[Draft of 1/20/98]
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXXX XXXXXX WELLSFORD, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT of
XXXXXXX XXXXXX WELLSFORD, L.L.C. (the "Company"), dated as of the 20th day
of January, 1998 (the "Agreement") is entered into by and between WELLSFORD
CRC HOLDING CORP. ("Wellsford"), a Maryland corporation which is a wholly-
owned subsidiary of Wellsford Real Properties, Inc. ("WRP"), and SX
Advisors, LLC, a Delaware limited liability company ("Xxxxxxx"; Xxxxxxx
together with Wellsford being collectively referred to hereinafter as the
"Members" and individually as a "Member").
W I T N E S S E T H:
WHEREAS, the Members have formed a limited
liability company pursuant to the Delaware Limited Liability Company Law,
as amended from time to time (the "Delaware Act"), by filing on the date
hereof the Certificate of Formation of the Company with the office of the
Secretary of State of the State of Delaware; and
WHEREAS, the undersigned desire to provide for the
regulation and establishment of the affairs of the Company, the conduct of
its business and the relations among them as Members of the Company.
NOW, THEREFORE, in consideration of the foregoing,
and of the mutual promises herein contained, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE XXII
ORGANIZATION, NAME, PURPOSES, POWERS AND TERM
1.22.1 Organization, Name and Office.
1. The Company shall maintain, preserve, and keep in full
force and effect its limited liability company existence and all rights,
franchises, licenses and permits necessary to the proper conduct of its
business, and the ownership, lease, or operation of its properties which,
if not so maintained, could reasonably be expected to have a material
adverse effect on the Company, and to take all action which may be
reasonably required to obtain, preserve, renew and extend all material
licenses, permits, authorizations, trade names, trademarks, service names,
service marks, copyrights and patents which are necessary for the
continuance of the operation of any such property by the Company.
2. The Managing Member (as hereinafter defined) shall cause
the Company to be qualified, formed or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company transacts business in which such qualification, formation or
registration is required or desirable. The Managing Member, acting as an
authorized person within the meaning of the Delaware Act, shall execute,
deliver and file any certificates (and any amendments and/or restatements
thereof) necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business.
3. The name of the Company shall be Xxxxxxx Xxxxxx
Wellsford, L.L.C., and the principal office of the Company shall be
located at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
place as the Members may agree upon from time to time.
1.22.2 Purposes. The purpose of the Company is to (a) provide
consulting services to the real estate industry with respect to the
operation, management, finance and refinance, marketing and rehabilitation
of real estate and interests in real estate, and, acting singly or
together with others, directly or indirectly, as principal, partner,
shareholder or otherwise, to purchase, own, invest in, develop, operate,
manage, lease, exchange, mortgage or otherwise generally deal in and with
real estate, real property and interests therein, either improved or
unimproved, in accordance with all applicable laws, (b) invest in,
participate, directly or indirectly, as a general partner or managing
member in, and manage directly, or through its subsidiaries or affiliates,
entities formed for the purpose of acquiring distressed, discount or other
secured mortgage debt, including without limitation, entities formed
pursuant to the Clairborne Investors Mortgage Investment Program (the
"Clairborne Program") and (c) engage in any lawful activity related or
incidental to one or more of the foregoing activities.
1.22.3 Powers of the Company. 1. The Company shall possess
and may exercise all powers and privileges authorized to be exercised by a
limited liability company, including all those necessary or convenient to
the conduct, promotion or attainment of its business, purposes or
activities, to the fullest extent provided in the Delaware Act. Subject
to Section 4.1(d) hereof, the Managing Member may, or may authorize any
person, to enter into and perform any document on behalf of the Company.
2. Notwithstanding the foregoing, the Company shall not do
business in any jurisdiction that would jeopardize the limitation on
liability afforded to the Members or agents of the Company under the
Delaware Act or this Agreement.
1.22.4 Term. The term of the Company shall commence on the
date hereof and shall continue until December 31, 2007, unless sooner
dissolved or terminated as hereinafter provided.
ARTICLE XXIII
CAPITAL CONTRIBUTIONS
2.23.1 Capital Contributions. Wellsford and Xxxxxxx have
contributed capital to the Company in cash amounts of $490 and $510,
respectively. In addition, Wellsford has committed to contribute to the
Company from time to time amounts up to an aggregate of $15,000,000 in
cash for investment in connection with the Clairborne Program, any such
contributions to be made in accordance with provisions of Article II of
the Program Agreement for the Clairborne Program, dated as of December 10,
1997 (the "Program Agreement"), between The Prudential Investment
Corporation, a New Jersey Corporation ("PIC") and Old Xxxxxxx (as
hereinafter defined). Wellsford may, in its sole discretion, elect to
contribute additional capital to the Company in connection with the
Company's investments in the Ventures (as hereinafter defined) under
Clairborne Program. Each such capital contributions by Wellsford and
Xxxxxxx shall hereinafter be referred to as "Capital Contributions".
2.23.2 Additional Capital Contributions. Subject to Section
2.1 hereof and to the extent required by Section 4.1(e) hereof, no Member
shall be required to contribute additional capital to the Company unless
with the consent of all Members.
2.23.3 Capital Account.
1. A capital account shall be maintained for each Member.
The initial capital account of each Member shall be equal to the initial
Capital Contribution of such Member. Each Member's capital account shall
be increased by the cash or net agreed value of each subsequent Capital
Contribution made by or on behalf of such Member and allocations to such
Member of Net Profit (as hereinafter defined). Each Member's capital
account shall be decreased by the cash or net value of each distribution
made to the Member by the Company and allocations to such Member of Net
Loss (as hereinafter defined). The capital accounts shall be further
maintained and adjusted in accordance with the Treasury Regulations
promulgated pursuant to Section 704 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. No interest shall be paid on the Members' capital
accounts and no Member shall withdraw any part of such Member's capital
account or shall be entitled to receive any distribution from this Company
except as may be specifically provided in this Agreement. No Member with
a negative balance in its capital account shall have any obligation to the
Company or the other Member to restore said negative balance to zero.
2.23.4 Interests. The "Interest" of a Member in the Company
shall mean the rights or interest of such Member in the Company. The
"Member Interest" of a Member shall mean the percentage set forth opposite
such Member's name on Schedule A attached hereto.
ARTICLE XXIV
DISTRIBUTIONS AND ALLOCATIONS
3.24.1 Capital Return and Distribution of Cash Flow. (1) The
following terms shall have the following meanings when used herein:
"Adjusted Wellsford Base Amount" means, for each Distribution
Period, an amount equal to the Wellsford Base Amount reduced by the sum of
all Old Wellsford Share and all New Wellsford Share distributed to
Wellsford for all prior Distribution Periods.
"Aggregate Capital Contribution" means an amount equal to the sum
of the Wellsford Unreturned Capital Contributions and the amount
contributed by Wellsford to the Company to purchase any interests in the
Venture(s) under the Clairborne Program in connection with a buy/sell
thereunder.
"Cash Receipts" means all cash funds received by the Company other
than (i) Capital Contributions, (ii) loans by Members, and (iii) Post-
Buy/Sell Net Cash Flow.
"Distribution Period" means each fiscal year, or such other time
period as the Managing Member may determine in accordance with Section
3.1(d) hereof.
"Xxxxxxx Share" means, for each Distribution Period, an amount
equal to 51% of any excess of the Net Cash Flow for such Distribution
Period over distributions made by the Company with respect to the
Wellsford Priority Return for such Distribution Period.
"Net Cash Flow" means, for each Distribution Period, (A) the sum
of (i) Cash Receipts and (ii) any amount released from its reserves, less
(B) the sum of amounts paid or funded during such Distribution Period with
respect to the following items: (i) current charges and expenses
(including operating expenses and payroll), (ii) debt service, interest
and other payments with respect to any loan or obligation extended to the
Company, (iii) expenditures for acquisition of property and for capital
improvements or replacements not financed through Capital Contributions,
borrowings, or reserves previously set aside by the Company for such
purposes, (iv) Wellsford First Level Preferred Return, (v) Wellsford First
Level Carry, (vi) Wellsford Second Level Carry, (vii) Wellsford Unreturned
Capital Contributions and (viii) amounts contributed to reasonable
reserves for working capital, contingencies, capital improvements and
replacements.
"New Wellsford Share" means, for each Distribution Period, an
amount equal to 49% of any excess of the Net Cash Flow for such
Distribution Period over distributions made by the Company with respect to
the Wellsford Priority Return for such Distribution Period.
"Old Xxxxxxx" means Xxxxxxx Realty Consultants.
"Old Xxxxxxx Net Cash Flow" means, for each Distribution Period,
(A) the sum of (i) all cash funds received by Old Xxxxxxx (other than
capital contributions and loans by partners of Old Xxxxxxx) and (ii) any
amounts released from its reserves, less (B) the sum of amounts paid or
funded during such Distribution Period with respect to the following
items: (i) current charges and expenses (including operating expenses and
payroll), (ii) debt service, interest and other payments with respect to
any loan or obligation extended to Old Xxxxxxx, (iii) expenditures for
acquisition of property and for capital improvements or replacements not
financed through capital contributions, borrowings, or reserves previously
set aside by Old Xxxxxxx for such purposes and (iv) amounts contributed to
reasonable reserves for working capital, contingencies, capital
improvements and replacements.
"Old Wellsford Share" means for each Distribution Period, an
amount equal to 49% of any excess of the Old Xxxxxxx Net Cash Flow over
distributions made by Old Xxxxxxx with respect to the Wellsford Priority
Return during such Distribution Period.
"Post-Buy/Sell Net Cash Flow" means, as to any Venture, for each
Distribution Period after the Company has purchased the interest of the
Prudential Investor in such Venture, all cash funds received by the
Company from such Venture.
"Prudential Investor" means any account managed or advised by
Prudential Real Estate Investors ("PREI"), a division of PIC, or any of
their respective successors and assigns.
"Venture" means each limited liability company or limited
partnership, as the case may be, formed by the Company or a subsidiary
thereof and a Prudential Investor to acquire distressed, discount or other
secured mortgage debt under the Clairborne Program.
"Venture Agreement" means the form of limited liability company
agreement attached as Exhibit C to the Program Agreement and which
provides the model for the operating agreement of each Venture between a
Prudential Investor and the Company or a subsidiary thereof.
"Wellsford Base Amount" means an amount equal to $2 million.
"Wellsford First Level Carry" means an amount equal to one-half of
the amount received by the Company or any of its subsidiaries as a
distribution of the First Level Carried Percentage (as defined in the
Venture Agreement) from each Venture during each Distribution Period.
"Wellsford First Level Preferred Return" means an amount equal to
the First Level Preferred Return (as defined in the Venture Agreement),
received by the Company or any of its subsidiaries from each Venture
during each Distribution Period.
"Wellsford Post Buy/Sell Share" means the distribution of 90% of
the Post Buy/Sell Net Cash Flow from a Venture distributable to Wellsford
pursuant to Section 3.1(e)(iv) below.
"Wellsford Priority Return" means, for each Distribution Period,
an amount equal to 15% per annum times the outstanding balance of the
Adjusted Wellsford Base Amount on the first day of such Distribution
Period.
"Wellsford Second Level Carry" means an amount equal to one-third
of the amount received by the Company or any of its subsidiaries as a
distribution of the Second Level Carried Percentage (as defined in the
Venture Agreement) from each Venture during each Distribution Period.
"Wellsford Unreturned Capital Contributions" means the Unreturned
Capital Contributions (as defined in the Venture Agreement) contributed
indirectly to each Venture by Wellsford through the Company.
(2) Capital Return and Wellsford Distributions. The
Wellsford First Level Preferred Return, the Wellsford Unreturned Capital
Contributions, the Wellsford First Level Carry and the Wellsford Second
Level Carry shall be distributed by the Company to Wellsford not later
than three (3) business days after receipt of such distributions by the
Company.
(3) Distributions. Net Cash Flow shall be distributed
annually, not later than 45 days after the end of each fiscal year as
follows:
(i) Until Wellsford shall have received by virtue of the
receipt by it of distributions of the New Wellsford Share and the Old
Wellsford Share an aggregate amount equal to the Wellsford Base Amount,
Net Cash Flow shall be distributed as follows:
(A) First, to Wellsford, an amount which when added to
distributions of Old Xxxxxxx Net Cash Flow received by Wellsford
from Old Xxxxxxx during such period equals the Wellsford Priority
Return payable to Wellsford for the current Distribution Period,
plus any accrued and unpaid Wellsford Priority Return; and
(B) Second, to each of Wellsford and Xxxxxxx, the New
Wellsford Share and the Xxxxxxx Share, respectively.
(ii) Thereafter, Net Cash Flow shall be distributed to
each of Wellsford and Xxxxxxx in accordance with their respective Member
Interests in the Company.
(iii) Upon termination and dissolution of the Company,
the assets of the Company shall be used, applied and distributed as
provided in Section 5.4 of this Agreement.
(4) Interim Distributions. In addition to the annual
distributions of Net Cash Flow made under 3.1(c) hereof, the Managing
Member (as hereinafter defined) may make interim distributions of Net Cash
Flow during the fiscal year, to the extent the Company has available cash,
provided, however, that all such interim distributions of Net Cash Flow
shall be made in the order of priority as provided in Section 3.1(c)
hereof and the Managing Member shall act prudently with respect to its
decisions as to the amount and frequency of such distributions. The
Members agree that it shall be deemed prudent to distribute, on a
quarterly basis, amounts sufficient to pay the anticipated tax obligations
of the Members attributable to their Interests.
(5) Special Provisions Regarding Distributions after a
Buy/Sell under the Clairborne Program. Notwithstanding the foregoing, in
the event the Company (under the direction of Wellsford) purchases the
interests of the Investor (as defined in the Venture Agreement) in any
Venture under the Clairborne Program as set forth in Section 4.1(e)
hereof, from and after the date of such purchase, the Post-Buy/Sell Net
Cash Flow from any such Venture shall be distributed not later than twenty
(20) days after the end of each fiscal quarter as follows:
((5).1 First, to Wellsford, an amount equal to the First
Level Preferred Return (as defined in the Venture Agreement) distributed
by each such applicable Venture to the Company.
(ii) Second, to Wellsford, an amount equal to the
Aggregate Capital Contribution with respect to such Venture.
(iii) Third, to Wellsford, an amount which, when added
to the sum of the amounts distributed under clauses (i) and (ii)
immediately above, would result in Wellsford receiving a sixteen percent
(16%) internal rate of return in respect of the Aggregate Capital
Contribution of the Company in such Venture.
(iv) After such time as Wellsford shall have received
out of distributions made by the applicable Venture an amount equal to the
sum of the amounts set forth in clauses (i), (ii) and (iii) immediately
above, the Post-Buy/Sell Net Cash Flow from such Venture shall be
distributed 90% to Wellsford (such 90% interest to be referred to herein
as the "Wellsford Post Buy/Sell Share") and the remaining 10% shall be
deemed Cash Receipts, and distributed in accordance with the priorities
set forth in Section 3.1(c) of this Agreement.
(f) In the event of a buy/sell of the interests of the
Prudential Investor in any Venture , the Members agree to take all action
necessary to increase the Fixed Expense Reimbursement (as defined in the
Venture Agreement) to be received by the Company or the respective
subsidiary which shall act as the managing member or partner for each such
Venture, to one-half of one percent (1/2%) from one-quarter of one percent
(1/4%) of the Aggregate Capital Contribution.
(g) In the event the Company (at the direction of Wellsford)
elects to purchase the interest of a Prudential Investor in a Venture,
Wellsford or such other entity as may be purchasing such interest shall
pay or cause to be paid to the Company, in addition to the amounts
required to purchase the interest of the Prudential Investor, an amount
equal to the sum of one-half (1/2) of the First Level Carried Interest (as
defined in the Venture Agreement) and two-thirds (2/3) of the Second Level
Carried Interest (as defined in the Venture Agreement) that would have
been received by the Company had the property owned by such Venture been
sold for the Special Valuation Amount (as defined in the Program
Agreement). Such amount shall be treated by the Company as Cash Receipts.
3.24.2 Allocations of Net Profits and Net Losses.
1. ((0).1 "Net Profit" means, for each fiscal year, the
excess, if any, of the Company's items of income and gain over the
Company's items of loss and deduction for such fiscal year, determined in
accordance with Federal income tax principles, taking account, however, of
the difference, if any, between the book value and the tax basis of the
assets of the Company in accordance with the principles of Sections 1.704-
1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
((0).2 "Net Loss" means, for each fiscal year, the
excess, if any, of the Company's items of loss and deduction over the
Company's items of income and gain for such fiscal year, determined in
accordance with Federal income tax principles, taking account, however, of
the difference, if any, between the book value and the tax basis of the
assets of the Company in accordance with the principles of Sections 1.704-
1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
2. Net Profit and Net Loss shall be allocated between the
Members with respect to each fiscal year for purposes of maintaining the
capital accounts of the Company so as to bring the Members' respective
capital account balances into the ratio of the Members' respective Member
Interests, and then in the ratio of the Members' respective Member
Interests.
3. Notwithstanding Section 3.2(b) hereof, appropriate
adjustments shall be made, if required, to the allocations to the extent
required to comply with the "qualified income offset," "minimum gain
chargeback" and "chargeback for nonrecourse debt for which a member bears
a risk of loss" rules of the Treasury Regulations promulgated pursuant to
Section 704(b) of the Code. To the extent permitted by such Treasury
Regulations, the allocations in such year and subsequent years shall be
further adjusted so that the cumulative effect of all the allocations
shall be the same as if all such allocations were made pursuant to
Sections 3.2(b) hereof without regard to this Section 3.2(c).
4. Allocations pursuant to this Section 3.2 shall be made
after taking account of all distributions with respect to the period for
which the allocations are being made.
5. Notwithstanding the foregoing, allocations for income
tax purposes shall be made in the same manner as allocations for purposes
of maintaining the capital accounts of the Company, except that
appropriate adjustments shall be made to such allocations (i) to take
account of the effect of any Section 754 election of the Company and (ii)
if applicable, in accordance with the principles of Section 704(c) of the
Code and the Treasury Regulations thereunder and Sections 1.704-
1(b)(2)(iv)(d), (e), (f) and (g) of the Treasury Regulations.
6. Upon the transfer of an Interest in the Company, the
allocations between transferor and transferee shall be apportioned by an
interim closing of the books of the Company.
3.24.3 No Salaries; Reimbursement. (1) No salary or other
compensation shall be paid to any Member by the Company, but the Company
shall reimburse each Member for actual expenses incurred by such Member,
in connection with the business of, and in fulfilling its duties or
rendering services to and on behalf of, the Company so long as such
expenses are provided for in the Budget and that they do not exceed the
amounts provided therefor in the Budget by 10% or more.
(2) Notwithstanding the foregoing and subject to the
provisions in the immediately following sentence, the Members acknowledge
that the Company shall continue to employ and shall pay to each of Xxxxx
X. Xxxxxxx, Xx. ("Xxxxx Xxxxxxx") and Xxxxxxx X. Xxxxxx ("Xxxxxx") for
each fiscal year his respective base compensation in an amount which, when
added to his respective base compensation received from Old Xxxxxxx,
equals $300,648.66 and $294,528.78, respectively. However, it is further
understood and agreed that, commencing with calendar year 1999, in the
event there shall be any accrued and unpaid Wellsford Priority Return
outstanding as of the end of the preceding fiscal year, an amount equal to
the sum of all accrued and unpaid Wellsford Priority Return outstanding as
of the end of such fiscal year, but in any event not to exceed $100,000
per annum, shall be withheld by the Company (taking into account any
amount which may be withheld by Old Xxxxxxx pursuant to the applicable
provision of the Amended and Restated General Partnership Agreement of Old
Xxxxxxx, dated as of the date hereof, between Wellsford and FGC Realty
Consultants, Inc. (the "Old Xxxxxxx Partnership Agreement")) from each of
Xxxxx Xxxxxxx'x and Xxxxxx'x base compensation, such amount to be deducted
pro rata from each of their respective compensation on each payroll period
during such fiscal year, and such withheld amounts shall be applied to the
payment of any accrued and unpaid Wellsford Priority Return. The amount
so withheld shall accrue interest at the rate of fifteen percent (15%) per
annum, and be payable to each of Xxxxx Xxxxxxx and Xxxxxx, respectively,
to the extent the Company has available cash remaining therefor, at any
time after the distribution to Wellsford of any and all accrued and unpaid
Wellsford Priority Return for all previous Distribution Periods.
3.24.4 Periodic Financial Statements, Status Reports and Tax
Returns. (1) Within 70 days after the end of each fiscal year and 25
days after the end of each quarter, Xxxxxxx and the Xxxxxxx Designees (as
hereinafter defined) shall prepare, maintain and mail (or cause to be
prepared, maintained and mailed) to each Member a financial report
(audited in the case of a report sent at the end of the fiscal year and
unaudited in the case of a report sent at the end of a quarter), which
shall be prepared in accordance with generally accepted accounting
principles, consistently applied, setting forth or containing as of the
end of such fiscal year or quarter: (i) a consolidated balance sheet of
the Company and its subsidiaries or affiliated entities; (ii) a
consolidated statement of income or loss and a consolidated statement of
cash flows of the Company and its subsidiaries or affiliated entities;
(iii) a consolidated statement of changes in capital accounts of the
Company and its subsidiaries or affiliated entities; and (iv) a
consolidated statement of the investments made by the Company and its
subsidiaries or affiliated entities.
(2) Within 70 days after the end of each fiscal year,
Xxxxxxx and the Xxxxxxx Designees (as hereinafter defined) shall prepare
and mail (or cause to be prepared and mailed) to each Member, a financial
report (which shall include, without limitation, a Form K-1 for each
Member or former Member) setting forth in sufficient detail such business
and transactions of the Company during such fiscal year as shall enable
each Member (or their respective legal representatives or accountants) to
prepare their respective income tax returns in accordance with the laws,
rules and regulations then prevailing.
ARTICLE XXV
OPERATION AND MANAGEMENT
4.25.1 Management. 1. Subject to the provisions set forth in
Sections 4.1(d) and 4.1(e) hereof, Xxxxxxx shall act as the managing
member of the Company (the "Managing Member") and through its designees
(the "Xxxxxxx Designees"), shall have complete power and authority to do
all things it deems necessary or desirable to conduct the day-to-day
operations and business activities of the Company, including, without
limitation, the making of any payment set forth in the Budget (as
hereinafter defined), provided, however, that (i) the Xxxxxxx Designees
shall prepare, maintain and provide (or cause to be prepared, maintained
and provided) to Wellsford periodic reports as set forth in Section 3.4
hereof and (ii) there shall be regular Members' meetings on a monthly
basis, or such other interval as the Members shall determine, in which the
Xxxxxxx Designees shall discuss and consult with the Wellsford Designees
regarding the operations and other business affairs of the Company and
shall obtain any consent which may be required for any impending activity
of the Company.
2. No later than sixty days prior to the end of each fiscal
year, Xxxxxxx shall prepare and provide (or cause to be prepared and
provided) to Wellsford a plan of operations for the business of the
Company for such calendar year and an operating and capital budget for the
Company, setting forth the estimated receipts and expenditures (capital
and operating) of the business for the following fiscal year (the
"Budget") to be considered for approval by Wellsford. In the event the
Members do not reach a mutual agreement with respect to the Budget within
five (5) days prior to the beginning of the year for which the Budget
applies, then the Budget for such year shall be the same as the Budget for
the preceding year, provided that each line item (other than base
compensation payable to Xxxxx Xxxxxxx or Xxxxxx, as to which there shall
be no increase) shall be increased by 10% of the amount reflected in the
preceding year's Budget.
3. Notwithstanding Section 4.1(b) hereof, the Budget for the
fiscal year beginning January 1, 1998 in the form attached hereto as
Schedule B is hereby approved and adopted by the Members.
4. The following activities and decisions shall require the
unanimous consent of all of the Members:
(i) making any investment decisions with respect to the
Clairborne Program;
(ii) the admission of any additional members;
(iii) the assignment, transfer, sale, lease or otherwise
disposition of all or substantially all of the Company's property or
assets, or any material change in the nature of its business, or any
decision to wind up, liquidate or dissolve the Company, or any agreement
to do any of the foregoing;
(iv) increasing the compensation payable by the Company to
any officer, director, employee or agent of the Company or any of the
Members' designees having an annual base compensation in excess of
$125,000, except as otherwise provided in an approved budget;
(v) making any payments or loans directly or indirectly to
or for the benefit of any Member, except as expressly permitted by this
Agreement;
(vi) with respect to an expenditure provided for in the
Budget, paying or committing to pay any amount which exceeds the budgeted
amount for such expenditure by 10%;
(vii) acquiring, by purchase, lease or otherwise, or disposing
of or abandoning any real property or any interest therein;
(viii) making any investments in connection with the
acquisition of distressed, discount or other secured mortgage debt under
the Clairborne Program;
(ix) making any tax elections in connection with the Company;
(x) making any decision with respect to setting up new
subsidiaries or affiliated entities; and
(xi) doing any other act which would materially alter or
materially adversely affect the Company's business.
With respect to the activities set forth in subclauses (i) and
(viii) above, the Managing Member shall provide Wellsford with all
available information and documentation necessary for Wellsford to
evaluate any such investment proposal or opportunity in order for
Wellsford to be able to make any decision with respect thereto.
5. (i) Notwithstanding anything to the contrary herein, with
respect to the buy/sell of interests in each Venture under the Clairborne
Program, any and all rights of the Company and each subsidiary thereof
with respect to such buy/sell and any decision relating thereto shall vest
in Wellsford, so that Wellsford shall make any and all decisions with
respect to the buy/sell of interests in the Venture(s) for and on behalf
of the Company or the respective subsidiary, including, without
limitation, the initiation of a buy/sell, the decision to purchase or sell
the interests in the Venture(s) in response to a buy/sell initiated by the
relevant Prudential Investor or, if applicable, the determination of the
Special Valuation Amount (as defined in the Program Agreement), provided,
however, that (A) if Xxxxxxx disagrees with Wellsford's decision to
initiate a buy/sell of interests in any Venture(s), or (B) in the event
Wellsford elects to sell the interests of the Company or any subsidiary
thereof in any Venture(s) in response to a buy/sell initiated by the
Prudential Investor(s), Xxxxxxx shall have the right to elect to purchase
Wellsford's interests in such Venture(s) by paying to Wellsford an amount
(the "Purchase Price") calculated as follows. In the event of a purchase
pursuant to clause (A) of the immediately preceding sentence, the Purchase
Price shall be calculated based on such Special Valuation Amount as
Wellsford proposed to include in the Initiating Notice it proposed to send
to the Prudential Investor. In the event of a purchase pursuant to clause
(B) of the next preceding sentence, the Purchase Price shall be calculated
based on the Special Valuation Amount included in the Initiating Notice
received by the Company from the Prudential Investor. In either case, the
Purchase Price shall be equal to the amount Wellsford would have received
as a distribution under Sections 3.1(b) and (c)(ii) of this Agreement
assuming the Company had sold its interest in such Venture(s)based on the
an assumed sale by the Venture at the applicable Special Valuation Amount.
Upon compliance with the provisions of the next sentence, Xxxxxxx shall
have the right to make any and all decisions relating to the buy/sell of
interests in such Venture(s). In order to exercise its right to purchase
Wellsford's interests in such Venture(s), (i) a written notice of such
intent shall be delivered promptly by Xxxxxxx to Wellsford (but in any
case no later than the earlier of (x) five (5) days prior to the
expiration of the Option Period (as defined and set forth in the Program
Agreement) and (y) two (2) business days after notification by Wellsford,
through the Company or the relevant subsidiary thereof, of its or their
election with respect to the Offering Notice (as defined in the Program
Agreement) delivered by the relevant Prudential Investor(s)); (ii) cash in
an amount equal to 10% of the Special Valuation Amount shall be deposited
by Xxxxxxx into an account specified by Wellsford simultaneously with the
delivery of such written notice and (iii) Xxxxxxx shall provide evidence,
reasonably satisfactory to Wellsford, of the availability of funds
sufficient to pay the balance of such Purchase Price as provided in the
Program Agreement.
(ii) In the event the Company sells to the respective
Prudential Investor(s) the interests of the Company or any subsidiary
thereof in any Venture(s) in accordance with Section 4.1(e)(i) hereof and
Section 4.1 of the Program Agreement, any proceeds received by the Company
as a result of such sale shall be distributed as follows: first to
Wellsford, an amount which would have been distributable to Wellsford
under Section 3.1(b) hereof had the property owned by the Venture been
sold for the Special Valuation Amount and the proceeds distributed by the
Venture to the Company; and second, the balance shall be treated as Cash
Receipts.
6. The Members may appoint, employ or otherwise contract
with such other persons for the transaction of the business of the Company
or the performance of services for or on their behalf or for or on behalf
of the Company. Each Member shall designate up to two designees who shall
act on its behalf in managing the affairs or transacting the business of
the Company. The initial Xxxxxxx Designees and the designees of Wellsford
(the "Wellsford Designees") are set forth on Schedule C attached hereto.
Each designee shall continue to act on behalf of its designating Member
until his respective resignation or removal by the designating Member. A
Member may not remove or replace a designee not designated by it. In the
event that either Xxxxx Xxxxxxx or Xxxxxx (or both) elects voluntarily to
terminate his (or their) employment with the Company or Old Xxxxxxx, as
the case may be, prior to the later of (i) the Adjusted Wellsford Base
Amount being reduced to zero and (ii) the expiration of the Commitment
Period under the Program Agreement (the "Employment Period"), Wellsford
shall have the right to initiate (or direct Xxxxxxx to initiate, in which
case Xxxxxxx shall be obligated to initiate) the Interest Buy/Sell (as
hereinafter defined).
ARTICLE XXVI
TERMINATION; TRANSFERS OF INTERESTS; BUY/SELL OF INTEREST
5.26.1 Events of Termination. The Company shall be dissolved
and its affairs wound up upon the first to occur of the following:
1. the sale or other disposition of all or substantially
all of the assets of the Company;
2. a determination of all of the Members to dissolve and
liquidate the Company (except that upon the death or disability of either
Xxxxx Xxxxxxx or Xxxxxx, such determination may be made by Wellsford and,
if applicable, the survivor of Xxxxx Xxxxxxx and Xxxxxx as set forth in
Section 9.2 hereof);
3. the withdrawal, dissolution or bankruptcy of any Member;
or
4. the expiration of the term of the Company.
For purposes of this Agreement, a bankruptcy of a Member
shall be deemed to occur when such Member files a petition in bankruptcy,
or voluntarily takes advantage of any bankruptcy or insolvency law, or is
adjudicated to be bankrupt, or if a petition or answer is filed proposing
the adjudication of such Member as bankrupt and such Member either
consents to the filing thereof or such petition or an answer is not
discharged or denied prior to the expiration of sixty (60) days from the
date of such filing.
5.26.2 Withdrawal of a Member. Except as set forth in Section
4.1(f) hereof or except as set forth in the last sentence of this Section
5.2, no Member shall have the right voluntarily to withdraw from the
Company without the written consent of the other Member. Upon withdrawal
by a Member, as aforesaid, such Member shall cease to be a Member and
shall not retain its interest in the Net Profits, Net Losses and
distributions of the Company. Following the death, resignation or
permanent disability of either Xxxxx Xxxxxxx or Xxxxxx, the voluntary
resignation of the survivor of either of them shall be deemed a withdrawal
by Creamer.
5.26.3 Winding Up. Upon a dissolution of the Company requiring
the winding up of its affairs, the Members or a designated person or
persons shall with reasonable promptness wind up the Company's affairs.
The assets of the Company shall be sold within a reasonable period of
time, to the extent necessary to pay or provide for the debts and
liabilities of the Company, and may be sold to the extent deemed
commercially feasible by the person or persons winding up the affairs of
the Company, and all assets of the Company shall be distributed as
provided in Section 5.4.
5.26.4 Distributions upon Winding Up. The proceeds of any
winding up shall be applied and distributed in the following order of
priority (to the extent that such order of priority is consistent with the
laws of the State of Delaware):
1. to the payment of the debts and liabilities of the
Company and the expenses of dissolution and liquidation;
2. to the setting up of any reserves which the person or
persons winding up the affairs of the Company may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of
the Company, and, at the expiration of such period as the aforesaid person
or persons may deem advisable, for distribution in the manner hereinafter
provided;
3. to the payment of any Wellsford First Level Preferred
Return, any Wellsford Unreturned Capital Contributions, any Wellsford
First Level Carry, any Wellsford Second Level Carry, and any Wellsford
Post Buy/Sell Share to the extent the proceeds of any winding up represent
any such amounts;
4. to the payment of any accrued and unpaid Wellsford
Priority Return;
5. pro rata to the repayment of any advances or loans, with
interest accrued thereon, that may have been made by any of the Members to
the Company;
6. pro rata to the Members in proportion to their
respective positive capital account balances until such balances have been
reduced to zero; and
(g) pro rata to the Members in accordance with their
respective Member Interests.
5.26.5 Statements on Winding Up. Upon termination of the
Company, a statement shall be prepared by the Company's accountants, which
shall set forth the assets and liabilities of the Company as of the date
of termination.
5.26.6 Restrictions on Transfers of Interests.
(1) Neither Wellsford nor Xxxxxxx shall, or shall have the
right to, sell, assign, transfer or dispose of (whether by gift or
otherwise), mortgage, pledge, hypothecate, create a lien on or security
interest in, or otherwise encumber, whether voluntarily, involuntarily, by
operation of law or otherwise (a "Disposition") all or any part of their
respective Interests, except as permitted by, and only upon compliance
with, the terms of this Agreement. Any purported or attempted Disposition
of an Interest in violation of this subclause (a) shall be null, void and
of no effect.
(2) Notwithstanding the provisions of subclause (a)
immediately above,
(i) Subject to the terms of this Agreement, Wellsford
shall have the right, without requiring the consent of Xxxxxxx (but upon
prior notice to Xxxxxxx and the Company), to assign or transfer all or any
portion of its Interests to a wholly-owned subsidiary or other Wellsford
Related Entity (as hereinafter defined), provided that such subsidiary or
Wellsford Related Entity expressly assumes in writing all of Wellsford's
obligations under this Agreement and otherwise agrees to be bound by the
provisions of this Agreement as if an original signatory hereof. For the
purposes of this Agreement, the term "Wellsford Related Entity" shall mean
any person, partnership, corporation or other entity in which Wellsford or
WRP, directly or indirectly, owns a majority of the voting interests; and
(ii) Subject to the terms of this Agreement, Xxxxxxx
shall have the right (upon prior notice to Wellsford and the Company) to
assign or transfer all or a portion of its Interests to Xxxxx Xxxxxxx,
Xxxxxx, members of Xxxxx Xxxxxxx'x or Xxxxxx'x immediate family or to a
trust or trusts established for the benefit of the members of the
respective immediately family of Xxxxx Xxxxxxx or Xxxxxx, or to a wholly-
owned subsidiary of Xxxxxxx or an entity wholly-owned by either Xxxxx
Xxxxxxx or Xxxxxx or other Creamer Related Entity (as hereinafter defined)
provided that in connection with any such transfer, Xxxxxxx retains, by a
written voting trust or other instrument in form and substance
satisfactory to the Members and the Company, all voting and management
rights with respect to the transferred Interests and provided that any
such subsidiary or Xxxxxxx'x Related Entity expressly assumes in writing
all of Xxxxxxx'x obligations under this Agreement and otherwise agrees to
be bound by the provisions of this Agreement as if an original signatory
hereof. For the purposes of this Agreement, the term "Xxxxxxx Related
Entity" shall mean any person, partnership, corporation or other entity in
which either Xxxxxxx owns or Xxxxx Xxxxxxx or Xxxxxx owns a majority of
the voting interests, and the term "immediate family" shall mean the
respective spouse, parents and issue of Xxxxx Xxxxxxx or Xxxxxx, as the
case may be. If Xxxxxxx shall transfer any portion of its Interest to
Xxxxx Xxxxxxx or Xxxxxx, or members of Xxxxx Xxxxxxx'x or Xxxxxx'x
immediate family, or to a trust or trusts established for the benefit of
the members of the respective immediately family of Xxxxx Xxxxxxx or
Xxxxxx, or other Xxxxxxx Related Entity, all references in this Agreement
to "Xxxxxxx" shall apply to Xxxxxxx, Xxxxx Xxxxxxx or Xxxxxx, the legal
representative of Xxxxx Xxxxxxx'x or Xxxxxx'x estate, Xxxxx Xxxxxxx'x or
Xxxxxx'x heirs, the members of Xxxxx Xxxxxxx'x or Xxxxxx'x immediate
family, trusts established for the benefit of the members of the
respective immediately family of Xxxxx Xxxxxxx or Xxxxxx, or other Xxxxxxx
Related Entity to which such Interests were transferred and,
simultaneously with the transfer, the transferees shall execute and
deliver to Wellsford and the Company an agreement, in form and substance
satisfactory to Wellsford and the Company, pursuant to which such
transferees agree to be bound by all of the provisions of this Agreement.
(iii) Notwithstanding the foregoing, until the later of
(A) the Adjusted Wellsford Base Amount being reduced to zero and (B) the
expiration of the Employment Period, Xxxxx Xxxxxxx and Xxxxxx shall remain
the designees of Xxxxxxx and shall agree to be employed by the Company as
set forth in Section 3.3 hereof, subject to the provisions set forth in
Section 4.1(f) hereof.
5.26.7 Interest Buy/Sell Option. 1. Either Member may elect
to initiate a buy/sell procedure with respect to its Interest (the
"Interest Buy/Sell") if:
((0).1 the Members do not reach a mutual agreement with
respect to the Budget for two (2) consecutive years; or
((0).2 the Members (or the Partners of Old Xxxxxxx) are
not able to reach agreement as to any material matter such that the
Company or Old Xxxxxxx, as the case may be, is unable to carry out its
respective business, including, without limitation, satisfying its
respective obligations under the Clairborne Program or any of the
contracts or agreements, whether written or oral, to which Old Xxxxxxx
is bound (collectively, the "Old Xxxxxxx Commitments"), as the case
may be.
2. In the event (i) either Xxxxx Xxxxxxx or Xxxxxx (or
both) elects voluntarily to terminate his (or their) employment with the
Company or with Old Xxxxxxx, as the case may be, during the Employment
Period, or (ii) PIC gives notice of its intention to exercise its rights
under Section 4.1 of the Program Agreement, Wellsford shall have the right
to initiate (or direct Xxxxxxx to initiate, in which case Xxxxxxx shall be
obligated to initiate) the Interest Buy/Sell;
3. In the event (i) Xxxxxxx X. Xxxxxxx or Xxxxxx Xxxxxxxxx
ceases to act as the Chairman and the President, respectively, of WRP, or
(ii) of a merger or consolidation of WRP with a third party, or a sale of
the majority of the stock or substantially all of the assets of WRP to a
third party (each, a "WRP Change of Control"), or (iii) Wellsford refuses
to approve a total of five (5) investment opportunities, each of which
satisfies the objectives and criteria set forth in Exhibit A to the
Program Agreement during the term of the Commitment Period (as defined in
the Program Agreement), Xxxxxxx shall have the right to initiate (or
direct Wellsford to initiate, in which case Wellsford shall be obligated
to initiate) the Interest Buy/Sell.
4. In the event of the occurrence of any of the conditions
set forth in Section 5.7(a), (b) or (c) above, such Member as may be
applicable (the "Initiating Member") may initiate the Interest Buy/Sell by
giving a written notice of its intention to initiate the Interest Buy/Sell
(an "Interest Buy/Sell Notice") to the other Member (the "Offeree Member")
which sets forth an amount equal to the Initiating Member's valuation of
the entire Company (the "Sale Price") and such other terms of the sale as
the Initiating Member may determine. The Offeree Member shall then have
the option to (x) buy the Initiating Member's Interest at an amount equal
to the amount which the Initiating Member would be entitled to receive if
the Company were sold for the Sale Price and the proceeds distributed
pursuant to Section 5.4 hereof, and on the other terms and conditions set
forth in the Interest Buy/Sell Notice, or (y) sell its Interest to the
Initiating Member for an amount equal to the amount which the Offeree
Member would be entitled to receive if the Company were sold for the Sale
Price and the proceeds distributed pursuant to Section 5.4 hereof, and on
the other terms and conditions set forth in the Interest Buy/Sell Notice.
5. Within forty-five (45) days following the giving of
the Interest Buy/Sell Notice (the "Interest Buy/Sell Election Period"),
the Offeree Member shall deliver a written notice to the Initiating Member
of its decision to buy or sell. Failure to deliver such notice shall be
deemed a decision to sell.
6. The purchase or sale of an Interest pursuant to the
Interest Buy/Sell shall be consummated upon the transfer of the Interest
(the "Subject Interest") by the selling Member or its designee (the
"Selling Member"), and shall occur no later than fifteen (15) days
following the expiration of the Interest Buy/Sell Election Period.
7. If the Member or its designee purchasing the Subject
Interest pursuant to the Interest Buy/Sell (the "Purchasing Member") is
ready, willing and able to perform its obligations at the closing, and the
Selling Member defaults in performing its obligations at the closing, the
sale of the Subject Interest shall be deemed to have occurred at the
closing, the Company shall record the transfer of the Subject Interest in
its books and records, the Company shall treat the Purchasing Member as
the legal and beneficial owner of the Subject Interest sold by the Selling
Member, the Selling Member shall cease to have any rights as a Member of
the Company with respect to the Subject Interest, and the Selling Member's
sole remedy against the Purchasing Member shall be to be paid the amount
due it in connection with the sale of the Subject Interest (without
interest) upon reasonable written notice to the Purchasing Member and upon
tender to the Purchasing Member of the assignment of the Subject Interest
and other documents which should have been delivered at the closing.
8. If the Selling Member is ready, willing and able to
perform its obligations at the closing, and the Purchasing Member defaults
in performing its obligations at the closing, the Selling Member shall
have the right (but not the obligation) to acquire the Interest of the
Purchasing Member at a price equal to 75% (seventy-five percent) of the
amount which would otherwise have been payable to the Purchasing Partner
had the Purchasing Partner elected to be the seller, as determined in
accordance with clause (d) above, or to sell the Subject Interest to a
non-affiliated third party free of the restrictions set forth in Section
5.6 hereof.
9. At the closing, the Selling Member shall deliver to
the Purchasing Member a duly executed assignment of Subject Interest and
such other documents reasonably requested by the Purchasing Member which
are necessary to evidence or complete the transfer of such Subject
Interest, and the Purchasing Member shall deliver to the Selling Member
(i) cash payable by wire transfer of immediately available funds to an
account or accounts of the Selling Member at the bank specified by the
Selling Member in writing at least two business days prior to the closing,
or (ii) a certified or bank check payable to the Selling Member in an
amount equal to the Sale Price of the Subject Interest.
10. Any decision by a Member to initiate the Interest
Buy/Sell and/or any response by a Member to an Interest Buy/Sell Notice
shall be made simultaneously and consistently with respect to the
applicable buy/sell provisions of interests in Old Xxxxxxx as set forth in
the Old Xxxxxxx Partnership Agreement.
ARTICLE XXVII
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
6.27.1 Books and Records. Xxxxxxx, as Managing Member, shall
prepare and maintain (or cause to be prepared and maintained) for the
Company true and correct books and records which shall be prepared in
accordance with generally accepted accounting principles, consistently
applied, showing all costs, expenditures, sales, receipts, assets and
liabilities, Net Profits and Net Losses (as determined under Section 3.1
hereof) and all other records necessary, convenient or incidental to
recording the Company's business and affairs and sufficient to record the
allocation of Net Profits, Net Losses and distributions as provided for
herein.
6.27.2 Fiscal Year. The fiscal year of the Company shall be
the calendar year.
6.27.3 Bank Accounts. All receipts, funds and income of the
Company shall be deposited in the name of the Company in such banks as are
determined by the Members. Withdrawals from said banks shall be made on
signatures of Xxxxx Xxxxxxx or Xxxxxx, or such person or persons as shall
be authorized by the Members, and there shall be no commingling of the
monies and funds of the Company with monies and funds of any other entity.
6.27.4 Accounting Decisions. All decisions as to accounting
principles and tax elections shall be made by the Members. The Company
shall make any election permitted under Section 754 of the Code, unless
otherwise agreed to by the Members.
6.27.5 Tax Returns. Federal, state and local income tax
returns of the Company shall be prepared by such accounting firm as may be
selected by the Managing Member, subject to the approval of Wellsford.
Xxxxxxx shall file (or cause to be filed) all federal, state and local tax
returns required of the Company.
6.27.6 Tax Matters Partner. Xxxxxxx shall be the "tax matters
partner" of the Company within the meaning of Section 6231(a)(7) of the
Code. The tax matters partner shall not be liable for its conduct under
this Section 6.6 to any Member if it shall have acted in good faith and in
reliance upon the advice of legal counsel and/or Diamante, Xxxx & Xxxx or
such other tax accountants reasonably acceptable to the other Member. The
Company shall bear the expense of any tax audit or proceeding conducted at
the Company level, but the cost of any adjustment to any Member's tax
liability shall be borne by that Member. Xxxxxxx shall take all action
necessary for Wellsford to be a "notice partner" within the meaning of
Section 6231(a)(8) of the Code.
6.27.7 Inspection. Each Member or its authorized
representative may examine any of the books or records of the Company at
reasonable times and upon reasonable notice provided such examination
shall not interfere with the business of the Company.
ARTICLE XXVIII
LIABILITIES AND INDEMNIFICATION
7.28.1 Liability and Indemnification of the Company and the
Members. (1) To the fullest extent permitted by applicable law, an
Indemnified Person (as hereinafter defined) shall be entitled to
indemnification from the Company for any loss, damage or claim incurred by
such Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person, if such Indemnified Person acted in
good faith and in a manner reasonably believed by such Indemnified Person
to be in or not opposed to the best interests of the Company; provided
that the Indemnified Person's conduct shall not have constituted fraud,
gross negligence or willful or wanton misconduct. For purposes of this
Agreement, an Indemnified Person means (i) each Member and its directors,
officers, shareholders, members, partners, affiliates, trustees, employees
and agents, and (ii) any person who is or was serving at the request of
the Company or any Member, as a director, officer, shareholder, member,
partner, trustee, employee or agent of the Company or another corporation,
limited liability company, partnership, joint venture, trust or other
enterprise in connection with the business or investments of the Company.
(2) To the fullest extent permitted by applicable law,
expenses (including attorneys' fees and expenses) incurred in defending
any action, suit or proceeding subject to Section 7.1(a) shall be paid by
the Company in advance of the final disposition of such proceeding,
subject to repayment, if it shall conclusively be determined, by a court
of competent and final jurisdiction, that the Indemnified Person is not
entitled to be indemnified by the Company as authorized hereunder.
(3) The indemnification provided by this Section 7.1 shall
be in addition to any other rights to which an Indemnified Person may be
entitled under any agreement of the Members, as a matter of law or
otherwise, both as to action in the Indemnified Person's capacity as the
Member, a director, officer, employee or agent of a Member or a person
serving at the request of the Company and to any action in another
capacity. Such indemnification shall continue as to an Indemnified Person
who has ceased to serve in such capacity and shall inure to the benefit of
the heirs, successors, assigns, administrators and personal
representatives of such Indemnified Person.
(4) The Company may purchase and maintain insurance on
behalf of any one or more Indemnified Persons and other persons as the
Members shall determine against any liability that may be asserted against
or expense that may be incurred by such person in connection with the
activities of the Company, whether or not the Company would have the power
to indemnify such person against such liability hereunder.
(5) In no event may an Indemnified Person subject the
Members to personal liability by reason of this Section 7.1. except
specifically provided for in this Agreement.
(6) An Indemnified Person shall not be denied
indemnification in whole or in part under this Section 7.1 because the
Indemnified Person had an interest in the transaction with respect to
which indemnification applies if the transaction was otherwise permitted
by the terms hereof.
(7) The provisions of this Section 7.1 are for the benefit
of the Indemnified Persons and their heirs, successors, assigns,
administrators and personal representatives and shall not be deemed to
create any rights for the benefit of any other persons. Without
limitation of any provision of this Section 7.1, this Section 7.1 shall be
construed to indemnify all persons exculpated pursuant to Section 7.2 to
the fullest extent of any such exculpation.
7.28.2 Liability of the Managing Member. The Managing Member
shall be liable to the Company and the other Member for fraud, gross
negligence or willful or wanton misconduct in any of its actions or
omissions, but shall not be liable to the Company, the other Member or any
other persons who have acquired interests in any Interest, whether as
members, assignees or otherwise, for errors in judgment or for any acts or
omissions, made, taken or omitted in good faith and that Xxxxxxx, as the
Managing Member (or, if applicable, any of its designees, directors,
officers, employees or agents acting on its behalf) reasonably believes is
in or not opposed to the best interests of the Company, unless such errors
in judgment, acts or omissions constitute fraud, gross negligence or
willful or wanton misconduct.
ARTICLE XXIX
KEY-MAN LIFE INSURANCE; DEATH OF PRINCIPALS
8.29.1 Key-Man Life Insurance. The Company, at its sole cost and
expense (which expense shall be set forth in the Budget), shall purchase
and maintain one-year renewable term key-man life insurance ("Key-Man
Insurance") on the life of each of Xxxxx Xxxxxxx and Xxxxxx in an amount
with respect to each of them which, when added to the amount of the one-
year key-man life insurance purchased and maintained by Old Xxxxxxx, shall
equal the lesser of two million dollars ($2,000,000) or the amount of the
Adjusted Wellsford Base Amount, or such lesser amount as is determined by
Wellsford at its sole discretion. Xxxxx Xxxxxxx and Xxxxxx each shall
cooperate with respect to purchasing and maintaining the Key-Man
Insurance, including, without limitation, the taking of physical
examinations and the completion and execution of appropriate insurance
forms and applications. Upon the death of either Xxxxx Xxxxxxx or Xxxxxx,
any payment from the Key-Man Insurance shall be remitted to the Company.
8.29.2 Death of Principals. Upon the death or permanent
disability of either Xxxxx Xxxxxxx or Xxxxxx, the Company shall be
continued unless both Wellsford and the survivor of either Xxxxx Xxxxxxx
or Xxxxxx mutually consent to dissolve and liquidate the Company.
ARTICLE XXX
GENERAL PROVISIONS
9.30.1 Right of First Refusal/Other Business Activities.
(1) Wellsford may engage in all business activities
(including those similar to the activities of the Company or the entities
involved in the Clairborne Program), provided, however, that so long as
the Clairborne Program is in effect, Wellsford will, to the extent
possible, present any investment opportunities which are substantially
similar to those of the Clairborne Program to the Company. Xxxxxxx, the
Xxxxxxx Designees or any affiliates in which either Xxxxxxx or the Xxxxxxx
Designees or Xxxxx Xxxxxxx or Xxxxxx owns or shall own a majority of the
voting interests or over which Xxxxxxx or the Xxxxxxx Designees or Xxxxx
Xxxxxxx or Xxxxxx has or shall have voting control, may participate,
directly or indirectly, in any business activity or venture, provided,
however, that (a) such participation will not interfere with either of the
Xxxxxxx Designees' performance of his duties with respect to the
Clairborne Program, the Company or Old Xxxxxxx, and (b) in the event
Xxxxxxx, any Xxxxxxx Designee or any of their respective affiliates desire
to participate or sponsor (i) any program, investment fund or investment
venture with an investment objective, strategy or focus substantially
similar to those of the Clairborne Program, or (ii) other business
activity or business venture competitive to or substantially similar to
the activities or ventures of Old Xxxxxxx or the Company at any time
during the term of the Company, Xxxxxxx, the respective Xxxxxxx Designee
or the respective affiliates, whichever may be applicable, shall first
provide either Wellsford, the Company or Old Xxxxxxx with a right of first
refusal or priority participation therein on terms no less favorable to
those being offered to other third-party participants in such program,
investment fund or venture or business activity or venture.
No Member shall be required to devote any particular
amount of time to the business of the Company, except that Xxxxxxx shall
cause Xxxxx Xxxxxxx and Xxxxxx to devote such time, energies and attention
as are necessary to the fulfillment of their responsibilities and duties
to the Company and Old Xxxxxxx, including, without limitation, all
activities required of the Company and/or Old Xxxxxxx pursuant to the
Clairborne Program and the Old Xxxxxxx Commitments.
(2) In conjunction with the making of any investment
decisions as set forth in clauses (i) and (viii) of Section 4.1(d) hereof,
prior to the making of an investment proposal under the Clairborne
Program, Xxxxxxx or the Company shall present any such investment proposal
or opportunity to Wellsford (together with all information and
documentation with respect thereto to enable Wellsford to adequately
evaluate such proposal), and only upon Wellsford's approval of the
investment proposal shall any such investment proposal be presented to
PREI for consideration under the Clairborne Program, provided, however,
that nothing herein shall prevent Xxxxxxx or the Company from discussing
with PREI potential investment opportunities, which discussions shall not,
under any circumstances, bind the Company and/or Wellsford in
participating in such investment opportunities or obligate Wellsford to
fund its proportionate share of the required capital thereof. The
approval by Wellsford of any investment proposal for consideration by the
relevant PREI, shall constitute the agreement by Wellsford to fund its
proportionate share of the required capital for investment by the Company
in the Clairborne Program for interest in the applicable Venture. Nothing
herein shall be deemed to obligate Wellsford to contribute amounts in
excess of the Capital Contributions set forth in Section 2.1 hereof.
9.30.2 Representations and Warranties of Wellsford. Wellsford
represents and warrants that (a) it has all requisite capacity, power and
authority to execute, deliver and perform this Agreement and the Old
Xxxxxxx Partnership Agreement, and to consummate the transactions
contemplated hereby and thereby, (b) the execution, delivery and
performance by Wellsford of this Agreement and the Old Xxxxxxx Partnership
Agreement, and the consummation by Wellsford of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on its part, (c) this Agreement and the Old
Xxxxxxx Partnership Agreement have been duly and validly executed and
delivered by Wellsford, and each constitutes the valid and binding
obligation of Wellsford, enforceable against Wellsford in accordance with
its terms, and (d) it has adequate financial resources to satisfy its
funding obligations hereunder and under the Old Xxxxxxx Partnership
Agreement.
9.30.3 Representations and Warranties of Xxxxxxx. Xxxxxxx
represents and warrants that (a) it has all requisite capacity, power and
authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby, (b) the execution, delivery and
performance by Xxxxxxx of this Agreement, and the consummation by Xxxxxxx
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on its part, and (c) this Agreement has been
duly and validly executed and delivered by Xxxxxxx and constitutes the
valid and binding obligation of Xxxxxxx, enforceable against Xxxxxxx in
accordance with its terms.
9.30.4 Survival. The representations, warranties and covenants
made in this Agreement or other document executed at or prior to the date
hereof in connection herewith shall survive for one (1) year after the
date hereof. No investigation by Wellsford or on Wellsford's behalf
heretofore or hereafter conducted shall affect the representations,
warranties and covenants of Xxxxxxx (and its designees) set forth in this
Agreement.
9.30.5 Integration. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof. This Agreement supersedes any prior agreement or understanding
among the parties hereto, and may not be modified or amended in any manner
unless in writing and signed by all the parties hereto.
9.30.6 Notices. All notices, demands, offers or other
communications required or permitted by this Agreement shall be in writing
and shall be sent by prepaid registered or certified mail, return receipt
requested, or by hand delivery, and addressed to the Company at its
address set forth herein, and to the Members at their respective addresses
set forth on Schedule A hereto or to such other address as shall, from
time to time, be supplied by any party to the other by like notice, and
shall be deemed given upon the date the return receipt is signed on behalf
of the receiving party or, if hand delivered, upon delivery.
9.30.7 Benefits and Obligations. The covenants and agreements
herein contained shall be binding upon and inure to the benefit of the
legal representatives, heirs, executors, administrators, successors and
assigns of the respective parties hereto.
9.30.8 Severability. If any provision of this Agreement or the
application thereof to any part or circumstances shall be determined by
any court of competent jurisdiction to be invalid and unenforceable in any
respect and to any extent, the remainder of this Agreement or the
application of such provision to such person or circumstance, other than
that as to which it so determined invalid or unenforceable, shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by law.
9.30.9 Waivers. No waiver of any breach of any term hereof shall
be effective unless made in writing signed by the party against whom
enforcement of the waiver is sought, and no such waiver of any subsequent
breach of that term or any other term of the same or different nature
shall be construed as a waiver of any subsequent breach of that term of
the same or different nature.
9.30.10 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
9.30.11 No Partition. The Members hereby waive any right of
partition they may have with respect to any assets of the Company, now
existing or hereafter acquired.
9.30.12 Confidentiality. Except if and to the extent required by
law, or as the parties hereto may from time to time agree in writing, the
parties hereto shall not, and shall cause their respective employees,
officers, directors, partners, shareholders, affiliates or agents not to,
divulge, disclose or communicate, whether orally or in writing, the
provisions or subject matter of this Agreement, any confidential non-
public information regarding the business, affairs and operations of the
Company, the transactions contemplated hereby or the identity of the
parties hereto, other than to the parties' or the Company's respective
legal counsel, accountants and financial advisors.
9.30.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
9.30.14 Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect its interpretation.
9.30.15 Exhibits and Schedules. The Schedules and Exhibits
attached hereto are hereby incorporated herein and made a part hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
WELLSFORD CRC HOLDING CORP.
By:/s/ Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
SX ADVISORS, LLC
By:/s/ Xxxxx X. Xxxxxxx, Xx.
------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Member
The undersigned have executed this Agreement as of the day
and year first above written to reflect their agreement to Section
5.6(b)(iii) of this Agreement
/s/ Xxxxx X. Xxxxxxx, Xx.
-----------------------------------
Xxxxx X. Xxxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
SCHEDULE A
Name and Member
Address Interest
Wellsford CRC Holding Corp. 49%
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
SX Advisors, LLC 51%
[Provide Address]
SCHEDULE B
1998 BUDGET
SCHEDULE C
Member Designees
Wellsford CRC Holding Corp. Xxxxxxx X. Xxxxxx XX
Xxxxxxx X. Xxxxxxx
SX Advisors, LLC Xxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. Xxxxxx
