular financing may, without WCPT’s
approval, deviate from the Financing Parameters set forth in (b) and (c) above
as long as all of the financings, taken together, continue to comply with the
Financing Parameters, (ii) WCPT and WRP may be required (and hereby agree)
to provide guarantees to a prospective lender with respect to their fraud,
misappropriation, willful misconduct, tortious actions and other matters
comparable to those matters for which Fleet Bank has recourse to WRP and/or its
Members or similar matters consistent with market practice (provided
that unless one or more of the Whitehall funds actually provides such a
guarantee, WRP shall not be required to do so), (iii) such financing may be
cross-collateralized and cross-defaulted with other assets of the Company or its
Subsidiaries within the same or related financings that are contemporaneously
closed with each other (including a cross-collateralized facility that allows
for additional advances in connection with the financing or re-financing of
other assets of the Company or its Subsidiaries) and (iv) New Manager may incur
financing, including fixed rate financings, secured by any Credit Lease Asset
(as described above) and such financing and assets will not be taken into
account in determining compliance with the tests in paragraphs (b) and (c) above
(it being agreed that New Manager may only incur fixed rate financings in
connection with an exchange transaction for Credit Lease Assets). In the event
of a refinancing or repayment of debt that is currently allocable to the Saracen Members that
could result in a Saracen Debt Reduction Event, New Manager will obtain a
“Tax Opinion” (as defined in Section 3(a)(ii) below). |
| 3. |
Sale of Assets. (a) From and after the Effective Date, in lieu of the
existing provisions of Section 8.2 of the Operating Agreement (which will
be deleted), New Manager may from time to time cause the Company and its
Subsidiaries to enter into sales of the Company’s assets (or the Company
itself or any or all of its Subsidiaries) with the approval of the Whitehall
Group and without the approval of WCPT; provided that: |
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(i) |
the Whitehall Group will give WCPT a 30-day prior notice of any such sale for
informational purposes only (with no obligation to sell such asset to WCPT),
which notice shall set forth the projected or anticipated terms and conditions
thereof and, if available, any sales memorandum and analyses with respect to
such sale; |
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(ii) |
if the Whitehall Group decides to sell any of the assets listed on Schedule
B hereto (the “Non-Nomura Saracen Assets”), it may do so
without the consent of WCPT only in a §1031 exchange transaction (it being
agreed that WCPT has pre-approved a §1031 exchange transaction with respect
to such Non-Nomura Saracen Assets) and any liability pursuant to
Section 8.2A for such transaction or any future §1031 exchange
transaction that New Manager is permitted to complete shall be borne by the
Company, provided that New Manager obtains either (A) an opinion of Pre Approved
Counsel (defined to mean such law firm as the New Manager may engage without the
consent of WCPT) or another firm approved by WCPT addressed to the Company to
the effect that such transaction “should” not result in a liability
under the tax indemnification in favor of Saracen under Section 8.2A of the
Operating Agreement (such tax opinion is referred to as a “Tax
Opinion”) or (B) a waiver by Saracen of such tax indemnification; |
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(iii) |
if the Whitehall Group decides to sell any of the assets listed on Schedule
C hereto (the “Nomura Saracen Assets”), it may do so
without the consent of WCPT (A) in a §1031 exchange transaction as
described above for Credit Lease Assets, provided that New Manager obtains
either (I) a Tax Opinion or (II) a waiver by Saracen of such tax indemnification
or (B) for OP units issued by a pre-approved list of public companies (the
“Approved Public Companies”), provided that such OP units may
have “lock-up” restrictions prohibiting their transfer for
6 months or less and will, after such “lock-up”, be convertible
for or exchangeable into registered common stock or common stock entitled to
registration rights reasonably deemed acceptable by New Manager (units issued by
such companies and having such terms are referred to as “Qualified OP
Units”); |
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(iv) |
if the Whitehall Group decides to sell any of the assets other than the
Non-Nomura Saracen Assets and the Nomura Saracen Assets (the “Other
Assets”), it may do so without the consent of WCPT for (A) cash
consideration or (B) Qualified OP Units so long as the total value of the OP
units received in all such transactions consummated under this clause (iv) is
less than $50 million; and |
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(v) |
if the Whitehall Group decides to cause the Company to be party to a merger,
consolidation or similar business combination, it may do so without the consent
of WCPT for (x) cash consideration or (y) a combination of cash and Qualified OP
Units with any of the Approved Public Companies so long as the total value of
the OP units received in such a transaction consummated pursuant to this clause
(v) plus the total value of the OP units received in a transaction consummated
pursuant to the preceding clause (iv) is less than $50 million (a
transaction in this clause (v), an “Extraordinary
Transaction”). |
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The foregoing restrictions in clauses (ii) through (v) are referred to herein as
the “Sales Parameters”. In no event may the Company sell the
Company’s assets to any affiliate of the Whitehall Group without the
consent of WCPT other than any of the Recently Acquired Assets (as described in
Section 4 below). If a Tax Opinion is to be obtained by New Manager pursuant to
clauses (ii) or (iii) above, New Manager shall deliver to WCPT a copy of a draft
of such Tax Opinion at least 5 Business Days prior to the closing of such sale
(but such opinion shall not be subject to WCPT’s review or
approval). |
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(b) In connection with an Extraordinary Transaction described in
Section 3(v) (including a sale of all or substantially all of the Company Assets
in a single transaction), the Whitehall Group agrees that it will not execute a
confidentiality agreement without WCPT’s consent (such consent will not
be unreasonably withheld, conditioned or delayed and, in any event, such consent
shall be deemed given if it is not granted or denied within 3 business days of
delivery by the Whitehall Group of written notice thereof and copy of such
agreement). The parties agree that it will not be considered unreasonable for
WRP to request a “standstill” provision in such confidentiality
agreement in appropriate circumstances. |
| 4. |
Recently Acquired Assets. The Whitehall Group will cause the
Company to sell to an entity affiliated with the Whitehall Group the Recently
Acquired Assets for a purchase price equal to the Company’s all-in
acquisition cost of such Recently Acquired Asset plus a return on the invested
equity equal to LIBOR plus 400 basis points from the date of acquisition. The
foregoing obligation of the Whitehall Group is subject to the final approval of
the investment committee of each applicable Whitehall fund. |
| 5. |
Employees. (a) As of the Effective Date, all employees of WCPT
will be terminated and hired by New Manager on substantially the same terms
(i.e. salary and benefits) as provided by WCPT. New Manager will obtain
severance waivers from each such employee. New Manager will not assume all
liabilities but not for claims that relate to or arise from the period prior to
the Effective Date, including contractual or other claims arising from illegal
or tortious actions taken (or failed to be taken) or allegedly taken (or failed
to be taken) by WCPT, WRP or the agents or employees of either of them or as a
result of breach of contract by WCPT. Each of the employee’s time of
service with WCPT shall be counted towards any qualifying periods under any
benefit programs adopted by New Manager, and each employee will be either
compensated by the Company for any unused accrued vacation days not used or
permitted to use such accrued vacation days prior to the Effective Date, in each
case in accordance with the Company’s current policies. |
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(b) New Manager will allow Xxxxxxx Xxxxxxx to retain a part-time
position at WRP (for which WRP shall separately compensate Xx. Xxxxxxx),
provided that such responsibilities do not interfere with Xx. Xxxxxxx’x
responsibilities to New Manager (it being understood that any obligation
undertaken by Xx. Xxxxxxx to attend periodic meetings of the board of directors
of WRP will not be deemed to interfere with his responsibilities to New
Manager). In the event Xx. Xxxxxxx is unable to attend a meeting of the board of
directors of WRP for the purpose of discussing the Company’s business, New
Manager will send another senior employee of New Manager to attend such meeting
in lieu of Xx. Xxxxxxx, provided that New Manager will not be responsible in the
event such person cannot attend such meetings because of any circumstances that
are beyond New Manager’s control. |
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(c) Except as permitted in this Section 2, WCPT and/or WRP will not
be permitted to employ or solicit the employment or consulting services of any
individual employed by New Manager, and New Manager and the Whitehall Group will
not be permitted to employ or solicit the employment or consulting services of
any individual employed by WRP, except after the expiration of 6 months
following the termination for any reason of such individual’s employment by
WCPT or New Manager or WRP (as the case may be, provided that such individual
was not solicited by WRP, WCPT or New Manager (as the case may be) during such
individual’s employment). The provisions of this Section 5(c) will
terminate on January 1, 2007. |
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(d) Xxxxx Xxxxxxxx will remain an employee of WRP but will work 50%
of his time for New Manager and 50% of his time for WRP, and each of them will
share the cost of his compensation and benefits, on a 50/50 basis; provided that
New Manager will have the right to terminate his services to it upon 60 days’
prior notice to WRP. New Manager and WRP will determine a schedule that will
permit Xx. Xxxxxxxx to be available 2 days per week in any of New Manager’s
offices. |
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(e) The Company will pay the remaining balance of the Administration
Fee for the calendar year 2000. The Company will be responsible for the payment
of all bonuses for the calendar year 2000 in the amounts agreed by WCPT and the
Whitehall Group, to be allocated among the existing employees as determined by New
Manager in its sole discretion, subject to contractual commitments. |
| 6. |
Existing Advances by WRP. As of the date hereof, the Company
has outstanding unsecured advances made by WRP (the “WRP Advances”).
The WRP Advances will be repaid on December 31, 2000. |
| 7. |
Distributions. Except for the proceeds of assets sold in
§1031 transactions as described in Sections 1 and 3 above, New Manager will
cause the Company to
distribute all Available Cash derived from Capital Proceeds (as defined in the
Operating Agreement) within 45 days of such event; provided that the amounts
distributed will be net of reserves withheld for (1) working capital in
accordance with Section 3.4.A.(g) of the Operating Agreement; (2) potential
claims from a purchaser for breach of representations and warranties and any
other liabilities under a purchase and sale agreement (as such reserves or
potential liabilities are determined in the Whitehall Group’s reasonable
discretion) after the sale of such asset (provided that no such reserve shall
exceed 5% of the purchase price or be withheld for more than 18 months following
the closing of such sale, even though the dollar limit on and duration of the
Company’s (or Subsidiary’s) liability under any sales agreement may
exceed such amounts if New Manager and the Whitehall Group so determine); and
(3) any debt of the Company or any of its Subsidiaries that matures within 120
days after the sale of such asset. |
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WCPT will be solely responsible for monitoring and maintaining compliance with
its REIT qualification requirements and will notify New Manager, no later than
30 days prior to the relevant distribution date, of the amount of net taxable
income distributions WCPT will be required to receive in order to remain
qualified as a REIT (with a computation showing the basis for such amount) and
New Manager will, subject to the terms of the loan documentation to which the
Company or its Subsidiaries are a party, cause the Company to distribute cash to
satisfy such distribution requirement. In the event the Company is required to
distribute net taxable income realized in the last 15 days of a calendar year
pursuant to the terms of the preceding sentence, the New Manager will cause the
Company to distribute cash to satisfy such distribution requirement by January
31 of the following calendar year. Notwithstanding the foregoing, no
distributions will be made to the extent doing so would violate any loan
documents to which the Company or its Subsidiaries are bound. Any liability of
New Manager for wrongful or illegal distributions (e.g., because the Company was
or became insolvent upon the distribution or because the Company did not
adequately reserve for liabilities) will be borne by the Whitehall Group and
WCPT pro rata in accordance with their relative Percentage Interests.
Notwithstanding the foregoing, Saracen shall not be relieved of any liability it
would have to return such distributions that Saracen would otherwise be required
to return in accordance with the Limited Liability Company Act of the State of
Delaware. |
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The definitive agreement will include the mechanism for WCPT’s notification
to New Manager of the amount of net taxable income distributions to be made
pursuant to the foregoing. |
| 8. |
Revisions to the Promote. Under Section 7.1(q) of the
Operating Agreement, WCPT is required to distribute 50% of the distributions
received by it to certain designated employees of WCPT (the “First
Employee Promote”) in respect of distributions received pursuant to
Sections 7.1(c)(iii)(y), 7.1(c)(iv)(y), 7.1(f)(iii)(y) and 7.1(f)(iv)(y) of the
Operating Agreement (the “Old Money Promote”) and 55% of the
distributions received by it to certain designated employees of WCPT (the
“Second Employee Promote”) in respect of distributions
received 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)
of the Operating Agreement (the “New Money Promote”). After the
Effective Date, the foregoing amounts will be distributed as
follows: |
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(a) |
WRP will retain 50% of the Old Money Promote and 45% of the New Money Promote; |
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(b) |
With respect to the First Employee Promote, 15% of such amount (i.e. 7.5% of the
total Old Money Promote) will be retained by designees of WRP; |
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(c) |
With respect to the Second Employee Promote, 15% of such amount (i.e. 8.25% of
the total New Money Promote) will be retained by designees of WRP; |
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(d) |
The remaining First Employee Promote (i.e. 42.5% of the Old Money Promote) will
be allocated to employees of New Manager or to New Manager itself, in each case
as determined in whole or in part, by the Whitehall Group in its sole and
absolute discretion; and |
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(e) |
The remaining Second Employee Promote (i.e. 46.75% of the New Money Promote)
will be allocated to employees of New Manager or to New Manager itself, in each
case as determined in whole or in part, by the Whitehall Group in its sole and
absolute discretion. |
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In the event that the Company’s loan documents are replaced, waived or
modified so as to permit a transfer of the remaining First Employee Promote and
the remaining Second Employee Promote to New Manager, then WCPT shall effectuate
such transfer and will execute, acknowledge and deliver any instruments or
documents necessary to evidence the transfer of such portion of the First
Employee Promote and the Second Employee Promote as specified above. |
| 9. |
Capital Calls. (a) The Whitehall Group and WCPT will remain
responsible for funding their remaining Capital Commitment (it being agreed that
the current deadline of December 31, 2000 for capital calls will be extended
until December 31, 2001 (the “Deadline”) and New Manager shall
have the right without any further approval to make capital calls for such
amounts). The Deemed Value Per Membership Unit as of the date hereof will be $18
less the amount equal to the quotient of the amount of any Capital
Proceeds distributed prior to the Deadline divided by the number of outstanding
common membership units at the time of such distribution (it being agreed that
any distributions to WCPT or the Whitehall Group resulting from the Whitehall
Group’s purchase of any Recently Acquired Asset will not reduce the then
Deemed Value Per Membership Unit, and will increase the Capital Commitments of
each party so that such distributed amount is available for capital calls made
prior to the Deadline). Amounts to be funded by the Whitehall Group will be
allocated among the members of the Whitehall Group as they determine. The
outstanding Capital Commitments of the Whitehall Group and WCPT will be
increased by the amount of any distributions they receive in connection with any
sale of the Recently Acquired Assets to an entity affiliated with the Whitehall
Group (as set forth in Section 4). |
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(b) After the Capital Commitments are fully funded or expire, the
Whitehall Group and WCPT will at the request of New Manager fund or cause to be
funded on a
“revolving” basis up to $10 million for Necessary Expenditures (i.e.
amounts funded under this provision may be returned and redrawn again later).
Such amounts will be funded
60% by Whitehall and 40% by WCPT and will be callable prior to December 31,
2003. Fundings of the $10 million for Necessary Expenditures will be contributed
as either debt or preferred equity and will accrue interest or dividends at the
rate of LIBOR plus 500 basis points per annum. Such debt or preferred equity
will be (A) senior in priority to the Membership Units and will be paid prior to
any distributions made on the account of the Membership Units and (B) junior in
priority to the Series A Preferred Membership Units and any payments made in
respect of the such debt or preferred equity will be subordinate to any payments
due in respect of the Series A Preferred Membership Units. |
| 10. |
Buy-Sell. (a) In the event WCPT’s approval is sought
pursuant to Section 1(b)(i) above and is denied, the Whitehall Group will have
the right to exercise a buy-sell with respect to Pointview such that either WCPT
or the Whitehall Group will purchase Pointview pursuant to the following
terms: |
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(i) |
The Whitehall Group may trigger a Pointview Buy-Sell by delivering to WCPT a
notice (the “Pointview Buy-Sell Notice”) that specifies the
price the Whitehall Group is willing (1) to buy Pointview from the Company or
(2) to cause the Company to sell Pointview to WCPT. Such Pointview Buy-Sell
Notice shall contain both an irrevocable offer by the Whitehall Group to buy
Pointview for a price (the “Pointview Offer Price”) equal to
the price specified in the Pointview Buy-Sell Notice (the “Pointview
Offer to Buy”) and an offer to cause the Company to sell Pointview to
WCPT at the Offer Price (the “Pointview Offer to Sell”). Within
45 days after receipt of a Pointview Buy-Sell Notice, WCPT shall deliver to the
Whitehall Group an irrevocable binding notice (the “Pointview Election
Notice”) specifying whether it elects to accept the Whitehall
Group’s Pointview Offer to Buy or Pointview Offer to Sell. If within such
45-day period, WCPT shall not have delivered an Election Notice, then WCPT shall
be conclusively deemed to have irrevocably accepted the Whitehall Group’s
Pointview Offer to Buy. |
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(ii) |
If WCPT accepts (or is deemed to have accepted) the Whitehall Group’s Offer
to Buy, the Whitehall Group (or its designee) will make a deposit to the Company
in the amount equal to 10% of the Pointview Offer Price, which deposit shall be
non-refundable except in the event of a default by the Company or WCPT. If WCPT
accepts the Whitehall Group’s Pointview Offer to Sell, WCPT will make a
deposit to the Company in the amount equal to 10% of the Pointview Offer Price,
which deposit shall be non-refundable except in the event of a default by the
Company or the Whitehall Group. If WCPT elects to buy Pointview it may designate
another entity to buy Pointview. |
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(iii) |
Closing of the Pointview Buy-Sell will occur within 90 (or if the Offer Price
exceeds $25 million, 180) days after the Pointview Election. |
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Notice is delivered or an election is deemed made, with time being of the
essence. In the event the Company (or WCPT, in the event the Pointview Offer to
Buy is accepted, or the Whitehall Group, in the event the Pointview Offer to Sell is
accepted) defaults in its obligation to sell (or to cause the Company to sell)
Pointview, the non-defaulting party will be entitled to the return of the
deposit or to seek specific performance. If the party obligated to buy (the
“Buying Party”) Pointview defaults in its obligation, the
non-defaulting party (WCPT, in the event the Pointview Offer to Buy is accepted,
or the Whitehall Group, in the event the Pointview Offer to Sell is accepted)
will be entitled, at its election, to retain the deposit for the Company’s
account as liquidated damages (but the defaulting party shall not share in the
same) or apply the deposit towards the Pointview Offer Price and complete the
purchase of Pointview for the non-defaulting party’s account. In the event
the Whitehall Group defaults in its obligation either to cause the Company to
sell Pointview (if the Pointview Offer to Sell is accepted) or buy Pointview (if
the Pointview Offer to Buy is accepted), it will lose all further right to
trigger a buy-sell with respect to Pointview and WCPT will have the right to
exercise all such rights granted to the Whitehall Group under this Section
10(a)(i) (and in such event the Whitehall Group will have the same rights as
WCPT hereunder). |
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(iv) |
In connection with the foregoing purchase and sale, no representations will be
made by the Company. The following costs and expenses will be allocated as
follows: (i) the Company will be responsible for its own attorneys’ fees
and expenses and the Buying Party will be responsible for its own
attorneys’ fees and expenses; and (ii) the Company will be responsible for
the payment of any transfer taxes in connection with the sale of Pointview and
(iii) the Company will bear any consent or similar fees or expenses. |
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(v) |
In the event WCPT or its controlled affiliate acquires Pointview pursuant to the buy-sell,
New Manager will, at the request of WCPT or such controlled affiliate, agree to act as asset
manager of Pointview for a fee of 1% per annum of the Offer Price and to act as
leasing agent, development manager or construction manager (the “Development
Services”) at such fees set forth on Schedule 1 for a period of
not more than 3 years after the Effective Date (it being understood that New
Manager will not be required to act as an asset manager unless it is also
engaged to provide Development Services and vice versa). |
| |
(b) Except as provided in clause (c) below, each of the Whitehall
Group and WCPT (each a “Triggering Party”) will each have the
right to trigger a “Global Buy-Sell” after December 31,
2003 upon the following terms: |
| |
(i) |
A Triggering Party may trigger a Global Buy-Sell by delivering to the other
party (the “Non-Triggering Party”) a notice (the
“Global Buy-Sell |
| |
Notice”) that specifies the price per membership unit of the Company
(the “Unit Price”) such Triggering Party is willing (1) to pay
for the entire interest of the Non-Triggering Party in the Company (the
“Non-Triggering Party Interest”) or (2) to sell to the
Non-Triggering Party the entire interest of the Triggering Party in the Company
(the “Triggering Party Interest”). Such Global Buy-Sell Notice
shall contain both an irrevocable offer by the Triggering Party to buy the
Non-Triggering Party Interest for a price equal to the product of the Unit Price
and the number of Membership Units owned by the Non-Triggering Party (the
“Global Offer to Buy”) and an offer to sell the Triggering
Party Interest for a price equal to the product of the Unit Price and the number
of Membership Units owned by the Triggering Party (the “Global Offer to
Sell”). Within 30 days after receipt of a Global Buy-Sell Notice, the
Non-Triggering Party shall deliver to the Triggering Party an irrevocable
binding notice (the “Global Election Notice”) specifying
whether it elects to accept the Trigger Party’s Global Offer to Buy or
Global Offer to Sell. If within such 30-day period, the Non-Triggering Party
shall not have delivered a Global Election Notice, then the Non-Triggering Party
shall be conclusively deemed to have accepted the Triggering Party’s Global
Offer to Buy. |
| |
(ii) |
If the Non-Triggering Party accepts (or is deemed to have accepted) the
Triggering Party’s Global Offer to Buy, the Triggering Party will make a
deposit in the amount equal to 10% of the product of (x)
the number of Membership Units owned by the Non-Triggering Party multiplied by
(y) the Unit Price; provided that in the event the Company Value (i.e., the sum
of (I) the product of (A) the total number of outstanding Membership Units
multiplied by (B) the Unit Price, plus (II) all debt and preferred equity of the
Company) is greater than $250 million, the deposit shall be in the amount equal
to 7.5% of the product of (x) the number of Membership Units owned by the
Non-Triggering Party multiplied by (y) the Unit Price. |
| |
If the Non-Triggering Party accepts the Triggering Party’s Global Offer to
Sell, the Non-Triggering Party will make a deposit in the amount equal to 10% of
the product of (x) the number of Membership Units owned by the Triggering Party
multiplied by (y) the Unit Price; provided that in the event the Company Value
(i.e., the sum of (I) the product of (A) the total number of outstanding
Membership Units multiplied by (B) the Unit Price, plus (II) all debt and
preferred equity of the Company) is greater than $250 million, the deposit shall
be in the amount equal to 7.5% of the product of (x) the number of Membership
Units owned by the Triggering Party multiplied by (y) the Unit Price). |
| |
(iii) |
Closing of the Global Buy-Sell will occur within 180 days after the Global
Election Notice is delivered or an election is deemed made, with time being of
the essence after the Global Election Notice is delivered or an
election is deemed made, with time being of the essence. In the event a party
obligated to sell (the “Selling Party”) its interest in the
Company defaults in its obligation, the non-defaulting party will be entitled to
the return of the deposit or to seek specific performance. If the party
obligated to buy (the “Buying Party”) the other party’s
interest in the Company defaults in its obligation, the non-defaulting party
will be entitled to retain the deposit for its own account as liquidated
damages. In addition, the defaulting party will forfeit all further rights to
trigger a Global Buy-Sell and the non-defaulting party will have the right, from
time to time and at any time, to trigger the Global Buy-Sell. |
| |
(iv) |
In connection with the foregoing purchase and sale, the Selling Party will
represent, in addition to customary representations as to due authorization,
execution and delivery and enforceability of the transfer documents only that it
owns the entire Interest being sold and that it is transferring such Interest in
the Company free and clear of all liens and encumbrances. The Selling Party will
not be liable for any claims arising from or in connection with such transferred
interests after the closing date of such purchase and sale (the
“Post-Closing Claims”), arising prior to closing, except for
claims that result from or are on account of tortious actions of the Selling
Party and the Buying Party shall either obtain a release of the Selling Party
from, or indemnify the Selling Party against, the Post-Closing Claims. The
following costs and expenses will be allocated as follows: (i) each party will
be responsible for its own attorneys’ fees and expenses; (ii) the Selling
Party will be responsible for the payment of any transfer taxes in connection
with the sale of such party’s Interest; and (iii) the Buying Party
will bear any consent or similar fees or expenses. |
| |
(v) |
In the event that at the time of the Closing of the Global Buy-Sell the Company
owns Development Assets (which will be defined as any property as to which more
than $1 million of the budgeted tenant improvement, base building or renovation
work remains to be completed), then
the New Manager will, at the request of WCPT or its controlled affiliate
if it is the Buying Party, agree to
act as asset manager for such properties for a fee of 1% per annum of the costs
of such Development Assets and to provide such Development Services at 90% of
the market rates set forth on Schedule 1 for a period of up to 1 year.
The provisions of this clause shall not apply in the event WCPT designates a
third party to be the Buying Partying and such entity is not affiliated with
and controlled by WCPT. |
| |
(c) Notwithstanding the foregoing, in the event that on the date of
the delivery of a Global Buy-Sell notice the Company and its Subsidiaries do not
own any properties the sale of which would trigger the tax indemnification
obligation of the Company in favor of Saracen under Section 8.2A of the
Operating Agreement,
then the foregoing Global Buy-Sell mechanism will apply
mutatis mutandis (on the same basis as for the Pointview property) with respect
to all of the assets of the Company instead of the Triggering Party’s and
Non-Triggering Party’s interest in the Company; provided that the Closing
of such Buy-Sell will occur within 90 (or if the total purchase price of all
the assets (debt plus equity) (the “Total Purchase Price”)
would exceed $250 million, 120 days after the Global Election Notice is
delivered or an election is deemed made, with time being of the essence. The
Global Buy-Sell under this clause (c) will be for all (and not less than all) of
the Company’s Properties. In case of a buy-sell pursuant to this Section
9(c), the Buying Party will be required to make a deposit to the Company in the
amount equal to 5% of the Total Purchase Price. |
| |
(d) In connection with any of the buy-sells triggered pursuant to
this Section 9, neither party will make any representations to the other, except
only for those representations set forth in Section 10(b)(iv). |
| 11. |
New Manager Fee. (a) Initially, New Manager will earn an
annual asset management fee equal to 0.93% per annum of $700 million (the
“Base Value”) (such amount to be reduced 6 months after an
asset is sold by the Allocated Value of such asset and increased by the
acquisition price for any assets (other than Credit Lease Assets) acquired by
the Company (it being understood that such increase shall take effect upon the
acquisition of any asset other than an asset acquired in a §1031
transaction and, with respect to an asset acquired in a §1031 transaction,
shall take effect six months after the acquisition of such asset)), payable
monthly in arrears. Each month, the fee will be equal to 1/12 of 0.93% of the
Base Value as of the date which is 180 days before such month.
This fee will be in exchange for the services rendered by New Manger under the
Operating Agreement, which services will not include construction management and
leasing supervision (“Additional Services”). The Company will
pay New Manager additional fees for Additional Services at 90% of market rates
(with leasing overrides to be scheduled for each market in which the Company
owns assets). As of January 1, 2001, the Administration Fee payable to WRP will
be terminated. The fee payable to New Manager for Credit Lease Assets will be
set forth in the definitive agreements. The Base Value will be increased, with
respect to each Credit Lease Asset acquired by the Company, by an amount equal
to the equity value of such Credit Lease Asset (to be defined as the excess of
the acquisition price of such Credit Lease Asset over the amount of financing
secured by such Credit Lease Asset). In the event the Company acquires one or
more Credit Lease Assets, New Manager will, in its sole discretion, have the
right to commence a bidding process in which each of New Manager and WCPT will
seek a bid from one manager on a list of pre approved third party managers who
will be responsible for all asset management services, tax services and
accounting services (the scope of such services to be reasonably approved by
WCPT and New Manager before the commencement of the bidding process) with
respect to such Credit Lease Assets. After the receipt by the Company of
complying bids in response to such invitations to bid, New Manager will, in its
sole discretion, have the option of managing such Credit Lease Assets for a fee
equal to the more competitive bid submitted in the bidding process or awarding
the management of such Credit Lease Assets to the more competitive bidder. In
the event New Manager elects to award the management of such Credit Lease Assets
to the more competitive bidder, New Manager shall have no further reporting,
tax, accounting, information or other obligations to WRP or WCPT with respect to
such Credit Lease Assets (other than, for so long as the Company owns such
Credit Lease Assets, the consolidation of the financial results of such Credit
Lease Assets in the financial statements of the Company).
|
| |
(b) New Manager will be required to deliver such reports and
financial statements in the same form as currently provided (the
“Reports”) on a monthly basis within 20 days after such
calendar month. In the event New Manager fails to deliver the Reports on or
before the 25th day after a month-end or a quarter-end or the
60th day after a year-end (each such date, a “Reporting
Deadline”), New Manager will be assessed the following penalties: (1)
$10,000 if New Manager fails to deliver the Reports after the Reporting Deadline
for any month-end (other than a quarter-end month and year-end), (2) $100,000 if
the New Manager fails to deliver any Reports necessary for WRP to file its Form
10-Q or Form 10-K after the Reporting Deadline for any quarter-end month or
year-end and such penalty will be increased to $250,000 (instead of $100,000) if
New Manager fails to deliver any Reports on or before the 5th day
after such applicable Reporting Deadline; provided that no penalty shall be
assessed in the event that, with respect to an annual report, the New Manager
delivers such annual report within 60 days after the end of the fiscal year to
which such annual report relates and delivers the monthly Reports for the first
two months of the succeeding fiscal year within 80
days of the beginning of such fiscal year (and in such event all penalties for
January and February shall be refunded). If the New Manager fails to
meet two or more Reporting Deadlines, then WCPT may take over responsibility for
supervising the Company’s financial reporting (which will continue to be
performed by New Manager’s accounting staff), in which event WCPT will be paid an
annual fee of $600,000 (payable in monthly installments of $50,000) in
consideration of supervising such reporting to the Company’s Members. If WCPT
takes over such responsibility, there will be no further penalties assessed on New
Manager for late reports. If New
Manager provides a quarterly report and financial statements to WCPT within 25
days after the end of the calendar quarter, then any penalties for late monthly
reports and financial statements for such quarter shall be refunded and no
penalty shall be assessed in respect of such quarterly report. WCPT will be
responsible for the year-end audit and financial statement reporting for the
year ended December 31, 2000. |
| |
(c) At least 4 calendar days before any penalty would otherwise be
imposed on New Manager pursuant to the foregoing provision, WCPT shall provide
notice to the President and General Counsel of New Manager identifying the
Report that is overdue and that a penalty will be assessed, and no penalties will
be payable until not earlier than the 4 th day after such notice is
provided. |
| |
(d) Upon reasonable request by WCPT, New Manager will make available
to WCPT (and Ernst & Young for its quarterly review of the financial
statements of WRP) financial and other data and personnel of New Manager during reasonable hours,
provided that such requests by WCPT will not impose any significant cost on the
Company and New Manager. In connection with the exercise of any buy/sell, WCPT
will be given access to the Properties to conduct a customary real estate due
diligence investigation and will indemnify and hold harmless the Company and the
Whitehall Group for any loss or harm caused by or arising from such investigation
or inspection. In addition, consistent with past practice, WRP will be provided
with financial information and analyses reasonably requested by WRP for its board meetings. |
| |
(e) WCPT will be provided with a quarterly report showing amounts of
leasing, development and construction fees payable to New Manager or its
affiliates by the Company and the calculations thereof. |
| 12. |
WRP Fees. In consideration of the modifications described
herein, WRP will be paid a one-time fee equal to 0.25% of the gross sales price
for any asset of the Company that is either sold or exchanged. WRP will be paid
a one time acquisition fee (the “New Asset Fee”) equal to 0.6%
of the purchase price of each new asset with respect to which substantially all
of the acquisition, due diligence and underwriting work is performed by employees
of New Manager or New Manager acts as leasing agent, development manager or
asset manager for such asset after the acquisition of such asset, provided that no
New Asset Fee shall be payable in respect of any asset which
the Whitehall Group or its affiliates owned on or before the Effective
Date (the “New Venture Assets”); provided that (1) 50% of the
New Asset Fee for any New Venture Asset will be paid upon closing of the
acquisition and the other 50% will be subordinated to a 15% internal rate of
return on the capital invested in such New Venture Asset, (2) the New Asset Fee
will be payable to WRP only in respect of the first $400 million of New Venture
Assets and only upon the closing of the purchase of such assets,
and (3) in no event will the New Asset Fee exceed $2.4 million in the
aggregate. For clarification, no fees will be paid on the acquisition or sale of
the Recently Acquired Assets or the assets acquired by the Company in any
§1031 exchange transaction or the sale of any replacement assets as a
result of an §1031 exchange transaction. None of the foregoing fees will be
paid by the Company. New Manager will provide WCPT with prompt notice of any
transaction that would give rise to the payment of any New Asset Fee. |
| 13. |
The Warrants. The Whitehall Group will deliver its warrant
certificates to WRP, and the Warrant Agreements, the Registration Rights
Agreement and any other side letter agreement with respect to any rights to
purchase common stock of WRP will be terminated by the applicable parties
thereto. |
| 14. |
Exclusivity Provisions. The Whitehall Group will agree not to
enforce, either individually or on behalf of the Company, any exclusivity
provisions in the Operating Agreement which the Whitehall Group has the
authority to enforce. Subject to the preceding sentence, upon reasonable request
by WRP and/or WCPT and their affiliates, the Whitehall Group will acknowledge
the foregoing covenant to any third party entering into a transaction with WRP
and/or WCPT. |
| 15. |
Leases to be Assumed. New Manager will assume all of the
obligations of WCPT under all space, personal property and equipment leases to
which WCPT is a party to the extent such leases were entered into for the
benefit of the Company. |
| |
(a) |
No party will make any public statements or disclosures with respect to the
transactions contemplated by this MOU without consulting the other; provided
that no such consultation shall be required for statements or disclosures made
in order to comply with any applicable law, rule or regulation. |
| |
(b) |
WRP shall have all exclusive rights to the use of the “Wellsford”
name, and the name of the Company or any Subsidiary thereof will not include
“WRP” or any other derivative of the “Wellsford” name (but
may include “WCPT”). The name “Wellsford” will be removed
from all signage and other materials within 120 days after the Closing Date. |
| |
(c) |
Supplementing the existing provisions of the Operating Agreement, the Company
may, in the sole discretion of the Whitehall Group, retain Xxxxxxx, Xxxxx
& Co. in respect of debt financing transactions,
for fees not greater than 1% of gross proceeds for financings up to $150
million and 0.75% of the gross proceeds for financings in excess of $150
million. |
| |
(c) |
It is currently the intent of the parties to have a simultaneous signing and
closing of the transactions contemplated hereunder. |
This MOU is not
binding on the parties and is subject to the execution and delivery of final
legal documentation acceptable to the parties and their counsel incorporating,
without limitation, the terms set forth in this MOU and other terms satisfactory
to the parties. The parties understand and agree that this MOU does not include
all of the terms and conditions that will be included in the final legal
documentation.
This MOU is
governed by and shall be construed in accordance with the law of the State of
New York applicable to contracts made and performed in that State.
The parties hereto
acknowledge their agreement to the foregoing by signing the spaces provided
below.
| |
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: President |
| |
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: President |
| |
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Vice President |
17
| |
WXI/WWG REALTY, L.L.C.
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Vice President |
| |
W/W GROUP HOLDINGS, L.L.C.
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Vice President |
ANNEX A
The definitions of
Major Decisions and Operational Decisions will be modified as follows (it being
understood and agreed that, in the amended agreement, the vote required to
approve a Major Decision will be the same as the vote required to approve an
Operational Decision):
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 [no change from existing
agreement]; |
| |
(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 [no change from existing
agreement]; |
| |
(c)
making a capital call in excess of the remaining Capital Commitment except
as provided in the provisions of agreements that will reflect the Memorandum of
Understanding [changed from existing agreement]; |
| |
(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; [no change from existing agreement] |
| |
(e)
extending the term of the Company or any of its Subsidiaries beyond
December 31, 2045; [no change from existing agreement]; |
| |
(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) [no change from existing
agreement]; |
| |
(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)[;provided that,
in connection with a sale, the Whitehall Group may establish reserves in
accordance with the Memorandum of Understanding]; |
| |
(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 [other than any such changes that are required by GAAP as
determined by E&Y in its reasonable opinion] 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
[or by the provisions of the agreement that will reflect the Memorandum of
Understanding], 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), except
for immaterial amounts in the ordinary course of business [and except as
contemplated by the provisions of the agreement that will reflect the
Memorandum of Understanding]; |
| |
(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;[no change from existing agreement] |
| |
(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;
[provided that WCPT’s consent shall not be required if such
change in zoning results in a higher floor area ratio for such Property or if
the change in zoning is part of an Approved Business Plan or if any easement is
required to implement the Approved Business Plan]; |
| |
(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 [provided, that, without the consent of WCPT, (i) the
Company may admit one or more “mezzanine lenders” as New
Members of the Company and issue one or more new classes of Membership
Units to such New Member, as long as the terms of such Membership Units
provide the holder thereof prior to a default with only those
voting/approval rights as are customarily provided to debt lenders of
indebtedness, (ii) the Company may admit one or more Affiliates of the
Whitehall
Group as New Members and (iii) the Company may admit one or more employees of
New Manager as New Members of the Company and issue one or more new classes of
Membership Units to such New Member, so long as (x) the terms of such
Membership Units do not provide the holder thereof voting rights and
(y) the issue price of such Membership Units equals or exceeds the
Deemed Value Per Membership Unit (except that Whitehall may transfer a
portion of its Membership Units to such employees at any price it deems
appropriate); |
| |
(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
[no change from existing agreement]; |
| |
(q)
[provisions regarding Marketing Plan will be deleted]; |
| |
(s)
[Except as provided in the provisions of the agreement reflecting the
Memorandum of Understanding and] except 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 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 [and wholly owned subsidiaries]). |
The
“Operational Decisions” are:
| |
(a)
(i) terminating any lease covering premises greater than 25,000 square
feet, (ii) executing or modifying any lease covering premises greater than
25,000 square feet if the Absolute Net Rent is less than 90% of the amount set
forth in the Leasing Plan; provided, however, that the New 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. [The term “Absolute Net Rent” shall mean, for any
lease, the initial full service gross rent per square foot on the effective date
of such lease, minus (i) an amount equal to the initial operating
expenses per square foot, minus (ii) an amount per square foot equal
to (A) the present value of all free rent, commissions, tenant improvements
and other deal-related costs as of the effective date of such lease per square
foot at a discount rate of 11% per annum
amortized over (B) number of years in the term of the lease at an interest
rate of 11% per annum, plus (iv) an amount per square foot equal to
(I) the sum of the present value of each rent increase per square foot
during the term of such lease at a discount rate of 11% per annum amortized over
(II) the number of years in the term of the lease at an interest rate of
11% per annum]; |
| |
(b)
[Insurance Program will not require approval, but the Whitehall Group
will use reasonable efforts to obtain a competitive insurance program for the
Properties and will agree that the insurance costs to the Company will
be fairly allocated among these Properties and other properties covered
by the policy]; |
| |
(c)
retaining legal counsel for the Company (or its Subsidiaries) [other than
counsel specified on a pre-agreed list*] in connection with any
major financing or other capital event (including a merger, combination or
public offering of the Company); provided that local counsel may be retained
without WCPT’s consent; |
| |
(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 $500,000 [cross reference
WCPT’s right to consent for environmental liabilities in excess of $250,000
for any Saracen Exchange Asset]; |
| |
(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); provided that WCPT’s consent shall not be
required for settling the Pointview litigation claim if the amount of such
settlement exceeds $1.5 million in excess of litigation and arbitrations
costs; |
| |
(f)
unless required pursuant to the terms of any ground lease or mortgage
encumbering any Property, deciding to use the proceeds of any casualty or
condemnation to repair or rebuild in the case of material damage that affects
more than 10% of the square footage of any improvements on such Property, or any
part thereof, arising out of a casualty or condemnation (it being understood
that New Manager may, without WCPT’s consent, choose not to restore); |
| |
(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 |
____________________
| * |
This list will include Xxxxxxxx & Xxxxxxxx; Robinson, Silverman, Xxxxxx,
Aronsohn & Xxxxxx LLP; Arent Fox Xxxxxxx Xxxxxxx & Xxxx; and Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx as well as local counsel previously used
by the Company or reasonably acceptable to WCPT. |
| |
expenditure
or incurrence of such obligation either (1) was necessitated by the
occurrence of an event which was not in the control of the Manager or
(2) relates to a non-discretionary expenditure (e.g., taxes, utilities and
insurance), (ii) such expenditure or obligation is within a 5% variance
from the line item in question set forth in such Approved Budget (taking into
account all other expenditures in excess of such line item during the same
Budget Year not previously approved by the Management Committee) and the amount
of all variances for such Budget Year (including the pending variance) would not
exceed 5% of the total expenditures in the Approved Budget and (iii) such
expenditure or obligation would not cause the applicable Property Loan, if any,
to be in default [no change from existing agreement other than to implement
the delegation of authority memo]; |
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(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 [no change from
existing agreement]; |
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(i)
[Except for a master environmental services agreement with Archon
Group, L.P., New Manager will not be permitted to enter into any property
management, leasing, development or similar agreements with any affiliate of the
Whitehall Group without WCPT’s consent]. |
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(j)
Replacing any third party leasing, development and property management
agreements in effect as of the date hereof or subsequent replacement with
another third party if the terms
of any such new agreement are less
favorable to the Company than the existing terms of any such agreement. |
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[The
last sentence of Section 3.4 of the Operating Agreement shall be deleted.] |
