EXHIBIT 8
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AGREEMENT OF LIMITED PARTNERSHIP
OF
BERKSHIRE REALTY HOLDINGS, L.P.
THE INTERESTS OF THE GENERAL PARTNERS AND THE LIMITED PARTNERS ISSUED UNDER
THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES ACT OF ANY STATE OR THE DISTRICT OF COLUMBIA. NO RESALE OF AN
INTEREST BY A LIMITED PARTNER IS PERMITTED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT AND ANY APPLICABLE FEDERAL OR STATE SECURITIES
LAWS, AND ANY VIOLATION OF SUCH PROVISIONS COULD EXPOSE THE SELLING LIMITED
PARTNER AND THE PARTNERSHIP TO LIABILITY.
Dated as of April 13, 1999
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Terms Generally . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 2.
THE PARTNERSHIP AND ITS BUSINESS
2.1 Partnership Name . . . . . . . . . . . . . . . . . . . . 17
2.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 Filing of Certificate and Amendments . . . . . . . . . . 18
2.4 Business; Scope of Partners' Authority . . . . . . . . . 18
2.5 Principal Office; Registered Agent . . . . . . . . . . . 18
2.6 Names and Addresses of the Partners . . . . . . . . . . 19
2.7 Representations by the Partners . . . . . . . . . . . . 20
2.8 Control of the Berkshire Group . . . . . . . . . . . . . 22
2.9 Pre-Closing Costs and Expenses . . . . . . . . . . . . . 22
2.10 Compliance with Certain Agreements . . . . . . . . . . . 22
2.11 Miscellaneous . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 3.
MANAGEMENT OF PARTNERSHIP BUSINESS;
POWERS AND DUTIES OF THE ADMINISTERING GENERAL PARTNER
3.1 Management and Control . . . . . . . . . . . . . . . . . 23
3.2 Role of the Administering General Partner and
Limitations on its Authority . . . . . . . . . . . . 24
3.3 Majority Decisions . . . . . . . . . . . . . . . . . . . 29
3.4 Unanimous Decisions . . . . . . . . . . . . . . . . . . 33
3.5 Consents of General Partners. . . . . . . . . . . . . . 36
3.6 Meetings of General Partners; etc. . . . . . . . . . . 36
3.7 No Participation by or Authority of Limited
Partners; Limited Rights . . . . . . . . . . . . . . 37
3.8 Acts of the Partnership and the Partners;
Representatives . . . . . . . . . . . . . . . . . . 38
3.9 Waiver of Rights by the Limited Partners . . . . . . . . 39
3.10 Sales of Certain Properties by WHGP and Blackstone
GP . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 4.
RIGHTS AND DUTIES OF PARTNERS
4.1 Duties and Obligations of the Administering General
Partner . . . . . . . . . . . . . . . . . . . . . . 40
4.2 Other Activities of the Partners . . . . . . . . . . . . 40
4.3 Indemnification . . . . . . . . . . . . . . . . . . . . 41
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4.4 Compensation of Partners and their Affiliates;
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. as Financial Advisor . . . . . 42
4.5 Dealing with Partners . . . . . . . . . . . . . . . . . 44
4.6 Use of Partnership Property . . . . . . . . . . . . . . 45
4.7 Designation of Tax Matters Partner . . . . . . . . . . . 45
4.8 Guarantees. . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 5.
BOOKS AND RECORDS; ANNUAL REPORTS
5.1 Books of Account . . . . . . . . . . . . . . . . . . . . 47
5.2 Availability of Books of Account . . . . . . . . . . . . 48
5.3 Annual Reports and Statements; Annual Budgets and
Business Plans . . . . . . . . . . . . . . . . . . . 48
5.4 Accounting and Other Expenses . . . . . . . . . . . . . 50
5.5 Bank Account . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 6.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
6.1 Initial Capital Contributions of the Partners . . . . . 51
6.2 Additional Contributions . . . . . . . . . . . . . . . . 53
6.3 Dilution for Failure to Fund Capital Calls . . . . . . . 55
6.4 Capital of the Partnership . . . . . . . . . . . . . . . 56
6.5 Liability of General Partners . . . . . . . . . . . . . 56
6.6 Limited Liability of Limited Partners . . . . . . . . . 57
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
7.1 Capital Accounts . . . . . . . . . . . . . . . . . . . . 57
7.2 Profits and Losses . . . . . . . . . . . . . . . . . . . 58
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
8.1 Applications and Distributions . . . . . . . . . . . . . 64
8.2 Liquidation . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
9.1 Limitations on Assignments of Interests by Partners . . 67
9.2 Sale of All of the Properties Before the Fifth
Anniversary of the Closing Date at the Option of
Berkshire . . . . . . . . . . . . . . . . . . . . . 71
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9.3 Sale of All of the Properties Before the Fifth
Anniversary of the Closing Date at the Option of
Two General Partners . . . . . . . . . . . . . . . . 77
9.4 Sale of the Properties After the Fifth Anniversary . . . 78
9.5 Assignment Binding on Partnership . . . . . . . . . . . 79
9.6 Bankruptcy of a Limited Partner . . . . . . . . . . . . 80
9.7 Substituted Partners . . . . . . . . . . . . . . . . . . 80
9.8 Acceptance of Prior Acts . . . . . . . . . . . . . . . . 80
9.9 Additional Limitations . . . . . . . . . . . . . . . . . 80
9.10 Purchase of the Berkshire Group's Interest upon the
Termination of ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ Employment Under
the DK Employment Agreement . . . . . . . . . . . . 81
9.11 Transfers by the Blackstone Group and the Whitehall
Group . . . . . . . . . . . . . . . . . . . . . . . 83
9.12 Purchase of the Class A Preferred Units and Class B
Units . . . . . . . . . . . . . . . . . . . . . . . 83
9.13 Subsequent Transactions . . . . . . . . . . . . . . . . 86
ARTICLE 10.
DISSOLUTION OF THE PARTNERSHIP;
WINDING UP AND DISTRIBUTION OF ASSETS
10.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . 89
10.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . 90
10.3 Distribution of Assets . . . . . . . . . . . . . . . . . 90
10.4 Special Allocation . . . . . . . . . . . . . . . . . . . 91
ARTICLE 11.
AMENDMENTS
11.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 91
11.2 Additional Partners . . . . . . . . . . . . . . . . . . 92
ARTICLE 12.
MISCELLANEOUS
12.1 Further Assurances . . . . . . . . . . . . . . . . . . . 92
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 92
12.3 Headings and Captions . . . . . . . . . . . . . . . . . 93
12.4 Variance of Pronouns . . . . . . . . . . . . . . . . . . 93
12.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . 93
12.6 Governing Law . . . . . . . . . . . . . . . . . . . . . 93
12.7 Consent to Jurisdiction . . . . . . . . . . . . . . . . 93
12.8 Arbitration . . . . . . . . . . . . . . . . . . . . . . 94
12.9 Partition . . . . . . . . . . . . . . . . . . . . . . . 94
12.10 Invalidity . . . . . . . . . . . . . . . . . . . . . . . 95
12.11 Successors and Assigns . . . . . . . . . . . . . . . . . 95
12.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . 95
12.13 Waivers . . . . . . . . . . . . . . . . . . . . . . . . 95
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12.14 No Brokers . . . . . . . . . . . . . . . . . . . . . . . 95
12.15 Maintenance as a Separate Entity . . . . . . . . . . . . 95
12.16 Confidentiality . . . . . . . . . . . . . . . . . . . . 96
12.17 No Third Party Beneficiaries . . . . . . . . . . . . . . 96
12.18 Power of Attorney . . . . . . . . . . . . . . . . . . . 96
12.19 Construction of Documents . . . . . . . . . . . . . . . 98
12.20 Time of Essence . . . . . . . . . . . . . . . . . . . . 98
12.21 Default by Partnership . . . . . . . . . . . . . . . . . 98
12.22 Subsidiary Joint Ventures . . . . . . . . . . . . . . . 98
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SCHEDULES
Schedule 1.1(a) Properties; Preliminary Loan Amounts
Schedule 2.6(b) Names and Addresses of Partners
Schedule 2.7(c) Shares of Common Stock of BRI Owned by the Berkshire
Principals that will not be Contributed to the
Partnership
Schedule 2.10 Contribution Agreements
Schedule 3.2(a)(19) List of Ten Assets to be Sold
Schedule 3.2(a)(20) Allocated Acquisition Cost of Each Asset
Schedule 3.8 Representatives of the General Partners
Schedule 4.2(b) ▇▇▇▇▇ Affiliated Entities
Schedule 4.4(c) Managed Properties
Schedule 5.3(b) Initial Annual Budget
Schedule 6.1 Initial Capital Contributions of the Partners,
Partners; Partnership Percentage Interests;
Partnership Units held by the Partners
Schedule 9.10 Performance Termination
Schedule 9.13(a)(1) 17 Properties
Schedule 9.13(a)(2) 22 Properties
Schedule 9.13(a)(3) 33 Properties
EXHIBITS
Exhibit 1 Form of DK Employment Agreement
Exhibit 2 Form of Guarantee of Partnership Indebtedness
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AGREEMENT OF LIMITED PARTNERSHIP
OF
BERKSHIRE REALTY HOLDINGS, L.P.
This AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement"), is made and
entered into as of April __, 1999, by and among Whitehall Street Real Estate
Limited Partnership XI, a Delaware limited partnership ("Whitehall"), WXI/BRH
Gen-Par LLC , a Delaware limited liability company ("WHGP"), Stone Street
Real Estate Fund 1998 L.P., a Delaware limited partnership ("Stone Street"),
Bridge Street Real Estate Fund 1998 L.P., a Delaware limited partnership
("▇▇▇▇▇▇ ▇▇▇▇▇▇") and Stone Street WXI/BRH Corp., a Delaware corporation
("Stone Corp"), BRE/Berkshire LP L.L.C., a Delaware limited liability company
("Blackstone LP"), BRE/Berkshire GP L.L.C., a Delaware limited liability
company (in its capacity as a general partner hereunder, "Blackstone GP"),
Aptco Holdings, L.L.C., a Delaware limited liability company ("Berkshire")
and Aptco Gen-Par, L.L.C., a Delaware limited liability company ("BGP").
RECITALS
WHEREAS, the Partners desire to form a limited partnership pursuant
to the terms and provisions of this Agreement, and in accordance with the
statutes and laws of the State of Delaware relating to limited partnerships,
including without limitation, the Act;
WHEREAS, Berkshire Realty Holdings, L.P., (the "Partnership") intends
to acquire by merger Berkshire Realty Company, Inc., a Delaware corporation
(Berkshire Realty Company, Inc., together with its subsidiaries, "BRI");
WHEREAS, BRI Acquisition Sub, LP, a Subsidiary of the Partnership,
intends to merge with and into BRI OP Limited Partnership, a Delaware limited
partnership ("BRI OP"); and
WHEREAS, the Partnership intends to supervise the operation of the
business conducted by BRI, including the ownership, acquisition, management,
renovation and development of multifamily properties (the multifamily
properties owned by BRI and any additional multifamily properties (or
properties proposed for development) acquired by the Partnership, BRI OP, or
any of their respective subsidiaries, being hereinafter referred to as the
"Properties" and any of the foregoing individually being hereinafter referred
to as a "Property").
NOW, THEREFORE, in order to carry out their intent as expressed above
and in consideration of the mutual agreements hereinafter contained, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
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ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below, which meanings shall be applicable
equally to the singular and plural of the terms defined:
"Act" shall mean the Delaware Revised Uniform Limited Partnership
Act, as amended from time to time.
"Additional Capital Call" shall mean a capital call made on the
Partners pursuant to Section 6.2.
"Additional Contribution" shall mean any amounts contributed by a
Partner pursuant to Section 6.2.
"Administering General Partner" shall mean (i) BGP, upon the
execution and delivery hereof or (ii) if for any reason BGP ceases to be
Administering General Partner pursuant to the terms hereof (including Section
3.2(c)), another Person appointed by the General Partners of the Partnership
(except that BGP shall not have an approval right with respect to such
appointment).
"Administrative Services Agreement" shall have the meaning set forth
in Section 4.4(c).
"Affiliate" shall mean with respect to any Person (i) any other
Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with such Person,
(ii) any other Person owning or controlling 10% or more of the outstanding
voting securities of, or other ownership interests in, such Person, (iii) any
officer, director, member or partner of such Person and (iv) if such Person
is an officer, director, member or partner, the company for which such Person
acts in any such capacity. For purposes of this definition, the term
"control," when used with respect to any Person, means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall mean this Agreement of Limited Partnership, as it
may hereafter be amended or modified from time to time.
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"Annual Budget" shall mean the applicable budget for the Partnership
prepared by the Administering General Partner for approval pursuant to
Section 5.3(b).
"Appraiser" shall have the meaning set forth in Section 9.10(d).
"Approved Budget" shall mean (i) for calendar year 1999, the budget
previously approved by the General Partners and attached hereto as Schedule
5.3(b) and (ii) for any calendar year thereafter, the Annual Budget for the
Budget Year in question, as approved by at least two of the General Partners
in accordance with the provisions hereof and as any of the same may be
amended from time to time in accordance with the provisions hereof.
"Approved Business Plan" shall mean for any Budget Year, the Business
Plan for the Budget Year in question, as approved by at least two of the
General Partners in accordance with the provisions hereof and as any of the
same may be amended from time to time in accordance with the provisions
hereof.
"Available Cash" shall mean, for any quarterly period or such other
period for which computation may be appropriate, the excess, if any, of (A)
the sum of (i) the amount of all cash receipts of the Partnership during such
period from whatever source and (ii) any cash reserves of the Partnership
existing at the start of such period, less (B) the sum of (i) all cash
amounts paid or payable (without duplication) in such period on account of
expenses and capital expenditures incurred in connection with the
Partnership's business and approved in accordance with the provisions hereof
(including, without limitation, general operating expenses, taxes,
amortization or interest on any debt of the Partnership and expenses incurred
in connection with the satisfaction of any refinancing of any of the
Properties), and (ii) such cash reserves which may be required for capital
expenditures (not to exceed the greater of (x) $400 per apartment unit then
owned by the Partnership (directly or indirectly) and (y) amounts included in
an Approved Budget for capital expenditures less any amounts actually
expended), working capital and future needs of the Partnership in an amount
reasonably determined by at least two of the General Partners or, if not yet
determined for such period, in an amount equal to 105% of the amounts
required for the working capital and future needs of the Partnership as set
forth in the Partnership's Approved Budget.
"Bankruptcy" shall mean, with respect to the affected party, (i) the
entry of an order for relief under the Bankruptcy Code, (ii) the admission by
such party of its inability to pay its debts as they mature, (iii) the making
by it of an assignment for the benefit of creditors, (iv) the filing by it of
a petition in bankruptcy or a petition for relief under the Bankruptcy Code
or any other applicable federal or state bankruptcy or insolvency statute or
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any similar law, (v) an application by such party for the appointment of a
receiver for the assets of such party, (vi) an involuntary petition against
it seeking liquidation, reorganization, arrangement or readjustment of its
debts under any other federal or state insolvency law, provided that the same
shall not have been vacated, set aside or stayed within the sixty-day period
following the filing of such petition or (vii) the imposition of a judicial
or statutory lien on all or a substantial part of its assets unless such lien
is discharged or vacated or the enforcement thereof stayed within sixty (60)
days after its effective date.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended.
"Berkshire" shall have the meaning set forth in the first paragraph
of this Agreement.
"Berkshire Group" shall mean, collectively, Berkshire and BGP
together with any assignees or transferees to the extent permitted hereunder,
but only so long as any such Person continues in its capacity as a partner in
the Partnership.
"Berkshire Principals" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
"BGP" shall have the meaning set forth in the first paragraph of this
Agreement.
"Blackstone GP" shall have the meaning set forth in the first
paragraph of this Agreement.
"Blackstone Group" shall mean, collectively, Blackstone GP and
Blackstone LP, together with any assignees or transferees to the extent
permitted hereunder, but only so long as any such Person continues in its
capacity as a partner in the Partnership.
"Blackstone LP" shall have the meaning set forth in the first
paragraph of this Agreement.
"Book Value" shall mean, with respect to any Partnership Asset, its
adjusted basis for federal income tax purposes, except that the initial Book
Value of any asset contributed by a Partner to the Partnership shall be an
amount equal to the agreed gross fair market value of such asset, and such
Book Value shall thereafter be adjusted in a manner consistent with Treasury
Regulations Section 1.704-1(b)(2)(iv)(g) for revaluations pursuant to Section
7.1(b) and for the Depreciation taken into account with respect to such
asset.
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"BRI Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of April __, 1999 (as such agreement may be amended from time to
time), by and among the Partnership, BRI Acquisition LLC and Berkshire Realty
Company, Inc.
"BRI OP Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of April __, 1999 (as such agreement may be amended from
time to time), by and among the Partnership, BRI Acquisition Sub, L.P.,
Berkshire Apartments, Inc. and BRI OP.
"Bridge Loan" shall have the meaning set forth in Section 2.9(c).
"Bridge Street" shall have the meaning set forth in the first
paragraph of this Agreement.
"Budget Year" shall mean the period beginning on the date hereof and
ending on December 31, 1999; and beginning January 1, 2000, "Budget Year"
shall mean a period beginning on January 1, 2000 and ending on December 31,
2000 and each calendar year thereafter.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banks in New York are required or permitted to be
closed.
"Business Plan" shall mean the applicable business plan for the
Partnership prepared by the Administering General Partner for approval
pursuant to Section 5.3(b).
"Capital Account" shall mean, when used in respect of any Partner,
the Capital Account maintained for such Partner in accordance with Section
7.1, as said Capital Account may be increased or decreased from time to time
pursuant to the terms of this Agreement.
"Capital Contribution" shall mean, (i) with respect to any Investor
Group Partner, the aggregate amount of capital actually contributed (and, in
the case of Berkshire and BGP only, deemed to be contributed) to the
Partnership by such Partner in accordance with Article 6 (regardless of the
class of Partnership Units received in respect of such contribution) and (ii)
with respect to Class A Preferred Limited Partners and the Class B Limited
Partners, the amounts deemed contributed by such Partners pursuant to Section
6.1 hereof and reflected on Schedule 6.1 hereto.
"Cause" shall mean, with respect to any Person, the conviction, guilty
plea, plea bargain or plea of nolo contendere of such Person with respect to
a felony, or the commission of fraud, in each case, other than with respect
to the Partnership or its Subsidiaries, Properties, business or personnel.
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"Certificate" shall mean the Certificate of Limited Partnership of
the Partnership filed with the Secretary of State of Delaware on April ___,
1999, as the same may hereafter be amended and/or restated from time to time.
"Class A Preferred Limited Partner" shall mean each Limited Partner
who is deemed to have made a Capital Contribution pursuant to Section 6.1(c)
hereof and who holds Class A Preferred Units, and any transferee of the
foregoing to the extent permitted hereunder, but only so long as any such
Person continues in its capacity as a partner in the Partnership.
"Class A Preferred Percentage Interest" shall mean, with respect to
each Class A Preferred Limited Partner, its percentage interest in such
class, determined by dividing the Class A Preferred Units owned by such
Partner by the total number of Class A Preferred Units then outstanding as
specified in Schedule 6.1 attached hereto, as such schedule may be amended
and restated from time to time.
"Class A Preferred Unit" means a Partnership Unit that is
specifically designated, when issued, as being a Class A Preferred Unit under
the terms of this Agreement.
"Class B Limited Partner" shall mean each Limited Partner who is
deemed to have made a Capital Contribution pursuant to Section 6.1(d) hereof
and who holds Class B Units, and any transferee of the foregoing to the
extent permitted hereunder, but only so long as any such Person continues in
its capacity as a partner in the Partnership.
"Class B Percentage Interest" shall mean, with respect to each Class
B Limited Partner, its percentage interest in such class, determined by
dividing the Class B Units owned by such Partner by the total number of Class
B Units then outstanding, as specified in Schedule 6.1 attached hereto, as
such schedule may be amended and restated from time to time.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partners, when issued, as being a Class B Unit
under the terms of this Agreement.
"Class C Partner" shall mean each Partner (including each GP) who has
made a Capital Contribution pursuant to Section 6.1(a) hereof and who holds
Class C Preferred Units, and any transferee of the foregoing to the extent
permitted hereunder, but only so long as any such Person continues in its
capacity as a partner in the Partnership. The initial Class C Partners shall
be WHGP, Whitehall, Blackstone GP, ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
and Stone Corp.
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"Class C Preferred Percentage Interest" shall mean, with respect to
each Class C Partner, its percentage interest in such class, determined by
dividing the Class C Preferred Units owned by such Partner by the total
number of Class C Preferred Units then outstanding, as specified in Schedule
6.1 attached hereto, as such schedule may be amended and restated from time
to time.
"Class C Preferred Unit" means a Partnership Unit that is
specifically designated by the General Partners, when issued, as being a
Class C Preferred Unit under the terms of this Agreement.
"Class D Partner" shall mean each Partner (including each GP) who has
made a Capital Contribution pursuant to Section 6.1(b) hereof and who holds
Class D Units, and any transferee of the foregoing to the extent permitted
hereunder, but only so long as any such Person continues in its capacity as a
partner in the Partnership. The initial Class D Partners shall be BGP and
Berkshire.
"Class D Percentage Interest" shall mean, with respect to each
Class D Limited Partner, its percentage interest in such class, determined
by dividing the Class D Units owned by such Partner by the total number of
Class D Units then outstanding, as specified in Schedule 6.1 attached hereto,
as such schedule may be amended and restated from time to time.
"Class D Unit" means a Partnership Unit that is specifically
designated by the General Partners, when issued, as being a Class D Unit
under the terms of this Agreement.
"Class E Limited Partner" shall mean those Partners holding Class E
Units who shall be admitted to the Partnership from time to time pursuant to
the IMP upon the recommendation of the Administering General Partner and the
concurrence of the other General Partners.
"Class E Percentage Interest" shall mean, with respect to each Class
E Limited Partner, its percentage interest in such class, determined by
dividing the Class E Units then owned by such Partner by the total number of
Class E Units then outstanding, as specified in Schedule 6.1 attached hereto,
as such schedule may be amended and restated from time to time.
"Class E Unit" means a Partnership Unit that is specifically
designated by the General Partners, when issued, as being a Class E Unit
under the terms of this Agreement.
"Closing Date" shall mean the date upon which the closing under the
BRI Merger Agreement occurs.
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"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any corresponding provision(s) of succeeding law.
"Company Cause"shall mean, with respect to any Person, the
conviction, guilty plea, plea bargain or plea of nolo contendere of such
Person with respect to a felony, or the commission of fraud, wilful
misconduct, gross negligence or gross dereliction of duties, in each case,
with respect to the Partnership or its Subsidiaries, Properties, business or
personnel, provided that, in the case of gross negligence or gross
dereliction of duties capable of cure, written notice of such gross
negligence or gross dereliction has been provided to such Person and such
conduct is not cured within a thirty (30) day period.
"Confidential Information" shall have the meaning set forth in
Section 12.16.
"Contributing Partner" shall have the meaning set forth in Section
6.3(a).
"Covered Person" shall have the meaning set forth in Section 4.2.
"Depreciation" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to
Partnership Assets, including any improvements made thereto and any tangible
personal property located therein, or amortization of the cost of any
intangible property or other assets acquired by the Partnership, which have a
useful life exceeding one year; provided, however, that with respect to any
Partnership Asset whose tax basis differs from its Book Value at the
beginning of such Fiscal Year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Book Value as the
depreciation, amortization or other cost recovery deduction for such period
with respect to such asset for federal income tax purposes bears to its
adjusted tax basis as of the beginning of such Fiscal Year; provided,
however, that if the federal income tax depreciation, amortization or other
cost recovery deduction for such Fiscal Year is zero, Depreciation shall be
determined using any method selected by the General Partners.
"DK Employment Agreement" shall have the meaning set forth in Section
4.4(d).
"DK IMP" shall mean the right of holders of the Class D Units to
receive distributions under Sections 8.1(b)(5)(ii), (6)(i) and (7)(i), and
related rights.
"Failed Contribution" shall have the meaning set forth in Section
6.3(a).
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"Fair Market Value" shall have the meaning set forth in Section
9.10(d).
"Financing Capital Call" shall have the meaning set forth in Section
6.2(b).
"Fiscal Year" shall mean the fiscal year of the Partnership, which
shall be the calendar year; but upon termination of the Partnership, "Fiscal
Year" shall mean the period from the end of the last preceding Fiscal Year to
the date of such termination.
"▇▇▇▇▇▇▇ Mac" shall mean The Federal Home Loan Mortgage Corporation.
"▇▇▇▇▇▇▇ Mac Parameters" shall mean a loan with the following terms:
(i) an original principal amount equal to the greater of (A) 75% of the
appraised value of the properties listed on Schedule 1.1(a) hereto and (B)
$650 million (such principal amount to be reduced by the preliminary loan
amounts in respect of any assets sold at or prior to the Closing Date (as set
forth on Schedule 1.1(a) hereto) and by the preliminary loan amounts in
respect of any assets that are not included in the collateral pool for such
financing) (as set forth on Schedule 1.1(a) hereto), (ii) such loan and all
amounts payable with respect thereto shall be non recourse in all respects to
all Partners (with express exculpation), unless they agree in writing
otherwise, (iii) a term equal to seven years, (iv) fixed interest rate of 8%
per annum or less, (v) yield maintenance penalty due upon prepayments only
during the first five years of the term, (vi) the properties subject to such
loan will not be cross-collateralized and individual loans securing such
Properties will not be cross-defaulted and (vii) the other terms are no less
favorable to the Partnership than the terms of the "Conditional Commitment",
dated November 16, 1998, provided by ▇▇▇▇▇▇▇ Mac to the Investor Group
Partners.
"Funded Portion" shall have the meaning set forth in Section 6.3(a).
"General Partner" or "GP" shall mean each of WHGP, Blackstone GP,
BGP, and any Person who subsequently becomes a general partner of the
Partnership pursuant to the terms of the Agreement, for so long as such
Persons shall be general partners of the Partnership; "General Partners"or
"GPs", shall mean such Persons, collectively.
"▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co." shall mean ▇▇▇▇▇▇▇, Sachs & Co., a New York
limited partnership, and any Person succeeding to its business substantially
as an entirety.
-9-
"GS Group" shall mean The ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, L.P. and any Person
succeeding to its business substantially as an entirety, together with any
assignees or transferees to the extent permitted hereunder.
"GSMC" shall have the meaning set forth in Section 2.9(c).
"Holder Purchase Date" shall have the meaning set forth in Section
9.12(a).
"IMP" shall mean the incentive management participation plan approved
by the General Partners as a Unanimous Decision, which IMP shall provide the
Class E Limited Partners with the distributions under Sections
8.1(b)(5)(iii), 8.1(b)(6)(ii) and 8.1(b)(7)(ii) (it being understood and
agreed that none of BGP, Berkshire, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or any of their respective
Affiliates shall be allocated any IMP allocated to the Class E Limited
Partners).
"Initial Appraisals" shall have the meaning set forth in Section
9.10(d).
"Initial Business Plan" shall mean the Business Plan for 1999 to be
approved in accordance with Section 5.3 within 30 days after the date hereof.
"Initial Capital Contribution" shall mean any Capital Contributions
made or deemed made pursuant to Sections 6.1(a)-(d) and 6.1(h).
"Institutional Lender" shall mean an Affiliate of any Investor Group
Partner (other than Berkshire or BGP) and/or any one or more of the following
other entities, provided that for any such other entity to qualify as an
Institutional Lender hereunder, such other entity, together with its
Affiliates, must have total assets of at least $5,000,000,000 and
stockholders' equity or net worth of at least $250,000,000 (or, in either
case, the equivalent thereof in a foreign currency) as of the date the loan
is made: a savings bank, a savings and loan association, a commercial bank or
trust company, an insurance company subject to regulation by any governmental
authority or body, a publicly traded real estate investment trust, a union,
governmental or secular employees' welfare, benefit, pension or retirement
fund, a pension fund property unit trust (whether authorized or
unauthorized), an investment company or trust, a merchant or investment bank
or any other entity generally viewed as an institutional lender. In each of
the foregoing cases, such Affiliate or other entity shall constitute an
Institutional Lender whether (i) acting for itself or (ii) as trustee, in a
fiduciary, management or advisory capacity or, in the case of a bank, as
agent bank, for any number of lenders, so long as in the case of clause (ii)
the day-to-day management decisions relating to the loan are either exercised
by or recommended by such Institutional Lender and, during the life of the
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loan, such Institutional Lender shall only be removed from its clause (ii)
capacity if it is replaced by another Institutional Lender also so acting
under clause (ii).
"Interest" shall mean the entire interest of a Partner in the
Partnership at any particular time, including the right of such Partner to
any and all benefits to which a Partner may be entitled as provided in this
Agreement, together with the obligations of such Partner to comply with all
the terms and provisions of this Agreement. An Interest may be expressed as a
number of Partnership Units.
"Investment" shall mean, relative to any Person (i) any loan or
advance made by such Person to any other Person (excluding advances made to
officers and employees in the ordinary course of business); (ii) the purchase
by such Person of any debt obligation of any other Person; and (iii) any
ownership or similar interest held by such Person in any other Person.
"Investor Group Partners" shall mean Berkshire, BGP, Whitehall, WHGP,
Stone Street, Bridge Street, Stone Corp., Blackstone LP and Blackstone GP,
together with any assignees or transferees thereof to the extent permitted
hereunder.
"IRS" shall mean the Internal Revenue Service and any successor
agency or entity thereto.
"▇▇▇▇▇ Affiliated Entities" shall have the meaning set forth in
Section 4.2(a).
"Limited Partners" shall mean all Class A Preferred Limited Partners,
all Class B Limited Partners, all Class C Partners that hold limited
partnership interests, in their capacities as such holders, all Class D
Partners that hold limited partnership interests, in their capacities as such
holders, all Class E Limited Partners, all other Limited Partners admitted to
the Partnership pursuant to the terms hereof, and any transferees of the
foregoing permitted hereunder, but only so long as any such Person continues
in its capacity as a Partner in the Partnership.
"Losses" shall have the meaning set forth in Section 7.2(a).
"Majority Decision" shall have the meaning set forth in Section 3.3.
"Majority Sales Notice" shall have the meaning set forth in Section
9.3(a).
"Majority Third Party Offer" shall have the meaning set forth in
Section 9.3(b).
-11-
"Majority Triggering Parties" shall have the meaning set forth in
Section 9.3(b).
"Managed Properties" shall have the meaning set forth in Section
4.4(c).
"Mandatory Capital Call" shall have the meaning set forth in Section
6.2(a).
"Mandatory Capital Call Limit" shall have the meaning set forth in
Section 6.2(a).
"Maximum Share" shall have the meaning set forth in Section 9.1(a).
"Minimum Gain" shall mean an amount equal to the excess of the
principal amount of debt, for which no Partner is liable ("non-recourse
debt"), over the adjusted basis of the Partnership Assets which represents
the minimum taxable gain which would be recognized by the Partnership if the
nonrecourse debt were foreclosed upon and the Partnership Assets were
transferred to the creditor in satisfaction thereof, and which is referred to
as "minimum gain" in Treasury Regulations Section 1.704-2(b)(2). A Partner's
share of Minimum Gain shall be determined pursuant to Treasury Regulations
Section 1.704-2.
"Necessary Expenditure" shall have the meaning set forth in Section
6.2(a).
"Non-Contributing Partner" shall have the meaning set forth in
Section 6.3(a).
"Non-recourse Deductions" for a taxable year means deductions
attributable to non-recourse debt (as determined under Treasury Regulation
Sections 1.704-2(c) and 1.704-2(i)(2)) for such year.
"Non-Triggering Parties" shall have the meaning set forth in Section
9.2(a).
"Notice of Sale" shall have the meaning set forth in Section 9.1(a).
"Objection Notice" shall have the meaning set forth in Section
5.3(b).
"Offer Terms" shall have the meaning set forth in Section 9.1(a).
"Offered Interest" shall have the meaning set forth in Section
9.1(a).
-12-
"Organizational Document" shall mean, with respect to any Person, (i)
in the case of a corporation, such Person's certificate of incorporation and
by-laws, and any shareholder agreement, voting trust or similar arrangement
applicable to any of such Person's authorized shares of capital stock, (ii)
in the case of a partnership, such Person's certificate of limited
partnership, partnership agreement, voting trusts or similar arrangements
applicable to any of its partnership interests, (iii) in the case of a
limited liability company, such Person's certificate of formation, limited
liability company agreement or other document affecting the rights of holders
of limited liability company interests, or (iv) in the case of any other
legal entity, such Person's organizational documents and all other documents
affecting the rights of holders of equity interests in such Person.
"Partner-Funded Debt" shall mean any non-recourse debt of the
Partnership that is loaned or guaranteed by any Partner and/or is treated as
Partner non-recourse debt with respect to a Partner under Treasury
Regulations Section 1.704-2(b)(4).
"Partners" shall mean all Class A Preferred Limited Partners, all
Class B Limited Partners, all Class C Partners, all Class D Partners, all
Class E Limited Partners and all other Partners admitted to the Partnership
pursuant to the terms hereof, and any transferees of the foregoing permitted
hereunder, but only so long as any of the foregoing Persons continues in its
capacity as a partner in the Partnership; "Partner" shall mean any of the
foregoing individually.
"Partnership" shall mean Berkshire Realty Holdings, L.P., a Delaware
limited partnership, as said Partnership may from time to time be hereafter
constituted.
"Partnership Assets" shall mean all right, title and interest of the
Partnership in and to all or any portion of the assets of the Partnership and
any property (real, personal, tangible or intangible) or estate acquired in
exchange therefor or in connection therewith.
"Partnership Percentage Interest" shall mean, as to a Partner, the
percentage obtained by dividing the Partnership Units (other than Class A
Preferred Units, Class B Units or Class E Units) owned by such Partner by
the total number of Partnership Units (other than Class A Preferred Units,
Class B Units or Class E Units) then outstanding as specified in Schedule 6.1
attached hereto, as such exhibit may be amended and restated from time to
time. For the avoidance of doubt, the Partnership Percentage Interest of any
Class A Preferred Limited Partner, Class B Limited Partner or any Class E
Limited Partner shall be deemed zero percent (0%).
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"Partnership Redemption Date" shall have the meaning set forth in
Section 9.12(b).
"Partnership Unit" means a fractional, undivided share of the
Interests of all Partners issued pursuant to Section 6 hereof, and includes
Class A Preferred Units, Class B Units, Class C Preferred Units, Class D
Units, Class E Units and any other classes or series of Partnership Units
established after the date hereof. The number of Partnership Units
outstanding and the Class A Percentage Interests, Class B Percentage
Interests, Class C Percentage Interests, Class D Percentage Interests,
Class E Percentage Interests and the Partnership Percentage Interests in the
Partnership represented by such Partnership Units are set forth in
Schedule 6.1 hereto, as such Exhibit may be amended and restated from time to
time.
"Performance Termination" shall mean a termination of the DK
Employment Agreement after the third anniversary of the Closing Date as a
result of a determination by WHGP and Blackstone GP that the net operating
income of the Properties is not at least $124 million for the full year
ending on the third anniversary of the Closing Date (the "Test Year") (it
being understood that such net operating income shall be calculated based
upon the unaudited financial statements of the Partnership, provided that any
of the General Partners may require that the Performance Termination be based
on the net operating income shown on audited financial statements). For
purposes of calculating the foregoing test, (x) net operating income so
derived shall be reduced by (i) the amount of any net operating income
attributable to properties acquired by the Partnership after the Closing Date
and (ii) the amount of net operating income attributable to properties sold
by the Partnership prior to or after the Closing Date to the extent included
in the net operating income of the Test Year, and (y) the $124 million
threshold shall be reduced by the amount of net operating income attributable
to the Properties sold by the Partnership prior to or after the Closing Date,
as such attributable amounts are shown on Schedule 9.10 attached hereto.
"Permitted Pledge" shall mean, with respect to any member of the
Berkshire Group, a pledge of, or security interest in, an equity interest in
a legal entity to secure a loan made to the pledgor, provided that, (i) such
pledged equity interest may not be transferred to the pledgee by foreclosure,
assignment in lieu thereof or other enforcement of such pledge and (ii) the
pledgor may pledge only its economic interest in such legal entity and no
other rights under such legal entity's Organizational Documents.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other legal entity.
"Pledgee" shall have the meaning set forth in Section 9.1(b).
-14-
"Pledgor" shall have the meaning set forth in Section 9.1(b).
"Profits" shall have the meaning set forth in Section 7.2(a).
"Properties" shall have the meaning set forth in the Recitals.
"Property" shall have the meaning set forth in the Recitals.
"Property Loan" shall mean any bridge, permanent or construction
financing assumed or obtained by the Partnership in accordance with the
provisions hereof, which may be secured by a mortgage, or similar security in
the nature of a mortgage on all or any of the Properties.
"Purchaser" shall have the meaning set forth in 9.1(a).
"Rate of Return" shall mean, with respect to any Partnership Units
held by any Partner, a return of all Capital Contributions made by such
Partner with respect to such Partnership Units plus a cumulative, annually
compounded, return on such Capital Contributions (and accrued but unpaid
return at the specified rate outstanding from time to time) at a rate per
annum equal to the applicable percentage specified herein. A Partner shall
be deemed to have received a specified Rate of Return with respect to such
Partner's Partnership Units when the total Capital Contributions made from
time to time by such Partner in respect of such Partnership Units are
returned to such Partner together with an annual return thereon equal to such
specified percentage calculated commencing on the date such Capital
Contributions are made and compounded annually to the extent not paid on a
current basis, taking into account the timing and amounts of all previous
Capital Contributions by such Partner in respect of such Partnership Units
and all previous distributions by the Partnership to such Partner. For
purposes of computing such Rate of Return, the periods used to measure
capital inflows and outflows shall be monthly and any Capital Contribution
made, or deemed made, by such Partner, any forfeiture of any Capital
Contribution and any distribution of funds received by such Partner at any
time during a month shall be deemed to be made, forfeited or received on the
first day of such month. Any calculations shall be based on a 12-month year
based on thirty (30) day months.
"Restricted Period" shall have the meaning set forth in Section
4.2(a).
"Sales Notice" shall have the meaning set forth in Section 9.2(a).
"Sales Response Notice" shall have the meaning set forth in Section
9.2(c).
-15-
"Second Tier Differential" shall mean an amount equal to the excess
of (i) the amount distributed by the Partnership necessary to give the
holders of Class C Preferred Units a 20% Rate of Return on the aggregate
Capital Contributions made in respect of such Class C Preferred Units over
(ii) the amount distributed by the Partnership necessary to give the holders
of Class C Preferred Units a 17.5% Rate of Return on the aggregate Capital
Contributions made in respect of such Class C Preferred Units.
"Stone Corp" shall have the meaning set forth in the first paragraph
of this Agreement.
"Stone Street" shall have the meaning set forth in the first
paragraph of this Agreement.
"Subsidiaries" shall mean all of the entities in which the
Partnership owns (whether as of the date hereof or at any time hereafter),
directly or indirectly 51% or more of the ownership interests and
"Subsidiary" shall mean any one of them.
"Substituted Partner" shall mean any Person admitted to the
Partnership as a Partner pursuant to the provisions of Section 9.7.
"Targeted Capital Account Balance" shall mean, with respect to any
Partner, the balance necessary to produce a Capital Account for each Partner
such that if an amount of cash equal to such positive Capital Account were
distributed in accordance with such positive Capital Account balances, such
distribution would be in the amounts, sequence and priority set forth in
Section 10.3.
"Tax Matters Partner" shall mean the General Partner designated
pursuant to Section 4.7.
"Third Appraisal" shall have the meaning set forth in Section
9.10(d).
"Third Party Offer" shall have the meaning set forth in Section
9.2(f).
"Third Party Offer Price" shall have the meaning set forth in Section
9.2(f).
"Third Party Response Notice" shall have the meaning set forth in
Section 9.2(g).
"Transfer" shall have the meaning set forth in Section 9.1(a).
-16-
"Transferring Partner" shall have the meaning set forth in Section
9.1(a).
"Treasury Regulations" shall mean the regulations promulgated under
the Code, as such regulations are in effect on the date hereof.
"Triggering Party" shall have the meaning set forth in Section
9.2(a).
"Unanimous Decision" shall have the meaning set forth in Section 3.4.
"WHGP" shall have the meaning set forth in the first paragraph of
this Agreement.
"Whitehall" shall have the meaning set forth in the first paragraph
of this Agreement.
"Whitehall Group" shall mean, collectively, Whitehall, WHGP, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Stone Corp., together with any assignees or
transferees to the extent permitted hereunder, but only so long as any such
Person continues in its capacity as a partner in the Partnership.
1.2 Terms Generally. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(b) the words "including" and "include" and other words of
similar import shall be deemed to be followed by the phrase "without
limitation."
ARTICLE 2.
THE PARTNERSHIP AND ITS BUSINESS
2.1 Partnership Name. The business of the Partnership shall be
conducted under the name of Berkshire Realty Holdings, L.P. in the State of
Delaware and under such name or such assumed names as the Administering
General Partner deems necessary or appropriate to comply with the
requirements of any other jurisdiction in which the Partnership may be
required to qualify.
-17-
2.2 Term. The term of the Partnership shall continue in full
force and effect until terminated following dissolution on December 31, 2049
or such earlier date of dissolution as hereinafter provided.
2.3 Filing of Certificate and Amendments. The Certificate of
Limited Partnership of the Partnership was filed with the Secretary of State
of the State of Delaware on April ___, 1999. The Partners hereby agree to
execute and file any required amendments to the Certificate and shall do all
other acts requisite for the constitution of the Partnership as a limited
partnership pursuant to the laws of the State of Delaware or any other
applicable law and for enabling the Partnership to conduct business in the
jurisdictions in which the Partnership's properties are located.
2.4 Business; Scope of Partners' Authority.
(a) The Partnership is organized primarily for the purpose of
BRI merging with the Partnership (or a Subsidiary thereof) and, subsequent to
such merger, acquiring, owning, financing, refinancing, managing,
maintaining, operating, improving, developing, marketing and selling
multifamily properties. The Partnership is empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the
Partnership, including, without limitation, full power and authority to enter
into, perform and carry out contracts of any kind, borrow money, guarantee
and issue evidences of indebtedness whether or not secured by any mortgage,
deed of trust, pledge or other lien, acquire, own, manage, improve and
develop any real property (or any interest therein), and sell, transfer and
dispose of any such real property.
(b) Except as otherwise expressly and specifically provided in
this Agreement, no Partner shall have any authority to bind or act for, or
assume any obligations or responsibility on behalf of, any other Partner.
Neither the Partnership nor any Partner shall, by virtue of executing this
Agreement, be responsible or liable for any indebtedness or obligation of any
other Partner incurred or arising on, before or after the execution of this
Agreement, except, as to the Partnership, as to those joint responsibilities,
liabilities, indebtedness, or obligations expressly assumed by the
Partnership as of the date of this Agreement or incurred thereafter pursuant
to and as limited by the terms of this Agreement.
2.5 Principal Office; Registered Agent. The principal office of
the Partnership shall be c/o The Berkshire Group, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Partnership may change its place of
business to such location or locations as may at any time or from time to
time be determined by the Administering General Partner and consented to by
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WHGP and Blackstone GP. The mailing address of the Partnership shall be c/o
The Berkshire Group, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or such other address as may be selected from time to time by the
Administering General Partner. The address of the registered office of the
Partnership in the State of Delaware is c/o Bridge Service Corp., ▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name and address of the registered
agent of the Partnership for service of process in the State of Delaware is
Bridge Service Corp, ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.6 Names and Addresses of the Partners. The names and
addresses of the Partners on the date of this Agreement are as follows:
Whitehall Street Real Estate Limited Partnership XI
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WXI/BRH Gen-Par LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Bridge Street Real Estate Fund ▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Fund ▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇ WXI/BRH Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
BRE/Berkshire GP L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
BRE/Berkshire LP L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Aptco Holdings, L.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-19-
Aptco Gen-Par, L.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
The names and addresses of the other Limited Partners and of such
Partners as may be admitted as Partners to the Partnership after the date
hereof shall be as set forth on Schedule 2.6(b) hereof, as such Schedule may
be amended from time to time.
2.7 Representations by the Partners.
(a) Each Partner who is not an individual represents,
warrants, agrees and acknowledges that, as of the date hereof:
(1) it is a corporation, a limited liability
company or partnership, as applicable, duly organized or
formed and validly existing and in good standing under the
laws of the state of its organization or formation; it has
all requisite corporate, limited liability company or
partnership power and authority to enter into this
Agreement, to acquire and hold its Interest and to perform
its obligations hereunder; and the execution, delivery and
performance of this Agreement has been duly authorized by
all necessary corporate, limited liability company or
partnership action; and
(2) its execution and delivery of this Agreement
and the performance of its obligations hereunder will not
conflict with or violate any of the provisions of its
Organizational Documents.
(b) Each Partner, whether or not an individual, represents,
warrants, agrees and acknowledges that as of the date hereof:
(1) its execution and delivery of this Agreement
and the performance of its obligations hereunder will not
conflict with, result in a breach of or constitute a default
(or any event that, with notice or lapse of time, or both,
would constitute a default) or result in the acceleration of
any obligation under any of the terms, conditions or
provisions of any other agreement or instrument to which it
is party or by which it is bound or to which any of its
property or assets are subject, violate any statute or any
order, rule or regulation of any court or governmental or
regulatory agency, body or official, that would materially
-20-
and adversely affect the performance of its duties
hereunder; such Partner has obtained any consent, approval,
authorization or order of any court or governmental agency
or body required for the execution, delivery and performance
by such Partner of its obligations hereunder;
(2) there is no action, suit or proceeding pending
against such Partner or, to its knowledge, threatened in any
court or by or before any other governmental agency or
instrumentality which would prohibit its entering into or
performing its obligations under this Agreement; and
(3) this Agreement is a binding agreement on the
part of such Partner enforceable in accordance with its
terms against such Partner.
Further, each Limited Partner represents that it is acquiring its Interest
for its own account for investment purposes only and not with a view to the
distribution or resale thereof, in whole or in part, in violation of
applicable securities laws and agrees that it will not Transfer all or any
part of its Interest, or solicit offers to buy from or otherwise approach or
negotiate in respect thereof with any Person or Persons whomsoever, all or
any portion of its Interest in any manner that would violate or cause the
Partnership or any General Partner to violate applicable federal or state
securities laws.
(c) Berkshire and BGP represent, warrant and covenant that (i)
they will, on the Closing Date, contribute to the Partnership all shares of
common stock of BRI and all partnership interests in BRI OP owned by
Berkshire, BGP, the Berkshire Principals (other than the shares listed on
Schedule 2.7(c)) or any Affiliate of any of the foregoing as of the date
hereof and as of the Closing Date (it being understood that they shall only
be required to contribute 72.5% of the BRI OP interests held by Turtle Creek
Associates (such percentage representing their entire ownership percentage of
Turtle Creek Associates)), (ii) as of the date of this Agreement, Berkshire,
BGP, the Berkshire Principals and each Affiliate of any of the foregoing,
collectively own 512,203 shares of common stock of BRI (excluding the shares
listed on Schedule 2.7(c)) and 4,904,066 Units of partnership interests in
BRI OP and (iii) none of Berkshire, BGP, the Berkshire Principals, or any
Affiliates of any of the foregoing, shall Transfer any such shares or Units
except to the Partnership as the initial Capital Contributions of Berkshire
and BGP. Each of BGP and Berkshire further represents and warrants that,
except as set forth above and on Schedule 2.7(c), BGP, Berkshire, the
Berkshire Principals and their respective Affiliates have no equity interest
in BRI or BRI OP (other than the shares listed on Schedule 2.7(c)).
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2.8 Control of the Berkshire Group. Berkshire and BGP represent
and warrant that the Berkshire Principals control (which control is
exercisable without the consent or approval of any other Person) the business
and affairs of Berkshire and BGP.
2.9 Pre-Closing Costs and Expenses.
(a) Any reasonable out of pocket due diligence, legal and
underwriting costs or expenses incurred by an Investor Group Partner or its
Affiliate (other than GSMC) relating to the acquisition of BRI or the
execution of this Agreement will be reimbursed by the Partnership to such
Partner on or promptly after the Closing Date.
(b) The Partnership shall not be required to reimburse any
Partner for fees payable to any broker or investment banker in connection
with the proposed acquisition of BRI, except for the fee payable to ▇▇▇▇▇▇▇▇▇
& Co. in accordance with its existing agreement with The Berkshire Group,
which fee shall not be in excess of $4,955,000. Notwithstanding the
foregoing, the Partnership may pay fees to brokers or investment bankers in
connection with additional equity and/or debt financing as provided in
Section 3.4 or Section 4.4(a).
(c) The Partnership shall pay (i) all fees and expenses in an
amount not to exceed $750,000 related to the bridge financing committed by
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company ("GSMC") in connection with the contemplated
merger of the Partnership (or a Subsidiary thereof) and BRI and (ii) all fees
and expenses related to the bridge financing committed or provided by
Whitehall and Blackstone in connection with the contemplated merger of the
Partnership (or a Subsidiary thereof) and BRI (the "Bridge Loan") payable
under the commitment letter or definitive agreements relating to such Bridge
Loan.
(d) In the event that, under the terms of the BRI Merger
Agreement, a termination or break-up fee and/or reimbursement of expenses
becomes payable to the Partnership, such fee shall be allocated among the
Investor Group Partners as follows: (i) first, to reimburse the Investor
Group Partners for their actual out of pocket transaction costs and expenses
incurred to the date of the payment of such fee and (ii) second, to the
Investor Group Partners pro rata based upon their respective anticipated
initial Partnership Percentage Interests.
2.10 Compliance with Certain Agreements. The Partnership
acknowledges that from and after the Closing Date, it will be bound by and
will comply (and will cause BRI OP to comply) with the terms of the
agreements listed on Schedule 2.10 hereto, as if the Partnership were a party
to such agreements and that the Class A Preferred Limited Partners and Class
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B Limited Partners shall be able to enforce such agreements as third party
beneficiaries of such agreements. Nothing in this Agreement shall constitute
an amendment to, or diminish or alter any rights or obligations contained in,
any of the agreements listed on Schedule 2.10.
2.11 Miscellaneous. The Partnership anticipates that the equity
and debt financing expected to be raised in contemplation of the transactions
contemplated by the BRI Merger Agreement will be sufficient to pay the
purchase price required in connection with such merger and the transaction
costs associated therewith (assuming that the transaction costs of BRI and
BRI OP incurred in connection with the BRI Merger and the BRI OP Merger
(other than severance costs) do not exceed $11,000,000), but no assurance can
be made with respect to the foregoing.
ARTICLE 3.
MANAGEMENT OF PARTNERSHIP BUSINESS;
POWERS AND DUTIES OF THE ADMINISTERING GENERAL PARTNER
3.1 Management and Control.
(a) Except as limited specifically herein, the powers of the
General Partners shall include all powers, statutory and otherwise, possessed
by general partners under the laws of the State of Delaware. No General
Partner may be removed by the Limited Partners with or without cause.
(b) Except as otherwise expressly and specifically provided in
this Agreement, no Limited Partner shall have any authority to bind, to act
for, to execute any document or instrument on behalf of or to assume any
obligation or responsibility on behalf of the Partnership or any other
Partner.
(c) The provisions of this Agreement relating to the management
and control of the business and affairs of the Partnership shall also be
construed to be fully applicable to the management and control of each
Subsidiary, and any and all matters listed in Section 3.3 shall constitute
Majority Decisions for purposes hereof whether such matter relates to the
Partnership or any Subsidiary of the Partnership, any and all matters listed
in Section 3.4 shall constitute Unanimous Decisions for purposes hereof
whether such matter relates to the Partnership or any Subsidiary of the
Partnership and the provisions of Section 3.2 shall apply with respect to the
Partnership as well as to any Subsidiary of the Partnership. Without
limitation of the foregoing, given that the Partnership will, after
consummation of the transactions contemplated by the BRI Merger Agreement and
the BRI OP Merger Agreement, indirectly control the management of and will
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own 100% of the sole general partner of BRI OP, each of the General Partners
shall have management rights over BRI OP, and the Partnership, in its
capacity as the general partner, will not take any actions in respect of
"Majority Decisions" or "Unanimous Decisions" without the approval of the
required General Partners (as if such decisions were made by the
Partnership).
3.2 Role of the Administering General Partner and Limitations on
its Authority.
(a) In addition to such powers and rights of the Administering
General Partner as are expressly set forth herein, and subject to the express
restrictions set forth in Sections 3.3 and 3.4, the Administering General
Partner shall have the right and the duty to manage the business of the
Partnership, to execute documents and to implement the decisions made on
behalf of the Partnership by the General Partners in accordance with the
terms hereof and applicable laws and regulations, and such other rights and
powers as are granted to the Administering General Partner hereunder and as
the other General Partners may from time to time expressly delegate to the
Administering General Partner (provided, that any such obligations or
responsibilities that are delegated to the Administering General Partner
shall be subject to the Administering General Partner's acceptance to the
extent not set forth herein). The Administering General Partner shall devote
such time to the Partnership and its business as shall be reasonably
necessary to conduct the business of the Partnership in an efficient manner
and to carry out the Administering General Partner's responsibilities as set
forth herein. Without limiting the generality of the foregoing but subject
to WHGP's and Blackstone GP's rights with respect to Majority Decisions and
Unanimous Decisions, the Administering General Partner shall have the right
and duty to do, accomplish and complete, using Partnership funds at all times
except where expressly provided to the contrary in this Agreement, for and on
behalf of the Partnership with reasonable diligence and in a prompt and
businesslike manner, exercising such care and skill as a prudent owner with
sophistication and experience in owning, operating and managing property like
the Properties would exercise in dealing with its own property, all of the
following:
(1) applying for and using diligent efforts to obtain
any and all necessary consents, approvals and permits required for the
construction, occupancy and operation of the Properties;
(2) paying, before delinquency and prior to the addition
of interest or penalties, all taxes, assessments and other impositions
applicable to the Properties, and retaining counsel to initiate any action or
proceeding seeking to reduce such taxes, assessments or other impositions;
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(3) verifying that appropriate insurance (including any
required by the terms of any Property Loan) is maintained by each contractor
performing work on the Properties;
(4) assisting in obtaining any and all necessary
financing required to carry out the purposes of the Partnership;
(5) procuring and arranging all necessary insurance to
the extent available at commercially reasonable rates for the Partnership in
accordance with the insurance program adopted by the Partnership from time to
time pursuant to Section 3.3(12) below; causing the Investor Group Partners
to be named as additional insureds on all liability policies maintained by
the Partnership; delivering to the General Partners copies of all insurance
policies maintained by the Partnership from time to time, including renewals
or replacements of any expiring policies prior to the expiration thereof;
(6) demanding, receiving, acknowledging and instituting
legal action for recovery of any and all revenues, receipts and
considerations due and payable to the Partnership, in accordance with prudent
business practices;
(7) executing and delivering leases and other legal
documents necessary to carry out the business of the Partnership (which
leases and legal documents shall have first been approved by either one or
both of the other two General Partners if their approval is required pursuant
to this Agreement, including without limitation, Sections 3.3 and 3.4 below,
or shall otherwise be in accordance with the relevant Approved Budget and
Approved Business Plan);
(8) keeping all books of account and other records of
the Partnership and delivering all reports in the manner provided in Article
5 below;
(9) maintaining all funds of the Partnership in a
Partnership bank account in the manner provided in Article 5 below, which
funds shall not be commingled with the funds of any other Person;
(10) protecting and preserving the title and interests of
the Partnership in the Properties, and including keeping the Properties free
from mechanics' and materialmen's liens;
(11) preparing for approval by the General Partners and
implementing once the same shall have been approved in accordance herewith,
all Approved Budgets and Approved Business Plans, including negotiating all
contracts and expending funds in accordance therewith;
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(12) opening and maintaining bank accounts to the
extent required or permitted by Section 5.5;
(13) coordinating the defense of any claims, demands,
suits or legal proceedings made or instituted against the Partnership by
other parties, through legal counsel for the Partnership engaged in
accordance with the terms of this Agreement; giving WHGP and Blackstone GP
prompt notice of the receipt of any material claim or demand or the
commencement of any suit or legal proceeding and promptly providing WHGP and
Blackstone GP all information relevant or necessary thereto;
(14) monitoring and complying with (i) the terms and
provisions of any restrictive covenants or easement agreements affecting the
Properties or any portion thereof, and any and all contracts entered into or
assumed by the Partnership, including, without limitation, the exceptions
noted in any title policy, and (ii) the terms and provisions of any note,
mortgage and other loan documents assumed or executed by the Partnership,
including any Property Loan documents;
(15) delivering to the General Partners copies of any
notices received from lenders, or other persons with whom the Partnership has
material contractual obligations, alleging any material deficiencies or
defaults by the Partnership under the said contractual arrangements;
(16) paying (or causing to be paid), prior to
delinquency, all insurance premiums, debts and other obligations of the
Partnership, including amounts due under any loans of the Partnership and
costs of construction, operation and maintenance of the Properties;
(17) subject to the provisions of this Agreement,
developing, operating, maintaining and otherwise managing the Properties in
an efficient manner and in accordance with the relevant Approved Budget and
Approved Business Plan;
(18) promptly complying with all present and future laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments, courts, departments, commissions, boards and
officers, the requirements of any insurance policy (or any insurer
thereunder) covering the Properties (and any improvements thereon), any
national or local Board of Fire Underwriters, or any other body exercising
functions similar to those of any of the foregoing, which may be applicable
to any of the Properties (and any improvements thereon) and the operation and
management thereof, and when and to the extent approved by the General
Partners, the Administering General Partner shall contest or assist the
Partners in contesting the validity or application of any such law,
ordinance, order, rule, regulation or requirement;
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(19) provided that ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or, if the last
paragraph of this Section 3.2 applies, ▇▇▇▇▇▇ ▇▇▇▇▇) is still acting as
chairman and chief executive officer of the Partnership, selling the ten
(10) assets listed on Schedule 3.2(a)(19) hereto within the time period
contemplated by the Approved Business Plan to parties which are not
Affiliated with the Berkshire Group and in which the Berkshire Group and its
Affiliates have no continuing interest, for prices that yield the Partnership
net proceeds (after all transaction costs, transfer or similar taxes and debt
prepayment fees and expenses) equal to, in respect of each such Property, at
least 95% of the amounts set forth on Schedule 3.2(a)(19) hereto opposite
such Property, provided that the aggregate amount of all such net sale
proceeds shall not be less than 97.5% of the aggregate of all such amounts
set forth on Schedule 3.2(a)(19) hereto;
(20) provided that ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or, if the last
paragraph of this Section 3.2 applies, ▇▇▇▇▇▇ ▇▇▇▇▇) is still acting as
chairman and chief executive officer of the Partnership, selling certain
individual assets in any calendar year not in excess of $100 million in gross
proceeds, provided that (i) the price for each sold asset yields the
Partnership net proceeds (after all transaction costs, transfer or similar
taxes and debt prepayment fees and expenses) equal to at least 103% of the
allocated acquisition cost of such asset as set forth on Schedule 3.2(a)(20)
hereto and (ii) if any such assets are held by an entity that is a REIT
(other than any REIT that holds a single Property), independent tax counsel
approved by a majority of the General Partners renders an opinion that such
sale will not be a "prohibited transaction" within the meaning of Section 857
of the Code;
(21) (i) in the event the Partnership draws down the
Bridge Loan, incurring indebtedness on or prior to May 1, 2000 to refinance
all or part of the Bridge Loan, provided that such indebtedness satisfies the
▇▇▇▇▇▇▇ Mac Parameters or (ii) in the event the Partnership determines not to
draw down the Bridge Loan, incurring indebtedness satisfying the ▇▇▇▇▇▇▇ Mac
Parameters contemporaneously with the Closing Date (provided that a
commitment letter relating to indebtedness satisfying the ▇▇▇▇▇▇▇ Mac
Parameters is obtained by July 15, 1999, definitive agreements relating to
such indebtedness are executed by September 1, 1999, and at no time after
July 15, 1999 do WHGP and Blackstone GP reasonably conclude that there is a
material risk the indebtedness satisfying the ▇▇▇▇▇▇▇ Mac Parameters will not
be agreed to, closed and funded on or prior to the anticipated Closing
Date);
(22) implementing, in the form approved pursuant to the
terms of this Agreement, Unanimous Decisions and Majority Decisions approved
by the General Partners pursuant to the terms of this Agreement (including,
without limitation, Approved Business Plans);
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(23) performing all other services reasonably necessary
or required for the ownership, development, maintenance, marketing and
operation by the Partnership of the Properties or otherwise required to be
performed by the Administering General Partner pursuant to this Agreement and
not otherwise prohibited hereunder; and
(24) retaining legal firms to represent the Partnership
and its Subsidiaries provided that such firms are selected with due care and
are recognized as having expertise in the area for which they have been
retained.
(b) The Administering General Partner shall not (and shall not
have any right, power or authority to), without the prior approval of either
WHGP or Blackstone GP, or of both WHGP and Blackstone GP, as applicable, bind
or take any action on behalf of or in the name of the Partnership or any
Subsidiary, or enter into any commitment or obligation binding upon the
Partnership or any Subsidiary, except for actions authorized under this
Agreement (including all actions authorized by Section 3.2(a)) or actions
authorized by WHGP, Blackstone GP or the General Partners in the manner set
forth herein. Neither WHGP nor Blackstone GP shall have the authority to
take any action on behalf of or in the name of the Partnership or any
Subsidiary except for actions authorized under this Agreement.
(c) (1) Notwithstanding anything contained herein to the
contrary, BGP shall be removed as Administering General Partner and as a
General Partner, and be relieved of its obligations as same, and shall have
no further rights with respect to approvals of or consent to any Majority
Decision or Unanimous Decision in the event that (i) Berkshire, BGP or any of
their respective Affiliates Transfers any of its interests in the Partnership
in violation of the terms of this Agreement, (ii) the Partnership or any
member of the Blackstone Group or the Whitehall Group acquires the Interest
of the Berkshire Group pursuant to the terms of Section 9.10 of this
Agreement or (iii) a default by Berkshire, BGP or one of their respective
Affiliates of a loan secured by interests of Berkshire, BGP or an Affiliate
in the Partnership and such loan becomes due as a result of such default.
(2) Notwithstanding anything contained herein to the
contrary, BGP shall be removed as Administering General Partner and as a
General Partner in the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇ is removed as chief executive
officer of the Partnership for Cause or Company Cause at any time or ▇▇▇▇▇▇▇
▇▇▇▇▇ resigns as chief executive officer of the Partnership prior to the
fifth anniversary of the Closing Date, and in connection with such removal or
resignation, (i) the general partnership Interest of BGP shall automatically
(and without any notice or other action) be converted into a new class of
limited partnership interest (and there shall be no other limited
partnership interests of such class), (ii) such limited partnership Interest
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shall be entitled (by means of a class vote or similar mechanism) to
exercise the rights that BGP had under this Agreement as a General Partner
(provided, that BGP shall not have the right to vote with respect to the
Unanimous Decisions described in clauses (5)(it being understood and agreed
that upon such removal or resignation and such conversion of Interests, the
Berkshire Group shall not be obligated to fund any Additional Capital Call
made pursuant to such clause (5) but shall be subject to dilution as set
forth in Section 6.3), (10), (14) and (16) of Section 3.4 and shall not be
entitled to vote in respect of any Majority Decision (other than the Majority
Decisions described in clauses (4), (7) and (16) of Section 3.3, as to which
BGP shall have the right to vote) and (iii) from and after the date of such
removal, the remaining General Partners shall then have the right to sell the
Partnership or all or substantially all of the assets of the Partnership
(including by means of a merger, consolidation or other business combination)
provided that, as a result of such sale, the members of the Berkshire Group
receive, in the aggregate, an amount equal to the greater of (x) the Fair
Market Value of the Berkshire Group's Interest (excluding the DK IMP which
shall be forfeited upon the occurrence of any of such events) on the date of
such termination or resignation or (y) the amount equal to the aggregate
amount of Capital Contributions made by the Berkshire Group prior to the date
of such termination or resignation less any prior distributions made to the
Berkshire Group.
In the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇ ceases to be chief executive
officer of the Partnership as a result of the death or disability of ▇▇▇▇▇▇▇
▇▇▇▇▇ (but not as the result of the termination by the Partnership of ▇▇▇▇▇▇▇
▇▇▇▇▇'▇ employment by the Partnership or as a result of the resignation by
▇▇▇▇▇▇▇ ▇▇▇▇▇ of his employment by the Partnership), the Partnership will
offer ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ brother, the opportunity to serve as
chief executive officer of the Partnership on the same terms and conditions
as ▇▇▇▇▇▇▇ ▇▇▇▇▇ is employed as the chief executive officer of the
Partnership pursuant to this Agreement and the DK Employment Agreement.
3.3 Majority Decisions. Notwithstanding anything to the
contrary in this Agreement, no act shall be taken, sum expended, decision
made or obligation incurred by the Partnership or any Subsidiary, the
Administering General Partner or any of the General Partners with respect to
a matter within the scope of any of the Majority Decisions except as
expressly reserved as Unanimous Decisions or Administering Partner Decisions
pursuant to Section 3.2 or Section 3.4, unless and until the prior written
consent of at least two General Partners shall have been obtained pursuant to
and in accordance with this Section 3.3 and Section 3.5. Any two of the
General Partners shall have the full and complete right, power, authority and
discretion to decide, and take all actions necessary to implement, any
Majority Decision:
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The "Majority Decisions" are:
(1) making a Mandatory Capital Call pursuant to the
terms of Section 6.2(a) or a Financing Capital Call pursuant to the terms of
Section 6.2(b);
(2) approving any Annual Budget or Business Plan or
modifying or deviating from or making expenditures (whether operating or
capital in nature) or incurring any obligations in excess of any of the
foregoing except to the extent the Administering General Partner is so
permitted by Section 3.2 or by this Section 3.3; provided, however, that, so
long as ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or if the last paragraph of Section 3.2 applies,
▇▇▇▇▇▇ ▇▇▇▇▇) is still acting as chairman and chief executive officer of the
Partnership, the Administering General Partner may, without the approval of
any other General Partner, (i) incur payroll expenses which do not exceed
105% of the annual amount for such item on the Approved Budget and (ii) make
additional expenditures or incur additional obligations which, in the
aggregate, do not exceed 105% of annual expenses (other than payroll
expenses) as set forth in the Approved Budget; and provided further that
without the consent of the Administering General Partner no line item in an
Approved Budget may provide for expenditures (other than capital items or
reserves relating thereto) of more than 105% of the corresponding line item
in the previous Approved Budget.
(3) without limiting the Administering General Partner's
ability to take action under 3.2(a)(19), (20) or (21), taking any action in
respect of the Properties relating to environmental matters; provided,
however, that any General Partner is hereby authorized upon prior notice to
the other General Partners to take such action as may be reasonably required
to mitigate or eliminate any material environmental condition that poses
imminent danger to human health or safety; provided further, that such
emergency expenses referred to in the preceding clause shall not, without the
approval of all of the General Partners, exceed $100,000 in the aggregate in
any Budget Year;
(4) subject to the provisions of Article 9 hereof,
dissolving and winding-up the Partnership or electing to continue the
Partnership or electing to continue the business of the Partnership;
(5) incurring, renewing, refinancing or paying or
otherwise discharging (or agreeing to do any of the foregoing) indebtedness
of the Partnership (other than paying or discharging indebtedness secured by
an asset with proceeds from sales of such asset, which the Administering
General Partner shall have authority to do without the need to obtain
approval of another General Partner) provided that the Administering General
Partner (in addition to WHGP and Blackstone GP acting jointly) may incur
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(i) indebtedness expressly authorized by an Approved Business Plan or an
Approved Budget or (ii) indebtedness to ▇▇▇▇▇▇▇ Mac, or another institutional
lender, satisfying the ▇▇▇▇▇▇▇ Mac Parameters on or prior to the applicable
time periods specified in Section 3.2(a)(21). Notwithstanding the foregoing,
in the event (i) the Administering General Partner does not obtain financing
satisfying the ▇▇▇▇▇▇▇ Mac Parameters on or prior to May 1, 2000 (if the
Bridge Loan is drawn upon) or (ii) the Administering General Partner does not
obtain a commitment letter relating to indebtedness satisfying the ▇▇▇▇▇▇▇
Mac Parameters by July 15, 1999 or definitive agreements relating to such
indebtedness have not been executed by September 1, 1999 (or if at any time
after July 15, 1999 WHGP and Blackstone GP reasonably conclude that there is
a material risk the indebtedness satisfying the ▇▇▇▇▇▇▇ Mac Parameters will
not be agreed to, closed and funded on or prior to the anticipated Closing
Date), two General Partners may take action necessary to incur, refinance,
pay and otherwise discharge up to $650,000,000 of indebtedness on terms other
than the ▇▇▇▇▇▇▇ Mac Parameters as if such incurrence were a Majority
Decision provided that, (A) the General Partners use commercially reasonable
efforts to obtain financing on terms as close as possible to the ▇▇▇▇▇▇▇ Mac
Parameters, (B) any such financing shall be fixed rate or be subject to
appropriate hedging arrangements and (C) the recourse of any lender of such
financing permitted to be incurred pursuant to this sentence shall be limited
to the Partnership Assets (and shall not be recourse to any Partner without
such Partner's approval);
(6) modifying (i) any loan documentation executed by the
Partnership or (ii) any other material agreement, except if such modification
is contained in an Approved Business Plan;
(7) instituting proceedings to adjudicate the
Partnership a bankrupt, or consenting to the filing of a bankruptcy
proceeding against the Partnership, or filing a petition or answer or consent
seeking reorganization of the Partnership under the Bankruptcy Code or any
other similar applicable federal, state or foreign law, or consenting to the
filing of any such petition against the Partnership, or consenting to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy
or insolvency of the Partnership or of its property, or making an assignment
for the benefit of creditors of the Partnership, or admitting in writing the
Partnership's inability to pay its debts generally as they become due;
(8) taking any action that would constitute an event of
default under any loan agreement to which the Partnership is a party;
(9) organizing or forming any Subsidiary of the
Partnership, except as otherwise expressly provided herein;
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(10) approving or filing any tax return or tax report on
behalf of the Partnership (it being understood and agreed that the
Administering General Partner shall prepare the first draft of such tax
returns and deliver such drafts to the other General Partners by no later
than February 1 of each year and that such tax returns shall be completed
before February 15 of each year);
(11) approving an insurance program for the Partnership
or any of the Properties or making a material change to such approved
insurance program;
(12) settling a property insurance claim or condemnation
action involving a claim in excess of one hundred thousand dollars ($100,000)
or that, when added to all other insurance or condemnation claims during a
single calendar year, exceeds two hundred fifty thousand dollars ($250,000);
(13) making or agreeing to any material changes to the
zoning of any of the Properties or approving the terms and provisions of any
material restrictive covenant or material easement agreement affecting any of
the Properties or any portion thereof (other than utility easements and the
like granted or released in the ordinary course);
(14) establishing any reserves for the Partnership (in
addition to capital expenditure reserves) in excess of $250,000 in the
aggregate but less than $2,000,000 in the aggregate unless set forth in the
Approved Budget;
(15) except as expressly set forth in an Approved
Business Plan, approving or disapproving of a creditors' plan, the filing of
an involuntary petition of bankruptcy or the dismissal or discharge of a
claim of bankruptcy in connection with bankruptcy proceedings involving any
Person contracting with the Partnership other than contractors against whom
the Partnership's claim is less than $100,000;
(16) taking any action that involves or relates to, or
entering into any agreement with, any General Partner or any Affiliate
thereof (it being understood and agreed that such General Partner shall
recuse itself from the consideration of any such matter);
(17) executing, modifying, accepting the surrender of or
terminating any non-residential lease or other arrangement involving the
rental, use or occupancy of more than 5,000 square feet of the Properties
(provided that the subleasing a portion of BRI's current principal office at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ may be effected by the Administering
General Partner as if such decision were permitted under Section 3.2), except
in accordance with the applicable Approved Business Plan; provided, however,
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that the Administering General Partner may modify a lease of all or any
portion of the Properties if such lease would still satisfy the applicable
Approved Business Plan as modified; and provided further, however, that the
Administering General Partner may terminate any lease (and bring eviction and
legal proceedings against the tenant thereunder) where the tenant has
defaulted in its rent payments or is otherwise in material default;
(18) unless required pursuant to the terms of any ground
lease or mortgage encumbering any of the Properties, deciding whether to
repair or rebuild in case of material damage to any of the improvements on
any Property, or any part thereof, arising out of a casualty or condemnation
(except such emergency repairs as may be necessary to protect such Property);
(19) except as otherwise expressly set forth in Sections
3.2(a), 3.10 and Article 9 of this Agreement, selling any of the Partnership
Assets or Properties;
(20) entering into hedging, interest rate protection or
similar arrangements with respect to up to 50% of the anticipated amount of
debt financing to be incurred by the Partnership or its Subsidiaries in
connection with the BRI Merger and the BRI OP Merger;
(21) exercising any rights by the Partnership under the
DK Employment Agreement or Section 9.10 hereof; and
(22) any action that is not a Unanimous Decision or that
the Administering General Partner has the authority to effect pursuant to
Section 3.2(a) (it being understood that in the case of any inconsistency
between Sections 3.2(a)(19), 3.2(a)(20) and 3.2(a)(21) and this Section 3.3,
the foregoing Sections will prevail); provided that two General Partners may
modify Section 3.2(a) (other than clauses (19), (20) and (21) thereof) to
provide that any such actions set forth in Section 3.2(a) shall constitute
Majority Decisions.
3.4 Unanimous Decisions. Notwithstanding anything to the
contrary in this Agreement, no act shall be taken, sum expended, decision
made or obligation incurred by the Partnership, the Administering General
Partner or any of the General Partners with respect to a matter within the
scope of any of the Unanimous Decisions, unless and until the prior written
consent of all of the General Partners shall have been obtained pursuant to
and in accordance with this Section 3.4 and Section 3.5. The General
Partners, acting unanimously, shall have the full and complete right, power,
authority and discretion to decide, and take all actions necessary to
implement, any Unanimous Decision.
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The "Unanimous Decisions" are:
(1) taking any action in contravention of, amending,
modifying or waiving any of the provisions of this Agreement or the
Certificate;
(2) except as permitted by Article 9, approving the
admission to the Partnership of a successor or a new Partner, removing any
Partner, designating or approving the classification of any new class of
Partners (and establishing the designations, preferences and relative rights
and duties of each class of Partners), or making any public or private
offering for the sale of equity interests or securities issued by the
Partnership;
(3) except as provided in Article 9, merging or
consolidating the Partnership with or into another Person (or engaging in any
other transaction having substantially the same effect); it being agreed that
the terms of Section 17-211(g) of the Act shall be applicable such that the
General Partners acting pursuant to this Section 3.4 shall have the right to
effect any amendment to this Agreement or effect the adoption of a new
partnership agreement for a limited partnership if it is the surviving or
resulting limited partnership on the merger or consolidation (except as may
be expressly prohibited under Section 3.7(b) or Section 3.7(c));
(4) altering the nature of the business of the
Partnership from the businesses permitted by Section 2.4(a);
(5) making an Additional Capital Call other than
pursuant to Sections 6.2(a) and 6.2(b);
(6) disposing of all or any portion of the property
known as Berkshire Towers or the subsidiary that owns such property prior to
the fifth anniversary of the Closing Date, provided, however, that such
disposition shall be a Majority Decision if it is made in a tax deferred
transaction;
(7) acquiring any real property or interest therein or
other material assets;
(8) except as set forth in Article 9, selling the
Partnership or all or substantially all of the Partnership Assets prior to
the date which is forty-two months after the Closing Date;
(9) changing, amending or terminating the BRI Merger
Agreement or the BRI OP Merger Agreement; executing the foregoing
documentation or any documents related thereto or executed in connection
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therewith; or accepting any closing deliveries, or making any election or
granting any consents, approvals or waivers of conditions to the
Partnership's obligation to close the merger with BRI pursuant to the
foregoing documentation or any documents related thereto or executed in
connection therewith;
(10) approving the IMP (and the persons to whom such IMP
is allocated) and admitting or removing any Class E Limited Partner;
(11) incurring, refinancing, paying and otherwise
discharging indebtedness in connection with the financing of the transactions
contemplated by the BRI Merger Agreement and the BRI OP Merger Agreement if
the all-in, blended interest rate for such financing exceeds a per annum
rate equal to 10%;
(12) selecting or varying depreciation and accounting
methods and making or revoking any other decisions or elections with respect
to federal, state, local or foreign tax matters or other financial purposes;
(13) establishing reserves for the Partnership (in
addition to capital expenditure reserves) in an amount equal to or in excess
of $2,000,000 in the aggregate unless set forth in the Approved Budget;
(14) changing the Partnership's accountants and
independent auditors from PriceWaterhouse Coopers (it being agreed and
understood that the General Partners intend that PriceWaterhouse Coopers
shall act as the Partnership's initial accountants); making any accounting
decisions for the Partnership (other than those specifically provided for in,
or necessary to carry out, other sections of this Agreement); or approving
any financial statements prepared by the Partnership's auditors;
(15) using Partnership funds to extend credit, make an
Investment, make a loan or become a guarantor or surety for debt of another
party;
(16) except as provided in Section 4.2(b), entering into
any property management, leasing, development or similar agreement;
(17) entering into hedging, interest rate protection or
similar arrangements with respect to an amount of the debt financing to be
incurred by the Partnership or its Subsidiaries in connection with the BRI
Merger and the BRI OP Merger in excess of 50% of such indebtedness; and
(18) except as expressly set forth in the Approved
Business Plan, taking any action that reasonably would be expected to have a
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material adverse effect on the assets, liabilities, income or expenses of the
Properties.
Notwithstanding anything else to the contrary herein, but subject to
Section 3.7(b), Article 9 and Section 11.1, any action or decision that is
not a Unanimous Decision or a decision permitted pursuant to Section 3.2 to
be taken by the Administering General Partner without the consent of any
other General Partner shall be deemed to be a Majority Decision and may be
taken or made by the General Partners acting together without the consent or
approval of any other Partner.
3.5 Consents of General Partners. If BGP consents to any
Majority Decision or Unanimous Decision in its capacity as the Administering
General Partner, BGP need not also give its consent to such Majority Decision
or Unanimous Decision in its capacity as a General Partner. In the event of
any need for consent of the General Partners to any Majority Decision or
Unanimous Decision, the Administrating General Partner, or the requesting
General Partner as the case may be, shall make such request of the General
Partners and shall provide the General Partners with any information
reasonably necessary for the General Partners to make an informed decision.
If a General Partner does not respond within ten (10) Business Days after
receipt of such request for consent to a Majority Decision or Unanimous
Decision, such General Partner shall be deemed to have rejected such request;
provided that a request pursuant to Section 3.3(a)(12), shall be deemed to be
approved by a General Partner that does not respond within such ten Business
Day period. Each General Partner (including the Administering General
Partner) shall use its good faith reasonable efforts to respond promptly to
requests for consent and to keep the other General Partners informed of the
status of any matter regarding which such General Partner intends to request
the General Partners' consent under Section 3.3 or Section 3.4. No General
Partner shall be permitted to enter into a separate agreement with another
General Partner regarding the voting of its General Partner interests or the
granting of its consent to any Majority Decision or Unanimous Decision.
3.6 Meetings of General Partners; etc. The Administering
General Partner shall from time to time, but no less frequently than every
fiscal quarter, meet with WHGP and Blackstone GP at WHGP's or Blackstone GP's
request to discuss the business and affairs of the Partnership or to discuss
any particular matter reasonably requested by WHGP or Blackstone GP. WHGP
and Blackstone GP shall promptly inform BGP of actions taken by WHGP and
Blackstone GP with respect to any Majority Decision. No General Partner shall
be responsible to the Partners for any adverse consequences, of actions taken
in accordance with the terms of this Agreement or without its consent.
Notice of meetings of the General Partners shall be given in the manner
provided in Section 12.2 hereof at least seventy-two (72) hours before the
time of such meeting (unless each General Partner waives such notice). No
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action may be taken at any meeting of the General Partners unless a quorum of
at least two (2) General Partners shall be present thereat; and no action may
be taken at any such meeting at which less than all of the General Partners
are present unless such action was included in the notice for such meeting.
The General Partners may act by written consent in lieu of a meeting.
3.7 No Participation by or Authority of Limited Partners;
Limited Rights.
(a) No Limited Partner shall have the right to participate in
the management or conduct of the Partnership. No Limited Partner shall
transact business for the Partnership, nor shall any Limited Partner have
power to sign, act for or bind the Partnership, all of such powers being
vested solely and exclusively in the General Partners. Except as required by
law or as expressly provided in this Section 3.7, no holder of Limited
Partnership Interests shall be entitled to vote at any meeting of the
Partners or for any other purpose or otherwise to participate in any action
taken by the Partnership or the Partners, or to receive notice of any meeting
of the Partners. When entitled to vote on a matter being submitted to
holders of Partnership Interests of more than one class or series, all
classes of Interests in the Partnership shall vote together as one class with
each interest in the Partnership having a vote equal to the Partnership
Percentage Interest related to such Interest.
(b) Notwithstanding anything in this Agreement to the contrary,
so long as any Class A Preferred Units are outstanding, the Partnership shall
not, without the prior approval of the holders of at least a majority of the
outstanding Class A Preferred Units held by Persons other than the General
Partners and their respective Affiliates, (i) amend any provisions of this
Agreement in any manner that (x) adversely affects the holders of the Class A
Preferred Units disproportionately with respect to the rights of holders of
other classes of Partnership Units or (y) alters the preferences, rights,
privileges or powers of, or restrictions provided for the benefit of, the
Class A Preferred Units (it being understood and agreed that this Section
3.7(b) shall not prevent the Partnership from authorizing or creating any
class of Partnership Units on a parity with the Class A Preferred Units or
junior to the Class A Preferred Units as to distributions or liquidations),
(ii) authorize or create any class of Partnership Units with a priority as to
distributions or liquidations over the Class A Preferred Units (it being
understood and agreed that this Section 3.7(b) shall not prevent the
Partnership from issuing any debt securities), (iii) issue any additional
Class A Preferred Units or (iv) except as expressly provided herein, redeem
or repurchase any Interests (other than the Interests of Class E Limited
Partners which may be redeemed at any time).
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(c) Notwithstanding anything in this Agreement to the contrary,
so long as any Class B Units are outstanding, the Partnership shall not,
without the prior approval of the holders of at least a majority of such
outstanding Class B Units held by Persons other than the General Partners and
their respective Affiliates, amend any provisions of this Agreement in any
manner that (i) adversely affects such holders of such Class B Units
disproportionately with respect to the rights of holders of other classes of
Partnership Units or (ii) alters the preferences, rights, privileges or
powers of, or restrictions provided for the benefit of, the Class B Units (it
being understood and agreed that this Section 3.7(c) shall not prevent the
Partnership from authorizing or creating any class of Partnership Units,
whether on a parity, junior or senior to the Class B Units as to
distributions or liquidations).
3.8 Acts of the Partnership and the Partners; Representatives.
(a) Whenever in this Agreement or elsewhere it is provided that
consent is required of, a demand shall be made by, or acts shall be performed
by or at the direction of the Administering General Partner, all such
consents, demands and acts are to be made, given or performed upon the
consent of any of the Persons listed on Schedule 3.8 attached hereto (as the
same may be amended from time to time by the Administering General Partner)
under the heading "Representatives of the Administering General Partner" who
shall be vested with the authority of the Administering General Partner,
until such time, as any, as the General Partners shall receive a notice from
the Administering General Partner designating one or more new
representatives.
(b) Whenever in this Agreement or elsewhere it is provided that
consent is required of, a demand shall be made by, or acts shall be performed
at the direction of WHGP, all such consents, demands and acts are to be made,
given or performed upon the consent of any of the Persons listed on Schedule
3.8 attached hereto (as the same may be amended from time to time by WHGP)
under the heading "Representatives of WHGP" who shall be vested with the
authority of WHGP, until such time, as any, as the Administering General
Partner and Blackstone GP shall receive a notice from WHGP designating one or
more new representatives.
(c) Whenever in this Agreement or elsewhere it is provided that
consent is required of, a demand shall be made by, or acts shall be performed
at the direction of Blackstone GP, all such consents, demands and acts are to
be made, given or performed upon the consent of any of the Persons listed on
Schedule 3.8 attached hereto (as the same my be amended from time to time by
Blackstone GP) under the heading "Representatives of Blackstone GP" who shall
be vested with the authority of Blackstone GP, until such time, as any, as
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the Administering General Partner and WHGP shall receive a notice from
Blackstone GP designating one or more new representatives.
3.9 Waiver of Rights by the Limited Partners. To the fullest
extent permitted by law, subject to Sections 3.7(b) and (c) and subject to
compliance with the agreements referenced in Section 2.10, each of the
Limited Partners hereby (a) waives any rights it may have to (i) consent to,
(ii) request statutory appraisal rights with respect to or (iii) otherwise
approve, any merger, combination, sale of Partnership Assets, cross-
collateralized financing or refinancing or other similar transaction with
respect to the Partnership and (b) releases each Partner of the Whitehall
Group, the Berkshire Group and the Blackstone Group from any claims that the
Limited Partners might have had with respect to such rights had they not been
waived (it being understood and agreed that such waivers shall not constitute
a waiver of fiduciary duties owed to the Limited Partners).
3.10 Sales of Certain Properties by WHGP and Blackstone GP.
(a) In the event that the Administering General Partner does not
sell the ten (10) assets as set forth in Section 3.2(a)(19) within the time
period contemplated by the initial Business Plan the WHGP and Blackstone GP,
acting together as if such decision were a Majority Decision, may cause the
Partnership to sell (or to enter into an agreement to sell) such assets
during the immediately succeeding six (6) month period to parties that are
not Affiliated with either the Whitehall Group or the Blackstone Group and in
which neither the Whitehall Group nor the Blackstone Group have a continuing
interest, provided that such sales would satisfy the requirements of Section
3.2(a)(19) had the Administering General Partner effected such sales.
(b) In the event that the Administering General Partner does not
sell Properties in any calendar year for gross proceeds of at least
$50,000,000 pursuant to Section 3.2(a)(20), during the six months following
such calendar year, WHGP and Blackstone GP, acting together as if such
decision were a Majority Decision, may cause the Partnership to sell
Properties for an amount of gross proceeds equal to the lesser of (i)
$50,000,000 or (ii) the excess of $100,000,000 over the gross proceeds
received by the Partnership in respect of Property sales during the preceding
calendar year pursuant to Section 3.2(a)(20); provided that such Property
sales pursuant to this clause (b) would satisfy the requirements of Section
3.2(a)(20) had they been effected by the Administering General Partner.
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ARTICLE 4.
RIGHTS AND DUTIES OF PARTNERS
4.1 Duties and Obligations of the Administering General Partner.
In addition to such duties as are described elsewhere in this Agreement, the
Administering General Partner shall (i) prepare and deliver to WHGP and
Blackstone GP (or cause to be prepared and delivered to WHGP and Blackstone
GP) the Business Plan for each Budget Year, (ii) deliver to WHGP and
Blackstone GP promptly upon its receipt, copies of all (x) summonses and
complaints served on the Partnership, or the Administering General Partner
(as a general partner of the Partnership) and (y) notices of default on any
loan or other indebtedness of the Partnership or on any liens against any
Partnership Asset, (iii) monitor compliance by the Partnership with any loan
agreements, mortgages, purchase agreements and other material agreements to
which the Partnership is bound (and take appropriate steps to cure any non-
compliance to the extent permitted under this Agreement or otherwise promptly
notify WHGP and Blackstone GP of any noncompliance of which it has obtained
knowledge) and (iv) manage the Partnership and the Partnership Assets with
the same care as it would use if it owned the Partnership Assets
individually.
4.2 Other Activities of the Partners.
(a) So long as ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇ shall be the chief
executive officer of the Partnership, or BGP or another Affiliate of ▇▇▇▇▇▇▇
▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇ is the Administering General Partner (the "Restricted
Period"), Berkshire and BGP shall comply, and shall cause the Berkshire
Principals and their respective Affiliates (including, without limitation,
(i) any immediate family members of the Berkshire Principals or trusts
established for the benefit of such family members of the Berkshire
Principals and (ii) any public or private partnership or other entities
(other than BRI) in which any Berkshire Principals or any of their Affiliates
owns, directly or indirectly, a general partner interest or an economic
interest (as limited partner, member or stockholder) of 50% or more (the
"▇▇▇▇▇ Affiliated Entities")) (any of the foregoing, a "Covered Person") to
comply with the provisions of this Section 4.2. Berkshire and BGP
acknowledge that this covenant is a material inducement to Whitehall, WHGP,
Blackstone LP and Blackstone GP entering into this Agreement and that a
material breach of this covenant that is not cured after written notice and a
reasonable period to cure shall constitute a material breach of this
Agreement entitling such Partners to exercise all remedies available to them
at law or in equity. Berkshire and BGP represent that all of the ▇▇▇▇▇
Affiliated Entities are identified on Schedule 4.2(b).
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(b) During the Restricted Period, no Covered Person may,
directly or indirectly, develop a new multifamily property (other than
development that completes previously commenced construction or a multifamily
property that is a part of a portfolio of multifamily property acquired by
such Covered Person) located within a one mile radius of any Property held
by the Partnership.
(c) During the Restricted Period each Covered Person shall offer
the Partnership the opportunity to act as property manager for each
multifamily property owned by such Covered Person that is not managed by a
third party property manager unaffiliated with the Partnership or any Covered
Person for a management fee equal to the amount (or percentage) that is
market at such time.
(d) Subject to this Section 4.2, each Partner may engage or
invest in any other activity or venture or possess any interest therein
independently or with others. Subject to this Section 4.2, none of the
Partners, the Partnership or any other Person employed by, related to or in
any way affiliated with any Partner or the Partnership shall have any duty or
obligation to disclose or offer to the Partnership or the Partners, or obtain
for the benefit of the Partnership or the Partners, any other activity or
venture or interest therein including, without limitation, any multifamily
property. Except in the event of a breach of the limitations set forth in
subparagraph (a) or (b) above, none of the Partnership, the Partners, the
creditors of the Partnership or any other Person having any interest in the
Partnership shall have (A) any claim, right or cause of action against any
Partner or any other Person employed by, related to or in any way affiliated
with, any Partner by reason of any direct or indirect investment or other
participation, whether active or passive, in any such activity or venture or
interest therein, or (B) any right to any such activity or venture or
interest therein or the income or profits derived therefrom.
(e) During the Restricted Period Berkshire and BGP agree to give
written notice to the Partnership and each of the General Partners of the
acquisition by any Covered Person of a multifamily property promptly
following the acquisition by such Covered Person of any such property or any
direct or indirect interest therein (but in no event more than sixty (60)
days following such acquisition).
4.3 Indemnification.
(a) Notwithstanding anything in this Agreement to the contrary,
no Partner, or General Partner or tax matters partner shall be liable,
responsible or accountable in damages or otherwise to the Partnership, any
third party or to any other Partner for (i) any act performed within the
scope of the authority conferred on such Partner or General Partner by this
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Agreement except for the gross negligence or willful misconduct of such
Partner or General Partner in carrying out its obligations hereunder or any
act that is in breach of its fiduciary duties, (ii) such Partner's or General
Partner's failure or refusal to perform any act, except those required by the
terms of this Agreement, (iii) such Partner's or General Partner's
performance of, or failure to perform, any act on the reasonable reliance on
advice of legal counsel to the Partnership or (iv) the negligence, dishonesty
or bad faith of any agent, consultant or broker of the Partnership selected,
engaged or retained in good faith. In any threatened, pending or completed
action, suit or proceeding, each Partner, General Partner and tax matters
partner shall be fully protected and indemnified and held harmless by the
Partnership against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, proceedings, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, reasonable
attorneys' fees, costs of investigation, fines, judgments and amounts paid in
settlement, actually incurred by such Partner or General Partner in
connection with such action, suit or proceeding) by virtue of its status as
Partner, General Partner or tax matters partner or with respect to any action
or omission taken or suffered in good faith, other than liabilities and
losses resulting from the gross negligence or willful misconduct of such
Partner, General Partner or tax matters partner. The indemnification
provided by this Section 4.3 shall be recoverable only out of the assets of
the Partnership, and no Partner or General Partner shall have any personal
liability (or obligation to contribute capital to the Partnership) on account
thereof.
(b) Each General Partner shall defend and indemnify the
Partnership and the other Partners against, and shall hold it and them
harmless from, any damage, loss, liability, or expense, including reasonable
attorneys' fees, as and when incurred by the Partnership or the other
Partners in connection with or resulting from such indemnifying General
Partner's gross negligence, malfeasance, fraud, breach of fiduciary duty or
willful misconduct.
4.4 Compensation of Partners and their Affiliates; ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. as Financial Advisor.
(a) No General Partner nor any other Partner, nor any of their
respective Affiliates, shall be entitled to compensation from the Partnership
in connection with any matter that may be undertaken in connection with the
fulfillment of its duties and responsibilities hereunder, except as provided
in this Section 4.4, or as set forth in an approved Business Plan.
(b) For so long as Whitehall is a Partner of the Partnership, to
the extent the Partnership seeks to retain an investment bank for (i) an
initial public offering of the Partnership or (ii) any other sale, merger or
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financing transaction relating to the Partnership involving an amount in
excess of $100 million, the Partnership shall offer to ▇▇▇▇▇▇▇, Sachs & Co.
or one or more of its Affiliates the opportunity to act as (A) lead
investment banker with respect to an initial public offering or (B) co-lead
investment banker with respect to a transaction described in clause (ii)
above; provided, however, that in the event of a sale, merger or financing
other than an initial public offering, the Partnership may, at the election
of BGP or Blackstone GP engage a second investment banker of its choice to
act as co-lead financial advisor. In the event that the Partnership engages
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and/or one of its Affiliates in connection with such an
initial public offering or to arrange a purchase, sale, financing,
refinancing, securitization or similar transaction in respect of the
Partnership, or all or any portion of the Properties, ▇▇▇▇▇▇▇, Sachs & Co.
and/or such Affiliate shall be entitled to receive from the Partnership its
customary fees, commissions and indemnification for such services charged to
independent third parties. In addition, in the event of any sale, merger or
other disposition relating to the Partnership and involving an amount in
excess of $100 million, the Partnership shall pay to an Affiliate of
Blackstone LP an advisory fee, equal to 33% of the total fees paid to
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in connection with such engagement. Notwithstanding the
foregoing, the aggregate amount of fees so paid to ▇▇▇▇▇▇▇, Sachs & Co. or
its Affiliates and to such Affiliate of Blackstone LP shall not exceed in the
aggregate customary amounts that would be payable to one investment banker in
a transaction of that type.
(c) Each of BGP and Berkshire, on behalf of itself and each
member of the Berkshire Group and their respective Affiliates, hereby agrees
that for so long as any member of the Berkshire Group or any Affiliate
thereof shall control the owner of the properties listed on Schedule 4.4(c)
hereto (the "Managed Properties") and until the latter to occur of (i) the
end of the Restricted Period or (ii) the third anniversary of the Closing
Date, subject to its fiduciary duties as general partner of such owners,
Berkshire shall cause the owner of such Managed Properties not to terminate
or reduce the management fees payable under, or seek to terminate or reduce
the management fees payable under, any of the management or similar contracts
relating to such Managed Properties to which BRI, the Partnership or any of
their respective Affiliates is a party without the prior written consent of
Blackstone GP and WHGP; provided that the owner of such Managed Properties
may, after the third anniversary of the Closing Date, reduce the management
fee paid under such agreements to four percent (4%) of the gross revenues of
the properties subject to such management agreements. In addition, each of
BGP and Berkshire, on behalf of itself and each member of the Berkshire Group
and their respective Affiliates, hereby agrees that it will use its best
efforts, prior to the Closing Date (and following the Closing Date if the
amendments or waivers referred to in this Section 4.4(c) are not made or
obtained prior to the Closing Date) to cause The Berkshire Companies Limited
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Partnership to amend the Administrative Services Agreement, dated as of
February 28, 1997, as amended (as so amended, the "Administrative Services
Agreement"), between a subsidiary of BRI and The Berkshire Companies Limited
Partnership to provide that (i) the transactions contemplated by this
Agreement and the merger agreement between BRI and the Partnership shall not
constitute a "Change in Control" for purposes of the Administrative Services
Agreement, (ii) no termination or similar fee shall be payable by BRI, the
Partnership or their respective successors, assigns or Affiliates in
connection with any termination of such Administrative Services Agreement,
(iii) The Berkshire Companies Limited Partnership will not terminate or
reduce the fees payable under, or seek to terminate or reduce the fees
payable under, the Administrative Services Agreement without the prior
written consent of Blackstone GP and WHGP.
By its execution below solely for the purpose of this paragraph, The
Berkshire Companies Limited Partnership hereby agrees, and Berkshire hereby
agrees, on behalf of its Affiliates, including The Berkshire Companies
Limited Partnership, that, upon and after consummation of the transactions
contemplated by the BRI Merger Agreement and the BRI OP Merger Agreement, no
further BRI OP Units or other consideration shall be issuable to The
Berkshire Companies Limited Partnership or any other person under the terms
of the Advisory Contribution Agreement, dated as of February 26, 1996, by and
among BRI, BRI OP and The Berkshire Companies Limited Partnership.
(d) The Partnership will enter into an employment agreement with
▇▇▇▇▇▇▇ ▇▇▇▇▇ in substantially the form set forth on Exhibit 1 hereto (the
"DK Employment Agreement") effective as of the Closing Date.
4.5 Dealing with Partners.
(a) Subject to paragraph (b) below, the fact that a Partner, an
Affiliate of a Partner, or any officer, director, employee, partner,
consultant or agent of a Partner, is directly or indirectly interested in or
connected with any Person employed by the Partnership to render or perform a
service, or from or to whom the Partnership may buy or sell any property or
have other business dealings, shall not prohibit a General Partner from
employing such Person or from dealing with such Person on customary terms and
at competitive rates of compensation, and neither the Partnership nor any of
the other Partners shall have any right in or to any income or profits
derived therefrom by reason of this Agreement. The foregoing is not intended
to modify the restrictions on the authority of the Administering General
Partner under Sections 3.3 and 3.4.
(b) Except as provided in Section 4.4, the Partnership shall not
employ to render or perform a service, buy or sell any property from or to,
or have any other business dealings with, any Person who is a Partner in the
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Whitehall Group, the Blackstone Group or the Berkshire Group or any Affiliate
of any Partner in the Whitehall Group, the Blackstone Group or the Berkshire
Group without the prior approval of both of the disinterested General
Partners.
4.6 Use of Partnership Property. No Partner shall make use of
the funds or property of the Partnership, or assign its rights to specific
Partnership property, other than for the business or benefit of the
Partnership.
4.7 Designation of Tax Matters Partner. WHGP shall act as the
"tax matters partner" of the Partnership, as provided in the regulations
pursuant to Section 6231 of the Code. Each Partner hereby approves of such
designation and agrees to execute, certify, acknowledge, deliver, swear to,
file and record at the appropriate public offices such documents as may be
deemed necessary or appropriate to evidence such approval. The Partnership
and each General Partner further agrees to indemnify WHGP for any claims made
against it in its capacity as tax matters partner in accordance with Section
4.3. To the extent and in the manner provided by applicable Code sections
and regulations thereunder, the Tax Matters Partner (a) shall furnish the
name, address, profits interest and taxpayer identification number of each
Partner to the IRS and (b) shall inform each Partner of administrative or
judicial proceedings for the adjustment of Partnership items required to be
taken into account by a Partner for income tax purposes. The Tax Matters
Partner shall not enter into an agreement with the IRS or any other taxing
authority to extend the limitation period for assessment of any federal,
state or local income, franchise or unincorporated business tax of any
Partner or owner thereof nor settle with the IRS or any other taxing
authority to disallow deductions or increase income from the Partnership with
respect to any Partner, unless all of the General Partners shall have agreed
thereto. Each Partner hereby reserves all rights under applicable law,
including the right to retain independent counsel of its choice at its
expense (which counsel shall receive the full cooperation of the Tax Matters
Partner and shall be entitled to prior review of submissions by the
Partnership in respect of any dispute with relevant taxing authorities).
4.8 Guarantees.
(a) The General Partners acknowledge that certain of the
Partners (individually, an "Indemnitor Partner," and collectively, the
"Indemnitor Partners") would, absent a guarantee of Partnership indebtedness,
be required to recognize income or gain under the Code in respect of their
interests in the Partnership. For purposes of this Section 4.8, the amount
of Partnership liabilities that an Indemnitor Partner would need to
guarantee, at any time, so as to enable such Indemnitor Partner to defer the
recognition of income or gain that would otherwise result by virtue of the
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liability allocation rules under Code Section 752 and Section 465 and the
Treasury Regulations thereunder is referred to herein as the "Minimum Debt
Amount" and the aggregate of the Minimum Debt Amounts of all the Indemnitor
Partners on the date first written above is referred to herein as the
"Aggregate Minimum Debt Amount."
(b) On the Closing Date and otherwise upon written request from
an Indemnitor Partner, the General Partners on behalf of the Partnership
shall permit such Partner to guarantee (a "Guarantee") an amount of the
"least risky portion" of Partnership indebtedness then available (it being
understood and agreed that, subject to the following sentence, this Section
4.8 shall not impose any obligations on the Partnership with respect to the
incurrence or maintenance of any amount of indebtedness) equal to such
Indemnitor Partner's then Minimum Debt Amount, pursuant to a guarantee
substantially in the form attached hereto as Exhibit 2 to the extent not
prohibited by the applicable lenders. The General Partners agree that until
the earliest of (i) the date that is sixty-six months after the Closing Date,
or (ii) the sale of all or substantially all of the Partnership's assets
(other than any transaction described in Section 9.13(a)) or (iii) the sale
of the Partnership's assets pursuant to a plan of liquidation of the
Partnership the Partnership shall maintain at least $110,000,000 of
Partnership indebtedness (including by reason of any guarantees made by the
Partnership of indebtedness of partnerships in which the Partnership is a
partner directly or indirectly, the form of such guarantees to be provided to
BRI OP prior to the closing of the BRI OP Merger Agreement and subject to the
reasonable approval of BRI OP). In the event that the minimum debt provision
of the previous sentence ceases to apply, the Partnership shall use
reasonable efforts to continue to maintain such minimum debt; provided that
such reasonable efforts are consistent with the Partnership's Approved
Business Plan and that no Indemnitor Partner shall have any rights to assert
that the Partnership has not used such reasonable efforts to so maintain such
indebtedness. In the event that the sum of the Minimum Debt Amounts of the
Indemnitor Partners other than Berkshire and BGP who request a Guarantee of
indebtedness exceeds the Aggregate Minimum Debt Amount of such Partners or
the amount of available debt, each such Indemnitor Partner shall be entitled
to a Guarantee of indebtedness pro rata based upon the respective Minimum
Debt Amounts of such Indemnitor Partners then requesting Guarantees as of the
date first written above. The General Partners on behalf of the Partnership
shall use commercially reasonable efforts to cause any lender of Partnership
indebtedness that is the subject of the Guarantee to acknowledge and accept
such Guarantee, and such Indemnitor Partner's obligation thereunder and to
cause the Partnership to acknowledge and accept the indemnification
obligation of such Indemnitor Partner contained in any such Guarantee.
(c) Nothing in this Section 4.8 shall prohibit or preclude the
General Partners, at any time and in their sole discretion (but subject to
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any other provision of this Agreement), from refinancing, paying down or
paying off any Partnership indebtedness or permitting new Partners to
guarantee excess amounts of debt, or indemnify the General Partners for, any
portion of the Partnership indebtedness; provided, however, with respect to
any Partnership indebtedness that is subject to a Guarantee and which is to
be refinanced, paid down or paid off, the Administering General Partner shall
notify, in writing (the "Notice"), each such Indemnitor Partner of such
refinancing, paydown or payoff, and such Indemnitor Partner shall have
fifteen (15) days from the date of receipt of the Notice to execute a
substitute Guarantee (a "Substitute Guarantee") for an amount of the "least
risky portion" of Partnership indebtedness then in existence determined in
the manner described in subsection (b) above pursuant to a guarantee having
substantially similar terms as the Guarantee that is being substituted. If,
within fifteen (15) days of the Indemnitor Partner's receipt of the Notice,
the Indemnitor Partner notifies the Administering General Partner, in
writing, of the Indemnitor Partner's desire to execute a Substitute Guarantee
as described in the Notice, then the Administering General Partner shall,
subject to the limitations set forth herein: (i) permit such Indemnitor
Partner to execute such Substitute Guarantee; (ii) use commercially
reasonable efforts to cause the lender of the Partnership indebtedness that
is guaranteed by the Substitute Guarantee to acknowledge and accept such
Substitute Guarantee, and such Indemnitor Partner's obligations thereunder,
and (iii) cause the Partnership to acknowledge and accept the indemnification
obligation of such Indemnitor Partner contained in such Guarantee.
(d) Notwithstanding anything herein to the contrary, provided
that the General Partners and the Partnership satisfy their obligations under
this Section 4.8, at no time and under no circumstances shall an Indemnitor
Partner have any recourse against the Partnership, the General Partners or
any other Person, and none of the Partnership, the General Partners nor any
other Person shall have any liability under this Section 4.8 or otherwise in
the event that a Guarantee or Substitute Guarantee (i) is not acknowledged or
accepted by any lender and/or (ii) does not result in the deferral of taxes.
ARTICLE 5.
BOOKS AND RECORDS; ANNUAL REPORTS
5.1 Books of Account. At all times during the continuance of
the Partnership, the Administering General Partner shall keep or cause to be
kept true and complete books of account in which shall be entered fully and
accurately each transaction of the Partnership. Such annual books shall be
kept on the basis of the Fiscal Year in accordance with the accrual method of
accounting, and shall reflect all Partnership transactions in accordance with
generally accepted accounting principles. Any Investor Group Partner shall
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have the right to inspect, copy and audit the books and records of the
Partnership at reasonable times and upon reasonable notice.
5.2 Availability of Books of Account. All of the books of
account referred to in Section 5.1, together with an executed copy of this
Agreement and the Certificate, and any amendments thereto, shall at all times
be maintained at the principal office of the Partnership or such other
location as the Administering General Partner may propose and WHGP and
Blackstone GP shall approve (which other location, upon such approval, shall
be communicated to all of the Partners), and upon reasonable notice to the
Administering General Partner, shall be open to the inspection and
examination of the General Partners or their representatives during
reasonable business hours.
5.3 Annual Reports and Statements; Annual Budgets and Business
Plans.
(a) For each Fiscal Year, the Administering General Partner
shall send to each Person who was a Partner at any time during such Fiscal
Year, by no later than February 15 of the next Fiscal Year, an annual report
of the Partnership including an annual balance sheet, profit and loss
statement and a statement of changes in financial position, and a statement
showing distributions to the Partners all as prepared in accordance with
generally accepted accounting principles consistently applied and audited by
the Partnership's independent public accountants, which initially shall be
PricewaterhouseCoopers, and a statement showing allocations to the Partners
of taxable income, gains, losses, deductions and credits, as prepared by such
accountants (it being acknowledged that the Administering General Partner's
obligations hereunder are not to guaranty timely delivery of audits, tax
returns or similar third-party work product, and the failure of the auditor
or another third party to make such delivery shall not itself constitute a
default hereunder on the part of the Administering General Partner). For
each quarter, the Administering General Partner shall send to each Person who
was a Partner at any time during such quarter, within forty-five (45) days
after the end of such quarter, quarterly financial statements of the
Partnership including a quarterly balance sheet, profit and loss statement
and a statement of changes in financial position, and a statement showing
distributions to the Partners all as prepared in accordance with generally
accepted accounting principles consistently applied. In addition, the
Administering General Partner shall send (i) to each General Partner within
twenty-five (25) days after the end of each month of each Fiscal Year a
monthly report setting forth the financial and operating information on an
accrual basis and in form and substance approved by the General Partners
(acting reasonably) after the date hereof, (ii) to each Partner by no later
than February 15 of each year, completed IRS Schedules K-1 prepared by the
Partnership's accountants in accordance with Section 3.3(ii), and (iii) to
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each Partner such other information concerning the Partnership and reasonably
requested by any Partner as is necessary for the preparation of each
Partner's federal, state and local income or other tax returns. Each General
Partner agrees that the Partnership will use and comply with the requirements
and deadlines of the Whitehall REPSYS management reporting system (to the
extent that compliance with such reporting system does not cause the
Partnership to incur additional material costs). The Administering General
Partner shall prepare and deliver to the lender under any loan documents to
which the Partnership is a party all reports and statements required by such
lender.
(b) The Administering General Partner shall prepare or cause to
be prepared a proposed Annual Budget and related Business Plan for the
Partnership as a whole. The initial Annual Budget and Business Plan, which
have been approved by all of the General Partners, are attached hereto as
Schedule 5.3(b). Not later than November 15 of the prior Budget Year with
respect to each subsequent Budget Year, the Administering General Partner
shall prepare for the Partnership for the Budget Year in question, a proposed
Annual Budget and a proposed Business Plan for the Partnership as a whole.
Not later than thirty (30) days after receipt by WHGP and Blackstone GP of a
proposed Annual Budget or Business Plan (or such longer period as WHGP or
Blackstone GP may reasonably request on notice to the Administering General
Partner), WHGP or Blackstone GP may deliver a notice (an "Objection Notice")
to the Administering General Partner stating that WHGP or Blackstone GP
objects to any information contained in or omitted from such proposed Annual
Budget or Business Plan and setting forth the nature of such objections.
With respect to all or any portion of such proposed Annual Budget or Business
Plan as to which no Objection Notice is delivered prior to such thirtieth
(30th) day (or such longer period as WHGP or Blackstone GP may have
reasonably requested), the proposed Annual Budget or Business Plan or such
portion thereof will be deemed to have been accepted and consented to by WHGP
and Blackstone GP. If the Objection Notice is timely delivered, the
Administering General Partner shall modify the proposed Annual Budget or
Business Plan, taking into account WHGP's and/or Blackstone GP's, as
applicable, objections, shall resubmit the same to WHGP and Blackstone GP for
WHGP's and Blackstone GP's approval within 15 days thereafter, and WHGP and
Blackstone GP may deliver further Objection Notices (if any) within 15 days
thereafter (in which event, the re-submission and review process described
above in this sentence shall continue until the Annual Budget or Business
Plan in question is accepted and consented to by WHGP and/or Blackstone GP or
deemed to be so accepted and consented to). As to any portion of a proposed
Annual Budget or Business Plan that is the subject of an Objection Notice,
the Annual Budget or Business Plan (as the case may be) for the immediately
preceding year shall be deemed to control pending resolution by WHGP and/or
Blackstone GP of the disputed items (as adjusted in accordance with Section
3.3(2) above). Notwithstanding the foregoing, approval of the Annual Budget
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and the Business Plan shall at all times be a Majority Decision and no
General Partner shall have the right to submit an Objection Notice after the
approval of an Annual Budget or Business Plan by the General Partners in
accordance with Section 3.3.
5.4 Accounting and Other Expenses. All out-of-pocket expenses
payable to Persons, including Affiliates of the Administering General Partner
that are retained in accordance with the terms of this Agreement, in
connection with the keeping of the books and records of the Partnership and
the preparation of audited or unaudited financial statements and federal and
local tax and information returns required to implement the provisions of
this Agreement or required by any governmental authority with jurisdiction
over the Partnership or otherwise required to be paid in connection with the
management or operation of the Partnership shall be borne by the Partnership
as an ordinary expense of its business. The Partnership shall reimburse the
Administering General Partner's consultants for the preparation of K-1's, and
federal and local tax and information returns.
5.5 Bank Account. The Administering General Partner shall, as
soon as reasonably practicable, establish and maintain segregated bank
accounts in the Partnership's name and for the Partnership's business, which
accounts shall, to the extent reasonably practicable, be interest-bearing.
Withdrawals or checks, other than withdrawals or checks made or issued in
respect of required mortgage payments, in excess of $500,000 (or, upon notice
to the Administering General Partner, such lesser or greater amount as WHGP
and Blackstone GP may from time to time determine) shall require the
signature of an authorized representative of WHGP or Blackstone GP.
Withdrawals or checks not in excess of $500,000 (or upon notice to the
Administering General Partner, such lesser or greater amount as WHGP and
Blackstone GP may from time to time determine) and withdrawals and checks
made or issued in respect of required mortgage payments may be made by an
authorized representative of the Administering General Partner to the extent
that the Administering General Partner is permitted hereunder to incur the
expense or other liability paid or discharged without the prior consent or
approval of the other General Partners.
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ARTICLE 6.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
6.1 Initial Capital Contributions of the Partners.
(a) Each Class C Partner shall, on or prior to the Closing Date,
make initial cash Capital Contributions, to the Partnership in the aggregate
amounts set forth opposite such Class C Partner's name on Schedule 6.1(a)
hereto and the Partnership shall, in consideration of such Capital
Contribution, issue to each such Class C Partner the number of Class C
Preferred Units set forth opposite such Class C Partner's name on Schedule
6.1 hereto. Each Class C Partner shall be deemed to have made a Capital
Contribution to the Partnership in an amount equal to the amount of cash so
contributed to the Partnership.
(b) As contemplated by Section 2.7(c), each Class D Partner
shall, on or prior to the Closing Date, make an initial Capital Contribution
to the Partnership of 512,203 shares of common stock of BRI and 4,904,066 BRI
OP Units held by Berkshire, BGP and their respective Affiliates on such date
free and clear of any and all liens and encumbrances, such Capital
Contributions having an agreed value equal to the product of (i) the number
of shares plus the number of such BRI Units so contributed to the Partnership
and (ii) $12.25. In consideration for such Capital Contributions, the
Partnership shall issue to Berkshire and BGP a number of Class D Units equal
to the sum of the number of shares of common stock of BRI plus the number of
BRI OP Units so contributed to the Partnership.
(c) Each holder of BRI OP Units electing to receive Class A
Preferred Units in the merger of BRI OP and a subsidiary partnership of the
Partnership (the "Partnership Merger") shall be considered to have made, as a
result of the Partnership Merger, an initial Capital Contribution to the
Partnership on the Closing Date of all BRI OP Units held by such holder on
such date (it being understood and agreed that all such BRI OP Units shall,
immediately prior to the consummation of such Partnership Merger, be free and
clear of any and all liens and encumbrances). In consideration for such
Capital Contributions, the Partnership shall issue to such holder of BRI OP
Units a number of Class A Preferred Units equal to the number of BRI OP Units
so contributed to the Partnership. Each such holder shall be deemed to have
made a Capital Contribution to the Partnership in an amount equal to the
product of (i) the number of BRI OP Units so contributed to the Partnership
by such holder of BRI OP Units and (ii) $12.25.
(d) Each holder of BRI OP Units electing to receive Class B
Units in the Partnership Merger shall be considered to have made, as a result
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of the Partnership Merger, an initial Capital Contribution to the Partnership
on the Closing Date of all BRI OP Units held by such holder on such date (it
being understood and agreed that all such BRI OP Units shall, immediately
prior to the consummation of such Partnership Merger, be free and clear of
any and all liens and encumbrances). In consideration for such Capital
Contributions, the Partnership shall issue to such holder of BRI OP Units a
number of Class B Units equal to the number of BRI OP Units so contributed to
the Partnership. Each such holder shall be deemed to have made a Capital
Contribution to the Partnership in an amount equal to the product of (i) the
number of BRI OP Units so contributed to the Partnership by such holder of
BRI OP Units and (ii) $12.25.
(e) Schedule 6.1 hereto, as such schedule may be amended from
time to time, sets forth the respective number and type of Units held by,
and the Class A Preferred Percentage Interest, Class B Percentage Interest,
Class C Percentage Interest, Class D Percentage Interest and Class E
Percentage Interest of, each of the Partners.
(f) Intentionally omitted.
(g) The General Partners may, acting by unanimous decision
pursuant to Section 3.4, cause the Partnership to admit officers, employees
or consultants of the Partnership as Class E Limited Partners and in
connection therewith, in their sole discretion, apportion Class E Percentage
Interests to such Class E Limited Partners. Each such officer, employee or
consultant shall become a Class E Limited Partner only when (i) such person
executes a written acceptance of all of the terms and conditions of this
Agreement and (ii) the Administering General Partner has entered such person
as a Partner on the books and records of the Partnership. The General
Partners may, acting as if such decision were a Unanimous Decision, remove
any Class E Limited Partner for Cause or Company Cause (as determined by the
General Partners), and in the event of such removal such Class E Limited
Partner shall forfeit his Class E Limited Partnership Interest. In addition,
the Partnership may, upon the approval of all of the General Partners as if
such decision were a Unanimous Decision, enter into agreements with one or
more Class E Limited Partners providing for, among other things, the
repurchase or forfeiture of Class E Limited Partnership Interests in
accordance with the terms of such agreements.
(h) On the date hereof and prior to the Closing Date, the Class
C Partners may make Capital Contributions to fund the Partnership's
obligations (or make payments in respect of obligations) that arise prior to
the Closing Date, including, without limitation, the Partnership's
obligations to provide an escrowed amount under the terms of the BRI Merger
Agreement or to purchase interest rate hedge agreements). All such Capital
Contributions or payments made by such Class C Partners shall be deemed to be
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made pursuant to Section 6.1(a). Any amounts paid by Berkshire or BGP to
fund such obligations shall be treated as an advance to the Partnership and
shall be repaid by the Partnership contemporaneously with the closing under
the BRI Merger Agreement (together with a 12% return thereon). This clause
(h) shall not apply with respect to the payment of fees and expenses that are
to be reimbursed pursuant to Section 2.9(a)
6.2 Additional Contributions.
(a) If two of the General Partners, acting together as if such
decision were a Majority Decision, determine that funds are necessary with
respect to required debt service payments, the payment of taxes required to
be paid in respect of the Properties or the operations of the Partnership,
operating deficits, insurance premiums and similar matters, or by an
emergency that threatens injury to persons or damage to property, (a
"Necessary Expenditure"), such General Partners shall have the right to make
a capital call (a "Mandatory Capital Call") with respect to the Investor
Group Partners in an amount as reasonably determined by such General Partners
making such Mandatory Capital Call in order to remedy such matter and shall
as promptly as reasonably possible deliver a notice to each of the other
Investor Group Partners (by telephone, telecopier or such other means as is
necessary in order to remedy such emergency potential injury or damage)
describing the amount and nature of such Necessary Expenditure and making a
Mandatory Capital Call for such amount. Notwithstanding anything contained
herein to the contrary, in no event may the General Partners make Mandatory
Capital Calls in excess of an aggregate amount equal to the amount obtained
by dividing (a) $10,000,000 by (b) the aggregate Partnership Percentage
Interests of Berkshire and BGP on the date hereof (the "Mandatory Capital
Call Limit") (it being understood and agreed that any Additional Capital Call
or portion thereof in respect of Necessary Expenditures in an amount which
when aggregated with the amounts of all previous Mandatory Capital Calls
exceeds the Mandatory Capital Call Limit shall be subject to Section 6.2(c)).
Each Investor Group Partner shall be required to contribute to the capital of
the Partnership an amount of cash equal to such Investor Group Partner's pro
rata portion (based on such Investor Group Partner's Partnership Percentage
Interest as compared to the Partnership Percentage Interests of all of the
other Investor Group Partners) which contribution shall be made as promptly
as reasonably determined by the General Partners making such Mandatory
Capital Call (but in no event sooner than twenty (20) business days following
the delivery of the notice of a Mandatory Capital Call) in order to remedy
such matter requirement, emergency, potential injury or damage. The
Partnership shall use reasonable efforts to minimize the costs and
expenditures to the Partnership in connection with such requirement,
emergency, potential injury or matter.
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(b) Two of the General Partners, acting together as if such
decision were a Majority Decision, may, during the period ending on the date
that is the later of (i) the first anniversary following the Closing Date and
(ii) three months after the maturity of the Bridge Loan, require the funding
of one or more Additional Capital Calls in an aggregate amount not to exceed
$30,000,000 (a "Financing Capital Call"). In the event such General Partners
determine to make such a Financing Capital Call, such General Partners shall
as promptly as reasonably possible deliver a notice to each of the other
Investor Group Partners (in the manner provided in Section 12.2) describing
the amount and nature of such Financing Capital Call. Each of Berkshire,
Whitehall and Blackstone LP shall be required to contribute to the capital of
the Partnership an amount in cash equal to one-third (1/3) of the amount of
such Financing Capital Call, which contribution shall be made as promptly as
possible, but in no event later than twenty (20) business days following the
delivery of notice of such Financing Capital Call.
(c) Any Additional Capital Calls not described in clause (a) or
clause (b) of this Section 6.2 (including, without limitation, an Additional
Capital Call on account of a Necessary Expenditure in excess of the Mandatory
Capital Call Limit) shall be Unanimous Decisions subject to the approval
requirements of Section 3.4. In the event that such an Additional Capital
Call is so approved, each of the Investor Group Partners shall be required to
contribute to the capital of the Partnership an amount in cash equal to such
Partner's pro rata portion (based on such Investor Group Partner's
Partnership Percentage Interest as compared to the Partnership Percentage
Interests of all of the other Investor Group Partners) which contribution
shall be made as promptly as possible, but in no event later than thirty (30)
days, after such approval.
(d) Unless otherwise determined by the unanimous vote of the
General Partners, the Partnership shall issue Class C Preferred Units as
consideration for Additional Contributions and such Class C Preferred Units
shall be issued by the Partnership at a price of $12.25 per Class C
Preferred Unit.
(e) The amount of any U.S. federal and state tax liability of
the direct or indirect owners of the Berkshire Group (after giving effect to
any losses allocated to the Berkshire Group under Section 7.2 hereof) arising
from gain recognized by the Partnership in connection with the merger of BRI
with the Partnership (or a Subsidiary thereof) (as a result of the shares of
common stock in Berkshire Realty Company, Inc. contributed to the Partnership
by the Berkshire Group) will be deemed to constitute an Additional
Contribution made pro rata by the Berkshire Group on the date such tax
liability is paid, up to a maximum of $1.5 million, and the Berkshire Group
shall receive Class D Units in exchange for such deemed Additional
Contributions valued at $12.25 per class D Unit.
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6.3 Dilution for Failure to Fund Capital Calls.
(a) If any Partner shall fail to make a capital contribution
required pursuant to an Additional Capital Call in the amount and within the
time periods specified therein (such Partner is hereinafter referred to as a
"Non-Contributing Partner"), the Administering General Partner (or, if the
Administering General Partner is the Non-Contributing Partner, WHGP or
Blackstone GP) shall give notice of such failure to all other Investor Group
Partners and the amount of the capital contribution not funded by the Non-
Contributing Partner (such amount is hereinafter referred to as the "Failed
Contribution") and, within twenty (20) business days after receiving notice
of such failure, any Investor Group Partner or Investor Group Partners that
is or are not in default with respect to the Failed Contribution or any
contribution required to be made in connection with such Additional Capital
Call may fund all or part of such Failed Contribution (each such funding
Partner is hereinafter referred to as a "Contributing Partner"). If more
than one Partner desires to be a Contributing Partner, each such Partner
shall have the right to fund a portion of such Failed Contribution (the
"Funded Portion") pro rata in proportion to the relative Partnership
Percentage Interests of such Contributing Partners. At any time after
funding all or part of a Failed Contribution, the Partnership Percentage
Interest of each such Contributing Partner(s) shall be increased to the
percentage (rounded up to the nearest one hundredth of one percent) equal to
the sum of (i) such Contributing Partner's Partnership Percentage Interest
immediately prior to giving effect to the Capital Contributions pursuant to
such Additional Capital Call plus (ii) the percentage equal to the quotient
of (x) the sum of (A) the amount funded by such Contributing Partner pursuant
to such Additional Capital Call (other than the Funded Portion) plus (B) the
product of 2.0 (200%) times the Funded Portion funded by such Contributing
Partner divided by (y) the sum of all Partners' (other than the Class A
Preferred Limited Partners) Capital Contributions after giving effect to the
Capital Contributions funded pursuant to such Additional Capital Call
(including the Funded Portions). The Partnership Percentage Interest of the
Non-Contributing Partner shall be decreased by the aggregate amount of the
increase in the Partnership Percentage Interests of all Contributing Partners
as a result of the failure of the Non-Contributing Partner to fund the
capital calls in question.
Notwithstanding the foregoing, the words "1.0 (100%)" shall replace
the words "2.0 (200%)" for determining the applicable dilution for a Non-
Contributing Partner in respect of any Additional Capital Call made pursuant
to clause (a) of Section 6.2, to the extent, but only to the extent, that
Berkshire's share of such Additional Capital Contribution is in excess of
$10,000,000.
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(b) In the event that the Partnership Percentage Interest of a
Non-Contributing Partner or of a Contributing Partner is adjusted pursuant to
the foregoing provisions of this Section 6.3, the Class C Percentage Interest
or other Percentage Interest relating to a class of Partnership Units of such
Contributing Partner or Non-Contributing Partner and the number of
Partnership Units of each class held by such Non-Contributing Partner shall
likewise be adjusted, using the same dilution factors as are used in
determining the adjustment to the Partnership Percentage Interests (it being
understood and agreed that such adjustments will result in an adjustment to
the Partnership Percentage Interest of the Non-Contributing and Contributing
Partner and to the Class C Percentage Interest (or such other applicable
Percentage Interest) and to the number of Partnership Units of each class
held by the Contributing Partner and the Non-Contributing Partner).
(c) In the event one or more of the Investor Group Partners fund
an Additional Capital Call, the Limited Partners other than the Investor
Group Partners shall not be required or entitled to fund any portion of such
Additional Capital Call and the Partnership Percentage Interest of such
Limited Partners (and of the Investor Group Partners) shall be adjusted as
provided in clause (a) of this Section 6.3; provided, however, that the words
"1.0 (100%)" shall replace the words "2.0 (200%)" for purposes of all such
calculations.
(d) Notwithstanding anything contained herein to the contrary,
the Class A Preferred Limited Partners, Class B Limited Partners and Class E
Limited Partners shall have no obligation to contribute any additional
capital to the Partnership and the Partnership Percentage Interest of the
Class A Preferred Limited Partners , Class B Limited Partners and Class E
Limited Partners (which shall at all times be zero (0%), shall not be diluted
by operation of this Section 6.3.
6.4 Capital of the Partnership. Except as otherwise expressly
provided herein, no Partner shall be entitled to withdraw or receive any
interest or other return on, or return of, all or any part of its Capital
Contribution, or to receive any Partnership property (other than cash) in
return for its Capital Contribution. No Partner shall be entitled to make a
Capital Contribution to the Partnership except as expressly authorized by
this Agreement or to make any loans to the Partnership except with the
unanimous consent of the General Partners.
6.5 Liability of General Partners. All debts and obligations of
the Partnership shall be paid or discharged first with the assets of the
Partnership before the General Partners shall be obligated to pay or
discharge such debts or obligations (and then such obligation shall be only
to the extent required by applicable law). The General Partners shall not be
liable for the return of the Capital Contribution of any Limited Partner.
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6.6 Limited Liability of Limited Partners. Except as provided
in Section 4.8, no Limited Partner shall be bound by, or be personally liable
for, the expenses, liabilities, indebtedness or obligations of the
Partnership or of the General Partners. The liability of each Limited
Partner shall be limited solely to the amount of its Capital Contribution;
provided, however, that after a Limited Partner has received a distribution
from the Partnership, such Limited Partner may be liable to the Partnership
for the amount of the distribution but only to the extent required by the
Act. Without affecting the rights and remedies provided under Sections 6.2
through 6.5 hereof, the Limited Partners shall not be required to contribute
any amounts to the Partnership other than their Initial Capital
Contributions. Nothing contained in this Agreement shall be deemed to confer
on any Limited Partner the right to control the business of the Partnership
for purposes of the Act.
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
7.1 Capital Accounts.
(a) The Partnership shall maintain a Capital Account for each
Partner in accordance with federal income tax accounting principles. Each
Partner's Capital Account as of the Effective Date will be equal to its
original Capital Contribution pursuant to Section 6.1. In the event any
General Partner or any controlling person of such General Partner files a
bankruptcy or similar proceeding with respect to the Partnership without
first obtaining the prior written approval of at least one other General
Partner, the Capital Account, the Partnership Percentage Interest, Class C
Percentage Interest and/or Class D Percentage Interest of such General
Partner and of whichever of the Berkshire Group, the Whitehall Group or The
Blackstone Group of which it is a member shall be reduced to zero (0).
(b) The Capital Account of each Partner shall be increased by
(i) the amount of any cash and the agreed Book Value of any property (net of
liabilities encumbering such property) as of the date of contribution
subsequently contributed as a Capital Contribution to the capital of the
Partnership by such Partner and (ii) the amount of any Profits allocated to
such Partner. The Capital Account of each Partner shall be decreased by (i)
the amount of any Losses allocated to such Partner and (ii) the amount of
distributions (including the fair market value of any property distributions
(net of liabilities encumbering such Properties)) to such Partner. In all
respects, the Partner's Capital Accounts shall be determined in accordance
with the detailed capital accounting rules set forth in Treasury Regulations
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Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of
certain events as provided in Treasury Regulations Section 1.704-
1(b)(2)(iv)(f).
(c) A transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account)
attributable to the transferred Interest.
7.2 Profits and Losses.
(a) The profits and losses of the Partnership ("Profits" and
"Losses") shall be the net income or net loss (including capital gains and
losses), respectively, of the Partnership determined for each Fiscal Year in
accordance with the accounting method followed for federal income tax
purposes except that (i) in computing Profits and Losses, all depreciation
and cost recovery deductions shall be deemed equal to Depreciation, (ii) in
computing Profits and Losses, gains or losses shall be determined by
reference to Book Value rather than tax basis, (iii) any tax-exempt income
received by the Partnership shall be included as an item of gross income;
(iv) the amount of any adjustments to the Book Values of any assets of the
Partnership pursuant to Code Section 743 shall not be taken into account
except to the extent provided in the penultimate sentence of Treasury
Regulation Section 1.704-1(b)(2)(iv)(m)(2), (v) any expenditure of the
Partnership described in Code Section 705(a)(2)(B) (including any
expenditures treated as being described in Section 705(a)(2)(B) pursuant to
Treasury Regulations under Code Section 704(b)) shall be treated as a
deductible expense, (vi) the amount of items of income, gain, loss or
deduction specially allocated to any Partners pursuant to Section 7.2(f)
shall not be included in the computation and (vii) the amount of any
increases or decreases in the Book Value of any asset upon an adjustment to
the Book Values of the assets pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(f) shall be included in the computation as items of gain and loss
respectively.
(b) Whenever a proportionate part of the Profits or Losses is
allocated to a Partner, every item of income, gain, loss, deduction or credit
entering into the computation of such Profits or Losses or arising from the
transactions with respect to which such Profits or Losses were realized shall
be credited or charged, as the case may be, to such Partner in the same
proportion; provided, however, that "recapture income", if any, shall be
allocated to the Partners who were allocated the corresponding depreciation
deductions.
(c) If any Partner transfers all or any part of its Interest
during any Fiscal Year or its Interest is increased or decreased, Profits and
Losses attributable to such Interest for such Fiscal Year shall be
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apportioned between the transferor and transferee or computed as to such
Partners, as the case may be, ratably on a daily basis, provided in all
events that any apportionment described above shall be permissible under the
Code and applicable regulations thereunder.
(d) For all purposes, including federal, state and local income
tax purposes, Profits shall be allocated each year among all the Partners as
follows:
(i) First, pro rata among all the Partners in proportion
to the amounts allocated and previously allocated pursuant to Section
7.2(e)(viii) hereof until the amount allocated and previously
allocated pursuant to this Section 7.2(d)(i) equals the amount
allocated and previously allocated pursuant to Section 7.2(e)(viii)
hereof;
(ii) Second, to the Partners so that the cumulative
amounts allocated to each of them pursuant to this Section 7.2(d)(ii)
equals the cumulative amount distributed to each of them for the
current period and all prior periods pursuant to Section 8.1(b)(1)
hereof (including amounts distributed on a sale or other disposition
of all or substantially all of the Partnership Assets pursuant to the
accrued and unpaid distribution clause of Section 10.3(5)).
(iii) Third, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section
8.1(b)(2) hereof (excluding amounts attributable to Capital
Contributions but including amounts (x) that would be distributable
pursuant to Section 8.1(b)(2) hereof as a result of the application
of Section 10.3(6) upon a sale or other disposition of all or
substantially all of the Partnership Assets, or (y) that would have
been distributable if the Partnership had received and distributed
the full amount of cash attributable to the income being allocated)
until the amount allocated and previously allocated pursuant to this
Section 7.2(d)(iii) (and not reversed by Section 7.2(e)(vii) hereof)
equals such distributed or distributable amounts;
(iv) Fourth, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section
8.1(b)(3) hereof (excluding amounts attributable to Capital
Contributions but including amounts (x) that would be distributable
pursuant to Section 8.1(b)(3) as a result of the application of
Section 10.3(6) upon a sale or other disposition of all or
substantially all of the Partnership Assets, or (y) that would have
been distributable if the Partnership had received and distributed
the full amount of cash attributable to the income being allocated)
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until the amount allocated and previously allocated pursuant to this
Section 7.2(d)(iv) (and not reversed by Section 7.2(e)(vi) hereof)
equals such distributed or distributable amounts;
(v) Fifth, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section
8.1(b)(4) hereof (excluding amounts attributable to Capital
Contributions but including amounts (x) that would have been
distributable pursuant to Section 8.1(b)(4) as a result of the
application of Section 10.3(6) upon a sale or other disposition of
all or substantially all of the Partnership Assets, or (y) that would
have been distributable if the Partnership had received and
distributed the full amount of cash attributable to the income being
allocated) until the amount allocated and previously allocated
pursuant to this Section 7.2(d)(v) (and not reversed by Section
7.2(e)(v) hereof) equals such distributed or distributable amounts;
(vi) Sixth, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section
8.1(b)(5) hereof (excluding amounts attributable to Capital
Contributions but including amounts (x) that would be distributable
pursuant to Section 8.1(b)(5) as a result of the application of
Section 10.3(6) upon a sale or other disposition of all or
substantially all of the Partnership Assets, or (y) that would have
been distributable if the Partnership had received and distributed
the full amount of cash attributable to the income being allocated)
until the amount allocated and previously allocated pursuant to this
Section 7.2(d)(vi) (and not reversed by Section 7.2(e)(iv) hereof)
equals such distributed or distributable amounts;
(vii) Seventh, to the Partners in proportion to the
amounts distributable and previously distributed pursuant to Section
8.1(b)(6) hereof (including amounts (x) that would be distributable
pursuant to Section 8.1(b)(6) as a result of the application of
Section 10.3(6) upon a sale or other disposition of all or
substantially all of the Partnership Assets, or (y) that would have
been distributable if the Partnership had received and distributed
the full amount of cash attributable to the income being allocated)
until the amount allocated and previously allocated pursuant to this
Section 7.2(d)(vii) (and not reversed by Section 7.2(e)(iii) hereof)
equals such distributed or distributable amounts;
(viii) Thereafter, (A) with respect to periods during which
BGP is the Administering General Partner, (I) seventeen and one-half
percent (17 1/2%) pro rata to the Class D Partners, (II) seven and
one-half percent (7 1/2%) to the Class E Limited Partners (in
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proportion to their respective Class E Percentage Interests) and
(III) seventy-five percent (75%) to the Partners other than the Class
A Preferred Limited Partners and Class E Limited Partners (pro rata
in proportion to their Partnership Percentage Interests, or (B) with
respect to periods during which BGP is not the Administering General
Partner, (I) seventeen and one-half percent (17 1/2%) to the Class E
Limited Partners and (II) the remainder to the Partners other than
the Class A Preferred Limited Partners and Class E Limited Partners
(pro rata in proportion to their Partnership Percentage Interests).
(e) For all purposes, including federal, state and local income
tax purposes, Losses shall be allocated each year among all the Partners as
follows:
(i) First, pro rata to the Class D Partners in
proportion to and to the extent of their positive Capital Account
balances;
(ii) Second, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(viii) hereof over (B) the
respective amounts previously allocated to them pursuant to this
Section 7.2(e)(ii);
(iii) Third, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(vii) hereof over (B) the
respective amounts previously allocated to them pursuant to this
Section 7.2(e)(iii);
(iv) Fourth, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(vi) hereof over (B) the respective
amounts previously allocated to them pursuant to this Section
7.2(e)(iv);
(v) Fifth, to the Partners in proportion and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(v) hereof over (B) the respective
amounts previously allocated to them pursuant to this Section
7.2(e)(v);
(vi) Sixth, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(iv) hereof over (B) the respective
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amounts previously allocated to them pursuant to this Section
7.2(e)(vi);
(vii) Seventh, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(iii) hereof over (B) the
respective amounts previously allocated pursuant to this Section
7.2(e)(vii); and
(viii) Thereafter, pro rata among all the Partners in
proportion to their Partnership Percentage Interests.
(f) Notwithstanding Sections 7.2(d) and (e) hereof,
(i) For federal income tax purposes but not for purposes
of crediting or charging Capital Accounts, depreciation or gain or
loss realized by the Partnership with respect to any property that
was contributed to the Partnership (including any dividend or other
income realized by the Partnership with respect to Berkshire's
contribution to the Partnership of the BRI common stock and operating
partnership units) or that was held by the Partnership at a time when
the Book Value of the Partnership Assets was adjusted pursuant to the
third sentence of Section 7.1(b) shall, in accordance with the
"traditional method" under Section 704(c) of the Code and Treasury
Regulation Sections 1.704-1(b)(2)(iv)(d) and (f) and 1.704-3(b), be
allocated among the Partners in a manner which takes into account the
differences between the adjusted basis for federal income tax
purposes to the Partnership of its interest in such property and the
fair market value of such interest at the time of its contribution or
revaluation.
(ii) If there is a net decrease in the Minimum Gain of
the Partnership during a taxable year (including any Minimum Gain
attributable to Partner-Funded Debt), each Partner at the end of such
year shall be allocated, prior to any other allocations required
under this Article 7, items of gross income for such year (and, if
necessary, for subsequent years) in the amount and proportions
described in Treasury Regulation Sections 1.704-2(g) and 1.704-
2(i)(4).
(iii) Notwithstanding the allocations provided for in
Sections 7.2(d), (e) and (f) no allocation of an item of loss or
deduction shall be made to a Partner to the extent such allocation
would cause or increase a deficit balance in such Partner's Capital
Account as of the end of the taxable year to which such allocation
relates. If any Partner receives an adjustment, allocation or dis-
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tribution that causes or increases such a deficit balance, taking
into account the rules of Treasury Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6), such Partner shall be allocated
(after taking into account any allocations made pursuant to Section
7.2(g)(ii)) items of income and gain in an amount and manner to
eliminate the Partner's Capital Account deficit attributable to such
adjustment, allocation or distribution as quickly as possible. For
purposes of this Section 7.2(g)(iii), there shall be excluded from a
Partner's deficit Capital Account balance at the end of a taxable
year of the Partnership (a) such Partner's share, determined in
accordance with Section 704(b) of the Code and Treasury Regulation
Section 1.704-2(g) of Minimum Gain (provided that in the case of
Minimum Gain attributable to Partner-Funded Debt, such Minimum Gain
shall be allocated to the Partner or Partners to whom such debt is
attributable pursuant to Treasury Regulation Section 1.704-2(i)) and
(b) the amount, if any, that such Partner is obligated to restore to
the Partnership under Treasury Regulation Section 1.704-
1(b)(2)(ii)(c).
(iv) Notwithstanding the allocations provided for in
subsection (i) of this Section 7.2(g) and Sections 7.2(d), (e) and
(f), if there is a net increase in Minimum Gain of the Partnership
during a taxable year of the Partnership that is attributable to
Partner-Funded Debt then first Depreciation, to the extent the
increase in such Minimum Gain is allocable to depreciable property,
and then a proportionate part of other deductions and expenditures
described in Section 705(a)(2)(B) of the Code, shall be allocated to
the lending or guaranteeing Partner (and to joint lenders or
guarantors in proportion to their relative obligations), provided
that the total amount of deductions so allocated for any year shall
not exceed the increase in Minimum Gain attributable to such Partner-
Funded Debt in such year.
(v) Subject to the provisions of Section 7.2(f)(iv),
above, all Non-recourse Deductions of the Partnership for any year
shall be allocated to the Class A, Class B and Class D Partners in
the same manner and proportion as their relative shares of Profits
and Losses for such year, and the Partnership shall allocate "excess
non-recourse liabilities" (as determined under Treasury Regulation
Section 1.752-3(a)(3)) in the same ratio.
(vi) Any special allocation under Sections 7.2(f)(ii)
through (v) shall be taken into account (to the extent appropriate)
in computing subsequent allocations of Profits and Losses of any item
thereof pursuant to this Article 7 so that the net amount of any
items so allocated and the Profits, Losses and all items thereof
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allocated to each Partner pursuant to this Article 7 shall, to the
extent permissible under Sections 704(b) of the Code and the Treasury
Regulations promulgated thereunder, be equal to the net amount that
would have been allocated to each Partner pursuant to this Article 7
if such special allocation had not occurred.
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
8.1 Applications and Distributions.
(a) Distributions of Available Cash (subject to all restrictions
contained in the definition of such term) for each quarter shall be made to
the Partners by the Administering General Partner on behalf of the
Partnership in accordance with Section 8.1(b) within 60 days after the end of
such quarter of each Fiscal Year.
(b) Available Cash shall be distributed to the Partners in the
following order of priority (and the calculations described in the following
clauses shall be made as of the date of each distribution, on a cumulative
basis), subject to the other terms of this Article 8 and the terms of Section
6.3:
(1) First, to the Class A Preferred Limited Partners,
pro rata in accordance with their respective Class A Preferred
Percentage Interests, until each of the Class A Preferred Limited
Partners has received a cumulative, compounded quarterly to the
extent not paid on a quarterly basis, return of 7.5% per annum on the
amount of such Class A Preferred Limited Partner's Capital
Contribution taking into account the amount and timing of all prior
distributions under this Section 8.1(b)(1) (any shortfall in the full
payment of such return, from time to time, being referred to in this
Agreement as an unpaid and accrued distribution in respect of the
Class A Preferred Units).
(2) Second, to holders of Class C Preferred Units (pro
rata in proportion to the amount of any accrued and unpaid return
owing with respect to the Class C Preferred Units held by each such
Partner) until each of such Partners has received, taking into
account the amount and timing of all prior distributions under this
Section 8.1(b)(2) and of all prior Capital Contributions made
pursuant to Sections 6.1 and 6.2 (to the extent made in respect of
Class C Preferred Units) by such Partner, a Rate of Return on the
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aggregate Capital Contributions made by it in respect of the Class C
Preferred Units equal to twelve percent (12%).
(3) Third, to the holders of Class B Units and Class D
Units on a pari passu basis (pro rata in proportion to the amount of
any accrued and unpaid return owing with respect to the Class B Units
and Class D Units held by each such Partner) until each such Partner
has received, taking into account the amount and timing of all prior
distributions under this Section 8.1(b)(3) and of all prior Capital
Contributions made in respect of such Class B Units or Class D Units,
as applicable, pursuant to Section 6.1 by such Partner, a Rate of
Return on the aggregate Capital Contributions made in respect of the
Class B Units and Class D Units equal to twelve percent (12%).
(4) Fourth, to all of the Partners other than the Class
A Preferred Limited Partners and the Class E Limited Partners (pro
rata in proportion to their relative Capital Contributions) until
each Partner other than the Class A Preferred Limited Partners and
the Class E Limited Partners has received, taking into account the
amount and timing of all prior distributions under this Section
8.1(b)(4) and under Sections 8.1(b)(2) and 8.1(b)(3) and of all prior
Capital Contributions made by such Partner, a Rate of Return on the
aggregate Capital Contributions made in respect of the Partnership
Units held by such Partner equal to fifteen percent (15%).
(5) Fifth, (i) 80% to all of the Partners other than the
Class A Preferred Limited Partners and the Class E Limited Partners
(pro rata in proportion to their relative Capital Contributions) and
(ii) with respect to periods during which BGP is the Administering
General Partner, fourteen percent (14%) to the Class D Partners (pro
rata in proportion to their relative Class D Percentage Interests),
and (iii) 6% to the Class E Limited Partners as IMP (pro rata in
proportion to their respective Class E Percentage Interests) until
each Partner other than the Class A Preferred Limited Partners and
the Class E Limited Partners has received, taking into account the
amount and timing of all prior distributions under this Sections
8.1(b)(5) and under Sections 8.1(b)(2), 8.1(b)(3) and 8.1(b)(4) and
the amount and timing of all prior Capital Contributions, a Rate of
Return on the aggregate Capital Contributions made in respect of the
Partnership Units held by such Partner equal to twenty percent (20%).
(6) Sixth, (i) with respect to periods during which BGP
is the Administering General Partner, seventy percent (70%) to the
Class D Partners (pro rata in proportion to their relative Class D
Percentage Interests) and (ii) thirty percent (30%) to the Class E
Limited Partners as IMP (in proportion to their respective Class E
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Percentage Interests) until the Class D Partners, if applicable, and
the Class E Limited Partners have received under this Section
8.1(b)(6) together with the amounts previously received under Section
8.1(b)(5)(ii) or 8.1(b)(5)(iii), (but only to the extent amounts
previously received under Section 8.1(b)(5)(ii) or 8.1(b)(5)(iii) are
received after each Partner other than the Class A Preferred Limited
Partners and the Class E Limited Partners has received a Rate of
Return on the aggregate Capital Contributions made by such Partner in
respect of the Partnership Units held by such Partner equal to
seventeen and one half percent (17 1/2%)) as applicable, an amount
equal to twenty-five percent (25%) of the Second Tier Differential.
(7) Seventh, (i) with respect to periods during which
BGP is the Administering General Partner, seventeen and one-half
percent (17 1/2%) of the remainder to the Class D Partners (pro rata
in proportion to their relative Class D Percentage Interests),
(ii) seven and one-half percent (7 1/2%) of the remainder to the
Class E Limited Partners as IMP (pro rata in proportion to their
respective Class E Percentage Interests) and (iii) seventy-five
percent (75%) of the remainder to the Partners other than the Class A
Preferred Limited Partners and the Class E Limited Partners (pro rata
in proportion to their relative Capital Contributions).
With respect to periods during which BGP is not the
Administering General Partner, amounts otherwise distributable to the holders
of the Class D Units pursuant to Sections 8.1(b)(5)(ii), (6)(i) and (7)(i)
shall be distributable under Sections 8.1(b)(5)(i), (6)(ii) and (7)(iii),
respectively, unless the General Partners (other than BGP) desire to admit a
new Administering General Partner, in which case the General Partners may
jointly determine to distribute part or all of such amounts instead to such
new Administering General Partner or otherwise as such other General Partners
shall determine.
(c) The Partnership shall endeavor to distribute in each Fiscal
Year (and, to the extent required, the immediately following Fiscal Year)
Available Cash (strictly in accordance with the priorities set forth in
Section 8.1(b)) in an amount at least sufficient (taking into account all
other distributions) for the Investor Group Partners' (and if such Investor
Group Partner is a pass-through entity for tax purposes, the shareholders,
members or partners comprising such Investor Group Partner) payment of
federal, state and local income taxes arising in respect of each Investor
Group Partner's share (or the share of the shareholders, members or partners
comprising such Investor Group Partner) of the income of the Partnership for
such Fiscal Year, assuming the highest combined effective tax rate applicable
to an individual resident in Massachusetts (but the foregoing shall not be
grounds for an Additional Capital Call), provided, however, that in the case
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of phantom income for any member of the Berkshire Group, such distribution
shall be made in proportion to the Partnership Percentage Interests of the
Investor Group Partners provided, however, that no distributions may be made
pursuant to this clause (c) at any time when distributions to be paid under
Section 8.1(b)(1) are accrued and unpaid and provided further that such
distributions shall offset amounts otherwise distributable to partners
currently or in the future.
8.2 Liquidation. In the event of the sale or other disposition
of all or substantially all of the Partnership Assets, the Partnership shall
be dissolved and the proceeds of such sale or other disposition shall be
distributed to the Partners in liquidation as provided in Article 10, except
that to the extent that the Partnership receives a purchase money note or
notes in exchange for all or a portion of such assets, the Partnership shall
continue until such purchase money notes or notes have been paid in full.
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
9.1 Limitations on Assignments of Interests by Partners.
(a) Except as provided in this Article 9, no Partner shall
Transfer (as hereinafter defined) all or any portion of its Interest or
permit such a Transfer or contract to do so, without the consent of each of
the General Partners (which consent may be withheld in such General Partner's
sole discretion for any reason or no reason) and in strict compliance with
the provisions of this Article 9. Notwithstanding the foregoing, but subject
to Section 9.9, (i) each member of the Whitehall Group, the Blackstone Group
or the Berkshire Group may, at any time, and without the prior consent of the
General Partners, Transfer all or any portion of its Interest to a Person
qualifying as an Affiliate under clause (i) of its definition hereof of such
transferring Partner and (ii) each member of the Berkshire Group and each
Class A Preferred Limited Partner and Class B Limited Partner may at any
time, and without the prior consent of the General Partners, and solely for
estate planning purposes, Transfer all or any portion of its Interest to one
or more family members of the Berkshire Principals, or to trusts established
for such family members or, as applicable, to family members of or trusts
established for the families of such Class A Preferred Limited Partners or
Class B Limited Partners. In addition each Class A Preferred Limited Partner
and Class B Limited Partner may transfer its Class A Preferred Units or Class
B Units to one or more Affiliates of such Class A Preferred Limited Partner
or Class B Limited Partner satisfying the requirements of clause (i) of the
definition of "Affiliate". As used herein "Transfer" of an Interest means,
with respect to any Partner, any transfer, sale, pledge, hypothecation,
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encumbrance, assignment or other disposition of any portion of the Interest
of such Partner or the proceeds thereof (whether voluntarily, involuntarily,
by operation of law or otherwise, other than a pledge permitted under Section
9.1(b)). Any purported Transfer in violation of this Article 9 shall be
void ab initio, and shall not bind the Partnership, and the Partners making
such purported transfer, sale or assignment shall indemnify and hold the
Partnership and the other Partners harmless from and against any federal,
state or local income taxes, or transfer taxes, including without limitation,
transfer gains taxes, arising as a result of, or caused directly or
indirectly by, such purported Transfer. The giving of any consent to a
Transfer in any one or more instances shall not limit or waive the need for
such consent in any other or subsequent instances. Notwithstanding the
foregoing, a Class A Preferred Limited Partner or a Class B Limited Partner
may (after giving the Partnership and the Class C Partners and Class D
Partners the right to purchase such Partnership Unit described in this
Section 9.1(a)) Transfer all, but not less than all, of its Class A Preferred
Units or Class B Units, respectively, to an "accredited investor" (as such
term is defined in Regulation D under the Securities Act) as long as
(i) prior to such Transfer, such Class A Preferred Limited Partner or Class B
Limited Partner offers to the Partnership and the Class C Partners and the
Class D Partners the right to purchase such Partnership Units in accordance
with the procedures described below in this Section 9.1, (ii) such transferee
agrees to be bound by all of the provisions of this Agreement, (iii) prior to
such Transfer outside legal counsel to the Partnership delivers (at the sole
expense of the transferring Partner except as provided below) an opinion to
the Partnership to the effect that such transfer does not require
registration under the Securities Act and does not cause the Partnership to
be a "publicly traded partnership" within the meaning of Section 7704 of the
Code (it being understood and agreed that (a) the Partnership shall spend up
to $50,000 in legal fees and expenses in any fiscal year in respect of any
such transfers, but that any legal fees or expenses in excess of such amount
shall be for the account of the transferring Partner or Partners; (b) that
the Partnership shall not be obligated to pay (and the transferring Partner
shall be obligated to pay) any and all fees and expenses incurred by such
transferring Partner including, without limitation, transfer and similar
taxes, and fees and expenses of legal counsel engaged by such transferring
Partners or the transferee and (c) the Partnership shall not charge the
transferring Partner with other fees and expenses incurred by the Partnership
in connection with such transfer), and (iv) such Transfer otherwise complies
with the provisions of Sections 9.5, 9.7, 9.8, 9.9, and this Section 9.1.
Prior to any Transfer of Class A Preferred Units or Class B Units pursuant to
this Section 9.1(a), a Partner desiring to transfer such Partnership Units (a
"Transferring Partner") shall first give written notice (a "Notice of Sale")
to the Partnership and the General Partners, which Notice of Sale shall state
the Transferring Partner's desire to make such Transfer, the number and Class
of Units held by such Transferring Partner (the "Offered Interest") and the
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price and such other terms on which the Transferring Partner proposes to
Transfer its Interest (collectively, the "Offer Terms"). Each Notice of Sale
shall constitute an irrevocable offer by the Transferring Partner to sell to
the Partnership and the General Partners the Offered Interest on the Offer
Terms. No Offer Terms in respect of an Offered Interest may include any form
of consideration other than cash (which may be paid at closing, in install-
ments or after any period of time (as set forth in the Offer Terms) or
indebtedness (secured, unsecured, guaranteed, supported by a letter of credit
or otherwise) (as set forth in the Offer Terms) of the Purchaser (as defined
below) of such Offered Interest.
The Partnership may elect to purchase (or cause an Affiliate
designated by the Partnership to purchase) the Offered Interest on the Offer
Terms by delivering to the Transferring Partner, with a copy to the
Partnership and the General Partners, within twenty-five (25) days following
the date the Notice of Sale is received by the Partnership and all of the
General Partners, notice of such election (a "Notice of Purchase"). The
decision of the Partnership to purchase an Offered Interest shall be a
Unanimous Decision.
In addition, if the Partnership does not elect to purchase
the Offered Interest on the Offer Terms the General Partners may, by
delivering a Notice of Purchase not more than five (5) days after the
expiration of the 25-day period specified above, elect to purchase (or cause
an Affiliate designed by them to purchase) stating (x) the maximum share of
the Offered Interest that such General Partner (or such designated Affiliate)
elects to purchase (the "Maximum Share") (which Maximum Share may be greater
than such General Partners's proportionate share of the Offered Interest
calculated in accordance with its Partnership Percentage Interest), (y) that
the election made by such Notice of Purchase is irrevocable and (z) that such
General Partner irrevocably commits to purchase any share of the Offered
Interest up to and including the Maximum Share specified in preceding clause
(x) on the Offer Terms. Each of the General Partners that delivers a Notice
of Purchase (each, a "Purchaser") shall be allocated the Maximum Share of the
Offered Interest set forth in such Purchaser's Notice of Purchase, unless
such allocation, together with the shares of the Offered Interest allocated
to the other Purchasers, exceeds one hundred percent (100%) of the Offered
Interest, in which case each Purchaser whose Maximum Share is less than such
Purchaser's proportionate share of the Offered Interest calculated in
accordance with its Percentage Interest shall receive its Maximum Share, and
the remaining share of the Offered Interest shall be allocated among the
remaining Purchasers ratably in accordance with their respective Percentage
Interests. A Notice of Purchase shall be deemed to be an irrevocable
commitment by the Purchaser to purchase from the Transferring Partner on the
Offer Terms the Maximum Share of the Offered Interest that such Purchaser has
elected to purchase pursuant to its Notice of Purchase.
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If in the aggregate the Purchasers do not commit to purchase
the entire Offered Interest within the time periods specified in Section
9.2(b), the Transferring Partner (i) shall be under no obligation to sell any
portion of the Offered Interest to any Purchaser, unless the Transferring
Partner so elects, and (ii) may, within a period of 6 months from and after
the later of (x) the date of the last Notice of Purchase delivered to the
Transferring Partner in accordance with Section 9.2(b) hereof and (y) the
date which is twenty five (25) days from the date of the Notice of Sale,
Transfer the entire Offered Interest to one or more Persons at a price equal
to or higher than the price included in the Offer Terms. If the
Transferring Partner shall not have consummated the Transfer of the Offered
Interest to any Person or Persons prior to the expiration of such six month
period then the provisions of this Section 9.2 shall again apply.
(b) Subject to compliance with the remaining provisions of this
Article 9 and notwithstanding anything to the contrary set forth in Section
9.1(a) above, each of the Investor Group Partners, Class A Preferred Limited
Partners and Class B Limited Partners may, from time to time and without any
consent or approval, pledge or otherwise grant a security interest in all or
part of such Partner's Interest to an Institutional Lender to secure a loan
made to such Partner or its Affiliates (a "Pledgor") by such Institutional
Lender (a "Pledgee"); provided, however, that with regard to any such pledges
made by a member of the Berkshire Group, any Class A Preferred Limited
Partner or any Class B Limited Partner, (i) such pledged Interest may not be
transferred to the Pledgee by foreclosure, assignment in lieu thereof or
other enforcement of such pledge, (ii) such Partner may pledge only its
economic interests in the Partnership and no other rights hereunder, (iii)
such pledges shall be securing a loan which is fully recourse to such Partner
and, in the case of a pledge by a member of the Berkshire Group, The
Berkshire Companies Limited Partnership (or its successor) or one or more of
the Berkshire Principals and (iv) Blackstone GP and WHGP shall have the right
to review and reasonably approve, the documents relating to such loan to
confirm the non-foreclosable nature of the pledge and the recourse nature of
the loan. Any right of the Pledgee in the Interest shall be expressly
subordinated to the rights (then existing or thereafter arising) of any
Partner in the Interest as a result of any claims for indemnification
pursuant to Section 4.3.
(c) Any direct or indirect transfer of interests in Berkshire or
BGP shall require the consent of all of the GPs to the extent such transfer
results in Berkshire or BGP no longer being controlled (directly or
indirectly) by a Berkshire Principal. Any direct or indirect transfer of
interests in Whitehall or WHGP shall require the consent of all of the GPs to
the extent such transfer results in Whitehall or WHGP no longer being
controlled (directly or indirectly) by or under common control with a member
of the Whitehall Group or GS Group. Any direct or indirect transfer of
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interests in Blackstone GP or Blackstone LP shall require the consent of all
of the GPs to the extent such transfer results in Blackstone GP or Blackstone
LP no longer being controlled (directly or indirectly) by or under common
control with Blackstone Real Estate Acquisitions III L.L.C.
9.2 Sale of All of the Properties Before the Fifth Anniversary
of the Closing Date at the Option of Berkshire.
(a) Notwithstanding any other provisions herein, at any time
during the period beginning on the date that is the second anniversary of the
Closing Date and ending on the day that is the date immediately before the
date that is the fifth anniversary of the Closing Date, the Berkshire Group,
may, by delivering written notice (a "Sales Notice") to WHGP and Blackstone
GP (the Berkshire Group, or such member thereof as shall deliver such Sales
Notice, being referred to as a "Triggering Party" and the recipients of such
Sales Notice each being referred to as a "Non-Triggering Party", and
collectively as the "Non-Triggering Parties"), require the Partnership (and
act on behalf of the Partnership with full right, power and authority) to
sell all or substantially all of the Properties in one or more transactions
to a Person not Affiliated with any member of the Berkshire Group (including
by merger of the Partnership), subject to the provisions of this Section 9.2.
Any such Sales Notice shall state the cash price (the "Total Price") at which
the Triggering Party desires to sell the Properties, free and clear of any
liens. Any sale of the Properties pursuant to this Section 9.2 may be
accomplished by a sale of the Partnership itself (including by merger of the
Partnership) or of all of the Partnership Assets, provided that such a
proposed transaction may provide for the members of the Berkshire Group to
receive consideration other than cash and for the other Partners to receive
at their election, either cash or such other consideration.
(b) Concurrently with the delivery of the Sales Notice referred
to in Section 9.2(a), the Triggering Party shall submit to the Non-Triggering
Parties an offer (the "Offer"), to sell (or cause the Partnership to sell)
the Properties to the Non-Triggering Parties (or their designees) for cash in
exchange for the Non-Triggering Parties (or their designees) paying to the
Partnership the Total Price, failing which the Triggering Party shall be
entitled to market the Properties, as more particularly set forth below in
this Section 9.2. The Offer shall also set forth any other material economic
terms of the purchase; provided that, any Offer may include a holdback for
breaches of representations or warranties (which may survive for claims made
within no more than one year from the transfer of the Properties) by the
Partnership (which in each case shall be as outlined by the Triggering Party
in the Offer) not to exceed 5% of the purchase price, which holdback amount
may be available for no more than the survival period of the representations
and warranties; provided, further, that the terms of the transaction shall
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not, in any event, provide for the personal liability of any Partner in the
event of the breach of such representations and warranties.
(c) Within thirty (30) days after receiving the Offer, each Non-
Triggering Party shall deliver a notice (a "Sales Response Notice") to the
Triggering Party, stating the election by such Non-Triggering Party of one of
the two following options:
(1) to purchase (or have its Affiliate purchase) for the
Total Price the Properties on or before the date (the "Applicable
Closing Date") specified in such Sales Response Notice (which date
shall be no later than sixty (60) days after the Sales Response
Notice is delivered) and in accordance with the terms set forth in
the Offer; concurrently with the delivery of a Sales Response Notice,
and as a condition to its effectiveness under this Section 9.2(c),
such Non-Triggering Party shall also deliver to the Partnership (for
the account of the Triggering Party) a down payment equal to the
product of (i) 5% of the Total Price and (ii) the aggregate
Partnership Percentage Interest of the Triggering Party and each Non-
Triggering Party that does not elect to purchase the Properties
pursuant to this clause (c)), (provided that if more than one Non-
Triggering party makes such an election, each such non-Triggering
Partner shall pay a pro rata portion of such deposit based on its
respective Partnership Percentage Interest) which shall not be
refundable except if the Partnership defaults as a seller of the
Properties; or
(2) to agree to the sale of the Properties in accordance
with the terms of the Offer, subject to such changes therein as are
contemplated by the terms of this Section 9.2 provided below, in
which event, such Non-Triggering Party shall have no further rights
to purchase the Properties, except as may be expressly provided for
below in this Section 9.2.
If any Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that such Non-Triggering Party elected option (2) above
(and such Non-Triggering Party hereby consents to such sale in such case).
In the event that both the Whitehall Group and the Blackstone Group, as Non-
Triggering Parties, make an election pursuant to Section 9.2(c)(1), they
shall each acquire 50% of each Property.
(d) Promptly after an election by a Non-Triggering Party
pursuant to Section 9.2(c)(1), the Partnership and such electing Non-
Triggering Party (or its Affiliate(s)) shall proceed with such purchase and
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sale, the closing for which shall be held on or before the Applicable Closing
Date, during normal business hours at the offices of counsel to the Non-
Triggering Party. The Non-Triggering Party shall be entitled to one
five (5) Business Day adjournment, whereupon time shall be of the essence
with respect to the Non-Triggering Party's obligation to close on the
purchase of the Properties in accordance with the terms of this
Section 9.2(d) on or before the Applicable Closing Date, and if the Non-
Triggering Party does not close in accordance with this paragraph, the
Triggering Party shall be entitled, as the sole and exclusive remedies of the
Triggering Party, to market and sell the Properties on behalf of the
Partnership in accordance with this Section 9.2 as if the Non-Triggering
Party made the election described in Section 9.2(c)(2) and the Triggering
Party and each Non-Triggering Party that did not elect to purchase the
Properties or that is not in default shall be entitled, as its sole and
exclusive remedy, to keep a portion of the downpayment described in Section
9.2(c)(1) above (pro rata based on its respective Partnership Interests)
(unless the failure to close is due to the default of the Partnership, in
which case the Triggering Party shall not be entitled to the foregoing
remedies). No defaulting Non-Triggering Party shall have any rights of first
offer under this Section 9.2 after such default in respect of any subsequent
offers.
(e) Upon an election (or deemed election) by each Non-Triggering
Party pursuant to Section 9.2(c)(2), the Triggering Party shall have the
right to cause the Partnership to market the Properties for a period (the
"Marketing Period") of one hundred and eighty (180) days commencing with the
earlier to occur of (i) the thirtieth (30th) day after the delivery of the
Offer to the Non-Triggering Parties or (ii) the notice by each Non-Triggering
Party to the Triggering Party of each Non-Triggering Party's election to
proceed under Section 9.2(c)(2). The Partners shall cooperate fully with the
efforts of the Triggering Party to market the Properties and shall use their
good faith efforts to cause the sale of the Properties on the terms set forth
in the Offer or on terms more favorable to the Partnership.
(f) Subject to the provisions of Section 9.2(l), if (i) during
the Marketing Period, the Partnership receives a third-party offer to
purchase the Properties for all cash (a "Third Party Offer") that the
Triggering Party desires to accept, (ii) the sale price provided for therein
(the "Third Party Offer Price") is equal to 100% or more of the Total Price,
(iii) the terms are otherwise no less favorable to the Partnership than those
set forth in the Offer and shall not provide for any additional or separate
consideration to the Triggering Party (or its Affiliates), or to Berkshire,
BGP, or any member of the Berkshire Group or any of their respective
Affiliates (whether through the payment of fees, salaries, consideration or
otherwise) then the Partnership shall sell the Properties in accordance with
the terms of such Third Party Offer (the Triggering Party being fully
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authorized and empowered to execute and deliver all necessary documents,
agreements and instruments on the Partnership's or the Non-Triggering
Parties' behalf and to make the representations and warranties on the
Partnership's (but not the Non-Triggering Parties') behalf that were outlined
in the Offer) and no Non-Triggering Party shall have any right to purchase
the Properties or to object to or otherwise interfere with such sale,
provided that the closing of such sale shall occur not later than the one
hundred eightieth (180th) day after the commencement of the Marketing Period.
In the event that the closing shall not occur within such one hundred eighty
(180)-day period, or the Partnership does not receive a Third Party Offer
that satisfies the conditions of this Section 9.2(f) during the Marketing
Period, then the Triggering Party shall have the right at any time thereafter
to further attempt to sell the Properties, subject to the rights of the Non-
Triggering Parties under Section 9.2(a), which shall be reinstated with
respect to any such further decision on the part of Triggering Party to sell
the Properties. Any purchase and sale or other agreement documenting such
Third Party Offer shall provide that the Non-Triggering Parties may exercise
their rights and the Partnership its obligations to the Non-Triggering
Parties set forth in the immediately previous sentence without penalty to the
Partnership.
(g) If a Non-Triggering Party, having elected to proceed under
Section 9.2(c)(1), defaults on its obligation to purchase the Properties as
required thereunder, then as set forth in clause (d) above the Triggering
Party and each Non-Triggering Party that does not elect to purchase the
Properties or that is not in default shall be entitled to retain, as liqui-
dated damages, its portion of the down payment received in contemplation of
such sale (as determined above), it being agreed that the amount represents a
fair and equitable estimate of the damages to be suffered by the Triggering
Party or the Partnership if a Non-Triggering Party were to so default and
that actual damages would be highly impracticable to determine. If the
Partnership defaults on its obligation to sell the Properties to a Non-
Triggering Party pursuant to such Non-Triggering Party's election to purchase
the Properties under Section 9.2(c)(1), then such Non-Triggering Party shall
be entitled to specific performance by the Partnership.
(h) Notwithstanding anything to the contrary, the Triggering
Party shall, subject to and in accordance with this Section 9.2, have full
right, power and authority (acting alone) to execute, deliver and perform,
for and in the name of the Partnership and, in the case of a sale of the
Partnership, of the Partners, and each Partner hereby agrees to execute,
deliver and perform, any and all documents, agreements and instruments, and
to take any other actions as may be required or desirable for the purpose of
transferring the Properties, to the maker of the Third Party Offer or a Non-
Triggering Party, as the case may be.
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(i) The following provisions shall apply to a purchase by a Non-
Triggering Party pursuant to the election in Section 9.2(c)(1):
(i) If such Non-Triggering Party is any of the
Whitehall Group, the Blackstone Group or both of such Groups, such
Non-Triggering Party may elect either (a) to purchase the Properties,
in which case, the price payable to the Partnership shall be the
Total Price (in the case of a purchase by such Non-Triggering Party
pursuant to Section 9.2(c)(1)) less the principal and accrued
interest on account of any third party debt that will be assumed by
such Non-Triggering Party or be paid at closing by such Non-
Triggering Party (or its designee) from its own funds or (b) to
purchase all of the Interests (other than the Class A Preferred Units
and Class B Units) not already owned by such Non-Triggering Party,
which Interests shall be sold free and clear of any liens or
encumbrances. Subject to subparagraph (iii) of this Section 9.2(i),
if such Non-Triggering Party elects to purchase the Interests (other
than the Class A Preferred Units and Class B Units) not already owned
by such Non-Triggering Party, such Non-Triggering Party shall pay to
the other Partners an amount in cash that the other Partners would
have received had the Properties been sold to a third party for the
Total Price (in the case of a purchase by a Non-Triggering Party
pursuant to Section 9.2(c)(1)) and the net proceeds (after deducting
all fees, costs and expenses incurred in connection with such
transaction) of such sale were distributed pursuant to Section 10.3
and any required deposits shall be calculated in respect of such
amount. In the event more than one Non-Triggering Party makes an
election under this clause (k), such Non-Triggering Partners shall
purchase, on a pro rata basis (based on their respective Partnership
Percentage Interests), the Interests not owned by them and to be
purchased pursuant to this Section 9.2(i)(i). In the event that two
Non-Triggering Partners elect to purchase the Partnership's assets
pursuant to this Section 9.2, such Non-Triggering Partners shall use
commercially reasonable efforts to permit the Class A Limited
Partners and the Class B Limited Partners to invest in such entity in
similar proportions, and subject to substantially the same terms and
conditions, as the investment of the Class A Limited Partners and the
Class B Limited Partners in the Partnership and in a manner that
permits such Partners to defer the recognition of any gain
attributable to their Interests.
(ii) All transfer costs (including transfer taxes) shall
be paid in accordance with customary practices in the relevant
jurisdiction (unless the Offer provided otherwise) and there shall be
an adjustment of the purchase price at closing to reflect a proration
of any accrued income and expenses, excluding non-cash items,
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provided that each of the Triggering Party and such Non-Triggering
Party shall bear its own attorneys' fees. Within forty-five (45)
days after the closing, such Non-Triggering Party shall direct the
independent accountants for the Partnership to complete an audit of
the Partners' proration and such independent accountants shall
deliver their audit report to the partners. If such audit report
shall adjust such proration, the party in whose favor such adjustment
is made shall promptly be paid by the other party the amount of such
adjustment.
(iii) On payment of the purchase price, such Non-
Triggering Party shall, with respect to each Partnership debt,
obligation and claim against the Partnership for which the
Partnership or any Partner (or any guarantor affiliated therewith or
which delivered the guaranty on behalf of such Person) is or may be
personally liable with respect to the Properties at the option of
such Non-Triggering Party either (i) obtain a release of the
Partnership and each such Partner (and any guarantor affiliated
therewith or which delivered the guaranty on behalf of such Person)
from all liability, direct or contingent, from holders of such debt,
obligation or claim or (ii) deliver to the Partnership and each such
Partner, an agreement in form and substance reasonably satisfactory
to the Partnership and each such Partner, which satisfaction may
require a creditworthy guarantor, to defend, indemnify and hold the
Partnership and each such Partner (and any guarantor affiliated
therewith or which delivered the guaranty on behalf of such Person)
harmless from any actions, including attorneys' fees and costs of
litigation, claims or loss arising from such debt, obligation or
claim. In no event shall such indemnity apply to liabilities
resulting from the breach by any Partner of its obligations under
this Agreement. This subparagraph (iii) shall not apply to any debt,
obligation or claim which is fully insured by public liability
insurer(s) reasonably acceptable to the Partnership and each Partner.
(j) Notwithstanding anything contained herein to the contrary,
the Berkshire Group may not, without the consent of each General Partner
other than BGP, sell all of the Properties of the Partnership in one or more
transactions pursuant to this Section 9.2 (i) to any member of the Berkshire
Group or any Affiliate thereof or (ii) unless the net proceeds from all sales
that are, at the time of the calculation pursuant to this clause (ii),
subject to binding agreements would result in a 12% per annum annually
compounded Rate of Return (taking into account the timing of the receipt of
the proceeds of such sale and the amount thereof and the timing and amount of
prior distributions from the Partnership pursuant to Section 8.1(b)) to each
of the Whitehall Group and the Blackstone Group in respect of all their
Capital Contributions prior to the date of the receipt of such sale proceeds
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(it being understood and agreed that the Berkshire Group may, at its
election, make payments to the Whitehall Group and the Blackstone Group in
amounts necessary to achieve such Rate of Return for all of the members of
the Whitehall Group and the Blackstone Group in respect of all such Capital
Contributions and, provided that as a result of any such payments and the
sale of the Properties contemplated hereby all of the members of the
Whitehall Group and the Blackstone Group achieve such Rate of Return in
respect of all of their Capital Contributions prior to such date, may
consummate such sales although the net proceeds of such sales alone would not
be sufficient to result in the achievement of such Rate of Return
thresholds).
9.3 Sale of All of the Properties Before the Fifth Anniversary
of the Closing Date at the Option of Two General Partners.
(a) Notwithstanding any other provisions herein, at any time
during the period beginning on the date that is forty-two (42) months after
the Closing Date and ending on the day that is immediately before the date
that is the fifth anniversary of the Closing Date, WHGP and Blackstone GP,
acting together, (acting as if such decision were a Majority Decision) may,
by delivering written notice (a "Majority Sales Notice") to any General
Partner that did not join in such decision, require the Partnership (and act
on behalf of the Partnership with full right, power and authority) to sell
all or substantially all the Properties in one or more bona fide transactions
to parties that are not Affiliates of any Majority Triggering Party and in
which no Majority Triggering Party has a continuing interest.
(b) Subject to the provisions of Section 9.3(c), if following
the delivery of a Majority Sales Notice, the Partnership receives a third-
party offer to purchase the Properties for all cash (a "Majority Third Party
Offer") that the General Partners delivering the Majority Sales Notice (the
"Majority Triggering Parties") desire to accept, then the Partnership shall
sell the Properties in accordance with the terms of such Majority Third Party
Offer (the Majority Triggering Parties being fully authorized and empowered
to execute and deliver all necessary documents, agreements and instruments on
the Partnership's behalf or on behalf of the Partners other than the Majority
Triggering Parties and to make the representations and warranties on the
Partnership's (but not such other Partners') behalf that were outlined in the
Majority Third Party Offer).
(c) Notwithstanding anything contained herein to the contrary,
if a sale of the Properties pursuant to this Section 9.3 closes during the
period beginning on the date that is forty-two (42) months after the Closing
Date and ending on the date that is fifty-four (54) months after the Closing
Date, then the Majority Triggering Parties shall ensure that in connection
with such sale, the members of the Berkshire Group and the Class B Limited
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Partners receive, in accordance with Section 10.3, an amount at least equal
to the excess of the aggregate amount of Capital Contributions made by the
members of the Berkshire Group or the Class B Limited Partners, as applicable
through the date of such sale over the amount of any distributions from the
Partnership previously received by such member of the Berkshire Group (or its
Affiliates or predecessors).
Any sale of the Properties pursuant to this Section 9.3 may be
accomplished by a sale of the Partnership itself (including by merger of the
Partnership) or of all of the Partnership Assets. Notwithstanding anything
to the contrary, the Majority Triggering Parties shall, subject to and in
accordance with this Section 9.3, have full right, power and authority to
execute, deliver and perform, for and in the name of the Partnership and, in
the case of a sale of the Partnership, of the Partners, and each Partner
hereby agrees to execute, deliver and perform, any and all documents,
agreements and instruments, and to take any other actions, as may be required
or desirable for the purpose of transferring the Properties to the purchaser
of the Partnership's assets or the Partnership under this Section 9.3.
Any sale of the Properties pursuant to this Section 9.3 (x) shall not
contain any representations by any Partner without the consent of such
Partner (but may contain representations by the Partnership), and (y) may
include a holdback for breaches of representations or warranties (which may
survive for claims made within no more than one year from the transfer of the
Properties) by the Partnership not to exceed 5% of the purchase price, which
holdback amount may be available for no more than the survival period of the
representations and warranties; provided, further, that the terms of the
transaction shall not, in any event, provide for the personal liability of
any Partner in the event of the breach of such representations and
warranties.
9.4 Sale of the Properties After the Fifth Anniversary.
Notwithstanding any other provisions herein, at any time after the date that
is the fifth anniversary of the Closing Date, each of the General Partners
shall be authorized unilaterally to cause a sale in which each General
Partner will have the option to receive consideration consisting of all cash
of (i) all or substantially all of the Properties or (ii) the Partnership in
one or more bona fide transactions to a Person in which none of the Whitehall
Group, the Blackstone Group or the Berkshire Group and no Affiliate of any of
the Whitehall Group, the Blackstone Group or the Berkshire Group has an
interest; provided, however, that BGP may not exercise such right until the
date that is three months following the fifth anniversary of the Closing
Date, unless during such three month period (i) the DK Employment Agreement
is terminated for reasons other than Cause or Company Cause and (ii) neither
WHGP nor Blackstone GP has already exercised its rights under this Section
9.4. In the event that one or more General Partners elect to cause the sale
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of the Properties pursuant to this Section 9.4 by giving written notice of
such election to any General Partner not joining in such election, no other
General Partner may subsequently make an election pursuant to this Section
9.4 until the date that is 180 days after the date such electing General
Partner or General Partners deliver such notice of election.
Any sale of the Properties pursuant to this Section 9.4 may be
accomplished by a sale of the Partnership itself (including by merger of the
Partnership) or of all of the Partnership Assets. Notwithstanding anything
to the contrary, the General Partners shall, subject to and in accordance
with this Section 9.4, have full right, power and authority to execute,
deliver and perform, for and in the name of the Partnership and, in the case
of a sale of the Partnership, of the Partners, and each Partner hereby agrees
to execute, deliver and perform, any and all documents, agreements and
instruments, and to take any other actions as may be required or desirable
for the purpose of transferring the Properties, to the purchaser of the
Partnership's assets or the Partnership under this Section 9.4.
Any sale of the Properties pursuant to this Section 9.4 (x) shall not
contain any representations by any Partner without the consent of such
Partner (but may contain representations by the Partnership) and (y) may
include a holdback for breaches of representations or warranties (which may
survive for claims made within no more than one year from the transfer of the
Properties) by the Partnership not to exceed 5% of the purchase price, which
holdback amount may be available for no more than the survival period of the
representations and warranties; provided, further, that the terms of the
transaction shall not, in any event, provide for the personal liability of
any Partner in the event of the breach of such representations and
warranties.
9.5 Assignment Binding on Partnership. No Transfer of all or
any part of the Interest of a Partner permitted to be made under this
Agreement shall be binding upon the Partnership unless and until a duplicate
original of such assignment or instrument of transfer, duly executed and
acknowledged by the assignor or transferor, has been delivered to the
Partnership, and such instrument evidences (i) the written acceptance by the
assignee of all of the terms and provisions of this Agreement, (ii) the
assignee's representation that such assignment was made in accordance with
all applicable laws and regulations and (iii) the consent to the Transfer of
the Interest required pursuant to Section 9.1, if any. In addition, a Person
to whom a Transfer may be made pursuant to this Article 9, other than
pursuant to Section 9.1(a), may also be required, in the reasonable
discretion of any of the General Partners, and as a condition precedent to
its becoming a transferee to make certain representations, warranties and
covenants to evidence compliance with U.S. federal and state securities laws
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including, but not limited to, representations as to its net worth,
sophistication and investment intent.
9.6 Bankruptcy of a Limited Partner. The Partnership shall not
be dissolved or terminated by reason of the Bankruptcy, removal, withdrawal,
dissolution or admission of any Limited Partner.
9.7 Substituted Partners.
(a) Partners who assign all their Interests pursuant to an
assignment or assignments permitted under this Agreement shall cease to be
Partners of the Partnership except that unless and until a Substituted
Partner is admitted in its stead, the assigning Partner shall not cease to be
a Partner of the Partnership under the Act and shall retain the rights and
powers of a member under the Act and hereunder, provided that such assigning
Partner may, prior to the admission of a Substituted Partner, assign its
economic interest in its Interest, to the extent otherwise permitted under
Article 9. Any Person who is an assignee of any portion of the Interest of a
Partner and who has satisfied the requirements of Article 9 shall become a
Substituted Partner only when (i) the Administering General Partner has
entered such assignee as a Partner on the books and records of the
Partnership, which the Administering General Partner is hereby directed to do
upon satisfaction of such requirements, and (ii) such assignee shall have
paid all reasonable legal fees and filing costs in connection with the
substitution as a Partner except as otherwise provided in Section 9.1(a).
(b) Any Person who is an assignee of any of the Interest of a
Partner but who does not become a Substituted Partner and desires to make a
further assignment of any such Interest, shall be subject to all the
provisions of this Article 9 to the same extent and in the same manner as any
Partner desiring to make an assignment of its Interest.
9.8 Acceptance of Prior Acts. Any person who becomes a Partner,
by becoming a Partner, accepts, ratifies and agrees to be bound by all
actions duly taken pursuant to the terms and provisions of this Agreement by
the Partnership prior to the date it became a Partner and, without limiting
the generality of the foregoing, specifically ratifies and approves all
agreements and other instruments as may have been executed and delivered on
behalf of the Partnership prior to said date and which are in force and
effect on said date.
9.9 Additional Limitations. Notwithstanding anything contained
in this Agreement, no Transfer of an Interest shall be made, and any General
Partner shall have the right to prohibit and may refuse to accept any
Transfer, unless (i) registration is not required under the Securities Act of
1933, as amended, in respect of such Transfer; (ii) such Transfer does not
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violate any applicable federal or state securities, real estate syndication,
or comparable laws; (iii) except as otherwise provided in Section 9.2, 9.3 or
9.4 such Transfer will not be subject to, or such Transfer, when aggregated
with prior Transfers in accordance with applicable law will not result in the
imposition of, any state, city or local transfer taxes, including, without
limitation, any transfer gains taxes, unless such assignor pays such taxes;
and (iv) such Transfer will not cause the Partnership to be treated as a
"publicly-traded partnership" within the meaning of Section 7704 of the Code.
Any General Partner may elect prior to any Transfer to require an opinion of
counsel with respect to any of the foregoing matters.
9.10 Purchase of the Berkshire Group's Interest upon the
Termination of ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ Employment Under the DK Employment Agreement.
(a) In the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇ is terminated as chief
executive officer of the Partnership as a result of a Performance
Termination, the Berkshire Group shall have the right (but not the
obligation), exercisable at any time within 60 days after such termination,
to require the Partnership to acquire its Interest (including the DK IMP) for
a price equal to the Fair Market Value (as such term is defined below) of its
Interest (including the DK IMP) on the date such right is exercised.
(b) In the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇ (i) is terminated as chief
executive officer of the Partnership for Company Cause, or for Cause at any
time, or (ii) resigns or otherwise terminates the DK Employment Agreement on
or prior to the fifth anniversary of the Closing Date, the Partnership shall
have the right (but not the obligation), exercisable at any time within 60
days after such termination or resignation, to purchase the Interest of the
Berkshire Group for a price equal to the greater of (x) the Fair Market Value
of the Berkshire Group's Interest (excluding the DK IMP which shall be
forfeited upon the occurrence of any of the events described in clause (i)
and (ii) above) on the date such right is exercised or (y) the amount equal
to the aggregate amount of Capital Contributions made by the Berkshire Group
prior to the date of such termination or resignation less any prior
distributions made to the Berkshire Group.
(c) In the event ▇▇▇▇▇▇▇ ▇▇▇▇▇ is terminated as chief executive
officer of the Partnership prior to the fifth anniversary of the Closing Date
for any reason other than for Company Cause, Cause, a Performance Termination
or ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ death or disability, the Partnership shall purchase the
Interest of the Berkshire Group for a cash price equal to the greater of (i)
the Fair Market Value of the Berkshire Group's Interest (including the DK
IMP) at the date of such termination or (ii) the sum of (x) an amount equal
to a 12% Rate of Return on the amount of the Berkshire Group's Capital
Contributions made prior to the date of such termination, for the five year
period ending with fifth anniversary of the Closing Date (taking into account
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the amount and timing of prior distributions to the Berkshire Group and
discounting back such amount to the date of payment utilizing as the discount
rate the then current Treasury rate for Treasury obligations with a maturity
equal to or approximating the term between the date of such termination and
the fifth anniversary of the Closing Date) plus (y) an amount in cash equal
to $10 million (in full payment of the DK IMP).
(d) For purposes of this Section 9.10, "Fair Market Value" of
the Berkshire Group's Interest (either including or excluding the DK IMP as
specified above) will be the amount the Berkshire Group would have received
upon the full liquidation of the tangible assets then owned by the
Partnership at the fair market value of such assets (with all intangible
assets being valued at zero) and the distribution of the proceeds pursuant to
Section 10.3. "Fair Market Value" will be determined based upon what a
willing buyer, under no compulsion to buy, would pay a willing seller, under
no compulsion to sell. If all three General Partners cannot agree on a fair
market value after a 30-day resolution period, each of BGP, on the one hand,
and WHGP and Blackstone GP, on the other hand, shall select an independent,
disinterested appraiser who is a certified member of the Appraisal Institute
with at least ten (10) years' established experience in appraising properties
and interests of the same type and in the same geographic areas as the
Properties ("Appraiser") and have an appraisal prepared (the "Initial
Appraisals") within sixty (60) days after the expiration of the thirty (30)
day period described above. If the lower of the Initial Appraisals is not
more than ten percent (10%) less than the higher of the Initial Appraisals,
then the Initial Appraisals shall be averaged and such average shall be the
Fair Market Value for the Properties. If the lower of the Initial Appraisals
is more than ten percent (10%) less than the higher of the Initial
Appraisals, then within ten (10) days after the date on which the last
Initial Appraisal is delivered to the other party the two Appraisers shall
select a third Appraiser or, if the two Appraisers are unable to agree on a
third Appraiser within such time period, the third Appraiser shall be
designated by the American Arbitration Association's New York, New York,
office at the request of either party. The third Appraiser shall conduct a
third, independent appraisal (the "Third Appraisal") within twenty (20) days.
If the Third Appraisal is required, the Fair Market Value shall be the
appraised value of whichever Initial Appraisal is closest to the appraised
value of the Third Appraisal. Each such Initial Appraisal and Third
Appraisal shall be made as of the date of the termination of the DK
Employment Agreement. Each side will bear its own costs and expenses in the
arbitration. If the requisite General Partners (other than BGP) elect, at
any time before the arbitration panel is selected, to cause a sale of the
Properties, rather than having the fair market value determined by the
arbitration panel, the Berkshire Group will receive its share of the sale
proceeds (either including or excluding its share of any IMP as specified
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above) that instead of the amount it would have received based on the
arbitrated value.
9.11 Transfers by the Blackstone Group and the Whitehall Group.
Each of the Partners acknowledges and agrees that the Blackstone LP intends
to Transfer its Interests to one or more persons satisfying the condition of
clause (i) of the definition of Affiliate after the date hereof, and that no
consent of any Partner shall be required in connection therewith. Upon such
transfer such Affiliate(s) shall automatically become Substituted Partner(s)
without any further action and, upon Transfer by the Blackstone LP of all its
entire Interest, shall be deemed to have assumed all of Blackstone LP's
obligations hereunder with respect to such Interest so transferred and
Blackstone LP shall be released from any liabilities under or relating to
this agreement with respect to such Interests so transferred.
(b) Each of the Partners acknowledges and agrees that Whitehall
may Transfer its Interests to one or more persons satisfying the condition
of clause (i) of the definition of Affiliate after the date hereof, and that
no consent of any Partner shall be required in connection therewith. Upon
such Transfer such Affiliate(s) shall automatically become Substituted
Partner(s) without any further action and, upon Transfer by Whitehall of such
Interest, shall be deemed to have assumed all of Whitehall's obligations
hereunder with respect to such Interest so transferred and Whitehall shall be
released from any liabilities under or relating to this agreement with
respect to such Interests so transferred.
9.12 Purchase of the Class A Preferred Units and Class B Units.
(a) Each holder of Class A Preferred Units shall, from and after
the date that is the five years after the Closing Date, have the right, by
delivering written notice to the Partnership, to require the Partnership to
purchase all, but not less than all of its Class A Preferred Units for an
amount in cash equal to $12.25 per Class A Preferred Unit, plus an amount
equal to the accrued and unpaid distributions on such Class A Preferred Units
for all fiscal quarters ending on or prior to the Holder Purchase Date. Any
notice of redemption delivered pursuant to this Section 9.12(a), will be
mailed to the Partnership, by certified mail, postage prepaid, not less
than 180 days prior to the date upon which the holder designates such
purchase is to occur (the "Holder Purchase Date"). The Partnership shall pay
the holders of the Class A Preferred Units as to which such an election has
duly been made hereunder the full amount due under this Section 9.12(a) on
the Holder Purchase Date.
(b) The Partnership shall have the right, from and after the
earlier to occur of (i) the sixth anniversary of the Closing Date, (ii) the
consummation by the Partnership (or its successor) of an underwritten public
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offering of its equity securities, (iii) the time immediately prior to the
consummation of a merger, consolidation or other business combination (other
than (x) a merger, consolidation or other business combination with a General
Partner or an Affiliate of a General Partner or (y) a merger in which the
holders of Partnership Units prior to such merger, consolidation or other
business combination hold 51% or more of the partnership interests in the
surviving entity after the consummation of such merger, consolidation or
other business combination) involving, the Partnership or (iv) the sale of
all or substantially all of the assets of the Partnership (other than such a
sale to a General Partner or an Affiliate of a General Partner), to (1)
redeem all the Class A Preferred Units for a cash price equal to $12.25 per
Class A Preferred Unit, plus an amount equal to the accrued and unpaid
distributions on such Class A Preferred Units for all fiscal quarters ending
on or prior to the date of such redemption (it being understood and agreed
that no payment shall be made in respect of any other quarterly distribution
period), and (2) redeem all of the Class B Units held by any Partner for a
cash price equal to the fair market value of such Class B Units, as such fair
market value shall be reasonably determined by the General Partners (taking
into account appraisals that have been performed at the request of the
Partnership prior to the date of such determination, without imposing any
obligation on the Partnership to obtain any such appraisals). Any notice of
redemption delivered pursuant to this Section 9.12(b) will be mailed by the
Partnership, by certified mail, postage prepaid, not less than 10 nor more
than 60 days prior to the date upon which such redemption is to occur (the
"Partnership Redemption Date"), addressed to each holder of record of the
Partnership Units to be redeemed at such holder's address as it appears on
the records of the Partnership. No failure to give or defect in such notice
shall affect the validity of the proceedings for the redemption of any
Partnership Units. In addition to any information required by law, each such
notice shall state: (a) the Partnership Redemption Date, (b) the redemption
price, (c) the aggregate number of each class of Partnership Units to be to
be redeemed, and (d) the place or places where such Partnership Units to be
redeemed are to be surrendered for payment of the amount payable upon
redemption. Notwithstanding the foregoing, in the event of a public offering
of equity securities of the Partnership prior to the date that is five and
one half years after the Closing Date, the Partnership shall use its
commercially reasonable efforts to structure such offering in a manner that
would permit the holders of the Class A Preferred Units and Class B Units to
remain Partners in the Partnership; provided, however, if the lead
underwriters of such public offering advise the Partnership that such
structure would adversely affect the price to be obtained in such offering or
otherwise materially adversely affect the offering, the provisions of this
sentence shall not apply and instead the Partnership shall have the right to
redeem the Class A Preferred Units or Class B Units pursuant to this Section
9.12(b).
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(c) Except as provided above in clause (a) or clause (b), the
Partnership shall make no payment or allowance for unpaid distributions,
whether or not in arrears, on any Partnership Units purchased or called for
redemption or purchase pursuant to clause (a) or (b) of this Section 9.12.
On and after a Holder Purchase Date or a Partnership Redemption Date,
distributions will cease to accumulate on the Partnership Units for which the
holder purchase option has been exercised or Partnership Units called for
redemption, as applicable, unless the Partnership defaults in payment of the
full redemption price therefor. If any date fixed for redemption or purchase
of Partnership Units is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the originally
scheduled redemption date. If payment of the redemption or purchase price is
improperly withheld or refused and not paid by the Partnership, distributions
on such Partnership Units will continue to accumulate from the originally
scheduled redemption date to the date of payment.
(d) In the event the Partnership defaults in its obligations to
purchase Class A Preferred Units under Section 9.12(a) for a period of more
than fifteen (15) days, the coupon rate on such Class A Preferred Units shall
increase to a rate per annum, compounded quarterly, to the extent not paid on
quarterly basis, equal to 12% during such period of default and the
Partnership shall reimburse the holder of any such Class A Preferred Units as
to which such a default has occurred for all reasonable out of pocket
expenses incurred by such holder in enforcing the collection of such
defaulted amounts.
(e) In the event that prior to the date that is five and one
half years after the Closing Date the Partnership proposes to make a
distribution which, after giving effect to such distribution, will result in
the Investor Group Partners having received cumulative distributions from the
Partnership pursuant to Section 8.1(b) or 8.1(c) equal to more than 50% of
their aggregate Capital Contributions, then (i) the Partnership shall, not
fewer than thirty (30) days prior to such scheduled distribution, provide
notice of such proposed distribution to the Class A Preferred Limited
Partners and provide to the Class A Preferred Limited Partners the
opportunity to accelerate their rights under this Section 9.12(a) to the date
of such proposed distribution (and each such Class A Preferred Limited
Partner shall have the right to exercise such right by delivering to the
Partnership, by hand delivery or nationally recognized overnight courier,
such election not less than five (5) business days prior to such proposed
distribution and (ii) the Partnership shall, on or prior to the date of such
proposed distribution purchase all such the Class A Preferred Units as to
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which such an election has been made at a price equal to the purchase price
specified in Section 9.12(a).
9.13 Subsequent Transactions.
(a) As a result of the closing of the Mergers under the BRI
Merger Agreement and the BRI OP Merger Agreement, immediately after the
Closing Date the Partnership shall be the sole owner (directly and/or
indirectly) of all of the ownership interests of BRI OP, and BRI OP shall be
the sole owner (directly and/or indirectly) of all of the Properties. The
Administering General Partner hereby acknowledges and agrees that, unless
there has been a change in law that would make the structure below not
effective in achieving its intended purpose, it shall cause the Partnership
to undertake the following actions to occur promptly following the closing of
the loan contemplated by the ▇▇▇▇▇▇▇ Mac Parameters (but in no event later
than January 15, 2000) in a manner consistent with its obligations under
Section 4.8 hereof, (collectively, the "Section 9.13 Structure"):
(1) with respect to the 17 properties listed on
Schedule 9.13(a)(1) attached:
(i) the Partnership shall form a limited
liability company under the laws of the State of Delaware
(the "Property LLC") with the Partnership as the sole member
in the Property LLC; and the Partnership shall elect that
the Property LLC be taxed as a partnership or a "disregarded
entity" under any applicable federal and state taxation
laws;
(ii) each Property listed on Schedule 9.13(a)(1)
attached hereto shall be transferred to the Property LLC
either (A) through an asset transfer with the entity which
directly owns such Property (each such entity, a "Property
Owning Entity") as the transferor, (B) by transfer of all of
the ownership interests in the Property Owning Entity for
such Property, or (C) by other means that minimize expenses
or taxes (including transfer taxes) without impairing the
tax benefits afforded by the Section 9.13 Structure;
(2) with respect to the 22 Properties listed on Schedule
9.13(a)(2):
(i) the Partnership shall acquire 100% of the
outstanding common shares of capital stock of one or more
newly formed REITs, and 100 individuals or entities to be
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selected jointly by the Blackstone GP and WHGP shall acquire
preferred shares of the stock of each REIT;
(ii) the REITs described in clause (i) shall
elect to be treated as real estate investment trusts (as
defined in Parts II and III of Subchapter M of Chapter 1 of
Subtitle A of the Code) and shall comply with any and all
requirements, restrictions and limitations imposed on real
estate investment trusts under the Code or any other
applicable laws or governmental rules or regulations;
(iii) the Partnership shall form one or more
Delaware limited partnerships whose partners shall consist
of the Partnership with a 1% general partnership interest
and one of the REITs described in clause (i) with a 99%
limited partnership interest;
(iv) each Property listed on Schedule 9.13(a)(2)
shall be transferred to a limited partnership described in
clause (iii) either (A) through an asset transfer with the
Property Owning Entity of such Property, as the transferor,
(B) by transfer of all of the ownership interests in the
Property Owning Entity of such Property or (C) by other
means that minimize expenses or taxes (including transfer
taxes), without impairing the tax benefits afforded by the
Section 9.13 structure;
(3) with respect to the 33 Properties listed on Schedule
9.13(a)(3):
(i) the Partnership shall acquire 100% of the
outstanding common shares of capital stock of a newly formed
REIT ("REIT 33"), and 100 individuals or entities to be
selected jointly by the Blackstone GP and the Whitehall GP
shall purchase 100 preferred shares of the stock of REIT 33;
(ii) REIT 33 shall elect to be treated as a real
estate investment trust (as defined in Parts II and III of
Subchapter M of Chapter 1 of Subtitle A of the Code) and
shall comply with any and all requirements, restrictions and
limitations imposed on real estate investment trusts under
the Code or any other applicable laws or governmental rules
or regulations; and
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(iii) the Partnership shall transfer to REIT 39 a
99% interest in BRI OP, and the REIT 33 shall become a 99%
limited partner in BRI OP.
(b) In the event that the Administering General Partner does not
cause the Partnership to undertake the actions set forth in Section 9.13(a)
to occur (unless there has been a change in law that would make the Section
9.13 Structure not effective in achieving its intended purpose) by January
15, 2000, the Blackstone GP and the Whitehall GP shall each be entitled,
without the consent of any other Partner, to cause such actions to occur at
any time after such date, and each of the Blackstone GP and the Whitehall GP
shall have the full right, power and authority (acting alone) to execute,
deliver and perform, for and in the name of the Partnership, any and all
documents, agreements and instruments, and to take any other actions, as may
be required or desirable in order to cause the actions set forth in Section
9.13(a) to occur.
(c) If in lieu of (i) implementing the structure set forth in
Section 9.13(a) (the "Section 9.13 Structure") or (ii) maintaining the
ownership structure of the Properties and BRI OP in effect immediately after
the closings under the BRI Merger Agreement and BRI OP Merger Agreement, any
General Partner proposes a change in the structure (a "Revised Section 9.13
Structure") of the ownership of any of the Properties or entities then
supporting one or more Guarantees contemplated by Section 4.8 or BRI OP
(other than in connection with a third party transaction otherwise authorized
under this Agreement), and such Revised Section 9.13 Structure, in the
opinion of each General Partner (in its sole discretion) does not (i)
generate increased Unrelated Business Taxable Income for the Partnership,
(ii) diminish or impair the economic and tax benefits received by the
Investor Group Partners under this Agreement and the Section 9.13 Structure,
or (iii) otherwise adversely affect the rights (including the governance
rights under Article 3 and the sale rights under Article 9) and remedies of
the Investor Group Partners under this Agreement and the Section 9.13
Structure, then the General Partners, subject to the other provisions of this
Agreement, including, without limitation, Section 4.8, shall cause the
Partnership to implement the Revised Section 9.13 Structure, in lieu of the
Section 9.13 Structure but otherwise in accordance with this Section 9.13.
The Blackstone GP and the Whitehall GP each agrees to use commercially
reasonable efforts to cooperate with BGP in developing a Revised Section 9.13
Structure which meets the requirements set forth in this Section 9.13(c) and
eliminates the necessity of (or reduces the amount of) the guarantees from
BGP or its Affiliates. Notwithstanding the foregoing provisions of this
Section 9.13(c), the Partnership shall not undertake, and no Partner shall
cause the Partnership to undertake, any restructuring involving any Revised
Section 9.13 Structure hereof unless either (i) an opinion of counsel
reasonably satisfactory to BGP is obtained to the effect that such
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restructuring would not increase the risk that any Limited Partner or BGP
would be required to recognize taxable income or (ii) the Partnership agrees
to fully indemnify BGP and any Limited Partner that is required to recognize
taxable income as a result of the consummation of such Revised Section 9.13
Structure.
(d) Any expenses incurred by the Partnership or the General
Partners in implementing the Section 9.13 Structure (or Revised Section 9.13
Structure, as applicable), including, without limitation attorneys and
accountants fees and disbursements, transfer taxes, recording costs, and the
formation costs of the REIT and the Property LLC, shall constitute expenses
of the Partnership.
ARTICLE 10.
DISSOLUTION OF THE PARTNERSHIP;
WINDING UP AND DISTRIBUTION OF ASSETS
10.1 Dissolution.
(a) The Partnership shall be dissolved and its affairs shall be
wound up upon the first to occur of the following:
(1) the dissolution or Bankruptcy of any General Partner
or the occurrence of any other event that terminates the continued
membership of a General Partner in the Partnership, unless the
business of the Partnership is continued by the consent of the
majority of the outstanding Partnership Interests ninety (90) days
following the occurrence of any such event;
(2) the sale or other disposition of all of the
Partnership Assets and receipt of the final payment of any
installment obligation received as a result of any such sale or
disposition;
(3) the written consent of all of the General Partners;
(4) any event which makes it unlawful for the
Partnership's business to be continued;
(5) the issuance of a decree by any court of competent
jurisdiction that the Partnership be dissolved and liquidated;
(6) December 31, 2049.
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(b) No Partner shall have the right to (i) withdraw or resign as
a Partner of the Partnership, (ii) redeem, or request redemption of, its
Interest or any part thereof, other than pursuant to Section 9.10(a), or
(iii) dissolve itself voluntarily.
10.2 Winding Up.
(a) In the event of the dissolution of the Partnership pursuant
to Section 10.1(a), the Majority-in-Interest may wind up the Partnership's
affairs.
(b) Upon dissolution of the Partnership and until the filing of
a certificate of cancellation as provided in the Act, two General Partners
(acting as if such action were a Majority Decision) or a liquidating trustee,
as the case may be, may, in the name of, and for and on behalf of, the
Partnership, prosecute and defend suits, whether civil, criminal or
administrative, gradually settle and close the Partnership's business,
dispose of and convey the Partnership's property, discharge or make
reasonable provision for the Partnership's liabilities, and distribute to the
Partners in accordance with Section 10.3 any remaining assets of the
Partnership, all without affecting the liability of Partners and without
imposing liability on any liquidating trustee.
(c) Upon the completion of winding up of the Partnership, two
General Partners (acting as if such action were a Majority Decision) or
liquidating trustee, as the case may be, shall file a certificate of
cancellation in the Office of the Secretary of State of Delaware as provided
in the Act.
10.3 Distribution of Assets. Upon the winding up of the
Partnership, the assets shall be distributed as follows:
(1) to the payment of expenses of the liquidation;
(2) to the payment of debts and liabilities of the
Partnership, in order of priority as provided by law, other than
debts and liabilities owed to Partners;
(3) to the setting up of any reserves that the two
General Partners or the liquidating trustee, as the case may be,
shall determine are reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership or the
Partners;
(4) to the payment of debts and liabilities of the
Partnership owed to Partners;
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(5) to the Partners who are holders of Class A Preferred
Units, in proportion to the respective number of Class A Preferred
Units, in an amount not to exceed an amount per Class A Preferred
Unit equal to $12.25, plus an amount equal to the accrued and unpaid
distributions for each quarterly period ended prior to the date of
such redemption (it being understood and agreed that no payment shall
be made in respect of any other distribution period); and
(6) to the Partners other than holders of Class A
Preferred Units in accordance with Section 8.1(b).
10.4 Special Allocation. It is intended that, to the extent
possible, at the liquidation of the Partnership each Partner's Capital
Account balance will be equal to such Partner's Targeted Capital Account
Balance. Notwithstanding anything in Article 7, if the ending Capital
Account balance of any partner immediately prior to the distributions to be
made pursuant to Section 10.3 is more or less than such Partner's Targeted
Capital Account Balance, then Partnership Profit and Loss, including items of
income, gain, loss and deduction, shall be specially allocated among the
Partners for the year in which liquidating distributions are made pursuant to
Section 10.3 until each Partner's actual Capital Account balance, to the
extent possible, is equal to such Partner's Targeted Capital Account Balance.
The special allocation provision provided by this Section 10.4 shall be
applied in such a manner so as to cause the difference between each Partner's
Targeted Capital Account Balance and the actual balance in its Capital
Account (determined after this allocation, but immediately prior to the
distributions pursuant to this Article 10) to be the smallest dollar amount
possible.
ARTICLE 11.
AMENDMENTS
11.1 Amendments. Subject to Sections 3.7(b) and 3.7(c),
amendments may be made to this Agreement from time to time by the
Administering General Partner with the consent of each of the General
Partners and without the consent of any Limited Partner; provided, however,
that no such amendment shall without such Partner's consent reduce the
amounts distributable to any Partner (in a manner that is not pro rata with
respect to all Interests of a class of Interests), increase the obligations
or liabilities of any Partner hereunder, or otherwise impair the rights of
any Partner under this Agreement, other than an impairment of rights that is
pro rata with other Partners holding the same class of Interests. Without
the consent of the holders of a majority of the outstanding Class A Preferred
Units and Class B Units (excluding holders that are General Partners or
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Affiliates of General Partners), voting together as a single class, this
Agreement may not be amended to change materially the nature of the business
of the Partnership or to change this sentence. No amendment, modification,
supplement, discharge or waiver hereof or hereunder shall require the consent
of any Person not a party to this Agreement. Notwithstanding the foregoing,
(a) no consent of any Partner other than WHGP and Blackstone GP shall be
required for an amendment entered into to reflect any assignment made
pursuant to Section 9.10, (b) no amendment of the proviso clause of the
first sentence of this Section 11.1 shall be made without the consent of all
Partners, (c) no amendment of Section 3.7(b) or this clause (c) shall be made
without the consent of the holders of a majority of the outstanding Class A
Preferred Units (excluding holders that are General Partners or Affiliates of
General Partners), and (d) no amendment of Section 3.7(c) or this clause (d)
shall be made without the consent of the holders of a majority of the
outstanding Class B Units (excluding holders that are General Partners or
Affiliates of General Partners).
11.2 Additional Partners. If this Agreement shall be amended as
a result of adding or substituting a Partner, the amendment to this Agreement
shall be signed by the General Partners, by the Person to be added or
substituted and by the assigning Partner, if any. In making any amendments,
the Administering General Partner shall prepare and file for recordation such
documents and certificates as shall be required to be prepared and filed.
ARTICLE 12.
MISCELLANEOUS
12.1 Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and
things, as may be required by law or as, in the reasonable judgment of any
General Partner, may be necessary or advisable to carry out the intent and
purpose of this Agreement.
12.2 Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party
to this Agreement may desire or be required to give hereunder shall be in
writing and shall be given by hand by depositing the same in the United
States mail, first class postage prepaid, certified mail, return receipt
requested, or by a recognized overnight courier service providing
confirmation of delivery, to the addresses set forth in Sections 2.5 and 2.6,
as applicable, or at such other address as may be designated by the addressee
thereof (which in the case of the Partnership, shall be designated by the
Administering General Partner) upon written notice to all of the Partners.
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All notices given pursuant to this Section 12.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date
delivery was refused by the addressee or (ii) if delivered by United States
mail or by overnight courier, on the date of delivery as established by the
return receipt or courier service confirmation (or the date on which the
return receipt or courier service confirms that acceptance of delivery was
refused by the addressee).
12.3 Headings and Captions. All headings and captions contained
in this Agreement and the table of contents hereto are inserted for
convenience only and shall not be deemed a part of this Agreement.
12.4 Variance of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or entity may require.
12.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one Agreement.
12.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CON-
STRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO CONFLICT OF LAW PROVISIONS THEREOF.
12.7 Consent to Jurisdiction. Each party hereto hereby
irrevocably consents and agrees, for the benefit of each party, that any
legal action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement and with respect to the enforcement, modification, vacation or
correction of an award rendered in an arbitration proceeding may be brought
in any state or federal court located in the Borough of Manhattan, The City
of New York (a "New York Court"), and hereby irrevocably accepts and submits
to the non-exclusive jurisdiction of each New York Court, as the case may be,
with respect to any such action, suit or proceeding. Each party hereto also
hereby irrevocably consents and agrees, for the benefit of each other party,
that any legal action, suit or proceeding against it shall be brought in any
New York Court, and hereby irrevocably accepts and submits to the exclusive
jurisdiction of each such New York Court with respect to any such action,
suit or proceeding. Each party hereto waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions,
suits or proceedings brought in any such New York Court and hereby further
waives and agrees not to plead or claim in any such New York Court that any
such action, suit or proceeding brought therein has been brought in an
inconvenient forum.
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12.8 Arbitration.
(a) Arbitration shall be the exclusive method for resolution of
any claims or disputes arising in connection with this Agreement, and the
determination of the arbitrators shall be final and binding (except to the
extent there exist grounds for vacation or an award under applicable
arbitration statutes) on the Partners. The parties agree that they will give
conclusive effect to the arbitrators' determination and award and that
judgment thereon may be entered in any court having jurisdiction. Each party
shall bear its own costs, in any arbitration.
(b) The number of arbitrators shall be three, each of whom shall
be disinterested in the dispute or controversy and shall be impartial with
respect to all parties hereto. The Whitehall Group the Blackstone Group, and
the Berkshire Group shall each appoint one arbitrator within ten (10)
business days of notice from a party that arbitration is requested.
Notwithstanding the foregoing, in the event one or more Class A Limited
Partners or Class B Limited Partners are claimants in such arbitration
proceedings, such Class A Limited Partners and/or Class B Limited Partners
shall collectively have the right to designate one arbitrator to such
arbitration panel, the Partnership (as if such decision were a Majority
Decision) or the General Partners involved in such proceeding, as
applicable, collectively shall appoint one arbitrator, and such two appointed
arbitrators shall appoint the third arbitrator. In the event the parties
fail to agree upon the arbitrators, the arbitrators (or such number thereof
as shall not have been agreed upon) shall be appointed under the commercial
arbitration rules of the American Arbitration Association.
(c) The place of arbitration shall be the Borough of Manhattan,
The City of New York. The arbitration shall be conducted in the English
language. The arbitrators shall give effect insofar as possible to the
desire of the parties hereto that the dispute or controversy be resolved in
accordance with good commercial practice. The arbitrators shall decide such
dispute in accordance with the law of the State of Delaware. The arbitrators
shall decide such dispute within thirty (30) days of selection of the
arbitrators. The arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association.
12.9 Partition. The Partners hereby agree that no Partner nor
any successor-in-interest to any Partner shall have the right to have the
property of the Partnership partitioned, or to file a complaint or institute
any proceeding at law or in equity to have the property of the Partnership
partitioned, and each Partner, on behalf of himself, his successors,
representatives, heirs and assigns, hereby waives any such right.
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12.10 Invalidity. Every provision of this Agreement is intended
to be severable. The invalidity and unenforceability of any particular
provision of this Agreement in any jurisdiction shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as
if such invalid or unenforceable provision were omitted.
12.11 Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and legal assigns and shall
inure to the benefit of the parties hereto and, except as otherwise provided
herein, their respective successors, executors, administrators, legal
representatives, heirs and legal assigns. No Person other than the parties
hereto and their respective successors, executors, administrators, legal
representatives, heirs and permitted assigns shall have any rights or claims
under this Agreement.
12.12 Entire Agreement. This Agreement supersedes all prior
agreements among the parties with respect to the subject matter hereof and
contains the entire Agreement among the parties with respect to such subject
matter.
12.13 Waivers. No waiver of any provision hereof by any party
hereto shall be deemed a waiver by any other party nor shall any such waiver
by any party be deemed a continuing waiver of any matter by such party.
12.14 No Brokers. Each of the Partners hereto warrants to each
other that, except as set forth in Section 2.9(b) (it being understood,
however, that BRI and BRIOP, in connection with the Merger, hired Lazard
Freres & Co LLC, ▇▇▇▇▇▇ Brothers Inc. and Prudential Securities Incorporated
as their financial advisors and paid fees to such parties), there are no
brokerage commissions or finders' fees (or any basis therefor) resulting from
any action taken by such Partner or any Person acting or purporting to act on
their behalf upon entering into this Agreement. Each Partner agrees to
indemnify and hold harmless each other Partner for all costs, damages or
other expenses arising out of any misrepresentation made in this Section
12.14.
12.15 Maintenance as a Separate Entity. The Partnership shall
maintain books and records and bank accounts separate from those of its
Affiliates; shall at all times hold itself out to the public as a legal
entity separate and distinct from any of its Affiliates (including in its
operating activities, in entering into any contract, in preparing its
financial statements, and on its stationery and any signs it posts), and
shall cause its Affiliates to do the same and to conduct business with it on
an arm's-length basis; shall not commingle its assets with assets of any of
its Affiliates; shall not guarantee any obligation of any of its Affiliates;
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shall cause its business to be carried on by the General Partners and shall
keep minutes of all meetings of the Partners.
12.16 Confidentiality. Each Partner agrees not to disclose or
permit the disclosure of any of the terms of this Agreement or of any other
confidential, non-public or proprietary information relating to this
Agreement (collectively, "Confidential Information"), provided that such
disclosure may be made (a) to any Person who is a member, partner, officer,
director or employee of such Partner or counsel to or accountants of such
Partner solely for their use and on a need-to-know basis, provided that such
Persons are notified of the Partners' confidentiality obligations hereunder,
(b) with the prior consent of the other Partners, (c) subject to the next
paragraph, pursuant to a subpoena or order issued by a court, arbitrator or
governmental body, agency or official, (d) to any lender providing financing
to the Partnership, (e) in connection with a purchase agreement under Section
9.2, to the sellers thereunder, (f) to a bona fide potential transferee of an
Interest who agrees in writing with the Partnership to be bound by the
provisions of this Section 12.16 or (g) as required by law or regulation.
In the event that a Partner shall receive a request to disclose any
Confidential Information under a subpoena or order, such Partner shall
(i) promptly notify the other General Partners thereof, (ii) consult with the
other General Partners on the advisability of taking steps to resist or
narrow such request and (iii) if disclosure is required or deemed advisable,
cooperate with any of the other General Partners in any attempt it may make
to obtain an order or other assurance that confidential treatment will be
accorded the Confidential Information that is disclosed.
No Partner shall issue any press release or other public
communication about the formation or existence of the Partnership without the
express written consent of BGP, WHGP and Blackstone GP.
12.17 No Third Party Beneficiaries. This Agreement is not
intended and shall not be construed as granting any rights, benefits or
privileges to any Person not a party to this Agreement. Without limiting the
generality of the foregoing, no creditor of the Partnership, or of any
Partner shall have any right whatsoever to require any Partner to contribute
capital to the Partnership.
12.18 Power of Attorney.
(a) Each of the Limited Partners (other than the Investor Group
Partners) does hereby irrevocably constitute and appoint each of WHGP,
Blackstone GP and, for so long as it is the Administering General Partner,
BGP with full power of substitution, as its true and lawful attorney, in its
name, place and stead, to execute, acknowledge, swear to, deliver, record and
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file, as appropriate and in accordance with this Agreement (i) all amendments
to the original Certificate required or permitted by law or the provisions of
this Agreement, (ii) all certificates and other instruments requiring
execution by the Partners or any of them and deemed necessary or advisable by
WHGP, Blackstone GP or BGP to qualify or continue the Partnership as a
Partnership wherein the Partners have limited liability in the jurisdictions
where the Partnership may be conducting its operations, (iii) all instruments
requiring execution by the Partners or any of them and that WHGP, Blackstone
GP or BGP deems appropriate to reflect a change or modification of this
Agreement or the Partnership in accordance with this Agreement, including,
without limitation, the substitution of assignees as Substituted Partners
pursuant to Section 9.6 (provided, however, that any such modification is
otherwise in accordance with this Agreement), and (iv) all conveyances and
other instruments deemed necessary or advisable by WHGP, Blackstone GP or BGP
to effect the dissolution and termination of the Partnership in accordance
with this Agreement. Nothing contained in this Section 12.18 shall empower
any General Partner to take any action requiring the consent of any other
General Partner hereunder unless such consent is first obtained.
(b) The powers of attorney granted pursuant to this Section
12.18 are coupled with an interest and shall be irrevocable and survive and
not be affected by the subsequent death, incapacity, disability, Bankruptcy
or dissolution of the grantor; may be exercised by any of the General
Partners either by signing separately as attorney-in-fact for each Partner or
by the General Partners acting as attorneys-in-fact for all of them; and
shall survive the delivery of an assignment by a Partner of the whole or any
fraction of its Interest, except that, where the whole of such Partner's
Interest has been assigned or diluted in accordance with this Agreement, the
power of attorney of the assignor shall survive the delivery of such
assignment for the sole purpose of enabling the General Partners to execute,
acknowledge, swear to, deliver, record and file any instrument necessary or
appropriate to effect such substitution. In the event of any conflict
between this Agreement and any document, instrument, conveyance or
certificate executed or filed by any General Partner pursuant to such power
of attorney, this Agreement shall control.
(c) Each Partner shall execute and deliver to any General
Partner, within five days after the receipt of such General Partner's request
therefor, such further designations, powers of attorney and other instruments
as such General Partner deems necessary or appropriate to carry out the
provisions of this Agreement.
(d) Notwithstanding the foregoing provisions of this Section
12.18, in the event that BGP has been removed as the Administering General
Partner or any General Partner has been removed or has resigned as a General
Partner pursuant to the terms of this Agreement or has voluntarily ceased to
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manage or administer the day-to-day business of the Partnership as
contemplated by Section 3.2, then, in either case, the power of attorney
granted to BGP or such General Partner, as applicable, pursuant to this
Section 12.18 shall immediately be revoked and terminated.
12.19 Construction of Documents. The parties hereto acknowledge
that they were represented by counsel in connection with the review,
negotiation and drafting of this Agreement and that this Agreement shall not
be subject to the principle of construing their meaning against the party
that drafted same.
12.20 Time of Essence. Time is of the essence in the performance
of each and every term of this Agreement.
12.21 Default by Partnership. In the event that on or prior to
the Closing Date, one or more of the Investor Group Partners defaults in its
obligations to make Capital Contributions hereunder, then (i) in the event
such default results in the Partnership defaulting in its obligations under
the BRI Merger Agreement and the Partnership's deposit thereunder being
retained by BRI, such defaulting Partner or Partners shall immediately pay in
cash to the non-defaulting Partners, as sole and liquidated damages under
this Agreement, the amount of any Capital Contributions previously made to
the Partnership by such non-defaulting Partners and (ii) the defaulting
Partner or Partners shall forfeit their respective Interests in the
Partnership and immediately be deemed to have withdrawn from the Partnership.
To the extent there is more than one defaulting Partner under this Section,
amounts to be paid by the defaulting Partners hereunder shall be paid by each
such defaulting Partner in relative proportion to their relative Partnership
Percentage Interests. Amounts due to any Partner under this Section and not
paid shall accrue interest and compound annually at a rate per annum (until
paid in full) equal to the lesser of (i) 20% or (ii) the maximum rate
permitted by law.
12.22 Subsidiary Joint Ventures. The Partnership agrees that it
will not, without the consent of the holders of a majority of the Class A
Preferred Units (excluding any Class A Preferred Units held by a General
Partner or an Affiliate of a General Partner), voting as a separate class,
transfer Properties of the Partnership having a total value of more than one-
third of the total value of all of the Properties of the Partnership to one
or more joint venture companies, partnerships or similar entities, if such
joint venture companies, partnerships, or similar entities issue equity
securities to a party other than the Partnership that rank prior to the Class
A Preferred Units with respect to distributions or receipt of proceeds upon
liquidation.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement of Limited Partnership as of the day and year first above written.
GENERAL PARTNERS:
WXI/BRH Gen-Par LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
BRE/Berkshire GP L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Aptco Gen-Par, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
LIMITED PARTNERS:
Whitehall Street Real Estate
Limited Partnership XI
By: WH Advisors, L.L.C. XI
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
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BRE/Berkshire L.P. L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Aptco Holdings, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
Stone Street Real Estate Fund 1998 L.P.
By: Stone Street Advantage Realty Corp.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President
Bridge Street Real Estate Fund 1998 L.P.
By: Stone Street Advantage Realty Corp.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President
Stone Street WXI/BRH Corp.
By: /s/ ▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President
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For the purposes of Section 4.4(c):
The Berkshire Companies Limited Partnership
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
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