SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405\A
AMENDMENT NO. 1
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(Exact name of registrant as specified in its charter)
The undersigned registrant hereby amends the following sections of its
Report for December 31, 1996 on Form 10-K405 as set forth in the pages
attached hereto:
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
Pages 80 through 83
EXHIBIT INDEX AND EXHIBITS THERETO
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull
Senior Vice President
Dated: April 8, 1997
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits.
3-A. Amended and Restated Agreement of Limited
Partnership, is hereby incorporated by reference to Exhibit 3 to the
Partnership's Form 10-K (File No. 0-16111) for December 31, 1992 dated
March 19, 1993.
3-B. Acknowledgement of rights and duties of the
General Partners of the Partnership between ABPP Associates, L.P. (a
Successor Associated General Partner of the Partnership and JMB Realty
Corporation as of December 31, 1995 is incorporated herein by reference to
the Partnership's report for September 30, 1996 on Form 10-Q (File No. 0-
1611) dated November 8, 1996.
4-A. Assignment Agreement set forth as Exhibit B to the
Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the
Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992
dated March 19, 1993.
4-B. Documents relating to the modification of the
mortgage loan secured by 260 Franklin Street Building are hereby
incorporated herein by reference to the Partnership's Report on Form 10-K
(File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-C. Forbearance agreement relating to the modification
of the mortgage loan secured by NewPark Mall dated October 1995 is
incorporated herein by reference to the Partnership's Report for September
30, 1995 on Form 10-Q (File No. 0-16111) dated November 9, 1995.
4-D. Documents relating to the modification and
extension of the mortgage loan secured by Wells Fargo-South Tower are filed
herewith.
4-E. Amended and restated promissory note between Wells
Fargo Bank and the Partnership is filed herewith.
4-F. Loan modification agreement of Wells Fargo Bank is
filed herewith.
4-G. Documents relating to the third mortgage
modification and extension agreement secured by the 260 Franklin Street
Building dated December 4, 1996 are filed herewith.
80
10-A. Acquisition documents relating to the purchase by
the Partnership of an interest in the 900 Third Avenue Building in New
York, New York, are hereby incorporated herein by reference to the Partner-
ship's Registration Statement on Form S-11 (File No. 2-95382) dated January
18, 1985.
10-B. Acquisition documents relating to the purchase by
the Partnership of an interest in the Piper Jaffray Tower in Minneapolis,
Minnesota, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 2-95382) dated January 18,
1985.
10-C. Acquisition documents relating to the purchase by
the Partnership of an interest in the Crocker Center South Tower in Los
Angeles, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Amendment No. 2 to Form S-11 (File
No. 2-95382) dated July 5, 1985.
10-D. Acquisition documents relating to the purchase by
the Partnership of an interest in the Owings Mills Shopping Center in
Owings Mills, Maryland, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-E. Acquisition documents relating to the purchase by
the Partnership of an interest in the 260 Franklin Street Building in
Boston, Massachusetts, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 4 to
Form S-11 dated April 30, 1986.
10-F. Acquisition documents relating to the purchase by
the Partnership of an interest in the California Plaza office building in
Walnut Creek, California are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 5 to
Form S-11 dated July 31, 1986.
10-G.* Real Estate Purchase Agreement dated June 30,
1992, between Erie-McClurg Associates ("Beneficiary") and The Streeterville
Corporation ("Purchaser") for the sale of Erie-McClurg Parking Facility, is
hereby incorporated herein by reference.
10-H.* First Amendment to Real Estate Purchase Agreement
dated August 26, 1992, between Erie-McClurg Associates ("Beneficiary") and
The Streeterville Corporation ("Purchaser") for the sale of Erie-McClurg
Parking Facility, is hereby incorporated herein by reference.
10-I.* Second Amendment to Real Estate Purchase Agreement
dated September 3, 1992, between Erie-McClurg Associates ("Beneficiary")
and The Streeterville Corporation ("Purchaser") for the sale of Erie-
McClurg Parking Facility, is hereby incorporated herein by reference.
81
10-J. Agreement of Limited Partnership of Carlyle-XV
Associates, L.P., dated April 19, 1993 between the Partnership and Carlyle
Partners, Inc. relating to the 125 Broad Street Building, is hereby
incorporated herein by reference to the Partnership's report for December
31, 1993 on Form 10-K (File No. 0-16111) dated March 28, 1994.
10-K. Documents relating to the modification of the
mortgage loan secured by California Plaza are hereby incorporated herein by
reference to the Partnership's report for December 31, 1993 on Form 10-K
(File No. 0-16111) dated March 28, 1994.
10-L. Documents relating to the extension of the
mortgage loan secured by the 900 Third Building are incorporated herein by
reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-16111) dated March 27, 1995.
10-M. Documents relating to the assignment of the
Partnership's interest in the 125 Broad Street Building to O&Y Plaza Corp.
("Assignee") are incorporated herein by reference to the Partnership's
report for October 15, 1994 on Form 8-K dated November 15, 1994.
10-N. Lockbox and forbearance agreements related to the
mortgage note secured by the Wells Fargo Building are incorporated herein
by reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-16111) dated March 27, 1995.
10-O. Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street Building is hereby incorporated by reference to
the Partnership's Report for June 30, 1995 on Form 10-Q (File No. 0-16111)
dated August 9, 1995.
10-P. The Partnership Interest Purchase Agreement
related to the sale of the Partnership's interest in Eastridge Mall is
hereby incorporated herein by reference to the Partnership's report for
June 30, 1995 on Form 8-K dated July 24, 1995.
10-Q. Documents relating to the operating agreement of
Maguire Thomas Partners-South Tower, L.L.C. are filed herewith.
10-R. Modification to Reserve Escrow Agreement dated
December 4, 1996 relating to the 260 Franklin Street Building dated
December 4, 1996 are filed herewith.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
-----------------
* Previously filed as Exhibits 10-G, 10-H and 10-I,
respectively, to the Partnership's Report for December 31, 1992 on Form 10-
K of the Securities Exchange Act of 1934 (File No. 0-16111) dated March 19,
1993 and hereby incorporated herein by reference.
82
(b) No reports on Form 8-K have been filed since the beginning of
the last quarter of the period covered by this report.
No annual report for the fiscal year 1996 or proxy material has
been sent to the Partners of the Partnership. An annual report will be
sent to the Partners subsequent to this filing.
83
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
EXHIBIT INDEX
Document
Incorporated
By Reference Page
------------ ----
3-A. Amended and Restated Agreement Yes
of Limited Partnership of the
Partnership, included as Exhibit A
to the Partnership's Prospectus
dated July 5, 1985.
3-B. Acknowledgement of Rights and
Dates of General Partners Yes
4-A. Assignment Agreement, included as Yes
Exhibit B to the Partnership's
Prospectus dated July 5, 1985.
4-B. Documents relating to the modification
of the mortgage loan secured by
the 260 Franklin Street Building Yes
4-C. Documents relating to the modification
of the mortgage loan secured by
NewPark Mall Yes
4-D. Documents relating to the modifica-
tion and extension of the mortgage
loan secured by Wells Fargo-
South Tower No
4-E. Amended and restated promissory
note of Wells Fargo Bank No
4-F. Loan modification agreement of
Wells Fargo Bank No
4-G. Documents relating to the third
mortgage modification and extension
agreement secured by the 260 Franklin
Street Building No
10-A. through
10-F. * Exhibits 10.A through 10.F Yes
are hereby incorporated herein by
reference.
10-G. through
10-K. Exhibits 10-S. through 10-K.
are hereby incorporated herein by
reference. Yes
10-L. Documents relating to the extension of the
mortgage loan secured by the 900 Third
Building are filed herewith Yes
10-M. Documents relating to the assignment
of the Partnership's interest in the
125 Broad Street Building are
incorporated by reference. Yes
10-N. Lockbox and forbearance agreements
related to the mortgage note secured
by the Wells Fargo Building are
hereby incorporated by reference. Yes
10-O. Document relating to the
Modification to Reserve Escrow
Agreement relating to the
260 Franklin Street Building
is hereby incorporated by reference. Yes
10-P. Document relating to the
Partnership Interest Purchase
Agreement relating to sale of the
Partnership's interest in
Eastridge Mall is hereby
incorporated by reference Yes
10-Q. Documents relating to the operating
agreement of Maguire Thomas Partners-
South Tower, L.L.C. No
10-R. Modification to Reserve Escrow
Agreement dated December 4,
1996 relating to the 260 Franklin
Street Building No
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
EXHIBIT 4-D
- -----------
(Carlyle-XV)
MODIFICATION AND EXTENSION AGREEMENT
THIS AGREEMENT is made as of September 19, 1996, between AETNA
LIFE INSURANCE COMPANY, a Connecticut corporation ("AETNA"), and
MAGUIRE/THOMAS PARTNERS-SOUTH TOWER, a California limited partnership
("MTP-SOUTH TOWER LP").
1. Aetna is the holder of that indebtedness of MTP-South
Tower LP (the "LOAN") evidenced and secured by, among other instruments
and agreements:
a. that $200,000,000 Promissory Note dated
November 26, 1984 (as at any time heretofore amended, extended, restated
or replaced, the "NOTE"), by MTP-South Tower LP (then known as Maguire
Partners - Crocker Properties - South Tower) payable to the order of The
Aetna Casualty and Surety Company, a Connecticut corporation ("AETNA
CASUALTY AND SURETY");
b. that Deed of Trust, Assignment of Rents and Security
Agreement dated as of November 26, 1984 (as at any time heretofore
amended, extended, restated or replaced, the "DEED OF TRUST"), by
MTP-South Tower LP (then known as Maguire Partners - Crocker Properties -
South Tower), as Trustor, to Ticor Title Insurance Company of California,
as Trustee, for the benefit of Aetna Casualty and Surety, as Beneficiary,
and recorded November 28, 1984 as Instrument Number 84-1399775 in the
Official Records of Los Angeles County, California; and
c. that California Assignment of Rents and Leases dated as
of November 26, 1984 (as at any time heretofore amended, extended,
restated or replaced, the "ASSIGNMENT OF RENTS"), by MTP-South Tower LP
(then known as Maguire Partners - Crocker Properties - South Tower), as
assignor, to Aetna Casualty and Surety, as assignee, and recorded November
28, 1984 as Instrument Number 84-1399776 in the Official Records of Los
Angeles County, California.
2. The Deed of Trust encumbers, with first lien priority, that
improved real property in Los Angeles, California more particularly
described in Exhibit A to the Deed of Trust (the "PROJECT"), which
improvements include, without limitation, the 45-story office building
project now known as the "IBM Tower" located at 355 South Grand Avenue,
together with associated subterranean parking and a garage penthouse
structure, and the "X-2 Garage" located at 235 South Hill Street.
3. Aetna Casualty and Surety assigned and transferred its
interest under the Note, the Deed of Trust and the Assignment of Rents to
Aetna pursuant to that Assignment dated October 29, 1986 and recorded on
December 4, 1986 as Instrument Number 86-1676563 in the Official Records
of Los Angeles County, California.
4. As of December 1, 1994, MTP-South Tower LP, Aetna and CB
Commercial Real Estate Group, Inc., as Agent for Aetna, entered into that
Lockbox Agreement (as heretofore supplemented and amended, the "LOCKBOX
AGREEMENT") providing for the deposit of all Gross Receipts (as defined
therein) into Aetna's "DEPOSIT ACCOUNT" (as defined and provided for
therein) and certain other matters.
5. The Loan matured on December 1, 1994 and has not been repaid.
6. Prior to the execution and delivery of this Agreement,
International Business Machines Corporation ("IBM"), the only limited
partner in MTP-South Tower LP, transferred its limited partnership
interest in MTP-South Tower LP to Maguire Partners-Bunker Hill, Ltd., one
of the general partners of MTP-South Tower LP.
7. MTP-South Tower LP and Aetna now wish to provide for, subject
to the payment to Aetna of $2,000,000 from equity contributions (as
provided for herein) and the satisfaction of certain other conditions
precedent to the "Effective Date" provided for herein, an extension of the
scheduled maturity date of the Loan, until September 1, 2003, and for
certain other modifications to the terms and conditions of the instruments
and agreements evidencing and securing the Loan (collectively, the "Loan
Documents," including but not limited to the Note, the Deed of Trust, the
Assignment of Rents and the Lockbox Agreement).
8. In connection with such conditional modification of the Loan
Documents, simultaneously herewith, Aetna and MTP-South Tower LP have
caused certain recording instructions dated as of even date herewith (the
"RECORDING INSTRUCTIONS") to be issued to Chicago Title Company ("CHICAGO
TITLE") providing for the transmittal of this Agreement and the other
instruments and agreements described below to Chicago Title and the
subsequent closing of the transactions provided for herein upon receipt of
the $2,000,000 payment described above and the satisfaction of certain
other conditions precedent, prior to the expiration or sooner termination
of the Recording Instructions.
9. Accordingly, as of even date herewith, the parties are
executing the following instruments and agreements and are transmitting
same to Chicago Title pursuant to the Recording Instructions:
a. this Agreement between Aetna and MTP-South Tower LP,
with the appended Acknowledgment and Agreement executed by the direct and
indirect general partners of MTP-South Tower LP;
b. that Allonge to Promissory Note dated as of even date
herewith (the "ALLONGE"), between MTP-South Tower LP and Aetna, amending
the Note;
c. that Amendment to Deed of Trust, Assignment of Rents
and Security Agreement and to California Assignment of Rents and Leases
and Fixture Filing dated as of even date herewith (the "AMENDMENT TO
SECURITY DOCUMENTS"), between MTP-South Tower LP and Aetna, amending the
Deed of Trust and the Assignment of Rents;
d. that Environmental Indemnity dated as of even date
herewith (the "ENVIRONMENTAL INDEMNITY AGREEMENT"), by MTP-South Tower LP
to and for the benefit of Aetna, providing for certain additional
covenants of MTP-South Tower LP in connection with the Project;
e. that Acknowledgment Agreement (Wells Fargo Center
Project Agreements) dated as of even date herewith (the "CENTER
ACKNOWLEDGMENT AGREEMENT"), by MTP-South Tower LP and Maguire Partners -
Crocker Properties Phase I, a California limited partnership (the "PHASE I
OWNER"), in favor of Aetna;
f. that Agreement of Property Manager dated as of even
date herewith (the "PROPERTY MANAGER'S AGREEMENT"), by Maguire/Thomas
Partners-Development, Ltd., a California limited partnership
("MTP-DEVELOPMENT"), and MTP-South Tower LP in favor of Aetna; and
g. that Consent to Lease Amendment (Munger Tolles & Olson)
dated as of even date herewith (the "MUNGER TOLLES CONSENT"), between
Aetna and MTP-South Tower LP, providing for the approval by Aetna of (i)
that Third Amendment to Lease dated as of March 1, 1996 between MTP-South
Tower LP, as Landlord, and Munger, Tolles & Olsen, as Tenant, and (ii)
that Termination Agreement dated as of March 1, 1996 among MTP-South Tower
LP, the general partners of MTP-South Tower LP and Munger, Tolles & Olson.
The instruments and agreements described in this Recital H executed by
each party are being (promptly upon full execution thereof) transmitted to
Chicago Title pursuant to the terms and conditions of the Recording
Instructions, and this Agreement and such other instruments and agreements
shall become effective only if and when same are delivered to the parties
in accordance with the terms and conditions of this Agreement prior to the
expiration or sooner termination of the Recording Instructions. The Loan
Documents, if and when amended as of the Effective Date by this Agreement,
the Allonge, the Amendment to Security Documents and the Environmental
Indemnity, are sometimes collectively referred to herein as the "AMENDED
LOAN DOCUMENTS."
IN CONSIDERATION of the recitals and agreements set forth herein,
and for other valuable consideration, the receipt and adequacy of which is
hereby acknowledged, MTP-South Tower LP and Aetna agree that the Loan
Documents shall be supplemented and modified as follows:
1. TRANSACTIONS ON EFFECTIVE DATE AND LLC CONVERSION.
1.1 CONDITIONS PRECEDENT TO EFFECTIVE DATE. Among the
conditions precedent to the Effective Date provided for herein, prior to
the expiration or sooner termination of the Recording Instructions:
1.1.1one or more of the Equity Owners (as defined in
Section 1.5 below) of MTP-South Tower (as defined below) must have made
capital contributions totalling $2,000,000 in accordance with Section 1.7
below, which sum must have been deposited with Chicago Title pursuant to
the Recording Instructions, for disbursement to Aetna on the Effective
Date provided for herein in accordance with this Agreement and the
Recording Instructions; and
1.1.2the Investment Committee of Aetna must have approved
the execution and delivery of this Agreement and the transactions provided
for herein, and Aetna must have provided Chicago Title with written
confirmation of such Investment Committee approval.
IF FOR ANY REASON SUCH TRANSACTIONS AND THE OTHER CONDITIONS PRECEDENT
PROVIDED FOR IN SECTION 10.2 BELOW HAVE NOT BEEN SATISFIED PRIOR TO THE
EXPIRATION OR SOONER TERMINATION OF THE RECORDING INSTRUCTIONS, THEN THIS
AGREEMENT AND THE OTHER INSTRUMENTS AND AGREEMENTS EXECUTED AS OF EVEN
DATE HEREWITH BY AETNA AND MTP-SOUTH TOWER LP SHALL BE NULL AND VOID, AND
NEITHER PARTY SHALL HAVE ANY LIABILITY OR OBLIGATION HEREUNDER OR
THEREUNDER. The Recording Instructions provide, among other things, that
any of the general partners of MTP-South Tower LP or Aetna may, each
acting unilaterally and with or without cause, terminate the Recording
Instructions at any time after September 26, 1996, time being of the
essence. Without limiting the generality of the foregoing, the parties
acknowledge that if the Recording Instructions are terminated prior to the
Effective Date provided for herein, the Loan Documents shall remain in
full force and effect, unmodified by the matters provided for in this
Agreement, and Aetna reserves the right, without limitation, to claim and
enforce the imposition of interest at the default rate provided for in the
Note for the period from December 1, 1994 until the Note and all other
obligations of MTP-South Tower LP to Aetna under the Loan Documents are
paid in full. The foregoing acknowledgments of MTP-South Tower LP and
Aetna shall survive the expiration or sooner termination of the Recording
Instructions.
1.2 EFFECTIVE DATE. This Agreement shall become effective only
on the date of the Closing of certain transactions provided for in this
Agreement, which Closing is described in Section 10.1 below and is subject
to satisfaction of the conditions precedent provided for in Section 1.1
above and in Section 10.2 below. The date of such Closing (as publicly
evidenced by the recording by Chicago Title, in accordance with the
Recording Instructions, of the Amendment to Security Documents in the
Official Records of Los Angeles County) is herein referred to as the
"EFFECTIVE DATE," as provided for in Section 10.1.
1.3 CONSENT TO EQUITY TRANSACTION. Aetna hereby consents to
the transfer by IBM of its interest in MTP-South Tower described in
Recital F above.
1.4 CONVERSION TO LIMITED LIABILITY COMPANY. The general
partners of MTP-South Tower LP plan to cause a limited liability company
to be formed under California law, to be named Maguire Thomas
Partners-South Tower, LLC ("MTP-SOUTH TOWER LLC"), and to cause MTP-South
Tower LLC to succeed by operation of law to all of the assets and
liabilities of MTP-South Tower LP. If MTP-South Tower LLC is formed and
succeeds to the assets and liabilities of MTP-South Tower LP, whether
before or after the Effective Date, Aetna consents to such formation and
succession, provided that:
1.4.1all of the general partners of MTP-South Tower LP
must be the managing members of MTP-South Tower LLC;
1.4.2within five days following such formation and
succession, MTP-South Tower LLC:
1.4.2.1 must duly execute, acknowledge and
deliver to Aetna an Amendment to Deed of Trust and Acknowledgement
Agreement in the form of Exhibit D attached hereto (the "MTP-SOUTH
TOWER LLC ACKNOWLEDGMENT");
1.4.2.2 must duly execute and deliver to Aetna a
Uniform Commercial Code Fixture Filing in the form of Exhibit E attached
hereto (the "MTP-SOUTH TOWER LLC FIXTURE FILING");
1.4.2.3 must duly execute and deliver to Aetna
two Uniform Commercial Code Financing Statements in the forms set forth on
Exhibit F attached hereto (the "MTP-SOUTH TOWER LLC FINANCING
STATEMENTS");
and
1.4.2.4 must cause Chicago Title to record the
MTP-South Tower LLC Acknowledgment and the MTP-South Tower LLC Fixture
Filing, and to issue a further endorsement to Aetna's title insurance
policy referred to in Section 9.3, confirming that record title to the
Project has vested in MTP-South Tower LLC and that the Aetna continues to
hold a first lien thereon, with no loss of priority -- all premiums, fees
and charges in connection therewith shall be paid by MTP-South Tower LLC,
as Approved Operating Costs hereunder; and
1.4.2.5 must execute such additional instruments
as Aetna may reasonably require to evidence the assumption by MTP-South
Tower LLC, subject to the provisions of Section 11.8 below, of all of the
obligations and liabilities of MTP-South Tower LP hereunder and to confirm
the liens and interests of Aetna on the assets of MTP-South Tower LLC in
accordance with the terms of the Amended Loan Documents.
If MTP-South Tower LLC is so organized and succeeds to the interest of
MTP-
South Tower LP, the failure to comply with the provisions of Section 1.4.1
and Section 1.4.2 above shall constitute a breach of this Agreement with
respect to MTP-South Tower LP.
1.5 MTP-SOUTH TOWER; EQUITY OWNERS. As used herein, "MTP-SOUTH
TOWER" shall mean and refer to MTP-South Tower LP or MTP-South Tower LLC
as the successor in interest to MTP-South Tower LP, as applicable, and the
partners of MTP-South Tower LP or the members of MTP-South Tower LLC, as
the case may be, are herein collectively referred to as the "EQUITY
OWNERS" of MTP-South Tower and each is herein individually referred to as
a "EQUITY OWNER" of MTP-South Tower. Without limiting the generality of
the foregoing, after the date MTP-South Tower LLC succeeds to the interest
of MTP-South Tower LP, the provisions of Section 11.8 shall apply to the
liability of MTP-South Tower LLC, as "MTP-South Tower" thereunder, and to
the members of MTP-South Tower LLC, as "Equity Owners" thereunder.
1.6 APPLICATION OF PRE-CLOSING PAYMENTS. Subject to the
disclaimers set forth in the last paragraph of Section 1.1 above (in the
event the Effective Date does not occur for any reason):
1.6.1 Aetna and MTP-South Tower agree that all payments
received by Aetna on each "Disbursement Date" under the Lockbox Agreement
during the period from December 1, 1994 (the scheduled maturity date of
the Loan under the existing Loan Documents) through September 20, 1996
(the most recent Disbursement Date for a disbursement by Agent under the
Lockbox Agreement) shall be credited and accounted for as of each such
Disbursement Date during such period as follows: (i) first, to the
reimbursement of then unpaid legal and other expenses of Aetna
reimbursable by MTP-South Tower pursuant to the terms of the Loan
Documents (during such period, the total amount of such reimbursements was
$443,892.30); (ii) second, to then accrued unpaid interest on the Loan at
the rate of thirteen percent (13%) per annum, the applicable interest rate
during such period under the existing Loan Documents, through such date;
and (iii) third, any excess to principal reduction on such date. As a
result of the foregoing, Aetna and MTP-South Tower acknowledge, affirm and
agree that as of September 20, 1996: (i) interest on the Loan has been
paid through that date, (ii) the principal balance of the Loan is One
Hundred Eighty-Nine Million Sixty Thousand Three Hundred Seven and 69/100
Dollars ($189,060,307.69) on that date, and (iii) the balance in the
Deposit Account on that date is approximately $3,000 (the minimum balance
maintained therein) plus any deposits posted thereto since September 18,
1996.
1.6.2 During the period following September 20, 1996
through the Effective Date, any payments received by Aetna in accordance
with the Lockbox Agreement on each Disbursement Date thereunder shall be
credited and accounted for in the same manner, as follows: (i) first, to
reimbursement of any then unpaid reimbursable expenses of Aetna under the
terms of the Lockbox Agreement and the other Loan Documents, (ii) second,
to then accrued unpaid interest on the Loan at the rate of thirteen
percent (13%) per annum through such date, and (iii) third, any remaining
balance to reduction of the principal balance of the Loan on such date.
1.7 ADDITIONAL PAYMENT AT CLOSING. On the Effective Date,
MTP-South Tower must also pay to Aetna the sum of Two Million
Dollars ($2,000,000), which sum shall be applied on the Effective Date in
accordance with Section 1.8 to certain obligations of MTP-South Tower. In
connection therewith, MTP-South Tower covenants, agrees, represents and
warrants to Aetna:
1.7.1 that said sum shall be contributed to the equity of
MTP-South Tower by one or more of its Equity Owners;
1.7.2 that no portion of said sum shall have been obtained
from Project rents or other Gross Receipts (as defined in the Lockbox
Agreement), from other pre-Closing assets of MTP-South Tower, or from
indebtedness of MTP-South Tower, whether owed to such Equity Owner or
Owners or to any other person; and
1.7.3 that no Equity Owner making such contribution to the
capital of MTP-South Tower shall have any right to receive any return on
or return of such sum at any time prior to the repayment in full of the
Loan and all other obligations of MTP-South Tower to Aetna.
As provided for in Section 10.1, the payment provided for in this
Section 1.7 shall be made through Chicago Title pursuant to the Recording
Instructions, which provide for the simultaneous (i) release of fully
executed counterparts of this Agreement and the other instruments and
agreements provided for herein to the parties, and (ii) the application of
such sum in accordance with the provisions of Section 1.8 below.
1.8 APPLICATION OF FUNDS AT CLOSING. On the Effective Date,
the $2,000,000 payment by MTP-South Tower pursuant to Section 1.7, shall
be released by Chicago Title pursuant to the Recording Instructions and
applied or disbursed by Aetna for obligations of MTP-South Tower as
follows:
1.8.1 $88,800 shall be applied by Chicago Title for the
title insurance premium for the policy or endorsement and recording fees
provided for in Section 9.3 below;
1.8.2 $388,934 shall be disbursed to MTP-Development as
payment in full of all previously held-back leasing commissions owed by
MTP-South Tower, which sum shall be paid by MTP-South Tower to
MTP-Development in satisfaction of all such obligations (and MTP-South
Tower hereby represents and warrants that such sum (of which $258,514 was
50% of the commission earned in connection with the February 6, 1995 lease
to The Los Angeles Unified School District, $51,176 was 50% of the
commission earned plus certain other fees earned in connection with the
March 8, 1995 lease to Finova Capital Corporation, and $79,244 was 100% of
the commission earned in connection with the July 10, 1995 lease to The
Boston Consulting Group) represents the full amount of all accrued leasing
commissions and other fees owed by MTP-South Tower to MTP-Development as
of the date of this Agreement); and
1.8.3 following the disbursements described above, the
balance of such $2,000,000 shall be disbursed to Aetna, and shall be
applied by Aetna:
1.8.3.1 first, for reimbursable costs of Aetna,
to the extent not disbursed to Aetna from the Deposit Account pursuant to
the terms of the Lockbox Agreement prior to the Effective Date, including,
without limitation, such sums as required to reimburse Aetna's legal fees
and expenses in connection with the Loan for the period following
March 31, 1996 (the last date for which such fees and expenses were
reimbursed by Aetna as provided in Section 1.6 above) through the
Effective Date (without limitation with respect to fees and expenses for
subsequent periods, such fees and expenses for the period from April 1,
1996 through August 31, 1996 were approximately $51,200); and
1.8.3.2 the remaining amount shall credited by
Aetna on the Effective Date to reduction of the principal balance of the
Loan.
1.9 ESTABLISHMENT OF PROJECT RESERVE ACCOUNT.
1.9.1 In addition to the existing Deposit Account and the
existing "TAX AND INSURANCE ESCROW" (as defined and provided for in the
Lockbox Agreement), in connection with the transactions provided for
herein, Aetna has established a new deposit account, Account No.
12336-21673 (the "PROJECT RESERVE") with Bank of America N.T. & S.A., in
the name of Agent, as agent for Aetna. As used in this Agreement and in
the Lockbox Agreement, "AGENT" means CB Commercial Real Estate Group, Inc.
or such other entity as may be designated by Aetna from time-to-time, in
accordance with Section 13 of the Lockbox Agreement (and Aetna hereby
agrees to not so designate as its Agent an entity which, directly or
through affiliates, owns, manages or is developing a competing office
building project in downtown Los Angeles), to act as Aetna's agent with
respect to the Deposit Account, the Tax and Insurance Escrow and the
Project Reserve pursuant to this Agreement and the Lockbox Agreement, as
supplemented and modified by the provisions of this Agreement (unless the
context requires otherwise, references herein to the "LOCKBOX AGREEMENT"
shall mean and refer to the existing Lockbox Agreement as so supplemented
and modified). Until the Loan and all other obligations of MTP-South
Tower under this Agreement and the other Amended Loan Documents have been
paid in full, MTP-South Tower shall remain obligated to reimburse the
reasonable fees and costs of Aetna's Agent, which fees shall not be
limited to the current fees of Agent specified in the Lockbox Agreement
(such fees and costs shall be paid out of Operating Receipts as defined in
Section 6.2.1) in accordance with Section 7.2.1.3 below). The Project
Reserve shall be the property of Aetna and shall be exclusively controlled
by Agent for Aetna for the purposes provided for in this Agreement.
1.9.2 Absent Default (as defined in Section 8.14.1) under
the Amended Loan Documents, in which event Aetna shall have the rights and
remedies provided for in Section 6.4.2, the Project Reserve shall be used:
(i) to fund Approved Capital Costs (as defined in Section 5.2.2.1 below)
for the Project (including tenant improvement costs and leasing
commissions), in accordance with Section 7.3 below; and (ii) to provide
working capital for the Project (in addition to the provision for $250,000
of working capital in section 6(b) of the Lockbox Agreement) -- as
provided for in the first paragraph of Section 7.2.1 below, if the balance
on deposit in the Deposit Account is insufficient therefor, funds in the
Project Reserve may be transferred to the Deposit Account for disbursement
to pay or permit payment of Approved Operating Costs (as defined in
Section 7.2.1.4), Fixed Rate Interest (as defined in Section 2.2.1 below)
and certain other obligations which have been approved in advance by
Aetna.
1.9.3 The amount of the maximum balance to be maintained
in the Project Reserve at any time in accordance with this Agreement (the
"PROJECT RESERVE MAXIMUM BALANCE") shall equal $3,000,000 or such lesser
sum as Aetna and MTP-South Tower may mutually agree upon in writing;
provided, however, that at any time following the designation of any such
lesser sum, MTP-South Tower shall have the right, by notice to Aetna and
Agent, to specify that the Project Reserve Maximum Balance again be the
sum of $3,000,000 (whereupon the Project Reserve shall be funded to such
increased Project Reserve Maximum Balance amount only to the extent of
subsequent disbursement of Operating Receipts pursuant to Section 7.2.1.7,
i.e., no party shall be responsible for funding such increased amount).
2. EXTENSION AND INTEREST.
ref EXTENSION; EXTENSION FEE. The scheduled "Maturity Date"
provided for in Paragraph 1(h) of the Note, in paragraph a. on page 2 of
the Deed of Trust, and in any other provision of the Loan Documents, i.e.,
December 1, 1994, is hereby extended until September 1, 2003, at which
time the entire unpaid principal balance of the Loan, all accrued but
unpaid interest on the Loan (including both Fixed Rate Interest and
Participation Interest, as provided for below), and any other unpaid
amounts owed to Aetna in accordance with the terms of the Amended Loan
Documents, shall be immediately due and payable. In consideration of such
extension, MTP-South Tower shall pay to Aetna a fee (the "EXTENSION FEE")
of Five Hundred Thousand Dollars ($500,000), which sum shall be paid to
Aetna out of disbursements of Operating Receipts pursuant to Section
7.2.1.9 below.
2.2 INTEREST. In consideration of Aetna's agreement to extend
the scheduled maturity date of the Loan, as provided for in Section 2.1
above, and to reduce the fixed rate of interest payable on the Loan, as
provided for in Section 2.2.1 below, MTP-South Tower has agreed that Aetna
shall also be entitled to Participation Interest, as provided for in
Section 2.2.2.1 below.
2.2.1FIXED RATE INTEREST. Effective from and after the
Effective Date, until the Loan has been repaid in full, the rate of fixed
interest which shall accrue on the outstanding unpaid balance of the Loan
shall be decreased to ten percent (10%) per annum ("FIXED RATE INTEREST"),
payable monthly in arrears in accordance with the Note, as amended by the
Allonge (the "AMENDED NOTE"); provided, however, during the time that any
installment of principal or interest payable under the Amended Note is
delinquent, interest at the rate of twelve percent (12%) per annum shall
accrue and be due and payable on the total of all unpaid principal plus
all arrearages of interest past due under the Amended Note; provided
further, however, that if there is a maximum legal rate of interest
applicable to the Amended Note, the total interest payable on account of
the Amended Note shall not exceed interest at such maximum rate permitted
by law. Such changes in the fixed interest rate shall only be effective
from and after the Effective Date; any unpaid accrued interest on the Loan
for the period prior to the Effective Date, at the rate of thirteen
percent (13%) per annum, shall be payable at such rate on the next date
interest is due following the Effective Date in accordance with the terms
of the Amended Note.
2.2.2PARTICIPATION INTEREST.
2.2.2.1 As more particularly provided for in the
Allonge, at the maturity of the Loan (including acceleration and
prepayment) other than upon Early Repayment in accordance with Section 3.1
below, MTP-South Tower shall also be obligated to pay Aetna additional
interest (as more particularly defined in the Allonge, "PARTICIPATION
INTEREST") equal to fifty percent (50%) of the amount, if any, by which
the sum of:
2.2.2.1.1 the "Fair Market Value" of the
Project (as defined and provided for in the Allonge, and determined by
appraisal in accordance with the Allonge, except in connection with an
"Arms-Length Sale" of the Project in accordance with Section 4.4 below),
less an amount equal to one percent (1%) of such sum as an allowance for
assumed commissions and other closing costs (except in connection with an
Arms-Length Sale of the Project, in which case the amount of closing costs
shall be based on the actual closing costs, as provided for in Section 4.4
below), plus
2.2.2.1.2 all other assets of MTP-South Tower
(other than the Excluded Assets provided for in Section 8.12 below) plus
all amounts on deposit in the Deposit Account, in the Project Reserve and
in the Tax and Insurance Escrow, to the extent not required to pay or
provide for then-accrued obligations of MTP-South Tower for (i) Fixed Rate
Interest and all other sums then due Aetna under the Amended Loan
Documents (other than principal, Yield Maintenance Payment (as defined in
Section 3.3 below) and Participation Interest), (ii) property taxes on the
Project, (iii) Approved Operating Costs, and (iv) Approved Capital Costs,
exceeds the sum of the then-outstanding principal balance of the
Loan plus the amount of any Yield Maintenance Payment then due and
payable; provided, however, that the amount of Participation Interest due
and payable to Aetna pursuant to this Agreement and the Amended Note shall
not exceed the "MAXIMUM PARTICIPATION INTEREST AMOUNT" as defined and
provided for in the Allonge.
2.2.2.2 The Participation Interest provided for
herein and in the Allonge equals a share (50%) of the entire unencumbered
value of the Project and such other amounts, and is not limited to a share
of any appreciation in such value; by way of example:
2.2.2.2.1 if Participation Interest was to
become due prior to any principal reduction of the Loan, and if the
aggregate value (determined as provided for in Section in by ref above) of
the Project plus such other assets (not including the Excluded Assets) and
the amounts on deposit in the Deposit Account, in the Project Reserve and
in the Tax and Insurance Escrow (to the extent not required to pay or
provide for then-accrued obligations of MTP-South Tower, as provided for
in Section 2.2.2.1.2 above) then exceeded the principal balance of the
Loan by $1,000,000, and no Yield Maintenance Payment was then due, then
the amount of Participation Interest then due would equal $500,000; and
2.2.2.2.2 if instead Participation Interest
was to become due later, during which period (i) the principal balance of
the Loan had been reduced by $5,000,000 and (ii) the aggregate value of
the Project plus such other assets (not including the Excluded Assets) and
the amounts on deposit in the Deposit Account, in the Project Reserve and
in the Tax and Insurance Escrow (to the extent not required to pay or
provide for then-accrued obligations of MTP-South Tower, as provided for
in Section 2.2.2.1.2 above) had increased (from the amount described in
the preceding example) by $6,000,000, and no Yield Maintenance Payment was
due, then such aggregate value would exceed the then-current Loan balance
by $12,000,000 and the amount of Participation Interest then due would
equal $6,000,000.
3. PAYMENT OF THE LOAN.
3.1 EARLY REPAYMENT. At any time during the period (the
"PERMITTED PREPAYMENT PERIOD") from the Effective Date through and
including September 1, 1999, if not then in Default under the Amended Loan
Documents, MTP-South Tower shall have the right, without the consent of
Aetna, to prepay the Loan in full or in part, and in connection with such
voluntary cash repayment of the Loan on or before said date ("EARLY
REPAYMENT"), Aetna hereby agrees that no Participation Interest shall be
due or payable in connection with any Early Repayment.
3.2 AMOUNTS DUE AT MATURITY. At the scheduled maturity date of
the Loan or the earlier date of acceleration of the obligations evidenced
and secured by the Amended Loan Documents, or upon the repayment of the
Loan in full, upon such event ("MATURITY"), in addition to accrued Fixed
Rate Interest and any other unsatisfied obligations of MTP-South Tower to
Aetna under the Amended Loan Documents, the following amounts shall be due
and payable to Aetna by MTP-South Tower:
3.2.1 any Yield Maintenance Payment (to the extent
provided for in the Allonge or in Section 3.3 below); and
3.2.2 Participation Interest (except on Early Repayment,
and subject to the provisions set forth in Section 4.2 with respect to a
Deferred Obligation in connection with a refinancing of the Loan).
3.3 YIELD MAINTENANCE PAYMENT. MTP-South Tower shall also be
obligated to pay Aetna the "YIELD MAINTENANCE PAYMENT" (as defined in the
Allonge) in the amount provided for in the Allonge, (a) upon any
acceleration of the maturity of the Loan following March 1, 2000 by reason
of an Event of Default under the Amended Loan Documents, and (b) upon any
full or partial prepayment of the Loan after March 1, 2000, except with
respect to (i) principal payments made from monthly disbursements of
Operating Receipts, as provided for in Section 7.2.1.10 below,
(ii) Additional Loan Advance Repayments in accordance with Section 3.4.1,
or (iii) principal payments made from the proceeds of condemnation awards
or insurance recoveries, as provided for in Section 4.1.2.2, made after
said date. No Yield Maintenance Payment shall be due or payable upon any
full or partial prepayment of the Loan at any time on or before March
1, 2000, regardless of whether or not an Event of Default then exists
under
the Amended Loan Documents.
3.4 REPAYMENT OF ADDITIONAL LOAN ADVANCES.
3.4.1ADDITIONAL LOAN ADVANCE REPAYMENTS. The provisions
of this Section 3.4 shall apply only if Aetna has made any Additional Loan
Advance pursuant to Section 7.4 below. In such event, on the September
1st immediately following the date of the first Additional Loan Advance,
and on each subsequent September 1st until the Loan has been repaid in
full (each an "ADJUSTMENT DATE"), MTP-South Tower shall be required to
make a partial principal payment on the Loan (an "ADDITIONAL LOAN ADVANCE
REPAYMENT"), from the proceeds of equity contributions by one or more of
the Equity Owners of MTP-South Tower in accordance with Section 3.4.2
below, equal to the lesser of:
3.4.1.1 the amount, if any, by which (i) the
outstanding principal balance of the Loan on such Adjustment Date exceeds
(ii) the amount of the applicable Maximum Principal Balance (defined
below) provided for in Exhibit A for such Adjustment Date (i.e., no
Additional Loan Advance Repayment shall be due on an Adjustment Date if
the outstanding principal balance of the Loan is then less than or equal
to the amount of the Maximum Principal Balance provided for on such date
in Exhibit A); or
3.4.1.2 the sum of (i) the aggregate amount of all
Additional Loan Advances made by Aetna pursuant to Section 7.4 below
during the twelve month period (herein referred to as a "LOAN YEAR") prior
to such Adjustment Date (e.g., on September 1, 1998, the aggregate amount
of such Additional Loan Advances made during the Loan Year between
September 1, 1997 through August 31, 1998), plus (ii) the aggregate amount
of all disbursements to MTP-South Tower in accordance with Section 7.2.1.8
during the (same) Loan Year prior to such Adjustment Date.
As more specifically provided for in Exhibit A attached hereto and
incorporated herein by reference, the "Maximum Principal Balance" for each
Loan Year specified therein shall be reduced by the amount of any
principal
payments by MTP-South Tower following the Effective Date, other than:
(i) principal payments made from monthly disbursements of Operating
Receipts, as provided for in Section 7.2.1.10, (ii) Additional Loan
Advance Repayments in accordance with Section 3.4.1, or (iii) principal
payments made from the proceeds of condemnation awards or insurance
recoveries, as provided for in Section 4.1.2.2. Such reduction of the
Maximum Principal Balance for the current and each subsequent Loan Year
shall become effective immediately upon receipt of any such principal
payment. All references in this Agreement to any "MAXIMUM PRINCIPAL
BALANCE" shall mean the applicable amount shown on Exhibit A as same may
be so reduced following any such principal payment. Any such Additional
Loan Advance Repayment pursuant to this Section 3.4.1 shall be due and
payable on the first business day immediately following the applicable
Adjustment Date. Any such Additional Loan Advance Repayment received by
Aetna from MTP-South Tower shall be applied to reduction of the principal
balance of the Loan. No Yield Maintenance Payment shall be due or payable
in connection with any such Additional Loan Advance Repayment.
3.4.2EQUITY CONTRIBUTIONS. MTP-South Tower covenants and
agrees as follows with respect to each such Additional Loan Advance
Repayment:
3.4.2.1 that the amount of any such Additional Loan
Advance Repayment shall be contributed to the equity of MTP-South Tower on
or immediately before the applicable Adjustment Date by one or more of its
Equity Owners and said sum shall be used to make such Additional Loan
Advance Repayment to Aetna;
3.4.2.2 that no portion of the amount of such
Additional Loan Advance Repayment shall be obtained from Project rents or
other Gross Receipts (as defined in the Lockbox Agreement), from other
assets of MTP-South Tower (other than any Excluded Assets), or from
indebtedness of MTP-South Tower, whether owed to such Equity Owner or
Owners or to any other person; and
3.4.2.3 that no Equity Owner making such
contribution to the capital of MTP-South Tower shall have any right to
receive any return on or return of such sum at any time prior to the
repayment in full of the Loan and all other obligations of MTP-South Tower
to Aetna (except a right to participate in any disbursement made to
MTP-South Tower in accordance with Section 3.4.3 and Section 7.2.1.8).
3.4.3PERMITTED EQUITY DISTRIBUTIONS. If (a) MTP-South
Tower makes any Additional Loan Advance Repayments following the Effective
Date, (b) on any subsequent Disbursement Date (as defined in Section
7.2.1) during the same or any subsequent Loan Year, the balance of the
Loan becomes less than the Maximum Principal Balance as provided for in
Section 3.4.1 and the schedule attached as Exhibit A for the September 1st
next following such Disbursement Date, and (c) no Default then exists,
then MTP-South Tower shall be entitled to disbursements, up to the amount
of any such Additional Loan Advance Repayments (without interest), of
excess Operating Receipts (as defined in Section 6.2.1) disbursed on such
Disbursement Date in accordance with the terms and conditions of (and at
the priority provided for in) Section 7.2.1.8 below, and any amount so
disbursed to MTP-South Tower may, notwithstanding any other provision of
this Agreement, be distributed or paid by MTP-South Tower to its Equity
Owners; provided, however, that the right to receive such disbursements
pursuant to Section 7.2.1.8 shall terminate on the earliest of (i) the
Maturity of the Loan, (ii) September 1, 2003, or (iii) the date any
Deferred Obligation is created pursuant to Section 4.2. An example of the
operation of Section 3.4.1 and the operation of Section 7.2.1.8 is
attached hereto as Exhibit C.
4. CAPITAL EVENTS.
4.1 PAYMENTS UPON RECEIPT OF CAPITAL PROCEEDS. In the event of
a refinancing of the Loan or the receipt of other Capital Receipts (as
defined in Section 6.2.2 below) by MTP-South Tower (except in connection
with a sale of the Project, which shall be governed by Section 4.4 below,
but including, without limitation, receipt of any insurance proceeds or
condemnation proceeds, to the extent not required to repair or restore the
Project), then:
4.1.1 MTP-South Tower shall be obligated to pay Aetna an
amount (not to exceed the aggregate amount owed to Aetna, including but
not limited to accrued unpaid Fixed Rate Interest, the unpaid balance of
the Loan, any Yield Maintenance Payment and any Participation Interest)
equal to 100% of the amount of net proceeds therefrom ("NET CAPITAL
PROCEEDS"), after payment of or provision for the customary and reasonable
costs associated with such refinancing or other capital event, as
reasonably approved by Aetna ("CAPITAL TRANSACTION COSTS"), including,
without limitation, (i) reasonable legal fees, appraisal costs, points and
other closing costs reasonably associated therewith, or (ii) any costs
payable out of any insurance proceeds or condemnation proceeds as
reasonably required to repair or restore the Project.
4.1.2 As provided for in Section 6.2 below, all such
proceeds received by MTP-South Tower (before deduction or provision for
Capital Transaction Costs) shall constitute "Capital Receipts" and must be
immediately deposited in Aetna's Deposit Account upon receipt by MTP-South
Tower. Agent shall disburse such Capital Receipts from the Deposit
Account as follows:
4.1.2.1 Following Aetna's reasonable approval of
such Capital Transaction Costs and in accordance with a disbursement
schedule proposed by MTP-South Tower and reasonably approved by Aetna at
the time of such capital event, from such Capital Receipts funds shall be
disbursed to MTP-South Tower, in installments, to the extent required to
permit MTP-South Tower to pay Capital Transaction Costs. In the event of
condemnation or casualty, absent the existence of an Event of Default,
Aetna shall permit insurance proceeds or condemnation payments to be
applied to the reasonable costs of any necessary repair and restoration of
the Project, and Aetna's approval of such repair or restoration costs
shall not be unreasonably withheld, delayed or conditioned. Any or all
Capital Transaction Costs may be paid or disbursed by an escrow holder or
other third party (other than MTP-South Tower or its affiliates) in
connection with a sale, refinancing or other event giving rise to Capital
Receipts, in which event (i) disbursements for such Capital Transaction
Costs shall be made by such escrow holder or other third party, and not by
Agent, and (ii) the approval by Aetna of a settlement statement or similar
instrument describing such costs shall constitute Aetna's approval of such
Capital Transaction Costs for purposes of this Agreement.
4.1.2.2 The entire amount of Net Capital Proceeds
(i.e., all Capital Receipts after payment of or provision for Capital
Transaction Costs to be disbursed to MTP-South Tower pursuant to
Section 4.1.2.1), shall be disbursed to Aetna, to be applied by Aetna to
reduction of the principal amount of the Loan plus any Yield Maintenance
Payment with respect to such principal payment (as provided for in
Section 3.3, no Yield Maintenance Payment shall be due in connection with
such principal payments made from the proceeds of condemnation awards or
insurance recoveries).
4.1.2.3 If the amount of Net Capital Proceeds
paid to Aetna in accordance with Section 4.1.2.2 is sufficient to repay
the entire principal balance of the Loan and any Yield Maintenance Payment
associated therewith, then the Loan shall mature and all other amounts due
at Maturity, as provided for in Section 3.2 above, shall be due and
payable, and:
4.1.2.3.1 Aetna shall apply such excess amount
of Net Capital Proceeds, after repayment pursuant to Section 4.1.2.2 of
the entire principal balance of the Loan and any Yield Maintenance Payment
associated therewith:
(1) first, to Fixed Rate Interest and
any other accrued unpaid obligations of MTP-South Tower under the Amended
Loan Documents other than Participation Interest, and
(2) second, (except in connection with
Early Repayment) to Participation Interest.
4.1.2.3.2 To the extent such excess amount of
Net Capital Proceeds is insufficient to pay all of such obligations owed
to Aetna under the Amended Loan Documents, including (except in connection
with Early Repayment) all Participation Interest, then MTP-South Tower
shall be obligated to immediately pay Aetna all such amounts, subject,
however, to the provisions of Section 4.2 regarding deferral of the
obligation to pay unpaid Participation Interest upon certain refinancings.
4.2 SUBORDINATION OF PARTICIPATION INTEREST ON REFINANCING. In
the event that MTP-South Tower refinances the Loan, to the extent that the
net proceeds of such refinancing (after payment of or provision for the
Capital Transaction Costs and funding any Qualified Reserves and/or
Qualified Set-Asides (as defined in Section 4.2.8.5 and Section 4.2.8.6
below, respectively) required by the first lien lender) plus all amounts
in the Project Reserve are sufficient (and are applied) to repay the
entire outstanding principal balance of the Loan, plus any Yield
Maintenance Payment associated therewith, and to pay all accrued unpaid
Fixed Rate Interest and all other obligations to Aetna under the Amended
Loan Documents, but are not sufficient to repay in full all Participation
Interest then due Aetna (i.e., in the event of Early Repayment, for which
no Participation Interest is due, the provisions of this Section 4.2 shall
not apply), then Aetna shall permit MTP-South Tower to repay the unpaid
balance of such Participation Interest (which balance shall be determined
and fixed as of the date (the "REFINANCING DATE") of such refinancing and
repayment of the principal balance of the Loan), plus Fixed Rate Interest
on such unpaid balance from the Refinancing Date until repaid (the
"DEFERRED OBLIGATION"), over a three year period subject to the terms and
conditions of this Section 4.2.
4.2.1 The Deferred Obligation shall remain a secured debt
obligation of MTP-South Tower, as part of the Loan and evidenced and
secured by the Amended Loan Documents (and subject, without limitation, to
the limitation on the liability of MTP-South Tower and its Equity Owners
in accordance with Section 11.8), as the Amended Loan Documents are
further amended as provided for in this Section 4.2.
4.2.2 The lien of the Amended Loan Documents securing the
Deferred Obligation shall be subordinated by Aetna to the lien of the
instruments and agreements evidencing and securing the new financing
obtained by MTP-South Tower to refinance the Loan, pursuant to a
subordination agreement reasonably acceptable to Aetna.
4.2.3 The Deferred Obligation, including all accrued
unpaid interest thereon, shall be due and payable on the earlier of
(i) September 1, 2006 or (ii) the third anniversary of the Refinancing
Date, regardless of the availability of funds for such repayment.
4.2.4 During the three year period following the
Refinancing Date, however, the Deferred Obligation shall be repaid out of,
and only to the extent of (i) 100% of Operating Receipts (as defined in
Section 6.2.1) remaining after payment or provision for (a) operating
costs, including taxes and insurance and a working capital reserve not to
exceed $250,000, (b) capital expenditures, including funding a Qualified
Reserve therefor not to exceed $3 million, and (c) debt service on the
first lien loan, and (ii) 100% of any Net Capital Proceeds (as defined in
Section 4.1.1) remaining after any required repayment of such first lien
loan.
4.2.5 The Deposit Account and lockbox requirements of the
Lockbox Agreement, as supplemented and modified by this Agreement, shall
continue to apply to provide for such application of funds to operating
expenses, including taxes and insurance and a working capital reserve not
to exceed $250,000, and capital expenditures, including funding a reserve
therefor not to exceed $3 million, and other approved obligations of
MTP-South Tower, including debt service on the first lien loan, and
payment of the Deferred Obligation; provided, however, that if the first
lien lender requires that MTP-South Tower provide such lender with a
similar lockbox or deposit account arrangement, then Aetna agrees to
consent to same provided that such documents, in form and substance
reasonably acceptable to Aetna, provide for direct payments to Aetna for
the Deferred Obligation from all excess funds as provided for herein.
4.2.6 Following the date that the balance of the Loan
(other than the Deferred Obligation) is repaid, Aetna shall have no
obligation to make any Additional Loan Advances and there shall be no
further disbursements to MTP-South Tower in connection therewith pursuant
to Section 7.2.1.8.
4.2.7 Aetna also agrees to reasonably cooperate to
accommodate the reasonable requests of the first lien lender in connection
with amendments to the Amended Loan Documents and agreements subordinating
the liens thereof to the liens of the instruments and agreements
evidencing and securing the first lien loan.
4.2.8 The economic terms of the new first lien loan to
which any Deferred Obligation is to be subordinated (the "NEW LOAN") shall
be subject to the prior approval of Aetna, in its reasonable discretion
(as such standard is provided for in Section 5.4), unless the following
conditions are satisfied, in which event Aetna will be deemed to have
approved such economic terms (and any amendment of such economic terms
shall similarly remain subject to the prior approval of Aetna, in its
reasonable discretion):
4.2.8.1 the maturity date of the New Loan must be
not less than five years;
4.2.8.2 the interest rate of the New Loan must be a
market rate of interest, taking into account points and fees;
4.2.8.3 the New Loan must be non-amortizing or have
an amortization schedule of not less than 25 years (level payment), with
no additional principal payments required before maturity;
4.2.8.4 no kicker, participating or other contingent
interest must be due or payable under the New Loan prior to the repayment
in full of the Deferred Obligation;
4.2.8.5 if the lender with respect to the New Loan
requires reserves for capital expenditures to be funded or maintained out
of disbursements from Operating Receipts, then (i) the maximum amount of
such capital reserve must not exceed $3,000,000 (in addition to a working
capital reserve of not more than $250,000 and any reserve for Project
property taxes and/or insurance premiums), and after the Refinancing Date
the Project Reserve Maximum Balance shall be reduced by the amount of the
required balance in such capital reserve (so that the aggregate amount of
both (in addition to a working capital reserve not to exceed $250,000 and
a reserve for Project property taxes and insurance) does not exceed the
sum of $3,000,000), and (ii) Aetna must have a lien on such reserve
subordinate only to any lien thereon securing the New Loan (such reserve
meeting the foregoing conditions is herein referred to as a "QUALIFIED
RESERVE");
4.2.8.6 if in addition to any Qualified Reserve, the
lender with respect to the New Loan requires any amounts be set-aside from
the proceeds of the New Loan, then (i) such set-asides must be used to
fund a Qualified Reserve or be held to fund Project costs (including
capital costs, operating expenses and debt service) over a period not to
exceed three years (and Aetna will not unreasonably withhold its approval
of a longer period), (ii) any amounts released from such set-asides not
used for such purposes must be included in Operating Receipts for
disbursement in accordance with this Agreement, and (iii) Aetna must have
a lien on any such set-aside funds subordinate only to any liens thereon
securing the New Loan (such set-asides meeting the foregoing conditions
are herein referred to as "QUALIFIED SET-ASIDES"); and
4.2.8.7 if the proceeds of the New Loan are to be
disbursed in installments, then the net proceeds of any such future
advances, to the extent not applied to Project operating or capital costs
or held in a Qualified Set-Aside for such Project costs, must be applied
to the Deferred Obligation when received by MTP-South Tower.
4.2.9 The obligation of Aetna to commit to such
subordination and deferral of unpaid Participation Interest shall be
subject to the following conditions:
4.2.9.1 the Loan and all other obligations of
MTP-South Tower to Aetna (other than Participation Interest) must have
been repaid in full;
4.2.9.2 to the extent that the net proceeds of the
New Loan (after payment of reasonable and customary closing costs
(including, without limitation, reasonable attorneys fees, points, swap
costs, and title insurance premiums) and funding any Qualified Reserves
and Qualified Set-Asides required by the first lien lender) plus all
amounts in the Project Reserve (but excluding amounts in the Tax and
Insurance Escrow, the Deposit Account or the Operating Account) exceed the
amount required to satisfy such other Loan obligations to Aetna, the
excess amount must have been applied to pay Participation Interest;
4.2.9.3 amendments to the Amended Loan Documents,
and agreements subordinating the liens thereof to the instruments and
agreements securing the New Loan, must be acceptable to Aetna, in its
reasonable discretion;
4.2.9.4 the economic terms of the New Loan must have
been approved, or deemed approved, by Aetna as provided for in
Section 4.2.8;
4.2.9.5 the first lien lender must have consented to
all documents and the transactions provided for therein;
ce to t the closing of such transactions must occur
on or before September 1, 2003, the scheduled maturity date of the Loan
(subject to any extension of that date by written express amendment of the
Amended Loan Documents);
4.2.9.7 all instruments and agreements must be duly
executed and delivered by all parties;
4.2.9.8 Aetna must receive opinions of counsel to
MTP-South Tower as Aetna may reasonably request;
4.2.9.9 Aetna must have received an endorsement to
its title insurance policy, confirming the second lien priority of the
instruments and agreements evidencing and securing the Deferred
Obligation;
and
4.2.9.10 MTP-South Tower must reimburse all of
Aetna's reasonable costs and expenses in connection with negotiating,
documenting and closing the transactions provided for in this Section 4.2
(including, without limitation, reasonable attorneys' fees and costs).
4.3 RIGHT OF FIRST OFFER. In connection with any sale or other
disposition of the Project by MTP-South Tower, MTP-South Tower must comply
with the terms of this Section 4.3. If MTP-South Tower desires to sell or
otherwise dispose of the Project, then MTP-South Tower must offer to sell
the Project to Aetna, which offer shall be in writing (the "OFFER") and
shall specify the purchase price and any other material economic terms
upon which MTP-South Tower would be willing to sell the Project; without
limiting the foregoing: (i) unless otherwise specified in the Offer, the
Project shall include the Excluded Assets provided for herein, and (ii)
the Offer must specify the terms of any post-closing property management
contract with MTP-Development or any other affiliate of MTP-South Tower
(as used herein, an "AFFILIATE" of MTP-South Tower means any person or
entity which is controlled by, controls or is under common control with
MTP-South Tower or any of the Equity Owners of MTP-South Tower) -- absent
such specification, there shall be no such affiliate contract.
4.3.1 If Aetna accepts such Offer in writing within
thirty (30) days following its receipt, or accepts any Revised Offer (as
defined below) within seven (7) business days following its receipt,
MTP-South Tower and Aetna shall proceed in good faith to document and
close such sale as soon as possible, in accordance with such Offer or
Revised Offer, as applicable, and at such closing, the Project shall be
sold to Aetna or its nominee subject to the matured Loan, i.e., all
accrued unpaid Fixed Rate Interest, the entire principal balance, any
Yield Maintenance Payment associated therewith, Participation Interest
(except on Early Repayment), and all other amounts payable under the
Amended Loan Documents shall be deducted in the determination of the
portion of the purchase payable to MTP-South Tower at the closing of such
sale of the Project to Aetna or its nominee. The amount of Participation
Interest, if any, shall be calculated in the same manner as provided for
in Section 4.6 below (i.e., based on (i) the purchase price, plus (ii)
amounts in the Deposit Account, in the Project Reserve and in the Tax and
Insurance Escrow, plus (iii) all cash and other assets of MTP-South Tower
other than the Excluded Assets), except that no closing costs shall be
payable at such closing or deductible in such calculation of Participation
Interest then due. At such closing, property taxes, operating expenses
and current rents shall be prorated. Aetna and MTP-South Tower shall be
obligated to close such sale within thirty (30) days following the date
Aetna accepts the applicable Offer or Revised Offer, and in such event,
solely for the purpose of determining whether or not any Yield Maintenance
Payment or Participation Interest is then due, provided MTP-South Tower
diligently proceeds to close such sale to Aetna, such sale shall be deemed
to have occurred on the date Aetna accepts the Offer or Revised Offer, as
applicable.
4.3.2 If Aetna declines or fails to accept an Offer within
such thirty (30) day period, or if Aetna declines or fails to accept a
Revised Offer within the seven business day period provided for below,
then MTP-South Tower shall have the right at any time during the following
nine months to close the sale of the Project in an Arms-Length Sale (as
provided for in Section 4.4 below) provided that the purchase price and
other material economic terms of such sale are no more favorable to the
buyer than the purchase price and other material economic terms declined
or so deemed declined by Aetna, and in such event Aetna shall have no
approval rights with respect to such Arms-Length Sale (provided that the
other "arms-length" requirements of Section 4.4 are satisfied); provided,
however:
4.3.2.1 that at any time during such nine month
period following Aetna's rejection or deemed rejection of an Offer,
MTP-South Tower shall have the right to submit a revised offer to Aetna (a
"REVISED OFFER"), which Aetna must accept, if at all, within seven (7)
business days following its receipt;
4.3.2.2 that Aetna's failure to accept any such
Offer or Revised Offer from MTP-South Tower shall not affect the right of
Aetna to approve or reject any sale or other disposition of the Project
which is not an Arms-Length Sale in accordance with Section 4.5
(including, without limitation, Aetna's rights in connection with certain
transactions in accordance with Paragraph 17 of the Note); and
4.3.2.3 that the references herein to MTP-South
Tower's rights within the nine month period described shall not be
construed to extend the date of Maturity of the Loan.
4.4 ARMS-LENGTH SALE OF PROJECT. In the event of an
Arms-Length Sale (as defined below) the Loan shall be due and payable and,
except in the case of Early Repayment (when no Participation Interest is
due hereunder), the amount of Participation Interest related to the value
of the Project shall be determined with reference to the amount of the net
proceeds of such sale, as provided for in Section 4.5 (in all other cases,
the amount of Participation Interest attributable to the value of the
Project shall be determined by appraisal, as more particularly provided
for in Section 2.2.2.1 and in the Allonge). As used herein, a sale of the
Project shall constitute an "ARMS-LENGTH SALE" only if:
4.4.1 the purchase price and the other material economic
terms of such sale are no more favorable to the buyer than those contained
in an Offer or any Revised Offer made by MTP-South Tower to Aetna in
accordance with Section 4.3, which Offer and any Revised Offer have been
declined by Aetna (or been deemed to have been declined by Aetna in
accordance with Section 4.3.2) within nine months preceding the date of
closing of such sale;
4.4.2 following such sale, if MTP-Development or any other
affiliate of MTP-South Tower is to continue to manage the Project, the
management fee payable to such affiliated entity is not more than the
management fee now payable by MTP-South Tower to MTP-Development, i.e., 2-
1/2% of Project revenues;
4.4.3 if following such sale MTP-Development or any other
affiliate of MTP-South Tower is to continue to provide leasing agent
services at the Project, the leasing commissions payable to such entity
are not more than the leasing commissions payable to MTP-Development under
its contract with MTP-South Tower as of the date of this Agreement; and
4.4.4 all other aspects of such sale are with unaffiliated
entities, including but not limited to any sales commissions payable in
connection with such sale, and none of MTP-South Tower or any of the
Equity Owners of MTP-South Tower or any affiliate of any of them retains
or receives any direct or indirect interest in the buyer or in the Project
following such sale.
Notwithstanding any other provision of this Agreement, MTP-South Tower
shall not be required to obtain the consent of Aetna to an Arms-Length
Sale of the Project.
4.5 PROCEEDS OF SALE OF PROJECT. In the event of any sale or
other disposition of the Project, whether or not same qualifies as an
Arms-Length Sale hereunder (this Section, however, shall not be deemed to
be a consent to any transfer other than in accordance with Section 5.1
hereof), upon such sale or other disposition ("SALE"):
4.5.1 The Loan and all other obligations of MTP-South
Tower to Aetna under the Amended Loan Documents shall be immediately due
and payable, and all of such obligations must be paid to Aetna regardless
of the amount of the net proceeds of such sale (except in the case of
Participation Interest payable in connection with an Arms-Length Sale, as
provided for in Section Documents relating to the assignment of the
Partnership's interest in the 125 Broad Street Building to O&Y Plaza Corp.
("Assignee") are incorporated herein by reference to the Partnership's
report for October 15, 1994 on Form 8K dated November 15, 1994.
Lockbox and forbearance agreements related to the mortgage note
secured
by the Wells Fargo Building are incorporated herein by reference to the
Partnership's report for December 31, 1994 on Form 10-K (File No. 0-16111)
dated March 27, 1995.
Modification to Reserve Escrow Agreement relating to the 260 Franklin
Street Building is hereby incorporated by reference to the Partnership's
Report for June 30, 1995 on Form 10-Q (File No. 0-16111) dated August 9,
1995.
The Partnership Interest Purchase Agreement related to the sale of
the Partnership's interest in Eastridge Mall is hereby incorporated herein
by reference to the Partnership's report for June 30, 1995 on Form 8-K
dated July 24, 1995.
Documents relating to the operating agreement of Maguire Thomas
Partners-South Tower, L.L.C. are filed herewith.
Modification to Reserve Escrow Agreement dated December 4, 1996
relating to the 260 Franklin Street Building dated December 4, 1996 are
filed herewith.<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed
on its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
By: JMB Realty Corporation
Corporate General Partner
By: GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
Judd D. Malkin, Chairman and
Chief Financial Officer
March 21, 1997
NEIL G. BLUHM*
Neil G. Bluhm, President and Director
Date:March 21, 1997
H. RIGEL BARBER*
H. Rigel Barber, Chief Executive Officer
Date:March 21, 1997
GLENN E. EMIG*
Glenn E. Emig, Chief Operating Officer
Date:March 21, 1997
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 21, 1997
A. LEE SACKS*
A. Lee Sacks, Director
Date: March 21, 1997
STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 21, 1997
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
Gailen J. Hull, Attorney-in-Fact
March 21, 1997
EXHIBIT 4-E
- -----------
(Carlyle-XV)
AMENDED AND RESTATED PROMISSORY NOTE
$40,834,557.40 October __, 1996
FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby
promises to pay to the order of WELLS FARGO BANK, N.A., a national banking
association ("Bank"), at its office at 2120 E. Park Place, Suite 100, El
Segundo, California 90245 (Attn: J. Morgan)(or such other place as Bank may
direct from time to time), in lawful money of the United States and in
immediately available funds, (i) the principal amount of FORTY MILLION
EIGHT HUNDRED THIRTY-FOUR THOUSAND FIVE HUNDRED FIFTY-SEVEN AND 40/100
DOLLARS ($40,834,557.40) on September 1, 2003, (and such earlier times as
provided herein) and (ii) interest from the date hereof (computed on the
basis of a year of 360 days for the actual number of days elapsed), in like
money and funds and at such office, on principal amounts outstanding
hereunder until paid in full, at a rate per annum of:
(a) seventeen percent (17%), to and including the date of
maturity (whether at the stated due date, upon acceleration or otherwise),
said interest to be payable at the times and in the amounts set forth in
Section 4 of the Loan Modification Agreement (defined below); and
(b) after maturity (whether at scheduled maturity, upon
acceleration or otherwise), the greater of (i) seventeen percent (17%) per
annum, or (ii) Bank's "Prime Rate" from time to time PLUS five percent
(5%), which post-maturity interest shall change effective on and as of the
date of each change in Bank's Prime Rate and shall be payable upon demand.
(Bank's "Prime Rate" is the rate of interest which Bank announces publicly
from time to time at its San Francisco or Los Angeles executive office as
its "prime rate" for unsecured commercial borrowings.)
This Note is the "New Note" referred to in the Loan
Modification Agreement by and between Borrower and Bank dated as of the
date hereof (the "Loan Modification Agreement"), and amends and restates
that certain Promissory Note dated December 30, 1985, made by Borrower to
Bank (as successor in interest to Crocker National Bank) in the original
principal amount of $12,250,000. This Note is secured by certain
Collateral more specifically described in the Security Agreements and as
provided in the Loan Modification Agreement.
Whenever any Collateral proceeds or cash Collateral (including,
without limitation, any Subject Disbursements or Management Disbursements)
are received by Bank (or are collected by or paid to Bank) under any of the
Loan Documents (as defined in the Loan Modification Agreement), such amount
shall be immediately due and payable under this Note. Such amount shall be
applied first to expenses and other amounts due other than principal and
interest, then to interest and then to principal owing under this Note.
However, notwithstanding the foregoing, so long as Maguire/Thomas Partners
Development Ltd. ("Property Manager") is obligated to make monthly
installment payments of the "Manager's Payment" to Borrower or Bank under
the Manager's Letter Agreement (as defined in the Loan Modification
Agreement), or Maguire Thomas Partners-South Tower, LLC is obligated to
withhold any installment of the Manager's Payment, if requested by Borrower
or Bank, Borrower's sixty-five percent (65%) share of the $25,000 shall be
due and payable under this Note no later than thirty (30) days after the
date Bank gives written notice to Property Manager or Maguire Partners-
Bunker Hill, Ltd. ("Maguire")(with a copy to Borrower), or notice directly
to Borrower, of the failure of Property Manager or Maguire to pay such
installment payment within the five (5) business day cure period following
the date such installment payment is due. Since such installment payment
is due on the first day of each calendar month under the Manager's Letter
Agreement, the corresponding payment under this Note shall be due and owing
to the Bank on that same date, subject to such cure period.
Upon any failure by Borrower to (i) make any payment of
principal hereunder when and as the same shall become due and payable, or
(ii) make any payment of interest hereunder within (5) days after such
interest becomes due and payable, or upon any other default under this
Note, or upon the occurrence of an Event of Default as defined in the Loan
Agreement (as defined in the Loan Modification Agreement) or the Security
Agreements, the holder of this Note may, at its option and without notice,
declare immediately due and payable the entire unpaid principal balance of
this Note, together with all accrued but unpaid interest.
Borrower, for itself and its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest,
demand, dishonor and nonpayment of this Note. Borrower expressly agrees
that this Note or any payment hereunder may be extended from time to time,
and that Bank may accept security or release any security herefor, all
without in any way affecting the liability of Borrower or any endorsers or
guarantors hereof.
No extension of time for the payment of this Note or any
renewal or modification hereof made by agreement by Bank with any person or
entity now or hereafter liable for the payment of this Note shall affect
the liability of Borrower under this Note, even if Borrower is not a party
to such agreement.
Borrower agrees to pay all collection expenses, court costs and
reasonable attorneys' fees which may be incurred in connection with the
collection, defense, or enforcement of this Note or any part hereof,
including by exercising any rights available to a creditor with respect to
this Note or any Collateral in any case commenced by or against the
Borrower under any provision of the United States Bankruptcy Code. If any
suit or action is instituted to enforce this Note, Borrower promises to
pay, in addition to the costs and disbursements otherwise allowed by law,
reasonable attorneys' fees in such suit or action. In the event that suit
is brought under this Note, any judgment obtained in or as a result of such
suits shall be enforceable solely against the Collateral, and Borrower and
its partners shall have no personal liability therefor.
All amounts payable under this note are payable in lawful money
of the United States. Checks will constitute payment only when collected.
Notwithstanding anything to the contrary in this Note, Bank is
entitled to all of the benefits provided to it in the Loan Agreement, the
Loan Modification Agreement, the Security Agreements and all other Loan
Documents, and reference is hereby made to the foregoing for full
particulars of the matters described therein.
Terms used in this Note and not otherwise defined herein shall
have the meanings given to such terms in the Loan Modification Agreement.
This Note shall be governed by and construed in accordance with
the laws of the State of California.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB Realty Corporation
By:
Its:
EXHIBIT 4-F
- -----------
(Carlyle-XV)
LOAN MODIFICATION AGREEMENT
(Carlyle-XV)
This Loan Modification Agreement ("Agreement") is executed as of this
_____ day of October, 1996, by and between CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois limited partnership (the "Borrower"), and WELLS
FARGO BANK, N.A., as successor by merger to Crocker National Bank (the
"Bank"). This Agreement is executed based on the following facts and
understandings.
RECITALS
--------
A. On or about December 26, 1985, Borrower and the Bank entered
into that certain "Loan Agreement" pursuant to which the Bank made a loan
(the "Loan") to Borrower in the original principal amount of $22,750,000.
The Loan was evidenced by a promissory note dated as of December 30, 1985
(the "Note"). All obligations of Borrower to the Bank arising out of or
relating to the Loan Agreement, the Note, or any other documents executed
pursuant to any of them, as they may be amended from time to time, are
secured by certain collateral described in a "Security Agreement" dated
December 26, 1985 and executed by Borrower in favor of the Bank (the
"Original Security Agreement"). The Loan Agreement, the Note, the Original
Security Agreement, and the other documents executed concurrently therewith
or at any time before the Closing Date pursuant thereto are hereafter
referred to as the "Original Loan Documents."
B. Borrower is a general partner of Maguire Thomas Partners-South
Tower (the "Partnership"). The other general partners of the Partnership
are Maguire Partners-Bunker Hill, Ltd. ("Maguire") and Carlyle Real Estate
Limited Partnership-XIV ("Carlyle 14"). The sole limited partner of the
Partnership was International Business Machines Corporation, a New York
Corporation ("IBM"), although its interest was recently acquired by
Maguire. Borrower has requested the Bank's consent to the merger of the
Partnership into a limited liability company formed under California law to
be named Maguire Thomas Partners-South Tower, LLC (the "LLC"), and to the
Operating Agreement of Maguire Thomas Partners-South Tower, LLC dated as of
September 24, 1996 (the "LLC Operating Agreement"), which replaces the
"Partnership Agreement" of the former Partnership (as defined in the LLC
Operating Agreement).
C. Carlyle 14 is also indebted to the Bank. On or about December
26, 1985, Carlyle 14 and the Bank entered into a "Loan Agreement" (the
"Carlyle 14 Loan Agreement") pursuant to which the Bank made a loan (the
"Carlyle 14 Loan") to Carlyle 14 in the original principal amount of
$12,250,000. The Carlyle 14 Loan was evidenced by a "Promissory Note"
dated December 30, 1985 (the "Carlyle 14 Note"). All obligations of
Carlyle 14 to the Bank arising out of or relating to the Carlyle 14 Loan
Agreement, the Carlyle 14 Note, or any other documents executed at any time
pursuant to any of them as they might be amended in writing from time to
time were secured by certain collateral described in a "Security Agreement"
(the "Carlyle 14 Security Agreement") dated December 26, 1985 and executed
by Carlyle 14 in favor of the Bank. The Carlyle 14 Loan Agreement, the
Carlyle 14 Note, and the Carlyle 14 Security Agreement, and the other
documents executed concurrently therewith or at any time pursuant thereto
by Carlyle 14 and/or the Bank are hereafter referred to as the "Original
Carlyle 14 Loan Documents." The Original Carlyle 14 Loan Documents,
together with the amendments and supplements thereto (such as counterparts
corresponding to the New Documents as described in Section 3.1 from
Borrower) as are required by the Carlyle 14 Loan Modification Agreement
dated as of the date hereof (herein, together with that Carlyle 14 Loan
Modification Agreement, collectively called the "New Carlyle 14 Documents")
are herein collectively called the "Carlyle 14 Loan Documents."
D. Borrower's present and future obligations to the Bank are
secured by the "Collateral" described in ANNEX A hereto (the "Collateral").
E. The primary asset of the Partnership is an office building more
specifically described in EXHIBIT A attached hereto (herein, together with
the Partnership's right, title and interests in all equipment, fixtures,
inventory and other real and personal property located thereon or
associated therewith and all rights and interests appurtenant or related
thereto consisting of rents, issues, profits, leases, accounts, chattel
paper, instruments, general intangibles, contract rights and other rights
to payment, collectively called the "Property"). The Property is
encumbered by a lien in favor of Aetna Life Insurance Company, as successor
to the Aetna Casualty & Surety Company ("Aetna") in the original principal
amount of $200,000,000 (the "Aetna Loan"). The Partnership has negotiated
or is in the process of negotiating and documenting a modification of the
Aetna Loan with a maturity of September 1, 2003 (the "Aetna Restructuring")
pursuant to a Modification and Extension Agreement dated as of
September 19, 1996, and certain "Amended Loan Documents" described therein
(herein collectively called the "Aetna Restructuring Documents"). The
"Aetna Loan Documents" include all "Loan Documents" defined in the Aetna
Restructuring Documents, together with the Aetna letter agreement dated
October 24, 1996 "Re Payment of Management Fee" (the "Aetna Manager Fee
Transfer Approval") and the "Letter Agreement" dated September 30, 1996
referenced therein (the "Manager's Letter Agreement") among Carlyle, the
LLC and Maguire/Thomas Partners Development Ltd. (herein, together with its
successors and assigns called, "Property Manager"), the Company
Acknowledgment and Consent dated as of the date hereof among Maguire,
Property Manager, LLC, Carlyle and Bank of America NT&SA (the "Manager's
Warranty"), and the Acknowledgment and Agreement dated September 25, 1996,
executed by Aetna in favor of the Bank (the "Aetna/WFB Acknowledgment").
F. The obligations evidenced by the Note matured on December 1,
1994. As of that date, the principal outstanding under the Note totalled
$12,250,000. Interest continued to accrue thereafter at the rate
applicable after maturity. Borrower has asked the Bank to modify and
extend the maturity date of the Loan approximately to coincide with the
maturity date of the Aetna Loan after completion of the Aetna
Restructuring. Borrower has also asked the Bank to consent to the Aetna
Restructuring Documents.
G. Subject to the terms and conditions set forth in this
Agreement, the Bank is willing to modify and extend the maturity date of
the Loan, to make certain other modifications to the Original Loan
Documents as expressly set forth below, and otherwise to do what is
expressly required for the Bank to do in this Agreement.
AGREEMENT
---------
WHEREFORE, for fair and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as
follows:
1. ACKNOWLEDGEMENTS, DEFINITIONS.
1.1 RELATION TO PAST. Borrower acknowledges, agrees,
represents and warrants that the Recitals set forth above are true and
correct. Borrower further acknowledges and agrees that, except as
expressly revised as set forth herein, the Original Loan Documents remain
fully valid, binding and enforceable in accordance with their respective
express, written terms, subject to no claims, defenses, or offsets of any
kind.
1.2 DEFINITION OF "LOAN DOCUMENTS". The term "Loan
Documents" used in this Agreement and in Article III of the Loan Agreement
(and elsewhere in the Loan Agreement) shall be deemed to refer not only to
the Original Loan Documents, but also to this Agreement, the New Documents,
all documents and agreements executed pursuant thereto, and all other duly
executed written amendments or supplements thereto or modifications
thereof. The New Documents are Loan Documents under all of the Original
Loan Documents. References to the "Partnership" in Article III of the Loan
Agreement shall be deemed to also refer to the LLC, such that, for example,
Section 3.5 of the Loan Agreement which contains a representation and
warranty that there is also no action, suit or proceeding pending against
the Partnership shall be deemed to also constitute a representation and
warranty that, to the extent applicable, as of the date hereof, there is
also no action, suit or proceeding pending against the LLC. As used in the
Original Loan Agreement, the following definitions are also modified as
follows for the purposes of the Loan Documents: (a) the "Partnership
Agreement" also includes the LLC Operating Agreement; (b) "Bank" means
Wells Fargo Bank, N.A. and its successors and assignees; and (c) "Security
Agreement" means collectively the Original Security Agreement and the
Supplemental Security Agreement. Except as otherwise expressly provided in
this Agreement, the terms used herein and defined in the California Uniform
Commercial Code as amended or recodified from time to time ("UCC") shall be
used in this Agreement with that defined meaning.
2. AGREEMENTS BY THE BANK. Subject to the satisfaction of the
conditions precedent set forth in Section 3 below, the Bank agrees as
follows:
2.1 NEW NOTE. To modify the Note in accordance with the
terms set forth in a "New Note" in the form of EXHIBIT B attached hereto,
such that (among other things):
(a) The principal amount shall be equal to the amount
stated in the New Note (calculated as to the sum of all outstanding
principal plus all accrued and unpaid interest (at the rate applicable
under the Note after maturity) from and after December 1, 1985 through the
"Closing Date" (defined below) plus a capitalized restructuring fee. The
restructuring fee is approximately equal to the difference between (i) the
total amount of interest payments made under the Note from and after
December 1, 1985 through the Closing Date, plus accrued and unpaid interest
owing on the Note, and (ii) the amount which would have been paid under the
Note if the interest rate applicable thereunder for the period from
December 1, 1985 through the Closing Date equalled seventeen percent (17%)
per annum computed on the basis of a 360 day year for actual days elapsed;
(b) The maturity date shall be extended until the first
to occur of (i) September 1, 2003, or (ii) acceleration due to the
occurrence of an "Event of Default";
(c) Interest shall accrue on the outstanding principal
amount of the New Note at a rate per annum prior to maturity of seventeen
percent (17%) per annum, and after maturity at a rate per annum equal to
the greater of (i) seventeen percent (17%) per annum, or (ii) the "Prime
Rate" (being charged by the Bank from time to time, changing with each
change in such Prime Rate) plus five percent (5%), in either case, based on
a 360-day year for actual days elapsed.
(d) The Loan (and all costs and expenses and other
payment obligations of Borrower) may be prepaid at any time without
penalty; and
(e) The New Note interest and principal shall be due
when and to the extent that any Subject Disbursements, Management
Disbursements, or other Collateral or proceeds are available in cash, and
such amounts shall be allocated first to expenses and other amounts due
other than principal and interest, then to interest and then to principal.
However, notwithstanding the foregoing, so long as the Property Manager is
obligated to make monthly installment payments (each a "Manager's Payment")
of the Management Disbursements to Borrower or the Bank under the Manager's
Letter Agreement (or the LLC is obligated to withhold any portion of any
installment of the $300,000 payment from Property Manager, if requested by
Carlyle or the Bank), Borrower's sixty-five percent (65%) share of $25,000
shall be due under the New Note no later than thirty (30) days after the
date the Bank gives written notice to Property Manager or Maguire (with a
copy to Borrower), or notice directly to Borrower, of the failure of
Property Manager or Maguire to pay such installment payment within the five
(5) day cure period following the date such installment payment is due.
Since such installment is due on the first day of each calendar month under
the Manager's Letter Agreement, the corresponding payment on the New Note
shall be due and owing to the Bank on the same date, subject to such cure
period.
2.2 ADDITIONAL ADVANCE. Subject to and upon the terms and
conditions stated in this Agreement, the Bank shall advance for the account
of Borrower Six Hundred Fifty Thousand and No/100 Dollars ($650,000.00) as
additional indebtedness evidenced by the New Note. Such advance shall be
disbursed by the Bank directly to the escrow for the Aetna Restructuring in
order to satisfy Borrower's share of the funds required by Aetna as a
condition to the closing of that transaction, and Borrower hereby
unconditionally consents to that direct disbursement of such additional
advance.
2.3 OTHER MODIFICATIONS. The Original Loan Documents shall
be deemed to have been modified and supplemented as expressly set forth in
this Agreement, including by the New Documents described below. However,
except as otherwise expressly so amended or supplemented by New Documents,
the Original Loan Documents remain in full force and effect.
3. CONDITIONS PRECEDENT. It shall be a condition precedent to
each and every obligation of the Bank to Borrower under this Agreement that
each of the following shall be satisfied (the date the satisfaction of
which shall be referred to as the "Closing Date"), which Closing Date shall
be no later than October 31, 1996 (as to which time is of the essence):
3.1 DOCUMENTS. The Bank shall have received originals of the
following documents from Borrower, each in form and substance satisfactory
to the Bank, and each of which shall have been duly executed by all parties
thereto (herein collectively called the "New Documents"):
(a) this Agreement (or a counterpart thereof);
(b) the "New Note" substantially in the form of EXHIBIT
B attached hereto;
(c) a "Release" in substantially the form of EXHIBIT C
attached hereto;
(d) a "Wells Fargo Bank Addendum" to the LLC Operating
Agreement executed by Maguire and in form and substance satisfactory to the
Bank;
(e) a "Notice of Assignment and Acknowledgement of
Receipt" in the form of EXHIBIT D attached hereto executed by the LLC and
each of the members thereof;
(f) a "Notice of Assignment and Acknowledgement of
Receipt" in the form of EXHIBIT D attached hereto executed by the Property
Manager (defined below);
(g) a "Security Agreement" in the form of EXHIBIT E
attached hereto (the "Supplemental Security Agreement");
(h) a "UCC-1 Financing Statement," and an amendment to
the existing UCC financing statement, each in the form of EXHIBIT F
attached hereto; and
(i) the Aetna Manager's Fee Transfer Approval, the
Manager's Letter Agreement, the Manager's Warranty, and the Aetna/WFB
Acknowledgment in form and substance satisfactory to the Bank.
3.2 COLLATERAL. The Bank shall have received a duly
perfected security interest of no less than first priority in all
Collateral described in ANNEX A hereto.
3.3 EXTENSION FEES. Borrower shall have paid to the Bank an
"Extension Fee" in cash or immediately available funds equal to $32,430.
Furthermore, the Bank shall have received in cash or in immediately
available funds from Carlyle 14 a separate extension fee of $17,570.
3.4 COSTS AND ATTORNEYS' FEES. Borrower shall have
reimbursed the Bank for all costs, expenses, and reasonable attorneys' fees
incurred between January 1, 1996, and the Closing Date in connection with
the defense, protection, exercise of the Bank's rights under, or
enforcement of, the Original Loan Documents, in responding to claims and
disputes raised by any of Borrower's partners in the Partnership or Aetna,
in negotiating and documenting the terms of this Agreement and the other
New Documents (and the superseded negotiations of other related matters),
in reviewing and commenting upon the Aetna loan transaction and other
matters potentially threatening or affecting the Collateral, in reviewing
and commenting upon the restructuring of the Partnership into an LLC and
negotiating and documenting the LLC Operating Agreement, and any and all
potential amendments to the Partnership Agreement and the LLC Operating
Agreement, and any other costs, expenses or charges of the type described
in Section 6.4 below (which sum is set forth in Annex B attached hereto
and is payable 65% from Borrower and 35% from Carlyle 14).
3.5 AETNA RESTRUCTURING. The Bank shall have received
evidence satisfactory to the Bank indicating that the Partnership (and/or
the LLC) and Aetna have modified the Aetna Loan and Aetna Restructuring
Documents on terms and conditions satisfactory to the Bank, including that
the maturity date of the Aetna Loan has been extended to September 1, 2003,
and delivery to the Bank of the Aetna Acknowledgement and Agreement in
favor of the Bank in connection with the Aetna Restructuring.
3.6 FORMATION OF LLC. The LLC shall have been duly formed in
accordance with documentation in form and substance satisfactory to the
Bank, including by an LLC Operating Agreement and the related "Wells Fargo
Bank Addendum," in the form of EXHIBIT G attached hereto, and the
Partnership shall have been duly merged into the LLC.
3.7 UCC STATEMENTS. The Bank shall have received from
Borrower duly executed UCC-2 statements amending the original financing
statements and perfecting the Bank's security interests (or perfecting the
Bank's security interests) granted under the Original Security Agreement,
so as to reflect the amendments to the Loan pursuant to this Agreement, and
the Bank shall have received from Borrower duly executed UCC-1 Statements
(for Illinois and California) relating to the New Security Agreement as a
supplement to the provisions of the Original Security Agreement.
3.8 NECESSARY CONSENTS. The Bank shall have received duly
executed consents, releases, and acknowledgements executed by the
Partnership and/or the LLC and the other partners in the Partnership and/or
the members in the LLC relating to the Collateral for the obligations owing
to the Bank and the other issues raised by the transactions described
herein, in the form of the New Documents described in Sections 3.1(d), (e)
and (f).
3.9 LEASES. The Bank shall have received copies of all
pending leases relating to the Property for which approval is under
consideration by the LLC, together with such related documents and
information as the Bank may reasonably request (to the extent Borrower is
entitled thereto under the LLC Operating Agreement).
3.10 CARLYLE 14 TRANSACTION. The Bank shall have received a
duly executed original (or counterpart) of the Carlyle 14 Loan Modification
Agreement and all conditions precedent to the Bank's obligations thereunder
shall have been satisfied or waived in writing by the Bank, including the
execution of the other New Carlyle 14 Documents.
3.11 FINANCIAL DOCUMENTS. The Bank shall have received the
most current profit and loss statement, balance sheet, Property rent rolls,
Property operating statements, and cash flow statement relating to the
Partnership, the LLC, and/or the Property, and the Bank shall also have
received all of the most current financial reports and documentation
provided to Aetna by the Partnership (and/or the LLC) or its various
partners (and/or the members of the LLC)(other than Maguire); and
3.12 OPINION OF COUNSEL. Borrower shall have delivered to the
Bank a favorable opinion of counsel for Borrower, addressed to the Bank and
dated as of the Closing Date covering the matters incident to the closing
of this Agreement, to the Collateral, to the valid, binding and enforceable
nature of the Loan Documents, to the formation of the LLC and the valid
nature and enforceability of the LLC Operating Agreement, and to the merger
of the Partnership into the LLC, all as the Bank may reasonably request.
4. MODIFICATION OF LOAN. Subject to the satisfaction of the
conditions precedent set forth in Section 3 above, the Original Loan
Documents shall be further modified, amended and supplemented as follows:
4.1 PAYMENT TERMS. As stated in the New Note, payments of
principal and interest are due and payable prior to the maturity date
thereof as and when cash is available from or on account of the Collateral
to make payments, including as follows:
(a) All LLC or Partnership disbursements (collectively
"Subject Disbursements") from or on account of the interests of Borrower
and Carlyle 14 in the Partnership and/or the LLC shall be delivered
directly to the Bank by the payor thereof (and may be collected directly by
the Bank at any time pursuant to UCC 9318 and 9502 or otherwise) in
accordance with this Agreement, the Security Agreements, and any other
applicable documentation executed pursuant hereto, whether before or after
the occurrence of any Event of Default or default. Additionally, Borrower
agrees to deliver to the Bank in kind and in cash (to the extent received
in cash) any Subject Disbursements which Borrower receives within five (5)
business days of having received such Subject Disbursements.
(b) The $300,000 in aggregate annual payments which are
payable in monthly installments to Borrower and Carlyle 14 by
Maguire/Thomas Partners-Development, Inc. as "Property Manager" on account
of management fees (the "Management Disbursements") shall be delivered
directly to the Bank by the payor thereof (and may be collected directly by
the Bank at any time pursuant to UCC 9318 and 9502 or otherwise) in
accordance with this Agreement and any other applicable documentation
executed pursuant hereto, whether before or after the occurrence of any
Event of Default or default. Additionally, Borrower agrees to immediately
deliver to the Bank in kind and in cash (to the extent received in cash)
any Management Disbursements which Borrower receives within five (5)
business days of having received such Management Disbursement.
(c) Any other amounts of cash Collateral or cash
proceeds of Collateral received by Borrower shall be paid to the Bank
within five (5) business days of when the same are first received or
available (and at all times subject to direct collection by the Bank
immediately pursuant to UCC 9318 and 9501 or otherwise) whether or not
any Event of Default exists.
(d) Regardless of what the amount may be of Subject
Disbursements and Management Disbursements (plus other payments or
disbursements that are made by or on account of the interests of Borrower
in the Partnership or the LLC) all principal, accrued interest, fees,
costs or other payments for which Borrower is liable shall be due and
payable on the first to occur of (a) September 1, 2003, and (b)
acceleration due to the occurrence of an "Event of Default."
4.2 MODIFICATIONS REGARDING PREPAYMENTS. Section 1.4 of the
Loan Agreement is hereby deleted. Should Borrower desire to prepay the
Loan or any portion thereof, the payment shall be first applied to any
outstanding indemnity and reimbursement liabilities, expenses and costs for
which Borrower is liable, then to any accrued or unpaid interest and late
charges, and then to the principal owing under the New Note. Furthermore,
Section 1.5 of the Original Loan Agreement is amended, such that the last
sentence reading, "Any such prepayment shall be accompanied by payment of a
premium computed in accordance with the provisions of Section 1.4, and by
all accrued and unpaid interest on the principal amount prepaid", shall be
deleted. The only limitation on prepayments (as indicated above) is that,
if Borrower desires to make a prepayment on its New Note, the payments must
be first applied to all Loan Document liabilities in the order specified
above.
4.3 EVENTS OF DEFAULT. The provisions regarding the
definition of an "Event of Default" in the Original Loan Documents shall be
supplemented by the following provisions such that it shall constitute an
Event of Default under the Loan Documents (as modified by this Agreement
and the other New Documents) when, if, or to the extent that:
(a) (I) The LLC or any of its members shall modify,
amend, supplement or otherwise alter the Aetna Loan or any of the "Aetna
Loan Documents" or Aetna Restructuring Documents or the LLC Operating
Agreement in any respect whatsoever (or shall agree to or permit any
capital call or other monetary obligation to arise as a Major Decision [as
defined in the LLC Operating Agreement], without first obtaining the prior
written consent of the Bank), in any such case without first obtaining the
prior written consent of the Bank to such modification amendment or
supplement, or (II) any "Event of Default" or default shall occur under any
of the Aetna Loan Documents which is not cured before Aetna serves or files
any notice of default, accelerates any payment due under the Aetna Loan, or
exercises any other remedy thereunder, or (III) the termination for any
reason of Property Manager as the Property Manager for the purposes of
Paragraph 2(ii) of the Manager's Letter Agreement, or the filing of any
petition by or against Property Manager under any provisions of the
Bankruptcy Code or any other law providing any moratorium on debt payments
or other exercise of creditor rights, in either case before the
satisfaction of the obligations with respect to the Supplemental Preferred
Return and the $5,000,000 Preference under the LLC Operating Agreement in
accordance with Paragraph 2(i) of the Manager's Letter Agreement, provided
that, if such Event of Default is determined by the Bank in its discretion
to be reasonably capable and reasonably probable of timely cure by
Borrower, then, so long as Borrower is continuously engaged in its diligent
efforts to cure such Event of Default (and so long as Aetna has not filed a
notice of default, accelerated any payment due under the Aetna Loan, or
exercised any other remedy under the Aetna Restructuring Documents), for up
to five (5) business days the Bank shall forbear from noticing any
foreclosure sale of any Collateral or accelerating the indebtedness owing
under the Note. However, the Bank shall have no obligation or duty to
consent to any Major Decision which exposes Borrower to any significant
risk of a capital call or other monetary obligation under the LLC Operating
Agreement for which Borrower has no reasonably certain committed source of
funding a timely payment of such obligation. For example, if the LLC
proposes a lease requiring tenant improvement allowances which could only
be funded with capital calls, approval of that lease is treated the same as
causing a capital call without the Bank's prior written consent;
(b) The LLC for any reason whatsoever is dissolved or,
absent the timely cure of any event of default by or involving Borrower or
Carlyle 14, will be dissolved; provided that, if such event of default is
determined by the Bank in its discretion to be reasonably capable and
reasonably probable of timely cure by Borrower under the applicable and
foreseeable circumstances, then so long as Borrower is continuously engaged
in using its diligent best efforts to cure before dissolution occurs,
Borrower shall have the grace period (if any) prescribed in the LLC
Operating Agreement to cure such event of default;
(c) Borrower fails to make any capital contribution as
and when required by any provision of the LLC Operating Agreement or
otherwise fails to pay or perform any other monetary obligation as or when
provided therein;
(d) Any "Event of Default" occurs under the LLC
Operating Agreement; provided that, if such Event of Default is determined
by the Bank in its discretion to be reasonably capable and reasonably
probable of being timely cured by Borrower under applicable and foreseeable
circumstances, then so long as Borrower is continuously engaged in using
its diligent best efforts to cure such Event of Default, Borrower shall
have the grace period (if any) prescribed in the LLC Operating Agreement to
cure such Event of Default;
(e) Any or all of Borrower's interest in the
Partnership or the LLC for any reason or cause is subject to loss (other
than as a result of general market conditions), impairment, dilution,
purchase by another partner or member, or the occurrence of a Major
Decision which is made without opposition by Borrower and either to which
the Bank has not in its sole discretion given its prior written consent (if
the Bank deems the same to threaten or impair any of its Collateral or
related interests) or on which the Bank has not declined in writing in its
sole discretion to either consent or disapprove; provided that, if the Bank
determines in its discretion that such event or effect is reasonably
capable and reasonably probable of timely cure to prevent the same under
applicable and foreseeable circumstances, then so long as Borrower is
continuously engaged in using its diligent efforts to cure or avoid such
event or effect, Borrower shall have the grace period (if any) prescribed
in the LLC Operating Agreement to cure or avoid such event of effect;
(f) Borrower shall breach any provision of Article 5 of
this Agreement, each of which breach shall constitute an immediate Event of
Default, or Borrower shall breach or fail to comply with any other
provision of any New Document besides those otherwise enumerated as Events
of Default in the Loan Agreement and such Event of Default is not cured
within five (5) business days after receipt of notice of such breach or
failure from Bank; provided that, if such Event of Default is determined by
the Bank in its discretion to be reasonably capable and reasonably probable
of being timely cured by Borrower under applicable and foreseeable
circumstances, then so long as Borrower is continuously engaged in using
its diligent efforts to cure such Event of Default (and so long as Aetna
has not filed a notice of default, accelerated the payment of the Aetna
loan, or exercised any other remedy under the Aetna Restructuring
Documents), Borrower shall have an additional twenty (20) business days to
cure such Event of Default; provided further, however, that if any Event of
Default occurs as a result of Borrower's failure to provide to the Bank any
reports or documents which are to be prepared by Maguire and which have not
yet been delivered to Borrower, then so long as Borrower is continuously
engaged in using its diligent efforts to cure such Event of Default, then
Borrower shall have a reasonable period of time (not to exceed fifteen (15)
business days) to cure such Event of Default; or
(g) Borrower shall (i) fail to timely pay to the Bank
its sixty-five percent (65%) share of any installment of the $300,000 in
aggregate annual payments payable in monthly installments to the Bank under
the Manager's Letter Agreement (or the Aetna Manager Fee Transfer Approval
or the LLC Operating Agreement), or (ii) fail to cure any breach of any
covenant or agreement of Property Manager or Maguire under the Manager's
Letter Agreement or Section 3.01(b) (iv) of the LLC Operating Agreement, no
later than thirty (30) days after the date the Bank gives written notice to
Property Manager or Maguire (with a copy to Borrower), or notice directly
to Borrower, of the failure of Property Manager or Maguire to pay such
installment payment, or to perform such covenant or agreement, within the
five (5) business day cure period following the date such installment
payment, or performance of such covenant or agreement, is due.
Notwithstanding any provision to the contrary contained herein
or in the Loan Agreement, the terms and provisions of Sections 4.3(a) and
(f) hereof shall replace and supersede the terms and provisions of Section
5.1.I of the Loan Agreement with respect to the occurrence of any default
under the Aetna Loan.
4.4 REMEDIES UPON DEFAULT. The Original Security Agreement
and the other Original Loan Documents are hereby amended such that any
provisions limiting the Bank's methods of selling or disposing of that
portion of the Collateral described in Section 2(b) of the Original
Security Agreement to those set forth in Section 3.03 of the Partnership
Agreement ARE DELETED. Specifically, and without limitation, the following
language is HEREBY DELETED from paragraph 9 of the Original Security
Agreement:
Notwithstanding anything to the contrary contained herein,
Secured Party shall sell or dispose of that portion of the Collateral
described in Section 2(b) of this Agreement only in accordance with Section
3.03 of the Partnership Agreement.
Instead, there shall be no limitations on the exercise of the Bank's rights
or remedies except those expressly imposed on the Bank by the Wells Fargo
Bank Addendum attached hereto as EXHIBIT G with respect to the LLC
Operating Agreement.
4.5 REPORTING REQUIREMENTS. The following reporting
requirements shall supplement the reporting requirements set forth in
Section 4.1 of the Original Loan Agreement (and any reference to reports to
be provided by (or obligations to be performed by) the Partnership or its
partners shall be deemed to refer to the LLC and its members after the
merger of the Partnership into the LLC):
(a) Before the Partnership and/or the LLC enters into
any new leases or other contracts for or with respect to any of the
Property to which Borrower (or its representative on the Management
Committee) has any right to consent or object, where the same involves any
Major Decision or any lease for more than 50,000 square feet of the
Property, Borrower shall provide to the Bank copies of such proposed leases
and contracts and any material current correspondence or other
documentation reasonably requested by the Bank (to the extent provided to
Borrower under the LLC Operating Agreement) regarding the terms thereof
with the prospective tenants (and the Bank must consent in writing thereto
before Borrower agrees to support, suffer or permit entering into a
prospective lease or contract); provided, however, that if the Bank fails
to approve or disapprove any such lease or Property contract within fifteen
(15) business days (or such longer period as may be granted to Borrower
under the LLC Operating Agreement or other agreement if and when Borrower
is limited to a specific period for approving or disapproving such lease)
after the time when the Bank has been provided all of the documents and
information which are required to be delivered to Borrower under the LLC
Operating Agreement with respect to such lease or Property contract, then
the failure by the Bank to comment within such fifteen (15) business days
(or such longer period as may be granted to Borrower under the LLC
Operating Agreement or other agreement if and when Borrower is limited to a
specific period for approving or disapproving such lease) shall be deemed
consent to Borrower's recommended position on the issue;
(b) By the 50th calendar day after the end of each
calendar quarter, Borrower shall deliver to the Bank a profit and loss
statement, and a balance sheet each of which shall contain year-to-date
figures, as well as the monthly or quarterly data for each of (i) the
Partnership and/or the LLC, and (ii) Borrower;
(c) By the 20th calendar day of each calendar month for
the previous month ending Borrower shall deliver to the Bank an operating
statement, rent roll, and profit and loss statement for the Property, each
of which shall contain year-to-date figures;
(d) Within 90 days after the end of each calendar year,
Borrower shall deliver to the Bank a financial statement with respect to
the Partnership and/or the LLC, Borrower, and the Property;
(e) Within 60 days after the filing thereof, Borrower
shall deliver to the Bank the applicable Federal Tax Return or other filing
form and all attachments thereto for the Partnership and/or the LLC, and
Borrower; and
(f) Within 30 days after the receipt or preparation by
Borrower thereof, Borrower shall deliver to the Bank any report, document
containing financial data, operating statement, or other documentation
prepared by or on behalf of the Partnership and/or the LLC, the general
partners of the Partnership and/or the members of the LLC, or any of the
Property or Management Contract which relate in any way to the operation or
profitability of the Partnership and/or the LLC or the Property.
In addition, at any reasonable time and from time to time the
Bank, as attorney-in-fact for Borrower, shall have access to all books and
records of the LLC which are available to Borrower under the LLC Operating
Agreement or otherwise, as well as reasonable access to all books and
records (including, without limitation, any and all leases) of Borrower
pertaining to the Property.
4.6 MANAGEMENT DISBURSEMENTS; ENFORCEMENT BY THE BANK. As
noted in Section 4.1(b) above, the $300,000 in aggregate annual Manager's
Letter Agreement payments which are payable in monthly installments to
Borrower and Carlyle 15 by the Property Manager on account of the
Management Disbursements shall be delivered directly to the Bank by the
payor thereof (and may be collected directly by the Bank at any time
pursuant to UCC 9318 and 9502 or otherwise whether before or after any
default or Event of Default) in accordance with this Agreement and any
other applicable documentation executed pursuant hereto, whether before or
after the occurrence of any Event of Default or default, including as
provided in the Manager's Letter Agreement, the Aetna Manager Fee Transfer
Approval and the LLC Operating Agreement. Bank shall have the right as
either or both a secured party or attorney-in-fact for Borrower to take any
and all action necessary under the LLC Operating Agreement, the Loan
Documents or applicable law to enforce collection of all or any portion of
such payments of the Manager's Payment under the Manager's Letter Agreement
including without limitation, by the Bank's execution and delivery of any
and all documents, consents, notices, acknowledgements, instruments and
other agreements, and the exercise of any and all remedies available to
Borrower under the LLC Operating Agreement, the Manager's Warranty, the
Manager's Letter Agreement, the Aetna Manager Fee Transfer Approval or any
Loan Documents. Without limiting the generality of the foregoing, the Bank
may (either as a secured party or as an attorney in fact for Borrower)
require the LLC to withhold any Manager's Payment from Property Manager and
instead to pay such amount to the Bank in accordance with the Manager's
Letter Agreement and to exercise any right available to Borrower under the
LLC Operating Agreement as a consequence of the nonpayment of the Manager's
Payment installment to the Bank, including the rights of Borrower pursuant
to Section 3.01(b)(iv) and 3.06 of the LLC Operating Agreement. To the
extent that all or any portion of the Manager's Payment is not timely paid
to the Bank, and the Bank directly collects (as secured party or attorney-
in-fact for Borrower) all or any portion of such unpaid amounts of the
defaulted installment payment from later Manager's Payments, then the Bank
shall remit to Borrower any amounts which Borrower has previously paid to
the Bank (from Borrower's sources other than the Collateral) on account of
such unpaid amounts (less any reasonable and customary expenses, including
reasonable attorneys' fees, and other amounts incurred by the Bank in
making such collection or enforcing or defending the Bank's rights and
interests under the Manager's Letter Agreement or the LLC Operating
Agreement), if an only if (i) no Event of Default exists (besides such
payment cured by Borrower); (ii) Borrower makes such payment voluntarily
within 30 days from the date when first due (which time is of the essence)
from Borrower's sources other than the Collateral; and (iii) Borrower
notifies the Bank in writing at the time of such payment of the Borrower's
source of such payment and Borrower's intention to recoup such amount from
future payments. For example, if there are insufficient LLC funds
available to make any monthly installment payment and Borrower pays the
Bank such amount from non-Collateral funds of Borrower, then the Borrower
may recoup that payment when LLC funds are later available for such late
payment. However, Borrower's right of recoupment hereunder is subordinate
to the Bank's rights to current payments (under the Manager's Letter
Agreement), so that if there are insufficient LLC funds to pay the Bank and
Borrower in a subsequent month, Borrower may only recoup its payment from
any excess remaining after the current installment is paid to the Bank.
5. REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Borrower set forth in Article III of the Loan Agreement is
hereby reaffirmed as though made as of the date of this Agreement, except
that such representations and warranties are modified and supplemented as
follows:
5.1 DUE ORGANIZATION OF LLC. The LLC upon formation shall be
(and, if already formed, currently is) duly organized and validly existing
under applicable law, qualified to do business and in good standing in each
jurisdiction where required, and has complied with all laws necessary to
conduct its business as presently conducted. The LLC Operating Agreement
is a valid and binding obligation of the parties thereto which is legally
enforceable in accordance with its express terms. No "Event of Default"
exists under the Partnership Agreement or LLC Operating Agreement, and no
event, condition or matter exists which would constitute any such "Event of
Default" after the giving of notice or the passage of time or both.
5.2 EFFECT OF SECURITY AGREEMENT. Borrower acknowledges,
agrees, represents, and warrants that the liens and security interests
granted by Borrower to the Bank pursuant to the Original Loan Documents
shall remain in full force and effect and that, when the Partnership is
merged into the LLC and the Bank obtains a security interest in Borrower's
economic and other membership interest in the LLC (which constitutes
proceeds of the interest in the Partnership), the Bank shall have an
uninterrupted, continuing security interest of first priority in said
interest in the LLC (and in all other collateral described in the Original
Security Agreement) as well as in the collateral described in the New
Security Agreement executed pursuant hereto. Said liens and security
interests in favor of the Bank securing the obligations described herein,
in the New Note and the other New Documents executed pursuant hereto is of
first priority, subject to no liens, claims, encumbrances, offsets or
defenses of any kind.
5.3 FINANCIAL REPORTS. Except as to documents prepared by
Maguire or other third parties and which are forwarded by Borrower without
warranty hereunder (except that Borrower represents that it does not
affirmatively disagree with any of such documents, except as disclosed in
writing to the Bank), the various financial reports delivered to the Bank
pursuant to Section 3 above are accurate and fairly present the financial
condition and results of operations of Borrower, the Partnership, the LLC,
and the Property as may be applicable for the periods covered thereby, all
in accordance with accounting principles and practices accepted in the real
estate industry, consistently applied. To the best of Borrower's knowledge
(with respect only to those documents prepared by Maguire or other third
parties), since the date of the various reports, statements, and
documentation indicated above, there has been no material adverse change in
such condition or operations.
5.4 LIENS ON PROPERTY. Borrower specifically reaffirms
Section 3.11 of the Loan Agreement, except that the representation and
warranty relating to the fact that the Property is subject to no liens
securing monetary obligations other than the "Aetna Loan" shall include the
Aetna Loan as modified in accordance with the Aetna Restructuring.
References to the Aetna Loan in Article III of the Loan Agreement shall be
deemed to refer to the Aetna Loan as so modified.
5.5 VALID, ETC., LOAN DOCUMENTS. Each of the Loan Documents
is and remains a valid and binding obligation of Borrower which is
enforceable in accordance with its respective express terms.
5.6 AETNA RESTRUCTURING. The Aetna Loan and Aetna
Restructuring Documents dated as of September 19, 1996, shall become
effective at the Closing Date in the form and substance of the documents
submitted to escrow on or about September 25, 1996, as attached to the
October 7, 1996, letter from Mark L. Bronson to G. Larry Engel.
6. MISCELLANEOUS.
6.1 AMENDMENTS AND WAIVERS. If the Bank and Borrower at any
time wish to enter into any supplement, modification or amendment to any
provision of this Agreement, any other New Document executed pursuant
hereto or in connection herewith, and/or any other Loan Document, any such
amendment, supplement or modification shall be in a writing duly executed
by the parties' authorized representatives, and no oral, implied or other
amendment, supplement or modification shall be of any force or effect
whatsoever. Similarly, if the Bank wishes at any time to waive any default
or Event of Default, to consent to any matter or variance, or otherwise to
confer any benefit or approval or accept any detriment, such waiver,
consent or other conduct shall only be binding or effective against the
Bank if and when the Bank shall duly execute and deliver to Borrower a
written instrument waiving any provision of this Agreement or any other
Loan Document, or consenting to any departure by Borrower therefrom or
conferring or accepting any such benefit, approval or detriment (subject to
Section 4.5(a) above). Any such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given and only after execution and delivery or such writing by the
Bank (subject to Section 4.5(a) above).
6.2 NOTICES. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (includ-
ing by overnight courier or telecopier) and mailed, sent or delivered to
the respective parties hereto at or to their respective addresses or telex
or telecopier numbers set forth below their names on the signature pages
hereof, or at or to such other address or telecopier number as shall be
designated by any party in a written notice to the other parties hereto.
All such notices and communications shall be effective (a) if delivered by
hand or overnight courier, upon delivery; (b) if sent by mail, upon the
earlier of the date of receipt or five (5) business days after deposit in
the mail, first class, postage prepaid; and (c) if sent by telecopy, upon
receipt.
6.3 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part
of the Bank to exercise, and no delay in exercising, any right, remedy,
power or privilege hereunder or under any other Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
The rights and remedies under this Agreement and the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the Bank.
6.4 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
6.4.1 COSTS AND EXPENSES. Borrower agrees to pay on
demand (to the extent incurred after the Closing Date):
(a) all reasonable and customary out-of-pocket
costs and expenses of the Bank, and all reasonable fees of counsel (and all
disbursements by such counsel) to the Bank (including allocated reasonable
costs of internal counsel), in connection with the negotiation,
preparation, execution, and delivery of the Loan Documents, the LLC
Operating Agreement, the Aetna Loan Documents, and any amendments, modifi-
cations or waivers of the terms thereof or disputes among the parties
thereto, or in connection with the exercise of any of the Bank's rights
thereunder;
(b) all reasonable and customary title,
appraisal, survey, audit, consulting, search, recording, filing and similar
fees and expenses incurred by the Bank in connection with the Loan
Documents or the Collateral; and
(c) all reasonable and customary costs and ex-
penses of the Bank and reasonable fees and disbursements of counsel
(including allocated reasonable costs of internal counsel), whether before,
during or after the filing of any petition under any provision of the
Bankruptcy Code by or against Borrower or the LLC or Partnership in connec-
tion with (i) any default or Event of Default, (ii) the exercise,
enforcement or defense (or attempted exercise, enforcement or defense), and
preservation of any rights or interests under any or all of the Loan
Documents, (iii) any out-of-court workout or other refinancing or
restructuring or any bankruptcy case, (iv) any relief from stay proceedings
or other actions or defenses of any kind taken in any bankruptcy or
insolvency proceeding, and (v) the enforcement, defense or preservation of,
and realization upon, any of the Collateral, including any losses, costs
and expenses sustained by the Bank as a result of any failure by Borrower
to perform or observe its obligations contained in any of the Loan
Documents.
Notwithstanding any provision to the contrary contained
herein, Borrower shall have no obligation to pay to the Bank any
administrative fees, servicing fees or other similar discretionary fees
payable to the Bank or its affiliates or to any third parties to whom the
Bank has delegated any servicing or administrative functions (provided that
this sentence does not affect the Bank's right to reimbursement for
attorneys' fees or other third party fees permitted under the Loan
Documents).
6.4.2 INDEMNITY. Subject to Section 6.13, Borrower shall
indemnify the Bank from and against any loss, cost, damage, expense
(including reasonable attorneys' fees of inside and outside counsel) which
the Bank may suffer or incur as a consequence of Borrowers' noncompliance
with or breach of any provision of any Loan Document, the Partnership
Agreement, the LLC Operating Agreement or any of the Aetna Loan Documents,
including any monetary amount which the Bank would have to assume or pay in
order to succeed to Borrower's interest in the LLC or to cure Aetna Loan
Document Events of Default so as to preserve the value of the Collateral or
other rights or interests of the Bank under the Loan Documents, or to
perform any indemnity or other obligation to Aetna under the Aetna Manager
Fee Transfer Approval.
6.4.3 PROTECTIVE ADVANCES. The Bank may (but shall not
be obligated to) make any advance (or take, consistent with Section 6.4.1
above, any other action at the expense of Borrower) that the Bank may deem
necessary or appropriate in order to protect, defend, enforce or preserve
any of its rights or interests with respect to any Collateral or Loan
Documents, including by curing any monetary obligation of Borrower directly
or indirectly (through the Partnership or LLC) owing under the LLC
Operating Agreement or any of the Aetna Loan Documents. Any such amount
advanced by the Bank hereunder shall be added to the principal balance
owing under the New Note, shall bear interest at the rate specified therein
and shall be secured and supported by the same security and Loan Documents
as if included in the New Note indebtedness.
6.5 BENEFITS OF AGREEMENT. This Agreement and the other Loan
Documents are entered into for the sole protection and benefit of the par-
ties hereto and their respective permitted successors and assigns, and no
other person or entity shall be a direct or indirect beneficiary of, nor
shall have any direct or indirect cause of action or claim in connection
with, this Agreement or any other Loan Document.
6.6 ACKNOWLEDGMENTS. The Bank's activities in connection
with this Agreement, all other Loan Documents and Borrower are not "outside
the scope of the activities of a lender of money" within the meaning of
Section 3434 of the California Civil Code. The Bank shall not be liable or
responsible for any acts, omissions or decisions of Borrower. The Bank is
not, and shall not be construed as, a partner of, joint venturer with or
controlling person of Borrower.
6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
6.8 BINDING EFFECT; ASSIGNMENT.
6.8.1 BINDING EFFECT. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by Borrower, the Bank and
their respective permitted successors and assigns.
6.8.2 ASSIGNMENT. Borrower shall not have the right to
assign its rights and obligations hereunder or under the other Loan
Documents or any interest herein or therein or any Collateral without the
prior written consent of the Bank. The Bank may sell, assign, transfer or
grant a participation interest in all or any portion of the Bank's rights
and obligations hereunder and under the other Loan Documents and in
connection therewith may disclose any information and documents as are
available to the Bank at any time.
6.8.3 REAFFIRMATION. Borrower hereby reaffirms the
validity and continued enforceability of each and every term of the
Original Loan Documents as set forth therein, except as expressly modified
in this Agreement and other New Documents.
6.9 WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER AND THE BANK HEREBY
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS. A COPY OF THIS SECTION 6.9 MAY BE FILED WITH ANY
COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND
CONSENT TO TRIAL BY COURT.
6.10 ENTIRE AGREEMENT. This Agreement and the other Loan
Documents reflect the entire agreement between Borrower and the Bank with
respect to the matters set forth herein and therein and supersede any prior
agreements, term sheets, letters of intent, commitments, discussions and
understandings, oral or written.
6.11 SEVERABILITY. If one or more provisions contained in
this Agreement or the other Loan Documents shall be determined by final
judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect in any jurisdiction or with respect to any
party, such invalidity, illegality or unenforceability in such jurisdiction
or with respect to such party shall, to the fullest extent permitted by
applicable law, not invalidate or render illegal or unenforceable any such
provision in any other jurisdiction or with respect to any other party, or
any other provisions of this Agreement or the other Loan Documents.
6.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counter-
parts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute but one and the same
agreement.
6.13 LIMITED LIABILITY. In the event that suit is brought
under this Agreement or any of the Loan Documents, any judgment obtained in
or as a result of such suit shall be enforceable solely against the
Collateral, and Borrower and its partners shall have no personal liability
therefor.
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed this Agreement as of the date first above written.
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois
limited partnership
By: JMB Realty Corporation
By: _____________________________
Title: __________________________
Address:_________________________
_________________________________
Fax No.:_________________________
WELLS FARGO BANK, N.A.
By: _____________________________
Title: __________________________
Address:_________________________
_________________________________
Fax No.:_________________________
GLOSSARY OF TERMS
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Original Security Agreement. . . . . . . . . . . . . . . . . . . . . . . 1
Original Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . 1
Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Maguire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Carlyle 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
IBM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LLC Operating Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 1
Partnership Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Carlyle 14 Loan Agreement. . . . . . . . . . . . . . . . . . . . . . . . 1
Carlyle 14 Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Promissory Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Carlyle 14 Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Carlyle 14 Security Agreement. . . . . . . . . . . . . . . . . . . . . . 2
Original Carlyle 14 Loan Documents . . . . . . . . . . . . . . . . . . . 2
New Carlyle 14 Documents . . . . . . . . . . . . . . . . . . . . . . . . 2
Carlyle 14 Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . 2
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Aetna. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Aetna Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Aetna Restructuring. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Amended Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 3
Aetna Restructuring Documents. . . . . . . . . . . . . . . . . . . . . . 3
Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Partnership Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
New Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
25% Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 5
Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
insider. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
New Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
New Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Wells Fargo Bank Addendum. . . . . . . . . . . . . . . . . . . . . . . . 6
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Supplemental Security Agreement. . . . . . . . . . . . . . . . . . . . . 7
Security Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
UCC-1 Financing Statement. . . . . . . . . . . . . . . . . . . . . . . . 7
Extension Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Carlyle 14 Modification Agreement. . . . . . . . . . . . . . . . . . . . 9
Subject Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Management Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Management Disbursements . . . . . . . . . . . . . . . . . . . . . . . . 10
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Aetna Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
outside the scope of the activities of a lender of money . . . . . . . . 18
TABLE OF EXHIBITS
Exhibit
Description<PAGE>
A
Property
Description<PAGE>
B<PAGE>
New Note
C<PAGE>
Release
D<PAGE>
Notice of Assignment and Acknowledgement of Receipt
E<PAGE>
Security Agreement
F<PAGE>
UCC-1 Financing Statement
G<PAGE>
Wells Fargo Bank Addendum
ANNEX A
TO LOAN MODIFICATION AGREEMENT
(CARLYLE XV)
DEFINITION OF COLLATERAL
All of Borrower's obligations now or hereafter owing to the Bank
under the Loan Documents shall be secured by the following "Collateral":
A. (a) any and all partnership interests of Borrower in
Maguire Thomas Partners-South Tower, a California limited partnership (the
"Partnership") and membership interests of Borrower in Maguire Thomas
Partners-South Tower, LLC, a California limited liability company (the
"LLC"), now existing or hereafter acquired (collectively, the
"Partnership/Membership Interests"), and all distributions, capital and
profits, cash, warrants, rights, certificates, instruments, chattel paper,
accounts, contract rights, general intangibles, and other rights, property
or proceeds and products from time to time evidencing, arising from,
relating to, received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Partnership/Membership Interests; (b) all
additional rights to purchase interests in the Partnership or the LLC from
time to time acquired by Borrower in any manner (which interests shall be
deemed to be part of the Partnership/Membership Interests), the
certificates or other instruments representing such additional interests,
if any, and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of such additional interests or other rights; (c) any and all accounts,
contract rights, instruments, chattel paper, general intangibles and other
rights to payment arising from or under or as provided in the LLC Operating
Agreement or Partnership Agreement, in each case, as the same may be
amended, supplemented or modified from time to time; and (d) to the extent
not covered by clauses (a), (b) and (c) above, all Proceeds of any or all
of the foregoing. The term "Proceeds" shall have the meaning assigned that
term under the Uniform Commercial Code (the "Code") as in effect in the
State of California and the State of Illinois, as applicable, whether
consisting of general intangibles, accounts, contract rights, instruments,
chattel paper, or other rights to payment or kinds of property, and in any
event shall include, but not be limited to, any and all (A) proceeds of any
indemnity or guaranty payable to Borrower or Bank from time to time with
respect to any of the Collateral, and (B) any other amounts from time to
time paid or payable under or in connection with any of the Collateral.
B. all of Borrower's right, title and interest: (a) as a
partner in and to the Partnership and as a member in and to the LLC,
whether now owned or hereafter acquired, including, but not limited to, any
management and voting rights with respect to the Partnership/Membership
Interests, (b) all other property which, absent this Agreement would, now
or hereafter, be distributable or distributed, transferable or transferred,
payable or paid, or deliverable or delivered to Borrower as a partner in
the Partnership or a member in the LLC, as applicable, whether at any time
prior to, or in connection with, or after the dissolution of the
Partnership or the LLC, if any, including, without limitation,
distributions of cash and of property in kind by the Partnership or the LLC
(collectively, "Distributions"), and (c) all other rights, interests,
claims and other property of Borrower in any manner arising out of or
relating to the Partnership/Membership Interests, whether such rights,
interests, claims or other property are now owned or hereafter acquired by
Borrower, whatever their respective kind or character, whether they are
tangible or intangible property, and wheresoever they may exist or be
located, including, without limitation, all Proceeds, goods, documents,
instruments, claims, general tangibles, chattel paper, accounts and deposit
accounts (as such terms are defined in the Code), if any, now owned or
hereafter acquired by Borrower and in any manner arising out of or relating
to the Partnership/Membership Interests, and further including, without
limitation, all of the rights of Borrower as a holder of the
Partnership/Membership Interests to: (1) operate the business of the
Partnership or the LLC and deal with and receive the benefit from the
Partnership's or the LLC's assets; (2) receive proceeds of any indemnity,
warranty or guaranty under any agreement between Borrower and any other
party or entity associated with the Partnership or the LLC or otherwise
arising by operation of law for the account of Borrower, including any
rights of equitable or implied indemnity arising in connection with any
acts or omissions of Borrower in connection with the LLC or Partnership or
their assets; (3) receive fees, income, rents, proceeds of sale, issues,
earnings, deposits, receipts, royalties, revenues, recoveries,
compensation, permits, trade or business names, franchises, claims and
causes of action arising out of or relating to the Partnership or the LLC,
and all other rights, powers, property and remedies of Borrower with
respect to any of the foregoing; and (4) access the Partnership's or the
LLC's books and records and to the other information concerning or
affecting the Partnership or the LLC.
In the event that suit is brought under any of the Loan Documents,
any judgment obtained in or as a result of such suit shall be enforceable
solely against the Collateral, and Borrower and its partners shall have no
personal liability therefor.
ANNEX B
TO LOAN MODIFICATION AGREEMENT
(CARLYLE XV)
Legal Fees and Expenses
(from January 1, 1996
through the Closing Date) $55,257.95 (65% of
$85,012.23)
THIS DOCUMENT IS A COPY FROM THE FORM SE THAT WAS FILED ON MARCH 31,
1997 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
EXHIBIT 4-G
- -------------
(Carlyle-XV)
PREPARED BY AND UPON
RECORDING RETURN TO:
William H. Goebel, Esq.
Investment Law Department
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, N.Y. 10017
THIRD MORTGAGE MODIFICATION
AND
EXTENSION AGREEMENT
THIS AGREEMENT, executed as of the 4th day of December, 1996, but
effective as of the first day of January, 1996, by and between NORMAN S.
GELLER, THOMAS M. BENNETT, JEFFREY GLUSKIN and NEIL G. BLUHM, BRIAN K.
ELLISON and JULIA C. PARKS, as Trustees of 260 FRANKLIN STREET ASSOCIATES
TRUST under a Declaration of Trust dated May 16, 1986, duly recorded with
the Suffolk County Registry of Deeds in Book 12510, Page 64 and filed with
the Suffolk County Registry District of the Land Court as Document No.
405198, as amended in accordance with the Certificate of Trustee as to
Appointment of Additional Trustees and First Amendment to Declaration of
Trust establishing 260 Franklin Street Associates Trust, dated September
12, 1986, duly recorded with Suffolk County Registry of Deeds as Instrument
No. 374 of September 26, 1986, and filed with the Suffolk Country Registry
District of the Land Court as Document No. 411174, and as further amended
by Certificate of Trustee as to removal of certain Trustees and appointment
of additional Trustees dated July 23, 1990, duly recorded with the Suffolk
County Registry of Deeds in Book 16416, Page 342, and Document No. 467674,
with appointment of six Trustees registered as Documents Nos. 467675
through 467680 with the Suffolk County Registry District of the Land Court,
as further amended in accordance with a Certificate of Trustee as to
Removal of Certain Trustees and Appointment of Additional Trustees, dated
May 20, 1992, duly recorded with the Suffolk County Registry of Deeds as
Document No. 487549, having a mailing address c/o JMB Realty Corporation,
900 North Michigan Avenue, Chicago, Illinois 60611 ("Mortgagor"), having a
mailing address c/o JMB Realty Corporation, 900 North Michigan Avenue,
Chicago, Illinois 60611-1575, and TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA, a New York corporation having a mailing address of
730 Third Avenue, New York, New York 10017 ("Mortgagee").
WHEREAS, pursuant to the terms of that certain Second Mortgage
Modification and Consolidation Agreement between the parties hereto dated
as of January 1, 1991, and recorded with the Suffolk County Registry of
Deeds as Instrument No. 308 of December 31, 1991, in Book 17222, Page 286
and filed with Suffolk County Registry District of the Land Court as
Document No. 482106, Mortgagor is justly indebted to Mortgagee in the
consolidated principal amount (the "Consolidated Principal Indebtedness")
of SEVENTY - FOUR MILLION EIGHT HUNDRED NINETY - ONE THOUSAND TWELVE AND
83/100THS ($74,891,012.83) DOLLARS, plus interest thereon from date, which
Agreement consolidated the indebtedness evidenced by those two certain
Mortgage Notes, (a) the first being that certain Note payable to the order
of Mortgagee in the original sum principal sum of SIXTY - FIVE MILLION AND
NO/100THS ($65,000,000.00) DOLLARS dated December 18, 1985, made originally
by 260 Franklin Incorporated, the repayment obligation for which has been
assumed by Mortgagor by that certain agreement captioned "NOTE MODIFICATION
AGREEMENT WITH RESPECT TO $65,000,000 NOTE DATED DECEMBER 18, 1985"
(collectively, "Note No. 1"); (b) the other being that certain Note made by
Mortgagor payable to the order of Mortgagee in the original principal sum
of TEN MILLION AND NO/100THS ($10,000,000.00) DOLLARS, dated September 24,
1986 ("Note No. 2");
WHEREAS, the Consolidated Principal Indebtedness evidenced by both
Notes are secured by that certain Security Agreement and Mortgage ("the
$65,000,000.00 Mortgage") dated December 18, 1985, and recorded with the
Suffolk County Registry of Deeds in Book 12143, Page 249 and filed with
Suffolk County Registry of Deeds in book 12902, Page 302 and filed with the
Suffolk County Registry District of the Land Court as Document No. 399401
and that certain Security Agreement and Mortgage Deed (the $10,000,000.00
Mortgage") dated September 24, 1986, and recorded with the Suffolk County
Registry District of the Land Court as Document No. 411176; as such
Mortgages have been consolidated and modified by that (i) certain Mortgage
Modification and Consolidation Agreement between Mortgagor and Mortgagee
dated September 24, 1986 and recorded with the Suffolk County Registry of
Deeds in Book 12901, Page 347 and filed with the Suffolk County Registry
District of the Land County as Document No. 411178, and (ii) the aforesaid
Second Mortgage Modification and Consolidation Agreement. Both the
$65,000,000.00 Mortgage and the $10,000,000.00 Mortgage as consolidated and
modified by the aforesaid Mortgage Modification and Consolidation Agreement
and Second Mortgage Modification and Consolidation Agreement are
2
collectively called the "Consolidated Mortgage" and both such mortgages
encumber and mortgage, as security for Consolidated Principal Indebtedness,
those certain lots, parcels and pieces of land with the buildings and
improvements erected thereon situate, lying and being in the City of
Boston, County of Suffolk, Commonwealth of Massachusetts described in the
mortgages and on Exhibit A attached hereto and forming a part hereof
(hereinafter called "the Premises");
WHEREAS, the Consolidated Principal Indebtedness is also secured by,
among other things, (a) a certain Assignment of Lessor's Interest in
Lease(s) from 260 Franklin Incorporated to Mortgagee dated December 18,
1985, and recorded with the Suffolk County Registry of Deeds on December
19, 1985, as Instrument No. 503 and filed with the Suffolk County Registry
District of the Land Court as Document No. 399403 as supplemented by that
certain Supplemental Assignment of Lessor's Interest in Lease(s) from
Mortgagor to Mortgagee dated September 24, 1986, and recorded with the
Suffolk County Registry of Deeds as Instrument No. 379 filed with filed
with the Suffolk County Registry District of the Land Court as Document No.
411179 (hereinafter collectively called the "$65,000,000.00 Assignment of
Lessor's Interest in Lease(s)"); (b) that certain Assignment of Lessor's
Interest in Lease(s) from Mortgagor to Mortgagee dated September 24, 1986,
and recorded with the Suffolk County Registry of Deeds as Instrument No.
377 of September 26, 1986, and filed with the Suffolk County Registry
District of the Land Court as Document No. 411177 (hereinafter called the
"$10,000,000 Assignment of Lessor's Interest in Leases"); and (c) that
certain Supplemental Assignment of Lessor's Interest in Leases (the "1991
Supplemental Assignment") dated as of January 1, 1991, and recorded with
the Suffolk County Registry of Deeds as Instrument No. 309 of December 31,
1991, in Book 17222, Page 308 and filed with Suffolk County Registry
District of the Land Court as Document No. 482107;
WHEREAS, Mortgagor continues to be the owner of the Premises and does
hereby warrant and represent that the Consolidated Mortgages continue to be
first and superior liens on the Premises in accordance with their terms
(subject to only those encumbrances set forth in that certain title policy
bearing title insurance No. 616157M bearing effective date equal to the
date on which this Agreement is recorded held by Mortgagee from Ticor Title
Insurance Company) for the Consolidated Principal Indebtedness of SEVENTY -
FOUR MILLION EIGHT HUNDRED NINETY - ONE THOUSAND TWELVE AND 83/100THS
($74,891,012.83) DOLLARS, plus interest, as evidenced by Note No. 1 and No.
2 as such
3
indebtedness has been consolidated by the terms of the Second Mortgage
Modification and Consolidation Agreement; that it has no defense or offset
to its liability thereunder and all the provisions are unmodified and in
full force and effect of the Consolidated Mortgages, No. 1, Note No. 2, the
$65,000,000 Assignment of Lessor's Interest in Lease(s), the $10,000,000
Assignment of Lessor's Interest in Leases, the 1991 Supplemental Assignment
and all other documents held by Mortgagee in connection with the
indebtedness evidenced by Note No. 1 and Note No. 2;
WHEREAS, Mortgagor has requested that the date on which the
Consolidated Principal Indebtedness is to paid in full under the Second
Mortgage Modification and Consolidation Agreement be extended to January 1,
1997 (the new "Scheduled Maturity Date"), subject to Mortgagee having the
right to accelerate such maturity date upon thirty (30) days' prior written
notice to Mortgagor, which request is agreeable to Mortgagee provided there
are certain other modifications as hereinafter provided;
NOW, THEREFORE, in consideration of the Premises, the covenants and
conditions herein contained, and the sum of TEN ($10.00) DOLLARS and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby covenant and agree as
follows:
1. The date of January 1, 1996, set forth in the Second Mortgage
Modification and Consolidation Agreement on which the entire Consolidated
Principal Indebtedness, plus all accrued fixed interest, the hereinafter
defined Yield Maintenance Amount, the hereinafter defined Residual Interest
Amount, and such other sums due thereon pursuant thereto are to be paid in
full, is hereby extended to January 1, 1997, and the respective liens of
the Consolidated Mortgages are hereby extended thereby to cover such date
of January 1, 1997, subject to such date being accelerated at Mortgagee's
election to an earlier date (the "Acceleration Date") that Mortgagee may
select ("Mortgagee's Election to Accelerate") upon thirty (30) days' prior
written notice sent to Mortgagor in accordance with Paragraph 33 of the
$10,000,000 Mortgage at Mortgagor's address above set forth and in such
event, the entire Consolidated Principal Indebtedness, plus all accrued
fixed interest, the Yield Maintenance Amount, the Residual Interest Amount,
and the other sums owed thereon pursuant thereto shall immediately become
due and payable and
4
shall be paid by Mortgagor on the Acceleration Date.
2. Paragraph 1 of the Second Mortgage Modification and Consolidation
Agreement is hereby deleted in its entirety and the following provisions
are substituted in its place and stead:
"Mortgagor covenants, or promises and agrees to pay to Mortgagee, or
to its order, at its address hereinabove set further to such other address
as Mortgagee may designate in writing from time to time, the Consolidated
Principal Indebtedness of SEVENTY - FOUR MILLION EIGHT HUNDRED NINETY-ONE
THOUSAND TWELVE AND 83/100THS ($74,891,012.83) DOLLARS in lawful money of
the United States of America, with fixed Interest thereon at the rate of
EIGHT (8%) PERCENT per annum and to be paid in installments of fixed
interest alone in the amount of FOUR HUNDRED NINETY-NINE THOUSANDS TWO
HUNDRED SEVENTY - THREE AND 42/100THS ($499,273.42) DOLLARS each,
commencing on the first day of January, 1996, and continuing on the first
day of each calendar month thereafter occurring until the earlier of the
Acceleration Date or the first day of December, 1996, and, in any event ,
the entire unpaid Consolidated Principal Indebtedness of SEVENTY - FOUR
MILLION EIGHT HUNDRED NINETY - ONE THOUSAND TWELVE AND 83/100THS
($74,891,012.83) DOLLARS plus all accrued fixed interest thereon at the
rate of EIGHT (8%) PERCENT per annum and the Yield Maintenance Amount,
Residual Interest Amount and all other sums then due and owing to be paid
hereunder shall be due and payable on the first day of January, 1997, or on
the Acceleration Date if Mortgagee had exercised Mortgagee's Election to
Accelerate pursuant to the provisions of Paragraph 1 hereof.
In addition thereto, on January 1, 1997, the Acceleration Date or any
other date of acceleration of maturity (whether by default or otherwise)
and on the date of prepayment as hereinafter provided (hereinafter each of
said dates is referred to as "Maturity"), there shall be paid by Mortgagor
to Mortgagee, the total of (i) a sum determined as hereinafter provided
("Yield Maintenance Amount") which when paid to Mortgagee will cause
Mortgagee to receive interest on an actual cash basis at an annual yield on
the Consolidated Principal Indebtedness of ELEVEN (11%) PERCENT per annum
("Yield Maintenance Rate") from January 1, 1991, through the date on which
the Consolidated Mortgages are satisfied of record; PLUS (ii) as sum
("Residual Interest Amount") equal to SIXTY (60%) PERCENT of the highest
amount, if any, of (A) the net sales proceeds (the "Net Sales Proceeds") of
the Premises (consisting of the total consideration received or receivable,
whether by
5
cash, purchase money notes, including the par value of any promissory note
in connection with any conveyance or agreement to convey the Premises to
bona fide third party at market value after arm's length negotiations)
after deducting payment of the Consolidated Principal Indebtedness, the
Yield Maintenance Amount, customary brokerage commissions and normal and
customary closing costs actually paid to unaffiliated third parties, but
not in excess of THREE (3%) PERCENT of the sales price proceeds ("Approved
Closing Costs"); or (B) the appraisal value of the Premises after deducting
payment of the Consolidated Principal Indebtedness, the Yield Maintenance
Amount, and Approved Closing Costs of any bona fide sale or refinancing
occurring in connection with such determination of appraisal value and of
the appraisals made in conjunction with determining Residual Interest
Amount (the "Net Appraisal Value"); provided, however, that in no event
shall the Residual Interest Amount to be paid to Mortgagee hereunder cause
Mortgagee to receive interest on an actual cash basis of more than an
annual yield of SIXTEEN (16%) PERCENT per annum on the Consolidated
Principal Indebtedness from January 1, 1991 (the "Residual Interest
Amount").
In order to determine the Residual Interest Amount to be paid to
Mortgagee at Maturity, Mortgagor shall forward the following documents to
Mortgagee, either simultaneously with the sending of the notice of
prepayment, and as a condition precedent to such notice being deemed to
effective, or ninety (90) days prior to January 1, 1997, if no prepayment
has been made, or within thirty (30) days of acceleration of maturity after
default or other acceleration: (a) an appraisal of the Premises prepared
by an independent M.A.I. appraiser having at least ten (10) years'
experience appraising commercial real estate similar to the Premises in the
Boston area, which appraisal shall value the Premises as if it were free
and clear of all liens and debts but subject to all leases than in effect
(the income stream for which will also be considered by the Appraiser in
determining the Appraisal value of the Premises); (b) if the Premises are
being sold to a third party simultaneously with such payment, the contract
of sale, real estate brokerage agreement (if deduction for a brokerage
commission is being claimed), and a statement of all closing costs, with
supporting data, for which deductions are being claimed; and if the sale is
not for a one hundred (100%0 percent interest in the Premises, then the
sales price set forth in the contract of sale shall be projected as if one
hundred (100%) percent of the Premises were being sold and such projection
shall be used for determining the amount due Mortgagee hereunder;
additional, the sales price for the purpose of
6
determining the amount due hereunder shall include the amount of all cash
payments, deferred payments, debs assumed and the value of all assets,
securities, interests, and other consideration received or receivable in
connection with such sale; (c) a current rent roll of the Premises,
supporting leases, and a certified statement of income and expenses for the
twelve (12) month period immediately preceding the date of such notice
setting forth all the information necessary to do an appraisal of the
Premises; (d) a statement of all other closing costs, with supporting data,
for which deductions are being claimed; and (e) a true and correct
statement from Mortgagor calculating the Residual Interest Amount.
Mortgagor shall promptly furnish Mortgagee with all additional
information that Mortgagee may request. If Mortgagee does not agree with
any of the conclusions, calculations, computations, valuations or other
information supplied by Mortgagor, Mortgagee shall notify Mortgagor in
writing and both parties shall in good faith endeavor to resolve such
differences. If such disagreement is over the amount of the appraised
value of the Premises, Mortgagee shall furnish Mortgagor with an appraisal
in conformity to the standards imposed with respect to Mortgagor with an
appraisal. If the two appraisals differ by ten (10%) percent or less, the
appraised value of the Premises shall be the average valuation of the two
appraisals. If the difference is greater than ten (10%) percent, either
party shall have the right to require that a third independent M.A.I.
appraiser, mutually satisfactory to both Mortgagor and Mortgagee, be
selected to appraise the Premises. Such third appraiser shall render his
report within thirty (30) days of appointment, which report must not set a
valuation lower than the lowest valuation of the appraisals previously
submitted nor higher than the highest valuation of the appraisals
previously submitted. The valuations set forth in all three appraisals
shall be aggregated and the appraised value of the Premises shall be deemed
to be the average of all such appraisals. Mortgagor shall pay the cost of
all of the appraisals, but it shall have the right to deduct the cost as
part of the Approved Closing Costs provided it shall have first secured
Mortgagee's written approval of the same (which approval Mortgagee will not
unreasonably withhold). If the Mortgagor does not in the time required
supply an appraisal from an appraiser meeting the qualifications in item
(a) of the immediate preceding paragraph, then Mortgagee may obtain such an
appraisal and the mortgagor agrees that any such appraisal obtained by and
satisfactory to Mortgagee shall be the appraisal used in determining the
amounts due hereunder. If the privilege to
7
prepay is not exercised, the Consolidated Principal Indebtedness together
with any fixed interest accrued thereon shall be paid on Maturity and
together with the total of (i) Yield Maintenance Amount computed as
hereinafter set forth as will cause Mortgagee to have received interest on
the Consolidated Principal Indebtedness to Maturity at the Yield
Maintenance Rate, PLUS (ii) the Residual Interest Amount, if any, computed
as hereinabove set forth.
If the Residual Interest Amount has not been determined on the date
on which a sale of the Premises or refinancing of the Consolidated
Indebtedness is to be consummated, Mortgagor shall nevertheless have the
option to close such sale or any refinancing provided (a) it pays the
Consolidated Principal Indebtedness, accrued fixed interest, the Yield
Maintenance Amount, and all other sums due Mortgagee hereunder other than
the Residual Interest Amount; (b) it deposits into an escrow account under
an agreement and with an escrow agent satisfactory to Mortgagee such amount
that Mortgagee shall designate (which amount shall in no event be less than
(i) the amount of any Net Appraisal Value established by an appraiser or
(ii) the amount of the sales proceeds received or receivable by Mortgagor
in connection with any sale or the amount of the refinancing proceeds in
connection with any refinancing, as the case may be; (c) Mortgagee is able
to perfect and shall perfect a superior and first lien security interest in
such escrow account and funds; and (d) Mortgagee has such assurances that
it deems necessary that no party involved in or affiliated with any party
involved in any such transaction is insolvent or subject to bankruptcy.
Upon the determination of the amount of Residual Interest due Mortgagee,
such sum shall be immediately paid to Mortgagee together with the pro-rata
share of all interest earned on the funds in the Escrow Account. For
reference purposes, this paragraph is called "Post Closing Residual
Interest Determination."
The Yield Maintenance Amount and the Residual Interest Amount shall
be computed by determining the total interest per annum ("Annual Minimum
Yield") which would have been earned at the Yield Maintenance Rate or the
Residual Interest Amount, as the case may be, for each calendar year, or
part of a calendar year ("Yield Year") on the Consolidated Indebtedness or
such other portion outstanding from time to time for such Yield Year
beginning with the period from January 1, 1991 to December 31, 1991 ("first
Yield Year"). There shall be subtracted from the Annual Minimum Yield of
the first Yield Year the actual amount of
8
fixed interest paid with respect to the first Yield Year, and the amount by
which the Annual Minimum Yield exceeds the actual amounts of fixed interest
paid during such period shall be the Yield Maintenance Amount or Residual
Interest Amount, as the case may be, as of the last day of the first Yield
Year. The Yield Maintenance Amount and the Residual Interest Amount
established for the first Yield Year shall be carried forward to the end of
the second Yield Year (being the 1992 calendar year). At the end of the
second Yield Year there shall be added to the Yield Maintenance Amount and
the Residual Interest Amount established at the end of the first Yield Year
(a) interest on such Yield Maintenance Amount at the Yield Maintenance Rate
and interest on the Residual Interest Amount at the Residual Interest Rate,
as applicable, for the period from the end of the first Yield Year to the
end of the second Yield Year and (b) the Annual Minimum Yield for the
second Yield Year, and from such total there shall be deducted the actual
amount of fixed interest paid on the Consolidated Indebtedness outstanding
during the second Yield Year and this resulting amount shall become the
Yield Maintenance Amount or Residual Interest Amount, as the case may be,
to be carried forward to the end of the third Yield Year. In like manner
the Yield Maintenance Amount and Residual Interest Amount shall be
recomputed from Yield Year to Yield Year to Maturity. Notwithstanding any
other provision of this Agreement the Mortgagor may pay any portion of the
Yield Maintenance Amount or Residual Interest Amount with accrued interest
thereon at the applicable Yield Maintenance Rate or Residual Interest Rate
as determined from time to time on any installment payment date upon thirty
(30) days' prior written notice to Mortgagee."
3. The aforesaid provisions shall take precedence over and supersede
the payment provisions contained in the Second Mortgage Modification and
Consolidation Agreement and in Note No. 1 and Note No. 2, and any failure,
refusal or neglect to pay when due (but subject to the expiration of any
grace periods contained in the Loan Documents to the extent applicable) the
Consolidated Principal Indebtedness or any installment of fixed interest,
the Yield Maintenance Amount or the Residual Interest Amount as provided
for in this Agreement shall constitute a default under Second Mortgage
Modification and Consolidation Agreement, Note No. 1, Note No.2 and the
Consolidated Mortgages to the same extent and with the same force and
effect as if Mortgagor had failed, refused or neglected to pay the
principal indebtedness or any installment of interest when due under the
Second Mortgage Modification and Consolidation Agreement or such Notes, and
Mortgagee, at its option, shall be entitled to exercise all
9
remedies available to it under the Consolidated Mortgages and at law
provided including but not limited to the right to declare the Consolidated
Indebtedness, accrued fixed interest, the Yield Maintenance Amount and the
Residual Interest Amount to be immediately due and payable. Any failure to
exercise any option or right hereinabove provided shall not constitute a
waiver of the right to exercise the same in the event of any subsequent
default.
4. Whenever in the Second Mortgage Modification and Consolidation
Agreement, the Consolidated Mortgages, the $65,000,000 Assignment of
Lessor's Interest in Leases, the $10,000,000 Assignment of Lessor's
Interest in Leases or the 1991 Supplemental Assignment, reference is made
to the Note secured thereby, such reference shall mean Note No. 1 and Note
No. 2 as consolidated by the Second Mortgage Modification and Consolidation
Agreement and to be repaid as in this Agreement provided. Additionally,
all references to the term "interest" in Note No. 1, Note No. 2 and the
other referenced loan documents shall mean the fixed interest, Yield
Maintenance Amount and Residual Interest Amount hereinabove mentioned.
5. The prepayment privilege provisions set forth in Paragraph 4 of
the Second Mortgage Modification and Consolidation Agreement are hereby
deleted and Mortgagor can prepay the Consolidated Principal Indebtedness on
any installment payment date upon thirty (30) days' prior written notice
provided it simultaneously pays the Yield Maintenance Amount and Residual
Interest Amount hereinabove set forth in a addition to the Consolidated
Principal Indebtedness, accrued fixed interest and all other sums, if any,
due hereunder.
6. Paragraph 52 of the Consolidated Mortgages is hereby modified to
substitute the words"Reserve Pledge Account" for the words "Reserve Escrow
Account," the words "Pledge Accounts" for the words "Escrow Accounts" and
the words "Pledge Agent" for the words "Escrow Agent" wherever in the
paragraph such words appeared. Moreover, the reference made in the
paragraph to the Reserve Escrow Agreement shall mean the Reserve Escrow
Agreement dated January 1, 1991, as amended by the Modification to Reserve
Escrow Agreement dated January 1, 1994, and as further amended and restated
by that certain Modification of Reserve Escrow Agreement and Restatement as
the Reserve Pledge Agreement dated of even date herewith among Mortgagor,
Mortgagee and The Boston Mortgage Company (hereinafter called "Reserve
Pledge Agreement"). Whenever reference is made in the
10
Consolidated Mortgages or in this Agreement to the term Reserve Escrow
Agreement, the reference shall hereafter mean the Reserve Pledge Agreement.
7. Except as hereinabove contained, the Consolidated Mortgages, Note
No. 1, Note No. 2, the $65,000,000 Assignment of Lessor's Interest in
Leases, the $10,000,000 Assignment of Lessor's Interest in Leases, and the
1991 Supplemental Assignments are unmodified and remain in full force and
effect and Mortgagor does hereby covenant and agree to pay the Consolidated
Indebtedness, all accrued fixed interest, the Yield Maintenance Amount and
Residual Interest Amount in the time and manner hereinabove set forth and
to otherwise observe and fulfill all of the covenants, warranties,
conditions and agreements hereinabove contained and contained in the
Consolidated Mortgages, Note No. 1, Note No. 2, the $65,000,000 Assignment
of Lessor's Interest in Leases, the $10,000,000 Assignment of Lessor's
Interest in Leases and the 1991 Supplemental Assignment.
8. This Agreement does not create any new, further or other
indebtedness, but secures the same indebtedness evidenced by Note No. 1 and
Note No. 2 as consolidated by the terms of the Second Mortgage Modification
and Consolidation Agreement and extended by the terms of this Agreement and
Mortgagor covenants, promises and agrees to pay in accordance with the
terms of this Agreement the Consolidated Principal Indebtedness of SEVENTY
- - FOUR MILLION EIGHT HUNDRED NINETY - ONE THOUSAND TWELVE AND 83/100THS
($74,891,012.83) DOLLARS, plus fixed interest, the Yield Maintenance Amount
and Residual Interest Amount.
9. IF ANY TERM, COVENANT OR CONDITION OF THIS AGREEMENT SHALL BE
HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY-RESPECT, THIS AGREEMENT
SHALL BE CONSTRUED WITHOUT SUCH PROVISIONS. IN ADDITION, IF THE
TRANSACTION EVIDENCED AND SECURED HEREBY SHALL BE RESCINDED OR OTHERWISE
RENDERED UNENFORCEABLE IN WHOLE OR IN PART ON ACCOUNT OF ANY LAWS
RESPECTING CREDITOR'S RIGHTS OR FOR ANY OTHER REASON, THEN, AT MORTGAGEE'S
OPTION, THE ORIGINAL NOTE NO. 1 AND NOTE NO. 2 (AS CONSOLIDATED HERETOFORE
UNDER THE SECOND MORTGAGE MODIFICATION AND CONSOLIDATION AGREEMENT) AND
ORIGINAL CONSOLIDATED MORTGAGES SHALL BE UNIMPAIRED, AND THEIR TERMS AND
PROVISIONS SHALL BE UNMODIFIED AND IN FULL FORCE AND EFFECT AS IF THE
MODIFICATIONS CONTAINED IN THIS AGREEMENT HAD NEVER BEEN EXECUTED.
10. Mortgagor shall promptly cause this Agreement to be filed,
registered or recorded in such manner and in such
11
places as may be required by any present or future law in order to publish
notice of and fully to protect the liens of the Consolidated Mortgages
upon, and the interest of Mortgagee in, the Premises. Mortgagor shall pay
all filing, registration and recording fees, all expenses incident to the
preparation, execution and acknowledgement of this Agreement and all
federal, state, county and municipal taxes, duties, imposts, assessments
and charges arising out of or in connection with the filing, registration,
recording, executing and delivery of this Agreement, and Mortgagor shall
hold harmless and indemnify Mortgagee against any liability incurred by
reason of the imposition of any tax on the issuance, making, filing,
registration or recording of this Agreement; provided, however, Mortgagor
shall not be responsible for Mortgagee's income, franchise or similar such
taxes.
11. Mortgagor represents, warrants and covenants that (a) there are
no offsets, counterclaims or defenses against the Consolidated Principal
Indebtedness, Note No. 1, Note No. 2, the Consolidated Mortgages, the
$65,000,000 Assignment of Lessor's in Leases, the $10,00,000.00 Assignment
of Lessor's in Leases, or the 1991 Supplemental Assignment and (b)
Mortgagor (and its respective undersigned representatives) have full power,
authority and legal right to execute this Agreement and to keep and observe
all of the terms of this Agreement on all such parties' part to be observed
or performed, and (c) this Agreement is valid and binding upon all such
parties and enforceable against all such parties in accordance with its
terms.
12. This Agreement shall be binding upon Mortgagor and Mortgagee and
their respective successors and assigns and shall inure to the benefit or
Mortgagor and Mortgagee and their permitted successors and assigns.
13. This Agreement may be executed in any number of duplicate
originals and each such duplicates original shall be deemed to constitute
but one and the same instrument.
14. MORTGAGOR HEREBY ACKNOWLEDGES THAT MORTGAGOR AND THE
BENEFICIARIES OF THE TRUST ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS
AND EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS, (ii) THEY AND THEIR
ATTORNEYS FULLY UNDERSTAND THE EFFECT OF THE ABOVE PROVISIONS, (iii)
MORTGAGEE WOULD NOT MAKE THE LOAN SECURED HEREBY WITHOUT SUCH PROVISIONS
AND (iv) SUCH LOAN IS A COMMERCIAL OR BUSINESS LOAN, NEGOTIATED BY
MORTGAGEE AND MORTGAGOR AND THEIR RESPECTIVE ATTORNEYS AT ARMS LENGTH.
13
NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS CREATING A JOINT
VENTURE OR PARTNERSHIP RELATIONSHIP BETWEEN THE PARTIES HERETO.
15. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
16. It is specifically agreed that time is of the essence of this
Agreement and that the waiver of options or obligations secured by this
Agreement shall not at any time be held to be abandonment of such rights.
Notice of the exercise of any option granted to Mortgagee herein is not
required to be given unless expressly provided to the contrary herein.
The Trustees of 260 Franklin Street Associates Trust hereby certify
pursuant to Paragraph 6 of said Trust that the execution and delivery of
this Instrument has been duly authorized and directed by all of the
beneficiaries of said Trust and said Trust is in full force and effect as
of the date hereof. The foregoing authorization has not been altered,
amended or rescinded and is in full force and effect as of the date hereof.
The party or parties executing this Agreement as Mortgagor are
executing the same as Trustees and not in any individual capacity. As
such, they are not personally liable for fulfilling any of their
obligations under this Agreement and Mortgagee shall look to and be
entitled to succeed to the Premises and the other assets of the trust for a
breach by Mortgagor of its obligations under this Agreement.
Without limitation on the foregoing, but in addition thereto, neither
Mortgagor nor any Trustee, advisor or any other entity shall be personally
liable in any manner or to any extent under or in connection with this
Agreement (including, but without limitation, the items set forth as
exceptions to Paragraph 36 of the Consolidated Mortgages) or any other
agreement or instrument entered into in connection herewith; provided,
however, that the foregoing shall not affect or impair the lien of the
Consolidated Mortgage, the rights of Mortgagee to proceed against the
Premises, or any obligations under a certain
Indemnity and Payment Agreement dated December 1991, given Carlyle Real
Estate Limited Partnership -XV and Carlyle Real Estate Limited Partnership
- - XVI to Mortgagee.
IN WITNESS WHEREOF, the Mortgagor and the Mortgagee have duly signed,
sealed and delivered this Agreement as a sealed instrument the day and year
hereinabove first written.
/s/ MARY D. SERVIN /s/ BRIAN K. ELLISON
- ------------------------------ ------------------------------
Mary D. Servin Brian K. Ellison
Witness not personally but solely as
Trustee of 260 Franklin Street
Associates Trust as aforesaid
for self and co - trustees
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
EXECUTED By: /s/ MARK A. DE PRIMA
______________________________ ___________________________
Witness Name: Mark A. De Prima
Title: Associate Director
EXECUTED
______________________________ By: /s/ HEATHER DAVIS
Witness ___________________________
Name: Heather Davis
Title: Associate Director
14
ACKNOWLEDGMENTS
---------------
STATE OF NEW YORK )
)ss: New York
COUNTY OF NEW YORK )
Before me, the undersigned authority, a Notary in and for said State,
on this day personally appeared _____________________________________ and
______________________________, known to me to be the persons whose names
are subscribed to the foregoing instrument and known to me to be the
____________________ and ____________________, respectively, of Teachers
Insurance and Annuity Association of America, a New York corporation, and
that the seal affixed to the foregoing instrument is the corporate seal of
said corporation, and that said instrument was signed and sealed in behalf
of said corporation by authority of its Board of Trustees, and acknowledged
that they executed the said instrument for the uses, purposes and
consideration therein expressed on behalf of said Teachers Insurance and
Annuity Association of America.
Given under my hand and Seal of office this ______ day of __________,
1996.
______________________________
Notary Public in and
for the State of New York
My commissions expires:
STATE OF ILLINOIS )
)ss.
COUNTY OF COOK )
On this 4th day of November, 1996, before me appeared BRIAN K.
ELLISON, to me personally know, who, being by me duly sworn, did say that
he is a trustee of 260 Franklin Street Associates Trust, and that said
instrument was signed in behalf of said trust, and said BRIAN K. ELLISON
acknowledged said instrument to be the free act and deed of the trustees on
behalf of said trust.
/s/ LAURA BETH MILLER
______________________________
Laura Beth Miller
Notary Public, State of Illinois
Commission Expires 12/1/96
15
ACKNOWLEDGMENTS
---------------
STATE OF NEW YORK )
)ss: New York
COUNTY OF NEW YORK )
Before me, the undersigned authority, a Notary in and for said State,
on this day personally appeared MARK A. DEPRIMA and HEATHER DAVIS, known to
me to be the persons whose names are subscribed to the foregoing instrument
and known to me to be the ASSOCIATE DIRECTOR and ASSOCIATE DIRECTOR,
respectively, of Teachers Insurance and Annuity Association of America, a
New York corporation, and that the seal affixed to the foregoing instrument
is the corporate seal of said corporation, and that said instrument was
signed and sealed in behalf of said corporation by authority of its Board
of Trustees, and acknowledged that they executed the said instrument for
the uses, purposes and consideration therein expressed on behalf of said
Teachers Insurance and Annuity Association of America.
Given under my hand and Seal of office this 4th day of December,
1996.
/s/ AZUCENA V. PROBLETE
Azucena V. Problete
Notary Public in and
for the State of New York
My commissions expires:
October 13, 1998
COMMONWEALTH OF MASSACHUSETTS
______________________________ ss, , 1996
Then personally appeared the above named ____________________________
_________________, and acknowledged the foregoing as his/her free act and
deed, before me.
______________________________
Notary Public
My commission expires:
15
EXHIBIT A
---------
A parcel of land situated in Boston, Suffolk County, Massachusetts,
shown on a plan entitled "Plan of Land, Boston, Massachusetts" prepared by
R.E. Cameron & Associates, Inc., dated January 26, 1983, revised February
24, 1983, recorded with Suffolk Registry of Deeds at the end of Book 10281,
and bounded:
SOUTHWESTERLY by Oliver Street, 165.82 feet;
NORTHWESTERLY by land of Thomas J. White, et al, Trustees, 96.41
feet;
NORTHEASTERLY by the same land, 15.80 feet;
NORTHWESTERLY by the same land, 10.90 feet;
NORTHEASTERLY by Lot C as shown on said plan, 31.29 feet;
NORTHWESTERLY by said Lot C, 12.41 feet;
NORTHEASTERLY by Jenton Way, formerly Hamilton Alley, 122.43
feet; and
SOUTHEASTERLY by Franklin Street, 95.85 feet.
Included in the above - described parcel is a parcel of registered
land, bounded:
SOUTHWESTERLY by the northeasterly line of Oliver Street, forty -
eight and 42/100 (48.42) feet;
NORTHWESTERLY by lands now or formerly of Daniel M. Driscoll et
al and of Frank Cair Macomber, Jr., the line running in part through the
middle of a sixteen (16) inch brick wall, one hundred seventeen and 06/100
(117.06) feet;
NORTHEASTERLY by Hamilton Alley, forty - two and 83/1100 (42.83)
feet; and
SOUTHEASTERLY twenty - five and 73/100 (25.73) feet;
NORTHEASTERLY seven and 51/100 (7.51) feet; and
16
2. Easement for light and air created by grant from James F. Dwinnell to
Alvah A. Burrage dated August 30, 1872, recorded in Book 1126, Page 117 as
modified by agreement dated August 5, 1910, recorded in Book 3475, Page 482
(benefits northwesterly 23 feet of Lot A on Plan in Book 4193, Page 612 and
burdens Lot B on said Plan).
3. Easements for light, air and passage reserved in a deed from Alvah H.
Burrage to James F. Dwinnell et al dated September 16, 1872, recorded in
Book 1126, page 116 (benefits Lot A on plan in Book 4193, Page 612 and
burdens Lot C and the four foot strip on the northeasterly side of Lot C on
said Plan).
4. Easement for passage and repassage in Jenton Way (formerly known as
Hamilton Alley).
5. Easements for light and air and building maintenance granted by Grant
and Release of Easements between Ferdinand Colloredo - Mansfield, et al,
the Trustees of CC&F - F&) Property Trust and 2 Oliver Incorporated dated
January 27, 1984, recorded in Book 11100, Page 001.
18
EXHIBIT 10-Q
- ------------
(Carlyle-XV)
OPERATING AGREEMENT
OF
MAGUIRE THOMAS PARTNERS - SOUTH TOWER, LLC
a California limited liability company
DATED
AS OF
SEPTEMBER 30, 1996
OPERATING AGREEMENT OF
MAGUIRE THOMAS PARTNERS - SOUTH TOWER, LLC
a California limited liability company
This Operating Agreement of MAGUIRE THOMAS PARTNERS - SOUTH TOWER,
LLC, a California limited liability company (the "AGREEMENT") is made and
entered into as of September 30, 1996 by and among MAGUIRE PARTNERS-BUNKER
HILL, LTD., a California limited partnership ("MAGUIRE PARTNERS"), CARLYLE
REAL ESTATE LIMITED PARTNERSHIP-XIV, an Illinois limited partnership
("CARLYLE 14"), and CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV, an Illinois
limited partnership ("CARLYLE 15").
RECITALS
--------
A. Maguire Partners, Carlyle 14 and Carlyle 15 are partners in
Maguire/Thomas Partners-South Tower, a California limited partnership, (the
"PARTNERSHIP") pursuant to that certain Amended and Restated Agreement of
Limited Partnership, dated as of June 28, 1985, as amended by that certain
Amendment to Amended and Restated Agreement of Limited Partnership dated as
of August 1, 1985, as further amended by that certain Second Amendment to
Amended and Restated Agreement of Limited Partnership dated as of August 1,
1986 (the "PARTNERSHIP AGREEMENT").
B. International Business Machines Corporation ("IBM") was
previously a limited partner in the Partnership. Pursuant to that certain
Assignment and Assumption of Partnership Interest dated as of June 28,
1996, IBM assigned all of its interest in the Partnership to Maguire
Partners and Maguire Partners assumed all of IBM's interest and obligations
under the Partnership Agreement as of the date thereof. Carlyle 14 and
Carlyle 15 acknowledge and agree to such assignment by IBM to Maguire
Partners under the Partnership Agreement.
C. As a result of the foregoing, the Partnership is comprised of
Maguire Partners, with a 50.01% general and limited partnership interest
(including the 20% limited partnership interest formerly owned by IBM),
Carlyle 14 with a 17.4965% general partnership interest and Carlyle 15 with
a 32.4935% general partnership interest, each such interest being referred
to herein as such party's "PARTNERSHIP INTEREST".
D. Maguire Partners, Carlyle 14 and Carlyle 15 desire to (a)
form a limited liability company to be known as MAGUIRE THOMAS PARTNERS -
SOUTH TOWER, LLC (the "COMPANY") under the laws of the State of California
(b) merge the Partnership into the Company by a statutory merger under
California Corporations Code Section 17000 et seq. and pursuant to Code
Section 708(b)(2)(A) so that the Company will be considered the continuing
entity, and (c) set forth, in their entirety, the rights and obligations of
the parties with respect to the Company and its assets and liabilities.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises made herein, effective as of the date set forth above,
Carlyle 14, Carlyle 15 and Maguire Partners hereby form the Company as a
limited liability company under the Beverly-Killea Limited Liability
Company Act as set forth in Title 2.5 (commencing with Section 17500) of
the Corporations Code of the State of California (the "ACT") and this
Agreement shall be the Operating Agreement of the Company under the Act.
Carlyle 14, Carlyle 15 and Maguire Partners shall be the Initial Members
(as hereinafter defined) of the Company, with the rights, duties and
obligations set forth in this Agreement.
1. DEFINITIONS.
For purposes of this Agreement, the following terms which are used
herein shall have the meaning indicated, whether appearing in the plural or
singular number:
ACT - means the (California) Beverly-Killea Limited Liability Company
Act as set forth in Title 2.5 (commencing with Section 17000) of the
Corporations Code of the State of California (or any corresponding
provision or provisions of any succeeding law).
ADJUSTED CAPITAL ACCOUNT - means, with respect to any Member, such
Member's Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
(i) increase such Capital Account by any amounts which such
Member is obligated to contribute to the Company (pursuant to the terms of
this Agreement or otherwise) or is deemed to be obligated to contribute to
the Company pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-
2(i)(5); and
(ii) reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
AETNA LOAN - means the first deed of trust loan made by Aetna Life
Insurance Company (as successor-in-interest to Aetna Casualty and Surety
Company) ("AETNA") to the Partnership, secured by the Property, on November
26, 1984 as amended by the Modification and Extension Agreement and related
documents between the Partnership and Aetna dated September 19, 1996
("MODIFICATION DOCUMENTS") whereby the Aetna Loan was modified and
extended.
APPROVED BY THE MANAGEMENT COMMITTEE, OR APPROVAL OF THE MANAGEMENT
COMMITTEE - means, except as otherwise provided below, the approval in
writing by Members of the Company holding at least seventy-five percent
(75%) of the aggregate Percentage Interests in the Company, acting through
their respective representatives on the Management Committee designated
pursuant to SECTION 3.01(a) hereof.
ARTICLES OF ORGANIZATION - means the articles of organization filed
with the California Secretary of State for the purpose of forming the
Company.
BUILDING - means the 44-story office tower constructed on the
Property as part of the Project at 355 South Grand Avenue, Los Angeles,
California.
CAPITAL ACCOUNT - means the capital account established for each
Member pursuant to SECTION 2.04 hereof.
CAPITAL SHORTFALL - means any event which necessitates additional
capital contributions (other than the capital contributions required under
SECTION 2.03 hereof) by the Members in order to complete, finance and
operate the Project, including but not by way of limitation, (i) failure of
performance by a contractor or subcontractor, (ii) damage to or destruction
of Improvements on the Property, (iii) shortfall in financing for the
Project, and (iv) operating losses incurred in connection with the Project.
CARLYLE - means, collectively, Carlyle 14 and Carlyle 15.
CARLYLE 14 - means Carlyle Real Estate Limited Partnership-XIV, an
Illinois limited partnership.
CARLYLE 14 PERCENTAGE INTEREST - means 17.4965%, subject to any
adjustments pursuant to this Agreement, provided, however, that the Carlyle
14 Percentage Interest shall be adjusted to 23.33% immediately upon
satisfaction of the First Level and Second Level distribution preferences
under SECTIONS 2.06(b)(i) and (ii) and/or SECTIONS 2.06(c)(i) and (ii), as
applicable.
CARLYLE 15 - means Carlyle Real Estate Limited Partnership-XV, an
Illinois limited partnership.
CARLYLE 15 PERCENTAGE INTEREST - means 32.4935%, subject to any
adjustments pursuant to this Agreement, provided, however, that the Carlyle
15 Percentage Interest shall be adjusted to 43.34% immediately upon
satisfaction of the First Level and Second Level distribution preferences
under SECTIONS 2.06(b)(i) and (ii) and/or SECTIONS 2.06(c)(i) and (ii), as
applicable.
CODE - means the Internal Revenue Code of 1986, as amended from time
to time. Reference to a particular Code provision shall refer as well to
any similar successor statute.
COMPANY - means Maguire Thomas Partners-South Tower, LLC, a
California limited liability company.
COMPANY INTEREST - means an ownership interest in the Company, which
includes the Percentage Interest, the right to vote or participate in the
management of the Company, and the right to information concerning the
business and affairs of the Company, as provided in this Agreement and
under the Act.
COMPANY MINIMUM GAIN - means the amount determined by computing with
respect to each nonrecourse liability of the Company, the amount of gain
(of whatever character), if any, that would be realized by the Company if
it disposed (in a taxable transaction) of the property subject to such
liability in full satisfaction thereof, and by then aggregating the amounts
so computed as set forth in Regulations Section 1.704-2(d).
CRA - means The Community Redevelopment Agency of The City of Los
Angeles, California.
DDA - means the Disposition and Development Agreement dated June 21,
1979 between CRA and Robert F. Maguire III.
DISPOSITION EVENT - means any sale, transfer, disposition or taking
(including, but not limited to, any taking under any eminent domain
proceeding) of the Property or the Improvements or any portion thereof or
interest therein, (2) any event, circumstance or condition relating to the
Company's interest in the Property or the Improvements and resulting in any
payment to the Company under any casualty insurance policy or title
insurance policy, and (3) any financing or refinancing of the Company's
interest in the Property or the Improvements or any portion thereof.
DISPOSITION PROCEEDS - means the aggregate Net Cash Flow
distributable hereunder to the Members as a result of a Disposition Event.
In the computation of such Disposition Proceeds there shall be deducted (i)
the payment of all costs and other expenses related thereto, (ii) the
payment for any capital expenditures or other expenses for which such
proceeds are used, (iii) the satisfaction of any indebtedness being
discharged and any other debts or liabilities of the Company including,
without limitation, the payment of any Participation Interest, Fixed Rate
Interest and/or Yield Maintenance Payment due to Aetna under the
Modification Documents (as such terms are defined in the Modification
Documents) and (iv) the setting aside of such reserves therefrom as are
Approved by the Management Committee.
DISPOSITION PROFIT AND DISPOSITION LOSS - means, respectively, the
net gain realized or net loss suffered by the Company (and each related
item of gain or loss) attributable to a Disposition Event.
IBM - means International Business Machines Corporation, a New York
corporation.
IBM LEASE - means that certain lease, dated October 1, 1982, as
amended heretofore or hereafter, between the Company and IBM relating to
space in the Building.
IMPROVEMENTS - means any physical construction on the Property,
including, without limitation, the Building, the attendant subterranean
parking garage and the Off-Site Parking Facility.
MAGUIRE PARTNERS - means Maguire Partners-Bunker Hill, Ltd., a
California limited partnership.
MAGUIRE PARTNERS PERCENTAGE INTEREST - means 50.01%, subject to any
adjustments pursuant to this Agreement, provided, however, that the Maguire
Partners Percentage Interest shall be adjusted to 33.33% immediately upon
satisfaction of the First Level and Second Level distribution preferences
under SECTIONS 2.06(b)(i) and (ii) and/or SECTIONS 2.06(c)(i) and (ii), as
applicable.
MAJOR DECISION - has the meaning set forth in SECTION 3.01(c).
MANAGEMENT COMMITTEE - means the Management Committee of the Company
contemplated by SECTION 3.01(a) hereof.
MEMBER - means a Person who:
(a) Has been admitted to the Company as a member in
accordance with the Articles of Organization or this Agreement, or an
assignee of a Company Interest, other than a right to share in Net Cash
Flow or Operating Profits or Operating Loss, who has become a Member
pursuant to Section 3.03.
(b) Has not resigned, withdrawn or been expelled as a
Member or, if other than an individual, been dissolved.
Reference to a "MEMBER" shall be to any one of the Members. Reference to
an "INITIAL MEMBER" shall be to any one of the Members listed in
SECTION 2.02.
MEMBER NONRECOURSE DEBT - has the meaning attributable to "partner
nonrecourse debt" as set forth in Regulations Section 1.704-2(b)(4).
MEMBER NONRECOURSE DEBT MINIMUM GAIN - means an amount, with respect
to each Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a nonrecourse
liability of the Company, determined in accordance with Regulations
Sections 1.704-2(i)(2) and (3).
MEMBER NONRECOURSE DEDUCTIONS - has the meaning attributable to
"partner nonrecourse deductions" as set forth in Regulations Section
1.704-2(i)(2). The amount of Member Nonrecourse Deductions with respect to
a Member Nonrecourse Debt for a fiscal year of the Company equals the
excess (if any) of the net increase (if any) in the amount of Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt
during that fiscal year over the aggregate amount of any distributions
during that fiscal year to the Member that bears (or is deemed to bear) the
economic loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(2).
NET CASH FLOW - means that amount determined by deducting from the
gross cash receipts of any kind or description (including, without
limitation, the proceeds of any refinancing Approved by the Management
Committee, but excluding the proceeds of any capital contributions (except
to the extent utilized to provide reserves for contingencies)) of the
Company during a calendar month, the following:
(i) All costs of acquiring, improving, developing,
managing, leasing, operating, maintaining, replacing and preserving the
Project (including the Property and the Improvements) to the extent paid in
cash during such calendar month;
(ii) All operating or other expenses of the Company paid in
cash during such calendar month, or any amounts expended as a result of any
casualty losses to the extent that such losses are not reimbursed during
such month by any third party responsible therefor or through insurance
maintained by the Company, but not including any expenses paid in cash to
the extent that such expenses were reserved against and funded from such
reserves;
(iii) All cash payments made with respect to the discharge of
Company indebtedness during a calendar month, but not including any such
payments to the extent that the amounts thereof were reserved against and
funded from such reserves; and
(iv) All reasonable amounts of reserve cash as shall be
determined and Approved by the Management Committee to be necessary and
advisable for:
(a) repayment of Company indebtedness, coming due in
one or more calendar months next succeeding the month for which Net Cash
Flow is computed;
(b) the acquisition, improvement, development,
management, operation (including, but not limited to insurance and property
taxes and assessments), maintenance, replacement or preservation of the
Project (including the Property and Improvements); and
(c) increases in working capital and other
contingencies.
In computing Net Cash Flow, no deductions shall be made for depreciation or
amortization.
NET RECEIPTS - means all Net Cash Flow distributable hereunder to the
Members, from whatever source derived other than Disposition Proceeds.
OFF-SITE PARKING FACILITY - means the seven level parking garage
constructed on the Property as part of the Project at Second and Hill
Streets, Los Angeles, California.
OPERATING BUDGET - means the annual budget prepared by the Property
Manager as contemplated by SECTION 3.01(b)(iii) hereof.
OPERATING LOSS - means the net loss realized by the Company during a
fiscal year (after excluding any Disposition Profit and Disposition Loss),
including each and every item of income, gain, loss and deduction
comprising such net loss, whether includable in, or deductible from, the
Company's taxable income in accordance with Code Section 703(a).
OPERATING PROFIT - means the net profit realized by the Company
during the fiscal year (after excluding any Disposition Profit and
Disposition Loss), including each and every item of income, gain, loss and
deduction comprising such net profit, whether includable in, or deductible
from, the Company's taxable income in accordance with Section 703(a) of the
Code.
PERCENTAGE INTEREST - means the following: the Maguire Partners
Percentage Interest, the Carlyle 14 Percentage Interest and the Carlyle 15
Percentage Interest.
PERSON - means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or government, or any agency or
political subdivision thereof.
PHASE I BUILDING - means the 54-story office building located at 333
South Grand Avenue, Los Angeles, California.
PHASE I PARTNERSHIP - means Maguire Partners-Crocker Properties Phase
I, a California limited partnership which owns and operates the Phase I
Project.
PHASE I PROJECT - means the Phase I Building and related improvements
constructed on Parcel N of the Bunker Hill Urban Renewal Project.
PROJECT - means the development and construction of the Improvements
on the Property and the operation of the Improvements following completion
as contemplated herein.
PROPERTY - means Parcels 0 and X-2(b) in the Bunker Hill Urban
Renewal project in Los Angeles, California, as more particularly described
in EXHIBIT A attached hereto, together with all Improvements from time to
time existing thereon, and all appurtenances thereof.
PROPERTY MANAGER - means the Property Manager appointed as
contemplated in SECTION 3.01(b) hereof.
REGULATIONS - means the federal income tax regulations promulgated by
the Treasury Department under the Code, as such regulations may be amended
from time to time. All references herein to a specific section of the
Regulations shall be deemed also to refer to any corresponding provisions
of succeeding Regulations.
SECRETARY OF STATE - shall mean the Secretary of State of the State
of California.
2. FORMATION OF COMPANY; CAPITAL, DISTRIBUTIONS AND ALLOCATIONS.
2.01 INTRODUCTORY MATTERS.
(a) The parties have formed the Company pursuant to the
provisions of the Act by filing the Articles of Organization with the
Secretary of State.
(b) The purpose of the Company shall be to own and operate
the Property and Improvements as investments and for income-producing
purposes, as the successor-in-interest by merger to the Partnership. The
Company shall have no other intended purpose nor engage in any other
business, except as set forth above, and shall be operated independently of
the Phase I Partnership, except to the extent that coordination between the
Phase I Project and the Project is determined by the mutual determination
of the respective Management Committees of the Company and the Phase I
Partnership to be mutually beneficial in connection with their operation.
(c) The term of the Company commenced upon the filing of the
Articles of Organization for the Company and shall end on December 31, 2035
unless the Company is terminated or dissolved sooner, in accordance with
the provisions of this Agreement.
(d) The Company shall maintain its principal place of
business at 355 South Grand Avenue, Suite 4500, Los Angeles, California
90071, or any other location mutually agreed upon by the Members.
(e) The name and address of the Company's agent for service
of process is Maguire Partners, 355 South Grand Avenue, Suite 4500, Los
Angeles, CA 90071.
2.02 MEMBERS AND THEIR INTERESTS.
(a) The Initial Members in the Company consist of Maguire
Partners, Carlyle 14 and Carlyle 15, each with the Percentage Interest in
income and capital distributions of the Company as is defined in ARTICLE I
hereof subject to the preferences set forth in SECTIONS 2.06 and 2.09.
(b) The parties hereby agree to merge the Partnership into
the Company. The Members shall cause the necessary filings and documents to
be prepared and filed to effect the merger of the Partnership into the
Company as quickly as possible including the execution of an Agreement of
Merger between the Partnership and the Company and a Certificate of Merger
(Form LLC-9) to be filed with the Secretary of State and, if necessary,
recorded in Los Angeles County Records. The Members intend that such
merger shall be accomplished pursuant to Section 708(b)(2)(A) so that the
Company is the continuing entity and shall comply with the Regulations and
rulings under Code Section 708. The Members acknowledge that they shall
hold all of their respective rights and obligations with respect to the
Project solely through the Company, from and after the effective date of
the merger of the Partnership into the Company, and that no Member has any
separate rights or claims against any other Member or any other partner in
the Partnership, or with respect to the Project, by or through the
Partnership.
(c) Maguire Partners holds an undivided twenty percent (20%)
interest in certain artworks described on EXHIBIT "B" attached hereto
("ARTWORK"), separate and apart from Maguire Partner's interest in said
Artwork through the Company. Carlyle holds no interest in such Artwork
directly or through the Company.
2.03 CAPITAL CONTRIBUTIONS.
(a) Each Member has the Capital Account set forth on EXHIBIT
"C" attached hereto, which Capital Accounts reflect the adjustment to such
Capital Accounts provided for in SECTION 2.04(a) through the date of the
Supplemental Contributions required by SECTION 2.03(b). Such Capital
Accounts have been revalued in accordance with Regulation Section 1.704-
1(b)(2)(4)(f).
(b) On the date hereof, each of Maguire Partners and Carlyle
shall contribute $1,000,000 in cash to the capital of the Company
("SUPPLEMENTAL CONTRIBUTIONS") for a total of $2,000,000 of capital. The
Supplemental Contributions shall be paid by the Company to Aetna pursuant
to the Modification Documents.
2.04 CAPITAL ACCOUNTS.
(a) A separate non-interest bearing Capital Account shall be
maintained for each Member, (A) to which there shall be credited (1) all
cash contributions of such Member to the Company, (2) the fair market
value, at the date of contribution, of property contributed by such Member
to the Company (net of liabilities assumed by the Company and liabilities
to which such contributed property is subject), which amount credited may
be less than $0, (3) such Member's share of Operating Profit, (4) such
Member's share of Disposition Profit (including, but not limited to,
Disposition Profit described in SECTION 3.06(g) hereof), (5) if an election
under Section 754 of the Code shall apply to a distribution of property by
the Company to a Member, (a) the amount of gain, if any, recognized by such
Member upon such distribution in accordance with Section 731(a)(1) of the
Code, and (b) in the case of a distribution of Company property other than
money under Section 732(a)(2) of the Code, the excess, if any, of the
Company's adjusted basis of such distributed property over the basis of
such distributed property to the distributee Member, and (6) 50% of any
recaptured investment tax credit suffered by the Member if no election
under Section 48(q)(4) of the Code was made with respect to the investment
tax credit subject to recapture; and (B) to which there shall be debited
(1) all cash distributions to such Member, (2) the fair market value of
property distributed to such Member (net of liabilities assumed by such
Member and liabilities to which such distributed property is subject),
which amount debited may be less than $0, (3) such Member's share of
Operating Loss, (4) such Member's share of Disposition Loss (including, but
not limited to, Disposition Loss described in SECTION 3.06(g) hereof), and
(5) 50% of any investment tax credit allocated to such Member unless an
election under Section 48(q)(4) of the Code was made with respect to such
investment tax credit. Upon the sale or exchange of a Company Interest,
(i) if such sale or exchange causes a termination of the Company within the
meaning of Section 708(b)(1)(B) of the Code, the income tax consequences of
the deemed distribution of Company property and the deemed immediate
contribution of Company property to a new partnership or limited liability
company (which for all other purposes continues to be the Company) shall be
governed by the relevant provision of Subchapter K of Chapter I of the Code
and the regulations promulgated thereunder (including Section 704(c) of the
Code) and the Capital Accounts of the Members shall be redetermined in
accordance with this SECTION 2.04(a); (ii) if such sale or exchange does
not cause a termination of the Company within the meaning of Section
708(b)(1)(B) of the Code and if an election by the Company under Section
754 of the Code shall apply to such sale or exchange, the Capital Account
of the selling or exchanging Member (or such portion which is attributable
to the interest sold or exchanged) will be carried over to the transferee
Member and there shall be made to the Capital Account of the Member who
receives the special basis adjustment under Section 743 of the Code a
corresponding adjustment to take into account such Code Section 743 basis
adjustment; or (iii) in the case of a sale or exchange not described in
clause (i) or (ii) of this sentence, the Capital Account of the selling or
exchanging Member (or such portion which is attributable to the interest
sold or exchanged) will be carried over to the transferee Member.
(b) Funds of the Company which are held in reserve and not
available for distribution shall to the extent practicable be invested in
bank certificates of deposit at market rates. Interest earned on funds of
the Company so invested shall inure solely to the benefit of the Company,
and no interest shall be paid to any Member upon any contributions or
advances to the capital of the Company (except as expressly provided
herein), nor upon any undistributed or reinvested income or profits of the
Company.
2.05 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) Additional capital contributions shall be made by the
Members as described below in order to satisfy any Capital Shortfall
declared by the Management Committee as a Major Decision under SECTION
3.01(c). Such capital contributions will not be made until other existing
funds of the Company have been utilized, and the Members shall use their
best efforts to cause the Company to borrow from third parties any funds
required for satisfaction of such Capital Shortfall before any demand is
made on the Members for capital contributions for the same. No Member
shall have any obligation to make a capital contribution to the Company
except as expressly required by the provisions of this Agreement.
(b) If any additional capital contributions are required to
satisfy any Capital Shortfall declared by the Management Committee as a
Major Decision under SECTION 3.01(c) (it being contemplated that the
Project Reserve permitted by the Aetna Modification Documents and the
Additional Loan Advances which Aetna has agreed to fund to the Partnership
under the Modification Documents will be used first to fund Company
requirements as described in SECTION 2.07(a) hereof before the Members
shall be obligated to make a contribution with respect to the same), then
the same shall be contributed by the Members in proportion to their
respective Percentage Interests at the time of such Capital Shortfall.
(c) In the event any Member shall fail to make any required
capital contribution required by SECTION 2.05(b) above within ten days (10)
after written demand for such payment by any other Member, (i) unless the
Members other than the non-contributing Member elect, either pursuant to
clause (ii) below or pursuant to SECTION 2.05(d) below, to make the entire
contribution required to be made by the non-contributing Member, each
Member that has made the additional capital contribution required to be
made by it pursuant to SECTION 2.05(b) above may withdraw such capital
contribution from the Company and may retain such amount until the non-
contributing Member shall have made the additional capital contribution
required to be made by it pursuant to SECTION 2.05(b) above, or (ii) the
capital contribution required to be made by the non-contributing Member may
be made by the other Members, in proportion to their respective Percentage
Interests or as they may otherwise agree, in which event such unpaid
capital contribution shall constitute a debt owed by the non-contributing
Member to the contributing Members, which shall bear interest at the prime
rate from time to time announced by Wells Fargo Bank, N.A., plus 5% per
annum (but not to exceed the maximum rate permitted by law), until paid and
shall be payable (with interest as aforesaid) 120 days after demand by the
contributing Members. In addition, and not in limitation of, the other
rights and remedies of the contributing Members, any distributions
otherwise to be made by the Company to a non-contributing Member shall
instead be made to the contributing Members, to be applied against such
debt, and until such amounts, including accrued interest, are paid in full,
no further distributions shall be made to any non-contributing Member by
the Company and such non-contributing Member shall cease to have any vote
on the Management Committee. Such debt, with interest as aforesaid, shall
be with recourse as to the non-contributing Member, and shall be secured by
a security agreement being executed contemporaneously herewith by such
Member encumbering such Member's Company Interest. Any capital
contribution so contributed by one Member on behalf of another Member
shall, for purposes of SECTION 2.05(a) above, be deemed made by the Member
on behalf of which such contribution was made.
(d) In the event any Member shall fail to make any capital
contribution required by SECTION 2.05(b) above and the other Members do not
elect to make such capital contribution in its entirety pursuant to SECTION
2.05(c) above within 45 days after written demand for payment of the
capital contribution given to the defaulting Member by any other Member
(which may be the same written demand as that given under SECTION 2.05(c)
above), then (unless the interest of the non-contributing Member in the
Company is acquired pursuant to SECTION 3.06(c) hereof as a result thereof)
the remaining Members may make such additional capital contributions in
cash in proportion to their respective Percentage Interests, or as they may
otherwise agree, in which event the respective Percentage Interests of the
Members shall be:
(i) in the case of a Member making such additional
capital contributions pursuant hereto, the Percentage Interest of such
contributing Member shall be increased by a percentage (herein called the
"PERCENTAGE ADJUSTMENT") determined by (x) dividing the amount of the
required capital contribution made by such contributing Member by the
"Estimated Value" of the defaulting Member's Interest, and (y) multiplying
the result by such defaulting Member's Percentage Interest before such
adjustment. For this purpose, "Estimated Value" shall be equal to 80% of
the total proceeds such defaulting Member would receive upon a liquidation
of the Company at its "Net Fair Market Value" and a distribution to the
Members in accordance with SECTIONS 3.06(d) and 2.06(c) hereof. Except as
otherwise provided in this Agreement, such "Net Fair Market Value" of the
Company shall be determined in accordance with SECTION 3.03(e) hereof;
(ii) in the case of a defaulting Member, its Percentage
Interest shall be decreased by the total Percentage Adjustment increases
pursuant to (i) above.
(e) The Percentage Adjustments shall be adjusted to the
nearest one hundredth of 1%. Adjustment shall be made in the respective
Percentage Interests on each occasion when an additional aggregate capital
contribution of at least $500,000 is made pursuant to SECTION 2.05(b),
taking into consideration for this purpose on a cumulative basis any such
capital contributions not previously included in making any such
adjustment. Nothing herein shall obligate a Member to make any additional
capital contribution required by SECTION 2.05(b) in the event one or more
of the Members fails to make such contributions hereunder.
(f) To illustrate the operation of this SECTION 2.05, assume,
for purposes of this example only, that the Percentage Interests of Carlyle
14, Carlyle 15 and Maguire Partners are 17.495%, 32.495% and 50.01%,
respectively, at the time an additional capital contribution of $10,000,000
is required pursuant to SECTION 2.05(b).
(i) If all of the Members contribute the required
capital pro rata ($1,749,500 by Carlyle 14, $3,249,500 by Carlyle 15 and
$5,001,000 by Maguire Partners) there would be no adjustment in the
respective Percentage Interests.
(ii) If Carlyle 14 and Carlyle 15 did not make their
required capital contributions and Maguire Partners made such contributions
(assuming that no loans were made to Carlyle 14 and Carlyle 15 pursuant to
SECTION 2.05(c) above) then, assuming that the Net Fair Market Value of the
Company has been appraised at an amount that would result in a total
distribution of $120 million to Carlyle 14 and Carlyle 15 upon liquidation
of the Company, the Percentage Interest of Maguire Partners would be
increased by 2.61%.
MAGUIRE PARTNERS
1,749,500 x 17.495% = 0.91%
-----------------
80% x $41,996,399
3,249,500 x 32.495% = 1.69%
-----------------
80% x $78,003,601
The Percentage Interest of Carlyle 14 would be decreased by 0.91% to
16.585%, and the Percentage Interest of Carlyle 15 would be decreased by
1.69% to 30.805%.
2.06 DISTRIBUTIONS.
(a) Not later than fifteen (15) days after the end of each
calendar month, the Property Manager shall make a distribution to the
Members of the entire Net Cash Flow of the Company during such preceding
month.
(b) Net Receipts shall be distributed to the Members as
follows:
(i) FIRST LEVEL. The first available Net Receipts
shall be distributed equally (50/50) to Maguire Partners and to Carlyle
until each of them has received a cumulative amount of Net Receipts under
this SECTION 2.06(b)(i) and Disposition Proceeds under SECTION 2.06(c)(i)
to provide each Member with a 25% internal rate of return, calculated on an
annual basis, on the Supplemental Contribution made by such Member from the
date of the making of the Supplemental Contribution through the date such
return is calculated with the first distributions being treated as return
on capital. The foregoing amount is referred to herein as the
"SUPPLEMENTAL CONTRIBUTION PREFERRED RETURN". For purposes hereof, the
internal rate of return on the Supplemental Contributions shall be
calculated by the Company's accountants, which calculations shall be final
and conclusive, if made in good faith and without manifest arithmetic
error.
(ii) SECOND LEVEL. After satisfaction of the
Supplemental Contribution Preferred Return to Maguire Partners and Carlyle
under SECTION 2.06(b)(i), the next available Net Receipts, up to a
cumulative amount of $5,000,000 of Net Receipts under this SECTION
2.06(b)(ii) and Disposition Proceeds under SECTION 2.06(c)(ii), shall be
distributed pari passu 80% to Carlyle and 20% to Maguire Partners. The
allocation of Net Receipts under this SECTION 2.06(b)(ii) is referred to
herein as the "$5,000,000 PREFERENCE".
(iii) THIRD LEVEL. The balance of the Net Receipts
remaining, after the distributions under the First and Second Levels above,
shall be distributed to the Members in proportion to their Percentage
Interests.
All Net Receipts distributable to Carlyle 14 and
Carlyle 15 pursuant to this SECTION 2.06(b) shall be distributed in the
ratio of their Percentage Interests.
(c) The Disposition Proceeds shall be distributed to the
Members as follows:
(i) FIRST LEVEL. In the event distribution of Net
Receipts previously made to the Members pursuant to SECTION 2.06(b)(i)
hereof, plus the amount of the prior distributions of Disposition Proceeds
pursuant to this First Level, shall be less than the Supplemental
Contribution Preferred Return as of the date the current distribution of
such Disposition Proceeds shall be made, then there shall first be
distributed to Maguire Partners, on the one hand, and Carlyle, on the other
hand, on an equal (50/50) basis, out of such Disposition Proceeds an amount
equal to such deficiency.
(ii) SECOND LEVEL. After distribution of Disposition
Proceeds as required by SECTION 2.06(c)(i), in the event the amount of
distributions previously made to the Members pursuant to SECTION
2.06(b)(ii) hereof, plus the amount of distributions of Disposition
Proceeds previously made pursuant to this Second Level, is, in the
aggregate, less than the $5,000,000 Preference as of the date of the
current distribution of such Disposition Proceeds being made, then there
shall next be distributed an amount equal to such deficiency, on a pari
passu basis, 80% to Carlyle and 20% to Maguire Partners out of such
Disposition Proceeds.
(iii) THIRD LEVEL. The balance of the Disposition
Proceeds remaining after the distributions under the First and Second
Levels above shall be distributed to the Members in accordance with their
respective Percentage Interests.
The cash portion of the Members' share of Disposition Proceeds,
together with all installments and payments of cash of or against any
deferred portion of such Disposition Proceeds, shall be distributed in
accordance with the levels provided above, with each person or entity
entitled to payment under a level receiving the entire amount of such cash
until the sum payable under such level shall have been discharged in cash.
All Disposition Proceeds distributable to Carlyle 14 and Carlyle 15
pursuant to this SECTION 2.06(c) shall be distributed in the ratio of their
Percentage Interests.
2.07 RESERVES.
(a) During the term of the Aetna Loan, and until the Aetna
Loan is refinanced with a replacement loan that permits a greater reserve
amount, the Company shall maintain a $3,000,000 Project Reserve for capital
improvements and operating costs and a $250,000 working capital reserve in
accordance with, and to the extent permitted by, the Modification
Documents.
(i) At such time as the Company is no longer subject to
the Modification Documents, the Company shall establish capital
improvements and operating reserves as are determined from time to time
with the Approval of the Management Committee.
(b) The capital improvements and operating reserves
established from time to time by the Company shall be used (A) to fund
tenant improvements and leasing commissions with respect to space in the
Building, (B) to pay operating deficits (including, but not limited to, any
of the same resulting from the obligation to pay debt service) for any
period after the date of this Agreement, (C) to fund any required capital
improvements, and (D) to fund any obligations of the Company under leases
of space assumed by the Company from persons who have become or may
hereafter become tenants in the Building.
2.08 RESERVED.
2.09 ALLOCATIONS AMONG MEMBERS.
(a) All Operating Profit, Operating Loss, Disposition
Profits, Disposition Loss and tax credits shall be allocated to the Members
as provided below in this SECTION 2.09.
(b) The Operating Profit and Disposition Profit of the
Company shall be allocated among the Members in the following order of
priority:
(i) First, to the Members in proportion to, and in a
cumulative amount equal to, the cumulative amount of Operating Loss and
Disposition Loss previously allocated to the Members pursuant to SECTIONS
2.09(c)(ii), (iii) and (iv);
(ii) Second, to the Members in proportion to, and in a
cumulative amount up to, the cumulative amount of Net Receipts and
Disposition Proceeds distributed to the Members or to be distributed to the
Members under SECTIONS 2.06(b)(i) and (ii) and 2.06(c)(i) and (ii),
excluding any distribution of Net Receipts and Disposition Proceeds which
represents a return of the capital contributions of such Members
(including, for example, the return of the Supplemental Contributions as
part of the Supplemental Contribution Preferred Return); and
(iii) Third, the balance of the Operating Profit and
Disposition Profit in any fiscal year shall be allocated among the Members
in proportion to their Percentage Interests.
(c) The Operating Loss and Disposition Loss of the Company
shall be allocated among the Members in the following order of priority:
(i) First, to the Members in proportion to, and in a
cumulative amount equal to, the cumulative amount of Operating Profit and
Disposition Profit previously allocated to the Members pursuant to SECTION
2.09(b)(iii) until the Adjusted Capital Account of each of the Members is
reduced to the sum of (A) its share of the undistributed Supplemental
Contribution Preferred Return and (B) its share of the undistributed
$5,000,000 Preference;
(ii) Second, to the Members in proportion to the amounts
required to be allocated pursuant to this SECTION 2.09(c)(ii), until the
Adjusted Capital Account of each of the Members is reduced to its share of
the undistributed Supplemental Contribution Preferred Return;
(iii) Third, to the Members in proportion to the amounts
required to be allocated pursuant to this SECTION 2.09(c)(iii), until the
Adjusted Capital Account of each of the Members is reduced to zero; and
(iv) Fourth, the balance of the Operating Loss and
Disposition Loss in any fiscal year shall be allocated among the Members in
proportion to their Percentage Interests.
(v) Notwithstanding anything to the contrary in this
SECTION 2.09(c),
(A) Interest income recognized on any deferred
purchase price obligation received in connection with a Disposition Event
shall not be considered a part of Disposition Profit or Disposition Loss,
as the case may be, and shall be allocated to the Member receiving the
interest payment to which such income is attributable.
(B) To the extent permitted by the applicable
Code provisions and Regulations, all Disposition Profit treated as ordinary
income because it is attributable to the recapture of depreciation or cost
recovery deductions shall be allocated among the Members in the same ratio
as prior allocations to such Members of the depreciation or cost recovery
deductions subject to recapture. The preceding sentence is intended merely
to characterize the gain allocable to the Members, and shall not operate to
increase or decrease the amount of Disposition Profit otherwise allocable
to the Members under SECTION 2.09(c)(ii).
(vi) For purposes of making the allocations provided for
in this SECTION 2.09, the Capital Account of each Member shall be
determined as of the end of the fiscal year in which the Disposition Event
occurred, after (x) crediting to such account all capital contributions
made by the Members within 15 days after the close of the fiscal year, (y)
debiting all distributions (whether of Net Receipts, Disposition Proceeds
or liquidation proceeds) made or to be made to such Member, and (z) after
crediting or debiting, as the case may be, such Member's share of the
Operating Profit or Operating Loss for such fiscal year.
(d) TAX CREDITS
The Company's basis in any property qualifying for the
investment tax credit shall be allocated among the Members in accordance
with the manner in which they share Operating Profit at the time the
property is first placed in service.
(e) SPECIAL ALLOCATIONS
Notwithstanding anything to the contrary in SUBSECTIONS
(b) through (d) of this SECTION 2.09:
(i) QUALIFIED INCOME OFFSET. If any Member
unexpectedly receives any adjustments, allocation or distributions
described in clauses (4), (5) or (6) of Regulations Section
1.704-1(b)(2)(ii)(d), items of Company income shall be specially allocated
to such Member in an amount and manner sufficient to eliminate the deficit
in such Member's Adjusted Capital Account created by such adjustments,
allocations or distributions as quickly as possible. This SECTION
2.09(e)(i) is intended to constitute a "qualified income offset" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(d)(3);
(ii) MINIMUM GAIN CHARGEBACK. If there is a net
decrease in Company Minimum Gain during a fiscal year, each Member will be
allocated, before any other allocation under this SECTION 2.09, items of
income and gain for such fiscal year (and if necessary, subsequent years)
in proportion to and to the extent of an amount equal to such Member's
share of the net decrease in Company Minimum Gain determined in accordance
with Regulations Section 1.704-2(g)(2). This SECTION 2.09(e)(ii) is
intended to comply with, and shall be interpreted consistently with, the
"minimum gain chargeback" provisions of Regulations Section 1.704-2(f);
(iii) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this SECTION 2.09, but except
SECTION 2.09(e)(ii), if there is a net decrease in Member Nonrecourse Debt
Minimum Gain attributable to a Member Nonrecourse Debt during any fiscal
year of the Company, each Member who has a share of the Member Nonrecourse
Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal such Member's share of the
net decrease in Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined
in accordance with Regulations Section 1.704-2(i)(4). This
SECTION 2.09(e)(iii) is intended to comply with the minimum gain chargeback
requirement of that Section of the Regulations and shall be interpreted
consistently therewith;
(iv) MEMBER NONRECOURSE DEDUCTIONS. Any Member
Nonrecourse Deductions for any fiscal year or other period shall be
specially allocated to the Member who bears (or is deemed to bear) the
economic risk of loss with respect to the Member Nonrecourse Debt to which
such Member Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(2).
(v) NON-RECOURSE DEDUCTIONS. Any "Non-Recourse
Deductions" as defined in Regulations Section 1.704-2(c) for any fiscal
year or other period shall be specially allocated as items of loss in the
manner provided in Regulations Section 1.704-2(j)(1)(ii).
(vi) SPECIAL ALLOCATIONS. Any special allocations of
Operating Profits and Disposition Profits pursuant to SECTIONS 2.09(e)(ii),
(iii) and (iv) shall be taken into account in computing subsequent
allocations of Operating Profits and Disposition Profits pursuant to
SECTION 2.09(b) and (c), so that the net amount of any items so allocated
and the gain, loss and any other item allocated to each Member pursuant to
this SECTION 2.09 shall, to the extent possible, be equal to the net amount
that would have been allocated to each such Member pursuant to the
provisions of this SECTION 2.09 if such special allocations had not
occurred;
(vii) FEES TO MEMBERS OR AFFILIATES. In the event that
any fees, interest, or other amounts paid to any Member or any affiliate
thereof pursuant to this Agreement or any other agreement between the
Company and any Member or affiliate thereof providing for the payment of
such amount, and deducted by the Company in reliance on Section 707(a)
and/or 707(c) of the Code, are disallowed as deductions to the Company on
its federal income tax return and are treated as Company distributions,
then:
(a) the Operating Profits or Operating Loss, as
the case may be, for the fiscal year in which such fees, interest, or other
amounts were paid shall be increased or decreased, as the case may be, by
the amount of such fees, interest, or other amounts that are treated as
Company distributions; and
(b) there shall be allocated to the Member to
which (or to whose Affiliate) such fees, interest, or other amounts were
paid, prior to the allocations pursuant to SECTION 2.09(b), an amount of
gross income for the fiscal year equal to the amount of such fees,
interest, or other amounts that are treated as Company distributions.
(viii) 704(C) ALLOCATION. Any item of income, gain,
loss, and deduction with respect to any property (other than cash) that has
been contributed by a Member to the capital of the Company and which is
required or permitted to be allocated to such Member for income tax
purposes under Section 704(c) of the Code so as to take into account the
variation between the tax basis of such property and its fair market value
at the time of its contribution shall be allocated to such Member solely
for income tax purposes in the manner so required or permitted. The
accounting for SECTION 704(c) for each Member shall continue in the same
manner as for the partners in the Partnership.
(f) ALLOCATION UPON CHANGE IN INTERESTS.
The Company shall treat all transfers and acquisitions of any
interest in the profits or losses of the Company that occur during the
first 15 days of a month as occurring on the first day of the month, and
shall treat all such transfers and acquisitions that occur after the 15th
day of the month as occurring on the 16th day of the month, except that a
daily allocation shall be made in the case of the acquisition or
disposition of a Member's entire interest in the Company. For purposes of
this subsection (f), the Company shall utilize the interim closing of the
books method.
(g) ALLOCATIONS BETWEEN CARLYLE 14 AND CARLYLE 15.
The Operating Profit and Operating Loss of the Company (and
items of income and deduction entering into the calculation of Operating
Profit or Operating Loss) which is allocated to Carlyle 14 and Carlyle 15
as aforesaid shall be allocated between Carlyle 14 and Carlyle 15, on a
monthly basis, in such a manner that the cumulative allocations to Carlyle
14 and Carlyle 15 will be allocated 65% to Carlyle 15 and 35% to Carlyle
14.
(h) NON-RECOURSE LIABILITIES.
The non-recourse liabilities of the Partnership, as defined in
Regulations Section 1.752-1(a)(2) shall be allocated among the Members in
accordance with Regulations Section 1.752-3(1)(1), (2) and (3).
2.10 RESERVED.
2.11 SPECIAL ASSETS.
(a) Neither Carlyle 14 nor Carlyle 15 will have any interest
in any of the Artwork described on EXHIBIT "B" hereto, any benefits
therefrom to accrue to Maguire Partners; provided that if any such artwork
shall hereafter be removed from its present location, Maguire Partners
shall promptly replace any Artwork it causes or permits to be removed with
other artwork comparable in size and appearance to that so removed, in
compliance with any governmental requirements presently in effect and with
all requirements in the Permitted Exceptions, Tenant Leases, Loan Documents
and Continuing Contracts (as such terms are defined in that certain
Agreement Re: Purchase and Sale of Partnership Interests among Maguire
Partners, Carlyle and Crocker Properties, Inc. dated June 28, 1985)
relating to artworks in or around the Building, and shall promptly restore
and finish the Property to first-class condition after any such removal.
(b) Maguire Partners shall have the right, on behalf of the
Company, to covenant to the City of Los Angeles any and all "Excess Parking
Capacity" (as hereinafter defined) in the Off-Site Parking Facility,
pursuant to Section 12.26E5 of the Los Angeles Municipal Code, or any
successor provision, for the benefit of any third party for the maintenance
of off-street parking spaces for the construction, operation or other
benefit of any other development projects or structures in the City of Los
Angeles and to receive and own any consideration paid by third parties for
such Excess Parking Capacity (all gain and income recognized by the Company
for income tax purposes due to such consideration being allocated to
Maguire Partners); provided, however, that no person shall be entitled to
actually occupy parking spaces within the Off-Site Parking Facility without
both obtaining the consent of the Company and paying to the Company the
prevailing market rate for comparable parking rights in downtown Los
Angeles, to which Carlyle 14 and Carlyle 15 will be entitled in accordance
with their Company interests. As used herein, "Excess Parking Capacity"
means that number of code compliance automobile parking spaces in the Off-
Site Parking Facility equal to the excess, if any, of (a) the total number
of code compliance automobile parking spaces in the Off-Site Parking
Facility, over (b) the aggregate number of automobile parking spaces
covenanted to the City of Los Angeles or otherwise restricted (including
restrictions which are to become effective at some future date) so as to be
unavailable for covenanting to the City of Los Angeles for the benefit of
third parties.
2.12 AETNA LOCKBOX. Notwithstanding anything to the contrary in
this Agreement, all receipts and funds of the Company shall be subject to
the terms, conditions and procedures of that certain Lockbox Agreement
dated as of December 1, 1994, by and among the Partnership, Aetna and CB
Commercial Real Estate Group, Inc. and of the Modification Documents so
long as such agreements remain in force and effect.
3. MANAGEMENT AND OPERATION.
3.01 MANAGEMENT OF THE COMPANY.
(a) MANAGEMENT COMMITTEE.
(i) The overall management and control of the business
and affairs of the Company shall be vested in a Management Committee,
appointed as hereinafter provided in this SECTION 3.01, which shall be
required to approve all decisions with respect to the management or control
of the Company, except as otherwise expressly provided herein. Except
where herein expressly provided to the contrary, all decisions with respect
to the management and control of the Company that are "Approved by the
Management Committee" shall be binding on the Company and all of its
Members. The size of the Management Committee shall be determined by
written approval of Members holding Percentage Interests in the Company
equal to at least seventy-five percent (75%), and the members of the
Management Committee shall be appointed by similar written approval and
shall include at least one representative each for Maguire Partners, for
Carlyle 14 and for Carlyle 15; provided, however, that the same person or
persons may be designated as the representative or representatives of both
Carlyle 14 and of Carlyle 15. The Company shall be a limited liability
company managed by its Members for purposes of the Act. The number of
representatives which each Member may have on the Management Committee
shall in any event be subject to the written approval of each of the other
Members other than a Member whose Percentage Interest in the Company shall
at any time be equal to or less than twenty percent (20%). Each Member so
entitled shall designate in writing from time to time its respective
representatives on the Management Committee and an alternate.
Any action of the Management Committee shall require the
written approval of the representatives on the Management Committee of all
Members. Each such representative shall be fully authorized to provide any
consent or approval which may be required hereunder of the Management
Committee. No meeting of the Management Committee shall be held unless at
least one representative of Maguire Partners and one representative of
either Carlyle 14 or Carlyle 15 are present.
(ii) In the event that the Management Committee fails to
take action on a Major Decision due to the inability of the representatives
of Maguire Partners and Carlyle to agree on the action to be taken, then
either Maguire Partners or Carlyle may give written notice (the
"ARBITRATION NOTICE") to the other that such inability to agree poses
significant risk to the successful operation of the Company (provided that
no Member shall give an Arbitration Notice with respect to a proposed
refinancing of the indebtedness on the Property that is not permitted by
SECTION 3.01(c)(ii) below) and thereupon the following actions shall be
taken:
(aa) Within thirty (30) days after transmittal of
such notice Maguire Partners and Carlyle shall each appoint an arbitrator,
and the two arbitrators so appointed shall appoint a third arbitrator. If
only two arbitrators are appointed within the first ten (10) days of the
initial thirty day period, then either Maguire Partners or Carlyle shall be
entitled to apply to the presiding judge of the Superior Court of the
County of Los Angeles for the selection of a third arbitrator who shall
then participate in such arbitration proceedings, and who shall be selected
from a list of four arbitrators possessing the qualifications set forth
below two of which shall be submitted by Maguire Partners and two of which
shall be submitted by Carlyle. Any arbitrator appointed pursuant to this
SECTION 3.01(a)(ii) shall be a qualified expert with generally recognized
current competence in real estate development. In conducting their
proceedings, the arbitrators shall be guided by the intention of the
Members that the Project be constructed and operated as a high quality
investment and building complex suitable for a corporate headquarters.
Except as otherwise provided herein, such arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
(bb) Within fifteen (15) days of the date of
selection of the last of the arbitrators to be selected by the foregoing
procedure set forth in clause (aa), the arbitrators shall furnish Maguire
Partners and Carlyle with written determination of a reasonable action to
be taken on the Major Decision in question. Such written determination
shall be signed by at least a majority of the arbitrators.
Either Maguire Partners or Carlyle shall have the
right to disapprove the determination by the arbitrators by written notice
to the other within ten (10) days after the delivery of the written
determination. Failure to so disapprove the written determination shall
constitute approval of the action on the Major Decision as set forth in the
written determination.
(cc) In the event either Maguire Partners or
Carlyle disapproves said written determination, then either Maguire
Partners or Carlyle (hereinafter called the "INITIATING PARTNER") shall, by
giving written notice to the other (hereinafter called the "RESPONDING
PARTNER"), of its disapproval of said determination within said ten (10)
day period be deemed to have initiated proceedings for the purchase or sale
of its respective Percentage Interest in the Company as herein
contemplated. If a majority of the arbitrators fail to deliver a written
determination within the time period provided above, then either Maguire
Partners or Carlyle as the Initiating Member may similarly give written
notice to the other as the Responding Member of its election to initiate
such proceedings. Within ten (10) days after the delivery of such notice
to initiate such procedures, Maguire Partners and Carlyle shall take steps
to have the Net Fair Market Value of the Company determined by appraisal as
provided in SECTION 3.03(e) hereof or by agreement or by any other means or
methods upon which they may from time to time agree. Within ten (10) days
after receipt of the results of such appraisal, or other agreement upon or
determination of such Net Fair Market Value, the Responding Member shall
give written notice to the Initiating Member as to whether the Responding
Member elects to sell its Percentage Interest in the Company to the
Initiating Member at the Net Fair Market Value thereof as so determined or
whether it elects to purchase the Percentage Interest in the Company of the
Initiating Member at such Net Fair Market Value. All such notices to
purchase when so delivered shall effect a binding agreement between Maguire
Partners and Carlyle to purchase or sell its respective Percentage Interest
in the Company to the other for cash as herein contemplated and such
purchase or sale shall be consummated within the time period and in the
manner contemplated in SECTION 3.03(d) hereof. Upon the delivery of such
election to purchase or sell, the Member whose interest is to be purchased
as herein contemplated shall cease to have a vote on the Management
Committee unless and until the Member which is to purchase such interest
shall default in its obligation to do so. If the Responding Member fails
to exercise its election to purchase or sell within the time period
provided, or if the Member which elects to purchase the Percentage Interest
of the other Member as herein contemplated thereafter fails to consummate
such purchase as herein contemplated, then the Initiating Member (in case
of the Responding Member's failure) or the nondefaulting Member (in case of
such failure of the Purchasing Member) as the case may be, shall have the
right by giving written notice of its election to do so to purchase the
Percentage Interest of such Responding Member or defaulting Member for cash
within the time period and in the manner contemplated in SECTION 3.03(d)
hereof. The price to be paid for the Percentage Interest to be so
purchased shall equal that portion of the Net Fair Market Value of the
assets of the Company which such selling Member would receive in the event
of dissolution of the Company pursuant to SECTION 3.06(d).
(dd) Neither Carlyle 14 nor Carlyle 15 shall take
any action pursuant to this SECTION 3.01(a)(ii) without the concurrence of
the other.
(b) PROPERTY MANAGER.
(i) The Company shall have a manager (the "PROPERTY
MANAGER") who shall be Maguire/Thomas Partners Development, Ltd., a
California limited partnership. The Property Manager shall be responsible
for the implementation of the decisions of the Management Committee and for
conducting the ordinary and usual business and affairs of the Company as
more fully set forth herein and in the Management Agreement referred to
below. The Management Committee of the Company shall require that the
Property Manager shall at all times conform to the policies and programs
established by the Management Committee and that the scope of the Property
Manager's authority shall be limited to said policies and programs. The
acts of the Property Manager shall bind the Members and the Company only
when within the scope of such Property Manager's authority. The Property
Manager shall at all times be subject to the direction of the Management
Committee, and the Management Committee shall require that the Property
Manager shall keep such Management Committee informed as to all matters of
concern to the Company.
o th The duties, obligations and compensation of the
Property Manager are set forth in the existing Property Management and
Leasing Agreement between the Company and the Property Manager. The
Property Manager may be another affiliate of Maguire Partners if
Maguire/Thomas Partners-Development, Ltd. resigns for any reason. The
Property Manager may, but is not obligated to, hire a professional building
management firm to assist in carrying out the duties of the Property
Manager, in which event such affiliate of Maguire Partners shall receive
such compensation, if any, for performing the duties of the Property
Manager as may be Approved by the Management Committee. The Property
Manager may, with the Approval of the Management Committee, be terminated
as the Property Manager with or without cause as provided in the Management
Agreement; provided that if an affiliate of Maguire Partners is acting as
the Property Manager, Carlyle 14 and Carlyle 15 may, with cause, terminate
its employment as the Property Manager and may, with or without cause,
terminate the employment of any professional building management firm
employed by Maguire Partners to assist it as aforesaid. In the event that
the Management Committee cannot agree upon the appointment of any successor
Property Manager within thirty (30) days after the termination or removal
of such Property Manager, then within thirty (30) days after the expiration
of said thirty (30) day period, Maguire Partners may deliver to the other
Members a written statement setting forth the names of three responsible
parties experienced in the management of real estate who would be
acceptable to Maguire Partners as the Property Manager and the terms and
conditions under which such parties would act as the Property Manager.
Within thirty (30) days after receipt of such statement, the other Members
shall give Maguire Partners a joint written notice setting forth the name
of the party out of such three parties which they select to act as the
Property Manager. In the event that Maguire Partners fails to provide the
other Members with the written statement of three responsible parties
referred to above within the required thirty (30) day period, the other
Members may proceed jointly to select a Property Manager and give Maguire
Partners notice of such selection. In the event that Maguire Partners
gives the aforesaid written statement as provided above and the other
Members do not give to Maguire Partners the joint written notice setting
forth the name of the party selected as Property Manager within the
aforesaid thirty (30) days, Maguire Partners may select the Property
Manager from the list and give the other Member notice of its selection.
Upon receipt of notice from the other Members, or from Maguire Partners, as
the case may be, all parties hereto shall execute such documents and do
such other acts as may be required to appoint such party as the Property
Manager and enable such party to act as the Property Manager. Subject to
the Approval of the Management Committee, the Property Manager being
removed or terminated shall continue to serve as such until the successor
Property Manager as provided herein has been selected. During any period
of time in which there shall not be a Property Manager actively serving in
such a capacity, the Management Committee shall carry out all
responsibilities of the Property Manager hereunder and under the Management
Agreement.
(iii) Not less often than once each fiscal year, the
Property Manager shall prepare and submit to the Management Committee for
its consideration an Operating Budget setting forth the estimated receipts
and expenditures (capital, operating and other) of the Company for the
forthcoming year, which Operating Budget shall be submitted to the
Management Committee at least sixty (60) days prior to the commencement of
each fiscal year of the Company. The Management Committee shall review and
adjust the Operating Budget on a quarterly basis. The Operating Budget as
so reviewed shall provide sufficient funds for the operation of the
Project, so as to permit operation of the Project in a manner consistent
with that for the operation of a first-class office building. When
Approved by the Management Committee, the Property Manager shall implement
the Operating Budget and shall be authorized, without the need for further
Approval by the Management Committee, to make the expenditures and incur
the obligations provided for in such Operating Budget.
(iv)Maguire/Thomas Partners Development, Ltd. ("MTP-D")
has entered into a letter agreement with Carlyle dated of even date
herewith re: Maguire Thomas Partners-South Tower, LLC- Manager's Payment
(the "LETTER AGREEMENT"). Pursuant to the Letter Agreement, MTP-D is
obligated to pay the Manager's Payment, as defined therein, to Carlyle in
monthly installments on the terms and conditions specified in the Letter
Agreement. Maguire Partners agrees that if MTP-D fails to pay any
installment of the Manager's Payment when due and payable to Carlyle under
the Letter Agreement, and if Carlyle notifies MTP-D of such default and
such default remains uncured for at least 10 days after such notice (a copy
of which shall also be given to Maguire Partners), then Maguire Partners
shall cause the delinquent installment of Manager's Payment to be paid by
Maguire/Thomas Partners Development, Ltd. to Carlyle in accordance with the
Letter Agreement within 15 days after such notice of default from Carlyle.
If Maguire Partners fails to cause such payment to be made as required by
the preceding sentence, then Carlyle may take whatever action Carlyle deems
appropriate to enforce its rights under the Letter Agreement or hereunder,
in its own name or in the name of the Company, to the Manager's Payment and
may invoke the procedures of SECTION 3.06 hereof with respect to such
default of Maguire Partners.
(1) Notwithstanding anything in this Agreement to the
contrary, Maguire Partners shall not be entitled to receive, or have an
interest in, any Net Receipts or other distributions under this Agreement,
in the event Maguire Partners is in default under this SECTION 3.03(b)(iv)
except to the extent the Net Receipts or other distributions hereunder
otherwise distributable to Maguire Partners exceed any amount for which
Maguire Partners is obligated to Carlyle pursuant to this SECTION
3.03(b)(iv) ("MAGUIRE PARTNERS' OBLIGATION"). Any Net Receipts or other
distributions hereunder which, but for the preceding sentence, would be
distributed to Maguire Partners, shall be held by the Company and applied
by it to pay the Maguire Partners' Obligation by payment to Carlyle. Any
amount held by the Company on account of such Maguire Partners' Obligation
shall be deemed to be a distribution to Maguire Partners (followed by a
payment by Maguire Partners on account of the Maguire Partners'
Obligation), shall reduce the amount otherwise distributable to Maguire
Partners pursuant to this Agreement, shall reduce the Capital Account of
Maguire Partners and shall reduce the amount of the Maguire Partners'
Obligation.
(2) Maguire Partners waives: (a) any defense based upon
any legal disability to enter into the Letter Agreement or other defense of
MTP-D; (b) any defense based on any lack of authority of the officers,
directors, partners or agents acting or purporting to act on behalf of MTP-
D or any principal of MTP-D, or any defect in the formation of MTP-D or any
principal of MTP-D; (c) any and all rights and defenses arising out of an
election of remedies by Carlyle, even though that election of remedies has
destroyed Maguire Partners' rights of subrogation and reimbursement against
the principal; (d) any defense based upon Carlyle's failure to disclose to
Maguire Partners any information concerning MTP-D's financial condition or
any other circumstances bearing on MTP-D's ability to perform its
obligations the Letter Agreement; (e) any defense based upon any statute or
rule of law which provides that the obligation of a surety must be neither
larger in amount nor in any respects more burdensome than that of a
principal; (f) any defense based upon Carlyle's election, in any proceeding
instituted under the Federal Bankruptcy Code, of the application of Section
1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (g) any
defense based upon any borrowing or any grant of a security interest under
Section 364 of the Federal Bankruptcy Code; (h) any right of subrogation,
any right to enforce any remedy which Carlyle may have against MTP-D and
any right to participate in, or benefit from, any security for the Letter
Agreement now or hereafter held by Carlyle; and (i) presentment, demand,
protect and notice of any kind. Maguire Partners agrees that payment or
performance of any act which tolls any statute of limitations applicable to
the Letter Agreement shall similarly operate to toll the statute of
limitations applicable to Maguire Partners' liability hereunder. Without
limiting the generality of the foregoing or any other provision hereof,
Maguire Partners expressly waives, to the extent permitted by law, any and
all rights and defenses which might otherwise be available to Maguire
Partners under California Civil Code Sections 2787 to 2855, inclusive, 2899
and 3433, or any of such sections.
(c) APPROVAL OF MAJOR DECISIONS.
Except for matters that the Property Manager may be
specifically authorized to do pursuant to SECTION 3.01(b) above, no act
shall be taken, sum expended, decision made or obligation incurred by the
Company, the Management Committee, the Property Manager, or any Member with
respect to any matter relating to the management or control of the Company
and each of the major decisions enumerated below (the "MAJOR DECISIONS"),
unless and until each such decision has been Approved by the Management
Committee. The Major Decisions shall include:
(i) Acquisition of any land or other real
property or interest therein.
(ii) Financing or refinancing of the Company
assets, including without limitation, the financing of the acquisition of
any property of the Company, interim and long-term financing or refinancing
of the Project, and financing operations of the Company; provided, however,
the Members hereby agree that when the present Aetna Loan (as extended by
the Modification Documents) shall mature, they shall accept in replacement
thereof a new mortgage loan in the maximum amount reasonably practicable
having a due date not earlier than 10 years and bearing interest without
any participation or accruals and otherwise at a market rate of interest
and points (which shall not be in excess of the rate of interest and fees
that would be charged on a loan with similar terms but in an amount equal
to the then outstanding balance of the Aetna Loan) and on market terms and
conditions. The Members hereby approve the Permanent Financing Guidelines
attached hereto as EXHIBIT "D".
(iii)Mortgaging or the placing or suffering of any
encumbrance on any of the Property owned or operated by the Company,
including the Improvements thereon; provided, however, that the Property
may be mortgaged to secure a replacement loan described in clause (ii)
above or a second mortgage not in excess of $500,000 (if permitted by the
holder of the first mortgage).
(iv) Approval of the form or forms of leases and
adoption of the terms, conditions and standards (the "LEASE GUIDELINES")
for the leasing of space within any of the Improvements owned or operated
by the Company. The Property Manager shall be authorized to negotiate and
execute, on behalf of the Company, leases of such space within the lease
guidelines.
(v) Execution of any lease or other arrangement
involving the rental, use or occupancy of space in any of the Improvements
owned or operated by the Company, if such lease or other arrangement
provides for terms, conditions or standards more favorable to the lessee
than those contained in the lease guidelines or otherwise materially varies
from the approved lease guidelines or from the lease forms previously
Approved by the Management Committee. Leases of space in the Building
shall be effected by the Property Manager pursuant to a standard form of
building lease which shall be Approved in advance by the Management
Committee. The financial responsibility of each prospective tenant in the
Building and such tenant's compatibility with the general use of the
Building as contemplated herein, and any deviation in terms of the lease to
any prospective tenant including, without limitation, terms as to base
rental, tenants' standard improvements or otherwise, shall be Approved by
the Management Committee.
(vi) Termination or modification of any lease or
other arrangement involving the rental, use or occupancy of space in any of
the Improvements owned or operated by the Company, if such lease or other
arrangement was required to be Approved by the Management Committee
pursuant hereto or if such modification would result in a modified lease or
other arrangement which would, if it were a new lease, be required to be
Approved by the Management Committee pursuant hereto.
(vii)Construction of any Improvements or the making of
any capital improvements, repairs, alterations or changes in, to or of that
portion of the Project owned or operated by the Company in an amount which
exceeds the limitations in clause (xiii) below, except for such matters as
may be expressly delegated in writing to the Property Manager by the
Management Committee. As used in this clause (vii), the term "capital
improvement" does not include any tenant improvements for any one tenant
which do not exceed $45 per square foot (exclusive of improvements paid for
by the tenant or amortized by payments made over the term of the lease).
(viii) Selecting or varying depreciation and
accounting methods and making other decisions with respect to treatment of
various transactions for state or federal income tax purposes or other
financial purposes.
(ix) Approval of all construction and
architectural contracts and all architectural plans, specifications, and
drawings prior to the construction and/or alteration of improvements on the
Property, and any modifications of such contracts, plans, specifications
and drawings, except for such matters as may be expressly delegated in
writing to the Property Manager by the Management Committee.
(x) Varying or changing any portion of the
insurance program set forth in the insurance schedule attached hereto as
EXHIBIT "E".
(xi) Determining whether distributions should be
made to the Members, except as otherwise set forth in SECTIONS 2.06, 2.07
and 2.08 hereof.
(xii)Approving the Operating Budget pursuant to SECTION
3.01(b)(iii) hereof.
(xiii) Making any expenditure or incurring any
obligation by or on behalf of the Company involving a sum in excess of
$10,000 or involving a sum of less than $5,000 where the same relates to a
component part of work, the combined cost of which in any one fiscal year
exceeds $100,000, except for expenditures made and obligations incurred
pursuant to and specifically set forth in an Operating Budget theretofore
Approved by the Management Committee or expressly provided for in this
Agreement.
(xiv)Making any expenditure or incurring an obligation
which when added to any other expenditure for the fiscal year of the
Company exceeds the Operating Budget or any line item specified in the
Operating Budget.
(xv) Preparation and release of all promotional
and advertising material relating to the Project or concerning the Company,
including without limitation, press releases.
(xvi)Selection or termination or removal of the Property
Manager (as contemplated in SECTION 3.01(d) hereof).
(xvii) Retention of counsel for the Company or
institution of any legal action, except for such action as the Management
Committee may in writing expressly authorize the Property Manager to
institute;
(xviii) Declaring the existence of a Capital
Shortfall for purposes of SECTION 2.05; or
(xix)Any other decision or action which by any provision
of this Agreement is required to be Approved by the Management Committee or
which is not contemplated by the foregoing clauses (i) through (xviii) and
which materially affects the Company or the assets or operations thereof.
Notwithstanding the foregoing, any sale or other disposition of
all or substantially all of the assets of the Company shall require the
written consent of Members holding at least 75% of the Percentage Interests
in the Company.
(d) LIMITATIONS ON AUTHORITY.
Any provisions hereof to the contrary notwithstanding, except
for expenditures made and obligations incurred that were previously
Approved by the Management Committee or incurred pursuant to a Operating
Budget Approved by the Management Committee, or otherwise not required to
be approved by the Management Committee, the Property Manager shall not
have any authority to make any expenditure or incur any obligation on
behalf of the Company. The Property Manager shall not expend more than
what the Property Manager in good faith believes to be the fair and
reasonable market value at the time and place of delivery or performance
for any goods purchased or services engaged on behalf of the Company. The
rights and obligations of the Property Manager under this Agreement and the
Management Agreement shall not be assignable voluntarily or by operation of
law by the Property Manager without the prior written Approval of the
Management Committee. None of the Members shall, without the consent of
the other Members, take any action on behalf of or in the name of the
Company, or enter into any commitment or obligation binding upon the
Company, except for (i) actions expressly provided for in this Agreement,
(ii) actions by the Property Manager within the scope of its authority
granted hereunder, and (iii) actions authorized by the Members in the
manner set forth herein. Each Member shall indemnify and hold harmless the
other Members and their affiliates, directors and officers from and against
any and all claims, demands, losses, damages, liabilities, lawsuits and
other proceedings, judgments and awards, and costs and expenses (including
but not limited to reasonable attorneys' fees) arising directly or
indirectly in whole or in part out of any breach of the foregoing
provisions by such Member or its affiliates, officers, agents or employees.
fer TIME DEVOTED TO THE COMPANY.
The Members shall each devote such time to the Company as is
reasonably necessary to carry out the provisions of this Agreement. Except
as may otherwise be expressly provided for herein or hereafter may be
Approved by the Management Committee, no payment shall be made by the
Company to any Member for the services of such Member or any member,
shareholder, director or employee of any such Member. Any such payments
shall not exceed the fair market value of such services.
(f) TRANSACTIONS WITH RELATED PERSONS.
The Property Manager shall not knowingly enter into any
agreement or other arrangement for the furnishing to or by the Company of
goods or services with any Person related to or affiliated with the
Property Manager or any Member unless such agreement or arrangement has
been Approved by the Management Committee. Such agreement or other
arrangement shall provide for payments to any such Persons not exceeding
the fair market value of the goods or services supplied. By way of
illustration and not as a limitation on the scope of the phrase "related to
or affiliated with," for the purposes of this Subsection (g), the following
Persons shall be deemed to be "related to or affiliated with" the Property
Manager or a Member:
(i) Any Owning Person, which shall mean a Person
owning directly or indirectly more than five percent (5%) of the issued and
outstanding stock of, or more than a five percent (5%) beneficial interest
in, the Property Manager or any Member;
(ii) Any Owned Person, which shall mean a Person
more than five percent (5%) of the issued and outstanding stock of which,
or more than a five percent (5%) beneficial interest in which, is owned
directly or indirectly by the Property Manager or any Member;
(iii)Any Affiliated Person, which shall mean (x) a
Person more than five percent (5%) of the issued and outstanding stock of
which, or more than a five percent (5%) beneficial interest in which, is
owned by an Owning Person or an Owned Person, and (y) a Person which owns
more than five percent (5%) of the issued and outstanding stock of, or more
than a five percent (5%) beneficial interest in, any Owning Person or any
Owned Person; and
(iv) Any agent, officer, director, employee or
partner (or any member of the family of an agent, officer, director,
employee, or partner) of the Property Manager, any Member, any Owning
Person, any Owned Person, or any Affiliated Person.
(g) OTHER INTERESTS OF MEMBERS.
Each of the Members understands that the other Members or their
affiliates may be interested, directly or indirectly, in various other
businesses and undertakings not included in the Company. Each Member also
understands that the conduct of the business of the Company may involve
business dealings with such other businesses or undertakings. The Members
hereby agree that the creation of the Company and the assumption by each of
the Members of their duties hereunder shall be without prejudice to their
rights (or the rights of their affiliates) to have such other interests and
activities and to receive and enjoy profits or compensation therefrom, and
each Member waives any rights he or it might otherwise have to share or
participate in such other interests or activities of the other Members or
their affiliates. The Members or any of them, may engage in or possess any
interest in any other business venture of any nature or description
independently or with others, including, but not limited to, the ownership,
financing, leasing, operation, management, syndication, brokerage, or
development of real property and neither the Company nor any other Member
shall have any right by virtue of this Agreement in and to such venture or
the income or profits derived therefrom. Each Member shall give notice to
the other Members of its interest, or the interest of any of its
affiliates, in any other business or undertaking which proposes to enter
into any business transactions with the Company.
3.02 ACCOUNTING, TAX ELECTIONS AND RELATED MATTERS.
(a) At all times during the existence of the Company, the
Company shall cause the Property Manager, at the Company's expense, to
maintain accurate books and records of account in which shall be entered
all matters relating to the Company, including all income, expenditures,
assets and liabilities thereof. Such books and records of account shall be
maintained on the accrual basis in accordance with the tax accounting
method used in filings of Federal income tax returns. The Company will
elect and use the accrual method of accounting for the Federal and state
returns of income of the Company unless otherwise changed pursuant to
SECTION 3.01(c). The Company will make available adequate information to
provide any Member with all financial information as may be needed for any
Member or an affiliate of any Member for purposes of satisfying the
financial and tax reporting obligations of any Member or its respective
affiliate or affiliates. Each Member shall be entitled to any additional
information with respect to the Company as the Member's individual needs
may dictate, provided that the cost of providing such information shall be
borne solely by the Member so requesting such additional information.
(b) The Company's books and records of account shall be kept
and maintained at all times at the place or places Approved by the
Management Committee. Each Member, and its authorized representatives,
including, without limitation, such Member's lenders upon the request of
such Member, and any supervisory or regulatory authority which has
oversight over any Member or its lenders (through its representatives)
shall have the right to inspect, examine and copy the books, records,
files, securities, and other documents of the Company at all reasonable
times including, without limitation, the leases of the Property and all
correspondence concerning such leases. Said supervisory and regulatory
authorities shall also have the right in connection with an examination of
the Company activities, to examine any other Person (including, but without
limitation, the Property Manager) and the employees of such other Person
having custody or control of the Company documents with respect to such
documents.
(c) The fiscal year of the Company shall end on December 31st
of each year, unless otherwise changed pursuant to SECTION 3.01(c).
(d) (i) The Property Manager shall cause the accountants
employed by the Company to prepare a balance sheet of the Company as of the
last day of each month of each fiscal year, and an income and Net Cash Flow
statement for each month for each fiscal year. Such statements shall be
certified by an officer of the Property Manager, and copies shall be
furnished to each of the Members within ten (10) days after the end of each
month to the extent feasible. An annual statement of financial condition
of the Company and Income and Net Cash Flow statements (unaudited) shall to
the extent feasible be furnished to each of the Members within sixty (60)
days after the close of the fiscal year.
(ii) The records and accounts of the Company shall be
audited annually by Arthur Andersen & Co. or other nationally recognized
firm of independent certified public accountants Approved by the Management
Committee, who shall render their opinion on the statement of financial
condition of the Company as of the end of each fiscal year and the results
of its operations, changes in its financial condition and its income and
Net Cash Flow for each fiscal year. Such firm shall also render its
opinion on the Net Cash Flow computations made by the accountants for the
Company and certify that the distributions thereof are made in accordance
with SECTION 2.06 of this Agreement.
(e) Funds of the Company shall be deposited in an account or
accounts of a type in form and name and in a bank or banks Approved by the
Management Committee. Withdrawals from bank accounts shall be made by
parties Approved by the Management Committee.
(f) All accounting decisions for the Company (other than
those specifically provided for elsewhere in this SECTION 3.02) shall be
Approved by the Management Committee and shall be in accordance with
generally accepted accounting principles.
(g) Federal, state and local income tax returns of the
Company shall be prepared by the independent auditors. Copies of all tax
returns of the Company shall be furnished for review and Approved by the
Management Committee at least thirty (30) days prior to the statutory date
for filing, including extensions thereof, if any.
(h) Each item of income, gain, loss, deduction, or credit
earned, realized or available by or to the Company shall be allocated to
the Members for federal and state income tax purposes in accordance with
SECTION 2.09 hereof; provided, however, that, subject to the provisions of
SECTION 2.09(f) hereof, under no circumstances shall any item of expense or
deduction attributable to the period prior to the date of admission of a
Member be allocated to such Member, even if actually paid in a subsequent
period. The Company shall make the election under Section 754 of the
Internal Revenue Code (and under the corresponding section of state or
local law) at the request of any Member, or if otherwise Approved by the
Management Committee, with respect to any Company Interest in the Company
to which Section 754 applies. The Company shall make such other tax
decisions and elections as are set forth on EXHIBIT "F" hereto. Tax
decisions and elections for the Company not provided for expressly herein
or on said EXHIBIT "F" must be Approved by the Management Committee. All
information relating to depreciation, including method, useful lives and
asset amount, shall be furnished to each Member in sufficient detail and
with such promptness as to permit compliance with requirements of any
applicable supervising or regulatory authority.
(i) The Members shall jointly represent the interests
of the Company before the Internal Revenue Service and, for purposes of
notice to the Company, Carlyle 15 shall be designated the Tax Matters
Partner or Member (as defined in Section 6231(a)(7) of the Code). Carlyle
15 shall not make any commitment or agreement binding on the Company, as
such Tax Matters Member, without the approval of all Members and shall
fulfill all of the duties and obligations of the Tax Matters Member as set
forth in the Code and any Regulations promulgated in connection therewith,
including, without limitation, transmitting to Members copies of all
notices and information the Tax Matters Member from the Secretary (as
defined in Section 7701(a)(11) of the Code ("SECRETARY")) immediately after
receipt thereof, providing the Secretary sufficient information to enable
the Secretary to provide proper notice to each Member of any administrative
proceeding with respect to the Company or the Members (as specified in
Sections 6223(a) and (c) of the Code) and notice to the other Members of
the terms and conditions of any settlement entered into between it and the
Secretary within thirty (30) days of the date of such settlement. In
addition, the Tax Matters Member shall:
(1) Ensure that each other Member is
a Notice Partner or Member (as defined in Section 6231(a)(8) of the Code)
at all times with respect to the Company;
(2) In the event registration of the
Company is required under the provisions of Section 6111 of the Code,
following the providing to the Tax Matters Member by the other Members of
all information required to be submitted with or in connection with such
registration, promptly register the Company with the Secretary and submit
complete and accurate information in connection therewith; timely furnish
to each Member the identification number assigned by the Secretary to the
Company in connection with any such registration; and
(3) Indemnify and hold each other
Member and the Company harmless from and against any penalty or other
liability that may be imposed upon each other Member or the Company under
the provisions of Section 6707 or any other provision of the Code by reason
of any failure of the Tax Matters Member to comply promptly and fully with
the obligations imposed upon it under this SECTION 3.02(i).
(j) All Fixed Rate Interest accruing on the Aetna Loan
(excluding any Participation Interest, as defined in the Modification
Documents) after the date hereof shall be paid by the Company on a current
basis and shall not be deferred.
3.03 SALE, TRANSFER OR MORTGAGE OF INTERESTS IN THE COMPANY.
(a) Except as expressly permitted herein, no Member shall,
voluntarily or by operation of law, sell, assign, transfer, mortgage,
charge or otherwise encumber, or permit any third party to sell, assign,
transfer, mortgage, charge or otherwise encumber (herein sometimes
collectively called a "TRANSFER"), either directly or indirectly, any part
or all of its Company interest without the written consent of all Members
and any attempt to do so shall be void unless such transfer is made in
accordance with the provisions of SECTION 3.03(b) provided that the
foregoing shall not preclude a Member from granting to a Financial
Institution as security for or in connection with a loan the right to
receive part of all of the distributions to which such Member is or may
become entitled under this Agreement. In order to effectuate the purpose
of this SECTION 3.03, each Member agrees to transfer its interest in the
Company only through a direct transfer of such interest in the manner
contemplated in this SECTION 3.03, and that no transfer of any stock or
partnership or other beneficial interest in Carlyle, Maguire Partners or
other corporation, partnership or other Person which holds an interest in
the Company will be effective; provided, however, that the foregoing is not
intended to prohibit sales or transfers of stock of publicly traded
companies or the sale or transfer of limited partnership interests in
Carlyle. Nothing contained in this SECTION 3.03 (other than the provisions
of SECTION 3.03(g) hereof) or in any other provision of this Agreement
shall preclude Carlyle or Maguire Partners from granting a security
interest in or encumbering its Company interest to another Member or to a
bank, savings and loan association, insurance company or other financial
institution having a net worth of at least $100 million (a "FINANCIAL
INSTITUTION"), provided that such Financial Institution agrees to give the
other Members written notice of any default under such security interest or
encumbrance and grant to such Members for a period of 30 days after such
notice the right to cure such default or pay the entire balance due on such
loan and obtain the rights of such lender under such security interest or
encumbrance and provided further that such security interest or encumbrance
shall not secure any loan or obligation of a Member which is in excess of
40% of the value of the Members' interest in the Company.
No change in a Percentage Interest pursuant to SECTION
2.05 will be deemed a transfer pursuant to this SECTION 3.03.
(b) Except for any transfer of a Company Interest which is
not prohibited by SUBSECTION 3.03(a) above, if any Member proposes to
transfer all or any portion of its Company Interest (such Member being
hereinafter called the "OFFEROR"), such Member shall give notice ("THE
OFFERING NOTICE") to the other Members (each such Member or group of
Members receiving the Offering Notice being hereinafter referred to as the
"OFFEREES") of the terms upon which the Offeror proposes to transfer the
Company Interest and a list of potential transferees, whereupon the
following provisions shall apply:
(i) In the Offering Notice, the Offeror shall offer
(the "SALE OFFER") to the Offerees the right to purchase all and not less
than all of the Company Interest of the Offeror referred to in said
Offering Notice (which may be less than the Offeror's entire Percentage
Interest in the Company), at the same price and subject to the same terms
and conditions as set forth in said Offering Notice. The Offerees shall
jointly have the first right to purchase proportionate shares of the
Offeror's entire Company Interest so proposed to be sold or transferred;
provided, however, that if any Offeree does not elect to purchase its full
proportionate share of the Offeror's Company Interest, the other Offerees
may elect to purchase proportionately the balance of said Offeror's Company
Interest so proposed to be sold or transferred. The Offerees shall notify
the Offeror of their election within thirty (30) days of the date of
receipt of the Offering Notice. The proportionate shares of each electing
Offerees shall be based on the ratio which its respective Percentage
Interest in the Company bears to the aggregate Percentage Interests of all
electing Offerees.
(ii) If the Sale Offer is accepted by one or more of the
Offerees, and notice in writing is given within the period specified in
subsection (i) above, the Offeror shall thereupon be bound to sell to the
Offeree or Offerees and the Offerees shall be bound to purchase the Company
Interest referred to in the Sale Offer in accordance with the terms of such
Sale Offer. The purchase shall be closed in accordance with SECTION
3.03(d) below.
(iii) If no Offerees have accepted the Sale Offer as
provided in subsection (i) above within the time limits referred to
therein, the Sale Offer shall be deemed to have been declined by the
Offerees and the Offeror shall be free to sell that portion of its Company
Interest described in the Offering Notice at a price and upon terms and
conditions not less favorable to the Offeror than those set forth in the
Offering Notice and which complies with subsection (iv) below (but no such
sale shall be made at a price less than the price or on terms and
conditions less favorable to the Offeror than those set forth in the
Offering Notice without first sending the Offerees the new Offering Notice
at the changed price and on any such changed terms and conditions, in which
event the Offerees shall have a further period in which to elect to
purchase at the new price or on the changed terms and conditions as
aforesaid, said further period to be ten (10) business days in the case of
a proposed sale at a changed price which is not less than 95% of the price
and is otherwise on terms and conditions not less favorable to the Offeror
than as set forth in the Offering Notice (and thirty (30) days in all other
instances) and all rights of the Offerees under this Section with respect
to such sale only shall be deemed void and of no further force or effect,
but the Offerees shall continue to enjoy the rights granted in this
subsection with respect to any and all subsequent sales of the same or any
other Company Interest. If in any instance the Offerees elect not to
exercise their rights hereunder or to waive such rights, such election
shall not constitute a waiver of the Offerees' right to an Offering Notice
in the case of any subsequent sale. If such Company Interest is not so
sold and the transfer not consummated within one hundred twenty (120) days
from the expiration of the time limits referred to in subsection (i), the
relevant Company Interest shall again become subject to all the provisions
of this SECTION 3.03.
(iv) The Offeror shall not be entitled to consummate a
sale pursuant to Clause (iii) above unless the following additional
conditions have been satisfied:
(aa) The purchaser of the interest in the Company
proposed to be sold is one of the proposed transferees identified in the
Offering Notice;
(bb) The proposed purchase price is payable solely
in lawful money of the United States or in any equivalent foreign currency,
and if not payable in its entirety in cash, under no circumstances may
payment of the non-cash portion of the proposed purchase price be secured
by any charge, encumbrance or hypothecation of the interest in the Company
except to the selling Member with a provision that the selling Member may
not discount or otherwise transfer the obligation and the security interest
in the Company interest to any other Person. The holder of such charge,
encumbrance or hypothecation shall be subject to the provisions of this
SECTION 3.03 in connection with any disposition of such Company Interest.
(cc) The offer contains provisions whereby the
purchaser is obligated to comply with the provisions of SECTION 3.03(d)
hereof;
(dd) The purchaser is not an agent acting on
behalf of an undisclosed principal; and
(ee) The Offeror shall not have caused or
permitted an Event of Default under Section 3.06 hereof; provided, however,
that if following the occurrence of an Event of Default under SECTION 3.06
hereof on the part of the Offeror the Non-Defaulting Members (as defined in
SECTION 3.06) do not exercise any rights under SECTION 3.06 hereof to
acquire the Offeror's Company Interest within the time period therein set
forth, the Offeror may proceed to exercise its rights under this subsection
(a) with the same force and effect as if the Offeror had not caused or
permitted any Event of Default under SECTION 3.06 hereof.
(c) In the event of any attempted transfer of any part of a
Company Interest as a result of the involuntary dissolution of a Member or
any attempted transfer otherwise by operation of law, the other Members of
the Company shall have the right to purchase the entire interest of such
dissolved or bankrupt Member in the Company for a total price equal to that
portion of the Net Fair Market Value of the assets of the Company which
such dissolved or bankrupt Member would receive in the event of dissolution
of the Company pursuant to SECTION 3.06(d). In such event the other
Members shall jointly have the first right to purchase proportionate shares
of such dissolved or bankrupt Member's entire interest; provided, however,
that if any such other Member does not elect to purchase his full
proportionate share thereof, then the remaining Members may elect to
purchase proportionately the balance thereof. The other Members shall
notify the duly appointed representative of the dissolved or bankrupt
Member of their election within sixty (60) days of receipt of the appraisal
made pursuant to SECTION 3.03(e) hereof, and failure to give such notice of
election within said period shall be deemed to be an election not to
purchase the interest of such dissolved or bankrupt Member's interest. The
proportionate shares of the other Members shall be based on the ratio which
their respective Percentage Interests in the Company bear to the aggregate
Percentage Interests of all other Members exercising rights in the same
manner. If none of the other Members elects to so purchase, or if
following an election by one or more other Members to so purchase, no other
Member is ready and willing to consummate the purchase of the entire
interest of the dissolved or bankrupt Member, the personal representative
of such Member may forthwith commence proceedings for dissolution of the
Company. Anything hereinabove contained in this SECTION 3.03(c) to the
contrary notwithstanding, in the event that any transfer by operation of
law of all or any portion of the Percentage Interest of Maguire Partners
occurs as a result of the death of Maguire or the dissolution of Maguire's
marriage, the other Members shall have no right under this SECTION 3.03(c)
or any other section of this Agreement, to purchase any portion of the
Percentage Interest of Maguire Partners which is retained by Maguire
Partners. Furthermore, in said event, Maguire Partners shall for a period
of 180 days after the occurrence of such death or dissolution, be entitled
to seek a purchaser for the portion of its Percentage Interest so
transferred, including the entire Percentage Interest if so transferred,
pursuant to the provisions of SECTION 3.03(b) hereof. If no sale offer is
made pursuant to SECTION 3.03(b) within said 180 days, then the provisions
of this SECTION 3.03(c) shall become effective as to any portion of the
Percentage Interest so transferred.
(d) The closing of any sale of an interest in the Company
pursuant to this SECTION 3.03 (the "CLOSING") shall be held at a mutually
acceptable place on a mutually acceptable date not more than 120 days after
(i) receipt by the Offeror of the written notices of election by the
Offerees or after the expiration of the time within which the Offerees must
so elect as provided in SECTION 3.03(b) above or (ii) receipt by the
representative of a dissolved or bankrupt Member of written notice or
notices of election as provided in SECTION 3.03(c) above. Any Member
transferring its interest shall transfer such interest free and clear of
any liens, encumbrances or any interests of any third party and shall
execute or cause to be executed any and all documents required to fully
transfer such interest to the acquiring Members including, but not limited
to, any documents necessary to evidence such transfer, and all documents
required to release any interest of a Member's spouse or any other party
who may claim an interest in such Member's Company Interest. As of the
effective date of any transfer not prohibited hereunder by a Member of its
entire interest in the Company, such Member's rights and obligations
hereunder shall terminate except as to items accrued and any liability for
damages as of such date and except as to any indemnity obligations of such
Member expressly provided for in this Agreement attributable to acts or
events occurring prior to such date and, as to Maguire or Maguire Partners,
as the case may be, any obligations assumed under the DDA. Thereupon,
except as limited by the preceding sentence, this Agreement shall terminate
as to the transferring Member but shall remain in effect as to the other
Members. In the event that pursuant to the provisions of this SECTION
3.03, any Member (the "TRANSFEROR") shall transfer its Company Interest to
any person or entity other than the other Members ("TRANSFEREE"), no such
transfer shall be made or shall be effective to make such Transferee a
Member (limited or general) or entitle such Transferee to any benefits or
rights hereunder until the proposed Transferee enters into a written
agreement with the other Members whereby the Transferee agrees to assume
and be bound by all the obligations of the Transferor and be subject to all
the restrictions to which the Transferor is subject under the terms of this
Agreement and any further agreement with respect to the Project to which
the Transferor is then subject or is then required to be a party.
(e) Whenever provision is made herein for the purchase of an
interest in the Company or for other valuation by appraisal, the value of
such interest in the Company shall be determined as follows: Except as
otherwise agreed by the Member whose interest is to be transferred (the
"TRANSFEROR") and the Members who are to acquire such interest (the
"TRANSFEREE"), the Transferor and the Transferee shall within twenty (20)
days after the date on which the appraisal procedure is invoked as provided
in this Agreement, each appoint a recognized real estate expert who shall
have generally recognized current competence in the valuation of properties
similar to the Company assets which are located in Los Angeles, California.
The two appraisers so appointed shall appoint a third recognized real
estate expert possessing the aforesaid qualifications. If the three
appraisers to be so appointed are not appointed within thirty (30) days of
the date the appraisal procedure is invoked as provided in this Agreement,
then the appraiser or appraisers, if any, who have been selected shall
proceed to carry out the appraisal. The appraiser or appraisers so
selected shall furnish the Members with a written appraisal within forty-
five (45) days of the date of selection of the last of the appraisers to be
so selected, setting forth the Net Fair Market Value of the Company as of
the date as of which the appraisal is to be made as provided in this
Agreement or if not otherwise so provided, then as of a date within thirty
(30) days of the date of their report. Any appraisal report so submitted
shall be signed by a majority of the appraisers if more than two have been
selected. If only two appraisers have been selected and they are unable to
agree, then either the Transferor or the Transferee shall be entitled to
apply to the presiding judge of the Superior Court of the County of Los
Angeles for the selection of a third appraiser who shall then participate
in such appraisal proceeding, and who shall be selected from a list of
names of appraisers possessing the aforesaid qualifications submitted by
the Transferor and Transferee. As used in this section, the term "NET FAIR
MARKET VALUE" shall mean the cash price which a purchaser would pay on the
effective day of the appraisal for all assets of the Company taking into
account the nature, extent and maturity date of the liabilities of the
Company, whether fixed or contingent, such valuation to be made on the
assumption that such assets are subject to this Agreement and to any other
agreement, including leases, management and service agreements then in
effect. Such appraisals shall assume that the Project is the highest and
best use of the Property subject thereto and shall be made in the usual and
normal manner for real estate appraisals. The cost of the appraisal shall
be an expense of the Company. The value of an interest in the Company
shall be deemed to be the amount that the owner of such interest would have
received under the provisions of this Agreement if the Property had been
sold for cash at the value determined by such appraisal and the Company had
been wound up and dissolved following such sale in accordance with the
terms of this Agreement.
(f) As a matter separate and apart from the other provisions
of this SECTION 3.03, the Members agree amongst themselves that none of
them will, without the prior written consent of the other Member(s),
propose to transfer, transfer, dispose of, grant a security interest in or
encumber any portion of its interest in the Company prior to the fifth
anniversary hereof, except for:
(i) a pledge by a Member of a part or all of its
interest in the Company to a bank, savings and loan association, insurance
company or other financial institution having a net worth of not less than
$100 million;
(ii) the issuance, sale or assignment of limited
partnership interests in Carlyle 14 or Carlyle 15;
(iii) with the consent of the other Members (which
consent each Member agrees not to unreasonably withhold), a sale by a
Member of part or all of its interest in the Company for reasons that are
unrelated to the Company or the Property and are presently unforeseen; or
(iv) any transfer of an interest in the Company which
under the provisions of SECTION 3.03(a) above is permitted to be made
without the prior approval or consent of any other Member.
Nothing in this SECTION 3.03(f) shall in any way affect the operation
of the other provisions of this SECTION 3.03.
(g) Notwithstanding anything to the contrary herein, no
transfer of any Company Interest shall be made if either (i) such transfer
would result in termination of the Company within the meaning of Section
708(b)(1)(B) of the Code, unless the transferring Member delivers (A) an
opinion of a nationally recognized law firm, in form and substance
satisfactory to the other Members, that no material adverse tax
consequences would result to the Company nor any of the other Members; and
(B) an indemnity reasonably satisfactory to the other Members against any
liabilities, obligations, damages, losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) on account of such
termination under Section 708(b)(1)(B); or (ii) the transferee of a Company
Interest does not have net worth at least equal to the net worth of the
transferring Member, at such time, as established to the reasonable
satisfaction of the other Members. A Member who breaches the covenant set
forth in the preceding sentence shall be liable to the other Members and
the Company for all liabilities, obligations, damages, losses, costs and
expenses (including, without limitation, reasonable attorneys' fees)
resulting to the Company and/or the other Members, or any of them, on
account of such breach.
3.04 RESERVED.
3.05 ADMISSION OF ADDITIONAL MEMBERS; SUBSTITUTION.
(a) Except as otherwise expressly provided herein, additional
Members shall be admitted to the Company only with the Approval of the
Management Committee. Except as the Members with respect to the Company
shall agree, admission of new Members shall be accomplished only by
proportional reduction of the interests of the existing Members in the
Company.
(b) Notwithstanding any other provisions hereof, the assignee
of a Member's interest shall not become a substituted partner unless (i)
the assigning partner so provides in the instrument of assignment and (ii)
the assignee agrees in writing to be bound by the provisions of this
Agreement.
(c) In the event of any assignment or transfer of a Company
Interest by any Member permitted hereunder, the Company shall not be
dissolved or wound up but instead shall continue as before with, however,
the addition or substitution (pursuant to the terms of this Agreement) of
such new Member.
3.06 DEFAULT AND DISSOLUTION.
(a) The occurrence of any of the following events shall
constitute an event of default (an "EVENT OF DEFAULT") hereunder on the
part of the Member with respect to whom such event occurs:
(i) The failure of the Member to make any additional
capital contribution to the Company as required pursuant to the provisions
of SECTION 2.05 hereof unless such contribution is made by another Member
or Members as contemplated in SECTION 2.05(c) hereof;
(ii) The unauthorized transfer by a Member of any of its
Company interest in violation of the restrictions set forth in SECTION 3.03
(other than 3.03(c), which shall be governed by the provisions thereof) of
this Agreement;
(iii) Institution by a Member of proceedings of any
nature under any laws of the United States or of any state, whether now
existing or subsequently enacted or amended, for the relief of debtors
wherein such Member is seeking relief as debtor; or a general assignment by
a Member for the benefit of creditors; or the institution by a Member of a
proceeding under any section or chapter of the Federal Bankruptcy Code as
now existing or hereafter amended or becoming effective; or the institution
against a Member of a proceeding under any section or chapter of the
Federal Bankruptcy Code as now existing or hereafter amended or becoming
effective, which proceeding is not dismissed, stayed or discharged within a
period of sixty (60) days after the filing thereof or is stayed, which stay
is thereafter lifted without a contemporaneous discharge or dismissal of
such proceedings; or the calling of a general meeting of its creditors by a
Member for the appointment of a receiver, trustee or a like officer to take
possession of assets having a value in excess of $100,000 of a Member if
the pendency of said receivership would reasonably tend to have a
materially adverse effect upon the performance by said Member of its
obligations under this Agreement, which receivership remains undischarged
for a period of thirty (30) days from the date of its imposition; or
admission by a Member in writing of his or its ability to pay his or its
debts as they mature;
(iv) Attachment, execution or other judicial seizure of
all or any substantial part of a Member's assets or of a Member's Company
Interest, or any part thereof, such attachment, execution or seizure being
with respect to an amount not less than $100,000 and remaining undismissed
or undischarged for a period of fifteen (15) days after the levy thereof,
if the occurrence of such attachment, execution or other judicial seizure
would reasonably tend to have a materially adverse effect upon the
performance by said Member of its obligations under this Agreement;
provided, however, that said attachment, execution or seizure shall not
constitute an Event of Default hereunder if said Member posts bond
sufficient to fully satisfy the amount of such claim or judgment within
fifteen (15) days after the levy thereof and the Member's assets are
thereby released from the lien of such attachment; and
(v) Any material default in the representation or
warranties of a Member material to the success of the Project contained in
SECTIONS 4.01, 4.02 or 4.03 hereof or in the performance of any other
agreements or obligations of a Member herein contained or in any other
agreements among all of the Members relating to this Agreement which are
material to the success of the Project.
ere The Company shall be dissolved in the event that:
(i) An Event of Default has occurred as provided in
SECTION 3.06(a) above and the Management Committee elects to dissolve the
Company as provided in SECTION 3.06(c);
(ii) Members holding at least 75% of the Percentage
Interests in the Company agree to terminate the Company;
(iii) The Company ceases to maintain any interest (which
term shall include but not be limited to a security interest) in the
Project;
(iv) Carlyle and Maguire Partners mutually agree to
dissolve or terminate the Company pursuant to any provisions of this
Agreement permitting such election to be made; or
(v) The Company by its terms, as set forth in this
Agreement, is terminated; or
(vi) The death, withdrawal, resignation, expulsion,
bankruptcy or dissolution of a Member or the occurrence of any other event
which terminates the Member's continued membership in the Company, unless
the business of the Company is continued by the unanimous vote of all
remaining Members within ninety (90) days of the happening of that event.
(c) Upon the occurrence of an Event of Default by a Member
("DEFAULTER"), any of the other Members (individually, a "NON-DEFAULTER" or
"NON-DEFAULTING MEMBER" and, collectively, the "NON-DEFAULTERS" or "NON-
DEFAULTING MEMBERS") shall have the right to give the Defaulter a notice of
default ("NOTICE OF DEFAULT") setting forth the nature of the default. If
within thirty (30) days following receipt of the Notice of Default the
Defaulter pays such monies, or in the case of non-monetary defaults
commences in good faith to perform such obligation in default and cure such
default and thereafter prosecutes to completion with diligence and
continues the curing thereof and cures such default within a reasonable
time, or if a waiver of such Event of Default (other than an Event of
Default arising by Maguire Partners' breach of SECTION 3.01(b)(iv)) shall
be Approved by the Management Committee (which approval shall include the
vote of Maguire Partners, unless its Company Interest shall be reduced to
or below 20%, and the vote of Carlyle 14 and Carlyle 15, unless their
aggregate Percentage Interests shall be reduced to or below 20%, whether or
not such Event of Default involves Maguire Partners or Carlyle 14 or
Carlyle 15), it shall be deemed that the Notice of Default was not given
and the initial Defaulter shall lose no rights hereunder. If, within such
time periods, the Defaulter (or another Member on behalf of the Defaulter
pursuant to SECTION 2.05(d) hereof) does not either pay or commence in good
faith the curing of such default or does not thereafter prosecute to
completion with diligence and continues the curing thereof, then (without
prejudice to any right to assert a claim for damages as the result of any
such default) the non-Defaulters shall have the right to acquire the
Company interest of the Defaulter for cash at a price determined pursuant
to appraisal procedures set forth in SECTION 3.03(e) above. For this
purpose, the price to be so paid shall equal that portion of the Net Fair
Market Value of the assets of the Company which such Defaulter would
receive in the event of dissolution of the Company pursuant to SECTION
3.06(d). In furtherance of such right, any one or more non-Defaulters may
notify the other Members within thirty (30) days of the expiration of the
aforesaid time periods of its election to invoke the appraisal procedure
set forth in SECTION 3.03(e). Upon receipt of the appraisal, any one or
more non-Defaulters may notify the other Members of its election to
purchase the interest of the Defaulter, and the non-Defaulters who elect to
acquire the interest of the Defaulter shall acquire the interest in the
following manner: the remaining non-Defaulters shall have the first right
to purchase proportionate shares of the Defaulter's entire interest;
provided, however, if any non-Defaulter does not elect to purchase his or
its full proportionate share of the Defaulter's interest, the other non-
Defaulters may purchase proportionately the Defaulter's entire interest.
The non-Defaulters shall notify the Defaulter of their election within
thirty (30) days of receipt of the appraisal. For purposes of this SECTION
3.06(c), a Member's proportionate share of the interest of another Member
shall be determined on the basis of the ratio which such Member's
Percentage Interest in the Company bears to the aggregate Percentage
Interests of all Members therein who are exercising their rights in the
same manner as such Member. The closing of any purchase pursuant to this
SECTION 3.06(c) shall take place as provided in SECTION 3.03(d) hereof. If
the non-Defaulters do not elect to acquire the interest of the Defaulter as
set forth above, then any non-Defaulter may elect to terminate the Company
pursuant to SECTION 3.06(d) below by written notice given to the other
Members not later than 15 days after (i) the expiration of the 30 day
period within which the said appraisal procedure may be invoked as
aforesaid, where the same is not invoked, or (ii) the expiration of the 30
day period after the receipt of the appraisal within which the non-
defaulters may elect to purchase such Company interest, where the appraisal
procedure is invoked but the election to purchase such Company interest is
not made; provided however that no Member shall have the election to so
terminate the Company prior to expiration of any time period during which
any non-Defaulter may elect to acquire a Defaulter's interest under this
SECTION 3.06(c).
(d) Upon dissolution of the Company pursuant to SECTION
3.06(b) hereof, the Company shall immediately commence to wind up its
affairs and the Members shall proceed with reasonable promptness to
liquidate the business of the Company. During the period of the winding up
of the affairs of the Company, the rights and obligations of the Members
set forth herein with respect to the management of the Company shall
continue. For purposes of winding up, the Management Committee shall
continue to act as such and shall make all decisions relating to the
conduct of any business or operations during the winding-up period and the
sale or other disposition of assets of the Company; provided that if the
termination of the Company results from any Event of Default, the
defaulting Member(s) shall have no further right to participate in the
management or affairs of the Company or to attend Management Committee
meetings or vote on decisions by the Management Committee of the Company,
and shall be bound by all decisions made by such Management Committee,
which shall determine all such matters as provided in this SECTION 3.06(d)
by the affirmative vote of not less than seventy-five percent (75%) of the
aggregate Percentage Interests of all non-Defaulting Members in the
Company.
If the Company is dissolved for any reason while there is
work in progress on the construction of improvements in or on any portion
of the Property and Improvements owned or operated by the Company, winding
up the affairs and termination of the business of the Company may include
completion of the work in progress to the extent of constructing and
leasing improvements then being developed on such Property and Improvements
as the Management Committee of the Company may determine to be necessary to
bring the matters under construction to a state of completion convenient
for the cessation of work, giving due regard to the interest of all
Members.
Net Cash Flow of the Company during the period of winding
up resulting from normal operations shall be distributed in accordance with
SECTION 2.06 hereof, after making provision for any necessary reserves as
therein contemplated, and Net Cash Flow of the Company from the sale of all
or substantially all of the assets of the Company, whether or not in
connection with the winding up of the Company shall be distributed as
provided in the next succeeding paragraph.
The assets of the Company shall be applied and
distributed in liquidation in the following order of priority:
(i) First, in payment of debts and obligations
of the Company owed to third parties, including the setting aside of such
reserves as are Approved by the Management Committee to satisfy contingent
or unforeseen liabilities of the Company;
(ii) Second, to pay the accrued, unpaid interest
and then principal on each of the debts and obligations of the Company to
any Member (based on the inverse chronological order in which the
indebtedness was incurred); and
(iii) Third, the balance, if any, to the Members
in accordance with SECTION 2.06. It is intended that the distributions set
forth in this subsection (iii) comply with the requirement of Regulations
Section 1.704-1(b)(2)(ii)(b)(2) that liquidating distributions be made in
accordance with positive Capital Account balances. However, if the
balances in the Capital Accounts do not result in such requirement being
satisfied, no change in the amounts of distributions pursuant to this
Section shall be made, but, instead, items of income, gain, loss, deduction
and credit will be reallocated among the Members so as to cause the
balances in the Capital Accounts to be in the amounts necessary so that, to
the extent possible, such result is achieved.
Following the final allocations and the final
distributions (other than the distribution, if any, required by this
sentence) of Company Property in connection with a dissolution and
termination of the Company, each Member that has obligated itself to make
up any deficits in its Capital Account pursuant to SECTION 3.06(f) shall
contribute to the Company an amount equal to (and shall in no event be
obligated to contribute more than) the lesser of (i) the amount that such
Member has so obligated itself to contribute and (ii) the deficit balance
in the Capital Account of such Member after such distributions and
allocations, and such contribution shall be distributed to the Members that
have positive balances in their Capital Accounts (unless such contribution
is used to satisfy obligations of the Company).
If the liquidation proceeds are insufficient to satisfy
all of the claims within any of the categories described in SECTIONS
3.06(d)(i) through (iii) above, the proceeds shall be applied prorata to
all claims within such category in order of priority for which any proceeds
are available for payment or distribution.
Every effort shall be made to dispose of the assets of
the Company so that the distribution may be made to the Members in cash.
If, at the time of the completion of the winding up of the Company, the
Company owns any assets in the form of work in progress, notes or deeds of
trust or otherwise which it has been unable to dispose of, such assets, if
any, shall be distributed in kind to the Members, in lieu of cash,
proportionately to their right to receive the assets of the Company if all
of the same were sold for cash.
(e) Each Member shall look solely to the assets of the
Company for all distributions with respect to the Company and its capital
contributions thereto and its share of the profits or losses thereof, and
shall have no recourse therefor (in the event of any deficit in a Member's
capital account or otherwise) against the other Members; provided that,
subject to SECTION 6.09, nothing contained herein shall relieve any Member
of such Member's obligation to make the capital contributions herein
provided or to pay any liability or indebtedness owing to the Company by
such Member, and the Company and the other Members shall be entitled at all
times to enforce such obligations of such Member. No holder of a Company
interest shall have any right to demand or receive property other than cash
upon dissolution and termination of the Company.
(f) Each Member may, prior to, or at the time prescribed by
law for the filing of the Company federal income tax return for each
taxable year (not including extensions), elect to be unconditionally
obligated to restore all or a portion of any deficit in such Member's
Capital Account upon liquidation of its interest in the Company. Any such
election shall be evidenced by written notice to the other Members,
delivered prior to such time, specifying the amount of any deficit for
which the Member elects a deficit restoration obligation. Any amount owing
pursuant to a deficit restoration obligation shall be payable upon the
later of (i) the end of the fiscal year in which a Member's interest is
liquidated or (ii) 90 days after the end of such liquidation. The amount
of any such election shall automatically be reduced to the extent the
deficit in such Member's Capital Account is subsequently reduced. If any
allocation or distribution thereafter increased the deficit in such
Member's Capital Account, unless a Member elects otherwise under this
SECTION 3.06(f), such Member will be obligated to restore the deficit only
to the extent of the lesser of (A) the deficit amount such Member has
previously elected to restore, or (B) the smallest deficit balance in such
Member's Capital Account at any time after such election. For purposes of
determining the amount referred to above in Clause (B), the income, gain,
losses and deductions of the Company shall be prorated on a daily basis,
except for income, gain, losses and deductions from the sale or disposition
of capital items, which will be allocated under an interim closing of the
books method.
(g) Any Company property which is not sold, but which is
distributed or deemed distributed to any Members (including any deemed
distribution in connection with a constructive termination of the Company
under Section 708 of the Code), shall be valued at its then fair market
value, as reasonably determined by the Management Committee, to determine
the gain or loss which would have resulted if such Company property had
actually been sold (subject to any debt secured by such property) at such
value, which fair market value (less the amount of any debt secured by such
property)) shall be treated as Disposition Proceeds for purposes of SECTION
2.06(c) hereof. The Members' share of the hypothetical gain or loss
realized by the Company from such deemed sale based on the property's fair
market value shall be considered a part of the Disposition Profit or
Disposition Loss, as the case may be, and shall be allocated among the
Members in accordance with SECTION 2.09 hereof. The Capital Accounts of
the Members shall be appropriately adjusted under SECTION 2.04 hereof to
take into account such allocations.
(h) All documents and records of the Company including,
without limitation, all financial records, vouchers, cancelled checks and
bank statements, shall be delivered to Carlyle upon termination of the
Company. In the event any Member ("WITHDRAWING MEMBER") for any reason
ceases as provided herein to be a Member at any time prior to termination
of the Company, and the Company is continued without the Withdrawing
Member, the other Members ("SURVIVING MEMBERS") agree that said documents
and records of the Company up to the date of the termination of the
Withdrawing Member's interest shall be maintained by the Surviving Members,
their successors and assigns, for a period of not less than seven (7) years
thereafter, and shall be available for inspection, examination and copying
by the Withdrawing Member upon reasonable notice, and by supervisory and
regulatory authorities (through their representatives) of any such
Withdrawing Member in the same manner as provided in SECTION 3.02(b) hereof
during said seven (7) year period.
4. BINDING EFFECT OF AGREEMENT; REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE PARTIES.
4.01 REPRESENTATIONS, WARRANTIES AND COVENANTS OF MAGUIRE PARTNERS.
Maguire Partners represents, warrants and covenants to Carlyle
that (i) Maguire Partners is not bound by any contractual or other
arrangement which would require the approval of any other party to the
effectuation of the transactions contemplated by this Agreement, which
approval has not been obtained, and (ii) there are no agreements between
Maguire Partners and any of the other parties hereto with respect to the
Company or the Project except as set forth or described herein and the
Wells Fargo Bank Addendum attached to this Agreement.
4.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF CARLYLE 14 AND
CARLYLE 15.
Carlyle 14 and Carlyle 15 each represents, warrants and covenants to
Maguire Partners that (i) it is not bound by any contractual or other
arrangement which would require the approval of any other party to the
effectuation of the transactions contemplated by this Agreement, which
approval has not been obtained, and (ii) there are no agreements between
Carlyle 14 and/or Carlyle 15 and any of the other parties hereto with
respect to the Company or the Project except as set forth or described
herein and the Wells Fargo Bank Addendum attached to this Agreement.
4.03 RESERVED.
4.04 INDEMNIFICATION.
Maguire Partners and Carlyle each agree to indemnify and hold
harmless the other and their affiliates, directors and officers against any
and all claims, demands, losses, damages, liabilities, lawsuits, and other
proceedings, judgments and awards and costs and expenses (including but not
limited to reasonable attorneys' fees) arising directly or indirectly in
whole or in part out of any breach of any of the foregoing representations
and warranties and covenants made by Maguire Partners or Carlyle, as the
case may be, under SECTION 4.01 or 4.02 above.
4.05 SURVIVAL OF REPRESENTATIONS.
The foregoing representations and warranties of Maguire Partners or
Carlyle set forth in SECTIONS 4.01 and 4.02 hereof shall survive the
consummation of this Agreement.
5. RESERVED.
6. MISCELLANEOUS PROVISIONS.
6.01 COMPLETE AGREEMENT; AMENDMENT.
This Agreement and the Wells Fargo Bank Addendum attached hereto,
constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all agreements, representations,
warranties, statements, promises and understandings, whether oral or
written, with respect to the subject matter hereof, and no party hereto
shall be bound by or charged with any oral or written agreements,
representations, warranties, statements, promises or understandings not
specifically set forth in this Agreement, the exhibits hereto and the Wells
Fargo Bank Addendum. This Agreement may not be amended, altered or modified
except by a writing signed by all parties hereto.
6.02 NOTICES.
(a) All notices under this Agreement shall be in writing and
shall be delivered by personal service, or by certified or registered mail,
postage prepaid, return receipt requested to the parties at the addresses
herein set forth and to the Company at its principal place of business.
The addresses for notices are as follows:
If to Maguire Partners or the Company:
355 South Grand Ave., Suite 4500
Los Angeles, CA 90071
Attn: Mr. Robert F. Maguire III
with a copy to:
Gilchrist & Rutter Professional Corporation
1229 Ocean Avenue
Suite 900
Santa Monica, California 90401
Attn: Paul S. Rutter, Esq.
If to Carlyle 14 or to Carlyle 15:
c/o JMB Realty Corporation
875 North Michigan Avenue, Suite 3900
Chicago, Illinois 60611
Attn: Mr. Patrick Meara
with a copy to:
Paul, Hastings, Janofsky & Walker
555 South Flower Street, 23rd Floor
Los Angeles, California 90071-2371
Attn: Paul Walker, Esq.
with a copy to:
Wells Fargo Bank, N.A.
2030 Main Street
Suite 800
Irvine, California 92714
Attn: Mr. Patrick Mooney, Vice President
with a copy to:
Brobeck, Phleger & Harrison, LLP
One Market Plaza, Spear Street Tower
23rd Floor
San Francisco, California 94105
Attn: G. Larry Engel
(b) All notices, demands and requests shall be effective upon being
deposited in the United States mail. However, the time period in which a
response to any such notice, demand or request must be given shall commence
to run from the date of receipt on the return receipt of the notice, demand
or request by the addresses thereof. Rejection or other refusal to accept
or the inability to deliver because of changed address of which no notice
was given as provided in subsection (c) below shall be deemed to be receipt
of the notice, demand or request sent.
(c) By giving to the other party at least thirty (30) days' written
notice thereof, the parties hereto and their respective permitted
successors and assigns shall have the right from time to time and at any
time during the term of this Agreement to change their respective addresses
for notices and each shall have the right to specify as its address for
notice any other address within the United States of America.
6.03 ATTORNEYS' FEES.
Should any litigation be commenced between the parties hereto or
their representatives or should any party institute any proceedings in a
bankruptcy or similar court which has jurisdiction over any other party
hereto or any or all of his or its property or assets concerning any
provision of this Agreement or the rights or duties of any person or entity
in relation thereto, the party or parties prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted to a
reasonable sum as and for his or its or their attorneys' fees and court
costs in such litigation which shall be determined by the court in such
litigation or in a separate action brought for that purpose.
6.04 SEPARABILITY.
In the event that any provision of this Agreement shall be held to be
invalid, the same shall not affect in any respect whatsoever the validity
of the remainder of this Agreement.
6.05 SURVIVAL OF RIGHTS AND ASSIGNABILITY.
Except as provided herein to the contrary, this Agreement shall be
binding upon and inure to the benefit of the parties signatory hereto,
their respective heirs, representatives and permitted successors and
assigns; provided, however, that except as expressly permitted by the
provisions of this Agreement, no Member shall be permitted to assign any
rights hereunder to any third party.
6.06 GOVERNING LAW.
This Agreement has been entered into in the State of California and
all questions with respect to this Agreement and the rights and liabilities
of the parties hereto shall be governed by the laws of that State.
6.07 WAIVER.
No consent or waiver, express or implied, by any Member to or of any
breach or default by them in the performance by them of their obligations
hereunder shall be deemed to be a consent or waiver to or of any other
breach or default in performance by them of the same or any other
obligation of them hereunder. Except as otherwise provided herein, failure
to act of any Member or to declare any Member in default shall not
constitute a waiver by any Member of its rights hereunder. The giving of
consent by any Member in any one instance shall not limit or waive the
necessity to obtain such Member's consent in any future instance.
6.08 ALTERNATIVE REMEDIES; EQUITABLE REMEDIES.
The rights and remedies of any of the Members hereunder shall not be
mutually exclusive, i.e., the exercise of one or more of the provisions
hereof shall not preclude the exercise of any other provisions hereof.
Each of the Members confirms that damages at law will be an inadequate
remedy for a breach or threatened breach of this Agreement and agrees that
in the event of a breach or threatened breach of any provision hereof, the
respective rights and obligations hereunder shall be enforceable by
specific performance, injunction or other equitable remedy, but nothing
herein contained is intended to nor shall it limit or affect any rights at
law or by statute or otherwise of any party aggrieved as against the other
for a breach or threatened breach of any provision hereof.
6.09 LIMITATION ON LIABILITY.
No Person who is a present or future Member in the Company, or a
direct or indirect partner or member in any Member in the Company shall
have any personal liability of any kind or nature for or by reason of any
matter or thing whatsoever under or in connection with this Agreement or
any other agreement entered into under or in connection herewith, and the
Company and each other Member hereby waives all such personal liability.
6.10 WELLS FARGO BANK ADDENDUM.
The Members hereby incorporate the provisions of the Wells Fargo
Bank Addendum attached to this Agreement as part of this Agreement.
6.11 ACTIONS BETWEEN MEMBERS.
Any Member shall be entitled to maintain, on its own behalf or on
behalf of the Company, any action or proceeding against the other Members
or the Company (including, without limitation, any action for damages,
specific performance or declaratory relief) for or by reason of any breach
by such Member of this Agreement or any other agreement with or related to
the Company, notwithstanding the fact that any or all of the parties to
such proceeding may then be Members in the Company, and without dissolving
the Company as a limited liability company.
6.12 NO THIRD PARTY BENEFICIARIES.
Nothing contained herein, except as otherwise herein expressly set
forth, shall be deemed to create any right or interest in any third party
or any right in any third party to enforce any provision of this Agreement
("third party" for purposes of the foregoing meaning any Person other than
a Member or an assignee, transferee or agent of a Member).
6.13 TERMINOLOGY.
All personal pronouns used in this Agreement whether used in the
masculine, feminine or neuter gender shall include all genders; and the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and neither limit nor amplify the
provisions of this Agreement itself. The use herein of the word
"including" when following any general statement, term or matter shall not
be construed to limit such statement, term or matter to the specific items
or matters set forth immediately following such word or to similar items or
matters whether or not non-limiting language (such as "without limitation"
or "but not limited to" or words of similar import) is used with reference
thereto but rather shall be deemed to refer to all other items or matters
that could reasonably fall within the broadest possible scope of such
general statement, term or matter.
6.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which shall constitute
one and the same Agreement.
6.15 FURTHER ASSURANCES.
Each party hereto agrees to do all acts and things and to make,
execute and deliver such written instruments as shall be reasonably
required to carry out the terms and provisions of this Agreement, and to
enable each party to obtain the benefits of this Agreement provided for it
herein.
6.16 NON-DISCRIMINATION.
There shall be no discrimination against or segregation of, any
person, or group of persons on account of race, color, creed, national
origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure, or enjoyment of the Property or the Improvements thereon, nor shall
the Company or any Person claiming under or through it, establish or permit
any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, or vendees of the land.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above set forth.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV
an Illinois limited partnership
By: JMB REALTY CORPORATION
an Illinois corporation,
General Partner
By: ________________________________
Vice President
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV
an Illinois limited partnership
By: JMB REALTY CORPORATION
an Illinois corporation,
General Partner
By: ______________________________________
Vice President
MAGUIRE PARTNERS-BUNKER HILL, LTD.
a California Limited Partnership
By: Maguire Partners BGHS, LLC
a California limited liability company
General Partner
By: Maguire Partners SCS, Inc.
a California corporation
Its Manager
By:_________________________
Robert F. Maguire III
President
WELLS FARGO BANK ADDENDUM
The undersigned parties are entering into this Addendum which is
attached to and made a part of the Operating Agreement ("OPERATING
AGREEMENT") of Maguire Thomas Partners-South Tower, LLC ("SOUTH TOWER").
In the event of a conflict between the provisions of the Operating
Agreement and this Addendum, the provisions of this Addendum shall control
only as among the parties to this Addendum; otherwise, the Operating
Agreement shall control.
A. CONSENT TO BANK SECURITY INTEREST. Maguire Partners-Bunker
Hill, Ltd. (herein, together with its permitted successors and assignees,
called "MP") consents to and acknowledges the Wells Fargo Bank (herein,
together with its successors and permitted assignees, called the "BANK" or
"WELLS FARGO BANK") security interest in the Carlyle membership interest in
South Tower ("CARLYLE INTERESTS") for the purposes of (i) Section 3.03 of
the Operating Agreement, and (ii) Sections 9318 and 9502 of the UCC. The
Bank may assign its rights and liens to any affiliate of the Bank in which
the Bank owns at least a majority ownership interest and has the right to
control the management of the affiliate ("AFFILIATE"), all without the need
for consent by MP or compliance with Section B below. The Bank shall give
prior written notice of any such assignment to MP. The 40% loan to value
and other limitations on permissible liens on membership interests shall
not apply to the Bank's security interest on the Carlyle Interests (or to
the successors or assignees of the Bank who hold such Interests and who are
affiliates of the Bank). All references herein to "membership interests"
(or similar terms) shall include all economic interests and rights to
distributions or payments of money or property.
B. RIGHT OF FIRST NEGOTIATION. The Bank may foreclose on its
security interest or otherwise acquire any or all of the Carlyle Interests,
either directly or through one of the Bank's affiliates, all without
complying with the offer and sale procedure in Section 3.03(b) of the
Operating Agreement, so long as the Bank or its affiliate is the transferee
of the Interests. An Event of Default by Carlyle under the Operating
Agreement shall not prevent the Bank from exercising its remedies under its
loan documents with Carlyle, subject to the Bank's obligations regarding
the cure of Carlyle defaults under SECTION C below; provided that the
foregoing shall not limit the remedies of MP for an Event of Default by
Carlyle under the Operating Agreement, subject to the right of the Bank to
cure such default under SECTION C.
Notwithstanding the two foregoing sentences, the following procedure
(herein called the "right of first negotiation procedure") shall apply (i)
if the Bank intends to transfer the Carlyle Interests, or any portion
thereof, to any entity or person other than the Bank (or its affiliate) or
Carlyle, or (ii) if the Bank transfers ownership of its affiliate, whether
as a result of a foreclosure on such Interests or as a result of a transfer
by the Bank subsequent to its foreclosure and acquisition of the Interests.
In such case, the Bank shall give notice to MP at least 30 days prior to
the date of such transfer. If the Bank does not receive written notice
from MP of MP's desire to negotiate to attempt to acquire such Interests
within 10 days from the date such notice of intent to transfer was sent to
MP, then the Bank may transfer the Carlyle Interests without further
restriction. However, if MP (i) wishes to negotiate to attempt to acquire
such Carlyle Interests, and (ii) gives its corresponding notice of that
desire to the Bank within such 10 days from the date the initial notice of
intent to transfer was sent to MP, then an exclusive negotiation period
shall exist for the balance of the 30 day period commencing on the date the
initial notice of intent to transfer was sent to MP. During that 30 day
exclusive negotiation period, Bank and MP shall negotiate in good faith
with each other regarding the terms of such purchase and sale of the
Carlyle Interests (or of the Bank's loan and security interest in the
Carlyle Interests, if the parties so agree in their respective discretion,
but without in any way implying any right or interest by MP or anyone else
in Bank's loan or security and without adversely affecting Bank's
unrestricted right to manage, administer, amend, renew, extend,
restructure, enforce or otherwise deal with its loan and security in any
way the Bank wishes). During said 30 day period in which the Bank or MP
are so negotiating with respect to the transfer of the Carlyle Interests,
the Bank shall not complete its foreclosure on, sell or agree to sell its
loan or the Carlyle Interests to any other party; provided that, the Bank
may notice the foreclosure sale for any time after the end of the 30 day
period and otherwise place itself in a position to complete a foreclosure
immediately after such 30 day period, if the negotiations with MP are
unsuccessful.
The Bank may always sell participations in its loans and security
without triggering this Section B exclusive negotiation procedure, as long
as such participants are subject to the same procedure as must be followed
by the Bank hereunder; provided that Bank will not sell such portion of the
loans and security such that Bank no longer has effective control over the
exercise of rights and remedies (subject to customary rights of approval by
loan participants in similar loans) as the holder of the loans unless (i)
Bank first gives South Tower written notice thereof at least thirty (30)
days prior to the consummation of such sale and (ii) the purchaser or
purchasers of such controlling interest in the loans is a Financial
Institution having at least $100,000,000 in net worth, as defined in
Section 3.03(a) of the Operating Agreement.
The Bank agrees that, if MP gives the Bank a written offer to
purchase the Carlyle Interests on an all cash basis ("MP OFFER") during the
30 day negotiation period, and if the Bank fails to accept such MP Offer
within the time period set forth in the MP Offer (which period for
acceptance must be at least twenty-five (25) days after the delivery of the
MP Offer), then from the date of receipt of the MP Offer until the date
that is one hundred eighty (180) days thereafter (the "TRANSFER PERIOD"),
the Bank shall have the right to transfer the Carlyle Interests to a
reputable third party, whether by foreclosure or otherwise, for a price
greater than the price in the MP Offer, although the Bank's transfer at a
higher price may be on terms other than cash, including a credit bid by the
Bank at the foreclosure sale. If, during the Transfer Period, the Bank
receives an offer from a third party for the purchase of the Carlyle
Interests which is equal to or lower than the MP Offer, and which the Bank
intends to accept, then the Bank shall not consummate a foreclosure sale or
other transfer of the Carlyle Interests to such offeror without first
complying with the offer and sale procedures of Section 3.03 of the
Operating Agreement. If the Bank receives an offer from a third party at a
price superior to the MP Offer during the Transfer Period, the Bank may
consummate such sale at a price greater than the MP Offer. After the
Transfer Period, if no sale is pending as of the last day of the Transfer
Period (or if such a sale is then pending but the closing date for such
sale is scheduled to occur more than thirty (30) days after the expiration
of the Transfer Period), including a foreclosure sale for a price above the
MP Offer, and if the Bank has not timely accepted the MP Offer, and the
Bank desires to sell the Carlyle Interests, the sales process shall re-
commence in accordance with the procedures described herein for a new 180-
day Transfer Period.
The comparison of the price to a third party compared to the MP Offer
is as to the aggregate compensation benefit to the Bank, considering all
factors relevant to a reasonable commercial bank under such circumstances.
Nothing herein prevents the Bank from making a credit bid at a foreclosure
sale in an amount in excess of the MP Offer. At all times, subject to the
right of first negotiation procedure herein (in the case of a sale of the
Carlyle Interests, or any portion thereof, to any third party other than
the Bank or its affiliate), the Bank may comply with the applicable laws to
make any foreclosure sale commercially reasonable and in compliance with
UCC 9504.
Subject to the Bank complying with the right of first negotiation
procedures governing the sale of the Carlyle Interests in accordance with
this SECTION B, a purchaser of the Carlyle Interests through a Bank
foreclosure sale shall become a substitute member in South Tower, subject
only to (i) the provisions of the Agreement requiring the substitute member
to assume all of the obligations of Carlyle under the Agreement, and (ii)
the delivery to MP of a certification from such substitute member, from
Carlyle (if then a member), and from the Bank, certifying that the
substitute member is either an affiliate of the Bank or has acquired the
Carlyle Interests after compliance by the Bank with the procedures set
forth in this Section B.
Nothing herein deprives the Bank of its rights under Section 3.03 of
the Operating Agreement. MP agrees that MP shall comply with the offer and
sale procedures of Section 3.03 of the Operating Agreement in connection
with the transfer of the MP interests.
C. RIGHT TO CURE DEFAULTS. The Bank shall receive directly copies
of all notices given to Carlyle by MP under the Operating Agreement,
including notices of default under Section 3.06, or offers to buy or sell
under Section 3.03, and of arbitration. The Bank (or its affiliate) shall
have the right, but not the obligation prior to the transfer of the Carlyle
Interests to the Bank or such affiliate, to cure any Carlyle default under
the Operating Agreement within a reasonable period after notice to the Bank
of Carlyle's default, which cure period shall not exceed the longer of (i)
ten (10) days from written notice thereof for monetary defaults, (ii)
thirty (30) days from written notice thereof for non-monetary defaults, or
(iii) the cure periods granted to Carlyle under the Agreement for the
relevant default; provided, however, that the Bank (or its successor or
permitted assignee which acquires the Carlyle Interests) shall have the
obligation to cure any Carlyle monetary default and any Carlyle non-
monetary default that is reasonably curable by a successor owner of the
Carlyle Interests within the foregoing cure periods once the Bank or its
successor or permitted assignee has acquired ownership of the Carlyle
Interests, calculating such Bank cure periods for such purpose from the
date when the Bank or its successor or permitted assignee so acquires such
Carlyle Interests. However, if the Bank or its successor or permitted
assignee becomes the substitute member in place of Carlyle, any non-
monetary defaults by Carlyle that are not reasonably capable of cure (with
a commercially reasonable effort) by the Bank or its successor or permitted
assignee need not be cured by the Bank or such other substitute member. As
long as the Bank can still cure Carlyle defaults and is diligently
undertaking reasonable efforts to cure such defaults, the Bank or its
successor or permitted assignee shall have the right to vote the Carlyle
Interests once the Bank or such successor or assignee acquires the Carlyle
Interests.
D. DISTRIBUTIONS. All distributions or payments for the account
of Carlyle in connection with South Tower shall be made directly to the
Bank pursuant to UCC Sections 9318 and 9502, and Carlyle irrevocably
consents to MP complying with such direction as to payments to the Bank.
Carlyle shall indemnify and hold MP harmless from any liability as a result
of its compliance with the foregoing direction.
E. NO ASSUMPTION. Unless and until the Bank replaces Carlyle as a
member, the Bank assumes none of the Carlyle obligations under the
Operating Agreement. However, the Bank recognizes any superior right which
South Tower may have to offset liabilities of Carlyle to South Tower
against the obligations of South Tower to Carlyle, as provided in UCC
9318(1)(a).
F. ARBITRATION. The Bank may intervene as a party and/or
participate (all at its option) in any arbitration proceeding pursuant to
the Operating Agreement in order to protect its interests. To the extent
that the Carlyle Interests in which the Bank has a security interest are
affected by any arbitration in which the Bank is permitted to participate
as a party, the results of such arbitration that are binding on Carlyle
likewise bind the Carlyle Interests which are subject to the Bank's
security interest, whether or not the Bank elects to participate in the
arbitration.
G. BANK APPROVAL OF CARLYLE ACTIONS. MP acknowledges that the
Bank holds its security interest and has certain rights to approve the
actions of Carlyle with respect to the Carlyle Interests in South Tower,
and that MP does not have any claim against the Bank as a result of its
having such approval rights through its loan documentation with Carlyle.
MP shall continue to deal exclusively with Carlyle in the management of
South Tower under the terms of the Operating Agreement, without regard to
the position of the Bank unless and until the Bank (or its affiliate)
becomes the substituted member pursuant to its security interest in the
Carlyle Interests. MP shall not bring a claim against the Bank by reason
of the Bank prohibiting Carlyle, under the Bank's loan documents with
Carlyle, from taking (or omitting to take) certain actions or approving (or
disapproving) certain decisions as a member of South Tower (without waiving
any rights or claims as to Carlyle as a member in the Company).
H. NO TERMINATION OF PARTNERSHIP. The Bank agrees that in no event
shall the exercise of the Bank's remedies as a secured creditor with a
security interest in the Carlyle Interests, nor any subsequent transfer of
the Carlyle Interests by the Bank or its successor or permitted assignee,
result in the termination of the South Tower limited liability company
under Section 708 of the Internal Revenue Code; provided, however, in
determining whether a transfer of the Carlyle Interests would cause a
Section 708 termination, the Bank shall be permitted to disregard any
transfer of the MP interest, or any portion thereof, during the preceding
12 month period. However, should the Bank succeed to the Carlyle
Interests, the Bank shall thereafter have no less rights than Carlyle would
have under the Operating Agreement, none of which shall be impaired by the
provisions of this Addendum, addressing the issues regarding the Bank's
position as a secured creditor of Carlyle. Nothing contained herein
relating to the transfer of the Carlyle Interests pursuant to the Bank's
rights as a secured creditor shall abridge or limit any other or greater
rights the Bank or any affiliate may have under the Operating Agreement
should the Bank or any affiliate acquire the Carlyle Interests or any other
interest of another member in South Tower.
I. NOTICES. The parties agree that notices hereunder shall be
given in accordance with Section 6.02 of the Operating Agreement and to the
addresses specified therein, in the case of Carlyle and MP. Notices to the
Bank shall be addressed as follows:
Wells Fargo Bank, N.A.
2030 Main Street
Suite 800
Irvine, California 92714
Attn: Patrick Mooney, Vice President
with a copy to:
Brobeck, Phelger & Harrison, LLP
One Market Plaza, Spear Street Tower
23rd Floor
San Francisco, California 94105
Attn: G. Larry Engel
(415) 442-1400
IN WITNESS WHEREOF, the parties below have entered into this Addendum
as of the 30th day of September, 1996.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV
an Illinois limited partnership
By: JMB REALTY CORPORATION
an Illinois corporation,
General Partner
By: ________________________________
Vice President
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV
an Illinois limited partnership
By: JMB REALTY CORPORATION
an Illinois corporation,
General Partner
By: ______________________________________
Vice President
MAGUIRE PARTNERS-BUNKER HILL, LTD.
a California Limited Partnership
By: Maguire Partners BGHS, LLC
a California limited liability company
General Partner
By: Maguire Partners SCS, Inc.
a California corporation
Its Manager
By:_________________________
Robert F. Maguire III
President
WELLS FARGO BANK, N.A.
a national banking association
By:
Its:
EXHIBIT "A"
LEGAL DESCRIPTION
(attached)
EXHIBIT "B"
LIST OF WELLS FARGO CENTER ARTWORK
Work: Artist: Type:
La Caresse d'un Oiseau Miro Sculpture
La Dandy Dubuffet Sculpture
Four Female Figures Graham Sculpture
Sequi Graves Sculpture
Light Touches Fall Color Wile Sculpture
Lock Down Aonoldi Sculpture
Sawtooth Obulich Sculpture
Night Sail (1985) Nevelson Sculpture
EXHIBIT "C"
INITIAL CAPITAL ACCOUNTS
Maguire Partners
(Initially booked to -0-)
$1,000,000 (after Supplemental Contribution)
Carlyle 14
(Initially booked to -0-)
$350,000 (after Supplemental Contribution)
Carlyle 15
(Initially booked to -0-)
$650,000 (after Supplemental Contribution)
EXHIBIT "D"
PERMANENT FINANCING GUIDELINES
1) The maximum Fixed Interest Rate, prior to any participation for Debt
Financing, is 14% per annum. This rate is to be subject to the IRR
parameters in item 10.
2) Should the Fixed Interest Rate, prior to any participation for
Convertible Financing, exceed 12%, the maximum Equity Participant
Percentage must drop from the maximum of 50% to a percentage that will
yield no more than an 18% pre-tax IRR including Originating Fees. An
example of the Lender Financial Analysis not exceeding 12% is attached to
illustrate the calculation of the IRR. The IRR and IROR are synonymous in
this illustration.
3) No maximum term of loan.
4) Minimum term of loan is 10 years.
5) NO PRINCIPAL REDUCTION REQUIRED.
6) Minimum Principal = Total Project Construction Costs; NO MAXIMUM
PRINCIPAL.
7) Minimum Debt Service Coverage Ratio = 1.1:1
8) The pre-tax IRR or Effective Yield on permanent financing must not
exceed 18%. (See attached sheet.)
9) No more than a 1.5 Points Originating Fee is to be paid to the
lending institution. If required, this fee will be paid from the proceeds
of the mortgage obtained for Permanent financing.
10) No Compensating Balances are to be maintained with the lending
institution.
*Definition IRR (Internal Rate of Return).
The rate of return on that amount provided by the Permanent Lender to
finance the project through its minimum term of 10 years.
The internal rate of return is calculated by finding the discount rate that
equates the present value of future cash flows plus the residual value
(which is the cash flow capitalized in the year of conversion by the
Permanent Lender by a capitalization rate that will return to the lender no
more than 18% pretax) to the cost of the investment. The effective yield
is synonymous with Pretax IRR for the purposes of this document.
EXHIBIT "E"
MAGUIRE/THOMAS PARTNERS - SOUTH TOWER, LLC
INSURANCE PROGRAM
Property: South Tower
Limits- No less than $175,000,000 all risk with a stop loss
limit of $75,000,000 for earthquake and flood (as long as obtainable at
cost effective rates). The stop loss limit is calculated on an annual
aggregate basis.
- No less than $30,000,000 rental income
sublimit, no time limitation, deductions shall not exceed 15 days.
Deductibles - No more than - $ 25,000 per loss for all
perils except:
- $100,000 per loss from
flood
- 2% of value at time of
loss from earthquake
Property: X-2(b) Parking Garage
Limits- No less than $15,000,000 all risk including earthquake
and flood, no stop loss, no coinsurance.
Deductibles - No more than - $ 25,000 per loss for all
perils except:
- $100,000 per loss from
flood
- 2% of value at time of
loss from earthquake
Liability: South Tower and X-2(b) Parking Garage
Limits- $20,000,000 per accident for direct damage and
business interruption
- $25,000 per accident for expediting expense
- $25,000 per accident for water damage
Deductibles - $25,000 per accident
GENERAL OVERALL REQUIREMENTS:
1. The insurance program will provide for a waiver of subrogation
against IBM as tenant of the Project, as long as obtainable.
2. Certified copies of all such policies will be provided to the
Members.
3. The all risk insurance coverage will, at a minimum,
cover loss by fire, lightning and perils of broad form extended
coverage as now and hereafter constituted for the lesser of the full
replacement cost without deduction for physical depreciation or the actual
cash value of the Project.
4. The liability insurance coverage will provide protection for all the
Members with respect to their ownership of the Project.
EXHIBIT "F"
I. ELECTIONS
The Company has made or will make the following tax elections:
a. The election under section 168(b)(3) or otherwise to claim
straight-line depreciation or cost recovery deductions with respect to all
"section 1250 property" (as defined in section 1250(c)), and accelerated
depreciation or cost recovery deductions with respect to all "section 1245
property" (as defined in section 1245(c)), over as short a period as is
permissible;
b. If and to the extent there are start-up expenses, an election
under section 195(b) to amortize such start-up expenses over a period of 60
months;
c. If and to the extent there are organizational expenses, an
election under section 709(b) to amortize such organizational expenses over
a period of 60 months.
d. The election under section 46(d) for qualified progress
expenditures with respect to any conveying systems.
II. CAPITAL ACCOUNTS
The Capital Account of each Member as of the effective date of this
Agreement is calculated as set forth in Attachment 1 hereto in accordance
with SECTION 2.04 of the Agreement. The following is a list of principles
that were applied in determining the Capital Accounts. The Members
recognize that certain of the numbers contained in the assumptions set
forth in said Attachment are tentative in that they reflect certain
assumptions as to the amounts, bases and values of assets and liabilities
of the Company on the date of the Agreement and other similar items, which
assumptions may prove to be other than as set forth herein. The Members
agree to revise this Exhibit if necessary, to reflect actual capital
accounts using such revised items in place of the items now contained
herein, but otherwise using the same method for calculations set forth
herein.
TABLE OF CONTENTS
ARTICLE 1. Definitions. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. Formation of Company; Capital, Distributions and
Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.01 Introductory Matters. . . . . . . . . 8
Section 2.02 Members and Their Interests . . . . . 9
Section 2.03 Capital Contributions . . . . . . . . 10
Section 2.04 Capital Accounts. . . . . . . . . . . 10
Section 2.05 Additional Capital Contributions. . . 11
Section 2.06 Distributions . . . . . . . . . . . . 14
Section 2.07 Reserves. . . . . . . . . . . . . . . 16
Section 2.08 Reserved. . . . . . . . . . . . . . . 16
Section 2.09 Allocations Among Members . . . . . . 16
Section 2.10 Reserved. . . . . . . . . . . . . . . 21
Section 2.11 Special Assets. . . . . . . . . . . . 21
Section 2.12 Aetna Lockbox . . . . . . . . . . . . 21
ARTICLE 3. Management and Operation . . . . . . . . . . . . . . 22
Section 3.01 Management of the Company . . . . . . 22
Section 3.02 Accounting, Tax Elections and Related
Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.03 Sale, Transfer or Mortgage of Interests in
the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.04 Reserved. . . . . . . . . . . . . . . 44
Section 3.05 Admission of Additional Members;
Substitution . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.06 Default and Dissolution . . . . . . . 44
ARTICLE 4. Binding Effect of Agreement; Representations,
Warranties and Covenants of the Parties. . . . . . . 51
Section 4.01 Representations, Warranties
and Covenants of Maguire Partners. . . . . . . . . . . . . . . . . 51
Section 4.02 Representations, Warranties
and Covenants of Carlyle 14 and Carlyle 15 . . . . . . . . . . . . 51
Section 4.03 Reserved. . . . . . . . . . . . . . . 51
Section 4.04 Indemnification . . . . . . . . . . . 51
Section 4.05 Survival of Representations . . . . . 52
ARTICLE 5. Reserved . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 6. Miscellaneous Provisions . . . . . . . . . . . . . . 52
Section 6.01 Complete Agreement; Amendment . . . . 52
Section 6.02 Notices . . . . . . . . . . . . . . . 52
Section 6.03 Attorneys' Fees . . . . . . . . . . . 54
Section 6.04 Separability. . . . . . . . . . . . . 54
Section 6.05 Survival of Rights and Assignability. 54
Section 6.06 Governing Law . . . . . . . . . . . . 54
Section 6.07 Waiver. . . . . . . . . . . . . . . . 54
Section 6.08 Alternative Remedies; Equitable
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.09 Limitation on Individual Liability. . 55
Section 6.10 Wells Fargo Bank Addendum . . . . . . 55
Section 6.11 Actions Between Members . . . . . . . 55
Section 6.12 No Third Party Beneficiaries. . . . . 55
Section 6.13 Terminology . . . . . . . . . . . . . 56
Section 6.14 Counterparts. . . . . . . . . . . . . 56
Section 6.15 Further Assurances. . . . . . . . . . 56
Section 6.16 Non-Discrimination. . . . . . . . . . 56
WELLS FARGO BANK ADDENDUM
EXHIBITS
Exhibit A - Legal Description
Exhibit B - Artwork
Exhibit C - Initial Capital Accounts
Exhibit D - Permanent Financing
Guidelines
Exhibit E - Insurance Program
Exhibit F - Tax Elections
THIS DOCUMENT IS A COPY FROM THE FORM SE THAT WAS FILED ON MARCH 31,
1997 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
EXHIBIT 10-R
- ------------
(Carlyle-XV)
Appl. #MA-374
Mtge. #000207800
RESERVE PLEDGE AGREEMENT
THIS RESERVE AGREEMENT, (hereinafter called "this Agreement"),
executed as of the 4th day of December, 1996, but effective as of the first
day of January, 1996, by and between NORMAN S. GELLER, THOMAS M. BENNETT,
JEFFREY GLUSKIN and NEIL G. BLUHM, BRIAN K. ELLISON and JULIA C. PARKS, as
Trustees of 260 FRANKLIN STREET ASSOCIATES TRUST under a Declaration of
Trust dated May 16, 1986, duly recorded with the Suffolk County Registry of
Deeds in Book 12510, Page 64 and filed with the Suffolk County Registry
District of the Land Court as Document No. 405198, as amended in accordance
with the Certificate of Trustee as to Appointment of Additional Trustees
and First Amendment to Declaration of Trust establishing 260 Franklin
Street Associates Trust, dated September 12, 1986, duly recorded with
Suffolk County Registry of Deeds as Instrument No. 374 of September 26,
1986, and filed with the Suffolk Country Registry District of the Land
Court as Document No. 411174, and as further amended by Certificate of
Trustee as to removal of certain Trustees and appointment of additional
Trustees dated July 23, 1990, duly recorded with the Suffolk County
Registry of Deeds in Book 16416, Page 342, and Document No. 467674, with
appointment of six Trustees registered as Documents Nos. 467675 through
467680 with the Suffolk County Registry District of the Land Court, as
further amended in accordance with a Certificate of Trustee as to Removal
of Certain Trustees and Appointment of Additional Trustees, dated May 20,
1992, duly recorded with the Suffolk County Registry of Deeds as Document
No. 487549, having a mailing address c/o JMB Realty Corporation, 900 North
Michigan Avenue, Chicago, Illinois 60611 (hereinafter called "Borrower"),
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York
corporation having a mailing address of 730 Third Avenue, New York, New
York 10017 ("Lender") and BOSTON MORTGAGE CAPITAL CORP, a Massachusetts
corporation having a mailing address of 100 Huntington, Avenue, Tower 2,
Fourth Floor, Boston, Massachusetts 02116 (hereinafter called "Pledge
Agent").
WITNESSETH:
----------
WHEREAS, pursuant to the terms of that certain Second
Mortgage Modification and Consolidation Agreement (sometimes hereinafter
called the "Notes and Modification Agreement") between Lender and Borrower
dated as of January 1, 1991, and recorded with the Suffolk County Registry
of Deeds as Instrument No. 308 of December 31, 1991, in Book 17222, Page
286 and filed with Suffolk County Registry District of the Land Court as
Document No. 482106, Borrower is justly indebted to Lender in the
consolidated principal amount (the "Consolidated Principal Indebtedness")
of SEVENTY-FOUR MILLION EIGHT HUNDRED NINETY-ONE THOUSAND TWELVE AND
83/100THS ($74,891,012.83) DOLLARS, plus interest thereon from date, which
Agreement consolidated the indebtedness evidenced by those two certain
Mortgage Notes, the first being (a) that certain Note payable to the order
of Lender in the original sum principal sum of SIXTY-FIVE MILLION AND
NO/100THS ($65,000,000.00) DOLLARS dated December 18, 1985, made originally
by 260 Franklin Incorporated, the repayment obligation for which has been
assumed by Borrower by that certain agreement captioned "NOTE MODIFICATION
AGREEMENT WITH RESPECT TO $65,000,000 NOTE DATED DECEMBER 18, 1985"
(collectively, "Note No. 1"); and the other being (b) that certain Note
made by Borrower payable to the order of Lender in the original principal
sum of TEN MILLION AND NO/100THS ($10,000,000.00) DOLLARS, dated September
24, 1986 ("Note No. 2");
WHEREAS, the Consolidated Principal Indebtedness evidenced by both
Notes is secured, among other things, by that certain Security Agreement
and Mortgage ("the $65,000,000.00 Mortgage") dated December 18, 1985, and
recorded with the Suffolk County Registry of Deeds in Book 12143, Page 249
and filed with Suffolk County Registry District of the Land Court as
Document No. 399401 and that certain Security Agreement and Mortgage Deed
(the "$10,000,000.00 Mortgage") dated September 24, 1986, and recorded with
the Suffolk County Registry District of the Land Court as Document No.
411176; as such Mortgages have been consolidated and modified by that (i)
certain Mortgage Modification and Consolidation Agreement between Borrower
and Lender dated September 24, 1986 and recorded with the Suffolk county
Registry of Deeds in Book 12902, Page 302, and filed with the Suffolk
County Registry District of the Land Court as Document No. 411176, and (ii)
the aforesaid Second Mortgage Modification and Consolidation Agreement.
Both the $65,000,000.00 Mortgage and the $10,000,000.00 Mortgage as
consolidated and modified by the aforesaid Mortgage Modification and
Consolidation Agreement and Second Mortgage Modification and Consolidation
Agreement are collectively called the "Consolidated
2
Mortgage" and both such mortgages encumber and mortgage, as security for
Consolidated Principal Indebtedness, those certain lots, parcels and pieces
of land with the buildings and improvements erected thereon situate, lying
and being in the City of Boston, County of Suffolk, Commonwealth of
Massachusetts described in the Mortgages and on Exhibit A attached hereto
and forming a part hereof (hereinafter called "the Premises"); the
Consolidated Mortgage and all other documents executed by Borrower and held
by Lender as security for the Consolidated Indebtedness are hereinafter
collectively called the "Loan Documents";
WHEREAS, in connection with the execution and delivery of the Second
Mortgage Modification and Consolidation Agreement, Borrower and Lender
entered into a certain Reserve Escrow Agreement with Pledge Agent dated
January 1, 1991, to provide additional security for the Consolidated
Indebtedness evidenced by Note No. 1 and Note No. 2, which Reserve Escrow
Agreement has been subsequently modified by that certain Modification to
Reserve Escrow Agreement dated January 1, 1994, and as so modified is
hereinafter called the "Reserve Escrow Agreement;"
WHEREAS, Borrower and Lender are simultaneously herewith executing
that Third Mortgage Modification and Extension Agreement (hereinafter
called the "Mortgage Modification Agreement") of even date herewith
whereby, among other things, certain repayment terms have been modified and
the loan term for the Consolidated Indebtedness has been extended until
January 1, 1997, subject to such date being accelerated at Lender's option
to an earlier date (the "Acceleration Date") that Lender may select upon
thirty (30) days' prior written notice sent in accordance with Paragraph 33
of the $10,000,000.00 Mortgage to Borrower;
WHEREAS, the parties hereto do hereby wish to convert the Reserve
Escrow Agreement into a Reserve Pledge Agreement and to restate the
agreement as hereinafter provided.
1. PLEDGE AGENT. Borrower and Lender hereby confirm the
appointment of Boston Mortgage Capital Corp as Pledge Agent for the
purposes heretofore and hereinafter set forth including the specific
purposes of (i) receiving and holding the "Pledged Funds" (as hereinafter
defined) for the benefit of Lender, (ii) perfecting Lender's security
interest in the Pledged
3
Funds by taking possession thereof and (iii) disbursing the Pledged Funds
in accordance with the terms of this Agreement and Pledge Agent hereby
accepts such appointment and designation.
2. PRIOR DEPOSITS. Pledge Agent acknowledges that it holds the
following monies in the following accounts as of April 26, 1996:
(i) Tenant Security Account: $ 66,575.88
(ii) Reserve Account: $3,581,340.95
3. FUTURE DEPOSITS. Borrower shall continue to make the following
deposits:
(i) A sum equal to all future security deposits under all new
leases entered into Borrower from time to time until the "Termination Date"
(which is defined as the earliest to occur of the following: (i) the date
as of which all amounts due under the Loan Documents, whether at maturity
or otherwise, shall have been paid in full; (ii) the date of foreclosure
sale of the Premises; (iii) the date title to the Premises vests in the
transferee in the event of a deed in lieu of foreclosure; or (iv) the date
a receiver is appointed for the Premises pursuant to Lender's application
for a receiver after a default under the Loan Documents);
(ii) An amount equal to all leasing and brokerage fees and
commissions relating to the Premises payable to Borrower, JMB Realty
Corporation, JMB/Urban Development Company, Carlyle Real Estate Limited
Partnership XV, Carlyle Real Estate Limited Partnership XVI, or any entity
affiliated with Borrower, JMB Realty Corporation, JMB/Urban Development
Company, or any general partner or affiliate of the general partner of
either Carlyle Real Estate Limited Partnership XV or Carlyle Real Estate
Limited Partnership XVI, shall be deposited within fifteen (15) days
following the end of each month in which any such fees and commissions
become due and payable, until the Termination Date; and
4
(iii) An amount monthly equal to all Available Cash Flow received
from the Premises remaining after payment of Operating Expenses for the
Premises as hereinafter defined shall be deposited within fifteen (15) days
of following the end of each month until the Termination Date, commencing
January 1, 1996. For the purpose of this Agreement, "Available Cash Flow"
means all income, receipts and revenue from all sources respecting the
Premises received by or for the benefit of Borrower remaining after payment
into the Reserve Account, Working Capital Account and Tenant Security
Deposit Account (as such Accounts are hereinafter defined) of all other
monies required or permitted to be deposited under the terms of this
Agreement. "Operating Expenses for the Premises" are to be determined in
accordance with the Approved Budget and include all other items of cost and
expense of a nature which are permitted to be paid from the "Working
Capital Account" described below, but which have been paid from Available
Cash Flow rather than from the Working Capital Account, but "Operating
Expenses for the Premises" shall not include (a) the installment of fixed
interest to be paid to Lender as set forth in Paragraph 1 of the Notes and
Mortgage Modification Agreement; (b) the installment (hereinafter called
"Tax and Insurance Estimate Payments") for taxes, assessments and other
impositions (if any) and premiums for fire, rental value and other
insurance covering the Premises required be carried pursuant to Paragraph 2
of the Consolidated Mortgages; and (c) payments for Capital Expenditures,
leasing and brokerage commissions, lease inducements and tenant
improvements; provided, however, that notwithstanding the foregoing, items
of a nature described (c) above becoming due and payable to parties
unaffiliated with Borrower under existing tenant leases (herein "Existing
Lease Obligations") may be funded from and charged against the Reserve
Account and, to the extent necessary to meet such Existing Lease
Obligations,
5
Lender shall not unreasonably withhold its consent to
modifications to the Draw Request Requirements set forth below in respect
thereof;
(iv) From the income, receipts and revenues from all sources
respecting the Premises received by or for the benefit of Borrower,
Borrower shall deposit within fifteen (15) days following the end of each
month, commencing January 15, 1996, until the Termination Date, an amount
equal to the monthly installments for the items described in clauses (a)
and (b) of the immediately preceding Subparagraph (iii);
(v) Any amount remaining in the Working Capital Account
(established and maintained pursuant to Paragraph 4 hereof), after payment
of expenses approved by Lender, following the sending by Lender to
Borrower of the Notice of Default called for in Paragraph 4.
4. WORKING CAPITAL ACCOUNT. Borrower had heretofore deposited
from money received from the Reserve Account the sum of ONE HUNDRED FIFTY
THOUSAND AND NO/100THS ($150,000.00) DOLLARS into a separate segregated
account for the exclusive use and benefit of the Premises known as the
"Working Capital Account." As long as Lender does not send to Borrower a
Notice of Default, Borrower shall have the right to maintain the Account
and use the money in the Account and all interest earned thereon to pay for
(i) unforeseen expenses and capital expenditures not anticipated or
approved in the to be approved annual Approved Budget mentioned in
Paragraph 10 hereof; and (ii) tenant improvement costs of under $20,000.00
and any other expenses or capital expenditures (each of which capital
expenditures shall not exceed $25,000.00) which are incurred pursuant to or
in accordance with the Approved Budget. Borrower shall report all money
received and expended from the Working Capital Account as part of the
reporting statements to be delivered by Borrower to Lender as more
particularly provided in the Notes and Mortgage Modification Agreement. To
the extent that payment was made out of the Working Capital Account for an
expenditure that has been approved by Lender in writing (which approval
shall not be unreasonably withheld or denied or which expenditure is of a
nature described in (ii) above, Borrower shall have the right to deduct the
amount of such payment from the amount of Available Cash Flow that would
6
otherwise be deposited in the Reserve Account and deposit such amount in
the Working Capital Account. If Borrower shall default in its obligations
under the Loan Documents or under this Agreement and such default continue
uncured beyond the applicable cure period (if any), Borrower shall, upon
written notice of default sent by Lender to Borrower (the "Notice of
Default"), immediately transmit all funds remaining in the Working Capital
Account into the Reserve Account, which funds shall be used for the
purposes contained in the Reserve Account.
5. DUTY TO HOLD FUNDS. Pledge Agent confirms its agreement to
hold all funds deposited with it hereunder (the "Pledged Funds") in trust
in clearly segregated separate pledge accounts, one of which shall be to
cover all tenant security deposits (the "Tenant Security Deposit Account")
and the other to cover all other funds to be deposited hereunder (the
"Reserve Account"). Neither account may be commingled with the other
account or with any other account held by The Boston Mortgage Company, Inc.
Pledge Agent agrees that it shall not release any funds held by it except
as otherwise expressly permitted by the terms of this Agreement.
6. SECURITY FOR BORROWER'S OBLIGATION. Borrower and Lender
acknowledge and agree that the Reserve Account and Tenant Security Deposit
Account are given as additional security for the performance of Borrower's
obligations to pay installments of fixed interest, Residual Interest
Amount, Yield Maintenance Documents when due, and as security for the
performance of Borrower's obligations under the Agreement.
Borrower hereby grants to Lender a security interest in the Working
Capital Account, Reserve Account and Tenant Security Deposit Account in
order to secure the performance of Borrower's obligations under the Loan
Documents; provided, however, that the said security interest in the Tenant
Security Deposit Account is only in and to Borrower's rights to any
proceeds from such account and is subject to the terms of the applicable
tenant leases. Pledge Agent hereby acknowledges the security interest in
the Reserve Account and Tenant Security Deposit Account granted herein by
Borrower to Lender and the parties hereto agree that Pledge Agent is the
agent of Lender for the purposes of perfecting the security interests of
Lender in the Reserve Account and Tenant Security Deposit Account and that
for such purpose possession of such Reserve Account and Tenant Security
Deposit Account by the Pledge Agent shall constitute possession
7
by Lender, but that in all other respects Pledge Agent is an independent
contractor. However, upon request Borrower shall execute such financing
statements and other documents reasonably requested by Lender to further
evidence perfection of such security interests. Borrower covenants and
agrees that it shall not further assign or grant a security interest in, or
otherwise hypothecate any of its right, title and interest in the Working
Capital Account, Reserve Account or Tenant Security Deposit Account.
Pledge Agent covenants and agrees that it shall accept no assignment,
security interest in or other hypothecation of the Reserve Account or
Tenant Security Deposit Account.
7. TENANT SECURITY DEPOSIT ACCOUNT. The parties hereto do further
acknowledge that the money in the Tenant Security Deposit Account is to
ensure the safety and propriety of the security deposits. Borrower
covenants and agrees that it shall not assign, grant a security interest in
or otherwise hypothecate any of its rights, title and interest in the
Tenant Security Deposit Account, and Pledge Agent covenants and agrees that
it shall accept no assignment, security interest in or other hypothecation
of the Tenant Security Deposit Account. To the extent the landlord
receives any right to all or any portion of any funds in the Tenant
Security Deposit Account, such funds, following due notice to Lender and
Pledge Agent, shall be transferred to the Reserve Account and used for the
purposes provided in the Account.
Upon any acquisition of title by foreclosure, deed in lieu of
foreclosure or otherwise by Lender or any designee, assignee or nominee of
Lender, all moneys held in the Tenant Security Deposit Account shall be
transferred in accordance with Lender's written directions. Upon payment
in full of the Consolidated Indebtedness and satisfaction of record of the
Consolidated Mortgages, all money held in the Tenant Security Deposit
Account shall be transferred in accordance with Borrower's written
direction upon delivery to Pledge Agent of a certified copy of the recorded
satisfaction of Consolidated Mortgages document and other proof of payment
in full of the Consolidated Indebtedness.
8. INTEREST AND INVESTMENTS. Pledge Agent shall invest the
Pledged Funds from time to time, in accordance with Borrower's written
directions, in one or more of the following investments:
(a) Bank accounts, money market funds and/or bank
8
certificates of deposit, the principal of which is one hundred
(100%) percent insured by the Federal Deposit Insurance Corporation and
which have a maturity date of not more than one (1) year from the date of
not more than one (1) year from the date of investment, or money market
funds which invest in government backed securities;
(b) United States Treasury Bills which have a maturity date of not
more than one (1) year from the date of the investment.
All interest that accrues on the Pledged Funds shall belong to and be
credited for the benefit of Borrower, but shall at all times remain as part
of the Pledged Funds. All investments by Pledge Agent are contingent upon
Pledge Agent's receipt of IRS Form W-9, executed by an authorized signatory
of Borrower, reciting the identity and tax identification number of
Borrower. Lender shall not be responsible for the loss of all or any part
of the Pledge Funds resulting from such investments or any other cause. If
there is a loss of all or any part of the Pledged Funds, Pledge Agent will
notify Borrower and Lender within two (2) business days of learning of the
loss. Borrower will replace the lost funds within five (5) business days
of receiving the notice of the loss from Pledge Agent; provided, however,
that fluctuations in the value of the pledged accounts by reason of changes
in interest rates shall not be construed as a loss of Pledged Funds for
purposes of this Agreement.
To the extent necessary, Pledge Agent is directed to sell and reduce
to cash funds a sufficient amount of such investments whenever the cash
balance in the Reserve Account or Tenant Security Deposit Account, as the
case may be, is insufficient to make a disbursement from the Reserve
Account or Tenant Security Deposit Account when permitted or required by
the terms of this Reserve Pledge Agreement.
9. WITHDRAWAL TERMS. Pledge Agent shall, from time to time, make
the following payments from the Reserve Account and Tenant Security Deposit
Account, only upon the following conditions:
(a) TO LENDER MONTHLY: Commencing on January 1, 1996, and
continuing on the first day of each month thereafter occurring until the
Consolidated Indebtedness is paid in full, Pledge Agent shall pay Lender,
to the extent funds are available in
9
the Reserve Account, the amount then due Lender under the Notes
and Mortgage Modification Agreement (receipt of a copy of which Pledge
Agent acknowledges) within the time periods called for in the said
Agreement. Nothing contained in this Paragraph shall relieve Borrower of
its obligations under the Notes and Modification Agreement to make all
payments required to be made thereunder within the time frames called for
therein, and any failure on Pledge Agent's part to make any payment in the
amount required by the Noted and Modification Agreement shall require
Borrower to pay the amount not so paid directly to Lender within the time
frame called for in the Notes and Modification Agreement. Pledge Agent
shall notify Lender and Borrower of any inability to make any such payments
not later than three (3) days of the due date therefor.
(b) TO BOSTON MORTGAGE CAPITAL CORP AS SERVICER, OR TO LENDER, IF
BOSTON MORTGAGE CAPITAL CORP IS NO LONGER THE SERVICER: Commencing on
January 1, 1996, and continuing on the first day of each month thereafter
occurring until the Consolidated Indebtedness is paid in full, Pledge Agent
shall pay itself as Servicer of Lender, to the extent funds are available
in the Reserve Account, the monthly installment of Tax and Insurance
Estimate Payment that Borrower is required to pay to Lender under Paragraph
2 of the Consolidated Mortgages, which funds are to be used by Servicer to
pay such items when due in accordance with the terms of a separate
Servicing Agreement with Lender. Nothing contained in this Paragraph shall
relieve Borrower of its obligations to make such Tax and Insurance Estimate
Payment within the time frames called for in the Consolidated Mortgages and
any failure on Pledge Agent's part to make any such payment shall require
Borrower to pay the amount not paid to Lender or to its Servicer within the
time frame called for in the Consolidated Mortgages. Pledge Agent shall
notify Lender and Borrower of any inability to make any such payment not
later than three (3) days of the due date therefor.
(c) TO LENDER FOLLOWING DEFAULT: Upon written
10
direction from Lender, a copy of which shall also be sent to
Borrower, alleging that Borrower has failed to pay principal, fixed
interest, Residual Interest Amount, Yield Maintenance Amount, prepayment
premiums or other payment as required by the Loan Documents, Pledge Agent
will pay Lender out of funds from the Reserve Account the amount set forth
in the written directions from Lender. Lender agrees that no such
direction shall be sent unless and until Borrower's failure to make any
such payment shall have continued uncorrected to and beyond the expiration
of any applicable grace periods specifically provided in the Loan Documents
for such payment.
(d) TO A TENANT IN RETURN OF SECURITY DEPOSIT: Upon presentation
of (i) written instructions from Borrower setting forth the name of the
tenant and the amount of the security deposit to be returned and certifying
that the amount was previously delivered to Pledge Agent and held by Pledge
Agent in the Tenant Security Deposit Account and that the lease has been
terminated and/or the tenant is justly entitled to such money, and (ii)
confirmation that Lender has approved the same (which approval Lender
agrees will not be unreasonably withheld or denied), Pledge Agent will pay
out of funds in the Tenant Security Deposit Account to the tenant the
amount of the security deposit that Borrower says is then due and payable.
(e) TO JMB REALTY CORPORATION: Provided this Reserve Pledge
Agreement has not been terminated on or before such date, and Lender has
been paid the amount of accrued fixed interest due it on January 1, 1997,
under the Loan Documents, Pledge Agent shall pay to the direction of JMB
Realty Corporation, out of funds in the Reserve Account, on the first
business day following January 1, 1997, the lesser of (I) the amount then
remaining in the Reserve Account or (II) the sum of TWO HUNDRED FIFTY
THOUSAND AND NO/100THS ($250,000.00) DOLLARS, LESS IN EACH INSTANCE THE
AMOUNT OF TRANSACTION COSTS PAID TO BORROWER OUT OF THE RESERVE ACCOUNT
PURSUANT TO ITEM (h) HEREOF.
11
(f) TO BORROWER FOR LEASING COMMISSIONS TO BE PAID LEASING AGENTS
AND BROKERS: Pledge Agent will pay Borrower the amount due for leasing
commissions out of funds in the Reserve Account upon Borrower's compliance
with the draw request requirements hereinafter set forth. Notwithstanding
the foregoing, no payment is to be made pursuant to this Subparagraph to
Borrower, JMB Realty Corporation, JMB/Urban Development Company, Carlyle
Real Estate Limited Partnership XV, Carlyle Real Estate Limited Partnership
XVI or any entity affiliated with Borrower, JMB Realty Corporation,
JMB/Urban Development Company, or general partner or affiliate of the
general partner of either Carlyle Real Estate Limited Partnership XV or
Carlyle Real Estate Limited Partnership XVI (collectively "non-paying
leasing brokers").
(g) TO BORROWER FOR PAYMENT OF TENANT IMPROVEMENTS, CAPITAL
EXPENDITURES OR LEASE INDUCEMENTS: Pledge Agent will pay Borrower, out of
funds in the Pledge Account, the amount due for tenant improvements,
Capital Expenditures or lease inducements upon compliance with the draw
request requirements.
(h) TO BORROWER TO PAY THE EXCESS AMOUNT OF AVAILABLE CASH FLOW
DEPOSITED IN A CALENDAR YEAR: Following determination by Pledge Agent that
an Excess Amount, as hereinafter defined and determined, has been paid into
the Reserve Account, Pledge Agent shall remit the Excess Amount to Borrower
in accordance with the following condition:
(i) The money that is subject to remittance is limited solely
to the amount of Available Cash Flow deposited for that particular calendar
year.
(ii) Pledge Agent shall determine the amount to be remitted
based upon analyzing and reconciling the certified monthly statements
submitted to Lender pursuant to Paragraph 9 (a) of the Second Mortgage
Modification and
12
Consolidation Agreement, such determination to be solely
made based upon all such quarterly statements for such calendar year (or
quarterly portion thereof) confirming that there would not have been
Available Flow deposited in the Reserve Account if Available Cash Flow had
been determined for all such quarters of such calendar year for which such
analysis and reconciliation is made.
(iii) The only amount that is to be remitted to Borrower is the
amount of Available Cash Flow ("Excess Amount") deposited in the Reserve
Account for the calendar year that, based upon the analysis and
reconciliation made pursuant to Subparagraph 9 (b) hereof, would not have
been deposited in the Reserve Account if Available Cash Flow had been
determined as provided in Subparagraph (ii).
(iv) Analysis, reconciliations and remittances, if any, are to
be made solely on a particular calendar year basis. In no event can money
deposited in the Reserve Account or statements submitted by Borrower
pursuant to Paragraph 9(a) of the Second Mortgage Modification and
Consolidation Agreement for a preceding calendar year be used for
determining any remittance due Borrower pursuant to this Agreement in a
subsequent year.
(v) Borrower shall be required to repay any amounts remitted
to it under this Agreement to the extent of any discrepancy that may arise
as determined from the financial statements, audited and/or certified
reports and Lender's audits required or occurring under the Second Mortgage
Modification and Consolidation Agreement, and any failure on Borrower's
part to pay upon demand the amount of any remittance that should not have
been paid to Borrower based upon such annual statement, audited and/or
certified report or Lender's audit shall constitute a default
13
under the Second Mortgage Modification and Consolidation
Agreement, at Lender's option, affording Lender with all rights and
remedies as provided in the Second Mortgage Modification and Consolidation
Agreement.
(i) TO BORROWER UPON PAYMENT IN FULL OF ALL AMOUNTS DUE LENDER:
Upon receipt of Lender's notice that the loan evidenced and secured by the
Loan Documents has been satisfied in full and that Borrower has paid all
money owed Lender as more particularly set forth in Paragraph 12, Pledge
Agent shall pay to Borrower any money then remaining in the Reserve Pledge
Account and Tenant Security Deposit Account.
10. DRAW REQUEST REQUIREMENTS. The following are the procedures
under which funds are to be paid for the items enumerated in Paragraphs 8
(f) and (g) hereof:
(a) Borrower shall have the right once in each calendar month to
make written request ("Draw Request") to Pledge Agent for the release of a
portion of the Pledged Funds in the Reserve Account to pay for Tenant
Improvement Costs, Capital Expenditures, Lease Inducement Amounts and
Leasing Commissions (all defined below); provided, however, that no draw
request can be processed for Tenant Improvements for an individual tenant
unless it is either a request for final payment or for an amount in excess
of $20,000.00, and provided further that the portion of the monthly draw
requests for which satisfactory proof of payment has not been submitted
cannot exceed $100,000.00 without Lender's express written consent (which
consent will not be unreasonably withheld or denied, but Lender can
withhold its consent where it has not received satisfactory proof that
Borrower has paid to proper parties all funds due such parties from prior
draw fundings).
(b) Pledge Agent will only release Pledged Funds when it receives a
Draw Request from Borrower accompanied by the following items of
documentation:
A. For all disbursements following the first draw request,
documentation categorically confirming that funds from the immediately
prior draw request were paid to the parties for whom such draw was
requested. Such documentation must include,
14
in addition to the documentation to be submitted under items B through F
(to the extent applicable):
(i) Where payment was to go to a tenant, a leasing broker or
third party for the benefit of the tenant, duly executed acknowledgements
of receipt of all such funds from such tenant, leasing broker or third
party, or copies of cancelled checks or other proof of payment reasonably
satisfactory to Lender.
(ii) Where payment was to pay any materialman, laborer or
other party to tenant improvement cost or capital expenditure, and a
conditional lien waiver has been previously obtained, unconditional lien
waiver confirming receipt in full of all monies covered by the disbursement
or other proof reasonably satisfactory to Lender that no claim exists nor
can exist for any non-payment.
(iii) Where payment was to pay for materialmen, laborer or
other party for tenant improvement costs or capital expenditures to
reimburse for costs of under $5,000.00 for which no lien waiver was
obtained, proof reasonably satisfactory to Lender that payment to such
materialmen, laborer or other party has, in fact, been made.
B. For the initial Draw Request for Tenant Improvement Costs in an
individual tenant space:
(i) A fully executed lease or related agreement or amendment
to lease, together with a copy of Lender's written approval of the same and
a statement in the form of Exhibit B outlining the major lease terms;
except that Borrower does not need to present Pledge Agent with Lender's
approval for (and Lender shall be deemed to have approved) any lease (or
related agreement or amendment to a lease) so long as Borrower delivers a
certification to Pledge Agent that said lease, related agreement or
amendment to lease is for an a new tenant of less than 5,000 net rentable
square feet or for existing tenant for less than 10,000 square feet of net
rentable area (a) if the lease is on a form previously approved as such by
Lender either without material variation from such form or with variations
which Lender has previously approved in writing with respect to such tenant
(or if an amendment or related agreement imposes no adverse economic
burdens on Borrower from that previously approved by Lender), (b) is for a
term of not less than three (3) years; and (c) meets the leasing
requirements as established in Schedule A
15
of the Approved Budget for the year in which the lease (or related
agreement or amendment to lease) is executed. Any lease specifically
approved by Lender will include a work letter for the tenant improvement
work and will have attached any related agreements providing for Lease
Inducement Amounts, all of which must have the Lender's written approval
(which approval Lender agrees to not unreasonably withhold or deny).
Leases for new tenants of less than 5,000 net rentable square feet and for
existing tenants of less than 10,000 net rentable square feet, not
specifically approved by Lender, will include a tenant work letter
reflecting any tenant improvement work and will have attached any
agreements providing for Lease Inducement Amounts.
It is understood and agreed among the parties hereto that in
negotiating and entering into any lease or related agreement or amendment,
allocations in the Approved Budget, Tenant Improvement Costs, Lease
Inducement Amounts and Free Rent may be re-allocated among said categories
by Borrower so long as such items, following such reallocation, when
considered in their entirety, constitute market terms and do not exceed
certain limits as set forth in Schedule A of the Approved Budget for the
particular lease, related agreement or amendment in question. Lender
agrees not to unreasonably withhold or deny its approval of any lease,
related agreement or amendment.
(ii) Subordination of Mortgage in the form attached hereto as
Exhibit C, executed by the tenant in question, or such other form that
Lender has specifically approved in writing (which approval Lender agrees
not to unreasonably withhold or deny).
(iii) A copy of any required building permit or permits for the
improvements for which reimbursement is sought.
C. For any Draw Request (including the initial, subsequent and
final Draw Requests) for Tenant Improvement Costs in an individual tenant
space and Capital Expenditures:
(i) General Contractor's affidavit and lien waivers executed
by any and all contractors, subcontractors or any other persons supplying
labor or material for which reimbursement is being sought (said lien
waivers to be unconditional except as they relate to the specific amounts
for which reimbursement is sought) except that lien waivers need not
16
be obtained where costs for materials or labor for individual Tenant
Improvement Costs do not exceed $5,000.00 and other proof of payment has
been submitted Lender.
(ii) A certification of Borrower in the form attached hereto
as Exhibit D.
D. For the final Draw Request for Tenant Improvement Costs in an
individual tenant space and for Capital Expenditures to the extent
applicable:
(i) Unconditional certificate of occupancy for the space in
question.
(ii) An architect's certificate (or general contractor's
certificate for new leases for under 5,000 net rentable square feet or
renewals of space for tenants occupying 10,000 net rentable square feet)
certifying that the work for space in question has been completed
substantially in accordance with the plans and specifications for the work,
that the space is substantially completed (subject to minor punch-list
items) and ready for occupancy and that the improvements comply with all
applicable governmental regulations.
(iii) For Capital Expenditures in excess of $50,000.00 and for
leases of 5,000 square feet or more of net rentable area for new tenants
and of 10,000 square feet of net rentable area for existing tenants, a
title report of the Premises from the title insurance company that issued
the title insurance policy in favor of Lender (or such other title company
reasonably satisfactory to Lender) dated as of the date of the draw
disbursement, confirming no non-insured over lien for labor or material has
been filed against the Premises and confirming no new title exception or
condition (not approved or deemed approved by Lender) which effectively
changes title coverage from that afforded Lender in the title policy held
by it.
(iv) A duly executed Statement of Tenant In Re: Lease in the
form attached hereto as Exhibit E.
E. For any Draw Request for Leasing Commissions (defined below)
relating to an individual tenant space:
(i) A letter executed by the leasing broker stating the total
leasing commissions paid or payable for the
17
lease in question, stating the amount for which the draw request is being
made, stating that the amount being requested is all that is then due and
owing to the leasing broker for the lease in question and stating amount of
any additional leasing/commissions that will become due and payable with
respect to the lease (or a satisfactory methodology for determining same).
The total leasing commissions payable in connection with a lease calculated
on a dollar per square foot of space leased basis may not exceed the
leasing commission level established in the Approved Budget for the year in
which the lease is signed
(ii) A certificate from Borrower that the leasing broker is
not a non-paying leasing broker therefore not entitled to any payment.
F. For any Draw Request that includes Lease Inducement Amounts (as
such term is hereinafter defined) relating to an individual tenant space:
(i) A certification of Borrower in the form attached hereto
as Exhibit F.
(ii) If not previously submitted, all items required in
Section 9(b) (B) above.
All fundings hereunder are conditioned upon receipt of the required
documentation therefor by the 10th of the month preceding the date of
funding and all documentation for a draw request must be submitted at one
time and not on a piecemeal basis. To the extent documentation is complete
or Lender has waived in writing any such required documentation, fundings
will be made by the 25th of the month; provided, however, that unless
Lender has approved in writing, either through written lease approvals or
otherwise, all components of a Draw Request must meet the leasing
requirements established in Schedule A of the Approved Budget subject to
the re-allocation rights set forth above.
Within five (5) business days after funding a Draw Request, Pledge
Agent will forward to Lender all documentation delivered to it in
connection with the Draw Request and in connection with proof of property
payment of monies owed to other parties but paid to Borrower in a prior
Draw Request.
If any of the documentation does not comply with the requirements of
this Agreement or the amounts requested or
18
recited in the documents are not consistent with levels established in
Schedule A of the Approved Budget subject to the re-allocation rights set
forth above or with amounts otherwise approved by Lender, then the Draw
Request (or applicable portion thereof) relating to such non-complying
documentation is submitted. The portion of the Draw Request for which
complying documentation has been provided shall be honored, provided that
Borrower is otherwise in compliance with the other terms and conditions of
this Agreement without regard to the notice preconditions set forth in
Paragraph 10(p).
(c) For purposes hereof, the following terms shall have the
following respective meanings:
(i) The term "Tenant Improvement Costs" means: any costs
incurred or payable by Borrower in connection with the improvement,
alteration, decoration, furnishing or retrofit of tenant spaces in the
Premises and any payments made or payable by Borrower to any tenant as
tenant finish allowance if and to the extent the tenant is doing its own
tenant finish work, but only to the extent such costs or payments are
incurred or payable in connection with leases approved by Lender in
writing or leases deemed approved as provided in Paragraph 9(b) (B) (i)
above, to Borrower and only to the extent such costs or payments meet the
leasing guidelines of Schedule A of the Approved Budget subject to the re-
allocation rights set forth above.
(ii) The term "Lease Inducement Amounts" means: any payments
made or payable by Borrower to a tenant of the Premises to induce the
tenant to enter into or renew its lease; the actual out-of-pocket expenses
incurred by Borrower when it assumes a tenant's lease of other property in
order to induce the tenant to lease space in the Premises and any other
cash payments incurred or payable by Borrower in the nature of tenant
concessions or inducements, but only to the extent such payments are made
or payable in connection with leases approved by Lender in writing or
leases deemed approved as provided in Paragraph 9 (b) (B) (i) and are
memorialized in the lease or in
19
a separate agreement between Borrower and the tenant, and only
to the extent such payments, when added to free rent, meet the leasing
requirements in Schedule A by the Approved Budget for the year in which the
lease was signed, or have been otherwise specifically approved by Lender
subject to the re-allocation rights set forth above.
(iii) The term "Leasing Commissions" means: any leasing or
brokerage commissions or other similar expenses incurred or payable by
Borrower in order to obtain leases of space in the Premises, but only to
the extent such commissions or similar expenses are reasonable and
customary and were incurred or are payable in connection with leases
approved by Lender in writing or leases deemed approved as provided in
Paragraph 10 (b) (B) (i) and meet the leasing requirements in Schedule A of
the levels established by the Approved Budget for the year in which the
lease was signed, or have been otherwise specifically approved by Lender
subject to the re-allocation rights set forth above.
(iv) The term "Approved Budget" means: the budget for each
year as approved by Lender pursuant to Paragraph 54 of the Second Mortgage
Modification and Consolidation Agreement. Borrower will deliver a copy of
the Approved Budget to Pledge Agent on or before January 2 or such later
date as the same shall have been approved by Lender, for each year during
the term of this Agreement with evidence of such written approval attached
to the Approved Budget.
(v) The term "Capital Expenditures" means: (i) amounts that
under standard accounting principles are not considered to be
expenses, (ii) are not for tenant improvement work, and (iii) do not in the
aggregate exceed the amount therefor in the Approved Budget and such amount
exceeds $25,000.00. Capital expenditures of $25,000.00 or less are to be
made in accordance with the Approved Budget and the other requirements
contained in this Agreement.
20
11. MISCELLANEOUS.
a. The various funds received by Pledge Agent are hereby deposited
with Fidelity Investments at 82 Devonshire, Boston, Massachusetts with the
Security Deposits with the Security Deposits being initially deposited in
Pledged Agent's Tenant Security Deposit Account (Account No. #0690-
00080270713--Fidelity-Money Market Government Trust (hereinafter called
"Security Account") and the pledged funds received by Pledge Agent as part
of the Reserve Account being deposited in Pledge Agent's reserve account
(Account No. #0680-00080270721--Fidelity-US Treasury Income Fund
(hereinafter called "Reserve Account"). All reasonable costs and fees of
the Escrow Agent shall be paid for by Borrower and shall be deducted by
Pledge Agent out of interest earned from the Reserve Account or Tenant
Security Deposit Account.
b. Pledge Agent may act in reliance upon any writing or instrument
or signature which it, in good faith, believes to be genuine, may assume
the validity and accuracy of any statement or assertion contained in such a
writing or instrument and may assume that any person purporting to give any
writing, notice, advice or instruction in connection with the provisions
hereof has been duly authorized so to do.
c. Pledge Agent's duties under this Agreement shall be limited to:
(1)Accepting the Pledged Funds for deposit into the Reserve Account and
Tenant Security Deposit Account;
(2)Instructing Security Account Bank and Pledge Bank to invest and
reinvest such sums from time to time pursuant to the terms of this
Agreement in permitted investments and in accordance with Borrower's
written instructions;
(3)Causing to be paid, from time to time out of pledged funds, all
monies to be paid pursuant to Paragraphs 9 and 10 hereof;
(4)Within fifteen (15) days following the end of each monthly period and
continuing until the Consolidated Indebtedness is paid in full, delivering
to Lender a reconciliation statement certified as being true and correct by
the chief financial officer of Pledge Agent, listing all monies held in the
Reserve Account and Tenant Security Deposit Account, including separately a
schedule of all security deposits held by Pledge Agent and the
21
tenants for which such security deposits are held, all money received, all
income and interest earned and all payments made by Pledge Agent, and such
other information as Lender has requested by notice from Lender to Borrower
and Pledge Agent;
(5)Supplying all information that is requested by the certified public
accountant retained by Borrower so as to conduct the audit required to be
done under Paragraph 10(d) of the Notes and Mortgage Modification
Agreement; and
(6)Open up the books and records and make the same available to Lender
and all employees, agents and representatives of Lender at such places and
times as Lender or such employees, agents and representatives of Lender
desire.
d. Pledge Agent undertakes to perform only the duties as are
expressly set forth herein and no implied duties or obligations shall be
read into this Agreement against Pledge Agent.
e. Borrower hereby agrees to indemnify Pledge Agent and hold it
harmless from any and all claims, liabilities, losses, actions, suits or
proceedings at law or in equity, or any other expense, fee or charge of any
character or nature, which it may incur or with which it may be threatened
by reason of its acting as Pledge Agent under this Agreement, and in
connection therewith, to indemnify Pledge Agent against any and all
expenses, including attorneys' fees and the cost of defending any action,
suit or proceeding or resisting any claim.
f. If the parties hereto shall be in disagreement about the
interpretation of this Agreement, or about their rights and obligations
hereunder, or the propriety of any action contemplated by Pledge Agent
hereunder, or if Lender files an objection to a request for payment, any
party hereto may, at its discretion, file an action in a Massachusetts
court of competent jurisdiction to resolve such disagreement. Pledge Agent
shall be indemnified by Borrower for all costs, including attorney's fees,
in connection with any such action, and shall be fully protected in
suspending all or a part of its activities under this Agreement until a
final judgement in the action is received.
g. Pledge Agent shall not be liable for any mistakes of fact or
errors of judgement or for any acts or omissions of any kind unless caused
by the willful misconduct or gross negligence of Pledge Agent. Escrow
Agent shall not be deemed to be in
22
violation of this Agreement if it is complying with a court order,
including an attachment, garnishment or levy.
h. Pledge Agent may resign upon thirty (30) days' prior written
notice to the parties to this Agreement. If a successor escrow agent is
not appointed within a thirty (30) day period following such written
notice, Pledge Agent may petition a Massachusetts court of competent
jurisdiction to name a successor. The costs of such action shall be paid
by Borrower, and shall be subject to the provisions of Paragraph 10(e)
hereof.
i. All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if sent by registered or certified
mail, return receipt requested, postage prepaid, by facsimile or by Federal
Express, to the addresses set forth in the preamble of this Agreement. The
name or place to which notice must be given may be changed by thirty (30)
days' prior written notice thereof. This Agreement may be executed in one
(1) or more counterparts and/or with counterpart signature pages, each of
which shall constitute one and the same agreement. This Agreement may also
be executed by facsimile signatures. The facsimile numbers of the parties
are as follows:
PLEDGE AGENT: (617) 262-0404
Attn: Kathleen Frost
LENDER: (212) 599-4126
Attn: Mark DePrima or
Jennifer Hochglaube
BORROWER: (312) 915-2310
Attn: Robert J. Chapman
with a copy sent to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90067
Attn: Real Estate Notices
j. This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and upon their respective successors and
assigns.
k. This Agreement shall be construed, enforced and interpreted
under the laws of Commonwealth of Massachusetts, without regard to
principles of conflict of laws.
l. In event of any litigation hereunder between
23
Borrower and Lender, the prevailing party shall be entitled to its
reasonable attorneys' fees and other costs incurred in such litigation. A
prevailing party shall be a party that prevails on at least 51% of the
monetary damages it claims.
m. The failure of Lender to enforce strict performance of the
terms and conditions hereof shall not constitute a waiver of its rights
under this Agreement or under any of the Loan Documents.
n. Borrower shall not assign its rights and/or obligations under
this Agreement except only in connection with a transfer permitted under
the Loan Documents. Subject to its right to resign as set forth under this
Agreement, Pledge Agent shall not assign its rights and/or obligations
under this Agreement.
o. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
and the same instrument.
p. A default by Borrower under this Agreement shall be a default
under the Loan Documents; provided, however, that Borrower shall not be in
default under this Agreement unless (i) in the case of a monetary default,
Borrower shall fail to cure the same within five (5) days following written
notice given by or on behalf of Lender or Pledge Agent to Borrower, or (ii)
in the case of a non-monetary default, Borrower shall fail to cure same
within twenty (20) days following written notice of such default given by
or on behalf of Lender or Pledge Agent.
q. In the event any provision is deemed to be invalid, it shall
not affect the rest, residue and remainder of this Agreement and this
Agreement shall be construed as if such provision was never included in
this Agreement.
r. Each party hereto does hereby warrant and represent that it has
full power and authority to execute this Agreement for the uses and
purposes herein contained.
12. TERMINATION OF RESERVE ACCOUNT. This Agreement and the Reserve
Account shall terminate when Lender provides Pledge Agent with written
notification that the loan evidenced and secured by the Loan Documents has
been satisfied in full, at which time Pledge Agent shall pay over the
remaining proceeds in
24
the Reserve Account to Borrower after the payment by Borrower to Lender of
all outstanding principal indebtedness, fixed interest, Yield Maintenance
Amount, Residual; Interest Amount, prepayment premiums, and all other sums
required to be paid under the Loan Documents. Notwithstanding the
aforesaid to the contrary, if the Premises are sold under foreclosure or
are otherwise acquired by Lender after default under the Loan Documents,
the remaining balance in the Reserve Account shall be credited to the
indebtedness evidenced and secured by the Loan Documents as of the date of
commencement of foreclosure proceedings or as of the date the title to the
Premises shall be otherwise acquired.
13. TERMINATION OF THE TENANT SECURITY DEPOSIT ACCOUNT. The Tenant
Security Deposit Account shall be maintained and terminated as more
particularly provided under the paragraph captioned "Tenant Security
Deposit Account."
14. COUNTERPART EXECUTIONS. This Agreement can be executed in one
or more counterparts, each of which shall be an original and all of which
shall constitute one agreement.
15. HEADINGS. The headings used herein are for convenience only
and are not to be used in interpreting this Agreement.
The party or parties executing this Agreement for and on behalf of
Borrower are doing so in their capacity of Trustee and not as individuals.
As such, any liability for breaching any of the Borrower's obligations
hereunder shall be limited to the Premises, trust assets and the monies
deposited in escrow under Agreement.
25
Without limitation on the foregoing, but in addition thereto, neither
Borrower nor any Trustee, advisor or any other entity shall be personally
liable in any manner or to any extent under or in connection with this
Agreement or any other agreement or instrument entered into in connection
herewith; provided, however, that the foregoing shall not affect or impair
any obligations under a certain Indemnity and Payment Agreement of even
date herewith given by Carlyle Real Estate Limited Partnership XV and
Carlyle Real Estate Limited Partnership XVI to Lender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
/s/ MARY D. SERVIN /s/ BRIAN K. ELLISON
- ------------------------------ ------------------------------
Mary D. Servin Brian K. Ellison
Witness not personally but solely as
Trustee of 260 Franklin Street
Associates Trust as aforesaid
for self and co-trustees
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
Executed By: Executed
- ------------------------------ ------------------------------
Witness Name:
Title:
Attest: THE BOSTON MORTGAGE CAPITAL CORP.
Executed By: Executed
- ------------------------------ ------------------------------
Name: Name:
Title: Title:
[ Seal ]
26
ATTACHED TO AND FORMING A PART OF THEIR RESERVE PLEDGE
AGREEMENT COVERING APPL. #MA-374
27
EXHIBIT "A"
Exhibit "A" from that certain Reserve Escrow Agreement dated as of January
1, 1991, by and among Norman S. Geller, Thomas Pabian, Thomas M. Bennett,
Douglas J. Welker, Jeffrey Gluskin, Neil G. Bluhm, Vince McBrien and Julia
Parks, as Trustees of the 260 Franklin Trust under a Declaration of Trust
dated May 16, 1986, as amended, Teachers Insurance and Annuity Association
of America, a New York corporation, and The Boston Mortgage Company, Inc.,
a Massachusetts corporation (the "Prior Agreement"), is hereby incorporated
herein by reference.
EXHIBIT "B"
Exhibit "B" from the Prior Agreement is hereby incorporated herein by
reference.
EXHIBIT "C"
Exhibit "C" from the Prior Agreement is hereby incorporated herein by
reference.
EXHIBIT "D"
Exhibit "D" from the Prior Agreement is hereby incorporated herein by
reference.
EXHIBIT "E"
Exhibit "E" from the Prior Agreement is hereby incorporated herein by
reference.
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a partner of the following joint ventures:
JMB/Piper Jaffray Tower Associates, a general partnership, which is a
partner in (i) OB Joint Venture II, a general partnership, which is a
partner of 222 South Ninth Street Limited Partnership, a limited partner-
ship, which holds title to the Piper Jaffray Tower office building in
Minneapolis, Minnesota, and (ii) OB Joint Venture, a general partnership,
which holds title to the land underlying the Piper Jaffray Tower office
building; JMB/Piper Jaffray Tower Associates II, a general partnership
which also is a partner in OB Joint Venture, a general partnership, which
holds title to the land underlying the Piper Jaffray Tower office building;
900 3rd Avenue Associates, a general partnership, which is a partner of
Progress Partners, a general partnership, which holds title to 900 Third
Avenue Building located in New York, New York; Maguire Thomas Partners -
South Tower, a limited liability company, which holds title to Wells Fargo
Center - IBM Tower located in Los Angeles, California; 260 Franklin Street
Associates, a general partnership, which holds title to the 260 Franklin
Street Building located in Boston, Massachusetts; C-C California Plaza
Partnership, a general partnership, which holds title to the California
Plaza office building in Walnut Creek, California; and JMB/NewPark
Associates, a general partnership, which is a partner in NewPark
Associates, a general partnership, which holds title to the NewPark Mall in
Newark, California. Reference is made to the Notes for a description of
the terms of such venture partnerships.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XV, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1996, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 22nd day of January, 1997.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1996,
and any and all amendments thereto, the 22nd day of January, 1997.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XV, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1996, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 22nd day of January, 1997.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1996,
and any and all amendments thereto, the 22nd day of January, 1997.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 20,664,264
<SECURITIES> 0
<RECEIVABLES> 11,033,758
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,698,022
<PP&E> 81,443,065
<DEPRECIATION> 31,766,188
<TOTAL-ASSETS> 174,989,293
<CURRENT-LIABILITIES> 137,463,717
<BONDS> 100,932,989
<COMMON> 0
0
0
<OTHER-SE> (80,575,338)
<TOTAL-LIABILITY-AND-EQUITY>174,989,293
<SALES> 26,916,089
<TOTAL-REVENUES> 28,496,327
<CGS> 0
<TOTAL-COSTS> 19,711,618
<OTHER-EXPENSES> 13,251,199
<LOSS-PROVISION> 26,000,000
<INTEREST-EXPENSE> 23,796,808
<INCOME-PRETAX> (54,263,298)
<INCOME-TAX> 0
<INCOME-CONTINUING> (49,291,781)
<DISCONTINUED> 12,665,186
<EXTRAORDINARY> 35,222,897
<CHANGES> (30,000,000)
<NET-INCOME> (31,403,748)
<EPS-PRIMARY> (64.72)
<EPS-DILUTED> (64.72)
</TABLE>
