AGREEMENT OF LIMITED PARTNERSHIP
OF
237/1290 LOWER TIER ASSOCIATES, L.P.
Dated as of October 10, 1996
11764.0001 340937.14
TABLE OF CONTENTS
Page
ARTICLE 1 EFFECTIVENESS OF AGREEMENT................................ 1
ARTICLE 2 DEFINED TERMS............................................. 1
ARTICLE 3 ORGANIZATIONAL MATTERS.................................... 16
Section 3.1 Formation................................................. 16
Section 3.2 Name...................................................... 17
Section 3.3 Registered Office and Agent; Principal Office............. 17
Section 3.4 Power of Attorney......................................... 17
Section 3.5 Term...................................................... 19
ARTICLE 4 PURPOSE................................................... 19
Section 4.1 Purpose and Business...................................... 19
Section 4.2 Powers.................................................... 19
ARTICLE 5 CAPITAL CONTRIBUTIONS..................................... 20
Section 5.1 Capital Contributions of the Partners..................... 20
Section 5.2 Additional Funds; Restrictions on General Partner......... 20
Section 5.3 Issuance of Additional Partnership Interests;
Admission of Additional Limited Partners................ 21
Section 5.4 No Third Party Beneficiary................................ 21
Section 5.5 No Interest; No Return.................................... 21
Section 5.6 No Preemptive Rights...................................... 21
ARTICLE 6 DISTRIBUTIONS............................................. 22
ARTICLE 7 ALLOCATIONS............................................... 23
ARTICLE 8 MANAGEMENT AND OPERATIONS OF BUSINESS..................... 23
Section 8.1 Management................................................ 23
Section 8.2 Certificate of Limited Partnership........................ 28
Section 8.3 Reimbursement of the General Partner...................... 28
Section 8.4 Outside Activities of the General Partner................. 28
Section 8.5 Contracts with Affiliates................................. 29
Section 8.6 Indemnification........................................... 29
Section 8.7 Liability of the General Partner.......................... 31
Section 8.8 Other Matters Concerning the General Partner.............. 32
Section 8.9 Title to Partnership Assets............................... 32
Section 8.10 Reliance by Third Parties................................. 33
11764.0001 340937.14
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Page
ARTICLE 9 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................33
Section 9.1 Limitation of Liability...................................33
Section 9.2 Management of Business....................................34
Section 9.3 Outside Activities of Limited Partners....................34
Section 9.4 Return of Capital.........................................34
Section 9.5 Rights of Limited Partners Relating to the
Partnership..............................................35
ARTICLE 10 BOOKS, RECORDS, ACCOUNTING AND REPORTS....................36
Section 10.1 Records and Accounting....................................36
Section 10.2 Fiscal Year...............................................36
Section 10.3 Reports...................................................36
ARTICLE 11 TAX MATTERS...............................................37
Section 11.1 Preparation of Tax Returns................................37
Section 11.2 Tax Elections.............................................37
Section 11.3 Tax Matters Partner.......................................37
Section 11.4 Organizational Expenses...................................38
Section 11.5 Withholding...............................................38
ARTICLE 12 TRANSFERS AND WITHDRAWALS.................................38
Section 12.1 Transfer..................................................38
Section 12.2 General Partner's Purchase Right; Limited Partner's
Put Rights...............................................39
Section 12.3 Transfer of the General Partner Interest..................41
Section 12.4 Limited Partners' Rights to Transfer......................41
Section 12.5 Substituted Limited Partners..............................41
Section 12.6 Intentionally Omitted.....................................42
Section 12.7 General Provisions........................................42
ARTICLE 13 ADMISSION OF PARTNERS.....................................43
Section 13.1 Admission of Successor General Partner....................43
Section 13.2 Admission of Additional Limited Partners..................43
Section 13.3 Amendment of Agreement and Certificate of Limited
Partnership..............................................44
ARTICLE 14 DISSOLUTION, LIQUIDATION AND TERMINATION..................44
Section 14.1 Dissolution...............................................44
Section 14.2 Winding Up................................................45
Section 14.3 No Obligation to Contribute Deficit.......................47
Section 14.4 Rights of Limited Partners................................47
Section 14.5 Notice of Dissolution.....................................47
Section 14.6 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.......................47
Section 14.7 Reasonable Time for Winding-Up............................47
11764.0001 340937.14
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Section 14.8 Waiver of Partition.......................................48
ARTICLE 15 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS..............48
Section 15.1 Amendments................................................48
Section 15.2 Meetings of the Partners..................................49
ARTICLE 16 GENERAL PROVISIONS........................................50
Section 16.1 Addresses and Notice......................................50
Section 16.2 Titles and Captions.......................................50
Section 16.3 Pronouns and Plurals......................................50
Section 16.4 Further Action............................................50
Section 16.5 Binding Effect............................................51
Section 16.6 Creditors.................................................51
Section 16.7 Waiver....................................................51
Section 16.8 Counterparts..............................................51
Section 16.9 Applicable Law............................................51
Section 16.10 Invalidity of Provisions..................................51
Section 16.11 Entire Agreement..........................................52
EXHIBITS
Exhibit A -Allocations
Exhibit B -Partners' Contributions and Partnership Interests
Exhibit C -Indemnity Agreement
11764.0001 340937.14
iii
AGREEMENT OF LIMITED PARTNERSHIP
OF
237/1290 LOWER TIER ASSOCIATES
THIS AGREEMENT OF LIMITED PARTNERSHIP OF 237/1290 LOWER TIER
ASSOCIATES, L.P. (the "Partnership"), dated as of October 10, 1996 (this
"Agreement"), is entered into by and between Metropolis Realty Trust, Inc., a
Maryland corporation, as general partner (the "General Partner") and 237/1290
Upper Tier Associates, L.P., a Delaware limited partnership, as limited partner
(the "Limited Partner").
WHEREAS, the parties hereto desire to form a Delaware limited
partnership under the Revised Uniform Limited Partnership Act of the State of
Delaware and in accordance with the terms and conditions of the Joint Plan of
Reorganization of 000 Xxxx Xxxxxx Associates, L.L.C. and 1290 Associates, L.L.C.
(collectively, the "Debtors"), filed under title 11 of the United States Code,
11 U.S.C. Sections 101 et seq. (the "Plan"); and
WHEREAS, the General Partner and the Partnership are parties
to the GP Contribution Agreement (as hereinafter defined) pursuant to which,
among other things, the General Partner will contribute to the Partnership the
Contributed Debt (as hereinafter defined); and
WHEREAS, the Limited Partner and the Partnership are parties
to the LP Contribution Agreements (as hereinafter defined) pursuant to which,
among other things, the Limited Partner will contribute to the Partnership the
Initial LP Contributed Property (as hereinafter defined).
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties do hereby agree as follows:
ARTICLE 1
EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective on the Effective Date
(as hereinafter defined).
ARTICLE 2
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.
11764.0001 340937.14
"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 5.3 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means with respect to any
Partner, the negative balance, if any, in such Partner's Capital Account as of
the end of any relevant fiscal year, determined after giving effect to the
following adjustments:
(a) credit to such Capital Account any portion of such
negative balance which such Partner (i) is treated as obligated to
restore to the Partnership pursuant to the provisions of Section
1.704-1(b)(2)(ii)(c) of the Regulations, or (ii) is deemed to be
obligated to restore to the Partnership pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
"Adjusted GP Contribution" means as of any time such amount is
being determined, the aggregate Capital Contributions made by the General
Partner to the Partnership plus the Preference Amount reduced by the total
distributions previously made to such Partner pursuant to paragraphs 4(a)(ii),
4(b)(ii) and 4(b)(v) of Exhibit A.
"Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of the Properties or the Property Owning Partnership
Interests, (ii) any release, discharge or reduction of non-recourse indebtedness
of the Property Owning Partnerships (other than through payment of scheduled
amortization, actions taken by a secured lender such as application of insurance
proceeds or condemnation awards or the exercise of remedies, or in the case
where the released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with clause (B) below), (iii) any
distribution of Partnership assets (other than distributions of cash and other
distributions by the Partnership and the Property Owning Partnerships, in each
case, in the ordinary course of business), or (iv) any other transaction or
agreement to which any of the Partnership and the Property Owning Partnerships
is a party, if as a result of any such transaction or agreement described in
(i), (ii), (iii), or (iv) above, JMB LP as a partner in the Upper Tier Limited
Partnership would be required to recognize a material amount of taxable income
or gain prior to the Approval Right Termination Date. Adverse Transactions shall
specifically exclude (A) Partnership income derived in the ordinary course of
the Partnership's and the Property Owning Partnerships' business, (B)
non-recourse refinancing of the Properties on commercially reasonable terms in
an aggregate amount equal to not less than the lesser of $325,000,000 or the
amortized balance of the then existing non-recourse financing encumbering the
Properties (utilizing an amortization schedule no shorter than twenty (20)
years), (C) payment of amortization on
11764.0001 340937.14
2
non-recourse financing encumbering the Properties, provided that the outstanding
balance of such financing is not reduced below $325,000,000, in the aggregate,
as such amount would be reduced between the date hereof and the Approval Right
Termination Date assuming such amount is amortized based on a twenty (20) year
amortization schedule and except as otherwise provided in the parenthetical of
clause (ii) above (i.e. actions taken by a secured lender such as application of
insurance proceeds or condemnation awards or the exercise of remedies, or in the
case where released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with clause (B) above), (D) the consummation
of the transactions described in the Plan (i.e., the property transfers and the
issuance of the securities provided therein), (E) a transfer of the Properties
pursuant to an involuntary foreclosure or similar action arising from a default
by the Property Owning Partnerships with respect to their obligations under
their indebtedness, and (F) a transfer of the Properties pursuant to a
consensual foreclosure or similar action (including, without limitation, a deed
in lieu of foreclosure) arising from a default by the Property Owning
Partnerships with respect to their obligations under their indebtedness provided
that in the case of a consensual foreclosure or deed in lieu of foreclosure by
reason of a default under the New Notes (as defined in the Plan) the default is
a bona fide default and the foreclosure or deed in lieu of foreclosure is not a
collusive transaction between the holders of the New Notes and the General
Partner attributable to any commonality of ownership between the beneficial
ownership of the New Notes and the General Partner. As used in clause (F) above,
the term New Notes shall include refinancings in which there is a commonality of
ownership between the holder of such financing and the General Partner similar
to that anticipated with respect to the New Notes.
"Affiliate" means, (a) with respect to any individual Person,
any member of the Immediate Family of such Person or a trust established for the
benefit of such member, or (b) with respect to any Entity, any Person which,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, any such Entity.
"Agreement" means this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.
"Approval Right Termination Date" shall mean the earliest of
(i) January 2, 2001, (ii) the date on which the Upper Tier Limited Partnership
no longer holds any Partnership Interest as a result of the authorized exercise
of the Purchase Right or the Put Right pursuant to Sections 12.2A or 12.2C of
this Agreement or pursuant to such other transaction which does not constitute
an Adverse Transaction, (iii) the date on which the Partnership no longer holds
the Property Owning Partnership Interests pursuant to a transaction which does
not constitute an Adverse Transaction, (iv) the date on which JMB LP no longer
holds any partnership interest in the Upper Tier Limited Partnership, and (v)
the Default Date.
11764.0001 340937.14
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"Assignee" means a Person to whom Limited Partner Interests
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 12.6.
"Asset Management Agreement" means the Asset Management
Agreement, date the date hereof, between the REIT and Xxxxxx Capital Group,
L.P., providing for the overall oversight of the property of the REIT, as same
may be amended, and any substitutions or replacements therefor.
"Available Cash" means, with respect to the applicable period
of measurement (i.e., any period beginning on the first day of the fiscal year,
quarter or other period commencing immediately after the last day of the fiscal
year, quarter or other applicable period for purposes of the prior calculation
of Available Cash for or with respect to which a distribution has been made, and
ending on the last day of the fiscal year, quarter or other applicable period
immediately preceding the date of the calculation) the excess, if any, as of
such date, of (a) the gross cash receipts of the Partnership for such period
from all sources whatsoever, including, without limitation, the following:
(i) all rents, revenues, income and proceeds derived by the
Partnership from its operations, including, without limitation,
distributions received by the Partnership from any Entity in which the
Partnership has an interest; (ii) all proceeds and revenues received by
the Partnership on account of any sales of property of the Partnership
or any Entity in which the Partnership has an interest or as a
refinancing of or payments of principal, interest, costs, fees,
penalties or otherwise on account of any borrowings or loans made by
the Partnership or any Entity in which the Partnership has an interest
or financings or refinancings of any property of the Partnership or any
Entity in which the Partnership has an interest; (iii) the amount of
any insurance proceeds and condemnation awards received by the
Partnership; (iv) all cash capital contributions or loans received by
the Partnership from its Partners; (v) all cash amounts previously
reserved by the Partnership, to the extent such amounts are no longer
needed for the specific purposes for which such amounts were reserved;
and (vi) the proceeds of liquidation of the Partnership's property in
accordance with this Agreement,
over (b) the sum of:
(i) all operating costs and expenses, including costs relating
to tenant improvements, brokerage expenses, taxes and other expenses of
the Properties, of the Partnership and capital expenditures made during
such period (without deduction, however, for any capital expenditures,
charges for Depreciation or other expenses not paid in cash or
expenditures from reserves described in (viii) below) by the
Partnership or any Entity in which the Partnership has an interest;
(ii) all costs and expenses expended or paid during such period in
connection with the sale or other disposition, or financing or
refinancing, of property of the Partnership or any Entity in which the
11764.0001 340937.14
4
Partnership has an interest or the recovery of insurance or
condemnation proceeds; (iii) all fees provided for under this
Agreement, the Property Owning Partnership Agreements, and the Property
Management and Leasing Agreements; (iv) all debt service, including
principal and interest, paid during such period on all indebtedness
(including under any line of credit) of the Partnership or any Entity
in which the Partnership has an interest; (v) all capital
contributions, advances, reimbursements or similar payments made to any
Entity in which the Partnership has an interest; (vi) all loans made by
the Partnership in accordance with the terms of this Agreement; (vii)
all reimbursements to the General Partner or its Affiliates during such
period; and (viii) any new reserves or increases in reserves reasonably
determined by the General Partner to be necessary for working capital,
capital improvements, payments of periodic expenditures, debt service
or other purposes for the Partnership or any Person in which the
Partnership has an interest.
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.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified under title 11 of the United States Code and in effect on the
Confirmation Date.
"Bankruptcy Court" means the District Court of the United
States District Court for the Southern District of New York having jurisdiction
over the Reorganization Cases and, to the extent of having reference under
section 157, title 28, United States Code, the unit of such District Court
constituted under section 151, title 28, United States Code.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure as in effect on the Petition Date.
"Capital Account" means with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
a. to each Partner's Capital Account there shall be credited
(i) such Partner's Capital Contributions, (ii) such Partner's
distributive share of Net Income and any items in the nature of income
or gain which are specially allocated to such Partner pursuant to
Paragraphs 1 and 2 of Exhibit A and (iii) the amount of any Partnership
liabilities assumed by such Partner or which are secured by any asset
distributed to such Partner;
b. to each Partner's Capital Account there shall be debited
(i) the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this
Agreement, (ii) such Partner's distributive share of Net Losses and any
items in the nature of expenses or losses which are specially allocated
to such Partner pursuant to Paragraphs 1 and 2 of Exhibit A and (iii)
the amount of any
11764.0001 340937.14
5
liabilities of such Partner assumed by the Partnership or which are
secured by any asset contributed by such Partner to the Partnership;
and
c. in the event all or a portion of a Partnership Interest is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent it relates to the transferred Partnership Interest.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Sections 1.704-1(b) and 1.704-2 of the Regulations, and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall reasonably 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 assets or which are
assumed by the Partnership, the General Partner or any Limited Partner) are
computed in order to comply with such Regulations, the General Partner may make
such modification; provided that it does not have an adverse effect on the
amounts distributable to any Partner at any time.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Gross Asset Value of property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Article 5
hereof.
"Capital Transaction" shall mean any one of the following
events: (i) any sale, transfer or other disposition of a Property or a Property
Owning Partnership Interest, (ii) any loan made to the Partnership or a Property
Owning Partnership, (iii) the refinancing of indebtedness of the Property Owning
Partnerships, (iv) the condemnation of all or any part of a Property or (v) any
insurance recovery relating to the Property Owning Partnerships (other than
rental interruption insurance).
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed on September 30, 1996 in the office of the
Delaware Secretary of State, as amended from time to time in accordance with the
terms hereof and the Act.
"Charter" means the Articles of Incorporation of Metropolis
Realty Trust, Inc., as amended and restated from time to time.
"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.
"Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
11764.0001 340937.14
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"Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 15.2 hereof.
"Contributed Debt" means the undivided $300,000,000 portion of
the principal amount of the Existing Notes contributed by the General Partner to
the Partnership pursuant to the GP Contribution Agreement.
"Contributed Property" means each property or other asset,
other than the Initial LP Contributed Property and the Contributed Debt, in such
form as may be permitted by the Act, contributed or deemed contributed to the
Partnership by any Partner (including deemed contributions to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
"Default Date" has the meaning set forth in Section 12.2.
"Depreciation" means, with respect to any asset of the
Partnership (or, with respect to assets of the Property Owning Partnerships, the
Partnership's share) for any fiscal year or other period, the depreciation,
depletion, amortization or other cost recovery deduction, as the case may be,
allowed or allowable for federal income tax purposes in respect of such asset
for such fiscal year or other period; provided, however, that except as
otherwise provided in Section 1.704-2 of the Regulations, if there is a
difference between the Gross Asset Value (including the Gross Asset Value, as
increased pursuant to paragraph 1 of the definition of Gross Asset Value) and
the adjusted tax basis of such asset at the beginning of such fiscal year or
other period, Depreciation for such asset shall be an amount that bears the same
ratio to the beginning Gross Asset Value of such asset as the federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
fiscal year or other period bears to the beginning adjusted tax basis of such
asset; provided, further, that if the federal income tax depreciation,
depletion, amortization or other cost recovery deduction for such asset for such
fiscal year or other period is zero, Depreciation of such asset shall be
determined with reference to the beginning Gross Asset Value of such asset using
any reasonable method selected by the General Partner.
"Effective Date" means the eleventh day (calculated under Rule
9006 of the Bankruptcy Rules) after the Confirmation Date if (x) no stay is then
in effect and (y) each of the conditions precedent to the occurrence of the
Effective Date contained in the Plan have been satisfied or waived.
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, real estate investment trust,
limited liability company, cooperative or association.
11764.0001 340937.14
7
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Existing Notes" means those certain notes issued and
outstanding under the Indenture.
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"GAAP Net Income" for any period means the net income (or
loss) of the Property Owning Partnerships for such period, determined in
accordance with GAAP, consistently applied, excluding (without duplication) to
the extent included therein (a) all extraordinary gains, including, without
limitation, any extraordinary gains arising from, or in connection with a
Capital Transaction, and (b) non-recurring gains. GAAP Net Income with respect
to the Properties shall be determined in good faith by the General Partner and
such determination shall be final and binding on all parties hereto.
"General Partner" means Metropolis Realty Trust, Inc., a
Maryland corporation, in its capacity as the general partner of the Partnership,
or its successors as general partner of the Partnership and, without limitation,
all other Persons being or acting as a general partner of the Partnership,
individually and collectively.
"General Partner Interest" means a Partnership Interest held
by the General Partner, in its capacity as general partner.
"GP Contribution Agreement" means the Debt Contribution
Agreement, dated as of the Effective Date, between the General Partner, the
Partnership and the Property Owning Partnerships relating to the Contributed
Debt.
"Gross Asset Value" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
1. the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, without reduction for liabilities, as determined by the
contributing Partner and the Partnership on the date of contribution
thereof;
2. if the General Partner reasonably determines that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners, the Gross Asset Values of all Partnership
assets shall be adjusted in accordance with Sections
1.704-1(b)(2)(iv)(f) and (g) of the Regulations to equal their
respective gross fair market values, without reduction for liabilities,
as reasonably determined by the General Partner, as of the following
times:
11764.0001 340937.14
8
a. a Capital Contribution (other than a de minimis
Capital Contribution) to the Partnership by a new or existing
Partner as consideration for a Partnership Interest; or
b. the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership assets as
consideration for the repurchase of a Partnership Interest; or
c. the liquidation of the Partnership within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations;
3. the Gross Asset Values of Partnership assets distributed to
any Partner shall be the gross fair market values of such assets
without reduction for liabilities, as reasonably determined by the
General Partner as of the date of distribution; and
4. the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Sections 734(b) or 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704- 1(b)(2)(iv)(m)
of the Regulations (as set forth in Exhibit A); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this paragraph (4)
to the extent that the General Partner reasonably determines that an
adjustment pursuant to this paragraph (4) would duplicate an adjustment
pursuant to this paragraph (2).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss.
"Immediate Family" means, with respect to any natural Person,
such Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters-in-law or any trust solely for the benefit of any of the foregoing
family members whose sole beneficiaries include the foregoing family members.
"Incapacity" or "Incapacitated" means, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him incompetent to manage his person or his
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 which is a Partner, the
dissolution and commencement of winding up of the partnership; (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
11764.0001 340937.14
9
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 of or against such Partner 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 or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment; or (h) an appointment referred to in clause (g) which has been
stayed 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 (A) such Person's status as (1) the General Partner, (2) a
stockholder, director, trustee or officer of the Partnership or the General
Partner, or (3) a director, trustee or officer of any other Entity, each Person
serving in such capacity at the request of the Partnership or the General
Partner, or (B) his or its liabilities, pursuant to a loan guarantee 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 assets
subject to); and (ii) such other Persons (including Affiliates of the General
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.
"Indenture" means that certain Mortgage Spreader and
Consolidation Agreement and Trust Indenture dated as of March 20, 1984 among O&Y
Equity Corp., Olympia & York Holdings Corporation, FAME Associates, Olympia &
York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company as Trustee, as supplemented by that certain
Supplemental Indenture No. 1 dated as of March 20, 1984, that certain
Supplemental Indenture No. 2 dated as of December 30, 1986, that certain
Supplemental Indenture No. 3 dated as of March 30, 1988, that certain Instrument
of Resignation, Appointment and Acceptance dated as of October 28, 1992 among 0
Xxxxxxxx Xxxxxxxxxx, 0 Xxxxxxxx Xxxx Company, 000 Xxxx Xxxxxx Associates, 1290
Associates, NationsBank of Tennessee, N.A., and Manufacturers Hanover Trust
Company, that certain Supplemental Indenture No. 4 dated August 17, 1995 and
that certain Supplemental Indenture No. 5 dated as of September 18, 1995 and as
the same may be further supplemented from time to time in accordance with the
terms thereof prior to the date of the Supplemental Indenture.
11764.0001 340937.14
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"Initial LP Contributed Property" means (i) 000 Xxxx Xxxxxx,
Xxx Xxxx, XX and the related assets that will be contributed to the Partnership
by the Upper Tier Limited Partnership, and (ii) 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx and the related assets that will be contributed to the
Partnership by the Upper Tier Limited Partnership, in each case pursuant to the
terms of the LP Contribution Agreements. The Partnership's books and records
shall reflect that (i) the initial gross fair market value of 000 Xxxx Xxxxxx,
Xxx Xxxx, XX and the related assets shall be $290,000,000, the Initial Gross
Fair Market Value of 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, XX and the related
amounts shall be $387,000,000 and that such properties are encumbered by
$700,000,000 of Partnership Non-recourse Liabilities and (ii) after giving
effect to the reductions in debt secured by the Initial LP Contributed Property
taking place concurrently herewith, 000 Xxxx Xxxxxx will be encumbered by
$171,344,165* of Partnership Non-recourse Liabilities and 1290 Avenue of the
Americas such property shall be encumbered by $228,655,835* of Partnership
Nonrecourse Liabilities.
"IRS" shall mean the Internal Revenue Service of the United
States.
"JMB" means JMB/NYC Office Building Associates, an Illinois
general partnership.
"JMB Collateral" shall have the meaning provided in Section
12.2B hereof.
"JMB Indemnitors" means JMB/Manhattan Associates, Ltd.,
Carlyle Real Estate Limited Partnership - XIII and Carlyle Real Estate Limited
Partnership XIV.
"JMB Indemnity" means the Indemnity Agreement to be executed
and delivered by the JMB Indemnitors to the General Partner as of the Effective
Date in the form of Exhibit C hereto.
"JMB LP" means JMB/NYC Office Building Associates, L.P., an
Illinois limited partnership.
"JMB Notes" means that certain (i) Promissory Note dated July
27, 1984, reissued July 25, 1985, made by JMB to O&Y DFC in the principal amount
of $9,758,363 secured by certain liens and security interests granted under the
Security Agreement dated July 27, 1984 between JMB and OYHC and assigned by O&Y
DFC to O&Y MFC pursuant to the Assignment and Assumption Agreement dated
September 28, 1987; (ii) Promissory Note dated August 14, 1984, reissued July
25, 1985, made by JMB to O&Y DFC in the principal amount of $4,514,229 secured
by certain liens and security interests granted under the Security Agreement
dated August 14, 1984 between JMB and OYHC and assigned by O&Y DFC to O&Y MFC
pursuant to the Assignment and Assumption Agreement dated September 28, 1987;
and (iii) Amended, Restated and Consolidated Promissory Note dated May 31, 1995
between JMB LP and O&Y MFC in the principal amount of $78,605,779 secured by
certain liens and security interests granted under the Amended, Restated and
11764.0001 340937.14
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Consolidated Security Agreement dated May 31, 1995 between JMB LP and O&Y MFC,
which Notes and Security Agreements have been assigned as of the date hereof to
the General Partner (subject to the interest of the participant under a
Participation Agreement of even date herewith) and are being amended and
restated as of the date hereof pursuant to the Second Amended, Restated and
Consolidated Promissory Note in the principal amount of $88,572,780 and the
Second Amended, Restated and Consolidated Security Agreement.
"Lien" means any lien, security interest, mortgage, deed of
trust, charge, claim, encumbrance, pledge, option, right of first offer or first
refusal and any other right or interest of others of any kind or nature, actual
or contingent, or other similar encumbrance of any nature whatsoever.
"Limited Partner" means the Upper Tier Limited Partnership or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a limited partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all 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.
"Liquidating Event" has the meaning set forth in Section 14.1
hereof.
"Liquidator" has the meaning set forth in Section 14.2 hereof.
"LP Contribution Agreements" means, collectively, (i) the 237
Property Contribution Agreement, dated as of the Effective Date, between The
Upper Tier Limited Partnership, the Partnership and 237 Park Partners, L.P with
respect to the portion of the Initial LP Contributed Property constituting 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx and related assets, and (ii) the 1290 Property
Contribution Agreement, dated as of the Effective Date, between the Upper Tier
Limited Partnership, the Partnership and 1290 Partners, L.P, with respect to the
portion of the Initial LP Contributed Property constituting 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx and related assets.
"Net Income" or "Net Loss" means, for each fiscal year or
other applicable period, an amount equal to the Partnership's taxable income or
loss for such year or period as determined for federal income tax purposes by
the General Partner, 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) of the Code shall be included in
taxable income or loss), adjusted as follows: (a) by including as an item of
gross income any tax-exempt income received by the Partnership and not otherwise
taken into account in computing Net Income or Net Loss; (b) by treating as a
deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (or which is treated as a
11764.0001 340937.14
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Section 705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations) and not otherwise taken into account in computing Net Income or Net
Loss, including amounts paid or incurred to organize the Partnership (unless an
election is made pursuant to Section 709(b) of the Code) or to promote the sale
of interests in the Partnership and by treating deductions for any losses
incurred in connection with the sale or exchange of Partnership property
disallowed pursuant to Section 267(a)(1) or 707(b) of the Code as expenditures
described in Section 705(a)(2)(B) of the Code; (c) by taking into account
Depreciation in lieu of depreciation, depletion, amortization and other cost
recovery deductions taken into account in computing taxable income or loss; (d)
by computing gain or loss resulting from any disposition of Partnership property
with respect to which gain or loss is recognized for federal income tax purposes
by reference to the Gross Asset Value of such property rather than its adjusted
tax basis; (e) in the event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of the Partnership be
adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the
Regulations, by taking into account the amount of such adjustment as if such
adjustment represented additional Net Income or Net Loss pursuant to Exhibit A;
and (f) by not taking into account in computing Net Income or Net Loss items
separately allocated to the Partners pursuant to Paragraphs 1 and 2 of Exhibit
A.
"Net Operating Income" for any period means the amount equal
to (a) the Property Owning Partnerships' 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 Property Owning Partnerships, and (ii) the real
estate related depreciation and amortization expenses for such period of the
Property Owning Partnerships in respect of the Properties. Net Operating Income
with respect to the Properties shall be determined in good faith by the General
Partner and such determination shall be final and binding on all parties hereto.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners, collectively.
"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).
11764.0001 340937.14
13
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner 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.
"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 a Partnership Minimum Gain, for a
Partnership taxable 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 for the distribution of Available Cash pursuant to Section
6.1 hereof.
"Partnership Year" means the fiscal year of the Partnership,
as set forth in Section 10.2 hereof.
"Permitted Partners" has the meaning set forth in subparagraph
1(b) of Exhibit A.
"Permitted Transferee" means any person to whom Limited
Partner Interests are Transferred in accordance with Section 12.4 of this
Agreement.
"Person" means an individual or Entity.
"Petition Date" the date on which the Debtors filed their
voluntary petitions under chapter 11 of the Bankruptcy Code.
"Plan" means the Second Amended Joint Plan of Reorganization
of 000 Xxxx Xxxxxx Associates, LLC and 1290 Associates, LLC filed under title 11
of the United States Code, 11 U.S.C. Sections 101 et seq. with the United States
Bankruptcy Court, Southern District of New York on September 20, 1996.
"Precontribution Gain" has the meaning set forth in
subparagraph 3(c) of Exhibit A.
11764.0001 340937.14
14
"Preference Amount" shall mean $100,000,000.
"Prohibited Action" shall have the meaning provided in Section
12.2B hereof.
"Properties" means 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx and
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx.
"Property Management and Leasing Agreements" means the
Property Management and Leasing Agreements, dated the date hereof between the
Property Owning Partnerships and Tishman Speyer Properties, L.P., providing for
the day-to-day management of, and leasing services related to, the Properties,
as same may be amended, and any substitutions or replacements therefor.
"Property Owning Partnerships" means 237 Park Partners, L.P.
and 1290 Partners, L.P., each a Delaware limited partnership.
"Property Owning Partnership Interests" means the
Partnership's 99% interest as a limited partner in each of the Property Owning
Partnerships.
"Property Owning Partnership Agreements" means the (i)
Agreement of Limited Partnership of 237 Park Partners, L.P., dated as of the
date hereof, between 237 GP Corp. and the Partnership, and (ii) the Agreement of
Limited Partnership of 1290 Partners, L.P., dated as of the date hereof, between
1290 GP Corp. and the Partnership.
"Purchase Price Amount" has the meaning set forth in Section
12.2.
"Purchase Right Notice" has the meaning set forth in Section
12.2.
"Purchase Right" has the meaning set forth in Section 12.2.
"Put Price" has the meaning set forth in Section 12.2.
"Put Right" has the meaning set forth in Section 12.2.
"Put Right Notice" has the meaning set forth in Section 12.2.
"Quarter" means each of the three month periods ending on
March 31, June 30, September 30 and December 31.
"Regulations" means the final, temporary or proposed Income
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
11764.0001 340937.14
15
"REIT" means a real estate investment trust as defined in
Section 856 of the ---- Code.
"REIT Requirements" has the meaning set forth in Section 6.2.
"Reorganization Cases" means the Debtors' cases under chapter
11 of the Bankruptcy Code, Case Nos. 96B42177(JLG) and 96B42178(JLG), which were
commenced by the Debtors by the filing of voluntary petitions with the
Bankruptcy Court on the Petition Date.
"Restricted Partner" has the meaning set forth in Section 1(b)
of Exhibit A.
"Subsidiary" means, with respect to any Person, any
corporation, partnership 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 12.5 hereof.
"Tax Items" has the meaning set forth in Exhibit A.
"Transfer" as a noun, means any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, means
to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise
transfer.
"Upper Tier Limited Partnership" means 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership.
Certain additional terms and phrases have the meanings set
forth in Exhibit A.
ARTICLE 3
ORGANIZATIONAL MATTERS
Section 3.1 Formation
The Partners hereby agree to form the Partnership under and
pursuant to the Act. 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.
11764.0001 340937.14
16
Section 3.2 Name
The name of the Partnership shall be 237/1290 Lower Tier
Associates, L.P. The Partnership's business may be conducted under any other
name or names deemed advisable by the General Partner, including the name 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, upon 5 days prior written notice to the Limited
Partner, change the name of the Partnership.
Section 3.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the
State of Delaware and the name and address of the registered agent for service
of process on the Partnership in the State of Delaware is The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx (Xxx Xxxxxx Xxxxxx), Xxxxxxxx 00000. The
principal office of the Partnership shall be c/o Xxxxxx Capital Group, 000 Xxxxx
Xxxxxx -- 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxx Xxxxx, 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 3.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes
and appoints 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 the 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 or plans to
conduct business or own property, including,
without limitation, any documents necessary
or advisable to convey any Contributed
Property to the Partnership; (b) all
instruments that the General Partner deems
appropriate or necessary to reflect any
amendment, change, modification or
restatement of this Agreement in accordance
with
11764.0001 340937.14
17
its terms; (c) all conveyances and other
instruments or documents that the General
Partner or the 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 12, 13 or
14 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 Interest; and
(2) execute, swear to, seal, 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 herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 15
hereof or as may be otherwise expressly provided for in this Agreement.
B. 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
and 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 Limited
Partner Interests 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.
11764.0001 340937.14
18
Section 3.5 Term
The term of the Partnership shall commence on the date hereof
and shall continue until December 31, 2099, unless the Partnership is dissolved
sooner pursuant to the provisions of Article 14 or as otherwise provided by law.
ARTICLE 4
PURPOSE
Section 4.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is to hold the property of the Partnership and serve as a limited
partner of the Property Owning Partnerships; to undertake such other activities
as may be necessary, advisable, desirable or convenient to the business of the
Partnership; to engage in such other ancillary activities as shall be necessary
or desirable to effectuate the foregoing purposes; and to engage in such
activities as are consistent with the powers described in the proviso in Section
4.2 hereof. The Partnership shall have all powers necessary or desirable to
accomplish the purposes enumerated. In connection with the foregoing, but
subject to all of the terms, covenants, conditions and limitations contained in
this Agreement and any other agreement entered into by the Partnership, the
Partnership shall have full power and authority to enter into, perform, and
carry out contracts of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, trust deed, pledge or other
Lien, and, directly or indirectly, to acquire and construct additional
properties necessary or useful in connection with its business.
Section 4.2 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; provided, 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 to continue to qualify as a
REIT; (ii) could subject the General Partner to any additional 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 the
General Partner or its securities, unless such action (or inaction) shall have
been specifically consented to by the General Partner in writing.
11764.0001 340937.14
19
ARTICLE 5
CAPITAL CONTRIBUTIONS
Section 5.1 Capital Contributions of the Partners
(a) Pursuant to the Plan and the GP Contribution Agreement, on
the Effective Date, the General Partner shall make a Capital Contribution of the
Contributed Debt to the Partnership. The Partnership and the General Partner
hereby agree that the Contributed Debt shall have a Gross Asset Value of
$280,000,000.
(b) The General Partner may, in its sole discretion, make
additional Capital Contributions to the Partnership.
(c) Pursuant to the Plan and the LP Contribution Agreement, on
the Effective Date, the Limited Partners shall make a Capital Contribution of
the Properties, subject to the liabilities described in the LP Contribution
Agreements, to the Partnership. The Partnership and the Limited Partner hereby
agree that the 000 Xxxx Xxxxxx Property shall have a Gross Asset Value of
$299,894,836 and the 1290 Avenue of the Americas Property shall have a Gross
Asset Value of $400,205,164 and are subject to $700,000,000 of debt. The excess
of the Gross Asset Value over the adjusted tax basis of the Properties shall be
allocated entirely to real property.
(d) The Partners shall have an interest in Net Income, Net
Loss and distributions of the Partnership as set forth in Exhibit A, which
interests shall be adjusted in Exhibit A from time to time by the General
Partner to the extent necessary to reflect accurately exchanges, additional
Capital Contributions or similar events having an effect on any Partner's
Partnership Interest. Except as provided in this Section 5.1 and 11.5, the
Partners shall have no obligation to make any additional Capital Contributions
or loans to the Partnership.
Section 5.2 Additional Funds; Restrictions on General Partner
The sums of money required to finance the business and affairs
of the Partnership shall be derived from the initial Capital Contributions made
to the Partnership by the Partners as set forth in Section 5.1 and from funds
generated from the operation and business of the Partnership including, without
limitation, distributions directly or indirectly received by the Partnership
from any Property Owning Partnership. In the event additional financing is
needed from sources other than as set forth in the preceding sentence for any
reason, the General Partner may, in its sole and absolute discretion but subject
to Section 8.1E, in such amounts and at such times as it solely shall determine
to be necessary or appropriate, (i) cause the Partnership to issue additional
Partnership Interests and admit additional limited partners to the Partnership
in accordance with Section 5.3; (ii) make additional Capital Contributions to
the Partnership; (iii) cause the Partnership to borrow money, enter into loan
arrangements, issue debt securities, obtain letters of credit or otherwise
11764.0001 340937.14
20
borrow money on a secured or unsecured basis; (iv) make a loan or loans to the
Partnership; or (v) subject to Section 8.1E sell any assets or properties of the
Partnership.
Section 5.3 Issuance of Additional Partnership Interests;
Admission of Additional Limited Partners
In addition to any Partnership Interests issuable by the
Partnership pursuant to Section 5.2, the General Partner is authorized to cause
the Partnership to issue additional Partnership Interests (or options therefor)
senior or junior to the Partnership Interests issued in respect of the initial
Capital Contributions (as set forth in Section 5.1(a), (b) and (c)) to any
Persons at any time or from time to time, for consideration not less than the
fair market value thereof (or the fair market value as of the date an option is
granted) (as such fair market value is determined in the sole and absolute
discretion of the General Partner's Board of Directors), and on such terms and
conditions, as the General Partner shall establish in each case in its sole and
absolute discretion, without any approval being required from any Limited
Partner or any other Person; provided, however, that such issuance does not
cause any amounts of the Partnership's indebtedness to be excluded from the tax
basis of the Partnership Interests of the Limited Partners who are Partners of
the Partnership prior to such issuance. Subject to the limitations set forth in
the preceding sentence, the General Partner may take such steps as it, in its
reasonable discretion, deems necessary or appropriate to admit any Person as a
Limited Partner of the Partnership, including, without limitation, amending the
Certificate, Exhibit B or any other provision of this Agreement.
Section 5.4 No Third Party Beneficiary
No creditor or other third party having dealings with the
Partnership shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans or to pursue any other right or
remedy hereunder or at law or in equity, it being understood and agreed that the
provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns.
Section 5.5 No Interest; No Return
No Partner shall be entitled to interest on its Capital
Contribution or on such Partner's Capital Account. Except as provided herein or
by law, no Partner shall have any right to demand or receive the return of its
Capital Contribution from the Partnership.
Section 5.6 No Preemptive Rights
No Person shall have any preemptive or other similar right
with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Interests.
11764.0001 340937.14
21
ARTICLE 6
DISTRIBUTIONS
6.1 Regular Distributions
Except for distributions pursuant to Section 14.2 in
connection with the dissolution and liquidation of the Partnership, and subject
to the provisions of Sections 6.3, 6.4 and 6.5, the General Partner shall cause
the Partnership to distribute, from time to time as determined by the General
Partner, but in any event not less frequently than quarterly, all Available
Cash, to the Partners, in accordance with the provisions of Exhibit A.
6.2 Qualification as a REIT
The General Partner shall use its best efforts to cause the
Partnership to distribute sufficient amounts under this Article 6 to enable the
General Partner to pay stockholder dividends that will (i) satisfy the
requirements for qualifying as a REIT under the Code and Regulations ("REIT
Requirements"), and (ii) avoid any federal income or excise tax liability of the
General Partner, provided, however, the General Partner shall not be bound to
comply with this covenant to the extent such distributions would (i) violate
applicable Delaware law or (ii) contravene the terms of any notes, mortgages or
other types of debt obligations which the Partnership may be subject to in
conjunction with borrowed funds.
6.3 Withholding
With respect to any withholding tax or other similar tax
liability or obligation to which the Partnership may be subject as a result of
any act or status of any Partner or to which the Partnership becomes subject
with respect to any Partnership Interest, the Partnership shall have the right
to withhold amounts of Available Cash distributable to such Partner or with
respect to such Partnership Interest, to the extent of the amount of such
withholding tax or other similar tax liability or obligation pursuant to the
provisions contained in Section 11.5.
6.4 Additional Partnership Interests
If the Partnership issues Partnership Interests in accordance
with Section 5.2 or 5.3, the distribution priorities set forth in Exhibit A
shall be amended, as necessary, to reflect the distribution priority of such
Partnership Interests.
6.5 Distributions Upon Liquidation
Proceeds from a Capital Transaction shall be distributed
pursuant to the provisions of Exhibit A and any other cash received or
reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in
11764.0001 340937.14
22
accordance with Section 14.2, after allocating Net Income, Net Loss or items
thereof in accordance with Section 1(c) of Exhibit A.
ARTICLE 7
ALLOCATIONS
The Net Income, Net Loss and other Partnership items shall be
allocated pursuant to the provisions of Exhibit A.
ARTICLE 8
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 8.1 Management
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Section 8.1E hereof, 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 shall have, subject to Section 8.1E hereof, 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 4.2 hereof and to
effectuate the purposes set forth in Section 4.1 hereof, including, without
limitation:
(1) (a) the making of any expenditures, the
lending or borrowing of money, including,
without limitation, making prepayments on
loans and borrowing money to permit the
Partnership to make distributions to its
Partners in such amounts as will permit the
General Partner (so long as the General
Partner qualifies as a 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 stockholders in
amounts sufficient to permit the General
Partner to maintain REIT status, (b) the
assumption or guarantee of, or other
contracting for, indebtedness and other
liabilities, (c) the issuance of evidence of
indebtedness (including the securing of the
same by deed, mortgage, deed of trust or
other lien or encumbrance on the
Partnership's assets) and (d) the incurring
of
11764.0001 340937.14
23
any obligations it 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 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;
(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, the
Property Owning Partnerships or any of the
Partnership's Subsidiaries, the lending of
funds to other Persons (including, without
limitation, the Property Owning
Partnerships, the Subsidiaries of the
Partnership and/or the General Partner) and
the repayment of obligations of the
Partnership, the Property Owning
Partnerships and the Subsidiaries of the
Partnership and any other Person in which
the Partnership has an equity investment,
and the making of capital contributions to
the Property Owning Partnerships and the
Partnership's Subsidiaries;
(5) the management, operation, expansion,
development, construction, leasing,
landscaping, repair, alteration, demolition
or improvement of any real property or
improvements owned by the Partnership or any
Subsidiary of the Partnership;
(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 (i)
contracting with property managers, leasing
agents, contractors, developers,
consultants, accountants, legal counsel,
other professional advisors and other
agents, and (ii) the payment of such related
expenses and compensation out of the
Partnership's assets;
11764.0001 340937.14
24
(7) the distribution of Partnership cash or
other Partnership assets in accordance with
this Agreement;
(8) holding, managing, investing and reinvesting
cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and
dismissal of employees of the Partnership
(including, without limitation, employees
having titles such as "president," "vice
president," "secretary" and "treasurer" of
the Partnership), and agents, outside
attorneys, accountants, consultants and
contractors of the Partnership, and the
determination of their compensation and
other terms of employment or engagement;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners
as it deems necessary or appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of
property to, any further limited or general
partnerships, joint ventures or other
relationships that it deems desirable
(including, without limitation, the
acquisition of interests in, and the
contributions of property to, its
Subsidiaries, the Property Owning
Partnerships and any other Person in which
it has an equity investment from time to
time);
(13) 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, arbitration or other forms of
dispute resolution, and the representation
of the Partnership in all suits or legal
proceedings, administrative proceedings,
arbitrations or other forms of dispute
resolution, the incurring of legal expenses,
and the indemnification of any Person
against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect
investment in its Subsidiaries, the
11764.0001 340937.14
25
Property Owning Partnerships or any other
Person (including, without limitation, the
contribution or loan of funds by the
Partnership to such Persons);
(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 asset 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, the Property
Owning Partnerships or any other Person in
which the Partnership has a direct or
indirect interest, 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 an interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, execution and delivery of any
and all deeds, leases, notes, mortgages,
deeds of trust, security agreements,
conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases
or legal instruments or agreements in
writing necessary or appropriate, in the
judgment of the General Partner, for the
accomplishment of any of the foregoing;
(20) the issuance of additional Partnership
Interests, as appropriate, in connection
with Capital Contributions by Additional
Limited Partners and additional Capital
Contributions by Partners pursuant to
Article 5 hereof; and
(21) The opening of bank accounts on behalf of,
and in the name of, the Partnership and its
Subsidiaries.
B. 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 (except as provided in Section 8.1E),
notwithstanding any other provision of this Agreement, to the
11764.0001 340937.14
26
fullest extent permitted under the Act or other applicable law, rule or
regulation. 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. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain at any and all times
working capital accounts and other cash or similar balances in such amount as
the General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. Except as provided in Section 8.1E, in exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner of any
action taken by it. The General Partner and the Partnership shall not have
liability to a Limited Partner under any circumstances as a result of an income
tax liability incurred by such Limited Partner as a result of an action (or
inaction) by the General Partner taken pursuant to its authority under and in
accordance with this Agreement.
E. Notwithstanding anything to the contrary set forth in this
Agreement, until the Approval Right Termination Date, the General Partner shall
not, without the prior written consent of the Upper Tier Limited Partnership
(which may be given or withheld in its sole and absolute discretion) cause or
permit (to the extent within the General Partner's reasonable control) any
Adverse Transaction to occur, provided however that the General Partner shall be
under no obligation to commence litigation or to incur any expense (unless JMB
LP shall fund such expense) in order to avoid or prevent an Adverse Transaction
from occurring. In addition, until the Approval Right Termination Date, the
General Partner shall not, without the prior written consent of the Upper Tier
Limited Partnership (which may be given or withheld in its sole and absolute
discretion), have the power to take, on behalf of the Partnership as a limited
partner of the Property Owning Partnerships, the following actions:
1. Consent to any Adverse Transaction (as such term
is defined in the Property Owning Partnership Agreements)
pursuant to Section 6.1E of the Property Owning Partnership
Agreements;
2. Consent to the amendment of the Property Owning
Partnership Agreements in a manner that would be prohibited
under Sections 15.1B and 15.1C hereof with respect to this
Agreement; and
3. Consent to the dissolution of the Property Owning
Partnerships pursuant to Section 11.1C of the Property Owning
Partnership Agreements.
11764.0001 340937.14
27
Section 8.2 Certificate of Limited Partnership
The General Partner has filed the Certificate with the
Secretary of State of Delaware as required by the Act. 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, or the District of Columbia, in which the
Partnership may elect to do business or own property. 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 of 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, or the
District of Columbia, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 9.5A(4) hereof, 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.
Section 8.3 Reimbursement of the General Partner
A. Except as provided in this Section 8.3 and elsewhere in
this Agreement (including the provisions of Articles 6 and 7 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner, shall be reimbursed on a monthly
basis, or such other basis as it may determine in its sole and absolute
discretion, for all expenses that it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership; provided, that the amount
of any such reimbursement shall be reduced by any interest earned by the General
Partner with respect to bank accounts or other instruments or accounts of the
Partnership held by it in its name. Such reimbursement shall be in addition to
any reimbursement made as a result of indemnification pursuant to Section 8.6
hereof.
Section 8.4 Outside Activities of the General Partner
A. The General Partner shall devote such time and effort to
the business of the Partnership as the General Partner shall reasonably deem
necessary to promote adequately the interests of the Partnership and the
interests of the Partners; however, it is specifically understood and agreed
that the General Partner shall not be required to devote full time to the
business of the Partnership and that the Partners and their respective
stockholders, partners, directors, officers and affiliates may at any time and
from time to time engage in and possess interests in other business ventures of
any and every type and description, including, without limitation, the
ownership, operation, financing and management of real estate, interests in real
estate or real estate-related securities, independently or with others which may
be competitive
11764.0001 340937.14
28
with the Partnership's business, and neither the Partnership nor any Partner
shall by virtue of this Agreement or otherwise have any right, title or interest
in or to such independent ventures.
B. The General Partner and any Affiliates of the General
Partner may acquire Limited Partner Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partner Interests.
C. The Partners shall be under no obligation to contribute
additional capital to the Partnership and the General Partner may raise
additional capital without any obligation to contribute it to the Partnership.
Section 8.5 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other
assets to its Subsidiaries or other Persons in which it has an equity investment
and such Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 8.1E, the Partnership may
Transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes are advisable.
C. 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, stock option plans, and
similar 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 in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner, or any
Subsidiaries of the Partnership.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a "right of first opportunity" or
"right of first offer" arrangement, non-competition agreements and other
conflict avoidance agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
Section 8.6 Indemnification
A. To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities,
11764.0001 340937.14
29
joint or several, expenses (including, without limitation, reasonable attorneys'
fees and other legal fees and expenses), judgments, fines, settlements, and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership or the General Partner as set forth in this
Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, except to the extent it is finally determined
by a court of competent jurisdiction, from which no further appeal may be taken,
that such Indemnitee's action constituted intentional acts or omissions
constituting willful misconduct or fraud. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise for any indebtedness of the Partnership, the Property
Owning Partnerships or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership, the Property Owning
Partnerships 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 indemnity agreements consistent with
the provisions of this Section 8.6 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. Any indemnification
pursuant to this Section 8.6 shall be made only out of the assets of the
Partnership, 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 8.6.
B. Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
C. The indemnification provided by this Section 8.6 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 Indemnities are indemnified.
D. The Partnership may, but shall not be obligated to,
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. For purposes of this Section 8.6, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by such Indemnitee of its duties to the
Partnership also imposes duties on, or otherwise involves services by, such
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 8.6; and
11764.0001 340937.14
30
actions taken or omitted by the Indemnitee with respect to an employee benefit
plan in the performance of its duties for a purpose reasonably believed by it to
be in the interest of the participant and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
Partnership.
F. 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. An Indemnitee shall not be denied indemnification in whole
or in part under this Section 8.6 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. The provisions of this Section 8.6 are for the benefit of
the Indemnitees, their 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 8.6 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 8.6, 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 8.7 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers and directors shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained or liabilities incurred as a result of errors in judgment
or of any act or omission if the General Partner acted in good faith; provided,
however, the foregoing shall not be deemed to exculpate the General Partner from
any liability the General Partner may have under the GP Contribution Agreement.
B. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the stockholders of the
General Partner collectively, that the General Partner, subject to the
provisions of Section 8.1E hereof, is under no obligation to consider the
separate interest of the Limited Partners in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner shall not 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.
With respect to any indebtedness of the Partnership which any Limited Partner
may have guaranteed, the General Partner shall have no duty to keep such
indebtedness outstanding.
C. Subject to its obligations and duties as General Partner
set forth in Section 8.1A hereof, the General Partner may exercise any of the
powers granted to it by this
11764.0001 340937.14
31
Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agent. 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.
Section 8.8 Other Matters Concerning the General Partner
A. 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. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the advice or
opinion of such Persons as to matters which such 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 advice or opinion.
C. 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 duly appointed 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. Notwithstanding any other provisions of this Agreement
(other than Section 8.1E) 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 to continue to qualify as a REIT; or (ii) to
avoid the General Partner incurring any taxes under Section 857 or Section 4981
of the Code, is expressly authorized under this Agreement and is deemed approved
by all of the Limited Partners.
Section 8.9 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 Partner, 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 asset for which legal title is
held in the name of the
11764.0001 340937.14
32
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; provided, that the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. 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 8.10 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 and to enter into any contracts on behalf of
the Partnership, and 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.
ARTICLE 9
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 9.1 Limitation of Liability
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement, including Section 11.5
hereof, or under the Act.
11764.0001 340937.14
33
Section 9.2 Management of Business
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, 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 9.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 8.5
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or any of its Subsidiaries, any Limited Partner
and any officer, director, partner, 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 that are in direct
competition with the Partnership or that are enhanced by the activities of 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 nor 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 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 9.4 Return of Capital
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. Except to the extent provided by Exhibit A, or as otherwise expressly
provided in this Agreement, no Limited Partner or Assignee shall have priority
over any other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.
11764.0001 340937.14
34
Section 9.5 Rights of Limited Partners Relating to the
Partnership
A. In addition to the other rights provided by this Agreement
or by the Act, and except as limited by Section 9.5B hereof, each Limited
Partner shall receive from the Partnership the following:
(1) copies of all annual and quarterly reports
of the Partnership;
(2) a copy of the Partnership's federal, state
and local income tax returns for each
Partnership Year; and
(3) a copy of this Agreement and the Certificate
and all amendments and/or restatements
thereto, together with executed copies of
all powers of attorney pursuant to which
this Agreement, the Certificate and all
amendments and/or restatements thereto have
been executed.
B. In addition, 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:
(1) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner; and
(2) 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.
C. Notwithstanding any other provision of this Section 9.5,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information (other than information partners of
the Limited Partners require in order to comply with law, including making
proper tax filings) 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 an unaffiliated third party
to keep confidential.
11764.0001 340937.14
35
ARTICLE 10
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 10.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to comply with applicable REIT
Requirements and to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Sections 9.5A and 10.3
hereof. 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, or
such other basis as the General Partner determines to be necessary or
appropriate.
Section 10.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 10.3 Reports
A. As soon as practicable, but in no event later than ninety
(90) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the General Partner if such statements are prepared solely on a consolidated
basis with the General Partner, for such Partnership Year, presented in
accordance with GAAP, such statements to be audited by Deloitte & Touche LLP or
another nationally recognized firm of independent public accountants selected by
the General Partner and, until the Approval Right Termination Date, reasonably
acceptable to JMB LP, provided that the failure of JMB LP to approve a public
accountant shall not be deemed to be unreasonable if such accountant fails to
confirm in writing to the Partnership and JMB LP that it will follow the
allocations of Partnership non-recourse liabilities as provided herein.
B. As soon as practicable, but in no event later than
forty-five (45) days after the close of each calendar quarter (except the last
calendar quarter of each calendar year), the General Partner shall cause to be
mailed to each Limited Partner a report containing unaudited financial
statements as of the last day of the calendar quarter of the Partnership, or of
the General Partner, if such statements are prepared solely on a consolidated
basis with the General Partner, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to be
appropriate.
11764.0001 340937.14
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ARTICLE 11
TAX MATTERS
Section 11.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing by the Partnership's accountants 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 sixty (60) days of the close of each taxable year, the tax
information reasonably required by Limited Partners for federal and state income
tax reporting purposes. The Upper Tier Limited Partnership and JMB LP, as a
partner therein, shall be entitled to confer with such accountants concerning
all tax matters.
Section 11.2 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. In addition, the Upper Tier Limited
Partnership will have full and exclusive authority with respect to those matters
reserved to the Limited Partner (as such term is defined in the Property Owning
Partnership Agreements) under Section 10.8 of each of the Property Owning
Partnership Agreements. The General Partner shall elect the "remedial method" of
making Section 704(c) allocations pursuant to Regulations Section 1.704-3 with
respect to property contributed pursuant to the LP Contribution Agreement and
shall not make the election under Section 754 of the Code prior to January 1,
1997, unless otherwise requested by the Limited Partner and in the event of any
such request, the General Partner shall comply with the request of the Limited
Partner as to the making of Section 704(c) allocations and the making (or
revocation) of a Section 754 election. The General Partner shall have the right
to seek to revoke any tax election it makes (other than (i) the election to use
the remedial method of making the Section 704(c) allocations described in this
Section 11.2 or another method of making Section 704(c) allocations requested by
the Limited Partner and (ii) 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 11.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of
the Partnership (within the meaning of Section 6231(a)(7) of the Code) and shall
exercise such position on a reasonable basis and in accordance with Sections
8.1D and 8.1E. Pursuant to Section 6230(e) of the Code, upon receipt of notice
from the Internal Revenue Service of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the Internal Revenue Service with the name, address, taxpayer
identification number, and profit interest of each of the Limited Partners and
the Assignees; provided, that such information is provided to the Partnership by
the Limited Partners and the Assignees.
11764.0001 340937.14
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B. 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 8.6 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. 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 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 11.4 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 11.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from 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 Sections 1441, 1442, 1445, or 1446 of the Code. Any amounts withheld
shall be treated as having been distributed to such Limited Partner.
ARTICLE 12
TRANSFERS AND WITHDRAWALS
Section 12.1 Transfer
A. The term "Transfer," when used in this Article 12 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which a Limited Partner purports to
assign all or any part of its Limited Partner Interest to another Person.
B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 12. Any Transfer or
11764.0001 340937.14
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purported Transfer of a Partnership Interest not made in accordance with this
Article 12 shall be null and void.
C. Subject to any provisions of this Agreement relating to
Adverse Transactions, the General Partner shall have the right to Transfer its
Partnership Interest in its sole discretion.
Section 12.2 General Partner's Purchase Right; Limited
Partner's Put Rights.
A. The General Partner shall have the continuing right the
("Purchase Right"), exercisable at any time on or after the earliest of (i) the
Default Date (as hereinafter defined), (ii) January 2, 2001 and (iii) the date
on which JMB LP no longer holds any partnership interest in the Upper Tier
Limited Partnership, to acquire or cause its designee to acquire the Partnership
Interest of the Limited Partner, free and clear of any liens, restrictions and
encumbrances (other than those set forth in this Agreement), 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 this Agreement
(after repaying all debt encumbering the Properties) if the Properties were sold
(and all proceeds therefrom were distributed to the Property Owning
Partnerships' partners in accordance with the Property Owning Partnership
Agreements) for a cash amount equal to the quotient of (A) the product of two
times the Properties' Net Operating Income for the period of January 1, 2000
through June 30, 2000 and (B) 0.12, and (y) $100. If the exercise of the
Purchase Right is prior to January 2, 2001 pursuant to clause (i) or (iii)
above, then the amount to be calculated under clause (A) above shall be
calculated in the manner provided in clause (A) of paragraph C below. The
Purchase Right shall be exercised upon fifteen (15) business days' prior written
notice (the "Purchase Right Notice") from the General Partner to the Limited
Partner (which shall not be delivered before fifteen (15) business days prior to
January 2, 2001 or an earlier Default Date) and shall be consummated, without
any action on the part of the Limited Partner, on the fifteenth business day
following delivery of the Purchase Right Notice. The Limited Partner hereby
constitutes and appoints the General Partner and its authorized officers and
attorneys-in-fact, 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 execute, swear to, acknowledge, deliver, file and record all
certificates, documents, and other instruments in order to effectuate the
transfer pursuant to the Purchase Right and the Put Right (as hereinafter
defined).
B. JMB LP shall concurrently herewith (i) cause the JMB
Indemnitors to execute and deliver to the General Partner the JMB Indemnity, and
(ii) deliver to the General Partner a marketable security in form and substance
acceptable to the General Partner which will be guaranteed by the full faith and
credit of the United States of America and which will have a market value as of
January 2, 2001 of $10,000,000 (the "JMB Collateral"). The General Partner shall
hold the JMB Collateral in accordance with the terms hereof and JMB LP hereby
grants to the General Partner a first priority perfected security interest
therein and agrees to take such actions as the General Partner may reasonably
request to ratify, confirm
11764.0001 340937.14
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and continue such security interest. JMB LP shall be charged with all income
accrued under the JMB Collateral prior to its liquidation and application by the
General Partner in accordance herewith. The General Partner may, at its
election, liquidate the JMB Collateral and hold or distribute the proceeds
thereof free and clear of any interest of JMB LP and demand payment under the
JMB Indemnity if (1) JMB LP or any of its officers, directors, partners,
stockholders, agents or affiliates (collectively, the "Controlled Entities")
intentionally interferes with, impedes or prevents (including, without
limitation, the filing by JMB LP of a voluntary petition under the Bankruptcy
Code or any other federal or state bankruptcy or insolvency statute or any
Controlled Entity joining an involuntary petition against JMB LP under the
Bankruptcy Code or such other statute) (x) the exercise by the General Partner
of the Purchase Right or (y) any disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of the Properties by the Property Owning Partnerships
or the Property Owning Partnership Interests by the Partnership or the merger or
other combination of the Property Owning Partnerships or the Partnership with or
into another entity, in accordance with the terms of this Agreement, provided
that such disposition, mortgage, pledge, encumbrance, hypothecation, exchange,
merger or other combination does not constitute an Adverse Transaction a
("Prohibited Action") and (2) the Prohibited Action is not revoked or rescinded
within sixty (60) days after notice by the indemnitee thereunder to the JMB
Indemnitors so as to permit the consummation of the transaction described in
clause (x) or (y) above unimpeded by any action by JMB LP or any of the
Controlled Entities. If JMB LP shall take a Prohibited Action (the date of such
Prohibited Action being the "Default Date" ), the General Partner shall have the
continuing right at any time after the Default Date to exercise the Purchase
Right pursuant to Section 12.2A. The General Partner shall deliver the JMB
Collateral to JMB LP upon the expiration of the preference period under Section
547 of the Bankruptcy Code following (A) the transfer of the interest of JMB LP
to or at the direction of the general partner of the Limited Partner pursuant to
JMB's put right contained in the Agreement of Limited Partnership of the Limited
Partner, (B) the transfer of the interest of the Limited Partner pursuant to the
Purchase Right or the Put Right, (C) a sale of the Properties by the Property
Owning Partnerships or a transfer of the Property Owning Partnership Interests
by the Partnership to the extent permitted under the terms of this Agreement, in
each case without JMB LP or any other Controlled Entity having taken any
Prohibited Action, or (D) receipt by the General Partner of all amounts payable
under the JMB Indemnity following the occurrence of a Prohibited Action. The
General Partner's right to apply the proceeds of the JMB Collateral as provided
herein shall be reduced on a dollar for dollar basis to the extent the General
Partner receives payments from the JMB Indemnitors under the JMB Indemnity in
excess of $15,000,000.
C. The Limited Partner shall have the continuing right (the
"Put Right") exercisable at any time to require the General Partner to purchase
the Partnership Interest of the Limited Partner, free and clear of all liens,
restrictions, and encumbrances (other than those set forth in the Agreement) for
a cash amount (the "Put Price") equal to the greater of (x) the amount that
would be distributed to the Limited Partner pursuant to Section 14.2 of this
Agreement (after repaying all debt encumbering the Property) if the Property
were sold for a cash amount equal to the quotient of (A) the Property's Net
Operating Income for the
11764.0001 340937.14
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period provided in the last sentence of this paragraph C and (B) 0.12, and (y)
$100. The Put Right shall be exercised by the Limited Partner upon fifteen (15)
days prior written notice (the "Put Right Notice") to the General Partner and
shall be consummated, without any action on the part of the Limited Partner,
within fifteen (15) days following the delivery of the Put Right Notice. If the
Limited Partner exercises the Put Right, the Put Price shall be calculated based
on the Property's Net Operating Income for the immediately preceding calendar
year.
D. In connection with the exercise of either the Purchase
Right or the Put Right, the Limited Partner shall pay all transfer taxes, gain
taxes and other similar costs related to the exercise of such rights, including,
in the case of the Put Right, any additional transfer taxes and transfer gains
taxes which would be retroactively assessed with respect to the transfer of the
Properties to the Property Owning Partnerships pursuant to the Plan by reason of
the exercise of the Put Right.
Section 12.3 Transfer of the General Partner Interest
A. The General Partner may Transfer all or any part of its
General Partner Interest or withdraw as General Partner, in its sole discretion
and without the consent of any Limited Partners; provided that the General
Partner may withdraw as general partner only in connection with a Transfer of
its General Partner Interest and immediately following the admission of a
successor General Partner, as general partner, in accordance with Article 13
hereof.
B. In the event the General Partner withdraws as general
partner in accordance with clause A. above, its Partnership Interest shall
immediately be converted into a Limited Partner Interest and the General Partner
shall be entitled to receive distributions from the Partnership and the share of
Net Income, Net Losses, any other items, gain, loss, deduction and credit that
were otherwise attributable to its General Partner Interest.
Section 12.4 Limited Partners' Rights to Transfer
A Limited Partner may Transfer such Limited Partner's Limited
Partner Interests only with the prior written consent of the General Partner,
which may be withheld in the sole and absolute discretion of the General
Partner. Any such attempted or actual Transfer by a Limited Partner to any
Person without the approval of the General Partner shall be null and void ab
initio and of no force and effect.
Section 12.5 Substituted Limited Partners
A. The General Partner shall have the right to consent to the
admission of a transferee who receives Limited Partner Interests pursuant to
Section 12.4, which consent may be given or withheld by the General Partner in
its sole and absolute discretion. The General
11764.0001 340937.14
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Partner's failure or refusal to permit such transferee to become a Substituted
Limited Partner shall not give rise to any cause of action against the
Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 12 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. No Permitted Transferee will be admitted as a Substituted
Limited Partner unless (i) such transferee has furnished to the General Partner
(a) 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 3.4 and 12.2(A) hereof and (b) such other
documents or instruments as may be required in the reasonable discretion of the
General Partner in order to effect such Person's admission as a Substituted
Limited Partner and (ii) the General Partner has consented to such admission in
accordance with Section 12.5A. Upon the admission of a Substituted Limited
Partner, the General Partner shall amend Exhibit B to reflect the name, address
and Limited Partner Interests of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 12.6 Intentionally Omitted
Section 12.7 General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted Transfer of all of such Limited Partner's
Limited Partner Interests in accordance with this Article 12.
B. Any Limited Partner who shall Transfer all of its Limited
Partner Interests in a Transfer permitted pursuant to this Article 12 shall
cease to be a Limited Partner upon the admission of all Assignees of such
Limited Partner Interests as Substituted Limited Partners.
C. Without the consent of the General Partner, transfers
pursuant to this Article 12 may only be made as of the first day of a fiscal
quarter of the Partnership.
D. If any Partnership Interest is transferred or assigned
during the Partnership's fiscal year in compliance with the provisions of this
Article 12 on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such Partnership Year shall be divided and allocated between the
transferor Partner and the transferee Partner 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. Solely for purposes
of making such allocations, each of such items for the calendar month in which
the Transfer or assignment occurs shall be allocated to the transferee Partner,
and none of such items for the calendar
11764.0001 340937.14
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month in which an exchange occurs shall be allocated to the exchanging Partner,
provided, however, that the General Partner may adopt such other conventions
relating to allocations in connection with transfers, assignments, or exchanges
as it determines are necessary or appropriate. All distributions of Available
Cash attributable to such Limited Partner Interests with respect to which the
Partnership Record Date is before the date of such transfer, assignment, or
exchange shall be made to the transferor Partner or the exchanging Partner, as
the case may be, and in the case of a Transfer or assignment other than an
exchange, all distributions of Available Cash thereafter attributable to such
Limited Partner Interests shall be made to the transferee Partner.
ARTICLE 13
ADMISSION OF PARTNERS
Section 13.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to
Section 12 hereof who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the 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. In the case of such admission on any day other than the first day
of a Partnership Year, all items attributable to the General Partner Interest
for such Partnership Year shall be allocated between the transferring General
Partner and such successor as provided in Section 12.7D hereof.
Section 13.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial
Limited Partner on the Effective Date, a Person who makes a Capital Contribution
to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner 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 3.4 and, if applicable,
12.2(A) hereof and (ii) such other documents or instruments as may be required
in the discretion of the General Partner in order to effect such Person's
admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section
13.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an Additional Limited Partner shall become effective on the
11764.0001 340937.14
43
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.
C. 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.
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 of 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
of the Partners and Assignees, including such Additional Limited Partner.
Section 13.3 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 (including, if applicable, amendments
of Exhibits A and B) 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 3.4 hereof.
ARTICLE 14
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1 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.
In the event of the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. Subject to Section 8.1E
hereof, the Partnership shall dissolve, and its affairs shall be wound up, only
upon the first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 3.5
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act unless, within ninety (90) days after such event of withdrawal all of
the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective
11764.0001 340937.14
44
as of the date of withdrawal, of a successor General Partner, provided that a
withdrawal of the General Partner in connection with a Transfer of its General
Partner Interest shall be governed by the provisions of Section 12.3A hereof;
C. until the Approval Right Termination Date, an election to
dissolve the Partnership made by the General Partner, with the consent of the
Limited Partner (which may be given or withheld in its sole and absolute
discretion);
D. from and the after Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, in its sole
and absolute discretion;
E. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
F. the sale of all or substantially all of the assets and
properties of the Partnership.
Section 14.2 Winding Up
A. 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, in the event there is no remaining General
Partner, any Person elected by Limited Partners holding at least a majority of
the Limited Partnership Interests (the General Partner or such other Person
being referred to herein as 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 shares of beneficial interest or
other securities of the General Partner) 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 other
Partners; and
(4) The balance, if any, to the General Partner and
Limited Partners to the extent of and in accordance
with the positive balances in their Capital
11764.0001 340937.14
45
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 14.
B. Notwithstanding the provisions of Section 14.2A hereof
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 asset except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 14.2A hereof, 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 interests 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.
C. In the discretion of the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article 14 may be:
(1) 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 the
General Partner arising out of or in
connection with the Partnership. 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 Liquidator, 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
(2) withheld or escrowed 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 or escrowed
amounts shall be distributed to the General
Partner and Limited Partners
11764.0001 340937.14
46
in the manner and order of priority set forth
in Section 14.2A as soon as practicable.
Section 14.3 No Obligation to Contribute Deficit
If any Partner has a deficit balance in his 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.
Section 14.4 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 provided in
this Agreement, no Limited Partner shall have priority over any other Partner as
to the return of its Capital Contributions, distributions, or allocations.
Section 14.5 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but for the provisions of an election or objection by one or more
Partners pursuant to Section 14.1, 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.
Section 14.6 Termination of Partnership and Cancellation
of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership's
assets, as provided in Section 14.2 hereof, the Partnership shall be terminated,
a certificate of cancellation shall be filed, 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 14.7 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 14.2 hereof in order 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.
11764.0001 340937.14
47
Section 14.8 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
ARTICLE 15
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 15.1 Amendments
A. 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 Section 5.3
hereof;
(4) to reflect a change that (i) is of an
inconsequential nature or to cure any
ambiguity, correct or supplement any
provision in this Agreement not inconsistent
with law or with other provisions, 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 (ii) does
not adversely affect any Limited Partner in
any material respect; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order,
directive, opinion, ruling or regulation of
a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 15.1A is taken.
B. Notwithstanding Section 15.1A hereof, this Agreement shall
not be amended without the Consent of each Partner adversely affected (which
consent may be given or withheld in its sole and absolute discretion) if such
amendment would (i) convert a Limited Partner's Partnership Interest into a
General Partner Interest; (ii) modify the limited liability
11764.0001 340937.14
48
of a Limited Partner in a manner adverse to such Limited Partner; (iii) alter
rights of the Partner to receive distributions pursuant to Article 6 or Article
14, or the allocations specified in Article 7 (except as permitted pursuant to
Article 4 and Section 15.1A(3) hereof); (iv) cause the termination of the
Partnership prior to the time set forth in Section 3.5 or 14.1; or (v) amend
this Section 15.1B. Further, no amendment may alter the restrictions on the
General Partner's authority set forth in Section 14.1C without the Consent
specified in that section.
C. Notwithstanding Section 15.1A or Section 15.1B hereof, the
General Partner shall not amend at any time prior to the Approval Right
Termination Date, Article XI, or Sections 4.1, 8.1D, 8.1E, 10.3, 12.2, 14.3, or
15.1C, without the consent of the Upper Tier Limited Partnership which consent
may be given or withheld in its sole and absolute discretion.
Section 15.2 Meetings of the Partners
A. 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 (other than the General Partner) holding 25 percent
or more of the Partnership Interests. The request 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 the Limited Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
the Partners. Except as otherwise expressly provided in this Agreement, the
Consent of holders of a majority of the Partnership Interests held by Partners
(including Limited Partnership Interests held by the Company) shall control.
B. 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 Partnership 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 Partnership
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. 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 his
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,
11764.0001 340937.14
49
such revocation to be effective upon the Partnership's receipt of written notice
of such revocation from the Limited Partner executing such proxy.
D. Each meeting of the 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 deems appropriate. Meetings of Partners may be conducted in the
same manner as meetings of the stockholders of the General Partner and may be
held at the same time, and as part of, meetings of the stockholders of the
General Partner.
ARTICLE 16
GENERAL PROVISIONS
Section 16.1 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 Exhibit B or such other
address of which the Partner shall notify the General Partner in writing.
Section 16.2 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" and
"Sections" are to Articles and Sections of this Agreement.
Section 16.3 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 16.4 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.
11764.0001 340937.14
50
Section 16.5 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 16.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 16.7 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 16.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all of 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 16.9 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 laws thereof.
Section 16.10 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.
11764.0001 340937.14
51
Section 16.11 Entire Agreement
This Agreement contains the entire understanding and agreement
among the Partners with respect to the subject matter hereof and supersedes any
other prior written or oral understandings or agreements among them with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of October 10, 1996.
GENERAL PARTNER:
METROPOLIS REALTY TRUST, INC.
By:
Name:
Title:
LIMITED PARTNER:
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp.,
general partner
By:
Name:
Title:
Solely with respect to
Section 12.2B hereof:
JMB/NYC OFFICE BUILDING ASSOCIATES,
L.P., an Illinois limited partnership
By: Carlyle Managers, Inc.,
its General Partner
By:
Name:
Title:
11764.0001 340937.14
52
Exhibit A
Allocations
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided in this Exhibit A, Net
Income (or items thereof) (other than Net Income, or items thereof, arising in
connection with a Capital Transaction) of the Partnership for any fiscal year or
other applicable period shall be allocated to the Partners first in accordance
with any prior allocation of Net Losses, other than Nonrecourse Deductions and
Partner Nonrecourse Deductions, pro rata, until each Partner has been allocated
an amount of Net Income pursuant to this clause equal to the cumulative amount
of Net Losses, other than Nonrecourse Deductions and Partner Nonrecourse
Deductions, that have been allocated to such Partner, and thereafter to the
Partners in accordance with the manner in which Available Cash has been (or
would be, if the Partnership had an amount of Available Cash equal to such Net
Income) distributed to the Partners, other than distributions representing a
return of Capital Contributions.
(b) Net Loss. Except as otherwise provided in this Exhibit A, Net Loss
(or items thereof) (other than Net Loss, or items thereof, arising in connection
with a Capital Transaction) of the Partnership for each fiscal year or other
applicable period shall be allocated to the Partners first in accordance with
the positive Capital Account balances of the Partners, pro rata, until such
Capital Accounts have been reduced to zero, and thereafter 95% to the General
Partner and 5% to the Limited Partner. Notwithstanding the preceding sentence,
to the extent any Net Loss (or items thereof) allocated to a Partner under this
subparagraph (b) would cause such Partner (hereinafter, a "Restricted Partner")
to have an Adjusted Capital Account Deficit, or increase the amount of an
existing Adjusted Capital Account Deficit, as of the end of the fiscal year or
other applicable period to which such Net Loss relates, such Net Loss shall not
be allocated to such Restricted Partner and instead shall be allocated to the
other Partner(s) (hereinafter, the "Permitted Partner").
(c) Capital Transaction; Liquidation. Allocations 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 the Adjusted GP Contribution and
the Limited Partner's Capital Account is equal to $100,000, and the remainder of
such Net Income or Net Loss (or items thereof) shall be allocated to the
Partners in a manner that results 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. Notwithstanding the preceding sentence, to the
extent any Net Loss (or items thereof) would be allocated to a Restricted
Partner under this subparagraph (c), such Net Loss shall not be allocated to
such Restricted Partner and instead shall be allocated to the Permitted Partner.
11764.0001 340937.14
A-1
(d) Rules of Construction.
(1) Capital Account Increases. For purposes of making
allocations pursuant to subparagraph 1(c) of this Exhibit A, a Partner's Capital
Account balance shall be deemed to be increased by such Partner's share of any
Partnership Minimum Gain and Partner Minimum Gain remaining at the close of the
fiscal period in respect of which such allocations are being made.
(2) Change in Partnership Interests. In the event any
Partner's Partnership Interest changes during a fiscal year for any reason,
including without limitation, the Transfer of any interest in the Partnership,
the tax allocations contained in this Exhibit A shall be applied as necessary to
reflect the varying interests of the Partners during such year.
2. Special Allocations. Notwithstanding any provisions of paragraph 1 of
this Exhibit A, the following special allocations shall be made.
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as
otherwise provided in Section 1.704-2(f) of the Regulations, if there is a net
decrease in Partnership Minimum Gain for any Partnership fiscal 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 to the extent
required by Regulations Section 1.704-2(f). The items to be so allocated shall
be determined in accordance with Sections 1.704-2(f) and (i) of the Regulations.
This subparagraph 2(a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Regulations, shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
that Partner's share of the net decrease in the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt to the extent and in the manner
required by Section 1.704-2(i) of the Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and (j)(2)(ii) of
the Regulations. This subparagraph 2(b) is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt contained
in Section 1.704-2 of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this subparagraph 2(b) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
11764.0001 340937.14
A-2
(c) Qualified Income Offset. In the event a Partner unexpectedly
receives any adjustments, allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such Partner has an
Adjusted Capital Account Deficit, items of Partnership income (including gross
income) and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly
as possible as required by the Regulations. This subparagraph 2(c) is intended
to constitute a "qualified income offset" under Section 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
or other applicable period shall be allocated to the Partners in accordance with
their respective Partnership Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any fiscal year or other applicable period with respect to a Partner Nonrecourse
Debt shall be specially allocated to the Partner that bears the economic risk of
loss for such Partner Nonrecourse Debt (as determined under Sections
1.704-2(b)(4) and 1.704-2(i)(1) of the Regulations).
(f) Intent of Allocations. The parties intend that the allocation
provisions of this Exhibit A shall result in final Capital Account balances of
the Partners that equal to the amounts distributable to the Partners in
accordance with paragraph 4(b) of this Exhibit A, so that when liquidating
distributions are made in accordance with such final Capital Account balances
under Section 14.2A(4) hereof, such distributions will be able to return to each
Partner the amounts distributable to the Partner in accordance with paragraph
4(b) of this Exhibit A. To the extent that such final Capital Account balances
do not so reflect the intent of this Exhibit A, income and loss of the
Partnership for the current year and future years, as computed for book
purposes, shall be allocated among the Partners so as to result in final Capital
Account balances reflecting the intent of this Exhibit A. This subparagraph
shall control notwithstanding any reallocation of income, loss, or items
thereof, as computed for book purposes, by the Internal Revenue Service or any
other taxing authority.
(g) Section 754 Adjustment. To the extent an adjustment to the adjusted
tax basis of any asset of the Partnership pursuant to Section 734(b) of the Code
or Section 743(b) of the Code is required, pursuant to Section
1.704-1(b)(2)(iv)(m) of the Regulations, 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 gain or loss shall be
specially allocated among the Partners in a manner consistent with the manner in
which each of their respective Capital Accounts are required to be adjusted
pursuant to such section of the Regulations.
11764.0001 340937.14
A-3
3. Tax Allocations.
(a) Items of Income or Loss. Except as is otherwise provided in this
Exhibit A, an allocation of Partnership Net Income or Net Loss to a Partner
shall be treated as an allocation to such Partner of the same share of each item
of income, gain, loss, deduction and item of tax-exempt income or Section
705(a)(2)(B) expenditure (or item treated as such expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i)) ("Tax Items") that is taken into
account in computing Net Income or Net Loss.
(b) Section 1245/1250 Recapture. If any portion of gain from the sale
of Partnership assets is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), then such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated. This subparagraph 3(b) shall not alter the amount of Net Income
(or items thereof) allocated among the Partners, but merely the character of
such Net Income (or items thereof). For purposes hereof, in order to determine
the proportionate allocations of depreciation and amortization deductions for
each fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.
(c) Precontribution Gain. The Partnership shall use the remedial method
of allocation contained in Section 1.704-3(d) of the Regulations to take into
account any variation between the adjusted basis and the fair market value of
the Initial LP Contributed Property and the Contributed Debt at the time of the
contribution ("Precontribution Gain"). By executing this Agreement, each Partner
hereby agrees to report income, gain, loss and deduction on such Partner's
federal income tax return in a manner that is consistent with the use of the
remedial method of allocation with respect to the Initial LP Contributed
Property and the Contributed Debt. With respect to any Contributed Property
other than the Initial LP Contributed Property and the Contributed Debt, the
Partnership shall use any permissible method contained in the Regulations
promulgated under Section 704(c) of the Code selected by the General Partner, in
its sole discretion, to take into account any variation between the adjusted
basis of such asset and the fair market value of such asset as of the time of
the contribution, provided that such method does not cause 000 Xxxx Xxxxxx
Associates (or its successor by merger) or its members any material adverse
income tax consequences. Each Partner hereby agrees to report income, gain, loss
and deduction on such Partner's federal income tax return in a manner consistent
with the method used by the Partnership.
(d) Allocations Respecting Section 704(c) and Revaluations. If any
asset has a Gross Asset Value which is different from the Partnership's adjusted
basis for such asset for federal income tax purposes because the Partnership has
revalued such asset pursuant to Regulations Section 1.704-1(b)(2)(iv)(f), the
allocations of Tax Items shall be made in accordance with the principles of
Section 704(c) of the Code and the Regulations and the methods of allocation
promulgated thereunder, provided, however, that with respect to the Initial LP
Contributed Property and the Contributed Debt, income, gain, loss and deduction
11764.0001 340937.14
A-4
with respect to such property shall be allocated using the "remedial method"
described in Regulations Section 1.704-3(b). The intent of this subparagraph
3(d) and subparagraph 3(c) above is that each Partner who contributed to the
capital of the Partnership a Contributed Property will bear, through reduced
allocations of depreciation, increased allocations of gain or other items, the
tax detriments associated with any Precontribution Gain. This subparagraph 3(d)
and subparagraph 3(c) are to be interpreted consistently with such intent.
(e) Excess Nonrecourse Liability Safe Harbor. Pursuant to Regulations
Section 1.752-3(a)(3), for purposes of determining each Partner's proportionate
share of the "excess nonrecourse liabilities" of the Partnership (as defined in
Regulations Section 1.752- 3(a)(3)), the Partners' respective interests in
Partnership profits shall be determined in accordance with each Partner's
Partnership Interest; provided, however, that each Partner who has contributed
an asset to the Partnership shall be allocated, to the extent possible, a share
of "excess nonrecourse liabilities" of the Partnership which results in such
Partner being allocated nonrecourse liabilities in an amount which is at least
equal to the amount of income pursuant to Section 704(c) of the Code and the
Regulations promulgated thereunder (the "Liability Shortfall"). In the event
there is an insufficient amount of nonrecourse liabilities to allocate to each
Partner an amount of nonrecourse liabilities equal to the Liability Shortfall,
then an amount of nonrecourse liabilities to the extent of, the Liability
Shortfall shall be allocated to the Upper Tier Limited Partnership. The intended
effect of using the "remedial method" described in Regulation Section 1.704-3(d)
shall be that the Upper Tier Limited Partnership shall receive an allocation of
Partnership Nonrecourse Liabilities that on the date hereof is not less than
$380,000,000.
(f) References to Regulations. Any reference in this Exhibit A or the
Agreement to a provision of proposed and/or temporary Regulations shall, in the
event such provision is modified or renumbered, be deemed to refer to the
successor provision as so modified or renumbered, but only to the extent such
successor provision applies to the Partnership under the effective date rules
applicable to such successor provision.
(g) Successor Partners. For purposes of this Exhibit A, a transferee of
a Partnership Interest shall be deemed to have been allocated the Net Income,
Net Loss and other items of Partnership income, gain, loss, deduction and credit
allocable to the transferred Partnership Interest that previously have been
allocated to the transferor Partner pursuant to this Agreement.
4. Distributions.
(a) Available Cash. Except as set forth in subparagraph (b), Available
Cash shall be distributed in the following order of priority:
(i) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (a)(i) equal to an amount which,
when added to all prior distributions to the General Partner made pursuant to
clause (b)(i) below, equals 12% per annum
11764.0001 340937.14
A-5
cumulative compounded on its Adjusted GP Contribution, commencing with respect
to each Capital Contribution, on the date such Capital Contribution was made;
(ii) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (a)(ii) equal to an amount
which, when added to all prior distributions to the General Partner made
pursuant to clauses (b)(ii) and b(v) below, equals the Adjusted GP Contribution;
and
(iii) 95% to the General Partner and 5% to the Limited
Partner.
(b) Capital Transactions. The net proceeds of Capital Transactions
shall be distributed in the following order of priority:
(i) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(i), which, when added to all
prior distributions to the General Partner made pursuant to clause (a)(i) above,
equals the product of (x) .5 and (y) 12% per annum cumulative compounded on its
Adjusted GP Contribution, commencing with respect to each Capital Contribution,
on the date such Capital Contribution was made;
(ii) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(ii) equal to an amount which
when added to all prior distributions to the General Partner made pursuant to
clause (a)(ii), equals the product of (x) .75 and (y) the Adjusted GP
Contribution;
(iii) of the next $500,000, 90% to the Limited Partner and 10%
to the General Partner;
(iv) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(iv) which, when added to all
prior distributions to the General Partner made pursuant to clauses (a)(i) and
(b)(i), equals 12% per annum cumulative compounded on its Adjusted GP
Contribution, commencing with respect to each Capital Contribution, on the date
such Capital Contribution was made;
(v) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(v) which, when added to all
prior distributions to the General Partner made pursuant to clauses (a)(ii) and
(b)(ii), equals the Adjusted GP Contribution; and
(vi) 95% to the General Partner and 5% to the Limited Partner.
11764.0001 340937.14
A-6
Exhibit B
Partners' Contributions and Partnership Interests
Cash Agreed
Value of
Name and Address of Partner Contributions % Interest
General Partner
Metropolis Realty Trust, Inc. $280,000,000 95%
c/o Xxxxxx Capital Group, L.P.
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Limited Partner
237/1290 Upper Tier Associates, L.P. $100,000 5%
c/o Xxxxxx Capital Group, L.P.
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
11764.0001 340937.14
Exhibit C
Indemnity Agreement
[To be annexed/form contained in Plan Supplements]
11764.0001 340937.14
