WELLSFORD REAL PROPERTIES, INC.
535 Madison Avenue
New York, New York 10022
September 30, 2000
Creamer Vitale Wellsford, LLC
535 Madison Avenue, 26th Floor
New York, New York 10022
Frank G. Creamer, Jr.
27 Fern Street
Floral Park, New York 11001
Michael J. Vitale
77 Kensington Road
Garden City, New York 11530
Gentlemen:
Reference is made to (i) the Limited Liability Company Agreement of Creamer
Vitale Wellsford, LLC, dated as of January 20, 1998 (the "CVW Operating
Agreement"), by and between Wellsford CRC Holding Corp. ("Wellsford"), a
wholly-owned subsidiary of Wellsford Real Properties, Inc. ("WRP"), and SX
Advisors, LLC ("SX Advisors"), (ii) the Amended and Restated General Partnership
Agreement of Creamer Realty Consultants ("CRC"), dated as of January 1, 1998, by
and between Wellsford and FGC Realty Consultants, Inc. and (iii) the Assignment
and Assumption, made as of January 20, 1998, by and between CRC and Creamer
Vitale Wellsford, LLC ("CVW').
Reference is also made to the proposal by CVW to form a limited liability
company ("Clairborne Fordham Tower, LLC") together with Wellsford Fordham Tower,
LLC and The Prudential Insurance Company ("Prudential") for the purpose of
purchasing, owning, repositioning, restructuring and otherwise investing in and
dealing with a $34,000,000 mezzanine loan to be made to Fordham/ICD Superior,
L.L.C. (the making of such loan, the "Proposed Investment"), which Proposed
Investment is expected to close on September 29, 2000.
PART I
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In anticipation of the closing of the Proposed Investment, WRP, CVW, Frank
G. Creamer, Jr. ("Creamer") and Michael J. Vitale ("Vitale" and collectively
with WRP, CVW and Creamer, the "Parties") desire to provide for the separation
of Creamer from CVW and other matters relating to the administration and
operation of CVW. The Parties hereby therefore agree as follows:
Exhibit 10.102 Page 1
1. Effective as of September 30, 2000 (the "Effective Date"), (i)
Creamer shall terminate his employment with CVW and (ii) CVW shall
terminate the employment of all other persons employed by CVW, with the
exception of Vitale. Upon such terminations, CVW shall make severance
payments to the terminated employees in accordance with Schedule A attached
hereto.
2. The Parties agree that CVW shall reimburse all unreimbursed bona
fide business expenses incurred by employees of CVW for the benefit of CVW
during the period up to and including the Effective Date.
3. Attached hereto as Schedule A is a projection of the cash flow of
CVW through December 31, 2000 (the "Cash Flow Projection"), which Cash Flow
Projection has been prepared by CVW's accountants. Each of Creamer and
Vitale severally represents and warrants to WRP that (i) he has reviewed
the Cash Flow Projection and (ii) to the best of his knowledge, the Cash
Flow Projection (A) was prepared based upon assumptions which had a
reasonable basis at the time of preparation and (B) as of the date hereof,
represents a good faith reasonable estimate of the cash flow of CVW through
December 31, 2000.
4. Following the Effective Date, (i) WRP shall provide technical and
administrative support to Vitale substantially similar in scope to the
support currently provided to him by CVW, and CVW shall cease to provide
such support.
5. Creamer, Vitale and CVW jointly and severally covenant and agree to
(i) take appropriate measures to eliminate all operating costs of CVW as
soon as practicable after the date hereof, except for such costs as shall
be required to maintain (A) CVW's ongoing business and (B) liability
protection for CVW in connection with its prior operations up to and
through the date hereof and (ii) use their best efforts to collect, as soon
as practicable after the date hereof, all outstanding receivables due CVW.
6. Up to and including the Effective Date, Creamer and Vitale shall
not, and after the Effective Date, Vitale shall not, permit CVW to make any
cash expenditure in excess of $2,000 without the prior written approval of
WRP.
7. The Parties agree to work together diligently to cause the closing
of the Proposed Investment by November 15, 2000.
8. Vitale and Creamer covenant and agree, in connection with the
Proposed Investment, to use their commercial best efforts to facilitate an
orderly transition of their relationship with Prudential to key personnel
of WRP, including, without limitation, negotiating a reduction of the share
payable to Prudential of the extension fee due CVW in connection with the
Proposed Investment.
9. The Parties agree that CVW shall make no distributions or
allocations of income to SX Advisors for the 2000 fiscal year of CVW, and
Creamer and
Exhibit 10.102 Page 2
Vitale each hereby waives on behalf of SX Advisors any claim to such
distributions or allocations.
10. Vitale and Creamer jointly and severally covenant and agree that
no material decision with respect to or affecting the Proposed Investment
or Clairborne Fordham Tower, LLC will be made without the specific prior
express consent of WRP.
11. The Parties agree that, notwithstanding anything in this letter
agreement to the contrary, the Warrant Agreements, each dated as of January
20, 1998 (each, a "Warrant Agreement"), executed by WRP and accepted by
each of Creamer and Vitale, respectively, shall continue in full force and
effect in accordance with their respective terms.
PART II
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If the Proposed Investment closes by November 15, 2000 (or by such other
date as the Parties shall hereafter otherwise agree), and CVW's cash on hand
less reserves for unpaid liabilities, costs and employee compensation payable
through December 31, 2000 (such net amount calculated as of October 1, 2000, the
"Distributable Cash") is $175,000 or more, the Parties further agree as follows:
1. Effective as of October 1, 2000, WRP shall purchase the 51%
membership interest in CVW held by SX Advisors (the "SX Interest") for a
purchase price of $200,000 (such purchase transaction, the "Buyout
Transaction"), which purchase price shall be paid by wire transfer in
immediately available funds to an account designated by SX Advisors.
2. In connection with the Buyout Transaction, Creamer and Vitale,
jointly and severally, hereby represent and warrant to WRP on behalf of SX
Advisors, on the date hereof and on the date of the closing of the Buyout
Transaction, that:
(a) The consummation by SX Advisors of the Buyout Transaction has
been duly and validly authorized by all necessary limited liability
company action on the part of SX Advisors;
(b) SX Advisors has good and valid title to the SX Interest, free
and clear of all liens, security interests, pledges, mortgages, rights
of first refusal, options, proxies, voting trusts or other encumbrance
(collectively, "Encumbrances"), and the sale and delivery of the SX
Interest to WRP will vest in WRP good and valid title to the SX
Interest, free and clear of all Encumbrances (other than Encumbrances
created or suffered by WRP);
(c) The consummation of the Buyout Transaction by SX Advisors
will not, with or without the giving of notice or the lapse of time,
or both, conflict with or violate (i) any provision of law, rule or
regulation to which either SX Advisors or CVW is subject, (ii) any
order, judgment or decree applicable to SX
Exhibit 10.102 Page 3
Advisors or CVW or binding upon the assets or properties of SX
Advisors or CVW, or (iii) any provision of the organizational or
operational documents of CVW;
(d) CVW has no material liabilities, commitments or obligations
(secured or unsecured and whether accrued, absolute, contingent or
otherwise and whether due or to become due) which have not been
disclosed to WRP, other than any liabilities, commitments or
obligations incurred in the ordinary course of CVW's business
consistent with past practice;
(e) CVW has good title to all of the assets and properties which
it purports to own free and clear of all Encumbrances;
(f) Except for the agreements disclosed on Schedule B attached
hereto (the "Commitments"), CVW is not a party to or bound by any
material contract or agreement and is not in material breach of or
default under any of the Commitments;
(g) There are no lawsuits, actions or proceedings in any court or
before any governmental authority pending or, to the best knowledge of
Creamer and Vitale, threatened against SX Advisors or CVW, nor is
either SX Advisors or CVW subject to any outstanding orders, rulings,
judgments or decrees of any court or governmental authority;
(h) CVW is in compliance in all material respects with all
applicable laws, rules and regulations currently in effect;
(i) No consent, approval or authorization of, or exemption by, or
filing with, any governmental authority or any third party is required
to be obtained or made by SX Advisors in connection with the Buyout
Transaction, except to the extent such consents have been obtained;
and
(j) CVW is not liable for any due and unpaid taxes of any kind in
any jurisdiction and has not received notice of any audit or other
proceeding from any tax authority.
3. In connection with the Buyout Transaction, WRP hereby represents
and warrants to Creamer and Vitale for the benefit of SX Advisors, on the
date hereof and on the date of the closing of the Buyout Transaction, that:
(a) The consummation by WRP of the Buyout Transaction has been
duly and validly authorized by all necessary corporate action on the
part of WRP;
(b) The consummation of the Buyout Transaction by WRP will not,
with or without the giving of notice or the lapse of time, or both,
conflict with or violate (i) any provision of law, rule or regulation
to which WRP is subject, (ii) any
Exhibit 10.102 Page 4
order, judgment or decree applicable to WRP or binding upon the assets
or properties of WRP, or (iii) any provision of the certificate of
incorporation or by-laws of WRP; and
(c) No consent, approval or authorization of, or exemption by, or
filing with, any governmental authority or any third party is required
to be obtained or made by WRP in connection with the Buyout
Transaction, except to the extent such consents have been obtained.
4. The representations and warranties contained in paragraphs 2 and 3
of this Part II hereof shall survive for a period of one year following the
closing of the Buyout Transaction, except that the representations and
warranties contained in paragraph 2(b) of this Part II shall survive
without limitation as to time.
5. Following the closing of the Buyout Transaction, WRP shall be
responsible for filing or causing to be filed all federal, state and local
tax returns required of CVW and shall be the "tax matters partner" of CVW
within the meaning of Section 6231(a)(7) of the Internal Revenue Code of
1986, as amended.
6. WRP and Vitale shall negotiate in good faith an agreement that
provides for Vitale to continue as an employee of CVW until December 31,
2000 at Vitale's current compensation.
7. Upon the closing of the Proposed Investment, CVW shall pay to WRP
(i) $68,000 of the origination fee payable to CVW in connection with the
Proposed Investment and (ii) $8,500 of the extension fee payable to CVW in
connection with the Proposed Investment, for an aggregate payment to WRP of
$76,500.
8. Upon the closing of the Buyout Transaction, CVW shall distribute to
Wellsford all of the Distributable Cash of CVW. The Parties agree that such
payment to Wellsford shall be in full satisfaction of the priority
distribution due Wellsford for fiscal 2000 (the "2000 Priority Payment")
pursuant to Article III of the CVW Operating Agreement, and WRP hereby
waives, on behalf of Wellsford, any further claim against CVW for the 2000
Priority Payment.
9. Upon the closing of the Buyout Transaction, all rights and
obligations of SX Advisors, Creamer and Vitale under the CVW Operating
Agreement shall terminate.
10. As more fully set forth in the Promote Sharing Agreement, dated as
of even date herewith, among the Parties and CVW, in the event CVW receives
any payments from Clairborne Fordham Tower, LLC representing distributions
of First Level Carried Percentage or Second Level Carried Percentage (as
such terms are defined in the operating agreement of Clairborne Fordham
Tower, LLC) with respect to the Proposed Investment (such payments, the
"Promote Payments"), each of Creamer and Vitale shall be entitled to
receive an amount equal to (i) 25% of the first $1,000,000 and (ii) 27.5%
of all amounts in excess of $1,600,000 of such Promote Payments in the
aggregate.
Exhibit 10.102 Page 5
11. WRP agrees that, at any time after March 31, 2001, upon the
request of either of Creamer or Vitale, it shall promptly cause the name of
CVW to be changed to a name that does not include the name "Creamer" or
"Vitale," as the case may be, and to cause CVW thereupon to cease use of
the name "Creamer" or "Vitale," as the case may be, in connection with the
business and operations of CVW.
If WRP does not acquire the SX Interest, the Parties agree to negotiate in
good faith with respect to all matters necessary to ensure the orderly
continuation of CVW's existence and operation.
Exhibit 10.102 Page 6
Please acknowledge your agreement with the foregoing by signing the
acknowledgment provided below:
Very truly yours,
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
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Name: Edward Lowenthal
Title: President & CEO
Accepted and agreed to this
30th day of September, 2000
CREAMER VITALE WELLSFORD, LLC
By: /s/ Michael J. Vitale
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Name: Michael J. Vitale
Title Managing Director
FRANK G. CREAMER, JR.
/s/ Frank G. Creamer, Jr.
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MICHAEL J. VITALE
/s/ Michael J. Vitale
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Exhibit 10.102 Page 7