Exhibit 10.101
FIVE HUNDRED BOYLSTON WEST VENTURE
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
By and Between
BOYLSTON WEST 1986 ASSOCIATES
LIMITED PARTNERSHIP
and
DIHC BOYLSTON ASSOCIATES
dated
October 27, 1997
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I
DEFINED TERMS
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Terminology...................................................9
ARTICLE II
THE VENTURE
SECTION 2.01. Reallocation Date; Consent to Transfer; Continuation;
Governing Law..............................................9
SECTION 2.02. Purposes and Scope of the Venture............................10
SECTION 2.03. Assumed Name Certificate.....................................10
SECTION 2.04. Scope of Venturer's Authority................................10
SECTION 2.05. Principal Place of Business..................................11
ARTICLE III
MANAGEMENT
SECTION 3.01. Management of the Venture....................................11
SECTION 3.02. Property Management and Other Authorized Payments............16
SECTION 3.03. Execution and Performance of Documents.......................16
SECTION 3.04. Decisions by the Venturers/Venturer's Authority..............17
SECTION 3.05. Budgets......................................................18
SECTION 3.06. Compensation and Expenses of Venturers and Venture...........18
SECTION 3.07. Contracts with Related Parties...............................19
SECTION 3.08. Property Financing...........................................19
ARTICLE IV
ACCOUNTING, CONTRIBUTIONS,
DISTRIBUTIONS AND ALLOCATIONS
SECTION 4.01. Percentage Interests of Venturers............................20
SECTION 4.02. Capital Contributions........................................22
SECTION 4.03. Intentionally deleted........................................23
SECTION 4.04. Tax Status and Returns.......................................23
SECTION 4.05. Distributions................................................26
SECTION 4.06. Allocations of Profits, Gains and Losses.....................28
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Section Page
------- ----
SECTION 4.07. Accounting...................................................32
SECTION 4.08. Bank Accounts................................................33
ARTICLE V
TERM AND TERMINATION
SECTION 5.01. Term.........................................................33
SECTION 5.02. Voluntary Termination-Buy/Sell...............................33
SECTION 5.03. Closing......................................................35
SECTION 5.04. Assumption of Liabilities....................................36
SECTION 5.05. Right of First Offer.........................................38
SECTION 5.06. Liquidation and Distribution Procedure.......................40
SECTION 5.07. Event of Dissolution.........................................40
SECTION 5.08. Default......................................................43
SECTION 5.09. Conversion to Limited Partnership............................44
ARTICLE VI
SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION
SECTION 6.01. Prohibited Transfers.........................................44
SECTION 6.02. Permitted Transfers..........................................45
ARTICLE VII
INSURANCE
SECTION 7.01. Minimum Insurance Requirements...............................49
ARTICLE VIII
INTENTIONALLY DELETED
ARTICLE IX
INTENTIONALLY DELETED
ARTICLE X
GENERAL
SECTION 10.01. Notices.....................................................51
SECTION 10.02. Governing Laws..............................................53
SECTION 10.03. Exculpation/Indemnification.................................53
SECTION 10.04. Entire Agreement............................................54
SECTION 10.05. Waiver......................................................54
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Section Page
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SECTION 10.06. Severability................................................54
SECTION 10.07. Status Reports..............................................54
SECTION 10.08. Appraisals..................................................54
SECTION 10.09. Attorneys' Fees.............................................55
SECTION 10.10. Terminology.................................................55
SECTION 10.11. Binding Agreement...........................................55
SECTION 10.12. Additional Remedies.........................................56
SECTION 10.13. Artwork.....................................................56
SECTION 10.14. Meetings....................................................56
SECTION 10.15. Partition...................................................56
SECTION 10.16. Confidentiality.............................................56
SECTION 10.17. Transfer of Property........................................56
SECTION 10.18. Administration Agreement....................................56
Schedule of Exhibits
Exhibit A-Description of Land
Exhibit B-Description of Eastern Component
iii
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
THIS AMENDED AND RESTATED JOINT VENTURE AGREEMENT of Five
Hundred Boylston West Venture (this "Agreement"), made and entered into as of
this 27th day of October, 1997, by and among BOYLSTON WEST 1986 ASSOCIATES
LIMITED PARTNERSHIP, a Texas limited partnership ("Hines") and DIHC BOYLSTON
ASSOCIATES, a Georgia general partnership ("Company");
WHEREAS, Five Hundred Boylston West Venture (the "Venture") was formed
pursuant to that certain Joint Venture Agreement dated as of May 29, 1986 (the
"Original Venture Agreement");
WHEREAS, the Original Venture Agreement was amended on December 31, 1993
to reflect the transfer of New England Mutual Life Insurance Company's interest
in the Venture to Company;
WHEREAS, Cornerstone Properties Inc. ("Cornerstone"), directly or
indirectly, has acquired all of the beneficial ownership of Company;
WHEREAS, the "Permanent Loan" (as defined in the Original Venture
Agreement) has been contributed to the capital of the Venture as more
particularly herein described; and
WHEREAS, Hines and Company (the "Original Venturers") desire to amend and
restate the Original Venture Agreement in its entirety on the terms and
conditions herein set forth.
W I T N E S S E T H :
In consideration of the mutual covenants set forth herein, and for other
good and valuable consideration each party to the other in hand paid, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.01. Definitions.
As used herein, the following terms shall have the following meanings:
"Accountant" shall have the meaning set forth in Section 4.07(c).
2
"Adjusted Capital Account Deficit" shall have the meaning set forth
in Section 4.06(a)(i).
"Administration Agreement" shall mean that certain Administration
Agreement dated as of May 29, 1986 by and between the Venture and the
Administrator for certain administration services with respect to the
Property as such agreement may be amended from time to time with the
Approval of the Venturers.
"Administrator" shall mean DIHC Management Corporation.
"Affiliate" shall mean, as to any Person, (i) any other Person
directly or indirectly controlling, controlled by or under common control
with such Person; (ii) the officers, directors or partners of such Person;
(iii) if such Person is an officer, director or partner, any company for
which such Person acts in any such capacity; and (iv) any relative (by
blood, adoption or marriage) within the second degree of any such Person
or of any Person described in (i) and (ii) above. For purposes of this
definition the term "control" means the ownership of 10% or more of the
beneficial or voting interest in the Person referred to.
"Affiliated Entity" shall mean any corporation, partnership or other
entity which is more than 50% owned, directly or indirectly, through
subsidiaries or other partnerships, by the ultimate members or
shareholders of any Venturer.
"Annual Budget" shall mean the detailed business plan and annual
budget prepared by the Managing Partner in accordance with Section
3.01(b).
"Appraisal Panel" shall have the meaning set forth in Section 10.08.
"Approved by the Venturers" or "Approval by (or of) the Venturers"
shall mean approved in writing in advance by all Venturers in their sole
and absolute discretion unless otherwise noted.
"Bankrupt Party" shall have the meaning set forth in Section
5.07(b)(v)(1).
"BRA" shall mean the "Boston Redevelopment Authority" or such other
agency or authority which shall replace the Boston Redevelopment
Authority.
"Capital Account" shall mean the accounts maintained for each
Venturer as set forth in Section 4.01(b).
"change in control" shall have the meaning set forth in Section
6.02(d).
3
"City" shall mean the City of Boston.
"Closing" shall have the meaning set forth in Section 5.03(a).
"Code" shall mean the United States Internal Revenue Code of 1986,
as amended, and any successor statute thereto.
"Company" shall mean DIHC Boylston Associates and its permitted
successors and assigns (specifically including any transferee under
Section 6.02(d) as to its interest in the Venture).
"Controlled or Control" means with respect to any Person, the
possession, directly or indirectly, of the power to direct or to cause the
direction of the management of such Person, whether through ownership of
voting securities or a general partnership interest or by contract, agency
or otherwise.
"Cornerstone" shall have the meaning set forth in Section 6.02(d).
"CPI" shall have the meaning set forth in Section 3.01(b).
"Defaulting Venturer" shall have the meaning set forth in Section
5.08.
"Deficit Election" shall have the meaning set forth in Section
4.02(f)(iv).
"DIHC Holding" shall mean Dutch Institutional Holding Company, Inc.,
a Delaware corporation.
"Eastern Component" shall mean the building commonly known as ▇▇▇
▇▇▇▇▇▇▇▇ situated on the site adjacent to the Land, and more particularly
described on Exhibit B, to which the Improvements are integrated and
attached.
"election period" shall have the meaning set forth in Section
5.05(a)(iii).
"Event of Dissolution" shall have the meaning set forth in Section
5.07(b).
"Exchange Act" shall have the meaning set forth in Section 6.02(d).
"Final Appraiser" shall have the meaning set forth in Section 10.08.
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"Governmental Documents" shall mean all documents, permits,
approvals, licenses, certificates and agreements with BRA, the City or any
governmental or quasi-governmental agency which has jurisdiction over the
property or its development.
"HILP" shall mean ▇▇▇▇▇ Interests Limited Partnership, a Delaware
limited partnership.
"Hines" shall mean Boylston West 1986 Associates Limited
Partnership, a Texas limited partnership and its permitted successors and
assigns.
"Hines Control Group" means (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and/or the estate of either, (ii) a corporation, the stock of which is
wholly owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the estate of either,
and/or any member of the Hines Family, (iii) any Person Controlled by a
majority of the then-current members of the Hines Management Group, or
(iv) any Person to which the operational assets of HILP are conveyed,
which is Controlled by any one or more of the Persons described in (i) or
(ii) above and/or a majority of the then-current members of the Hines
Management Group.
"Hines Family" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (or any
trust established for the benefit of the spouse, issue, grandchildren,
brother, sister, or parents of either ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇).
"Hines Management Group" means, from time to time, the ten (10)
senior ranking executives or officers of HILP other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇.
"Improvements" shall mean the mixed use development located on the
Land and consisting of approximately 710,000 square feet of office and
retail/commercial space located in a 25-story tower rising from a 6-story
low-rise base structure and a 3-level parking garage below grade
containing parking spaces for approximately 600 automobiles and any other
improvements from time to time constructed or to be constructed upon the
Land by the Venture.
"Incumbent Directors" shall have the meaning set forth in Section
6.02(d).
"Institutional Lender" shall mean any domestic or foreign insurance
company, bank, trust company, savings and loan association, savings bank,
merchant bank, investment banking or securities company or similar
financial institution among whose primary business is the making of
commercial loans.
5
"Land" shall mean that certain parcel of real property and the
improvements presently thereon located in the City of Boston,
Massachusetts, more particularly described in Exhibit A attached hereto.
"Losses" shall have the meaning set forth in Section 4.06(a)(ii).
"MAI Appraiser" shall have the meaning set forth in Section 10.08.
"Major Decisions" shall have the meaning set forth in Section
3.01(d).
"Management and Leasing Agreement" shall mean that certain
Management and Leasing Agreement dated as of May 29, 1986, as amended and
restated by that certain Amended and Restated Management and Leasing
Agreement dated of even date herewith by and between the Venture and HILP
for the management and leasing of the Property, as such agreement may be
further amended from time to time with the Approval of the Venturers.
"Managing Partner" shall mean either Hines or Company or an
Affiliated Entity of Hines or Company (if Hines or Company, as applicable,
shall Transfer its entire interest to such Person pursuant to Section
6.02(a)).
"Marketing Plan" shall mean the leasing guidelines prepared in
accordance with Section 3.05.
"Member" shall mean the corporate officer(s) or general partner(s)
or other authorized agent(s), as the case may be, through whom a Venturer
shall act in connection with decisions relating to its interests in the
Venture.
"Net Cash Flow" shall have the meaning set forth in Section 4.05(a).
"Net Operating Income" shall mean the projected Net Cash Flow to be
generated by the Property during the term of any proposed Property
Financing (with respect to the balance of the calendar year in which such
determination is being made, the Net Cash Flow shall equal the Net Cash
Flow assumed for purposes of preparing the Annual Budget for such calendar
year, and for the balance of the term of the proposed Property Financing
Net Cash Flow shall be determined in accordance with the principles
utilized in preparing each Annual Budget for the Venture) without
deduction for interest, periodic amortization and other debt service of
any indebtedness of the Venture, plus the projected amount of capital
expenditures to be incurred during such period (which, for the calendar
year in which such determination is being made, shall be deemed to equal
the amount reserved for capital expenditures in the Annual Budget
6
for such calendar year and, for the period, shall not include any
expenditures which would require additional capital contributions) such as
tenant finish costs, leasing commissions, capital improvement expenditures
and extraordinary capital repairs, which otherwise shall have reduced
projected Net Cash Flow for such period.
"Non-Defaulting Venturer" shall have the meaning set forth in
Section 5.08.
"Notice of Default" shall have the meaning set forth in Section
5.08.
"Offer", "Offeree" and "Offeror" shall have the meanings assigned to
such terms in Sections 5.02 and 5.05.
"Offer Price" shall have the meaning set forth in Section 5.02(a).
"Offeror's Interest" shall have the meaning set forth in Section
5.02(a).
"Operating Expenses" shall have the meaning set forth in Section
4.05(a)(ii).
"Percentage Interest" shall have the meaning set forth in Section
4.01(a).
"Permitted Venturer" shall have the meaning set forth in Section
4.06(c).
"Person" shall mean any individual, partnership, association,
corporation or other entity. "Profits" shall have the meaning set forth in
Section 4.06(a)(ii).
"Prohibited Syndication Offering" shall mean any transaction or
offering of securities constituting a direct or indirect interest in the
Venture where the transaction or offering would be required to be
registered or exempted from registration (under Regulation D or otherwise)
pursuant to the Securities Act of 1933.
"Property" shall mean the Land, Improvements and all other assets of
the Venture.
"Property Debt Service Coverage Ratio" shall mean, for any period,
the quotient derived by dividing the Net Operating Income from the
Property for such period by the debt service for such Property Financing
for such period. For purposes hereof, debt service shall mean the
scheduled, regularly recurring payments of principal (if any) and interest
(as reasonably estimated by the borrowing Venturer in the event of a
floating rate financing) during the term of such Property Financing.
7
"Property Financing" shall have the meaning set forth in Section
3.08 hereof.
"Property Manager" shall mean the manager appointed to manage and
lease the Property under the Management and Leasing Agreement or such
replacement manager selected in accordance with this Agreement or the
Management and Leasing Agreement.
"Property Manager Recommendations" shall have the meaning set forth
in Section 3.01(c).
"Public Relations Plan" shall mean the advertising and public
relations guideline prepared in accordance with the provisions of Section
3.05.
"REA" shall mean the Construction, Operation and Reciprocal Easement
Agreement between the Venture and New England Mutual Life Insurance
Company.
"Reallocation Date" shall have the meaning set forth in Section
2.01(a).
"Regulations" shall mean the Income Tax Regulations promulgated
under the Code, as such Regulations may be amended from time to time (all
references herein to specific sections of the Regulations shall be deemed
to refer also to any corresponding provisions of succeeding Regulations).
"Regulatory Allocations" shall have the meaning set forth in Section
4.06(e).
"Restricted Venturer" shall have the meaning set forth in Section
4.06(c).
"Sale and Construction Agreement" shall mean that certain Amended
and Restated Sale and Construction Agreement dated as of April 15, 1986
among the City, BRA, New England Mutual Life Insurance Company, and ▇▇▇▇▇▇
▇. ▇▇▇▇▇ Interests, Inc., and such further amendments as Approved by the
Venturers.
"Sales or Refinancing Proceeds" shall mean the excess of the
proceeds received by the Venture from (i) any sale or other disposition of
all or part of the Property (other than incidental sales of personal
property or fixtures now or hereafter located on the Property), (ii) any
casualty resulting in the receipt of insurance proceeds (other than under
policies commonly known as rent insurance) or damage recoveries by the
Venture, (iii) the condemnation of all or part of the Property, (iv) any
mortgaging, financing, or refinancing of the Property or other loan as
Approved by the Venturers to the extent required hereunder and/or (v) any
other transactions involving the ownership, operation or maintenance of
the Property which do not come within the
8
items enumerated in Section 4.05(a)(i) (other than the receipt of capital
contributions from the Venturers or security deposits); over (A) any and
all interest on and principal of any debt obligations of the Venture that
become due as a result of the occurrence of any of the events described in
(i)-(v) above; (B) all costs and expenses related to such sale, insurance
claim, condemnation, mortgaging, financing, refinancing, loan or other
transaction and (C) the amounts paid or reserved to fund the cost of
restoration or the expenditures of the Venture for which such mortgaging,
financing, refinancing, or loan occurred as Approved by the Venturers to
the extent required hereunder.
"Surviving Mortgages" shall have the meaning set forth in Section
5.02(a).
"Terms of Sale" shall have the meaning set forth in Section
5.05(a)(i).
"Third Party" shall have the meaning set forth in Section
5.05(a)(i).
"TMP" shall mean the tax matters partner as defined in Section
4.04(c)(i).
"Transfer" shall have the meaning set forth in Section 6.01.
"Venture" shall mean Five Hundred Boylston West Venture, a general
partnership formed for the limited purposes and scope set forth herein.
"Venturer" shall mean Hines or Company individually and the term
"Venturers" shall mean Hines and Company collectively.
"Venturer Debt Service Coverage Ratio" shall mean the quotient
derived by dividing annualized Venturer distributions by annualized debt
service for the Venture Interest Financing. For purposes hereof,
annualized Venturer distributions shall mean actual distributions of Net
Cash Flow to the Venturer which intends to obtain the applicable Venture
Interest Financing for the calendar year ending on a date no earlier than
a day which is sixty (60) days prior to application by the Venturer for
any Venture Interest Financing and debt service shall mean the scheduled,
regularly recurring installments of principal (if any) and interest (as
reasonably estimated by the borrowing Venturer in the event of a floating
rate financing) during the first full twelve (12) month period of such
Venture Interest Financing, provided, however, if the interest rate or
principal payments to be made in any year of the term of the Venture
Interest Financing will vary from the first full twelve (12) month period,
debt service shall mean the average of the annual scheduled principal and
interest payments over the term of the Venture Interest Financing.
"Venture Interest" shall have the meaning set forth in Section
6.02(b)(iv).
9
"Venture Interest Financing" shall have the meaning set forth in
Section 6.02(b)(iv) hereof.
"Venture Operations Arbitration Process" shall have the meaning
ascribed to such term in Section 4.1 of the Management and Leasing
Agreement.
"Withdrawing Venturer" shall have the meaning set forth in Section
5.07(c).
SECTION 1.02. Terminology.
All personal pronouns used in this agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of Articles and
Sections are for convenience only, and neither limit nor amplify the provisions
of the Agreement itself, and all references herein to Articles, Sections or
subdivisions thereof shall refer to the corresponding Article, Section or
subdivision of this Agreement unless specified reference is made to such
Article, Sections or subdivisions of another document or instrument.
ARTICLE II
THE VENTURE
SECTION 2.01. Reallocation Date; Consent to Transfer; Continuation;
Governing Law.
(a) The Venturers agree that the books of the Venture will be closed as of
11:59 p.m. on October 31, 1997 (the "Reallocation Date") and Net Cash Flow,
Sales or Refinancing Proceeds, Profits, Losses and other items of income, gain,
deduction and loss shall be accounted for as of such date and allocated to the
Original Venturers in accordance with the provisions of Article IV of the
Original Venture Agreement in accordance with its provisions immediately prior
to the effect of this Agreement. From and after the Reallocation Date all of the
aforesaid items shall be allocated to the Venturers in accordance with the terms
of this Agreement. The Venture shall instruct the Venturers accountants to
furnish a detailed accounting of the aforesaid financial and tax items as of the
Reallocation Date for review and approval by each of the Venturers and the
Venturers shall cooperate in good faith for the purpose of agreeing upon an
accounting for the Venture as of the Reallocation Date.
(b) Hines consents to the acquisition by Cornerstone of all of the
beneficial ownership of Company and agrees the same shall not constitute a
breach or violation of Section 6.01 or any other provision of the Original
Venture Agreement so long as Company and Cornerstone comply with the provisions
of Section 6.01 and any other provision of the Original Venture Agreement in
connection with the consummation of such acquisition. The
10
Company hereby represents and warrants to the Venture and Hines that the
acquisition of all of the beneficial ownership of Company by Cornerstone was
accomplished in compliance with all applicable state or federal securities laws.
In connection therewith, Company hereby agrees to indemnify and hold harmless
the Venture and Hines from and against any and all costs, damage, injury,
claims, actions and demands (including without limitation, attorney's fees)
suffered by the Venture or Hines as a result of any violation or alleged
violation or failure to comply or alleged failure to comply with any state or
federal securities laws.
(c) The business and affairs of the Venture shall continue to be conducted
solely under the name "Five Hundred Boylston West Venture" and such name shall
be used at all times in connection with the Venture's business and affairs.
Except as expressly provided herein to the contrary, the rights and obligations
of the Venturers and the administration and termination of the Venture shall be
governed by the Uniform Partnership Act of the Commonwealth of Massachusetts.
SECTION 2.02. Purposes and Scope of the Venture. (a) Subject to the
provisions of this Agreement, the Venture shall be limited strictly to the
leasing, sale, operation, management, maintenance and improvement of the
Property (including construction, reconstruction, development and repair of the
Improvements) for investment and the production of income and profit and shall
not be extended by implication or otherwise unless Approved by the Venturers.
(b) Nothing in this Agreement shall be deemed to restrict in any way the
freedom of any Venturer (or any Affiliate of any Venturer) to conduct any other
business or activity whatsoever (including the acquisition, development,
leasing, sale, operation and management of real property) without any
accountability to the Venture or any other Venturer with respect to the income
or profits therefrom or the effect of such activity on the Property, even if
such business or activity competes with the business of the Venture. The
Venturers hereby acknowledge that the Venturers (or Affiliates of the Venturers)
have ownership and management interests in the Eastern Component and that this
Section 2.02(b) is specifically applicable to such interests.
SECTION 2.03. Assumed Name Certificate. The Venturers shall execute and
file in the appropriate records any assumed or fictitious name certificate or
certificates required by law to be filed in connection with the continuation of
the Venture.
SECTION 2.04. Scope of Venturer's Authority. Except as otherwise expressly
and specifically provided in this Agreement, no Venturer shall have any
authority to act for, or assume any obligations or responsibility on behalf of,
any other Venturer or the Venture.
11
SECTION 2.05. Principal Place of Business. The principal place of business
of the Venture shall be in the Improvements, or at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or at such other place of business in
Boston, Massachusetts as Approved by the Venturers.
ARTICLE III
MANAGEMENT
SECTION 3.01. Management of the Venture. (a) Hines and Company are
individually and collectively hereby designated as the Managing Partner of the
Venture and each hereby accepts such designation. Except where herein expressly
provided to the contrary, all decisions with respect to the operation and
control of the Venture shall be vested in the Company and shall be implemented
by Company, it being acknowledged that (subject to the requirements of Section
3.01(c) with regard to Property Manager Recommendations) the Company shall have
the authority to take all actions to be taken by "the Managing Partner"
hereunder and, in furtherance thereof, to execute and deliver all documents on
behalf of the Venture in furtherance of its responsibilities as the Managing
Partner hereunder, subject to any other terms and conditions contained in this
Agreement, including, without limitation, Sections 3.01(c) and 3.01(d). Except
where herein contained to the contrary, Company shall be responsible for the day
to day supervision of all aspects of the business of the Venture (including,
without limitation, the leasing, operation, maintenance and improvement of the
Property) and the discharge of all obligations of the Managing Partner
hereunder; provided, however, if Company fails to execute any lease proposed by
the Property Manager which does not require the Approval of Company hereunder or
under the Management and Leasing Agreement, ▇▇▇▇▇, as Managing Partner, shall
have the right to execute such lease on behalf of the Venture. ▇▇▇▇▇ and Company
agree and acknowledge that certain of the duties and obligations of the Managing
Partner hereunder have been delegated to the Property Manager pursuant to the
Management and Leasing Agreement and further acknowledge that Company shall have
no liability to ▇▇▇▇▇ or the Venture under this Agreement as a result of the
failure of the Property Manager to discharge such duties and obligations so
delegated to it under the Management and Leasing Agreement and that Company
shall not be deemed to be a Defaulting Venturer under Section 5.08 hereof as a
result of any such failure by the Property Manager; provided, however, nothing
herein shall affect the Company's liability for the Venture's liability to
Persons (including the Venture's liability to the Property Manager pursuant to
Section 7.13 of the Management and Leasing Agreement) resulting from the
Company's general partner status.
(b) No later than November 1 of each calendar year, the Venture shall
cause Property Manager to prepare and submit to the Venturers, for their
approval, a detailed business plan and budget, which shall include and take into
account, without limitation, the Marketing Plan and the Public Relations Plan,
(the "Annual Budget") setting forth the course
12
of business to be followed by the Venture and the estimated receipts and
expenditures (capital, operating and other) of the Venture for the following
full calendar year. The Annual Budget shall not be implemented or acted upon
unless and until it has been Approved by the Venturers, at which time the Annual
Budget shall govern the operation of the Venture for such calendar year. If no
budget is Approved by the Venturers, the Annual Budget for the prior year shall
govern the operation of the Venture until a new budget is agreed upon. Company
shall cause the Property Manager to operate and manage the Venture in all
material respects in compliance with the Annual Budget except Property Manager
shall have the right, without the prior approval of the Venturers, to make
expenditures and incur obligations not authorized by the Annual Budget to the
extent permissible under Section 2.1 of the Management and Leasing Agreement.
Company shall enforce the Management and Leasing Agreement on behalf of the
Venture in accordance with its terms and shall not consent to any modification
or deviation from the Management and Leasing Agreements, by the Property
Manager, unless such modification or deviation is Approved by the Venturers.
(c) It is understood that the Property Manager shall from time to time
submit to Company for Approval on behalf of the Venture recommendations with
respect to new leases, the Annual Budget, and all other matters involving
management, operation, maintenance and improvement of the Property ("Property
Manager Recommendations"). To the extent Company or the Venture intends to enter
into a new lease, adopt an annual budget or take action on any other matter
involving the leasing, management, operation, maintenance or improvement of the
Property that is not the subject of a Property Manager Recommendation, Company
shall give written notice to Property Manager, together with a reasonably
detailed explanation thereof, at least ten (10) days prior to entering into such
lease, adopting such Annual Budget or taking such other action, as the case may
be, to provide Property Manager the opportunity to submit a Property Manager
Recommendation with respect thereto. Company shall have the right to Approve or
disapprove such recommendations unilaterally and without the need for any
further Approval from ▇▇▇▇▇ and once Approved, the Company shall oversee the
implementation of the Property Manager Recommendations. The Venture shall cause
Property Manager, at the expense of the Venture, to furnish or where appropriate
make available to Company, such documents and information as Company shall
reasonably request in order to enable Company to evaluate such recommendation.
The failure of Company to Approve or disapprove any Property Manager
Recommendation within ten (10) days after receipt by Company of such Property
Manager Recommendation together with all additional information reasonably
requested by Company pertaining thereto shall be deemed the Approval of Company
of such Property Manager Recommendation and Property Manager shall be entitled
to implement same, provided, however, the Property Manager Recommendation shall
state in capitalized letters that: "THE FAILURE TO RESPOND TO THIS PROPERTY
MANAGER RECOMMENDATION WITHIN 10 DAYS AFTER RECEIPT OF THIS NOTICE AND ANY
REASONABLY REQUESTED ADDITIONAL INFORMATION PERTAINING HERETO SHALL BE DEEMED
YOUR APPROVAL TO SUCH PROPERTY
13
MANAGER RECOMMENDATION." If Company is unwilling or unable to Approve or
disapproves such Property Manager Recommendation, after consultation and
discussion with the Property Manager, then the resolution of such matters may be
submitted by Company or the Property Manager to the Venture Operations
Arbitration Process for resolution.
(d) Notwithstanding anything contained herein to the contrary other than
Sections 3.06(c) and 3.07, no act shall be taken, sum expended, decision made or
obligation incurred by the Venture, the Managing Partner, the Property Manager
or any Venturer with respect to any of the major decisions enumerated below
(hereinafter called "Major Decisions"), unless such act, sum, decision or
obligation has been Approved by both of the Venturers. The Major Decisions shall
include:
(1) Acquisition of any land or interest therein other than the Land;
(2) Except as provided in Section 3.08, financing of the Venture,
including, but not limited to, the permanent financing of the improvements
and operations of the Venture (including, but not limited to, the
modification, extension or prepayment of the same);
(3) Sale, or other Transfer (except permitted sales or Transfers
pursuant to Articles V or VI) or mortgaging or the placing of any
encumbrance on the Property or any parts thereof (except as provided in
Section 3.08);
(4) Selecting or varying depreciation and accounting methods,
changing the fiscal year of the Venture and making other material
decisions with respect to treatment of various transactions for accounting
or tax purposes including without limitation making elections as to the
proper maintenance of the Capital Accounts of the Venturers in accordance
with Section 4.01 and other tax elections on behalf of the Venture;
(5) Approval of all construction and architectural contracts and any
modifications or amendments to such contracts (or payment and performance
bonds); provided, however, individual contracts for construction of less
than $100,000 and up to $1,000,000 in the aggregate which are in
compliance with the Annual Budget or which provide for the performance of
tenant construction work pursuant to tenant leases entered into in
accordance with the terms of this Agreement and the Management and Leasing
Agreement shall not be deemed a Major Decision and require the Approval of
the Venturers;
(6) Approving the "standard form lease" to be used by the Venture
for leasing all the office and commercial/retail space in the Property;
14
(7) Granting, altering or terminating any property rights or
easements (including the REA);
(8) Varying or changing any portion of the insurance program
required by Article VII;
(9) Making any distributions to the Venturers, except as set forth
in Section 4.05;
(10) The adjustment, settlement, or the compromise of any claim,
obligation, debt, demand, suit or judgment in excess of $25,000 against or
on behalf of the Venture;
(11) Except to the extent the Property Manager is entitled to do so
pursuant to the Management and Leasing Agreement, the making of
non-capital expenditures in excess of the aggregate amount authorized
under the Annual Budget for non-capital expenditures excluding all real
estate taxes, utilities serving the Property, debt service and other
borrowing entered into by the Venture and insurance premium amounts;
provided, however, that Managing Partner may freely pay all real estate
taxes and insurance premiums (for insurance Approved by the Venturers) and
may freely incur expenses to perform tenant construction pursuant to the
terms of leases entered into in accordance with this Agreement and the
Management and Leasing Agreement and to provide additional services to
tenants (e.g., tenant improvements and supervision of tenant construction
not required of the Venture under leases) if such expenses are to be
promptly, expressly and directly reimbursed by tenants;
(12) The institution or defense of any cause of action, suit,
declaratory judgment or other litigation affecting in any way the Property
and the development thereof;
(13) The filing of a petition in bankruptcy under any of the
bankruptcy laws by the Venture;
(14) Doing any act in contravention of this Agreement;
(15) Any modification or amendment to the Governmental Documents; or
(16) Any other decision or action which, by the provisions of this
Agreement, is required to be Approved by the Venturers.
15
In addition, in the event ▇▇▇▇▇ or an Affiliate of ▇▇▇▇▇ ceases to manage
the Property pursuant to the Management and Leasing Agreement or other
similar property management agreement, Major Decisions shall thereafter be
deemed to include:
(i) Approval of the Annual Budget, including the Marketing Plan and
the Public Relations Plan;
(ii) Making capital expenditures not authorized, or in excess of the
amounts reserved for certain line items in, the Annual Budget, provided
however, that the Managing Partner may freely pay all real estate taxes,
utilities serving the Property, debt service and other borrowings entered
into by the Venture and insurance premiums (for insurance Approved by the
Venture) and may incur obligations to perform tenant construction pursuant
to the terms of leases entered into in accordance with this Agreement and
the Management and Leasing Agreement and may incur expenses to provide
additional services to tenants (e.g. tenant improvements and supervision
of tenant construction not required of the Venturer under leases) if such
expenses are to be promptly, expressly and directly reimbursed by tenant;
(iii) Approving any lease if it (i) is for space in excess of 10,000
rentable square feet in the case of office space or in excess of 2,500
rentable square feet in the case of retail space (for purposes of the
foregoing, multiple leases to a single tenant shall be aggregated for
purposes of determining the square footage of any particular lease with
respect to such tenant), (ii) materially deviates from the "standard form
lease" Approved by the Venturers or (iii) is for a term or at a rental
rate which deviates from the guidelines set forth in the Marketing Plan or
will require concessions or expenditures which exceed amounts specified in
such Marketing Plan.
The Managing Partner or the Property Manager, as the case may be, shall at
the expense of the Venture furnish, or where appropriate, make available
to each Venturer, or use its best efforts to obtain from third parties,
such documents and information as such Venturer may reasonably request in
order to enable such Venturer to make the Major Decisions set forth above.
The failure of any Venturer to Approve or disapprove any Major Decision
within twenty-one (21) days (or in the case of a Major Decision that is
required pursuant to a Property Manager Recommendation, ten (10) days as
set forth in Section 3.01(c) hereof) after (i) receipt by such Venturer of
a notice requesting its Approval and (ii) receipt of all additional
information reasonably requested by such Venturer pertaining thereto,
shall be deemed the Approval of such Venturer to such Major Decision;
provided, however, that except for Major Decisions required pursuant to a
Property Manager Recommendation (A) such notice shall state in capitalized
letters that: "THE FAILURE TO RESPOND TO THE PROPOSAL SET FORTH HEREIN
WITHIN 14 DAYS AFTER RECEIPT OF THIS NOTICE AND
16
ANY REQUESTED ADDITIONAL INFORMATION PERTAINING HERETO SHALL BE DEEMED
YOUR APPROVAL TO SUCH PROPOSAL" and (B) if such Venturer shall not respond
by such 14th day, the Managing Partner (or such other Venturer) shall send
to the non-responding Venturer an additional notice by hand
delivery, telex, telecopy or telegram to advise such Venturer of its
failure to respond to the specific Major Decision, and such Venturer shall
nonetheless fail to Approve or disapprove such matter within seven (7)
days after its receipt of such additional notice.
SECTION 3.02. Property Management and Other Authorized Payments.
(a) Concurrently herewith, the Venture has entered into a separate
Management and Leasing Agreement with HILP for the management and leasing of the
Property, which provides for HILP to have primary responsibility for the
implementation of the decisions Approved by the Venturers and for conducting the
ordinary and usual day-to-day business and affairs of the Venture as more fully
set forth in, and as limited by, the provisions of the Management and Leasing
Agreement.
(b) Company may cancel any agreement between the Venturer and the Property
Manager, ▇▇▇▇▇ or its Affiliate, as the case may be, in the event ▇▇▇▇▇, as
Managing Partner, shall breach any fiduciary duty to the Venture or the
Venturers or shall otherwise fail to perform any of the material obligations
hereunder as a Venturer or violate a material term of this Agreement provided
such breach is not cured within twenty (20) days after delivery of written
notice by Company to ▇▇▇▇▇, or if any non-monetary default cannot by its nature
be cured in such time period, then such reasonable additional period of time as
is necessary to cure same, provided ▇▇▇▇▇ or its Affiliate promptly commences to
cure such default and thereafter diligently and continually prosecutes to
completion the cure of the same. In addition, Company may exercise on behalf of
the Venture without the prior approval of ▇▇▇▇▇, the Venture's right to
terminate the Management and Leasing Agreement with HILP for the management and
leasing of the Property in accordance with the terms of Article V of the
Management and Leasing Agreement. In the event ▇▇▇▇▇ or any Affiliate thereof is
terminated under any service or other agreement (including, without limitation,
the Management and Leasing Agreement) by Company or the Venture in accordance
with the foregoing, the replacement service provider and the terms of its
engagement shall be determined by Company.
SECTION 3.03. Execution and Performance of Documents.
Documents to which the Venture is a party shall be executed and/or
performed on behalf of the Venture by all the Venturers or by the Managing
Partner or the Property Manager, as the case may be, where the Venturers give
the Managing Partner or the Property Manager, as the case may be, the right to
do so. No Person shall be required to inquire into
17
said authority of the Venturers or the Managing Partner or the Property Manager
to execute and/or perform any document on behalf of the Venture where the
Venturers give the Managing Partner or the Property Manager the express and
specific right to do so. Except as otherwise expressly provided in this
Agreement, no Venturer or representative thereof shall have the authority or
right to bind or act for the Venture or any of the other Venturers.
SECTION 3.04. Decisions by the Venturers/Venturer's Authority.
(a) ▇▇▇▇▇ and Company each shall act through either one of the respective
Members it has appointed to oversee and make decisions with respect to their
respective interests in the Venture. Upon notice to the other Venturer's
Members, each of ▇▇▇▇▇ or Company may at any time and for any reason substitute
another person as its Member. If a particular Member should die, retire,
withdraw for any reason or become disabled, the Venturer whom such Member
represents shall designate a substitute Member within the following ten (10)
business days. If during any period of time both Members representing a Venturer
should die, retire, withdraw or for any reason become disabled the Venture shall
make no further Major Decisions until at least one Member representing such
Venturer shall have been substituted as set forth above.
Further, for any purpose a Member may be represented by a proxy appointed by a
written, executed instrument or a telegram, telecopy or telex. ▇▇▇▇▇ and Company
initially designate as their respective Members:
▇▇▇▇▇: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇
Company: ▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
In the event any Venturer shall Transfer a portion of its interest in the
Venture to a third party in accordance with the provisions hereof, such third
party shall not be entitled to its own Member but the transferring Venturer
shall act for both itself and for the transferee of such interest.
(b) The Members shall meet at least annually in Boston, Massachusetts or
such other place Approved by the Venturers at a time and place acceptable to all
Members. The Members shall merely be authorized representatives of the Venturer
they represent and in such capacity shall have no liability to third parties.
The Venture shall indemnify and hold harmless each Member from and against any
claim, cost (including reasonable attorneys' fees), liability, judgment or cause
of action which he may sustain or incur as a result of acting (or of having
acted) as a Member, provided that such indemnification shall not encompass bad
faith or any grossly negligent act or omission; and provided further that such
indemnification shall extend only to a Member's capacity, as such, and
accordingly shall not affect the liability which any
18
Member representing a Venturer, who may also be a general partner or officer of
such Venturer, has as such general partner or officer.
(c) Although a Venturer's organizational or internal documents or
structure may require the taking of certain action or the obtaining of certain
approvals in order for its Member to do certain acts, each Venturer represents
that it will be solely responsible for taking such action and obtaining such
approvals and that, prior to entering into any binding agreement or making any
decision, its Member will be vested with all power, right and authority to bind,
and make decisions on behalf of, such Venturer. Accordingly, the Venturers and
any third party may rely without inquiry upon its dealings with the other
Venturer's Member as being fully binding upon such other Venturer.
SECTION 3.05. Budgets. In addition to the Annual Budget required under
Section 3.01(b), the Managing Partner shall furnish each Venturer within 20 days
after the end of each month, a report prepared by Property Manager detailing the
operations for the preceding month, including a comparison against the Annual
Budget. The Managing Partner agrees to provide all such statements and reports
in a timely manner and in a form acceptable to the Venturers and shall use its
best efforts to insure that such statements and reports effectively analyze and
detail the results of the operations for the period in question. All statements,
financial reports and budgets shall be prepared in accordance with generally
accepted accounting principles, consistently applied.
On or prior to November 1 of each calendar year as a part of the Annual
Budget, the Managing Partner shall also cause the Property Manager to prepare
the following plans and guidelines for the Approval of the Venturers:
(i) a detailed marketing plan which shall specify the minimum
acceptable rentals for individual spaces, the maximum concessions for
major and minor tenants, the minimum and maximum acceptable terms
(including renewal options) for individual spaces and the estimated
"tenant fit-up" cost per square foot (the "Marketing Plan"); and
(ii) a detailed public relations plan (the "Public Relations Plan")
which shall specify the advertising and public relations activities and
actions which the Venture shall undertake.
SECTION 3.06. Compensation and Expenses of Venturers and Venture. (a)
Except as may be expressly provided for herein or in the Management and Leasing
Agreement, the Administration Agreement or hereafter Approved by the Venturers,
no payment will be made by the Venture to any Venturer for the services of such
Venturer or any member, stockholder, director or employee of any Venturer.
19
(b) Except as expressly provided herein, no Venturer shall be entitled to
any compensation or reimbursement from the Venture or any other Venturer for
expenses incurred in connection with the formation, business or affairs of the
Venture.
(c) Notwithstanding any provision of this Agreement to the contrary,
▇▇▇▇▇, Company and the TMP shall be entitled to reimbursement for out-of-pocket
expenses actually incurred on behalf of the Venture, provided only that (i) the
same are reasonable in amount and reasonably necessary or appropriate in the
Venture business, (ii) notice of same is given to the other Venturers within
thirty (30) days after such expense is incurred and (iii) same are consistent
with the provisions of this Agreement and are reasonably approved by the other
Venturer.
SECTION 3.07. Contracts with Related Parties. After the date hereof and
except as otherwise provided in Section 3.02, neither Property Manager nor any
Venturer may contract with or employ on behalf of the Venture any person or
entity which is an Affiliate of any Venturer in connection with the performance
of any duties or providing any goods or services to the Venture specified in
this Agreement unless Approved by the Venturers (or pursuant to an Annual Budget
Approved by the Venturers provided such Annual Budget identifies such
Affiliate).
SECTION 3.08. Property Financing. (a) Notwithstanding Section 3.01(d)(2)
and (3), Company may, unilaterally and without Approval of any other Venturer,
accept a loan on behalf of the Venture secured by the Property (a "Property
Financing") provided that such Property Financing meets or exceeds the following
conditions:
(i) The lender providing the Property Financing is an Institutional
Lender that is not a Venturer or a Person related to a Venturer within the
meaning of Section 465(b)(3)(C) of the Code or within the meaning of
section 1.752-4(b) of the Regulations;
(ii) The loan-to-value-ratio of the Property Financing does not
exceed fifty-percent (50%) where the "loan amount" is the full amount
committed by such Institutional Lender and the "value" is the appraised
value of the Property as determined by an appraisal by or obtained for
such Institutional Lender;
(iii) The Property Debt Service Coverage Ratio of the Property
Financing for each year of the term of the Property Financing is
projected, in the good faith estimation of the Company, to be at least
1.75;
(iv) The Property Financing shall be nonrecourse to the Venture and
the Venturers in all material respects, such that the sole recourse of the
Institutional Lender
20
in the event of default thereunder shall be to the Property subject,
however, to exclusions to such limitations on recourse for fraud, willful
and intentional acts, and misappropriation of condemnation and insurance
proceeds and/or the rents, profits and other income generated by the
Property after a default which exclusions, if included, are subject to the
approval of each Venturer which will have recourse liability therefor
(such approval not to be unreasonably withheld or delayed);
(v) The Property Financing does not contain provisions providing for
any participation in the revenues of the Property, such as a participating
mortgage loan or a loan with an equity kicker; and
(vi) The fees and expenses of the Venture in obtaining the Property
Financing (including all commitment fees, points, finder's fees and legal
fees) do not exceed one and one-half percent (1.5%) of the loan amount.
At such time as Company desires to obtain Property Financing that
meets or exceeds the foregoing conditions, Company shall inform ▇▇▇▇▇ in
writing and prior to accepting any loan commitment or otherwise binding
the Venture with respect to any such Property Financing, Company shall
consult with ▇▇▇▇▇ and allow ▇▇▇▇▇ at least ten (10) business days to
review and comment on any loan commitment for such Property Financing
Company is otherwise prepared to accept on behalf of the Venture;
provided, however, that ▇▇▇▇▇ shall not have any right to disapprove any
such loan commitment. The Company shall have the unilateral right without
any further consent or Approval from any other Venturer to execute and
deliver all documents necessary to consummate any such Property Financing,
including, without limitation, a promissory note, mortgage, deed of trust,
UCC financing and/or other similar interest mortgaging and pledging the
Property to secure such loan, and such Property Financings shall for all
purposes of the Agreement be deemed to be a loan or debt Approved by the
Venturers. Any Property Financing not meeting or exceeding the foregoing
conditions shall require the Approval of both of the Venturers in
accordance with the terms of Section 3.01(c).
ARTICLE IV
ACCOUNTING, CONTRIBUTIONS,
DISTRIBUTIONS AND ALLOCATIONS
SECTION 4.01. Percentage Interests of Venturers. (a) Effective as of the
Reallocation Date, each Venturer's interest in the Venture ("Percentage
Interest") shall be as follows:
21
Company 91.5%
▇▇▇▇▇ 8.5%
(b) The Venture shall determine and maintain "Capital Accounts" for each
Venturer throughout the full term of the Venture in accordance with section
1.704-1(b)(2)(iv) of the Regulations. To the extent not inconsistent with these
rules, the following provisions shall apply:
(i) The Capital Accounts of the Venturers, determined as of the date
of this Agreement after taking into account the contribution of the
Permanent Loan as set forth in Section 4.02(a), shall be:
Company $206,480,000.00
▇▇▇▇▇ $19,181,000.00
(ii) Thereafter, the Capital Accounts of the Venturers shall be
adjusted by increasing such Capital Accounts by the sum of:
(A) The cumulative amount of cash that has been contributed to
the capital of the Venture by such Venturer after the date of this
Agreement;
(B) The agreed-upon net fair market value (as of the date of
contribution) of all property (other than cash) that has been
contributed to the capital of the Venture by such Venturer after the
date of this Agreement; and
(C) The cumulative amount of "Profits" and all other items of
income and gain for all years ending after the date of this
Agreement and prior to the date of the determination that have been,
or are required to be, allocated to such Venturer under Sections
4.06(b), (d), or (e);
and decreasing such Capital Accounts by the sum of the following:
(A) The cumulative amount of cash that has been distributed to
such Venturer after the date of this Agreement;
(B) The agreed-upon net fair market value (as of the date of
distribution) of all property (other than cash) that has been
distributed by the Venture to such Venturer as of such date; and
22
(C) The cumulative amount of "Losses" and all other items of
loss and deduction for all fiscal years ending after the date of
this Agreement and prior to the date of the determination that have
been, or are required to be, allocated to such Venturer under
Sections 4.06(c), (d), or (e).
A Venturer's Capital Account shall also be increased or decreased as of
such date to reflect any items described in Section 1.704-1(b)(2)(iv) of
the Regulations, that are required to be reflected in such Venturer's
capital account under such Regulations and which are not otherwise taken
into account in computing such Capital Account under this Section 4.01(b).
SECTION 4.02. Capital Contributions.
(a) Immediately after the acquisition of Company by Cornerstone, Company
contributed the Permanent Loan to the capital of the Venture. Thereafter, the
Permanent Loan was canceled and all rights and obligations under the Permanent
Loan ceased to exist.
(b) Intentionally deleted.
(c) Intentionally deleted.
(d) Intentionally deleted.
(e) Intentionally deleted.
(f) (i) Except as provided in the remaining provisions of this Section
4.02(f), no Venturer shall be obligated to contribute money to the Venture to
restore any deficit in its Capital Account upon the liquidation of the Venture
or of any Venturer's interest in the Venture.
(ii) ▇▇▇▇▇ may elect, at the times and in the manner set forth in
Section 4.02(f)(iv) below, to agree to restore all or a portion of the
deficit in its Capital Account in accordance with the provisions of
Section 4.02(f)(vi) below.
(iii) Intentionally deleted.
(iv) ▇▇▇▇▇ may annually elect to restore all or a portion of the
deficit in its Capital Account by delivering a written notice to the
Venture and to the other Venturer setting forth the dollar amount of the
deficit in its Capital Account which ▇▇▇▇▇ agrees to restore pursuant to
this Section 4.02(f) (the "Deficit Election"); provided, however, that a
Deficit Election of ▇▇▇▇▇ may not reduce the amount of the Capital Account
23
deficit which ▇▇▇▇▇ previously agreed to restore in a prior Deficit
Election. The Deficit Election shall be delivered to the Venture no later
than 60 days prior to the beginning of any fiscal year of the Venture.
(v) Provided ▇▇▇▇▇ has delivered a Deficit Election, Company may
elect to agree to restore a portion of the deficit in its Capital Account
in accordance with the provisions of Section 4.02(f)(vi) below, by
delivering to the Venture and to the other Venturer(s) a Deficit Election
no later than 30 days prior to the beginning of any fiscal year of the
Venture if, in the view of counsel to Company, such election is necessary
to allocate to Company, Losses and deductions in accordance with the
provisions of Section 4.06(c).
(vi) Provided a Venturer has delivered a Deficit Election under this
Section 4.02(f), then if, upon the liquidation of the Venture, the
liquidation of such Venturer's interest in the Venture or the sale of such
Venturer's interest under the buy-sell procedure pursuant to Section 5.02,
a Venturer shall have a deficit in its Capital Account, after giving
effect to all adjustments to the Capital Account of such Venturer pursuant
to Section 4.01(b), such Venturer shall contribute to the Venture cash in
(X) the amount of such deficit or (Y) the amount specified in such
Venturer's most recent Deficit Election, whichever is less. Contributions
under this Section 4.02(f) shall be made by the end of the taxable year of
the Venture in which the liquidation or sale of such Venturer's interest
occurs (or, if later, within 90 days after the date of such liquidation or
sale) and shall be used first to satisfy any amounts then owing by the
Venture to its creditors to the extent such creditors have recourse to the
assets of the Venturers and any remaining contributions shall be
distributed to the Venturers having positive balances in their Capital
Accounts in proportion to such positive balances.
(vii) For purposes of this provision, the term "liquidation" shall
have the meaning set forth in the first sentence of Regulation section
1.704-1(b)(2)(ii)(g), but shall not include a constructive liquidation of
the Venture caused by a termination under section 708(b)(1) of the Code.
(g) Intentionally deleted.
(h) No Venturer shall be required to make any contributions to the Venture
except as required by the provisions of this Section 4.02.
SECTION 4.03. Intentionally deleted.
SECTION 4.04. Tax Status and Returns. (a) Notwithstanding any provisions
hereof to the contrary, each of the Venturers hereby recognizes that the Venture
will be a partnership
24
for United States federal income tax purposes and that the Venture will be
subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the
Code; provided, however, that the filing of U.S. Partnership Returns of Income
shall not be construed to extend the purpose of the Venture or expand the
obligations or liabilities of the Venturers. At the request of any Venturer, the
Venture shall file an election under section 754 of the Code.
(b) ▇▇▇▇▇ (as long as ▇▇▇▇▇, an Affiliated Entity of ▇▇▇▇▇ or a Person
Conrtolled by a member of the ▇▇▇▇▇ Control Group is the Property Manager) or
Company (in all other instances) shall prepare or cause to be prepared at the
expense of the Venture all tax returns and statements, if any, which must be
filed on behalf of the Venture regarding this transaction and the operation,
dissolution and liquidation of the Venture with any taxing authority, and shall
submit such returns and statements to all of the Venturers for their prior
approval at least 30 days before such returns and statements are due (including
extensions), and when Approved by the Venturers, make timely filing thereof. In
addition, within 120 days after the end of each fiscal year of the Venture,
▇▇▇▇▇ (as long as ▇▇▇▇▇, an Affiliated Entity of ▇▇▇▇▇ or a Person Controlled by
a member of the ▇▇▇▇▇ Control Group is the Property Manager) or Company (in all
other instances) shall furnish each Venturer with a report setting forth in
sufficient detail all data and information regarding the business and affairs of
the Venture as shall enable the Venture and each Venturer to prepare its
federal, state and local tax returns.
(c) (i) Company is designated tax matters partner (herein "TMP") as
defined in section 6231(a)(7) of the Code and the Venturers will take such
actions as may be necessary, appropriate, or convenient to effect the
designation of Company as TMP. In the event that Company shall no longer
be a Managing Partner, then ▇▇▇▇▇ shall be the TMP for all taxable years
beginning with the year during which Company ceases to be a Managing
Partner. The TMP and the other Venturers shall use their best efforts to
comply with the responsibilities outlined in this section and in Sections
6222 through 6231 of the Code (including any Regulations promulgated
thereunder). In determining the TMP's responsibilities under Section
6223(g) of the Code, the term "each partner" shall be deemed to mean "each
Venturer".
(ii) ▇▇▇▇▇ shall furnish Company with such information as Company
shall reasonably request to permit it to provide the Internal Revenue
Service with sufficient information to allow proper notice to the parties
in accordance with Section 6223 of the Code.
(iii) As TMP, the Company covenants and agrees with the other
Venturers that (i) after the receipt of a final partnership administrative
adjustment for a taxable year, the Company will not file a "petition for
readjustment of the partnership items", within the meaning of Section 6226
of the Code, in any court other than the United States Tax Court, without
the consent of the other Venturers and (ii) the Company will
25
not agree, pursuant to Section 6229(b)(l)(B) of the Code, to extend the
period for assessing any tax imposed by subtitle A of the Code with
respect to any person which is attributable to any partnership item (or
affected items) of the Venture without the consent of all of the
Venturers. In the event any other Venturer becomes a TMP, such Venturer
shall be bound by this provision.
(iv) No Venturer shall file, pursuant to section 6227 of the Code, a
request for an administrative adjustment of partnership items for any
partnership taxable year without first notifying the other Venturers. If
the other Venturers agree with the requested adjustment, the TMP shall
file the request for administrative adjustment on behalf of the Venture.
If the Venturers do not reach agreement within thirty days or within the
period required to timely file the request for administrative adjustment,
if shorter, any Venturer may file a request for administrative adjustment
on its own behalf. If, under section 6227 of the Code, a request for
administrative adjustment which is to be made by the TMP must be filed on
behalf of the Venture, the TMP shall also file such a request on behalf of
the Venture under the circumstances set forth in the preceding sentence.
(v) If any Venturer intends to file a petition under section 6226 or
6228 of the Code with respect to any partnership item or other tax matter
involving the Venture, the Venturer so intending shall notify the other
Venturers of such intention and the nature of the contemplated proceeding.
Such notice shall be given in a reasonable time to allow the other
Venturers to participate in the choosing of the forum in which such
petition will be filed. If the Venturers do not agree on the appropriate
forum, the petition shall be filed with the United States Tax Court. If
any Venturer intends to seek review of any court decision rendered as a
result of the proceeding instituted under the preceding part of this
subsection, such party shall notify the others of such intended action.
(vi) The TMP shall not bind the other Venturers to settlement
agreement without the Approval of the Venturers. If any Venturer enters
into a settlement agreement with the Secretary of the Treasury with
respect to any partnership items, as defined by section 6231(a)(3) of the
Code, it shall notify the other Venturers of such settlement agreement and
its terms within thirty days from the date of settlement.
(vii) These provisions shall survive the termination of the Venture
or the termination of any Venturer's interest in the Venture and shall
remain binding on the Venturers for a period of time necessary to resolve
with the Internal Revenue Service or the Department of the Treasury any
and all matters regarding the Federal income taxation of the Venture and
each of the Venturers with respect to Venture matters.
26
(d) Each Venturer (and any transferee of such Venturer) shall timely file
and shall use its best efforts to cause any of its Affiliates timely to file any
election permitted by law if, in the opinion of tax counsel for such Venturer
(or such Affiliate), the timely filing of such an election:
(i) would prevent the Venture's assets from being treated in whole
or in part as "tax-exempt use property" within the meaning of Code section
168(j) (or any successor provision thereto); and
(ii) would not create a significant risk that such Venturer or any
of its Affiliates shall, as a result of the filing of such election,
become subject to a more onerous tax burden than the burden to which they
would have been subject had such an election not been made.
Such Venturer and its Affiliates shall be reimbursed by the Venture for
any reasonable expenses, including reasonable attorneys' fees, which they incur
in the determination of whether to make such election and the preparation and
filing of any such election.
SECTION 4.05. Distributions. (a) For purposes of this Agreement, the "Net
Cash Flow" of the Venture shall be computed in accordance with accepted cash
basis accounting principles, consistently applied, by deducting the sum of the
amounts described in (ii) and (iii) below from the amounts described in (i)
below:
(i) The gross cash (or cash equivalent) receipts (other than Sales
or Refinancing Proceeds and capital contributions by the Venturers)
(computed in accordance with accepted cash basis accounting principles,
consistently applied) derived by the Venture, any of the Venturers,
Property Manager or any other person on behalf of the Venture from all
sources whatsoever as a direct or indirect result of the ownership or
operation of the Property or the operation of the Venture including, but
not limited to the gross amounts received as rent, prepaid rent,
additional rent, the proceeds of rent insurance, fees, charges or
otherwise (excluding security deposits unless such security deposits are
applied as payment of rent or forfeited upon default under a lease),
sundry receipts, concessionaire receipts, interest on deposits provided
that such interest is not the property of tenants by lease or local law,
the net amount of any refund of impositions of tax applicable to any
period of this Agreement (to the extent that the Venture is not required
to remit such refund to tenants), the proceeds of any sale of personal
property or fixtures now or hereafter located on the Property, but
specifically excluding any capital contribution by the Venturers.
(ii) The Operating Expenses of the Venture. For purposes of this
Agreement, the term "Operating Expenses" shall mean the operating expenses
actually
27
paid by the Venture, computed in accordance with accepted cash basis
accounting principles, consistently applied, for costs of: the
maintenance, management, operation, repair and replacement of any portion
of the Property except to the extent financed by borrowings of the
Venture, amounts paid by the Venture (including reimbursements) to the
Property Manager under the Management and Leasing Agreement or to the
Administrator under the Administration Agreement, accountants, attorneys
or other agents for services rendered in connection with the operation of
the Property, and all other costs specifically designated by or in
accordance with the provisions hereof to be Operating Expenses. Operating
Expenses shall include the costs of or charges for the following by way of
illustration but not limitation: interest and other periodic amortization,
if any, on any indebtedness of the Venture Approved by the Venturers,
whether or not secured by a lien on the Property, together with all other
costs incurred in connection with any such indebtedness or lien;
promotional and advertising costs; leasing commissions; real estate taxes
and assessments; all taxes upon the gross or net rental income of the
Venture derived from the Property; water and sewer charges; linkage
payments (or the alternative thereto) to the City or the BRA under the
Sale and Construction Agreement; insurance premiums; licenses, permits and
inspections (excepting building permits and inspections relating to the
initial construction of the Improvements); heat, light and power;
janitorial services; building staff; garbage services; costs of providing
air-conditioning; costs of supplies, materials, equipment and tools; and
the cost to the Venture of contesting by appropriate proceedings the
applicability to the Property or the validity of any statute, ordinance,
rule or regulation affecting the Property which might increase Operating
Expenses; provided, however, that Operating Expenses shall not include
depreciation, amortization of previously capitalized expenditures or any
other expense not involving a cash expenditure by the Venture or any
amounts paid from funds specifically excluded from the gross cash receipts
specified in Section 4.05(a)(i).
(iii) A reasonable reserve for contingencies, accrued but unpaid
Operating Expenses, and the general working capital requirements of the
Venture as Approved by the Venturers.
(b) Within 10 days after the close of each calendar month, the Venture
shall distribute or otherwise apply the Net Cash Flow realized for the preceding
calendar month to the Company and ▇▇▇▇▇ in proportion to their relative
Percentage Interests.
(c) Sales or Refinancing Proceeds shall be distributed or otherwise
applied to Company and ▇▇▇▇▇ in proportion to their relative Percentage
Interests.
(d) Anything in this Agreement to the contrary notwithstanding, in the
event of a liquidation of the Venture, the proceeds of such liquidation
remaining after the payment of or
28
provision for the debts and liabilities of the Venture shall be applied in
accordance with the following order of priority:
(i) First, to the payment of the expenses of liquidation;
(ii) Next, to the setting up of any reserves which the remaining
Venturers may deem necessary or appropriate for any contingent or
unforseen liabilities or obligations of the Venture (said reserves may be
transferred by the remaining Venturers to a bank or trust company
acceptable to the remaining Venturers, as escrowee, to be held by it for
distributing such reserves in payment of any of the aforementioned
liabilities or obligations) and at the expiration of such period as the
remaining Venturers shall deem advisable, if any, thereafter remaining in
the manner provided herein;
(iii) Thereafter, to the Venturers in proportion to their Percentage
Interests.
SECTION 4.06. Allocations of Profits, Gains and Losses. (a) Definitions.
For purposes of this Section 4.06, the following terms shall have the following
meanings:
(i) Adjusted Capital Account Deficit. The "Adjusted Capital Account
Deficit" of any Venturer means, as of any particular date, the deficit
balance, if any, in such Venturer's Capital Account as of such date, as
determined in the manner provided in Section 4.01 and by then adjusting
such Capital Account as so determined as follows:
(A) Such Capital Account shall be increased to reflect the
amount, if any, which such Venturer is obligated to restore to the
Venture under any provision of this Agreement or is deemed to be
obligated to restore pursuant to Sections 1.704-2(g) and
1.704-2(i)(5) of the Regulations; and
(B) Such Capital Account shall be reduced to reflect any items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6) of the
Regulations.
(ii) Profits and Losses. The "Profits" and "Losses," as the case may
be, of the Venture for each year shall be an amount equal to the Venture's
taxable income or taxable loss under Section 703(a) of the Code and
Section 1.703-1 of the Regulations (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or
loss), but with the following adjustments:
29
(A) Any tax-exempt income, as described in Section
705(a)(1)(B) of the Code, realized by the Venture during such year
shall be taken into account in computing such taxable income or
taxable loss as if it were taxable income.
(B) Any expenditures of the Venture described in Section
705(a)(2)(B) of the Code for such year, including any items treated
under Section 1.704-1(b)(2)(iv)(i) of the Regulations as items
described in Section 705(a)(2)(B) of the Code, shall be taken into
account in computing such taxable income or taxable loss as if they
were deductible items.
(C) Any items that are specially allocated pursuant to
Sections 4.06(e) shall not be taken into account in computing such
taxable income or taxable loss.
(b) Allocation of Profits. Profits for any year of the Venture shall be
allocated as follows:
(i) First, to the Venturers in proportion to, and to the extent of,
the negative balances, if any, in their respective Capital Accounts as of
the last day of such year; and then
(ii) To the Venturers in proportion to their respective Percentage
Interests.
(c) Allocation of Losses. Losses for any year of the Venture shall be
allocated to the Venturers in proportion to their respective Percentage
Interests. Notwithstanding the preceding sentence, to the extent any Losses
allocated to a Venturer hereunder would cause such Venturer (hereafter, a
"Restricted Venturer") to have an Adjusted Capital Account Deficit as of the end
of the year to which such Losses relate, such Losses shall not be allocated to
such Restricted Venturer and instead shall be allocated to the other Venturer
(hereafter, a "Permitted Venturer") in proportion to, and to the maximum extent
that, the amounts in which such Losses may be allocated to the Permitted
Venturer without causing it to have an Adjusted Capital Account Deficit.
(d) Special Allocations. The following special allocations shall be made
in the following order:
(i) Minimum Gain Chargeback. If there is a net decrease in
"partnership minimum gain" (as that term is defined in Sections
1.704-2(b)(2) and 1.704-2(d) of the Regulations) during any year, each
Venturer shall be specially allocated items of Venture income and gain for
such year in an amount equal to that Venturer's share of the net decrease
in partnership minimum gain. Allocations pursuant to the previous
30
sentence shall be made in accordance with Section 1.704-2(f)(6) of the
Regulations. This Section 4.06(d)(i) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. If there is a net decrease in
"partner nonrecourse debt minimum gain" (as that term is defined in
Sections 1.704-2(i)(2) and (3) of the Regulations) during any year, each
Venturer who has a share of that partner nonrecourse debt minimum gain as
of the beginning of the year shall, to the extent required by Section
1.704-2(i)(4) of the Regulations, be specially allocated items of Venture
income and gain for such year (and, if necessary, subsequent years) equal
to that Venturer's share of the net decrease in partner nonrecourse debt
minimum gain. Allocations pursuant to the previous sentence shall be made
in accordance with Section 1.704-2(i)(4) of the Regulations. This Section
4.06(d)(ii) is intended to comply with the requirement in Section
1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith.
(iii) Qualified Income Offset. If any Venturer unexpectedly receives
any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Venture income and
gain shall be specially allocated to each such Venturer in an amount and
manner sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Venturer as quickly as
possible, provided that an allocation pursuant to this Section
4.06(d)(iii) shall be made only if and to the extent that such Venturer
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Section 4.06 have been tentatively made as if this
Section 4.06(d)(iii) were not in the Agreement.
(iv) Gross Income Allocation. If any Venturer has a deficit capital
account at the end of any year that is in excess of the sum of (i) the
amount such Venturer is obligated to restore pursuant to any provision of
this Agreement, and (ii) the amount such Venturer is deemed to be
obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g) and 1.704-2(i)(5), each such Venturer shall be
specially allocated items of Venture income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to
this Section 4.06(d)(iv) shall be made only if and to the extent that such
Venturer would have a deficit capital account in excess of such sum after
all other allocations provided for in this Section 4.06 have been made as
if Sections 4.06(d)(iii) and (iv) were not in the Agreement.
(v) Nonrecourse Deductions. "Nonrecourse deductions" (as that term
is defined in Sections 1.704-2(b)(1) and (c) of the Regulations) for any
year or other
31
period shall be specially allocated to the Venturers in proportion to
their respective Percentage Interests.
(vi) Partner Nonrecourse Deductions. "Partner nonrecourse
deductions" (as that term is defined in Section 1.704-2(i) of the
Regulations) for any year or other period shall be specially allocated to
the Venturer who bears the economic risk of loss with respect to the
"partner nonrecourse debt" (as that term is defined in Section 1.704-
2(b)(4) of the Regulations) to which such partner nonrecourse deductions
are attributable, in accordance with Regulations Section 1.704-2(i)(1).
(vii) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining capital
accounts, the amount of such adjustment to capital accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Venturer in a manner consistent
with the manner in which their capital accounts are required to be
adjusted pursuant to such Section of the Regulations.
(e) Curative Allocations. The allocations set forth in Section 4.06(d)
hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations. It is the intent of the Venturers that, to the
extent possible, all Regulatory Allocations that are made be offset either with
other Regulatory Allocations or with special allocations pursuant to this
Section 4.06(e). Therefore, notwithstanding any other provision of this Section
4.06 (other than the Regulatory Allocations), the Company, as Managing Partner,
shall make such offsetting special allocations in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Venturer's
capital account balance is, to the extent possible, equal to the capital account
balance such Venturer would have had if the Regulatory Allocations were not part
of this Agreement and all Venture items were allocated pursuant to Sections
4.06(b) and (c). In exercising its discretion under this Section 4.06(e), the
Managing Partner shall take into account future Regulatory Allocations under
Sections 4.06(d)(i) and (ii) that, although not yet made, are likely to offset
other Regulatory Allocations previously made under Sections 4.06(d)(v) and (vi).
(f) Section 704(c) Allocation. Any item of income, gain, loss, and
deduction with respect to any property (other than cash) that has been
contributed by a Venturer to the capital of the Venture and which is required to
be allocated to the Venturers for income tax purposes under Section 704(c) of
the Code so as to take into account the variation between the tax basis of such
property and its agreed upon fair market value at the time of its contribution
shall be allocated to the Venturers for income tax purposes in the manner so
required or permitted. In
32
addition, any deduction to which the Venture is entitled in a year with respect
to any accrued but unpaid item transferred to the Venture by a Venturer that is
required to be allocated to the Venturers under Section 704(c)(3) of the Code
shall be allocated in the manner so required.
SECTION 4.07. Accounting. (a) The fiscal year of the Venture shall be the
calendar year.
(b) The Managing Partner shall cause the Venture to maintain true and
correct books and records of the Venture in accordance with generally accepted
accounting principles, consistently applied, showing all costs, expenditures,
receipts, assets and liabilities and profits and losses and all other records
necessary, convenient or incidental to accurately record the business and
affairs of the Venture. The books of account of the Venture shall be kept and
maintained at all times at the Venture's principal place of business or such
other place or places Approved by the Venturers. The books of account shall be
maintained on an accrual basis of and such method of accounting shall be used
for federal income tax reporting purposes.
(c) The Venturers agree that the Venture's certified public accountants
shall be Coopers & ▇▇▇▇▇▇▇ LLP or such other independent firm of certified
public accountants as Approved by the Venturers from time to time (the
"Accountant"); provided, however, that the termination of Coopers & ▇▇▇▇▇▇▇ LLP
as the Accountant of the Venture shall be Approved by the Venturers. On or
before January 30 of each year, ▇▇▇▇▇ (as long as ▇▇▇▇▇, an Affiliated Entity of
▇▇▇▇▇ or a Person Controlled by a member of the ▇▇▇▇▇ Control Group is the
Property Manager) or Company (in all other instances) shall deliver to the
Accountant the information necessary to prepare an audited Balance Sheet,
Statement of Income or Loss and Statement of Change in Financial Position of the
Venture for the prior fiscal year. Thereafter, ▇▇▇▇▇ (as long as ▇▇▇▇▇, an
Affiliated Entity of ▇▇▇▇▇ or a Person Controlled by a member of the ▇▇▇▇▇
Control Group is the Property Manager) or Company (in all other instances) shall
respond to any additional inquiries or provide additional documentation required
by the Accountant and will use its best efforts to cause the Accountant to
prepare and furnish to each of the Venturers, within 60 days after the close of
each fiscal year, an audited balance sheet of the Venture dated as of the end of
the fiscal year, and a related audited statement of income or loss for the
Venture for such fiscal year. ▇▇▇▇▇ (as long as ▇▇▇▇▇, an Affiliated Entity of
▇▇▇▇▇ or a Person Controlled by a member of the ▇▇▇▇▇ Control Group is the
Property Manager) or Company (in all other instances) shall furnish to the other
Venturers such other reports on the Venture's operations and condition as may be
reasonably requested by either such Venturer.
(d) Each Venturer shall have the right at all reasonable times during
usual business hours to audit, examine and make copies of or extracts from the
books of account of the Venture. Such right may be exercised through any agent
or employee of such Venturer designated by it or by an independent firm of
certified public accountants designated by such
33
Venturer. Each Venturer shall bear all expenses incurred in any examination made
for such Venturer's account unless there is an error of more than 3% in such
books of account (including the computation of Net Cash Flow of the Venture for
any fiscal year) in which event the Venture shall reimburse such Venturer for
its costs and expenses. In addition, if the Venture can qualify to forego
payment of any withholding taxes by preparing and filing the appropriate forms,
the Venture shall prepare and file such forms.
SECTION 4.08. Bank Accounts. Funds of the Venture shall be deposited in an
account or accounts of a type, in form and name Approved by the Venturers in
Mellon Bank or another bank or banks Approved by the Venturers. Withdrawals from
bank accounts shall be made only by parties Approved by the Venturers.
ARTICLE V
TERM AND TERMINATION
SECTION 5.01. Term. The Venture commenced on May 29, 1986 and shall
continue until May 29, 2061 or until sooner terminated in accordance with the
provisions of this Article V, which provisions shall not be mutually exclusive,
i.e., the exercise or use of one of the provisions of this Article shall not
preclude the exercise or use of any other provisions of this Agreement except as
in this Article V expressly provided. No Venturer shall have the right and each
Venturer hereby agrees not to dissolve, terminate or liquidate, or to petition a
court for the dissolution, termination or liquidation of, the Venture except as
provided in this Agreement.
SECTION 5.02. Voluntary Termination-Buy/Sell. (a) Either of Company or
▇▇▇▇▇ (the "Offeror") shall, subject to the conditions herein provided and only
at the time specified in Section 5.02(b), have the right to withdraw from the
Venture by giving notice of such intention to withdraw to the other Venturer
(the "Offeree") and, in addition, by delivering to the Offeree an offer in
writing (the "Offer") stating the cash price (determined as set forth below) at
which the Offeror would be willing to purchase or sell an undivided 100%
interest in the Property. The price set forth in the Offer (the "Offer Price")
shall be the positive or negative amount which, in the Offeror's sole and
absolute opinion, is equal to the difference between (x) the value of the
Property free and clear of any mortgages, deeds of trust and other liens and
encumbrances and (y) the aggregate unpaid principal balance plus accrued and
unpaid interest and charges (including, without limitation, prepayment
premiums), if any, of the mortgages, deeds of trust and other liens and
encumbrances affecting the Property as of the date of the Offer subject to which
the Property would be conveyed (the "Surviving Mortgages"). In each instance all
Surviving Mortgages shall be described in the Offer.
If the Improvements have been damaged or if there is a condemnation or
other taking for a public purpose pending, the Offer shall state whether or not
the Offer Price specified is
34
contingent upon the Improvements being fully repaired and whether or not the
condemnation or other taking has been taken into account in the calculation of
the Offer Price. The Offer shall also specify as to whether the Offer is
contingent upon the Property being repaired and restored prior to the closing,
or whether the purchasing party will agree to accept the Property in an
unrepaired or unrestored condition and an assignment of the insurance proceeds
or condemnation award. The Managing Partner or the Property Manager, as the case
may be, shall furnish, or where appropriate, make available to the Offeror and
the Offeree, or use its best efforts to obtain from third parties such
certificates, documents and information as the Offeror and the Offeree may
reasonably request in order to enable the Offeror to prepare the Offer and
compute the Offer Price and the Offeree to make the decision described in
Section 5.02(c).
(b) Neither Venturer may make the Offer to buy or sell described in
Section 5.02(a) at any time prior to November 1, 2007.
(c) Upon receipt of an Offer given and delivered pursuant to Section
5.02(a), each Offeree shall be obligated to elect in accordance with the
provisions of Section 5.02(e), either to purchase the Offeror's entire interest
in the Venture or to sell to the Offeror the entire interest of such Offeree in
the Venture, in either case for a purchase price determined in the manner set
forth below in Section 5.02(d) and payable in cash at the closing described in
Section 5.03.
(d) The purchase price payable for any purchase and sale of an interest of
a Venturer shall be equal to the amount of Sales or Refinancing Proceeds, if
any, that would have been distributed to such Venturer in accordance with the
provisions of Section 4.05(c), subject to reduction as provided in 4.02(e) to
take into account, under certain circumstances, any negative Capital Account
balance, had the Property been sold for an amount equal to the Offer Price.
(e) An Offeree shall give written notice of its election to the Offeror
within 60 days after receipt of the Offer. Failure of an Offeree to give notice
that such Offeree has elected to purchase the Offeror's entire interest in the
Venture shall be conclusively deemed to be an election of such Offeree to sell
such Offeree's entire interest in the Venture to the Offeror. In the event that
an Offeree elects to sell its interests in the Venture to the Offeror, the
Offeror shall purchase the interest of the Offeree.
(f) If, by virtue of the election of the Offeror or Offeree to purchase
the selling Venturer's interest in the Venture pursuant to this Section 5.02,
the holder of any loan encumbering the Property has the right to, and notifies
the Venture of its intent to accelerate such loan, it shall be a condition to
the Closing that the purchasing Venturer repay such loan (plus any deferred and
accrued and unpaid interest thereon) at the Closing and the failure to do
35
so will constitute such Venturer a Defaulting Venturer. The purchasing Venturer
who shall be a Defaulting Venturer agrees to indemnify the selling Venturer and
its Affiliates and hold each of them harmless from and against any damage, loss
or liability to any of them as a result of the indemnifying party's failure to
repay such loan at the Closing in accordance with the provisions hereof.
(g) If, following an election or a deemed election by an Offeree to
purchase or sell its interest, the purchasing Venturer fails to consummate the
purchase in accordance with Section 5.03, the purchasing Venturer shall be
deemed a Defaulting Venturer. The selling Venturer, in addition to all other
rights and remedies available at law or in equity against the Defaulting
Venturer (as set forth in Section 5.08), shall have the right (but not the
obligation) (i) to purchase the interest of the Defaulting Venturer in the
Venture as if the Defaulting Venturer had made an election to sell its interest
in the Venture pursuant to Section 5.02(c) or (ii) to sell the Property to a
bona fide third party who is not an Affiliate of any Non-Defaulting Venturer
without the consent of the Defaulting Venturer.
SECTION 5.03. Closing. (a) The closing ("Closing") of any sale pursuant to
this Article V (other than pursuant to Section 5.05) shall be held at a mutually
acceptable place, on a mutually acceptable date but not more than 90 days after
receipt by the Offeror of the Offeree's written notice of election, or the
expiration of the time during which the Offeree is entitled to elect, as
provided in Section 5.02(e). However, within 45 days after such receipt or
expiration, there shall be a preliminary closing at which the Venturers shall
negotiate the form of the instruments and documents that are reasonably
necessary and desirable to effectuate the sale and transfer to the purchasing
party(ies).
(b) At the Closing, an assignment and, if requested by the purchasing
party, a ▇▇▇▇ of sale (both with covenants against grantor's acts) from the
selling Venturer to the purchasing party of the selling Venturer's interest
therein, together with such other instruments and documents as may be reasonably
necessary or desirable to effectuate the sale and transfer to the purchasing
party, shall be deposited in escrow under an escrow agreement and with an escrow
agent which has been approved by the Venturers, which approval shall not be
unreasonably withheld. If there is any dispute between the parties, the title
company which issued a fee title policy to the Venture shall act as the escrow
agent. The instruments and documents to be deposited in escrow at the Closing
shall be legally sufficient to convey all of the selling Venturer's interest in
the Venture to the purchasing party, free and clear of all mortgages, deeds of
trust, liens and encumbrances, and, at such time, the Property shall be free and
clear of all mortgages, deeds of trusts, liens and encumbrances except the
Surviving Mortgages. The purchase price shall be paid to the selling Venturer by
federal wire transfer of "same day" funds to an account designated by the
selling Venturer. At Closing, all prepaid expenses of the Venture, including,
without limitation, lease payments, advance payments on service and maintenance
contracts and similar items, shall be calculated, and to the extent any
prepayment
36
relates to a period beyond Closing, the selling Venturer's pro rata share (based
on the Percentage Interest of such Venturer) shall be credited to the purchase
price. All accrued but unpaid expenses of the Venture, including, without
limitation, interest and contract and other payments made in arrears, shall be
calculated, and to the extent any such accrued expenses relate to the period
prior to Closing, the selling Venturer's pro rata share (based on the Percentage
Interest of such Venturer) shall be debited against the purchase price at
Closing. To the extent the Venture has undistributed Net Cash Flow, the selling
Venturer's distributive share(s) thereof shall be credited to the purchase price
at Closing and any funds received by the Venture after Closing which are
attributable to periods prior to Closing and were not included in the
computation of Net Cash Flow shall be prorated between the Venturers and the
selling Venturer's share shall be paid to it upon receipt by the Venture.
(c) In the event there are any conveyance, transfer or similar taxes
payable as an incident to the conveyances at the preliminary closing or the
Closing, such taxes shall be expenses of the Venture. In the event that any
title insurance company insuring the title of the Venture to the Property shall
refuse to endorse its policy of title insurance to reinsure the Venture's title
to the Land and the Improvements effective immediately after the transfer to the
purchasing Venturer without exception other than as set forth in the original
policy of title insurance (other than exceptions for real estate taxes, rights
of tenants in possession, as tenants only, any Surviving Mortgages, any
easements created by the Venture in favor of utility suppliers providing utility
service to the Venture, and any other matter Approved by the Venturers at any
time or from time to time), then the assignment from the selling Venturer to the
purchasing Venturer shall contain general warranties of its title to its
interest in the Venture and the Land and Improvements.
(d) The purchasing Venturer shall have the right, within its sole and
absolute discretion, to cause its nominee or designee to acquire the selling
Venturer's interest in the Venture at the Closing but nothing herein shall
relieve the purchasing Venturer of its other obligations hereunder. Any such
designee shall, upon Closing, become a Venturer only if expressly approved and
consented to by the purchasing Venturer.
SECTION 5.04. Assumption of Liabilities. (a) At the Closing held pursuant
to this Article (other than pursuant to Section 5.05), the purchasing Venturer
shall, by a legally enforceable agreement, assume the payment of all obligations
of the Venture accruing after Closing, including, without limitation, any
indebtedness under any lien on the Property identified in the Offer to the
extent that the Venturers have personal liability therefor.
(b) If, at the time of the purchase of the Venture interest, the Property
is subject to any mortgage, deed of trust, lien or encumbrance, other than a
Surviving Mortgage, the purchasing Venturer shall discharge, assume, or take
subject to such mortgage, deed of trust, lien or encumbrance and reduce the
amount of the Offer by the amount of money as would be
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required to discharge such mortgage, deed of trust, lien or encumbrance
(including, without limitation, any and all prepayment premiums or
penalties)with an appropriate reduction in the purchase price under Section
5.02(d). In addition, if such an encumbrance shall have been placed by the
selling Venturer in contravention of the terms and provisions of this Agreement,
then the purchasing Venturer shall also have all of the rights provided in this
Article V with respect to a default by any Venturer.
(c) If the Improvements are damaged by fire or other casualty, or if any
party possessing the right of eminent domain or such similar right (including
the BRA pursuant to its remedies set forth under the Sale and Construction
Agreement) shall give notice of an intention to take or acquire a substantial
part of the Land or any part of the Improvements, and such damage occurs, or
such notice is given between the date of the Offer and the Closing, the
following shall apply:
(i) If the Improvements are damaged by an insured casualty (or an
uninsured casualty not resulting in significant damage, which for the
purposes of this subsection only shall mean damage the cost to repair of
which would not exceed $1,000,000), or if the taking or acquisition shall
not involve a substantial portion of the Land or any part of the
Improvements resulting in any other substantial reduction in income, then
the purchasing Venturer shall be required to complete the transaction and
accept an assignment of the insurance or condemnation proceeds, in which
case the purchase price shall be reduced by the amount of the uninsured
casualty, if any, and shall be further reduced by the sum of all
deductible amounts specified under the policies of insurance.
(ii) If the Improvements are damaged by an uninsured casualty
resulting in significant damage, or if the taking or acquisition shall or
may result in a substantial reduction in the income producing capacity of
the Property, then the purchasing Venturer shall have the option to either
(1) accept the Venture interest with the Property in an "as is" condition
together with any insurance proceeds, settlements and awards (in which
case the purchase price shall be reduced by the sum of all deductible
amounts specified under policies of insurance), or (2) cancel the
purchase.
In the event that the purchase is canceled by the purchasing Venturer in
accordance with this Section 5.04(c), the terms of this Agreement shall remain
in effect and continue to be binding on the parties.
SECTION 5.05. Right of First Offer. (a) (i) If Company or ▇▇▇▇▇ wishes to
offer for sale all or any portion of its interest in the Venture (the "Offeror's
Interest") to a Person other than Venturer or Affiliated Entity of a Venturer
(the "Third Party") or receives an offer from a Third Party which it is willing
to accept, other than an entity which is directly or
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indirectly part of a Prohibited Syndication Offering (which shall be prohibited
under any circumstances), then such Venturer (the "Offeror") shall give prompt
notice in writing to the other Venturer (the "Offeree"), setting forth the
Percentage Interest being offered for sale, the name and address of the Third
Party, the price and other terms of the proposed offer of sale (the "Terms of
Sale") and such financial and other information regarding the Third Party as the
Offeree may reasonably request. The Terms of Sale shall not provide for (a) any
payment to be made which is not legal tender or (b) any security or collateral
to be given other than a lien on an interest of a Venturer.
(ii) The giving of such notice by the Offeror to the Offeree shall
constitute an offer by the Offeror to sell or transfer the Offeror's
Interest to the Offeree upon the same terms and conditions as contained in
the Terms of Sale. Within 10 business days after receipt of such notice,
the Offeree shall request any and all further information regarding such
offer as Offeree may reasonably require in order to fully evaluate the
Offer.
(iii) Within 60 days after the Offeror has supplied all requested
information to the Offeree (the "election period"), Offeree may elect (by
sending notice to the Offeror) to purchase or acquire the Offeror's
Interest upon the same terms and conditions as contained in the Terms of
Sale. If the Offeree elects to purchase the Offeror's Interest, then on
the closing date (which date shall be the date set forth in the Offeree's
notice of election to the Offeror but shall not be sooner than 15 days nor
later than 90 days after the date of the giving of such notice of
election), Offeror shall convey, transfer and assign to Offeree (by
instruments prepared by Offeror's attorneys and in form and substance
reasonably satisfactory to Offeree's attorneys) all or the appropriate
portion of Offeror's Interest upon the same terms and conditions as
contained in the Terms of Sale (subject to the condition imposed by
paragraph (v) below).
(iv) If the Offeree shall fail to exercise its right to purchase the
entire Offeror's Interest or, if for any other reason the Offeree does not
elect to purchase the entire Offeror's Interest, the Offeror may sell or
transfer the entire Offeror's Interest to the Third Party only, provided
(A) such sale or transfer is made on no more favorable terms and
conditions than those set forth in the Terms of Sale, (B) such sale or
transfer is consummated within 180 days after the expiration of the
election period, and (C) such sale or transfer is not, directly or
indirectly, part of a Prohibited Syndication Offering. In the event that
such sale to the Third Party is not consummated in accordance with this
Section 5.05 or the Offeror wishes to sell to someone other than the Third
Party listed in the Terms of Sale, the provisions of this Section 5.05
shall be applicable as if the previous Terms of Sale had never been
submitted.
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(v) If, by virtue of the election of the Offeree to purchase the
Offeror's Interest in accordance with the provisions of this Section 5.05,
the holder of any loan encumbering the Property has the right to, and
notifies the Venture of its intent to accelerate such loan, it shall be a
condition to the closing that the Offeree repay such loan (plus any
deferred and accrued and unpaid interest thereon) at the closing of the
sale of the Offeror's Interest.
(vi) The failure of Offeree to repay such loan in accordance with
Section 5.05(a)(v) above shall make such Offeree a Defaulting Venturer as
defined in Section 5.08 hereof. Furthermore, regardless of whether the
Offeror is then a Venturer, such Offeree who shall be a Defaulting
Venturer agrees to indemnify the Offeror and its Affiliates and hold each
of them harmless from and against any damage, loss or liability to any of
them as a result of the failure of the indemnifying party to repay such
loan in the amount indicated herein at the time specified herein for such
repayment.
(b) In the event of a sale to the Offeree or to a Third Party by the
Offeror permitted under Section 5.05, the Venture shall not be dissolved or
wound up but instead shall continue as before with, however, the replacement of
the Third Party or the Offeree as the successor in interest to the Offeror's
Interest or as a Venturer with an increased Percentage Interest, as the case may
be. No such sale shall relieve the Offeror from any of its obligations under
this Agreement accruing prior to such sale. Notwithstanding the foregoing, as a
condition to any sale by the Offeror to a Third Party, such Third Party must
execute this Agreement (as it may have been amended), or a separate consent
thereto, and agree to be bound by all of its terms and provisions; provided,
however, that such Third Party shall (i) neither become a Managing Partner by
virtue of its purchase of a Venturer's Percentage Interest nor (ii) have any
rights to participate in the management or decision-making of the Venture or to
vote on any Major Decisions, unless Company and ▇▇▇▇▇ agree otherwise. In the
event Company transfers more than 50% of its Percentage Interest as of November
1, 1997 (91.5%) to the Offeree or to a Third Party pursuant to this Section 5.05
or otherwise, then from and after the date on which such transfer is
consummated, Company shall no longer have the right or authority granted under
the second sentence of Section 3.01(a) hereof to take all actions to be taken by
"the Managing Partner" hereunder and ▇▇▇▇▇ shall thereafter have all such right
and authority, provided, however, that Company shall continue to remain a
Managing Partner of the Venture and shall have the right to participate in the
management and decision-making process of the Venture and to vote on Major
Decisions as provided herein with respect to all Venturers.
SECTION 5.06. Liquidation and Distribution Procedure. (a) Effective upon
the deposit in escrow of the documents of transfer and the purchase price
pursuant to Section 5.03, at the election of the purchasing Venturer, the
Venture shall be deemed dissolved. In such event the Venture's business and
affairs shall be wound up, its just debts and obligations paid
40
and its remaining assets, if any, distributed to the remaining Venturers in
accordance with Section 4.05(d).
(b) In the event of a liquidation and dissolution as a result of the
occurrence of an Event of Dissolution pursuant to Section 5.07 hereof or a
default pursuant to Section 5.08 hereof, the Withdrawing Venturer or the
Defaulting Venturer, as the case may be, shall have no power or authority to
bind the Venture or the other Venturer but shall assist the remaining Venturer
in the dissolution and winding up of the Venture and the distribution of the
assets thereof. Upon such distribution and winding up, the parties hereto shall
be relieved of all obligations hereunder except for obligations, duties or
rights which have not been determined or ascertained as of the date of such
termination and for rights or remedies which a Non-Defaulting Venturer may have
against a Defaulting Venturer in law or equity. The winding up of the Venture
and the termination of the business and affairs of the Venture shall be
conducted by the remaining Venturer. During the period of such winding up, the
business and affairs of the Venture shall be conducted so as to maintain and
preserve the assets of the Venture in a manner consistent with the winding up of
the affairs thereof.
SECTION 5.07. Event of Dissolution. (a) The Venture shall not be wound up
and terminated by the occurrence of an Event of Dissolution unless all of the
remaining Venturers shall so decide.
(b) The term "Event of Dissolution" as used hereunder shall mean:
(i) the death of any natural person who is now or who shall
hereafter become a Venturer;
(ii) the dissolution or termination of any partnership or
corporation (other than (x) as a result of a transfer of interests therein
permitted by this Agreement or (y) a dissolution immediately followed by a
reconstitution of such partnership or corporation) which at the time is a
Venturer;
(iii) the declaration of any natural person who is now or who shall
hereafter become a Venturer as a lunatic in any judicial proceedings, or a
showing that such Venturer is of unsound mind;
(iv) the showing by competent medical evidence that any natural
person who is now or who shall hereafter become a Venturer is mentally or
medically unable to perform the duties required of him by the Venture;
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(v) the occurrence of any one of the following events:
(1) if any Venturer (hereinafter referred to as the "Bankrupt
Party") shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief for itself
under the present or any future federal bankruptcy act or any other
present or future applicable federal, state or other statute or law
relative to bankruptcy, insolvency or other relief for debtors, or
shall seek or consent to or acquiesce in the appointment of any
trustee, receiver, conservator or liquidator of the Bankrupt Party
or of any substantial part of said party's properties or said
party's interest in the Venture (the term "acquiesce" as used in
this Article includes but is not limited to, the failure to file a
petition or motion to vacate or discharge any order, judgment or
decree within 30 days after the date of such order, judgment or
decree); or
(2) if a court of competent jurisdiction shall enter an order,
judgment or decree approving a petition filed against the Bankrupt
Party seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy act or any other present or
future applicable federal, state or other statute or law relating to
bankruptcy, insolvency or other relief for debtors, and such party
shall acquiesce in the entry of such order, judgment or decree or
such order, judgment or decree shall remain unvacated or unstayed
for an aggregate of 90 days (whether or not consecutive) from the
date of entry thereof, or any trustee, receiver, conservator or
liquidator of such party or of all or any substantial part of such
party's property or interest in the Venture shall be appointed
without the consent or acquiescence of such party and such
appointment shall remain unvacated or unstayed for an aggregate of
90 days (whether or not consecutive); or
(3) if any Venturer shall admit in writing its inability to
pay its debts as they mature; or
(4) if any Venturer shall give notice to any governmental body
of insolvency or pending insolvency, or suspension of operations; or
(5) if any Venturer shall make a general assignment for the
benefit of creditors or take any other similar action for the
protection or benefit of creditors.
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(c) In the event of the occurrence of an Event of Dissolution or otherwise
upon the agreement of all the Venturers:
(i) Provided that the other Venturer has elected to wind up and
terminate the Venture, the Venturer as to whom the Event of Dissolution
has occurred ("Withdrawing Venturer") shall immediately cease to have any
right to participate in the management or decision-making processes of the
Venture (provided that the Withdrawing Venturer shall nevertheless be
entitled to continue to receive distributions of Net Cash Flow and Sales
or Refinancing Proceeds and liquidation proceeds and allocations of gain,
loss and credit as fully as if such Venturer were not a Withdrawing
Venturer) and the remaining Venturer may send notices of the dissolution
to such persons and entities as the remaining Venturer may deem
appropriate and necessary under the circumstances.
(ii) The remaining Venturer shall settle the business of the Venture
as expeditiously as its nature will permit and account for the interests
of the Venturers. Such settlement procedure may include, but shall not be
limited to, a purchase by the remaining Venturer of the interest of the
Withdrawing Venturer at a price determined in accordance with the
appraisal procedures set forth in Section 10.08 hereof but otherwise in
accordance with the principles set forth in Section 5.02(d), a public sale
of all or any part of the assets of the Venture, a winding up of the
Venture, or a petition to a court of appropriate jurisdiction requesting
that such court supervise and approve a partitioning of the Property. If
by virtue of an Event of Dissolution, the holder of any loan encumbering
the Property has the right to, and notifies the Venture of its intent to
accelerate such loan, any settlement shall require the Venture to cause
such loan to be repaid in full.
(iii) The good will of the Venture (including the name, records and
files) shall belong to and remain solely vested in the Venture.
(iv) The prior written consent of the remaining Venturer shall be
required prior to any consent to any administration of the Property by any
referee, trustee or court of bankruptcy. The remaining Venturer shall have
the right at all times to continue the business and affairs of the Venture
pursuant to the terms of this Agreement.
SECTION 5.08. Default. If any Venturer fails to perform any of its
obligations hereunder, or violates the terms of this Agreement (the "Defaulting
Venturer"), the other Venturer (the "Non-Defaulting Venturer") shall have the
right to give the Defaulting Venturer a notice of default (the "Notice of
Default") specifically setting forth the nature of the default and stating that
the Defaulting Venturer shall have a period of 20 days to cure any such
43
default, and if the Defaulting Venturer shall fail to cure such default within
such 20-day period, or if such default is not capable of being cured within such
period, the Defaulting Venturer has not commenced in good faith the curing of
such default within such 20-day period and does not thereafter prosecute to
completion with diligence and continuity the curing thereof, the Non- Defaulting
Venturer shall (in addition to any other rights under this Agreement, by law or
in equity) have the right:
(a) to bring any proceeding in the nature of specific performance,
injunction or other equitable remedy, it being acknowledged by each of the
Venturers that damages at law may be an inadequate remedy for a default or
threatened breach of this Agreement;
(b) to bring any action at law by or on behalf of the Venture or the
Non-Defaulting Venturer as may be permitted in order to recover damages;
(c) to institute such proceedings (including but not limited to the
right to purchase the interest of the Defaulting Venturer at a price
determined by appraisal made in accordance with the appraisal procedures
set forth in Section 10.08 hereof but otherwise in accordance with the
principles set forth in Section 5.02(d)) as may be appropriate to secure
an accounting and to dissolve, wind up and terminate the Venture; or
(d) if such default is a material default, to institute the
procedure set forth in Section 5.02 hereof by giving a notice to such
effect to the Defaulting Venturer, notwithstanding the time limitations
contained in Section 5.02(b).
In addition to the remedies set forth above, the Non-Defaulting Venturer shall
have the right to remove the Defaulting Venturer as Managing Partner, and if the
Defaulting Venturer is ▇▇▇▇▇, terminate the Management and Leasing Agreement and
designate a new Property Manager under an agreement substantially similar to the
Management and Leasing Agreement in accordance with Section 3.02(b) hereof and
if the Defaulting Venturer is Company, ▇▇▇▇▇ shall succeed to Company's
management rights under Section 3.01(a) and shall be entitled to terminate the
Administration Agreement in accordance with the terms thereof.
SECTION 5.09. Conversion to Limited Partnership.
(a) Upon the occurrence of an Event of Dissolution or the occurrence of a
default pursuant to Section 5.08 which is not cured within the time period
specified in Section 5.08, then in addition to, and without excluding the
availability of any other remedy hereunder, the remaining Venturer or the
Non-Defaulting Venturer, as the case may be, may elect to convert the Venture to
a limited partnership organized and existing under the laws of the State of
44
Massachusetts and to convert the Withdrawing Venturer or Defaulting Venturer, as
the case may be, to a limited partner therein. Upon such conversion, the former
Withdrawing Venturer or Defaulting Venturer, as the case may be, shall have
absolutely no right whatsoever to participate in the management or decision
making processes of the Venture, regardless of whether the activity in question
constitutes a Major Decision. Specifically, without limiting the generality of
the foregoing, following such conversion the former Withdrawing Venturer or
Defaulting Venturer, as the case may be, will not have any right to participate
in any decisions with respect to a sale or refinancing of the Property.
(b) In the event of any such conversion, the former Withdrawing Venturer
or Defaulting Venturer, as the case may be, agrees to execute, swear to, and
deliver any and all amendments to this Agreement, together with a certificate of
limited partnership in recordable form, in such form and substance as shall be
reasonably specified by the other Venturer, all within ten (10) days after
demand and notice form the other Venturer. In order to effectuate the foregoing,
each Venturer hereby appoints the full and complete power and authority in its
name and stead to execute, swear to, deliver, and record any and all such
amendments and such certificates. This power has been given between the
Venturers upon good and adequate consideration; it is a power coupled with an
interest; it is irrevocable; and it shall survive any death, incapacity,
dissolution, or any other event concerning any such Venturer.
(c) Any and all costs and expenses, including, without limitation
attorneys fees, recording costs, and other charges and expenses incurred in
connection with the conversion of the Venture to a limited partnership as
described in this Section 5.09 shall be paid in full by the former Withdrawing
Venturer or Defaulting Venturer, as the case may be.
ARTICLE VI
SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION
SECTION 6.01. Prohibited Transfers. (a) Except as provided in Articles V
and VI, no Venturer may sell, transfer, assign or otherwise dispose of or
mortgage, hypothecate, or otherwise encumber or permit or suffer any encumbrance
of all or any part of its or his interest in the Venture whether voluntarily or
involuntarily, by operation of law or otherwise (hereinafter "Transfer") unless
Approved by the Venturers, and any attempt so to Transfer any such interest
shall be void and shall constitute a default hereunder by the Venturer
attempting to do so. The foregoing prohibition on Transfer shall also apply to a
Transfer of stock or partnership interests being held in any Venturer or the
Transfer of partnership interests or shares of stock, as the case may be, in
such members or shareholders being held by its members or shareholders, as the
case may be, or the Transfer or other agreement which results in Person(s) other
than the present beneficial owners of ▇▇▇▇▇ or Company directly or indirectly
having an interest in the Venture.
45
(b) No Venturer, directly or indirectly, shall consolidate with or merge
into or become a member any other partnership or other entity or convey or
transfer any part of its properties or assets except as hereby expressly
permitted. No Venturer, directly or indirectly, shall admit any new partners
(general or limited) nor shall any Venturer permit any of its general partners
to resign, except as specifically permitted under Section 6.02.
SECTION 6.02. Permitted Transfers. (a) Notwithstanding any other provision
of this Agreement to the contrary but subject to the provisions of Sections
6.02(g) and 6.02(h), each Venturer shall have the right, without the consent of
any other Venturer, to Transfer all of its interest in the Venture to an
Affiliated Entity.
(b) (i) Subject to Sections 6.02(g) and 6.02(h), ▇▇▇▇▇ shall have the
right, without the consent of any other Venturer, to transfer all of its
interest in the Venture to any Person Controlled by a member of the ▇▇▇▇▇
Control Group.
(ii) Subject to Sections 6.02(g) and 6.02(h), each partner of ▇▇▇▇▇
(or the partner of any partner of ▇▇▇▇▇) may, without the consent of any
Venturer, Transfer all or any part of its interest in ▇▇▇▇▇ (or any
partner of ▇▇▇▇▇) to any Person as long as ▇▇▇▇▇ continues to be
Controlled by a member of the ▇▇▇▇▇ Control Group.
(iii) Subject to Sections 6.02(g) and 6.02(h), Company shall have
the right to Transfer all of its interest in the Venture to any limited
partnership whose sole general partner is Cornerstone or an Affiliated
Entity of Cornerstone provided that the limited partners have the right to
convert their limited partnership interests into the stock of Cornerstone
or Affiliated Entities of Cornerstone.
(iv) Notwithstanding anything contained herein to the contrary but
subject to Section 6.02(g) and Section 6.02(h), Company and ▇▇▇▇▇ shall
each be permitted to pledge their respective interests in the Venture
(herein, a "Venture Interest") for any purpose (a "Venture Interest
Financing") (and any further Transfer to the initial lender providing such
Venture Interest Financing which lender satisfies the requirements under
clause (A) below pursuant to a foreclosure or execution upon such Venture
Interest in connection which such pledge shall be permitted) provided that
the Venture Interest Financing complies with the following:
(A) the lender providing such Venture Interest Financing is an
Institutional Lender approved by the non-borrowing Venturer (such
approval not to be unreasonably withheld or delayed);
(B) the loan-to-value ratio for the Venture Interest Financing
is not in excess of fifty percent (50%); where the "loan amount" is
the full amount
46
committed by such Institutional Lender and the value is the value of
the applicable Venture Interest as determined by the Institutional
Lender and for these purposes any appraisal obtained by or for the
Institutional Lender shall be conclusive as to such appraised value;
(C) the Venture Debt Service Coverage Ratio for such Venture
Interest Financing shall be at least 1.75;
(D) the loan documents evidencing the Venture Interest
Financing shall provide for the giving of notice to the
non-borrowing Venturer of any default thereunder by the borrowing
Venturer with the same right to cure such default for the
non-borrowing Venturer as is given to the borrowing Venturer; and
(E) all fees and expenses of obtaining the Venture Interest
Financing shall be borne by the borrowing Venturer.
Notwithstanding anything contained in Section 5.02(b), the
non-borrowing Venturer may make an Offer under Section 5.02 at any time
after such non-borrowing Venturer has cured a default under any other
Venturer's Venture Interest Financing or after such Venture Interest has
been foreclosed, executed upon or otherwise transferred pursuant to such
Venture Interest Financing.
(c) Any permitted transferee of an interest in the Venture shall become a
Venturer unless the terms of the Transfer expressly provide to the contrary;
provided, however, any such permitted transferee shall be required to (i)
execute a copy of this Agreement (or a separate consent thereto), and agree to
be bound by all of the terms and provisions hereof and (ii) assume all of its
transferor's obligations hereunder, and provided, further, that, notwithstanding
anything herein, no transferee of a partial interest of any Venturer shall have
any right to participate in the management of the Venture independently of the
Venturer making such transfer unless such participation is Approved by the
Venturers.
(d) Notwithstanding anything contained herein to the contrary, the
Venturers acknowledge that the Company is beneficially owned and controlled by
Cornerstone Properties Inc. ("Cornerstone"), an entity which is publicly traded,
and that any change in the composition of the ownership of Cornerstone, even to
the extent of a change in control thereof, shall not constitute a Transfer for
any purpose hereunder and the provisions of Section 6.01(b) shall not be
applicable to Cornerstone. Notwithstanding the foregoing, in the event any
change in the composition of the ownership of Cornerstone results in a "change
in control" with respect to Cornerstone (as defined below), Company shall notify
▇▇▇▇▇ of such change in control within twenty (20) days after the occurrence
thereof and ▇▇▇▇▇ shall have the right,
47
which must be exercised within thirty (30) days after receiving such written
notice of a change in control together with all additional information
reasonably requested by ▇▇▇▇▇ pertaining to the change in control and the new
controlling Person, to (i) approve such change in control (such approval not to
be unreasonably withheld), or (ii) give Company written notice that it may elect
to cause Cornerstone or its successor or designee to acquire its Venture
Interest on the terms and for a purchase price determined in accordance with the
provisions set forth below and that ▇▇▇▇▇ desires to have the purchase price
determined in the manner described below. As used herein, a "change in control"
shall mean the occurrence of any of the following (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) becoming the "beneficial owner(s)"
(as defined in said Rule 13-d-3) of shares of capital stock of Cornerstone which
entitle the holder thereof to control more than fifty percent (50%) of all
voting rights with respect to all shares of capital stock of Cornerstone; (b)
approval of the stockholders of Cornerstone of a merger, reorganization,
consolidation, exchange of shares, recapitalization, restructuring or other
business combination which results in beneficial ownership of more than fifty
percent (50%) of the common stock of Cornerstone being transferred to a person
or persons (or entities) other than DIHC Holding or an Affiliate as of the date
of this Agreement; (c) sale of all or substantially all of the Cornerstone's
assets; (d) Incumbent Directors (as defined below) cease to comprise a majority
of the directors on Cornerstone's board of directors; or (e) any transaction
that results in the common stock of Cornerstone no longer being required to be
registered under Section 12 of the Exchange Act. As used herein, the term
"Incumbent Directors" shall mean (x) all of the individuals constituting the
Board of Directors of Cornerstone as of the date of this Agreement, and (y) all
individuals hereafter designated as nominees to the board of directors of
Cornerstone by holders of common stock or preferred shares of Cornerstone as of
the date of this Agreement which holders currently have the right to nominate
individuals to the board of directors.
In the event ▇▇▇▇▇ gives the notice described in clause (ii) above, the
purchase price payable for the Venture Interest which shall be acquired shall be
determined by the Venture's Accountant as soon as practicable (and the Venturers
shall direct such Accountant to make such determination) and shall be equal to
the amount of Sales or Refinancing Proceeds, if any, that would have been
distributed to the transferring Venturer in accordance with the provisions of
Section 4.05(c) had the Property been sold for the value of the Property which
shall be determined in accordance with the appraisal procedure described in
Section 10.08. The Venture's Accountant shall be directed to communicate the
purchase price to the Venturers by written notice. Within fifteen (15) days
after receipt by ▇▇▇▇▇ of a written determination of such purchase price
determined by the Venture's Accountant, ▇▇▇▇▇ shall have the right to elect
(which election shall be irrevocable) to cause Company or its successor or
assignee to acquire its Venture Interest on the terms (including the purchase
price) determined in accordance with the terms of this Section 6.02(d), such
closing to be effected as soon as is practicable but in any event within thirty
(30) days after the making of such election by ▇▇▇▇▇.
48
In the event ▇▇▇▇▇ does not so elect, ▇▇▇▇▇ shall be deemed to have approved the
change in control. At the closing of such transfer, the transferring Venturer
shall, at the request of the transferee, execute and deliver to the transferee
or its designee an assignment and ▇▇▇▇ of sale (with covenants against grantor's
acts) of the transferring Venturer's Venture Interest, together with such other
instruments and documents as may be reasonably necessary or desirable to
effectuate the sale and transfer to the transferee. The purchase price shall be
paid to the transferring Venturer by a cashier's or certified check from a bank
reasonably acceptable to the transferring Venturer. At the closing, any closing
adjustments which are usual and customary in the locality of the Property shall
be made between the transferee and the transferring Venturer as of the date of
closing. In the event there are any conveyance, transfer or similar taxes
payable as an incident to the conveyances at the closing, such taxes shall be
paid by the transferee. At the closing, the transferee shall, by legally
enforceable agreement, assume the payment of any indebtedness under any lien on
the Property to the extent the Venturers have personal liability therefor, and
the transferee must execute this Agreement (as it may have been amended), or a
separate consent thereto, and agree to be bound by all of its terms and
provisions.
(e) The Transfer of all or any part of the interest of any Venturer which
is permitted hereunder shall not result in a dissolution of the Venture as a
general partnership under the Massachusetts Uniform Partnership Act even though
such Transfer may result in the withdrawal of a Venturer as a general partner of
the Venture and/or the admission of a new general partner to the Venture. The
Transfer of all or any part of the interest of any Venturer which is permitted
pursuant to Section 6.02 shall not be subject to the "right of first offer"
requirements set forth in Section 5.05 hereof.
(f) Intentionally deleted.
(g) Notwithstanding the prior provisions of this Section 6.02 (but in no
event shall this provision affect Transfers pursuant to Sections 5.02 and 5.05),
a Venturer may not Transfer all or any part of its interest in the Venture nor
may a direct or indirect owner of a Venturer Transfer all or any part of its
interest in such Venturer, if, solely as a result of such Transfer, all or any
part of the Venture's assets would thereafter become "tax-exempt use property"
within the meaning of Section 168(j) (or any successor provision) of the Code.
(h) The Venture or any Venturer shall have the right, as an absolute
condition precedent to the effectiveness or validity of any Transfer, to require
the transferor to provide the Venture and the non-transferring Venturer with
assurances that the Transfer does not violate any applicable state and federal
securities laws, that the Transfer is exempt from registration (i.e., no
Transfer shall be permitted which requires such registration), and that the
Venturer making the Transfer will indemnify and hold harmless the Venture and
the other Venturer from and against any and all costs, damage, injury, claims,
actions, and demands
49
(including, without limitation, attorneys fees) suffered by the Venture or the
other Venturer as a result of any violation or claimed violation or failure to
conform or claimed failure to conform to any state or federal securities laws.
The Venture and such other Venturer may further require the submission to the
Venture and the other Venturer of a legal opinion from counsel satisfactory to
the Venture and the other Venturer in such form and substance reasonably
satisfactory to the Venture and the other Venturer.
ARTICLE VII
INSURANCE
SECTION 7.01. Minimum Insurance Requirements. (a) The Venture shall carry
and maintain in force the following insurance, the premium for which shall be a
cost and expense of the Venture:
(i) Workers' Compensation Insurance (including Employer's Liability
Insurance for an amount not less than $500,000) covering all employees of
the Venture, if any, employed in, on or about the property of the Venture
to provide statutory benefits as required by the laws of the Commonwealth
of Massachusetts;
(ii) Commercial General Liability Insurance (including protective
liability insurance on operations of independent contractors, blanket
contractual liability insurance, and personal injury liability insurance)
for the benefit of the Venture and the Venturers as named insureds against
claims, including without limitation, bodily injury, death or property
damage liability with a limit of not less than $25,000,000 for any one
occurrence, such insurance which may be furnished under a "primary" policy
and an "umbrella" policy shall also include coverage against liability for
bodily injuries or property damage arising out of the use by or on behalf
of the Venture or the Venturers of any owned, non- owned or hired
automotive equipment for a limit of not less than that specified above;
(iii) All Risks Builder's Risk Insurance on any new construction,
including coverage against collapse, written on a completed value basis in
an amount not less than the total value of the Improvements under
construction (less the value of such of the Improvements as are
uninsurable under the policy, i.e., site preparation, grading, paving,
parking lots, excepting, however, foundations and other undersurface
installations subject to collapse or damage by other insured perils)
including, if applicable, the coverage available under the so-called
Installation Floater, all in form and amount as may from time to time be
required by any mortgagee of any Improvements under construction;
50
(iv) Fire, Extended Coverage and Vandalism and Malicious Mischief
Insurance on the Improvements in an amount not less than the balance of
any institutional mortgages on the Property or for such other amount (at
no time, however, less than the principal balance secured by said
mortgages) as may be required to prevent the Venture and the Venturers
from becoming coinsurers under the terms of the applicable policy, but in
any event, in an amount not less than 90% of the then actual replacement
cost of the Improvements (exclusive of excavation and foundation costs and
costs of underground tanks, conduits, pilings and other similar
underground items) without deduction for physical depreciation thereof;
such insurance on the completed Improvements shall contain the
"Replacement Cost Endorsement";
(v) In the event that such equipment is installed in the
Improvements, Boiler and Machinery Equipment Insurance in the amount of
$1,000,000 or such greater amount as Approved by the Venturers covering
boilers, pressure vessels, pressure piping, all major components and of
any central air-conditioning or heating system and such additional
equipment as Approved by the Venturers at any time;
(vi) If the Improvements are situated in an area now or subsequently
designated as having special flood hazards as defined by the Flood
Disaster Protection Act of 1973, as amended from time to time, Flood
Insurance in an amount equal to the replacement cost of the Improvements
or the maximum amount of Flood Insurance available, whichever is the
lesser; and
(vii) Such other insurance or such additional coverage, including
but not limited to insurance on rental income, as may be Approved by the
Venturers or required by the holder of any mortgage covering the
Improvements or by the City or BRA under the Governmental Documents.
(b) Evidence of all such aforesaid policies of insurance shall be
delivered to each Venturer and shall name the Venture and each of the Venturers,
as named insureds, as their respective interests may appear. All such insurance
shall be effected under policies issued by insurers and be in forms and for
amounts Approved by the Venturers and in compliance with the Governmental
Documents and the requirements of any loan encumbering the Property.
(c) All of the aforementioned insurance coverage shall be contained in
insurance policies and issued by insurance companies Approved by the Venturers
and by the City or BRA and any mortgage lenders (to the extent their consent or
approval is required).
ARTICLE VIII
INTENTIONALLY DELETED.
51
ARTICLE IX
INTENTIONALLY DELETED.
ARTICLE X
GENERAL
SECTION 10.01. Notices. (a) All notices, demands or requests provided for
or permitted to be given pursuant to this Agreement must be in writing.
(b) All notices, demands and requests to be sent to ▇▇▇▇▇ or any permitted
assignee of the interest of ▇▇▇▇▇ hereunder pursuant hereto shall be deemed to
have been properly given or served by (i) delivering the same personally
(including overnight courier), or (ii) transmitting the same by telefacsimile,
or (iii) depositing the same in the United States mail, addressed to ▇▇▇▇▇,
postpaid and registered or certified with return receipt requested at the
following address:
If to ▇▇▇▇▇:
c/o Hines Interests Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ Interests Limited Partnership
East Coast Regional Office
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
52
and to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(c) All notices, demands or requests to be sent to Company or any
permitted assignee of the interest of Company hereunder pursuant hereto shall be
deemed to have been properly given or served by (i) delivering the same
personally or (ii) transmitting the same by telefacsimile, or (iii) by
depositing the same in the United States mail, addressed to Company, postpaid
and registered or certified with return receipt requested at the following
address:
If to Company:
Cornerstone Properties Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and to:
King & Spalding
1185 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier: 212-556-2222
(d) All notices, demands and requests shall be effective upon personal
delivery or upon being deposited in the United States mail. However, if the
notice, demand or request is delivered by U.S. mail, the time period in which a
response to any such notice, demand or request must be given shall commence to
run from the date of receipt on the return receipt of the notice, demand or
request by the addressee thereof. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to be receipt of the notice, demand or request sent. In the
event that registered or certified mail is not being accepted for prompt
delivery, notices may then be served by personal service upon any officer,
director or partner of any Venturer or upon any individual who is a Venturer.
53
(e) By giving to the other parties at least 30 days written notice
thereof, the parties hereto and their respective successors and assigns shall
have the right from time to time and at any time during the term of this
Agreement to change their respective addresses and each shall have the right to
specify as its address any other address at which it has a place of business or
up to two (2) other addresses to which it wishes copies of any notice sent.
(f) No transferee of any interest by any Venturer shall be entitled to
receive a notice independent of the notice sent to the Venturer making such
transfer. A notice sent or made to a Venturer shall be deemed to have been sent
and made to all transferees, if any, of such Venturer.
SECTION 10.02. Governing Laws. This Agreement and the obligations of the
Venturers hereunder shall be interpreted, construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
SECTION 10.03. Exculpation/Indemnification. (a) No Venturer (or any
partner, director, officer or employee of any Venturer) shall be personally
liable or personally responsible to any other Venturer or to the Venture beyond
its interest in the assets of the Venture for damages or other liabilities
(other than for capital contributions required of such Venturer under Section
4.02) caused by any act or omission performed or omitted by it in respect of
this Agreement or the Venture or the Property or arising under any indemnity
other than the indemnity set forth in Section 10.03(b) hereof, unless such
damage or liability results from its gross negligence, fraud or willful
misconduct.
(b) Each Venturer shall defend, indemnify and hold the other Venturer and
its officers, directors, partners, shareholders, agents and employees harmless
from and against any third party claims, demands, losses, damages or liabilities
suffered or incurred by it by reason of the fraud, gross negligence or willful
misconduct of such Venturer, its officers, directors, partners, agents or
employees. The Venture shall defend, indemnify, and hold harmless each Venturer
and its officers, directors, partners, shareholders, agents and employees from
and against any third party claims, demands, losses, damages, liabilities, or
costs and expenses, including, without limitation, attorney's fees and court
costs, suffered or incurred by any of them by reason of their actions or
omissions pursuant to this agreement or by reason of their being a Venturer in
the Venture, other than those involving willful misconduct, fraud or gross
negligence of the indemnified Venturer.
SECTION 10.04. Entire Agreement. This Agreement contains the entire
agreement between the parties hereto relative to the Venture. No variations,
modifications or changes herein or hereof shall be binding upon any party hereto
unless set forth in a document duly executed by or on behalf of such party.
54
SECTION 10.05. Waiver. No consent or waiver, express or implied, by any
Venturer to or of any breach or default by the other in the performance by the
other of its obligations hereunder shall be deemed or construed to be a consent
or waiver to or of any other breach or default in the performance by such other
party of the same or any other obligations of such Venturer hereunder.
SECTION 10.06. Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
SECTION 10.07. Status Reports. Recognizing that each party hereto may find
it necessary from time to time to establish to third parties such as
accountants, banks, mortgagees or the like, the then current status of
performance hereunder, each party agrees, upon the written request of any other,
made from time to time, to furnish promptly a written statement (in recordable
form, if requested) on the state of any matter pertaining to this Agreement to
the best of the knowledge and belief of the party making such statement.
SECTION 10.08. Appraisals. Any valuations of the Property which the
Venturers have agreed is to be determined by appraisals shall be determined in
Boston, Massachusetts as follows:
The initiating Venturer shall designate by notice to the other Venturer a
disinterested member of the American Institute of Real Estate Appraisers ("MAI
Appraiser") to serve on the Appraisal Panel (as defined below). Upon receipt of
such notice from the initiating Venturer, the other Venturer shall have fourteen
(14) days in which to designate its own disinterested MAI Appraiser to serve on
the Appraisal Panel by serving notice of such designation to the other Venturer.
In the event that any Venturer shall fail to designate an MAI Appraiser within
such fourteen-day period, only those MAI Appraiser(s) who have been properly
selected by the Venturers shall serve on the Appraisal Panel. The MAI Appraisers
so designated by the Venturers in accordance with the foregoing shall then have
ten (10) days in which to designate a final MAI Appraiser (the "Final
Appraiser"). If the MAI Appraisers designated by the Venturers are unable to
unanimously agree on such Final Appraiser, any Venturer may request the Suffolk
Superior Court Judge in Suffolk County to appoint such Final Appraiser, and the
MAI Appraisers designated by the Venturers and the Final Appraiser (the
"Appraisal Panel") shall each appraise the Property taking into account
appropriate indicators of the value of such Property. Within 30 days after the
appointment of the Final Appraiser, each MAI Appraiser designated by a Venturer
shall submit his findings in writing to the Final Appraiser. Any such findings
which are not timely submitted to the Final Appraiser shall be disregarded for
purposes of calculating the fair market value of the Property. The Final
Appraiser shall then submit his
55
findings along with the findings of all of the other MAI Appraisers which have
been timely submitted to each Venturer and the average of the appraisal value of
the Final Appraiser and the appraisal value closest thereto shall be deemed the
fair market value of the Property. Each Venturer shall pay the fees and expenses
of the MAI Appraiser appointed by it, or in whose stead, as above provided, such
appraiser was appointed, and the fees and expenses of the Final Appraiser, if
any, shall be borne equally by the Venturers; provided, however, that if the
foregoing appraisal procedure is used to determine the value of the Property
pursuant to Section 6.02(d), all such fees and expenses shall be borne by the
Company. To be qualified to be selected or designated as an MAI Appraiser for
purposes of this Paragraph, such MAI Appraiser must demonstrate (1) current good
standing in the American Institute of Real Estate Appraisers as evidenced by a
certificate from such institute, and (2) past appraising experience in the
Metropolitan Boston market of at least seven (7) years for comparable commercial
properties.
SECTION 10.09. Attorneys' Fees. If the Venture or any Venturer obtains a
judgment against any Venturer by reason of its breach of this Agreement or
failure to comply with the provisions hereof, the defaulting Venturer shall pay
the reasonable attorney's fees of the Venture or the prevailing Venturer.
SECTION 10.10. Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural and vice versa. Titles of
Articles and Sections are for convenience only, and neither limit nor amplify
the provisions of the Agreement itself, and all references herein to Articles,
Sections or subdivisions thereof shall refer to the corresponding Article,
Section or subdivision of this Agreement unless specified reference is made to
such Article, Sections or subdivisions of another document or instrument.
SECTION 10.11. Binding Agreement. Subject to the restrictions on transfers
and encumbrances set forth herein, this Agreement shall inure to the benefit of
and be binding upon the undersigned Venturers and their respective successors
and assigns. Whenever in this instrument a reference to any party or Venturer is
made, such reference shall be deemed to include a reference to the heirs,
executors, legal representatives, successors and assigns of such party or
Venturer.
SECTION 10.12. Additional Remedies. Except as otherwise provided herein,
the rights and remedies of the Venturers hereunder shall not be mutually
exclusive, i.e., the exercise of one or more of the provisions hereof shall not
preclude the exercise of any other provisions hereof.
SECTION 10.13. Artwork. The Venturers agree that the size and nature of
the Property warrant the continuation of a reasonable art program. The selection
of any new artwork for the Property shall be Approved by the Venturers.
56
SECTION 10.14. Meetings. Meetings of the Venturers may be called by any
Venturer for any matter on which the Venturers may act pursuant to the terms of
this Agreement, upon the giving of not less than five (5) days' advance written
notice. The Venturers will endeavor to conduct such meetings by telephone.
SECTION 10.15. Partition. Each Venturer hereby waives any right of
partition under the laws of Massachusetts.
SECTION 10.16. Confidentiality. Each Venturer hereby covenants and agrees
with the other that it will use its best efforts, acting in good faith, not to
disclose or permit the disclosure of any information concerning the Property,
the Venture or the Venturers which is included within the scope of any matter
which is identified as confidential in any Public Relations Plan Approved by the
Venturers.
SECTION 10.17. Transfer of Property. With respect to any and all real
property and interests therein owned by the Venture, any person dealing with the
Venture or the Venturers may always: (a) conclusively rely without further
inquiry on a certificate signed by all those who then appear of record at the
Suffolk County Registry of Deeds to be the Venturers in the Venture as to the
existence or nonexistence of any facts which are in any manner germane to the
affairs of the Venture, and (b) conclusively assume that this Agreement and the
Venture have not been terminated and that there has been no change in the
provisions of this Section or in the identity of the Venturers unless such
termination or change is reflected by a deed or certificate given in accordance
with clause (a) and duly recorded with said Deeds.
SECTION 10.18. Administration Agreement. Venturers hereby acknowledge and
agree that on or about the effective date of this Amendment, Cornerstone or an
Affiliate thereof will acquire, directly or indirectly, ownership of DIHC
Management Corp. and, as a result, will acquire the rights of such Affiliate
under that certain Administration Agreement dated May 29, 1986. ▇▇▇▇▇ and any
other Venturer hereby acknowledge such acquisition and agree that the
Administration Agreement is not terminable or otherwise affected by such
acquisition.
57
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
BOYLSTON WEST 1986 ASSOCIATES
LIMITED PARTNERSHIP, a Texas limited
partnership
By: GDHI Limited Partnership, a General Partner
By: ▇▇▇▇▇ Consolidated Investments, Inc., a
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Executive Vice President
DIHC BOYLSTON ASSOCIATES, a Georgia
General partnership
By: DIHC Boylston Corp. a General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇.▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit A
Description of Land
[To be provided by Company upon request]
Exhibit B
Description of Eastern Component
[To be provided by Company upon request]