FILED: NEW YORK COUNTY CLERK 08/10/ :30 PM INDEX NO /2015 NYSCEF DOC. NO. 100 RECEIVED NYSCEF: 08/10/2016 EXHIBIT C

Transcription

1 FILED: NEW YORK COUNTY CLERK 08/10/ :30 PM INDEX NO /2015 NYSCEF DOC. NO. 100 RECEIVED NYSCEF: 08/10/2016 EXHIBIT C

2 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X WHEEL ESTATE LLC, v. Plaintiff, Index No / NYW LLC and V ANDELA Y VENTURES LLC, Defendants X STATEOFNEWYORK ) ) ss: COUNTY OF NEW YORK ) AFFIDAVIT OF MEIR LAUFER MEIR LAUFER, being duly sworn, deposes and says: 1. I am a member of 57 NYW LLC ("57 NYW"), a defendant and counterclaimplaintiff in this action. I submit this affidavit in opposition to plaintiffwheel Estate LLC's ("Wheel Estate") motion to dismiss 57 NYW's Counterclaims. I am fully familiar with the facts and information set fmih herein. 2. In 2008, I came up with the idea to develop a tourist attraction in New York City similar to that of the "London Eye" ferris wheel (the "Wheel Project"). 3. In the years that followed, I took numerous steps to make the Wheel Project a reality. This included, among various other steps, organizing meetings with the New York City Depmiment of City Planning to discuss potential sites for the project and preparing a response to a Request for Expression oflnterest for the project (which was later accepted by the New York City Economic Development Corporation, the "EDC").

3 4. After the EDC informed me in or around November 2011 that they were interested in proceeding with the project, it was clear that significant funding was going to be needed to develop and construct the Wheel. 5. Thereafter, Rich Marin (a former Bear Steams executive who was retained to serve as President for the project) and I began to seek investors for the project. 6. As pati of these effmis, Marin approached The Feil Organization, a prominent real estate investor, which eventually led to an agreement whereby The Feil Organization, along with the Goldman and Nakash families (two other prominent New York-based real estate investors), agreed to invest in the project. Their investment was through an entity known as Wheel Estate, LLC ("Wheel Estate"). 7. The te1ms of their investment were set fmih in a Limited Liability Company Operating Agreement for New York Wheel LLC, dated as of July 27, 2012 (the "Operating Agreement"). New York Wheel LLC (the "Company") was formed as the entity to own and manage the Wheel Project. (A copy of the Operating Agreement is annexed as Exhibit B to the Affirmation of Kenneth J. Rubinstein ("Rubinstein Aff.").) 8. Under the Operating Agreement, I was recognized as the Founder of the Company. I was also named an Officer and Chairman ofthe Board of Directors ofthe Company Despite my positions with the Company, I was mistreated by other members of the Board. I was often subject to rude and disparaging remarks. For instance, despite the fact that I originated the idea for the project and had done all of the leg-work to move the project forward, I was instructed to become "invisible." I was told by Marin that I should "suck d**k" I held these positions until recently when I was improperly and wrongfully suspended from my positions. (This matter is currently pending in an arbitration proceeding.) 2

4 and to "swallow it even if [I] don't like it," because the others knew "how to play the board game better than" me. 10. In addition, I was often not provided with the same materials and information that were provided to other Board members and I was frequently excluded from conversations relating to the project. 11. I believe I was treated differently than other members of the Board because I am a practicing Hasidic Jew. Indeed, Marin told me that "our investors do not want you being publicly visible on this project," and that in order to attract investors, the project could not have "more than one board member from your 'community."' 12. On numerous occasions, the Board scoffed at and/or ignored my ideas, including suggestions that the Company seek outside investors for the project. Despite being an Officer, Chairman of the Board, and the Founder of the Company, I was told that I had no authority to seek out investors and to refrain from efforts to raise capital. 13. It became obvious that the Board would not consider my ideas. In fact, certain recommendations I made that were rejected or ignored by the Board were eventually implemented, such as my suggestion to seek investment through the EB-5 program. 14. Eventually, the other Board members decided to issue capital calls to raise capital from the Company's existing members to secure what I was told was capital needed to continue with the development of the project. 15. On various occasions, I voiced my opposition to raising capital through capital calls. I continued to propose that the Company seek alternative methods for raising capital that would have obviated the need for any such capital calls. (Examples of the written 3

5 communications regarding my opinions, including during Board meetings, are annexed as Exhibits D though G to the Rubinstein Affirmation. 2 ) 16. For example, the December 4, 2014 Board meeting minutes reflect that I proposed "," instead of the capital calls. (Rubinstein Aff., Ex. D) 17. The Board was well aware of my opposition to the capital calls. However, a majority vote was all that was required to approve the capital calls pursuant to the terms of the Operating Agreement and the rest of the Board (controlled by Wheel Estate) was in favor of the capital calls. Therefore, to avoid any fmiher discord between me and the Board, I did not vote against the capital calls. 18. I only voted for the capital calls because I knew that the outcome was a certainty, no matter how I voted. My vote was meaningless; the capital calls were going to be approved by the Board. All a vote against the capital calls would have accomplished is fmiher exacerbating my relationship with the Board, such as it was. 19. In no respect was I ever in favor of any of the capital calls as I wished to pursue other financing options that I believed were more favorable to the Company NYW (which is comprised of several members, including me) funded the first capital call and pmiially funded the second and third capital calls in order to try and protect its interest (to the extent possible). In no respect was this a "ratification" of the propriety of the capital calls. 21. In addition, I do not believe that the manner in which the capital calls were issued complied with the requirements of the Operating Agreement. 2 The Board minutes never fully captured my (or others) comments and opinions expressed during Board meetings, including those expressed regarding the capital calls. 4

6 22. Under the Operating Agreement, in order to require Supplemental Capital Contributions, the Board was required to (a) "reasonably determine that the Company then is, or at any time within the following ninety (90) days will be, in the position of having payment obligations for any amounts which for which funds are not then available to the Company (a 'Project Budget Shortfall')"; (b) notify the Company's Members and "describ[e] with particularity the amount of funds and the purpose for which [such funds were] needed"; and (c) "reasonably... seek to fund any Project Budget Shortfall out of third-party loans and/or thirdparty equity to the Company on market terms." (Rubinstein Aff., Ex. B, 3.3(a)) 23. I do not believe that the Board ever: (a) reasonably determined that the Company faced a Project Budget Shortfall; (b) provided sufficient notice in accordance with Section 3.3(a) of the Operating Agreement; or (iii) adequately sought to fund any purported Project Budget Shortfall out of third-party loans and/or third-party equity prior to the Supplemental Capital Contribution calls NYW received a Funding Default Notice in mid-june 2014 indicating that if a required Supplemental Capital Contribution was not made within 10 days, a funding default would occur. 57 NYW never received any other Funding Default Notice (as was required under Section 3.7 of the Operating Agreement). 25. Despite the fact that the last capital call was issued in June 2014, upon information and belief, 57 NYW's interest in the Company was not diluted until July 23, At that time, 57 NYW was advised that its interest in the Company was decreased to % (and, as a result of the restructuring that took place through financing transactions in May 2015 (mentioned below), 57 NYW now had an approximate 3% interest in the overall project). 5

7 26. The Board eventually secured debt and additional equity financing for the project in or around May As I was not fully apprised of the details and information sunounding these transactions, and by that point, had serious concerns about how the Board was conducting itself and the Company's affairs, I abstained from the vote related to these transactions. (A copy of the minutes from the Board meeting related to these transactions is annexed to the Rubinstein Affirmation as Exhibit L.) 28. I believed that in order to effectuate these transactions, the Board required "an affirmative vote of all members ofthe Board ofdirectors," as is stated in Section 6.3(b) ofthe Operating Agreement. 29. In fact, I advised the Board that: " " (A copy of this is annexed to the Rubinstein Affitmation as Exhibit K.) 30. Despite the fact that there was not the required "affirmative vote of all members of the Board of Directors" for these transactions, the Board proceeded to consummate the transactions. The effects of these transactions on the Company was illustrated in a July

8 Company investor presentation. (Exhibit J to Rubinstein Aff., p. 37) This reflects that the new interest holder in the overall project was New York Wheel Investor LLC, the 100% owner of New York Wheel Mezzanine LLC (which is the parent ofnew York Wheel Owner LLC, the holder of the lease and project contracts). In tum, the Company is now a member of a New York Wheel. In the same presentation, it notes that 57 NYW maintains a 33% interest in the Company; although just one week later, 57 NYW was notified that, as a result of the financing transactions, its interest in the overall project had been effectively diluted to approximately 3%. Swom to before me this 28th day of March, 2016 /j_~~ MEIR LAUFER v Notary Public AZAL A AHMED Notary Public - State of New York NO. 01AH Qualified in Kings CourU'v J My Commission Expires/?/:?)/; Cf { DOCX; 4} 7