Exhibit 10.1
XXXXXXX PACIFIC OPERATING PARTNERSHIP, L.P.
Third Amendment to the Agreement of Limited Partnership of
Xxxxxxx Pacific Operating Partnership, L.P.
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This Third Amendment to the Agreement of Limited Partnership of Xxxxxxx
Pacific Operating Partnership, L.P. dated as of May 11, 1998 (this "Third
Amendment") amends the Agreement of Limited Partnership of Xxxxxxx Pacific
Operating Partnership, L.P., dated as of November 14, 1997, as heretofore
amended, by and among Xxxxxxx Pacific Properties, Inc., Xxxxxxx Pacific
Operating Partnership, L.P. and the Contributors, Existing Partners and other
entities that are signatories thereto (the "Partnership Agreement").
Capitalized terms not otherwise defined in this Third Amendment shall have
the meanings set forth in the Partnership Agreement.
WHEREAS, Section 14.1.B grants the General Partner power, without the
consent of the Limited Partners, provided that such amendment does not adversely
affect the Limited Partners in any material respect, to amend the Partnership
Agreement; and
WHEREAS, the General Partner has determined that the amendments set forth
in this Third Amendment are in the interests of the Partnership, are not
inconsistent with law or with the provisions of the Partnership Agreement, and
do not adversely affect any existing Partner;
NOW, THEREFORE, the Partnership Agreement is hereby amended as follows:
I. ACCELERATION OF COMMENCEMENT OF REDEMPTION RIGHT.
The first sentence of Section 8.6.A(i) is hereby deleted and replaced with
the following sentence:
"Subject to Section 8.6.C, at (A) any time after the first June 30 or the
first December 31 that is or follows the first anniversary of the date on
which a Partnership Unit is issued to a Limited Partner pursuant to Article
IV hereof (regardless of whether such Partnership Unit is designated upon
issuance as a Class A Unit, a Class B Unit or otherwise), or (B) any time
after such earlier date as the General Partner in its sole and absolute
discretion, designates with respect to any or all Class A Units then
outstanding, or (C) any time after such other date as may be provided in an
Applicable Contribution Agreement, the holder of such 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."
II. PROVISIONS RELATING TO CONSENTING RECOURSE DEBT LIMITED PARTNERS.
1. The following definitions are added to the defined terms set
forth in Article I of the Partnership Agreement:
"Consenting Recourse Debt Limited Partner" means a Limited Partner who
has consented to an allocation of loss pursuant to Section 6.1.B with
respect to a portion of the Partnership's recourse debt and a corresponding
obligation to contribute to the capital of the Partnership pursuant to
Section 13.3 in the event an allocation of loss with respect to such
recourse debt is made and certain other conditions as specified in Section
13.3 are met.
"Modified Adjusted Capital Account Balance" means the balance of the
Capital Account maintained for each Partner as of the end of each
Partnership Year (i) increased by any amounts which such Partner 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).
2. Section 6.1.B is deleted and replaced by the following Section
6.1.B:
B. NET LOSSES. After giving effect to the special allocations set
forth in Section 1 of EXHIBIT C attached hereto, Net Losses shall be
allocated (i) first, to the Partners in the same ratio and reverse order as
Net Income was allocated to each such Partner pursuant to Section
6.1.(A)(ii) and (iii) for all fiscal years until the excess of the
aggregate amount of Net Income previously allocated to each such Partner
pursuant to such provisions of Section 6.1.A over the cumulative amount of
distributions to each such Partner pursuant to Section 5.1 equals the
aggregate amount of Net Loss allocated to such Partners pursuant to this
Section 6.1.B(i); (ii) second, to the Limited Partners, pro rata, in
proportion to their Modified Adjusted Capital Account Balances until their
Modified Adjusted Capital Account Balance has been reduced to zero; (iii)
third, to the General Partner until its Modified Adjusted Capital Account
Balance has been reduced to zero; provided however, for purposes of this
Section 6.1.B(ii) and (iii) each such Partner's Modified Adjusted Capital
Account Balance shall not include the portion of such Modified Adjusted
Capital Account Balance attributable to Capital Contributions made by such
Partner, if any, with respect to Partnership Interests that are entitled to
any preference in distribution; (iv) fourth, to the Partners who are
holders of Partnership Interests that are entitled to a preference in
distribution, pro rata, in proportion to the portion of their Modified
Adjusted Capital Account Balance attributable to Capital Contributions with
respect to such Partnership Interests,
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until the aggregate amount of Net Loss allocated to such Partners pursuant
to this Section 6.1.B(iv) has reduced such portion of their Modified
Adjusted Capital Account Balance to zero; (v) fifth, to the General Partner
until the General Partner's negative Modified Adjusted Capital Account
Balance is equal to the excess, if any, of the aggregate recourse
liabilities of the Partnership over the aggregate amount of recourse debt
(the "Recourse Debt Amount") set forth on a recourse debt level schedule
("Recourse Debt Level Schedule") to be maintained and appropriately amended
from time to time showing (A) the name of each Consenting Recourse Debt
Limited Partner, (B) the maximum amount of recourse debt with respect to
which each Consenting Recourse Debt Limited Partner has consented to
contribute to the capital of the Partnership under the circumstances set
forth in Section 13.3 and (C) the percentage ("Limited Partner Recourse
Debt Percentage") with respect to each Consenting Recourse Debt Limited
Partner of the aggregate of the amounts referred to in the immediately
preceding clause (B) with respect to all such Consenting Recourse Debt
Limited Partners; (vi) to the Consenting Recourse Debt Limited Partners
listed on the Recourse Debt Level Schedule, in proportion to each such
Consenting Recourse Debt Limited Partner's Limited Partner Recourse Debt
Percentage, until the aggregate amount allocated pursuant to this 6.1.B(vi)
is equal to the Recourse Debt Amount; and (vii) thereafter, all Net Losses
in excess of the limitations set forth in this Section 6.1.B shall be
allocated to the General Partner.
3. Section 13.3 is deleted and replaced with the following Section
13.3:
Section 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to 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).
If the General Partner has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions and allocations
for all fiscal 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 Treasury Regulations Section
1.704-1(b)(2)(ii)(b)(3)). If, at such time as (i) the Partnership is
liquidated or (ii) a Consenting Recourse Debt Limited Partner's interest in
the Partnership is fully liquidated, transferred, terminated or redeemed
(each such event set forth in (i) or (ii) a "Determination Event"), any
Consenting Recourse Debt Limited Partner with respect to which a
Determination Event has occurred has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and
allocations for all Fiscal Years or portions thereof, including the year
during which such Determination Event occurs), each such Consenting
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Recourse Debt Limited Partner shall be obligated (the "Obligation") to
contribute cash to the capital of the Partnership in an amount equal to the
lesser of (i) the amount required to increase its Capital Account as of
such date to zero, determined by applying the provisions of Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) so as to adjust (for this purpose)
each such Partner's Capital Account balance for the full amount of such
Partner's unrealized gains and losses on a fair market value basis,
(provided, however, such adjustment shall be made without regard to any
value that may be deemed to exist with respect to any redemption rights
under Section 8.6) or (ii) such Consenting Recourse Debt Limited Partner's
Limited Partner Recourse Debt Percentage multiplied by the Recourse Debt
Amount (each as defined in Section 6.1.B). Any such contribution required
of a Partner hereunder shall be made on or before the later of (i) the end
of the Partnership Year in which such Determination Event occurs or (ii)
the ninetieth (90th) day following the date of such Determination Event
occurs. The amount of the Obligation, if any, shall be determined by the
General Partner and confirmed by the Consenting Recourse Debt Limited
Partners with respect to which a Determination Event has occurred. In the
event the parties cannot agree on the amount of the Obligation, then an
independent appraiser shall be utilized to determine the value of the
Partnership's assets for the purpose of measuring the Partnership's
solvency, the cost of which appraisal shall be borne by such Consenting
Recourse Debt Limited Partners. Notwithstanding any provision hereof to
the contrary, all amounts so contributed by a Partner to the capital of the
Partnership shall, upon the liquidation of the Partnership under Article
XIII, be paid only to any then creditors of the Partnership, including
Partners that are Partnership creditors (in the order provided in Section
13.2 hereof), and shall not be distributed to the other Partners then
having positive balances in their respective Capital Accounts, including
holders of any Partnership Interest entitled to any preference in
distribution.
After the death of a Consenting Recourse Debt Limited Partner, the
executor of the estate of such Consenting Recourse Debt Limited Partner may
elect to reduce (or eliminate) the deficit Capital Account restoration
obligation of such Consenting Recourse Debt Limited Partner pursuant to
this Section 13.3. Such election may be made by such executor by
delivering to the General Partner within two hundred seventy (270) days of
the death of such Consenting Recourse Debt Limited Partner a written notice
setting forth the maximum deficit balance in his Capital Account that such
executor agrees 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 his Capital Account is negative at such
time), then such Consenting Recourse Debt Limited Partner's estate (and the
beneficiaries thereof who receive distribution of Partnership Interests
therefrom) shall be deemed to have a deficit Capital Account restoration
obligation as set forth pursuant to the terms of this Section 13.3. Any
Consenting Recourse Debt Limited Partner which is itself a partnership may
likewise elect, after the death of its respective partner,
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to reduce (or eliminate) its deficit Capital Account restoration obligation
pursuant to this Section 13.3 by delivering a similar written notice to the
General Partner within the time period specified herein. Any such
partnership that does not make any such timely election shall similarly be
deemed to have a deficit Capital Account restoration obligation as set
forth pursuant to the terms of this Section 13.3.
IN WITNESS WHEREOF, this Third Amendment has been executed as of the date
first above written.
XXXXXXX PACIFIC OPERATING
PARTNERSHIP, L.P.
By: Xxxxxxx Pacific Properties, Inc.,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Chief Financial Officer
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