EXHIBIT 10-A
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(Carlyle-XIII)
Notice to Purchase Limited Partnership Interest
of 237/1290 Upper Tier Associates, L.P.
in 1290 Partners, L.P.
March 2, 2001
Reference is made to Section 12.2 of the Limited Partnership
Agreement, dated as of November 22, 1999 (the "Partnership Agreement"), of
1290 Partners, L.P. (the "Partnership"). Capitalized terms not defined
herein shall have the meaning ascribed to such terms in the Partnership
Agreement.
Pursuant to Section 12.2 of the Partnership Agreement, 1290 GP Corp.,
the general partner of the Partnership (the "General Partner"), hereby
gives notice to 237/1290 Upper Tier Associates, L.P. (the "Limited
Partner") of its intention to cause its designee (Metropolis Realty Trust,
Inc,) to purchase the limited partnership interest (the "Interest") of the
Limited Partner in the Partnership on Friday, March 23, 2001 ("Closing
Date").
Section 12.2 of the Partnership Agreement provides that the
consideration to be paid by the General Partner for the Interest shall be
an amount equal to the greater of (x) the amount that would be distributed
to the Limited Partner (the "Limited Partner Distribution Amount") upon the
winding up of the Partnership in accordance with Section 14.2 of the
Agreement (after repaying all debt encumbering the Property) if the
Property was sold (and all proceeds therefrom were distributed to the
partners of the Partnership in accordance with such section) for a cash
amount equal to the quotient of (A) the product of two times the Property's
net operating income for the period of January 1, 2000 through June 30,
2000 and (B) 0.12, and (y) $1,414,141.00.
Attached hereto as EXHIBIT A is a calculation of the Limited Partner
Distribution Amount reviewed as to accuracy by Xxxxxxxx & Touche LLP. Since
the Limited Partner Distribution Amount is less than $1.414,141.00, in
accordance with Section 12.2 of the Partnership Agreement, the General
Partner shall pay to the Limited Partner on the Closing Date in
consideration for the Interest $1,414,141.00 by wire transfer of
immediately available funds to an account designated by the Limited
Partner. PLEASE PROVIDE US WITH THE ACCOUNT NUMBER AND OTHER RELEVANT WIRE
TRANSFER INFORMATION.
On the Closing Date, the General Partner will also cause to be
released to the Limited Partner any collateral held by the General Partner
as security for the Limited Partner's obligations under the Partnership
Agreement by LaSalle Bank.
The form of assignment pursuant to which the Limited Partner shall
transfer the Interest to the General Partner's designee is attached hereto
for your reference as EXHIBIT B.
1290 GP Corp.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Vice President
EXHIBIT A
INDEPENDENT ACCOUNT'S REPORT ON APPLYING
AGREED-UPON PROCEDURES
To the Board of Directors
1290 GP Corp.
c/o Capital Trust, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
We have performed the procedures enumerated below, which were agreed to by
1290 GP Corp. (the "Company"), the general partner of the 1290 Partners,
L.P. (the "Partnership"), solely to assist you with respect to the
determination of the purchase price (the "Purchase Price Amount") for the
limited partnership interests 237/1290 Upper Tier Associates, L.P. (the
"Limited Partner") in the Partnership. This engagement to apply agreed-upon
procedures was performed in accordance with standards established by the
American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of the specified parties.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has
been requested or for any other purpose.
The procedures that we performed and our findings are as follows:
1. We obtained a copy of the 1290 Partners, L.P. amended and restated
partnership agreement (the "Agreement") dated November 22, 1999.
2. We read section 12.2A of the Agreement regarding the Company's
purchase right. The Agreement states that "the General Partner shall have
the continuing right (the "Purchase Right"), to acquire or cause its
designee to acquire the partnership interest of the Limited Partner, free
and clear of any liens, restrictions and encumbrances, for an amount (the
"Purchase Price Amount") equal to the greater of (x) the amount that would
be distributed to the Limited Partner pursuant to Section 14.2 of the
Agreement (after repaying all debt encumbering the Property) if the
Property were sold (and all proceeds therefrom were distributed to the
Partners in accordance with such section) for a cash amount equal to the
quotient of (A) the product of two times the Property's Net Operating
Income for the period of January 1, 2000 through June 30, 2000 and (B) 0.12
(the "Formula Price"), and (y) $1,414,141."
3. We read section 2 of the Agreement regarding the definition of Net
Operating Income. The Agreement states that "Net Operating Income for any
period means the amount equal to (a) the Partnership's GAAP Net Income for
such fiscal year, plus, (b) the sum, without duplication (and only to the
extent such amounts are deducted from revenues in determining such GAAP net
income), of (i) the interest expense for such period of the Partnership,
and (ii) the real estate related depreciation and amortization expenses for
such period of the Partnership in respect of the Property."
4. We read section 14.2 and Exhibit A of the Agreement regarding the
allocation of distributions in connection with a capital transaction or
liquidation of the Partnership. The Agreement states that "Allocation of
Net Income or Net Loss (or items thereof) in connection with a capital
transaction or liquidation of the Partnership shall first be made so that,
to the extent possible, the General Partner's Capital Account balance is
$1, the Capital Account balance of Metropolis Realty Trust Inc.
("Metropolis") is $274,375,365 and the Limited Partner's Capital Account is
equal to $100,000, and the remainder of such net income or net loss (or
item thereof) shall be allocated to the Partners in a manner that result in
the capital account of each partner being equal to the distribution to
which each such partner is entitled pursuant to paragraph 4 of this Exhibit
A."
5. We obtained a copy of the Partnership's financial statements for the
six months ended June 30, 2000.
6. We obtained a copy of the Schedule of Purchase Price Amount
Calculation (the "Schedule") from the Company. (Attached as Appendix A.)
7. We agreed the elements of the Schedule to the provisions in section
12.2A of the Agreement regarding the Company's Purchase Right and noted no
differences.
8. We agreed the elements of the Net Operating Income calculation used
in the Schedule to the definition set forth in section 2 of the Agreement
and noted no differences.
9. We compared financial information used in the Schedule to the
Partnership's financial statements for the six months ended June 30, 2000,
including GAAP net income, interest expense, depreciation and amortization
expenses and mortgage payable and noted no differences.
10. We recalculated the net operating income, the hypothetical sale price
and the amount distributable in the Schedule and noted no differences.
11. We agreed the elements of the limited partner allocation percentage
set forth in the Schedule to the provisions in section 14.2 and Exhibit A
of the Agreement and noted no differences.
12. We recalculated the limited partner allocation percentage in the
Schedule and noted no differences.
13. We recalculated the Formula Price in the Schedule and noted no
differences.
14. We recalculated the Purchase Price Amount by comparing the Formula
Price to $1,414,141 and noted no differences.
We were not engaged to, and did not; perform an audit, the objective of
which would be the expression of an opinion on the specified elements,
accounts, or items. Accordingly, we do not express such an opinion. Had
we performed additional procedures, other matters might have come to our
attention that would have been reported to you.
This report is intended solely for the information and use of the specified
parties listed above and is not intended to be and should not be used by
anyone other than these specified parties.
February 19, 2001
APPENDIX A
Schedule of Purchase Price Amount Calculation
Calculation:
GAAP net income for 6 months ended June 30, 2000 $ 3,304,698
Add back:
Interest expense $ 7,921,075
Depreciation and amortization expenses $ 18,211,548
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Net operating income $ 29,437,321
Multiplied by 2 X 2
Divided by 0.12 / 0.12
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1290 hypothetical sales price $490,622,017
Less: Mortgage payable as of June 30, 2000 $425,000,000
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Amount distributable $ 65,622,017
Limited partner allocation percentage 0.04%
Formula Price $ 23,908
Since the Formula Price is less than $1,414,141, the Purchase Price Amount
to be paid to the Limited Partner for its interest in the Partnership will
be $1,414,141.
EXHIBIT B
ASSIGNMENT
This ASSIGNMENT is made this 23rd day of March, 2001, from
237/1290 Upper Tier Associates, L.P. ("Assignor") to Metropolis Realty
Trust, Inc. ("Assignee").
The parties hereto have entered into this Assignment pursuant
to Section 12.2 of the Limited Partnership Agreement, dated as of
November 22, 1999 (the "Partnership Agreement"), of 1290 Partners, L.P., a
Delaware limited partnership (the "Partnership").
Assignor, for $1,414,141.00, the receipt and sufficiency of
which is hereby acknowledged, hereby grants, sells, assigns, transfers and
conveys, free and clear of any and all liens, claims, encumbrances and
pledges, to Assignee all of Assignor's right, title and interest in and to
its limited partnership interest (the "Interest") in the Partnership
including, without limitation, all rights to receive distributions of
money, profits and other assets of or relating to the Partnership,
presently existing or hereafter arising or accruing, TO HAVE AND TO HOLD
the same unto Assignee and its successors and assigns forever. From and
after the date hereof, Assignor shall have no rights or interest whatsoever
in the Interest.
Assignee hereby accepts the assignment of the Interest and
assumes and agrees to be bound by and perform its obligations under the
Partnership Agreement applicable to the Interest with respect to
obligations arising hereafter.
IN WITNESS WHEREOF, the undersigned have caused this instrument
to be duly executed as of the date first above made.
ASSIGNOR:
237/1290 UPPER TIER ASSOCIATES, L.P.
By: 237/1290 Upper Tier GP Corp.,
its general partner
By:
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Name:
Title:
ASSIGNEE:
METROPOLIS REALTY TRUST, INC.
By:
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Name:
Title:
