[Draft of 1/20/98]
AMENDED AND RESTATED
GENERAL PARTNERSHIP AGREEMENT
OF
▇▇▇▇▇▇▇ REALTY CONSULTANTS
THIS AMENDED AND RESTATED GENERAL PARTNERSHIP AGREEMENT of ▇▇▇▇▇▇▇
REALTY CONSULTANTS, a general partnership formed pursuant to the laws of
the State of New York (the "Partnership") dated as of the 1st day of
January, 1998 (the "Agreement") by and between WELLSFORD CRC HOLDING CORP.
("Wellsford"), a Maryland corporation which is a wholly-owned subsidiary of
Wellsford Real Properties, Inc., ("WRP"), and FGC REALTY CONSULTANTS, INC.,
a New York corporation ("FGC"; FGC together with Wellsford being
collectively referred to hereinafter as the "Partners" and individually as
a "Partner").
W I T N E S S E T H:
WHEREAS, the Partnership was originally formed pursuant to a
Partnership Agreement dated as of December 21, 1990 (the "Original
Agreement") between FGC and ▇▇▇ Taurus & Company, Inc., a Delaware
corporation ("▇▇▇ Taurus"; ▇▇▇ Taurus and FGC, collectively referred to
hereinafter as the "Original Partners");
WHEREAS, in connection with the sale by ▇▇▇ Taurus and the purchase by
Wellsford of all of the partnership interest of ▇▇▇ Taurus in the
Partnership pursuant to an Asset Purchase Agreement dated as of the date
hereof, among Duterra Corp., a Delaware corporation ("Duterra"), ▇▇▇▇
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇ Taurus and Wellsford (the "Asset Purchase
Agreement"), the parties hereto desire to enter into this Agreement to
amend, modify and restate the Original Agreement in its entirety as
provided below.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
promises herein contained, the Partners, intending to be legally bound,
agree as follows:
ARTICLE XII
ORGANIZATION, NAME, PURPOSES AND TERM
1.12.1 Organization, Name and Office.
1. The Partners shall promptly file any and all
documentation as shall be necessary under the laws of the State of New York
to give effect to the provisions of this Agreement and to constitute the
Partners as partners of the Partnership and the Partnership as a general
partnership, and to maintain the qualification of the Partnership as a
general partnership in any state or other jurisdiction in which such
qualification is required by law.
2. The name of the Partnership shall remain ▇▇▇▇▇▇▇ Realty
Consultants, and the principal office of the Partnership shall be located
at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
the Partners may agree upon from time to time.
3. All property owned by the Partnership shall be deemed
owned by the Partnership as an entity, and no Partner, individually, shall
have any ownership of such property.
1.12.2 Purposes. The purpose of the Partnership 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 and (b) engage in any lawful activity
related or incidental to one or more of the foregoing activities.
1.12.3 Term. The term of the Partnership shall commence on
the date hereof and shall continue until December 31, 2007, unless sooner
dissolved or terminated as hereinafter provided.
ARTICLE XIII
CAPITAL CONTRIBUTIONS
2.13.1 Capital Contributions. ▇▇▇ Taurus and FGC, as Original
Partners, upon formation of the Partnership pursuant to the Original
Agreement, contributed, in cash, capital to the Partnership in amounts
equal to $500,000 and $100, respectively.
2.13.2 Additional Capital Contributions. No Partner shall be
required to contribute additional capital to the Partnership unless all
Partners agree.
2.13.3 Capital Account.
1. A capital account shall be maintained for each Partner.
The capital account of each Partner as of the date hereof (hereinafter
sometimes referred to as such Partner's "Initial Capital Account Balance")
appears on Schedule A attached hereto (which, if such amounts cannot be
determined at execution of this Agreement, such amounts shall be determined
after such execution by the Partnership's accountants, and the amounts so
determined shall be entered onto Schedule A). Each Partner's capital
account shall after the date hereof be increased by the cash or net agreed
value of each capital contribution made by or on behalf of such Partner
after the date hereof and allocations to such Partner after the date hereof
of Net Profit (as hereinafter defined). Each Partner's capital account
shall be decreased by the value of each distribution made to such Partner
by the Partnership after the date hereof and allocations to such Partner
after the date hereof 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 Partners' capital
accounts and no Partner shall withdraw any part of such Partner's capital
account or shall be entitled to receive any distribution from this
Partnership except as may be specifically provided in this Agreement. No
Partner with a negative balance in its capital account shall have any
obligation to the Partnership or the other Partner to restore said negative
balance to zero.
2.13.4 Interests. The "Interest" of a Partner in the
Partnership shall mean the rights or interest of such Partner in the
Partnership. The "Percentage Interest" of a Partner shall mean the
percentage set forth opposite such Partner's name on Schedule B attached
hereto.
ARTICLE XIV
DISTRIBUTIONS AND ALLOCATIONS
3.14.1 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.
"Clairborne Program" means the Clairborne Investors Mortgage
Investment Program, as established by the Program Agreement.
"Distribution Period" means each fiscal year, or such other time
period as the Managing Partner may determine in accordance with Section
3.1(c) hereof.
"FGC Share" means, for each Distribution Period, an amount equal
to 51% of any excess of the Net Cash Flow for such Distribution Period over
the Wellsford Priority Return for such Distribution Period.
"Net Cash Flow" means, for each Distribution Period, (A) the sum
of (i) all cash funds received by the Partnership (other than capital
contributions or loans by the Partners) and (ii) any amounts released from
Partnership 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 Partnership, (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
Partnership for such purposes and (iv) amounts contributed to reasonable
reserves for working capital, contingencies, capital improvements and
replacements.
"New ▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Wellsford, L.L.C.
"New ▇▇▇▇▇▇▇ Cash Receipts" means all cash funds received by New
▇▇▇▇▇▇▇ (other than (i) capital contributions, (ii) loans by members of New
▇▇▇▇▇▇▇ and (iii) Post-Buy/Sell Net Cash Flow (as defined in the Operating
Agreement of New ▇▇▇▇▇▇▇).
"New ▇▇▇▇▇▇▇ Net Cash Flow" means, for each Distribution Period,
(A) the sum of (i) New ▇▇▇▇▇▇▇ Cash Receipts 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 New ▇▇▇▇▇▇▇, (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 New
▇▇▇▇▇▇▇ 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 the New ▇▇▇▇▇▇▇ Net Cash Flow over
distributions made by New ▇▇▇▇▇▇▇ with respect to the Wellsford Priority
Return during such Distribution Period.
"Old 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 Partnership with respect
to the Wellsford Priority Return for such Distribution Period.
"Post-Buy/Sell Net Cash Flow" means, as to any Venture, for each
Distribution Period after New ▇▇▇▇▇▇▇ has purchased the interest of the
Prudential Investor in such Venture, all cash funds received by New ▇▇▇▇▇▇▇
from such Venture.
"Program Agreement" means the Program Agreement for the
Clairborne Program, dated as of December 10, 1997, between the Partnership
and PIC (as hereinafter defined).
"Prudential Investor" means any account managed or advised by
Prudential Real Estate Investors ("PREI"), a division of The Prudential
Investment Corporation, a New Jersey Corporation ("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 New ▇▇▇▇▇▇▇ or a subsidiary
thereof and a Prudential Investor to acquire distressed, discount or other
secured mortgage debt under the Clairborne Program.
"Venture Agreement" means 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 New ▇▇▇▇▇▇▇ or a subsidiary of New ▇▇▇▇▇▇▇.
"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 New ▇▇▇▇▇▇▇ 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 New ▇▇▇▇▇▇▇ or any of its subsidiaries from each Venture during
each Distribution Period.
"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 New ▇▇▇▇▇▇▇ 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 or an affiliate of Wellsford
through New ▇▇▇▇▇▇▇.
(2) Distributions. Net Cash Flow shall be distributed
annually, within 45 days after the close of each fiscal year as follows:
(i) Until Wellsford shall have received by virtue of
the receipt by it of distributions of the Old Wellsford Share and the New
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 New ▇▇▇▇▇▇▇ Net Cash Flow received by Wellsford
from New ▇▇▇▇▇▇▇ 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 FGC, the Old Wellsford
Share and the FGC Share, respectively.
(ii) Thereafter, Net Cash Flow shall be distributed to
each of Wellsford and FGC in accordance with their respective Percentage
Interests in the Partnership.
(iii) Upon termination and dissolution of the
Partnership, the assets of the Partnership shall be used, applied and
distributed as provided in Section 5.4 of this Agreement.
(3) Interim Distributions. In addition to the annual
distributions of Net Cash Flow made under Section 3.1(b) hereof, the
Managing Partner (as hereinafter defined) may make interim distributions of
Net Cash Flow during the fiscal year to the extent the Partnership has
available cash, provided, however, that all such interim distributions of
Net Cash Flow shall be made in the order of priority provided in Section
3.1(b) hereof and that the Managing Partner shall act prudently with
respect to its decisions as to the amount and frequency of such
distributions. The Partners agree that it shall be deemed prudent to
distribute, on a quarterly basis, amounts sufficient to pay the anticipated
tax obligations of the Partners attributable to their Interests.
3.14.2 Allocations of Net Profits and Net Losses. [OPEN]
1. ((0).1 "Net Profit" means, for each fiscal year, the
excess, if any, of the Partnership's items of income and gain over the
Partnership'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 Partnership in accordance with the principles of Section s
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 Partnership's items of loss and deduction over the
Partnership'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 Partnership in accordance with the principles of Section s
1.704-1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
2. Net Profit and Net Loss shall be allocated between the
Partners with respect to each fiscal year for purposes of maintaining the
capital accounts of the Partnership as follows:
((0).1 Subject to Section 3.2(b)(ii) below, Net Profit
and Net Loss shall be allocated between the Partners
so as to bring the differences (positive or negative) between the Partners'
respective Capital Account Balances and the Partners' respective Initial
Capital Account Balances into the ratio of the Partners' respective
Percentage Interests, and then in the ratio of the Partners' respective
Percentage Interests, provided that such allocations shall be adjusted to
the extent necessary to prevent one Partner's capital account from being
negative while the other Partner's capital account is positive.
((0).2 Net Profit and Net Loss upon liquidation (which
for this purpose shall mean the year or years during which the Partnership
sells or is in the process of selling all or substantially all of its
assets) shall be allocated between the Partners so as to bring the
Partners' respective capital account balances into the ratio of the
Partners' respective Percentage Interests, and then in the ratio of the
Partners' respective Percentage 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 partner 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 Section s
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 Partnership, except that
appropriate adjustments shall be made to such allocations (i) to take
account of the effect of the Section 754 election of the Partnership and
(ii) if applicable, in accordance with the principles of Section 704(c) of
the Code and the Treasury Regulations thereunder and Section s 1.704-
1(b)(2)(iv)(d), (e), (f) and (g) of the Treasury Regulations.
6. Upon the transfer of an Interest in the Partnership,
the allocations between transferor and transferee shall be apportioned by
an interim closing of the books of the Partnership.
3.14.3 No Salaries; Reimbursement. (1) No salary or other
compensation shall be paid to any Partner by the Partnership, but the
Partnership shall reimburse each Partner for actual expenses incurred by
such Partner, in connection with the business of, and in fulfilling its
duties or rendering services to and on behalf of, the Partnership 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 Partners acknowledge
that the Partnership shall continue to employ and shall pay to each of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") for each
fiscal year his respective base compensation in an amount which, when added
to his respective base compensation received from New ▇▇▇▇▇▇▇, 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 Partnership (taking into account any amount
which may be withheld by New ▇▇▇▇▇▇▇ pursuant to the applicable provision
of the Limited Liability Company Agreement of New ▇▇▇▇▇▇▇, dated as of the
date hereof, between Wellsford and SX Advisors, LLC (the "New ▇▇▇▇▇▇▇
Operating Agreement")) from each of ▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇▇'▇ base
compensation, such amount to be deducted pro rata from each of their
respective base 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 ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, respectively, to the extent the
Partnership 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.
3.14.4 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, FGC and the FGC Designees (as hereinafter
defined) shall prepare, maintain and mail (or cause to be prepared,
maintained and mailed) to each Partner 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 Partnership and its
subsidiaries or affiliated entities; (ii) a consolidated statement of
income or loss and a consolidated statement of cash flows of the
Partnership and its subsidiaries or affiliated entities; (iii) a
consolidated statement of changes in capital accounts of the Partnership
and its subsidiaries or affiliated entities; and (iv) a consolidated
statement of the investments made by the Partnership and its subsidiaries
or affiliated entities.
(2) Within 70 days after the end of each fiscal year, FGC
and the FGC Designees (as hereinafter defined) shall prepare and mail (or
cause to be prepared and mailed) to each Partner, a financial report (which
shall include, without limitation, a Form K-1 for each Partner or former
Partner) setting forth in sufficient detail such business and transactions
of the Partnership during such fiscal year as shall enable each Partner (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 XV
OPERATION AND MANAGEMENT
4.15.1 Management. 1. Subject to the provisions set forth in
Section 4.1(d) hereof, FGC shall act as the managing partner of the
Partnership (the "Managing Partner") and through its designees (the "FGC
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 Partnership, including, without limitation, the
making of any payment set forth in the Budget (as hereinafter defined),
provided, however, that (i) the FGC 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 Partners' meetings on a monthly basis, or such other interval as
the Partners shall determine, in which the FGC Designees shall discuss and
consult with the Wellsford Designees regarding the operations and other
business affairs of the Partnership and shall obtain any consent which may
be required for any impending activity of the Partnership.
2. No later than sixty days prior to the end of each fiscal
year, FGC shall prepare and provide (or cause to be prepared and provided)
to Wellsford a plan of operations for the business of the Partnership for
such calendar year and an operating and capital budget for the Partnership,
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 Partners 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
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, 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 C is hereby approved and adopted by the Partners.
4. The following activities and decisions shall require the
unanimous consent of all of the Partners:
(i) the admission of any additional partners;
(ii) the assignment, transfer, sale, lease or otherwise
disposition of all or substantially all of the Partnerships' property or
assets, or any material change in the nature of its business, or any
decision to wind up, liquidate or dissolve the Partnership, or any
agreement to do any of the foregoing;
(iii) increasing the compensation payable by the
Partnership to any officer, director, employee or agent of the Partnership
or any of the Partners' designees having an annual base compensation in
excess of $125,000, except as otherwise provided in an approved budget;
(iv) making any payments or loans directly or indirectly
to or for the benefit of any Partner, except as expressly permitted by this
Agreement;
(v) 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%;
(vi) acquiring, by purchase, lease or otherwise, or
disposing of or abandoning any real property or any interest therein;
(vii) making any tax elections in connection with the
Partnership;
(viii) making any decision with respect to setting up new
subsidiaries or affiliated entities; and
(ix) doing any other act which would materially alter or
materially adversely affect the Partnership's business.
5. The Partners may appoint, employ or otherwise contract
with other persons for the transaction of the business of the Partnership
or the performance of services for or on their behalf or for or on behalf
of the Partnership. Each Partner shall designate up to two designees who
shall act on its behalf in managing the affairs or transacting the business
of the Partnership. The initial FGC Designees and the designees of
Wellsford (the "Wellsford Designees") are set forth on Schedule D attached
hereto. Each designee shall continue to act on behalf of its designating
Partner until his respective resignation or removal by the designating
Partner. A Partner may not remove or replace a designee not designated by
it. In the event that either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ (or both) elects
voluntarily to terminate his (or their) employment with the Partnership or
New ▇▇▇▇▇▇▇, 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 FGC to initiate, in
which case FGC shall be obligated to initiate) the Buy/Sell (as hereinafter
defined).
ARTICLE XVI
TERMINATION; TRANSFERS OF INTERESTS; BUY/SELL
5.16.1 Events of Termination. The Partnership 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 Partnership;
2. a determination of all of the Partners to dissolve and
liquidate the Partnership (except that upon the death or disability of
either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, such determination may be made by Wellsford and,
if applicable, the survivor of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ as set forth in Section
9.2 hereof);
3. the withdrawal, dissolution or bankruptcy of any
Partner; or
4. the expiration of the term of the Partnership.
For purposes of this Agreement, a bankruptcy of a Partner
shall be deemed to occur when such Partner 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 Partner as bankrupt and such Partner 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.
5.16.2 Withdrawal of a Partner. Except as set forth in
Section 4.1(e) hereof or except as set forth in the last sentence of this
Section 5.2, no Partner shall have the right voluntarily to withdraw from
the Partnership without the written consent of the other Partner. Upon
withdrawal by a Partner, as aforesaid, such Partner shall cease to be a
Partner and shall not retain its interest in the Net Profits, Net Losses
and distributions of the Partnership. Following the death, resignation or
permanent disability of either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, the voluntary resignation
of the survivor of them shall be deemed a withdrawal by FGC.
5.16.3 Winding Up. Upon a dissolution of the Partnership
requiring the winding up of its affairs, the Partners or a designated
person or persons shall with reasonable promptness wind up the
Partnership's affairs. The assets of the Partnership shall be sold within
a reasonable period of time, to the extent necessary to pay or provide for
the debts and liabilities of the Partnership, and may be sold to the extent
deemed commercially feasible by the person or persons winding up the
affairs of the Partnership, and all assets of the Partnership shall be
distributed as provided in Section 5.4.
5.16.4 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 New York):
1. to the payment of the debts and liabilities of the
Partnership 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 Partnership may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of
the Partnership, 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 accrued and unpaid Wellsford
Priority Return;
4. pro rata to the repayment of any advances or loans,
with interest accrued thereon, that may have been made by any of the
Partners to the Partnership; and
5. pro rata to the Partners in proportion to their
respective positive Capital Account Balances, until such capital account
balances have been reduced to zero; and
(f) pro rata to the Partners in accordance with their
respective Percentage Interests.
5.16.5 Statements on Winding Up. Upon termination of the
Partnership, a statement shall be prepared by the Partnership's
accountants, which shall set forth the assets and liabilities of the
Partnership as of the date of termination.
5.16.6 Restrictions on Transfers of Interests.
(1) Neither Wellsford nor FGC 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 FGC (but upon prior
notice to FGC and the Partnership), 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, FGC shall
have the right (upon prior notice to Wellsford and the Partnership) to
assign or transfer all or a portion of its Interests to Creamer, Vitale,
members of ▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇'▇ immediate family or to a trust or trusts
established for the benefit of the members of the respective immediate
family of ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, or to a wholly-owned subsidiary of FGC or an
entity wholly-owned by either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ or other FGC Related Entity
(as hereinafter defined) provided that in connection with any such
transfer, FGC retains, by a written voting trust or other instrument in
form and substance satisfactory to the Partners and the Partnership, all
voting and management rights with respect to the transferred Interests and
provided that any such subsidiary or FGC's Related Entity expressly assumes
in writing all of FGC'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 "FGC
Related Entity" shall mean any person, partnership, corporation or other
entity in which either FGC owns or ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ owns a majority of the
voting interests, and the term "immediate family" shall mean the respective
spouse, parents and issue of ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, as the case may be. If FGC
shall transfer any portion of its Interest to ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, or members
of ▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇'▇ immediate family, or to a trust or trusts
established for the benefit of the members of the respective immediately
family of ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, or other FGC Related Entity, all references in
this Agreement to "FGC" shall apply to FGC, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, the legal
representative of ▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇'▇ estate, ▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇'▇
heirs, the members of ▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇'▇ immediate family, trusts
established for the benefit of the members of the respective immediately
family of ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, or other FGC Related Entity to which such
Interests were transferred and, simultaneously with the transfer, the
transferees shall execute and deliver to Wellsford and the Partnership an
agreement, in form and substance satisfactory to Wellsford and the
Partnership, 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, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall remain the
designees of FGC and shall agree to be employed by the Partnership as set
forth in Section 3.3 hereof, subject to the provisions set forth in
Section 4.1(e) hereof.
5.16.7 Buy/Sell Option. 1. Either Partner may elect to
initiate a buy/sell procedure (the "Buy/Sell") with respect to its Interest
if:
((0).1 the Partners do not reach a mutual agreement
with respect to the Budget for two (2) consecutive years; or
(ii) the Partners (or the Members of New ▇▇▇▇▇▇▇) are
not able to reach agreement as to any material matter such that the
Partnership or New ▇▇▇▇▇▇▇, as the case may be, is unable to carry out
its respective business, including, without limitation, satisfying its
respective obligations under the Partnership Commitments (as
hereinafter defined) or the Clairborne Program, as the case may be.
2. In the event (i) either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ (or both)
elects voluntarily to terminate his (or their) employment with the
Partnership or with New ▇▇▇▇▇▇▇, 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 FGC to initiate, in which case FGC shall be
obligated to initiate) the Buy/Sell;
3. In the event (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
ceases to act as the Chairman and the President, respectively, of WRP, or
(ii) 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), FGC shall have the right to initiate (or direct
Wellsford to initiate, in which case Wellsford shall be obligated to
initiate) the 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 Partner as may be
applicable (the "Initiating Partner") may initiate the Buy/Sell by giving a
written notice of its intention to initiate the Buy/Sell (a "Buy/Sell
Notice") to the other Partner (the "Offeree Partner") which sets forth an
amount equal to the Initiating Partner's valuation of the entire
Partnership (the "Sale Price") and such other terms of the sale as the
Initiating Partner may determine. The Offeree Partner shall have the
option to (x) buy the Initiating Partner's Interest at an amount equal to
the amount which the Initiating Partner would be entitled to receive if the
Partnership 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 Buy/Sell Notice, or (y) sell its Interest to the Initiating
Partner for an amount equal to the amount which the Offeree Partner would
be entitled to receive if the Partnership 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 Buy/Sell Notice.
5. Within forty-five (45) days following the giving of the
Buy/Sell Notice (the "Buy/Sell Election Period"), the Offeree Partner shall
deliver a written notice to the Initiating Partner 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
Buy/Sell shall be consummated upon the transfer of the Interest (the
"Subject Interest") by the selling Partner or its designee (the "Selling
Partner"), and shall occur no later than fifteen (15) days following the
expiration of the Buy/Sell Election Period.
7. If the Partner or its designee purchasing the Subject
Interest pursuant to the Buy/Sell (the "Purchasing Partner") is ready,
willing and able to perform its obligations at the closing, and the Selling
Partner defaults in performing its obligations at the closing, the sale of
the Subject Interest shall be deemed to have occurred at the closing, the
Partnership shall record the transfer of the Subject Interest in its books
and records, the Partnership shall treat the Purchasing Partner as the
legal and beneficial owner of the Subject Interest sold by the Selling
Partner, the Selling Partner shall cease to have any rights as a Partner of
the Partnership with respect to the Subject Interest, and the Selling
Partner's sole remedy against the Purchasing Partner 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 Partner
and upon tender to the Purchasing Partner of the assignment of the Subject
Interest and other documents which should have been delivered at the
closing.
8. If the Selling Partner is ready, willing and able
to perform its obligations at the closing, and the Purchasing Partner
defaults in performing its obligations at the closing, the Selling Partner
shall have the right (but not the obligation) to acquire the Interest of
the Purchasing Partner at a price equal to 75% (seventy-five percent) of
the amount that 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 Partner shall deliver
to the Purchasing Partner a duly executed assignment of Subject Interest
and such other documents reasonably requested by the Purchasing Partner
which are necessary to evidence or complete the transfer of such Subject
Interest, and the Purchasing Partner shall deliver to the Selling Partner
(i) cash payable by wire transfer of immediately available funds to an
account or accounts of the Selling Partner at the bank specified by the
Selling Partner in writing at least two business days prior to the closing,
or (ii) a certified or bank check payable to the Selling Partner in an
amount equal to the purchase price of the Subject Interest.
10. Any decision by a Partner to initiate the Buy/Sell
and/or any response by a Partner to a Buy/Sell Notice shall be made
simultaneously and consistently with respect to the applicable buy/sell
provisions of interests in New ▇▇▇▇▇▇▇ as set forth in the New ▇▇▇▇▇▇▇
Operating Agreement.
ARTICLE XVII
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
6.17.1 Books and Records. FGC, as Managing Partner, shall
prepare and maintain (or cause to be prepared and maintained) for the
Partnership 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 Partnership's business and affairs and sufficient to record
the allocation of Net Profits, Net Losses and distributions as provided for
herein.
6.17.2 Fiscal Year. The fiscal year of the Partnership shall
be the calendar year.
6.17.3 Bank Accounts. All receipts, funds and income of the
Partnership shall be deposited in the name of the Partnership in such banks
as are determined by the Partners. Withdrawals from said banks shall be
made on signatures of ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, or such person or persons as shall
be authorized by the Partners, and there shall be no commingling of the
monies and funds of the Partnership with monies and funds of any other
entity.
6.17.4 Accounting Decisions. All decisions as to accounting
principles and tax elections shall be made by the Partners. The
Partnership shall make any election permitted under Section 754 of the
Code, unless otherwise agreed to by the Partners.
6.17.5 Tax Returns. Federal, state and local income tax
returns of the Partnership shall be prepared by such accounting firm as may
be selected by the Managing Partner, subject to the approval of Wellsford.
FGC shall file (or cause to be filed) all federal, state and local tax
returns required of the Partnership.
6.17.6 Tax Matters Partner. FGC shall be the "tax matters
partner" of the Partnership 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 Partner if it shall have acted in good faith
and in reliance upon the advice of legal counsel and/or Diamante, ▇▇▇▇ &
▇▇▇▇ or such other tax accountants reasonably acceptable to the other
Partner. The Partnership shall bear the expense of any tax audit or
proceeding conducted at the Partnership level, but the cost of any
adjustment to any Partner's tax liability shall be borne by that Partner.
FGC shall take all actions necessary for Wellsford to be a "notice partner"
within the meaning of Section 6231(a)(8) of the Code.
6.17.7 Inspection. Each Partner or its authorized
representative may examine any of the books or records of the Partnership
at reasonable times and upon reasonable notice provided such examination
shall not interfere with the business of the Partnership.
ARTICLE XVIII
REPRESENTATIONS AND WARRANTIES
FGC, in order to induce Wellsford to enter into this Agreement,
hereby represents and warrants to Wellsford the following with respect to
the Partnership:
7.18.1 Organization; Etc. The Partnership has all requisite
power and authority to carry on its business as it is now being conducted
and presently proposed to be conducted and to own or lease and to operate
its properties and assets. The Partnership is duly qualified or licensed
to do business and is in good standing in every jurisdiction in which the
failure to be so qualified or licensed or in good standing could have a
material adverse effect on its respective business, properties, assets,
financial condition, results of operations (a "Material Adverse Effect").
The Partnership is a partnership for federal income tax purposes, and has
never been known by any other name.
7.18.2 Financial Statements; Undisclosed Liabilities.
(1) Certain Definitions. The following terms shall have
the following meanings when used herein:
"Partnership's 1996 Financial Statements" means the
Partnership's Financial Statements as of and for the year ended December
31, 1996.
"Partnership's 1997 Financial Statements" means the
unaudited balance sheets of the Partnership as of December 31, 1997, and
the related statements of income and expense, retained earnings and cash
flows for the periods then ended, and the notes thereto.
"Partnership's Audited Financial Statements" means the
audited balance sheets of the Partnership as of December 31 in each of the
years 1995 through 1996, and the related statements of income and expense,
retained earnings and cash flows for the years then ended, and the notes
thereto.
"Partnership's Financial Statements" means the Partnership's
Audited Financial Statements, the Partnership's Unaudited Financial
Statements and the Partnership's 1997 Financial Statements.
"Partnership's Unaudited Financial Statements" means the
unaudited balance sheets of the Partnership as of December 31 in each of
the years 1991 through 1994, and the related statements of income and
expense, retained earnings and cash flows for the years then ended, and the
notes thereto.
(2) The Partnership's Financial Statements, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated. The Partnership's
Financial Statements, are correct, true and complete in all material
respects and fairly present the financial position and the results of
operations of the Partnership as of the respective dates thereof and for
the respective periods indicated. Except as disclosed, reflected or
reserved against in the Partnership's 1996 Financial Statements and the
Partnership's 1997 Financial Statements, the Partnership does not have any
material liabilities, commitments or obligations (secured or unsecured and
whether accrued, absolute, contingent or otherwise and whether due or to
become due), other than any liabilities, commitments or obligations
incurred after the respective dates thereof in the ordinary course of
business. The assets and properties of the Partnership are fairly valued
in the Partnership's Financial Statements.
7.18.3 Title to Assets. 1. The Partnership has good and
valid (and, in the case of real property, marketable) title to all of the
assets and properties which it purports to own (including those reflected
in the Partnership's 1996 Financial Statements and the Partnership's 1997
Financial Statements, except for assets and properties sold, consumed or
otherwise disposed of in the ordinary course of business since the date of
the Partnership's 1996 Financial Statements and the Partnership's 1997
Financial Statements), free and clear of all liens, security interests,
pledges, mortgages, rights of first refusal, options, proxies, voting
trusts or other encumbrances ("Encumbrances") and except for liens for
taxes not yet due and payable or due but not delinquent or being contested
in good faith by appropriate proceedings and for which adequate reserves
have been provided in the Partnership's 1996 Financial Statements and the
Partnership's 1997 Financial Statements.
2. All property and assets owned or utilized by the
Partnership (i) are in good operating condition and repair (except for
ordinary wear and tear), free from any defects (except such minor defects
as do not interfere with the use thereof in the conduct of the normal
operations), (ii) have been maintained consistent with the standards
generally followed in the industry and (iii) are sufficient to carry on the
business of the Partnership as presently conducted.
7.18.4 Commitments. 1. Schedule 7.4 attached hereto sets
forth, as of the date hereof, a list of each of contracts or agreements,
whether written or oral (including any and all amendments thereto), to
which the Partnership is a party or by which the Partnership is bound
(collectively, the "Partnership Commitments")
2. No Commitment violates any law or any order of any
court or administrative or governmental entity which violation would have a
material adverse effect on the Partnership. The Partnership is not in
breach of or default under any of the Commitments whereby the breach
thereof or default thereunder would have a material adverse effect on the
Partnership, and no event or omission has occurred on the part of the
Partnership which through the passage of time or the giving of notice, or
both, would constitute a breach of or default thereunder or cause the
acceleration of or give rise to the right to accelerate the Partnership's
obligations thereunder or result in the creation of any Encumbrance on any
of the assets owned, used or occupied by the Partnership thereunder. To
the best of FGC's knowledge, no third party is in breach of or default
under any Commitment, nor has any event or omission occurred which, through
the passage of time or the giving of notice, or both, would constitute a
breach of or default thereunder or give rise to an automatic termination,
or the right of discretionary termination, thereof. Each Commitment is
(assuming due power and authority of, and due execution and delivery by,
the other party or parties thereto) valid and binding upon each party
thereto and is in full force and effect.
7.18.5 Insurance. Schedule 7.5 attached hereto sets forth a
complete and accurate list of all policies of fire, liability, workers'
compensation, health and other forms of insurance currently in effect with
respect to the business and properties of the Partnership. All such
insurance is in full force and effect, and no notice of cancellation or
termination, or reduction of coverage or intention to cancel, terminate or
reduce coverage, has been received with respect to any policy for such
insurance. The insurance coverage provided by such policies or insurance
will not terminate or lapse by reason of the transactions contemplated by
this Agreement and, on and after the date hereof, the Partnership will
continue to be covered under such policies for events occurring prior to
the date hereof.
No such policy provides for or is subject to any currently enforceable
retroactive rate or premium adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof.
7.18.6 Litigation. Schedule 7.6 attached hereto sets forth a
list of all lawsuits, legal, administrative, arbitration or other
proceeding or action or investigation ("Litigation") pending or threatened
against or involving the Partnership. Except as set forth in Schedule 7.6,
the Partnership is not subject to and has not received written notice of
any outstanding orders, rulings, judgments or decrees of any court,
arbitration or administrative or governmental entity. Notwithstanding the
foregoing, there is no Litigation, pending, or to the best of FGC's
knowledge, threatened against or involving the Partnership or any of its
properties, assets or rights which could reasonably be expected to have a
Material Adverse Effect.
7.18.7 Compliance with Law; Licenses, Permits. The
Partnership is in compliance with all applicable laws, rules, regulations
and orders currently in effect the non-compliance with which would have a
material adverse effect on the Partnership. The Partnership has all third
party consents and authorizations and governmental permits, licenses and
authorizations necessary for the conduct of its business as presently
conducted or proposed to be conducted.
7.18.8 Employee Benefit Plans. Except as set forth on
Schedule 7.8, neither the Partnership nor any of its respective ERISA
Affiliates established, adopted, maintained, sponsored or contributed to
any employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
none of such entities has any obligation to contribute to any such employee
benefit plan. For purposes of this Agreement, the term "ERISA Affiliate"
means any corporation or person which is a member of any group of
organizations described in Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, or Section 4001(a)(14)] of ERISA of
which the Partnership is a member.
7.18.9 Tax Returns; Taxes. (i) All federal, state, local and
foreign income and other tax returns required to be filed by the
Partnership have been filed in a timely manner (taking into account all
extensions of due dates) and all taxes and other charges shown as due
thereon have been paid. (ii) There are no Encumbrances for unpaid taxes
(other than taxes not yet due and payable) upon any of the assets of the
Partnership. (iii) No claims or deficiencies in writing for any taxes with
respect to the Partnership have been asserted or assessed in writing which
remain unpaid. (iv) There are no waivers of statutes of limitations in
effect in respect of any tax liability of the Partnership. (v) To FGC's
knowledge, the Partnership has withheld and paid all taxes required to have
been withheld and paid by it in connection with income, payments or
distributions to its partners, employees or other recipients. (vi) The
Partnership has made no election to be taxable as a corporation or any
other election not reflected on the Partnership returns. (vii) Neither FGC
nor the Partnership have received any notice by any tax authority that such
authority intends to audit the Partnership.
7.18.10 Environmental Matters. The Partnership does not have any
knowledge of, and has not received any claims or notices (whether oral or
written) from any person or governmental or administrative entity, that
there are lawsuits, orders, consent decrees, administrative enforcement
actions, environmental cleanup proceedings or notices of violation pending
or threatened, with respect to compliance or in connection with all
applicable laws, foreign and domestic statutes, ordinances, rules,
regulations, common law, orders, decrees and other binding legal
requirements pertaining to health, protection of the environment,
pollution, natural resources, waste management and other matters relating
to the environment affecting the Partnership.
7.18.11 Labor Matters. 1. The Partnership has been for the last
five years and is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and is not and has not been engaged in any unfair labor practices
as defined in the National Labor Regulations Act or other applicable law,
ordinance or regulation.
(b) The Partnership does not have any employees, except for
those sets forth in Schedule 7.11 attached hereto. There are no
administrative charges or court complaints against the Partnership
concerning alleged employment discrimination or other employment related
matters pending or threatened before the U.S. Equal Employment Opportunity
Commission or any administrative or governmental entity. There is not
pending as of the date hereof any complaint against the Partnership issued
by or pending before the National Labor Relations Board.
7.18.12 Affiliates' Relationships. Except as set forth in the
Partnership's 1996 Financial Statements and the Partnership's 1997
Financial Statements, the Partnership does not have any outstanding
contract, agreement or other arrangement with either Duterra, ▇▇▇▇▇▇▇, ▇▇▇
Taurus or any of their respective affiliates, which will continue after the
Closing (as defined in the Asset Purchase Agreement).
7.18.13 Patents and Trademarks. The Partnership has valid, legal
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights
(collectively, the "Intellectual Property Rights") which are necessary to,
or used in, its business, which Intellectual Property Rights are set forth
on Schedule 7.13 attached hereto. Schedule 7.13 sets forth a list of all
trade and service marks which have been registered or for which an
application for registration is pending, in each case which are owned and
used or held for use exclusively by the Partnership (the "Patent Rights").
Except as set forth on Schedule 7.13 attached hereto, the Partnership (i)
is not a defendant in any claim, suit, action or proceeding relating to its
business which involves a claim of infringement of any patents, trademarks
or service marks, (ii) does not have any knowledge of any existing
infringement by another person of any of the Patent Rights belonging to it,
(iii) has not granted any licenses or other rights, and has no obligations
to grant licenses or other rights, to any of its Intellectual Property
Rights, or (iv) has not received notice of its infringement of the patent,
trademark, copyright or other intellectual property rights of a third
party.
7.18.14 Directors, Officers and Employees; Conflicts of Interest.
No director, officer or employee of the Partnership has or claims to have
(i) any interest in the property, real or personal, tangible or intangible,
including, without limitation, intangibles, licenses, inventions,
technology, processes, designs, computer programs, know-how and formulae
used in the business of the Partnership, or (ii) any contract, commitment,
arrangement or understanding with the Partnership.
7.18.15 Accounts Receivable. All accounts receivable of the
Partnership are bona fide accounts receivable. There has not been any
material adverse change in the collectability of accounts receivable of the
Partnership since the date of the Partnership's 1996 Financial Statements.
7.18.16 Investments. (1) Schedule 7.16 attached hereto sets
forth a list of all securities, membership or partnership interests,
mortgages, investments in real estate, real property and interests therein,
or other investments (collectively, the "Investments") owned by the
Partnership as of December 31, 1997, and a list of all transactions in
Investments by the Partnership as of December 31, 1997, together with the
cost basis book or amortized value, as the case may be, as of December 31,
1997, as well as such other information with respect to transactions in
Investments by the Partnership as of December 31, 1997, of such
Investments.
(2) The Partnership has good and marketable title to the
Investments listed on Schedule 7.16 or acquired in the ordinary course of
business since December 31, 1997 other than with respect to those
Investments which have been disposed of in the ordinary course of business
or redeemed in accordance with their terms since such date.
(3) The Partnership has not committed any act or omitted to
take any act which would make any of the Investments not enforceable
against the issuer thereof or the parties thereto in accordance with their
terms.
7.18.17 Activities of the Partnership. The Partnership does not
engage and has not engaged in any business or activity of any nature other
than such activities as set forth in its partnership agreements,
certificates of partnership or other organizational documents, or in
connection with the transactions reflected in the Commitments.
7.18.18 Disclosure; Guarantee. No representation or warranty by
FGC contained in this Agreement and no information contained in any
Schedule or Exhibit hereto contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
7.18.19 No Outstanding Loans; Cancellations or Waivers. The
Partnership has not cancelled any debts payable to it or waived in writing
any claims or any rights or any statute of limitation operating to its
benefit.
7.18.20 No Distributions. Except as set forth on Schedule 7.20
attached hereto, no distributions (whether in the form of cash or property)
have been made by the Partnership to ▇▇▇ Taurus or FGC since December 31,
1996. Except as set forth on Schedule 7.20, the Partnership has not
declared or set aside for payment any distribution since December 31, 1996.
7.18.21 Bank Accounts. Schedule 7.21 attached hereto sets forth
the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Partnership
maintains accounts of any nature and the names of all persons authorized to
draw thereon or make withdrawals therefrom.
7.18.22 Consents. No consent, approval or authorization of, or
exemption by, or filing with, any governmental or administrative entity or
any third party is required to be obtained or made by the Partnership in
connection with the execution, delivery and performance by FGC of this
Agreement or the taking by FGC or the Partnership of any other action
contemplated hereby.
7.18.23 Representations by ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇. Each of ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ by their execution of this Agreement, certifies, to the best of
their respective knowledge after due inquiry and investigation with respect
to any and all matters of, and relating to, the Partnership, that the
representations and warranties set forth in the this Article VII are true,
correct and complete, and each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall agree to
indemnify Wellsford with respect thereto. Notwithstanding the foregoing,
the liability of each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ with respect to such
representations and warranties shall be limited to $375,000. Each of
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may satisfy any such liability by (a) tendering cash in
the amount of such liability, or, (b) surrendering certain of the warrants
issued to each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ on January 16, 1998 to purchase up to
74,000 shares of common stock of WRP (the "Shares") which warrants have not
been exercised, such warrants to be valued for the specific purpose set
forth in this Section 7.23, at an amount equal to the difference between
the exercise price of such warrants and the fair market price of the Shares
underlying such warrants as of the date of the exercise thereof, provided
that in no event shall such value be less than $5 with respect to the
Warrant for each Share.
ARTICLE XIX
LIABILITIES AND INDEMNIFICATION
8.19.1 Liability and Indemnification of the Partnership and
the Partners. (1) To the fullest extent permitted by applicable law, an
Indemnified Person (as hereinafter defined) shall be entitled to
indemnification from the Partnership 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 Partnership; 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 Partner 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
Partnership or any Partner, as a director, officer, shareholder, member,
partner, trustee, employee or agent of the Partnership or another
corporation, limited liability company, partnership, joint venture, trust
or other enterprise in connection with the business or investments of the
Partnership.
(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 8.1(a) shall be paid by the
Partnership 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 Partnership as authorized hereunder.
(3) The indemnification provided by this Section 8.1 shall
be in addition to any other rights to which an Indemnified Person may be
entitled under any agreement of the Partners, as a matter of law or
otherwise, both as to action in the Indemnified Person's capacity as the
Partner, a director, officer, employee or agent of a Partner or a person
serving at the request of the Partnership 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 Partnership may purchase and maintain insurance on
behalf of any one or more Indemnified Persons and other persons as the
Partners 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 Partnership, whether or not the Partnership would have
the power to indemnify such person against such liability hereunder.
(5) In no event may an Indemnified Person subject the
Partners to personal liability by reason of this Section 8.1 except
specifically provided for in this Agreement.
(6) An Indemnified Person shall not be denied
indemnification in whole or in part under this Section 8.1 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 8.1 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 8.1, this Section 8.1 shall be construed
to indemnify all persons exculpated pursuant to Section 8.2 to the fullest
extent of any such exculpation.
8.19.2 Liability of the Managing Partner. The Managing
Partner shall be liable to the Partnership and the other Partner for fraud,
gross negligence or willful or wanton misconduct in any of its actions or
omissions, but shall not be liable to the Partnership, the other Partner or
any other persons who have acquired interests in any Interest, whether as
partners, assignees or otherwise, for errors in judgment or for any acts or
omissions, made, taken or omitted in good faith and that FGC, as the
Managing Partner (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 Partnership, unless such
errors in judgment, acts or omissions constitute fraud, gross negligence or
willful or wanton misconduct.
FGC shall indemnify Wellsford and its affiliates for any
loss, damage or claim incurred or suffered by Wellsford and/or its
affiliates, but only if such loss, damage or claim is incurred or suffered
as a result of any breach of FGC's representations and warranties herein,
or by reason of any act or omission on or prior to the date hereof by FGC,
any FGC Designee or the Partnership and their respective directors,
officers, employees or agents acting on their respective behalves, which
act or omission constitutes fraud, gross negligence or willful or wanton
misconduct.
ARTICLE XX
KEY-MAN LIFE INSURANCE; DEATH OF PRINCIPALS
9.20.1 Key-Man Life Insurance. The Partnership, 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 ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ 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 New ▇▇▇▇▇▇▇, shall equal
the lesser of two million dollars ($2,000,000) or an amount equal to the
Adjusted Wellsford Base Amount, or such lesser amount as is determined by
Wellsford at its sole discretion. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, any payment from the Key-Man
Insurance shall be remitted to the Partnership.
9.20.2 Death of Principals. Upon the death or permanent
disability of either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇, the Partnership shall be continued
unless both Wellsford and the survivor of either ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ mutually
consent to dissolve and liquidate the Partnership.
ARTICLE XXI
GENERAL PROVISIONS
10.21.1 Right of First Refusal/Other Business Activities.
Wellsford may engage in all business activities (including those similar to
the activities of the Partnership 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 New ▇▇▇▇▇▇▇. FGC, the FGC Designees or any
affiliates in which either FGC or the FGC Designees or ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇
owns or shall own a majority of the voting interests or over which FGC or
the FGC Designees or ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ 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 FGC Designees' performance of his duties hereunder or
with respect to New ▇▇▇▇▇▇▇ or the Clairborne Program, and (b) in the event
FGC, any FGC 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 the Clairborne Program, or (ii) other business activity or
business venture competitive to or substantially similar to the activities
or ventures of the Partnership or New ▇▇▇▇▇▇▇ at any time during the term
of this Partnership, FGC, the respective FGC Designee or the respective
affiliates, whichever may be applicable, shall first provide either
Wellsford, the Partnership or New ▇▇▇▇▇▇▇ 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 Partner shall be required
to devote any particular amount of time to the business of the Partnership,
except that FGC shall cause ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ to devote such time,
energies and attention as are necessary to the fulfillment of their
responsibilities and duties to the Partnership and New ▇▇▇▇▇▇▇, including,
without limitation, all activities required of the Partnership and/or New
▇▇▇▇▇▇▇ pursuant to the Partnership Commitments and the Clairborne Program.
10.21.2 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 New
▇▇▇▇▇▇▇ Operating Agreement, and to consummate the transactions
contemplated hereby and thereby, (b) the execution, delivery and
performance by Wellsford of this Agreement and the New ▇▇▇▇▇▇▇ Operating
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 New ▇▇▇▇▇▇▇
Operating 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 New ▇▇▇▇▇▇▇ Operating Agreement.
10.21.3 Representations and Warranties of FGC. FGC 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 FGC of this Agreement, and the consummation by FGC 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 FGC and constitutes the valid
and binding obligation of FGC, enforceable against FGC in accordance with
its terms.
10.21.4 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, except for representations, warranties and covenants regarding tax-
related matters set forth in Section 7.9 hereof, which representations and
warranties shall survive until the expiration of the relevant statute of
limitations, including any extensions thereof, and which covenants shall
survive for the duration of their term. No investigation by Wellsford or
on Wellsford's behalf heretofore or hereafter conducted shall affect the
representations, warranties and covenants of FGC (and its designees) set
forth in this Agreement.
10.21.5 Sophisticated Investor. Wellsford is a sophisticated
investor with significant business experience and knowledge, and it has
consulted with all legal, accounting and other professionals which it deems
necessary to evaluate and understand the merits of, and to make informed
decisions with respect to, the transaction contemplated hereby. Wellsford
has had the opportunity to review all information regarding the
Partnership, which access and review does not in any way limit the
representation and warranties of any of FGC, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ set forth in
this Agreement.
10.21.6 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, including, without limitation, the Original
Agreement, and may not be modified or amended in any manner unless in
writing and signed by all the parties hereto.
10.21.7 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 Partnership at its
address set forth herein, and to the Partners at their respective addresses
set forth on Schedule B 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.
10.21.8 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.
10.21.9 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.
10.21.10 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.
10.21.11 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York.
10.21.12 No Partition. The Partners hereby waive any right of
partition they may have with respect to any assets of the Partnership, now
existing or hereafter acquired.
10.21.13 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 business, affairs and operations of the Partnership,
the transactions contemplated hereby or the identity of the parties hereto,
other than to the parties' or the Partnership's respective legal counsel,
accountants and financial advisors.
10.21.14 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.
10.21.15 Headings. The headings in this Agreement are solely
for convenience of reference and shall not affect its interpretation.
10.21.16 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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
FGC REALTY CONSULTANTS, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. Ceamer, Jr.
Title: President
The undersigned have executed this Agreement as of the day and
year first above written to reflect their agreement to Sections 5.6(b)(iii)
and 7.23 of this Agreement.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE A
CAPITAL ACCOUNT (AS OF JANUARY 1, 1998)
Wellsford CRC Holding Corp. [ ]
FGC Realty Consultants, Inc. [ ]
SCHEDULE B
Name and Percentage
Address Interest
Wellsford CRC Holding Corp. 49%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
FGC Realty Consultants, Inc. 51%
c/▇ ▇▇▇▇▇▇▇ Realty Consultants
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SCHEDULE C
1998 BUDGET
See attached
SCHEDULE D
Partner Designees
Wellsford CRC Holding Corp. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
FGC Realty Consultants, Inc. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE 7.4
PARTNERSHIP COMMITMENTS
See attached
SCHEDULE 7.5
INSURANCE
See attached
SCHEDULE 7.6
LITIGATION
None
SCHEDULE 7.8
EMPLOYEE BENEFIT PLANS
See attached
SCHEDULE 7.11
PARTNERSHIP EMPLOYEES
See attached
SCHEDULE 7.13
PATENTS AND TRADEMARKS
None
SCHEDULE 7.16
INVESTMENTS
None
SCHEDULE 7.20
DISTRIBUTIONS
See attached
SCHEDULE 7.21
BANK ACCOUNTS
See attached