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.
(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 Richard
Previdi (and possibly other employees) in amounts to be determined by
them.
(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:
(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");
(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%;
Exhibit 10.104 Page 1
(iii)The incurrence of debt for borrowed money not in compliance with
the Financing Parameters (as defined in Section 2 below);
(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), 250 Elm Street and BF
Goodrich (the "RECENTLY ACQUIRED ASSETS"), which will be
transferred pursuant to Section 4; and
(v) The purchase of any new real estate assets except for assets
acquired in one or more ss.1031 exchange transactions for any of
the Non-Nomura Saracen Assets or the Nomura Saracen Assets (each
as described below).
For purposes of clause (v), New Manager may cause the Company (A) to
acquire any one or more assets in a ss.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
ss.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 ss.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 Moody's 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, and provided that a Tax Opinion (as hereinafter defined) is
obtained, 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.
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.
Exhibit 10.104 Page 2
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.
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.
Exhibit 10.104 Page 3
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 agrees) 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:
(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;
(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 ss.1031 exchange
transaction (it being agreed that WCPT has pre-approved a ss.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 ss.1031 exchange transaction that New
Exhibit 10.104 Page 4
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;
(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 ss.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");
(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
(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").
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
Exhibit 10.104 Page 5
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).
(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 to 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 liabilities
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
or permitted to use such accrued vacation days prior to the Effective Date,
in each case in accordance with the Company's current policies.
(b) New Manager will allow Richard Previdi to retain a part-time position
at WRP (for which WRP shall separately compensate Mr. Previdi), provided
that such responsibilities do not interfere with Mr. Previdi's
responsibilities to New Manager (it being understood that any obligation
undertaken by Mr. Previdi to
Exhibit 10.104 Page 6
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
Mr. Previdi 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
Mr. Previdi, 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.
(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.
(d) Mario Mazzella 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 Mr. Mazzella to be available 2 days per week in any of New
Manager's offices.
(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 ss.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
Exhibit 10.104 Page 7
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.
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.
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
Exhibit 10.104 Page 8
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:
(a) WRP will retain 50% of the Old Money Promote and 45% of the New Money
Promote;
(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;
(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;
(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
(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.
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
Exhibit 10.104 Page 9
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).
(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:
(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.
(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
Exhibit 10.104 Page 10
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.
(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 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).
(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.
(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,
Exhibit 10.104 Page 11
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 45 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 45-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.
Exhibit 10.104 Page 12
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 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
Exhibit 10.104 Page 13
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 the 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 ss.1031 transaction and, with
respect to an asset acquired in a ss.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).
Exhibit 10.104 Page 14
As of January 1, 2001, the Administration Fee payable to WRP will be
terminated. 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
Exhibit 10.104 Page 15
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 business 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
Exhibit 10.104 Page 16
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 ss.1031 exchange transaction or the sale of any replacement assets
as a result of an ss.1031 exchange transaction. None of the foregoing fees
will be paid by the Company. New Manger 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.
16. Miscellaneous.
(a) No party will make any public statements or disclosures with respect
to the transactions contemplated by this MOU without the 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
Goldman, Sachs & 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.
Exhibit 10.104 Page 17
(d) It is currently the intent of the parties to have a simultaneous
signing and closing of the transactions contemplated hereunder.
Exhibit 10.104 Page 18
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/ Edward Lowenthal
----------------------------
Name: Edward Lowenthal
Title: President
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Edward Lowenthal
----------------------------
Name: Edward Lowenthal
Title: President
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Ronald L. Bernstein
----------------------------
Name: Ronald L. Bernstein
Title: Vice President
Exhibit 10.104 Page 19
WXI/WWG REALTY, L.L.C.
By: /s/ Ronald L. Bernstein
----------------------------
Name: Ronald L. Bernstein
Title: Vice President
W/W GROUP HOLDINGS, L.L.C.
By: /s/ Ronald L. Bernstein
----------------------------
Name: Ronald L. Bernstein
Title: Vice President
Exhibit 10.104 Page 20
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];
Exhibit 10.104 Page 21
(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];
(m) [THIS PROVISIONS, WHICH GOVERNS FINANCING, ETC., WILL BE REVISED
TO REFLECT THE MEMORANDUM OF UNDERSTANDING];
(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
Exhibit 10.104 Page 22
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];
(p) [THIS PROVISION WILL BE REVISED TO REFLECT THE MEMORANDUM OF
UNDERSTANDING];
(q) [PROVISIONS REGARDING MARKETING PLAN WILL BE DELETED]
(r) [THIS PROVISION WILL BE REVISED TO REFLECT THE MEMORANDUM OF
UNDERSTANDING]
(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
Exhibit 10.104 Page 23
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);
----------
* This list will include Sullivan & Cromwell; Robinson, Silverman, Pearce,
Aronsohn & Berman LLP; Arent Fox Kintner Plotkin & Kahn; and Fried, Frank,
Harris, Shriver & Jacobson as well as local counsel previously used by the
Company or reasonably acceptable to WCPT.
Exhibit 10.104 Page 24
(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
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];
(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];
(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].
(j) Replacing any third party leasing, development and property
management agreement 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.
[THE LAST SENTENCE OF SECTION 3.4 OF THE OPERATING AGREEMENT SHALL BE
DELETED.]
Exhibit 10.104 Page 25