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Exhibit 99.8
-----------------------------------------
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
-----------------------------------------
Dated as of July 2,2001
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS............................................................2
ARTICLE II ORGANIZATIONAL MATTERS..................................................17
Section 2.1 Organization....................................................17
Section 2.2 Name............................................................17
Section 2.3 Registered Office and Agent; Principal Office...................17
Section 2.4 Term............................................................17
ARTICLE III PURPOSE................................................................18
Section 3.1 Purpose and Business............................................18
Section 3.2 Powers..........................................................18
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES Of PARTNERSHIP INTERESTS............18
Section 4.1 Capital Contributions of the Partners...........................18
Section 4.2 Issuances of Partnership Interests..............................19
Section 4.3 No Preemptive Rights............................................21
Section 4.4 Other Contribution Provisions...................................21
Section 4.5 No Interest on Capital..........................................21
Section 4.6 Separate Agreements.............................................21
ARTICLE V DISTRIBUTIONS............................................................21
Section 5.1 Requirement and Characterization of Distributions...............21
Section 5.2 Amounts Withheld................................................25
Section 5.3 Distributions Upon Liquidation..................................25
Section 5.4 Revisions to Reflect Issuance of Partnership Interests..........25
ARTICLE VI ALLOCATIONS.............................................................25
Section 6.1 Allocations For Capital Account Purposes........................25
Section 6.2 Revisions to Allocations to Reflect Issuance of Partnership
Interests..............................................................28
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS..................................28
Section 7.1 Management......................................................28
Section 7.2 Certificate of Limited Partnership..............................33
Section 7.3 Title to Partnership Assets.....................................33
Section 7.4 Reimbursement of the General Partner............................33
Section 7.5 Outside Activities of the General Partner; Relationship of
Shares to Partnership Units; Funding Debt..............................36
Section 7.6 Transactions with Affiliates....................................38
Section 7.7 Indemnification.................................................38
Section 7.8 Liability of the General Partner................................40
Section 7.9 Other Matters Concerning the General Partner....................41
Section 7.10 Reliance by Third Parties.......................................43
Section 7.11 Restrictions on General Partner's Authority.....................43
Section 7.12 Loans by Third Parties..........................................44
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ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................45
Section 8.1 Limitation of Liability.........................................45
Section 8.2 Management of Business..........................................45
Section 8.3 Outside Activities of Limited Partners..........................45
Section 8.4 Return of Capital...............................................45
Section 8.5 Rights of Limited Partners Relating to the Partnership..........46
Section 8.6 Redemption Right................................................48
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS..................................50
Section 9.1 Records and Accounting..........................................50
Section 9.2 Fiscal Year.....................................................51
Section 9.3 Reports.........................................................51
ARTICLE X TAX MATTERS..............................................................51
Section 10.1 Preparation of Tax Returns......................................51
Section 10.2 Tax Elections...................................................51
Section 10.3 Tax Matters Partner.............................................52
Section 10.4 Organizational Expenses.........................................53
Section 10.5 Withholding.....................................................53
ARTICLE XI TRANSFERS AND WITHDRAWALS...............................................54
Section 11.1 Transfer........................................................54
Section 11.2 Transfers of Partnership Interests of General Partner...........54
Section 11.3 Limited Partners' Rights to Transfer............................55
Section 11.4 Substituted Limited Partners....................................57
Section 11.5 Assignees.......................................................58
Section 11.6 General Provisions..............................................59
ARTICLE XII ADMISSION OF PARTNERS..................................................61
Section 12.1 Admission of a Successor General Partner........................61
Section 12.2 Admission of Additional Limited Partners........................61
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership...62
ARTICLE XIII DISSOLUTION AND LIQUIDATION...........................................62
Section 13.1 Dissolution.....................................................62
Section 13.2 Winding Up......................................................63
Section 13.3 Compliance with Timing Requirements of Regulations;
Restoration of Deficit Capital Accounts................................64
Section 13.4 Rights of Limited Partners......................................66
Section 13.5 Notice of Dissolution...........................................66
Section 13.6 Cancellation of Certificate of Limited Partnership..............66
Section 13.7 Reasonable Time for Winding Up..................................67
Section 13.8 Waiver of Partition.............................................67
Section 13.9 Liability of Liquidator.........................................67
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS...........................67
Section 14.1 Amendments......................................................67
Section 14.2 Meetings of the Partners........................................69
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ARTICLE XV GENERAL PROVISIONS......................................................70
Section 15.1 Addresses and Notice............................................70
Section 15.2 Titles and Captions.............................................70
Section 15.3 Pronouns and Plurals............................................70
Section 15.4 Further Action..................................................70
Section 15.5 Binding Effect..................................................70
Section 15.6 Creditors.......................................................71
Section 15.7 Waiver..........................................................71
Section 15.8 Counterparts....................................................71
Section 15.9 Applicable Law..................................................71
Section 15.10 Invalidity of Provisions........................................71
Section 15.11 Power of Attorney...............................................71
Section 15.12 Entire Agreement................................................73
Section 15.13 No Rights as Shareholders.......................................73
Section 15.14 Limitation to Preserve REIT Status..............................73
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EXHIBIT A
FORM OF PARTNER REGISTRY
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
EXHIBIT E-1
(CAP Agreement)
EXHIBIT E-2
(1120 Agreement)
EXHIBIT E-3
(▇▇▇▇▇▇ Runstad Agreement)
EXHIBIT E-4
(▇▇▇▇▇▇▇▇▇ Agreement)
EXHIBIT E-5
(Palo Alto Square Agreement)
EXHIBIT E-6
(Cornerstone Agreement)
EXHIBIT E-7
(ECH-North Loop/Theater District Parking Agreement)
EXHIBIT E-8
(Seattle World Trade Center -- East Building Agreement)
EXHIBIT E-9
(▇▇▇▇▇▇▇ Agreement)
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ATTACHMENT A
(Series A Preferred Units)
ATTACHMENT B
(Series B Preferred Units)
ATTACHMENT C
(Series C Preferred Units)
ATTACHMENT D
(Series D Preferred Units)
ATTACHMENT E
(Series E Preferred Units)
ATTACHMENT F
(Series F Preferred Units)
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of July 2, 2001, is entered into by and among Equity
Office Properties Trust, a Maryland real estate investment trust, as the
General Partner, and the Persons whose names are set forth on the Partner
Registry (as hereinafter defined) as Limited Partners, together with any other
Persons who become Partners in the Partnership as provided herein.
WHEREAS, Equity Office Properties Trust, ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇
Real Estate Opportunity Partners Limited Partnership II, an Illinois limited
Partnership, and certain other persons named therein entered into an Agreement
of Limited Partnership of EOP Operating Limited Partnership dated as of July
3, 1997, pursuant to which the Partnership was formed (the "Original
Partnership Agreement");
WHEREAS, the General Partner and the other Partners in the
Partnership entered into eleven amendments to the Original Partnership
Agreement (the "Prior Amendments") and 20 addenda to the Original Partnership
Agreement effecting the admission of Additional Limited Partners to the
Partnership, the withdrawal of certain Partners from the Partnership, and, in
some cases, certain amendments to provisions of the Original Partnership
Agreement made in connection therewith (the "Prior Addenda");
WHEREAS, the General Partner and the other Partners in the
Partnership entered into the First Amended and Restated Agreement of Limited
Partnership, dated as of May 1, 2000, to incorporate the Original Partnership
Agreement, the Prior Amendments, and the Prior Addenda (the "First Amended and
Restated Agreement"); and
WHEREAS, in connection with the merger of Cornerstone
Properties Limited Partnership, the General Partner and the other Partners in
the Partnership entered into amendments to the First Amended and Restated
Agreement of Limited Partnership by entering into the Second Amended and
Restated Agreement of Limited Partnership, dated as of June 19, 2000 (the
"Second Amended and Restated Agreement");
WHEREAS, the General Partner and the other Partners in the
Partnership entered into five amendments to the Second Amended and Restated
Agreement;
WHEREAS, the Partnership redeemed the Series D 7% Cumulative
Convertible Preferred Units;
WHEREAS, in connection with the merger of ▇▇▇▇▇▇▇ Properties,
L.P. ("▇▇▇▇▇▇▇ Partnership") with and into the Partnership (the "▇▇▇▇▇▇▇
Merger") on July 2, 2001, the Partnership issued Class A units to holders of
common units of partnership interest of ▇▇▇▇▇▇▇ Partnership and issued new
Series D Preferred Units, Series E Preferred Units and Series F Preferred Units
(all as hereinafter defined) to the holder of certain preferred partnership
interests in ▇▇▇▇▇▇▇ Partnership;
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WHEREAS, in connection with the ▇▇▇▇▇▇▇ Merger, the General
Partner and the other Partners in the Partnership now desire to amend the Second
Amended and Restated Agreement and reflect the issuance of the Series D
Preferred Units, Series E Preferred Units and Series F Preferred Units, certain
agreements between the Partnership and certain Partners that received Class A
Units of the Partnership in the ▇▇▇▇▇▇▇ Merger, and certain other matters by
entering into this Third Amended and Restated Agreement of Limited Partnership;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Second Amended and Restated Agreement of Limited Partnership
in its entirety and agree to continue the Partnership as a limited partnership
under the Delaware Revised Uniform Limited Partnership Act, as amended from
time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such
statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained
for each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision
of this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply
with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital
Account as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B.
"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more
of the outstanding voting interests of such Person, (iii) any Person of which
such Person owns or controls ten percent (10%) or
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more of the voting interests or (iv) any officer, director, general partner or
trustee of such Person or any Person referred to in clauses (i), (ii), and
(iii) above. For purposes of this definition, "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.
"Aggregate Protected Amount" means the aggregate balances of
the Protected Amounts, if any, of all Protected Partners, as determined on the
date in question.
"Agreed Value" means (i) in the case of any Contributed
Property, the 704(c) Value of such property as of the time of its contribution
to the Partnership, reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, as the same is reflected in the books and records of the
Partnership; and (ii) in the case of any property distributed to a Partner by
the Partnership, the Partnership's Carrying Value of such property at the time
such property is distributed, reduced by any indebtedness either assumed by
such Partner upon such distribution or to which such property is subject at
the time of distribution as determined under Section 752 of the Code and the
regulations thereunder.
"Agreement" means this Third Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time
to time.
"Assignee" means a Person to whom one or more Partnership
Units have been transferred in a manner permitted under this Agreement, but
who has not become a Substituted Limited Partner, and who has the rights set
forth in Section 11.5.
"Available Cash" means, with respect to any period for which
such calculation is being made:
(a) all cash revenues and funds received by the Partnership
from whatever source (excluding the proceeds of any Capital Contribution) plus
the amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no longer
necessary) in reserves of the Partnership, which reserves are referred to in
clause (b)(iv) below;
(b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments
made during such period by the Partnership,
(ii) all cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under this
Agreement and are not otherwise described in clauses (b)(i) or (ii), and
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(iv) the amount of any increase in reserves
established during such period which the General Partner determines is
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include
any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such Contributed
Property or Adjusted Property and the adjusted basis thereof for federal
income tax purposes as of such date. A Partner's share of the Partnership's
Book-Tax Disparities in all of its Contributed Property and Adjusted Property
will be reflected by the difference between such Partner's Capital Account
balance as maintained pursuant to Exhibit B and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained strictly
in accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in Chicago, Illinois are authorized or required
by law to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Exhibit B.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed
Property or Adjusted Property, the 704(c) Value of such property reduced (but
not below zero) by all Depreciation with respect to such Contributed Property
or Adjusted Property, as the case may be, charged to the Partners' Capital
Accounts and (ii) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time
to time in accordance with Exhibit B, and to reflect changes, additions
(including capital improvements thereto) or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Delaware Secretary of
State, as amended from time to time in accordance with the terms hereof and
the Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
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"Class A Unit" means any Partnership Unit that is not
specifically designated by the General Partner as being of another specified
class of Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of
future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2.
"Consent of the Outside Limited Partners" means the Consent of
Limited Partners (excluding for this purpose any Limited Partnership Interests
held by the General Partner, any Person of which the General Partner owns or
controls more than fifty percent (50%) of the voting interests and any Person
directly or indirectly owning or controlling more than fifty percent (50%) of
the outstanding voting interests of the General Partner) holding Percentage
Interests that are greater than fifty percent (50%) of the aggregate
Percentage Interest of all Limited Partners who are not excluded for the
purposes hereof.
"Consolidation" means (i) the transactions whereby the
Partnership acquired interests in certain office properties owned by the
Opportunity Partnerships and certain asset management and property management
businesses that provided services to those properties and to other office
properties, in exchange for Partnership Units, and (ii) the merger of the ZML
Investors, Inc., ZML Investors II, Inc., ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate
Opportunity Partners III Trust and ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity
Partners IV Trust with and into Equity Office Properties Trust, all as
described in a Joint Proxy Statement/Offering Memorandum dated March 25, 1997.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act,
but excluding cash contributed or deemed contributed to the Partnership. Once
the Carrying Value of a Contributed Property is adjusted pursuant to Exhibit
B, such property shall no longer constitute a Contributed Property for
purposes of Exhibit B, but shall be deemed an Adjusted Property for such
purposes.
"Conversion Factor" means 1.0; provided that, if the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor
shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such
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dividend, distribution, subdivision or combination has occurred as of such
time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination; and provided
further that if an entity shall cease to be the General Partner Entity (the
"Predecessor Entity") and another entity shall become the General Partner
Entity (the "Successor Entity"), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which is the
Value of one Share of the Predecessor Entity, determined as of the date when
the Successor Entity becomes the General Partner Entity, and the denominator
of which is the Value of one Share of the Successor Entity, determined as of
that same date. (For purposes of the second proviso in the preceding sentence,
if any shareholders of the Predecessor Entity will receive consideration in
connection with the transaction in which the Successor Entity becomes the
General Partner Entity, the numerator in the fraction described above for
determining the adjustment to the Conversion Factor (that is, the Value of one
Share of the Predecessor Entity) shall be the sum of the greatest amount of
cash and the fair market value (as determined in good faith by the General
Partner) of any securities and other consideration that the holder of one
Share in the Predecessor Entity could have received in such transaction
(determined without regard to any provisions governing fractional shares).)
Any adjustment to the Conversion Factor shall become effective immediately
after the effective date of the event retroactive to the record date, if any,
for the event giving rise thereto, it being intended that (x) adjustments to
the Conversion Factor are to be made to avoid unintended dilution or
anti-dilution as a result of transactions in which Shares are issued, redeemed
or exchanged without a corresponding issuance, redemption or exchange of
Partnership Units and (y) if a Specified Redemption Date shall fall between
the record date and the effective date of any event of the type described
above, that the Conversion Factor applicable to such redemption shall be
adjusted to take into account such event.
"Convertible Funding Debt" has the meaning set forth in Section
7.5.F.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services, (ii) all amounts owed by
such Person to banks or other Persons in respect of reimbursement obligations
under letters of credit, surety bonds and other similar instruments
guaranteeing payment or other performance of obligations by such Person, (iii)
all indebtedness for borrowed money or for the deferred purchase price of
property or services secured by any lien on any property owned by such Person,
to the extent attributable to such Person's interest in such property, even
though such Person has not assumed or become liable for the payment thereof,
and (iv) obligations of such Person incurred in connection with entering into
a lease which, in accordance with generally accepted accounting principles,
should be capitalized.
"Declaration of Trust" means the Articles of Amendment and
Restatement of Declaration of Trust of Equity Office Properties Trust filed in
the State of Maryland on July 9, 1997, as amended or restated from time to
time.
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"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any
date with respect to any class of Partnership Interests, (a) if the common
shares of beneficial interest (or other comparable equity interests) of the
General Partner Entity are Publicly Traded (i) the total number of shares of
beneficial interest (or other comparable equity interest) of the General
Partner Entity corresponding to such class of Partnership Interest (as
provided for in Section 4.2.B) issued and outstanding as of the close of
business on such date (excluding any treasury shares) multiplied by the Value
of a share of such beneficial interest (or other comparable equity interest)
on such date divided by (ii) the Percentage Interests of the General Partner,
held directly or indirectly through another entity, in such class of
Partnership Interests on such date, and (b) otherwise, the aggregate Value of
such class of Partnership Interests determined as set forth in the fourth and
fifth sentences of the definition of Value. For purposes of clause (a) of the
preceding sentence, "Value" means the average of the daily market price of
such corresponding shares of beneficial interest (or other comparable equity
interests) of the General Partner Entity for such number of consecutive
trading days or the Business Day immediately preceding the date with respect
to which Value must be determined (which number of days or the Business Day
shall be determined by the General Partner in its sole discretion), with the
market price for each such trading day being the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day. Notwithstanding any of the
foregoing, with respect to any class or series of Partnership Interests that
is entitled to a preference as compared to the class of Partnership Interests
corresponding to common shares of beneficial interests (or other comparable
equity interests) of the General Partner Entity, "Value" means the stated
liquidation preference or value of such class or series of Partnership
Interests provided in the instrument establishing such class or series of
Partnership Interests (unless otherwise provided in such instrument).
"Depreciation" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as
the federal income tax depreciation, amortization, or other cost recovery
deduction for such year bears to such beginning adjusted tax basis; provided,
however, that if the federal income tax depreciation, amortization, or other
cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Carrying Value using any
reasonable method selected by the General Partner.
"Distribution Period" has the meaning set forth in Section
5.1.C.
"Effective Date" means the date of the closing of the
Consolidation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ERISA Partner" means either any (a) Limited Partner or (b)
holder of shares of beneficial interest in the General Partner that received
such Shares in the mergers of ZML Investors, Inc., ZML Investors II, Inc.,
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners III Trust, and
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners IV Trust into the General
Partner, and which Limited Partner or shareholder is either (i) an employee
benefit plan subject to Title I of ERISA or section 4975 of the Code, or (ii)
a nominee for or a trust established pursuant to such employee benefit plan,
or (iii) which is an entity whose underlying assets include assets of such
employee benefit plan by reason of such plan's investment in such entity.
"ERISA Plan" means an "employee benefit plan" as that term is
defined in 29 U.S.C. Section 1002(3), and which is not exempt from regulation
under ERISA by virtue of 29 U.S.C. Section 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Value" shall have the meaning described in Section
7.09.E(iv).
"Funding Debt" means the incurrence of any Debt by or on behalf
of the General Partner Entity for the purpose of providing funds to the
Partnership.
"General Partner" means Equity Office Properties Trust, a
Maryland real estate investment trust, or its successor, as general partner of
the Partnership.
"General Partner Entity" means the General Partner; provided,
however, that if (i) the common shares of beneficial interest (or other
comparable equity interests) of the General Partner are at any time not
Publicly Traded and (ii) the common shares of beneficial interest (or other
comparable equity interests) of an entity that owns, directly or indirectly,
fifty percent (50%) or more of the common shares of beneficial interest (or
other comparable equity interests) of the General Partner are Publicly Traded,
the term "General Partner Entity" shall refer to such entity whose common
shares of beneficial interest (or other comparable equity securities) are
Publicly Traded. If both requirements set forth in clauses (i) and (ii) above
are not satisfied, then the term "General Partner Entity" shall mean the
General Partner.
"General Partnership Interest" means a Partnership Interest
held by the General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"General Partner Payment" has the meaning set forth in Section
15.14 hereof.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person,
such natural Person's spouse, parents, descendants, nephews, nieces, brothers,
and sisters.
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"Incapacity" or "Incapacitated" means, (i) as to any individual
who is a Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her Person or estate, (ii) as to any corporation which is a Partner, the
filing of a certificate of dissolution, or its equivalent, for the corporation
or the revocation of its charter, (iii) as to any partnership or limited
liability company which is a Partner, the dissolution and commencement of
winding up of the partnership or limited liability company, (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership, (v) as to any trustee of a trust which is
a Partner, the termination of the trust (but not the substitution of a new
trustee) or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect, (b) the Partner is adjudged
as bankrupt or insolvent, or a final and nonappealable order for relief under
any bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files
an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f)
any proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Partner's consent or acquiescence of
a trustee, receiver of liquidator has not been vacated or stayed within ninety
(90) days of such appointment or (h) an appointment referred to in clause (g)
is not vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of its status as (A) the General Partner, (B) a Limited Partner, or
(C) a trustee, director or officer of the Partnership, or the General Partner
and (ii) such other Persons (including Affiliates of the General Partner, a
Limited Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner
in the Partner Registry or any Substituted Limited Partner or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partnership Interest" means a Partnership Interest of
a Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Limited Partnership
Interest may be expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
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"Liquidator" has the meaning set forth in Section 13.2.A.
"Net Income" means, for any taxable period, the excess, if any,
of the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction for such taxable period over
the Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase Shares, excluding grants under any Share Option Plan, or (ii) any
Debt issued by the General Partner Entity that provides any of the rights
described in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage
or negative pledge securing a Nonrecourse Liability, the amount of any taxable
gain that would be allocated to the Partners pursuant to Section 2.B of
Exhibit C if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions
for a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption
substantially in the form of Exhibit D.
"Opportunity Partnerships" means, ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real
Estate Opportunity Partners Limited Partnership, ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real
Estate Opportunity Partners Limited Partnership II, ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real
Estate Opportunity Partners Limited Partnership III, and ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇
Real Estate Opportunity Partners Limited Partnership IV.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
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"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partner Registry" means the Partner Registry maintained by the
General Partner in the books and records of the Partnership in substantially
the form of the Partner Registry attached hereto as Exhibit A and in
accordance with Section 7.1.A(21).
"Partnership" means the limited partnership formed under the
Act upon the terms and conditions set forth in the Original Partnership
Agreement and continued pursuant to this Agreement, or any successor to such
limited partnership.
"Partnership Interest" means a Limited Partnership Interest or
a General Partnership Interest and includes any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Partnership Interest may be
expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner either (i) for the distribution of Available Cash pursuant
to Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its
shareholders of some or all of its portion of such distribution, or (ii) if
applicable, for determining the Partners entitled to vote on or consent to any
proposed action for which the consent or approval of the Partners is sought
pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
and includes Class A Units, Class B Units, Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented
by such Partnership Units are set forth in the Partner Registry.
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"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in the Partner
Registry multiplied by the aggregate Percentage Interest allocable to such
class of Partnership Interests. If the Partnership shall at any time have
outstanding more than one class of Partnership Interests, the Percentage
Interest attributable to each class of Partnership Interests shall be
determined as set forth in Section 4.2.B.
"Person" means a natural person, partnership (whether general
or limited), trust, estate, association, corporation, limited liability
company, unincorporated organization, custodian, nominee or any other
individual or entity in its own or any representative capacity.
"Predecessor Entity" has the meaning set forth in the
definition of "Conversion Factor" herein.
"Protected Amount" means the amount specified on Exhibit E with
respect to any Protected Partner, as such Exhibit may be amended from time to
time.
"Protected Partner" means a Partner designated as a Protected
Partner on Exhibit E, as such Exhibit may be amended from time to time, which
Protected Partner is obligated to make certain contributions, not in excess of
such Protected Partner's Protected Amount, to the Partnership with respect to
any deficit balance in such Partner's Capital Account upon the occurrence of
certain events. A Protected Partner who is obligated to make any such
contribution only upon liquidation of the Partnership shall be designated on
Exhibit E as a Part I Protected Partner and a Protected Partner who is
obligated to make any such contribution to the Partnership either upon
liquidation of the Partnership or upon liquidation of such Protected Partner's
Partnership Interest shall be designated on Exhibit E as a Part II Protected
Partner.
"Publicly Traded" means listed or admitted to trading on the
New York Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on the NASDAQ National Market,
or any successor to any of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as
defined in Rule 501 promulgated under the Securities Act.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or Section
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized either as ordinary income or as
"unrecaptured Section 1250 gain" (as defined
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in Section 1(h)(7) of the Code because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Recourse Liabilities" means the amount of liabilities owed by
the Partnership (other than Nonrecourse Liabilities and liabilities to which
Partner Nonrecourse Deductions are attributable in accordance with Section
1.704-(2)(i) of the Regulations).
"Redeeming Partner" has the meaning set forth in Section 8.6.A.
"Redemption Amount" means either the Cash Amount or the Shares
Amount, as determined by the General Partner, in its sole and absolute
discretion; provided that if the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall
be paid only in the form of the Cash Amount unless the Redeeming Partner, in
its sole and absolute discretion, consents to payment of the Redemption Amount
in the form of the Shares Amount. A Redeeming Partner shall have no right,
without the General Partner's consent, in its sole and absolute discretion, to
receive the Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
"Regulations" means the Treasury Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856
of the Code.
"REIT Requirements" has the meaning set forth in Section 5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" means the 8.98% Series A Cumulative
Redeemable Preferred Shares of Equity Office Properties Trust issued in
connection with the merger of Beacon Properties Corporation into Equity Office
Properties Trust on December 19, 1997.
"Series A Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the
8.98% Series A Cumulative Redeemable Preferred Units with the designations,
preferences and other rights set forth in Attachment A hereto.
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"Series B Preferred Shares" means the 5.25% Series B
Convertible, Cumulative Preferred Shares of the Company, with the preferences,
conversion and other rights, voting powers , restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption of shares
as described in the Articles Supplementary to the Declaration of Trust filed
with the State Department of Assessments and Taxation of Maryland on February
19, 1998, establishing the series of preferred shares, designated Series B
Preferred Shares.
"Series B Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the
5.25% B Convertible, Cumulative Preferred Units, with the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
distributions, qualification and terms and conditions of redemption of units
set forth in Attachment B hereto.
"Series C Preferred Shares" means the 8 5/8% Series C
Cumulative Redeemable Preferred Shares of Beneficial Interest of the Company
issued and sold in the underwritten public offering made pursuant to the
Company's effective shelf registration statement on Form S-3 (Reg. No.
333-58729), its prospectus dated July 22, 1998, and its related prospectus
supplement dated December 1, 1998.
"Series C Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the 8
5/8% Series C Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment C hereto.
"Series D Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the
Series D Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment D hereto.
"Series E Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the
Series E Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment E hereto.
"Series F Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the
Series F Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment F hereto.
"704(c) Value" of any Contributed Property means the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as they may adopt;
provided, however, subject to Exhibit B, the General Partner shall, in its
sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the 704(c) Value of Contributed
Properties in a single or integrated transaction among each separate property
on a basis proportional to its fair market values.
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"Share" means a share of beneficial interest (or other
comparable equity interest) of the General Partner Entity. Shares may be
issued in one or more classes or series in accordance with the terms of the
Declaration of Trust (or, if the General Partner is not the General Partner
Entity, the organizational documents of the General Partner Entity). If there
is more than one class or series of Shares, the term "Shares" shall, as the
context requires, be deemed to refer to the class or series of Shares that
correspond to the class or series of Partnership Interests for which the
reference to Shares is made. When used with reference to Class A Units, the
term "Shares" refers to common shares of beneficial interest (or other
comparable equity interest) of the General Partner Entity.
"Share Option Plan" means any equity incentive plan of the
General Partner, the General Partner Entity, the Partnership and/or any
Affiliate of the Partnership.
"Shares Amount" means a number of Shares equal to the product
of the number of Partnership Units offered for redemption by a Redeeming
Partner times the Conversion Factor; provided that, if the General Partner
Entity issues to all holders of Shares rights, options, warrants or
convertible or exchangeable securities entitling such holders to subscribe for
or purchase Shares or any other securities or property (collectively, the
"rights"), then the Shares Amount shall also include such rights that a holder
of that number of Shares would be entitled to receive.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, if
the Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the General Partner of a Notice of
Redemption.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, trust, partnership or joint venture,
or other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests is owned, directly
or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as
a Limited Partner to the Partnership pursuant to Section 11.4.
"Successor Entity" has the meaning set forth in the definition
of "Conversion Factor" herein.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash or a related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets of the
Partnership for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i)
the fair market value of such property (as determined under Exhibit B) as of
such date, over (ii) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Exhibit B) as of such date.
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"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i)
the Carrying Value of such property (prior to any adjustment to be made
pursuant to Exhibit B) as of such date, over (ii) the fair market value of
such property (as determined under Exhibit B) as of such date.
"Valuation Date" means the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
first Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the
General Partner Entity that are Publicly Traded, the average of the daily
market price for the ten consecutive trading days immediately preceding the
date with respect to which value must be determined. The market price for each
such trading day shall be the closing price, regular way, on such day, or if
no such sale takes place on such day, the average of the closing bid and asked
prices on such day. If the outstanding Shares of the General Partner Entity
are Publicly Traded and the Shares Amount includes rights that a holder of
Shares would be entitled to receive, then the Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. If the Shares of the General Partner Entity are not Publicly
Traded, the Value of the Shares Amount per Partnership Unit offered for
redemption (which will be the Cash Amount per Partnership Unit offered for
redemption payable pursuant to Section 8.6.A) means the amount that a holder
of one Partnership Unit would receive if each of the assets of the Partnership
were to be sold for its fair market value on the Specified Redemption Date,
the Partnership were to pay all of its outstanding liabilities, and the
remaining proceeds were to be distributed to the Partners in accordance with
the terms of this Agreement. Such Value shall be determined by the General
Partner, acting in good faith and based upon a commercially reasonable
estimate of the amount that would be realized by the Partnership if each asset
of the Partnership (and each asset of each partnership, limited liability
company, trust, joint venture or other entity in which the Partnership owns a
direct or indirect interest) were sold to an unrelated purchaser in an arms'
length transaction where neither the purchaser nor the seller were under
economic compulsion to enter into the transaction (without regard to any
discount in value as a result of the Partnership's minority interest in any
property or any illiquidity of the Partnership's interest in any property). In
connection with determining the Deemed Value of the Partnership Interest for
purposes of determining the number of additional Partnership Units issuable
upon a Capital Contribution funded by an underwritten public offering or an
arm's length private placement of shares of beneficial interest (or other
comparable equity interest) of the General Partner, the Value of such shares
shall be the public offering or arm's length private placement price per share
of such class of beneficial interest (or other comparable equity interest)
sold.
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ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to
the provisions of the Act and upon the terms and conditions set forth in the
Original Agreement, as amended by the Prior Amendments, the Prior Addenda, the
First Amended and Restated Agreement, and the Second Amended and Restated
Agreement. The Partners hereby agree to continue the business of the Partnership
on the terms set forth in this Agreement. Except as expressly provided herein to
the contrary, the rights and obligations of the Partners and the administration
and termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
SECTION 2.2 NAME
The name of the Partnership is EOP Operating Limited
Partnership. The Partnership's business may be conducted under any other name
or names deemed advisable by the General Partner, including the name of any of
the General Partner or any Affiliate thereof. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and
from time to time and shall notify the Limited Partners of such change in the
next regular communication to the Limited Partners.
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the
State of Delaware shall be located at Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered
agent for service of process on the Partnership in the State of Delaware at
such registered office shall be Corporation Trust Company. The principal
office of the Partnership shall be ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
SECTION 2.4 TERM
The term of the Partnership commenced on November 1, 1996, and
shall continue until December 31, 2095, unless it is dissolved sooner pursuant
to the provisions of Article XIII or as otherwise provided by law.
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ARTICLE III
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that
such business shall be limited to and conducted in such a manner as to permit
the General Partner Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify or is not qualified as a REIT for any
reason or reasons not related to the business conducted by the Partnership,
(ii) to enter into any corporation, partnership, joint venture, trust, limited
liability company or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged, directly or
indirectly, in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the status of the General Partner Entity as a REIT inures to
the benefit of all the Partners and not solely to the General Partner Entity
or its Affiliates.
SECTION 3.2 POWERS
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, directly or through its ownership
interest in other entities, to enter into, perform and carry out contracts of
any kind, borrow money and issue evidences of indebtedness, whether or not
secured by mortgage, deed of trust, pledge or other lien, acquire, own,
manage, improve and develop real property, and lease, sell, transfer and
dispose of real property; provided, however, that the Partnership shall not
take, or refrain from taking, any action which, in the judgment of the General
Partner, in its sole and absolute discretion, (i) could adversely affect the
ability of the General Partner Entity to continue to qualify as a REIT, (ii)
could subject the General Partner Entity to any taxes under Section 857 or
Section 4981 of the Code or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over either the General
Partner or the General Partner Entity or its securities, unless such action
(or inaction) shall have been specifically consented to by the General Partner
in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
Prior to the execution of this Agreement, the Partners have
made the Capital Contributions as set forth in the Partner Registry. The
Partners own Partnership Units in the amounts set forth in the Partner
Registry and have Percentage Interests in the
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Partnership as set forth in the Partner Registry, which number of Partnership
Units and Percentage Interest shall be adjusted in the Partner Registry from
time to time by the General Partner to the extent necessary to reflect
accurately redemptions, Capital Contributions, the issuance of additional
Partnership Units or similar events having an effect on a Partner's Percentage
Interest occurring after the date hereof in accordance with the terms of this
Agreement. To the extent the Partnership acquires any property by the merger
of any other Person into the Partnership, Persons who receive Partnership
Interests in exchange for their interests in the Person merging into the
Partnership shall become Partners and shall be deemed to have made Capital
Contributions as provided in the applicable merger agreement and as set forth
in the Partner Registry. A number of Partnership Units held by the General
Partner equal to one percent (1%) of the aggregate number of Partnership Units
owned by the General Partner shall be deemed to be the General Partner
Partnership Units and shall be the General Partnership Interest of the General
Partner. All other Partnership Units held by the General Partner shall be
deemed to be Limited Partnership Interests and shall be held by the General
Partner in its capacity as a Limited Partner in the Partnership. Except as
provided in Sections 7.5, 10.5, and 13.3 hereof, the Partners shall have no
obligation to make any additional Capital Contributions or provide any
additional funding to the Partnership (whether in the form of loans,
repayments of loans or otherwise). Except as otherwise set forth in Section
13.3 hereof, no Partner shall have any obligation to restore any deficit that
may exist in its Capital Account, either upon a liquidation of the Partnership
or otherwise.
SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners (including the
General Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of property to the
Partnership) Partnership Units or other Partnership Interests in one or more
classes, or in one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties senior
to Limited Partnership Interests, all as shall be determined, subject to
applicable Delaware law, by the General Partner in its sole and absolute
discretion, including, without limitation, (i) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests, (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that no such Partnership Units or
other Partnership Interests shall be issued to the General Partner unless
either (a) the Partnership Interests are issued in connection with the grant,
award or issuance of Shares or other equity interests in the General Partner
having designations, preferences and other rights such that the economic
interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights
(except voting rights) of the Partnership Interests issued to the General
Partner in accordance with this Section 4.2.A or (b) the additional
Partnership Interests are issued to all Partners holding Partnership Interests
in the same class in proportion to their respective Percentage Interests in
such class. If the Partnership issues Partnership Interests pursuant to this
Section 4.2.A, the General Partner shall make such
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revisions to this Agreement (including but not limited to the revisions
described in Section 5.4, Section 6.2 and Section 8.6) as it deems necessary
to reflect the issuance of such Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units and so long as the Partnership
shall have outstanding more than one class of Partnership Interests, the
Percentage Interest related thereto shall be equal to a fraction, the
numerator of which is equal to the amount of cash, if any, plus the Agreed
Value of Contributed Property, if any, contributed with respect to such
additional Partnership Units and the denominator of which is equal to the sum
of (i) the Deemed Value of the Partnership Interests for all outstanding
classes (computed as of the Business Day immediately preceding the date on
which the additional Capital Contributions are made (an "Adjustment Date"))
plus (ii) the aggregate amount of additional Capital Contributions contributed
to the Partnership on such Adjustment Date in respect of such additional
Partnership Units. The Percentage Interest of each other Partner holding
Partnership Interests not making a full pro rata Capital Contribution shall be
adjusted to a fraction the numerator of which is equal to the sum of (i) the
Deemed Partnership Interest Value of such Limited Partner (computed as of the
Business Day immediately preceding the Adjustment Date) plus (ii) the amount
of additional Capital Contributions (such amount being equal to the amount of
cash, if any, plus the Agreed Value of Contributed Property, if any, so
contributed), if any, made by such Partner to the Partnership in respect of
such Partnership Interest as of such Adjustment Date and the denominator of
which is equal to the sum of (i) the Deemed Value of the Partnership Interests
of all outstanding classes (computed as of the Business Day immediately
preceding such Adjustment Date) plus (ii) the aggregate amount of the
additional Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such additional Partnership Interests. For
purposes of calculating a Partner's Percentage Interest pursuant to this
Section 4.2.B, cash Capital Contributions by the General Partner will be
deemed to equal the cash contributed by the General Partner plus (a) in the
case of cash contributions funded by an offering of any equity interests in or
other securities of the General Partner, the offering costs attributable to
the cash contributed to the Partnership, and (b) in the case of Partnership
Units issued pursuant to Section 7.5.E, an amount equal to the difference
between the Value of the Shares sold pursuant to any Share Option Plan and the
net proceeds of such sale.
C. Classes of Partnership Units. Subject to Section 4.2.A
above and Section 4.2.D below, the Partnership shall have two classes of
Partnership Units entitled "Class A Units" and "Class B Units." Either Class A
Units or Class B Units, at the election of the General Partner, in its sole
and absolute discretion, may be issued to newly admitted Partners in exchange
for the contribution by such Partners of cash, real estate partnership
interests, stock, notes or other assets or consideration; provided that any
Partnership Unit that is not specifically designated by the General Partner as
being of a particular class shall be deemed to be a Class A Unit. Each Class B
Unit shall be converted automatically into a Class A Unit on the day
immediately following the Partnership Record Date for the Distribution Period
(as defined in Section 5.1.C) in which such Class B Unit was issued, without
the requirement for any action by either the Partnership or the Partner
holding the Class B Unit.
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D. Preferred Units Outstanding. Pursuant to Section 4.2.A,
the Partnership has heretofore established and issued Series A Preferred
Units, Series B Preferred Units, and Series C Preferred Units, and the
Partnership is establishing and issuing the Series D Preferred Units, the
Series E Preferred Units and the Series F Preferred Units in connection with
the adoption of this Agreement. The terms and conditions of the Series A
Preferred Units, the Series B Preferred Units, the Series C Preferred Units,
the Series D Preferred Units, the Series E Preferred Units, and the Series F
Preferred Units are set forth in Attachment A, Attachment B, Attachment C,
Attachment D, Attachment E, and Attachment F, respectively, attached hereto
and made part hereof.
SECTION 4.3 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership or (ii) issuance or sale of any
Partnership Units or other Partnership Interests.
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS
If any Partner is admitted to the Partnership and is given a
Capital Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as if
the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
SECTION 4.5 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
SECTION 4.6 SEPARATE AGREEMENTS
In connection with the issuance of Partnership Units to certain
Additional Limited Partners, the Partnership has entered into separate
agreements that set forth additional rights and obligations of such Additional
Limited Partners and additional terms and conditions of such Additional
Limited Partner's Partnership Interests. Such agreements are described in
Exhibits E-1 through E-9 attached hereto and made part hereof.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the
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Partnership during such quarter or shorter period to the Partners who are
Partners on the Partnership Record Date with respect to such quarter or
shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D. Notwithstanding
anything to the contrary contained herein, in no event may a Partner receive a
distribution of Available Cash with respect to a Partnership Unit for a
quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a Share for which such Partnership Unit has been
redeemed or exchanged. Unless otherwise expressly provided for herein, in
Attachment A, Attachment B, Attachment C, Attachment D, Attachment E, and
Attachment F hereto, with respect to Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E
Preferred Units, and Series F Preferred Units, respectively, or in an
agreement at the time a new class or series of Partnership Interests is
created in accordance with Article IV hereof, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership Interest.
The General Partner shall make such reasonable efforts, as determined by it in
its sole and absolute discretion and consistent with the qualification of the
General Partner Entity as a REIT, to distribute Available Cash (a) to Limited
Partners so as to preclude any such distribution or portion thereof from being
treated as part of a sale of property to the Partnership by a Limited Partner
under Section 707 of the Code or the Regulations thereunder; provided, that,
the General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a Limited
Partner being so treated, and (b) to the General Partner in an amount
sufficient to enable the General Partner Entity to make distributions to its
shareholders that will enable the General Partner Entity to (1) satisfy the
requirements for qualification as a REIT under the Code and the Regulations
(the "REIT Requirements"), and (2) avoid any federal income or excise tax
liability.
B. Method. (i) Each holder of Partnership Interests that
is entitled to any preference in distribution (including, without limitation,
the preferences in distribution set forth in Attachment A, Attachment B,
Attachment C, Attachment D, Attachment E, and Attachment F hereto with respect
to Series A Preferred Units, Series B Preferred Units, Series C Preferred
Units, Series D Preferred Units, Series E Preferred Units, and Series F
Preferred Units, respectively) shall be entitled to a distribution in
accordance with the rights of any such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the
payment of any preference in distribution in accordance with the foregoing
clause (i), with respect to Partnership Interests that are not entitled to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within each such class, pro rata in proportion to
the respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for
any quarter or shorter period with respect to which a distribution is to be
made (a "Distribution Period") Class B Units are outstanding on the
Partnership Record Date for such Distribution Period, the General Partner
shall allocate the Available Cash with respect to such Distribution Period
available for distribution with respect to the Class A Units and
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Class B Units collectively between the Partners who are holders of Class A
Units ("Class A") and the Partners who are holders of Class B Units ("Class
B") as follows:
(1) Class A shall receive that portion of
the Available Cash (the "Class A Share") determined by
multiplying the amount of Available Cash by the
following fraction:
A x Y
------------------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of
the Available Cash (the "Class B Share") determined by
multiplying the amount of Available Cash by the
following fraction:
B x X
------------------------
(A x Y)+(B x X)
(3) For purposes of the foregoing
formulas, (i) "A" equals the number of Class A Units
outstanding on the Partnership Record Date for such
Distribution Period; (ii) "B" equals the number of Class
B Units outstanding on the Partnership Record Date for
such Distribution Period; (iii) "Y" equals the number of
days in the Distribution Period; and (iv) "X" equals the
number of days in the Distribution Period for which the
Class B Units were issued and outstanding.
The Class A Share shall be distributed among Partners holding
Class A Units on the Partnership Record Date for the Distribution Period in
accordance with the number of Class A Units held by each Partner on such
Partnership Record Date; provided that in no event may a Partner receive a
distribution of Available Cash with respect to a Class A Unit if a Partner is
entitled to receive a distribution out of such Available Cash with respect to
a Share for which such Class A Unit has been redeemed or exchanged. The Class
B Shares shall be distributed among the Partners holding Class B Units on the
Partnership Record Date for the Distribution Period in accordance with the
number of
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Class B Units held by each Partner on such Partnership Record Date. In no
event shall any Class B Units be entitled to receive any distribution of
Available Cash for any Distribution Period ending prior to the date on which
such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on
Different Dates. If Class B Units which have been issued on different dates
are outstanding on the Partnership Record Date for any Distribution Period,
then the Class B Units issued on each particular date shall be treated as a
separate series of Partnership Units for purposes of making the allocation of
Available Cash for such Distribution Period among the holders of Partnership
Units (and the formula for making such allocation, and the definitions of
variables used therein, shall be modified accordingly). Thus, for example, if
two series of Class B Units are outstanding on the Partnership Record Date for
any Distribution Period, the allocation formula for each series, "Series B1"
and "Series B2" would be as follows:
(1) Series B1 shall receive that portion
of the Available Cash determined by multiplying the
amount of Available Cash by the following fraction:
B1 x X1
--------------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that portion
of the Available Cash determined by multiplying the
amount of Available Cash by the following fraction:
B2 x X2
--------------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing formulas
the definitions set forth in Section 5.1.C.3 remain the
same except that (i) "B1" equals the number of
Partnership Units in Series B1 outstanding on the
Partnership Record Date for such Distribution Period;
(ii) "B2" equals the number of Partnership Units in
Series B2 outstanding on the Partnership Record Date for
such Distribution Period;
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(iii) "X1" equals the number of days in the Distribution
Period for which the Partnership Units in Series B1 were
issued and outstanding; and (iv) "X2" equals the number
of days in the Distribution Period for which the
Partnership Units in Series B2 were issued and
outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the Shares
of the General Partner Entity are not Publicly Traded, the General Partner
shall make cash distributions with respect to the Class A Units at least
annually for each taxable year of the Partnership beginning prior to the
fifteenth (15th) anniversary of the Effective Date in an aggregate amount with
respect to each such taxable year at least equal to 95% of the Partnership's
taxable income for such year allocable to the Class A Units, with such
distributions to be made not later than 60 days after the end of such year.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 13.2.
SECTION 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article V and the Partner
Registry as it deems necessary to reflect the issuance of such additional
Partnership Interests without the requirements for any other consents or
approvals.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the Partnership's
items of income, gain, loss and deduction (computed in accordance with Exhibit
B) shall be allocated among the Partners in each taxable year (or portion
thereof) as provided herein below.
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A. Net Income. After giving effect to the special
allocations set forth in Section 1 of Exhibit C of the Partnership Agreement,
Net Income shall be allocated:
(1) first, to the General Partner to the extent that
cumulative Net Losses previously allocated the General
Partner pursuant to Section 6.1.B(6) exceed cumulative
Net Income previously allocated to the General Partner
pursuant to this clause (1);
(2) second, to each Protected Partner until the
cumulative Net Income allocated such Protected Partner
under this clause (2) equals the cumulative Net Losses
allocated such Protected Partner under Section 6.1.B(5)
(and, within the class of Protected Partners, pro rata
in proportion to their respective percentages of the
cumulative Net Losses allocated all Protected Partners
pursuant to Section 6.1.B(5) hereof);
(3) third, to the General Partner until the cumulative
Net Income allocated under this clause (3) equals the
cumulative Net Losses allocated the General Partner
under Section 6.1.B(4);
(4) fourth, to the holders of any Partnership Interests
that are entitled to any preference upon liquidation
until the cumulative Net Income allocated under this
clause (4) equals the cumulative Net Losses allocated to
such Partners under Section 6.1.B(3);
(5) fifth, to the holders of any Partnership Interests
that are entitled to any preference in distribution in
accordance with the rights of any such class of
Partnership Interests until each such Partnership
Interest has been allocated, on a cumulative basis
pursuant to this clause (5), Net Income equal to the
amount of distributions received which are attributable
to the preference of such class of Partnership Interests
(and, within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of
the period for which such allocation is being made); and
(6) finally, with respect to Partnership Interests that
are not entitled to any preference in the allocation of
Net Income, pro rata to each such class in accordance
with the terms of such class (and, within such class,
pro rata in proportion to the respective Percentage
Interests as of the last day of the period for which
such allocation is being made).
B. Net Losses. After giving effect to the special
allocations set forth in Section 1 of Exhibit C, Net Losses shall be
allocated:
(1) first, to the holders of Partnership Interests, in
proportion to their share of the Net Income previously
allocated pursuant to Section 6.1.A(6), to the extent
that any prior allocations of Net Income
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to such Partners pursuant to Section 6.1.A(6) exceed, on
a cumulative basis, distributions with respect to such
Partnership Interests pursuant to clause (ii) of Section
5.1.B;
(2) second, with respect to classes of Partnership
Interests that are not entitled to any preference in
distribution upon distribution, pro rata to each such
class in accordance with the terms of such class (and,
within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of
the period for which such allocation is being made);
provided that Net Losses shall not be allocated to any
Partner pursuant to this Section 6.1.B(2) to the extent
that such allocation would cause such Partner to have an
Adjusted Capital Account Deficit (or increase any
existing Adjusted Capital Account Deficit) (determined
in each case (i) by not including in the Partners'
Adjusted Capital Accounts any amount that a Partner is
obligated to contribute to the Partnership with respect
to any deficit in its Capital Account pursuant to
Section 13.3 and (ii) in the case of a Partner who also
holds classes of Partnership Interests that are entitled
to any preferences in distribution upon liquidation, by
subtracting from such Partners' Adjusted Capital Account
the amount of such preferred distribution to be made
upon liquidation) at the end of such taxable year (or
portion thereof);
(3) third, with respect to classes of Partnership
Interests that are entitled to any preference in
distribution upon liquidation, in reverse order of the
priorities of each such class (and within each such
class, pro rata in proportion to their respective
Percentage Interests as of the last day of the period
for which such allocation is being made; provided that
Net Losses shall not be allocated to any Partner
pursuant to this Section 6.1.B(3) to the extent that
such allocation would cause such Partner to have an
Adjusted Capital Account Deficit (or increase any
existing Adjusted Capital Account Deficit) (determined
in each case by not including in the Partners' Adjusted
Capital Accounts any amount that a Partner is obligated
to contribute to the Partnership with respect to any
deficit in its Capital Account pursuant to Section 13.3)
at the end of such taxable year (or portion thereof);
(4) fourth, to the General Partner in an amount equal to
the excess of (a) the amount of the Partnership Recourse
Liabilities over (b) the Aggregate Protected Amount;
(5) fifth, to and among the Protected Partners, in
proportion to their respective Protected Amounts, until
such time as the Protected Partners as a group have been
allocated cumulative Net Losses pursuant to this clause
(5) equal to the Aggregate Protected Amount; and
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(6) thereafter, to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of
Regulation Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities
of the Partnership in excess of the sum of (i) the amount of Partnership
Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated by the General Partner by taking into account facts and
circumstances relating to each Partner's respective interest in the profits of
the Partnership. For this purpose, the General Partner will have discretion in
any fiscal year to allocate such excess Nonrecourse Liabilities among the
Partners in any manner permitted under Code Section 752 and the Regulations
thereunder.
D. Recapture Income. Any gain allocated to the Partners
upon the sale or other taxable disposition of any Partnership asset shall, to
the extent possible after taking into account other required allocations of
gain pursuant to Exhibit C, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains
as Recapture Income.
SECTION 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF PARTNERSHIP
INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article VI and the Partner
Registry as it deems necessary to reflect the terms of the issuance of such
Partnership Interests, including making preferential allocations to classes of
Partnership Interests that are entitled thereto. Such revisions shall not
require the consent or approval of any other Partner.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
▇. ▇▇▇▇▇▇ of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Partnership are and shall be exclusively vested in the General
Partner, and no Limited Partner shall have any right to participate in or
exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners
with or without cause. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement,
the General Partner, subject to Section 7.11, shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all powers set forth in Section 3.2
and to effectuate the purposes set forth in Section 3.1, including, without
limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without
limitation, making prepayments on
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loans and borrowing money to permit the
Partnership to make distributions to its Partners
in such amounts as are required under Section
5.1.E or will permit the General Partner Entity
(so long as the General Partner Entity qualifies
as REIT) to avoid the payment of any federal
income tax (including, for this purpose, any
excise tax pursuant to Section 4981 of the Code)
and to make distributions to its shareholders
sufficient to permit the General Partner Entity
to maintain REIT status), the assumption or
guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance
of evidences of indebtedness (including the
securing of same by mortgage, deed of trust or
other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations the
General Partner deems necessary for the conduct
of the activities of the Partnership;
(2) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to
governmental or other agencies having
jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or
all of the assets of the Partnership (including
the exercise or grant of any conversion, option,
privilege or subscription right or other right
available in connection with any assets at any
time held by the Partnership) or the merger or
other combination of the Partnership with or into
another entity on such terms as the General
Partner deems proper;
(4) the use of the assets of the Partnership
(including, without limitation, cash on hand) for
any purpose consistent with the terms of this
Agreement and on any terms it sees fit,
including, without limitation, the financing of
the conduct of the operations of the General
Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds
to other Persons (including, without limitation,
the General Partner, its Subsidiaries and the
Partnership's Subsidiaries) and the repayment of
obligations of the Partnership and its
Subsidiaries and any other Person in which the
Partnership has an equity investment and the
making of capital contributions to its
Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of
any real property or improvements owned by the
Partnership or any Subsidiary of the Partnership
or any Person in which the Partnership has made a
direct or indirect equity investment;
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36
(6) the negotiation, execution, and performance of
any contracts, conveyances or other instruments
that the General Partner considers useful or
necessary to the conduct of the Partnership's
operations or the implementation of the General
Partner's powers under this Agreement, including
contracting with contractors, developers,
consultants, accountants, legal counsel, other
professional advisors and other agents and the
payment of their expenses and compensation out of
the Partnership's assets;
(7) the mortgage, pledge, encumbrance or
hypothecation of any assets of the Partnership,
and the use of the assets of the Partnership
(including, without limitation, cash on hand) for
any purpose consistent with the terms of this
Agreement and on any terms it sees fit,
including, without limitation, the financing of
the conduct or the operations of the General
Partner or the Partnership, the lending of funds
to other Persons (including, without limitation,
any Subsidiaries of the Partnership) and the
repayment of obligations of the Partnership, any
of its Subsidiaries and any other Person in which
it has an equity investment;
(8) the distribution of Partnership cash or other
Partnership assets in accordance with this
Agreement;
(9) the holding, managing, investing and reinvesting
of cash and other assets of the Partnership;
(10) the collection and receipt of revenues and income
of the Partnership;
(11) the selection, designation of powers, authority
and duties and the dismissal of employees of the
Partnership (including, without limitation,
employees having titles such as "president,"
"vice president," "secretary" and "treasurer")
and agents, outside attorneys, accountants,
consultants and contractors of the Partnership
and the determination of their compensation and
other terms of employment or hiring;
(12) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems
necessary or appropriate;
(13) the formation of, or acquisition of an interest
(including non-voting interests in entities
controlled by Affiliates of the Partnership or
third parties) in, and the contribution of
property to, any further limited or general
partnerships, joint ventures, limited liability
companies or other relationships
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that it deems desirable (including, without
limitation, the acquisition of interests in, and
the contributions of funds or property to, or
making of loans to, its Subsidiaries and any
other Person in which it has an equity investment
from time to time, or the incurrence of
indebtedness on behalf of such Persons or the
guarantee of the obligations of such Persons);
provided that, as long as the General Partner has
determined to continue to qualify as a REIT, the
Partnership may not engage in any such formation,
acquisition or contribution that would cause the
General Partner to fail to qualify as a REIT;
(14) the control of any matters affecting the rights
and obligations of the Partnership, including the
settlement, compromise, submission to arbitration
or any other form of dispute resolution or
abandonment of any claim, cause of action,
liability, debt or damages due or owing to or
from the Partnership, the commencement or defense
of suits, legal proceedings, administrative
proceedings, arbitrations or other forms of
dispute resolution, the representation of the
Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other
forms of dispute resolution, the incurring of
legal expense and the indemnification of any
Person against liabilities and contingencies to
the extent permitted by law;
(15) the determination of the fair market value of any
Partnership property distributed in kind, using
such reasonable method of valuation as the
General Partner may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or
limited power of attorney, of any right,
including the right to vote, appurtenant to any
assets or investment held by the Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of
or in connection with any Subsidiary of the
Partnership or any other Person in which the
Partnership has a direct or indirect interest,
individually or jointly with any such Subsidiary
or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of
any Person in which the Partnership does not have
any interest pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering of any and
all deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust,
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security agreements, conveyances, contracts,
guarantees, warranties, indemnities, waivers,
releases or other legal instruments or agreements
in writing necessary or appropriate in the
judgment of the General Partner for the
accomplishment of any of the powers of the
General Partner enumerated in this Agreement; and
(20) the distribution of cash to acquire Partnership
Units held by a Limited Partner in connection
with a Limited Partner's exercise of its
Redemption Right under Section 8.6; and
(21) the maintenance of the Partner Registry to
reflect accurately at all times the Capital
Contributions and Percentage Interests of the
Partners as the same are adjusted from time to
time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance
of Partnership Units, the admission of any
Additional Limited Partner or any Substituted
Limited Partner or otherwise.
B. No Approval by Limited Partners. Except as provided in
Section 7.11, each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement,
the Act or any applicable law, rule or regulation, to the full extent
permitted under the Act or other applicable law. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement
or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date hereof,
the General Partner may cause the Partnership to obtain and maintain (i)
casualty, liability and other insurance on the properties of the Partnership
and (ii) liability insurance for the Indemnitees hereunder and (iii) such
other insurance as the General Partner, in its sole and absolute discretion,
determines to be necessary.
D. Working Capital and Other Reserves. At all times from
and after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time, including upon liquidation of the Partnership under Section
13.
E. No Obligations to Consider Tax Consequences of Limited
Partners. In exercising their authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action
taken (or not taken) by any of them. The General Partner and the Partnership
shall not have liability to a Limited Partner for monetary damages or
otherwise for losses sustained, liabilities incurred or benefits not derived
by
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such Limited Partner in connection with such decisions, provided that the
General Partner has acted in good faith and pursuant to its authority under
this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate with
the Secretary of State of Delaware. To the extent that such action is
determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, the
District of Columbia or other jurisdiction in which the Partnership may elect
to do business or own property. Subject to the terms of Section 8.5.A(4), the
General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate or any amendment thereto to any Limited
Partner. The General Partner shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be reasonable and necessary
or appropriate for the formation, continuation, qualification and operation of
a limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and any other state, the District
of Columbia or other jurisdiction in which the Partnership may elect to do
business or own property.
SECTION 7.3 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partners, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
the general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations.
The General Partner shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole and
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absolute discretion, for all expenses it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership (including, without
limitation, expenses related to the operations of the General Partner and to the
management and administration of any Subsidiaries of the General Partner or the
Partnership or Affiliates of the Partnership, such as auditing expenses and
filing fees); provided that the amount of any such reimbursement shall be
reduced by (i) any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it on behalf of the
Partnership as permitted in Section 7.5.A (which interest is considered to
belong to the Partnership and shall be paid over to the Partnership to the
extent not applied to reimburse the General Partner for expenses hereunder); and
(ii) any amount derived by the General Partner from any investments permitted in
Section 7.5.A. The General Partner shall determine in good faith the amount of
expenses incurred by it related to the ownership and operation of, or for the
benefit of, the Partnership. If certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in its sole and absolute discretion deems fair and
reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3.C and as a result of indemnification
pursuant to Section 7.7. All payments and reimbursements hereunder shall be
characterized for federal income tax purposes as expenses of the Partnership
incurred on its behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance of
Partnership Interests, Shares, Debt of the Partnership or the General Partner or
rights, options, warrants or convertible or exchangeable securities pursuant to
Article IV (including, without limitation, all costs, expenses, damages and
other payments resulting from or arising in connection with litigation related
to any of the foregoing), all of which expenses are considered by the Partners
to constitute expenses of, and for the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. If the General
Partner exercises its rights under the Declaration of Trust to purchase Shares
or otherwise elects to purchase from its shareholders Shares in connection with
a share repurchase or similar program or for the purpose of delivering such
Shares to satisfy an obligation under any dividend reinvestment or equity
purchase program adopted by the General Partner, any employee equity purchase
plan adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, the purchase price paid by the
General Partner for those Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be reimbursable to the General Partner, subject to the
conditions that: (i) if those Shares subsequently are to be sold by the General
Partner, the General Partner shall pay to the Partnership any proceeds received
by the General Partner for those Shares (provided that a transfer of Shares for
Partnership Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such Shares are not retransferred by the General
Partner within thirty (30) days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Partnership Units (rounded to
the nearest whole Partnership Unit) held by the General Partner equal to the
product attained
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by multiplying the number of those Shares by a fraction, the numerator of which
is one and the denominator of which is the Conversion Factor.
E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal income
tax purposes not to constitute a payment of expenses of the Partnership, the
amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners' Capital
Accounts.
F. Funding for Certain Capital Transactions. In the event that
the General Partner shall undertake to acquire (whether by merger,
consolidation, purchase, or otherwise) the assets or equity interests of another
Person and such acquisition shall require the payment of cash by the General
Partner (whether to such Person or to any other selling party or parties in such
transaction or to one or more creditors, if any, of such Person or such selling
party or parties), (i) the Partnership shall advance to the General Partner the
cash required to consummate such acquisition if, and to the extent that, such
cash is not to be obtained by the General Partner through an issuance of Shares
described in Section 4.2 or pursuant to a transaction described in Section
7.5.B, (ii) the General Partner shall immediately, upon consummation of such
acquisition, transfer to the Partnership (or cause to be transferred to the
Partnership), in full and complete satisfaction of such advance and as required
by Section 7.5, the assets or equity interests of such Person acquired by the
General Partner in such acquisition, and (iii) pursuant to and in accordance
with Section 4.2 and Section 7.5.B, the Partnership shall issue to the General
Partner Partnership Interests and/or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights that are substantially the same as those of any additional Shares,
other equity securities, New Securities and/or Convertible Funding Debt, as the
case may be, issued by the General Partner in connection with such acquisition
(whether issued directly to participants in the acquisition transaction or to
third parties in order to obtain cash to complete the acquisition). In addition
to, and without limiting the foregoing, in the event that the General Partner
engages in a transaction in which (x) the General Partner (or a wholly owned
direct or indirect Subsidiary of the General Partner) merges with another entity
(referred to as the "Parent Entity") that is organized in the "UPREIT format"
(i.e., where the Parent Entity holds substantially all of its assets and
conducts substantially all of its operations through a partnership, limited
liability company or other entity (referred to as an "Operating Entity")) and
the General Partner survives such merger, (y) such Operating Entity merges with
or is otherwise acquired by the Partnership in exchange in whole or in part for
Partnership Interests, and (z) the General Partner is required or elects to pay
part of the consideration in connection with such merger involving the Parent
Entity in the form of cash and part of the consideration in the form of Shares,
the Partnership shall distribute to the General Partner with respect to its
existing Partnership Interest an amount of cash sufficient to complete such
transaction and the General Partner shall cause the Partnership to cancel a
number of Partnership Units (rounded to the nearest whole number) held by the
General Partner equal to the product attained by multiplying the number of
additional Shares of the General Partner that the General Partner would have
issued to the Parent Entity or the owners of the Parent Entity in such
transaction if the
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entire consideration therefor were to have been paid in Shares by a fraction,
the numerator of which is one and the denominator of which is the Conversion
Factor.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER; RELATIONSHIP OF SHARES
TO PARTNERSHIP UNITS; FUNDING DEBT
A. General. Without the Consent of the Outside Limited Partners,
the General Partner shall not, directly or indirectly, enter into or conduct any
business other than in connection with the ownership, acquisition and
disposition of Partnership Interests as General Partner or Limited Partner and
the management of the business of the Partnership and such activities as are
incidental thereto. Without the Consent of the Outside Limited Partners, the
assets of the General Partner shall be limited to Partnership Interests and
permitted debt obligations of the Partnership (as contemplated by Section
7.5.F), so that Shares and Partnership Units are completely fungible except as
otherwise specifically provided herein; provided that the General Partner shall
be permitted to hold such bank accounts or similar instruments or accounts in
its name as it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents (provided
that accounts held on behalf of the Partnership to permit the General Partner to
carry out its responsibilities under this Agreement shall be considered to
belong to the Partnership and the interest earned thereon shall, subject to
Section 7.4.B, be applied for the benefit of the Partnership); and, provided
further that, the General Partner shall be permitted to acquire, directly or
through a Qualified REIT Subsidiary or limited liability company, up to a one
percent (1%) interest in any partnership or limited liability company at least
ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership. The General Partner and any of its Affiliates
may acquire Limited Partnership Interests and shall be entitled to exercise all
rights of a Limited Partner relating to such Limited Partnership Interests.
B. Repurchase of Shares. If the General Partner exercises its
rights under the Declaration of Trust to purchase Shares or otherwise elects to
purchase from its shareholders Shares in connection with a share repurchase or
similar program or for the purpose of delivering such shares to satisfy an
obligation under any dividend reinvestment or share purchase program adopted by
the General Partner, any employee share purchase plan adopted by the General
Partner or any similar obligation or arrangement undertaken by the General
Partner in the future, then the General Partner shall cause the Partnership to
purchase from the General Partner that number of Partnership Units of the
appropriate class equal to the product obtained by multiplying the number of
Shares purchased by the General Partner times a fraction, the numerator of which
is one and the denominator of which is the Conversion Factor, on the same terms
and for the same aggregate price that the General Partner purchased such Shares.
C. Forfeiture of Shares. If the Partnership or the General
Partner acquires Shares as a result of the forfeiture of such Shares under a
restricted or similar share plan, then the General Partner shall cause the
Partnership to cancel that number of Partnership Units equal to the number of
Shares so acquired, and, if the Partnership acquired such Shares, it shall
transfer such Shares to the General Partner for cancellation.
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D. Issuances of Shares. After the Effective Date, the General
Partner shall not grant, award, or issue any additional Shares (other than
Shares issued pursuant to Section 8.6 hereof, pursuant to a dividend or
distribution (including any share split) of Shares to all of its shareholders),
or in connection with any acquisition permitted by Section 7.5.A hereof of up to
a one percent (1%) interest in any partnership or limited liability company at
least ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership), other equity securities of the General Partner,
New Securities or Convertible Funding Debt unless (i) the General Partner shall
cause, pursuant to Section 4.2.A hereof, the Partnership to issue to the General
Partner Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights, all such that the economic interests are substantially the same as
those of such additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, and (ii) the General Partner
transfers to the Partnership, as an additional Capital Contribution, the
proceeds from the grant, award, or issuance of such additional Shares, other
equity securities, New Securities or Convertible Funding Debt, as the case may
be, or from the exercise of rights contained in such additional Shares, other
equity securities, New Securities or Convertible Funding Debt, as the case may
be. Without limiting the foregoing, the General Partner is expressly authorized
to issue additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, for less than fair market value,
and the General Partner is expressly authorized, pursuant to Section 4.2.A
hereof, to cause the Partnership to issue to the General Partner corresponding
Partnership Interests, as long as (a) the General Partner concludes in good
faith that such issuance is in the interests of the General Partner and the
Partnership (for example, and not by way of limitation, the issuance of Shares
and corresponding Partnership Units pursuant to a share purchase plan providing
for purchases of Shares, either by employees or shareholders, at a discount from
fair market value or pursuant to employee share options that have an exercise
price that is less than the fair market value of the Shares, either at the time
of issuance or at the time of exercise) and (b) the General Partner transfers
all proceeds from any such issuance or exercise to the Partnership as an
additional Capital Contribution.
E. Share Option Plan. If at any time or from time to time, the
General Partner sells Shares pursuant to any Share Option Plan, the General
Partner shall transfer the net proceeds of the sale of such Shares to the
Partnership as an additional Capital Contribution in exchange for an amount of
additional Partnership Units equal to the number of Shares so sold divided by
the Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares or
otherwise constitutes a class of New Securities ("Convertible Funding Debt"),
subject to the condition that the General Partner lend to the Partnership the
net proceeds of such Funding Debt; provided that Convertible Funding Debt shall
be issued pursuant to Section 7.5.D above; and, provided further that, the
General Partner shall not be obligated to lend the net proceeds of any Funding
Debt to the Partnership in a manner that would be inconsistent with the General
Partner's ability to remain qualified as a REIT. If the General Partner enters
into any Funding Debt, the loan to the Partnership shall be on comparable terms
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and conditions, including interest rate, repayment schedule and costs and
expenses, as are applicable with respect to or incurred in connection with such
Funding Debt.
SECTION 7.6 TRANSACTIONS WITH AFFILIATES
A. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or indirectly,
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, any Partner or any Affiliate of the
Partnership that is not also a Subsidiary of the Partnership, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party.
B. Conflict Avoidance. The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, a right
of first opportunity arrangement and other conflict avoidance agreements with
various Affiliates of the Partnership and General Partner on such terms as the
General Partner, in its sole and absolute discretion, believes are advisable.
C. Benefit Plans Sponsored by the Partnership. The General
Partner in its sole and absolute discretion and without the approval of the
Limited Partners, may propose and adopt on behalf of the Partnership employee
benefit plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them.
SECTION 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each Indemnitee to
the fullest extent provided by the Act from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorneys fees and other legal fees and expenses), judgments, fines,
settlements and other amounts arising from or in connection with any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, incurred by the Indemnitee and relating to the Partnership or
the General Partner or the operation of, or the ownership of property by, the
Partnership or the General Partner as set forth in this Agreement in which any
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed in
bad faith or was the result of active and deliberate dishonesty, (ii) the
Indemnitee actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guarantee, contractual obligation for any
indebtedness or other obligation or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without limitation,
any indebtedness which the Partnership or any Subsidiary of the Partnership has
assumed or taken subject to), and the General Partner is hereby authorized and
empowered, on behalf of the Partnership, to enter into one or more
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indemnity agreements consistent with the provisions of this Section 7.7 in favor
of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitee, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership or otherwise provide funds to enable the Partnership to fund
its obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain insurance
on behalf of the Indemnitees and such other Persons as the General Partner shall
determine against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i)
excise taxes assessed on an Indemnitee, of for which the Indemnitee is otherwise
found liable, with respect to an ERISA Plan pursuant to applicable law shall
constitute fines within the meaning of this Section 7.7, and (iii) actions taken
or omitted by the Indemnitee with respect to an ERISA Plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of such ERISA Plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Partnership.
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F. No Personal Liability for Limited Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their employees, officers, directors, trustees,
heirs, successors, assigns and administrators and shall not be deemed to create
any rights for the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.7, or any provision hereof, shall be prospective only
and shall not in any way affect the limitation on the Partnership's liability to
any Indemnitee under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or related
to matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may arise or be asserted.
I. Indemnification Payments Not Distributions. If and to the
extent any payments to the General Partner pursuant to this Section 7.7
constitute gross income to the General Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners' Capital
Accounts.
J. Exception to Indemnification. Notwithstanding anything to the
contrary in this Agreement, the General Partner shall not be entitled to
indemnification hereunder for any loss, claim, damage, liability or expense for
which the General Partner is obligated to indemnify the Partnership under any
other agreement between the General Partner and the Partnership.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. General. Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner shall not be liable for monetary damages to
the Partnership, any Partners or any Assignees for losses sustained, liabilities
incurred or benefits not derived as a result of errors in judgment or mistakes
of fact or law or of any act or omission unless the General Partner acted in bad
faith and the act or omission was material to the matter giving rise to the
loss, liability or benefit not derived.
B. No Obligation to Consider Separate Interests of Limited
Partners or Shareholders. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, that the General Partner
is under no obligation to consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to Limited
Partners or Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not
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be liable for monetary damages for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by the General Partner in good faith.
D. Effect of Amendment. Notwithstanding any other provision
contained herein, any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. Reliance on Documents. The General Partner may rely and shall
be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to matters
which the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be done
by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the
General Partner Entity. Notwithstanding any other provisions of this Agreement
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner Entity to qualify as a REIT or (ii) to allow the General
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Partner Entity to avoid incurring any liability for taxes under Section 857 or
4981 of the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
E. Actions to Maintain REOC Status. If and so long as the
Partnership Interests of "benefit plan investors" is "significant" (as such
terms, or terms succeeding thereto with the same objective, are used in 29
C.F.R. Section 2510.3-101(f) (such regulation or successor regulation being
known as the "Plan Assets Regulation")), or if necessary so that the underlying
assets of the General Partner will not be "plan assets" (as such term is defined
in the Plan Assets Regulations) of any ERISA Partner, then the General Partner
shall conduct the affairs of the Partnership in such manner so that the
Partnership shall qualify as a "real estate operating company" ("REOC"), as that
term is used in the Plan Assets Regulations, and so that the assets of the
Partnership will not be plan assets of any ERISA Partner.
(i) If the General Partner, pursuant to this Section
7.09.E, intends to conduct the affairs of the Partnership as a REOC, the General
Partner shall deliver to each ERISA Partner an opinion of counsel reasonably
acceptable to each ERISA Partner and upon which such ERISA Partner may rely with
respect to the Partnership's REOC status as of the "initial valuation date" and,
if requested in writing by an ERISA Partner, as of each "annual valuation
period" (as those terms, or terms succeeding thereto with the same objective,
are defined in the Plan Assets Regulation). Such opinion of counsel shall state,
(A) as to the opinion respecting the "initial valuation date," that the
Partnership shall qualify as a REOC for the period beginning on such "initial
valuation date" and ending on the last day of the first "annual valuation
period," and (B) as to each annual opinion respecting each "annual valuation
period," that the Partnership shall qualify as a REOC for the 12-month period
following the last day of such "annual valuation period." Such opinion of
counsel may rely upon, among other things, a certificate of the General Partner
as to the exercise of management rights with respect to one or more investments
(other than short-term investments pending long-term commitment or distribution
to investors) during the appropriate period and as to a description of such
investments, and also shall state whether the Partnership has included in a
certification to the opinion a statement to the effect that on such "initial
valuation date" or during such "annual valuation period" at least 50 percent of
Partnership assets (other than short-term investments pending long-term
commitment or distribution to investors), valued at cost, were invested in real
estate investments as described in the Plan Assets Regulation.
(ii) If the opinion described in this subsection is not
provided in the affirmative, or if any ERISA Partner shall obtain and deliver to
the General Partner an opinion of counsel to such ERISA Partner (which opinion
shall be reasonably satisfactory to the General Partner) that there is a
reasonable probability that either the Partnership was not or will not be a REOC
for a period in which either (i) participation by benefit plan investors in the
Partnership is significant or (ii) REOC status is necessary so that the
underlying assets of the General Partner will not be plan assets and the General
Partner does not obtain an opinion to the contrary reasonably acceptable to each
such ERISA Partner within fifteen (15) days of its receipt of the opinion
delivered by the ERISA Partner (it being understood that the existence or
reaffirmation of the opinion delivered by the ERISA Partner to the General
Partner shall not constitute the sole basis of any ERISA
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Partner's determination that the opinion delivered within fifteen days by the
General Partner is not reasonably satisfactory), then the General Partner is
hereby authorized and empowered to take such actions as it deems necessary and
appropriate to mitigate, prevent, or cure such adverse consequences as might
result to an ERISA Partner from the underlying assets of the Partnership being
assets of an ERISA Partner or the underlying assets of the General Partner being
assets of any ERISA Partner.
SECTION 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
SECTION 7.11 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. Consent Required. The General Partner may not take any action
in contravention of an express prohibition or limitation of this Agreement
without the written Consent of (i) all Partners adversely affected or (ii) such
lower percentage of the Limited Partnership Interests as may be specifically
provided for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided in
Article XIII, the General Partner may not, directly or indirectly, cause the
Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions (including by way of merger (including a
triangular merger), consolidation or other combination with any other Persons)
(i) if such merger, sale or other transaction is in connection with a
Termination Transaction permitted under Section 11.2.B hereof, without the
Consent of the Partners
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holding at least a majority of the then outstanding Partnership Units (including
any Partnership Units held by the General Partner), or (ii) otherwise, without
the Consent of the Outside Limited Partners.
C. Communications Act Investors. Unless otherwise approved in
writing by each affected Communications Act Investor (hereinafter defined), the
General Partner may not, directly or indirectly, cause the Partnership to invest
in any Property or otherwise take any action that (i) would result in the
Communications Act Investor being placed in a position whereby it would have or
be deemed to have the right to act for any third party in selecting or dealing
with any interexchange carrier (which, for purposes hereof, shall include
satellite telecommunication service) in providing long distance service between
local access and transport areas which originates in any State within the region
in which the affected Communications Act Investor (or the operating company
affiliate thereof) provides wireline telephone local exchange service, (but in
no event shall the foregoing be deemed to prohibit the Partnership from
contracting with a third party to perform such functions on a discretionary
basis as part of its property management duties where such activity is a
necessary adjunct to an investment and such activities, in the aggregate, are
not significant in relation to the Partnership's business activities taken as a
whole), or (ii) would cause a significant percentage of the Partnership's gross
income from any Property to be attributable to either the provision or resale of
long distance service between local access and transport areas which originates
in any State within the region in which the affected Communications Act Investor
(or the operating company affiliate thereof) provides wireline telephone local
exchange service, or the manufacture of telecommunications, customer premises or
related equipment. In addition, the Partnership will not engage in any
telecommunications activities other than those that may be ancillary to the
ownership or operation of its investments or make an investment in a cable
television system that would violate the cable-telephone cross-ownership
restriction in the Communications Act of 1934, as amended, with regard to the
local exchange service area of a Communications Act Investor (or the operating
company affiliate thereof). Notwithstanding the foregoing, the Partnership is
not precluded from engaging in any telecommunications business or cable business
unless such business is found to place the Communications Act Investor in
violation of law. The General Partner shall have a period of 120 days following
a finding by a court or regulatory body that such a violation exists to use its
reasonable best efforts to prevent or eliminate such violation, including, but
not limited to, correction of the condition giving rise to the violation,
amendment to this Agreement or sale of the relevant property or the interest of
the Communications Act Investor therein. A "Communications Act Investor" is a
Partner or shareholder of the General Partner that has notified the General
Partner that it is subject to the Communications Act of 1934, as amended.
SECTION 7.12 LOANS BY THIRD PARTIES
The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any acquisition of property) with any
Person upon such terms as the General Partner determines appropriate.
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ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5, or under
the Act.
SECTION 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates, or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to Section 7.5 hereof, and subject to any agreements entered
into pursuant to Section 7.6.C hereof and to any other agreements entered into
by a Limited Partner or its Affiliates with the Partnership or a Subsidiary, any
Limited Partner (other than the General Partner) and any officer, director,
employee, agent, trustee, Affiliate or shareholder of any Limited Partner shall
be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities in direct or indirect competition with the Partnership. Neither
the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. None of
the Limited Partners (other than the General Partner) or any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person (other than the
General Partner to the extent expressly provided herein), and such Person shall
have no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority
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over any other Limited Partner or Assignee either as to the return of Capital
Contributions (except as permitted by Section 4.2.A) or, except to the extent
provided by Exhibit C or as permitted by Sections 4.2.A, 5.1.B(i), 6.1.A(ii) and
6.1.B(i), or otherwise expressly provided in this Agreement, as to profits,
losses, distributions or credits.
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written demand
with a statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by either the General Partner
Entity or the Partnership pursuant to the Exchange
Act;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership
Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any
other property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on which each
became a Partner.
B. Notice of Conversion Factor. The Partnership shall notify each
Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner
Entity. The General Partner Entity shall not make any extraordinary
distributions of cash or property to its shareholders or effect a merger
(including, without limitation, a triangular merger), a sale of all or
substantially all of its assets or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such merger, sale or other extraordinary transaction at
least twenty (20) Business Days prior to the record date to determine
shareholders eligible to receive such distribution or to vote upon the approval
of such merger, sale or other extraordinary
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transaction (or, if no such record date is applicable, at least twenty (20)
business days before consummation of such merger, sale or other extraordinary
transaction); provided, however, that the General Partner, in its sole
discretion, may shorten the required notice period of not less than twenty (20)
business days prior to the record date to determine the shareholders eligible to
vote upon a merger transaction (but not any of the other transactions covered by
this Section 8.5.C.) to a period of not less than ten (10) calendar days
(thereby continuing to afford the holders of Units the opportunity to redeem
Units under Section 8.6 on or prior to the record date for the shareholder vote
on the merger transaction) so long as (i) the General Partner Entity will be the
surviving entity in such merger transaction, (ii) immediately following the
merger transaction, Persons who held voting securities of the General Partner
Entity immediately prior to such merger transaction will hold, solely by reason
of the ownership of voting securities of the General Partner Entity immediately
prior to the merger transaction, voting securities of the General Partner Entity
representing not less than fifty-one percent (51%) of the total combined voting
power of all outstanding voting securities of the General Partner Entity after
such merger, and (iii) in the event that in connection with such merger
transaction the Partnership will merge with another entity, the Partnership will
be the surviving entity in such merger. This provision for such notice shall not
be deemed (i) to permit any transaction that otherwise is prohibited by this
Agreement or requires a Consent of the Partners or (ii) to require a Consent on
the part of any one or more of the Limited Partners to a transaction that does
not otherwise require Consent under this Agreement. Each Limited Partner agrees,
as a condition to the receipt of the notice pursuant hereto, to keep
confidential the information set forth therein until such time as the General
Partner Entity has made public disclosure thereof and to use such information
during such period of confidentiality solely for purposes of determining whether
to exercise the Redemption Right; provided, however, that a Limited Partner may
disclose such information to its attorney, accountant and/or financial advisor
for purposes of obtaining advice with respect to such exercise so long as such
attorney, accountant and/or financial advisor agrees to receive and hold such
information subject to this confidentiality requirement.
D. Confidentiality. Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determine in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. General. (i) Subject to Section 8.6.C, at any time on or after
the first anniversary date of the issuance of a Partnership Unit to a Limited
Partner pursuant to Article IV hereof (which one-year period shall commence upon
the issuance of such Partnership Unit regardless of whether such Partnership
Unit is designated upon issuance as a Class A Unit, a Class B Unit or otherwise
and shall include the period of time from the date such Partnership Unit is
issued to such Limited Partner as other than a Class A Unit until the date such
Partnership Unit is converted automatically to a Class A Unit pursuant
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to Section 4.2.C hereof), or on or after such date prior to the expiration of
such one-year period as the General Partner, in its sole and absolute
discretion, designates with respect to any or all Class A Units then
outstanding, the holder of a Partnership Unit (if other than the General Partner
or the General Partner Entity or any Subsidiary of either the General Partner or
the General Partner Entity) shall have the right (the "Redemption Right") to
require the Partnership to redeem such Partnership Unit, with such redemption to
occur on the Specified Redemption Date and at a redemption price equal to and in
the form of the Cash Amount to be paid by the Partnership. Any such Redemption
Right shall be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the General Partner) by the Limited Partner who is
exercising the Redemption Right (the "Redeeming Partner"). A Limited Partner may
exercise the Redemption Right from time to time, without limitation as to
frequency, with respect to part or all of the Units that it owns, as selected by
the Limited Partner, provided that a Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Partnership Units unless
such Redeeming Partner then holds less than one thousand (1,000) Partnership
Units, in which event such Redeeming Partner must exercise the Redemption Right
for all of the Partnership Units held by such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with
respect to any Partnership Units so redeemed to receive any distributions paid
after the Specified Redemption Date with respect to such Partnership Units.
(iii) The Assignee of any Limited Partner may exercise the
rights of such Limited Partner pursuant to this Section 8.6, and such Limited
Partner shall be deemed to have assigned such rights to such Assignee and shall
be bound by the exercise of such rights by such Limited Partner's Assignee. In
connection with any exercise of such rights by such Assignee on behalf of such
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner.
(iv) If the General Partner Entity provides notice to the
Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall
be exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the date
on which the General Partner Entity provides such notice and ending on the
record date to determine shareholders eligible to receive such distribution or
to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
business days before the consummation of such merger, sale or other
extraordinary transaction). If this subparagraph (iv) applies, the Specified
Redemption Date is the date on which the Partnership and the General Partner
receive notice of exercise of the Redemption Right, rather than ten (10)
Business Days after receipt of the notice of redemption.
B. General Partner Assumption of Right. (i) If a Limited Partner
has delivered a Notice of Redemption, the General Partner may, in its sole and
absolute discretion (subject to the limitations on ownership and transfer of
Shares set forth in the Declaration of Trust), elect to assume directly and
satisfy a Redemption Right by paying to the Redeeming Partner either the Cash
Amount or the Shares Amount, as the General Partner determines in its sole and
absolute discretion (provided that payment of the
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Redemption Amount in the form of Shares shall be in Shares registered for resale
under Section 12 of the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded and, provided further
that, if the Shares are not Publicly Traded at the time a Redeeming Partner
exercises its Redemption Right, the Redemption Amount shall be paid only in the
form of the Cash Amount unless the Redeeming Partner, in its sole and absolute
discretion, consents to payment of the Redemption Amount in the form of the
Shares Amount), on the Specified Redemption Date, whereupon the General Partner
shall acquire the Partnership Units offered for redemption by the Redeeming
Partner and shall be treated for all purposes of this Agreement as the owner of
such Partnership Units. Unless the General Partner, in its sole and absolute
discretion, shall exercise its right to assume directly and satisfy the
Redemption Right, the General Partner shall not have any obligation to the
Redeeming Partner or to the Partnership with respect to the Redeeming Partner's
exercise of the Redemption Right. If the General Partner shall exercise its
right to satisfy the Redemption Right in the manner described in the first
sentence of this Section 8.6B and shall fully perform its obligations in
connection therewith, the Partnership shall have no right or obligation to pay
any amount to the Redeeming Partner with respect to such Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming Partner, the
Partnership and the General Partner shall, for federal income tax purposes,
treat the transaction between the General Partner and the Redeeming Partner as a
sale of the Redeeming Partner's Partnership Units to the General Partner.
Nothing contained in this Section 8.6.B shall imply any right of the General
Partner to require any Limited Partner to exercise the Redemption Right afforded
to such Limited Partner pursuant to Section 8.6.A.
(ii) If the General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total number
of Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares Amount. If this
amount is not a whole number of Shares, the Redeeming Partner shall be paid (i)
that number of Shares which equals the nearest whole number less than such
amount plus (ii) an amount of cash which the General Partner determines, in its
reasonable discretion, to represent the fair value of the remaining fractional
Share which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in connection with the
issuance of Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding
the provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A if (but only as long as)
the delivery of Shares to such Partner on the Specified Redemption Date (i)
would be prohibited under the Declaration of Trust or (ii) would be prohibited
under applicable federal or state securities laws or regulations (in each case
regardless of whether the General Partner would in fact assume and satisfy the
Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption. Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the General Partner, as
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the case may be, free and clear of all liens; and, notwithstanding anything
contained herein to the contrary, neither the General Partner nor the
Partnership shall be under any obligation to acquire Partnership Units which are
or may be subject to any liens. Each Limited Partner further agrees that, if any
state or local property transfer tax is payable as a result of the transfer of
its Partnership Units to the Partnership or the General Partner, such Limited
Partner shall assume and pay such transfer tax.
E. Additional Partnership Interests. If the Partnership issues
Partnership Interests to any Additional Limited Partner pursuant to Article IV,
the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption
Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS
A. Annual Reports. As soon as practicable, but in no event later
than the date on which the General Partner Entity mails its annual report to its
shareholders, the General Partner Entity shall cause to be mailed to each
Limited Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of the
General Partner Entity if such statements are prepared solely on a consolidated
basis with the Partnership, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner Entity.
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B. Quarterly Reports. If and to the extent that the General
Partner Entity mails quarterly reports to its shareholders, as soon as
practicable, but in no event later than the date on such reports are mailed, the
General Partner Entity shall cause to be mailed to each Limited Partner a report
containing unaudited financial statements, as of the last day of such calendar
quarter, of the Partnership, or of the General Partner Entity if such statements
are prepared solely on a consolidated basis with the Partnership, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
SECTION 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code; provided, however, that the General Partner shall make the
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
SECTION 10.3 TAX MATTERS PARTNER
A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
provided, however, that such information is provided to the Partnership by the
Limited Partners.
▇. ▇▇▇▇▇▇. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to
be taken into account by a
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Partner for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and
such judicial proceedings being referred to as
"judicial review"), and in the settlement agreement
the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i)
who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS
providing that the tax matters partner shall not have
the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the
Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) if a notice of a final administrative adjustment at
the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the tax matters
partner, to seek judicial review of such final
adjustment, including the filing of a petition for
readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a
Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 shall be fully applicable to the tax matters
partner in its capacity as such.
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C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
and/or law firm to assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership for such services
is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. If a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.5 when due, the General Partner may, in
its sole and absolute discretion, elect to make the payment to the Partnership
on behalf of such defaulting Limited Partner, and in such event shall be deemed
to have loaned such amount to such defaulting Limited Partner and shall succeed
to all rights and remedies of the Partnership as against such defaulting Limited
Partner (including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the base
rate on corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four (4) percentage
points (but not higher than the maximum lawful rate under the laws of the State
of Illinois) from the date such amount is due (i.e., fifteen (15) days after
demand) until such amount is paid in full. Each Limited Partner shall take such
actions as the
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Partnership or the General Partner shall request to perfect or enforce the
security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner or acquisition of Partnership Units from a Limited Partner by the
General Partner pursuant to Section 8.6 or otherwise. No part of the interest of
a Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.
B. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article XI. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article XI shall be null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL PARTNER
A. Except for transfers of Partnership Units to the Partnership
as provided in Section 7.5 or Section 8.6, the General Partner may not transfer
any of its Partnership Interest (including both its General Partnership Interest
and its Limited Partnership Interest) except in connection with a transaction
described in Section 11.2.B or as otherwise expressly permitted under this
Agreement, nor shall the General Partner withdraw as the General Partner except
in connection with a transaction described in Section 11.2.B.
B. The General Partner shall not engage in any merger (including
a triangular merger), consolidation or other combination with or into another
person, sale of all or substantially all of its assets or any reclassification,
recapitalization or change of outstanding Shares (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination as described in the definition of "Conversion Factor") ("Termination
Transaction"), unless the Termination Transaction has been approved by the
Consent of the Partners holding at least a majority of the then outstanding
Partnership Units (including any Partnership Units held by the General Partner)
and in connection with which all Limited Partners either will receive, or will
have the right to elect to receive, for each Partnership Unit an amount of cash,
securities, or
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other property equal to the product of the Conversion Factor multiplied by the
greatest amount of cash, securities or other property paid to a holder of Shares
corresponding to such Partnership Unit in consideration of one such Share at any
time during the period from and after the date on which the Termination
Transaction is consummated; provided that if, in connection with the Termination
Transaction, a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than fifty percent (50%) of the outstanding
Shares, each holder of Partnership Units shall receive, or shall have the right
to elect to receive without any right of Consent set forth above in this
subsection B, the greatest amount of cash, securities, or other property which
such holder would have received had it exercised the Redemption Right and
received Shares in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.4 and 11.6, a Limited Partner (other than the General Partner) may
transfer with or without the consent of the General Partner, all or any portion
of its Partnership Interest, or any of such Limited Partner's rights as a
Limited Partner, provided that prior written notice of such proposed transfer is
delivered to the General Partner. Notwithstanding the foregoing, any Limited
Partner may, at any time, without the consent of the General Partner, (i)
transfer all or any portion of its Partnership Interest to the General Partner,
(ii) transfer all or any portion of its Partnership Interest to an Affiliate,
another original Limited Partner or to an Immediate Family member, subject to
the provisions of Section 11.6, (iii) transfer all or any portion of its
Partnership Interest to a trust for the benefit of a charitable beneficiary or
to a charitable foundation, subject to the provisions of Section 11.6, and (iv)
subject to the provisions of Section 11.6, pledge (a "Pledge") all or any
portion of its Partnership Interest to a lending institution, which is not an
Affiliate of such Limited Partner, as collateral or security for a bona fide
loan or other extension of credit, and transfer such pledged Partnership
Interest to such lending institution in connection with the exercise of remedies
under such loan or extension or credit. Each Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i) - (iv) of the proviso of
the preceding sentence) shall have the right to transfer all or any portion of
its Partnership Interest, subject to the provisions of Section 11.6 and the
satisfaction of each of the following conditions (in addition to the right of
each such Limited Partner or Assignee to continue to make any such transfer
permitted by clauses (i) - (iv) of such proviso without satisfying either of the
following conditions):
(a) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The transferring
Partner shall give written notice of the proposed transfer to
the General Partner, which notice shall state (i) the identity
of the proposed transferee, and (ii) the amount and type of
consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10)
days upon which to give the transferring Partner notice of its
election to acquire the Partnership Units on the proposed
terms. If it so elects, it shall purchase the Partnership
Units on
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such terms within ten (10) days after giving notice of such
election. If it does not so elect, the transferring Partner
may transfer such Partnership Units to a third party, on
economic terms no more favorable to the transferee than the
proposed terms, subject to the other conditions of this
Section 11.3.
(b) QUALIFIED TRANSFEREE. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder
(excluding Pledges of a Partnership Interest, but including any transfer of the
pledged Partnership Interest, whether to the secured party or otherwise,
pursuant to the secured party's exercise of its remedies under such Pledge or
the related loan or extension of credit) that the transferee assumes by
operation of law or express agreement all of the obligations of the transferor
Limited Partner under this Agreement with respect to such transferred
Partnership Interest and no such transfer (other than pursuant to a statutory
merger or consolidation wherein all obligations and liabilities of the
transferor Partner are assumed by a successor corporation by operation of law)
shall relieve the transferor Partner of its obligations under this Agreement
without the approval of the General Partner, in its reasonable discretion.
Notwithstanding the foregoing, any transferee of any transferred Partnership
Interest shall be subject to any and all ownership limitations contained in the
Declaration of Trust. Any transferee, whether or not admitted as a Substituted
Limited Partner, shall take subject to the obligations of the transferor
hereunder. Unless admitted as a Substitute Limited Partner, no transferee,
whether by a voluntary transfer, by operation of law or otherwise, shall have
rights hereunder, other than the rights of an Assignee as provided in Section
11.5.
B. Incapacitated Limited Partners. If a Limited Partner is
subject to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate and
such power as the Incapacitated Limited Partner possessed to transfer all or any
part of its interest in the Partnership. The Incapacity of a Limited Partner, in
and of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner
may prohibit any transfer of Partnership Units by a Limited Partner unless it
receives a written opinion of legal counsel (which opinion and counsel shall be
reasonably satisfactory to the Partnership) to such Limited Partner that such
transfer would not require filing of a registration statement under the
Securities Act or would not otherwise violate any federal, or state securities
laws or regulations applicable to the Partnership or the Partnership Unit or, at
the option of the Partnership, an opinion of legal counsel to the Partnership to
the same effect.
D. No Transfers Affecting Tax Status of Partnership. No transfer
of Partnership Units by a Limited Partner (including a redemption or exchange
pursuant to
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Section 8.6) may be made to any Person if (i) in the opinion of legal counsel
for the Partnership, it would result in the Partnership being treated as an
association taxable as a corporation for federal income tax purposes or would
result in a termination of the Partnership for federal income tax purposes
(except as a result of the redemption or exchange for Shares of all Partnership
Units held by all Limited Partners other than the General Partner or the General
Partner Entity or any Subsidiary of the General Partner or the General Partner
Entity or pursuant to a transaction expressly permitted under Section 7.11.B or
Section 11.2), (ii) in the opinion of legal counsel for the Partnership, it
would adversely affect the ability of the General Partner Entity to continue to
qualify as a REIT or would subject the General Partner Entity to any additional
taxes under Section 857 or Section 4981 of the Code or (iii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code (provided that this clause (iii) shall not be the basis for limiting or
restricting in any manner the exercise of the Redemption Right under Section 8.6
unless, and only to the extent that, outside tax counsel provides to the General
Partner an opinion to the effect that, in the absence of such limitation or
restriction, there is a significant risk that the Partnership will be treated as
a "publicly traded partnership" and, by reason thereof, taxable as a
corporation).
E. No Transfers to Holders of Nonrecourse Liabilities. No Pledge
or transfer of any Partnership Units may be made to a lender to the Partnership
or any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability unless (i) the General Partner is provided notice thereof
and (ii) the lender enters into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Redemption Amount any Partnership
Units in which a security interest is held simultaneously with the time at which
such lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. Consent of General Partner. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place. The General
Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as
a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner's
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner. The General Partner hereby grants its consent to
the admission as a Substituted Limited Partner to any bona fide financial
institution that loans money or otherwise extends credit to a holder of Units
and thereafter becomes the owner of such Units pursuant to the exercise by such
financial institution of its rights under a Pledge of such Units granted in
connection with such loan or extension of credit.
B. Rights of Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this Article
XI shall have all the rights and powers and be subject to all the restrictions
and liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited
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Partner shall be conditioned upon the transferee executing and delivering to the
Partnership an acceptance of all the terms and conditions of this Agreement
(including, without limitation, the provisions of Section 15.11) and such other
documents or instruments as may be required to effect the admission.
C. Partner Registry. Upon the admission of a Substituted Limited
Partner, the General Partner shall include the name, address, Capital Account,
number of Partnership Units, and Percentage Interest of such Substituted Limited
Partner on the Partner Registry and eliminate or adjust, if necessary, the name,
address, Capital Account, number of Partnership Units and Percentage Interest of
the predecessor of such Substituted Limited Partner on the Partner Registry.
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain, loss and Recapture Income
attributable to the Partnership Units assigned to such transferee, and shall
have the rights granted to the Limited Partners under Section 8.6, but shall not
be deemed to be a holder of Partnership Units for any other purpose under this
Agreement, and shall not be entitled to vote such Partnership Units in any
matter presented to the Limited Partners for a vote (such Partnership Units
being deemed to have been voted on such matter in the same proportion as all
other Partnership Units held by Limited Partners are voted). If any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article XI to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
SECTION 11.6 GENERAL PROVISIONS
A. Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6.
B. Termination of Status as Limited Partner. Any Limited Partner
who shall transfer all of its Partnership Units in a transfer permitted pursuant
to this Article XI or pursuant to redemption of all of its Partnership Units
under Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI may
only be made upon three business days prior notice, unless the General Partner
otherwise agrees.
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D. Allocations. If any Partnership Interest is transferred during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section
8.6, Net Income, Net Losses, each item thereof and all other items attributable
to such interest for such fiscal year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the fiscal year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the General
Partner, in its sole and absolute discretion, elects to adopt a daily, weekly,
or a monthly proration period, in which event Net Income, Net Losses, each item
thereof and all other items attributable to such interest for such fiscal year
shall be prorated based upon the applicable method selected by the General
Partner). Solely for purposes of making such allocations, each of such items for
the calendar month in which the transfer or redemption occurs shall be allocated
to the Person who is a Partner as of midnight on the last day of said month. All
distributions of Available Cash attributable to any Partnership Unit with
respect to which the Partnership Record Date is before the date of such
transfer, assignment or redemption shall be made to the transferor Partner or
the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.
E. Additional Restrictions. In addition to any other restrictions
on transfer herein contained, including without limitation the provisions of
this Article XI, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including pursuant to Section 8.6) be made without the
express consent of the General Partner, in its sole and absolute discretion, (i)
to any person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) if in the opinion of legal counsel to the Partnership
such transfer would cause a termination of the Partnership for federal or state
income tax purposes (except as a result of the redemption or exchange for Shares
of all Partnership Units held by all Limited Partners or pursuant to a
transaction expressly permitted under Section 7.11.B or Section 11.2); (v) if in
the opinion of counsel to the Partnership, such transfer would cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners or pursuant to a transaction
expressly permitted under Section 7.11.B or Section 11.2); (vi) if such transfer
would cause the Partnership Interests of "benefit plan investors" to become
"significant," as those terms are used in Section 7.9.E., or would cause the
Partnership to become, with respect to any employee benefit plan subject to
Title I of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA)
or a "disqualified person" (as defined in Section 4975(c) of the Code); (vii) if
such transfer would, in the opinion of counsel to the Partnership, cause any
portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.1-101;
(viii) if such transfer requires the registration of such Partnership Interest
pursuant to any applicable federal or state securities laws; (ix) if such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code or such transfer causes the Partnership to become a
"publicly traded partnership," as
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such term is defined in Section 469(k)(2) or Section 7704(b) of the Code
(provided that this clause (ix) shall not be the basis for limiting or
restricting in any manner the exercise of the Redemption Right under Section 8.6
unless, and only to the extent that, outside tax counsel provides to the General
Partner an opinion to the effect that, in the absence of such limitation or
restriction, there is a significant risk that the Partnership will be treated as
a "publicly traded partnership" and, by reason thereof, taxable as a
corporation); (x) if such transfer subjects the Partnership to regulation under
the Investment Company Act of 1940, the Investment Advisors Act of 1940 or
ERISA, each as amended; (xi) such transfer could adversely affect the ability of
the General Partner Entity to remain qualified as a REIT; or (xii) if in the
opinion of legal counsel for the transferring Partner (which opinion and counsel
shall be reasonably satisfactory to the Partnership) or legal counsel for the
Partnership, such transfer would adversely affect the ability of the General
Partner Entity to qualify as a REIT or subject the General Partner Entity to any
taxes under Section 857 or Section 4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The General
Partner shall monitor the transfers of interests in the Partnership to determine
(i) if such interests are being traded on an "established securities market" or
a "secondary market (or the substantial equivalent thereof)" within the meaning
of Section 7704 of the Code and (ii) whether additional transfers of interests
would result in the Partnership being unable to qualify for at least one of the
"safe harbors" set forth in Regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors under which
interests will not be treated as "readily tradable on a secondary market (or the
substantial equivalent thereof)" within the meaning of Section 7704 of the Code)
(the "Safe Harbors"). The General Partner shall take all steps reasonably
necessary or appropriate to prevent any trading of interests or any recognition
by the Partnership of transfers made on such markets and, except as otherwise
provided herein, to insure that at least one of the Safe Harbors is met;
provided, however, that the foregoing shall not authorize the General Partner to
limit or restrict in any manner the right of any holder of a Partnership Unit to
exercise the Redemption Right in accordance with the terms of Section 8.6
unless, and only to the extent that, outside tax counsel provides to the General
Partner an opinion to the effect that, in the absence of such limitation or
restriction, there is a significant risk that the Partnership will be treated as
a "publicly traded partnership" and, by reason thereof, taxable as a
corporation.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF A SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partnership
Interest pursuant to Section 11.2 who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such successor shall carry on the business of
the Partnership without dissolution. In such case, the admission shall be
subject to such successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
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SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent shall be given
or withheld in the General Partner's sole and absolute discretion. A Person who
makes a Capital Contribution to the Partnership in accordance with this
Agreement, including without limitation, under Section 4.1.C, or who exercises
an option to receive Partnership Units shall be admitted to the Partnership as
an Additional Limited Partner only with the consent of the General Partner and
only upon furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 15.11 and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Partnership, following the consent of
the General Partner to such admission.
B. Allocations to Additional Limited Partners. If any Additional
Limited Partner is admitted to the Partnership on any day other than the first
day of a Partnership Year, then Net Income, Net Losses, each item thereof and
all other items allocable among Partners and Assignees for such Partnership Year
shall be allocated among such Additional Limited Partner and all other Partners
and Assignees by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method (unless the General Partner, in its sole and
absolute discretion, elects to adopt a daily, weekly or monthly proration
method, in which event Net Income, Net Losses, and each item thereof would be
prorated based upon the applicable period selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited Partner,
and all distributions of Available Cash thereafter shall be made to all the
Partners and Assignees including such Additional Limited Partner.
SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement and, if required by law, shall prepare
and file an amendment to the Certificate and may for this purpose exercise the
power of attorney granted pursuant to Section 15.11 hereof.
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ARTICLE XIII
DISSOLUTION AND LIQUIDATION
SECTION 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
(i) the expiration of its term as provided in
Section 2.4 hereof;
(ii) an event of withdrawal of the General
Partner, as defined in the Act (other than an event of bankruptcy), unless
within ninety (90) days after the withdrawal a "majority in interest" (as
defined below) of the remaining Partners Consent in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
(iii) through December 31, 2046, an election to
dissolve the Partnership made by the General Partner with the consent of Limited
Partners who hold ninety percent (90%) of the outstanding Units held by Limited
Partners (including Units held by the General Partner);
(iv) an election to dissolve the Partnership made
by the General Partner, in its sole and absolute discretion after December 31,
2046;
(v) entry of a decree of judicial dissolution of
the Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for marketable securities;
or
(vii) a final and non-appealable judgment is
entered by a court of competent jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is entered
by a court with appropriate jurisdiction against the General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect, unless prior to or at the time of the entry of such order
or judgment a "majority in interest" (as defined below) of the remaining
Partners Consent in writing to continue the business of the Partnership and to
the appointment, effective as of a date prior to the date of such order or
judgment, of a substitute General Partner.
As used in this Article XIII, a "majority in interest" shall refer to
Partners (excluding the General Partner) who hold more than fifty percent (50%)
of the outstanding Percentage Interests not held by the General Partner.
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SECTION 13.2 WINDING UP
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, if there is no
remaining General Partner, any Person elected by a majority in interest of the
Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include equity or other securities of the General Partner or any other
entity) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Limited
Partners;
(4) Fourth, to the holders of Partnership Interests that
are entitled to any preference in distribution upon
liquidation in accordance with the rights of any such
class or series of Partnership Interests, including
without limitation, Series A Preferred Units, Series
B Preferred Units, and Series C Preferred Units (and,
within each such class or series, to each holder
thereof pro rata based on the proportion of the total
number of outstanding units of such class or series
represented by such holder's units of such series or
class); and
(5) The balance, if any, to the Partners in accordance
with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for
all periods.
The General Partner shall not receive any additional compensation for
any services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of
Section 13.2.A which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as
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creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.2.A, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS; RESTORATION OF
DEFICIT CAPITAL ACCOUNTS
A. Timing of Distributions. If the Partnership is "liquidated"
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made under this Article XIII to the General Partner and Limited
Partners who have positive Capital Accounts in compliance with Regulations
Section 1.704-1(b)(2)(ii)(b)(2). In the discretion of the General Partner, a pro
rata portion of the distributions that would otherwise be made to the General
Partner and Limited Partners pursuant to this Article XIII may be: (A)
distributed to a trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets, collecting
amounts owed to the Partnership and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership (in which case the assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions as the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement); or (B) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership; provided that
such withheld amounts shall be distributed to the General Partner and Limited
Partners as soon as practicable.
B. Restoration of Deficit Capital Accounts Upon Liquidation of
the Partnership. If any Partner has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever, except as otherwise set forth in this Section 13.3.B, or as
otherwise expressly agreed in writing by the affected Partner and the
Partnership after the date hereof. Notwithstanding the foregoing, (i) if the
General Partner has a deficit balance in its Capital Account (after giving
effect to all contributions, distributions, and allocations for all Partnership
Years or portions thereof, including the year during which such liquidation
occurs), the General Partner shall contribute to the capital of the Partnership
the amount necessary to restore such deficit balance to zero in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(3); (ii) if a Protected Partner has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions, and allocations for all Partnership Years or
portions thereof, including the year during which such liquidation
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occurs), such Protected Partner shall be obligated to make a contribution to the
Partnership with respect to any such deficit balance in such Protected Partner's
Capital Account upon a liquidation of the Partnership in an amount equal to the
lesser of such deficit balance or such Protected Partner's Protected Amount; and
(iii) the first sentence of this Section 13.3.B shall not apply with respect to
any other Partner to the extent, but only to such extent, that such Partner
previously has agreed in writing, with the consent of the General Partner, to
undertake an express obligation to restore all or any portion of a deficit that
may exist in its Capital Account upon a liquidation of the Partnership
(including, without limitations, those Partners who have undertaken "deficit
restoration obligations" as defined in Exhibit E). No Limited Partner shall have
any right to become a Protected Partner, to increase its Protected Amount, or
otherwise agree to restore any portion of any deficit that may exist in its
Capital Account, except, and only to the extent, provided in Exhibits E-1
through E-9 (or the agreements described therein), without the express written
consent of the General Partners, in its sole and absolute discretion. Any
contribution required of a Partner under this Section 13.3.B. shall be made on
or before the later of (i) the end of the Partnership Year in which the interest
is liquidated or (ii) the ninetieth (90th) day following the date of such
liquidation. The proceeds of any contribution to the Partnership made by a
Protected Partner with respect to a deficit in such Protected Partner's Capital
Account balance shall be treated as a Capital Contribution by such Protected
Partner and the proceeds thereof shall be treated as assets of the Partnership
to be applied as set forth in Section 13.2.A.
C. Restoration of Deficit Capital Accounts Upon a Liquidation of
a Partner's Interest by Transfer. If a Protected Partner's interest in the
Partnership is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) (other than in connection with a liquidation of the
Partnership) which term shall include a redemption by the Partnership of such
Protected Partner's interest upon exercise of the Redemption Right, and such
Protected Partner is designated on Exhibit E as Part II Protected Partner, such
Protected Partner shall be required to contribute cash to the Partnership equal
to the lesser of (i) the amount required to increase its Capital Account balance
as of such date to zero, or (ii) such Protected Partner's Protected Amount. For
this purpose, (i) the Protected Partner's deficit Capital Account balance shall
be determined by taking into account all contributions, distributions, and
allocations for the portion of the Partnership Year ending on the date of the
liquidation or redemption, and (ii) solely for purposes of determining such
Protected Partner's Capital Account balance, the General Partner shall
redetermine the Carrying Value of the Partnership's assets on such date based
upon the principles set forth in Sections 1.D.(3) and (4) of Exhibit B hereto,
and shall take into account the Protected Partner's allocable share of any
Unrealized Gain or Unrealized Loss resulting from such redetermination in
determining the balance of its Capital Account. The amount of any payment
required hereunder shall be due and payable within the time period specified in
the second to last sentence of Section 13.3.B.
D. Effect of the Death of a Protected Partner. After the death of
a Protected Partner who is an individual, the executor of the estate of such
Protected Partner may elect to reduce (or eliminate) the Protected Amount of
such Protected Partner. Such elections may be made by such executor by
delivering to the General Partner within two hundred and seventy (270) days of
the death of such Limited Partner, a written notice setting forth the maximum
deficit balance in its Capital Account that such executor agrees
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to restore under this Section 13.3, if any. If such executor does not make a
timely election pursuant to this Section 13.3 (whether or not the balance in the
applicable Capital Account is negative at such time), then the Protected
Partner's estate (and the beneficiaries thereof who receive distributions of
Partnership Interests therefrom) shall be deemed a Protected Partner with a
Protected Amount in the same amount as the deceased Protected Partner. Any
Protected Partner which itself is a partnership may likewise elect, after the
date of its partner's death to reduce (or eliminate) its Protected Amount by
delivering a similar notice to the General Partner within the time period
specified above, and in the absence of any such notice the Protected Amount of
such Protected Partner shall not be reduced to reflect the death of any of its
partners.
SECTION 13.4 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise expressly provided in
this Agreement, no Limited Partner shall have priority over any other Limited
Partner as to the return of its Capital Contributions, distributions, or
allocations.
SECTION 13.5 NOTICE OF DISSOLUTION
If a Liquidating Event occurs or an event occurs that would, but for
provisions of an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Partners and to all other parties with whom the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
SECTION 13.6 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2, the Partnership shall be terminated and
the Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
SECTION 13.7 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect among
the Partners during the period of liquidation.
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SECTION 13.8 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
SECTION 13.9 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. Following such proposal (except an amendment
pursuant to Section 14.1.B), the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
vote of the Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written vote, the General Partner may require a response
within a reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or 14.1.C, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Article IV;
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(4) to reflect a change that does not adversely affect
the Limited Partners in any material respect, or to
cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law
or with other provisions of this Agreement, or make
other changes with respect to matters arising under
this Agreement that will not be inconsistent with law
or with the provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a federal, state or
local agency or contained in federal, state or local
law.
The General Partner shall notify the Limited Partners when any action
under this Section 14.1.B is taken in the next regular communication to the
Limited Partners; provided, however, that no notice need be given of any
amendment of this Agreement to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this Agreement. For purposes of the
immediately preceding sentence, notwithstanding any other means by which the
General Partner may provide any such notice to the Limited Partners, such notice
requirement shall be deemed to have been satisfied upon the filing with the
Securities and Exchange Commission by the Partnership of any amendment to this
Agreement permitted under this Section 14.1.B as an exhibit to (i) a
registration statement filed by the Partnership under the Securities Act or (ii)
any report or other document filed by the Partnership under the Exchange Act.
C. Amendments Requiring Limited Partner Approval (Excluding the
General Partner). Notwithstanding Section 14.1.A, without the Consent of the
Outside Limited Partners, the General Partner shall not amend Section 4.2.A,
Section 5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6,
Section 7.8, Section 7.11.B, Section 11.2, Section 13.1 (other than Section
13.1(iii) which can be amended only with a Consent of 90% of the Partnership
Units (including Partnership Units held by the General Partner)), the last
sentence of Section 11.4.A (provided that no such amendment shall in any event
adversely affect the rights of any lender who made a loan or who extended credit
and received in connection therewith a Pledge of Units prior to the date such
amendment is adopted unless, and only to the extent such lender consents
thereto), this Section 14.1.C or Section 14.2.
D. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without the
Consent of such Partner, or any Assignee who is a bona fide financial
institution that loans money or otherwise extends credit to a holder of Units,
adversely affected if such amendment would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest, (ii) modify the
limited liability of a Limited Partner, (iii) amend Section 7.11.A, (iv) amend
Article V or Article VI (except as permitted pursuant to Sections 4.2, 5.1.E,
5.4, 6.2 and 14.1(B)(3)), (v) amend Section 8.6 or any defined terms set forth
in Article I that relate to the Redemption Right (except as permitted in Section
8.6.E), or (vi) amend Sections 11.3 or 11.5, or any additional restrictions from
Section 11.6.E or amend Sections 14.1.B(4) or
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14.1.D. This Section 14.1.D does not require unanimous consent of all Partners
adversely affected unless the amendment is to be effective against all Partners
adversely affected.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A. Except as otherwise
expressly provided in this Agreement, the Consent of holders of a majority of
the Percentage Interests held by Limited Partners (including Limited Partnership
Interests held by the General Partner) shall control.
B. Actions Without a Meeting. Any action required or permitted to
be taken at a meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner or
its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership's receipt of written notice
thereof.
D. Conduct of Meeting. Each meeting of Partners shall be
conducted by the General Partner or such other Person as the General Partner may
appoint pursuant to such rules for the conduct of the meeting as the General
Partner or such other Person deem appropriate.
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ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in the Partner Registry or such
other address as the Partners shall notify the General Partner in writing.
SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" "Sections"
and "Exhibits" are to Articles, Sections and Exhibits of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.6 CREDITORS
Other than as expressly set forth herein with regard to any Indemnitee,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
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SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
SECTION 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.11 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatements
thereof) that the General Partner or any Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited partners have
limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may
conduct business or own property, (b) all instruments
that the General Partner or any Liquidator deem
appropriate or necessary to
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reflect any amendment, change, modification or
restatement of this Agreement in accordance with its
terms, (c) all conveyances and other instruments or
documents that the General Partner or any Liquidator
deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation,
(d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Article
XI, XII or XIII hereof or the Capital Contribution of
any Partner and (e) all certificates, documents and
other instruments relating to the determination of
the rights, preferences and privileges of Partnership
Interests; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners
hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole
discretion of the General Partner or any Liquidator,
to effectuate the terms or intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement except
in accordance with Article XIV hereof or as may be otherwise expressly provided
for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive and not be affected by the subsequent Incapacity of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
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SECTION 15.12 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any prior
written oral understandings or agreements among them with respect thereto.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
of the General Partner, including, without limitation, any right to receive
dividends or other distributions made to shareholders of the General Partner or
to vote or to consent or receive notice as shareholders in respect to any
meeting of shareholders for the election of trustees of the General Partner or
any other matter.
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General Partner
or any of its officers, trustees, employees or agents pursuant to Section 7.4 or
Section 7.7 would constitute gross income to the General Partner for purposes of
Section 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment") then,
notwithstanding any other provision of this Agreement, the amount of such
General Partner Payment for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.20%
of the General Partner's total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) though (H) of Section 856(c)(2) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(2) of the Code) derived by the
General Partner from sources other than those described in subsections (A)
through (H) of Section 856(c)(2) of the Code (but not including the amount of
any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25% of
the General Partner's total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) through (I) of Section 856(c)(3) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(3) of the Code) derived by the
General Partner from sources other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but not including the amount of
any General Partner Payments); provided, however, that General Partner Payments
in excess of the amounts set forth in subparagraphs (i) and (ii) above may be
made if the General Partner, as a condition precedent, obtains an opinion of tax
counsel that the receipt of such excess amounts would not adversely affect the
General Partner's ability to qualify as a REIT. To the extent General Partner
Payments may not be made in a year due to the foregoing limitations, such
General Partner Payments shall carry over and be treated as arising in the
following year, provided, however, that such amounts shall not carry over for
more than five years, and if not paid within such five year period, shall
expire; provided further, that (i) as General Partner Payments are made, such
payments
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shall be applied first to carry over amounts outstanding, if any, and (ii) with
respect to carry over amounts for more than one Partnership Year, such payments
shall be applied to the earliest Partnership Year first.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
EQUITY OFFICE PROPERTIES TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President, Chief
--------------------------------
Legal Counsel and Secretary
LIMITED PARTNERS:
By: Equity Office Properties Trust,
as Attorney-in-Fact for the
Limited Partners
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President, Chief
--------------------------------
Legal Counsel and Secretary
For purposes of Section 8.6 hereof:
EQUITY OFFICE PROPERTIES TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President, Chief
--------------------------------
Legal Counsel and Secretary
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EXHIBIT A
FORM OF PARTNER REGISTRY
CLASS A AND CLASS B UNITS
-------------------------
----------------- INITIAL CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- --------------- ------------
GENERAL PARTNER:
---------------
Equity Office Properties Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS:
----------------
TOTAL CLASS A AND CLASS B UNITS 100.00000%
==========
SERIES A PREFERRED UNITS
------------------------
INITIAL
CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- ------- ------------
TOTAL SERIES A PREFERRED UNITS 100.00000%
==========
83
SERIES B PREFERRED UNITS
------------------------
INITIAL
CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- ------- ------------
TOTAL SERIES B PREFERRED UNITS 100.00000%
==========
SERIES C PREFERRED UNITS
------------------------
INITIAL
CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- ------- ------------
TOTAL SERIES C PREFERRED UNITS 100.00000%
==========
SERIES D PREFERRED UNITS
------------------------
INITIAL
CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- ------- ------------
TOTAL SERIES D PREFERRED UNITS 100.00000%
==========
A-2
84
SERIES E PREFERRED UNITS
------------------------
INITIAL
CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- ------- ------------
TOTAL SERIES E PREFERRED UNITS 100.00000%
==========
SERIES F PREFERRED UNITS
------------------------
INITIAL
CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS ACCOUNT INTEREST (1)
--------------------------- ----------------- ----------------- ------------
TOTAL SERIES F PREFERRED UNITS 100.00000%
==========
NOTES:
(1) For purposes of this calculation, the Class A Units and Class B Units are
treated as one class. Of the aggregate Partnership Interests currently
outstanding, the percentage of each class and series are as follows:
Class A and B Units (collectively) %
Series A Preferred Units %
Series B Preferred Units %
Series C Preferred Units %
Series D Preferred Units %
Series E Preferred Units %
Series F Preferred Units
100.00%
A-3
85
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1 of the
Agreement and Exhibit C thereof, and decreased by (x) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C thereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by the
Partnership, provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made pursuant to
Section 734 of the Code as a result of the distribution of
property by the Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in the Partners'
Capital Accounts) shall be reflected in the Capital Accounts of
the Partners in the manner and subject to the limitations
prescribed in Regulations Section l.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and deduction shall
be made without regard to the fact that items described in
Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code are not
includible in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition
were equal in amount to
86
the Partnership's Carrying Value with respect to such property as
of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation
for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C to the
Agreement hereof shall not be taken into account.
C. A transferee (including any Assignee) of a Partnership Unit shall
succeed to a pro rata portion of the Capital Account of the transferor.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the
Carrying Values of all Partnership assets shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized
Loss attributable to such Partnership property, as of the times
of the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (b) immediately
prior to the distribution by the Partnership to a Partner of more
than a de minimis amount of property as consideration for an
interest in the Partnership; and (c) immediately prior to the
liquidation of the Partnership within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g), provided, however, that adjustments
pursuant to clauses (a) and (b) above shall be made only if the
General Partner determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section 1.704- l(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of
the time any such asset is distributed.
B-2
87
(4) In determining Unrealized Gain or Unrealized Loss for purposes of
this Exhibit B, the aggregate cash amount and fair market value
of all Partnership assets (including cash or cash equivalents)
shall be determined by the General Partner using such reasonable
method of valuation as it may adopt, or in the case of a
liquidating distribution pursuant to Article XIII of the
Agreement, shall be determined and allocated by the Liquidator
using such reasonable methods of valuation as it may adopt. The
General Partner, or the Liquidator, as the case may be, shall
allocate such aggregate fair market value among the assets of the
Partnership in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for
individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
l.704-l(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions or on
balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
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88
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit C, the
following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section 6.1
of the Agreement or any other provisions of this Exhibit C, if there is a net
decrease in Partnership Minimum Gain during any Partnership Year, each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Partner's share
of the net decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(f)(6). This Section 1.A is intended to comply
with the minimum gain chargeback requirements in Regulations Section 1.704-2(f)
and for purposes of this Section 1.A only, each Partner's Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to
Section 6.1 of this Agreement with respect to such Partnership Year and without
regard to any decrease in Partner Minimum Gain during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other provision
of Section 6.1 of this Agreement or any other provisions of this Exhibit C
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year, each
Partner who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i)(4). This Section
1.B is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.B, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of the Agreement or this Exhibit with respect to such Partnership Year,
other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of
89
Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain for the Partnership Year)
shall be specifically allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its Adjusted
Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 1.C is intended to constitute
a "qualified income offset" under Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
▇. ▇▇▇▇▇ Income Allocation. In the event that any Partner has an Adjusted
Capital Account Deficit at the end of any Partnership Year (after taking into
account allocations to be made under the preceding paragraphs hereof with
respect to such Partnership Year), each such Partner shall be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for
any Partnership Year shall be specially allocated to the Partner who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Regulations
Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent Exhibit E-1 with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or
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90
deduction is allocated pursuant to Section 6.1 of the Agreement and Section 1 of
this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners
consistent with the principles of Section 704(c) of the Code to
take into account the variation between the 704(c) Value of such
property and its adjusted basis at the time of contribution
(taking into account Section 2.C of this Exhibit C); and
(b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to
take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Exhibit B;
(ii) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners in the
same manner its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners the same manner as their correlative item
of "book" gain or loss is allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section 704(c) of
the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect the
method to be used by the Partnership and such election shall be binding on all
Partners; provided that, to the extent that the General Partner has agreed to
use a particular method with respect to a
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91
Contributed Property, the General Partner shall be bound by such agreement
(including, without limitation, the agreements set forth in Exhibit E hereto)
pursuant to the terms thereof. With respect to the Contributed Property
transferred to the Partnership in connection with the Consolidation and the
BRE/Worldwide L.L.C. purchase, the Partnership shall elect to use the
"traditional method" set forth in Treasury Regulation Section 1.704-3(b).
C-4
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EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________
Partnership Units in EOP Operating Limited Partnership in accordance with the
terms of the Agreement of Limited Partnership of EOP Operating Limited
Partnership, as amended, and the Redemption Right referred to therein, (ii)
surrenders such Partnership Units and all right, title and interest therein and
(iii) directs that the Cash Amount or Shares Amount (as determined by the
General Partner) deliverable upon exercise of the Redemption Right be delivered
to the address specified below, and if Shares are to be delivered, such Shares
be registered or placed in the name(s) and at the address(es) specified below.
The undersigned hereby represents, warrants, and certifies that the undersigned
(a) has marketable and unencumbered title to such Partnership Units, free and
clear of the rights of or interests of any other person or entity, (b) has the
full right, power and authority to redeem and surrender such Partnership Units
as provided herein and (c) has obtained the consent or approval of all persons
or entities, if any, having the right to consult or approve such redemption and
surrender.
Dated: Name of Limited Partner:
--------------- ---------------------
------------------------------
(Signature of Limited Partner)
------------------------------
(Street Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
--------------------------------------------------
Social Security or tax identifying number:
--------------------
93
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
PART I PROTECTED PARTNERS PROTECTED AMOUNT
PART II PROTECTED PARTNERS
(1) Protected Amount is the Deficit Obligation or Indemnity Obligation, as
applicable, as provided in the First Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-1.
(2) Protected Amount is the Deficit Obligation or Indemnity Obligation, as
applicable, as provided in the Second Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-2.
(3) Protected Amount is the DRO Amount or any applicable Partner Contribution
Amount, as defined in the Third Prior Amendment to the Original Partnership
Agreement, as set forth in Exhibit E-3.
(4) Protected Amount is the Deficit Obligation as defined in the Prior
Addendum, dated April 21, 1998, to the Original Partnership Agreement, as
set forth in Exhibit E-4.
(5) Protected Amount is as defined in the Tenth Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-5.
(6) Protected Amount is as provided for in Exhibit E-6.
(7) Protected Amount is as provided for in Exhibit E-7.
(8) Protected Amount is as provided for in Exhibit E-8.
(9) Protected Amount is as provided for in Exhibit E-9.
94
EXHIBIT E-1
(CAP AGREEMENT)
BACKGROUND
On September 2, 1997, pursuant to a closing under that certain
Agreement for Contribution of Real Estate and Related Property dated as of
August 1, 1997, by and among the Partnership, the General Partner, Columbus
America Properties, L.L.C. ("CAP"), and certain members of CAP (the
"Contribution Agreement"), CAP received 1,690,000 Class A Units, subject to
adjustment as provided in the Contribution Agreement, (referred to as the "CAP
Units"), in exchange for the office properties known as Texaco Center, LL&E
Tower and 601 Tchoupitoulas Garage (collectively, the "CAP Properties"). In
connection with the issuance of the CAP Units, the First Prior Amendment to the
Original Partnership Agreement was executed, which set forth specific agreements
regarding certain additional rights and obligations of CAP and which was later
amended by the Sixth Prior Amendment to the Original Partnership Agreement. Such
specific agreements are described below.
All capitalized terms used in this Exhibit E-1 and not otherwise
defined have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Notwithstanding any other provision in the Agreement to the
contrary and in addition to (and not in lieu thereof) any and all other rights
of CAP under the Agreement:
(i) The holders of the CAP Units shall have the right at any
time and from time to time, to exchange all or any number of such CAP Units at
the request of such holder for Shares in the form required in Section 8.6.B(i)
of the Agreement, but subject in all respects to the terms of a certain
Registration Rights Agreement dated as of September 2, 1997, by and among the
General Partner, CAP and the other signatories thereto; and
(ii) CAP shall have the right, exercisable upon written notice to
Partnership at any time and from time to time before the earlier to occur of (a)
September 3, 2000, or (b) the date that CAP shall have either transferred or
converted all of its CAP Units into Shares, to require the Partnership or the
General Partner to acquire all, or any portion or portions, of the CAP Units at
$29.00 per CAP Unit. The price for such CAP Units shall be paid by the
Partnership or the General Partner in immediately available funds not less than
five (5) days after receipt of such notice from CAP. The CAP Units shall be
conveyed to the Partnership or the General Partner, as applicable, free and
clear of all liens and encumbrances, other than those liens and encumbrances, if
any, in favor of General Partner or Partnership. At the closing of the
acquisition of the CAP Units by the Partnership or the General Partner, the
parties shall execute instruments of assignment and conveyance in the form
attached to the First Prior Amendment at "Exhibit B" and an amendment to the
Agreement evidencing the assignment of the CAP Units to the
95
Partnership, or the General Partner, as applicable, and the withdrawal of CAP as
a Limited Partner of the Partnership.
2. Notwithstanding any other provision of the First Prior Amendment
(as amended by the Sixth Prior Amendment) or the Agreement to the contrary, upon
liquidation of the Partnership, CAP shall be required to contribute to the
Partnership the deficit balance in its Capital Account computed in accordance
with Section 1.752-2(b)(1) and (2) of the Regulations, provided, however, that
such contribution obligation shall not exceed $84,350,000 (the "Deficit
Obligation"). CAP specifically waives any right of contribution or subrogation
with respect to such Deficit Obligation and neither the General Partner nor any
other Partner or other Person shall be required to reimburse CAP for such
contribution. Irrespective of the balance in the Capital Account of CAP, CAP
agrees to indemnify the Partnership and the General Partner to the extent that
the recourse obligations of the Partnership exceed the assets of the Partnership
available to satisfy such recourse obligations. This indemnity obligation is
intended to protect and hold the Partnership and the General Partner harmless
for such recourse obligations without regard to obligations imposed on the
General Partner under applicable state law or other contract provisions. This
indemnity obligation shall be limited to $84,350,000 (the "Indemnity
Obligation"). CAP hereby specifically waives any right of contribution from or
subrogation against the General Partner or any other Partner and neither the
Partnership nor any other Partner shall be required to contribute to or
otherwise reimburse CAP with respect to such indemnity. Upon payment of such
indemnity, CAP's Capital Account shall be credited with such payment only to the
extent of any deficit in such Capital Account. Amounts paid to the Partnership
pursuant to the Deficit Obligation or the Indemnity Obligation shall be used to
satisfy the recourse obligations of the Partnership.
CAP's Deficit Obligation and Indemnity Obligation shall not in the
aggregate exceed $84,350,000 (subject to reduction as provided herein). In
addition, the Deficit Obligation and the Indemnity Obligation shall be forever
reduced to $6,350,000 immediately upon the first placing, after acquisition of
the CAP Properties by the Partnership, of a non-recourse third party mortgage on
the CAP Properties securing a third party non-recourse loan to the Partnership
in an amount not less than $78,000,000.
Upon the sale, redemption, conversion or other disposition of the CAP
Units, the Deficit Obligation and the Indemnity Obligation of CAP under this
provision shall terminate proportionately with the number of CAP Units sold,
redeemed, converted or otherwise disposed of; provided, however, that a
transferee of CAP may, in its sole discretion, assume the Deficit Obligation
and/or the Indemnity Obligation of CAP and, in such event, the Deficit
Obligation and the Indemnity Obligation shall be the obligations solely of such
transferee (but CAP's obligation shall in all events be proportionately
terminated as of the date of any such disposition of its interest in the
Partnership). Nothing in this paragraph 2 shall in any way affect the sale,
exchange, or conversion rights of CAP under the Agreement or under the First and
Sixth Prior Amendments.
▇-▇ - ▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
(1120 AGREEMENT)
BACKGROUND
On October 16, 1997, pursuant to a closing under that certain
Contribution Agreement dated September 4, 1997, as amended, by and between the
Partnership and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Associates ("1120") (the "Contribution
Agreement"), 1120 received 1,645,885 Class A Units, subject to adjustment as
provided in the Contribution Agreement, (referred to as the "1120 Units") in
exchange for the office property known as ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. (the "1120 Property"). In connection with the
issuance of the 1120 Units, the Second Prior Amendment to the Original
Partnership Agreement, which set forth specific agreements regarding certain
additional rights and obligations of 1120, was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-2 and not otherwise
defined herein have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
Notwithstanding any other provision of the Agreement to the contrary,
upon liquidation of the Partnership, 1120 shall be required to contribute to the
Partnership the deficit balance in its Capital Account computed in accordance
with Sections 1.752-2(b)(1) and (2) of the Regulations; provided, however, that
such contribution obligation shall not exceed $14,000,000 (the "Deficit
Obligation"). 1120 specifically waives any right of contribution or subrogation
with respect to such Deficit Obligation and neither the General Partner nor any
other Partner or other Person shall be required to reimburse 1120 for such
contribution. Irrespective of the balance in the Capital Account of 1120, 1120
agrees to indemnify the Partnership and the General Partner to the extent that
the recourse obligations of the Partnership exceed the assets of the Partnership
available to satisfy such recourse obligations. This indemnity obligation is
intended to protect and hold the Partnership and the General Partner harmless
for such recourse obligations without regard to obligations imposed on the
General Partner under applicable state law or other contract provisions. This
indemnity obligation shall be limited to $14,000,000 (the "Indemnity
Obligation"). 1120 specifically waives any right of contribution from or
subrogation against the General Partner or any other Partner and neither the
Partnership nor any other Partner shall be required to contribute to or
otherwise reimburse 1120 with respect to such indemnity. Upon payment of such
indemnity, 1120's Capital Amount shall be credited with such payment only to the
extent of any deficit in such Capital Account. Amounts paid to the Partnership
pursuant to the Deficit Obligation or the Indemnity Obligation shall be used to
satisfy the recourse obligations of the Partnership.
Upon the sale, redemption, conversion or other disposition of the 1120
Units, the Deficit Obligation and the Indemnity Obligation of 1120 under this
provision shall terminate; provided, however, a transferee of 1120 may, in its
sole discretion, assume the Deficit Obligation and/or the Indemnity Obligation
of 1120 and, in such event, the Deficit
97
Obligation and the Indemnity Obligation shall be the obligation solely of such
transferee (but 1120's obligation shall in all events be terminated as of the
date of any disposition of its interest in the Partnership). Nothing herein
shall in any way effect the sale, exchange or conversion rights of 1120 under
the Agreement or under the Second Prior Amendment.
▇-▇ - ▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
(▇▇▇▇▇▇ RUNSTAD AGREEMENT)
BACKGROUND
On December 16, 1997, (i) pursuant to a closing under that certain
Contribution Agreement dated December 16, 1997, by and between the Partnership,
WRAM (as defined below), WRH (as defined below) and certain other parties (the
"Contribution Agreement") (a) ▇▇▇▇▇▇ Runstad Asset Management L.P., a Washington
limited partnership ("WRAM"), received 446,890 Class B Units in exchange for
certain partnership interests ("Titleholder Interests") in ▇▇▇▇▇▇ Runstad
Properties L.P., a Delaware limited partnership (the "Titleholder") and (b)
▇▇▇▇▇▇ Runstad Holdings L.P., a Washington limited partnership ("WRH"), received
2,168,810 Class B Units in exchange for certain Titleholder Interests; and (ii)
pursuant to a closing under that certain Investment Agreement dated December 16,
1997, by and among the Partnership, ▇▇▇▇▇▇ Runstad Associates Limited
Partnership, a Washington limited partnership, ("WRALP"), H. ▇▇▇ ▇▇▇▇▇▇▇
("Runstad"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), and
certain other parties (the "Investment Agreement"), Runstad, Norberg, and ▇▇▇▇▇▇
received, in the aggregate, 137,427 Class B Units in exchange for certain
limited partnership interests in WRALP ("WRALP Interests"). WRAM and WRH are
collectively referred to herein as the "Contributors." Runstad, Norberg, ▇▇▇▇▇▇
are collectively referred to herein as the "Principals." The Class B Units
issued as described above are referred to herein as the WRP Units. Certain
property owned by the Titleholder as described in the Contribution Agreement is
referred to herein as the "WRP Property." In connection with the issuance of the
WRP Units, the Third Prior Amendment to the Original Partnership Agreement,
which set forth specific agreements regarding certain additional rights and
obligations of the Contributors and the Principals, was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-3 and not otherwise
defined shall have the meanings assigned to them in the Agreement.
SPECIFIC AGREEMENTS
1. Right to Assign. Notwithstanding any other provision of this
Agreement or of the Third Prior Amendment, each Contributor shall have the right
to assign all or any portion of its WRP Units, together with any and all other
rights of such Contributor pursuant to the Third Prior Amendment and the
Agreement, to one or more of the constituent partners or shareholders, members,
partners, or beneficiaries of constituent partners of such Contributor on
December 16, 1997, without the need for the consent of the General Partner or
any Limited Partner and without being subject to the right of first refusal set
forth in Section 11.3.A(a) of the Agreement, but in each case subject to the
restrictions and conditions set forth in Sections 11.3.C, 11.3.D, 11.3.E, 11.6.E
and 11.6.F of the Agreement. Upon the delivery of written notice of such an
assignment to the General Partner, each assignee of WRP Units pursuant to the
immediately preceding sentence shall be admitted to the Partnership as a
Substituted Limited Partner owning the
99
WRP Units so assigned and having all of the rights of a Limited Partner under
the Agreement and the Third Prior Amendment, subject only to such assignee
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of the Agreement and such other documents or instruments as the
General Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of the WRP
Units issued to a Contributor pursuant to the Contribution Agreement that is
admitted as a Substituted Limited Partner in accordance with this Section 1 or
Article XI of the Agreement, for so long as such Person owns any such WRP Units,
is referred to herein as a "Contributor Limited Partner." Upon satisfaction of
the condition described in the second sentence of this Section 1, the General
Partner shall update the Partner Registry in the manner described in Section
11.4.C of the Agreement. For purposes of Section 8.6 of the Agreement, each
Contributor Limited Partner which is a permitted assignee of a Contributor shall
be entitled to exercise its right to require the Partnership to redeem all or
any portion of the WRP Units assigned to it by such Contributor at any time.
2. Adjustments to Carrying Values.
(a) Upon the admission of the Contributors and the Principals to
the Partnership and upon the distribution by the Partnership of the Cash
Amount to either Contributor or to any Principal or any Contributor Limited
Partner pursuant to the exercise of the Redemption Right with respect to
the WRP Units held by such Contributor, Principal or Contributor Limited
Partner, the Carrying Values of the Assets of the Partnership shall be
adjusted in accordance with the procedures described in Section 1.D of
Exhibit B to the Agreement; provided, however, that in order to minimize
the administrative burden associated with the adjustments required by this
Section 2(a) in connection with the distribution of the Cash Amount to a
Contributor, a Principal or a Contributor Limited Partner, the Partnership
shall make the adjustments to the Carrying Values of the Partnership's
Assets (and the resulting adjustments to the Capital Accounts of the
Partners) only upon the happening of the most material event during the
calendar year that is described in Section 1.D(2) of Exhibit B to the
Agreement (the "Annual Adjustment"); and provided, further, that upon the
distribution of the Cash Amount to a Contributor, a Principal or a
Contributor Limited Partner or, at the option of the General Partner, upon
the occurrence of any other event described in Section 1.D(2) of Exhibit B
to the Agreement, that occurs during any year other than as of the date of
the Annual Adjustment, the Partnership shall, at the time of such
distribution, make adjustments to the Carrying Values of the Partnership's
Assets in accordance with the procedures described in Section 1.D of
Exhibit B to the Agreement for purposes of adjusting the Capital Account of
such Contributor, such Principal or such Contributor Limited Partner who
has exercised his Redemption Right or such other affected Partner, but no
such adjustments shall be necessary at such time with respect to the
Capital Account balances of Partners who remain Partners through the date
of the Annual Adjustment or are otherwise not directly affected by any such
other event.
(b) Any determination of the fair market value of Partnership
assets pursuant to Section 1.D of Exhibit B to the Agreement (for purposes
of
E-3 - 2
100
calculating Unrealized Gain or Unrealized Loss), with respect to adjusting
the Carrying Values of Partnership assets in connection with the exercise
of Redemption Rights by a Contributor, any Principal or any Contributor
Limited Partner shall be made by assuming that the aggregate fair market
value of all Partnership assets is equal to the aggregate Cash Amount that
would be distributed by the Partnership if all Partnership Units held by
all Partners (including the General Partner) were redeemed in exchange for
the Cash Amount with respect to each such Partnership Unit at such time,
provided, however, such valuation methodology shall not be utilized for
purposes of determining the fair market value of the Partnership's assets
with respect to any such exercise of Redemption Rights in contemplation of
an assignment by or reorganization of the Partnership for the benefit of
creditors and any liquidation of the Partnership related thereto or
following the filing by (or in contemplation of a filing) by the
Partnership of a case under Title 11 of the U.S. Code.
3. Allocations. Notwithstanding the provisions of Section 2.C of
Exhibit C to the Agreement, for purposes of allocating items of income, gain,
loss and deduction with respect to the WRP Property in the manner required by
Section 704(c) of the Code, the Partnership shall employ, and shall cause any
entity controlled by the Partnership which holds title to any of the WRP
Property to employ, the "traditional method" as set forth in Regulation Section
1.704-3(b).
4. Obligation to Restore Deficit Capital Account.
(a) For purposes of this Section 4, the following terms shall
have the meanings set forth below:
(i) "DRO Amount" means (A) with respect to WRAM,
$10,873,678, (B) with respect to WRH, $63,014,285 and (C) with respect
to each Scheduled Assignee, the amount set forth opposite such
Scheduled Assignee's name on Schedule 1 hereto.
(ii) "Partner Contribution Agreement" means one or more
agreements in favor of that certain partnership or those certain
partnerships that are partners in WRH, which were executed
concurrently with the Third Prior Amendment and have been assigned by
such partnerships to WRH, pursuant to which a Second-Tier Partner has
agreed to make certain capital contributions to WRH on the terms and
subject to the conditions set forth in such Partner Contribution
Agreement.
(iii) "Partner Contribution Amount" means, with respect
to each Second-Tier Partner, the amount set forth opposite such
Second-Tier Partner's name on Schedule 1 hereto, which amount is the
amount of capital contributions agreed to be made by such Second-Tier
Partner pursuant to the Partner Contribution Agreement to which he is
a party.
▇-▇ - ▇
▇▇▇
(▇▇) "Scheduled Assignee" means each permitted assignee
of any of the WRP Units of either WRAM or WRH listed on Schedule 1
hereto and the successors and assigns of such Scheduled Assignee.
(v) "Second-Tier Partners" means those persons listed
on Schedule 1 to the Third Prior Amendment who are partners in certain
general partnerships that are partners in WRH and who have executed
and delivered one or more Partner Contribution Agreements.
(b) Notwithstanding any other provisions of the Agreement, upon
liquidation of the Partnership or upon the liquidation of the Partnership
Interest of a Contributor or a Scheduled Assignee, each Contributor or
Scheduled Assignee whose interest is being liquidated shall contribute to
the Partnership, in accordance with Section 1.704-1(b)(2)(ii)(b)(2) of the
Regulations, the deficit balance, if any, in its Capital Account,
calculated after the allocation for such year of all items of Net Income,
Net Losses, Gross Income and Unrealized Gain or Unrealized Loss allocated
in accordance with Section 1.D of Exhibit B to the Agreement; provided,
however, that in no event shall such contribution obligation for any
Contributor or Scheduled Assignee exceed such Contributor's or Scheduled
Assignee's DRO Amount. In addition, WRH assigned and conveyed to the
Partnership, effective upon distribution of the WRP Units by WRH, all of
WRH's rights under each Partner Contribution Agreement provided by a
Second-Tier Partner; provided that in no event shall the contribution
obligation pursuant to such Partner Contribution Agreement exceed such
Second-Tier Partner's Partner Contribution Amount. The obligation pursuant
to this Section 4(b) shall be for the benefit of the Partnership, the
General Partner, the creditors of the Partnership or any other person to
whom any debts, liabilities or obligations are owed by (or who otherwise
has any claim against) the Partnership or the General Partner in its
capacity as the general partner of the Partnership and shall be enforceable
by such parties. Each Contributor and Scheduled Assignee unconditionally
and irrevocably waives any subrogation, reimbursement or similar rights to
which it might otherwise be entitled as the result of its performance with
respect to the obligation created pursuant to Section 4(b), whether such
rights arise with respect to the Partnership, another Partner, or a third
party; provided, however, that the General Partner shall in all events be
entitled to enforce the contribution obligation of a Contributor or
Scheduled Assignee undertaken pursuant to Section 4(b).
(c) Notwithstanding the foregoing, in the event that the General
Partner, pursuant to Section 8.6.B of the Agreement, elects to assume
directly and satisfy a Redemption Right exercised by a Contributor or a
Scheduled Assignee (a "Tendering Limited Partner"), the General Partner
shall assume the obligation of the Tendering Limited Partner pursuant to
Section 4(b) above with respect to the WRP Units transferred to the General
Partner by such Tendering Limited Partner; provided, however, that if the
adjustment to the Carrying Values of Partnership Assets and the related
adjustments to the Capital Accounts of the Partners pursuant to Section 2
hereof and Section 1.D of Exhibit B to the Agreement that would have been
undertaken pursuant to Section 2 hereof had the
E-3 - 4
102
Partnership satisfied the Redemption Right exercised by such Tendering
Limited Partner would have resulted in the Capital Account of the Tendering
Limited Partner having a zero or positive balance, then, with respect to
such WRP Units acquired from the Tendering Limited Partner, the General
Partner shall have no obligation pursuant to Section 4(b) hereof with
respect to a liquidation of the Partnership or a liquidation of the
Partnership Interest reflected by such WRP Units that occurs more than
twelve months following the acquisition of such WRP Units by the General
Partner.
(d) In the event that the liquidation of the Partnership
Interest of a Tendering Limited Partner, other than in connection with the
liquidation of the Partnership, would trigger an obligation pursuant to
Section 4(b) hereof to contribute an amount to the Partnership, then the
Net Income of the Partnership for the portion of such year ending on the
Specified Redemption Date with respect to such Tendering Limited Partner
shall be specially allocated to such Tendering Limited Partner in the
amount necessary to eliminate the deficit balance in its Capital Account
remaining after all other adjustments for such year (including any
adjustments made pursuant to Section 1.D of Exhibit B to the Agreement).
5. Maintenance of Recourse Debt. The Partnership shall maintain
unsecured liabilities as to which the creditor has recourse to the General
Partner, including any such unsecured recourse liabilities (as to which the
creditor has recourse to the General Partner in its capacity as General Partner)
of any other entity that is allocable to the Partnership, in an aggregate amount
not less than the amount necessary such that: (a) prior to the distribution by
WRAM and WRH of WRP Units issued to them pursuant to the Contribution Agreement,
the amount of Partnership recourse liabilities allocated to each of WRAM and WRH
shall be not less than its DRO Amount; and (b) following the distribution by
WRAM and WRH of WRP Units issued to them pursuant to the Contribution Agreement,
the amount of Partnership recourse liabilities allocated directly or indirectly
to all Scheduled Assignees and Second-Tier Partners shall be not less than the
sum of their respective DRO Amounts and Partner Contribution Amounts. In making
such determination, the Partnership shall take into account any and all
allocations of Partnership recourse liabilities to other Partners by reason of
any guarantees, indemnities, restoration obligations or other, similar
arrangements with respect to any such Partners, and the liability by reason of
any such Partner's status as a general partner of the Partnership.
6. Amendments. Notwithstanding any provision in the Agreement to the
contrary, the provisions hereof and of the Third Prior Amendment may be waived
or amended or otherwise modified with the prior written consent of holders of
more than fifty percent (50%) of the WRP Units at the time outstanding and
without the consent of any other Limited Partner.
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ASSIGNEES AND SECOND-TIER PARTNERS
DRO Amount/
Scheduled Assignees/ Partner Contribution
Second-Tier Partners Amount
-------------------- ------
Runstad, H. ▇▇▇ (4,254,441)
Grousemount Associates (1,770,549)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (1,551,346)
▇▇▇▇▇▇, ▇▇▇ ▇. (593,282)
WRAM Inc. (2,704,060)
Allsop Inc. (2,608,769)
▇▇▇▇▇, ▇▇▇▇▇▇▇ (65,221)
▇▇▇▇▇, ▇▇▇▇▇ ▇. (50,842)
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (130,441)
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. (50,843)
▇▇▇▇, ▇▇▇▇▇ (64,912)
Cleveland T.E. (65,222)
▇▇▇▇▇, ▇▇▇▇ ▇. (130,445)
▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (608,394)
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (1,329,940)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (50,845)
▇▇▇▇▇, ▇▇▇▇▇ (260,876)
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (2,420,379)
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (801,449)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (130,446)
▇▇▇▇▇, ▇▇▇▇ ▇. (130,443)
▇▇▇▇▇▇▇, J. Michael (130,444)
Grousemount Associates (7,372,126)
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. (65,220)
Heeseman, Tex (50,845)
Helsell Partnership (108,388)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (280,007)
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (183,943)
Kosmos, ▇▇▇▇▇▇ ▇. ▇▇. (282,280)
Leendersten, ▇▇▇▇▇▇ ▇. (738,833)
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (426,318)
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. (130,445)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. (295,017)
▇▇▇▇▇, ▇▇▇▇▇ ▇. (50,845)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (3,518,589)
▇▇▇▇▇▇, ▇▇▇ ▇. (2,720,052)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. (130,445)
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (738,834)
▇-▇ - ▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇. (130,442)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. (256,141)
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. Family PS (608,393)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (2,084,177)
Runstad, H. ▇▇▇ (10,800,978)
▇▇▇▇▇▇▇▇▇, Theiline P. (2,401,958)
▇▇▇▇▇▇▇▇▇ Partnership (9,286,144)
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (453,335)
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ (130,443)
▇▇▇▇▇▇▇▇▇, M.E. (65,220)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (295,017)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (565,070)
Stuart, ▇. ▇▇▇▇▇▇ ▇▇. (1,825,169)
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (1,216,770)
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (225,585)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (496,317)
Trainer, ▇▇▇▇▇▇▇ U. (1,033,889)
▇▇▇▇▇, ▇▇▇▇ (50,845)
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (190,605)
Windhover Associates (125,384)
▇▇▇▇▇▇ Runstad & Company (729,314)
▇▇▇▇▇▇▇, ▇▇▇ ▇. (1,192,385)
▇▇▇▇▇▇▇, ▇▇▇▇ (54,446)
▇▇▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇ (43,181)
▇▇▇▇▇, ▇▇▇▇▇ ▇. (738,833)
▇▇▇▇▇, ▇▇▇▇▇ ▇. (434,094)
▇▇▇▇▇▇▇▇ ▇.▇. (3,723)
Ahearne T. (2,241)
▇▇▇▇▇▇ ▇.▇. (5,247)
▇▇▇▇▇▇▇▇ D (2,685)
Alston C. (618)
▇▇▇▇ ▇.▇. (4,744)
▇▇▇▇▇▇▇▇▇ ▇.▇. (54,556)
▇▇▇▇▇▇▇▇ M. (2,051)
▇▇▇▇▇▇▇▇▇▇▇ M.E. (17,141)
▇▇▇▇▇▇▇ ▇.▇. (750)
▇▇▇▇▇▇ ▇.▇. (4,920)
▇▇▇▇▇▇▇ F.L. (41,845)
▇▇▇▇▇ ▇. (2,716)
▇▇▇▇▇▇ B. (1,069)
▇▇▇▇▇▇▇ ▇.▇. (4,464)
▇▇▇▇▇▇ ▇.▇. (4,830)
▇▇▇▇ ▇. (758)
▇▇▇▇▇▇▇ ▇.▇. (63,006)
DIiJulio P.S. (3,598)
▇▇▇▇▇ ▇.▇. (1,736)
▇▇▇▇▇▇▇▇▇▇ ▇.▇. (21,820)
▇-▇ - ▇
▇▇▇
▇▇▇▇▇ ▇.▇. (3,525)
▇▇▇▇▇▇▇▇ ▇.▇. (1,755)
▇▇▇▇▇ ▇.▇. (2,006)
▇▇▇▇▇▇▇ ▇.▇. (49,462)
▇▇▇▇▇▇▇ L.L. (2,914)
▇▇▇▇▇▇ ▇.▇. (139,362)
▇▇▇▇▇▇▇▇ ▇.▇. (62,317)
▇▇▇▇▇▇▇▇ J. (1,129)
Gleaves C. (3,066)
▇▇▇▇▇▇▇▇ L.E. (2,638)
▇▇▇▇, ▇.▇. (93,138)
▇▇▇▇▇▇▇▇▇▇▇ J. (3,209)
▇▇▇▇ ▇.▇. (4,135)
▇▇▇▇▇▇▇ ▇.▇. (2,613)
Israel A.D. (13,854)
▇▇▇▇▇▇▇ D.E. (3,120)
▇▇▇▇▇ R.E. (92,690)
▇▇▇▇▇▇▇ ▇.▇. (5,979)
▇▇▇▇▇▇▇ ▇.▇. (22,914)
▇▇▇▇▇▇ A. (759)
▇▇▇ ▇.▇. (2,365)
▇▇▇▇▇▇▇ ▇.▇. (5,671)
▇▇▇▇ ▇. (5,530)
▇▇▇▇▇▇▇ ▇.▇. (2,749)
▇▇▇▇▇▇▇ ▇.▇. (43,651)
▇▇▇▇▇ D.E. (2,531)
▇▇▇▇▇▇ ▇.▇. (3,080)
▇▇▇▇▇▇ ▇.▇. (116,291)
▇▇▇▇▇▇▇▇▇▇ ▇.▇. (4,758)
Mc ▇▇▇▇▇▇▇▇ ▇.▇. (267)
▇▇▇▇▇▇ R. (2,569)
▇▇▇▇▇▇ ▇.▇. (3,440)
▇▇▇▇▇▇ ▇.▇. (14,101)
▇▇▇▇▇▇▇▇▇ ▇.▇. (1,123)
▇▇▇▇▇▇▇ ▇.▇. (180)
▇▇▇▇ ▇.▇. (25,934)
▇▇▇▇▇▇▇▇▇ ▇.▇. (57,947)
▇▇▇▇▇▇ ▇.▇. (50,680)
▇▇▇▇▇▇ ▇.▇. (42,303)
Prince D.R. (4,289)
▇▇▇▇▇▇ A.M. (41,769)
▇▇▇▇▇▇▇ ▇.▇. (2,778)
▇▇▇▇▇ ▇.▇. (2,881)
▇▇▇▇▇▇▇ ▇.▇. (6,033)
▇▇▇▇▇▇▇ ▇.▇. (31,986)
▇▇▇▇▇▇▇ ▇.▇. (5,855)
Sandler M.D. (6,704)
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ L.S. (1,200)
▇▇▇▇▇▇ R. (1,262)
Serkin B.P. (1,794)
▇▇▇▇▇▇ M. (3,025)
▇▇▇▇▇▇▇ H. (5,318)
▇▇▇▇▇▇▇▇▇ M.E. (9,304)
▇▇▇▇▇ ▇.▇. (44,495)
▇▇▇▇▇▇▇ ▇.▇. (3,833)
Thieme D. (2,631)
▇▇▇▇▇▇ ▇.▇. (4,370)
Utevsky D. (5,089)
Vaska M. (2,240)
▇▇▇▇▇▇▇▇ ▇.▇. (5,427)
▇▇▇▇▇▇▇▇ ▇.▇. (2,868)
▇▇▇▇▇▇ ▇.▇. (80,770)
Whiteley K. (8,925)
▇▇▇▇▇▇▇▇ ▇.▇. (15,963)
▇▇▇▇▇▇ D.R. (6,527)
▇▇▇▇▇▇▇▇ ▇.▇. (2,609)
Winter D.S. (3,114)
▇▇▇▇▇ ▇.▇. (1,417)
▇▇▇▇▇▇ ▇.▇. (3,295)
Total (73,887,963)
==========
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
(▇▇▇▇▇▇▇▇▇ AGREEMENT)
BACKGROUND
On April 21, 1998, ▇▇▇▇▇▇▇▇▇-Denver Limited Partnership, an
Ohio limited partnership ("▇▇▇▇▇▇▇▇▇") and ▇▇▇▇ ▇▇▇▇▇▇▇▇ Partnership, a Colorado
general partnership ("Broadway") (collectively the "Additional Limited
Partners") each was issued 1,684 Class B Units (referred to as the "▇▇▇▇▇▇▇▇▇
and Broadway Units"). In connection with the issuance of the ▇▇▇▇▇▇▇▇▇ and
Broadway Units, a Prior Addendum dated as of April 21, 1998, to the Original
Partnership Agreement, which set forth specific agreements regarding certain
additional rights and obligations of the Additional Limited Partners, was
executed. Such specific agreements are described below.
All capitalized terms used in this Exhibit E-4 and not
otherwise defined shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
Notwithstanding any other provision of the Agreement to the
contrary, upon liquidation of the Partnership, each of the Additional Partners
shall be required to contribute to the Partnership the deficit balance in such
party's Capital Account computed in accordance with Sections 1.752-2(b)(1) and
(2) of the Regulations; provided, however, that such contribution obligation
shall not exceed the amount by which the recourse obligations of the Partnership
exceed the assets of the Partnership available to satisfy such recourse
obligations and shall not exceed $4,154,000 with respect to ▇▇▇▇▇▇▇▇▇ and the
lesser of the deficit balance in Broadway's Capital Account in "owner" at the
date of "closing" reduced by any income allocated to Broadway after the date of
Closing or $10,500,000 with respect to Broadway (collectively, the "Deficit
Obligation"). Each of the Additional Limited Partners specifically waives any
right of contribution or subrogation with respect to such Deficit Obligation and
neither the General Partner nor any other Partner or other Person shall be
required to reimburse the Additional Limited Partners for such contributions.
Upon payment of such Deficit Obligation, each Additional Limited Partner's
Capital Account shall be credited with such payment. Amounts paid to the
Partnership pursuant to the Deficit Obligation shall be used to satisfy the
recourse obligations of the Partnership.
Upon the sale, redemption, conversion or other disposition of
the ▇▇▇▇▇▇▇▇▇ and Broadway Units received by any Additional Limited Partner, the
Deficit Obligation of such Additional Limited Partner shall be reduced in an
amount equal to the percentage of the ▇▇▇▇▇▇▇▇▇ and Broadway Units owned by such
Additional Limited Partner which were sold, redeemed, converted or otherwise
disposed of by such Additional Limited Partner, and upon the sale, redemption,
conversion or other disposition of all the ▇▇▇▇▇▇▇▇▇ and Broadway Units received
by any Additional Limited Partner, the Deficit Obligation shall be terminated
with respect to such Additional Limited Partner. Nothing in this Exhibit E-4
108
shall in any way effect the sale, exchange or conversion rights of the
Additional Limited Partners under the Agreement or this Exhibit E-4.
In the case of ▇▇▇▇▇▇▇▇▇ only, certain partners of ▇▇▇▇▇▇▇▇▇
shall execute and deliver to the Partnership, and the Partnership shall accept,
a Guarantee in the form agreed to by such ▇▇▇▇▇▇▇▇▇ partners and the
Partnership.
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
(▇▇▇▇ ▇▇▇▇ SQUARE AGREEMENT)
BACKGROUND
Pursuant to a closing under that certain Contribution
Agreement dated September 28, 1999, by and between Palo Alto Square Limited
Partnership, an Illinois limited partnership, ("Contributor") and the General
Partner (the "Contribution Agreement"), Contributor was issued 1,012,623 Class B
Units (referred to as the "Contributor Units") in exchange for certain real
property interests described in the Contribution Agreement (the "Property").
Contributor has assigned the Contributor Units to the Equity Holders (as defined
below). In connection with the issuance of Contributor Units, the Tenth Prior
Amendment to the Original Partnership Agreement, which set forth specific
agreements regarding certain additional rights and obligations of the
Contributor and its constituent partners as set forth on Schedule 1 to such
Tenth Prior Amendment (the "Equity Holders"), was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-5 and not
otherwise defined shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Right to Assign. Notwithstanding any other provision of
this Exhibit E-5 or of the Agreement, the Equity Holders shall have the right to
assign all or any portion of their Contributor Units, together with any and all
other rights of the Equity Holders pursuant to this Exhibit E-5 or the
Agreement, to one or more of the constituent partners or shareholders, members,
partners or beneficiaries of constituent partners of the Equity Holders as of
October 1, 1999, whether direct or indirect, without the need for the consent of
the General Partner or Limited Partners and without being subject to the right
of first refusal set forth in Section 11.3.A(a) of the Agreement, but in each
case subject to the restrictions and conditions set forth in Sections 11.3.C,
11.3.D, 11.3.E, 11.6.E and 11.6.F of the Agreement. Upon the delivery of written
notice of such an assignment to the General Partner, each assignee of
Contributor Units pursuant to the immediately preceding sentence shall be
admitted to the Partnership as a Substituted Limited Partner owning the
Contributor Units so assigned and having all of the rights of a Limited Partner
under the Agreement and this Exhibit E-5, subject only to such assignee
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of the Agreement and such other documents or instruments as the
General Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of the
Contributor Units, issued to the Contributor pursuant to the Contribution
Agreement and subsequently transferred to the Equity Holders, that is admitted
as a Substituted Limited Partner in accordance with this Section 1 or Article XI
of the Agreement, for so long as such Person owns any such Contributor Units, is
referred to in this Exhibit E-5 as an "Indirect Equity Holder." Upon
satisfaction of the condition described in the second sentence of this Section
1, the General Partner shall update the Partner Registry in the manner described
in Section 11.4.C of the Agreement. For purposes of Section 8.6 of the
Agreement, each Equity Holder and Indirect
110
Equity Holder shall be entitled to exercise its right to require the Partnership
to redeem all or any portion of the Contributor Units assigned to it by an
Equity Holder at any time on or after October 1, 1999.
2. Adjustments to Carrying Values. (a) The Carrying Values
of the Assets of the Partnership shall be adjusted in accordance with the
procedures described in Section 1.D of Exhibit B to the Agreement; provided,
however, that in order to minimize the administrative burden associated with the
adjustments required by this Section 2(a) in connection with the distribution of
the Cash Amount to an Equity Holder or an Indirect Equity Holder, the
Partnership shall make the adjustments to the Carrying Values of the
Partnership's assets (and the resulting adjustments to the Capital Accounts of
the Partners) only upon the happening of the most material event during the
calendar year that is described in Section 1.D(2) of Exhibit B to the Agreement
(the "Annual Adjustment") and; provided further that upon the distribution of
the Cash Amount to an Equity Holder or an Indirect Equity Holder or, at the
option of the General Partner, upon the occurrence of any other event described
in Section 1.D(2) of Exhibit B to the Agreement, that occurs during any year
other than as of the date of the Annual Adjustment, the Partnership shall, at
the time of such distribution, make adjustments to the Carrying Values of the
Partnership's assets in accordance with the procedures described in Section 1.D
of Exhibit B to the Agreement for purposes of adjusting the Capital Account of
an Equity Holder, or such Indirect Equity Holder who has exercised his
Redemption Right or such other affected Partner, but no such adjustments shall
be necessary at such time with respect to the Capital Account balances of
Partners who remain Partners through the date of the Annual Adjustment or are
otherwise not directly affected by any such other event.
(b) Any determination of the fair market value
of Partnership assets pursuant to Section 1.D of Exhibit B to the Agreement (for
purposes of calculating Unrealized Gain or, Unrealized Loss), with respect to
adjusting the Carrying Values of Partnership assets in connection with the
exercise of Redemption Rights by an Equity Holder or any Indirect Equity Holder
shall be made by assuming that the aggregate fair market value of all
Partnership assets is equal to the aggregate Cash Amount that would be
distributed by the Partnership if all Partnership Units held by all Partners
(including the General Partner) were redeemed in exchange for the Cash Amount
with respect to each such Partnership Unit at such time, provided, however, such
valuation methodology shall not be utilized for purposes of determining the fair
market value of the Partnership's assets with respect to any such exercise of
Redemption Rights in contemplation of an assignment by or reorganization of the
Partnership for the benefit of creditors and any liquidation of the Partnership
related thereto or following the filing by (or in contemplation of a filing) by
the Partnership of a case under Title 11 of the U.S. Code.
3. Allocations. Notwithstanding the provisions of Section
2.C of Exhibit C to the Agreement, for purposes of allocating, items of income,
gain, loss and deduction with respect to the Property in the manner required by
Section 704(c) of the Code, the Partnership shall employ, and shall cause any
entity controlled by the Partnership which holds title to any of the Property to
employ the "traditional method" as set forth in Regulation Section 1.704-3(b).
▇-▇ - ▇
▇▇▇
▇. Obligation to Restore Deficit Capital Accounts. (a)
For purposes of this Section 4, the following terms shall have the meanings set
forth below:
(i) "Protected Amount" means, with
respect to any Protected Partner, an amount equal to
(i) the taxable gain, if any, that would be realized
by such Protected Partner if such Partner were to
dispose of its Partnership Interests for no
consideration other than the release or deemed
release of liabilities of the Partnership assumed by
or otherwise allocable to such Partner under Code
Section 752, as such hypothetical gain is determined
from time to time, less (ii) such Partner's share of
"qualified nonrecourse financing" as defined in Code
Section 465(b)(6) and the Regulations thereunder, as
such share is determined from time to time in
accordance with Regulations Section 1.752-3(a). The
Protected Amount allocable to any Protected Partner
may be modified from time to time by an amendment to
the Agreement or by execution of a written instrument
by and between such Protected Partner and the General
Partner, acting on behalf of the Partnership and
without the prior written consent of any other
Partner (whether or not Protected Partners).
(ii) "Protected Partner(s)" means
that or those Limited Partner(s) designated as
Protected Partner(s) on Exhibit A attached to the
Tenth Prior Amendment, as such designation may be
modified from time to time by the General Partner,
whether by express amendment to the Agreement or by
execution of a written instrument by and between any
Protected Partner(s) and the General Partner, acting
on behalf of the Partnership and without the prior
consent of other Limited Partners (whether or not
Protected Partners). For purposes hereof, any
successor, assignee, or transferee of Partnership
Interests from a Protected Partner, which successor,
assignee or transferee determines its basis in such
Units by reference to the basis of the predecessor,
assignor or transferor Protected Partner, shall be
considered a Protected Partner.
(b) Notwithstanding any provision of the Partnership
Agreement to the contrary (including, without limitation, the second sentence of
Section 13.3 of the Partnership Agreement), upon liquidation of the Partnership
or upon the liquidation of the Partnership Interest of a Protected Partner, such
Protected Partner whose interest is being liquidated shall contribute to the
Partnership in accordance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), the deficit balance, if any, in its Capital Account,
calculated after the allocation for such year of all items of Net Income, Net
Losses, Gross Income and Unrealized Gain or Unrealized Loss allocated in
accordance with Section 6.1 of the Agreement, Section 1.D of Exhibit B to the
Agreement, provided, however, that in no event shall such contribution
obligation for any Protected Partner exceed such Protected Partner's Protected
Amount. The obligation created pursuant to this Section 4(b) shall be for the
benefit of the Partnership, the General Partner, the creditors of the
Partnership or any other person to whom any debts, liabilities or obligations
are owed by (or who otherwise has any claim against) the Partnership or the
General Partner in its capacity as
E-5 - 3
112
general partner of the Partnership and shall be enforceable by such parties.
Each Protected Partner unconditionally and irrevocably waives any subrogation,
reimbursement or similar rights to which it might otherwise be entitled as the
result of its performance with respect to the obligation pursuant to this
Section 4(b), whether such rights arise with respect to the Partnership, another
Partner of the Partnership or a third party; provided, however, that the General
Partner shall in all events be entitled to enforce the contribution obligation
of a Protected Partner undertaken pursuant to Section 4(b). Notwithstanding
anything herein to the contrary, the obligation of a Protected Partner to
contribute amounts pursuant to this paragraph shall continue in full force and
effect in accordance with the terms hereof until one year following the transfer
or other disposition by such Protected Partner of its Partnership Interests
unless the Partnership and such Protected Partner agree otherwise. Unless
expressly agreed by the Partnership and the affected holders of Contributor
Units to the contrary in this or any other agreement, no holder of Contributor
Units who is not a Protected Partner shall have any obligation to contribute
amounts to the Partnership.
5. Amendments. Notwithstanding any provision in the
Agreement to the contrary, the provisions of the Tenth Prior Amendment may be
waived or amended or otherwise modified with the prior written consent of
holders (being either the Equity Holders and/or the Indirect Equity Holders) of
more than seventy-five percent (75%) of the Contributor Units at the time
outstanding and without the consent of any other Limited Partner.
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
(CORNERSTONE AGREEMENT)
BACKGROUND
In connection with the closing of the merger of Cornerstone
Properties Limited Partnership ("Cornerstone Partnership") with and into the
Partnership on June 19, 2000, (the "Cornerstone Merger") pursuant to the
Agreement and Plan of Merger, dated as of February 11, 2000, as amended, among
the General Partner, the Partnership, Cornerstone Properties Inc. and
Cornerstone Partnership (the "Merger Agreement"), certain former limited
partners of Cornerstone Partnership who became Limited Partners as a result of
the Cornerstone Merger (referred to as "Former Cornerstone Limited Partners")
have elected to become Protected Partners and, as a group, the Former
Cornerstone Limited Partners have been given the right to increase their
Protected Amount after the closing of the Cornerstone Merger, subject to a
specified aggregate dollar limitation. In addition, the Partnership and
Cornerstone Partnership entered into certain other agreements with respect to
tax matters that affect the Former Cornerstone Limited Partners. The specific
agreements between the Partnership and Cornerstone Partnership with respect to
these various matters are described below.
All capitalized terms used and not otherwise defined in this
Exhibit E-6 shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Election by Certain Former Cornerstone Limited Partners to
Undertake Deficit Restoration Obligation. Each Former Cornerstone Limited
Partner who, prior to the closing of the Cornerstone Merger, had entered into an
agreement with Cornerstone Partnership to bear the economic risk of loss as to a
portion of Cornerstone Partnership's recourse indebtedness by undertaking the
obligation to restore a portion of its negative capital account balance upon
liquidation of such Former Cornerstone Limited Partner's interest in Cornerstone
Partnership was given the opportunity to become a Protected Partner with a
Protected Amount in an amount equal to the maximum amount such Former
Cornerstone Limited Partner was obligated to restore to Cornerstone Partnership
immediately prior to the closing of the Cornerstone Merger; provided, however,
that except as set forth in Paragraphs 2 and 3, below, no Former Cornerstone
Limited Partner has the right to increase its Protected Amount following the
Cornerstone Merger. The Former Cornerstone Limited Partners who have elected to
become Protected Partners under such provision of the Merger Agreement, along
with their specified Protected Amounts as of the closing of the Cornerstone
Merger, are set forth on Schedule 1 to this Exhibit E-6. Each such election by a
Former Cornerstone Limited Partner shall become effective upon the later of
receipt thereof by the General Partner or the "effective time" of the merger of
Cornerstone Partnership into the Partnership. Upon becoming effective, each such
election by a Former Cornerstone Limited Partner pursuant to this Section 1 or
any other provision of this Exhibit E-6 shall be irrevocable, cannot be reduced,
and shall be binding upon successive transferees of the Former Cornerstone
Limited Partners, except as provided in Section 13.3.D of the Agreement.
114
2. Election by Former Cornerstone Limited Partners to Increase
Protected Amount. Notwithstanding the proviso in Paragraph 1, above, Former
Cornerstone Limited Partners may, at any time following the Cornerstone Merger,
elect to become Protected Partners and/or increase their Protected Amounts (as
determined immediately prior to the Cornerstone Merger), as a group, by an
aggregate amount of up to $50 million, reduced by the amount of any increases to
the amounts that such former limited partners of Cornerstone Partnership were
obligated to restore to Cornerstone Partnership that occurred during the period
commencing on February 11, 2000, and ending at the closing of the Cornerstone
Merger.
3. Effect of Other Agreements With Former Cornerstone Limited
Partners. Pursuant to the Merger Agreement, the General Partner, the
Partnership, Cornerstone Properties Inc. and Cornerstone Partnership entered
into an Assignment and Assumption Agreement, dated as of June 19, 2000, pursuant
to which the Partnership assumed certain obligations of Cornerstone Partnership
made pursuant to certain tax protection agreements (the "Cornerstone Tax
Protection Agreements") described on Schedule A to such Assignment and
Assumption Agreement, a copy of which is attached as Schedule 2 to this Exhibit
E-6. To the extent that the Cornerstone Tax Protection Agreements included a
right to enter into deficit restoration obligations with respect to Cornerstone
Partnership, such Former Cornerstone Limited Partners who are beneficiaries of
such Cornerstone Tax Protection Agreements are Protected Partners and have
Protected Amounts as provided in the Cornerstone Tax Protection Agreements.
Notwithstanding the limitations in Paragraphs 1 and 2 above, the Protected
Partners who are beneficiaries of the Cornerstone Tax Protection Agreements
shall have the right to increase their Protected Amounts if and to the extent
provided in the applicable Cornerstone Tax Protection Agreement and the amount
of any such increase shall not be taken into account in applying the limitation
in Paragraph 2. The Cornerstone Tax Protection Agreements pursuant to which
certain Former Cornerstone Limited Partners have the right to become Protected
Partners or to increase their specified Protected Amounts (subject to the
limitations noted therein) are listed on Schedule 3 to this Exhibit E-6.
4. Request to Increase Amount of Deficit Restoration
Obligation. The Partnership shall consider in good faith a request from a Former
Cornerstone Limited Partner to become a Protected Partner and/or to increase its
Protected Amount, as applicable, from time to time after the Cornerstone Merger
if such Former Cornerstone Limited Partner shall provide information from its
professional tax advisor satisfactory to the Partnership showing that, in the
absence of such increased Protected Amount, such Limited Partner likely would
not be allocated from the Partnership sufficient indebtedness under Section 752
of the Code and the at-risk provisions under Section 465 of the Code to avoid
the recognition of gain (other than gain required to be recognized by reason of
actual cash distributions from the Partnership). The Partnership and its
professional tax advisors shall cooperate in good faith with such Former
Cornerstone Limited Partner and its professional tax advisor to provide such
information regarding the allocation of the Partnership liabilities and the
nature of such liabilities as is reasonably necessary in order to determine the
Former Cornerstone Limited Partner's adjusted tax basis in its Partnership
Interest and at-risk amount. In deciding whether or not to grant such a request,
the Partnership shall be entitled to take into account all factors related to
the Partnership, including, without limitation, the existing and anticipated
debt structure of
▇-▇ - ▇
▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, the tax situations of all other Partners, including the General
Partner (individually and as a group), and the effect that granting such a
request might have on their tax situation, and the anticipated long-term
business needs of the Partnership. The Partnership's only obligation with
respect to any such request from a Former Cornerstone Limited Partner pursuant
to this Paragraph 4 shall be to act in good faith. In the event the Partnership
fails to act in good faith with respect to any such request, the exclusive
remedy of the Former Cornerstone Limited Partner who made such request shall be
an action for specific performance, with no entitlement to monetary damages.
5. Manner of Electing to Become a Protected Partner or To
Increase Protected Amount. A Former Cornerstone Limited Partner who pursuant to
the rights set forth under the other Paragraphs of this Exhibit E-6, wishes to
become a Protected Partner or, if already a Protected Partner, to increase its
Protected Amount, shall provide a written notice to the General Partner
specifying the desired Protected Amount. If such election is made pursuant to
Paragraph 2, such election shall become effective upon the receipt thereof by
the General Partner unless (i) the General Partner determines that the
limitation set forth in Paragraph 2 would be exceeded by reason of such
election, or (ii) the General Partner reasonably determines, based on the advice
of its tax advisors and after consulting with the Former Cornerstone Limited
Partner and its tax advisors, that the amount specified in such Former
Cornerstone Limited Partner's election substantially exceeds the amount
necessary to cause such Former Cornerstone Limited Partner to be allocated
sufficient Partnership liabilities under Section 752 of the Code (taking into
account the effect of anticipated reductions in Partnership debt on such Former
Cornerstone Limited Partner's allocable share of Partnership liabilities) to
cover such Former Cornerstone Limited Partner's "negative tax capital account"
and reasonably projected changes therein. If such election is pursuant to a
Cornerstone Tax Protection Agreement, such election shall become effective upon
the receipt thereof by the General Partner unless the General Partner reasonably
determines, based on the advice of its tax advisors and after consulting with
the Former Cornerstone Limited Partner and its tax advisor, that such Former
Cornerstone Limited Partner does not have the right to undertake such election
without the consent of the General Partner. If such election is not pursuant to
Paragraph 2 or a Cornerstone Tax Protection Agreement (or such is election does
not become effective pursuant to the provisions of one of the two preceding
sentences), such election shall be deemed to be a request pursuant to Paragraph
4 of this Exhibit E-6 and shall become effective only upon approval by the
General Partner in accordance with the provisions of Paragraph 4. Upon becoming
effective, such election shall be irrevocable, cannot be reduced, and shall be
binding upon successive transferees of the Former Cornerstone Limited Partner
except as provided in Section 13.3.D of the Agreement.
6. No Obligation of the Partnership to Maintain Recourse Debt.
Notwithstanding any obligations of the Partnership referred to in this Exhibit
E-6, the Partnership shall not be obligated to maintain any level of
indebtedness that qualifies as a Recourse Liability or Partner Nonrecourse Debt
in excess of the amounts otherwise specifically required to be maintained under
the Cornerstone Tax Protection Agreements assumed by the Partnership pursuant to
the Merger Agreement.
7. Amendments of Exhibit E; Designation as Part II Protected
Partners. All Protected Partners and their respective Protected Amounts as
provided in this Exhibit
▇-▇ - ▇
▇▇▇
▇-▇ ▇▇▇▇▇ ▇▇ reflected on Exhibit E, which shall be amended from time to time as
necessary to reflect any additional Protected Partners and/or increases in
Protected Amounts made pursuant to paragraphs 2, 3, or 4, above. Former
Cornerstone Partnership Limited Partners who are or become Protected Partners
pursuant to the provisions of this Exhibit E-6 shall be designated on Exhibit E
as Part II Protected Partners; provided, however, that any Former Cornerstone
Limited Partner who is only obligated to restore a deficit in its capital
account upon liquidation of the Partnership pursuant to a Cornerstone Tax
Protection Agreement shall be designated on Exhibit E as a Part I Protected
Partner.
8. Section 704(c) Method. Notwithstanding Paragraph 2.C. of
Exhibit C, the Partnership shall use the "traditional method" under Regulations
Section 1.704-3(b) for purposes of making allocations under Section 704(c) of
the Code with respect to each property in which Cornerstone Partnership owns a
direct or indirect interest at the time of the Cornerstone Merger (the
"Cornerstone Properties") to take into account the Book-Tax Disparities as of
the effective time of the Cornerstone Merger with respect to the Cornerstone
Properties, with no "curative allocations" to offset the effect of the "ceiling
rule," except to the extent that the Partnership expressly would be required to
use a different method under a Cornerstone Tax Protection Agreement assumed by
the Partnership pursuant to the Merger Agreement. The 704(c) Values of the
Cornerstone Properties shall be as determined by agreement between Cornerstone
Partnership and the Partnership prior to the effective time of the Cornerstone
Merger, or in the absence of such agreement, as determined by the General
Partner using such reasonable method of valuation as it shall adopt.
9. Allocations of "Tier 3" Nonrecourse Liabilities Pursuant to
Regulations Section 1.752-3(a)(3). Unless, and only to the extent, expressly
provided otherwise in the Cornerstone Tax Protection Agreements assumed by the
Partnership pursuant to the Merger Agreement, and notwithstanding Section 6.1.C.
of the Agreement, the Partnership shall determine in its reasonable discretion
the method to be used for allocating "excess nonrecourse liabilities" of the
Partnership pursuant to Regulations Section 1.752-3(a)(3) following the
Cornerstone Merger, provided that (i) the Partnership shall not use with respect
to the Former Cornerstone Limited Partners a method that is less favorable than
the method used by the Partnership with respect to the other Limited Partners of
the Partnership who are not parties to an express agreement specifying a
particular method to be used for such purposes, and (ii) in the case of a Former
Cornerstone Limited Partner who, prior to the Cornerstone Merger, had been
specially allocated a portion of a Cornerstone Partnership nonrecourse liability
secured by a property with respect to which such Cornerstone Partner has a
built-in gain under Section 704(c) of the Code to take into account such Former
Cornerstone Limited Partner's share of such built-in gain that was not taken
into account in making the allocation of such liability by Cornerstone
Partnership under Regulations Section 1.752-3(a)(2), the Partnership shall
continue such method of allocating such liability following the Cornerstone
Merger.
E-6 - 4
117
SCHEDULE 1 TO
EXHIBIT E-6
FORMER CORNERSTONE LIMITED PARTNERS
WHO HAVE ELECTED TO BECOME PROTECTED PARTNERS
PURSUANT TO SECTION 1 OF EXHIBIT E-6
----------------------------------------------------------------------------------------------------------------------------
NAME OF FORMER CORNERSTONE LIMITED 2/11/00 6/19/00
PARTNER: RECOURSE DEBT AMOUNT: PROTECTED AMOUNT:
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇ ▇▇▇▇▇▇▇ Trust $11,910.00 -
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - $240,000.00
----------------------------------------------------------------------------------------------------------------------------
Webcor Investment Company - $250,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ Declaration of Trust dated July 27, 1989 - $6,500.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ $2,800.00 $2,800.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇ ▇. ▇▇▇▇▇ $25,000.00 $25,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ $58,023.00 $60,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇▇▇ Living Trust u/a dated 12/88 $35,000.00 $65,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Revocable Trust UTA dated 12/18/91 $1,185,000.00 $1,100,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇ Revocable Trust UTA dated 11/6/91 $1,185,000.00 $1,100,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Trust UTA dated 3/22/84 $575,000.00 $575,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $625,000.00 $600,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇ ▇. & ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Living Trust u/a dated
9/10/93 $6,800,000.00 $6,200,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1977 Revocable Trust $55,000.00 $17,000.00
----------------------------------------------------------------------------------------------------------------------------
The Lennon J. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust $25,000.00 $9,000.00
----------------------------------------------------------------------------------------------------------------------------
Webcor Builders, Inc. $1,750,000.00 $1,950,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Property Trust $780,000.00 $725,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Property Trust $780,000.00 $725,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Property Trust $780,000.00 $725,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇ ▇. ▇▇▇▇▇▇ Property Trust $780,000.00 $725,000.00
----------------------------------------------------------------------------------------------------------------------------
E-6 - 5
118
----------------------------------------------------------------------------------------------------------------------------
NAME OF FORMER CORNERSTONE LIMITED 2/11/00 6/19/00
PARTNER: RECOURSE DEBT AMOUNT: PROTECTED AMOUNT:
----------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $25,000.00 $57,000.00
----------------------------------------------------------------------------------------------------------------------------
The Spiegel Family Trust FBO ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $13,491.00 $5,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ $103,000.00 $100,000.00
----------------------------------------------------------------------------------------------------------------------------
The Gypsy Hershey Horsted Trust u/t/a dated 1/4/89 $103,000.00 $103,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Primary Trust u/a 8/23/94 - $72,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. Mayotte $75,000.00 -
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇▇▇▇ Family Trust - $160,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Trustee u/t/a dated 4/6/76 - $1,000,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - $57,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ - $60,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ - $1,500,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Family LLC - $500,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust u/t/a 2/1/84 - $76,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust u/t/a 2/1/84 - $76,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust u/t/a 2/1/84 - $76,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ - $55,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ - $55,000.00
----------------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇ Family Trust u/t/a 1/4/86 - $50,000.00
----------------------------------------------------------------------------------------------------------------------------
The Wales Family Trust - $25,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. Word - $2,750,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ - $104,000.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ - $4,500.00
----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III $3,000,00.00 $9,000,000.00
----------------------------------------------------------------------------------------------------------------------------
TOTAL $18,697,224.00 $30,985,800.00
----------------------------------------------------------------------------------------------------------------------------
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇▇ 2 TO
EXHIBIT E-6
ASSIGNMENT AND ASSUMPTION AGREEMENT
(Tax Protection Agreements)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is
made and entered into on June 19, 2000, between Cornerstone Properties Inc., a
Nevada corporation ("Cornerstone"), Cornerstone Properties Limited Partnership,
a Delaware limited partnership ("Cornerstone Partnership"), Equity Office
Properties Trust, a Maryland real estate investment trust ("EOP"), and EOP
Operating Limited Partnership, a Delaware limited partnership ("EOP
Partnership").
RECITALS
WHEREAS, Cornerstone, Cornerstone Partnership, EOP and EOP
Partnership are parties to the Agreement and Plan of Merger dated as of February
11, 2000, as amended (the "Merger Agreement"), pursuant to which (i) Cornerstone
will merge with and into EOP and (ii) Cornerstone Partnership will merge with
and into EOP Partnership;
WHEREAS, Cornerstone Partnership and/or Cornerstone is a party
to each of the agreements described on Schedule A attached hereto (collectively,
the "Cornerstone Tax Protection Agreements");
WHEREAS, in connection with the transactions contemplated by the
Merger Agreement and as required by Section 5.14 of the Merger Agreement,
Cornerstone Partnership and Cornerstone desire to assign to EOP Partnership and
EOP any and all of Cornerstone Partnership's and Cornerstone's rights and
interests under the Cornerstone Tax Protection Agreements (such rights and
interests hereinafter referred to as the "Cornerstone Rights") in exchange for
EOP Partnership's and EOP's assumption of any and all of Cornerstone
Partnership's and Cornerstone's remaining obligations under the Cornerstone Tax
Protection Agreements (such obligations hereinafter referred to as the
"Cornerstone Obligations"); and
WHEREAS, EOP Partnership and EOP desire to accept the
Cornerstone Rights and to assume the Cornerstone Obligations;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Assignment of Cornerstone Rights and Assumption of
Cornerstone Obligations. Cornerstone Partnership and Cornerstone hereby assign
to EOP Partnership
E-6 - 7
120
and EOP the Cornerstone Rights, and EOP Partnership and EOP hereby accept the
foregoing assignment and assume and agree to perform any and all of the
Cornerstone Obligations.
2. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute only one instrument.
[Remainder of Page Intentionally Left Blank]
E-6 - 8
121
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CORNERSTONE PROPERTIES INC.
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
CORNERSTONE PROPERTIES
LIMITED PARTNERSHIP
By: Cornerstone Properties Inc.,
its general partner
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
E-6 - 9
122
EQUITY OFFICE PROPERTIES TRUST
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President,
Chief Legal Counsel and Secretary
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties Trust,
its general partner
By:
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President,
Chief Legal Counsel and Secretary
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ A
CORNERSTONE TAX PROTECTION AGREEMENTS
1. First Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of January 29, 1997
(related to Corporate 500, Phase I, and Corporate 500, Phase II).
2. Second Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of April 28, 1998.
3. Third Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of June 3, 1998 (related to
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇), and related Tax Reimbursement Agreement, dated as of
June 3, 1998, by and among Cornerstone Properties Limited Partnership, the New
Partners named therein and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
4. Fifth Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of January 21, 2000
(related to ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇).
5. Contribution Agreement and Agreement and Plan of Merger,
dated as of June 22, 1998, as amended, by and among Cornerstone Properties Inc.,
Cornerstone Properties Limited Partnership, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Associates and the
entities listed on Schedule I thereto.
6. Letter, dated September 21, 1998, from Cornerstone
Properties Inc. and Cornerstone Properties Limited Partnership to
▇'▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇ & Associates.
7. Letter, dated September 11, 1998, from Cornerstone
Properties Inc. and Cornerstone Properties Limited Partnership to ▇▇▇▇▇ Ranch
Company.
8. Agreement to Contribute, dated as of April 28, 1998, by
and between One Memorial Drive Limited Partnership, The Prudential Insurance
Company of America, Cornerstone Properties Limited Partnership and One Memorial
Cornerstone LLC.
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 3 TO
EXHIBIT E-6
CORNERSTONE TAX PROTECTION AGREEMENTS PURSUANT TO WHICH
CERTAIN FORMER CORNERSTONE LIMITED PARTNERS
HAVE THE RIGHT TO BECOME PROTECTED PARTNERS
SECTION 3 OF EXHIBIT E-6
1. Third Amendment to Agreement of Limited Partnership of Cornerstone
Properties Limited Partnership, dated as of June 3, 1998 (related to
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇), and related Tax Reimbursement Agreement,
dated as of June 3, 1998, by and among Cornerstone Properties Limited
Partnership, the New Partners named therein and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
2. Contribution Agreement and Agreement and Plan of Merger, dated as of
June 22, 1998, as amended, by and among Cornerstone Properties Inc.,
Cornerstone Properties Limited Partnership, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Associates
and the entities listed on Schedule I thereto.
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
(ECH-NORTH LOOP/THEATER DISTRICT PARKING AGREEMENT)
BACKGROUND
On August 21, 2000, in connection with the closing of the Contribution
Agreement by and between North Loop-Tremont Partnership, an Illinois
partnership, ("Contributor"), the Partnership, ECH-Chicago Parking Limited
Partnership ("ECH"), and the Constituent partners of Contributor (the
"Constituent Partners"), dated November 6, 1997 and the Settlement Agreement and
Release of Claims by and between the Partnership, ECH, Contributor and the
Constituent Partners, Contributor received 91,406 Class B units of limited
Partnership Interest in the Partnership (the "ECHNLT Units") in exchange for its
limited partnership interest in ECH-North Loop/Theater District Parking Limited
Partnership. In connection with the issuance of the ECHNLT Units, the First
Amendment to the Agreement (the "FIRST AMENDMENT") was executed adding this
Exhibit E-7 to the Agreement, setting forth specific agreements regarding
additional rights and obligations of the Contributor with respect to the ECHNLT
Units. Such specific agreements are set forth below.
All Capitalized terms used and not otherwise defined in this Exhibit E-7
have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. ADMISSION TO PARTNERSHIP. Contributor is hereby admitted to the
Partnership as an Additional Limited Partner in accordance with Section
12.2 of the Agreement and hereby agrees to become a party to the
Agreement and to be bound by all of the terms, conditions and other
provisions of the Agreement, including, but not limited to, the power of
attorney set forth in Section 15.11 of the Agreement.
2. RIGHT TO ASSIGN. Notwithstanding any other provision of this Exhibit
E-7, the Agreement or the First Amendment, Contributor shall have the
right to assign at any time and from time to time all or any portion of
its ECHNLT Units, together with any and all other rights of Contributor
pursuant to this Exhibit E-7 or the Agreement, to one or more of the
constituent partners or shareholders, members, partners or beneficiaries
of constituent partners of Contributor on the date hereof, whether
direct or indirect, without the need for the consent of the General
Partner or any other General Partner or Limited Partner and without
being subject to the right of first refusal set forth in Section
11.3.A(a) of the Agreement, but in each case subject to the restrictions
and conditions set forth in Sections 11.3.C, 11.3.D, 11.3.E, 11.6.E and
11.6.F of the Agreement. Upon the delivery of written notice of such an
assignment to the General Partner, each assignee of ECHNLT Units
pursuant to the immediately preceding sentence shall be admitted to the
Partnership as a Substituted Limited Partner owning the ECHNLT Units so
assigned and having all of the rights of a Limited Partner under the
Agreement, the First Amendment
126
thereto and this Exhibit E-7, subject only to such assignee executing
and delivering to the Partnership an acceptance of all of the terms and
conditions of the Agreement and such other documents or instruments as
the General Partner may reasonably require to effect such admission, in
accordance with Section 11.4.B of the Agreement. Each permitted assignee
of any of the ECHNLT Units issued to the Contributor pursuant to the
Contribution Agreement that is admitted as a Substituted Limited Partner
in accordance with this Section 2 or Article XI of the Agreement, for so
long as such Person owns any such ECHNLT Units, is referred to in this
Exhibit E-7 as an "INDIRECT EQUITY HOLDER." Upon satisfaction of the
condition described in the second sentence of this Section 2, the
General Partner shall update the Partner Registry in the manner
described in Section 11.4.C of the Agreement. For purposes of Section
8.6 of the Agreement, Contributor and each Indirect Equity Holder shall
be entitled to exercise its right to require the Partnership to redeem
all or any portion of the ECHNLT Units at any time on or after the first
anniversary date of the issuance of the ECHNLT Units to Contributor.
3. PRE-CONTRIBUTION GAIN. Contributor shall be allocated gain in accordance
with Section 704(c) of the Code upon the sale, transfer, conveyance or
disposition, directly or indirectly, of either or both Properties (as
such term is defined in the First Amendment) (such gain being
hereinafter referred to as "PRE-CONTRIBUTION GAIN"). Notwithstanding
anything contained in the Agreement to the contrary, the
Pre-Contribution Gain allocable to Contributor pursuant to Section
704(c) of the Code in connection with any sale, transfer, conveyance or
disposition, directly or indirectly, of the Properties shall be, in
aggregate and as of the date hereof, $12,424,927 in respect of the TD
Self Park (as such term is defined in the First Amendment) and
$35,127,926 in respect of NLTC (as such term is defined in the First
Amendment), as each such amount is hereafter reduced in accordance with
the provisions of Section 704(c) of the Code and Exhibit C, Paragraph 2
of the Agreement. The provisions of Exhibit C, Paragraph 2 to the
Agreement shall be applicable with respect to the allocation of income,
gain, loss and deduction pursuant to Section 704(c) of the Code to
Contributor.
4. ALLOCATIONS. Notwithstanding any contrary provision in the Agreement,
for purposes of allocating items of income, gain, loss and deduction
with respect to the Properties in the manner required by Section 704(c)
of the Code, the Partnership shall employ, and shall cause any entity
controlled by the Partnership which holds title to any of the Properties
to employ, the "traditional method" as set forth in Regulation Section
1.704-3(b).
5. OBLIGATION TO RESTORE DEFICIT CAPITAL ACCOUNTS. Contributor shall be a
Part II Protected Partner pursuant to the Agreement for all relevant
purposes. The Protected Amount allocable to Contributor pursuant to the
Agreement shall be the amount designated on Schedule 1 to this Exhibit
E-7 as the Protected Amount for Contributor. Notwithstanding anything
contained in the Agreement to the contrary, any Indirect Equity Holder
that is admitted as a Substitute Limited Partner pursuant to, and in
accordance with, Section 2 to this Exhibit E-7 above
▇-▇ - ▇
▇▇▇
▇▇▇▇▇ ▇▇ admitted as a Part II Protected Partner if and only if all of
the following conditions are satisfied: (i) such Indirect Equity Holder
shall expressly assume, in writing, all of the liabilities and
obligations of a Part II Protected Partner pursuant to the Agreement for
the benefit of the General Partner and the Partnership (such written
assumption agreement, an "ASSUMPTION AGREEMENT"); (ii) such Indirect
Equity Holder shall designate its Protected Amount in the Assumption
Agreement, which Protected Amount shall be approved by Contributor (or
the applicable immediate predecessor-in-interest to such Indirect Equity
Holder) in writing; and (iii) the aggregate Protected Amount, at any
time, allocated to Contributor and any and all Indirect Equity Holders
allocated a Protected Amount pursuant to this sentence shall not exceed
the Protected Amount presently allocated to Contributor on Schedule 1 to
this Exhibit E-7.
E-7 - 3
128
SCHEDULE 1 TO EXHIBIT E-7
PART II PROTECTED PARTNER PROTECTED AMOUNT
------------------------- ----------------
North Loop-Tremont Partnership $32,341,926
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
(SEATTLE WORLD TRADE CENTER -- EAST BUILDING AGREEMENT)
BACKGROUND
On September 8, 2000, in connection with the closing of the Contribution
Agreement by and between WRC Trade Center LLC, a Washington limited liability
company, ("Contributor") and EOP-WTC LLC, a Delaware limited liability company,
("Acquiror") dated July 7, 1998, Contributor received 227,011 Class B Units of
limited Partnership Interest in the Partnership (the "WTC Units"), based on a
price per Unit of $30.3688, in exchange for its interest in the "Project," as
defined in the Contribution Agreement. In connection with the issuance of the
WTC Units, the Second Amendment to the Agreement was executed adding this
Exhibit E-8 to the Agreement, setting forth specific agreements regarding
additional rights and obligations of the Equity Holders, who were assigned the
WTC Units by the Contributor and the Intermediate Equity Holders as described
more fully in the Second Amendment to the Agreement, with respect to the WTC
Units. Such specific agreements are set forth below.
All Capitalized terms used and not otherwise defined in this Exhibit E-8
have the meanings assigned in the Agreement or the Second Amendment, as
applicable.
SPECIFIC AGREEMENTS
1. ADMISSION TO PARTNERSHIP. The Contributor is admitted to the Partnership
as an Additional Limited Partner in accordance with Section 12.2 of the
Agreement and agrees to become a party to the Agreement and to be bound
by all of the terms, conditions and other provisions of the Agreement,
including, but not limited to, the power of attorney set forth in
Section 15.11 of the Agreement. The General Partner has consented to the
transfer of a portion of the WTC Units from the Contributor to the
Intermediate Equity Holders, who have agreed to become parties to the
Agreement and to be bound by all of the terms, conditions and other
provisions of the Agreement, including, but not limited to, the power of
attorney set forth in Section 15.11 of the Agreement. The General
Partner has consented to the transfer the WTC Units from the Contributor
and the Intermediate Equity Holders, as applicable, to the Equity
Holders as reflected on Schedule 1 to the Second Amendment to the
Agreement. Accordingly, the Equity Holders are admitted to the
Partnership as Substituted Limited Partners in accordance with Section
11.4 of the Agreement and agree to become parties to the Agreement and
to be bound by all of the terms, conditions and other provisions of the
Agreement, including, but not limited to, the power of attorney set
forth in Section 15.11 of the Agreement. The Contributor and the
Intermediate Equity Holders are no longer Limited Partners of the
Partnership.
2. LOCK-UP PERIOD. For a period equal to one year following the Closing
Date (the "Lock-Up Period"), none of the Equity Holders shall, in any
way or to any extent, redeem (pursuant to the Agreement or otherwise),
sell, transfer, assign, pledge or encumber or otherwise convey any or
all of the WTC Units delivered to Contributor
130
pursuant to the Contribution Agreement and subsequently assigned to such
Equity Holders. Notwithstanding the foregoing, during and after the
Lock-Up Period, an Equity Holder shall have the right to (i) pledge or
encumber the WTC Units (or Conversion Shares, if applicable) to a
financial institution or other commercial lender for the purpose of
securing an extension of credit to such Equity Holder by such financial
institution or other commercial lender and (ii) assign all or any
portion of its WTC Units, together with any and all other rights and
obligations of such Equity Holder pursuant to this Exhibit E-8 and the
Agreement, to one or more of the constituent partners or shareholders,
members, partners or beneficiaries the such Equity Holder on the date
hereof, whether direct or indirect, without the need for the consent of
the General Partner or any other Limited Partner and without being
subject to the right of first refusal set forth in Section 11.3.A(a) of
the Agreement, but in each case subject to the restrictions and
conditions set forth in Sections 11.3.C, 11.3.D, 11.3.E, 11.6.E and
11.6.F of the Agreement and subject to the requirement that each such
assignee receiving any of such WTC Units and/or Conversion Shares is an
"Accredited Investor," as such term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended. Upon the
delivery of written notice of such an assignment to the General Partner,
each assignee of WTC Units pursuant to the immediately preceding
sentence shall be admitted to the Partnership as a Substituted Limited
Partner owning the WTC Units so assigned and having all of the rights of
a Limited Partner under the Agreement, the Second Amendment thereto and
this Exhibit E-8, subject only to such assignee executing and delivering
to the Partnership an acceptance of all of the terms and conditions of
the Agreement and such other documents or instruments as the General
Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of
the WTC Units, issued to the Contributor pursuant to the Contribution
Agreement, that is admitted as a Substituted Limited Partner in
accordance with this Section 2 or Article XI of the Agreement, for so
long as such Person owns any such WTC Units, is referred to in this
Exhibit E-8 as an "INDIRECT EQUITY HOLDER." Upon satisfaction of the
condition described in the second sentence of this Section 2, the
General Partner shall update the Partner Registry in the manner
described in Section 11.4.C of the Agreement. For purposes of Section
8.6 of the Agreement, each Indirect Equity Holder shall be entitled to
exercise its right to require the Partnership to redeem all or any
portion of the WTC Units assigned to it by the Contributor at any time
on or after the first anniversary of the issuance of the WTC Units to
Contributor pursuant to the closing under the Contribution Agreement.
3. SALE OF THE PROJECT. For a period of two years following the Closing
Date, the Partnership and the General Partner shall not, without the
prior written consent of the affected Equity Holder(s): (a) sell or
otherwise dispose of the Project (other than through a deed in lieu of
foreclosure, a foreclosure action, or an act of eminent domain) unless
such sale or disposition qualifies for non-recognition of gain under the
Code (for example, by means of exchanges contemplated under Code
sections 351, 354, 355, 368, 721, 1031, or 1033), in such manner as the
Code provides from time to time and the Equity Holders recognize no gain
as a result thereof or (b) cause a voluntary distribution of property
that would cause the Equity Holders to recognize
E-8 - 2
131
income or gain pursuant to the provisions of either or both of sections
704(c)(1)(B) and 737 of the Code.
4. ALLOCATIONS. Notwithstanding any contrary provision in the Agreement,
for a period of two years following the Closing Date, for purposes of
allocating items of income, gain, loss and deduction with respect to the
Property in the manner required by Section 704(c) of the Code, the
Partnership shall employ, and shall cause any entity controlled by the
Partnership which holds title to any of the Property to employ, the
"traditional method" without curative allocations as set forth in
Regulation Section 1.704-3(b).
5. EQUITY HOLDERS TO PROVIDE INFORMATION. Each Equity Holder agrees that it
shall deliver (or shall cause each of its partners, shareholders and
members, as applicable, to deliver) to the General Partner or to any
other party designated by the General Partner, any documentation that
may be required under the Agreement or the Declaration of Trust of the
General Partner and such other information as may reasonably be
requested by the General Partner at such time as any WTC Units are
exchanged for Shares of the General Partner (the "CONVERSION SHARES")
pursuant to Section 8.6 of the Agreement.
6. OBLIGATION TO RESTORE DEFICIT CAPITAL ACCOUNTS. Each Equity Holder whose
name appears on Schedule 1 to this Exhibit E-8 shall be a Part II
Protected Partner pursuant to the Agreement for all relevant purposes.
The Protected Amount allocable to each such Equity Holder pursuant to
the Agreement shall be the amount so designated on Schedule 1 to this
Exhibit E-8. The Protected Amount designated on Schedule 1 to this
Exhibit E-8 reflects the aggregate Protected Amount allocable to each
Equity Holder and, in the case of H. ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
and ▇▇▇ ▇. ▇▇▇▇▇▇, the prior Protected Amounts of each such Equity
Holder set forth in Exhibit E-3 to the Agreement are replaced and
superceded hereby.
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇▇ 1 TO EXHIBIT E-8
--------------------------------------------------------------------------------
PART II PROTECTED PARTNER PROTECTED AMOUNT
------------------------- ----------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
H. ▇▇▇ ▇▇▇▇▇▇▇ $15,905,389i
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $5,419,935ii
--------------------------------------------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇ $3,538,334iii
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $400,000
--------------------------------------------------------------------------------
------------------------
i Includes $15,055,389 Protected Amount previously set forth in Exhibit E-3.
ii Includes $5,069,935 Protected Amount previously set forth in Exhibit E-3.
iii Includes $3,313,334 Protected Amount previously set forth in Exhibit E-3.
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
(▇▇▇▇▇▇▇ AGREEMENT)
BACKGROUND
In connection with the closing of the merger of ▇▇▇▇▇▇▇ Properties, L.P.
("▇▇▇▇▇▇▇ Partnership") with the Partnership on July 2, 2001 pursuant to the
Agreement and Plan of Merger, dated as of February 22, 2001, as amended, by and
among the General Partner, the Partnership, ▇▇▇▇▇▇▇ Properties, Inc. ("▇▇▇▇▇▇▇")
and ▇▇▇▇▇▇▇ Partnership (the "Merger Agreement") (the "▇▇▇▇▇▇▇ Merger"), the
Partnership is making certain undertakings to certain former limited partners of
▇▇▇▇▇▇▇ Partnership who became Limited Partners as a result of the ▇▇▇▇▇▇▇
Merger (the "Former ▇▇▇▇▇▇▇ Limited Partners"). The specific agreements between
the Partnership and ▇▇▇▇▇▇▇ Partnership with respect to these various matters
are described below.
SPECIFIC AGREEMENTS
1. Definitions. All capitalized terms used and not otherwise defined in
this Exhibit E-9 shall have the meaning set forth in the Partnership Agreement.
As used herein, the following terms have the following meanings:
Guaranteed Amount: Means, as to each Guarantee Partner, the amounts
of the Guaranteed Debt guaranteed by such Guarantee Partner, as set forth
on Schedule 4 to this Exhibit E-9.
Guaranteed Debt: Means the Qualifying Debt guaranteed by the
Guarantee Partners.
Guarantee Opportunity: Shall have the meaning set forth in Paragraph
3(a).
Guarantee Partners: Means the Former ▇▇▇▇▇▇▇ Limited Partners whose
names are set forth on Schedule 4 to this Exhibit E-9.
Guarantee Protection Period: Means the period commencing on the date
of closing of the ▇▇▇▇▇▇▇ Merger and ending on the tenth (10th) anniversary
thereof (or if the Guarantee Partner also is a Sale Restriction Partner,
for the Protected Period for such Sale Restriction Partner, if longer).
Guaranty Agreement: With respect to guarantees in existence as of
February 17, 2001, the term Guaranty Agreement means the agreement dated as
of October 13, 1997, as amended to the date of the ▇▇▇▇▇▇▇ Merger, by and
among, inter alia, Spieker, ▇▇▇▇▇▇▇ Partnership, and the Guarantee
Partners. With respect to any guarantee entered into pursuant to Section
3(a) hereof, the term Guaranty Agreement refers to a "bottom guarantee" to
be entered into by and among Equity Office, EOP Partnership, and the
Guarantee Partners substantially in the form of the agreements attached as
Schedule 8-1 and Schedule 8-2 to this Exhibit E-9.
Protected Units: Means only those Partnership Units issued to the
Sale Restriction Partners in the ▇▇▇▇▇▇▇ Merger, or any Partnership Units
thereafter issued by the Partnership to the Sale Restriction Partners in
exchange for such Protected Units or solely with respect to such Protected
Units. The term Protected Units shall not include any other Units hereafter
acquired by a Sale Restriction Partner, whether from the Partnership or
otherwise.
E-9 - 1
134
Protected Properties: Means those Properties set forth on Schedule 2
to this Exhibit E-9 and any other properties or assets acquired by the
Partnership received as "substituted basis property" as defined in Section
7701(a)(42) of the Code with respect to such Protected Properties.(1)
Protected Period: Means with respect to each Sale Restriction
Partner, the period ending on the tenth (10th) anniversary of the closing
of the ▇▇▇▇▇▇▇ Merger, provided, however, that the Protected Period with
respect to each Sale Restriction Partner who enters into a Restriction
Agreement in the form of Schedule 3 to this Exhibit E-9 at or prior to the
closing of the ▇▇▇▇▇▇▇ Merger shall be increased by one year for each one
year of the term of the Restriction Agreement applicable to such Sale
Restriction Partner that has elapsed, provided further that in the event
that a Sale Restriction Partner violates the terms of the Restriction
Agreement (1) during the first two years of the term of the Restriction
Agreement, the Protected Period applicable to such Sale Restriction Partner
shall not include any portion of the term of the Restriction Agreement, and
(2) at any time after the expiration of the first two years of the term of
the Restriction Agreement, no portion of the term of the Restriction
Agreement following the date of such violation shall be taken into account
in determining the Protected Period applicable to such Sale Restriction
Partner.(2)
Qualifying Debt: Means indebtedness of the Partnership that is
described in (i), (ii) or (iii) below:
(i) In the case of indebtedness secured by any property or other
asset of the Partnership and not recourse to all of the assets of the
Partnership, it is the most senior indebtedness secured by that property
or asset, and the property securing the indebtedness must have a fair
market value, at the time that the Guarantee Opportunity is offered, at
least equal to (a) 400% of the aggregate amount of the guarantees
provided by Guarantee Partners hereunder, and (b) 133% of the aggregate
amount of all indebtedness secured by such property.
(ii) In the case of indebtedness that is recourse to all of the
assets of the Partnership, the indebtedness is at all times the most
senior indebtedness of the Partnership (but there shall not be a
prohibition against other indebtedness that is pari passu with such
indebtedness) and the face amount of the indebtedness outstanding is at
all times at least equal to 200% of the aggregate amount of the
guarantees provided hereunder.
(iii) The indebtedness is guaranteed as of February 17, 2001, by
the Guarantee Partners pursuant to the Guaranty Agreement.
In addition, at no time can there be guarantees with respect to the same
indebtedness that are not provided by other Guarantee Partners pursuant
hereto that are prior to or pari passu with the guarantees provided by the
Guarantee Partners pursuant hereto (but there shall be no prohibition on
guarantees of other portions of such indebtedness); provided, however, that
such prohibition shall not apply with respect to any other guarantees of
such debt that are in effect with respect to any of the Guaranteed Debt
described in clause (iii) above at the time of the closing of the ▇▇▇▇▇▇▇
Merger.
Sale Restriction Partners: Means those Former ▇▇▇▇▇▇▇ Limited
Partners set forth on Schedule 1 to this Exhibit E-9, and any Person who
holds Protected Units who acquires such Protected Units from a Sale
Restriction Partner in a transaction in which gain or loss is not
recognized in whole or in part for federal income tax purposes and in which
such transferee's adjusted basis, as determined for federal income tax
purposes, is determined by reference to the adjusted basis of the Sale
Restriction Partner in such Protected Units.(3)
---------------
(1) A property shall be a Protected Property only if such property (i) was
acquired by ▇▇▇▇▇▇▇ Partnership in connection with ▇▇▇▇▇▇▇'▇ IPO in a
contribution in which part or all of the gain with respect thereto was deferred
pursuant to Section 721 of the Code, or (ii) was acquired by ▇▇▇▇▇▇▇ Partnership
as "substituted basis property" as defined in Section 7701(a)(42) of the Code
with respect to a property described in clause (i).
(2) As of July 2, 2001 restriction agreements have been entered into by ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
Family Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(3) To be a Sale Restriction Partner, the Partner (i) cannot have redeemed any
of its ▇▇▇▇▇▇▇ Partnership OP Units after February 17, 2001, and (ii) must have
tendered all ▇▇▇▇▇▇▇ Options held on February 17, 2001 to Equity Office as
contemplated by Section 5.8(c) of the Merger Agreement.
▇-▇ - ▇
▇▇▇
▇▇▇▇▇▇▇ Properties: Means those Properties owned by ▇▇▇▇▇▇▇
Partnership at the time of the ▇▇▇▇▇▇▇ Merger, including, without
limitation, the Protected Properties.
2. Restrictions on Dispositions of Protected Properties.
(a) The Partnership agrees for the benefit of each Sale Restriction
Partner, for the term of the Protected Period applicable to such Sale
Restriction Partner, not to directly or indirectly sell, exchange, or
otherwise dispose of any Protected Property.
(b) Notwithstanding the restriction set forth in Paragraph 2(a), the
Partnership may dispose of a Protected Property if such disposition
qualifies as a like-kind exchange under Section 1031 of the Code, or an
involuntary conversion under Section 1033 of the Code, or other transaction
(including, but not limited to, a contribution of property to any entity
that qualifies for the nonrecognition of gain under Section 721 or Section
351 of the Code, or a merger or consolidation of the Partnership with or
into another entity that qualifies for taxation as a "partnership" for
federal income tax purposes (a "Successor Partnership")) that does not
result in the recognition of any taxable income or gain to a Sale
Restriction Partner with respect to Protected Units; provided, however,
that: (1) in the event of a disposition under Section 1031 or Section 1033
of the Code, any property that is acquired in exchange for or as a
replacement for a Protected Property shall thereafter be considered a
Protected Property for purposes of this Paragraph 2; (2) if the Protected
Property is transferred to another entity in a transaction in which gain or
loss is not recognized, the interest of the Partnership in such entity
shall thereafter be considered a Protected Property for Purposes of this
Paragraph 2, and if the acquiring entity's disposition of the Protected
Property would cause a Sale Restriction Partner to recognize gain or loss
as a result thereof, the transferred Protected Property still shall be
considered a Protected Property for purposes of this Paragraph 2 and the
transferee shall have agreed to be jointly and severally liable for any
payments required under Section 2(c) hereof; (3) in the event of a merger
or consolidation involving the Partnership and a Successor Partnership, the
Successor Partnership shall have agreed in writing for the benefit of the
Sale Restriction Partners that all of the restrictions of this Paragraph 2
shall apply with respect to the Protected Properties, and (4) after the end
of the ten (10) year period beginning on the closing date of the ▇▇▇▇▇▇▇
Merger, the Partnership may dispose of a Protected Property in a
transaction that would have qualified as a like-kind exchange under Section
1031 of the Code or as another transaction that would not have resulted in
the recognition of any taxable income or gain to the Former ▇▇▇▇▇▇▇ Limited
Partner under the federal income tax law in effect on the closing date of
the ▇▇▇▇▇▇▇ Merger and prior to the date of such transaction, even if, as a
result of change in law after the closing date of the ▇▇▇▇▇▇▇ Merger, such
transaction results in the recognition of income or gain to the Former
▇▇▇▇▇▇▇ Limited Partner at the time of such transaction.
(c) In the event that the Partnership breaches its obligation set
forth in Paragraph 2(a) with respect to a Sale Restriction Partner during
the Protected Period applicable to such Sale Restriction Partner, the Sale
Restriction Partner's sole right shall be to receive from the Partnership
as damages an amount equal to the aggregate federal, state and local income
taxes (computed taking into account any deduction allowed in computing
federal income taxes for state income taxes payable as a result thereof)
incurred by the Sale Restriction Partner as a result of the gain allocated
to such Sale Restriction Partner with respect to Protected Units by reason
of such disposition, plus an amount equal to the aggregate federal, state,
and local income taxes payable by the Sale Restricted Partner as a result
of the receipt of any payment required under this Section 2(c). In the
event that a Sale Restriction Partner shall acquire any additional
Partnership Units subsequent to the ▇▇▇▇▇▇▇ Merger by reason of a
contribution of additional money or property to the Partnership, the gain
that be taken into account for purposes of computing the damages payable
under this Paragraph 2(c) would not exceed the gain that such Sale
Restriction Partner would have recognized by reason of the Partnership's
breach of its obligation set forth in Paragraph 2(a) had such Sale
Restriction Partner not acquired such additional Partnership Units. In
addition, in no event shall the gain taken into account for purposes of
computing the damages payable under this Paragraph 2(c) exceed the amount
of gain that would have been recognized by the Sale Restriction Partner
with respect to the Protected Units if the Partnership had sold the
Protected Property in a fully taxable
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136
transaction on the day following the closing of the ▇▇▇▇▇▇▇ Merger for a
purchase price equal to the fair market value of such Protected Property at
such time.
(d) Notwithstanding any provision of this Exhibit E-9, the sole and
exclusive rights and remedies of any Sale Restriction Partner for a breach
or violation of the covenants set forth in Paragraph 2(a), shall be a claim
for damages against the Partnership, computed as set forth in Paragraph
2(c), and no Sale Restriction Partner shall be entitled to pursue a claim
for specific performance of the covenant set forth in Paragraph 2(a) or
bring a claim against any Person that acquires a Protected Property from
the Partnership in violation of Paragraph 2(a) (other than a Successor
Partnership that has agreed in writing to be bound by the terms of this
Exhibit E-9 or that has otherwise succeeded to all of the assets and all of
the liabilities of the Partnership, but then only for damages computed as
set forth in Paragraph 2(c)). If the Partnership has breached or violated
the covenant set forth in Paragraph 2(a) (or a Sale Restriction Partner
asserts that the Partnership has breached or violated the covenant set
forth in Paragraph 2(a)), the General Partner and the Sale Restriction
Partner agree to negotiate in good faith to resolve any disagreements
regarding any such breach or violation and the amount of damages, if any,
payable to such Sale Restriction Partner under Paragraph 2(c). If any such
disagreement cannot be resolved by the General Partner and such Sale
Restriction Partner within sixty (60) days after such breach, the General
Partner and the Sale Restriction Partner shall jointly retain a nationally
recognized independent public accounting firm ("an Accounting Firm") to act
as an arbitrator to resolve as expeditiously as possible all points of any
such disagreement (including, without limitation, whether a breach of the
covenant set forth Paragraph 2(a) has occurred and, if so, the amount of
damages to which the Sale Restriction Partner is entitled as a result
thereof, determined as set forth in Paragraph 2(c)). All determinations
made by the Accounting Firm with respect to the resolution of any breach or
violation of the covenant set forth in Paragraph 2(a) and the amount of
damages payable to the Sale Restriction Partner under Paragraph 2(c) shall
be final, conclusive and binding on the Partnership and the Sale
Restriction Partner. The fees and expenses of any Accounting Firm incurred
in connection with any such determination shall be shared equally by
General Partner and the Sale Restriction Partner.
3. Election by Certain Former ▇▇▇▇▇▇▇ Limited Partners to Enter into Bottom
Guarantees of Debt of EOP Partnership.
(a) During the Guarantee Protection Period, the Partnership shall make
available to each Guarantee Partner the opportunity (a "Guarantee
Opportunity") to make a "bottom guarantee" of Qualifying Debt of the
Partnership in the form of the Guaranty Agreement and in an amount at least
equal with respect to each Guarantee Partner to the amount set forth on
Schedule 4 to this Exhibit E-9, determined taking into account all existing
guarantees of such Guarantee Partner that are then in effect (treating as
"bottom guarantees" for this purpose the guarantees that are in effect with
respect to the indebtedness that is guaranteed as of February 17, 2001, by
the Guarantee Partners pursuant to the Guaranty Agreement, as set forth on
Schedule 4 to this Exhibit E-9). During the Guarantee Protection Period, if
Guaranteed Debt is repaid and, immediately after such repayment, (i) the
amount remaining outstanding with respect to such Guaranteed Debt would be
less than the Guaranteed Amount with respect to such Guaranteed Debt or
(ii) the Guaranteed Debt no longer would be treated as Qualifying Debt, the
Partnership shall provide to each Guarantee Partner that had a Guaranteed
Amount with respect to such Guaranteed Debt a new Guarantee Opportunity in
an amount equal to such Partner's Guaranteed Amount with respect to the
Guaranteed Debt being repaid or no longer qualifying as Qualifying Debt,
provided that if the Guaranteed Debt is not being repaid in full, the new
Guaranty Opportunity can be an offer to allow a guarantee of a portion of
that remaining debt so long as the remaining portion of such debt, after
taking into account the Guaranty Opportunities being offered with respect
thereto, would be Qualifying Debt. In the event that the Partnership is
required to offer a Guarantee Opportunity pursuant to this Paragraph 3(a),
the Partnership will provide the Guarantee Partners notice of the type,
amount and other relevant attributes of the Qualifying Debt with respect to
which the Guarantee Opportunity is offered at least fifteen (15) business
days, to the extent reasonably practicable, but in no event less than ten
(10) business days prior to (a) the earlier of the closing of the
incurrence of such debt and the scheduled repayment of the existing
Guaranteed Debt and (b) any
E-9 - 4
137
subsequent date on which the Partnership makes additional Guarantee
Opportunities by reason of the repayment of any indebtedness then subject
to a Guarantee by the Guarantee Partners. In the event that the Partnership
repurchases outstanding Guaranteed Debt, whether or not such debt is
retired, the repurchase thereof shall be treated as a repayment of the
Guaranteed Debt for purposes of this Paragraph 3.
(b) The Partnership makes no representation or warranty to any
Guarantee Partner that any guarantee currently in effect or any "bottom
guarantee" entered into pursuant to Paragraph 3(a) shall be respected for
federal income tax purposes for purposes of causing the Guarantee Partner
to be considered to bear the "economic risk of loss" with respect to the
indebtedness thereby guaranteed by such Guarantee Partner for purposes of
either Section 752 or Section 465 of the Code.
(c) In the event that the Partnership breaches its obligation set
forth in Paragraph 3(a) with respect to a Guarantee Partner during the
Guarantee Protection Period applicable to such Guarantee Partner, the
Guarantee Partner's sole right shall be to receive from the Partnership as
damages an amount equal to the aggregate federal, state and local income
taxes (computed taking into account any deduction allowed in computing
federal income taxes for state income taxes payable as a result thereof)
incurred by the Guarantee Partner as a result of the gain recognized by
such Guarantee Partner by reason of such failure, plus an amount equal to
the aggregate federal, state, and local income taxes payable by the sale
restricted partner as a result of the receipt of payment required under
this Section 3(c). In no event shall the amount taken into account for
purposes of computing the damages payable under this Paragraph 3(c) exceed
the amount of gain that would have been recognized by the Guarantee Partner
if, at the closing of the ▇▇▇▇▇▇▇ Merger, such Guarantee Partner has
recognized an amount of gain equal to the "negative capital account" that
it had with respect to its interest in the ▇▇▇▇▇▇▇ Partnership at the time
of the ▇▇▇▇▇▇▇ Merger. The Partnership shall be considered to have
satisfied it obligations under Paragraph 3(a), and therefore shall have no
liability under this Paragraph 3(c), if it make an offer to a Guarantee
Partner of an opportunity to guarantee Qualifying Debt within the time
periods specified in Paragraph 3(a); the Partnership shall have no
liability if a Guarantee Partner fails to join in such guarantee of
Qualifying Debt.
(d) Notwithstanding any provision of this Exhibit E-9, the sole and
exclusive rights and remedies of any Guarantee Partner for a breach or
violation of the covenants set forth in Paragraph 3(a), shall be a claim
for damages against the Partnership, computed as set forth in Paragraph
3(c), and no Guarantee Partner shall be entitled to pursue a claim for
specific performance of the covenant set forth in Paragraph 3(a). If the
Partnership has breached or violated the covenant set forth in Paragraph
3(a) (or a Guarantee Partner asserts that the Partnership has breached or
violated the covenant set forth in Paragraph 3(a)), the General Partner and
the Guarantee Partner agree to negotiate in good faith to resolve any
disagreements regarding any such breach or violation and the amount of
damages, if any, payable to such Guarantee Partner under Paragraph 3(c). If
any such disagreement cannot be resolved by the General Partner and such
Guarantee Partner within sixty (60) days after such breach, the General
Partner and the Guarantee Partner shall jointly retain an Accounting Firm
to act as an arbitrator to resolve as expeditiously as possible all points
of any such disagreement (including, without limitation, whether a breach
of the covenant set forth Paragraph 3(a) has occurred and, if so, the
amount of damages to which the Sale Restriction Partner is entitled as a
result thereof, determined as set forth in Paragraph 3(c)). All
determinations made by the Accounting Firm with respect to the resolution
of any breach or violation of the covenant set forth in Paragraph 3(a) and
the amount of damages payable to the Guarantee Partner under Paragraph 3(c)
shall be final, conclusive and binding on the Partnership and the Guarantee
Partner. The fees and expenses of any Accounting Firm incurred in
connection with any such determination shall be shared equally by General
Partner and the Guarantee Partner.
(e) In addition to the other rights set forth in this Paragraph 3,
each Guarantee Partner shall have the right, but not the obligation, upon
fifteen (15) business days prior written notice to the Partnership, to
enter into an additional "bottom guarantee" of the ▇▇▇▇▇▇▇ Partnership
7.125% Notes due December 1, 2006 (the "2006 Notes"), in an amount up to
the Available Additional Debt specified for such Guarantee Partner on
Schedule 4 to this Exhibit 9. In the event that a Guarantee Partner shall
exercise
E-9 - 5
138
such right, the Guaranteed Amount of such Guarantee Partner shall be
increased by the amount of such additional guarantee, and the provisions of
Paragraphs 3(a), 3(b), 3(c), and 3(d) shall thereafter apply with respect
to such guarantee as though it were in effect at the closing of the ▇▇▇▇▇▇▇
Merger. The rights of the Guarantee Partners pursuant hereto, if not
exercised, shall expire upon the earlier of the maturity or the prior
prepayment of the 2006 Notes, provided that the Partnership shall give the
Guarantee Partners thirty (30) days prior notice of the prepayment of the
2006 Notes.
4. No Obligation of the Partnership to Maintain Debt. Notwithstanding any
obligations of the Partnership referred to in this Exhibit E-9, the Partnership
shall not be obligated to maintain any level of indebtedness in excess of the
amounts specifically required to meet the obligations set forth in Paragraph 3
above or otherwise specifically required to be maintained under the ▇▇▇▇▇▇▇ Tax
Protection Agreements assumed by the Partnership pursuant to the Merger
Agreement.
5. Section 704(c) Method. Notwithstanding Paragraph 2.C. of Exhibit C, the
Partnership shall use the "traditional method" under Regulations Section
1.704-3(b) for purposes of making allocations under Section 704(c) of the Code
with respect to each ▇▇▇▇▇▇▇ Property to take into account the Book-Tax
Disparities as of the effective time of the ▇▇▇▇▇▇▇ Merger with respect to the
▇▇▇▇▇▇▇ Properties, with no "curative allocations" to offset the effect of the
"ceiling rule," except to the extent that the Partnership expressly would be
required to use a different method under a ▇▇▇▇▇▇▇ Tax Protection Agreement
assumed by the Partnership pursuant to the Merger Agreement. The 704(c) Values
of the ▇▇▇▇▇▇▇ Properties shall be as determined by agreement between ▇▇▇▇▇▇▇
Partnership and the Partnership prior to the effective time of the ▇▇▇▇▇▇▇
Merger, or in the absence of such agreement, as determined by the General
Partner for purposes of preparing the financial statements of the Partnership
and the General Partner reflecting the results of the ▇▇▇▇▇▇▇ Merger so long as
the outside accountants of the General Partner and the Partnership have approved
such financial statements as being in accordance with generally accepted
accounting procedures.
6. Allocations of "Tier 3" Nonrecourse Liabilities Pursuant to Regulations
Section 1.752-3(a)(3).
(a) The Partnership shall use commercially reasonable efforts to
cooperate with the Former ▇▇▇▇▇▇▇ Limited Partners set forth on Schedule 1
to this Exhibit 9 to determine the method to be used for allocating "excess
nonrecourse liabilities" of the Partnership pursuant to Regulations Section
1.752-3(a)(3) following the ▇▇▇▇▇▇▇ Merger. The Partnership shall not use
with respect to such Former ▇▇▇▇▇▇▇ Limited Partners a method that is less
favorable than the method used by the Partnership with respect to the other
Limited Partners of the Partnership who are not parties to the express
agreements in effect on February 17, 2001, specifying a particular method
to be used for such purposes, which are set forth on Schedule 5 to this
Exhibit E-9. In addition, the Partnership shall not make available after
the date of the ▇▇▇▇▇▇▇ Merger, whether pursuant to an agreement entered
into after such date or otherwise, to any other Limited Partner a method of
allocating "excess nonrecourse liabilities" of the Partnership that is more
favorable than that made available to such Former ▇▇▇▇▇▇▇ Limited Partners
without making such method available to the Former ▇▇▇▇▇▇▇ Limited Partners
on a pro rata basis with such other Limited Partners (except as, and only
to the extent, required pursuant to an agreement in effect on February 17,
2001, identified on Schedule 5 to this Exhibit E-9). In the case of a
Former ▇▇▇▇▇▇▇ Limited Partner who, prior to the ▇▇▇▇▇▇▇ Merger, had been
specially allocated a portion of a ▇▇▇▇▇▇▇ Partnership nonrecourse
liability secured by a property with respect to which such ▇▇▇▇▇▇▇ Partner
has a built-in gain under Section 704(c) of the Code to take into account
such Former ▇▇▇▇▇▇▇ Limited Partner's share of such built-in gain that was
not taken into account in making the allocation of such liability by
▇▇▇▇▇▇▇ Partnership under Regulations Section 1.752-3(a)(2), the
Partnership shall continue such method of allocating such liability
following the ▇▇▇▇▇▇▇ Merger.
(b) If the amount of debt allocated to a Former ▇▇▇▇▇▇▇ Limited
Partner under Section 1.752-3(a)(3) of the Code is reduced following the
▇▇▇▇▇▇▇ Merger from the amount allocated to such Former ▇▇▇▇▇▇▇ Limited
Partner immediately before the ▇▇▇▇▇▇▇ Merger and such reduction could
reasonably be expected to cause the Former ▇▇▇▇▇▇▇ Limited Partner to
recognize gain by reason of a deemed distribution of cash to it in excess
of its adjusted basis in its Partnership Interest, the Partnership shall
consider in good faith a request from such Former ▇▇▇▇▇▇▇ Limited Partner
to become a Protected
E-9 - 6
139
Partner and/or to increase its Protected Amount, as applicable, from time
to time after the ▇▇▇▇▇▇▇ Merger and/or to enter into a guarantee of
Qualifying Debt on terms substantially similar to those set forth in the
Guaranty Agreement if such Former ▇▇▇▇▇▇▇ Limited Partner shall provide
information from its professional tax advisor satisfactory to the
Partnership showing that, in the absence of such increased Protected Amount
or guarantee, such Limited Partner likely would not be allocated from the
Partnership sufficient indebtedness under Section 752 of the Code and the
at-risk provisions under Section 465 of the Code to avoid the recognition
of gain (other than gain required to be recognized by reason of actual cash
distributions from the Partnership). The Partnership and its professional
tax advisors shall cooperate in good faith with such Former ▇▇▇▇▇▇▇ Limited
Partner and its professional tax advisor to provide such information
regarding the allocation of the Partnership liabilities and the nature of
such liabilities as is reasonably necessary in order to determine the
Former ▇▇▇▇▇▇▇ Limited Partner's adjusted tax basis in its Partnership
Interest and at-risk amount. In deciding whether or not to grant such a
request, the Partnership shall be entitled to take into account all factors
related to the Partnership, including, without limitation, the existing and
anticipated debt structure of the Partnership, the tax situations of all
other Partners, including the General Partner (individually and as a
group), and the effect that granting such a request might have on their tax
situation, and the anticipated long-term business needs of the Partnership.
The Partnership's only obligation with respect to any such request from a
Former ▇▇▇▇▇▇▇ Limited Partner pursuant to this Paragraph 6(b) shall be to
act in good faith. In the event the Partnership fails to act in good faith
with respect to any such request, the exclusive remedy of the Former
▇▇▇▇▇▇▇ Limited Partner who made such request shall be an action for
specific performance, with no entitlement to monetary damages.
7. Effect of Other Agreements With Former ▇▇▇▇▇▇▇ Limited
Partners. Pursuant to the Merger Agreement, the General Partner, the
Partnership, ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ Partnership entered into an Assignment and
Assumption Agreement, dated as of July 2, 2001, pursuant to which the
Partnership assumed certain obligations of ▇▇▇▇▇▇▇ Partnership made pursuant to
certain tax protection agreements (the "▇▇▇▇▇▇▇ Tax Protection Agreements") set
forth on Schedule 6 to this Exhibit E-9.
8. Election by Certain Former ▇▇▇▇▇▇▇ Limited Partners to Undertake Deficit
Restoration Obligation. Each Former ▇▇▇▇▇▇▇ Limited Partner who, prior to
February 18, 2001, had entered into an agreement with ▇▇▇▇▇▇▇ Partnership to
bear the economic risk of loss as to a portion of ▇▇▇▇▇▇▇ Partnership's recourse
indebtedness by undertaking the obligation to restore a portion of its negative
capital account balance upon liquidation of such Former ▇▇▇▇▇▇▇ Limited
Partner's interest in ▇▇▇▇▇▇▇ Partnership was given the opportunity to become a
Protected Partner with a Protected Amount in an amount equal to the maximum
amount such Former ▇▇▇▇▇▇▇ Limited Partner was obligated to restore to ▇▇▇▇▇▇▇
Partnership on February 17, 2001; provided, however, that no Former ▇▇▇▇▇▇▇
Limited Partner has the right to increase its Protected Amount following the
▇▇▇▇▇▇▇ Merger. The Former ▇▇▇▇▇▇▇ Limited Partners who have elected to become
Protected Partners under such provision of the Merger Agreement, along with
their specified Protected Amounts as of the closing of the ▇▇▇▇▇▇▇ Merger, are
set forth on Schedule 6 to this Exhibit E-9. Each such election by a Former
▇▇▇▇▇▇▇ Limited Partner shall become effective upon the later of receipt thereof
by the General Partner or the "effective time" of the merger of ▇▇▇▇▇▇▇
Partnership into the Partnership. Upon becoming effective, each such election by
a Former ▇▇▇▇▇▇▇ Limited Partner pursuant to this Section 8 or any other
provision of this Exhibit E-9 shall be irrevocable, cannot be reduced, and shall
be binding upon successive transferees of the Former ▇▇▇▇▇▇▇ Limited Partners,
except as provided in Section 13.3.D of the Agreement.
E-9 - 7
140
SCHEDULE 1 TO EXHIBIT E-9
SALE RESTRICTION PARTNERS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ Family Trust
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
E-9 - 8
141
SCHEDULE 2 TO EXHIBIT E-9
PROTECTED PROPERTIES 1/
---------------------------------------------------------------------
TYPE NAME PROPERTY #
---------------------------------------------------------------------
O Santa ▇▇▇▇▇ Office Center I 10001
---------------------------------------------------------------------
O Stender Way II (3001 ▇▇▇▇▇▇▇ Way) 10011
---------------------------------------------------------------------
O Santa ▇▇▇▇▇ Office Center II 10021/10022
---------------------------------------------------------------------
O Gateway Office Phase I 10031
---------------------------------------------------------------------
I ▇▇▇▇▇ Boulevard (3281-3285 ▇▇▇▇▇
Blvd.) 10041
---------------------------------------------------------------------
O ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
I Airport Commerce Center 10071
---------------------------------------------------------------------
O Gateway Office Phase II (IIA, IIB
and IIC) 10081, 10082, 10083
---------------------------------------------------------------------
I ▇▇▇▇▇▇▇ Way - 3045 10101
---------------------------------------------------------------------
2727 Augustine (Applied Materials
I Inc.) 10111
---------------------------------------------------------------------
384 Santa Trinita (Sunnyvale
O Business Centre) 10121
---------------------------------------------------------------------
O The Alameda (1871) 10131
---------------------------------------------------------------------
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
North First ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
I Cupertino Business Center 10161
---------------------------------------------------------------------
O ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
I North American Van Lines 10191
---------------------------------------------------------------------
O 8880 Cal Center Drive 10211
---------------------------------------------------------------------
2685 Augustine (Applied Materials
I II) 10241
---------------------------------------------------------------------
▇ ▇▇▇▇▇'▇ 10251
---------------------------------------------------------------------
Aspect Telecommunications in San
I ▇▇▇▇ 10271
---------------------------------------------------------------------
O Gateway Oaks II 10281
---------------------------------------------------------------------
O Gateway Oaks I 10291
---------------------------------------------------------------------
I Cadillac Court 10301
---------------------------------------------------------------------
-------------
(1/) Notwithstanding the contents of this Schedule 3 to Exhibit E-9,
Protected Properties include only those properties that meet the definition
of "Protected Properties" as set forth in Exhibit E-9 to the Partnership
Agreement, which provides that a property shall be a Protected Property only
if such property (i) was acquired by ▇▇▇▇▇▇▇ Partnership in connection with
▇▇▇▇▇▇▇'▇ IPO in a contribution in which part or all of the gain with respect
thereto was deferred pursuant to Section 721 of the Code, or (ii) was
acquired by ▇▇▇▇▇▇▇ Partnership as "substituted basis property" as defined in
Section 7701(a)(42) of the Code with respect to a property described in
clause (i).
142
---------------------------------------------------------------------
TYPE NAME PROPERTY #
---------------------------------------------------------------------
O 701 University Avenue 10311
---------------------------------------------------------------------
O The Orchard 10341
---------------------------------------------------------------------
O ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
O ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
I ▇▇▇▇▇▇▇ ▇▇▇▇▇ Drive 10421
---------------------------------------------------------------------
I COG Warehouse 10431
---------------------------------------------------------------------
I Okidata Distribution Center 10451
---------------------------------------------------------------------
I Montague Industrial Center 10571
---------------------------------------------------------------------
O Redwood Shores 10711
---------------------------------------------------------------------
O Santa ▇▇▇▇▇▇ Business Park (aka)
The American Golf Building 12375
---------------------------------------------------------------------
I Fremont Bayside (Bayview
Business Center) 10371
---------------------------------------------------------------------
I ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
I Independent Road Warehouse 10491
---------------------------------------------------------------------
▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
I ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇) ▇▇▇▇▇
---------------------------------------------------------------------
I Dubuque Business Center 10591
---------------------------------------------------------------------
I ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(21001-21005) 10601
---------------------------------------------------------------------
I Eden Landing Business Center 10631
---------------------------------------------------------------------
I ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ (Good Guys
Distribution Center) 10641
---------------------------------------------------------------------
I Industrial Drive Warehouse 10661
---------------------------------------------------------------------
O ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ 10671
---------------------------------------------------------------------
O ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
O Bellevue Gateway I 20041
---------------------------------------------------------------------
O Bellevue Gateway II 20051
---------------------------------------------------------------------
O ▇▇▇▇▇▇▇ ▇▇▇▇ (▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇/
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇) ▇▇▇▇▇
---------------------------------------------------------------------
O ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Building 20061
---------------------------------------------------------------------
O San Mateo BayCenter I 11831
---------------------------------------------------------------------
O Pacific View Plaza 11351
---------------------------------------------------------------------
I Ravendale @ Central 11361
---------------------------------------------------------------------
O Pasadena Financial Center 11571
---------------------------------------------------------------------
O Point West Corporate Centre 11621
---------------------------------------------------------------------
I Huntwood Business Center 11761
---------------------------------------------------------------------
O Century Square 11581
---------------------------------------------------------------------
O San Mateo BayCenter II 12121
---------------------------------------------------------------------
O San Mateo BayCenter III 12531
---------------------------------------------------------------------
O Ontario Gateway II 12551
---------------------------------------------------------------------
I Hayward Business Park 12381
---------------------------------------------------------------------
143
---------------------------------------------------------------------
TYPE NAME PROPERTY #
---------------------------------------------------------------------
O Governor Executive Centre 12591
---------------------------------------------------------------------
O Lincoln Executive Center A 20394
---------------------------------------------------------------------
O Lincoln Executive Center B 20395
---------------------------------------------------------------------
O Lincoln Executive Center I 20391
---------------------------------------------------------------------
O Lincoln Executive Center II 20392
---------------------------------------------------------------------
O Lincoln Executive Center III 20393
---------------------------------------------------------------------
O Tower Seventeen 11791
---------------------------------------------------------------------
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
O ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
O Empire Corporate Center 12611
---------------------------------------------------------------------
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
▇ ▇▇▇▇▇ ▇▇▇▇ (▇▇▇▇▇▇▇▇ ▇▇▇▇▇) ▇▇▇▇▇
---------------------------------------------------------------------
O Station Oaks (Homestead) 12691
---------------------------------------------------------------------
O Bellevue I (I-90) 20411
---------------------------------------------------------------------
O Bellevue II (I-90) 20412
---------------------------------------------------------------------
O Drake's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
O Lincoln Center One 30321
O Lincoln Center Two 30322
O Lincoln Center Three 30323
O Lincoln Center Five 30325
O Lincoln Building 30326
O Lincoln Plaza 30327
O Lincoln Tower 30324
---------------------------------------------------------------------
O The Tower (The Tower at
Westwood) 12721
---------------------------------------------------------------------
O N.E. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇▇▇
▇▇▇▇) ▇▇▇▇▇
---------------------------------------------------------------------
O Emeryville Tower IV (aka
Watergate Tower IV) 11479
---------------------------------------------------------------------
144
SCHEDULE 3 TO EXHIBIT E-9
FORM OF RESTRICTION AGREEMENT
[Individual's Name] Restriction Agreement
, 2001
Equity Office Properties Trust
EOP Limited Partnership
Two ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that Equity Office Properties Trust, a Maryland
real estate investment trust ("EQUITY OFFICE"), EOP Limited Partnership, a
Delaware limited partnership ("EOP PARTNERSHIP"), ▇▇▇▇▇▇▇, Inc., a Maryland
corporation ("▇▇▇▇▇▇▇"), and ▇▇▇▇▇▇▇, ▇.▇., a California limited partnership
("▇▇▇▇▇▇▇ PARTNERSHIP"), have entered into an Agreement and Plan of Merger,
dated as of February 22, 2001 (the "MERGER AGREEMENT"), pursuant to which (i)
▇▇▇▇▇▇▇ Partnership will be merged with and into EOP Partnership or with a
subsidiary of EOP Partnership (the "PARTNERSHIP MERGER") and (ii) ▇▇▇▇▇▇▇ will
be merged with and into Equity Office (the "MERGER" and, together with the
Partnership Merger, the "MERGERS").
The Merger Agreement contemplates that, in connection with the closing of
the Partnership Merger, EOP Partnership will make certain undertakings related
to federal income tax matters to certain limited partners of ▇▇▇▇▇▇▇
Partnership, including the undersigned, who contributed assets to ▇▇▇▇▇▇▇
Partnership in connection with its formation in 1993 and will become EOP Limited
Partners as a result of the Partnership Merger. The specific undertakings and
agreements with respect to these matters will be set forth on Exhibit E-9 to the
EOP Partnership Agreement pursuant to the [ ] Amendment to the EOP
Partnership Agreement, which will be effective as of the Effective Time.
Under the terms of Exhibit E-9, the term during which certain of these "tax
protection" undertakings by EOP Partnership will apply can be extended from ten
years to up to twenty years for those ▇▇▇▇▇▇▇ limited partners who agree to and
comply with the restrictions set forth in this Restriction Agreement. In order
to obtain the benefit of the extended term of the "tax protection" undertakings
of EOP Partnership available under Exhibit E-9, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby agrees as follows:
1. DEFINITIONS
All capitalized terms used but not defined herein shall have the meanings
set forth in the Merger Agreement. As used in herein:
"DISPOSITION" shall include any sale (including a grant of any option,
contract to sell and any sale of a contract to purchase), assignment, pledge,
encumbrance, hypothecation, mortgage, exchange, or any swap agreement or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership (regardless of whether any of the transactions
described above is to be settled by the delivery of Partnership Units, Shares,
or such other securities, in cash or otherwise), provided that a pledge of
Partnership Units or Shares to secure bona fide indebtedness that does not
exceed sixty percent (60%) of the Value (as defined in the EOP Partnership
Agreement) of the Partnership Units or Shares pledged to secure such
indebtedness at the time such indebtedness is incurred shall not constitute a
Disposition (but a disposition of the Partnership Units or Shares securing such
indebtedness pursuant to a foreclosure or in lieu of foreclosure shall
constitute a Disposition at the time of such foreclosure or delivery in lieu
thereof). "DISPOSE" shall have the correlative meaning.
E-9 - 12
145
"EQUITY INTEREST" means the total number of Shares and Partnership Units in
which the undersigned will acquire a beneficial interest at the Effective Time,
computed assuming that the undersigned had not disposed of any ▇▇▇▇▇▇▇ OP Units
or shares of ▇▇▇▇▇▇▇ Common Stock after February 17, 2001 and assuming that each
share of ▇▇▇▇▇▇▇ Common Stock would be converted into 1.94462 Equity Office
Common Shares (that is, that the undersigned would receive only Equity Office
Common Shares (and no cash) in the Merger). The undersigned's Equity Interest is
set forth on Schedule 1 hereto.
"EXTENDED RESTRICTION PERIOD" means the period commencing on the day
following the second (2nd) anniversary of the Effective Time and ending on the
tenth (10th) anniversary of the Effective Time.
"IMMEDIATE FAMILY" shall have the meaning assigned to such term in Article
I of the EOP Partnership Agreement.
"INITIAL RESTRICTION PERIOD" means the period commencing on the date hereof
and continuing to and including the second (2nd) anniversary of the Effective
Time.
"PARTNERSHIP UNITS" means (a) the EOP "Partnership Units" (as such term is
defined in Article I of the EOP Partnership Agreement) in which the undersigned
will acquire a beneficial interest in connection with the Partnership Merger at
the Effective Time and (b) any securities convertible into or exercisable or
exchangeable for such Partnership Units in which the undersigned will acquire a
beneficial interest in connection with the Partnership Merger at the Effective
Time.
"PERMITTED DISPOSITION" means a Disposition to (i) a member of the
Immediate Family of the undersigned, (ii) a charitable organization a
contribution to which would be deductible pursuant to Section 170 of the Code,
or (iii) any partnership or trust, the partners or beneficiaries, as applicable,
of which are exclusively the undersigned or members of the Immediate Family of
the undersigned and/or a charitable organization a contribution to which would
be deductible pursuant to Section 170 of the Code, provided that any such
transfer shall not involve a disposition for value; provided that the transferee
in any such Disposition described in clause (i), clause (ii) or clause (iii), as
applicable, agrees in writing to be bound by the restrictions set forth herein
for the term hereof. Any Disposition by a permitted transferee shall be treated
as a Disposition by undersigned for purposes of this agreement.
"REDEMPTION RIGHTS" means, as applicable, any Redemption Rights pursuant to
Section 8.6 of the EOP Partnership Agreement.
"SHARES" means (a) the Equity Office "Shares" (as such term is defined in
Article VI of the Equity Office Declaration of Trust) in which the undersigned
would acquire a beneficial interest in connection with the Merger at the
Effective Time, assuming that the undersigned were to receive only Equity Office
Shares (and no cash) in the Merger and (b) any securities convertible into or
exercisable or exchangeable for Shares in which the undersigned will acquire a
beneficial interest in connection with the Merger at the Effective Time.
2. INITIAL RESTRICTION PERIOD
During the Initial Restriction Period, the undersigned shall not Dispose of
Partnership Units and/or Shares if such Disposition, taken together with all
prior Dispositions (excluding Permitted Dispositions) since February 17, 2000 of
any Shares, Partnership Units, shares of ▇▇▇▇▇▇▇ Common Stock and/or ▇▇▇▇▇▇▇ OP
Units, would result in a decrease in the undersigned's Equity Interest on the
date hereof by thirty percent (30%) or more; provided that nothing herein shall
prevent the undersigned from making a Permitted Disposition pursuant to which
the transferee becomes subject to the terms and restrictions of this Restriction
Agreement.
3. EXTENDED RESTRICTION PERIODS
During the Extended Restriction Period, the undersigned shall not Dispose
of Partnership Units and/or Shares if such Disposition, taken together with all
prior Dispositions (excluding Permitted Dispositions) since February 17, 2000 of
any Shares, Partnership Units, shares of ▇▇▇▇▇▇▇ Common Stock and/or ▇▇▇▇▇▇▇ OP
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ result in a decrease in the undersigned's Equity Interest on the
date hereof by an amount equal to or greater than the sum of (x) thirty five
percent (35%) and (y) the product of (a) five percent (5%), multiplied by (b)
number of full years of the Extended Restriction Period that have expired on the
date of such Disposition; provided that nothing herein shall prevent the
undersigned from making a Permitted Disposition pursuant to which the transferee
becomes subject to the terms and restrictions of this Restriction Agreement.
4. REPRESENTATION AND ACKNOWLEDGEMENTS
The undersigned now has good and marketable title to the undersigned's
units of limited partner interest in ▇▇▇▇▇▇▇ Partnership and shares of capital
stock of ▇▇▇▇▇▇▇, free and clear of all liens, encumbrances, and claims
whatsoever. The undersigned acknowledges that (a) in the event of a breach of
the restriction set forth in Section 2 hereof, the Protected Period for purposes
of Section 2 of Exhibit E-9 to the EOP Partnership Agreement with respect to the
undersigned will be limited to ten (10) years from the Effective Time and (b) in
the event of a breach of the restrictions set forth in Section 3, the Protected
Period for purposes of Section 2 of Exhibit E-9 to the EOP Partnership Agreement
with respect to the undersigned will not include any period attributable to the
year of the Extended Restriction Period in which the breach occurs or any year
thereafter. The undersigned further understands that this Restriction Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
5. LIMITATION ON REMEDIES.
In entering into this agreement, the undersigned is doing so with the
understanding the exclusive remedy of EOP Partnership and Equity Office in the
event of a breach hereof will be to limit the Protected Period as set forth in
Exhibit E-9, and that in no event shall either Equity Office or EOP Partnership
have the right to seek specific performance of this agreement or to bring an
action for damages hereunder.
6. MISCELLANEOUS
This agreement shall be governed by and construed in accordance with the
laws of the State of Delaware. This agreement is irrevocable and will be binding
on the undersigned and the respective successors, heirs, personal
representatives, and assigns of the undersigned. The undersigned has carefully
read this agreement and discussed its requirements, to the extent the
undersigned believed necessary, with his counsel.
Very truly yours,
--------------------------------------
[name]
Accepted:
EOP Operating Limited Partnership
By: Equity Office Properties Trust, its general partner
By:
--------------------------------------------------------
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 1
EQUITY INTEREST
(COMPUTED AS OF FEBRUARY 17, 2001)
▇▇▇▇▇▇▇ Shares ---------------
▇▇▇▇▇▇▇ Partnership Units ---------------
Equity Office Shares ---------------
(computed using an exchange ratio of 1.49586)
EOP Partnership Units ---------------
(computed using an exchange ratio of 1.94462)
Equity Interest ---------------
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 4 TO EXHIBIT E-9
FORMER ▇▇▇▇▇▇▇ LIMITED PARTNERS
WHO HAVE ENTERED INTO GUARANTEES
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PARTNERSHIP PARTNERSHIP PARTNERSHIP TOTAL AVAILABLE
6.80% NOTES 6.95% NOTES 7.125% NOTES GUARANTEE ADDITIONAL
GUARANTEE PARTNER DUE 12/15/01 DUE 12/15/02 DUE 12/01/06 AMOUNT DEBT(4)
----------------- ------------ ------------ ------------ ------------ -----------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇...... $ 0 $ 31,000,000 $ 5,000,000 $ 36,000,000 $11,454,156
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇........ $ 0 $ 13,000,000 $ 1,000,000 $ 14,000,000 $ 3,233,146
▇▇▇▇ ▇. ▇▇▇▇▇▇............. $ 0 $ 12,000,000 $ 1,000,000 $ 13,000,000 $ 2,483,599
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇........... $ 0 $ 12,500,000 $ 500,000 $ 13,000,000 $ 2,207,584
Blake Family Trust......... $ 0 $ 500,000 $ 150,000 $ 650,000 $ 505,596
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇......... $ 0 $ 92,000 $ 0 $ 92,000 $ 0
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.......... $ 0 $ 1,700,000 $ 200,000 $ 1,900,000 $ 735,845
▇▇▇▇▇ ▇. ▇▇▇▇.............. $ 289,500 $ 2,110,500 $ 700,000 $ 3,100,000 $ 704,881
▇▇▇▇ ▇. ▇▇▇▇▇▇............. $ 0 $ 1,000,000 $ 150,000 $ 1,150,000 $ 693,300
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇........ $ 0 $ 2,400,000 $ 200,000 $ 2,600,000 $ 872,223
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.......... $ 0 $ 1,600,000 $ 200,000 $ 1,800,000 $ 545,743
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.......... $ 0 $ 1,600,000 $ 150,000 $ 1,750,000 $ 586,521
▇▇▇▇ ▇. ▇▇▇▇▇▇▇............ $ 578,000 $ 728,000 $ 1,450,000 $ 2,756,000 $ 490,293
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇........... $ 578,000 $ 728,000 $ 1,450,000 $ 2,756,000 $ 490,292
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇........ $ 0 $ 1,000,000 $ 150,000 $ 1,150,000 $ 413,178
▇▇▇▇▇ ▇. ▇▇▇▇▇▇............ $ 130,000 $ 370,000 $ 200,000 $ 700,000 $ 506,109
▇▇▇▇ ▇▇▇▇▇▇▇▇.............. $ 0 $ 2,200,000 $ 150,000 $ 2,350,000 $ 323,534
Total...................... $ 1,575,500 $ 84,528,500 $ 12,650,000 $ 98,754,000
Total Amount of the
Notes.................... $50,000,000 $110,000,000 $100,000,000 $260,000,000 $26,246,000
---------------
(4) The Guarantee Partners will be entitled to additional guarantees in the
aggregate amount of $31,096,000 (reduced by any additional guarantee amounts
guaranteed by the Guarantee Partners prior to July 2, 2001) to be allocated
among the Guarantee Partners in the manner specified by ▇▇▇▇▇▇▇ at or prior to
the closing. In this regard, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
entered into additional guarantees with ▇▇▇▇▇▇▇ Partnership prior to the
closing of the ▇▇▇▇▇▇▇ Merger in the aggregate amount of $4,850,000, which
amount shall be applied against the $31,096,000 described above and the
aggregate Available Additional Debt amount as of July 2, 2001, shall
be $26,246,000.
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 5 TO EXHIBIT E-9
SECTION 752 ALLOCATION AGREEMENTS BETWEEN EOP PARTNERSHIP AND EXISTING EOP
LIMITED PARTNERS AS OF THE CLOSING DATE OF THE ▇▇▇▇▇▇▇ MERGER
1. Tax Reporting Agreement, dated September 2, 1997, by and among Columbus
American Properties LLC, Columbus Southeast Properties, Inc., ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇-901 Limited Partnership, ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇-400 Limited
Partnership and EOP Partnership.
2. Exhibit E-6 (Cornerstone Agreement) to the Second Amended and Restated
Agreement of Limited Partnership of EOP Partnership, effective as of
June 19, 2000.
3. Oral understanding between Beacon Properties L.P. and EOP Partnership to
allocate "Tier 3" Liabilities in accordance with the method now
described in Treas. Reg. sec. 1.752-3(a)(3), as amended in October 2000.
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 6 TO EXHIBIT E-9
▇▇▇▇▇▇▇ TAX PROTECTION AGREEMENTS ASSUMED PURSUANT TO THE MERGER AGREEMENT(5)
1. Contribution Agreement dated as of November 19, 1999 by and among
▇▇▇▇▇▇▇ Properties, L.P., ▇▇▇▇▇▇▇ Properties, Inc. and Lincoln Larkspur Office
One Associates, Ltd., Lincoln Larkspur Office Three Associates, Ltd. and
Larkspur One OP, LLC, Larkspur Two OP, LLC and Larkspur Three OP, LLC.
2. Contribution Agreement dated as of January 7, 1998 among ▇▇▇▇▇▇▇
Properties, L.P., ▇▇▇▇▇▇▇ Properties, Inc. and the contributors identified on
the signature page attached thereto in connection with certain properties
managed by Transpacific Development Company.
3. Third Amended and Restated Limited Partnership Agreement of Brea Place
Associates, L.P. dated as of June , 1997, as amended.
4. Limited Partnership Agreement of ▇▇▇▇▇▇▇ ▇▇▇▇, L.P., a Delaware Limited
Partnership dated as of April , 1997.
5. Agreement of Limited Partnership of Freemont Bayside Associates, L.P.
dated as of June 7, 1989, as amended.
6. Limited Liability Company Agreement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇/W9 Associates,
L.L.C., dated as of April 6, 1998, as amended.
---------------
(5) Must be the same as those listed on Schedule 2.18(j) to the Merger
Agreement, excluding the Guaranty Agreement, dated October 13, 1997, which
is governed only by the provisions of Paragraph 3 of Exhibit E-9 and, to the
extent applicable, the agreements on this Schedule 6.
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 7 TO EXHIBIT E-9
FORMER ▇▇▇▇▇▇▇ LIMITED PARTNERS
WHO HAVE ELECTED TO BECOME PROTECTED PARTNERS
PURSUANT TO SECTION 8 OF EXHIBIT E-9
NAME OF FORMER ▇▇▇▇▇▇▇ LIMITED 2/22/01 7/02/01
PARTNER: RESTORATION AMOUNT: PROTECTED AMOUNT:
------------------------------ ------------------- -----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇............................................. $10,850,000 $10,850,000*
▇▇▇▇▇▇ ▇. ▇▇▇▇.............................................. $ 250,000 $ 250,000*
▇▇▇▇ ▇. ▇▇▇▇................................................ $ 600,000 $ 600,000*
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1998 Trust.................................... $ 900,000 $ 900,000*
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1998 Trust................................ $ 900,000 $ 900,000*
▇▇▇▇▇ ▇▇▇▇▇................................................. $ 500,000 $ 500,000*
TOTAL....................................................... $14,000,000 $14,000,000*
* Represents the maximum available protected amount.
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇ 8-1 TO EXHIBIT E-9
FORM OF GUARANTY AGREEMENT -- FOR UNSECURED INDEBTEDNESS -- BETWEEN GUARANTEE
PARTNERS, EQUITY OFFICE AND EOP PARTNERSHIP PURSUANT TO SECTION 3(a) OF EXHIBIT
E-9(6)
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Agreement"), dated as of [date] is made and
entered into by and among EOP Operating Limited Partnership, a Delaware limited
partnership (the "Partnership"), Equity Office Properties Trust, a Maryland real
estate investment trust (the "General Partner"), and those certain undersigned
Persons identified on Schedule 1 attached hereto (as such Schedule 1 may be
amended, modified, supplemented or restated from time to time, the "EOP Limited
Partners").
WHEREAS, the General Partner is the general partner of the Partnership and
each of the EOP Limited Partners is a limited partner in the Partnership.
WHEREAS, the Partnership has issued certain unsecured notes (each of those
unsecured notes identified on Schedule 2 attached hereto and referred to herein
individually as a "Note" and collectively as the "Notes");
WHEREAS, it is in the best interests of each of the EOP Limited Partners
that the Partnership and the General Partner provide to the EOP Limited Partners
an opportunity to guaranty the payment and performance of a portion of the
Partnership's present and future indebtedness and obligations under the Notes;
NOW, THEREFORE, in consideration of the covenants and conditions set forth
herein, as well as other valuable consideration, the parties hereto hereby agree
as follows:
1. Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the same meanings as set forth in the partnership
agreement of the EOP Operating Limited Partnership, as such partnership
agreement may be amended, modified, supplemented or restated from time to time
(the "Partnership Agreement").
2. Partner Assumption of Indebtedness.
a. The EOP Limited Partners unconditionally guarantee to the
Partnership (and, as third party beneficiaries, the holders of the Notes)
the payment and performance of the Partnership's present and future
indebtedness and obligations under the Notes of at least an amount equal to
[TOTAL GUARANTY AMOUNT] (the "Total Guaranty Amount") (i.e., that the
aggregate principal amounts paid under the Notes by the Partnership will at
least equal the Total Guaranty Amount). In addition, the EOP Limited
Partners unconditionally indemnify the General Partner (and any other
partner of the Partnership that otherwise may have liability directly or
indirectly with respect thereof) from and against all liabilities in
respect of the Notes except to the extent such liability exceeds an amount
equal to the excess, if any, of (i) the Total Guaranty Amount over (ii)
payments of principal made by the Partnership on the Notes. The Partnership
and the General Partner shall sometimes hereinafter be referred to
collectively as the "Debtor". The amounts payable by each EOP Limited
Partner in respect of the guarantee and indemnification obligations
hereunder shall be in the same proportion as the amounts listed next to
such EOP Limited Partner's name on Schedule 3 attached hereto bears to the
Total Guaranty Amount provided that, notwithstanding anything to the
contrary contained in this Paragraph 2, each EOP Limited Partner's
obligation shall be limited to the amount(s) set forth on Schedule 3 next
to such EOP Limited Partner's name (with respect to each EOP Limited
Partner, a "EOP Limited Partner's Share") and shall be limited to
guaranteeing the payment and performance of, and indemnifying the General
Partner with respect to, only the Notes set forth on Schedule 3. For the
purposes of this ▇▇▇▇▇▇▇▇▇ ▇,
▇-▇ - 20
153
Notes that are repurchased by the Partnership but not retired shall not be
treated as having been repaid except to the extent that, if the repurchased
Notes were treated as having been repaid, the remaining outstanding balance
of the Notes would be less than 200% of the Total Guaranty Amount with
respect to such Notes.
b. Notwithstanding anything to the contrary contained in the
Partnership Agreement or the Bylaws or Declaration of Trust of the General
Partner, as each may be amended, modified, supplemented or restated from
time to time, any decision by Debtor hereunder, including a decision to
make a demand on the EOP Limited Partners under this Paragraph 2, shall
require the majority vote of the independent directors of the General
Partner. Each EOP Limited Partner authorizes Debtor at any time in its
discretion to alter any of the terms of the Notes and to make such
modifications to the Notes that have the effect of releasing Debtor from
liability for all or any part of the Notes; provided, however, that the
Partnership shall have complied with its obligations under Exhibit E-9 of
the Partnership Agreement to offer the EOP Limited Partners the opportunity
to guarantee other Qualifying Debt or shall have agreed to make the
payments required under Exhibit E-9 of the Partnership Agreement. Debtor
and the holders of the Notes or any other parties authorized pursuant to
the documents executed in connection with such Notes, and under all
modifications, renewals and extensions of those instruments (collectively,
the "Loan Documents") to enforce collection thereof (collectively, the
"Note Holders") may take any of the foregoing actions upon any terms and
conditions as Debtor and the Note Holders may elect, without giving notice
to any EOP Limited Partner or obtaining the consent of any EOP Limited
Partner and without affecting the liability of any EOP Limited Partner
under this Paragraph 2.
c. It is understood and agreed by each EOP Limited Partner that until
an amount with respect to the principal amount of the Notes equal to the
Total Guaranty Amount is fully paid and until each and every term, covenant
and condition of this Paragraph 2 is fully performed, no EOP Limited
Partner shall be released by any act or event which might, but for this
provision of this Paragraph 2, be deemed a legal or equitable discharge of
a surety, or by reason of any waiver, extension, modification, forbearance
or delay or other act or omission of any Note Holder or the Partnership's
failure to proceed promptly or otherwise as against the General Partner or
Debtor's failure to proceed promptly or otherwise as against any EOP
Limited Partner or any Note Holder's failure to proceed promptly or
otherwise against Debtor, or by any reason of any action taken or omitted
or circumstance which may or might vary the risk or affect the rights or
remedies of any EOP Limited Partner as against Debtor or any Note Holder,
or by reason of any further dealings between Debtor and any Note Holder,
whether relating to the Notes or otherwise, and each EOP Limited Partner
hereby expressly waives and surrenders any defense to its liability
hereunder based upon any of the foregoing acts, omissions, things,
agreements, waivers or any of them; it being the purpose and intent of this
Paragraph 2 that the obligations of each EOP Limited Partner hereunder are
absolute and unconditional under any and all circumstances. Each EOP
Limited Partner's obligations under this Paragraph 2 are independent of
those of Debtor. Debtor's rights under this Paragraph 2 will not be
exhausted by any action by it until an amount equal to the Total Guaranty
Amount has been fully paid and performed with respect to the Notes and the
period of time has expired during which any payment made to the Note
Holders by Debtor under the Notes or to Debtor by each EOP Limited Partner
under this Paragraph 2 may be determined to be a Preferential Payment (as
defined below) without such determination, in fact, being made. Each EOP
Limited Partner further agrees that to the extent all or any part of any
payment made to the Note Holders under the Notes or by a EOP Limited
Partner under this Paragraph 2 is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid by the
recipient thereof or paid over to a trustee, receiver or any other entity,
whether under any bankruptcy act or otherwise (any such payment is
hereinafter referred to as a "Preferential Payment"), then this Paragraph 2
shall continue to be effective or shall be reinstated, as the case may be,
and, to the extent of such payment or repayment, the obligations of the EOP
Limited Partner shall be revived and continued in full force and effect as
if said Preferential Payment had not been made. Each EOP Limited Partner
waives: (a) all statutes of limitations as a defense to any action brought
against any Limited Partner pursuant to this Paragraph 2, to the fullest
extent permitted by law; (b) any defense based upon any legal disability of
Debtor or any discharge or limitation of the liability of Debtor to the
Note Holders, whether consensual or arising by operation or law
E-9 - 21
154
or any bankruptcy, reorganization, receivership, insolvency, or
debtor-relief proceeding, or from any other cause; (c) presentment, demand,
protest and notice of any kind, provided that the foregoing waiver shall
not be construed to waive any demand or notice to the EOP Limited Partners
expressly provided for in this Paragraph 2; and (d) any defense upon or
arising out of any defense which Debtor may have to the payment or
performance of any part of the Notes.
d. Notwithstanding any other provision of this Paragraph 2 to the
contrary, each EOP Limited Partner hereby waives any claim or other rights
which such EOP Limited Partner may now have or hereafter acquire against
the General Partner, or each of them, or any other EOP Limited Partner, or
any other Person (including, without limitation, any other partner in the
Partnership), of all or any of the Notes that arise from the existence or
performance of such EOP Limited Partner's obligations under this Paragraph
2, the Notes or any of the Loan Documents (all such claims and rights are
referred to as the "EOP Limited Partner's Conditional Rights"), including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, or indemnification, any right to participate in any claim or
remedy of the Partnership or the Note Holders against the General Partner,
whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, by any payment made hereunder or
otherwise, including, without limitation, the right to take or receive from
Debtor, directly or indirectly, in cash or other property or by setoff or
in any other manner, payment or security on account of such claim or other
rights. If, notwithstanding the foregoing provisions, any amount shall be
paid to any EOP Limited Partner on account of any such EOP Limited
Partner's Conditional Rights and either (i) such amount is paid to such EOP
Limited Partner at any time when the Notes shall not have been paid or
performed in a principal amount equal to the Total Guaranty Amount, or (ii)
regardless of when such amount is paid to such EOP Limited Partner, any
payment made by Debtor to the Note Holders or by a EOP Limited Partner
under this Paragraph 2 is at any time determined to be a Preferential
Payment such that the total principal amount received by Note Holders, less
the Preferential Payment, is less than the Total Guaranty Amount, then a
portion of the amount paid to such EOP Limited Partner equal to the such
EOP Limited Partner's proportionate share of the excess of the Total
Guaranty Amount over the principal amount received by Note Holders (net of
the Preferential Payment) shall be held in trust for the benefit of Debtor
and the Note Holders, as their interests may appear, and shall forthwith be
paid to the Partnership as a Capital Contribution to be credited and
applied upon the Notes, whether matured or unmatured, in such order as
Debtor, in its sole and absolute discretion, shall determine. To the extent
that any of the provisions of this Paragraph 2 shall not be enforceable,
each EOP Limited Partner agrees that until such time as the Notes have been
paid and performed in a principal amount equal to the Total Guaranty Amount
and the period of time has expired during which any payment made by Debtor
to the Note Holders or by a EOP Limited Partner under this Paragraph 2 may
be determined to be a Preferential Payment, the EOP Limited Partner's
Conditional Rights to the extent not validly waived shall be subordinate to
the Note Holder's right to payment and performance of the Notes up to the
Total Guaranty Amount, and such EOP Limited Partner shall not enforce such
EOP Limited Partner's Conditional Rights during such period. Each EOP
Limited Partner assumes full responsibility for keeping fully informed of
the financial condition of Debtor and all other circumstances affecting
Debtor's ability to perform its obligations under the Loan Documents and
agrees that neither Debtor nor the Note Holders will have any duty to
report to any EOP Limited Partner any information which Debtor or the Note
Holders receive about Debtor's financial condition or any circumstances
being on Debtor's ability to perform.
e. Upon a default of the Partnership under the Loan Documents, the
Note Holders may elect to compromise, or adjust any part of the Notes, or
make any other accommodation with Debtor, or exercise any other remedy
against Debtor. Except as expressly provided herein, no such action by the
Note Holders will release or limit the liability of any EOP Limited
Partner. In addition to all rights of setoff or lien against any moneys,
securities or other property of any EOP Limited Partner given to the
Partnership by law, the Partnership shall have a right of setoff against
all distributions to which a EOP Limited Partner may be entitled from the
Partnership, and every such right of setoff may be exercised without demand
upon or notice to any EOP Limited Partner (except the notice expressly
provided for above). No right of setoff shall be deemed to have been waived
by any act or conduct on the part of the Partnership or
E-9 - 22
155
by any neglect to exercise such right of setoff, or by any delay in doing
so; and every right of setoff shall continue in full force and effect until
specifically waived or released by an instrument in writing executed by the
Partnership or until a EOP Limited Partner has satisfied in full all of
such EOP Limited Partner's obligations under this Paragraph 2. In the event
that any EOP Limited Partner shall advance or become obligated to pay any
sums toward the Notes, or in the event that for any reason whatsoever
Debtor is now, or shall hereafter become, indebted to any EOP Limited
Partner, each EOP Limited Partner agrees that the amount of such sums and
such indebtedness and all interest thereon shall at all times be
subordinate as to lien, time of payment and in all other respects to the
prior repayment to Note Holders of a principal amount equal to the Total
Guaranty Amount, and no EOP Limited Partner shall be entitled to enforce or
receive payment thereof until a principal amount equal to the Total
Guaranty Amount owing to the Note Holders has been paid in full and the
period of time has expired during which any payment made by Debtor to the
Note Holders or the EOP Limited Partners pursuant to this Paragraph 2 may
be determined to be a Preferential Payment. Any payment made by any EOP
Limited Partner under this Paragraph 2 shall be deemed to be a Capital
Contribution by said EOP Limited Partner to the Partnership.
f. This Paragraph 2 shall be governed by Delaware law, and, except to
the extent otherwise provided in this Paragraph 2, may be amended only by a
written instrument executed by the EOP Limited Partners listed from time to
time on Schedule 1 hereto and Debtor. Notwithstanding anything to the
contrary provided herein, in no event shall any EOP Limited Partner be
entitled to the issuance of any additional Partnership Units as a result of
any contribution made by such EOP Limited Partner pursuant to this
Paragraph 2, nor shall the Percentage Interests or Partnership Interests of
the Partners be adjusted as a result thereof. Without limiting any other
similar provision in this Agreement, the provisions of this Paragraph 2
shall bind and benefit the heirs' executors, administrators, legal
representatives, successors and assigns of each EOP Limited Partner and
Debtor.
g. Notwithstanding the foregoing, the obligations of the EOP Limited
Partners to make any payments under this Paragraph 2 shall terminate as of
the earliest date (the "Termination Date") that, as a result of a
repayment, compromise or adjustment of a principal amount of the Notes, the
total principal amount outstanding under the Notes is reduced by an amount
equal to or greater than the Total Guaranty Amount, or if the Partnership
incurs indebtedness senior to the Notes, provided that the obligations of
the EOP Limited Partners hereunder shall continue after the Termination
Date to the extent of any claims that are attributable fully and solely to
an event or action that occurred before the Termination Date, and provided
further that the Partnership shall offer the EOP Limited Partners a
Guarantee Opportunity in replacement of the guarantee provided under this
Guaranty Agreement to the extent required pursuant to Exhibit E-9 of the
Partnership Agreement.
3. Non-Discrimination. The Partnership and the General Partner agree to
exercise all of their rights under Paragraph 2 above in a non-discriminatory
manner with respect to the EOP Limited Partners and in a manner that is not
disproportionate to any of the EOP Limited Partner's Shares of the Indebtedness,
provided that the foregoing shall not impair or limit either the Partnership's
or the General Partner's right to exercise all of their rights under Paragraph 2
above to the fullest extent permitted under this Agreement.
4. Notices. All notices, offers or other communications required or
permitted to be given pursuant to this Agreement shall be given in the manner
and to the addresses set forth in the Partnership Agreement and shall be deemed
at such time as is set forth in the Partnership Agreement.
5. Effect and Interpretation. This Agreement shall be governed by and
construed in conformity with the laws of the State of Delaware.
6. Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
7. Third Party Beneficiaries. The Notes Holders shall be third party
beneficiaries of this Agreement.
8. Entire Understanding; Etc. This Agreement, together with the
Partnership Agreement, constitutes the entire agreement and understanding among
the parties hereto with respect to the matters set forth in this
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, and supersedes all prior agreements, oral and written, among the
parties hereto with respect to the subject matter hereof.
9. Amendments. Except to the extent expressly otherwise provided herein,
this Agreement may not be amended except by a written instrument signed by the
General Partner (and approved on behalf of the General Partner by at least a
majority of its directors who are not Affiliates of any of the Limited Partners)
and a Majority-In-Interest of the EOP Limited Partners.
10. Severability. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those to
which it is held invalid by such court, shall not be affected thereby.
11. Pronouns and Headings. As used herein, all pronouns shall include the
masculine, feminine and neuter, and all defined terms shall include the singular
and plural thereof wherever the context and facts require such construction. The
headings, titles and subtitles herein are inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof. Any
references in this Agreement to "including" shall be deemed to mean "including
without limitation."
12. Assurances. Each of the EOP Limited Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as may
be required or useful to carry out the intent and purpose of this Agreement and
as are not inconsistent with the terms hereof.
13. Tax Consequences. Each EOP Limited Partner acknowledges that he or she
has relied fully upon the advice of its own legal counsel and/or accountant in
determining the tax consequences of this Agreement and the transactions
contemplated hereby and not upon any representations or advice by the General
Partner, the Partnership or any other partner in the Partnership.
14. Disputes. Notwithstanding anything to the contrary contained in this
Agreement, all claims, disputes and controversies between or among any of the
parties hereto (including, without limitation, any claims, disputes and
controversies between the Partnership or the General Partner and any one or more
of the EOP Limited Partners) arising out of or in connection with this Agreement
or the subject matter hereof, relating to the validity, construction,
performance, breach, enforcement or termination thereof, or otherwise, shall be
resolved by binding arbitration pursuant to the applicable law of the State of
Delaware, this Section 14 and, to the extent not inconsistent with this Section
14, the Expedited Procedures and Commercial Arbitration Rules of the American
Arbitration Association (the "Arbitration Rules"). In the event of any direct
conflict, the terms of this Agreement shall control over any conflicting
provisions of Delaware law and the Arbitration Rules.
(a) Procedures. Any arbitration called for by this Section 14 shall
be conducted in accordance with the following procedures:
(i) The Partnership, the General Partner or any EOP Limited Partner
(the "Requesting Party") may demand arbitration pursuant to Section
14(a) at any time by giving written notice of such demand (the "Demand
Notice") to any other EOP Limited Partner with respect to which a claim,
dispute or controversy exists hereunder and (if the Requesting Party is
not the Partnership or the General Partner) to the Partnership and the
General Partner, which Demand Notice shall describe in reasonable detail
the nature of the claim, dispute or controversy.
(ii) Within fifteen (15) days after the giving of a Demand Notice,
the Requesting Party, on the one hand, and each of the other EOP Limited
Partners and/or the Partnership and/or the General Partners against whom
the claim has been made or with respect to which a dispute has arisen
(collectively, the "Responding Party"), on the other hand, shall select
and designate in writing to the other party one reputable, disinterested
individual (a "Qualified Individual") willing to act as an arbitrator of
the claim, dispute or controversy in question. Each of the Requesting
Party and the Responding Party shall use its best efforts to select a
present or former partner of a national accounting firm that is not then
currently employed by such party as its respective Qualified
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇. Within fifteen (15) days after the foregoing selections have
been made, the arbitrators so selected shall jointly select a present or
former partner of a national accounting firm that is not then currently
employed by any of the parties as the third Qualified Individual willing
to act as an arbitrator of the claim, dispute or controversy in question
(the "Third Arbitrator"). In the event that the two arbitrators
initially selected are unable to agree on the Third Arbitrator within
the second fifteen (15) day period referred to above, then, on the
application of either party, the American Arbitration Association shall
promptly select and appoint a present or former partner of a national
accounting firm that is not currently employed by any of the parties as
the Qualified Individual to act as the Third Arbitrator in accordance
with the terms of the Arbitration Rules. The three arbitrators selected
pursuant to this subsection (a) shall constitute the arbitration panel
for the arbitration in question.
(iii) The presentations of the EOP Limited Partners in the
arbitration proceeding shall be commenced and completed within sixty
(60) days after the selection of the arbitration panel pursuant to
subsection (b) above, and the arbitration panel shall render its
decision in writing within thirty (30) days after the completion of such
presentations. Any decision concurred in by any two (2) of the
arbitrators shall constitute the decision of the arbitration panel, and
unanimity shall not be required. If a decision concurred in by at least
two (2) of the arbitrators is not rendered within such thirty (30) day
period, then each of the parties shall select a new Qualified Individual
willing to act as an arbitrator and a new arbitration proceeding shall
commence in accordance with this Section 13.
(iv) The arbitration panel shall have the discretion to include in
its decision a direction that all or part of the attorneys' fees and
costs of the prevailing party or parties and/or the costs of such
arbitration be paid by any other party or parties. On the application of
a party before or after the initial decision of the arbitration panel,
and proof of its attorneys' fees and costs, the arbitration panel shall
order the other party to make any payments directed pursuant to the
preceding sentence.
(v) The Third Arbitrator shall have the right in its discretion to
authorize the obtaining of discovery, including the taking of
depositions of witnesses for the purpose of discovery.
(vi) At the request of any party, the arbitrators shall make and
provide to the parties written findings of fact and conclusions of law.
(vii) Notwithstanding anything to the contrary provided herein, the
arbitrators shall have no authority to award punitive damages.
(b) Binding Character. Any decision rendered by the arbitration panel
pursuant to this Section 14 shall be final and binding on the parties
thereto, and judgment thereon may be entered by any state or federal court
of competent jurisdiction sitting in the State of Delaware.
(c) Exclusivity. Arbitration shall be the exclusive method available
for resolution of claims, disputes and controversies described in this
Section 13 and the Partnership, the General Partner and the EOP Limited
Partners stipulate that the provisions hereof shall be a complete defense
to any suit, action, or proceeding in any court or before any
administrative or arbitration tribunal within respect to any such claim,
controversy or dispute. The provisions of this Section 14 shall survive the
dissolution of the Partnership. The General Partner and each EOP Limited
Partner consents to the jurisdiction of any state or federal court of
competent jurisdiction sitting in the State of Delaware to compel
arbitration in accordance with the provisions of this Section 13.
(d) No Alteration of Agreement. Nothing contained herein shall be
deemed to give the arbitrators any authority, power or right to alter,
change, amend, modify, add to, or subtract from any of the provisions of
this Partnership Agreement.
E-9 - 25
158
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EOP Operating Limited Partnership,
a Delaware limited partnership
By: Equity Office Properties Trust,
a Maryland real estate
investment trust
Its: General Partner
By:
----------------------------------
----------------------------------
Its:
----------------------------------
[Title]
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ EOP LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN GUARANTY AGREEMENT
DATED AS OF
--------------------------------------
Print Name of EOP Limited Partner
--------------------------------------
Signature of EOP Limited Partner
E-9 - 27
160
SCHEDULE 1
List of EOP Limited Partners
E-9 - 28
161
SCHEDULE 2
List of Notes
E-9 - 29
162
SCHEDULE 3
List of EOP Limited Partners' Guaranteed Amounts
E-9 - 30
163
SCHEDULE 8-2 TO EXHIBIT E-9
FORM OF GUARANTY AGREEMENT -- FOR SECURED NONRECOURSE INDEBTEDNESS -- BETWEEN
GUARANTEE PARTNERS, EQUITY OFFICE AND EOP PARTNERSHIP PURSUANT TO SECTION 3(a)
OF EXHIBIT E-9
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guarantee"), dated as of ,
2001, is made by those certain undersigned Persons identified on Schedule 1
attached hereto ("Guarantors"), in favor of [LENDER] ("Guaranteed Party").
WHEREAS, [BORROWER] ("Maker"), is indebted to the Guaranteed Party in the
sum of [LOAN], as evidenced by a certain Promissory Note dated [DATE] (the
"Note"), which is secured by a Mortgage (the "Mortgage") on certain property of
the Maker(the "Properties" and individually, a "Property").
WHEREAS, the Guarantors desire to guarantee collection of a portion of the
principal amount of the Note not in excess of [Guaranteed Amount] (the
"Guaranteed Amount").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, Guarantors agree as follows:
1. Guarantee
A. The Guarantors hereby irrevocably and unconditionally guarantee the
collection by the Guaranteed Party of, and hereby agree to pay to the Guaranteed
Party upon demand (following (1) foreclosure of the Mortgage, exercise of the
powers of sale thereunder and/or acceptance by the Guaranteed Party of a deed to
a Property in lieu of foreclosures, and (2) the exhaustion of the exercise of
any and all remedies available to the Guaranteed Party against Maker, including,
without limitation, realizing upon the assets of Maker other than the
Properties), an amount equal to the excess, if any, of the Guaranteed Amount
over the Maker Proceeds (as hereinafter defined). The amounts payable by each
Guarantor in respect of the guarantee obligations hereunder shall be in the same
proportion as the amounts listed next to such Guarantor's name on Schedule 2
attached hereto bears to the Guaranteed Amount provided that, notwithstanding
anything to the contrary contained in this Agreement, each Guarantor's
obligation shall be limited to the amount(s) set forth on Schedule 2 next to
such Guarantor's name. The Guarantors' obligations as set forth in this
Paragraph 1.A. are hereinafter referred to as the "Guaranteed Obligations."
B. For the purposes of this Guarantee, the term "Maker Proceeds" shall mean
the aggregate of the Foreclosure Proceeds (as hereinafter defined) plus all
amounts collected from the Maker or realized from the sale of assets of the
Maker other than the Properties.
C. For the purposes of this Guarantee, the term "Foreclosure Proceeds"
shall have the applicable meaning set forth below with respect to a Property:
1. If at least one bona fide third party unrelated to the Guaranteed
Party (and including, without limitation, any of the Guarantors) bids for
such Property at a sale thereof, conducted upon foreclosure of the related
Mortgage or exercise of the power of sale thereunder, Foreclosure Proceeds
shall mean the highest amount bid for such Property by the party that
acquires title thereto (directly or through a nominee) at or pursuant to
such sale. For the purposes of determining such highest bid, amounts bid
for the Property by the Guaranteed Party shall be taken into account
notwithstanding the fact that such bids may constitute credit bids which
offset against the amount due to the Guaranteed Party under the Note.
2. If there is no such unrelated third-party at such sale of the
Property so that only bidder at such sale is the Guaranteed Party or its
designee, the Foreclosure Proceeds shall be deemed to be fair market value
(the "Fair Market Value") of the Property as of the date of the foreclosure
sale, as such Fair Market Value shall be mutually agreed upon by the
Guaranteed Party and the Guarantor or determined pursuant to subparagraph
1.D.
3. If the Guaranteed Party receives and accepts a deed to the Property
in lieu of foreclosure in partial satisfaction of Maker's obligations under
the Note, the Foreclosure Proceeds shall be deemed to
▇-▇ - ▇▇
▇▇▇
▇▇ the Fair Market Value of such Property as of the date of delivery of the
deed-in-lieu of foreclosure, as such Fair Market Value shall be mutually
agreed upon by the Guaranteed Party and the Guarantor or determined
pursuant to subparagraph 1.D.
D. Fair Market Value of a Property shall be the price at which a willing
seller not compelled to sell would sell such Property, and a willing buyer not
compelled to buy would purchase the Property, free and clear of all mortgages
but subject to all leases and reciprocal easement and operating agreements. If
the Guaranteed Party and Guarantor are unable to agree upon the Fair Market
Value of a Property in accordance with subparagraphs 1.C.2. or 3. above, as
applicable, within twenty (20) days after the date of the foreclosure sale or
the delivery of the deed-in-lieu of foreclosure, as applicable, relating to a
Property, either party may have the Fair Market Value of a Property determined
by appraisal by appointing an appraiser having the qualifications set forth
below to determine the same and by notifying the other party of such appointment
within twenty (20 days after the expiration of such twenty (20) day period. If
the other party shall fail to notify the first party, within twenty (20) days
after its receipt of notice of the appointment by the first party, of the
appointment by the other party of an appraiser having the qualifications set
forth below, the appraiser appointed by the first party shall alone make the
determination of such Fair Market Value. Appraisers appointed by the parties
shall be members of the Appraisal Institute (MAI) and shall have at least ten
years' experience in the valuation of properties similar to the Property being
valued in the greater metropolitan area in which such Property is located. If
each party shall appoint an appraiser having the aforesaid qualifications and is
such tow appraiser cannot, within thirty (30) days after the appointment of the
second appraiser, agree upon the determination hereinabove required, then they
shall select a third appraiser which third appraiser shall have the aforesaid
qualifications, and if they fail so to do within forty (40) days after the
appointment of the second appraiser they shall notify the parties hereto, and
either party shall thereafter have the right, on notice to the other, to apply,
for the appointment of a third appraiser to the chapter of the American
Arbitration Association or its successor organization located in the
metropolitan area in which the Property is located or to which the Property is
proximate or if no such chapter is located in such metropolitan area, in the
metropolitan area closest to the Property in which such a chapter is located.
Each appraiser shall render its decision as to the Fair Market Value of the
Property in question within thirty (30) days after the appointment of the third
appraiser and shall furnish a copy thereof to the Guaranteed Party and
Guarantor. The Fair Market Value of the Property shall then be calculated as the
average of (i) the Fair Market Value determined by the third appraiser and (ii)
whichever of the Fair Market Values determined by the first two appraisers is
closer to the Fair Market Value determined by the third appraiser; provided,
however, that if the Fair Market Value determined by the third appraiser is
higher or lower than both Fair Market Values determined by the first two
appraiser, such Fair Market Value determined by the third appraiser shall be
disregarded and the Fair Market Value of the Property shall then be calculated
as the average of the Fair Market Value determined by the first two appraisers.
The Fair Market Value of a Property as so determined shall be binding and
conclusive upon the Guaranteed Party and Guarantor. Each party shall bear the
cost of its own appraiser and the cost of appointing, and the expenses of, the
third appraiser shall be shared equally by the Guaranteed Party and Guarantor.
2. Waivers: Other Agreements.
The Guaranteed Party is hereby authorized, without notice to demand upon
Guarantors, which notice or demand is expressly waived hereby, and without
discharging or otherwise affecting the enforceability of the obligations of the
Guarantors hereunder (which shall remain absolute and unconditional
notwithstanding any such action or omission to act), from time to time to:
(i) waive or otherwise consent to noncompliance with any provision of
the Note or Mortgage, or any part thereof, or any other instrument or
agreement in respect of the Guaranteed Obligations now or hereafter
executed by Maker or any other person and delivered to the Guaranteed
Party, except that Maker shall not extend the time for payment of the
Guaranteed Obligations by Maker;
(ii) accept partial payments on the Guaranteed Obligations by Maker;
▇-▇ - ▇▇
▇▇▇
(▇▇▇) receive, take and hold additional security or collateral for the
payment of the Guaranteed Obligations or for the payment of this Guarantee,
or for the payment of any other guarantees of the Guaranteed Obligations,
and exchange, enforce, waive, substitute, liquidate, terminate, abandon,
fail to perfect, subordinate, transfer, or otherwise alter or release any
such additional security or collateral;
(iv) apply any and all such security or collateral and direct the
order or manner of sale thereof as the Guaranteed Party may determine in
its sole discretion;
(v) settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations or accept, substitute, release, exchange or
otherwise alter, affect or impair any Mortgage or any other security or
collateral for the Guaranteed Obligations or any other guarantee therefore,
in any manner;
(vi) add, release or substitute any one or more other guarantors,
makers or endorsers of the Guaranteed Obligations and otherwise deal with
Maker or any other guarantor as the Guaranteed Party may elect in its sole
discretion; and
(vii) apply any and all payments or recoveries from Maker, Guarantors
or from any other guarantor of the Guaranteed Obligations, to such of the
Guaranteed Obligations as the Guaranteed Party in its sole discretion may
determine, whether such Guaranteed Obligations are secured or unsecured or
guaranteed or not guaranteed by others.
3. Miscellaneous.
A. This Guarantee is irrevocable as to any and all of the Guaranteed
Obligations until the earliest date (the "Termination Date") that, as a result
of a repayment, compromise or adjustment of a principal amount of the Note, the
total principal amount outstanding under the Note is reduced by an amount equal
to or greater than the Total Guaranty Amount, or if the Borrower incurs
indebtedness senior to, or pari passu with the Note, provided that the
obligations of the Guarantors hereunder shall continue after the Termination
Date to the extent of any claims that are attributable fully and solely to an
event or action that occurred before the Termination Date, and provided further
that the EOP Operating Limited Partnership shall offer the Borrower a Guarantee
Opportunity,(as defined in Exhibit E-9 of the Partnership Agreement) in
replacement of the guarantee provided under this Guaranty Agreement to the
extent required pursuant to Exhibit E-9.
B. This Guarantee is binding on the Guarantors and their successors and
assigns, and insures to the benefit of the Guaranteed Party.
C. No delay on the part of the Guaranteed Party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise or waiver by the Guaranteed Party of any right or remedy shall preclude
any further exercise thereof, nor shall any modification or waiver of any of the
provisions of this Guarantee be binding upon the Guaranteed Party, except as
expressly set forth in a writing duly signed or delivered by the Guaranteed
Party or on the Guaranteed Party's behalf by an authorized officer or agent of
the Guaranteed Party. The Guaranteed Party's failure at any time or times
hereafter to require strict performance by Maker, Guarantors or any other person
of any of the provisions, warranties, terms and conditions contained in any
security agreement, agreements, guarantee, instrument or document now or at any
time or times hereafter executed by Maker or Guarantors or delivered to the
Guaranteed Party shall not waive, affect or diminish any right of the Guaranteed
Party at any time or times hereafter to demand strict performance thereof and
such right shall not be deemed to have been waived by any act or knowledge of
the Guaranteed Party, its agents, officers, or employees, unless such waiver is
contained in an instrument in writing signed by an officer or agent of the
Guaranteed Party and directed to Maker or Guarantors, or either of them (as the
case may be) specifying such waiver. No waiver by the Guaranteed Party of any
default shall operate as a waiver of any other default or the same default on a
future occasion, and no action by the Guaranteed Party permitted hereunder shall
in any way affect or impair the Guaranteed Party's rights or the obligations of
Guarantors under this Guarantee.
D. This Guarantee shall be interpreted and the rights and liabilities of
the parties hereto determined in accordance with the laws (other than the
conflicts of law provisions) of the State of [New York].
E-9 - 33
166
E. This Guarantee contains all the terms and conditions of the agreement
between the Guaranteed Party and Guarantors. The terms and provisions of this
Guarantee may not be waived, altered, modified or amended except in writing duly
executed by the party to be charged thereby.
F. Any notice shall be directed to the parties at the following addresses:
If to Guarantors:
If to the Guaranteed Party:
G. Capitalized terms used herein and not otherwise defined herein shall
have the same meanings as set forth in the partnership agreement of the EOP
Operating Limited Partnership, as such partnership agreement may be amended,
modified, supplemented or restated from time to time (the "Partnership
Agreement").
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▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN GUARANTY AGREEMENT
DATED AS OF
IN WITNESS WHEREOF, the undersigned has duly executed this Guarantee as of
the date first above written.
--------------------------------------
Print Name of Guarantor
--------------------------------------
Signature of Guarantor
▇-▇ - ▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ A
(SERIES A PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Partnership
Agreement, set forth below are the terms and conditions of the Series A
Preferred Units established and issued by the Partnership to the General Partner
on December 19, 1997, in connection with the merger of Beacon Properties L.P.
("Beacon Partnership") with and into the Partnership (the "Beacon Partnership
Merger"), in exchange for the then outstanding Series A Preferred Units of
Beacon Partnership (all of which had been acquired by the General Partner as a
result of the merger of Beacon Properties Corporation with and into the General
Partner). All capitalized terms used in this Attachment and not otherwise
defined shall have the meanings assigned in the Partnership Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series A Preferred Units, was established on December 19, 1997, on
which date 8,000,0000 Series A Preferred Units were issued to the General
Partner in the Beacon Partnership Merger.
B. Rank. The Series A Preferred Units shall, with respect
to distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to the Class A Units, Class B Units and all
Partnership Interests ranking junior to the Series A Preferred Units; (b) on a
parity with the Series B Preferred Units, the Series C Preferred Units, the
Series D Preferred Units, the Series E Preferred Units, the Series F Preferred
Units and all Partnership Interests issued by the Partnership the terms of which
specifically provide that such Partnership Interests rank on a parity with the
Series A Preferred Units; and (c) junior to all Partnership Interests issued by
the Partnership the terms of which specifically provide that such Partnership
Interests rank senior to the Series A Preferred Units.
C. Distributions.
(i) Pursuant to Section 5.1 of the Partnership Agreement,
holders of Series A Preferred Units shall be entitled to receive, out of
Available Cash, cumulative preferential distributions of Available Cash at the
rate of 8.98% of the $25.00 liquidation preference per annum (equivalent to a
fixed annual amount of $2.245 per unit). Such distributions shall be cumulative
from the last date on which any distributions were paid with respect to the
Series A Preferred Units of Beacon Partnership for which the Series A Preferred
Units were exchanged in connection with the Beacon Partnership Merger and shall
be payable quarterly in arrears on or before March 15, June 15, September 15 and
December 15 of each year or, if not a business day, the next succeeding business
day (each a "Series A Preferred Unit
169
Distribution Payment Date"). Any distribution payable on the Series A Preferred
Units for any partial distribution period shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
(ii) No distributions on Series A Preferred Units shall be
authorized or paid or set apart for payment at such time as the terms and
provisions of any agreement of the Partnership, including any agreement relating
to its indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof, or a default thereunder, or if such
authorization or payment shall be restricted or prohibited by law.
(iii) Notwithstanding the foregoing, distributions with
respect to the Series A Preferred Units will accrue whether or not the terms and
provisions set forth in Section C.(ii) of this Attachment A at any time prohibit
the current payment of distributions, whether or not there is sufficient
Available Cash for such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series A Preferred Units
will accumulate as of the Series A Preferred Unit Distribution Payment Date on
which they first become payable.
(iv) When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series A
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series A Preferred Units, all distributions authorized
upon the Series A Preferred Units and any other Partnership Interests ranking on
a parity as to distributions with the Series A Preferred Units shall be
authorized pro rata so that the amount of distributions authorized per
Partnership Unit of Series A Preferred Units and such other Partnership
Interests shall in all cases bear to each other the same ratio that accrued
distributions per Partnership Unit on the Series A Preferred Units and such
other Partnership Interests (which shall not include any accrual in respect of
unpaid distributions for prior distribution periods if such other Partnership
Interests do not have a cumulative distribution) bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any distribution payment or payments on Series A Preferred Units which may be in
arrears.
(v) Except as provided in Section C.(iv) of this Attachment
A, unless full cumulative distributions on the Series A Preferred Units have
been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for payment for all past
distribution periods and the then current distribution period, no distributions
(other than in Partnership Interests ranking junior to the Series A Preferred
Units as to distributions and upon liquidation) shall be authorized or paid or
set aside for payment nor shall any other distribution be authorized or made
upon the Class A Units, the Class B Units, or any other Partnership Interests
ranking junior to or on a parity with the Series A Preferred Units as to
distributions or upon liquidation, nor shall any Class A Units,
Attachment A-2
170
Class B Units, or any other Partnership Interests ranking junior to or on a
parity with the Series A Preferred Units as to distributions or upon liquidation
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
such units or other Partnership Interests) by the Partnership (except by
conversion into or exchange for Partnership Interests ranking junior to the
Series A Preferred Units as to distributions and upon liquidation).
(vi) Holders of the Series A Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or Partnership
Units in excess of full cumulative distributions on the Series A Preferred Units
as described above. Any distribution payment made on the Series A Preferred
Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to such Series A Preferred Units which remains
payable.
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among holders of Series A Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of
Series A Preferred Units then outstanding are entitled to be paid out of the
assets of the Partnership available for distribution to the Partners pursuant to
Section 13.2.A of the Agreement a liquidation preference of $25.00 per Series A
Preferred Unit, plus an amount equal to any accrued and unpaid distributions to
the date of payment, before any distribution of assets is made to holders of
Class A Units, Class B Units or any other Partnership Interests that rank junior
to the Series A Preferred Units as to liquidation rights.
(ii) In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Partnership are insufficient to pay the amount of the liquidating distributions
on all outstanding Series A Preferred Units and the corresponding amounts
payable on all other Partnership Interests ranking on a parity with the Series A
Preferred Units in the distribution of assets, then such assets shall be
allocated among the Series A Preferred Units, as a class, and each class or
series of such other such Partnership Interests, as a class, in proportion to
the full liquidating distributions to which they would otherwise be respectively
entitled.
(iii) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series A Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
Attachment A-3
171
(iv) The consolidation or merger of the Partnership with or
into any other partnership, corporation, trust or entity or of any other
partnership, corporation, trust or other entity with or into the Partnership or
the sale, lease or conveyance of all or substantially all of, the property or
business of the Partnership, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Partnership for purposes of this Section E.
F. Redemption.
In connection with a redemption by the General Partner of any or
all of the Series A Preferred Shares of the General Partner, the Partnership
shall provide cash to the General Partner for such purpose which shall be equal
to redemption price of the Series A Preferred Shares to be redeemed and one
Series A Preferred Unit shall be canceled with respect to each Series A
Preferred Share so redeemed. From and after the date in which the Series A
Preferred Shares are redeemed, any Series A Preferred Units so canceled shall no
longer be outstanding and all rights hereunder, to distributions or otherwise,
with respect to such Series A Preferred Units shall cease.
Attachment A-4
172
ATTACHMENT B
(SERIES B PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement,
set forth below are the terms and conditions of the Series B Preferred Units
established and issued by the Partnership on February 19, 1998, in connection
with the issuance of Series B Preferred Shares by the General Partner.
Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series B Preferred Units was established on February 19, 1998, on
which date 6,000,000 Series B Preferred Units were issued to the General
Partner.
B. Rank. The Series B Preferred Units shall, with respect
to distribution rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, rank (a) senior to
the Class A Units, Class B Units and all Partnership Interests ranking junior to
the Series B Preferred Units; (b) on a parity with the Series A Preferred Units,
the Series C Preferred Units, the Series D Preferred Units, the Series E
Preferred Units, the Series F Preferred Units, and all other Partnership
Interests issued by the Partnership the terms of which specifically provide that
such Partnership Interests rank on a parity with the Series B Preferred Units;
and (c) junior to all Partnership Interests issued by the Partnership the terms
of which specifically provide that such Partnership Interests rank senior to the
Series B Preferred Units.
C. Distributions.
(i) Pursuant to Section 5.1 of the Agreement, holders of
Series B Preferred Units shall be entitled to receive, out of Available Cash,
cumulative preferential cash distributions at the rate of 5.25% of the $50.00
liquidation preference per annum (equivalent to a fixed annual amount of $2.625
per unit). Distributions (which term as used herein shall include liquidated
damages, if any, payable pursuant to Section C.(vi) of this Attachment B) on the
Series B Preferred Units shall be payable quarterly and be cumulative from the
fifteenth day of each February, May, August and November or, if not a business
day, the next succeeding business day (each, a "Series B Preferred Unit
Distribution Payment Date"). Any distribution (including the initial
distribution) payable on the Series B Preferred Units for any partial
distribution period shall be prorated and computed on the basis of a 360-day
year consisting of twelve 30-day months.
(ii) No distribution on the Series B Preferred Units shall be
authorized by the General Partner or paid or set apart for payment by the
173
Partnership at such time as the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, prohibits
such authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof, or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
the Series B Preferred Units which may be in arrears.
Notwithstanding the foregoing, distributions with respect to the
Series B Preferred Units shall accumulate whether or not any of the foregoing
restrictions exist, whether or not there is sufficient Available Cash for the
payment thereof and whether or not such distributions are authorized.
Accumulated but unpaid distributions on the Series B Preferred Units shall not
bear interest and holders of the Series B Preferred Units shall not be entitled
to any distributions in excess of full cumulative distributions. Any
distribution payment made on the Series B Preferred Units shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such units which remains payable.
(iii) Except as provided in Section C.(iv) of this Attachment
B, if any Series B Preferred Units are outstanding, no distributions (other than
in Partnership Interests ranking junior to the Series B Preferred Units as to
distributions and upon liquidation, dissolution or winding up of the affairs of
the Partnership) shall be declared or paid or set apart for payment nor shall
any other distribution be declared or made upon the Class A Units, the Class B
Units, or any other Partnership Interests ranking junior to or on a parity with
the Series B Preferred Units as to distributions or upon liquidation,
dissolution or winding up of the affairs of the Partnership for any period
unless full cumulative distributions have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
such payment on the Series B Preferred Units for all past distribution periods
and the then current distribution period, nor shall any Class A Units, Class B
Units, or any other Partnership Interests ranking junior to or on a parity with
the Series B Preferred Units as to distributions or upon liquidation,
dissolution or winding up of the affairs of the Partnership, be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Partnership
Interests) by the Partnership (except by conversion into or exchange for
Partnership Interests ranking junior to the Series B Preferred Units as to
distributions and upon liquidation, dissolution or winding up of the affairs of
the Partnership).
(iv) When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series B
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series B Preferred Units, all distributions declared upon
the Series B Preferred Units and any other Partnership Interests ranking on a
parity as to distributions with the Series B Preferred Units shall be declared
pro rata so that the amount of
Attachment B-2
174
distributions declared per unit of Series B Preferred Units and such other
Partnership Interests shall in all cases bear to each other the same ratio that
accumulated distributions per unit on the Series B Preferred Units and such
other Partnership Interests (which shall not include any accumulation in respect
of unpaid distributions for prior distribution periods if such other Partnership
Interests do not have a cumulative distribution) bear to each other.
(v) Holders of Series B Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or Partnership
Interests, in excess of full cumulative distributions on the Series B Preferred
Units as described above. Accumulated but unpaid distributions on the Series B
Preferred Units will accumulate as of the Series B Preferred Unit Distribution
Payment Date on which they first become payable.
(vi) If the General Partner fails to maintain the
effectiveness of the registration statement as required by the Registration
Rights Agreement dated February 19, 1998 between the General Partner and ▇▇▇▇▇▇
Brothers Inc. (the "Registration Rights Agreement"), liquidated damages shall
accumulate on the $50.00 liquidation preference of the Series B Preferred Units
at a rate of 0.25% per annum (equivalent to a fixed annual amount of $0.125 per
unit) with respect to the first quarter immediately following such failure and
at a rate of 0.50% per annum (equivalent to a fixed annual amount of $0.25 per
unit) with respect to the second quarter and all subsequent quarters following
such failure ("Liquidated Damages").
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among holders of Series B Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
(i) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Partnership, the
holders of the Series B Preferred Units shall be entitled to receive out of the
assets of the Partnership available for distribution to the Partners pursuant to
Section 13.2.A of the Agreement a liquidation preference of $50.00 per Series B
Preferred Unit, plus an amount equal to any accumulated and unpaid distributions
to the date of payment, before any distribution of assets is made to holders of
Class A Units, Class B Units or any other Partnership Interests that rank junior
to the Series B Preferred Units as to liquidation rights.
(ii) If upon any such voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the assets of the
Partnership are insufficient to make such full payment to holders of the Series
B Preferred Units and the corresponding amounts payable on all other Partnership
Interests ranking on a parity with the Series B Preferred Units in the
distribution
Attachment B-3
175
of assets, then the holders of such Partnership Interests shall share ratably in
any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
(iii) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Units shall have no right or claim to any of the remaining assets of the
Partnership.
(iv) None of a consolidation or merger of the Partnership
with or into another entity, merger of another entity with or into the
Partnership, a statutory unit exchange by the Partnership or a sale, lease or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the affairs of
the Partnership.
F. Redemption.
In connection with redemption by the General Partner of any of
its Series B Preferred Shares in accordance with the provisions of the Articles
Supplementary to the Declaration of Trust filed with the State Department of
Assessments and Taxation of Maryland on February 19, 1998, establishing the
Series B Preferred Shares (the "Articles Supplementary"), the Partnership shall
provide cash to the General Partner for such purpose which shall be equal to the
redemption price (as set forth in the Articles Supplementary) and one Series B
Preferred Unit shall be canceled with respect to each Series B Preferred Share
so redeemed by the General Partner. From and after the Series B Preferred Share
Redemption Date (as defined in the Articles Supplementary), any Series B
Preferred Units so canceled shall no longer be outstanding and all rights
hereunder, to distributions or otherwise, with respect to such Series B
Preferred Units shall cease.
G. Conversion.
In connection with conversion into Shares of any Series B
Preferred Shares in accordance with the provisions of the Articles
Supplementary, the Partnership shall (i) issue to the General Partner a number
of Class A Units equal to the number of Shares issued by the General Partner
upon such conversion; and (ii) provide cash to the General Partner, if
necessary, in an amount equal to the amount of cash paid by the General Partner
upon conversion of any Series B Preferred Shares which would otherwise result in
the issuance of fractional Shares. One Series B Preferred Unit, or any fraction
thereof, shall be canceled with respect to each Series B Preferred Share, or any
fraction thereof, so converted, and from and after such conversion, any Series B
Preferred Units so canceled shall no longer be outstanding and all rights
hereunder, to distributions or otherwise, with respect to such Series B
Preferred Units shall cease.
Attachment B-4
176
ATTACHMENT C
(SERIES C PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement,
set forth below are the terms and conditions of the Series C Preferred Units
established and issued by the Partnership on December 14, 1998, in connection
with issuance of Series C Preferred Shares by the General Partner. Capitalized
terms used herein and not otherwise defined shall have the meanings given to
them in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series C Preferred Units was established on December 14, 1998, on
which date 4,600,000 Series C Preferred Units were issued to the General
Partner.
B. Rank. The Series C Preferred Units shall, with respect
to distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to the Class A, Units, Class B Units and all
Partnership Interests ranking junior to the Series C Preferred Units; (b) on a
parity with the Series A Preferred Units, the Series B Preferred Units, the
Series D Preferred Units, the Series E Preferred Units, the Series F Preferred
Units, and all other Partnership Interests issued by the Partnership the terms
of which specifically provide that such Partnership Interests rank on a parity
with the Series C Preferred Units; and (c) junior to all Partnership Interests
issued by the Partnership the terms of which specifically provide that such
Partnership Interests rank senior to the Series C Preferred Units.
C. Distributions.
(i) Pursuant to Section 5.1 of the Agreement, holders of
Series C Preferred Units shall be entitled to receive, out of Available Cash,
cumulative preferential distributions of Available Cash at the rate of 8 5/8% of
the $25.00 liquidation preference per annum (equivalent to a fixed annual amount
of $2.15625 per unit). Such distributions shall accumulate on a daily basis and
be cumulative from the date of original issuance (December 8, 1998) and shall be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year or, if not a business day, the next succeeding business day (each a
"Series C Preferred Unit Distribution Payment Date"), commencing March 15, 1999.
Any distribution payable on the Series C Preferred Units for any partial
distribution period shall be computed on the basis of a 360-day year consisting
of twelve 30-day months.
(ii) No distributions on Series C Preferred Units shall be
authorized or paid or set apart for payment at such time as the terms and
provisions of any agreement of the Partnership, including any agreement relating
to its indebtedness, prohibits such authorization, payment or setting apart for
177
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof, or a default thereunder, or if such
authorization or payment shall be restricted or prohibited by law.
(iii) Notwithstanding the foregoing, distributions with
respect to the Series C Preferred Units will accumulate whether or not the terms
and provisions set forth in Section C.(ii) of this Attachment C at any time
prohibit the current payment of distributions, whether or not there is
sufficient Available Cash for such distributions and whether or not such
distributions are authorized. Accumulated but unpaid distributions on the Series
C Preferred Units will accumulate as of the Series C Preferred Unit Distribution
Payment Date on which they first become payable.
(iv) When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series C
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series C Preferred Units, all distributions authorized
upon the Series C Preferred Units and any other Partnership Interests ranking on
a parity as to distributions with the Series C Preferred Units shall be
authorized pro rata so that the amount of distributions authorized per
Partnership Unit of Series C Preferred Units and such other Partnership
Interests shall in all cases bear to each other the same ratio that accumulated
distributions per Partnership Unit on the Series C Preferred Units and such
other Partnership Interests (which shall not include any accumulation in respect
of unpaid distributions for prior distribution periods if such other Partnership
Interests do not have a cumulative distribution) bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any distribution payment or payments on Series C Preferred Units which may be in
arrears.
(v) Except as provided in Section C.(iv) of this Attachment
C, unless full cumulative distributions on the Series C Preferred Units have
been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for payment for all past
distribution periods and the then current distribution period, no distributions
(other than in Partnership Interests ranking junior to the Series C Preferred
Units as to distributions and upon liquidation) shall be authorized or paid or
set aside for payment nor shall any other distribution be authorized or made
upon the Class A Units, the Class B Units, or any other Partnership Interests
ranking junior to or on a parity with the Series C Preferred Units as to
distributions or upon liquidation, nor shall any Class A Units, Class B Units,
or any other Partnership Interests ranking junior to or on a parity with the
Series C Preferred Shares as to distributions or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such units or
other Partnership Interests) by the Partnership (except by conversion into or
exchange for Partnership Interests ranking junior to the Series C Preferred
Units as to distributions and upon liquidation).
Attachment C-2
178
(vi) Holders of the Series C Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or Partnership
Units in excess of full cumulative distributions on the Series C Preferred Units
as described above. Any distribution payment made on the Series C Preferred
Units shall first be credited against the earliest accumulated but unpaid
distribution due with respect to such Series C Preferred Units which remains
payable.
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among holders of Series C Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of
Series C Preferred Units then outstanding are entitled to be paid out of the
assets of the Partnership available for distribution to the Partners pursuant to
Section 13.2.A of the Agreement a liquidation preference of $25.00 per Series C
Preferred Unit, plus an amount equal to any accumulated and unpaid distributions
to the date of payment, before any distribution of assets is made to holders of
Class A Units, Class B Units or any other Partnership Interests that rank junior
to the Series C Preferred Units as to liquidation rights.
(ii) In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Partnership are insufficient to pay the amount of the liquidating distributions
on all outstanding Series C Preferred Units and the corresponding amounts
payable on all other Partnership Interests ranking on a parity with the Series C
Preferred Units in the distribution of assets, then such assets shall be
allocated among the Series C Preferred Units, as a class, and each class or
series of such other such Partnership Interests, as a class, in proportion to
the full liquidating distributions to which they would otherwise be respectively
entitled.
(iii) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series C Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(iv) The consolidation or merger of the Partnership with or
into any other partnership, corporation, trust or entity or of any other
partnership, corporation, trust or other entity with or into the Partnership or
the sale, lease or conveyance of all or substantially all of, the property or
business of the Partnership, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Partnership for purposes of this Section E.
Attachment C-3
179
F. Redemption.
In connection with a redemption by the General Partner of any or
all of the Series C Preferred Shares, the Partnership shall provide cash to the
General Partner for such purpose which shall be equal to redemption price of the
Series C Preferred Shares to be redeemed and one Series C Preferred Unit shall
be canceled with respect to each Series C Preferred Share so redeemed. From and
after the date in which the Series C Preferred Shares are redeemed, the Series C
Preferred Units so canceled shall no longer be outstanding and all rights
hereunder, to distributions or otherwise, with respect to such Series C
Preferred Units shall cease.
Attachment C-4
180
ATTACHMENT D
(SERIES D PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement,
set forth below are the terms and conditions of the Series D Preferred Units
hereby established that will be issued by the Partnership to ▇▇▇▇▇▇▇ on July 2,
2001, in connection with the merger of ▇▇▇▇▇▇▇ Properties, L.P. ("▇▇▇▇▇▇▇
Partnership") with and into the Partnership (the "▇▇▇▇▇▇▇ Partnership Merger"),
in exchange for the then outstanding Series B Preferred Interest of ▇▇▇▇▇▇▇
Partnership (all of which will be acquired by the General Partner in the merger
of ▇▇▇▇▇▇▇ Properties, Inc. with and into General Partner (the "REIT Merger")
immediately following the ▇▇▇▇▇▇▇ Partnership Merger). All capitalized terms
used in this Attachment D and not otherwise defined shall have the meanings
assigned in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series D Cumulative Redeemable Preferred Units (the "Series D
Preferred Units"), is hereby established. The number of Series D Preferred Units
shall be 4,250,000.
B. Rank. The Series D Preferred Units shall, with respect
to distribution rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the Partnership, rank (a) senior to the Class A
Units, Class B Units and all Partnership Interests ranking junior to the Series
D Preferred Units; (b) on a parity with the Series A Preferred Units, the Series
B Preferred Units, the Series C Preferred Units, Series E Preferred Units,
Series F Preferred Units, and all Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Series D Preferred Units (each referred to
as "Parity Preferred Units"); and (c) junior to all Partnership Interests issued
by the Partnership the terms of which specifically provide that such Partnership
Interests rank senior to the Series D Preferred Units.
C. Distributions.
(a) Subject to the rights of series of Preferred Units which
may from time to time come into existence, the holders of Series D Preferred
Units shall be entitled to receive distributions, when, as and if required
pursuant to the Agreement, of Available Cash, prior and in preference to any
distribution with respect to Class A Units or Class B Units, at the rate of
$2.3625 per Series D Preferred Unit per annum. Such distributions shall be
cumulative from the last date on which any distributions were paid with respect
to Series B Cumulative Redeemable Preferred Interest of ▇▇▇▇▇▇▇ Partnership for
which Series D Preferred Units were exchanged in connection with the merger of
▇▇▇▇▇▇▇ Partnership with
181
and into the Partnership and shall be payable quarterly in arrears on the last
day of March, June, September and December or, if not a business day, the next
succeeding business day (each, a "Distribution Payment Date"). Any distribution
payable on Series D Preferred Units for any partial distribution period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to Series D Preferred Unitholders at the close of
business on the Partnership Record Date, which shall be on such date designated
by the General Partner for the payment of distributions (each, a "Distribution
Record Date").
(b) Distributions on Series D Preferred Units will accrue
whether or not the Partnership has Available Cash, whether or not there are
funds legally available for the payment of such distributions and whether or not
such distributions are declared. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Series D Preferred Units which may be in arrears. Holders of the Series D
Preferred Units will not be entitled to distributions in excess of the full
cumulative distributions as described above.
(c) If any Series D Preferred Units are outstanding, no
distributions shall be declared or paid or set apart for payment on any
Partnership Unit, as to distributions, on a parity with or junior to Series D
Preferred Units for any period unless full cumulative distributions have been or
contemporaneously are paid or declared and a sum sufficient for the payment
thereof set apart for such payments on Series D Preferred Units for all past
distribution periods and the then current distribution period. When
distributions are not paid in full (or a sum sufficient for such full payment is
not set apart) upon the Series D Preferred Units and the Partnership Units
ranking on parity as to distributions with Series D Preferred Units, all
distributions declared upon Series D Preferred Units and any other series of
Partnership Units having parity as to distributions with Series D Preferred
Units shall be declared pro rata so that the amount of distributions declared
per Series D Preferred Units and such other Partnership Units shall in all cases
bear to each other the same ratio that accrued distributions per share on Series
D Preferred Units and such other Partnership Units bear to each other.
(d) Except as provided in Section 3(c), unless full
cumulative distributions on Series D Preferred Units have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past distribution periods and the
then current distribution period, no distributions (other than in Class A Units
or other Partnership Units ranking junior to Series D Preferred Units as to
distributions and amounts upon liquidation) shall be declared or paid or set
aside for payment or other distribution shall be declared or made upon the Class
A Units, Class B Units, Series A Preferred Units, Series B Preferred Units,
Series C Preferred Units, Series E Preferred Units and Series F Preferred Units
or any other Partnership Units ranking junior to or on a parity with Series D
Preferred Units as to distributions or upon liquidation, nor shall any Class A
Units, Class B Units, Series A Preferred Units, Series B Preferred
Attachment D-2
182
Units, Series C Preferred Units, Series E Preferred Units and Series F Preferred
Units, or any other Partnership Units ranking junior to or on a parity with
Series D Preferred Units as to distributions or amounts upon liquidation be
redeemed by the Partnership (except by conversion into or exchange for other
Partnership Units ranking junior to Series D Preferred Units as to distributions
and amounts upon liquidation).
(e) Any distribution payment made on Series D Preferred
Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to Series D Preferred Units which remains payable.
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among the holders of Series D Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
(a) Subject to the rights of series of Preferred Units which
may from time to time come into existence, upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Partnership, then,
before any distribution or payment shall be made to the holders of any Class A
Units, Class B Units, or any other class or series of Partnership ranking junior
to Series D Preferred Units in the distribution of assets upon any liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of
Series D Preferred Units shall be entitled to receive out of assets of the
Partnership legally available for distribution to limited partners, liquidation
distributions in the amount of the liquidation preference of $25.00 per share,
plus an amount equal to all distributions accrued and unpaid thereon. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Series D Preferred Units will have no right or claim to
any of the remaining assets of the Partnership. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Partnership, the available assets of the Partnership are insufficient to
pay the amount of the liquidation distributions on all outstanding Series D
Preferred Units and the corresponding amounts payable on all Partnership Units
ranking on a parity with Series D Preferred Units in the distribution of assets
upon any liquidation, dissolution or winding up of the affairs of the
Partnership ("Parity Units"), then the holders of Series D Preferred Units and
Parity Units shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
(b) For the purposes hereof, neither a consolidation or
merger of the Partnership with or into any other partnership, limited liability
company, corporation or any other entity, nor a merger of any other partnership,
limited liability company, corporation or any other entity with or into the
Partnership, nor a
Attachment D-3
183
sale or transfer of all or any part of the Partnership assets for cash or
securities shall be considered a liquidation, dissolution or winding up of the
Partnership.
F. Redemption
(a) Series D Preferred Units are not redeemable prior to
December 11, 2000. On and after December 11, 2000, the General Partner may
redeem outstanding Series D Preferred Units, in whole or in part, at any time or
from time to time, for cash at a redemption price of $25.00 per unit, plus an
amount equal to all distributions accrued and unpaid thereon to the date fixed
for redemption, without interest. The redemption price of Series D Preferred
Units (other than the portion thereof consisting of accrued and unpaid
distributions) is payable solely out of proceeds (without giving effect to any
temporary use of such proceeds) from the contributions with respect to other
Partnership Units, which may include Class A Units, Class B Units, Preferred
Units, or other ownership interests in the Partnership however designated (other
than debt securities converted into or exchangeable for Partnership Units), and
any rights, warrants or options to purchase any thereof. If fewer than all of
the outstanding Series D Preferred Units are to be redeemed, the number of units
to be redeemed will be determined by the General Partner and such units may be
redeemed pro rata from the holders of such units in proportion to the number of
such units held by such holders (with adjustments to avoid redemption of
fractional units) or by lot in a manner determined by the General Partner.
(b) Unless full cumulative distributions on all Series D
Preferred Units and Parity Units shall have been or contemporaneously are paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods and the then current distribution period, no
Series D Preferred Units or Parity Units shall be redeemed unless all
outstanding Series D Preferred Units and Parity Units are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Series D Preferred Units or Parity Units pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
Series D Preferred Units or Parity Units, as the case may be. Furthermore,
unless full cumulative distributions on all outstanding Series D Preferred Units
and Parity Units have been or contemporaneously are paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period, the Partnership
shall not purchase or otherwise acquire directly or indirectly any Series D
Preferred Units or Parity Units (except by conversion into or exchange for
Partnership Units ranking junior to Series D Preferred Units and Parity Units as
to distributions and amounts upon liquidation).
(c) The General Partner shall, in its sole discretion,
determine the form and content of a notice of redemption. If notice of
redemption of any Series D Preferred Units has been given and if the funds
necessary for such redemption have been set aside by the Partnership in trust
for the benefit of the holders of Series D Preferred Units so called for
redemption, then from and after the redemption date,
Attachment D-4
184
distributions will cease to accrue on such Series D Preferred Units, such Series
D Preferred Units shall no longer be deemed outstanding and all rights of the
holders of such units will terminate, except the right to receive the redemption
price.
(d) The holders of Series D Preferred Units at the close of
business on a Distribution Record Date will be entitled to receive the
distribution payable with respect to such Series D Preferred Units on the
corresponding Distribution Payment Date notwithstanding the redemption thereof
between such Distribution Record Date and the corresponding Distribution Payment
Date or the Partnership's default in the payment of the distribution due. Except
as provided above, the Partnership will make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series D Preferred Units which have
been called for redemption.
F. Status of Redeemed Series D Preferred Units.
In the event any Series D Preferred Units shall be redeemed
pursuant hereto, the units so redeemed shall revert to the status of authorized
but unissued Preferred Units available for future issuance and reclassification
by the General Partner.
G. Value.
For purposes of the definition of Deemed Value of Partnership
Interest, the Value on any date of the Series D Preferred Units shall be the
Liquidation Preference of such Series D Preferred Unit.
H. Voting Rights.
The holders of Series D Preferred Units shall have no voting
rights whatsoever, except for any voting rights to which they may be entitled
under the laws of the State of Delaware.
Attachment ▇-▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ E
(SERIES E PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement,
set forth below are the terms and conditions of the Series E Preferred Units
hereby established that will be issued by the Partnership to ▇▇▇▇▇▇▇ on July 2,
2001, in connection with the merger of ▇▇▇▇▇▇▇ Properties, L.P. ("▇▇▇▇▇▇▇
Partnership") with and into the Partnership (the "▇▇▇▇▇▇▇ Partnership Merger"),
in exchange for the then outstanding Series C Preferred Interest of ▇▇▇▇▇▇▇
Partnership (all of which will be acquired by the General Partner in the merger
of ▇▇▇▇▇▇▇ Properties, Inc. with and into General Partner (the "REIT Merger")
immediately following the ▇▇▇▇▇▇▇ Partnership Merger). All capitalized terms
used in this Attachment E and not otherwise defined shall have the meanings
assigned in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series E Cumulative Redeemable Preferred Units (the "Series E
Preferred Units"), is hereby established. The number of Series E Preferred Units
shall be 6,000,000.
B. Rank. The Series E Preferred Units shall, with respect
to distribution rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the Partnership, rank (a) senior to the Class A
Units, Class B Units and all Partnership Interests ranking junior to the Series
E Preferred Units; (b) on a parity with the Series A Preferred Units, the Series
B Preferred Units, the Series C Preferred Units, Series D Preferred Units,
Series F Preferred Units, and all Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Series E Preferred Units (each referred to
as "Parity Preferred Units"); and (c) junior to all Partnership Interests issued
by the Partnership the terms of which specifically provide that such Partnership
Interests rank senior to the Series E Preferred Units.
C. Distributions.
(a) Subject to the rights of series of Preferred Units which
may from time to time come into existence, the holders of Series E Preferred
Units shall be entitled to receive distributions, when, as and if required
pursuant to the Agreement, of Available Cash, prior and in preference to any
distribution with respect to Class A Units or Class B Units, at the rate of
$1.96875 per Series E Preferred Unit per annum. Such distributions shall be
cumulative from the last date on which any distributions were paid with respect
to Series C Cumulative Redeemable Preferred Interest of ▇▇▇▇▇▇▇ Partnership for
which Series E Preferred Units were exchanged in connection with the merger of
▇▇▇▇▇▇▇ Partnership with
186
and into the Partnership and shall be payable quarterly in arrears on the last
day of January, April, July and October or, if not a business day, the next
succeeding business day (each, a "Distribution Payment Date"). Any distribution
payable on Series E Preferred Units for any partial distribution period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to Series E Preferred Unitholders at the close of
business on the Partnership Record Date, which shall be on such date designated
by the General Partner for the payment of distributions (each, a "Distribution
Record Date").
(b) Distributions on Series E Preferred Units will accrue
whether or not the Partnership has Available Cash, whether or not there are
funds legally available for the payment of such distributions and whether or not
such distributions are declared. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Series E Preferred Units which may be in arrears. Holders of the Series E
Preferred Units will not be entitled to distributions in excess of the full
cumulative distributions as described above.
(c) If any Series E Preferred Units are outstanding, no
distributions shall be declared or paid or set apart for payment on any
Partnership Unit, as to distributions, on a parity with or junior to Series E
Preferred Units for any period unless full cumulative distributions have been or
contemporaneously are paid or declared and a sum sufficient for the payment
thereof set apart for such payments on Series E Preferred Units for all past
distribution periods and the then current distribution period. When
distributions are not paid in full (or a sum sufficient for such full payment is
not set apart) upon the Series E Preferred Units and the Partnership Units
ranking on parity as to distributions with Series E Preferred Units, all
distributions declared upon Series E Preferred Units and any other series of
Partnership Units parity as to distributions with Series E Preferred Units shall
be declared pro rata so that the amount of distributions declared per Series E
Preferred Units and such other Partnership Units shall in all cases bear to each
other the same ratio that accrued distributions per share on Series E Preferred
Units and such other Partnership Units bear to each other.
(d) Except as provided in Section 3(c), unless full
cumulative distributions on Series E Preferred Units have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past distribution periods and the
then current distribution period, no distributions (other than in Class A Units
or other Partnership Units ranking junior to Series E Preferred Units as to
distributions and amounts upon liquidation) shall be declared or paid or set
aside for payment or other distribution shall be declared or made upon the Class
A Units, Class B Units, Series A Preferred Units, Series B Preferred Units,
Series C Preferred Units, Series D Preferred Units and Series F Preferred Units
or any other Partnership Units ranking junior to or on a parity with Series E
Preferred Units as to distributions or upon liquidation, nor shall any Class A
Units, Class B Units, Series A Preferred Units, Series B Preferred Units, Series
C Preferred Units, Series D Preferred Units and Series F Preferred
Attachment E-2
187
Units, or any other Partnership Units ranking junior to or on a parity with
Series E Preferred Units as to distributions or amounts upon liquidation be
redeemed by the Partnership (except by conversion into or exchange for other
Partnership Units ranking junior to Series E Preferred Units as to distributions
and amounts upon liquidation).
(e) Any distribution payment made on Series E Preferred
Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to Series E Preferred Units which remains payable.
F. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among the holders of Series E Preferred Units in
accordance with Article VI of the Agreement.
G. Liquidation Preference.
(a) Subject to the rights of series of Preferred Units which
may from time to time come into existence, upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Partnership, then,
before any distribution or payment shall be made to the holders of any Class A
Units, Class B Units, or any other class or series of Partnership ranking junior
to Series E Preferred Units in the distribution of assets upon any liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of
Series E Preferred Units shall be entitled to receive out of assets of the
Partnership legally available for distribution to limited partners, liquidation
distributions in the amount of the liquidation preference of $25.00 per share,
plus an amount equal to all distributions accrued and unpaid thereon. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Series E Preferred Units will have no right or claim to
any of the remaining assets of the Partnership. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Partnership, the available assets of the Partnership are insufficient to
pay the amount of the liquidation distributions on all outstanding Series E
Preferred Units and the corresponding amounts payable on all Partnership Units
ranking on a parity with Series E Preferred Units in the distribution of assets
upon any liquidation, dissolution or winding up of the affairs of the
Partnership ("Parity Units"), then the holders of Series E Preferred Units and
Parity Units shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
(b) For the purposes hereof, neither a consolidation or
merger of the Partnership with or into any other partnership, limited liability
company, corporation or any other entity, nor a merger of any other partnership,
limited liability company, corporation or any other entity with or into the
Partnership, nor a sale or transfer of all or any part of the Partnership assets
for cash or securities shall be considered a liquidation, dissolution or winding
up of the Partnership.
Attachment ▇-▇
▇▇▇
▇. Redemption
(a) Series E Preferred Units are not redeemable prior to
October 10, 2002. On and after October 10, 2002, the General Partner may redeem
outstanding Series E Preferred Units, in whole or in part, at any time or from
time to time, for cash at a redemption price of $25.00 per unit, plus an amount
equal to all distributions accrued and unpaid thereon to the date fixed for
redemption, without interest. The redemption price of Series E Preferred Units
(other than the portion thereof consisting of accrued and unpaid distributions)
is payable solely out of proceeds (without giving effect to any temporary use of
such proceeds) from the contributions with respect to other Partnership Units,
which may include Class A Units, Class B Units, Preferred Units, or other
ownership interests in the Partnership however designated (other than debt
securities converted into or exchangeable for Partnership Units), and any
rights, warrants or options to purchase any thereof. If fewer than all of the
outstanding Series E Preferred Units are to be redeemed, the number of units to
be redeemed will be determined by the General Partner and such units may be
redeemed pro rata from the holders of such units in proportion to the number of
such units held by such holders (with adjustments to avoid redemption of
fractional units) or by lot in a manner determined by the General Partner.
(b) Unless full cumulative distributions on all Series E
Preferred Units and Parity Units shall have been or contemporaneously are paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods and the then current distribution period, no
Series E Preferred Units or Parity Units shall be redeemed unless all
outstanding Series E Preferred Units and Parity Units are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Series E Preferred Units or Parity Units pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
Series E Preferred Units or Parity Units, as the case may be. Furthermore,
unless full cumulative distributions on all outstanding Series E Preferred Units
and Parity Units have been or contemporaneously are paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period, the Partnership
shall not purchase or otherwise acquire directly or indirectly any Series E
Preferred Units or Parity Units (except by conversion into or exchange for
Partnership Units ranking junior to Series E Preferred Units and Parity Units as
to distributions and amounts upon liquidation).
(c) The General Partner shall, in its sole discretion,
determine the form and content of a notice of redemption. If notice of
redemption of any Series E Preferred Units has been given and if the funds
necessary for such redemption have been set aside by the Partnership in trust
for the benefit of the holders of Series E Preferred Units so called for
redemption, then from and after the redemption date, distributions will cease to
accrue on such Series E Preferred Units, such Series E Preferred Units shall no
longer be deemed outstanding and all rights of the holders of such units will
terminate, except the right to receive the redemption price.
Attachment ▇-▇
▇▇▇
(▇) The holders of Series E Preferred Units at the close of
business on a Distribution Record Date will be entitled to receive the
distribution payable with respect to such Series E Preferred Units on the
corresponding Distribution Payment Date notwithstanding the redemption thereof
between such Distribution Record Date and the corresponding Distribution Payment
Date or the Partnership's default in the payment of the distribution due. Except
as provided above, the Partnership will make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series E Preferred Units which have
been called for redemption.
F. Status of Redeemed Series E Preferred Units.
In the event any Series E Preferred Units shall be redeemed
pursuant hereto, the units so redeemed shall revert to the status of authorized
but unissued Preferred Units available for future issuance and reclassification
by the General Partner.
G. Value.
For purposes of the definition of Deemed Value of Partnership
Interest, the Value on any date of the Series E Preferred Units shall be the
Liquidation Preference of such Series E Preferred Unit.
H. Voting Rights.
The holders of Series E Preferred Units shall have no voting
rights whatsoever, except for any voting rights to which they may be entitled
under the laws of the State of Delaware.
Attachment ▇-▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ F
(SERIES F PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement,
set forth below are the terms and conditions of the Series F Preferred Units
hereby established that will be issued by the Partnership to ▇▇▇▇▇▇▇ on July 2,
2001, in connection with the merger of ▇▇▇▇▇▇▇ Properties, L.P. ("▇▇▇▇▇▇▇
Partnership") with and into the Partnership (the "▇▇▇▇▇▇▇ Partnership Merger"),
in exchange for the then outstanding Series E Preferred Interest of ▇▇▇▇▇▇▇
Partnership (all of which will be acquired by the General Partner in the merger
of ▇▇▇▇▇▇▇ Properties, Inc. with and into General Partner (the "REIT Merger")
immediately following the ▇▇▇▇▇▇▇ Partnership Merger). All capitalized terms
used in this Attachment F and not otherwise defined shall have the meanings
assigned in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series F Cumulative Redeemable Preferred Units (the "Series F
Preferred Units"), is hereby established. The number of Series F Preferred Units
shall be 4,000,000.
B. Rank. The Series F Preferred Units shall, with respect
to distribution rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the Partnership, rank (a) senior to the Class A
Units, Class B Units and all Partnership Interests ranking junior to the Series
F Preferred Units; (b) on a parity with the Series A Preferred Units, the Series
B Preferred Units, the Series C Preferred Units, Series D Preferred Units,
Series E Preferred Units, and all Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Series F Preferred Units (each referred to
as "Parity Preferred Units"); and (c) junior to all Partnership Interests issued
by the Partnership the terms of which specifically provide that such Partnership
Interests rank senior to the Series F Preferred Units.
C. Distributions.
(a) Subject to the rights of series of Preferred Units which
may from time to time come into existence, the holders of Series F Preferred
Units shall be entitled to receive distributions, when, as and if required
pursuant to the Agreement, of Available Cash, prior and in preference to any
distribution with respect to Class A Units or Class B Units, at the rate of
$2.00 per Series F Preferred Unit per annum. Such distributions shall be
cumulative from the last date on which any distributions were paid with respect
to Series E Cumulative Redeemable Preferred Interest of ▇▇▇▇▇▇▇ Partnership for
which Series F Preferred Units were exchanged in connection with the merger of
▇▇▇▇▇▇▇ Partnership with and into the
191
Partnership and shall be payable quarterly in arrears on the last day of March,
June, September, and December or, if not a business day, the next succeeding
business day (each, a "Distribution Payment Date"). Any distribution payable on
Series F Preferred Units for any partial distribution period will be computed on
the basis of a 360-day year consisting of twelve 30-day months. Distributions
will be payable to Series F Preferred Unitholders at the close of business on
the Partnership Record Date, which shall be on such date designated by the
General Partner for the payment of distributions (each, a "Distribution Record
Date").
(b) Distributions on Series F Preferred Units will accrue
whether or not the Partnership has Available Cash, whether or not there are
funds legally available for the payment of such distributions and whether or not
such distributions are declared. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Series F Preferred Units which may be in arrears. Holders of the Series F
Preferred Units will not be entitled to distributions in excess of the full
cumulative distributions as described above.
(c) If any Series F Preferred Units are outstanding, no
distributions shall be declared or paid or set apart for payment on any
Partnership Unit, as to distributions, on a parity with or junior to Series F
Preferred Units for any period unless full cumulative distributions have been or
contemporaneously are paid or declared and a sum sufficient for the payment
thereof set apart for such payments on Series F Preferred Units for all past
distribution periods and the then current distribution period. When
distributions are not paid in full (or a sum sufficient for such full payment is
not set apart) upon the Series F Preferred Units and the Partnership Units
ranking on parity as to distributions with Series F Preferred Units, all
distributions declared upon Series F Preferred Units and any other series of
Partnership Units parity as to distributions with Series F Preferred Units shall
be declared pro rata so that the amount of distributions declared per Series F
Preferred Units and such other Partnership Units shall in all cases bear to each
other the same ratio that accrued distributions per share on Series F Preferred
Units and such other Partnership Units bear to each other.
(d) Except as provided in Section 3(c), unless full
cumulative distributions on Series F Preferred Units have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past distribution periods and the
then current distribution period, no distributions (other than in Class A Units
or other Partnership Units ranking junior to Series F Preferred Units as to
distributions and amounts upon liquidation) shall be declared or paid or set
aside for payment or other distribution shall be declared or made upon the Class
A Units, Class B Units, Series A Preferred Units, Series B Preferred Units,
Series C Preferred Units, Series D Preferred Units and Series E Preferred Units
or any other Partnership Units ranking junior to or on a parity with Series F
Preferred Units as to distributions or upon liquidation, nor shall any Class A
Units, Class B Units, Series A Preferred Units, Series B Preferred Units, Series
C Preferred Units, Series D Preferred Units and Series E Preferred
Attachment F-2
192
Units, or any other Partnership Units ranking junior to or on a parity with
Series F Preferred Units as to distributions or amounts upon liquidation be
redeemed by the Partnership (except by conversion into or exchange for other
Partnership Units ranking junior to Series F Preferred Units as to distributions
and amounts upon liquidation).
(e) Any distribution payment made on Series F Preferred
Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to Series F Preferred Units which remains payable.
H. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among the holders of Series F Preferred Units in
accordance with Article VI of the Agreement.
I. Liquidation Preference.
(a) Subject to the rights of series of Preferred Units which
may from time to time come into existence, upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Partnership, then,
before any distribution or payment shall be made to the holders of any Class A
Units, Class B Units, or any other class or series of Partnership ranking junior
to Series F Preferred Units in the distribution of assets upon any liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of
Series F Preferred Units shall be entitled to receive out of assets of the
Partnership legally available for distribution to limited partners, liquidation
distributions in the amount of the liquidation preference of $25.00 per share,
plus an amount equal to all distributions accrued and unpaid thereon. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Series F Preferred Units will have no right or claim to
any of the remaining assets of the Partnership. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Partnership, the available assets of the Partnership are insufficient to
pay the amount of the liquidation distributions on all outstanding Series F
Preferred Units and the corresponding amounts payable on all Partnership Units
ranking on a parity with Series F Preferred Units in the distribution of assets
upon any liquidation, dissolution or winding up of the affairs of the
Partnership ("Parity Units"), then the holders of Series F Preferred Units and
Parity Units shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
(b) For the purposes hereof, neither a consolidation or
merger of the Partnership with or into any other partnership, limited liability
company, corporation or any other entity, nor a merger of any other partnership,
limited liability company, corporation or any other entity with or into the
Partnership, nor a sale or transfer of all or any part of the Partnership assets
for cash or securities shall be considered a liquidation, dissolution or winding
up of the Partnership.
Attachment F-3
193
F. Redemption
(a) Series F Preferred Units are not redeemable prior to
June 4, 2003. On and after June 4, 2003, the General Partner may redeem
outstanding Series F Preferred Units, in whole or in part, at any time or from
time to time, for cash at a redemption price of $25.00 per unit, plus an amount
equal to all distributions accrued and unpaid thereon to the date fixed for
redemption, without interest. The redemption price of Series F Preferred Units
(other than the portion thereof consisting of accrued and unpaid distributions)
is payable solely out of proceeds (without giving effect to any temporary use of
such proceeds) from the contributions with respect to other Partnership Units,
which may include Class A Units, Class B Units, Preferred Units, or other
ownership interests in the Partnership however designated (other than debt
securities converted into or exchangeable for Partnership Units), and any
rights, warrants or options to purchase any thereof. If fewer than all of the
outstanding Series F Preferred Units are to be redeemed, the number of units to
be redeemed will be determined by the General Partner and such units may be
redeemed pro rata from the holders of such units in proportion to the number of
such units held by such holders (with adjustments to avoid redemption of
fractional units) or by lot in a manner determined by the General Partner.
(b) Unless full cumulative distributions on all Series F
Preferred Units and Parity Units shall have been or contemporaneously are paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods and the then current distribution period, no
Series F Preferred Units or Parity Units shall be redeemed unless all
outstanding Series F Preferred Units and Parity Units are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Series F Preferred Units or Parity Units pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
Series F Preferred Units or Parity Units, as the case may be. Furthermore,
unless full cumulative distributions on all outstanding Series F Preferred Units
and Parity Units have been or contemporaneously are paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period, the Partnership
shall not purchase or otherwise acquire directly or indirectly any Series F
Preferred Units or Parity Units (except by conversion into or exchange for
Partnership Units ranking junior to Series F Preferred Units and Parity Units as
to distributions and amounts upon liquidation).
(c) The General Partner shall, in its sole discretion,
determine the form and content of a notice of redemption. If notice of
redemption of any Series F Preferred Units has been given and if the funds
necessary for such redemption have been set aside by the Partnership in trust
for the benefit of the holders of Series F Preferred Units so called for
redemption, then from and after the redemption date, distributions will cease to
accrue on such Series F Preferred Units, such Series F Preferred Units shall no
longer be deemed outstanding and all rights of the holders of such units will
terminate, except the right to receive the redemption price.
Attachment F-4
194
(d) The holders of Series F Preferred Units at the close of
business on a Distribution Record Date will be entitled to receive the
distribution payable with respect to such Series F Preferred Units on the
corresponding Distribution Payment Date notwithstanding the redemption thereof
between such Distribution Record Date and the corresponding Distribution Payment
Date or the Partnership's default in the payment of the distribution due. Except
as provided above, the Partnership will make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series F Preferred Units which have
been called for redemption.
F. Status of Redeemed Series F Preferred Units.
In the event any Series F Preferred Units shall be redeemed
pursuant hereto, the units so redeemed shall revert to the status of authorized
but unissued Preferred Units available for future issuance and reclassification
by the General Partner.
G. Value.
For purposes of the definition of Deemed Value of Partnership
Interest, the Value on any date of the Series F Preferred Units shall be the
Liquidation Preference of such Series F Preferred Unit.
H. Voting Rights.
The holders of Series F Preferred Units shall have no voting
rights whatsoever, except for any voting rights to which they may be entitled
under the laws of the State of Delaware.
Attachment F-5